ManpowerGroup 2008 Annual Report Download - page 48

46 Notes to Consolidated Financial Statements Manpower Annual Report 2008
Notes To Consolidated Financial Statements
in millions, except per share data
01.
Summary Of Significant Accounting Policies
NATURE OF OPERATIONS
Manpower Inc. is a world leader in the employment services industry. Our worldwide network of over 4,400 offices in 82
countries and territories enables us to meet the needs of our clients in all industry segments. Our largest operations, based on
revenues, are located in the U.S., France, Italy and the U.K. We specialize in permanent, temporary and contract recruitment;
employee assessment and selection; training; outsourcing; and outplacement and consulting services. We provide services
to a wide variety of clients, none of which individually comprise a significant portion of revenues for us as a whole.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles generally accepted in the United States
requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
for the reporting period. Actual results could differ from these estimates.
BASIS OF CONSOLIDATION
The consolidated financial statements include our operating results and the operating results of all of our subsidiaries. For
subsidiaries in which we have an ownership interest of 50% or less, but more than 20%, the consolidated financial statements
reflect our ownership share of those earnings using the equity method of accounting. These investments, as well as certain
other relationships, are also evaluated for consolidation under Financial Accounting Standards Board (“FASB”) Interpretation
No. 46(R), “Consolidation of Variable Interest Entities.” These investments were $81.0 and $98.7 as of December 31, 2008
and 2007, respectively, and are included as Other Assets in the consolidated balance sheets. Included in Shareholders’
Equity as of December 31, 2008 and 2007 are $53.2 and $52.3 of unremitted earnings from investments accounted for using
the equity method. All significant intercompany accounts and transactions have been eliminated in consolidation.
REVENUES AND RECEIVABLES
We generate revenues from sales of services by our company-owned branch operations and from fees earned on sales of
services by our franchise operations. Revenues are recognized as services are performed. The majority of our revenues are
generated by our recruitment business, where billings are generally negotiated and invoiced on a per-hour basis. Accordingly,
as contingent workers are placed, we record revenue based on the hours worked. Permanent recruitment revenues are
recorded as placements are made. Provisions for sales allowances, based on historical experience, are recognized at the
time the related sale is recognized.
Our franchise agreements generally state that franchise fees are calculated based on a percentage of revenues. We record
franchise fee revenues monthly based on the amounts due under the franchise agreements for that month. Franchise fees,
which are included in Revenues from Services, were $30.9 for the year ended December 31, 2008 and $35.7 for the years
ended December 31, 2007 and 2006.
In our outplacement business, we recognize revenue from individual programs over the estimated period in which services
are rendered to candidates. For group programs and large projects within the outplacement business, we recognize revenue
over the period in which the contracts are completed. In our consulting business, revenue is recognized upon the performance
of the obligations under the consulting service contract. The amount billed for outplacement and consulting services in
excess of the amount recognized as revenue is recorded as Deferred Revenue and included in Accrued Liabilities in our
consolidated balance sheets. We had $48.1 and $46.3 recorded as Deferred Revenue as of December 31, 2008 and
2007, respectively.
We record revenues from sales of services and the related direct costs in accordance with Emerging Issues Task Force Issue
No. 99-19, “Reporting Revenue Gross as a Principal versus Net as an Agent.” In situations where we act as a principal in the
transaction, we report gross revenues and cost of services. When we act as an agent, we report the revenues on a net basis.
Amounts billed to clients for out-of-pocket or other cost reimbursements are included in Revenues from Services, and the
related costs are included in Cost of Services.
ALLOWANCE FOR DOUBTFUL ACCOUNTS
We have an Allowance for Doubtful Accounts recorded as an estimate of the Accounts Receivable balance that may not be
collected. This allowance is calculated on an entity-by-entity basis with consideration for historical write-off experience, the
current aging of receivables and a specific review for potential bad debts. Items that affect this balance mainly include bad
debt expense and the write-off of accounts receivable balances.