ManpowerGroup 2008 Annual Report Download - page 66

64 Notes to Consolidated Financial Statements Manpower Annual Report 2008
Notes To Consolidated Financial Statements
in millions, except per share data
Our overall expected long-term rate of return on U.S. plan assets is 7.5%. Our overall expected long-term rate of return on our
non-U.S. plans varies by country and ranges from 1.3% to 6.3%. For a majority of our plans, a building block approach has
been employed to establish this return. Historical markets are studied and long-term historical relationships between equity
securities and fixed income instruments are preserved consistent with the widely accepted capital market principle that
assets with higher volatility generate a greater return over time. Current market factors such as inflation and interest rates are
evaluated before long-term capital market assumptions are determined. The long-term portfolio return is established with
proper consideration of diversification and rebalancing. We also use guaranteed insurance contracts for three of our foreign plans.
Peer data and historical returns are reviewed to check for reasonableness and appropriateness of our expected rate of return.
Projected salary levels utilized in the determination of the projected benefit obligation for the pension plans are based upon
historical experience.
We generally use an external investment manager to assist us in establishing our investment strategies and policies. Our
long-term objective is to minimize plan expenses and contributions by outperforming plan liabilities. We have historically used
a balanced portfolio strategy based primarily on a target allocation of equity securities and fixed-income instruments, which
vary by location. These target allocations, which are similar to the 2007 allocations, are determined based on the favorable risk
tolerance characteristics of the plan and, at times, may be adjusted within a specified range to advance our overall objective.
The weighted-average asset allocation of our plans as of December 31 is as follows:
2008 2007
Asset Category
Cash and other 18.0% 9.9%
Fixed-income securities 51.3% 48.0%
Equity securities 30.7% 42.1%
Plan assets are primarily comprised of domestic and foreign equity securities, professionally-managed equity and bond
funds, government and agency securities and guaranteed insurance contracts. None of our plan assets include any of our
debt or equity securities.
Effective January 1, 2009, we have terminated our defined benefit plan in Japan and replaced it with a defined contribution
plan. A gain of approximately $4.0 will be recorded in the first quarter of 2009 related to the settlement and curtailment of the
defined benefit plan.
RETIREE HEALTH CARE PLAN
We provide medical and dental benefits to certain eligible retired employees in the U.S. Due to the nature of the plan, there are
no plan assets. The reconciliation of the changes in the plan’s benefit obligation and the statement of the funded status of the
plan are as follows:
Year Ended December 31 2008 2007
Change in Benefit Obligation
Benefit obligation, beginning of year $ 22.6 $ 23.5
Service cost 0.2 0.3
Interest cost 1.4 1.3
Actuarial gain (0.7) (1.4)
Benefits paid (1.4) (1.2)
Medicare Part D subsidy receipts 0.3 0.1
Benefit obligation, end of year $ 22.4 $ 22.6
Funded Status at End of Year
Funded status, end of year $ (22.4) $ (22.6)
Amounts Recognized
Current liabilities $ (1.6) $ (1.5)
Noncurrent liabilities (20.8) (21.1)
Net amount recognized $ (22.4) $ (22.6)