ManpowerGroup 2008 Annual Report Download - page 69

67Manpower Annual Report 2008 Notes to Consolidated Financial Statements
13.
Derivative Financial Instruments
FOREIGN CURRENCY EXCHANGE RATE RISK MANAGEMENT
In certain circumstances, we enter into foreign currency forward exchange contracts to reduce the effects of fluctuating
foreign currency exchange rates on cash flows denominated in foreign currency. All such contracts entered into during 2008
and 2007, whether designated as cash flow hedges or fair value hedges, were considered highly effective, as defined by
SFAS No. 133, as amended.
As of December 31, 2008, there were £18.6 ($27.2) of net forward contracts outstanding that relate to cash flows owed to
our foreign subsidiaries in 2009. In addition, there were €2.7 ($3.7) of net forward contracts outstanding relating to cash flows
owed for interest due on our €200 Notes and €300 Notes in June 2009 and cash flows owed from foreign subsidiaries.
Our revolving credit agreement borrowings of €100.0 ($139.7), the €200.0 ($278.4) Notes and the €300.0 ($418.2) Notes
have been designated and are effective as economic hedges of our net investment in our foreign subsidiaries with a Euro
functional currency. Therefore, all translation gains or losses related to these borrowings are recorded as a component of
Accumulated Other Comprehensive (Loss) Income.
INTEREST RATE RISK MANAGEMENT
Our exposure to market risk for changes in interest rates relates primarily to our Long-Term Debt obligations. We have
historically managed interest rates through the use of a combination of fixed and variable rate borrowings and interest rate
swap agreements.
We have various interest rate swap agreements to fix our interest costs on a portion of our Euro-denominated variable rate
borrowings. The Euro interest rate swap agreements have a notional value of €100.0 ($139.7), which fix the interest rate, on a
weighted-average basis, at 5.71% and expire in July 2010. Such contracts have been designated as cash flow hedges and
were considered highly effective, as defined by SFAS No. 133, as amended, as of December 31, 2008. For the years ended
December 31, 2008, 2007 and 2006 these instruments increased interest expense by $1.9, $2.2 and $3.6, respectively.
FAIR VALUE OF DERIVATIVE FINANCIAL INSTRUMENTS
The fair value of our derivative financial instruments are reflected in the consolidated balance sheets as follows:
December 31 2008 2007
Other Long-Term Liabilities
€100.0 interest rate swaps $ (7.4) $ (5.1)
Forward contracts (8.4) —
Total fair value $ (15.8) $ (5.1)
14.
Contingencies
LITIGATION
We are involved in a number of lawsuits arising in the ordinary course of business which will not, in the opinion of management,
have a material effect on our results of operations, financial position or cash flows.
In November 2004, French authorities commenced an investigation at our French headquarters. According to the search
warrant, the investigation stems from a complaint submitted during 2003 to the European Commission and subsequently
transferred to France’s Direction Generale de la Concurrence, de la Consommation et de la Repression des Fraudes
(“DGCCRF”), a body of the French Finance Minister that investigates frauds and competition violations. This investigation has
led the DGCCRF to transmit the results of its inquiry to the French Competition Council. In November 2007, we received a