ManpowerGroup 2009 Annual Report Download - page 67

65
Notes to Consolidated Financial Statements Manpower 2009 Annual Report
The weighted-average assumptions used in the measurement of the net periodic benefi t cost are as follows:
U.S. Plans Non-U.S. Plans
Year Ended December 31 2009 2008 2007 2009 2008 2007
Discount rate 6.4% 6.3% 5.8% 5.7% 5.0% 4.6%
Expected long-term return on
plan assets 7.3% 7.5% 8.0% 5.7% 5.4% 5.4%
Rate of compensation increase 4.0% 4.5% 4.5% 4.2% 4.2% 4.1%
We determine our assumption for the discount rate to be used for purposes of computing annual service and interest costs
based on an index of high-quality corporate bond yields and matched-funding yield curve analysis as of the end of each fi scal year.
Our overall expected long-term rate of return on U.S. plan assets is 7.3%. Our overall expected long-term rate of return on
our non-U.S. plans varies by country and ranges from 3.7% 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 fi xed 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 infl ation and interest rates
are evaluated before long-term capital market assumptions are determined. The long-term portfolio return is established
with proper consideration of diversifi cation and rebalancing. We also use guaranteed insurance contracts for two 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 benefi t obligation for the pension plans are based upon
historical experience.
Our plans’ investment policies are to optimize the long-term return on plan assets at an acceptable level of risk and to
maintain careful control of the risk level within each asset class. 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 fi xed-income instruments, which vary by location. These target allocations, which
are similar to the 2009 allocations, are determined based on the favorable risk tolerance characteristics of the plan and, at
times, may be adjusted within a specifi ed range to advance our overall objective.
We determine the fair value of our pension plan assets primarily by using market quotes as of the last day of the period. A
portion of the governmental bonds and real estate was valued at a discounted amount based on the market expectations
about their future value. The fair value of our pension plan assets by asset category is as follows:
U.S. Plans Non-U.S. Plans
Fair Value Measurements Using Fair Value Measurements Using
Quoted
Prices
in Active
Markets for
Identical
Assets
(Level 1)
Signifi cant
Other
Observable
Inputs (Level 2)
Signifi cant
Unobservable
Inputs (Level 3)
December 31,
2009
Quoted
Prices
in Active
Markets for
Identical
Assets
(Level 1)
Signifi cant
Other
Observable
Inputs (Level 2)
Signifi cant
Unobservable
Inputs (Level 3)
December 31,
2009
Asset Category
Cash and cash equivalents(1) $ 3.4 $ 3.4 $ – $ – $ 4.6 $ 4.6 $ – $ –
Equity securities:
U.S. companies 16.3 16.3 – – 1.1 0.9 0.2 –
International companies – – – – 73.0 73.0 – –
Fixed income securities:
Governmental bonds(2) 15.3 15.3 – – 14.8 10.8 4.0 –
Corporate bonds ––––90.0 90.0 – –
Bank loans ––––0.60.6––
Guaranteed insurance contracts ––––7.8–7.8–
Other types of investments:
Equity hedge funds ––––0.60.6––
Real estate ––––8.1–8.1–
$ 35.0 $ 35.0 $ – $ – $ 200.6 $ 180.5 $ 20.1 $ –
(1) This category includes a prime obligations money market portfolio.
(2) This category includes U.S. Treasury / Federal agency securities and foreign governmental securities.