ManpowerGroup 2001 Annual Report Download - page 21

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Forward-Looking Statements
Statements made in this Annual Report that are not statements of
historical fact are forward-looking statements. All forward-looking
statements involve risks and uncertainties. The information under the
heading “Forward-Looking Statements” in the Company’s Annual
Report on Form 10-K for the year ended December 31, 2001, which is
incorporated herein by reference, provides cautionary statements
identifying, for purposes of the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995, important factors that could
cause the Company’s actual results to differ materially from those
contained in the forward-looking statements. Some or all of the factors
identified in the Company’s Report on Form 10-K may be beyond the
Company’s control. Forward-looking statements can be identified by
words such as “expect”, “anticipate”, “intend”, “plan”, “may”, “will”,
“believe”, “seek”, “estimate”, and similar expressions. The Company
cautions that any forward-looking statement reflects only the Company’s
belief at the time the statement is made. The Company undertakes
no obligation to update any forward-looking statements to reflect
subsequent events or circumstances.
Accounting Changes
Since June 1998, the Financial Accounting Standards Board (“FASB”)
has issued SFAS Nos. 133, 137, and 138 related to “Accounting for
Derivative Instruments and Hedging Activities” (“SFAS No. 133, as
amended” or “Statements”). These Statements establish accounting and
reporting standards requiring that every derivative instrument be
recorded on the balance sheet as either an asset or liability measured at its
fair value. If the derivative is designated as a fair value hedge, the changes
in the fair value of the derivative and of the hedged item attributable to
the hedged risk are recognized in earnings. If the derivative is designated
as a cash flow hedge, the effective portions of the changes in the fair value
of the derivative are recorded as a component of Accumulated other
comprehensive income (loss) and are recognized in the Consolidated
Statements of Operations when the hedged item affects earnings.
Ineffective portions of changes in the fair value of cash flow hedges are
recognized in earnings.
On January 1, 2001, the Company adopted SFAS No. 133, as amended.
As a result of adopting this standard, the Company recognized the fair
value of all derivative contracts as a net liability of $3.4 million on
the balance sheet at January 1, 2001. This amount was recorded as
an adjustment to Shareholders’ equity through Accumulated other
comprehensive income (loss). There was no impact on Net earnings.
During June 2001, the FASB issued SFAS No. 141, “Business Combinations,”
which requires all business combinations completed subsequent to June
30, 2001 to be accounted for using the purchase method. Although the
purchase method generally remains unchanged, this standard also requires
that acquired intangible assets should be separately recognized if the benefit
of the intangible assets are obtained through contractual or other legal
rights, or if the intangible assets can be sold, transferred, licensed, rented or
exchanged, regardless of the acquirer’s intent to do so. Intangible assets
separately identified must be amortized over their estimated economic life.
This statement was adopted by the Company on July 1, 2001. The
Company has accounted for previous acquisitions under the purchase
method and the related excess of purchase price over net assets was mainly
goodwill, therefore, the adoption of this statement did not have a material
impact on the Consolidated Financial Statements.
During June 2001, the FASB issued SFAS No. 142, “Goodwill and Other
Intangible Assets,” which prohibits the amortization of goodwill or
identifiable intangible assets with an indefinite life beginning January 1,
2002. In addition, goodwill or identifiable intangible assets with an
indefinite life resulting from business combinations completed between
July 1, 2001 and December 31, 2001 are no longer required to be
amortized. Rather, goodwill will be subject to impairment reviews by
applying a fair-value-based test at the reporting unit level, which
generally represents operations one level below the segments reported by
the Company. An impairment loss will be recorded for any goodwill that
is determined to be impaired.
The impairment testing provisions of this statement are effective for the
Company on January 1, 2002. Within six months of adoption, the Company
will perform an impairment test on all existing goodwill, which will be
updated at least annually. The Company has not yet determined the extent
of any impairment losses on its existing goodwill, however, any such losses
are not expected to be material to the Consolidated Financial Statements.
The non-amortization provisions of this statement related to goodwill
resulting from business combinations between July 1, 2001 and December
31, 2001 were adopted as of July 1, 2001. The remaining non-amortization
provisions of this statement were adopted as of January 1, 2002. Under the
provisions of this statement, $16.8 million of the 2001 Amortization of
intangible assets would not have been recorded.
To the Board of Directors and
Shareholders of Manpower Inc.:
We have audited the accompanying consolidated balance sheets of Manpower Inc. (a Wisconsin corporation) and subsidiaries as of December 31, 2001
and 2000, and the related consolidated statements of operations, cash flows and shareholders’ equity for each of the three years in the period ended
December 31, 2001. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Manpower Inc.
and subsidiaries as of December 31, 2001 and 2000, and the results of their operations and their cash flows for each of the three years in the period ended
December 31, 2001, in conformity with accounting principles generally accepted in the United States.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
January 28, 2002
Report of Independent Public Accountants
Management’s Discussion and Analysis (continued)
— of Financial Condition and Results of Operations —