ManpowerGroup 2001 Annual Report Download - page 30

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The discount rate used in the measurement of the benefit obligation was 7.5% in both 2001 and 2000. The components of net periodic benefit cost
(gain) for this plan are as follows:
2001 2000 1999
Service cost $ .4 $ .7 $ 2.4
Interest cost 1.3 1.7 1.9
Amortization of unrecognized gain (.9) (.3) –
Curtailment gain –(4.1) –
$ .8 $ (2.0) $ 4.3
The health care cost trend rate was assumed to be 12.0% for 2001, decreasing gradually to 5.5% for the years 2009 and beyond. Assumed health care
cost trend rates have a significant effect on the amounts reported. A one-percentage point change in the assumed health care cost trend rate would have
the following effects:
1% increase 1% decrease
Effect on total of service and interest cost components $ .2 $ (.2)
Effect on postretirement benefit obligation 2.8 (2.5)
Curtailments
On February 29, 2000, the Company froze all benefits in each of its U.S. defined benefit pension plans. The Company also offered a voluntary early
retirement package and certain other benefits to eligible employees. These benefits are expected to be paid from the respective defined benefit pension
plans. In addition, the Company no longer provides medical and dental benefits under its U.S. retiree health care plan to certain employees retiring
after March 1, 2000. The net impact of these plan changes was not material to the Consolidated Financial Statements.
Defined Contribution Plans
The Company has defined contribution plans covering substantially all permanent U.S. employees. Under the plans, employees may elect to
contribute a portion of their salary to the plans. Effective January 1, 2000, the Company amended its defined contribution plans to include a mandatory
matching contribution. In addition, profit sharing contributions are made if a targeted earnings level is reached in the U.S. The total expense was $2.9,
$3.2 and $.4 for 2001, 2000 and 1999, respectively. As of December 31, 2001, less than 3% of the plans’ assets were invested in the Company’s stock.
08 Leases
The Company leases property and equipment primarily under operating leases. Renewal options exist for substantially all leases.
Future minimum payments, by year and in the aggregate, under noncancelable operating leases with initial or remaining terms of one year or more
consist of the following at December 31, 2001:
year
2002 $ 67.5
2003 55.2
2004 40.2
2005 31.1
2006 22.9
Thereafter 48.0
Total minimum lease payments $ 264.9
Rental expense for all operating leases was $136.6, $118.0 and $108.5 for the years ended December 31, 2001, 2000 and 1999, respectively.
09 Interest and Other Expense
Interest and other expense consists of the following:
2001 2000 1999
Interest expense $ 39.1 $ 35.0 $ 17.3
Interest income (10.3) (7.3) (8.0)
Foreign exchange losses .2 2.3 1.9
Loss on sale of accounts receivable 5.3 9.8 9.8
Miscellaneous, net 5.4 6.0 3.8
Interest and other expense $ 39.7 $ 45.8 $ 24.8
10 Acquisitions of Businesses
In July 2001, the Company acquired Jefferson Wells International, Inc. (“Jefferson Wells”), a professional services provider of internal audit, accounting,
technology and tax services, for total consideration of approximately $174.0 million, including assumed debt. The acquisition of Jefferson Wells was
originally financed through the Company’s existing credit facilities. Jefferson Wells operates a network of offices throughout the United States
and Canada. Approximately $153.4 was recorded as goodwill. No other significant intangible assets were recorded.
In January 2000, the Company acquired Elan Group Ltd. (“Elan”), a European specialty IT staffing company with significant operations in the U.K.
and ten other countries throughout the world. The total consideration paid for Elan was approximately $146.2, the remaining $30.0 of which was paid
during 2001. This transaction was accounted for as a purchase, and the excess of the purchase price over the fair value of net assets acquired was recorded
as goodwill.
From time to time, the Company acquires and invests in companies throughout the world. The total consideration paid for such transactions, excluding
the acquisitions of Jefferson Wells and Elan, was $95.8, $56.2 and $18.8 in 2001, 2000 and 1999, respectively, the majority of which was recorded
as goodwill.
11 Derivative Financial Instruments
On January 1, 2001, the Company adopted SFAS No. 133, as amended. As a result of adopting the Statements, the Company recognized the fair
value of all derivative contracts as a net liability of $3.4 on the Consolidated Balance Sheets 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.
The Company enters into various derivative financial instruments to manage certain of its foreign currency exchange rate and interest rate risks.
The Company does not use derivative financial instruments for trading or speculative purposes.
Notes to Consolidated Financial Statements (continued)
— in millions, except per share data —