ManpowerGroup 2004 Annual Report Download - page 50

2004 Annual Report MANPOWER INC.48
On January 22, 2004, we completed our exchange offer to acquire RMC for $630.6 million. The purchase price includes
the issuance of 8,852,000 shares of our common stock valued at $48.40 per share ($428.4 million); the fair value of
1,962,000 options in our common stock that resulted from our assuming both of RMC’s stock option plans ($59.5 million);
the repayment of RMC’s long-term debt ($123.8 million); the payment of acquisition-related costs, net of tax ($11.5
million); a severance payment and accelerated vesting of RMC’s Supplemental Executive Retirement Plan, net of tax
($6.0 million); and other items ($1.4 million). (See note 2 to our consolidated financial statements for further information.)
In connection with the acquisition of RMC, we have established reserves for severances and other office closure costs
to streamline RMC’s worldwide operations that total $24.5 million. We have recorded a net deferred tax asset of $6.5
million related to these items. During 2004, approximately $7.8 million was paid from these reserves. Of the remaining
balance, approximately $15.1 million will be paid during 2005, with the remaining $1.6 million to be paid thereafter.
Net borrowings were $5.7 million for 2004, compared to repayments of $84.5 million for 2003, and $115.0 million
for 2002. During 2004, 2003, and 2002, we used excess cash to pay down borrowings under various facilities when
appropriate. Proceeds from Long-Term Debt and Repayments of Long-Term Debt include activity related to our
commercial paper program.
In October 2004, the Board of Directors authorized the repurchase of 5 million shares of our common stock, not to
exceed a total purchase price of $250.0 million. Share repurchases may be made from time to time and may be
implemented through a variety of methods, including open market purchases, block transactions, privately negotiated
transactions, accelerated share repurchase programs, forward repurchase agreements or similar facilities. This repurchase
authorization replaces all previous authorizations. As of December 31, 2004, there were no shares repurchased under
this authorization, however, as of February 11, 2005, 675,000 shares have been repurchased at a total cost of $30.0.
There were no share repurchases in 2003 and a total of 900,000 shares at a cost of $30.7 million were repurchased
in 2002 under a previous authorization.
During 2004, 2003, and 2002, the Board of Directors declared two cash dividends for a total of $0.30, $0.20, and $0.20
per share, respectively. Our total dividend payments were $27.1 million, $15.6 million, and $15.3 million in 2004, 2003,
and 2002, respectively.
We have aggregate commitments of $1,614.2 million related to debt repayments, operating leases, acquisition-related
severances and office closure costs, and certain other commitments as follows:
in millions 2005 2006 2007 2008 2009 Thereafter
Long-term debt $ 215.6 $ 539.0 $ 0.6 $ 1.0 $ 135.5 $ —
Short-term borrowings 10.1—————
Operating leases 172.1 136.0 95.2 67.2 49.4 92.5
Acquisition-related severances
and other office closure costs 15.1 0.4 0.4 0.4 0.4 —
Other 26.1 13.4 9.2 5.5 5.8 23.3
$ 439.0 $ 688.8 $ 105.4 $ 74.1 $ 191.1 $ 115.8
We also have entered into guarantee contracts and stand-by letters of credit that total approximately $115.3 million
and $135.4 million as of December 31, 2004 and 2003, respectively ($37.6 million and $68.7 million for guarantees,
respectively, and $77.7 million and $66.7 million for stand-by letters of credit, respectively). Guarantees primarily relate
to indebtedness, bank accounts, and leases. The stand-by letters of credit relate to workers’ compensation, operating
leases and indebtedness. If certain conditions were met under these arrangements, we would be required to satisfy our
obligation in cash. Due to the nature of these arrangements and our historical experience, we do not expect to make any
significant payments under these arrangements. Therefore, they have been excluded from our aggregate commitments
identified above.
MANAGEMENT’S DISCUSSION AND ANALYSIS
of financial condition and results of operations