ManpowerGroup 2004 Annual Report Download - page 51

MANPOWER INC. 2004 Annual Report49
CAPITAL RESOURCES
Total capitalization as of December 31, 2004 was $3,075.8 million,
comprised of $901.8 million in debt and $2,174.0 million in equity.
Debt as a percentage of total capitalization was 29% as of
December 31, 2004 compared to 39% as of December 31, 2003.
This decrease is primarily a result of the equity issued in connection
with the acquisition of RMC.
We have $435.4 million in aggregate principal amount at maturity of
unsecured zero-coupon convertible debentures, due August 17,
2021 (“Debentures”), with a carrying value of $265.3 million as of
December 31, 2004. These Debentures were issued in August 2001 at a discount to yield an effective interest rate of
3% per year, and they rank equally with all of our existing and future senior unsecured indebtedness. There are no
scheduled cash interest payments associated with the Debentures.
The Debentures are convertible into 6.1 million shares of our common stock if the closing price of our common stock
on the New York Stock Exchange exceeds specified levels, or in certain other circumstances.
Holders of the Debentures may require us to purchase these Debentures at the issue price, plus accreted original issue
discount, on the first, third, fifth, tenth and fifteenth anniversary dates. We have the option to settle this obligation in
cash, common stock, or a combination thereof. There were no Debentures “put” to us on the first anniversary date.
On the third anniversary date, $0.1 million of principal amount at maturity of the Debentures was tendered for repurchase,
resulting in a payment of approximately $0.1 million. Our intent is to settle any future “put” in cash. In the event of a
significant change in the economic environment, we may choose to settle a future “put” with common stock, which
would have a dilutive effect on existing shareholders. As of August 17, 2004, we may also now “call” the Debentures.
We have €150.0 million in unsecured notes due March 2005, at 6.25%, and €200.0 million in unsecured notes due
July 2006, at 5.63%. We plan to repay the €150.0 million notes with cash or other available borrowing facilities when
they come due. (See Significant Matters Affecting Results of Operations and notes 7 and 13 to the consolidated financial
statements for further information.)
In October 2004, we entered into a new $625.0 million revolving credit agreement with a syndicate of commercial banks
that expires in October 2009. The new agreement replaces our $450.0 million five-year revolving credit facility and $200.0
million 364-day revolving credit facility. Amounts borrowed under the $450.0 million five-year facility were transferred
to this new facility.
The new revolving credit agreement allows for borrowings in various currencies and up to $150.0 million may be used
for the issuance of stand-by letters of credit. Outstanding letters of credit totaled $77.7 million and $66.7 million as of
December 31, 2004 and 2003, respectively. Additional borrowings of $411.8 million were available to us under this new
revolving credit agreement as of December 31, 2004.
The interest rate and facility fee on the new agreement, as well as the fee paid for the issuance of letters of credit on
the facility, vary based on our public debt ratings and borrowing level. The current interest rate is LIBOR plus .675% and
the facility and issuance fees are .20% and .675%, respectively.
MANAGEMENT’S DISCUSSION AND ANALYSIS
of financial condition and results of operations
2000
2001
2002
740.4 557.5
814.3 834.8
999.9 821.8
1,310.3 841.7
2,174.0 901.8
TOTAL CAPITALIZATION
in millions ($)
2003
2004
equity debt