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2004 Annual Report MANPOWER INC.76
Convertible Debentures
We have $435.4 in aggregate principal amount at maturity of unsecured zero-coupon convertible debentures, due
August 17, 2021 (the “Debentures”). The 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.
The unamortized discount was $170.0, and $177.8 as of December 31, 2004 and 2003, respectively. During 2004, 2003,
and 2002, $7.8, $7.6, and $7.3, respectively, of the discount was amortized to Interest Expense in the consolidated
statements of operations. There are no scheduled cash interest payments associated with the Debentures.
The Debentures, which are convertible into 6.1 million shares of our common stock at an accreted price of approxi-
mately $43.68 per share (initially $39.50), become convertible from the thirtieth trading day in a quarter through the
twenty-ninth trading day in the following quarter when our share price for at least 20 of the first 30 trading days of a
quarter is more than 110% of the accreted value per convertible share on the thirtieth trading day of that quarter.
Given the accreted value per convertible share on the thirtieth trading day of the first, second, third and fourth quarters
of 2005, our share price will have to exceed $48.20, $48.56, $48.93, and $49.29, respectively, during the relevant
measurement periods to be convertible. The Debentures are also convertible in certain other circumstances as set forth
in the indenture.
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 of principal amount at maturity of the Debentures was tendered for repurchase,
resulting in a payment of approximately $0.1. 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.
During the second quarter of 2004, the Debentures became convertible because our share price exceeded certain
thresholds defined in the indenture. Based on the terms of the indenture, the Debentures remained convertible until
August 11, 2004.
Euro Notes
We have two Euro-denominated unsecured notes with face values of 200.0 and 150.0. The 200.0 notes are due
July 2006 and have scheduled annual interest payments at a rate of 5.63%. The 150.0 notes are due March 2005
and have scheduled annual interest payments at a rate of 6.25%. (See note 13 for further information.)
Revolving Credit Agreements
In October 2004, we entered into a new $625.0 revolving credit agreement with a syndicate of commercial banks that
expires in October 2009. The new agreement replaces our $450.0 five-year revolving credit facility and $200.0 364-day
revolving credit facility.
The new revolving credit agreement allows for borrowings in various currencies and up to $150.0 may be used for the
issuance of stand-by letters of credit. Outstanding letters of credit totaled $77.7 and $66.7 as of December 31, 2004
and 2003, respectively. Additional borrowings of $411.8 were available to us under the 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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
in millions, except share and per share data