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Manpower฀2006฀Annual฀Report
52
NOT ES฀TO฀CONSOLID AT ED฀FINA NCIAL ฀S TATEMENT S฀
in฀million s,฀except฀per฀sha re฀data
Notes฀to฀Consolidated฀Financial฀Statements฀
Our฀150.0฀Notes฀($198.4),฀due฀March฀2005,฀were฀retired฀on฀March฀7,฀2005,฀with฀available฀cash.฀In฀September฀2002,฀we฀฀
entered฀into฀derivative฀financial฀instruments฀to฀swap฀these฀notes฀to฀floating฀U.S.฀LIBOR,฀which฀expired฀concurrently฀with฀฀
the฀notes.฀Cash฀received฀from฀settlement฀of฀the฀foreign฀currency฀component฀of฀these฀derivative฀financial฀instruments฀was฀฀
approximately฀$50.7,฀resulting฀in฀a฀net฀repayment฀of฀$147.7฀related฀to฀the฀150.0฀Notes,฀and฀is฀reflected฀in฀cash฀flows฀from฀฀
financing฀activities฀on฀the฀consolidated฀statements฀of฀cash฀flows.฀
Revolving฀Credit฀Agreement
We฀have฀a฀$625.0฀revolving฀credit฀agreement฀with฀a฀syndicate฀of฀commercial฀banks.฀The฀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฀issued฀under฀the฀agreement฀totaled฀$4.0฀and฀$85.8฀as฀of฀December฀31,฀2006฀and฀2005,฀respectively.฀Beginning฀
in฀2006,฀the฀letters฀of฀credit฀outstanding฀under฀the฀revolving฀credit฀agreement฀were฀substantially฀reduced฀as฀certain฀letters฀of฀
credit฀have฀been฀issued฀directly฀by฀third฀parties฀rather฀than฀under฀the฀revolving฀credit฀agreement.฀Additional฀borrowings฀of฀
$489.0฀were฀available฀to฀us฀under฀this฀revolving฀credit฀agreement฀as฀of฀December฀31,฀2006.
In฀January฀2006,฀the฀revolving฀credit฀agreement฀was฀amended฀(the฀“amended฀agreement”)฀to฀extend฀the฀expiration฀date฀to฀
October฀2010฀from฀October฀2009,฀and฀to฀revise฀the฀borrowing฀margin฀and฀to฀reflect฀improved฀market฀pricing฀conditions.฀Also฀
under฀the฀amended฀agreement,฀effective฀January฀2006,฀total฀subsidiary฀borrowings฀cannot฀exceed฀$150.0฀in฀the฀first,฀second฀
and฀fourth฀quarters,฀and฀$300.0฀in฀the฀third฀quarter฀of฀each฀year,฀an฀increase฀from฀the฀previous฀$125.0฀limit.
The฀borrowing฀margin฀and฀facility฀fee฀on฀the฀amended฀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.฀As฀of฀December฀31,฀2006,฀the฀interest฀rate฀under฀the฀
amended฀agreement฀was฀LIBOR฀plus฀0.50%฀(for฀U.S.฀Dollar฀borrowings,฀or฀alternative฀base฀rate฀for฀foreign฀currency฀borrowings),฀
and฀the฀facility฀and฀issuance฀fees฀were฀0.125%฀and฀0.50%,฀respectively.
The฀amended฀agreement฀requires,฀among฀other฀things,฀that฀we฀comply฀with฀a฀Debt-to-EBITDA฀ratio฀of฀less฀than฀3.25฀to฀1฀and฀
a฀fixed฀charge฀ratio฀of฀greater฀than฀2.00฀to฀1.฀As฀defined฀in฀the฀amended฀agreement,฀we฀had฀a฀Debt-to-EBITDA฀ratio฀of฀1.33฀to฀
1฀and฀a฀fixed฀charge฀ratio฀of฀3.08฀to฀1฀as฀of฀December฀31,฀2006.฀Based฀upon฀current฀forecasts,฀we฀expect฀to฀be฀in฀compliance฀
with฀these฀covenants฀throughout฀the฀coming฀year.
There฀were฀no฀borrowings฀outstanding฀under฀our฀$125.0฀U.S.฀commercial฀paper฀program฀at฀December฀31,฀2006฀and฀2005,฀
respectively.
Interest฀Rate฀Swap฀Agreements
We฀have฀entered฀into฀various฀interest฀rate฀swap฀agreements฀to฀manage฀the฀interest฀rate฀and฀currency฀risk฀associated฀with฀our฀
debt฀instruments.฀(See฀Note฀13฀for฀further฀information.)
Fair฀Value฀of฀Debt
The฀carrying฀value฀of฀Long-Term฀Debt฀approximates฀fair฀value,฀except฀for฀the฀Euro-denominated฀notes฀which฀had฀a฀fair฀value,฀
as฀determined฀by฀quoted฀market฀prices,฀as฀of฀December฀31,฀as฀follows:
2006 2005
Euro-denominated฀notes $฀ 653.7 $฀ 600.3
Convertible฀Debentures
On฀February฀28,฀2005,฀we฀elected฀to฀call฀our฀Zero฀Coupon฀Convertible฀Debentures฀due฀August฀17,฀2021฀(the฀“Debentures”)฀at฀
a฀redemption฀price฀of฀$613.99฀per฀$1,000฀of฀principal฀amount฀at฀maturity฀of฀the฀Debentures.฀Under฀the฀Indenture฀related฀to฀the฀
Debentures,฀the฀Debentures฀could฀be฀converted฀at฀a฀conversion฀rate฀of฀13.9559฀shares฀of฀Manpower฀common฀stock฀per฀
$1,000฀of฀principal฀amount฀at฀maturity฀of฀Debentures,฀at฀the฀option฀of฀the฀debenture฀holders.฀On฀March฀30,฀2005,฀฀
the฀Debentures฀were฀redeemed,฀and฀of฀the฀$435.2฀principal฀amount฀at฀maturity฀of฀Debentures,฀$336.4฀principal฀amount฀at฀฀
maturity฀was฀redeemed฀for฀an฀aggregate฀cash฀payment฀of฀$206.6฀and฀$98.8฀principal฀amount฀at฀maturity฀($60.6฀in฀accreted฀
value)฀was฀converted฀into฀1,378,670฀shares฀of฀Manpower฀common฀stock.฀These฀shares฀were฀issued฀from฀Treasury฀Stock฀at฀
the฀average฀price฀per฀treasury฀share,฀which฀totaled฀$41.4.฀The฀remaining฀$19.2฀was฀recorded฀as฀Capital฀in฀Excess฀of฀Par฀Value.฀
The฀cash฀payment฀was฀financed฀through฀borrowings฀under฀our฀U.S.฀Receivables฀Facility฀($187.0)฀and฀our฀revolving฀credit฀
agreement฀($20.0).
Debt฀Maturities
The฀maturities฀of฀Long-Term฀Debt฀payable฀within฀each฀of฀the฀four฀years฀subsequent฀to฀December฀31,฀2007฀are฀as฀follows:฀฀
2008฀–฀$1.5,฀2009฀–฀$0.5,฀2010฀–฀$132.0,฀2011฀–฀$0.1,฀and฀$657.1฀thereafter.