ManpowerGroup 2007 Annual Report Download - page 26

23Management’s Discussion & Analysis Manpower 2007 Annual Report
In the fourth quarter of 2007, we established reserves totaling $4.4 million in France for offi ce closure costs and $4.0 million at
Jefferson Wells for severances and other offi ce closure costs related to reorganizations at these entities. Of the $4.4 million
recorded in France, no payment has been made as of December 31, 2007. We expect a majority of the $4.4 million will be paid
in 2008. Of the $4.0 million recorded at Jefferson Wells, $0.1 million has been paid as of December 31, 2007. We expect a
majority of the remaining $3.9 million will be paid in 2008.
In the fi rst quarter of 2006, we recorded expenses totaling $9.5 million in the U.K. and $1.2 million at Right Management for
severances and other offi ce closure costs related to reorganizations at these entities. Of the $9.5 million in the U.K., $7.3 million
has been paid as of December 31, 2007, of which $1.9 million was paid in 2007. We expect a majority of the remaining $2.2
million will be paid by 2009. All of the reorganization costs at Right Management were paid during the three months ended
March 31, 2006. In the fourth quarter of 2006, we recorded expenses totaling $6.9 million at Right Management for
severances. As of December 31, 2007, $4.8 million has been paid, of which $4.5 million was paid in 2007. During 2007, we
reversed $1.6 million of this reserve as fewer than expected former employees had claimed the severance. We expect the
remaining $0.5 million will be paid in 2008.
In 2005, we recorded total expenses of $15.3 million in France and $4.0 million at Right Management for severance costs
related to reorganizations in these entities. As of December 31, 2007, $13.6 million of the amount recorded in France has been
paid from this reserve, of which $5.0 million was paid in 2007. We expect the remaining $1.7 million will be paid in 2008. The full
$4.0 million recorded at Right Management was paid in 2005.
We also have entered into guarantee contracts and stand-by letters of credit that total approximately $129.3 million and $136.5
million as of December 31, 2007 and 2006, respectively ($78.2 million and $61.6 million for guarantees, respectively, and $51.1
million and $74.9 million for stand-by letters of credit, respectively). Guarantees primarily relate to debt facilities and bank
accounts. The stand-by letters of credit relate to workers’ compensation and debt facilities. 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 signifi cant payments under these arrangements. Therefore, they have
been excluded from our aggregate commitments identifi ed above.
CAPITAL RESOURCES
Total capitalization as of December 31, 2007 was $3,583.8 million,
comprised of $914.5 million in debt and $2,669.3 million in equity.
Debt as a percentage of total capitalization was 26% as of December
31, 2007 compared to 25% as of December 31, 2006.
On June 14, 2006, we offered and sold €200.0 million aggregate
principal amount of 4.75% notes due June 14, 2013 (the “€200.0
million Notes”). The net proceeds of €198.1 million ($249.5 million)
were invested in cash equivalents until July 26, 2006, when they were
used to repay our €200.0 million notes due July 2006 (the “1999
€200.0 million Notes”) as described below. The €200.0 million Notes
were issued at a price of 99.349% to yield an effective interest rate of 4.862%. The discount of €1.3 million ($1.6 million) will be
amortized to interest expense over the term of the €200.0 million Notes. Interest is payable annually on June 14. The €200.0
million Notes are unsecured senior obligations and rank equally with all of our existing and future senior unsecured debt and
other liabilities. We may redeem the €200.0 million Notes, in whole but not in part, at our option at any time for a redemption
price determined in accordance with the term of the €200.0 million Notes. The €200.0 million Notes also contain certain
customary restrictive covenants and events of default.
Our 1999 €200.0 million Notes ($254.3 million) were retired on July 26, 2006 with the net proceeds from the €200.0 million
Notes and other available cash.
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 relating 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 million principal amount at maturity of Debentures,
$336.4 million principal amount at maturity was redeemed for an aggregate cash payment of $206.6 million and $98.8 million
principal amount at maturity ($60.6 million in accreted value) was converted into 1,378,670 shares of Manpower common
Total Capitalization
in millions ($)
823.2
2,669.3
2007
2006
2005
914.5
2,474.2
735.0
2,146.6
equity debt