ManpowerGroup 2008 Annual Report Download - page 63

61Manpower Annual Report 2008 Notes to Consolidated Financial Statements
EURO NOTES
On June 14, 2006, we offered and sold €200.0 aggregate principal amount of 4.75% notes due June 14, 2013 (the “€200.0
Notes”). The net proceeds of €198.1 ($249.5) were invested in cash equivalents until July 26, 2006, when they were used to
repay our €200.0 notes due July 2006 (the “1999 €200.0 Notes”) as described below. The €200.0 Notes were issued at a
price of 99.349% to yield an effective interest rate of 4.862%. The discount of €1.3 ($1.6) is being amortized to interest
expense over the term of the €200.0 Notes. Interest is payable annually on June 14. The €200.0 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 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 Notes. The €200.0 Notes also contain certain customary non-financial restrictive covenants and events of default.
On June 1, 2005, we offered and sold €300.0 aggregate principal amount of 4.50% notes due June 1, 2012 (the “€300.0
Notes”). Net proceeds of approximately €297.7 ($372.3) were used to repay a portion of the outstanding indebtedness under
our revolving credit facility and U.S. Receivables Facility, to fund our share repurchase program, and for general corporate
purposes. The €300.0 Notes were issued at a price of 99.518% to yield an effective interest rate of 4.58%. The discount of
€1.4 ($1.8) is being amortized to interest expense over the term of the notes. Interest is payable annually on June 1. The
€300.0 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 €300.0 Notes, in whole but not in part, at our option at any time for a redemption price as
defined in the agreement. These notes also contain certain customary non-financial restrictive covenants and events of default.
Our 1999 €200.0 Notes ($254.3) were retired on July 26, 2006 with the net proceeds from the €200.0 Notes and other
available cash.
The €300.0 Notes, €200.0 Notes and other Euro-denominated borrowings have been designated as a hedge of our net
investment in subsidiaries with a Euro functional currency. Since our net investment in these subsidiaries exceeds the
respective amount of the designated borrowings, all translation gains or losses related to these borrowings are included as a
component of Accumulated Other Comprehensive (Loss) Income.
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 $3.8 and $3.7 as of December 31, 2008 and 2007, 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
$481.5 were available to us under this revolving credit agreement as of December 31, 2008.
In November 2007, the revolving credit agreement was amended to extend the expiration date to November 2012 from
October 2010, to revise certain covenant calculations, and increase the amount of subsidiary borrowings allowed under the
agreement.
The borrowing margin and facility fee on the credit 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, 2008, the interest rate under the
agreement was LIBOR plus 0.40% (for U.S. Dollar borrowings, or alternative base rate for foreign currency borrowings), and
the facility and issuance fees were 0.10% and 0.40%, respectively.
The credit 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 agreement, we had a Debt-to-EBITDA ratio of 1.22 to 1 and a
fixed charge ratio of 3.28 to 1.
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:
2008 2007
Euro-denominated notes $ 654.7 $ 722.5