ManpowerGroup 2009 Annual Report Download - page 32

30 Manpower 2009 Annual Report Management’s Discussion & Analysis
We have aggregate commitments of $1,758.6 million related to debt, operating leases, severances and offi ce closure costs,
and certain other commitments, as follows:
(in millions) 2010 2011-2012 2013-2014 Thereafter
Long-term debt including interest $ 33.9 $ 485.5 $ 292.0 $ –
Short-term borrowings 41.3–––
Operating leases 209.6 269.9 153.5 156.2
Severances and other offi ce closure costs 14.3 5.1 1.9 –
Other 27.1 29.2 16.4 22.7
$ 326.2 $ 789.7 $ 463.8 $ 178.9
Obligations arising from the pending acquisition of COMSYS IT Partners are excluded from the commitments above. Also
excluded is our liability for unrecognized tax benefi ts, including related interest and penalties of $31.0 million, as we cannot
determine the years in which these positions might ultimately be settled.
We recorded reorganization costs of $33.5 million, $37.2 million and $8.4 million in 2009, 2008 and 2007, respectively, in
Selling and Administrative Expenses, primarily related to severances as well as offi ce closures and consolidations in several
countries. As of December 31, 2009, $57.8 million has been paid out of these reserves, of which $43.2 million was paid
during 2009. We expect a majority of the remaining $21.2 million will be paid in 2010. (See Note 1 to the Consolidated Financial
Statements for further information.)
We also have entered into guarantee contracts and stand-by letters of credit that total approximately $163.3 million and
$158.0 million as of December 31, 2009 and 2008, respectively ($120.3 million and $107.6 million for guarantees, respectively,
and $43.0 million and $50.4 million for stand-by letters of credit, respectively). Guarantees primarily relate to bank accounts,
operating leases and indebtedness. The stand-by letters of credit relate to workers’ compensation, operating leases and
indebtedness. 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. The cost of these guarantees and letters of credit was $1.6 million and $1.0 million in 2009 and 2008, respectively.
Capital Resources
Total capitalization as of December 31, 2009 was $3,293.8 million, comprised of $757.3 million in debt and $2,536.5
million in equity. Debt as a percentage of total capitalization was 23% as of December 31, 2009 compared to 28% as of
December 31, 2008.
EURO NOTES
We have €300.0 million aggregate principal amount of 4.50% notes due June 1,
2012 (the “€300.0 million Notes”). The €300.0 million Notes were issued at a
price of 99.518% to yield an effective interest rate of 4.58%. The discount of
€1.4 million ($1.8 million) is being amortized to interest expense over the term
of the €300.0 million Notes. Interest is payable annually on June 1.
We also have €200.0 million aggregate principal amount of 4.75% notes due
June 14, 2013 (the “€200.0 million Notes”). 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 ($1.6 million) is being
amortized to interest expense over the term of the €200.0 million Notes. Interest is payable annually on June 14.
Both the €300.0 million Notes and the €200.0 million Notes are unsecured senior obligations and rank equally with all of our
existing and future senior unsecured debt and other liabilities. We may redeem these notes, in whole but not in part, at our
option at any time for a redemption price determined in accordance with the term of the notes. These notes also contain
certain customary non-fi nancial restrictive covenants and events of default.
When these facilities mature, we plan to repay these amounts with available cash or refi nance them with new long-term
facilities. In the event that the economy continues to decline for an extended period of time, we may be unable to repay these
amounts with available cash and, as such, we may need to replace these borrowings with new long-term facilities. The credit
terms, including interest rate and facility fees, of any replacement borrowings will be dependent upon the condition of the
credit markets at that time. We currently do not anticipate any problems accessing the credit markets should we need to
replace our facilities.
Management’s Discussion & Analysis
of fi nancial condition and results of operations
Equity Debt
2,658.3 914.5
2,459.4 952.9
2,536.5 757.3
Total Capitalization
IN MILLIONS ($)
09
08
07