ManpowerGroup 2009 Annual Report Download - page 70

Notes To Consolidated Financial Statements
in millions, except share and per share data
68 Manpower 2009 Annual Report Notes to Consolidated Financial Statements
12.
Interest and Other Expense
Interest and Other Expense consists of the following:
Year Ended December 31 2009 2008 2007
Interest expense $ 61.7 $ 63.9 $ 53.4
Interest income (11.7) (22.1) (24.4)
Foreign exchange losses (gains) 0.8 (2.9) (0.6)
Miscellaneous expenses, net 3.5 12.0 5.8
Loss from sale of an equity investment 10.3 – –
Interest and other expense $ 64.6 $ 50.9 $ 34.2
Included in interest expense for the year ended December 31, 2009 is $7.5, which was recorded as a result of our repayment
of the borrowings outstanding under the Amended Revolving Credit Agreement and our termination of the interest rate swap
agreements. Loss from sale of an equity investment in 2009 resulted as we sold an equity investment in Japan for cash
proceeds of $13.3 in September 2009.
13.
Derivative Financial Instruments
We are exposed to various risks relating to our ongoing business operations. The primary risks, which are managed through
the use of derivative instruments, are foreign currency exchange rate risk and interest rate risk. In certain circumstances, we
enter into foreign currency forward exchange contracts (“forward contracts”) to reduce the effects of fl uctuating foreign
currency exchange rates on our cash fl ows denominated in foreign currencies. Our exposure to market risk for changes in
interest rates relates primarily to our Long-Term Debt obligations. We have historically managed interest rate risk through the
use of a combination of fi xed and variable rate borrowings and interest rate swap agreements. In accordance with the current
accounting guidance for derivative instruments and hedging activities, we record all of our derivative instruments as either an
asset or liability measured at their fair values.
INTEREST RATE RISK MANAGEMENT
As we disclosed in Note 8 to the Consolidated Financial Statements, we repaid the €100.0 ($146.4) borrowing outstanding
under our Amended Revolving Credit Agreement and terminated the related interest rate swap agreements on October 16,
2009. Our interest rate swap agreements had been designated as cash fl ow hedges of the interest costs on our Euro-
denominated variable rate borrowings. The interest rate swap agreements had a notional value of €100.0 ($146.4) and fi xed
the variable portion of the interest rate on these borrowings, on a weighted-average basis, at 5.71% until July 2010. The total
interest rate on these borrowings was 6.21%, including the 50 basis point credit spread as defi ned in our previous revolving
credit agreement.
For cash fl ow hedges, we recorded the effective portions of our interest rate swap agreements as a component of
Accumulated Other Comprehensive Income (Loss) until we determined that it was probable (as of September 30, 2009) that
we would repay our outstanding borrowings under our revolving credit facility. We realized the costs included in Accumulated
Other Comprehensive Income (Loss) as interest expense by recording $6.4 in the Consolidated Statement of Operations for
the year ended December 31, 2009. We had no interest rate swap agreements as of December 31, 2009.