ManpowerGroup 2012 Annual Report Download - page 41

Both the €350.0 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-financial restrictive covenants and events of default.
When these notes mature, we plan to repay these amounts with available cash or borrowings under our $800.0 million
revolving credit facility, or new borrowing. 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 decide to replace our notes.
Our euro-denominated notes 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
foreign exchange gains or losses related to these borrowings are included as a component of accumulated other
comprehensive income. (See Significant Matters Affecting Results of Operations and Notes 7 and 12 to the Consolidated
Financial Statements for further information.)
REVOLVING CREDIT AGREEMENT
On October 5, 2011, we entered into a $800.0 million Five-Year Credit Agreement (the “Agreement”) with a syndicate of
commercial banks. This Agreement replaced our previous $400.0 million revolving credit facility. The Agreement allows for
borrowing in various currencies and up to $150.0 million may be used for the issuance of stand-by letters of credit.
The Agreement terminates in October 2016. Outstanding letters of credit issued under the Agreement totaled $0.9 million
and $1.6 million as of December 31, 2012 and 2011, respectively. Additional borrowings of $799.1 million and $798.4 million
were available to us under the Agreement as of December 31, 2012 and 2011, respectively.
Under the Agreement, a credit ratings-based pricing grid determines the facility fee and the credit spread that we add to
the applicable interbank borrowing rate on all borrowings. At our current credit rating, the annual facility fee is 22.5 bps paid
on the entire $800.0 million facility and the credit spread is 127.5 bps on any borrowings. Any downgrades from the credit
rating agencies would unfavorably impact our facility fees and result in additional costs ranging from approximately $0.2
million to $0.4 million annually. We had no borrowings under this Agreement as of December 31, 2012 or 2011.
The Agreement contains customary restrictive covenants pertaining to our management and operations, including
limitations on the amount of subsidiary debt that we may incur and limitations on our ability to pledge assets, as well as
financial covenants, including covenants requiring, among other things, that we comply with a leverage ratio (net Debt-to-
EBITDA) of not greater than 3.5 to 1 and a fixed charge coverage ratio of not less than 1.5 to 1. The Agreement also
contains customary events of default, including, among others, payment defaults, material inaccuracy of representations
and warranties, covenant defaults, bankruptcy or involuntary proceedings, certain monetary and non-monetary judgments,
change of control and customary ERISA defaults.
As defined in the Agreement, we had a net Debt-to-EBITDA ratio of 0.97 to 1 (compared to the maximum allowable ratio of
3.5 to 1) and a Fixed Charge Coverage ratio of 2.84 to 1 (compared to the minimum required ratio of 1.5 to 1) as of
December 31, 2012. Based on our current forecast, we expect to be in compliance with our financial covenants for the next
12 months.
OTHER
In addition to the previously mentioned facilities, we maintain separate bank credit lines with financial institutions to
meet working capital needs of our subsidiary operations. As of December 31, 2012, such uncommitted credit lines
totaled $379.4 million, of which $334.8 million was unused. Under the Agreement, total subsidiary borrowings cannot
exceed $300.0 million in the first, second and fourth quarters, and $600.0 million in the third quarter of each
year. Due to these limitations, additional borrowings of $255.4 million could have been made under these lines as of
December 31, 2012.
In January 2013, Moody’s Investors Services lowered our credit outlook from positive to stable, while maintaining the Baa3
credit rating. Our credit rating from Standard and Poor’s is BBB- with a stable outlook. The rating agencies use a proprietary
methodology in determining their ratings and outlook which includes, among other things, financial ratios based upon debt
levels and earnings performance. Both of the current credit ratings are investment grade.
Management’s Discussion & Analysis ManpowerGroup 2012 Annual Report 39