ManpowerGroup 2001 Annual Report Download - page 27

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This two-step transaction is accounted for as a sale of receivables under the provisions of SFAS No. 140, “Accounting for Transfers and Servicing of
Financial Assets and Extinguishment of Liabilities.” There was no amount advanced under the Receivables Facility at December 31, 2001. There
was $145.0 advanced under the Receivables Facility at December 31, 2000, and accordingly, that amount of accounts receivable has been removed
from the Consolidated Balance Sheet. Costs associated with the sale of receivables, primarily related to the discount and loss on sale, were $5.3, $9.8
and $9.8 in 2001, 2000 and 1999, respectively, and are included in Other expenses in the Consolidated Statements of Operations.
05 Debt
Information concerning short-term borrowings at December 31, is as follows:
2001 2000
Short-term borrowings $ 10.2 $ 60.7
Weighted-average interest rates 5.0% 6.6%
The Company and some of its foreign subsidiaries maintain lines of credit with foreign financial institutions to meet short-term working capital
needs. Such lines totaled $163.0 at December 31, 2001, of which $152.8 was unused. The Company has no significant compensating balance
requirements or commitment fees related to these lines.
A summary of long-term debt at December 31, is as follows:
2001 2000
Zero-coupon convertible debentures $ 242.7 $ –
Euro denominated notes, at a rate of 5.7% 177.9 188.0
Euro denominated notes, at a rate of 6.3% 133.4 141.0
Commercial paper, maturing within 90 days, at weighted
average interest rates of 2.3% and 7.0%, respectively 57.1 4.6
Revolving credit agreement:
Euro denominated borrowings, at a rate of 4.2% and 5.4%, respectively 86.3 83.7
Yen denominated borrowings, at a rate of .8% and 1.4%, respectively 91.2 54.7
Other 36.0 24.8
824.6 496.8
Less—Current maturities 13.5 5.2
Long-term debt $ 811.1 $ 491.6
Convertible Debentures
During August 2001, the Company issued $435.4 in aggregate principal amount at maturity of unsecured zero-coupon convertible debentures, due
August 17, 2021 (the “Debentures”). These Debentures were issued at a discount to yield an effective interest rate of 3% per year and rank equally with
all existing and future senior unsecured indebtedness of the Company. Gross proceeds of $240.0 were used to repay borrowings under the Company’s
unsecured revolving credit agreement and advances under the Receivables Facility. At December 31, 2001, the unamortized discount was $192.7.
During 2001, $2.7 of the discount was amortized and is included in Interest expense in the Consolidated Statements of Operations. There are no scheduled
cash interest payments associated with the Debentures.
The Debentures are convertible into shares of the Company’s common stock at an initial price of $39.50 per share if the closing price of the Company’s
common stock on the New York Stock Exchange exceeds specified levels, or in certain other circumstances.
The Company may call the Debentures beginning August 17, 2004 for cash at the issue price, plus accreted original issue discount. Holders of the
Debentures may require the Company to purchase the Debentures at the issue price, plus accreted original issue discount, on the first, third, fifth, tenth
and fifteenth anniversary dates. The Company may purchase these Debentures for either cash, the Company’s common stock, or combinations thereof.
Euro Notes
In March 2000, the Company issued K150.0 in unsecured notes due March 2005. Net proceeds of $143.1 from the issuance were used to repay
amounts under the Company’s unsecured revolving credit agreement.
The Company also has K200.0 in unsecured notes due July 2006.
Revolving Credit Agreements
During November 2001, the Company entered into new revolving credit agreements with a syndicate of commercial banks. The new agreements consist of
a $450.0 million five-year revolving credit facility (the “Five-year Facility”) and a $300.0 million 364-day revolving credit facility (the “364-day Facility”).
The revolving credit agreements allow for borrowings in various currencies and up to $100.0 million of the Five-year Facility may be used for the
issuance of standby letters of credit. Outstanding letters of credit totaled $65.5 million and $62.1 million as of December 31, 2001 and 2000,
respectively. Additional borrowings of $449.9 million were available to the Company under these agreements at December 31, 2001.
The interest rate and facility fee on both agreements, and the issuance fee paid for the issuance of letters of credit on the Five-year Facility, vary based
on the Company’s debt rating and borrowing level. Currently, on the Five-year Facility, the interest rate is LIBOR plus .725% and the facility and
issuance fees are .15% and .725%, respectively. On the 364-day Facility, the interest rate is LIBOR plus .75% and the facility fee is .125%. The Five-year
Facility expires in November 2006. The 364-day Facility expires in November 2002.
The agreements require, among other things, that the Company comply with a maximum Debt-to-EBITDA ratio and a minimum fixed charge ratio.
Borrowings of $57.1 were outstanding under the company’s U.S. commercial paper program. Commercial paper borrowings, which are backed by the
Five-year Facility, have been classified as long-term debt due to the availability to refinance them on a long-term basis under this facility.
Interest Rate Swaps
During April 2001, the Company entered into a Yen denominated interest rate swap agreement with a notional value of ¥4,150.0 ($31.5) to fix a
portion of its Yen denominated variable rate borrowings at .8%, which expires in 2006. In addition, during June 2000, the Company entered into
various interest rate swap agreements in order to fix its interest costs on a portion of its Euro and Yen denominated variable rate borrowings.
The Euro interest rate swap agreements have a notional value of K100.0 ($89.0) which fix the interest rate, on a weighted-average basis, at 5.7% and
expire in 2010. The Yen interest rate swap agreement has a notional value of ¥4,000.0 ($30.3) which fixes the interest rate at .9% and expires in 2003.
These swap agreements have had an immaterial impact on the recorded interest expense during the years ended December 31, 2001 and 2000.
The Company also had an interest rate swap agreement that expired in January 2001. This agreement fixed the interest rate at 6.0% on $50.0 of the
Company’s U.S. Dollar-based borrowings and it had an immaterial impact on the recorded interest expense during the years ended December 31,
2001, 2000 and 1999.
Notes to Consolidated Financial Statements (continued)
— in millions, except per share data —