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Debt | 12 Months Ended
--- | ---
Dec. 31, 2016
Debt Disclosure [Abstract] |
Debt | Debt Debt at December 31, 2016 and 2015 was as follows:
(In millions) |  | 2016 |  | 2015
Allegheny Technologies $500 million 5.875% Senior Notes due 2023 (a) |  | $ | 500.0 |  |  | $ | 500.0 |
Allegheny Technologies $500 million 5.95% Senior Notes due 2021 |  | 500.0 |  |  | 500.0 |
Allegheny Technologies $350 million 9.375% Senior Notes due 2019 |  | 350.0 |  |  | 350.0 |
Allegheny Technologies $287.5 million 4.75% Convertible Senior Notes due 2022 |  | 287.5 |  |  | — |
Allegheny Ludlum 6.95% Debentures due 2025 |  | 150.0 |  |  | 150.0 |
Term Loan due 2017 |  | 100.0 |  |  | — |
U.S. revolving credit facility |  | — |  |  | — |
Foreign credit agreements |  | 4.4 |  |  | 1.4 |
Industrial revenue bonds, due through 2020, and other |  | 2.2 |  |  | 3.8 |
Debt issuance costs |  | (17.1 | ) |  | (9.5 | )
Total short-term and long-term debt |  | 1,877.0 |  |  | 1,495.7 |
Short-term debt and current portion of long-term debt |  | 105.1 |  |  | 3.9 |
Total long-term debt |  | $ | 1,771.9 |  |  | $ | 1,491.8 |
(a) | Bearing interest at 7.875% effective February 15, 2016.
Interest expense was $125.4 million in 2016, $111.4 million in 2015, and $109.8 million in 2014. Interest expense was reduced by $4.7 million, $2.2 million, and $5.3 million, in 2016, 2015, and 2014, respectively, from interest capitalization on capital projects. Interest and commitment fees paid were $127.2 million in 2016, $113.4 million in 2015, and $113.2 million in 2014. Net interest expense includes interest income of $1.4 million in 2016, $1.2 million in 2015, and $1.1 million in 2014. Scheduled principal payments during the next five years are $105.8 million in 2017, $0.7 million in 2018, $350.2 million in 2019, no payments in 2020, and $500.0 million payments in 2021. 2023 Notes The stated interest rate payable on the 5.875% Senior Notes due 2023 (2023 Notes) is subject to adjustment in the event of changes in the credit ratings on the 2023 Notes by either Moody’s or Standard & Poor’s (S&P). Each notch of credit rating downgrade from the credit ratings in effect when the 2023 Notes were issued in July 2013 increases interest expense by 0.25% on the 2023 Notes, up to a maximum 4 notches by each of the two rating agencies, or a total 2.0% potential interest rate change up to 7.875%. In February 2016, the 2023 Notes reset one notch to the maximum 7.875% annual interest rate as a result of a credit rating downgrade by S&P, which resulted in an additional $1.3 million of interest expense measured on an annual basis, compared to 2015. Credit rating downgrades in 2015 raised the annual interest expense on the 2023 Notes by $4.1 million compared to 2014. Any further credit rating downgrades have no effect on the interest rate of the 2023 Notes, and increases in the Company’s credit ratings from these ratings agencies would reduce interest expense incrementally on the 2023 Notes to the original 5.875% interest rate in a similar manner. Credit Agreements On September 23, 2015, the Company entered into a $400 million Asset Based Lending (ABL) Revolving Credit Facility, which includes a letter of credit sub-facility of up to $200 million. The ABL facility replaced a $400 million revolving credit facility originally entered into on July 31, 2007 (as amended, the “Prior Credit Facility”). Costs associated with entering into the ABL facility were $1.5 million, and are being amortized to interest expense over the 5-year term of the facility. The ABL facility matures in September 2020 and is collateralized by the accounts receivable and inventory of the Company’s domestic operations. In May 2016, the ABL facility was amended to add an eighteen-month term loan (Term Loan) in the amount of $100.0 million million, to support the Company’s restructuring actions and operational needs, and to amend certain of the ABL covenants and related defined terms. The interest rate on this Term Loan is 3.5% plus a LIBOR spread. Costs associated with amending the ABL facility were $0.9 million, and are being amortized to interest expense over the term of the facility. Proceeds of the Term Loan were used to pay down outstanding borrowings under the revolving credit portion of the ABL facility. The Term Loan is due on November 13, 2017 and can be prepaid in its entirety on a one-time basis on or after May 13, 2017 if certain minimum liquidity conditions are satisfied. The underwriting fees and other third-party expenses for the issuance of the Term Loan were $1.0 million and are being amortized to interest expense over the eighteen-month term of the loan. As amended, the applicable interest rate for borrowings under the ABL facility includes interest rate spreads based on available borrowing capacity that range between 2.0% and 2.5% for LIBOR-based borrowings and between 1.0% and 1.5% for base rate borrowings. As amended, the ABL facility contains a financial covenant whereby the Company must maintain a fixed charge coverage ratio of not less than 1.00:1.00 after an event of default has occurred and is continuing or if the undrawn availability under the ABL facility is less than the greater of (i) 12.5% of the then applicable maximum borrowing amount or (ii) $40.0 million. The Company does not meet this required fixed charge coverage ratio at December 31, 2016. As a result, the Company is not able to access this remaining 12.5% or $62.5 million of the ABL facility until it meets the required ratio. Additionally, the Company must demonstrate liquidity, as calculated in accordance with the terms of the agreement, of at least $500 million on the date that is 91 days prior to June 1, 2019, the maturity date of the 9.375% Senior Notes due 2019, and that such liquidity is available at all times thereafter until the 9.375% Senior Notes due 2019 are paid in full or refinanced. There were no outstanding revolving credit borrowings under the ABL facility as of December 31, 2016, and $25.9 million was utilized to support the issuance of letters of credit. Average revolving credit borrowings under the ABL facility for the fiscal year ended December 31, 2016 were $82 million, bearing an average annual interest rate of 1.757%. Average borrowings under the ABL and the Prior Credit Facility for the fiscal year ended December 31, 2015 were $61 million, bearing an average annual interest rate of 2.0%. Convertible Notes In May 2016, the Company issued and sold $250 million aggregate principal amount of 4.75% Convertible Senior Notes due 2022 (2022 Convertible Notes). The Company granted the underwriters a 30-day option to purchase up to an additional $37.5 million aggregate principal amount of 2022 Convertible Notes on the same terms and conditions to cover over-allotments, if any. On June 1, 2016, the Company announced that the underwriters exercised this option in full and on June 2, 2016, the Company completed the offering and sale of the additional $37.5 million aggregate principal amount of 2022 Convertible Notes. Interest on the 2022 Convertible Notes is payable in cash semi-annually in arrears on each January 1 and July 1, commencing January 1, 2017. The Company used a portion of the proceeds from the 2022 Convertible Notes to make a $115 million contribution in July 2016 to the Company’s U.S. defined benefit pension plan, and expects to use additional 2022 Convertible Note proceeds to meet future pension funding requirements. The underwriting fees and other third-party expense for the issuance of the 2022 Convertible Notes were $9.4 million and are being amortized to interest expense over the 6-year term of the 2022 Convertible Notes. The Company does not have the right to redeem the 2022 Convertible Notes prior to their stated maturity date. Holders of the 2022 Convertible Notes have the option to convert their notes into shares of the Company’s common stock, at any time prior to the close of business on the business day immediately preceding the stated maturity date (July 1, 2022). The initial conversion rate for the 2022 Convertible Notes is 69.2042 shares of ATI common stock per $1,000 (in whole dollars) principal amount of Notes (19.9 million shares), equivalent to conversion price of $14.45 per share, subject to adjustment in certain events. Other than receiving cash in lieu of fractional shares, holders do not have the option to receive cash instead of shares of common stock upon conversion. Accrued and unpaid interest that exists upon conversion of a note will be deemed paid by the delivery of shares of ATI common stock and no cash payment or additional shares will be given to the holders. If the Company undergoes a fundamental change, holders of the 2022 Convertible Notes may require the Company to repurchase the notes in whole or in part for cash at a price equal to 100% of the principal amount of the notes to be purchased plus any accrued and unpaid interest to, but excluding, the repurchase date. In June 2009, ATI issued $402.5 million in aggregate principal amount of 4.25% Convertible Senior Notes due 2014 (2014 Convertible Notes). Interest was payable semi-annually on June 1 and December 1 of each year. The 2014 Convertible Notes were unsecured and unsubordinated obligations of the Company and ranked equally with all of its existing and future senior unsecured debt. On June 2, 2014, the Company repaid the remaining $397.5 million outstanding of the 2014 Convertible Notes. Holders of the 2014 Convertible Notes had the option to convert their notes into shares of ATI common stock at any time prior to the close of business on the second scheduled trading day immediately preceding the June 1, 2014 maturity date. Prior to the maturity date, $5.0 million of the 2014 Convertible Notes were converted into 120,476 shares of ATI common stock. The conversion rate for the 2014 Convertible Notes was 23.9263 shares of ATI common stock per $1,000 principal amount of 2014 Convertible Notes, equivalent to a conversion price of approximately $41.795 per share. Other than receiving cash in lieu of fractional shares, holders did not have the option to receive cash instead of shares of common stock upon conversion. Ladish Notes In conjunction with the acquisition of Ladish Co., Inc. (“Ladish”, now ATI Ladish LLC) in May 2011, the Company assumed the Series B and Series C Notes previously issued by Ladish. During 2015, the Company prepaid $5.7 million in aggregate principal amount of its 6.14% ATI Ladish Series B senior notes due May 16, 2016, representing all of the remaining outstanding Series B Notes. Also during 2015, the Company repaid the $10.0 million aggregate principal amount of its outstanding 6.41% ATI Ladish Series C senior notes, due September 2, 2015. Foreign and Other Credit Facilities The Company has an additional separate credit facility for the issuance of letters of credit. As of December 31, 2016, $17 million in letters of credit were outstanding under this facility. STAL, the Company’s Chinese joint venture company in which ATI has a 60% interest, has a separate $20 million revolving credit facility entered into in April 2015. Borrowings under the STAL revolving credit facility are in U.S. dollars based on U.S. interbank offered rates. The credit facility is supported solely by STAL’s financial capability without any guarantees from the joint venture partners. The credit facility requires STAL to maintain a minimum level of shareholders’ equity, and certain financial ratios. The Company has no off-balance sheet financing relationships as defined in Item 303(a)(4) of SEC Regulation S-K, with variable interest entities, structured finance entities, or any other unconsolidated entities. At December 31, 2016, the Company had not guaranteed any third-party indebtedness.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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