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Financial Instruments | 6 Months Ended
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Jun. 27, 2021
Debt Disclosure [Abstract] |
Financial Instruments | Financial Instruments The Company's financial instruments include cash and cash equivalents, accounts receivable, short-term borrowings, accounts payable and certain accrued liabilities. At June 27, 2021, June 28, 2020 and December 27, 2020, the carrying cost of these instruments approximated their fair value. The Company's financial instruments at June 27, 2021, June 28, 2020 and December 27, 2020 also include certain assets and liabilities measured at fair value (see Notes 11 and 12) as well as long-term borrowings. The carrying costs, which are equal to the outstanding principal amounts, and fair values of the Company's long-term borrowings as of June 27, 2021, June 28, 2020 and December 27, 2020 are as follows:
| June 27, 2021 |  | June 28, 2020 |  | December 27, 2020
| Carrying Cost |  | Fair Value |  | Carrying Cost |  | Fair Value |  | Carrying Cost |  | Fair Value
3.90% Notes Due 2029 | $ | 900.0 |  |  | 982.1 |  |  | $ | 900.0 |  |  | 938.1 |  |  | $ | 900.0 |  |  | 1,011.2 |
3.55% Notes Due 2026 | 675.0 |  |  | 731.9 |  |  | 675.0 |  |  | 712.2 |  |  | 675.0 |  |  | 752.7 |
3.00% Notes Due 2024 | 500.0 |  |  | 530.2 |  |  | 500.0 |  |  | 523.4 |  |  | 500.0 |  |  | 540.6 |
6.35% Notes Due 2040 | 500.0 |  |  | 675.2 |  |  | 500.0 |  |  | 579.7 |  |  | 500.0 |  |  | 636.5 |
3.50% Notes Due 2027 | 500.0 |  |  | 538.1 |  |  | 500.0 |  |  | 516.0 |  |  | 500.0 |  |  | 544.5 |
2.60% Notes Due 2022 | 300.0 |  |  | 308.0 |  |  | 300.0 |  |  | 309.7 |  |  | 300.0 |  |  | 311.5 |
5.10% Notes Due 2044 | 300.0 |  |  | 353.0 |  |  | 300.0 |  |  | 304.0 |  |  | 300.0 |  |  | 338.1 |
3.15% Notes Due 2021 (1) | — |  |  | — |  |  | 300.0 |  |  | 318.6 |  |  | 300.0 |  |  | 302.3 |
6.60% Debentures Due 2028 | 109.9 |  |  | 136.0 |  |  | 109.9 |  |  | 124.5 |  |  | 109.9 |  |  | 137.4 |
Variable % Notes Due December 30, 2022 (2) | 50.0 |  |  | 50.0 |  |  | 400.0 |  |  | 400.0 |  |  | 300.0 |  |  | 300.0 |
Variable % Notes Due December 30, 2024 | 562.5 |  |  | 562.5 |  |  | 592.5 |  |  | 592.5 |  |  | 577.5 |  |  | 577.5 |
Production Financing Facilities | 212.6 |  |  | 212.6 |  |  | 142.0 |  |  | 142.0 |  |  | 165.5 |  |  | 165.5 |
Total long-term debt | $ | 4,610.0 |  |  | 5,079.6 |  |  | $ | 5,219.4 |  |  | 5,460.7 |  |  | $ | 5,127.9 |  |  | 5,617.8 |
Less: Deferred debt expenses | 31.7 |  |  | — |  |  | 38.3 |  |  | — |  |  | 35.3 |  |  | — |
Less: Current portion | 189.6 |  |  | — |  |  | 378.6 |  |  | — |  |  | 432.6 |  |  | — |
Long-term debt | $ | 4,388.7 |  |  | 5,079.6 |  |  | $ | 4,802.5 |  |  | 5,460.7 |  |  | $ | 4,660.0 |  |  | 5,617.8 |
(1) During the first quarter of 2021, the Company repaid in full its 3.15% Notes, in the aggregate amount of $300.0 million due in May 2021. (2) During the second quarter of 2021, the Company repaid $250.0 million of the Variable % Notes Due December 30, 2022. In November 2019, in conjunction with the Company's acquisition of eOne, the Company issued an aggregate of $2.4 billion of senior unsecured debt securities (the "Notes") consisting of the following tranches: $300.0 million of notes due 2022 (the "2022 Notes") that bear interest at a fixed rate of 2.60%, $500.0 million of notes due 2024 (the "2024 Notes") that bear interest at a fixed rate of 3.00%, $675.0 million of notes due 2026 (the "2026 Notes") that bear interest at a fixed rate of 3.55% and $900.0 million of notes due 2029 (the "2029 Notes") that bear interest at a fixed rate of 3.90%. Net proceeds from the issuance of the Notes, after deduction of $20.0 million of underwriting discount and fees, totaled $2.4 billion. These costs are being amortized over the life of the Notes, which range from three to ten years. The Notes bear interest at the stated rates but may be subject to upward adjustment if the credit rating of the Company is reduced by Moody's or Standard & Poors. The adjustment can be from 0.25% to 2.00% based on the extent of the ratings decrease. The Company may redeem the Notes at its option at the greater of the principal amount of the Notes or the present value of the remaining scheduled payments discounted using the effective interest rate on applicable U.S. Treasury bills at the time of repurchase, plus (1) 15 basis points (in the case of the 2022 Notes); (2) 25 basis points (in the case of the 2024 Notes); (3) 30 basis points (in the case of the 2026 Notes); and (4) 35 basis points (in the case of the 2029 Notes). In addition, on and after October 19, 2024 for the 2024 Notes, September 19, 2026 for the 2026 Notes and August 19, 2029 for the 2029 Notes, such series of Notes will be redeemable, in whole at any time or in part from time to time, at the Company's option at a redemption price equal to 100% of the principal amount of the Notes to be redeemed plus any accrued and unpaid interest. In September 2019, the Company entered into a $1.0 billion Term Loan Agreement (the "Term Loan Agreement”) with Bank of America N.A. (“Bank of America”), as administrative agent, and certain financial institutions as lenders, pursuant to which such lenders committed to provide, contingent upon the completion of the eOne Acquisition and certain other customary conditions to funding, (1) a three-year senior unsecured term loan facility in an aggregate principal amount of $400.0 million (the “Three-Year Tranche”) and (2) a five-year senior unsecured term loan facility in an aggregate principal amount of $600.0 million (the “Five-Year Tranche” and together with the Three-Year Tranche, the “Term Loan Facilities”). Loans under the Term Loan Facilities bear interest at the Company’s option, at either the Eurocurrency Rate or the Base Rate, in each case plus a per annum applicable rate that fluctuates (1) in the case of the Three-Year Tranche, between 87.5 basis points and 175.0 basis points, in the case of loans priced at the Eurocurrency Rate, and between 0.0 basis points and 75.0 basis points, in the case of loans priced at the Base Rate, and (2) in the case of the Five-Year Tranche, between 100.0 basis points and 187.5 basis points, in the case of loans priced at the Eurocurrency Rate, and between 0.0 basis points and 87.5 basis points, in the case of loans priced at the Base Rate, in each case, based upon the non-credit enhanced, senior unsecured long-term debt ratings of the Company by Fitch Ratings Inc., Moody’s Investor Service, Inc. and S&P Global Rankings, subject to certain provisions taking into account potential differences in ratings issued by the relevant rating agencies or a lack of ratings issued by such rating agencies. Loans under the Five-Year Tranche require principal amortization payments that are payable in equal quarterly installments of 5.0% per annum of the original principal amount thereof for each of the first two years after funding, increasing to 10.0% per annum of the original principal amount thereof for each subsequent year. The Term Loan Agreement contains affirmative and negative covenants typical of this type of facility, including: (i) restrictions on the Company’s and its domestic subsidiaries’ ability to allow liens on their assets, (ii) restrictions on the incurrence of indebtedness, (iii) restrictions on the Company’s and certain of its subsidiaries’ ability to engage in certain mergers, (iv) the requirement that the Company maintain a Consolidated Interest Coverage Ratio of no less than 3.00:1.00 as of the end of any fiscal quarter and (v) the requirement that the Company maintain a Consolidated Total Leverage Ratio of no more than, depending on the gross proceeds of equity securities issued after the effective date of the acquisition of eOne, 5.65:1.00 or 5.40:1.00 for each of the first, second and third fiscal quarters ended after the funding of the Term Loan Facilities, with periodic step downs to 3.50:1.00 for the fiscal quarter ending December 31, 2023 and thereafter. The notes were drawn down on December 30, 2019, the closing date of the eOne Acquisition. During the first six months of 2021, the Company paid $265.0 million toward the $1.0 billion term loan notes consisting of $250.0 million on the principal balance of the Three-Year Tranche loans in addition to the required quarterly principal amortization payments totaling $15.0 million on the Five-Year Tranche loans. As of June 27, 2021, the Company was in compliance with the financial covenants contained in the Term Loan Agreement. The Company may redeem its 5.10% notes due in 2044 (the "2044 Notes") at its option, at the greater of the principal amount of the notes or the present value of the remaining scheduled payments, discounted using the effective interest rate on applicable U.S. Treasury bills at the time of repurchase. Current portion of long-term debt at June 27, 2021 o f $189.6 million, as shown on the consolidated balance sheet, represents the current portion of required quarterly principal amortization payments for the Term Loan Facilities and production financing facilities. All of the Company’s other long-term borrowings have contractual maturities that occur subsequent to the second quarter of 2022. The fair values of the Company's long-term debt are considered Level 3 fair values (see Note 11 for further discussion of the fair value hierarchy) and are measured using the discounted future cash flows method. In addition to the debt terms, the valuation methodology includes an assumption of a discount rate that approximates the current yield on a similar debt security. This assumption is considered an unobservable input in that it reflects the Company's own assumptions about the inputs that market participants would use in pricing the asset or liability. The Company believes that this is the best information available for use in the fair value measurement. Production Financing In addition to the Company's financial instruments, the Company uses production financing to fund certain of its television and film productions which are typically arranged on an individual production basis by special purpose production subsidiaries. Production financing facilities are secured by the assets and future revenue of the individual production subsidiaries and are non-recourse to the Company's assets. Production financing facilities typically have maturities of less than two years, while the titles are in production, and are repaid once delivered and all credits, broadcaster pre-sales and international sales have been received. The production financing facilities as of June 27, 2021, June 28, 2020 and December 27, 2020 are as follows:
| June 27, 2021 |  | June 28, 2020 |  | December 27, 2020
Production financing held by production subsidiaries | $ | 212.6 |  |  | $ | 142.0 |  |  | $ | 165.5 |
Other loans (1) | — |  |  | 6.4 |  |  | 5.4 |
Total | $ | 212.6 |  |  | $ | 148.4 |  |  | $ | 170.9 |
Production financing included in the consolidated balance sheet as: |  |  |  |  |
Non-current | $ | 53.0 |  |  | $ | 93.4 |  |  | $ | 62.9 |
Current | 159.6 |  |  | 48.6 |  |  | 102.6 |
Total | $ | 212.6 |  |  | $ | 142.0 |  |  | $ | 165.5 |
(1) Other loans consist of production related demand loans, and are recorded within Short-term Borrowings in the Company's consolidated balance sheets. Interest is charged at bank prime rate plus a margin based on the risk of the respective production. The weighted average interest rate on all production financing as of June 27, 2021 was 3.0%. The Company has Canadian dollar and U.S. dollar production credit facilities with various banks. The carrying amounts are denominated in the following currencies:
| Canadian Dollars |  | U.S. Dollars |  | Total
As of June 27, 2021 | $ | 49.0 |  |  | $ | 163.6 |  |  | $ | 212.6 |
The following table represents the movements in production financing and other related loans during the first six months of 2021:
| Production Financing |  | Other Loans |  | Total
December 27, 2020 | $ | 165.5 |  |  | $ | 5.4 |  |  | $ | 170.9 |
Drawdowns | 114.7 |  |  | 16.7 |  |  | 131.4 |
Repayments | (70.0) |  |  | (23.0) |  |  | (93.0) |
Foreign exchange differences | 2.4 |  |  | 0.9 |  |  | 3.3 |
Balance at June 27, 2021 | $ | 212.6 |  |  | $ | — |  |  | $ | 212.6 |

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -Subparagraph (h) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1C -Subparagraph (c) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1I -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1I -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(c)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -Subparagraph (g) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1C -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1C -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1E -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495348-112611 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1I -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -Subparagraph (i) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 + Details
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