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Long-Term Debt | 12 Months Ended
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Dec. 31, 2014
Debt Disclosure [Abstract] |
Long-Term Debt | Long-Term Debt: Long-term debt consists of the following at December 31, 2014 and 2013 (in thousands):
| December 31,
| 2014 |  | 2013
1.875% Senior notes, net of unamortized discount of $6,605 at December 31, 2014 | $ | 844,315 |  |  | $ | — |
3.00% Senior notes, net of unamortized discount of $306 at December 31, 2014 | 249,694 |  |  | — |
4.15% Senior notes, net of unamortized discount of $1,439 at December 31, 2014 | 423,561 |  |  | — |
4.50% Senior notes, net of unamortized discount of $1,871 at December 31, 2014 and $2,186 at December 31, 2013 | 348,129 |  |  | 347,814 |
5.10% Senior notes, net of unamortized discount of $3 at December 31, 2014 and $36 at December 31, 2013 | 324,997 |  |  | 324,964 |
5.45% Senior notes, net of unamortized discount of $1,029 at December 31, 2014 | 348,971 |  |  | — |
Commercial paper notes | 367,178 |  |  | 363,000 |
Fixed rate foreign borrowings | 1,958 |  |  | 7,879 |
Variable-rate foreign bank loans | 25,139 |  |  | 34,910 |
Miscellaneous | 189 |  |  | 297 |
Total long-term debt | 2,934,131 |  |  | 1,078,864 |
Less amounts due within one year | 711,096 |  |  | 24,554 |
Long-term debt, less current portion | $ | 2,223,035 |  |  | $ | 1,054,310 |
Aggregate annual maturities of long-term debt as of December 31, 2014 are as follows (in millions): 2015—$711.1; 2016—$0.0; 2017—$0.0; 2018—$0.0; 2019—$258.3; thereafter—$1,975.9. Senior Notes In the fourth quarter of 2014, we issued a series of senior notes (collectively, the “2014 Senior Notes”) as follows:
• | €700.0 million aggregate principal amount of senior notes, issued on December 8, 2014, bearing interest at a rate of 1.875% payable annually on December 8 of each year, beginning in 2015. The effective interest rate on these senior notes is approximately 2.10%. These senior notes mature on December 8, 2021.
• | $250.0 million aggregate principal amount of senior notes, issued on November 24, 2014, bearing interest at a rate of 3.00% payable semi-annually on June 1 and December 1 of each year, beginning June 1, 2015. The effective interest rate on these senior notes is approximately 3.18%. These senior notes mature on December 1, 2019.
• | $425.0 million aggregate principal amount of senior notes, issued on November 24, 2014, bearing interest at a rate of 4.15% payable semi-annually on June 1 and December 1 of each year, beginning June 1, 2015. The effective interest rate on these senior notes is approximately 5.06%. These senior notes mature on December 1, 2024.
• | $350.0 million aggregate principal amount of senior notes, issued on November 24, 2014, bearing interest at a rate of 5.45% payable semi-annually on June 1 and December 1 of each year, beginning June 1, 2015. The effective interest rate on these senior notes is approximately 5.50%. These senior notes mature on December 1, 2044.
The net proceeds from the 2014 Senior Notes, together with borrowings from our Commercial Paper Notes, Term Loan and Cash Bridge Facility (each as defined below) were used to finance the cash portion of the consideration for the acquisition of Rockwood Holdings, Inc. (“Rockwood”) which closed on January 12, 2015, pay fees and expenses related to the acquisition, repay the 5.10% senior notes on February 1, 2015, with the remainder, if any, to be used for general corporate purposes. For additional information about the acquisition of Rockwood, see “Subsequent Event—Acquisition of Rockwood Holdings, Inc.” within Note 23, “Acquisitions.” Our $325.0 million aggregate principal amount of senior notes, issued on January 20, 2005, bore interest at a rate of 5.10% payable semi-annually on February 1 and August 1 of each year. The effective interest rate on these senior notes was approximately 5.19%. These senior notes matured and were repaid on February 1, 2015. As a result of the refinancing of these senior notes prior to December 31, 2014, these senior notes were included in Current portion of long-term debt at December 31, 2014. Our $350.0 million aggregate principal amount of senior notes, issued on December 10, 2010, bear interest at a rate of 4.50% payable semi-annually on June 15 and December 15 of each year. The effective interest rate on these senior notes is approximately 4.70%. These senior notes mature on December 15, 2020. In anticipation of refinancing our 5.10% senior notes in the fourth quarter of 2014, on January 22, 2014, we entered into a pay fixed, receive variable rate forward starting interest rate swap with J.P. Morgan Chase Bank, N.A., to be effective October 15, 2014. Our risk management objective and strategy for undertaking this hedge was to eliminate the variability in the interest rate and partial credit spread on the 20 future semi-annual coupon payments that we will pay in connection with our 4.15% senior notes. The notional amount of the swap was $325.0 million and the fixed rate was 3.281%, with the cash settlement determined by reference to the changes in the U.S. dollar 3-month LIBOR and credit spreads from the date we entered into the swap until the date the swap was settled (October 15, 2014). This derivative financial instrument was designated and accounted for as a cash flow hedge under ASC 815, Derivatives and Hedging. We determined there was no ineffectiveness during the term of the swap. On October 15, 2014, the swap was settled, resulting in a payment to the counterparty of $33.4 million. This amount was recorded in Accumulated other comprehensive (loss) income and is being amortized to interest expense over the life of the 4.15% senior notes. The amount to be reclassified to interest expense from Accumulated other comprehensive (loss) income during the next twelve months is approximately $3.3 million. In connection with the offering of the 1.875% Euro-denominated senior notes which were priced on December 1, 2014, we entered into two forward contracts on November 24, 2014, each with a notional value of €350.0 million, to exchange a total of €700.0 million for U.S. dollars, with settlement occurring on December 18, 2014, and with the total notional value representing an amount equivalent to the gross proceeds from the offering of the 1.875% Euro-denominated senior notes. The objective of entering into these forward contracts was to minimize the financial impact of changes in the Euro-to-U.S. Dollar exchange rate with respect to our foreign subsidiaries where the Euro serves as the functional currency. From the effective date of the contracts until the date of settlement, the forward contracts were designated as effective hedges of our net investment in these foreign subsidiaries. Upon settlement, a gain of $5.2 million was recorded in accumulated other comprehensive (loss) income, and such amount is expected to remain in accumulated other comprehensive (loss) income until the complete or substantially complete liquidation of our investment in these foreign subsidiaries. On December 18, 2014, the carrying value of the 1.875% Euro-denominated senior notes was designated as an effective hedge of our net investment in foreign subsidiaries where the Euro serves as the functional currency, and beginning on the date of designation, gains or losses on the revaluation of these senior notes to our reporting currency have been and will be recorded in accumulated other comprehensive (loss) income. During the year ended December 31, 2014, a gain of $12.8 million was recorded in accumulated other comprehensive (loss) income in connection with the revaluation of these senior notes to our reporting currency. Credit Agreement On February 7, 2014, we entered into a new $750.0 million credit facility. The five-year, revolving, unsecured credit agreement (hereinafter referred to as the February 2014 Credit Agreement) matures on February 7, 2019 and replaced our previous $750.0 million amended and restated credit agreement dated as of September 22, 2011. Borrowings bear interest at variable rates based on the LIBOR for deposits in the relevant currency plus an applicable margin which ranges from 0.900% to 1.500%, depending on the Company’s credit rating from Standard & Poor’s Ratings Services (“S&P”) and Moody’s Investors Services (“Moody’s”). The applicable margin on the facility was 1.300% as of December 31, 2014. Borrowings under the February 2014 Credit Agreement are conditioned upon compliance with the following covenants: (a) consolidated funded debt, as defined in the agreement, must be less than or equal to 3.50 times consolidated EBITDA, as defined in the agreement, (which reflects adjustments for certain non-recurring or unusual items such as restructuring charges, facility divestiture charges and other significant non-recurring items), or herein “consolidated adjusted EBITDA,” as of the end of any fiscal quarter; (b) with the exception of certain liens as specified in the agreement, liens may not attach to assets when the aggregate amount of all indebtedness secured by such liens plus unsecured subsidiary indebtedness, other than indebtedness incurred by our subsidiaries under the February 2014 Credit Agreement, would exceed 20% of consolidated net worth, as defined in the agreement; and (c) with the exception of certain indebtedness as specified in the agreement, subsidiary indebtedness may not exceed the difference between 20% of consolidated net worth, as defined in the agreement, and indebtedness secured by liens permitted under the agreement. On August 15, 2014, certain amendments were made to the February 2014 Credit Agreement which include the following: (a) an increase in the maximum leverage ratio (as described above) from 3.50 to 4.50 for the first four quarters following the completion of the acquisition of Rockwood, stepping down by 0.25 on a quarterly basis thereafter until reaching 3.50; (b) modification of the indebtedness covenant to permit the incurrence of indebtedness represented by Rockwood’s former senior notes due in 2020; and (c) requiring subsidiaries of Albemarle that guarantee Rockwood’s former senior notes or that guarantee the 2014 Senior Notes to also guarantee the February 2014 Credit Agreement. On December 22, 2014, the February 2014 Credit Agreement was further amended to provide for, among other things, an increase in the aggregate commitments under the facility to $1.0 billion. As of December 31, 2014, there were no borrowings outstanding under the February 2014 Credit Agreement. Commercial Paper Notes On May 29, 2013, we entered into agreements to initiate a commercial paper program on a private placement basis under which we may issue unsecured commercial paper notes (the “Commercial Paper Notes”) from time-to-time up to a maximum aggregate principal amount outstanding at any time of $750.0 million. The proceeds from the issuance of the Commercial Paper Notes are expected to be used for general corporate purposes, including the repayment of other debt of the Company. Our February 2014 Credit Agreement is available to repay the Commercial Paper Notes, if necessary. Aggregate borrowings outstanding under the February 2014 Credit Agreement and the Commercial Paper Notes will not exceed the $1.0 billion current maximum amount available under the February 2014 Credit Agreement. The Commercial Paper Notes will be sold at a discount from par, or alternatively, will be sold at par and bear interest at rates that will vary based upon market conditions at the time of issuance. The maturities of the Commercial Paper Notes will vary but may not exceed 397 days from the date of issue. The definitive documents relating to the commercial paper program contain customary representations, warranties, default and indemnification provisions. At December 31, 2014, we had $367.2 million of Commercial Paper Notes outstanding bearing a weighted-average interest rate of approximately 0.79% and a weighted-average maturity of 25 days. In order to maintain flexibility with regard to our liquidity strategy, in the second quarter of 2014 the Commercial Paper Notes were reclassified from Long-term debt to Current portion of long-term debt. Term Loan and Bridge Financing On August 15, 2014, we entered into a term loan credit agreement (the “Term Loan”) providing for a tranche of senior unsecured term loans in an aggregate amount of $1.0 billion. Amounts borrowed under the Term Loan were used as short-term borrowings to fund a portion of the cash consideration payable in connection with the acquisition of Rockwood and pay related fees and expenses. Borrowings bear interest at variable rates based on an average LIBOR for deposits in dollars plus an applicable margin which ranges from 1.125% to 2.000%, depending on our credit rating from S&P and Moody’s. As of December 31, 2014, the applicable margin over LIBOR was 1.500%. Term Loan borrowings are guaranteed by the subsidiaries of Albemarle that guarantee Rockwood’s former senior notes or that guarantee the 2014 Senior Notes. The Term Loan matures 364 days following the date of funding, which occurred on January 12, 2015. Borrowings are conditioned upon compliance with one financial covenant which requires that our maximum leverage ratio must be less than or equal to 4.50 times consolidated adjusted EBITDA as of the end of any fiscal quarter. As of December 31, 2014, there were no borrowings outstanding under the Term Loan. On July 15, 2014, we entered into a commitment letter (the “Commitment Letter”) with Bank of America, N.A. and Merrill Lynch, Pierce, Fenner & Smith Incorporated. The Commitment Letter provided for the following, if needed: (a) a senior unsecured cash bridge facility (the “Cash Bridge Facility”) in an aggregate principal amount of up to $1.15 billion; and (b) a senior unsecured bridge facility, which was subsequently eliminated upon the attainment of permanent financing in the form of the Term Loan and the 2014 Senior Notes. On December 2, 2014, we entered into a new senior unsecured credit facility agreement documenting the Cash Bridge Facility pursuant to which the lenders thereunder will provide up to $1.15 billion in loans. The Cash Bridge Facility is guaranteed by each of the Company’s subsidiaries that guarantee the February 2014 Credit Agreement. Amounts borrowed under the Cash Bridge Facility were used as short-term borrowings to fund a portion of the cash consideration payable in connection with the acquisition of Rockwood and pay related fees and expenses, and mature 60 days following the completion of Rockwood acquisition, which occurred on January 12, 2015. The interest rate on amounts outstanding will be either (a) LIBOR, or (b) an alternate base rate (defined as the highest of (i) Bank of America’s prime rate, (ii) the Federal Funds rate plus 0.50% and (iii) a daily rate equal to one-month LIBOR plus 1.00%), plus, in each case, an applicable margin based on our credit rating. As of December 31, 2014, there were no borrowings outstanding under the Cash Bridge Facility. Structuring and underwriting fees of approximately $19.0 million were paid in 2014 in connection with the bridge facilities, and are reflected in Other, net, in our consolidated statements of cash flows. These costs were capitalized and we expense them over the term of the facilities or until the date at which permanent financing is obtained and the facilities are eliminated. Accordingly, we recorded approximately $16.7 million of expense in 2014, which is reflected in Other (expenses) income, net, in the consolidated statements of income and Other, net, in our consolidated statements of cash flows. Financing Costs Debt financing costs incurred and paid in 2014 were $18.9 million and $17.6 million, respectively, in connection with the 2014 Senior Notes, Term Loan and February 2014 Credit Agreement. Other We have additional credit lines in the U.S. with financial institutions that provide for borrowings under uncommitted credit lines up to a maximum of $60.0 million. There were no outstanding borrowings under these agreements at either December 31, 2014 or December 31, 2013. The average interest rate on borrowings under these agreements during 2013 and 2012 was 0.89% and 1.49%, respectively. We have an agreement with a foreign bank that provides immediate U.S Dollar or Euro-denominated borrowings under uncommitted credit lines up to a maximum of $48.0 million or the Euro equivalent. At December 31, 2014 and 2013, there were no outstanding borrowings under this agreement. One of our foreign subsidiaries has agreements with several foreign banks, which provide immediate borrowings under uncommitted credit lines up to a maximum of 4.5 billion Japanese Yen (approximately $37.3 million at December 31, 2014, based on applicable exchange rates). At December 31, 2014 and 2013 there were outstanding borrowings of $8.3 million and $16.4 million, respectively, under these agreements. The weighted average interest rate on borrowings under these agreements during 2014 and 2013 was 0.50% and 0.52%, respectively (there were no borrowings in 2012). Certain of our remaining foreign subsidiaries have additional agreements with foreign institutions that provide immediate uncommitted credit lines, on a short term basis, up to an aggregate maximum of approximately $67.8 million, of which $60.0 million supports foreign subsidiaries based in China. We have guaranteed these agreements. At December 31, 2014 and 2013, there were no outstanding borrowings under these agreements. At December 31, 2014 and 2013, we had the ability and intent to refinance our borrowings under our other existing credit lines with borrowings under the February 2014 Credit Agreement. Therefore, the amounts outstanding under those credit lines, if any, are classified as long-term debt at December 31, 2014 and 2013. At December 31, 2014, we had the ability to borrow $632.8 million under our commercial paper program and the February 2014 Credit Agreement. Our consolidated joint venture, Jordan Bromine Company Limited (“JBC”), has foreign currency denominated debt, which amounted to $18.8 million and $26.4 million at December 31, 2014 and 2013, respectively, and principally includes (i) foreign plant-related construction borrowings maturing in April 2015 amounting to $2.0 million and $7.9 million at December 31, 2014 and 2013, respectively, which bore interest at rates ranging from 2.09% to 5.5% at December 31, 2014, and (ii) short-term borrowings of $16.8 million and $18.5 million at December 31, 2014 and 2013, respectively, bearing interest at 1.47% as of December 31, 2014. At December 31, 2014, JBC had additional borrowing capacity of approximately $7.6 million. We believe that as of December 31, 2014, we were, and currently are, in compliance with all of our debt covenants.

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- Definition The entire disclosure for long-term debt. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 22 -Article 5 + Details
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