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Financing Arrangements

12 Months Ended

Dec. 31, 2019

Financing Arrangements

Financing Arrangements

NOTE 7 – Financing Arrangements

The Company had total debt outstanding of $1.8 billion and $2.1 billion at December 31, 2019 and 2018, respectively. Short-term borrowings at December 31, 2019 and 2018 consist primarily of amounts outstanding under various unsecured local country operating lines of credit.

On April 12, 2019, the Company amended and restated the Term Loan Credit Agreement that was set to mature on April 25, 2019 (“Term Loan”) of $165 million to establish a 24-month senior unsecured term loan credit facility in an amount up to $500 million that matures on April 12, 2021. The Company used the $500 million of borrowings under the new facility to pay down amounts outstanding under its revolving credit facility and to pay off the Term Loan balance.

All borrowings under the amended term loan credit agreement for the new facility (“Amended Term Loan Credit Agreement”) bear interest at a variable annual rate based on LIBOR or a base rate, at the Company’s election, subject to the terms and conditions thereof, plus, in each case, an applicable margin. The Company is required to pay a fee on the unused availability under the Amended Term Loan Credit Agreement. The Amended Term Loan Credit Agreement contains customary representations, warranties, covenants and events of default, including covenants restricting the incurrence of liens, the incurrence of indebtedness by the Company’s subsidiaries and certain fundamental changes involving the Company and its subsidiaries, subject to certain exceptions in each case. The Company must also maintain a specified consolidated leverage ratio and consolidated interest coverage ratio. As of December 31, 2019, the Company was in compliance with these financial covenants. The occurrence of an event of default under the Amended Term Loan Credit Agreement could result in all loans and other obligations being declared due and payable and the term loan credit facility being terminated.

On October 11, 2016, the Company entered into a new five-year, senior, unsecured $1 billion revolving credit agreement (the “Revolving Credit Agreement”) that replaced its previously existing $1 billion senior unsecured revolving credit facility.

Subject to certain terms and conditions, the Company may increase the amount of the revolving credit facility under the Revolving Credit Agreement by up to $500 million in the aggregate. The Company may also obtain up to two one-year extensions of the maturity date of the Revolving Credit Agreement at its requests and subject to the agreement of the lenders. All committed pro rata borrowings under the revolving credit facility bear interest at a variable annual rate based on the LIBOR or base rate, at the Company’s election, subject to the terms and conditions thereof, plus, in each case, an applicable margin based on the Company’s leverage ratio (as reported in the financial statements delivered pursuant to the Revolving Credit Agreement) or the Company’s credit rating. Subject to specified conditions, the Company may designate one or more of its subsidiaries as additional borrowers under the Revolving Credit Agreement provided that the Company guarantees all borrowings and other obligations of any such subsidiaries thereunder.

The Revolving Credit Agreement contains customary representations, warranties, covenants, events of default, terms and conditions, including covenants restricting on liens, subsidiary debt and mergers, subject to certain exceptions in each case. The Company must also comply with a leverage ratio covenant and an interest coverage ratio covenant. As of December 31, 2019, the Company was in compliance with these financial covenants. The occurrence of an event of default under the Revolving Credit Agreement could result in all loans and other obligations under the agreement being declared due and payable and the revolving credit facility being terminated.

As of December 31, 2019, there were $10 million in borrowings outstanding under the Revolving Credit Agreement. In addition to borrowing availability under its Revolving Credit Agreement, the Company has approximately $585 million of unused operating lines of credit in the various foreign countries in which it operates.

Presented below are the Company’s debt carrying amounts, net of related discounts, premiums, and debt issuance costs, and fair values as of December 31, 2019 and 2018:


		December 31, 2019						December 31, 2018
		Carrying			Fair			Carrying			Fair
(in millions)		Amount			Value			Amount			Value
3.2% senior notes due October 1, 2026		$	497		$	491		$	496		$	462
4.625% senior notes due November 1, 2020			400			399			399			409
6.625% senior notes due April 15, 2037			253			246			254			295
5.62% senior notes due March 25, 2020			200			200			200			205
Term loan credit agreement due April 25, 2019			—			—			165			165
Term loan credit agreement due April 12, 2021			405			405			—			—
Revolving credit facility			10			10			418			418
Fair value adjustment related to hedged fixed rate debt instrument			1			—			(1)			—
Long-term debt			1,766			1,751			1,931			1,954
Short-term borrowings			82			82			169			169
Total debt		$	1,848		$	1,833		$	2,100		$	2,123

The Company’s long-term debt matures as follows: $600 million in 2020, $500 million in 2026, and $250 million in 2037. The Company’s Term Loan of $405 million matures in 2021. The Company’s long-term debt as of December 31, 2019 includes the 5.62% senior notes due March 25, 2020 and 4.625% senior notes due November 1, 2020. The Company has the ability and intent to refinance such senior notes on a long-term basis using the revolving credit facility or other sources prior to the maturity date.

The Company guarantees certain obligations of its consolidated subsidiaries. The amount of the obligations guaranteed aggregated $57 million at December 31, 2019 and 2018.