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Financing Arrangements

12 Months Ended

Dec. 31, 2020

Financing Arrangements

Financing Arrangements

NOTE 7 – Financing Arrangements

The Company had total debt outstanding of approximately $2.2 billion and approximately $1.8 billion at December 31, 2020 and 2019, respectively. Short-term borrowings at December 31, 2020 and 2019 consist primarily of the term loan credit agreement that matures in April 2021 and amounts outstanding under various unsecured local country operating lines of credit.

During the year ended December 31, 2020, the Company sold its (i) 2.900% senior notes due 2030 in the principal amount of $600 million (the “2030 Notes”) and (ii) 3.900% senior notes due 2050 in the principal amount of $400 million (the “2050 Notes” and, together with the “2030 Notes,” the “Notes”). The Company recorded the aggregate discount of approximately $7 million at which the Notes were issued and capitalized debt issuance costs of approximately $9 million associated with the Notes.

The Company applied the net proceeds from the sale of the Notes to pay in full the outstanding balance of $394 million under the revolving credit facility described below (the “Revolving Credit Facility”) and set aside funds to repay its 4.625% senior notes due November 1, 2020 (the “November 2020 Notes”). On June 8, 2020, the Company issued a notice for the redemption in full of all $400 million principal amount of the November 2020 Notes. The November 2020 Notes were redeemed on July 9, 2020 for a total redemption price of $409 million, including $4 million of accrued interest and a $5 million “make-whole” premium as set forth in the indenture governing the November 2020 Notes.

During the year ended December 31, 2020, the Company used proceeds from the Revolving Credit Facility to repay $200 million of its 5.62% senior notes due March 25, 2020.

On April 12, 2019, the Company amended and restated the Term Loan Credit Agreement for a $165 million senior unsecured term loan credit facility that was set to mature on April 25, 2019 (“Term Loan”) 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 the Revolving Credit Facility and to pay off the Term Loan balance. The balance of the amended and restated term loan credit agreement for the new facility (“Amended Term Loan Credit Agreement”) was $380 million as of December 31, 2020.

All borrowings under the Amended Term Loan Credit Agreement bear interest at a variable annual rate based on the specified London Interbank Offered Rate (“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, 2020, 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”) to establish the Revolving Credit Facility, which replaced its previously existing $1 billion senior unsecured revolving credit facility. All committed pro rata borrowings under the Revolving Credit Facility 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 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, 2020, 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, 2020, there were no borrowings outstanding under the Revolving Credit Agreement. The Revolving Credit Agreement expires on October 10, 2021. In addition to borrowing availability under its Revolving Credit Agreement, the Company has approximately $1.2 billion 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, 2020 and 2019:


		December 31, 2020						December 31, 2019
		Carrying			Fair			Carrying			Fair
(in millions)		Amount			Value			Amount			Value
2.900% senior notes due June 1, 2030		$	594		$	596		$	—		$	—
3.200% senior notes due October 1, 2026			497			500			497			491
3.900% senior notes due June 1, 2050			390			395			—			—
4.625% senior notes due November 1, 2020			—			—			400			399
6.625% senior notes due April 15, 2037			253			246			253			246
5.620% senior notes due March 25, 2020			—			—			200			200
Term loan credit agreement due April 12, 2021			—			—			405			405
Other long-term borrowings			14			14			—			—
Revolving credit facility			—			—			10			10
Fair value adjustment related to hedged fixed rate debt instrument			—			—			1			—
Total long-term debt			1,748			1,751			1,766			1,751
Term loan credit agreement due April 12, 2021			380			380			—			—
Other short-term borrowings			58			58			82			82
Total short-term borrowings			438			438			82			82
Total debt		$	2,186		$	2,189		$	1,848		$	1,833

The Company’s long-term debt matures as follows: $500 million in 2026, $600 million in 2030, $250 million in 2037, and $400 million in 2050.

The Company guarantees certain obligations of its consolidated subsidiaries. The amount of the obligations guaranteed aggregated $58 million and $57 million at December 31, 2020 and 2019, respectively.