Debt

6 Months Ended

Jun. 30, 2019

DEBT

The following table summarizes the components of Long-term borrowings and finance lease obligations:



(in millions)	June 30, 2019		December 31, 2018
Amended 2016 Credit Agreement ^(a)	$	208.8	$	209.4
Finance lease obligations	0.6		0.7
Total long-term borrowings and finance lease obligations, including current portion	209.4		210.1
Less: Current finance lease obligations	0.2		0.2
Total long-term borrowings and finance lease obligations	$	209.2	$	209.9


(a)	Defined as the Amended and Restated Credit Agreement, dated January 27, 2016, as amended on June 2, 2017.

As more fully described within Note 12 – Fair Value Measurements, the Company uses a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The fair value of long-term debt is based on interest rates that we believe are currently available to us for issuance of debt with similar terms and remaining maturities (Level 2 input).

The following table summarizes the carrying amounts and estimated fair values of the Company’s long-term borrowings:



	June 30, 2019				December 31, 2018
(in millions)	Notional Amount		Fair Value		Notional Amount		Fair Value
Long-term borrowings^(a)	$	209.4	$	209.4	$	210.1	$	210.1


(a)	Long-term borrowings includes current portions of long-term debt and current portions of finance lease obligations of $0.2 million and $0.2 million as of June 30, 2019 and December 31, 2018, respectively.

Borrowings under the Amended 2016 Credit Agreement bear interest, at the Company’s option, at a base rate or a LIBOR rate, plus, in each case, an applicable margin. The applicable margin ranges from 0.00% to 1.25% for base rate borrowings and 1.00% to 2.25% for LIBOR borrowings. The Company must also pay a commitment fee to the lenders ranging between 0.15% to 0.30% per annum on the unused portion of the $400 million revolving credit facility along with other standard fees. Letter of credit fees are payable on outstanding letters of credit in an amount equal to the applicable LIBOR margin plus other customary fees.

The Company is subject to certain leverage ratio and interest coverage ratio financial covenants under the Amended 2016 Credit Agreement that are to be measured at each fiscal quarter-end. The Company was in compliance with all such covenants as of June 30, 2019.

As of June 30, 2019, there was $208.8 million of cash drawn and $11.3 million of undrawn letters of credit under the Amended 2016 Credit Agreement, with $179.9 million of net availability for borrowings. As of December 31, 2018, there was $209.4 million cash drawn and $11.3 million of undrawn letters of credit under the Amended 2016 Credit Agreement, with $179.3 million of net availability for borrowings.

For the six months ended June 30, 2019, gross borrowings under the Amended 2016 Credit Agreement were $10.7 million and there were $13.8 million of gross payments. For the six months ended June 30, 2018, gross borrowings and gross payments were $8.0 million and $34.6 million, respectively.

On July 30, 2019, the Company entered into the Second Amended and Restated Credit Agreement (the “2019 Credit Agreement”), by and among the Company (the “U.S. Borrower”) and certain of its foreign subsidiaries (collectively, the “Borrowers”), Wells Fargo Bank, National Association, as administrative agent, swingline lender and issuing lender, JPMorgan Chase Bank, N.A. as syndication agent, and the other lenders and parties signatory thereto. The 2019 Credit Agreement amends and restates the Company’s Amended 2016 Credit Agreement. See Note 13 – Subsequent Events for additional information.

Interest Rate Swap

On June 2, 2017, the Company entered into an interest rate swap (the “Swap”) with a notional amount of $150.0 million, as a means of fixing the floating interest rate component on $150.0 million of its variable-rate debt. The Swap is designated as a cash flow hedge, with a termination date of June 2, 2020. As a result of the application of hedge accounting treatment, all unrealized gains and losses related to the derivative instrument are recorded in Accumulated other comprehensive loss and are reclassified into operations in the same period in which the hedged transaction affects earnings. Hedge effectiveness is assessed quarterly. We do not use derivative instruments for trading or speculative purposes.

As more fully described within Note 12 – Fair Value Measurements, the Company uses a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The fair value of the Swap is derived from a discounted cash flow analysis based on the terms of the contract and the interest rate curve (Level 2 inputs) and measured on a recurring basis in our Condensed Consolidated Balance Sheets. At June 30, 2019 and December 31, 2018, the fair value of the Swap, included in Prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets, was $0.4 million and $2.0 million, respectively. During the three and six months ended June 30, 2019, unrealized pre-tax losses of $1.0 million and $1.6 million, respectively, were recorded in Accumulated other comprehensive loss. During the three and six months ended June 30, 2018, unrealized pre-tax gains of $0.3 million and $1.3 million, respectively, were recorded in Accumulated other comprehensive loss.