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Debt | 12 Months Ended
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Dec. 31, 2011
Debt |
Debt |
6. Debt The following table summarizes the long-term debt of the Company at December 31, 2011 and 2010:
|  | 2011 |  | 2010 |
--- | --- | --- | --- | --- | ---
Secured Credit Agreement: |  |  |  |  |  |  |
Revolving Credit Facility: |  |  |  |  |  |  |
Revolving Loans |  | $ | — |  | $ | — |
Term Loans: |  |  |  |  |  |  |
Term Loan A (170 million AUD) |  |  | 173 |  |  |  |
Term Loan B |  |  | 600 |  |  |  |
Term Loan C (116 million CAD) |  |  | 114 |  |  |  |
Term Loan D (€141 million) |  |  | 182 |  |  |  |
Fourth Amended and Restated Secured Credit Agreement: |  |  |  |  |  |  |
Term Loan A |  |  |  |  |  | 92 |
Term Loan B |  |  |  |  |  | 190 |
Term Loan C |  |  |  |  |  | 111 |
Term Loan D |  |  |  |  |  | 253 |
Senior Notes: |  |  |  |  |  |  |
6.75%, due 2014 |  |  |  |  |  | 400 |
6.75%, due 2014 (€225 million) |  |  |  |  |  | 300 |
3.00%, Exchangeable, due 2015 |  |  | 624 |  |  | 607 |
7.375%, due 2016 |  |  | 588 |  |  | 585 |
6.875%, due 2017 (€300 million) |  |  | 388 |  |  | 401 |
6.75%, due 2020 (€500 million) |  |  | 647 |  |  | 668 |
Senior Debentures: |  |  |  |  |  |  |
7.80%, due 2018 |  |  | 250 |  |  | 250 |
Other |  |  | 137 |  |  | 164 |
Total long-term debt |  |  | 3,703 |  |  | 4,021 |
Less amounts due within one year |  |  | 76 |  |  | 97 |
Long-term debt |  | $ | 3,627 |  | $ | 3,924 |
On May 19, 2011, the Company's subsidiary borrowers entered into the Secured Credit Agreement (the "Agreement"). The proceeds from the Agreement were used to repay all outstanding amounts under the previous credit agreement and the U.S. dollar-denominated 6.75% senior notes due 2014. On June 7, 2011, the Company also redeemed the Euro-denominated 6.75% senior notes due 2014. The Company recorded $25 million of additional interest charges for note repurchase premiums and the related write-off of unamortized finance fees. At December 31, 2011, the Agreement included a $900 million revolving credit facility, a 170 million Australian dollar term loan, a $600 million term loan, a 116 million Canadian dollar term loan, and a €141 million term loan, each of which has a final maturity date of May 19, 2016. At December 31, 2011, the Company's subsidiary borrowers had unused credit of $804 million available under the Agreement. The Agreement contains various covenants that restrict, among other things and subject to certain exceptions, the ability of the Company to incur certain liens, make certain investments, become liable under contingent obligations in certain defined instances only, make restricted junior payments, make certain asset sales within guidelines and limits, make capital expenditures beyond a certain threshold, engage in material transactions with shareholders and affiliates, participate in sale and leaseback financing arrangements, alter its fundamental business, and amend certain outstanding debt obligations. The Agreement also contains one financial maintenance covenant, a Leverage Ratio, that requires the Company not to exceed a ratio calculated by dividing consolidated total debt, less cash and cash equivalents, by Consolidated Adjusted EBITDA, as defined in the Agreement. The Leverage Ratio could restrict the ability of the Company to undertake additional financing or acquisitions to the extent that such financing or acquisitions would cause the Leverage Ratio to exceed the specified maximum. Failure to comply with these covenants and restrictions could result in an event of default under the Agreement. In such an event, the Company could not request borrowings under the revolving facility, and all amounts outstanding under the Agreement, together with accrued interest, could then be declared immediately due and payable. If an event of default occurs under the Agreement and the lenders cause all of the outstanding debt obligations under the Agreement to become due and payable, this would result in a default under a number of other outstanding debt securities and could lead to an acceleration of obligations related to these debt securities. A default or event of default under the Agreement, indentures or agreements governing other indebtedness could also lead to an acceleration of debt under other debt instruments that contain cross acceleration or cross-default provisions. The Leverage Ratio also determines pricing under the Agreement. The interest rate on borrowings under the Agreement is, at the Company's option, the Base Rate or the Eurocurrency Rate, as defined in the Agreement. These rates include a margin linked to the Leverage Ratio. The margins range from 1.25% to 2.00% for Eurocurrency Rate loans and from 0.25% to 1.00% for Base Rate loans. In addition, a facility fee is payable on the revolving credit facility commitments ranging from 0.25% to 0.50% per annum linked to the Leverage Ratio. The weighted average interest rate on borrowings outstanding under the Agreement at December 31, 2011 was 3.09%. As of December 31, 2011, the Company was in compliance with all covenants and restrictions in the Agreement. In addition, the Company believes that it will remain in compliance and that its ability to borrow funds under the Agreement will not be adversely affected by the covenants and restrictions. Borrowings under the Agreement are secured by substantially all of the assets, excluding real estate, of the Company's domestic subsidiaries and certain foreign subsidiaries. Borrowings are also secured by a pledge of intercompany debt and equity in most of the Company's domestic subsidiaries and stock of certain foreign subsidiaries. All borrowings under the agreement are guaranteed by substantially all domestic subsidiaries of the Company for the term of the Agreement. During May 2010, a subsidiary of the Company issued exchangeable senior notes with a face value of $690 million due June 1, 2015 ("2015 Exchangeable Notes"). The 2015 Exchangeable Notes bear interest at 3.00% and are guaranteed by substantially all of the Company's domestic subsidiaries. Upon exchange of the 2015 Exchangeable Notes, under the terms outlined below, the issuer of the 2015 Exchangeable Notes is required to settle the principal amount in cash and the Company is required to settle the exchange premium in shares of the Company's common stock. The exchange premium is calculated as the value of the Company's common stock in excess of the initial exchange price of approximately $47.47 per share, which is equivalent to an exchange rate of 21.0642 per $1,000 principal amount of the 2015 Exchangeable Notes. The exchange rate may be adjusted upon the occurrence of certain events, such as certain distributions, dividends or issuances of cash, stock, options, warrants or other property or effecting a share split, or a significant change in the ownership or structure of the Company, such as a recapitalization or reclassification of the Company's common stock, a merger or consolidation involving the Company or the sale or conveyance to another person of all or substantially all of the property and assets of the Company and its subsidiaries substantially as an entirety. Prior to March 1, 2015, the 2015 Exchangeable Notes may be exchanged only if (1) the price of the Company's common stock exceeds $61.71 (130% of the exchange price) for a specified period of time, (2) the trading price of the 2015 Exchangeable Notes falls below 98% of the average exchange value of the 2015 Exchangeable Notes for a specified period of time (trading price was 226% of exchange value at December 31, 2011), or (3) upon the occurrence of specified corporate transactions. The 2015 Exchangeable Notes may be exchanged without restrictions on or after March 1, 2015. As of December 31, 2011, the 2015 Exchangeable Notes are not exchangeable by the holders. The value of the exchange feature of the 2015 Exchangeable Notes was computed using the Company's non-exchangeable debt borrowing rate at the date of issuance of 6.15% and was accounted for as a debt discount and a corresponding increase to share owners' equity. The carrying values of the liability and equity components at December 31, 2011 and 2010 are as follows:
|  | 2011 |  | 2010 |
--- | --- | --- | --- | --- | ---
Principal amount of exchangeable notes |  | $ | 690 |  | $ | 690 |
Unamortized discount on exchangeable notes |  |  | 66 |  |  | 83 |
Net carrying amount of liability component |  | $ | 624 |  | $ | 607 |
Carrying amount of equity component |  | $ | 93 |  | $ | 93 |
The debt discount is being amortized over the life of the 2015 Exchangeable Notes. The amount of interest expense recognized on the 2015 Exchangeable Notes for the years ended December 31, 2011 and 2010 is as follows:
|  | 2011 |  | 2010 |
--- | --- | --- | --- | --- | ---
Contractual coupon interest |  | $ | 21 |  | $ | 14 |
Amortization of discount on exchangeable notes |  |  | 17 |  |  | 10 |
Total interest expense |  | $ | 38 |  | $ | 24 |
The Company has a €280 million European accounts receivable securitization program, which extends through September 2016, subject to annual renewal of backup credit lines. Information related to the Company's accounts receivable securitization program as of December 31, 2011 and 2010 is as follows:
|  | 2011 |  | 2010 |
--- | --- | --- | --- | --- | ---
Balance (included in short-term loans) |  | $ | 281 |  | $ | 247 |
Weighted average interest rate |  |  | 2.41 | % |  | 2.40 | %
The Company capitalized $1 million and $24 million in 2011 and 2010, respectively, under capital lease obligations with the related financing recorded as long-term debt. These amounts are included in other in the long-term debt table above. Annual maturities for all of the Company's long-term debt through 2016 are as follows: 2012, $76 million; 2013, $129 million; 2014, $206 million; 2015, $1,134 million; and 2016 $929 million. Fair values at December 31, 2011, of the Company's significant fixed rate debt obligations are as follows:
|  | Principal Amount |  | Indicated Market Price |  | Fair Value |
--- | --- | --- | --- | --- | --- | --- | ---
Senior Notes: |  |  |  |  |  |  |  |  |  |
3.00%, Exchangeable, due 2015 |  | $ | 690 |  |  | 92.23 |  | $ | 636 |
7.375%, due 2016 |  |  | 600 |  |  | 110.00 |  |  | 660 |
6.875%, due 2017 (€300 million) |  |  | 388 |  |  | 101.56 |  |  | 394 |
6.75%, due 2020 (€500 million) |  |  | 647 |  |  | 99.75 |  |  | 645 |
Senior Debentures: |  |  |  |  |  |  |  |  |  |
7.80%, due 2018 |  |  | 250 |  |  | 111.50 |  |  | 279 |

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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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 129 -Paragraph 2, 4 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 19, 20, 22 -Article 5 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 + Details
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