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Debt | 3 Months Ended
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Mar. 31, 2018
Debt |
Debt | 8. Debt The following table summarizes the long-term debt of the Company:
|  | March 31, |  | December 31, |  | March 31, |
|  | 2018 |  | 2017 |  | 2017 |
Secured Credit Agreement: |  |  |  |  |  |  |  |  |  |
Revolving Credit Facility: |  |  |  |  |  |  |  |  |  |
Revolving Loans |  | $ | 462 |  | $ | — |  | $ | 285 |
Term Loans: |  |  |  |  |  |  |  |  |  |
Term Loan A |  |  | 1,149 |  |  | 1,148 |  |  | 1,370 |
Term Loan A (€279 million at March 31, 2017) |  |  |  |  |  |  |  |  | 284 |
Senior Notes: |  |  |  |  |  |  |  |  |  |
6.75%, due 2020 (€500 million) |  |  | 613 |  |  | 594 |  |  | 530 |
4.875%, due 2021 (€330 million) |  |  | 404 |  |  | 392 |  |  | 350 |
5.00%, due 2022 |  |  | 496 |  |  | 496 |  |  | 495 |
4.00%, due 2023 |  |  | 305 |  |  | 305 |  |  |  |
5.875%, due 2023 |  |  | 686 |  |  | 685 |  |  | 683 |
3.125%, due 2024 (€725 million at March 31, 2018) |  |  | 872 |  |  | 849 |  |  | 763 |
6.375%, due 2025 |  |  | 295 |  |  | 295 |  |  | 294 |
5.375%, due 2025 |  |  | 297 |  |  | 297 |  |  | 297 |
Senior Debentures: |  |  |  |  |  |  |  |  |  |
7.80%, due 2018 |  |  |  |  |  |  |  |  | 22 |
Capital Leases |  |  | 53 |  |  | 54 |  |  | 56 |
Other |  |  | 19 |  |  | 17 |  |  | 26 |
Total long-term debt |  |  | 5,651 |  |  | 5,132 |  |  | 5,455 |
Less amounts due within one year |  |  | 11 |  |  | 11 |  |  | 24 |
Long-term debt |  | $ | 5,640 |  | $ | 5,121 |  | $ | 5,431 |
On April 22, 2015, the Company entered into a Senior Secured Credit Facility, which subsequently has been amended several times with the most recent amendment being entered into on September 28, 2017 (the “Amended Agreement”). At March 31, 2018, the Amended Agreement includes a $300 million revolving credit facility, a $600 million multicurrency revolving credit facility, and a $1,575 million term loan A facility ($1,149 million net of debt issuance costs), each of which has a final maturity date of April 22, 2020. At March 31, 2018, the Company had unused credit of $412 million available under the Amended Agreement. The weighted average interest rate on borrowings outstanding under the Amended Agreement at March 31, 2018 was 2.98%. The Amended 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 payments, make certain asset sales within guidelines and limits, engage in certain affiliate transactions, participate in sale and leaseback financing arrangements, alter its fundamental business, and amend certain subordinated debt obligations. The Amended Agreement also contains one financial covenant, a Total Leverage Ratio that requires the Company not to exceed a ratio calculated by dividing consolidated total debt (excluding ordinary course revolver borrowings, except to the extent such borrowings existed at the prior year end, and non-recourse factoring or securitization debt), less cash and cash equivalents, by consolidated EBITDA, as defined in the Amended Agreement. The Total 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 Total Leverage Ratio to exceed the specified maximum of 4.0x for the first fiscal quarter ending March 31, 2018 and each fiscal quarter thereafter. Failure to comply with these covenants and restrictions could result in an event of default under the Amended Agreement. In such an event, the Company would be unable to request borrowings under the revolving facility, and all amounts outstanding under the Amended Agreement, together with accrued interest, could then be declared immediately due and payable. If an event of default occurs under the Amended Agreement and the lenders cause all of the outstanding debt obligations under the Amended 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. As of March 31, 2018, the Company was in compliance with all covenants and restrictions in the Amended Agreement. In addition, the Company believes that it will remain in compliance and that its ability to borrow funds under the Amended Agreement will not be adversely affected by the covenants and restrictions. The interest rates on borrowings under the Amended Agreement are, at the Company’s option, the Base Rate or the Eurocurrency Rate, as defined in the Amended Agreement, plus an applicable margin. The applicable margin for the term loan A facility and the revolving credit facility is linked to the Company’s Total Leverage Ratio and ranges from 1.25% to 1.75% for Eurocurrency Rate loans and from 0.25% to 0.75% for Base Rate loans. In addition, a facility fee is payable on the revolving credit facility commitments ranging from 0.20% to 0.30% per annum linked to the Total Leverage Ratio. Borrowings under the Amended Agreement are secured by substantially all of the assets, excluding real estate and certain other excluded assets, of certain of the Company’s domestic subsidiaries and certain foreign subsidiaries. Borrowings are also secured by a pledge of intercompany debt and equity investments in certain of the Company’s domestic subsidiaries and, in the case of foreign borrowings, of stock of certain foreign subsidiaries. All borrowings under the Amended Agreement are guaranteed by certain domestic subsidiaries of the Company. In March 2017, the Company expanded its borrowings under the Senior Notes due 2024 by issuing €225 million of additional notes that bear interest at 3.125% and are due November 15, 2024. The notes were issued via a private placement and are guaranteed by certain of the Company‘s domestic subsidiaries. The net proceeds, after deducting debt issuance costs, totaled approximately $237 million and were used to repay a portion of the Company’s revolving credit facility. During March 2017, the Company purchased in a tender offer approximately $228 million aggregate principal amount of its 7.80% Senior Debentures due in 2018. In November 2017, the remaining $22 million of the 7.80% Senior Debentures were repurchased by the Company, the indenture relating thereto was discharged, and all collateral and guarantees thereunder were released. In 2017, the Company recorded $18 million of additional interest charges for note repurchase premiums and the write-off of unamortized finance fees related to these actions. During December 2017, the Company issued senior notes with a face value of $310 million that bear interest at 4.00% and are due March 15, 2023. The notes were issued via a private placement and are guaranteed by certain of the Company‘s domestic subsidiaries. The net proceeds, after deducting debt issuance costs, totaled approximately $305 million and were used to repay a portion of the term loan A facility under the Amended Agreement. In order to maintain a capital structure containing appropriate amounts of fixed and floating-rate debt, the Company has entered into a series of interest rate swap agreements. These swap agreements were accounted for as fair value hedges (see Note 4). The Company assesses its capital raising and refinancing needs on an ongoing basis and may enter into additional credit facilities and seek to issue equity and/or debt securities in the domestic and international capital markets if market conditions are favorable. Also, depending on market conditions, the Company may elect to repurchase portions of its debt securities in the open market. The Company has a €185 million European accounts receivable securitization program, which extends through March 2019, subject to periodic renewal of backup credit lines. Information related to the Company’s accounts receivable securitization program is as follows:
|  | March 31, |  | December 31, |  | March 31, |
|  | 2018 |  | 2017 |  | 2017 |
Balance (included in short-term loans) |  | $ | 144 |  | $ | 133 |  | $ | 148 |
Weighted average interest rate |  |  | 1.01 | % |  | 0.76 | % |  | 0.88 | %
The carrying amounts reported for the accounts receivable securitization program, and certain long-term debt obligations subject to frequently redetermined interest rates, approximate fair value. Fair values for the Company’s significant fixed rate debt obligations are based on published market quotations, and are classified as Level 1 in the fair value hierarchy. Fair values at March 31, 2018 of the Company’s significant fixed rate debt obligations are as follows:
|  | Principal |  | Indicated |  |  |
|  | Amount |  | Market Price |  | Fair Value |
Senior Notes: |  |  |  |  |  |  |  |  |  |
6.75%, due 2020 (€500 million) |  | $ | 616 |  | $ | 114.41 |  | $ | 704 |
4.875%, due 2021 (€330 million) |  |  | 406 |  |  | 110.78 |  |  | 450 |
5.00%, due 2022 |  |  | 500 |  |  | 101.50 |  |  | 508 |
5.875%, due 2023 |  |  | 700 |  |  | 103.89 |  |  | 727 |
4.00%, due 2023 |  |  | 310 |  |  | 95.53 |  |  | 296 |
3.125%, due 2024 (€725 million) |  |  | 893 |  |  | 101.91 |  |  | 910 |
6.375%, due 2025 |  |  | 300 |  |  | 107.60 |  |  | 323 |
5.375%, due 2025 |  |  | 300 |  |  | 101.40 |  |  | 304 |

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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 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: 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 + Details
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