Note H. Debt and Other Obligations

Long-term Obligations

The Company’s long-term obligations, the fiscal year in which they mature and their respective interest rates are summarized below:

	September 30
	2017			2016
	(In millions)
Variable Rate Debt:
Revolving Credit Facility, expires 2022	$	—		$	—
Total variable rate debt		—			—
Fixed Rate Debt:
2.55% Notes due 2018		250			250
3.7% Notes due 2022		350			350
3.4% Notes due 2026		250			250
Medium Term Notes:
Notes due 2019, 7.42%		30			30
Notes due 2022, 8.34% — 8.47%		15			15
Notes due 2028, 6.57% — 7.28%		8			8
Total Medium Term Notes		53			53
Chinese Renminbi Debt, due 2018, 4.75%		5			4
Total fixed rate debt		908			907
Capital lease obligations, due through 2033		13			13
Unamortized debt issuance costs and debt discount⁽¹⁾		(4	)		(5	)
Total debt		917			915
Less current portion of long-term debt		(256	)		(1	)
Total long-term debt	$	661		$	914

⁽¹⁾In fiscal 2017, the Company adopted a new accounting standard that impacts the presentation of debt issuance costs on the Consolidated Balance Sheets. This new standard was applied retrospectively and fiscal 2016 balances have been updated as discussed in Note A.

Revolving Credit Facility—The amount available for borrowing under the revolving credit agreement was $1 billion as of September 30, 2017. The revolving credit agreement, which matures on October 23, 2022, subsequent to the exercise of the two one-year options to extend the maturity on the first and second anniversaries of the effective date, supports the Company’s commercial paper program. Borrowings may be used for working capital, letters of credit and other general corporate purposes. The revolving credit agreement contains affirmative and negative covenants, a single financial covenant (consolidated total debt to consolidated EBITDA, as defined in the credit agreement) and events of default customary for financings of this type.

Chinese Renminbi Debt due fiscal 2018—The Company’s consolidated Chinese subsidiaries had $5 million and $4 million of unsecured long-term debt outstanding with a noncontrolling shareholder of a consolidated subsidiary as of September 30, 2017 and September 30, 2016, respectively.

2.55% Notes due fiscal 2018—In July 2012, Cabot issued $250 million in registered notes with a coupon of 2.55% that mature on January 15, 2018. These notes are unsecured and pay interest on January 15 and July 15. The net proceeds of this offering were $248 million after deducting discounts and issuance costs. The discount of less than $1 million was recorded at issuance and is being amortized over the life of the notes.

3.7% Notes due fiscal 2022—In July 2012, Cabot issued $350 million in registered notes with a coupon of 3.7% that mature on July 15, 2022. These notes are unsecured and pay interest on January 15 and July 15. The net proceeds of this offering were $347 million after deducting discounts and issuance costs. The discount of less than $1 million was recorded at issuance and is being amortized over the life of the notes.

3.4% Notes due fiscal 2026—In September 2016, Cabot issued $250 million in registered notes with a coupon of 3.4% that mature on September 15, 2026. These notes are unsecured and pay interest on March 15 and September 15. The net proceeds of this offering were $248 million after deducting discounts and issuance costs. The discount of less than $1 million was recorded at issuance and is being amortized over the life of the notes.

Medium Term Notes—At both September 30, 2017 and 2016, there were $53 million of unsecured medium term notes outstanding issued to numerous lenders with various fixed interest rates and maturity dates. The weighted average maturity of the total outstanding medium term notes is 4 years with a weighted average interest rate of 7.65%.

Capital Lease Obligations—Cabot had capital lease obligations for certain equipment and buildings with a recorded value of $13 million at both September 30, 2017 and 2016. Cabot will make payments totaling $20 million over the next 16 years, including $7 million of imputed interest. At September 30, 2017 and 2016, the original cost of capital lease assets was $20 million and $18 million, respectively, and the associated accumulated depreciation of assets under capital leases was $12 million and $10 million, respectively. The amortization related to those assets under capital lease is included in depreciation expense.

Future Years Payment Schedule

The aggregate principal amounts of long-term debt and capital lease obligations due in each of the five years from fiscal 2018 through 2022 and thereafter are as follows:

Years Ending September 30	Principal Payments on Long-Term Debt		Payments on Capital Lease Obligations			Total
	(In millions)
2018	$	255	$	3		$	258
2019		30		2			32
2020		—		2			2
2021		—		2			2
2022		365		2			367
Thereafter		258		9			267
Less: Interest		—		(7	)		(7	)
Total	$	908	$	13		$	921

Standby letters of credit—At September 30, 2017, the Company had provided standby letters of credit that were outstanding and not drawn totaling $12 million, which expire through fiscal 2018.

Short-term Obligations

Short-term Notes Payable—The Company had unsecured notes with maturities of less than one year of $7 million at both September 30, 2017 and 2016. The weighted-average interest rate on short-term notes payable was 8.1% and 9.5% as of September 30, 2017 and 2016, respectively.

The Company has a commercial paper program and the maximum aggregate balance of commercial paper notes outstanding and the amounts borrowed under the revolving credit facility may not exceed the borrowing capacity of $1 billion under the revolving credit facility. The proceeds from the issuance of the commercial paper have been used for general corporate purposes, which may include working capital, refinancing existing indebtedness, capital expenditures, share repurchases, and acquisitions. The revolving credit facility is available to repay the outstanding commercial paper, if necessary.

There was no outstanding balance of commercial paper as of September 30, 2017 or 2016.

Redeemable Preferred Stock

In November 2013, the Company purchased all of its joint venture partner’s common stock in the former NHUMO, S.A. de C.V. (“NHUMO”) joint venture. At the close of the transaction, NHUMO issued redeemable preferred stock to the joint venture partner with a redemption value of $25 million. The preferred stock accumulates dividends at a fixed rate of 6% annually and is redeemable at the option of the former joint venture partner or the Company for $25 million starting in November 2018 or upon the occurrence of certain other conditions. Annual payment of the dividends by NHUMO is contingent on NHUMO achieving a minimum EBITDA (earnings before interest, taxes, depreciation and amortization) level and if such minimum EBITDA is not achieved in any year, the dividend will be accumulated and paid at the time the preferred shares are redeemed. The minimum EBITDA was achieved in all fiscal years since the close of the transaction and dividend payments of $1.5 million were paid for each fiscal year with the exception of the fiscal 2017 payment, which was accrued as of September 30, 2017 and is due in December 2017. The preferred stock issued in connection with the transaction is not mandatorily redeemable and has embedded put and call rights at the fixed redemption price. Accordingly, the instrument is accounted for as a financing obligation and has been separately presented in the Consolidated Balance Sheets as a long-term liability.