Debt

6 Months Ended

Jun. 30, 2021

DEBT

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


(in millions)	June 30, 2021		December 31, 2020

2019 Credit Agreement (a)	$	221.3	$	209.4
Finance lease obligations (b)	2.3		0.6
Total long-term borrowings and finance lease obligations, including current portion	223.6		210.0

Less: Current finance lease obligations (b)	0.6		0.2
Total long-term borrowings and finance lease obligations	$	223.0	$	209.8

(a) Defined as the Second Amended and Restated Credit Agreement, dated July 30, 2019. Amounts at June 30, 2021 include incremental borrowings to fund a portion of the OSW acquisition - see Note 2 – Acquisitions.

(b) Amounts at June 30, 2021 include finance lease obligations acquired in connection with the OSW acquisition - see Note 2 – Acquisitions.

As more fully described within Note 13 – 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, 2021				December 31, 2020
(in millions)	Notional Amount		Fair Value		Notional Amount		Fair Value

Long-term borrowings (a)	$	223.6	$	223.6	$	210.0	$	210.0

(a) Long-term borrowings includes current finance lease obligations of $0.6 million and $0.2 million as of June 30, 2021 and December 31, 2020, respectively.

Borrowings under the 2019 Credit Agreement bear interest, at the Company’s option, at a base rate or a London Interbank Offered Rate (“LIBOR”) rate, plus, in each case, an applicable margin. The applicable margin ranges from zero to 0.75% for base rate borrowings and 1.00% to 1.75% for LIBOR borrowings. The Company must also pay a commitment fee to the lenders ranging between 0.10% to 0.25% per annum on the unused portion of the $500 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 net leverage ratio and interest coverage ratio financial covenants under the 2019 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, 2021.

As of June 30, 2021, there was $221.3 million of cash drawn and $10.3 million of undrawn letters of credit under the 2019 Credit Agreement, with $268.4 million of net availability for borrowings. As of December 31, 2020, there was $209.4 million cash drawn and $10.3 million of undrawn letters of credit under the 2019 Credit Agreement, with $280.3 million of net availability for borrowings.

The following table summarizes the gross borrowings and gross payments under the Company’s revolving credit facilities:


	Six Months Ended June 30,
(in millions)	2021		2020
Gross borrowings	$	109.0	$	81.1
Gross payments	99.0		53.4

Interest Rate Swap

On October 2, 2019, the Company entered into an interest rate swap (the “Swap”) with a notional amount of $75.0 million, as a means of fixing the floating interest rate component on $75.0 million of its variable-rate debt. The Swap is designated as a cash flow hedge, with a maturity date of July 30, 2024.

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. The Company does not use derivative instruments for trading or speculative purposes.

The fair value of the Company’s interest rate swaps 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, 2021, the fair value of the Swap was a liability of $1.9 million, which was included in Other long-term liabilities on the Condensed Consolidated Balance Sheet. At December 31, 2020, the fair value of the Swap was a liability of $3.0 million, which was included in Other long-term liabilities on the Condensed Consolidated Balance Sheet. During the three months ended June 30, 2021, no unrealized pre-tax gain or loss was recorded in Accumulated other comprehensive loss, whereas during the six months ended June 30, 2021, an unrealized pre-tax gain of $1.1 million was recorded. No ineffectiveness was recorded in either period. During the three and six months ended June 30, 2020, unrealized pre-tax losses of $0.4 million and $4.4 million, respectively, were recorded to Accumulated other comprehensive loss, and no ineffectiveness was recorded.