Note 14. Debt

The Company’s debt at December 31, 2016 and 2015 consisted of the following:

	2016			2015
Borrowings under the credit facility	$	185.0		$	—
8.60% senior notes due August 15, 2016		—			219.6
11.25% senior notes due February 1, 2019 _(a)		172.2			172.2
7.625% senior notes due June 15, 2020		350.0			350.0
7.875% senior notes due March 15, 2021		448.8			448.5
8.875% debentures due April 15, 2021		80.9			80.9
7.00% senior notes due February 15, 2022		140.0			140.0
6.50% senior notes due November 15, 2023		350.0			350.0
6.00% senior notes due April 1, 2024		400.0			400.0
6.625% debentures due April 15, 2029		199.5			199.5
8.820% debentures due April 15, 2031		69.0			69.0
Other _(b)		8.5			13.3
Unamortized debt issuance costs		(16.5	)		(24.3	)
Total debt		2,387.4			2,418.7
Less: current portion		(8.2	)		(231.9	)
Long-term debt	$	2,379.2		$	2,186.8

(a)

As of December 31, 2015, the interest rate on the 11.25% senior notes due February 1, 2019 was 12.75% as a result of downgrades in the ratings of the notes by the rating agencies. As a result of a ratings downgrade on February 2, 2016, the interest rate increased from 12.75% to 13.0% in February 2016. As a result of a ratings downgrade on October 6, 2016, the rate increased to 13.25%. The maximum interest rate on these notes is 13.25%.

(b)	Includes miscellaneous debt obligations and capital leases.

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The fair values of the senior notes and debentures, which were determined using the market approach based upon interest rates available to the Company for borrowings with similar terms and maturities, were determined to be Level 2 under the fair value hierarchy. The fair value of the Company’s total debt was greater than its book value by approximately $4.3 million at December 31, 2016 and less than its book value by approximately $39.7 million at December 31, 2015.

On September 30, 2016, the Company entered into an amended and restated Credit Agreement (the “Credit Agreement”) providing for $800.0 million in credit facilities (the “Revolving Facility”). The commitments under the Revolving Facility will expire, and any borrowings outstanding under the Revolving Facility will become due and payable, on September 30, 2021. The borrowings and any repayments of such borrowings, under the amended and restated Credit Agreement which began in October 2016, have been presented on a gross basis on the Consolidated Statements of Cash Flows and the borrowings are classified as long term. Interest rates on borrowings are equal to, at the Company’s option, a base rate plus a margin ranging from 1.125% to 1.50%, or LIBOR plus a margin ranging from 2.125% to 2.50%, in either case based upon the leverage ratio of RR Donnelley. In addition, the Company will pay a facility fee on the actual daily amount of the aggregate revolving commitments regardless of usage ranging from 0.375% to 0.50%, based upon the leverage ratio of the Company. As a result of the reduction in borrowing capacity, the Company recognized a $1.4 million loss related to unamortized debt issuance costs within loss on debt extinguishments in the Consolidated Statements of Operations for the period ended December 31, 2016.

The Credit Agreement is subject to a number of covenants, including a maximum Leverage Ratio, as defined and calculated pursuant to the Credit Agreement, that, in part, restrict the Company’s ability to incur additional indebtedness, create liens, engage in mergers and consolidations, make restricted payments and dispose of certain assets. The Credit Agreement generally allows annual dividend payments of up to $60.0 million in aggregate, though additional dividends may be allowed subject to certain conditions.

The weighted average interest rate on borrowings under the Company’s credit facility was 2.5% during the year ended December 31, 2016. The weighted average interest rate on borrowing under the Company’s credit facility was 2.0% during the year ended December 31, 2015.

Cash on hand and borrowings under the credit facility were used to pay the $219.8 million of 8.6% senior notes that matured on August 15, 2016.

Cash on hand and borrowings under the credit facility were used to pay the $200.0 million 5.50% senior notes that matured on May 15, 2015.

On April 1, 2014, cash on hand and borrowings under the credit facility were used to pay the $258.2 million 4.95% senior notes that matured on April 1, 2014.

On March 20, 2014, the Company issued $400.0 million of 6.00% senior notes due April 1, 2024. Interest on the notes is payable semi-annually on April 1 and October 1, and commenced on October 1, 2014. The net proceeds from the offering along with borrowings under the Credit Agreement were used to repurchase $211.1 million of the 8.25% senior notes due March 15, 2019, $100.0 million of the 7.25% senior notes due May 15, 2018, and $50.0 million of the 7.625% senior notes due June 15, 2020. The repurchases resulted in a pre-tax loss on debt extinguishment of $77.1 million for the year ended December 31, 2014 related to the premiums paid, unamortized debt issuance costs, elimination of the $2.8 million fair value adjustment on the 8.25% senior notes and other expenses.

As of December 31, 2016, the Company had $77.8 million in outstanding letters of credit, of which $57.7 million were issued under the Credit Agreement. The letters of credit issued under the Credit Agreement did not reduce availability under the Credit Agreement at December 31, 2016, as the amounts issued were less than the reduction in availability from the Leverage Ratio covenant. As of December 31, 2016, the Company also had $140.4 million in other uncommitted credit facilities, primarily outside the U.S., (the “Other Facilities”). As of December 31, 2016, bank acceptance drafts, letters of credit and guarantees of $67.8 million were issued, and reduced availability, under the Company’s Other Facilities. As of December 31, 2016 and 2015, total borrowings under the Credit Agreement and the Other Facilities (the “Combined Facilities”) were $192.5 million and $11.2 million, respectively.

At December 31, 2016, the future maturities of debt, including capitalized leases, were as follows:

	Amount
2017	$	8.2
2018		0.2
2019		172.2
2020		350.0
2021		716.0
2022 and thereafter		1,159.0
Total ^(a)	$	2,405.6

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(a)	Excludes unamortized debt issuance costs of $16.5 million and $1.7 million of bond discount which do not represent contractual commitments with a fixed amount or maturity date.

Spinoff Transactions

In connection with the spinoff transactions, the Company, Donnelley Financial and LSC executed various debt transactions in order to capitalize each company. As these debt transactions were executed in order to successfully complete the spinoff capitalization transactions, the Company has classified the corporate level debt repurchased, resulting losses on debt extinguishments and all related interest expense as discontinued operations or liabilities held for disposition.

On September 30, 2016, the Company’s then wholly-owned subsidiary Donnelley Financial issued senior notes and incurred a senior secured term loan B facility with total aggregate principals of $300.0 million and $350.0 million, respectively. Additionally on September 30, 2016, the Company’s then wholly-owned subsidiary LSC issued senior notes and incurred a senior secured term loan B facility with total aggregate principals of $450.0 million and $375.0 million, respectively. All of the related net proceeds were distributed to the Company in connection with the Separation. After the Separation, RR Donnelley has no obligations as it relates to these senior notes, senior secured term loan B facilities or any other LSC or Donnelley Financial indebtedness.

On August 31, 2016, the Company and certain third party financial institutions (such financial institutions collectively, the “Third Party Purchasers”), launched cash tender offers for certain of the Company’s outstanding debt securities, including the Company’s 6.125% senior notes due January 15, 2017 (the “2017 Notes”), 7.250% senior notes due May 15, 2018 the (“2018 Notes”), 8.250% senior notes due March 15, 2019 (the “2019 Notes”) and 7.000% senior notes due February 15, 2022 (the “2022 Notes”). On September 16, 2016, the Third Party Purchasers purchased $274.4 million in aggregate principal amount of the 2017 Notes and 2018 Notes (the “Third Party Purchase Notes”). On September 30, 2016, the Company purchased approximately $503.6 million in aggregate principal amount of the 2017 Notes, the 2018 Notes, the 2019 Notes and the 2022 Notes (the “Company Purchase Notes”), and exchanged $300.0 million in aggregate principal amount of the Donnelley Financial senior notes for the Third Party Purchase Notes. The Company cancelled the Third Party Purchase Notes and Company Purchase Notes on September 30, 2016. As a result, the Company recognized an $85.3 million loss on debt extinguishments in the period ending December 31, 2016 related to premiums and other related transaction costs within net earnings from discontinued operations.

On October 6, 2016, the Company redeemed the outstanding $45.8 million principal amount of the 2018 Notes and the outstanding $21.3 principal amount of the 2019 Notes plus accrued and unpaid interest. Additionally, the Company redeemed the outstanding $155.2 million aggregate principal of the 2017 Notes on November 2, 2016. As a result, the Company recognized an additional $10.8 million loss on debt extinguishments within net earnings of discontinued operations in the fourth quarter of 2016.

Interest expense

The following table summarizes interest expense included in the Consolidated Statements of Operations:

	2016			2015			2014
Interest incurred	$	206.1		$	211.6		$	220.9
Less: interest income		(4.6	)		(3.7	)		(6.1	)
Less: interest capitalized as property, plant and equipment		(2.8	)		(3.8	)		(3.6	)
Interest expense, net	$	198.7		$	204.1		$	211.2

Interest paid, net of interest received, was $272.7 million, $272.5 million and $275.2 million in 2016, 2015 and 2014, respectively.