DEBT AND INTEREST

12 Months Ended

Dec. 31, 2022

DEBT AND INTEREST

DEBT AND INTEREST

7. DEBT AND INTEREST

Short-term Debt

The following table provides the components of the Company’s short-term debt obligations, along with applicable interest rates as of December 31, 2022 and 2021:

	2022				2021
			Average				Average
	Carrying		Interest		Carrying		Interest
(millions)	Value		Rate		Value		Rate
Short-term debt
Commercial paper		$-	-	%		$400.0	0.28	%
Notes payable		3.7	7.28	%		8.5	7.95	%
Long-term debt, current maturities		501.4				2.5
Total		$505.1				$411.0

Line of Credit

As of December 31, 2022, the Company had in place a $2.0 billion multi-currency revolving credit facility which expires in April 2026. The credit facility has been established with a diverse syndicate of banks and supports the Company’s U.S. and Euro commercial paper programs. There were no borrowings under the Company’s credit facility as of December 31, 2022 and 2021.

The Company has $337 million of available bank supported letters of credit, surety bonds and guarantees available in support of its commercial business transactions of which $144 million is outstanding as of December 31, 2022.

Commercial Paper

The Company’s commercial paper program is used as a potential source of liquidity and consists of a $2.0 billion U.S. commercial paper program and a $2.0 billion Euro commercial paper program. The maximum aggregate amount of commercial paper that may be issued by the Company under its commercial paper programs may not exceed $2.0 billion.

The Company had $400 million outstanding commercial paper under its U.S. program as of December 31, 2021.

As of December 31, 2022, the Company’s short-term borrowing program was rated A-2 by Standard & Poor’s, P-2 by Moody’s and F-1 by Fitch.

Notes Payable

The Company’s notes payable consists of uncommitted credit lines with major international banks and financial institutions, primarily to support global cash pooling structures. As of December 31, 2022 and 2021, the Company had $3.7 million and $8.5 million, respectively, outstanding under these credit lines. Approximately $1,925 million and $1,628 million of these credit lines were available for use as of December 31, 2022 and 2021, respectively.

Long-term Debt

The following table provides the components of the Company’s long-term debt obligations, along with applicable interest rates as of December 31, 2022 and 2021:

		2022								2021
				Stated		Effective				Stated		Effective
	Maturity	Carrying		Interest		Interest		Carrying		Interest		Interest
(millions)	by Year	Value		Rate		Rate		Value		Rate		Rate
Long-term debt
Public notes (2022 principal amount)
Two year 2021 senior notes ($500 million)	2023		$498.7	0.90	%	1.19	%		$497.2	0.90	%	1.19	%
Seven year 2016 senior notes (€575 million)	2024		596.9	1.00	%	1.03	%		649.3	1.00	%	1.19	%
Ten year 2015 senior notes (€575 million)	2025		596.7	2.63	%	2.81	%		649.7	2.63	%	2.87	%
Ten year 2016 senior notes ($750 million)	2026		721.1	2.70	%	3.21	%		744.9	2.70	%	2.89	%
Ten year 2017 senior notes ($500 million)	2027		433.9	3.25	%	4.77	%		488.4	3.25	%	2.89	%
Six Year 2021 senior notes ($500 million)	2027		496.5	1.65	%	1.83	%		495.7	1.65	%	1.84	%
Five Year 2022 senior notes ($500 million)	2028		492.7	5.25	%	5.36	%		-	-	%	-	%
Ten year 2020 senior notes ($698 million)	2030		653.5	4.80	%	3.72	%		709.1	4.80	%	4.06	%
Ten year 2020 senior notes ($600 million)	2031		555.2	1.30	%	1.70	%		593.4	1.30	%	1.39	%
Eleven year 2021 senior notes ($650 million)	2032		644.6	2.13	%	2.24	%		644.0	2.13	%	2.24	%
Thirty year 2011 senior notes ($389 million)	2041		384.5	5.50	%	5.62	%		384.3	5.50	%	5.63	%
Thirty year 2016 senior notes ($200 million)	2046		197.3	3.70	%	3.81	%		197.2	3.70	%	3.81	%
Thirty year 2017 senior notes ($484 million)	2047		425.5	3.95	%	4.79	%		424.3	3.95	%	4.80	%
Thirty year 2020 senior notes ($500 million)	2050		490.7	2.13	%	2.23	%		490.4	2.13	%	2.24	%
Thirty year 2021 senior notes ($850 million)	2051		838.9	2.70	%	2.78	%		838.5	2.70	%	2.78	%
Thirty-four year 2021 senior notes ($685 million)	2055		537.2	2.75	%	3.86	%		535.3	2.75	%	3.87	%
Finance lease obligations and other			12.8						8.0
Total debt			8,576.7						8,349.7
Long-term debt, current maturities			(501.4)						(2.5)
Total long-term debt			$8,075.3						$8,347.2

Public Notes

In November 2022, the Company issued $500 million in aggregate principal five year fixed rate notes with a coupon rate of 5.25% (“New 5-Year Note”). The proceeds are intended to be used for general corporate purposes, which may include, without limitation, repayment of commercial paper borrowings or other indebtedness. The notes mature January 2028.

In December 2021, the Company issued $2.5 billion in notes to repay the $3.0 billion delayed draw term loan used to fund the Purolite acquisition. These notes were comprised of $500 million 0.9% notes due 2023, $500 million 1.65% notes due 2027, $650 million 2.125% notes due 2032, and $850 million 2.7% notes due 2051.

In August 2021, the Company completed a private offering of a $300 million aggregate principal 34-year fixed rate notes with a coupon rate of 2.75% (“New 34-year Notes”). Immediately following the offering, the Company completed a private offering to exchange a portion of the outstanding senior notes due 2030, 2041, 2046, 2047 (“Old Notes”), for $385 million of New 34-year Notes. In connection with the exchange offering, $387 million of Old Notes were validly tendered and subsequently cancelled.

During the fourth quarter of 2021, pursuant to a registration rights agreement pertaining to the New 34-year Notes, the Company filed a registration statement regarding an offer to exchange each series of the New 34-year Notes for new issues of notes registered under the U.S. Securities Act of 1933, as amended. The registration statement was declared effective, and substantially all of the New 34-year Notes were exchanged. The terms of each series of the new notes are substantially identical to the terms of the applicable series of New 34-year Notes, except that the new notes are registered as mentioned above and the transfer restrictions and registration rights and related special interest provisions applicable to the New 34-year Notes do not apply to the new notes.

The New 34-year Notes bear a lower fixed coupon rate on an extended maturity date, compared with the Old Notes that were exchanged. There were no other significant changes to the terms between the Old Notes and the New 34-year Notes. The exchange was accounted for as a debt modification, and there were cash payments to the note holders of $118 million as a result of the exchange. Existing deferred financing costs associated with the Old Notes, as well as discounts associated with the New 34-year Notes aggregating $143 million, are being amortized over the term of the New 34-year Notes and recorded as interest expense.

In September 2021, the Company completed the retirement of the $500 million 2.375% Notes due 2022 and the $400 million 3.25% Notes due 2023 which was accounted for as a debt extinguishment. A make-whole premium of $25.0 million was expensed immediately and is reflected as a financing cash flow activity.

The Company’s public notes may be redeemed by the Company at its option at redemption prices that include accrued and unpaid interest and a make-whole premium. Upon the occurrence of a change of control accompanied by a downgrade of the public notes below investment grade rating, within a specified time period, the Company would be required to offer to repurchase the public notes at a price equal to 101% of the aggregate principal amount thereof, plus any accrued and unpaid interest to the date of repurchase. The public notes are senior unsecured and unsubordinated obligations of the Company and rank equally with all other senior and unsubordinated indebtedness of the Company.

Covenants and Future Maturities

The Company is in compliance with all covenants under the Company’s outstanding indebtedness at December 31, 2022.

As of December 31, 2022, the aggregate annual maturities of long-term debt for the next five years were:

(millions)
2023	$501
2024	607
2025	597
2026	721
2027	930

Net Interest Expense

Interest expense and interest income incurred during 2022, 2021 and 2020 were as follows:

(millions)	2022		2021		2020
Interest expense		$252.1		$230.6		$304.8
Interest income		(8.5)		(12.3)		(14.6)
Interest expense, net		$243.6		$218.3		$290.2

Interest expense generally includes the expense associated with the interest on the Company’s outstanding borrowings. Interest expense also includes the amortization of debt issuance costs and debt discounts, which are both recognized over the term of the related debt.

During 2021, the Company issued, exchanged and retired certain long-term debt, incurring debt refinancing charges of $32.3 million ($28.4 million after tax), which are included as a component of interest expense, net on the Consolidated Statements of Income.

During 2020, the Company retired certain long-term debt, and incurred debt refinancing charges of $83.1 million ($64.0 million after tax), which are included as a component of interest expense, net on the Consolidated Statements of Income.