Debt

9 Months Ended

Sep. 28, 2019

Debt

Short-term borrowings, including current portion of long-term debt, consists of the following:



	September 28, 2019		December 31, 2018
6.00% notes, due 2020	$	209,278	$	—
Borrowings on lines of credit	75,000		180,000
Other short-term borrowings	72,565		66,257
	$	356,843	$	246,257

Other short-term borrowings are primarily utilized to support working capital requirements. The weighted-average interest rate on these borrowings was 4.35% and 2.49% at September 28, 2019 and December 31, 2018, respectively.

The company has $200,000 in uncommitted lines of credit. There were $75,000 and $180,000 of outstanding borrowings under the uncommitted lines of credit at September 28, 2019 and December 31, 2018, respectively. These borrowings were provided on a short-term basis and the maturity is agreed upon between the company and the lender. The lines had a weighted-average effective interest rate of 2.88% and 3.39% at September 28, 2019 and December 31, 2018, respectively.

The company has a commercial paper program and the maximum aggregate balance of commercial paper outstanding may not exceed the borrowing capacity of $1,200,000. The company had no outstanding borrowings under this program at September 28, 2019 and December 31, 2018. The program had a weighted-average effective interest rate of 2.74% and 2.93% at September 28, 2019 and December 31, 2018, respectively.

Long-term debt consists of the following:



	September 28, 2019		December 31, 2018
Revolving credit facility	$	35,000	$	—
Asset securitization program	680,000		810,000
6.00% notes, due 2020	—		209,147
5.125% notes, due 2021	130,655		130,546
3.50% notes, due 2022	347,885		347,288
4.50% notes, due 2023	298,014		297,622
3.25% notes, due 2024	494,803		494,091
4.00% notes, due 2025	346,214		345,762
7.50% senior debentures, due 2027	109,837		109,776
3.875% notes, due 2028	494,507		494,095
Other obligations with various interest rates and due dates	5,378		788
	$	2,942,293	$	3,239,115

The 7.50% senior debentures are not redeemable prior to their maturity. All other notes may be called at the option of the company subject to “make whole” clauses.

The estimated fair market value, using quoted market prices, is as follows:



	September 28, 2019		December 31, 2018
6.00% notes, due 2020	$	213,000	$	214,500
5.125% notes, due 2021	135,000		134,500
3.50% notes, due 2022	357,500		345,000
4.50% notes, due 2023	315,500		303,500
3.25% notes, due 2024	508,000		467,000
4.00% notes, due 2025	364,000		340,500
7.50% senior debentures, due 2027	136,000		128,000
3.875% notes, due 2028	512,500		458,500

The carrying amount of the company’s short-term borrowings in various countries, revolving credit facility, asset securitization program, commercial paper, and other obligations approximate their fair value.

The company has a $2,000,000 revolving credit facility maturing in December 2023. This facility may be used by the company for general corporate purposes including working capital in the ordinary course of business, letters of credit, repayment, prepayment or purchase of long-term indebtedness, acquisitions, and as support for the company’s commercial paper program, as applicable. Interest on borrowings under the revolving credit facility is calculated using a base rate or a Eurocurrency rate plus a spread (1.18% at September 28, 2019), which is based on the company’s credit ratings, or an effective interest rate of 3.00% at September 28, 2019. The facility fee, which is based on the company’s credit ratings, was .20% of the total borrowing capacity at September 28, 2019. The company had $35,000 in outstanding borrowings under the revolving credit facility at September 28, 2019 and no outstanding borrowings under the revolving credit facility at December 31, 2018.

The company has an asset securitization program collateralized by accounts receivable of certain of its subsidiaries. The company may borrow up to $1,200,000 under the asset securitization program, which matures in June 2021. The asset securitization program is conducted through Arrow Electronics Funding Corporation (“AFC”), a wholly-owned, bankruptcy remote subsidiary. The asset securitization program does not qualify for true sale treatment. Accordingly, the accounts receivable and related debt obligation remain on the company’s consolidated balance sheets. Interest on borrowings is calculated using a base rate plus a spread (.40% at September 28, 2019), or an effective interest rate of 2.49% at September 28, 2019. The facility fee is .40% of the total borrowing capacity.

At September 28, 2019 and December 31, 2018, the company had $680,000 and $810,000, respectively, in outstanding borrowings under the asset securitization program, which was included in “Long-term debt” in the company’s consolidated balance sheets. Total collateralized accounts receivable of approximately $2,539,493 and $2,754,400, respectively, were held by AFC and were included in “Accounts receivable, net” in the company’s consolidated balance sheets. Any accounts receivable held by AFC would likely not be available to other creditors of the company in the event of bankruptcy or insolvency proceedings before repayment of any outstanding borrowings under the asset securitization program.

Both the revolving credit facility and asset securitization program include terms and conditions that limit the incurrence of additional borrowings and require that certain financial ratios be maintained at designated levels. The company was in compliance with all covenants as of September 28, 2019 and is currently not aware of any events that would cause non-compliance with any covenants in the future.

During 2018, the company redeemed $300,000 principal amount of its 3.00% notes due March 2018.

In the normal course of business, certain of the company’s subsidiaries have agreements to sell, without recourse, selected trade receivables to financial institutions. The company does not retain financial or legal interests in these receivables, and, accordingly they are accounted for as sales of the related receivables and the receivables are removed from the company’s consolidated balance sheets. Financing costs related to these transactions were not material and are included in “Interest and other financing expense, net” in the company’s consolidated statements of operations.

Interest and other financing expense, net, includes interest and dividend income of $13,501 and $42,038 for the third quarter and first nine months of 2019, respectively. Interest and other financing expense, net, includes interest and dividend income of $12,986 and $33,543 for the third quarter and first nine months of 2018, respectively.