Debt

12 Months Ended

Dec. 31, 2023

Debt Disclosure [Abstract]

Debt

Debt

The following is a summary of outstanding debt at December 31, (in millions):

	2023		2022
4.000% senior notes due 2024	$	198	$	196
4.875% senior notes due 2025	498		496
3.900% senior notes due 2025	47		47
4.200% senior notes due 2026	1,980		1,978
6.375% senior notes due 2027	488		483
6.625% senior notes due 2029	486		481
5.375% senior notes due 2036	417		417
5.500% senior notes due 2046	658		658
Revolving credit facility	131		225
Commercial paper	—		359
Receivables facility	—		35
Other debt	1		2
Total debt	4,904		5,377
Short-term debt and current portion of long-term debt	(329)		(621)
Long-term debt	$	4,575	$	4,756

Senior Notes

On August 21, 2023, Moody's Corporation (“Moody’s”) downgraded the Company’s debt ratings to “Ba2”. As a result of Moody’s downgrade, certain of the Company’s outstanding senior notes currently aggregating to approximately $3.1 billion (the “Coupon-Step Notes”) are subject to an interest rate adjustment of 25 basis points. The change to the interest rate due to the downgrade will increase the Company’s interest expense by approximately $8 million on an annualized basis (approximately $2 million in 2023).

On August 3, 2023, S&P Global Inc. (“S&P”) downgraded the Company’s debt ratings to “BB”. In March 2023, S&P had also downgraded the Company’s debt ratings to “BB+”. As a result of the S&P downgrades, the Company’s Coupon-Step Notes are subject to an aggregated interest rate adjustment of 50 basis points. The change to the interest rate due to the downgrade will increase the Company’s interest expense by approximately $15 million on an annualized basis (approximately $8 million in 2023). Furthermore, as a result of the March S&P downgrade, the Company’s ability to borrow from the commercial paper market on terms it deems acceptable or favorable was eliminated.

On February 9, 2024, Moody’s downgraded the Company’s senior unsecured debt rating to “Ba3”, subjecting the Coupon-Step Notes to an additional interest rate adjustment of 25 basis points. The change to the interest rate due to the downgrade will further increase the Company’s interest expense by approximately $8 million on an annualized basis (approximately $6 million in 2024).

On February 14, 2024, S&P downgraded the Company’s debt ratings to “BB-”, subjecting the Company’s Coupon-Step Notes to an additional interest rate adjustment of 25 basis points, which will increase interest expense by approximately $8 million on an annualized basis (approximately $6 million in 2024).

The S&P and Moody’s downgrades will increase the Company’s annual interest expense by approximately $39 million.

On February 14, 2023, Fitch Ratings downgraded the Company’s Long-Term Issuer Default Rating to “BB”, then to “B+” on November 1, 2023. These downgrades did not impact the interest rates on any of the Company’s senior notes.

Receivables Facility

The Company maintained an Accounts Receivable Securitization Facility (the “Securitization Facility”). The aggregate commitment under the Securitization Facility was $375 million. The Securitization Facility matured on October 2, 2023 and was terminated thereafter.

Revolving Credit Facility

As of December 31, 2023, the Company maintained a $1.5 billion Credit Revolver maturing in August 2027. On March 27, 2023, the Company entered into the First Amendment to (i) include non-cash expenses resulting from grants of stock awards among the items that may be added to Consolidated Net Income when calculating Consolidated Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), as defined in the First Amendment, and (ii) lower the Interest Coverage Ratio, as defined in the First Amendment, for the fiscal quarters ending on June 30, 2023, September 30, 2023, December 31, 2023 and March 31, 2024.

The Credit Revolver provides for the issuance of up to $150 million of letters of credit, so long as there is sufficient availability for borrowing under the Credit Revolver. At December 31, 2023, the Company had $131 million of outstanding borrowings under the Credit Revolver and approximately $20 million of outstanding standby letters of credit issued against the Credit Revolver, with a net availability of approximately $1.3 billion.

As disclosed in the Company’s Current report on Form 8-K filed with the SEC on February 9, 2024, the Company, certain of its subsidiaries, as subsidiary borrowers, and certain of its subsidiaries, as subsidiary guarantors, entered into the Second Amendment.

The Second Amendment, among other things, (i) reduces the commitments of the lenders from $1.5 billion to $1.0 billion, (ii) replaces the Company’s existing Total Indebtedness to Total Capitalization and Interest Coverage Ratio financial covenants with new financial covenants testing the Company’s Collateral Coverage Ratio and Total Net Leverage Ratio (each as defined in the Second Amendment), (iii) requires the Company and the Guarantors to guarantee all obligations under the Credit Revolver including, without limitation, obligations in respect of extensions of credit to any of the borrowers, certain hedging obligations, certain cash management obligations, and certain supply chain financing obligations, and (iv) requires the Company and the other Guarantors to grant a lien and security interest in certain of its assets consisting of eligible accounts receivable, eligible inventory, eligible equipment and eligible intellectual property, and all products and proceeds of the foregoing.

Future Debt Maturities

The Company’s debt maturities for the five years following December 31, 2023 and thereafter are as follows (in millions):

2024	2025	2026	2027	2028	Thereafter	Total
$332	$547	$1,985	$500	$2	$1,586	$4,952

Other

The indentures governing the Company’s senior notes contain usual and customary nonfinancial covenants. The Company’s borrowing arrangements other than the senior notes contain usual and customary nonfinancial covenants and certain financial covenants, including minimum interest coverage and maximum debt-to-total-capitalization ratios.

Weighted average interest rates for the years ended December 31, are as follows:

	2023	2022	2021
Total debt	5.2%	4.3%	4.7%
Short-term debt	6.9%	4.0%	0.9%

At December 31, 2023 and 2022, unamortized deferred debt issue costs were $24 million and $30 million, respectively. These costs are included in total debt and are being amortized over the respective terms of the underlying debt.

The fair values of the Company’s senior notes are based on quoted market prices and are as follows at December 31, (in millions):

	2023				2022
	Fair Value		Book Value		Fair Value		Book Value
Senior notes	$	4,633	$	4,772	$	4,511	$	4,756

The carrying amounts of all other significant debt approximates fair value.