Debt

3 Months Ended

Mar. 31, 2024

Debt Disclosure [Abstract]

Debt

Debt

Debt is comprised of the following at the dates indicated (in millions):

	March 31, 2024		December 31, 2023
4.00% senior notes due 2024 (1)	$	198	$	198
4.875% senior notes due 2025	498		498
3.90% senior notes due 2025	47		47
4.20% senior notes due 2026	1,980		1,980
6.375% senior notes due 2027	480		488
6.625% senior notes due 2029	476		486
5.375% senior notes due 2036	417		417
5.50% senior notes due 2046	658		658
Revolving credit facility (1)	231		131
Other debt	2		1
Total debt	4,987		4,904
Short-term debt and current portion of long-term debt	(429)		(329)
Long-term debt	$	4,558	$	4,575

(1)Included in short-term debt and current portion of long-term debt

Senior Notes

On February 9, 2024, Moody’s Corporation (“Moody’s”) downgraded the Company’s senior unsecured debt rating to “Ba3”. 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”) were subject to an interest rate increase 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 $6 million in 2024).

On February 14, 2024, S&P Global Inc. (“S&P”) downgraded the Company’s debt rating to “BB-”. As a result of the S&P downgrade, the Coupon-Step Notes were subject to an additional interest rate increase 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 $6 million in 2024).

The S&P and Moody’s downgrades will collectively increase the Company’s interest expense by approximately $16 million in the aggregate on an annualized basis (approximately $12 million in 2024).

Revolving Credit Facility

The Company had a $1.5 billion senior unsecured revolving credit facility (the “Credit Revolver”) maturing in August 2027. On March 27, 2023, the Company entered into an amendment (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.

On February 7, 2024, the Company, certain of its subsidiaries, as subsidiary borrowers, and certain of its subsidiaries, as subsidiary guarantors, entered into a second amendment to the Credit Revolver agreement (the “Second Amendment”). The Second Amendment, among other things, (i) reduced the commitments of the lenders from $1.5 billion to $1.0 billion (ii) replaced the Company’s existing financial covenants with new financial covenants testing the Company’s Collateral Coverage Ratio and Total Net Leverage Ratio (each further defined in the Second Amendment), (iii) required the Company and certain of the Company’s domestic and foreign subsidiaries (collectively 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) required 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, subject to certain limitations. See Footnote 1 for further information with respect to the Company’s SCF Program.

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 March 31, 2024, the Company had $231 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 $749 million.

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 collateral coverage and net leverage ratios.

Weighted average interest rates are as follows:

	Three Months Ended  March 31,
	2024		2023
Total debt	5.6	%	4.8	%
Short-term debt	8.3	%	6.1	%

The fair value of the Company’s senior notes are based upon prices of similar instruments in the marketplace and are as follows (in millions):

	March 31, 2024				December 31, 2023
	Fair Value		Book Value		Fair Value		Book Value
Senior notes	$	4,591	$	4,754	$	4,633	$	4,772

The carrying amounts of all other debt approximates fair value.