Long-Term Debt

9 Months Ended

Sep. 28, 2019

The following table shows the carrying value of the Company’s debt (in millions):



	September 28, 2019			December 31, 2018
Term Loan A	$	1,000		$	608
Term Loan B	—			445
Revolving Credit Facility	292			408
Receivables Financing Facilities	236			139
Total debt	$	1,528		$	1,600
Less: Debt issuance costs	(6		)	(5		)
Less: Unamortized discounts	(3		)	(4		)
Less: Current portion of debt	(205		)	(157		)
Total long-term debt	$	1,314		$	1,434

As of September 28, 2019, the future maturities of debt, excluding debt discounts and issuance costs, were as follows (in millions):



2019	$	80
2020	150
2021	119
2022	56
2023	81
Thereafter	1,042
Total future debt maturities	$	1,528

All borrowings as of September 28, 2019 were denominated in U.S. Dollars, except for €92 million under the Revolving Credit Facility that was borrowed in Euros.

The estimated fair value of the Company’s debt approximated $1.5 billion and $1.6 billion as of September 28, 2019 and December 31, 2018, respectively. These fair value amounts, developed based on inputs classified as Level 2 within the fair value hierarchy, represent the estimated value at which the Company’s lenders could trade its debt within the financial markets and does not represent the settlement value of these liabilities to the Company. The fair value of the debt will continue to vary each period based on a number of factors including fluctuations in market interest rates, as well as changes to the Company’s credit ratings.

Credit Facilities

On August 9, 2019, the Company entered into Amendment No. 2 to the Amended and Restated Credit Agreement (“Amendment No. 2”). Amendment No. 2 increased the Company’s borrowing under Term Loan A from $608 million to $1 billion and increased the Company’s borrowing capacity under the Revolving Credit Facility from $800 million to $1 billion. Term Loan A and the Revolving Credit Facility will continue to bear interest at variable rates plus an applicable margin. The maturities of Term Loan A and the Revolving Credit Facility were each extended to August 9, 2024. In conjunction with entering into Amendment No. 2, a payment of $445 million was made to fully pay off Term Loan B. As of September 28, 2019, the Company has no further obligations under Term Loan B.

As amended, the principal on Term Loan A is due in quarterly installments starting in the fourth quarter of 2019, with the majority due upon its August 9, 2024 maturity. The Company may make prepayments against the amended Term Loan A, in whole or in part, without premium or penalty. The Company would be required to prepay certain outstanding amounts in the event of certain circumstances or transactions. As of September 28, 2019, the Term Loan A interest rate was 3.55%. Interest payments are made monthly.

The Revolving Credit Facility is available for working capital and other general corporate purposes, including letters of credit. As of September 28, 2019, the Company had letters of credit totaling $5 million, which reduced funds available for borrowings under the agreement from $1 billion to $995 million. As of September 28, 2019, the Revolving Credit Facility had an average interest rate of 3.00%. Interest payments are made monthly. All remaining principal is due upon the Revolving Credit Facility’s maturity on August 9, 2024.

The refinancing of the Company’s debt during the third quarter of 2019 resulted in non-cash accelerated amortization of debt discount and debt issuance costs of $4 million and one-time charges of $3 million, which included certain third party fees and the accelerated amortization of losses on terminated interest rate swaps released from AOCI. These items are included in Interest Expense, net on the Consolidated Statements of Operations.

Additionally, issuance costs of $6 million incurred related to this debt refinancing were capitalized and will be amortized over the remaining term of Term Loan A and the Revolving Credit Facility.

On May 31, 2018, the Company entered into Amendment No. 1 to the Amended and Restated Credit Agreement (“Amendment No. 1”). Amendment No. 1 resulted in a new Term Loan A with principal of $670 million and increased the Revolving Credit Facility from $500 million to $800 million. Also, as part of Amendment No. 1, the Company had a partial early debt termination of $300 million and repricing of its Term Loan B. Amendment No. 1 resulted in $6 million of non-cash accelerated amortization of debt issuance costs and $1 million of one-time charges related to third party fees associated with the Amendment, both of which were reflected in Interest Expense, net on the Consolidated Statements of Operations during the second quarter of 2018.

Receivables Financing Facilities

The Company has a Receivables Financing Facility with a financial institution that has a borrowing limit of up to $180 million. As collateral, the Company pledges a perfected first-priority security interest in its U.S. domestically originated accounts receivable. The Company has accounted for transactions under the Receivables Financing Facility as secured borrowings. As amended during the second quarter of 2019, the Receivables Financing Facility will mature on March 29, 2021.

During the second quarter of 2019, the Company entered into an Additional Receivable Financing Facility with another financial institution, which allows for additional borrowings of up to $100 million, and thus total borrowings of up to $280 million, using U.S. domestically originated accounts receivables as collateral. The Company has also accounted for transactions under this Additional Receivables Financing Facility as secured borrowings. The Additional Receivables Financing Facility will mature on May 18, 2020.

As of September 28, 2019, the Company’s Consolidated Balance Sheets included $439 million of receivables that were pledged under the two Receivables Financing Facilities, of which $236 million had been borrowed against. Borrowings under the Receivables Financing Facilities bear interest at a variable rate plus an applicable margin. As of September 28, 2019, the Receivables Financing Facilities had an average interest rate of 2.95% and require monthly interest payments.

Both the Revolving Credit Facility and Receivables Financing Facilities include terms and conditions that limit the incurrence of additional borrowings and require that certain financial ratios be maintained at designated levels.

The Company uses interest rate swaps to manage the interest rate risk associated with its debt. See Note 7, Derivative Instruments for further information.

As of September 28, 2019, the Company was in compliance with all debt covenants.