NOTE E – BORROWINGS AND CREDIT ARRANGEMENTS

We had total debt of $5.616 billion as of December 31, 2017 and $5.484 billion as of December 31, 2016. The debt maturity schedule for the significant components of our long-term debt obligations is presented below:



			As of December 31,						Semi-annual Coupon Rate
in millions, except interest rates	Issuance Date	Maturity Date	2017			2016			Semi-annual Coupon Rate
January 2017 Notes	November 2004	January 2017	$	—		$	250		5.125	%
August 2018 Term Loan	August 2013	August 2018	—			150
October 2018 Notes	August 2013	October 2018	*			600			2.650	%
January 2020 Notes	December 2009	January 2020	850			850			6.000	%
May 2020 Notes	May 2015	May 2020	600			600			2.850	%
August 2020 Term Loan	August 2015	August 2020	—			600
May 2022 Notes	May 2015	May 2022	500			500			3.375	%
October 2023 Notes	August 2013	October 2023	450			450			4.125	%
May 2025 Notes	May 2015	May 2025	750			750			3.850	%
November 2035 Notes	November 2005	November 2035	350			350			7.000	%
January 2040 Notes	December 2009	January 2040	300			300			7.375	%
Unamortized Debt Issuance Discount		2018 - 2040	(6		)	(8		)
Unamortized Deferred Financing Costs		2018 - 2040	(18		)	(24		)
Unamortized Gain on Fair Value Hedges		2020-2025	38			51
Capital Lease Obligation		Various	1			1
Long-term debt			$	3,815		$	5,420

*As of December 31, 2017, the $600 million under the October 2018 Notes is outstanding and classified as short-term debt.



	Note:	The table above does not include unamortized amounts related to interest rate contracts designated as cash flow hedges.

Revolving Credit Facility

On August 4, 2017, we entered into a $2.250 billion revolving credit facility (the 2017 Facility) with a global syndicate of commercial banks and terminated our previous $2.000 billion revolving credit facility (the 2015 Facility), which was scheduled to mature in April 2020. The 2017 Facility will mature on August 4, 2022. Eurodollar and multicurrency loans under the 2017 Facility bear interest at LIBOR plus an interest margin of between 0.90 percent and 1.50 percent, based on our corporate credit ratings (1.10 percent as of December 31, 2017). Under the credit agreement for the 2017 Facility (the 2017 Credit Agreement), we are required to pay a facility fee (0.15 percent as of December 31, 2017) based on our credit ratings and the total amount of revolving credit commitment, regardless of usage of the 2017 Facility. This facility provides backing for the commercial paper program described below. There were no amounts borrowed under our current or prior revolving credit facilities as of December 31, 2017 or December 31, 2016.

The 2017 Credit Agreement requires that we maintain certain financial covenants, as follows:



	Covenant Requirement as of December 31, 2017	Actual as of December 31, 2017
Maximum leverage ratio (1)	3.5 times	2.2 times

(1) Ratio of total debt to consolidated EBITDA, as defined by the credit agreement, for the preceding four consecutive fiscal quarters.

The 2017 Credit Agreement provides for an exclusion from the calculation of consolidated EBITDA, as defined by the agreement, through maturity, of any non-cash charges and up to $500 million in restructuring charges and restructuring-related expenses related to our current or future restructuring plans. As of December 31, 2017, we had $444 million of the restructuring charge exclusion remaining. In addition, any cash litigation payments (net of any cash litigation receipts), as defined by the 2017 Credit Agreement, are excluded from the calculation of consolidated EBITDA, as defined in the 2017 Credit Agreement, provided that the sum of any excluded net cash litigation payments do not exceed $2.624 billion in the aggregate. As of December 31, 2017, we had approximately $1.839 billion of the legal exclusion remaining.

Any inability to maintain compliance with these covenants could require us to seek to renegotiate the terms of our credit facility or seek waivers from compliance with these covenants, both of which could result in additional borrowing costs. Further, there can be no assurance that our lenders would agree to such new terms or grant such waivers on terms acceptable to us. In this case, all credit facility commitments would terminate and any amounts borrowed under the facility would become immediately due and payable. Furthermore, any termination of our credit facility may negatively impact the credit ratings assigned to our commercial paper program which may impact our ability to refinance any then outstanding commercial paper as it becomes due and payable.

Commercial Paper

In June 2017, we launched a commercial paper program that allowed the Company to have a maximum of $2.000 billion in commercial paper outstanding. In August 2017, we increased our commercial paper program’s maximum to $2.250 billion, in line with the increased size of the 2017 Facility. Outstanding commercial paper directly reduces borrowing capacity available under the 2017 Facility. As of December 31, 2017 there was $1.197 billion of commercial paper outstanding. The commercial paper program is backed by the 2017 Facility. Commercial paper issued as of December 31, 2017 had a weighted average maturity of 38 days and a weighted average yield of 1.85 percent.

Term Loans

As of December 31, 2016, we had $750 million outstanding under our unsecured term loan facilities. These facilities included an unsecured term loan for $150 million maturing August 2018 (2018 Term Loan) and an unsecured term loan facility for $600 million maturing August 2020 (2020 Term Loan). Both of these term loan facilities were fully repaid in 2017.

Senior Notes

We had senior notes outstanding of $4.400 billion as of December 31, 2017 and $4.650 billion as of December 31, 2016. On January 12, 2017, we used our existing credit facilities to repay the $250 million plus interest of our senior notes due in January 2017.

Our senior notes were issued in public offerings, are redeemable prior to maturity and are not subject to sinking fund requirements. Our senior notes are unsecured, unsubordinated obligations and rank on parity with each other. These notes are effectively junior to borrowings under our credit and security facility, to the extent if borrowed by our subsidiaries and to liabilities of our subsidiaries (see Other Arrangements below).

Our $4.050 billion of senior notes issued in 2009, 2013 and 2015 contain a change-in-control provision, which provides that each holder of the senior notes may require us to repurchase all or a portion of the notes at a price equal to 101 percent of the aggregate repurchased principal, plus accrued and unpaid interest, if a rating event, as defined in the indenture, occurs as a result of a change-in-control, as defined in the indenture. Any other credit rating changes may impact our borrowing cost, but do not require us to repay any borrowings.

The interest rate payable on our November 2035 Notes is currently 7.00 percent. Corporate credit rating improvements may result in a decrease in the adjusted interest rate on our November 2035 Notes to the extent that our lowest credit rating is above BBB- or Baa3. The interest rates on our November 2035 Notes will be permanently reinstated to the issuance rate if the lowest credit ratings assigned to these senior notes is either A- or A3 or higher.

Other Arrangements

As of December 31, 2016, we maintained a $300 million credit and security facility secured by our U.S. trade receivables maturing on June 9, 2017. In February 2017, we amended the terms of this credit and security facility, including increasing the facility size to $400 million and extending the facility maturity date to February 2019. We had no amounts outstanding under this facility as of December 31, 2017 and $60 million outstanding under our credit and security facility as of December 31, 2016. The credit and security facilities requires that we maintain a maximum leverage covenant consistent with our revolving credit facility.

We have accounts receivable factoring programs in certain European countries that we account for as sales under FASB ASC Topic 860, Transfers and Servicing. These agreements provide for the sale of accounts receivable to third parties, without recourse, of up to approximately $456 million as of December 31, 2017. We have no retained interests in the transferred receivables, other than collection and administrative responsibilities and, once sold, the accounts receivable are no longer available to satisfy creditors in the event of bankruptcy. We de-recognized $171 million of receivables as of December 31, 2017 at an average interest rate of 1.8 percent and $152 million as of December 31, 2016 at an average interest rate of 1.8 percent.

In addition, we have uncommitted credit facilities with a commercial Japanese bank that provide for borrowings, promissory notes discounting and receivables factoring of up to 22.000 billion Japanese yen (approximately $195 million as of December 31, 2017). We de-recognized $157 million of notes receivable as of December 31, 2017 at an average interest rate of 1.3 percent and $149 million of notes receivable as of December 31, 2016 at an average interest rate of 1.6 percent. De-recognized accounts and notes receivable are excluded from trade accounts receivable, net in the accompanying consolidated balance sheets.

We had outstanding letters of credit of $49 million as of December 31, 2017 and $44 million as of December 31, 2016, which consisted primarily of bank guarantees and collateral for workers' compensation insurance arrangements. As of December 31, 2017 and 2016, none of the beneficiaries had drawn upon the letters of credit or guarantees, accordingly, we have not recognized a related liability for our outstanding letters of credit in our consolidated balance sheets as of December 31, 2017 or 2016.

As of and through December 31, 2017, we were in compliance with all the required covenants related to our debt obligations.