Contractual Obligations and Commitments

3 Months Ended

Mar. 31, 2021

NOTE E – CONTRACTUAL OBLIGATIONS AND COMMITMENTS

Borrowings and Credit Arrangements

We had total debt outstanding of $9.095 billion as of March 31, 2021 and $9.143 billion as of December 31, 2020, with current maturities of $13 million as of March 31, 2021 and $13 million as of December 31, 2020. The debt maturity schedule for our long-term debt obligations is presented below:


(in millions, except interest rates)	Issuance Date	Maturity Date	As of				Coupon Rate(1)
			March 31, 2021		December 31, 2020
May 2022 Notes	May 2015	May 2022	$	250	$	250	3.375%
October 2023 Notes	August 2013	October 2023	244		244		4.125%
March 2024 Notes	February 2019	March 2024	850		850		3.450%
May 2025 Notes	May 2015	May 2025	523		523		3.850%
June 2025 Notes	May 2020	June 2025	500		500		1.900%
March 2026 Notes	February 2019	March 2026	850		850		3.750%
December 2027 Notes	November 2019	December 2027	1,055		1,105		0.625%
March 2028 Notes	February 2018	March 2028	434		434		4.000%
March 2029 Notes	February 2019	March 2029	850		850		4.000%
June 2030 Notes	May 2020	June 2030	1,200		1,200		2.650%
November 2035 Notes(2)	November 2005	November 2035	350		350		7.000%
March 2039 Notes	February 2019	March 2039	750		750		4.550%
January 2040 Notes	December 2009	January 2040	300		300		7.375%
March 2049 Notes	February 2019	March 2049	1,000		1,000		4.700%
Unamortized Debt Issuance Discount and Deferred Financing Costs		2022 - 2049	(85)		(88)
Unamortized Gain on Fair Value Hedges		2023	5		5
Finance Lease Obligation		Various	6		7
Long-term debt			$	9,082	$	9,130

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

(1) Coupon rates are semi-annual, except for the euro-denominated December 2027 Notes, which bear an annual coupon.

(2) 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.

Revolving Credit Facility

We maintain a $2.750 billion revolving credit facility (Revolving Credit Facility) with a global syndicate of commercial banks that matures on December 19, 2023 with one-year extension options, subject to certain conditions. This facility provides backing for our commercial paper program, and outstanding commercial paper directly reduces borrowing capacity under the Revolving Credit Facility. The credit agreement requires that we comply with the financial covenant described below. There were no amounts outstanding under the Revolving Credit Facility as of March 31, 2021 or December 31, 2020.

Financial Covenant

As of and through March 31, 2021, we were in compliance with the financial covenant required by all existing credit facilities described above:

Covenant Requirement

Actual

as of March 31, 2021

Maximum permitted leverage ratio(1)

4.50 times

3.29 times

(1)Ratio of total debt to consolidated EBITDA, as defined by the credit agreements, as amended.

On April 21, 2020, we entered into an agreement with our banking syndicates to amend the financial covenant requirement for all of our outstanding credit arrangements as follows: (i) established a deemed Consolidated EBITDA of $671 million for the second, third and fourth quarters of 2020, reflecting average quarterly Consolidated EBITDA, as defined in the credit agreements, for 2018 and 2019; and (ii) maintain the maximum permitted leverage ratio of 4.75 times through the remainder of 2020, with a step-down for each succeeding fiscal quarter end, beginning with the first quarter of 2021, to 4.50 times, 4.25 times, 4.00 times and ultimately 3.75 times for the fourth quarter of 2021 and through the remaining term of the facility.

The financial covenant requirement provides for an exclusion from the calculation of consolidated EBITDA, as defined by the agreements, 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 March 31, 2021, we had $57 million of the restructuring charge exclusion remaining. In addition, any cash litigation payments (net of any cash litigation receipts), as defined by the agreements, are excluded from the calculation of consolidated EBITDA, as defined by the agreements, provided that the sum of any excluded net cash litigation payments do not exceed $2.624 billion in the aggregate. As of March 31, 2021, we had $809 million of the litigation exclusion remaining.

Any inability to maintain compliance with this amended covenant could require us to seek to further renegotiate the terms of our Revolving Credit Facility or seek waivers from compliance with this covenant, 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 Revolving Credit Facility commitments would terminate, and any amounts borrowed under the facility would become immediately due and payable. Furthermore, any termination of our Revolving 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

Our commercial paper program is backed by the Revolving Credit Facility, as discussed above, and outstanding commercial paper directly reduces borrowing capacity under the Revolving Credit Facility. We did not have any commercial paper outstanding as of March 31, 2021 or December 31, 2020.

Senior Notes

We had senior notes outstanding of $9.155 billion as of March 31, 2021 and $9.205 billion as of December 31, 2020. 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 liabilities of our subsidiaries (see Other Arrangements below).

Other Arrangements

We have accounts receivable factoring programs in certain European countries and with commercial banks in China and Japan which include promissory notes discounting programs. We account for our factoring programs as sales under FASB ASC Topic 860, Transfers and Servicing. We have no retained interest in the transferred receivables, other than collection and administration, and once sold, the accounts receivable are no longer available to satisfy creditors in the event of bankruptcy.

Amounts de-recognized for accounts and notes receivable, which are excluded from Trade accounts receivable, net in our accompanying unaudited consolidated balance sheets, are aggregated by contract denominated currency below (in millions):


Factoring Arrangements	As of March 31, 2021				As of December 31, 2020
	Amount De-recognized		Weighted Average Interest Rate		Amount De-recognized		Weighted Average Interest Rate
Euro denominated	$	149	2.0	%	$	148	1.9	%
Yen denominated	198		0.6	%	240		0.6	%
Renminbi denominated	—		3.5	%	—		3.5	%

Other Contractual Obligations and Commitments

We had outstanding letters of credit of $126 million as of March 31, 2021 and $124 million as of December 31, 2020, which consisted primarily of bank guarantees and collateral for workers' compensation insurance arrangements. As of March 31, 2021 and December 31, 2020, none of the beneficiaries had drawn upon the letters of credit or guarantees, and accordingly, we have not recognized a related liability for our outstanding letters of credit in our accompanying unaudited consolidated balance sheets as of March 31, 2021 and December 31, 2020.

Refer to Note F – Contractual Obligations and Commitments to our audited financial statements contained in Item 8 of our most recent Annual Report on Form 10-K for additional information on our borrowings and credit agreements.