Financing Activities

6 Months Ended

Jun. 30, 2022

Fair Value Disclosures [Abstract]

FINANCING ACTIVITIES

FINANCING ACTIVITIES

On May 1, 2020, the Company completed the public offering of $2.3 billion aggregate principal amount of Convertible Notes. The Convertible Notes bear interest at a rate of 1.25% and will mature on May 1, 2025. Interest on the notes is payable semi-annually in arrears on May 1 and November 1, beginning November 1, 2020.

Holders may convert their Convertible Notes at their option at any time prior to the close of business on the business day immediately preceding February 1, 2025, in the event certain conditions are met, as stated in the offering documents. As of June 30, 2022, the conditions were not met that would allow holders to exercise their conversion option.

Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of common stock, at the Company’s election. The Company intends to settle conversions by paying cash up to the principal amount of the Convertible Notes, with any excess conversion value settled in cash or shares of common stock. The initial conversion rate is 25.9909 shares of common stock per $1,000 principal amount of Convertible Notes (equivalent to an initial conversion price of approximately $38.48 per share of common stock).

Upon issuance, the Company bifurcated the Convertible Notes for accounting purposes between a liability component and an equity component utilizing applicable guidance. The liability component was determined by estimating the fair value of a hypothetical issuance of an identical offering excluding the conversion feature of the Convertible Notes. The initial carrying amount of the equity component was calculated as the difference between the liability component and the face amount of the Convertible Notes.

The Company adopted ASU 2020-06, as of January 1, 2022, utilizing the modified retrospective method approach. See Note 3 for further information. Upon adoption, the Company reclassified the remaining equity component, of $300 million, from Additional paid-in capital to Long-term debt associated with its Convertible Notes, and no longer records amortization of the debt discount to Interest expense. The following table details the equity and liability component recognized related to the Convertible Notes, prior to and following the adoption of ASU 2020-06:

(in millions)	June 30, 2022		December 31, 2021
Equity component:
Carrying amount of Convertible Notes	$	—	$	311
Carrying amount of issuance costs	—		(11)
Net carrying amount	$	—	$	300
Liability component:
Principal amount	$	1,795	$	2,097
Unamortized debt discount	—		(255)
Net carrying amount	$	1,795	$	1,842

The Company recognized interest expense associated with the Convertible Notes as follows:

	Three months ended June 30,				Six months ended June 30,
(in millions)	2022		2021		2022		2021
Non-cash amortization of the debt discount	$	—	$	19	$	—	$	37
Non-cash amortization of debt issuance costs	3		2		7		4
Contractual coupon interest	6		7		12		15
Total interest expense	$	9	$	28	$	19	$	56

The unamortized debt issuance costs are being recognized as non-cash interest expense based on the 5-year term of the notes, through May 1, 2025, less amounts that were or will be required to be accelerated immediately upon conversion or repurchases. The Company had no changes to conversion terms, contingencies, or exercise prices during the six months ended June 30, 2022. The effective interest rate associated with the Convertible Notes was approximately 1.9 percent for the three and six months ended June 30, 2022.

During the three and six months ended June 30, 2022, the Company paid $231 million and $555 million, respectively, in debt and finance lease obligations, which included scheduled debt and lease payments, extinguishment of Convertible Notes, and the early prepayment of debt. The following tables present the impact of the partial extinguishment of the Company's Convertible Notes and early prepayment of debt within the unaudited Condensed Consolidated Statement of Comprehensive Income for the three and six months ended June 30, 2022:

	Three months ended June 30, 2022
(in millions)	Cash payment		Principal repayment		Loss on extinguishment (a)		Non-cash amortization of debt discount and (issuance) costs
1.25% Convertible Notes due 2025	$	178	$	138	$	42	$	(2)
5.125% Notes due 2027	$	27	$	26	$	1	$	—
4.75% Notes due 2023	3		3		—		—
5.25% Notes due 2025	1		1		—		—
Total	$	209	$	168	$	43	$	(2)

	Six months ended June 30, 2022
(in millions)	Cash payment		Principal repayment		Loss on extinguishment (a)		Non-cash amortization of debt discount and (issuance) costs
1.25% Convertible Notes due 2025	$	409	$	302	$	112	$	(5)
5.125% Notes due 2027	$	61	$	56	$	4	$	1
4.75% Notes due 2023	3		3		—		—
5.25% Notes due 2025	1		1		—		—
Total	$	474	$	362	$	116	$	(4)

(a) Reflected in Other (gains) losses, net.

The Company has access to $1.0 billion under its amended and restated revolving credit facility (the "Amended A&R Credit Agreement"). In July 2022, this facility was amended to extend the expiration date to August 2025, and to change the benchmark rate from the London Interbank Offered Rate to the Secured Overnight Financing Rate ("SOFR"). There were no amounts outstanding under the Amended A&R Credit Agreement as of June 30, 2022.