Financing and Capital

9 Months Ended

Sep. 28, 2018

NOTE 5. FINANCING AND CAPITAL

Financing

The carrying value of the components of our long-term debt were as follows ($ in millions):



	September 28, 2018		December 31, 2017
U.S. dollar-denominated commercial paper	$	594.6	$	665.1
Euro-denominated commercial paper	273.3		282.7
U.S. dollar variable interest rate term loan due 2019	175.0		500.0
Delayed-draw term loan due 2019	1,350.0		—
Yen variable interest rate term loan due 2022	121.3		122.4
1.80% senior unsecured notes due 2019	299.5		298.9
2.35% senior unsecured notes due 2021	746.7		745.9
3.15% senior unsecured notes due 2026	891.8		891.0
4.30% senior unsecured notes due 2046	546.9		546.8
Other	3.4		3.4
Long-term debt	5,002.5		4,056.2
Less: current portion of long-term debt	1,824.5		—
Long-term debt, net of current maturities	$	3,178.0	$	4,056.2

Unamortized debt discounts, premiums and issuance costs of $15.5 million and $18.2 million as of September 28, 2018 and December 31, 2017, respectively, are netted against the aggregate principal amounts of the components of debt table above. Refer to Note 9 of our 2017 Annual Report on Form 10-K for further details of our debt financing.

We generally satisfy any short-term liquidity needs that are not met through operating cash flows and available cash primarily through issuances of commercial paper under our U.S. dollar and Euro-denominated commercial paper programs (“Commercial Paper Programs”). Credit support for the Commercial Paper Programs is provided by a five-year $1.5 billion senior unsecured revolving credit facility that expires on June 16, 2021 (the “Revolving Credit Facility”) which can also be used for working capital and other general corporate purposes. As of September 28, 2018, no borrowings were outstanding under the Revolving Credit Facility.

On July 20, 2018, we prepaid $325 million of our outstanding U.S dollar variable interest rate term loan due in 2019, and on October 5, 2018, we prepaid the remaining $175 million of the outstanding balance. The prepayment penalties associated with these payments were immaterial.

On August 22, 2018, we entered into a credit facility agreement that provides for a 364-day delayed-draw term loan facility (“Delayed-Draw Term Loan”) in an aggregate principal amount of $1.75 billion. On September 5, 2018, we drew down the full $1.75 billion available under the Delayed-Draw Term Loan in order to fund, in part, the Accruent Acquisition. The Delayed-Draw Term Loan bears interest at a variable rate equal to the London inter-bank offered rate plus a ratings based margin currently at 75 basis points. As of September 28, 2018, borrowings under this facility bore an interest rate of 2.69% per annum. The Delayed-Draw Term Loan is prepayable at our option, and we are not permitted to re-borrow once the term loan is repaid. The terms and conditions, including covenants, applicable to the Delayed-Draw Term Loan are substantially similar to those applicable to the Revolving Credit Facility. On September 26, 2018, we repaid $400 million of this loan.

In connection with the debt exchange in the split-off of the A&S Business, on October 1, 2018, we retired $244.7 million of our 1.80% senior unsecured notes due in 2019.

The details of our Commercial Paper Programs as of September 28, 2018 are as follows ($ in millions):



	Carrying value		Annual effective rate		Weighted average remaining maturity (in days)
U.S. dollar-denominated commercial paper	$	594.6	2.38	%	11
Euro-denominated commercial paper	$	273.3	(0.10	)%	87

We classified our borrowings outstanding under the Commercial Paper Programs as long-term debt in the accompanying Consolidated Condensed Balance Sheets as we had the intent and ability, as supported by availability under the Revolving Credit Facility referenced above, to refinance these borrowings for at least one year from the balance sheet date.

As of September 28, 2018, we were in compliance with all of our covenants.

Capital

On June 29, 2018, we issued 1,380,000 shares of 5.0% Mandatory Convertible Preferred Stock, Series A (“MCPS”) with a par value of $0.01 per share and liquidation preference of $1,000 per share, which included the exercise of an over-allotment option in full to purchase 180,000 shares. We received net $1.34 billion in proceeds from the issuance of the MCPS, excluding $43 million of issuance costs. We used the net proceeds from the issuance of MCPS to fund our acquisition activities and for general corporate purposes, including repayment of debt, working capital and capital expenditures.

In connection with the split-off of the A&S Business, on September 26, 2018, we triggered an anti-dilution adjustment pursuant to the terms of the MCPS and after giving affect to this adjustment, each then outstanding share of MCPS will convert automatically on July 1, 2021 (“Mandatory Conversion Date”) into between 10.9041 and 13.3575 common shares, subject to further anti-dilution adjustments. The number of shares of our common stock issuable on conversion will be determined based on the average volume weighted average price per share of our common stock over the 20 consecutive trading day period beginning on the 22nd scheduled trading day preceding the Mandatory Conversion Date. At any time prior to July 1, 2021, holders may elect to convert each share of the MCPS into shares of common stock at the rate of 10.9041, subject to further anti-dilution adjustments. In the event of a fundamental change, the MCPS will convert at the fundamental change rates specified in the certificate of designations, as adjusted, and the holders of MCPS would be entitled to a fundamental change make-whole dividend.

We may pay declared dividends in cash or, subject to certain limitations, in shares of our common stock, or in any combination of cash and shares of our common stock in January, April, July and October of each year, commencing on October 1, 2018 and ending on July 1, 2021. Dividends that are declared will be payable on the dividend payment dates to holders of record on the immediately preceding March 15, June 15, September 15 and December 15 (each a “record date”), whether or not such holders convert their shares, or such shares are automatically converted, after the corresponding record date.

Dividends on our MCPS are payable on a cumulative basis when, as and if declared by our Board, at an annual rate of 5.0% of the liquidation preference of $1,000 per share (equivalent to $50.00 annually per share). On August 2, 2018, we declared a dividend on the MCPS of $12.78 per share which was paid on September 28, 2018 to the holders of record on September 15, 2018.