Debt

The Company is obligated under notes and other indebtedness as follows (in millions):



	December 31,
	2017		2016
Accounts receivable securitization program	$	14.9	$	103.2
Revolving credit facilities	—		75.0
Senior notes	575.0		330.0
Other indebtedness, net of unamortized debt issuance costs	30.9		—
	620.8		508.2
Less current portion of debt	83.7		208.5
Long-term debt	$	537.1	$	299.7

Accounts receivable securitization program

We securitize certain of our domestic accounts receivable through an accounts receivable securitization program with a third-party bank. The maximum amount that can be outstanding under this program is $150.0 million. In November 2017, we renewed and modified the accounts receivable securitization program resulting in an extended maturity date of November 14, 2020 and the addition of the BFDS receivables to the program.

Under the terms of the accounts receivable securitization program, (a) we periodically acquire accounts receivable originated by certain of our domestic subsidiaries, including, but not limited to, DST Health Solutions, DST Technologies, BFDS, and DST Pharmacy Solutions (the “Subsidiary Originators”), (b) we transfer receivables originated by us and receivables acquired from the Subsidiary Originators, on a periodic basis, to a wholly-owned bankruptcy remote special purpose subsidiary of DST (the “SPE”), and (c) the SPE then sells undivided interests in the receivables to the bank. We retain servicing responsibility over the receivables. The program contains customary restrictive covenants as well as customary events of default.

We have continuing involvement with the transferred assets because we maintain servicing responsibilities for the accounts receivable assets included in the accounts receivable securitization program. Accounts receivable assets transferred from us to our wholly-owned, bankruptcy remote special purpose subsidiary contain restrictions because they are not available to satisfy the creditors of any other person, including DST or any of our subsidiaries or affiliates. Further, neither we nor the SPE guarantees collectability of the receivables or the creditworthiness of obligors. The SPE retains an interest in the receivables in excess of the amount transferred to the conduit, and such receivables continue to be recognized on the Consolidated Balance Sheet. The carrying value of the retained interest approximates its estimated fair value at the balance sheet date. We believe increases in the level of assumed interest rates and/or credit losses compared to assumptions in effect at the balance sheet date by 10% or 20% would not materially affect the fair value of the retained interest at the reporting date.

The outstanding amount under the program was $14.9 million and $103.2 million at December 31, 2017 and 2016, respectively. During the years ended December 31, 2017, 2016 and 2015 total proceeds from the accounts receivable securitization program were approximately $555.9 million, $895.5 million and $1,037.7 million, respectively, and total repayments were approximately $644.2 million, $792.3 million and $1,157.7 million, respectively, which comprise the net cash flow in the financing section of the Consolidated Statement of Cash Flows.

Aggregate transfers of undivided interests in the receivables from the SPE to the bank were $1,171.2 million and $1,459.9 million for the years ended December 31, 2017 and 2016, respectively. The impact on net income stemming from these transfers was not material. Costs associated with the accounts receivable securitization program are included in interest expense in the Consolidated Statement of Income. The program costs applicable to the outstanding amount of undivided interests in the receivables are generally based on LIBOR plus an applicable margin.

Revolving credit facilities

On October 1, 2014, we entered into a syndicated credit facility (“Credit Facility”). The Credit Facility provides for a revolving unsecured line in an aggregate principal amount of up to $850.0 million. The interest rates applicable to loans under the Credit Facility are generally based on Eurodollar, Federal Funds or prime rates plus applicable margins as defined in the agreement. The Credit Facility contains grid schedules that adjust borrowing costs up or down based upon our consolidated leverage ratio. The grid schedules may result in fluctuations in borrowing costs ranging from 1.00% to 1.70% over Eurodollar and 0.00% to 0.70% over base rate, as defined. Additionally, we pay an annual facility fee of 0.125% to 0.30%. Among other provisions, the Credit Facility requires certain leverage and interest coverage ratios to be maintained. If any event of default occurs and is continuing, all amounts payable under the credit agreement may be declared immediately due and payable. The Credit Facility also contains customary restrictive covenants and cross-default provisions. The maturity date for the Credit Facility is October 1, 2019. At December 31, 2017, there were no borrowings under the Credit Facility. Amounts borrowed on the Credit Facility were $75.0 million at December 31, 2016.

We also have an unsecured revolving line of credit to support our subsidiaries’ operations that provides total borrowings of up to $10.0 million. Borrowings on this line of credit are available at the bank’s Prime rate and mature during 2018. At December 31, 2017 and 2016, there were no borrowings under this line of credit.

During the years ended December 31, 2017, 2016 and 2015, total proceeds from our revolving credit facilities were approximately $1,194.1 million, $977.1 million and $1,053.6 million, respectively, and total repayments were approximately $1,269.1 million, $1,128.2 million and $871.8 million respectively, which comprise the net cash flows presented within the financing section of the Consolidated Statement of Cash Flows.

Senior notes

During 2010, we issued $370.0 million of aggregate principal of privately placed senior notes (collectively, the “2010 Senior Notes”) pursuant to a note purchase agreement dated August 9, 2010. The 2010 Senior Notes were comprised of $40.0 million of 4.19% Series A Senior Notes due August 9, 2015, $105.0 million of 4.86% Series B Senior Notes due August 9, 2017, $65.0 million of 5.06% Series C Senior Notes due August 9, 2018 and $160.0 million of 5.42% Series D Senior Notes due August 9, 2020. We repaid the Series A Senior Notes and Series B Senior Notes at maturity during 2015 and 2017, respectively.

During 2017, we agreed to issue $415.0 million of privately placed senior notes (collectively, the “2017 Senior Notes”) pursuant to a note purchase agreement dated November 14, 2017. The 2017 Senior Notes are comprised of $35.0 million of 3.55% Series A Senior Notes due January 9, 2023, $105.0 million of 3.82% Series B Senior Notes due January 9, 2025, $65.0 million of 4.02% Series C Senior Notes due August 6, 2025, $105.0 million of 4.04% Series D Senior Notes due January 9, 2028, $50.0 million of 4.14% Series E Senior Notes due January 9, 2030, and $55.0 million of 4.29% Series F Senior Notes due January 9, 2033. The 2017 Senior Notes were issued in November 2017, with the exception of the Series C Senior Notes which are scheduled to be issued on August 6, 2018. The November 2017 proceeds were primarily used to pay down our revolving credit facility.

Interest on our 2010 Senior Notes is payable semi-annually in February and August of each year. Interest on our outstanding 2017 Senior Notes is payable semi-annually in January and July of each year, beginning in July 2018. We may prepay the senior notes at any time, in an amount not less than 10% of the aggregate principal amount of such notes then outstanding, at a price equal to 100% of the principal amount being prepaid, plus accrued and unpaid interest and a “make-whole” prepayment premium.

Pursuant to terms of our senior note agreements, any Company subsidiary required to become a party to or otherwise guarantee the syndicated line of credit facility or other indebtedness in excess of $100.0 million, or in the case of the 2017 Senior Notes, certain other indebtedness in excess of $150.0 million, must also guarantee our obligations under the senior notes. The senior note agreements contain customary restrictive covenants, as well as certain customary events of default, including cross-default provisions. Among other provisions, the agreements limit our ability to incur or create liens, sell assets, issue priority indebtedness and change lines of business. The agreements also require certain leverage and interest coverage ratios to be maintained. We were in compliance with all debt covenants as of December 31, 2017.

Other indebtedness

In connection with the acquisition of the remaining interests in IFDS U.K. during 2017, we assumed a mortgage with a principal amount of £23.0 million which matures in October 2020 (“U.K. mortgage”). The outstanding amount under the mortgage was $28.4 million at December 31, 2017 with a fixed interest rate of 3.1%. Principal payments of £1.0 million are payable semi-annually in April and October of each year and accrued interest is payable quarterly, with the outstanding balance due at maturity.

Other indebtedness as of December 31, 2017 also included a $4.4 million mortgage acquired through a distribution of real estate and the related debt from Broadway Square Partners in December 2017 and $0.6 million of capital leases, offset by $2.5 million of unamortized debt issuance costs.

Future principal payments of indebtedness at December 31, 2017 are as follows (in millions):



2018	$	83.7
2019	3.6
2020	183.7
2021	0.7
2022	0.8
Thereafter	350.8
Total	$	623.3

The weighted average interest rates on our short-term borrowings were 2.72% and 2.36% for the years ended December 31, 2017 and 2016, respectively. Based upon the borrowing rates currently available to us for indebtedness with similar terms and average maturities, the carrying value of long-term debt, with the exception of the senior notes and U.K. mortgage, is considered to approximate fair value at December 31, 2017 and 2016. The estimated fair values of the senior notes and U.K. mortgage were derived principally from quoted prices (level 2 in the fair value hierarchy).

The carrying and estimated fair values of our fixed rate debt were as follows (in millions):



	December 31,
	2017				2016
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
2010 Senior notes—Series B	$	—	$	—	$	105.0	$	106.7
2010 Senior notes—Series C	65.0		65.7		65.0		67.5
2010 Senior notes—Series D	160.0		167.4		160.0		172.1
2017 Senior notes—Series A	35.0		34.6		—		—
2017 Senior notes—Series B	105.0		104.0		—		—
2017 Senior notes—Series D	105.0		104.5		—		—
2017 Senior notes—Series E	50.0		49.6		—		—
2017 Senior notes—Series F	55.0		54.1		—		—
U.K. mortgage	28.4		28.8		—		—
U.S. mortgage	4.4		4.4		—		—
Total	$	607.8	$	613.1	$	330.0	$	346.3