Debt

9 Months Ended

Sep. 28, 2024

Debt

Debt

Note G – Debt

Short-term borrowings, including current portion of long-term debt, consist of the following:

	September 28,		December 31,
(thousands)	2024		2023
3.25% notes, due September 2024	$	—	$	499,224
4.00% notes, due April 2025		349,618		—
Commercial paper		539,191		1,121,882
Other short-term borrowings		21,017		32,848
	$	909,826	$	1,653,954

The company has $500.0 million in uncommitted lines of credit. There were no outstanding borrowings under the uncommitted lines of credit at September 28, 2024 and December 31, 2023. These borrowings were provided on a short-term basis and their maturity was agreed upon between the company and the lender. The uncommitted lines of credit had a weighted-average effective interest rate of 5.77% and 5.83% at September 28, 2024 and December 31, 2023, respectively.

The company has a commercial paper program, and the maximum aggregate balance of commercial paper outstanding may not exceed the borrowing capacity of $1.2 billion. Amounts outstanding under the commercial paper program are backstopped by available commitments under the company’s revolving credit facility. The company had $539.2 million in outstanding borrowings under this program at September 28, 2024 and $1.1 billion in outstanding borrowings at December 31, 2023. The commercial paper program had an effective interest rate of 5.25% and 5.90% at September 28, 2024 and December 31, 2023, respectively.

Long-term debt consists of the following:

	September 28,		December 31,
(thousands)	2024		2023
North American asset securitization program	$	251,000	$	198,000
4.00% notes, due 2025		—		349,061
6.125% notes, due 2026		—		497,661
7.50% senior debentures, due 2027		110,246		110,184
3.875% notes, due 2028		497,603		497,098
5.15% notes, due 2029		494,983		—
2.95% notes, due 2032		495,440		495,039
5.875% notes, due 2034		494,878		—
Other obligations with various interest rates and due dates		19,091		6,510
	$	2,363,241	$	2,153,553

The 7.50% senior debentures are not redeemable prior to their maturity. All other notes may be called at the option of the company subject to “make whole” clauses.

The estimated fair market value of long-term debt, using quoted market prices, is as follows:

	September 28,		December 31,
(thousands)	2024		2023
4.00% notes, due 2025	$	—	$	343,500
6.125% notes, due 2026		—		502,000
7.50% senior debentures, due 2027		117,500		117,000
3.875% notes, due 2028		489,500		475,000
5.15% notes, due 2029		509,500		—
2.95% notes, due 2032		440,000		425,000
5.875% notes, due 2034		520,000		—

The carrying amount of the company’s other short-term borrowings, 4.00% notes, due April 2025, North American asset securitization program, commercial paper, and other obligations approximate their fair value.

The company has a $2.0 billion revolving credit facility maturing in September 2026. The facility may be used by the company for general corporate purposes including working capital in the ordinary course of business, letters of credit, repayment, prepayment or purchase of long-term indebtedness, acquisitions, and as support for the company’s commercial paper program, as applicable. Interest on borrowings under the revolving credit facility is calculated using a base rate or SOFR, plus a spread (1.08% at September 28, 2024), which is based on the company’s credit ratings, plus a credit spread adjustment of 0.10% or a weighted-average effective interest rate of 6.45% at September 28, 2024. The facility fee, which is based on the company’s credit ratings, was 0.175% of the total borrowing capacity at September 28, 2024. The company had no outstanding borrowings under the revolving credit facility at September 28, 2024 and December 31, 2023, respectively.

The company has a North American asset securitization program collateralized by accounts receivable of certain of its subsidiaries. The company may borrow up to $1.5 billion under the program. In September 2024, the company amended its North American asset securitization program to extend its maturity from September 2025 to September 2027, among other things. The program is conducted through AFC, a wholly-owned, bankruptcy remote subsidiary. The North American asset securitization program does not qualify for sale treatment. Accordingly, the accounts receivable and related debt obligation remain on the company’s consolidated balance sheets. Interest on borrowings is calculated using a base rate plus a spread (0.40% at September 28, 2024) plus a credit spread adjustment of 0.10% or an effective interest rate of 5.34% at September 28, 2024. The facility fee is 0.40% of the total borrowing capacity.

The company had $251.0 million and $198.0 million in outstanding borrowings under the North American asset securitization program at September 28, 2024 and December 31, 2023, respectively, which was included in “Long-term debt” on the company’s consolidated balance sheets. Total collateralized accounts receivable of approximately $2.5 billion and $2.7 billion were held by AFC and were included in “Accounts receivable, net” on the company’s consolidated balance sheets at September 28, 2024 and December 31, 2023, respectively. Any accounts receivable held by AFC would likely not be available to other creditors of the company in the event of bankruptcy or insolvency proceedings of the company before repayment of any outstanding borrowings under the North American asset securitization program.

Both the revolving credit facility and North American asset securitization program include terms and conditions that limit the incurrence of additional borrowings and require that certain financial ratios be maintained at designated levels. As of September 28, 2024, the company was in compliance with all such financial covenants.

During the third quarter of 2024, the company completed the sale of $500.0 million principal amount of 5.15% notes, due 2029. The net proceeds of the offering of $494.9 million were used for general corporate purposes and to repay the $500.0 million principal amount of its 3.25% notes, due September 2024, which were redeemed at maturity.

During the second quarter of 2024, the company completed the sale of $500.0 million principal amount of 5.875% notes, due 2034. The net proceeds of the offering of $494.7 million were used for general corporate purposes and to repay the $500.0 million principal amount of its 6.125% notes, due 2026, which were redeemed in April 2024.

Interest and dividend income of $10.3 million and $44.6 million for the third quarter and first nine months of 2024, respectively, and $16.9 million and $47.6 million for the third quarter and first nine months of 2023, respectively, were recorded in “Interest and other financing expense, net” within the company’s consolidated statements of operations.