Notes Payable and Long-Term Debt

As of September 30, 2012 and December 31, 2011, the Company had short-term and long-term debt outstanding as follows:



	September 30,		December 31,
(millions of dollars)	2012		2011
Short-term debt
Short-term borrowings	$	151.0	$	116.3
Receivables securitization	80.0		80.0
Total short-term debt	$	231.0	$	196.3

Long-term debt
3.50% Convertible senior notes due 04/15/12	$	—	$	368.5
5.75% Senior notes due 11/01/16 ($150 million par value)	149.5		149.5
8.00% Senior notes due 10/01/19 ($134 million par value)	133.9		133.9
4.625% Senior notes due 09/15/20 ($250 million par value)	247.9		247.7
7.125% Senior notes due 02/15/29 ($121 million par value)	119.4		119.3
Multi-currency revolving credit facility	180.0		70.0
Term loan facilities and other	19.9		19.8
Unamortized portion of debt derivatives	21.2		24.1
Total long-term debt	871.8		1,132.8
Less: current portion	5.5		381.5
Long-term debt, net of current portion	$	866.3	$	751.3

The weighted average interest rate on all borrowings outstanding as of September 30, 2012 and December 31, 2011 was 4.3% and 5.9%, respectively.

The Company's $650 million multi-currency revolving credit facility, which includes a feature that allows the Company's borrowings to be increased to $1 billion, provides for borrowings through June 30, 2016 and is guaranteed by the Company's material domestic subsidiaries. The Company has two key financial covenants as part of the credit agreement. These covenants are a debt compared to EBITDA (“Earnings Before Interest, Taxes, Depreciation and Amortization”) test and an interest coverage test. The Company was in compliance with all covenants at September 30, 2012 and expects to remain compliant in future periods. At September 30, 2012 and December 31, 2011, the Company had outstanding borrowings of $180.0 million and $70.0 million, respectively, under this facility.

On April 9, 2009, the Company issued $373.8 million in convertible senior notes, which were settled in April 2012. The Company settled its convertible senior notes by delivering approximately 11.4 million shares of common stock held in treasury to the note holders. The settlement resulted in a reduction in the current portion of long-term debt of $373.8 million, a reduction in common stock held in treasury of $617.3 million and a reduction in capital in excess of par value of $243.5 million in the second quarter of 2012. Prior to the settlement, the Company accreted the discounted carrying value of the convertible notes to their face value over the term of the notes.

The total interest expense related to the convertible senior notes in the Company’s Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2012 and 2011 was as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
(millions of dollars)	2012		2011		2012		2011
Interest expense	$	—	$	8.3	$	9.0	$	24.6
Non-cash portion	$	—	$	5.0	$	5.3	$	14.8

In conjunction with the convertible senior note offering, the Company entered into a bond hedge overlay, including both call options and warrants, at a net pre-tax cost of $25.2 million, effectively raising the conversion premium to 50.0%, or approximately $38.61 per share. On April 16, 2012, the Company settled the call option portion of the bond hedge overlay, receiving approximately 6.5 million shares of its common stock. The settlement resulted in an increase to common stock held in treasury of $503.9 million offset by an increase to capital in excess of par value of $503.9 million in the second quarter of 2012.

During the third quarter of 2012, the Company settled the majority of the warrants included in the bond hedge overlay, delivering approximately 4.4 million shares of its common stock held in treasury, resulting in a decrease to common stock held in treasury of $301.0 million offset by a decrease to capital in excess of par value of $301.0 million. Subsequent to the Balance Sheet date, during the fourth quarter of 2012, the Company delivered approximately 0.5 million shares of its common stock held in treasury, which will result in a decrease to common stock held in treasury of $37.5 million offset by a decrease to capital in excess of par value of $37.5 million. As of October 12, 2012, the warrant portion of the bond hedge overlay was completely settled.

As of September 30, 2012 and December 31, 2011, the estimated fair values of the Company’s senior unsecured notes totaled $773.9 million and $1,454.4 million, respectively. The estimated fair values were $123.2 million and $435.5 million higher at September 30, 2012 and December 31, 2011, respectively, than their carrying values. The carrying value of the Company's multi-currency revolving credit facility is equal to its fair value. Fair market values are developed using observable values for similar debt instruments, which are considered Level 2 inputs as defined by ASC Topic 820. The fair value estimates do not necessarily reflect the values the Company could realize in the current markets.

The Company had outstanding letters of credit of $55.8 million and $58.5 million at September 30, 2012 and December 31, 2011, respectively. The letters of credit typically act as guarantees of payment to certain third parties in accordance with specified terms and conditions.