NOTES PAYABLE AND DEBT

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

NOTES PAYABLE AND DEBT

NOTES PAYABLE AND DEBT

As of September 30, 2023 and December 31, 2022, the Company had debt outstanding as follows:

	September 30,		December 31,
(in millions)	2023		2022
Short-term borrowings	$	60	$	58
Long-term debt
3.375% Senior notes due 03/15/25 ($500 million par value)	384		499
5.000% Senior notes due 10/01/25 ($800 million par value)*	481		840
2.650% Senior notes due 07/01/27 ($1,100 million par value)	1,093		1,092
7.125% Senior notes due 02/15/29 ($121 million par value)	120		120
1.000% Senior Notes due 05/19/31 (€1,000 million par value)	1,041		1,051
4.375% Senior notes due 03/15/45 ($500 million par value)	495		495
Term loan facilities, finance leases and other	54		45
Total long-term debt	3,668		4,142
Less: current portion	3		2
Long-term debt, net of current portion	$	3,665	$	4,140

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*These notes include the fair value step-up from the Delphi Technologies acquisition. The fair value step-up was calculated based on observable market data and is amortized as a reduction to interest expense over the remaining life of the instrument using the effective interest method.

In September 2023, the Company purchased and extinguished $438 million of senior notes due in 2025, comprised of $115 million and $323 million face value of its 3.375% and 5.000% Senior Notes, respectively. Total cash consideration paid was $430 million. The Company recorded a gain of approximately $28 million during the three months ended September 30, 2023, consisting of an $8 million gain related to a cash settlement below the face value of the 2025 notes and $20 million related to the write-off of the unamortized premium and discount that was recorded at the time of note issuance. The gain was recorded to Interest (income) expense, net, in the Statements of Operations.

The Company may utilize uncommitted lines of credit for short-term working capital requirements. As of September 30, 2023 and December 31, 2022, the Company had $60 million and $58 million, respectively, in borrowings under these facilities, which are classified in Notes payable and other short-term debt in the Condensed Consolidated Balance Sheets. The short-term borrowings primarily relate to a European money market loan with an interest rate of Euribor plus 1.75% that is callable upon immediate notice by either party.

The following table provides details on Interest expense, net included in the Condensed Consolidated Statements of Operations:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2023		2022			2023		2022
Interest expense	$	21	$	16		$	57	$	53
Gain on debt extinguishment	(28)		—			(28)		—
Interest income	(12)		(4)			(26)		(12)
Interest expense, net	$	(19)	$	12		$	3	$	41

The Company has a $2 billion multi-currency revolving credit facility that allows the Company to increase the facility by $1 billion with bank group approval. This facility was renewed in September 2023 and now matures in September 2028. The credit agreement contains customary events of default and one key financial covenant which is a debt-to-EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) ratio. The Company was in compliance with the financial covenant at September 30, 2023.

At September 30, 2023 and December 31, 2022, the Company had no outstanding borrowings under this facility.

The Company’s commercial paper program allows the Company to issue up to $2 billion of short-term, unsecured commercial paper notes under the limits of its multi-currency revolving credit facility. Under this program, the Company may issue notes from time to time and use the proceeds for general corporate purposes. The Company had no outstanding borrowings under this program as of September 30, 2023 and December 31, 2022.

The total current combined borrowing capacity under the multi-currency revolving credit facility and commercial paper program cannot exceed $2 billion.

As of September 30, 2023 and December 31, 2022, the estimated fair values of the Company’s senior unsecured notes totaled $3,099 million and $3,530 million, respectively. The estimated fair values were $515 million lower than their carrying value at September 30, 2023 and $567 million lower than their carrying value at December 31, 2022. Fair market values of the senior unsecured notes are developed using observable values for similar debt instruments, which are considered Level 2 inputs as defined by ASC Topic 820. The carrying values of the Company's multi-currency revolving credit facility, commercial paper program and other debt facilities approximate fair value. 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 $35 million and $31 million at September 30, 2023 and December 31, 2022, respectively. The letters of credit typically act as guarantees of payment to certain third parties in accordance with specified terms and conditions.