Note 9: Short-term and Long-term Debt

Short-term and long-term debt as of 2017 and 2016 year end consisted of the following:


(Amounts in millions)	2017		2016
5.50% unsecured notes due 2017	$	–	$	150.0
4.25% unsecured notes due 2018		250.0		250.0
6.70% unsecured notes due 2019		200.0		200.0
6.125% unsecured notes due 2021		250.0		250.0
3.25% unsecured notes due 2027		300.0		–
Other debt*		186.8		160.2

		1,186.8		1,010.2
Less: notes payable and current maturities of long-term debt:
Current maturities of long-term debt	$	(250.0)	$	(150.0)
Commercial paper borrowings		(151.0)		(130.0)
Other notes		(32.2)		(21.4)

		(433.2)		(301.4)

Total long-term debt	$	753.6	$	708.8

* Includes fair value adjustments related to interest rate swaps.

The annual maturities of Snap-on’s long-term debt and notes payable over the next five years are $433.2 million in 2018, (including $250 million of unsecured 4.25% notes due January 16, 2018 (the “2018 Notes”), that were repaid upon maturity), $200 million in 2019, no maturities in 2020, $250 million in 2021, and no maturities in 2022. See Note 20 regarding the January 2018 repayment of the 2018 Notes.

Average notes payable outstanding, including commercial paper borrowings, were $126.8 million and $49.3 million in 2017 and 2016, respectively. The weighted-average interest rate of 2.45% in 2017 decreased from 7.09% last year. This reflects the impact of the higher commercial paper borrowings which generally have lower interest rates than other notes payable outstanding. Average commercial paper borrowings were $103.3 million and $26.6 million in 2017 and 2016, respectively, and the weighted-average interest rate of 1.14% in 2017 increased from 0.73% last year. At 2017 year end, the weighted-average interest rate on outstanding notes payable of 2.34% compared with 2.85% at 2016 year end. The 2017 year-end rate benefited from lower interest rates on international borrowings. The 2016 year-end rate benefited from lower interest rates on commercial paper borrowings.

On February 15, 2017, Snap-on sold, at a discount, $300 million of unsecured 3.25% long-term notes that mature on March 1, 2027 (the”2027 Notes”). Interest on the 2027 Notes accrues at a rate of 3.25% per year and is payable semi-annually beginning September 1, 2017. Snap-on used the $297.8 million of net proceeds from the sale of the 2027 Notes, reflecting $1.9 million of transaction costs, to repay a portion of its then-outstanding commercial paper borrowings and the remainder is being used for general corporate purposes, which may include working capital, capital expenditures and possible acquisitions.

Snap-on has a five-year, $700 million multi-currency revolving credit facility that terminates on December 15, 2020 (the “Credit Facility”); no amounts were outstanding under the Credit Facility as of December 30, 2017. Borrowings under the Credit Facility bear interest at varying rates based on Snap-on’s then-current, long-term debt ratings. The Credit Facility’s financial covenant requires that Snap-on maintain, as of each fiscal quarter end, either (i) a ratio not greater than 0.60 to 1.00 of consolidated net debt (consolidated debt net of certain cash adjustments) to the sum of such consolidated net debt plus total equity and less accumulated other comprehensive income or loss (the “Debt Ratio”); or (ii) a ratio not greater than 3.50 to 1.00 of such consolidated net debt to earnings before interest, taxes, depreciation, amortization and certain other adjustments for the preceding four fiscal quarters then ended (the “Debt to EBITDA Ratio”). Snap-on may, up to two times during any five-year period during the term of the Credit Facility (including any extensions thereof), increase the maximum Debt Ratio to 0.65 to 1.00 and/or increase the maximum Debt to EBITDA Ratio to 3.75 to 1.00 for four consecutive fiscal quarters in connection with certain material acquisitions (as defined in the related credit agreement). As of 2017 year end, the company’s actual ratios of 0.26 and 1.16, respectively, were both within the permitted ranges set forth in this financial covenant. Snap-on generally issues commercial paper to fund its financing needs on a short-term basis and uses the Credit Facility as back-up liquidity to support such commercial paper issuances.