Financing Arrangements

12 Months Ended

Dec. 31, 2020

Note 11 - Financing Arrangements

Short-term debt as of December 31, 2020 and 2019 was as follows:


	2020		2019
Variable-rate Accounts Receivable Facility with an interest rate of 0.96% at December 31, 2020 and of 2.77% at December 31, 2019	$	58.0	$	1.8
Borrowings under lines of credit for certain of the Company’s foreign subsidiaries with various banks with interest rates ranging from 0.24% to 1.75% at December 31, 2020 and 0.27% to 1.75% at December 31, 2019	61.8		15.5
Short-term debt	$	119.8	$	17.3

The Company has a $100.0 million Accounts Receivable Facility, which matures November 30, 2021. The Company currently intends to renew or replace the Accounts Receivable Facility prior it its maturity. Under the terms of the Accounts Receivable Facility, the Company sells, on an ongoing basis, certain domestic trade receivables to Timken Receivables Corporation, a wholly owned consolidated subsidiary that, in turn, uses the trade receivables to secure borrowings that are funded through a vehicle that issues commercial paper in the short-term market. Borrowings under the Accounts Receivable Facility are limited to certain borrowing base limitations. These limitations reduced the availability of the Accounts Receivable Facility to $83.9 million at December 31, 2020. As of December 31, 2020, there were outstanding borrowings of $58.0 million under the Accounts Receivable Facility, which reduced the availability under this facility to $25.9 million. All of the outstanding borrowings under the Accounts Receivable Facility were classified as short-term due to its upcoming maturity in November of 2021. The cost of this facility, which is the prevailing commercial paper rate plus facility fees, is considered a financing cost and is included in interest expense in the Consolidated Statements of Income. The interest rate was 1.0%, 2.8% and 3.2% at December 31, 2020, 2019 and 2018, respectively.

The lines of credit for certain of the Company’s foreign subsidiaries provide for short-term borrowings up to $277.4 million in the aggregate. Most of these lines of credit are uncommitted. At December 31, 2020, the Company’s foreign subsidiaries had borrowings outstanding of $61.8 million and guarantees of $0.7 million, which reduced the aggregate availability under these facilities to $214.9 million. The weighted-average interest rate on these lines of credit during the year were 0.6%, 0.5% and 0.6% in 2020, 2019 and 2018, respectively. The increase in the weighted-average interest rate was primarily due to an increase in borrowings in Europe with higher rates. The weighted-average interest rate on lines of credit outstanding at December 31, 2020 and 2019 was 0.8% and 1.0%, respectively.

Note 11 - Financing Arrangements (continued)

Long-term debt as of December 31, 2020 and 2019 was as follows:


	2020		2019
Variable-rate Senior Credit Facility with an average interest rate on U.S. Dollar of 2.01% and Euro of 1.48% at December 31, 2020 and 2.85% and 1.00%, respectively, at December 31, 2019	$	9.7	$	132.7
Variable-rate Euro Term Loan(1), matured on September 18, 2020, with an interest rate of 1.13% at December 31, 2019.	—		54.4
Variable-rate Accounts Receivable Facility, with an interest rate of 2.77% at December 31, 2019.	—		98.2
Variable-rate Term Loan(1), maturing on September 11, 2023, with an interest rate of 1.63% at December 31, 2020 and of 2.92% at December 31, 2019.	329.6		338.5
Fixed-rate Senior Unsecured Notes(1), maturing on September 1, 2024, with an interest rate of 3.875%	349.0		348.5
Fixed-rate Euro Senior Unsecured Notes(1), maturing on September 7, 2027, with an interest rate of 2.02%	182.9		167.7
Fixed-rate Senior Unsecured Notes(1), maturing on December 15, 2028, with an interest rate of 4.50%	396.5		396.1
Fixed-rate Medium-Term Notes, Series A(1), maturing at various dates through May 2028, with interest rates ranging from 6.74% to 7.76%	154.7		154.6
Fixed-rate Bank Loan, maturing on June 30, 2033, with an interest rate of 2.15%	18.8		18.0
Other	3.6		4.1
Total debt	$	1,444.8	$	1,712.8
Less current maturities	10.9		64.7
Long-term debt	$	1,433.9	$	1,648.1

(1) Net of discount and fees

The Company entered into the Senior Credit Facility on June 25, 2019. The Senior Credit Facility amends and restates the Company's previous credit agreement, dated as of June 19, 2015. The Senior Credit Facility is a $650.0 million unsecured revolving credit facility, which matures on June 25, 2024. At December 31, 2020, the Company had $9.7 million of outstanding borrowings under the Senior Credit Facility, which reduced the availability under this facility to $640.3 million. The Senior Credit Facility has two financial covenants: a consolidated leverage ratio and a consolidated interest coverage ratio. On May 27, 2020, the Senior Credit Facility was amended to, among other things, effectively increase the limit with respect to the consolidated leverage ratio. As amended, the consolidated leverage ratio is calculated using a net debt construct, netting unrestricted cash in excess of $25 million, instead of total debt. This change to the consolidated leverage ratio calculation is effective through June 30, 2021, after which the calculation of the consolidated leverage ratio under the Senior Credit Facility will revert back to using a total debt construct.

On November 1, 2019, the Company assumed certain fixed-rate debt of €16 million associated with the BEKA acquisition that matures on June 30, 2033.

On September 11, 2018, the Company entered into the $350 million 2023 Term Loan. Proceeds from the 2023 Term Loan were used to fund the acquisitions of Cone Drive and Rollon, which closed on September 1, 2018 and September 18, 2018, respectively. On July 12, 2019, the Company amended the 2023 Term Loan agreement to, among other things, align covenants and other terms with the Senior Credit Facility. On May 27, 2020, the 2023 Term Loan agreement was further amended to align the calculation of the consolidated leverage ratio and other terms with the Senior Credit Facility.

On September 18, 2017, the Company entered into the 2020 Term Loan, that matured on September 18, 2020. Upon the final payment during the third quarter of 2020, the Company fully repaid the 2020 Term Loan.

At December 31, 2020, the Company was in full compliance with all applicable covenants on its outstanding debt.

Note 11 - Financing Arrangements (continued)

The maturities of long-term debt (including $3.7 million of finance leases) for the five years subsequent to December 31, 2020 are as follows:


Year
2021	$	10.9
2022	10.2
2023	10.2
2024	304.5
2025	360.0
Thereafter	749.0

Interest paid was $65.2 million in 2020, $67.4 million in 2019 and $42.5 million in 2018. This differs from interest expense due to the timing of payments, the amortization of deferred financing fees and interest capitalized of $1.5 million in 2020, $1.1 million in 2019 and $0.4 million in 2018.