Financing Arrangements

12 Months Ended

Dec. 31, 2021

Debt Disclosure [Abstract]

Financing Arrangements

Note 12 - Financing Arrangements

Short-term debt as of December 31, 2021 and 2020 was as follows:

	2021		2020
Variable-rate Accounts Receivable Facility with an interest rate of 0.96% at December 31, 2020	$	—	$	58.0
Borrowings under lines of credit for certain of the Company’s foreign subsidiaries with various banks with interest rates ranging from 0.50% to 2.00% at December 31, 2021 and 0.24% to 1.75% at December 31, 2020	42.6		61.8
Short-term debt	$	42.6	$	119.8

The Company renewed the Accounts Receivable Facility on November 30, 2021. The $100.0 million facility matures on November 30, 2024. 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 may be limited to certain borrowing base limitations. These limitations reduced the availability of the Accounts Receivable Facility to $92.0 million at December 31, 2021. As of December 31, 2021, there were no outstanding borrowings under the Accounts Receivable Facility. 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 0.9%, 1.0% and 2.8% at December 31, 2021, 2020 and 2019, respectively.

The lines of credit for certain of the Company’s foreign subsidiaries provide for short-term borrowings up to $295.3 million in the aggregate. Most of these lines of credit are uncommitted. At December 31, 2021, the Company’s foreign subsidiaries had borrowings outstanding of $42.6 million and bank guarantees of $0.4 million, which reduced the aggregate availability under these facilities to $252.3 million. The weighted-average interest rate on these lines of credit during the year were 0.8%, 0.6% and 0.5% in 2021, 2020 and 2019, respectively. The increase in the weighted-average interest rate was primarily due to a higher borrowing rates. The weighted-average interest rate on lines of credit outstanding at December 31, 2021 and 2020 was 0.6% and 0.8%, respectively.

Note 12 - Financing Arrangements (continued)

Long-term debt as of December 31, 2021 and 2020 was as follows:

	2021		2020
Variable-rate Senior Credit Facility with an average interest rate on U.S. Dollar of 1.09% and Euro of 1.00% at December 31, 2021 and 2.01% and 1.48%, respectively, at December 31, 2020	$	9.0	$	9.7
Variable-rate Term Loan(1), maturing on September 11, 2023, with an interest rate of 1.23% at December 31, 2021 and of 1.63% at December 31, 2020.	321.1		329.6
Fixed-rate Senior Unsecured Notes(1), maturing on September 1, 2024, with an interest rate of 3.875%	349.5		349.0
Fixed-rate Euro Senior Unsecured Notes(1), maturing on September 7, 2027, with an interest rate of 2.02%	170.3		182.9
Fixed-rate Senior Unsecured Notes(1), maturing on December 15, 2028, with an interest rate of 4.50%	396.9		396.5
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		154.7
Fixed-rate Bank Loan, maturing on June 30, 2033, with an interest rate of 2.15%	15.8		18.8
Other	5.0		3.6
Total debt	$	1,422.3	$	1,444.8
Less current maturities	11.2		10.9
Long-term debt	$	1,411.1	$	1,433.9

(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, 2021, the Company had $9.0 million of outstanding borrowings under the Senior Credit Facility, which reduced the availability under this facility to $641.0 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 was calculated using a net debt construct, netting unrestricted cash in excess of $25 million, instead of total debt. The change to the consolidated leverage ratio calculation was effective through June 30, 2021. In the third quarter of 2021, the calculation of the consolidated leverage ratio under the Senior Credit Facility reverted back to 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 Apiary Investments Holding Limited and Rollon S.p.A., 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. The change to the consolidated leverage ratio calculation was effective through June 30, 2021. In the third quarter of 2021, the calculation of the consolidated leverage ratio under the 2023 Term Loan reverted back to a total debt construct.

On September 18, 2017, the Company entered into the €100 million variable-rate term loan that matured on September 18, 2020 (the "2020 Term Loan"). Upon the final payment during the third quarter of 2020, the Company fully repaid the 2020 Term Loan.

At December 31, 2021, the Company was in full compliance with all applicable covenants on its outstanding debt.

In the ordinary course of business, the Company utilizes standby letters of credit issued by financial institutions to guarantee certain obligations, most of which relate to insurance contracts. At December 31, 2021, outstanding letters of credit totaled $42.8 million, primarily having expiration dates within 12 months.

Note 12 - Financing Arrangements (continued)

The maturities of long-term debt (including $4.3 million of finance leases) for the five years subsequent to December 31, 2021 are as follows:

Year
2022	$	11.2
2023	9.8
2024	305.3
2025	359.3
2026	1.0
Thereafter	735.7

Interest paid was $56.5 million in 2021, $65.2 million in 2020 and $67.4 million in 2019. This differs from interest expense due to the timing of payments, the amortization of deferred financing fees and interest capitalized of $2.6 million in 2021, $1.5 million in 2020 and $1.1 million in 2019.