Avon 2013 Annual Report Download - page 90

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Maturities of Long-Term Debt
Annual maturities of long-term debt, which includes our notes (including unamortized discounts and premiums), capital leases and financing
obligations outstanding at December 31, 2013, are as follows:
2014 2015 2016 2017 2018
2019
and Beyond Total
Maturities $28.6 $53.7 $258.6 $6.2 $506.5 $1,616.6 $2,470.2
Other Financing
Revolving Credit Facility
In March 2013, we entered into a four-year $1 billion revolving credit facility (the “revolving credit facility”), which expires in March 2017.
The revolving credit facility replaced the previous $1 billion revolving credit facility (the “2010 revolving credit facility”), which was
terminated in March 2013 prior to its scheduled expiration in November 2013. There were no amounts drawn under the 2010 revolving
credit facility on the date of termination and no early termination penalties were incurred. In the first quarter of 2013, $1.2 was recorded for
the write-off of issuance costs related to the 2010 revolving credit facility. As discussed below under “Commercial Paper Program,” the $1
billion available under the revolving credit facility is effectively reduced by the principal amount of any commercial paper outstanding.
Borrowings under the revolving credit facility bear interest, at our option, at a rate per annum equal to LIBOR plus an applicable margin or a
floating base rate plus an applicable margin, in each case subject to adjustment based on our credit ratings. The revolving credit facility has
an annual fee of approximately $2.0, payable quarterly, based on our current credit ratings. The revolving credit facility may be used for
general corporate purposes. As of December 31, 2013, there were no amounts outstanding under the revolving credit facility, and as of
December 31, 2012, there were no amounts outstanding under the 2010 revolving credit facility.
Debt Covenants
The revolving credit facility and the term loan agreement (collectively, “the debt agreements”) contain covenants limiting our ability to incur
liens and enter into mergers and consolidations or sales of substantially all our assets. The debt agreements also contain covenants that limit
our subsidiary debt to existing subsidiary debt at February 28, 2013 plus $500.0, with certain other exceptions. In addition, the debt
agreements contain financial covenants which require our interest coverage ratio at the end of each fiscal quarter to equal or exceed 4:1 and
our leverage ratio to not be greater than 3.75:1 at the end of the fiscal quarter ended December 31, 2013 and each subsequent fiscal
quarter on or prior to September 30, 2014, and 3.5:1 at the end of each fiscal quarter thereafter. In addition, the debt agreements contain
customary events of default and cross-default provisions. The interest coverage ratio is determined by dividing our consolidated EBIT (as
defined in the debt agreements) by our consolidated interest expense, in each case for the period of four fiscal quarters ending on the date
of determination. The leverage ratio is determined by dividing the amount of our consolidated funded debt on the date of determination by
our consolidated EBITDA (as defined in the debt agreements) for the period of four fiscal quarters ending on the date of determination.
When calculating the interest coverage and leverage ratios, the debt agreements allow us, subject to certain conditions and limitations, to
add back to our consolidated net income, among other items: (i) extraordinary and other non-cash losses and expenses, (ii) one-time fees,
cash charges and other cash expenses, premiums or penalties incurred in connection with any asset sale, equity issuance or incurrence or
repayment of debt or refinancing or modification or amendment of any debt instrument and (iii) cash charges and other cash expenses,
premiums or penalties incurred in connection with any restructuring or relating to any legal or regulatory action, settlement, judgment or
ruling, in an aggregate amount not to exceed $400.0 for the period from October 1, 2012 until the termination of commitments under the
debt agreements; provided, that restructuring charges incurred after December 31, 2014 shall not be added back to our consolidated net
income. As of December 31, 2013, and based on then applicable interest rates, the full $1 billion revolving credit facility, less the principal
amount of commercial paper outstanding (which was $0 at December 31, 2013), could have been drawn down without violating any
covenant. We were in compliance with our interest coverage and leverage ratios under the debt agreements for the four fiscal quarters
ended December 31, 2013.
The indentures governing the notes described under the caption “Public Notes” below contain certain covenants, including limitations on
the incurrence of liens and restrictions on the incurrence of sale/leaseback transactions and transactions involving a merger, consolidation or
sale of substantially all of our assets. In addition, these indentures contain customary events of default and cross-default provisions. Further,
we would be required to make an offer to repurchase the 2018 Notes, the 2019 Notes and each series of the Notes (as defined above) at a