Avon 2015 Annual Report Download - page 101

NOTE 5. Debt and Other Financing
Debt
Debt at December 31 consisted of the following:
2015 2014
Debt maturing within one year:
Notes payable $ 50.4 $ 116.0
Current portion of long-term debt 4.8 5.7
Total $ 55.2 $ 121.7
Long-term debt:
2.375% Notes, due March 2016 $ – $ 249.9
5.75% Notes, due March 2018 249.8 249.7
4.20% Notes, due July 2018 249.8 249.7
6.50% Notes, due March 2019 348.6 348.2
Other debt, payable through 2025 with interest from .4%
to 7.8% 12.7 12.8
4.60% Notes, due March 2020 499.6 499.4
5.00% Notes, due March 2023 496.5 496.0
6.95% Notes, due March 2043 249.3 249.3
Total 2,106.3 2,355.0
Amortization of swap termination 58.1 79.4
Less current portion (4.8) (5.7)
Total long-term debt $2,159.6 $2,428.7
Notes payable included short-term borrowings of international subsidiaries at average annual interest rates of approximately 4.0% at
December 31, 2015 and 4.2% at December 31, 2014.
Other debt included obligations under capital leases of $11.7 at December 31, 2015 and $11.6 at December 31, 2014, which primarily
relate to leases of automobiles and equipment.
Public Notes
In March 2013, we issued, in a public offering, $250.0 principal amount of 2.375% Notes due March 15, 2016 (the “2.375% Notes”),
$500.0 principal amount of 4.60% Notes due March 15, 2020 (the “4.60% Notes”), $500.0 principal amount of 5.00% Notes due
March 15, 2023 (the “5.00% Notes”) and $250.0 principal amount of 6.95% Notes due March 15, 2043 (the “6.95% Notes”) (collectively,
the “2013 Notes”). The net proceeds from these 2013 Notes were used to repay outstanding debt. Interest on the 2013 Notes is payable
semi-annually on March 15 and September 15 of each year. On August 10, 2015, we prepaid our 2.375% Notes at a prepayment price
equal to 100% of the principal amount of $250.0, plus accrued interest of $3.1 and a make-whole premium of $5.0. In connection with the
prepayment of our 2.375% Notes, we incurred a loss on extinguishment of debt of $5.5 in the third quarter of 2015 consisting of the $5.0
make-whole premium for the 2.375% Notes and the write-off of $.5 of debt issuance costs and discounts related to the initial issuance of
the 2.375% Notes.
The indenture governing the 2013 Notes contains interest rate adjustment provisions depending on the long-term credit ratings assigned to
the 2013 Notes with S&P and Moody’s. As described in the indenture, the interest rates on the 2013 Notes increase by .25% for each one-
notch downgrade below investment grade on each of our long-term credit ratings assigned to the 2013 Notes by S&P or Moody’s. These
adjustments are limited to a total increase of 2% above the respective interest rates in effect on the date of issuance of the 2013 Notes. As a
result of the long-term credit rating downgrades by S&P in November 2014 to BB+, in February 2015 to BB and in June 2015 to B+, and by
Moody’s in October 2014 to Ba1 and in May 2015 to Ba3 for senior unsecured debt, the interest rates on the 2013 Notes have increased by
1.75%, of which .75% was effective as of March 15, 2015 and 1.0% was effective as of September 15, 2015.
A V O N 2015 F-19
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