Lexmark 2011 Annual Report Download - page 120

Credit Facility
Effective August 17, 2009, Lexmark entered into a new $275 million 3-year senior, unsecured, multi-
currency revolving credit facility with a group of banks. Under this credit facility, the Company may
borrow in U.S. dollars, Euros, British pounds sterling and Japanese yen. On August 26, 2009, the
Company entered into two commitment agreements that increased the available credit under the
facility to $300 million which was the same amount available under the prior facility that was terminated
in the third quarter of 2009. The facility includes commitments from nine financial institutions ranging
from $15 million to $60 million. Proceeds of the loans may be used to repay existing indebtedness,
finance working capital needs, and for general corporate purposes of the Company.
The facility contains usual and customary default provisions, leverage and interest coverage
restrictions and certain restrictions on, among other things, the Company’s indebtedness, disposition of
assets, liens and mergers and acquisitions. The minimum interest coverage ratio and maximum
leverage ratio financial covenants are substantially the same as those that existed under the prior
facility. The ratios are calculated in accordance with the facility agreement and may not be comparable
to similarly titled measures used by other registrants.
The facility also includes collateral terms providing that in the event the Company’s credit ratings
decrease to certain levels (Moody’s Ba2 or lower, S&P BB or lower) the Company will be required to
secure on behalf of the lenders first priority security interests in the Company’s owned U.S. assets.
These collateral arrangements will be released upon the Company achieving certain improvements in
its credit ratings (Moody’s Baa3 or higher, S&P BBB- or higher).
Interest on all borrowings under the facility depends upon the type of loan, namely alternative base rate
borrowings, swingline loans or eurocurrency borrowings. Alternative base rate borrowings bear interest
at the greater of the prime rate, the federal funds rate plus one-half of one percent, or the adjusted
LIBO rate (as defined in the facility) plus one percent. Swingline loans (limited to $50 million) bear
interest at an agreed upon rate at the time of the borrowing. Eurocurrency loans bear interest at the
sum of (i) LIBOR for the applicable currency and interest period and (ii) the credit default swap spread
as defined in the facility subject to a floor of 2.5% and a cap of 4.5%. In addition, Lexmark is required
to pay a commitment fee on the unused portion of the facility of 0.40% to 0.75% based upon the
Company’s debt ratings. The interest and commitment fees are payable at least quarterly.
Effective January 18, 2012, Lexmark entered into a $350 million 5-year senior, unsecured,
multicurrency revolving credit facility that replaces the Company’s $300 million 3-year Multicurrency
Revolving Credit Agreement entered into on August 17, 2009. Refer to Note 21 of the Notes to
Consolidated Financial Statements for additional information regarding the Company’s new credit
facility agreement.
Short-term Debt
Lexmark’s Brazilian operation has a short-term, uncommitted line of credit. The interest rate on this line
of credit varies based upon the local prevailing interest rates at the time of borrowing. As of
December 31, 2011 and 2010, there were no amounts outstanding under this credit facility.
Other
Total cash paid for interest on the debt facilities amounted to $42.6 million, $43.1 million and
$42.5 million in 2011, 2010, and 2009, respectively.
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