Lexmark 2015 Annual Report Download - page 103

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This facility provides for the availability of swingline loans and multicurrency letters of credit. Under certain circumstances and
subject to certain conditions, the aggregate amount available under the facility may be increased to a maximum of $650 million.
Interest on swingline borrowings under the facility is determined based on the offered rate at the time of the loan. Interest on ABR and
Eurocurrency borrowings are based on the Adjusted Base Rate and Adjusted LIBO Rate, respectively, plus in each case a margin that
is adjusted on the basis of a combination of the Company’s consolidated leverage ratio and the Company’s index debt rating. The
commitment fee was 0.25% as of December 31, 2015.
The amended revolving credit facility contains customary affirmative and negative covenants and also contains certain financial
covenants, including those relating to a minimum interest coverage ratio of not less than 3.0 to 1.0 and a maximum leverage ratio of
not more than 3.0 to 1.0 as defined in the agreement. The amended credit facility also limits, among other things, the Company’s
indebtedness, liens and fundamental changes to its structure and business. The Company was in compliance with all covenants and
other requirements set forth in the facility agreement at December 31, 2015.
On October 19, 2015, the revolving credit facility was further amended to reduce the impact of certain cash restructuring charges
incurred by the Company and certain fees and expenses incurred by the Company in connection with permitted acquisitions.
Senior Notes
In March 2013, the Company completed a public debt offering of $400.0 million aggregate principal amount of fixed rate senior
unsecured notes. The notes with an aggregate principal amount of $400.0 million and 5.125% coupon were priced at 99.998% to have
an effective yield to maturity of 5.125% and will mature March 15, 2020 (referred to as the “2020 senior notes”). The 2020 senior
notes will rank equally with all existing and future senior unsecured indebtedness. The notes from the May 2008 public debt offering
with an aggregate principal amount of $300.0 million and 6.65% coupon were priced at 99.73% to have an effective yield to maturity
of 6.687% and will mature June 1, 2018 (referred to as the “2018 senior notes”). At December 31, 2015, the outstanding balance of
senior note debt was $697.3 million (net of unamortized issuance costs of $2.5 million and unamortized discount of $0.2 million). At
December 31, 2014, the outstanding balance was $696.5 million (net of unamortized issuance costs of $3.2 million and unamortized
discount of $0.3 million).
The 2020 senior notes pay interest on March 15 and September 15 of each year. The 2018 senior notes pay interest on June 1 and
December 1 of each year. The interest rate payable on the notes of each series is subject to adjustments from time to time if either
Moody’s Investors Service, Inc. or Standard and Poor’s Ratings Services downgrades the debt rating assigned to the notes to a level
below investment grade, or subsequently upgrades the ratings.
The senior notes contain typical restrictions on liens, sale leaseback transactions, mergers and sales of assets. There are no sinking
fund requirements on the senior notes and they may be redeemed at any time at the option of the Company, at a redemption price as
described in the related indenture agreements, as supplemented and amended, in whole or in part. If a “change of control triggering
event” as defined below occurs, the Company will be required to make an offer to repurchase the notes in cash from the holders at a
price equal to 101% of their aggregate principal amount plus accrued and unpaid interest to, but not including, the date of repurchase.
A “change of control triggering event” is defined as the occurrence of both a change of control and a downgrade in the debt rating
assigned to the notes to a level below investment grade.
In March 2013, the Company repaid its $350.0 million principal amount of 5.90% senior notes that were due on June 1, 2013 (referred
to as the “2013 senior notes”). For the year ended December 31, 2013, a loss of $3.3 million was recognized in the Consolidated
Statements of Earnings, related to $3.2 million of premium paid upon repayment and $0.1 million related to the write-off of related
debt issuance costs.
The Company used a portion of the net proceeds from the 2020 senior notes offering to extinguish the 2013 senior notes and used the
remaining net proceeds for general corporate purposes, including to fund share repurchases, fund dividends, finance acquisitions,
finance capital expenditures and operating expenses, and invest in subsidiaries.
Other
During the second quarter of 2015, the Company entered into an agreement for an uncommitted revolving credit facility. Under the
agreement, the Company may borrow up to a total of $100 million. There were no outstanding borrowings under the uncommitted
revolving credit facility at December 31, 2015.
Total cash paid for interest on the debt facilities amounted to $45.0 million, $42.0 million, and $39.1 million in 2015, 2014 and 2013,
respectively. The cash paid for interest amount of $39.1 million for 2013 does not include the premium paid upon repayment of the
Company’s 2013 senior notes of $3.2 million and the write-off of related debt issuance costs of $0.1 million.