Pitney Bowes 2014 Annual Report Download - page 33

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23
Financings and Capitalization
We are a Well-Known Seasoned Issuer with the SEC, which allows us to issue debt securities, preferred stock, preference stock, common
stock, purchase contracts, depositary shares, warrants and units in an expedited fashion. We have a commercial paper program that is an
important source of liquidity for us and a committed credit facility of $1.0 billion to support our commercial paper issuances. During
2014, we did not borrow under our commercial paper program. In 2013, commercial paper borrowings averaged $52 million at a weighted-
average interest rate of 0.41% and the maximum amount of commercial paper outstanding at any point in time was $300 million. The
credit facility was renewed in January 2015 and expires in January 2020. We have not drawn upon the credit facility.
2014 Activity
We issued $500 million of 4.625% fixed rate 10-year notes. Interest is payable in March and September and the notes mature in March
2024, but may be redeemed, at any time, in whole or in part, at our option. If the notes are redeemed prior to December 15, 2023, the
redemption price will be equal to the sum of 100% of the principal amount, accrued and unpaid interest and a make-whole payment. Net
proceeds of $493 million received after fees and discounts were used to fund the 2014 Tender Offer (see below).
We redeemed an aggregate $500 million of the 5.75% Notes due 2017 and the 5.25% Notes due 2037 through a cash tender offer (the
2014 Tender Offer). Holders who validly tendered their notes received the principal amount, all accrued and unpaid interest and a premium
payment. We incurred expenses of $62 million, consisting of the call premium, the write-off of unamortized costs and bank transaction
fees.
We also repaid $100 million of outstanding Term Loans and received a loan of $16 million from the State of Connecticut in connection
with the relocation of our corporate headquarters. The loan consists of a $15 million development loan and $1 million jobs-training grant
that is subject to refund if certain conditions are not met. The loan requires monthly interest payments through November 2020 and
principal and interest payments from December 2020 through maturity in November 2024.
We repurchased $50 million of our common shares during 2014.
2013 Activity
We issued $425 million of 6.7% fixed-rate 30-year notes. Interest is payable quarterly and the notes mature in March 2043, but may be
redeemed, in whole or in part, at our option any time on or after March 2018 at a redemption price equal to 100% of the principal amount,
plus accrued and unpaid interest. Net proceeds of $412 million received after fees and discounts were used to fund the 2013 Tender Offer
(see below).
We redeemed an aggregate $405 million of the 4.875% Notes due 2014, the 5.0% Notes due 2015, and the 4.75% Notes due 2016 through
a cash tender offer (the 2013 Tender Offer). Holders who validly tendered their notes received the principal amount, all accrued and
unpaid interest and a premium payment. We received $5 million from the unwind of certain interest rate swap agreements and recognized
a net loss of $25 million, consisting primarily of the premium payment.
We redeemed $375 million of maturing 3.875% notes and an additional $300 million of 4.875% notes that were scheduled to mature in
August 2014. In connection with the early redemption of the notes, we received $3 million from the unwind of an interest rate swap and
incurred expenses of $8 million, consisting primarily of a premium payment.
2012 Activity
We borrowed $230 million under term loan agreements that bear interest at the applicable London Interbank Offered Rate plus 2.25%
or Prime Rate plus 1.25%, at our option. Interest is paid quarterly and the loans mature in 2015 and 2016. We also issued $110 million
of 10-year notes with a coupon rate of 5.25%. Interest is paid quarterly and the notes mature in November 2022. However, we may redeem
some or all of the notes at any time on or after November 2015 at a redemption price equal to 100% of the principal amount, plus accrued
and unpaid interest. The proceeds from these issuances were for general corporate purposes, including the repayment of 2013 debt
maturities.
Debt Maturities
We have $2 billion of debt maturing within the next five years, including $325 million due in 2015. While we fully expect to be able to
fund these maturities with cash or by refinancing through the U.S. capital markets, these obligations could increase our vulnerability to
adverse market conditions and impact our ability to refinance existing maturities.