Pitney Bowes 2015 Annual Report Download - page 42

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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. At December
31, 2015, there was $90 million of outstanding commercial paper borrowings with an effective interest rate of 1.1%. In 2015, commercial
paper borrowings averaged $66 million at a weighted-average interest rate of 0.6% and the maximum amount of commercial paper
outstanding at any point in time was $291 million. During 2014, we did not borrow under our commercial paper program. The credit
facility was renewed in January 2015 and expires in January 2020. We have not drawn upon the credit facility.
2015 Activity
We redeemed the $110 million 5.25% notes due November 2022 at par plus accrued but unpaid interest and repaid the $275 million 5%
notes. We also repaid $130 million of outstanding term loans and borrowed $150 million under a new term loan. The new term loan bears
interest at the applicable Eurodollar Rate plus .90%. The Eurodollar Rate on the date of funding was .59%. The term loan matures in
December 2016 but can be extended to June 2017 at our option.
In January 2016, we borrowed $300 million under a new term loan and used the proceeds to repay a portion of the $371 million, 4.75%
notes due January 15, 2016. The remaining portion was repaid through cash from operations. The new term loan bears interest at the
applicable Eurodollar Rate plus 1.25% and matures in December 2020. The Eurodollar Rate on the date of funding was .62%.
2014 Activity
We issued $500 million of 4.625% fixed rate 10-year notes. 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 consisted 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. In 2015, we satisfied the conditions under
the jobs-training grant.
2013 Activity
We issued $425 million of 6.7% fixed-rate 30-year notes. 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 unwinding 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 unwinding of an interest rate swap
and incurred expenses of $8 million, consisting primarily of a premium payment.
Debt Maturities
We have $2 billion of debt maturing within the next five years. 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. In addition, in October 2016, the $300 million of outstanding Preferred Stock of one of our
subsidiaries is redeemable at our option. If we do not redeem, the dividend rate increases 50% and will increase 50% every six months
thereafter. We are currently evaluating various alternatives to redeem or refinance the Preferred Stock. See Note 16` to the Consolidated
Financial Statements.