Western Union 2007 Annual Report Download - page 74

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WESTERN UNION 2007 Annual Report
Exclusive of discounts and the fair value of the interest rate swap,
maturities of borrowings as of December 31, 2007 are $838.2
million in 2008, $1.0 billion in 2011 and $1.5 billion thereafter.
There are no contractual maturities on borrowings during 2009
and 2010.
The Company’s obligations with respect to its outstanding
borrowings, as described below, rank equally.
Commercial Paper Program
On November 3, 2006, the Company established a commercial
paper program pursuant to which the Company may issue unse-
cured commercial paper notes (the “Commercial Paper Notes”)
in an amount not to exceed $1.5 billion outstanding at any time.
The Commercial Paper Notes may have maturities of up to 397
days from date of issuance. Interest rates for borrowings are
based on market rates at the time of issuance. The Company’s
commercial paper borrowings at December 31, 2007 and 2006
had weighted-average interest rates of approximately 5.5% and
5.4%, respectively, and a weighted-average initial terms of 36
days and 17 days, respectively.
Revolving Credit Facility
On September 27, 2006, the Company entered into a fi ve-year
unsecured revolving credit facility, which includes a $1.5 billion
revolving credit facility, a $250.0 million letter of credit sub-facility
and a $150.0 million swing line sub-facility (the “Revolving Credit
Facility”). The Revolving Credit Facility contains certain covenants
that, among other things, limit or restrict the ability of the Company
and other signifi cant subsidiaries to grant certain types of security
interests, incur debt or enter into sale and leaseback transac-
tions. The Company is also required to maintain compliance with
a consolidated interest coverage ratio covenant.
On September 28, 2007, the Company entered into an
amended and restated credit agreement, the primary purpose
of which was to extend the maturity by one year from its original
fi ve-year $1.5 billion facility entered into in 2006. No other material
changes were made in the amended and restated facility. As of
December 31, 2007, the Company had no outstanding borrow-
ings and had approximately $1.2 billion available for borrowings
under this agreement.
Interest due under the Revolving Credit Facility is fi xed for
the term of each borrowing and is payable according to the terms
of that borrowing. Generally, interest is calculated using LIBOR
plus an interest rate margin (19 basis points as of December 31,
2007 and 2006). A facility fee is also payable quarterly on the
total facility, regardless of usage (6 basis points as of December
31, 2007 and 2006). The facility fee percentage is determined
based on our credit rating assigned by Standard & Poor’s Ratings
Services (“S&P”) and/or Moody’s Investor Services, Inc. (“Moody’s”).
In addition, to the extent the aggregate outstanding borrowings
under the Revolving Credit Facility exceed 50% of the related
aggregate commitments, a utilization fee based upon such ratings
is payable to the lenders on the aggregate outstanding borrow-
ings (5 basis points as of December 31, 2007 and 2006).
The following table summarizes the fair value of derivatives held at December 31, 2007 and their expected maturities (in millions):
Total 2008 2009 2010 2011
Foreign currency hedges — cash fl ow $(33.1) $(25.8) $(7.3) $ — $ —
Foreign currency hedges — undesignated 0.4 0.4 — — —
Interest rate hedges 3.6 0.6 1.4 1.0 0.6
Total $(29.1) $(24.8) $(5.9) $1.0 $0.6
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13. Borrowings
The Company’s outstanding borrowings at December 31, 2007 and 2006 consist of the following (in millions):
December 31, 2007 December 31, 2006
Carrying Value Fair Value Carrying Value Fair Value
Due in less than one year:
Commercial paper $ 338.2 $ 338.2 $ 324.6 $ 324.6
Note payable due January 2007 — — 3.0 3.0
Floating rate notes, due 2008 500.0 495.2 — —
Due in greater than one year:
Floating rate notes, due 2008 — — 500.0 499.8
5.400% notes, net of discount, due 2011(a) 1,002.8 1,012.0 999.0 986.3
5.930% notes, net of discount, due 2016 999.7 1,001.2 999.7 992.2
6.200% notes, net of discount, due 2036 497.3 473.1 497.2 471.4
Total borrowings $3,338.0 $3,319.7 $3,323.5 $3,277.3
(a) During the second quarter 2007, the Company entered into a $75.0 million interest rate swap related to these notes. For further information regarding the interest rate swap, refer
to Note 12, “Derivative Financial Instruments.”