Quarterly report pursuant to Section 13 or 15(d)

Long-Term Debt and Borrowing Arrangements

v3.23.1
Long-Term Debt and Borrowing Arrangements
 3 Months Ended
Mar. 31, 2023
Debt Disclosure [Abstract]  
Long-Term Debt and Borrowing Arrangements
9. LONG-TERM DEBT AND BORROWING ARRANGEMENTS
The Company’s indebtedness consisted of:
March 31, 2023 December 31, 2022
Long-term debt: (a)
Amount
Weighted Average Rate (b)
Amount
Weighted Average Rate (b)
$750 million revolving credit facility (due April 2027)
 $ —  $ — 
$400 million term loan A (due April 2027)
 399  6.18% 399  5.92%
$1.6 billion term loan B (due May 2025)
1,141  3.71% 1,139  3.70%
4.375% senior unsecured notes (due August 2028)
 494  4.38% 494  4.38%
Finance leases 43  4.50% 45  4.50%
Total long-term debt 2,077  2,077 
Less: Current portion of long-term debt 26  20 
Long-term debt $ 2,051  $ 2,057 
______________________
(a)    The carrying amount of the term loans and senior unsecured notes are net of deferred debt issuance costs of $11 million as of both March 31, 2023 and December 31, 2022.
(b)    Weighted average interest rates are based on period-end balances, including the effects from hedging.
Maturities and Capacity
The Company’s outstanding debt as of March 31, 2023 matures as follows:
Long-Term Debt
Within 1 year $ 26 
Between 1 and 2 years 26 
Between 2 and 3 years 1,176 
Between 3 and 4 years 37 
Between 4 and 5 years 306 
Thereafter 506 
Total $ 2,077 

As of March 31, 2023, the available capacity under the Company’s revolving credit facility was as follows:
Revolving Credit Facility
Total capacity $ 750 
Less: Letters of credit 9 
Available capacity $ 741 
Deferred Debt Issuance Costs
The Company classifies deferred debt issuance costs related to its revolving credit facility within other non-current assets on the Condensed Consolidated Balance Sheets. Such deferred debt issuance costs were $3 million and $4 million as of March 31, 2023 and December 31, 2022, respectively.
Cash Flow Hedge
The Company has pay-fixed/receive-variable interest rate swaps which hedges the interest rate exposure on $1.1 billion, or more than 96% of the outstanding amount of its term loan B as of March 31, 2023. The interest rate swaps consist of a $600 million swap that expires in the second quarter of 2024 and has a weighted average fixed rate of 2.58% and a $500 million swap that expires in the fourth quarter of 2024 and has a weighted average fixed rate of 0.99%. The variable rates of the swap agreements are based on one-month LIBOR, which the Company intends to replace with SOFR by the end of the second quarter of 2023.The aggregate fair value of these interest rate swaps was an asset of $44 million and $53 million as of March 31, 2023 and December 31, 2022, respectively, which was included within other non-current assets on the Condensed Consolidated Balance Sheets, respectively. The effect of interest rate swaps on interest expense, net on the Condensed Consolidated Statements of Income was $7 million of income and $5 million of expense for the three months ended March 31, 2023 and 2022, respectively.
There was no hedging ineffectiveness recognized in the three months ended March 31, 2023 or 2022. The Company expects to reclassify $32 million of gains from accumulated other comprehensive income (“AOCI”) to interest expense during the next 12 months.
Interest Expense, Net
The Company incurred net interest expense of $22 million and $20 million for the three months ended March 31, 2023 and 2022, respectively. Cash paid related to such interest was $29 million and $24 million for the three months ended March 31, 2023 and 2022, respectively.