Quarterly report pursuant to Section 13 or 15(d)

DEBT (Tables)

v3.22.2.2
DEBT (Tables)
 9 Months Ended
Sep. 30, 2022
Debt Disclosure [Abstract]  
Schedule of Short-term Debt
Loans payable, commercial paper and the related weighted-average interest rates were as follows:
In millions September 30,
2022		 December 31,
2021
Loans payable (1)
$ 217  $ 208 
Commercial paper 2,393 
(2)(3)
 313 
(4)
(1) Loans payable consist primarily of notes payable to various domestic and international financial institutions. It is not practicable to aggregate these notes and calculate a quarterly weighted-average interest rate.
(2) The weighted-average interest rate, inclusive of all brokerage fees, was 2.82 percent at September 30, 2022. This included $97 million of borrowings under the Europe program at a weighted-average interest rate of 0.87 percent and $2,296 million of borrowings under the U.S. program at a weighted-average interest rate of 2.91 percent.
(3) Additional commercial paper borrowings were primarily used for the Meritor acquisition. See NOTE 16, "ACQUISITIONS," for additional information.
(4) The weighted-average interest rate, inclusive of all brokerage fees, was negative 0.01 percent at December 31, 2021. This included $113 million of borrowings under the Europe program that were at a negative weighted-average interest rate of 0.39 percent and $200 million of borrowings under the U.S. program at a weighted-average interest rate of 0.21 percent.
Summary of long-term debt
A summary of long-term debt was as follows:
In millions Interest Rate September 30,
2022		 December 31,
2021
Long-term debt    
Senior notes, due 2023 3.65% $ 500  $ 500 
Term loan, due 2025 Variable 2,000  — 
Senior notes, due 2025(1)
0.75% 500  500 
Debentures, due 2027 6.75% 58  58 
Debentures, due 2028 7.125% 250  250 
Senior notes, due 2030(1)
1.50% 850  850 
Senior notes, due 2043 4.875% 500  500 
Senior notes, due 2050 2.60% 650  650 
Debentures, due 2098(2)
5.65% 165  165 
Other debt 121  110 
Unamortized discount and deferred issuance costs (65) (68)
Fair value adjustments due to hedge on indebtedness (133) 34 
Finance leases 109  89 
Total long-term debt 5,505  3,638 
Less: Current maturities of long-term debt 55  59 
Long-term debt $ 5,450  $ 3,579 
(1) In 2021, we entered into a series of interest rate swaps to effectively convert from a fixed rate to floating rate. See "Interest Rate Risk" below for additional information.
(2) The effective interest rate is 7.48 percent.
On July 13, 2022, we entered into a loan agreement under which we may obtain delayed-draw loans in an amount up to $2.0 billion in the aggregate prior to October 13, 2022. We drew down the entire $2.0 billion balance on August 2, 2022, to help fund the acquisition of Meritor. The interest rate is based on Secured Overnight Financing Rate (SOFR) for the one-month interest period plus the relevant spread. The loan will mature on August 1, 2025. The agreement contains customary events of default and financial and other covenants, including maintaining a net debt to capital ratio of no more than 0.65 to 1.0.
Principal repayments on long-term debt
Principal payments required on long-term debt during the next five years are as follows:
In millions 2022 2023 2024 2025 2026
Principal payments $ 13  $ 563  $ 43  $ 2,509  $ 55 
Schedule of Interest Rate Derivatives
The following table summarizes the gains and losses:
Three months ended Nine months ended
In millions September 30, 2022 October 3, 2021 September 30, 2022 October 3, 2021
Type of Swap Gain (Loss) 
on Swaps		 Gain (Loss) on Borrowings Gain (Loss) 
on Swaps		 Gain (Loss) on Borrowings Gain (Loss) 
on Swaps		 Gain (Loss) on Borrowings Gain (Loss) 
on Swaps		 Gain (Loss) on Borrowings
Interest rate swaps(1)
$ (47) $ 45  $ —  $ —  $ (158) $ 159  $ —  $ — 
(1) The difference between the gain (loss) on swaps and borrowings represents hedge ineffectiveness.
Schedule of Derivative Instruments, Effect on Other Comprehensive Income (Loss) The following table summarizes the gains, net of tax, recognized in other comprehensive income:
In millions Three months ended Nine months ended
Type of Swap September 30,
2022		 October 3,
2021		 September 30,
2022		 October 3,
2021
Interest rate locks $ 21  $ —  $ 103  $ 28 
Fair value and carrying value of total debt
Based on borrowing rates currently available to us for bank loans with similar terms and average maturities, considering our risk premium, the fair values and carrying values of total debt, including current maturities, were as follows:
 
In millions September 30,
2022		 December 31,
2021
Fair value of total debt (1)
$ 7,635  $ 4,461 
Carrying value of total debt 8,115  4,159 
(1) The fair value of debt is derived from Level 2 input measures.