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+Simplified Capital Structure
By refinancing our subordinated and senior secured notes with senior unsecured notes we simplified our capital structure, further enhanced our financial flexibility, lowered our interest costs and extended our debt maturities.
– John Kunz,
– Vice President,
– Treasurer and Tax
More on Simplified Capital Structure
Our balance sheet is in a much better position than it was a year ago, with the next note maturity not due until 2015. Our liquidity and the existing cushion under the financial covenants reduce our financial risk and enable increased flexibility to operate in down economic cycles.
During the year, we went to the capital markets four times to extend maturities, lower interest rates and increase liquidity. First, we renewed the North American accounts receivable securitization program and increased the facilities’ size to $150 million. We then amended and extended the senior secured revolving credit facility, increasing its size to $622 million and lowering the interest cost. In the public market, we refinanced two of our outstanding notes, replacing senior secured and senior subordinated notes with senior unsecured notes maturing in 2018 and 2020 with a combined annual interest savings of $15 million.
Our overriding financial objective since becoming a standalone company has been to generate cash from operations to fund our growth and reduce our leverage. Although interrupted by the recent global financial crisis, we fully resumed our long-term deleveraging trend, accelerated by a successful equity issuance in 2009, and achieved a record low leverage ratio of 1.9x at the end of 2010.
– Paul Novas,
– Vice President, Controller
More on Leverage Ratio
Since becoming a standalone company, we have focused intensely on growing the business and paying down debt. While revenues are 68% higher than in 2000, our first full year as a standalone company, our net debt is more than $500 million lower than it was at the end of 2000.
We made good progress reducing our leverage, having reached a net debt/adjusted EBITDA* ratio of 2.4x at the end of 2007, before the global economic crisis began in 2008. Early in the crisis, we immediately redoubled our cost management efforts with an aggressive restructuring program and other cost reduction actions across all operations around the globe. In November 2009, we also issued 12 million shares of common stock and used the net proceeds of $188 million to pay down debt. By retaining and further building upon the hard-won operational efficiencies achieved during this challenging period, and then growing the business at a pace well above the overall industry recovery rate through 2010, we fully resumed our balance sheet deleveraging trend and achieved a new low of 1.9x at the end of 2010.
We plan to continue to generate positive cash flow to fund our growth and further delever the balance sheet, strengthening our foundation for future growth and enhancing financial flexibility to weather future economic down cycles.
*including noncontrolling interests