SEC Filing | Owens & Minor, Inc.

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omi-20200930

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

________________________________________________

FORM 10-Q

________________________________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-9810

_______________________________________________________

Owens & Minor, Inc.

(Exact name of Registrant as specified in its charter)

_______________________________________________________


Virginia			54-1701843
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

9120 Lockwood Boulevard	Mechanicsville	Virginia	23116
(Address of principal executive offices)			(Zip Code)

Post Office Box 27626, Richmond, Virginia			23261-7626
(Mailing address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code (804) 723-7000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $2 par value per share

OMI

New York Stock Exchange

_________________________________________________________

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “larger accelerated filer”, “accelerated filer”, “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐ (Do not check if a smaller reporting company)	Smaller reporting company	☒
Emerging growth company	☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.			☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of Owens & Minor, Inc.’s common stock outstanding as of October 29, 2020, was 73,512,279 shares.

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Owens & Minor, Inc. and Subsidiaries

Index


Part I. Financial Information		Page

Item 1.	Financial Statements	3
	Consolidated Statements of Operations—Three and Nine Months Ended September 30, 2020 and 2019	3
	Consolidated Statements of Comprehensive Income (Loss )—Three and Nine Months Ended September 30, 2020 and 2019	4
	Consolidated Balance Sheets—September 30, 2020 and December 31, 2019	5
	Consolidated Statements of Cash Flows—Ni ne Months Ended September 30, 2020 and 2019	6
	Consolidated Statements of Changes in Equity—Three and Nine Months Ended September 30, 2020 and 2019	7
	Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	32
Part II. Other Information

Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities	32
Item 6.	Exhibits	32

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Part I. Financial Information

Item 1. Financial Statements

Owens & Minor, Inc. and Subsidiaries

Consolidated Statements of Operations

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share data)	2020		2019		2020		2019
Net revenue	$	2,187,928	$	2,292,752	$	6,118,340	$	7,020,296
Cost of goods sold	1,843,589		2,012,130		5,236,035		6,176,537
Gross margin	344,339		280,622		882,305		843,759
Distribution, selling and administrative expenses	262,538		248,661		758,320		767,986
Acquisition-related and exit and realignment charges	6,382		4,522		18,500		14,776
Other operating (income) expense, net	(134)		1,329		(3,020)		2,385
Operating income	75,553		26,110		108,505		58,612
Interest expense, net	20,975		24,050		65,923		75,557
Other expense, net	1,093		550		1,387		4,014
Income (loss) from continuing operations before income taxes	53,485		1,510		41,195		(20,959)
Income tax provision (benefit)	7,404		(1,910)		3,863		(3,726)
Income (loss) from continuing operations, net of tax	46,081		3,420		37,332		(17,233)
Loss from discontinued operations, net of tax	—		(2,196)		(58,203)		(6,115)
Net income (loss)	$	46,081	$	1,224	$	(20,871)	$	(23,348)

Income (loss) from continuing operations per common share: basic and diluted	$	0.76	$	0.06	$	0.61	$	(0.28)
Loss from discontinued operations per common share: basic and diluted	—		(0.04)		(0.95)		(0.11)
Net income (loss) per common share: basic and diluted	$	0.76	$	0.02	$	(0.34)	$	(0.39)

See accompanying notes to consolidated financial statements.

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Owens & Minor, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2020		2019		2020		2019
Net income (loss)	$	46,081	$	1,224	$	(20,871)	$	(23,348)
Other comprehensive income (loss), net of tax:
Currency translation adjustments (net of income tax of $0 in 2020 and 2019)	5,173		(9,038)		7,003		(5,793)
Change in unrecognized net periodic pension costs (net of income tax of $47 and $135 in 2020, and $61 and $187 in 2019)	167		199		932		593
Net unrealized gain (loss) on derivative instruments (net of income tax of $831 and income tax benefit of $3,232 in 2020, and $1,225 and $4,866 in 2019)	1,681		(1,789)		(9,792)		(9,464)
Total other comprehensive income (loss), net of tax	7,021		(10,628)		(1,857)		(14,664)
Comprehensive income (loss)	$	53,102	$	(9,404)	$	(22,728)	$	(38,012)

See accompanying notes to consolidated financial statements.

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Owens & Minor, Inc. and Subsidiaries

Consolidated Balance Sheets

(unaudited)


	September 30,		December 31,
(in thousands, except per share data)	2020		2019
Assets
Current assets
Cash and cash equivalents	$	77,256	$	67,030
Accounts receivable, net of allowances of $20,135 and $21,015	688,884		674,706
Merchandise inventories	1,095,410		1,146,192
Other current assets	235,983		79,372
Current assets of discontinued operations	—		439,983
Total current assets	2,097,533		2,407,283
Property and equipment, net of accumulated depreciation of $273,403 and $245,718	301,299		315,427
Operating lease assets	143,362		142,219
Goodwill	390,395		393,181
Intangible assets, net	251,615		285,018
Other assets, net	112,911		99,956
Total assets	$	3,297,115	$	3,643,084
Liabilities and equity
Current liabilities
Accounts payable	$	946,116	$	808,035
Accrued payroll and related liabilities	71,406		53,584
Other current liabilities	412,483		231,029
Current liabilities of discontinued operations	—		323,511
Total current liabilities	1,430,005		1,416,159
Long-term debt, excluding current portion	1,099,645		1,508,415
Operating lease liabilities, excluding current portion	120,025		117,080
Deferred income taxes	75,009		40,550
Other liabilities	121,096		98,726
Total liabilities	2,845,780		3,180,930
Commitments and contingencies
Equity
Common stock, par value $2 per share; authorized - 200,000 shares; issued and outstanding - 63,716 shares and 62,843 shares	127,432		125,686
Paid-in capital	262,002		251,401
Retained earnings	116,465		137,774
Accumulated other comprehensive loss	(54,564)		(52,707)
Total equity	451,335		462,154
Total liabilities and equity	$	3,297,115	$	3,643,084

See accompanying notes to consolidated financial statements.

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Owens & Minor, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(unaudited)


	Nine Months Ended September 30,
(in thousands)	2020		2019
Operating activities:
Net loss	$	(20,871)	$	(23,348)
Adjustments to reconcile net loss to cash provided by operating activities:
Depreciation and amortization	69,494		88,204
Share-based compensation expense	15,275		12,057
Loss on divestiture	65,472		—
Provision for losses on accounts receivable	9,583		9,759
Deferred income tax expense (benefit)	25,017		(11,989)
Changes in operating lease right-of-use assets and lease liabilities	(1,328)		(1,280)
Changes in operating assets and liabilities:
Accounts receivable	(20,173)		73,986
Merchandise inventories	52,605		136,021
Accounts payable	136,156		(221,381)
Net change in other assets and liabilities	(69,117)		69,756
Other, net	6,083		7,320
Cash provided by operating activities	268,196		139,105
Investing activities:
Proceeds from divestiture	133,000		—
Additions to property and equipment	(21,678)		(31,224)
Additions to computer software	(4,702)		(6,928)
Proceeds from sale of property and equipment	178		220
Proceeds from cash surrender value of life insurance policies	6,032		—
Cash provided by (used for) investing activities	112,830		(37,932)
Financing activities:
Proceeds from issuance of debt	150,000		—
Repayments under revolving credit facility	(107,900)		(36,100)
Repayments of debt	(270,399)		(40,700)
Financing costs paid	(10,367)		(4,313)
Cash dividends paid	(467)		(5,072)
Other, net	(5,822)		(3,109)
Cash used for financing activities	(244,955)		(89,294)
Effect of exchange rate changes on cash and cash equivalents	6,721		(2,243)
Net increase in cash, cash equivalents and restricted cash	142,792		9,636
Cash, cash equivalents and restricted cash at beginning of period	84,687		103,367
Cash, cash equivalents and restricted cash at end of period	$	227,479	$	113,003
Supplemental disclosure of cash flow information:
Income taxes received, net of payments	$	(1,892)	$	(12,085)
Interest paid	$	61,271	$	76,470

See accompanying notes to consolidated financial statements.

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Owens & Minor, Inc. and Subsidiaries

Consolidated Statements of Changes in Equity

(unaudited)


(in thousands, except per share data)	Common Shares Outstanding	Common Stock ($2 par value )		Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Equity
Balance, December 31, 2019	62,843	$	125,686	$	251,401	$	137,774	$	(52,707)	$	462,154
Net loss						(11,324)				(11,324)
Other comprehensive loss								(39,405)		(39,405)
Dividends declared ($0.0025 per share)						(127)				(127)
Share-based compensation expense, exercises and other	42	84		4,956						5,040
Balance, March 31, 2020	62,885	125,770		256,357		126,323		(92,112)		416,338
Net loss						(55,627)				(55,627)
Other comprehensive income								30,527		30,527
Dividends declared ($0.0025 per share)						(156)				(156)
Share-based compensation expense, exercises and other	852	1,704		2,376						4,080
Balance, June 30, 2020	63,737	127,474		258,733		70,540		(61,585)		395,162
Net income						46,081				46,081
Other comprehensive income								7,021		7,021
Dividends declared ($0.0025 per share)						(156)				(156)
Share-based compensation expense, exercises and other	(21)	(42)		3,269						3,227
Balance, September 30, 2020	63,716	$	127,432	$	262,002	$	116,465	$	(54,564)	$	451,335

Balance, December 31, 2018	62,294	$	124,588	$	238,773	$	200,670	$	(45,612)	$	518,419
Net loss						(14,096)				(14,096)
Other comprehensive loss								(6,423)		(6,423)
Dividends declared ($0.0025 per share)						(119)				(119)
Share-based compensation expense, exercises and other	642	1,284		2,774						4,058
Balance, March 31, 2019	62,936	125,872		241,547		186,455		(52,035)		501,839
Net loss						(10,476)				(10,476)
Other comprehensive income								2,387		2,387
Dividends declared ($0.0025 per share)						(114)				(114)
Share-based compensation expense, exercises and other	28	56		3,209						3,265
Balance, June 30, 2019	62,964	125,928		244,756		175,865		(49,648)		496,901
Net income						1,224				1,224
Other comprehensive loss								(10,628)		(10,628)
Dividends declared ($0.0025 per share)						(175)				(175)
Share-based compensation expense, exercises and other	(102)	(204)		4,160						3,956
Balance, September 30, 2019	62,862	$	125,724	$	248,916	$	176,914	$	(60,276)	$	491,278

See accompanying notes to consolidated financial statements.

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Owens & Minor, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, unless otherwise indicated)

Note 1—Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements include the accounts of Owens & Minor, Inc. and the subsidiaries it controls (we, us, or our) and contain all adjustments (which are comprised only of normal recurring accruals and use of estimates) necessary to conform with U.S. generally accepted accounting principles (GAAP). All significant intercompany accounts and transactions have been eliminated. The Movianto business represents a component that met accounting requirements to be classified as discontinued operations and held-for-sale beginning December 31, 2019. In accordance with GAAP, the results of operations and financial position of the Movianto business are presented as discontinued operations through June 18, 2020 (the Divestiture Date) and, as such, have been excluded from continuing operations for all periods presented. With the exception of Note 3, the Notes to Consolidated Financial Statements reflect the continuing operations of Owens & Minor, Inc. and its subsidiaries. See Note 3 for additional information regarding discontinued operations. The results of operations for interim periods are not necessarily indicative of the results expected for the full year.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires us to make assumptions and estimates that affect reported amounts and related disclosures. Actual results may differ from these estimates.

Cash, Cash Equivalents and Restricted Cash

Cash, cash equivalents and restricted cash includes cash and marketable securities with an original maturity or maturity at acquisition of three months or less. Cash, cash equivalents and restricted cash are stated at cost. Nearly all of our cash, cash equivalents and restricted cash are held in cash depository accounts in major banks in the United States, Europe, and Asia. Cash that is held by a major bank and has restrictions on its availability to us is classified as restricted cash. Restricted cash included in other current assets represents cash held in a designated account as of September 30, 2020 as required by the Fifth Amendment to the Credit Agreement, which stipulates that the cash held within this account is to be used to repay the 2021 Notes or the Term Loans. Restricted cash included in Other assets, net as of September 30, 2020 represents cash held in an escrow account as required by the Centers for Medicare & Medicaid Services (CMS) in conjunction with the Bundled Payments for Care Improvement (BPCI) Advanced Program.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the accompanying consolidated balance sheets that sum to the total of those same amounts presented in the accompanying consolidated statements of cash flows.


	September 30, 2020		December 31, 2019
Cash and cash equivalents	$	77,256	$	67,030
Restricted cash included in Other current assets	133,899		—
Restricted cash included in Other assets, net	16,324		16,261
Cash of discontinued operations	—		1,396
Total cash, cash equivalents and restricted cash	$	227,479	$	84,687

Note 2—Fair Value

The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable reported in the consolidated balance sheets approximate fair value due to the short-term nature of these instruments. The carrying amount of restricted cash also approximates fair value due to its nature. The fair value of debt is estimated based on quoted market prices or dealer quotes for the identical liability when traded as an asset in an active market (Level 1) or, if quoted market prices or dealer quotes are not available, on the borrowing rates currently available for loans with similar terms, credit ratings, and average remaining maturities (Level 2). See Note 6 for the fair value of debt. The fair value of interest rate swaps and foreign currency contracts is determined based on the present value of expected future cash flows considering the risks involved,

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including non-performance risk, and using discount rates appropriate for the respective maturities. Observable Level 2 inputs are used to determine the present value of expected future cash flows. See Note 8 for the fair value of derivatives.

Note 3—Discontinued Operations

On June 18, 2020, we completed the previously announced divestiture of our European logistics business, Movianto (the Divestiture), as well as certain support functions in our Dublin office, to Walden Group SAS (the Buyer) and EHDH (as Buyer’s guarantor) for cash consideration of $133 million. We concluded that the Movianto business met the criteria for discontinued operations as of December 31, 2019 and through the Divestiture Date, as the intention to sell represented a strategic shift and the criteria for held-for-sale were met. Movianto was previously reported in the Global Solutions segment.

Accordingly, the results of operations from the Movianto business are reported in the accompanying consolidated statements of operations as Loss from discontinued operations, net of tax for the three and nine months ended September 30, 2020 and 2019, and the related assets and liabilities are classified as held-for-sale as of December 31, 2019 in the accompanying balance sheet. We are working with the Buyer on a final working capital adjustment that could result in a benefit in an amount up to $42 million. There is no benefit of any such adjustment reflected in our consolidated financial statements as of September 30, 2020.

The following table summarizes the financial results of our discontinued operations for the three and nine months ended September 30, 2020 and 2019:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Net revenue	$	—	$	106,265	$	226,759	$	324,308
Cost of goods sold	—		24,399		53,923		78,729
Gross margin	—		81,866		172,836		245,579
Distribution, selling, and administrative expenses	—		81,565		157,512		245,562

Loss on divestiture	—		—		65,472		—
Acquisition-related and exit and realignment charges	—		383		4,825		774
Other operating income, net	—		(20)		(388)		(492)
Operating loss	—		(62)		(54,585)		(265)
Interest expense, net	—		1,887		3,144		5,162
Loss from discontinued operations before income taxes	—		(1,949)		(57,729)		(5,427)
Income tax provision from discontinued operations	—		247		474		688
Loss from discontinued operations, net of tax	$	—	$	(2,196)	$	(58,203)	$	(6,115)

We suspended depreciation and amortization on assets that are held-for-sale, including right-of-use assets recorded in accordance with ASU No. 2016-02, for the nine months ended September 30, 2020.

All revenue and expense included in discontinued operations during the nine months ended September 30, 2020 relates to activity through the Divestiture Date. No revenue or expense have been recorded in discontinued operations related to the disposal group subsequent to the Divestiture Date.

We have entered into transition services agreements with a subsidiary of the Buyer, pursuant to which we and a subsidiary of the Buyer will provide to each other various transitional services. Certain transition service arrangement costs and reimbursements were recorded during the three and nine months ended September 30, 2020. These amounts were immaterial for the three and nine months ended September 30, 2020.

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The assets and liabilities of the discontinued Movianto business reflected on the consolidated balance sheet at December 31, 2019 were as follows:


	December 31, 2019
Assets of discontinued operations
Cash and cash equivalents	$	1,396
Accounts receivable, net	78,643
Merchandise inventories	16,058
Other current assets	188,853
Current assets of discontinued operations	284,950
Property and equipment, net	65,710
Intangible assets, net	6,579
Other assets, net	27,431
Operating lease assets	87,425
Valuation allowance on disposal group classified as held-for-sale	(32,112)
Total assets of discontinued operations	$	439,983
Liabilities of discontinued operations
Accounts payable	$	53,981
Other current liabilities	182,980
Current liabilities of discontinued operations	236,961
Long-term debt, excluding current portion	5,523
Operating lease liabilities, excluding current portion	76,270
Other liabilities	4,757
Total liabilities of discontinued operations	$	323,511

Assets and liabilities held-for-sale as of December 31, 2019 were classified as current since we expected the Divestiture to be completed within one year of the balance sheet date.

The following table provides operating and investing cash flow information for our discontinued operations:


	September 30, 2020		September 30, 2019
Operating Activities:
Depreciation and amortization	$	—	$	15,466
Loss on divestiture	65,472		—
Investing Activities:
Capital expenditures	3,027		17,298

Note 4—Goodwill and Intangible Assets

The following table summarizes the goodwill balances by segment and the changes in the carrying amount of goodwill through September 30, 2020:


	Global Solutions		Global Products		Consolidated
Carrying amount of goodwill, December 31, 2019	$	283,905	$	109,276	$	393,181
Currency translation adjustments	—		(2,786)		(2,786)
Carrying amount of goodwill, September 30, 2020	$	283,905	$	106,490	$	390,395

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Intangible assets at September 30, 2020 and December 31, 2019 were as follows:


	September 30, 2020						December 31, 2019
	Customer Relationships		Tradenames		Other Intangibles		Customer Relationships		Tradenames		Other Intangibles

Gross intangible assets	$	268,179	$	90,000	$	43,238	$	270,693	$	90,000	$	43,055
Accumulated amortization	(113,999)		(22,791)		(13,012)		(92,947)		(16,520)		(9,263)
Net intangible assets	$	154,180	$	67,209	$	30,226	$	177,746	$	73,480	$	33,792
Weighted average useful life	10 years		11 years		8 years		10 years		11 years		8 years

At September 30, 2020, $67.2 million in net intangible assets were held in the Global Solutions segment and $184.4 million were held in the Global Products segment. Amortization expense for intangible assets was $10.2 million and $10.6 million for the three months ended September 30, 2020 and 2019, respectively, and $31.5 million and $33.4 million for the nine months ended September 30, 2020 and 2019, respectively.

Based on the current carrying value of intangible assets subject to amortization, estimated amortization expense is $10.4 million for the remainder of 2020, $39.8 million for 2021, $38.9 million for 2022, $38.7 million for 2023, $33.9 million for 2024 and $28.2 million for 2025.

Note 5—Exit and Realignment Costs

We periodically incur exit and realignment and other charges associated with optimizing our operations which includes the consolidation of certain distribution and outsourced logistics centers, administrative offices and warehouses, our client engagement center and IT restructuring charges. These charges also include costs associated with our strategic organizational realignment which include management changes, certain professional fees, and costs to streamline administrative functions and processes.

Exit and realignment charges by segment for the three and nine months ended September 30, 2020 and 2019 were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Global Solutions segment	$	2,714	$	969	$	6,255	$	3,149
Global Products segment	2,877		11		3,364		252
Total exit and realignment charges	$	5,591	$	980	$	9,619	$	3,401

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The following table summarizes the activity related to exit and realignment cost accruals through September 30, 2020 and 2019:


	Total
Accrued exit and realignment costs, December 31, 2019	$	8,162
Provision for exit and realignment activities:
Severance	1,391
Information system restructuring costs	183
Other	255

Cash payments	(5,799)
Accrued exit and realignment costs, March 31, 2020	4,192
Provision for exit and realignment activities:
Severance	809
Information system restructuring costs	671
Other	720

Cash payments	(2,072)
Accrued exit and realignment costs, June 30, 2020	4,320
Provision for exit and realignment activities:
Severance	1,950
Information system restructuring costs	77
Other	3,564
Cash payments	(7,083)
Accrued exit and realignment costs, September 30, 2020	$	2,828


Accrued exit and realignment costs, December 31, 2018	$	7,477
Provision for exit and realignment activities:
Severance	360
Information system restructuring costs	261
Other	83
Cash payments	(2,206)
Accrued exit and realignment costs, March 31, 2019	5,975
Provision for exit and realignment activities:
Severance	1,008
Information system restructuring costs	705
Other	4

Cash payments	(2,301)
Accrued exit and realignment costs, June 30, 2019	5,391
Provision for exit and realignment activities:
Severance	305
Information system restructuring costs	664
Other	11

Cash payments	(2,586)
Accrued exit and realignment costs, September 30, 2019	$	3,785

Acquisition-related and exit and realignment charges presented in our consolidated statements of operations includes acquisition-related charges of $0.8 million and $8.9 million for the three and nine months ended September 30, 2020 and $3.5 million and $11.4 million for the three and nine months ended September 30, 2019, respectively, and consisted primarily of transition costs for the Halyard acquisition.

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Note 6—Debt

Debt consists of the following:


	September 30, 2020				December 31, 2019
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
3.875% Senior Notes, due September 2021	$	178,485	$	180,307	$	236,234	$	229,356
4.375% Senior Notes, due December 2024	244,697		245,122		273,978		212,086
Term A Loans, due July 2022	196,489		199,619		377,420		383,050
Term B Loan, due April 2025	478,127		475,913		480,337		442,217
Revolver	70,000		70,000		177,900		177,900
Receivables Securitization Program	147,580		150,000		—		—
Finance leases and other	13,371		13,371		13,783		13,783
Total debt	1,328,749		1,334,332		1,559,652		1,458,392
Less current maturities	(229,104)		(230,784)		(51,237)		(51,237)
Long-term debt	$	1,099,645	$	1,103,548	$	1,508,415	$	1,407,155

We have $178 million of 3.875% senior notes due in 2021 (the 2021 Notes) and $245 million of 4.375% senior notes due in 2024 (the 2024 Notes), with interest payable semi-annually. The 2021 Notes were sold at 99.5% of the principal amount with an effective yield of 3.951%. The 2024 Notes were sold at 99.6% of the principal amount with an effective yield of 4.422%. We have the option to redeem the 2021 Notes and 2024 Notes in part or in whole prior to maturity at a redemption price equal to the greater of 100% of the principal amount or the present value of the remaining scheduled payments discounted at the applicable Benchmark Treasury Rate plus 25 basis points for the 2021 Notes and the applicable Benchmark Treasury Rate plus 30 basis points for the 2024 Notes. In June 2020, we announced cash tender offers for up to $240 million aggregate principal amount of our outstanding 2021 Notes and 2024 Notes. As of the Early Settlement Date of June 22, 2020, $54.1 million of the 2021 Notes and $29.0 million of the 2024 Notes were repaid. On the Early Settlement Date, the 2021 Notes were redeemed at 100% of par, and the 2024 Notes were redeemed at 90% of par, resulting in a net gain on extinguishment of debt of $2.9 million. The tender offers remained open through July 2, 2020, and an additional $0.1 million of the 2021 Notes were redeemed at the Base Consideration price of 95% of par by the time the offers closed. Including the tender offer, we used $83.3 million of cash to repurchase $87.9 million aggregate principal amount of the 2021 Notes and 2024 Notes during the first nine months of 2020. Consistent with the terms of the Fifth Amendment to the Credit Agreement, we used $54.1 million of the proceeds from the sale of Movianto to fund the repayment of the 2021 Notes, which were retired in the second quarter as part of the tender offer. As required by the Fifth Amendment to the Credit Agreement, the remaining $78.9 million of proceeds from the sale of Movianto were placed in a designated account and will be used to repurchase a portion of the outstanding 2021 Notes within 210 days of the Divestiture Date or repay a portion of our Term Loans.

We have a Credit Agreement (last amended February 13, 2020) with a $400 million revolving credit facility and $675 million in outstanding term loans. The interest rate on our revolving credit facility and Term A Loans is based on 1) either the Eurocurrency Rate or the Base Rate plus 2) an Applicable Percentage which varies depending on Consolidated Total Leverage Ratio (each as defined in the Credit Agreement). Our credit spread on the revolving credit facility and Term A Loans at September 30, 2020 was Eurocurrency Rate plus 4.25%. Our Term B Loan accrues interest based on 1) either the Eurocurrency Rate or the Base Rate plus 2) an Applicable Percentage of 3.50% per annum for Base Rate Loans and 4.50% per annum for Eurocurrency Rate Loans (each as defined in the Credit Agreement). Our credit spread on the Term B Loan at September 30, 2020 was Eurocurrency Rate plus 4.50%. We are charged a commitment fee of between 12.5 and 25.0 basis points on the unused portion of the revolving credit facility. Our Credit Agreement has a “springing maturity date” with respect to the revolving credit facility, the Term A Loans, and the Term B Loan. If the outstanding balance of the 2021 Notes has not been paid in full as of the date 91 days prior to the maturity date of the 2021 Notes, then the Termination Date (as defined in the Credit Agreement) of the revolving credit facility, the Term A Loans, and the Term B Loan shall be the date that is 91 days prior to the maturity date of the 2021 Notes. Likewise, if the outstanding balance of the 2024 Notes has not been paid in full as of the date 91 days prior to the maturity date of the 2024 Notes, the Termination Date of the Term B Loan shall be the date that is 91 days prior to the maturity date of the 2024 Notes.

At September 30, 2020 and December 31, 2019, we had borrowings of $70.0 million and $177.9 million, respectively, under the revolver and letters of credit of $13.9 million and $11.7 million, respectively, outstanding under the Credit Agreement. At September 30, 2020 and December 31, 2019, we had $316.1 million and $209.3 million, respectively, available for borrowing. The December 31, 2019 availability reflected letters of credit associated with discontinued operations of $1.1 million. There were no letters of credit associated with discontinued operations as of September 30, 2020. We also had letters of credit and bank guarantees outstanding for $2.4 million, of which $0.8 million are in process of being transferred to

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the buyer of Movianto, and $1.6 million and $1.5 million as of September 30, 2020 and December 31, 2019, respectively, which supports certain leased facilities as well as other normal business activities in the United States and Europe. These letters of credit and guarantees were issued independent of the Credit Agreement.

We also have a Security and Pledge Agreement (the Security Agreement) pursuant to which we granted collateral on behalf of the holders of the 2021 Notes, the holders of the 2024 Notes, and the parties secured under the Credit Agreement (the Secured Parties) including first priority liens and security interests in (a) all present and future shares of capital stock owned by the Credit Parties (as defined) in the Credit Parties’ present and future subsidiaries of each Credit Party and (b) all present and future personal property and assets of the Credit Parties, subject to certain exceptions. The Fifth Amendment to the Credit Agreement included additional collateral requirements if the Credit Parties, including an obligation to pledge our owned U.S. real estate and the remaining equity interests in foreign subsidiaries.

On February 19, 2020, we entered into an accounts receivable securitization program (the Receivables Securitization Program). Pursuant to the Receivables Securitization Program the aggregate principal amount of the loans made by the Lenders (as defined) will not exceed $325 million outstanding at any time. The interest rate under the Receivables Securitization Program is based on a spread over the London Interbank Offered Rate (LIBOR) dependent on the tranche period thereto and any breakage fees accrued. Under the Receivables Securitization Program, certain of our subsidiaries sell substantially all of their accounts receivable balances to our wholly owned special purpose entity, O&M Funding LLC. The Receivables Securitization Program matures on February 17, 2023. Our Receivables Securitization Program has a “springing maturity date” with respect to the Term A Loans. If the outstanding balance of the Term A loans have not been paid in full as of the date 91 days prior to the maturity date of the Term A Loans, then the Scheduled Termination Date (as defined in the Receivables Financing Agreement) of the Receivables Securitization Program shall be the date that is 91 days prior to the maturity date of the Term A Loans. In February 2020, we drew $150 million from the Receivables Securitization Program to repay portions of the Term A Loans, consistent with the terms of the Fifth Amendment to the Credit Agreement. The Fifth Amendment to the Credit Agreement requires that any additional draws on the Receivables Securitization Program are restricted for use to repay the 2021 Notes or Term A loans to the extent those instruments are outstanding.

The Credit Agreement, Receivables Securitization Program, and Senior Notes contain cross-default provisions which could result in the acceleration of payments due in the event of default of either agreement. The terms of the Credit Agreement also require the company to maintain ratios for leverage and interest coverage, including on a pro forma basis in the event of an acquisition or divestiture. We were in compliance with our debt covenants at September 30, 2020.

As of September 30, 2020, scheduled future principal payments of debt were $12.4 million in 2020, $228.5 million in 2021, $218.8 million in 2022, $155.0 million in 2023, $251.0 million in 2024, and $468.8 million thereafter. Current maturities include scheduled principal payments within the next 12 months of $44.6 million and $5.0 million for our Term A and Term B Loans, respectively, $1.0 million in short-term finance leases, and $