PolyOne 2009 Annual Report

POLYONE CORPORATION
Financing Activities
(In millions) 2009 2008 2007
Cash Flows from Financing Activities
Change in short-term debt $ (5.7) $ 43.3 $ (0.2)
Issuance of long-term debt, net of debt
issuance costs — 77.8 —
Repayment of long-term debt (20.0) (25.3) (264.1)
Purchase of common stock for treasury — (8.9) —
Premium paid on early extinguishment of longterm
debt — — (12.8)
Proceeds from exercise of stock options — 1.1 1.2
Net cash (used) provided by financing
activities $(25.7) $ 88.0 $(275.9)
Cash used by financing activities in 2009 reflects the repayment
of short-term debt and our 6.91% medium-term notes.
Cash provided by financing activities in 2008 was primarily
used for the acquisition of GLS and the funding necessary to
extinguish maturing debt. On January 9, 2008, we borrowed
$40.0 million under the new credit facility. In April 2008, we sold
an additional $80.0 million in aggregate principal amount of
8.875% senior notes due 2012.
Cash used by financing activities in 2007 was primarily for the
extinguishment of debt.
Balance Sheets
The following discussion focuses on material changes in balance
sheet line items from December 31, 2008 to December 31, 2009
that are not discussed in the preceding “Cash Flows” section.
Pension benefits — Our liability for pension benefits
decreased $52.0 million during 2009, due mainly to the January 15,
2009 amendments to certain of our pension plans and improved
plan asset returns for the year. These amendments permanently
froze future benefit accruals and reduced our total future pension
fund contributions by approximately $19 million.
Post-retirement benefits other than pension — Our liability for
post-retirement benefits other than pensions decreased by
$59.1 million due primarily to the September 1, 2009 amendments
to certain of our other post-retirement benefit plans. These amendments
resulted in the phase-out of benefits for certain eligible
retirees through December 31, 2012 and reduced our total future
contributions by approximately $58 million.
Capital Resources
As of December 31, 2009, we had existing facilities to access
capital resources (receivables sale facility, credit facility, medium
term notes and senior unsecured notes and debentures) totaling
$522.4 million. As of December 31, 2009, we had used $409.6 million
of these facilities, and $112.8 million was available to be
drawn. As of December 31, 2009, we also had a $222.7 million
cash and cash equivalents balance adding to our available liquidity.
The following table summarizes our available and outstanding
facilities at December 31, 2009:
(In millions) Outstanding Available
Long-term debt, including current maturities $409.1 $ —
Receivables sale facility — 112.8
Short-term debt 0.5 —
Long-Term Debt
$409.6 $112.8
Our long-term debt matures over the period ranging from 2010 to
2015. Current maturities of long-term debt at December 31, 2009
were $19.9 million.
Guarantee and Agreement
We entered into a definitive Guarantee and Agreement with Citicorp
USA, Inc., KeyBank National Association and National City Bank on
June 6, 2006. Under this Guarantee and Agreement, we guarantee
some treasury management and banking services provided to us
and our subsidiaries, such as foreign currency forwards and bank
overdrafts. This guarantee is secured by our inventories located in
the United States.
Credit Facility
On January 3, 2008, we entered into a credit agreement with
Citicorp USA, Inc., as administrative agent and as issuing bank,
and The Bank of New York, as paying agent. The credit agreement
provides for an unsecured revolving and letter of credit facility with
total commitments of up to $40 million. The credit agreement
expires on March 20, 2011.
Borrowings under the credit facility are based on the applicable
LIBOR rate plus a fixed facility fee of 4.77%. At December 31, 2009,
we had outstanding borrowings under the credit facility of $40.0 million
that is included in Long-term debt on the accompanying consolidated
balance sheets. The credit agreement contains covenants
that, among other things, restrict our ability to incur liens, and
various other customary provisions, including affirmative and negative
covenants, and representations and warranties. As of
December 31, 2009, we were in compliance with the covenants
in the credit agreement.
Receivables Sale Facility
The receivables sale facility was amended in June 2007 to extend
the maturity to June 2012 and to, among other things, modify
certain financial covenants and reduce the cost of utilizing the
facility. In July 2007, the receivables sale facility was amended
to include up to $25.0 million of Canadian receivables, which
increased the facility size to $200.0 million. The maximum proceeds
that we may receive are limited to the lesser of $200.0 million
or 85% of the eligible domestic and Canadian accounts receivable
sold. This facility also makes up to $40.0 million available for
26