eBay 2015 Annual Report Download - page 63

we are unable to repay those borrowings from other sources when they become due. As a result, at December 31, 2015,
$500 million of borrowing capacity was available for other purposes permitted by the credit agreement.
Loans under the credit agreement bear interest at either (i) the London Interbank Offered Rate (“LIBOR”)
plus a margin (based on our public debt credit ratings) ranging from 0.875 percent to 1.5 percent or (ii) a formula
based on the agent bank’s prime rate, the federal funds effective rate plus 0.5 percent or LIBOR plus 1.0 percent,
plus a margin (based on our public debt credit ratings) ranging from 0.0 percent to 0.5 percent. The credit
agreement will terminate and all amounts owing thereunder will be due and payable on November 9, 2020,
unless (a) the commitments are terminated earlier, either at our request or, if an event of default occurs, by the
lenders (or automatically in the case of certain bankruptcy-related events of default), or (b) the maturity date is
extended upon our request, subject to the agreement of the lenders. The credit agreement contains customary
representations, warranties, affirmative and negative covenants, including financial covenants, events of default
and indemnification provisions in favor of the banks. The negative covenants include restrictions regarding the
incurrence of liens and subsidiary indebtedness, in each case, subject to certain exceptions. The financial
covenants require us to meet a quarterly financial test with respect to a minimum consolidated interest coverage
ratio and a maximum consolidated leverage ratio.
We were in compliance with all covenants in our outstanding debt instruments for the period ended
December 31, 2015.
Credit Ratings
Our credit ratings were downgraded as a result of the Distribution. As of January 1, 2014, our long-term
debt and short-term funding were rated investment grade by Standard and Poor’s Financial Services, LLC (long-
term rated A, short-term rated A-1, with a stable outlook), Moody’s Investor Service (long-term rated A2, short-
term rated P-1, with a stable outlook), and Fitch Ratings, Inc. (long-term rated A, short-term rated F-1, with a
stable outlook). All of these credit rating agencies lowered their ratings in connection with the Distribution,
which occurred on July 17, 2015. Since July 20, 2015, we have been rated investment grade by Standard and
Poor’s Financial Services, LLC (long-term rated BBB+, short-term rated A-2, with a stable outlook), Moody’s
Investor Service (long-term rated Baa1, short-term rated P-2, with a stable outlook), and Fitch Ratings, Inc.
(long-term rated BBB, short-term rated F-2, with a stable outlook). We disclose these ratings to enhance the
understanding of our sources of liquidity and the effects of these ratings on our costs of funds. Our borrowing
costs depend, in part, on our credit ratings and any further actions taken by these credit rating agencies to lower
our credit ratings, as described above, will likely increase our borrowing costs.
Commitments and Contingencies
We have certain fixed contractual obligations and commitments that include future estimated payments for
general operating purposes. Changes in our business needs, contractual cancellation provisions, fluctuating
interest rates, and other factors may result in actual payments differing from the estimates. We cannot provide
certainty regarding the timing and amounts of these payments. The following table summarizes our fixed
contractual obligations and commitments:
Payments Due During the Year Ending December 31, Debt Leases
Purchase
Obligations Total
(In millions)
2016 $ 164 $ 55 $175 $ 394
2017 1,613 52 83 1,748
2018 148 35 64 247
2019 1,697 30 13 1,740
2020 516 25 5 546
Thereafter 4,191 25 — 4,216
$8,329 $222 $340 $8,891
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