Company Quick10K Filing
Valvoline
10-Q 2021-03-31 Filed 2021-04-29
10-Q 2020-12-31 Filed 2021-02-04
10-K 2020-09-30 Filed 2020-11-24
10-Q 2020-06-30 Filed 2020-08-04
10-Q 2020-03-31 Filed 2020-05-07
10-Q 2019-12-31 Filed 2020-02-04
10-K 2019-09-30 Filed 2019-11-22
10-Q 2019-06-30 Filed 2019-08-01
10-Q 2019-03-31 Filed 2019-05-02
10-Q 2018-12-31 Filed 2019-02-07
10-K 2018-09-30 Filed 2018-11-21
10-Q 2018-06-30 Filed 2018-08-02
10-Q 2018-03-31 Filed 2018-05-03
10-Q 2017-12-31 Filed 2018-02-08
10-K 2017-09-30 Filed 2017-11-17
10-Q 2017-06-30 Filed 2017-08-08
10-Q 2017-03-31 Filed 2017-04-28
10-Q 2016-12-31 Filed 2017-02-13
10-K 2016-09-30 Filed 2016-12-19
8-K 2020-10-28
8-K 2020-10-02
8-K 2020-09-14
8-K 2020-08-03
8-K 2020-07-07
8-K 2020-06-04
8-K 2020-05-22
8-K 2020-05-08
8-K 2020-05-06
8-K 2020-04-23
8-K 2020-04-22
8-K 2020-03-24
8-K 2020-03-24
8-K 2020-02-25
8-K 2020-02-10
8-K 2020-02-03
8-K 2020-01-30
8-K 2019-11-14
8-K 2019-11-06
8-K 2019-09-04
8-K 2019-07-30
8-K 2019-07-17
8-K 2019-05-16
8-K 2019-05-01
8-K 2019-04-12
8-K 2019-02-06
8-K 2019-01-31
8-K 2018-11-19
8-K 2018-11-05
8-K 2018-08-01
8-K 2018-07-13
8-K 2018-05-17
8-K 2018-05-02
8-K 2018-05-02
8-K 2018-02-07
8-K 2018-01-31

VVV 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements
Note 1 - Basis of Presentation and Significant Accounting Policies
Note 2 - Fair Value Measurements
Note 3 - Acquisitions and Divestitures
Note 4 - Intangible Assets
Note 5 - Debt
Note 6 - Income Taxes
Note 7 - Employee Benefit Plans
Note 8 - Litigation, Claims and Contingencies
Note 9 - Earnings per Share
Note 10 - Reportable Segment Information
Note 11 - Supplemental Financial Information
Note 12 - Subsequent Events
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 6. Exhibits
EX-4.1 exhibit41-descriptionofsec.htm
EX-31.1 exhibit311-certificationof.htm
EX-31.2 exhibit312-certificationof.htm
EX-32.1 exhibit32-certificationofs.htm

Valvoline Earnings 2021-03-31

Balance SheetIncome StatementCash Flow

vvv-20210331
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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 March 31, 2021
OR
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 001-37884
VALVOLINE INC.

vvv-20210331_g1.jpg

Kentucky
30-0939371
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
100 Valvoline Way
Lexington, Kentucky 40509
Telephone Number (859) 357-7777

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

Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.01 per shareVVVNew 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 þ     No  o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).     Yes þ     No  o

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 “large 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
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 Act).  Yes      No þ
At April 23, 2021, there were 181,077,542 shares of the registrants common stock outstanding.



VALVOLINE INC. AND CONSOLIDATED SUBSIDIARIES
TABLE OF CONTENTS


Page
PART I – FINANCIAL INFORMATION
PART II – OTHER INFORMATION

2


PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Valvoline Inc. and Consolidated Subsidiaries
Condensed Consolidated Statements of Comprehensive Income

Three months ended March 31Six months ended March 31
(In millions, except per share amounts - unaudited) 2021202020212020
Sales$701 $578 $1,354 $1,185 
Cost of sales454 371 879 767 
Gross profit247 207 475 418 
Selling, general and administrative expenses129 96 246 213 
Net legacy and separation-related expenses (income)  1 (1)
Equity and other income, net(13)(6)(27)(15)
Operating income131 117 255 221 
Net pension and other postretirement plan income(14)(9)(27)(18)
Net interest and other financing expenses55 38 75 54 
Income before income taxes90 88 207 185 
Income tax expense22 25 52 49 
Net income$68 $63 $155 $136 
NET EARNINGS PER SHARE
Basic$0.37 $0.33 $0.84 $0.72 
Diluted$0.37 $0.33 $0.84 $0.72 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic182 188 184 188 
Diluted183 188 184 189 
COMPREHENSIVE INCOME
Net income$68 $63 $155 $136 
Other comprehensive (loss) income, net of tax
Currency translation adjustments(7)(21)11 (13)
Amortization of pension and other postretirement plan prior service credit(2)(2)(4)(4)
Unrealized gain on cash flow hedges1  1  
Other comprehensive (loss) income (8)(23)8 (17)
Comprehensive income$60 $40 $163 $119 

See Notes to Condensed Consolidated Financial Statements.
3


Valvoline Inc. and Consolidated Subsidiaries
Condensed Consolidated Balance Sheets
(In millions, except per share amounts - unaudited)March 31
2021
September 30
2020
Assets
Current assets
Cash and cash equivalents$247 $760 
Receivables, net448 433 
Inventories, net218 199 
Prepaid expenses and other current assets55 46 
Total current assets968 1,438 
Noncurrent assets
Property, plant and equipment, net741 613 
Operating lease assets299 261 
Goodwill and intangibles, net732 529 
Equity method investments45 44 
Deferred income taxes19 34 
Other noncurrent assets117 132 
Total noncurrent assets1,953 1,613 
Total assets$2,921 $3,051 
Liabilities and Stockholders’ Deficit
Current liabilities
Current portion of long-term debt$1 $ 
Trade and other payables180 189 
Accrued expenses and other liabilities267 255 
Total current liabilities448 444 
Noncurrent liabilities
Long-term debt1,719 1,962 
Employee benefit obligations286 317 
Operating lease liabilities265 231 
Other noncurrent liabilities259 173 
Total noncurrent liabilities2,529 2,683 
Commitments and contingencies
Stockholders deficit
Preferred stock, no par value, 40 shares authorized; no shares issued and outstanding
  
Common stock, par value $0.01 per share, 400 shares authorized; 181 and 185 shares issued and outstanding at March 31, 2021 and September 30, 2020, respectively
2 2 
Paid-in capital29 24 
Retained deficit(103)(110)
Accumulated other comprehensive income16 8 
Total stockholders’ deficit(56)(76)
Total liabilities and stockholders deficit
$2,921 $3,051 

See Notes to Condensed Consolidated Financial Statements.
4


Valvoline Inc. and Consolidated Subsidiaries
Condensed Consolidated Statements of Stockholders’ Deficit
Six months ended March 31, 2021
(In millions, except per share amounts - unaudited)Common stockPaid-in capitalRetained deficitAccumulated other comprehensive incomeTotals
SharesAmount
Balance at September 30, 2020185$2 $24 $(110)$8 $(76)
Net income— — — 87 — 87 
Dividends paid, $0.125 per common share
— — — (23)— (23)
Stock-based compensation, net of issuances— — 1 — — 1 
Repurchases of common stock(2)— — (58)— (58)
Cumulative effect of adoption of new credit losses standard, net of tax— — — (2)— (2)
Other comprehensive income, net of tax— — — — 16 16 
Balance at December 31, 2020183 $2 $25 $(106)$24 $(55)
Net income— — — 68 — 68 
Dividends paid, $0.125 per common share
— — — (23)— (23)
Stock-based compensation, net of issuances— — 4 — — 4 
Repurchases of common stock(2)— — (42)— (42)
Other comprehensive loss, net of tax— — — — (8)(8)
Balance at March 31, 2021181 $2 $29 $(103)$16 $(56)
Six months ended March 31, 2020
(In millions, except per share amounts - unaudited)Common stockPaid-in capitalRetained deficitAccumulated other comprehensive income (loss)Totals
SharesAmount
Balance at September 30, 2019188 $2 $13 $(284)$11 $(258)
Net income— — — 73 — 73 
Dividends paid, $0.113 per common share
— — — (21)— (21)
Stock-based compensation, net of issuances— — 3 — — 3 
Cumulative effect of adoption of new leasing standard, net of tax— — — 1 — 1 
Other comprehensive income, net of tax— — — — 6 6 
Balance at December 31, 2019188 $2 $16 $(231)$17 $(196)
Net income— — — 63 — 63 
Dividends paid, $0.113 per common share
— — — (21)— (21)
Repurchases of common stock(3)— — (60)— (60)
Other comprehensive loss, net of tax— — — — (23)(23)
Balance at March 31, 2020185 $2 $16 $(249)$(6)$(237)

See Notes to Condensed Consolidated Financial Statements.
5


Valvoline Inc. and Consolidated Subsidiaries
Condensed Consolidated Statements of Cash Flows
Six months ended
March 31
(In millions - unaudited)20212020
Cash flows from operating activities
Net income$155 $136 
Adjustments to reconcile net income to cash flows from operating activities
Loss on extinguishment of debt36 19 
Depreciation and amortization44 31 
Pension contributions(4)(5)
Stock-based compensation expense6 3 
Other, net2 2 
Change in assets and liabilities
Receivables(14)44 
Inventories(13)(20)
Payables and accrued liabilities4 (40)
Other assets and liabilities(26)(16)
Total cash provided by operating activities190 154 
Cash flows from investing activities
Additions to property, plant and equipment(74)(57)
Repayments on notes receivable12  
Acquisitions of businesses, net of cash acquired(223)(11)
Other investing activities, net9 (3)
Total cash used in investing activities(276)(71)
Cash flows from financing activities
Proceeds from borrowings, net of issuance costs546 1,132 
Repayments on borrowings(800)(475)
Premium paid to extinguish debt(26)(15)
Repurchases of common stock(100)(60)
Cash dividends paid(46)(42)
Other financing activities(5)(3)
Total cash (used in) provided by financing activities(431)537 
Effect of currency exchange rate changes on cash, cash equivalents, and restricted cash4 (4)
(Decrease) increase in cash, cash equivalents, and restricted cash(513)616 
Cash, cash equivalents, and restricted cash - beginning of period761 159 
Cash, cash equivalents, and restricted cash - end of period$248 $775 

See Notes to Condensed Consolidated Financial Statements.
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Index to Notes to Condensed Consolidated Financial StatementsPage

7


Valvoline Inc. and Consolidated Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited condensed consolidated financial statements have been prepared by Valvoline Inc. (“Valvoline” or the “Company”) in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and Securities and Exchange Commission (“SEC”) regulations for interim financial reporting, which do not include all information and footnote disclosures normally included in annual financial statements. Therefore, these condensed consolidated financial statements should be read in conjunction with Valvoline’s Annual Report on Form 10-K for the fiscal year ended September 30, 2020.

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make use of estimates and assumptions that affect the reported amounts and disclosures. Actual results may vary from these estimates. In the opinion of management, the assumptions underlying the condensed consolidated financial statements for these interim periods are reasonable, and all adjustments considered necessary for a fair presentation have been made and are of a normal recurring nature unless otherwise disclosed herein. The results for interim periods are not necessarily indicative of those to be expected for the entire year, particularly in light of the novel coronavirus ("COVID-19") global pandemic and its effects.

Valvoline has substantially maintained its operations throughout the COVID-19 pandemic to-date and has continued precautionary measures to protect the Company's employees and customers and manage through the currently known impacts on its business. Given the unprecedented nature of the pandemic, the extent of future impacts cannot be reasonably estimated at this time due to numerous uncertainties, including the duration and severity of the pandemic.

Recent accounting pronouncements

The following standards relevant to Valvoline were either issued or adopted in the current year, or are expected to have a meaningful impact on Valvoline in future periods upon adoption. The Financial Accounting Standards Board ("FASB") issued other accounting guidance during the period that is not currently applicable or expected to have a material impact on Valvoline’s condensed consolidated financial statements, and therefore, is not described below.

Recently adopted

In June 2016, the FASB issued updated guidance that changes the recognition of credit losses from an incurred or probable loss methodology to a current expected credit loss model that results in the immediate recognition of credit losses that are expected to occur over the life of the financial instruments that are within the scope of the guidance, principally trade and other receivables for Valvoline. The new credit loss guidance was adopted on October 1, 2020 using the required modified retrospective approach. Under this approach, the new accounting guidance is applied prospectively from the date of adoption through a cumulative effect adjustment in retained deficit, while prior period financial statements continue to be reported in accordance with the previous guidance. Adoption did not have a material impact on the Company's condensed consolidated financial statements and resulted in a $2 million, net of tax, cumulative effect of accounting change that increased retained deficit and allowances for credit losses.

In connection with and following the adoption of this guidance, Valvoline maintains allowances to estimate expected lifetime credit losses that are based on a broad range of reasonable and supportable information and factors, including the length of time receivables are past due, the financial health of its customers, macroeconomic conditions, and historical collection experience. Refer to Note 11 for additional information regarding the Company's trade and other receivables and its allowances for credit losses.

Issued but not yet adopted

In March 2020, the FASB issued guidance regarding the effects of reference rate reform intended to ease financial reporting burdens as the market transitions from the London Interbank Offered Rate ("LIBOR") and other interbank reference rates to alternative reference rates. The Company has interest rate swap hedging arrangements and long-term debt as described in Notes 2 and 5 to the Condensed Consolidated Financial Statements, respectively, for which existing payments are based on LIBOR. This guidance is available to be adopted through the end of calendar 2022 to simplify the accounting for arrangements modified for the transition to alternative reference rates.
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The Company expects to adopt this guidance to the extent its arrangements are modified for the underlying reference rate prior to the end of calendar 2022 and does not expect adoption will have a material impact on its condensed consolidated financial statements.

NOTE 2 - FAIR VALUE MEASUREMENTS

The following tables set forth the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis by level within the fair value hierarchy:

As of March 31, 2021
(In millions)TotalLevel 1Level 2Level 3
NAV (a)
Cash and cash equivalents
Money market funds$13 $13 $— $— $— 
Time deposits74 — 74 — — 
Prepaid expenses and other current assets
Currency derivatives (b)
3 — 3 — — 
Other noncurrent assets
Non-qualified trust funds13 — 4 — 9 
Interest rate swap agreements2 2 
Total assets at fair value$105 $13 $83 $— $9 
Accrued expenses and other liabilities
Currency derivatives (b)
$2 $— $2 $— $— 
Interest rate swap agreements1 — 1 — — 
Other noncurrent liabilities
Deferred compensation obligations23 — — — 23 
Total liabilities at fair value$26 $— $3 $— $23 
As of September 30, 2020
(In millions)TotalLevel 1Level 2Level 3
NAV (a)
Cash and cash equivalents
Money market funds$296 $296 $— $— $— 
Time deposits139 — 139 — — 
Prepaid expenses and other current assets
Currency derivatives (b)
3 — 3 — — 
Other noncurrent assets
Non-qualified trust funds16 — 8 — 8 
Total assets at fair value$454 $296 $150 $— $8 
Accrued expenses and other liabilities
Currency derivatives (b)
$2 $— $2 $— $— 
Interest rate swap agreements1 — 1 — — 
Other noncurrent liabilities
Deferred compensation obligations25 — — — 25 
Total liabilities at fair value$28 $— $3 $— $25 
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(a)Funds measured at fair value using the net asset value ("NAV") per share practical expedient have not been classified in the fair value hierarchy.
(b)The Company had outstanding contracts with notional values of $173 million and $149 million as of March 31, 2021 and September 30, 2020, respectively.

There were no material gains or losses recognized in earnings for the three and six months ended March 31, 2021 or 2020 related to these assets and liabilities.

Long-term debt

The fair values of the Company’s outstanding fixed rate senior notes shown in the table below are based on recent trading values, which are considered Level 2 inputs within the fair value hierarchy. Long-term debt is included in the Condensed Consolidated Balance Sheets at carrying value, rather than fair value, and is therefore excluded from the fair value table above. Carrying values shown in the following table are net of unamortized discounts and issuance costs.
March 31, 2021September 30, 2020
(In millions)Fair valueCarrying valueUnamortized
discounts and
issuance costs
Fair valueCarrying valueUnamortized
discounts and
issuance costs
2025 Notes$ $ $ $827 $790 $(10)
2030 Notes613 593 (7)613 592 (8)
2031 Notes519 528 (7)   
Total$1,132 $1,121 $(14)$1,440 $1,382 $(18)

Refer to Note 5 for more information on Valvoline’s other debt instruments that have variable interest rates, and accordingly, their carrying amounts approximate fair value.

NOTE 3 - ACQUISITIONS AND DIVESTITURES

Retail store acquisitions

The Company acquired 100 service center stores in single and multi-store transactions for an aggregate purchase price of $223 million during the six months ended March 31, 2021. These acquisitions expand Valvoline's retail presence in key North American and international markets, increase the Quick Lubes system to more than 650 company-operated and 1,500 system-wide service center stores, and included:

Fourteen company-operated service center stores in Texas acquired from Kent Lubrication Centers Ltd. (doing business as Avis Lube) on October 1, 2020;
Twenty-one former franchise locations converted to company-operated service center stores in Kansas and Missouri acquired from Westco Lube, Inc. on October 15, 2020;
Twelve company-operated service center stores in Idaho acquired from L&F Enterprises (doing business as Einstein's Oilery) on October 30, 2020;
Twenty-seven Mister Oil Change Express® locations (15 company-operated and 12 franchise-operated) across seven states acquired from Car Wash Partners, Inc. on December 11, 2020;
Seven former franchise and 14 former joint venture locations converted to company-operated service center stores acquired in single and multi-store transactions; and
Five company-operated service center stores acquired in single store transactions.

During the six months ended March 31, 2020, the Company acquired 14 service center stores in single and multi-store transactions, including six former franchise locations, for a total of $11 million.

The Company’s acquisitions are accounted for as business combinations. A summary follows of the aggregate cash consideration paid and the total assets acquired and liabilities assumed for the six months ended March 31:
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(In millions)20212020
Inventories$2 $ 
Other current assets1  
Property, plant and equipment (a)
82 1 
Operating lease assets26  
Goodwill (b)
180 5 
Intangible assets (c)
Reacquired franchise rights (d)
34 5 
Other3  
Other current liabilities (a)
(7) 
Operating lease liabilities(24) 
Other noncurrent liabilities (a)
(74) 
Net assets acquired$223 $11 
(a)Includes $73 million of finance lease assets in property, plant and equipment and finance lease liabilities of $3 million and $70 million in other current and noncurrent liabilities, respectively, for leases acquired during the six months ended March 31, 2021.
(b)Goodwill is generally expected to be deductible for income tax purposes and is primarily attributed to the operational synergies and potential growth expected to result in economic benefits in the respective markets of the acquisitions.
(c)Intangible assets acquired during the six months ended March 31, 2021 and 2020 have weighted average amortization periods of 11 and nine years, respectively.
(d)Prior to the acquisition of former franchise service center stores, Valvoline licensed the right to operate franchised quick lube service centers, including use of the Company’s trademarks and trade name. In connection with these acquisitions, Valvoline reacquired those rights and recognized separate definite-lived reacquired franchise rights intangible assets, which are being amortized on a straight-line basis over the weighted average remaining term of approximately 11 years for the rights reacquired in fiscal 2021. The effective settlement of these arrangements resulted in no settlement gain or loss as the contractual terms were at market.

The fair values above are preliminary for up to one year from the date of acquisition as they may be subject to measurement period adjustments if new information is obtained about facts and circumstances that existed as of the acquisition date. The Company does not currently expect any material changes to the preliminary purchase price allocations for acquisitions completed during the last twelve months.

NOTE 4 - INTANGIBLE ASSETS

Goodwill

The following table summarizes changes in the carrying amount of goodwill by reportable segment and in total during the six months ended March 31, 2021:
(In millions)Quick LubesCore North AmericaInternationalTotal
Balance at September 30, 2020$316 $89 $40 $445 
Acquisitions (a)
178  2 180 
Dispositions (b)
(10)  (10)
Currency translation2   2 
Balance at March 31, 2021$486 $89 $42 $617 
(a)Includes acquisitions within the Quick Lubes reportable segment of 86 service center stores and a former joint venture in the International reportable segment. Refer to Note 3 for additional details.
(b)Derecognition of goodwill associated with the sale of 12 company-owned, franchise-operated service center stores to franchisees.

Other intangible assets

Valvoline’s purchased intangible assets were specifically identified when acquired, have finite lives, and are reported in Goodwill and intangibles, net within the Condensed Consolidated Balance Sheets. The following summarizes the gross carrying amounts and accumulated amortization of the Company’s intangible assets:

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(In millions)March 31, 2021September 30, 2020
Gross carrying amountAccumulated amortizationNet carrying amountGross carrying amountAccumulated amortizationNet carrying amount
Definite-lived intangible assets
Trademarks and trade names $31 $(7)$24 $30 $(6)$24 
Reacquired franchise rights91 (18)73 57 (14)43 
Customer relationships 22 (8)14 22 (7)15 
Other intangible assets6 (2)4 3 (1)2 
Total definite-lived intangible assets$150 $(35)$115 $112 $(28)$84 

The table that follows summarizes amortization expense (actual and estimated) for intangible assets, assuming no additional amortizable intangible assets:

ActualEstimated
Six months ended
March 31
Years ended September 30
(In millions)202120212022202320242025
Amortization expense$7 $15 $14 $14 $13 $11 

NOTE 5 - DEBT

The following table summarizes Valvoline’s total debt as of:

(In millions)March 31
2021
September 30
2020
2031 Notes$535 $ 
2030 Notes600 600 
2025 Notes 800 
Term Loan475 475 
Trade Receivables Facility88 88 
China Construction Facility37 18 
Debt issuance costs and discounts(15)(19)
Total debt1,720 1,962 
Current portion of long-term debt1  
Long-term debt$1,719 $1,962 

Senior Notes
The Company's outstanding fixed rate senior notes as of March 31, 2021 consist of 3.625% senior unsecured notes due 2031 with an aggregate principal amount of $535 million (the “2031 Notes") and 4.250% senior unsecured notes due 2030 with an aggregate principal amount of $600 million (the "2030 Notes," and collectively with the 2031 Notes, the "Senior Notes").

In January 2021, Valvoline issued the 2031 Notes in a private offering for net proceeds of $528 million (after deducting initial purchasers’ discounts and debt issuance costs). The net proceeds, along with cash and cash equivalents on hand, were used to redeem in full Valvoline's 4.375% senior unsecured notes due 2025 with an aggregate principal amount of $800 million (the “2025 Notes"), plus an early redemption premium of $26 million, accrued and unpaid interest, as well as related fees and expenses for an aggregate redemption price of approximately $840 million. A loss on extinguishment of the 2025 Notes of $36 million was recognized in Net interest and other financing expenses in the Condensed Consolidated Statements of Comprehensive Income for the three and six months ended March 31, 2021, comprised of the early redemption premium and the write-off of related unamortized debt issuance costs and discounts.

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The 2031 Notes are subject to customary events of default for similar debt securities, which if triggered may accelerate payment of principal, premium, if any, and accrued but unpaid interest. Such events of default include non-payment of principal and interest, non-performance of covenants and obligations, default on other material debt, and bankruptcy or insolvency. If a change of control repurchase event occurs, Valvoline may be required to offer to purchase the 2031 Notes from the holders thereof. The 2031 Notes are not otherwise required to be repaid prior to maturity, although they may be redeemed at the option of Valvoline at any time prior to their maturity in the manner specified in the governing indenture.

Senior Credit Agreement
As of March 31, 2021 and September 30, 2020, the term loan facility (the “Term Loan”) had an outstanding principal balance of $475 million, and there were no amounts outstanding under the $475 million revolving credit facility (the "Revolver"), both of which are senior secured credit facilities provided under the senior credit agreement (the “Senior Credit Agreement”). As of March 31, 2021, the total borrowing capacity remaining under the Revolver was $470 million due to a reduction of $5 million for letters of credit outstanding.

As of March 31, 2021, Valvoline was in compliance with all covenants under the Senior Credit Agreement.

Trade Receivables Facility
The $175 million trade receivables securitization facility (the "Trade Receivables Facility") had an outstanding balance of $88 million as of March 31, 2021 and September 30, 2020. The financing subsidiary owned $246 million and $267 million of outstanding accounts receivable as of March 31, 2021 and September 30, 2020, respectively, which are included in Receivables, net in the Company’s Condensed Consolidated Balance Sheets.

On April 27, 2021, Valvoline amended the Trade Receivables Facility to extend its maturity to April 2024 and modify the eligibility requirements for certain receivables, which had the effect of increasing the Company’s remaining borrowing capacity to $87 million as of March 31, 2021. The amendment also reduces the minimum required borrowing to the lesser of (i) 33 percent of the total facility limit or (ii) the borrowing base from the availability of eligible receivables, in addition to permitting up to a 30 consecutive day annual exemption from this requirement. Other relevant terms and conditions of Trade Receivables Facility were substantially unchanged under this amendment.

China Construction Facility
During the six months ended March 31, 2021, Valvoline borrowed $18 million under its $40 million credit agreement to finance capital expenditures associated with the preparation of the blending and packaging plant in China for production at capacity (the "China Construction Facility"). The China Construction Facility had approximately $37 million and $18 million outstanding as of March 31, 2021 and September 30, 2020, respectively. The remaining borrowing capacity under the China Construction Facility was approximately $3 million as of March 31, 2021.

China Working Capital Facility

On November 16, 2020, the Company entered into a one-year revolving credit facility of approximately $