Debt | DEBT The carrying value of our notes payable, finance leases and long-term debt as of September 30, 2019 and December 31, 2018 is listed in the following table, and is adjusted for the fair value of interest rate swaps, unamortized discounts, deferred issuance costs and the unamortized portion of adjustments to fair value recorded in purchase accounting. Original issue discounts and adjustments to fair value recorded in purchase accounting are amortized to interest expense over the term of the applicable instrument using the effective interest method. September 30, 2019 December 31, 2018 Maturity Interest Rate Principal Adjustments Carrying Value Principal Adjustments Carrying Value Credit facilities: Uncommitted Credit Facility Variable $ 12.2 $ — $ 12.2 $ 33.4 $ — $ 33.4 June 2023 Variable 170.0 — 170.0 159.0 — 159.0 Senior notes: September 2019 5.500 — — — 650.0 (0.9) 649.1 March 2020 5.000 850.0 (0.4) 849.6 850.0 (1.0) 849.0 November 2021 5.250 600.0 (0.8) 599.2 600.0 (1.2) 598.8 June 2022 3.550 850.0 (2.9) 847.1 850.0 (3.6) 846.4 May 2023 4.750 550.0 4.9 554.9 550.0 (5.5) 544.5 August 2024 2.500 900.0 (8.0) 892.0 — — — March 2025 3.200 500.0 (3.7) 496.3 500.0 (4.3) 495.7 July 2026 2.900 500.0 (4.0) 496.0 500.0 (4.4) 495.6 November 2027 3.375 650.0 (5.4) 644.6 650.0 (5.9) 644.1 May 2028 3.950 800.0 (16.1) 783.9 800.0 (17.3) 782.7 March 2035 6.086 181.9 (14.1) 167.8 181.9 (14.4) 167.5 March 2040 6.200 399.9 (3.7) 396.2 399.9 (3.8) 396.1 May 2041 5.700 385.7 (5.3) 380.4 385.7 (5.3) 380.4 Debentures: May 2021 9.250 35.3 (0.5) 34.8 35.3 (0.7) 34.6 September 2035 7.400 148.1 (33.2) 114.9 148.1 (33.8) 114.3 Tax-exempt: 2020 - 2049 1.300 - 1.875 1,072.4 (6.1) 1,066.3 1,042.4 (5.6) 1,036.8 Finance leases: 2019 - 2049 3.070 - 12.203 112.4 — 112.4 109.5 — 109.5 Total Debt $ 8,717.9 $ (99.3) 8,618.6 $ 8,445.2 $ (107.7) 8,337.5 Less: current portion (912.8) (690.7) Long-term portion $ 7,705.8 $ 7,646.8 Credit Facilities In June 2018, we entered into a $2.25 billion unsecured revolving credit facility (the Credit Facility), which replaced our $1.0 billion and $1.25 billion unsecured credit facilities that would have matured in May 2021 and June 2019, respectively. The Credit Facility matures in June 2023. We may request two one The Credit Facility is subject to facility fees based on applicable rates defined in the Credit Facility agreement and the aggregate commitment, regardless of usage. Availability under our Credit Facility totaled $1,710.6 million and $1,694.1 million as of September 30, 2019 and December 31, 2018, respectively. The Credit Facility can be used for working capital, capital expenditures, acquisitions, letters of credit and other general corporate purposes. The Credit Facility agreement requires us to comply with financial and other covenants. We may pay dividends and repurchase common stock if we are in compliance with these covenants. As of September 30, 2019 and December 31, 2018, we had $170.0 million and $159.0 million of borrowings under our Credit Facility, respectively. We had $352.0 million and $379.6 million of letters of credit outstanding under our Credit Facility as of September 30, 2019 and December 31, 2018, respectively. We also have an Uncommitted Credit Facility, which bears interest at LIBOR, plus an applicable margin and is subject to facility fees defined in the agreement, regardless of usage. We can use borrowings under the Uncommitted Credit Facility for working capital and other general corporate purposes. The agreement governing our Uncommitted Credit Facility requires us to comply with certain covenants. The Uncommitted Credit Facility may be terminated by either party at any time. We had $12.2 million of borrowings and $33.4 million of borrowings outstanding under our Uncommitted Credit Facility as of September 30, 2019 and December 31, 2018, respectively. Senior Notes and Debentures In August 2019, we issued $900.0 million of 2.500% senior notes due 2024 (the 2.500% Notes). We used the net proceeds from the 2.500% Notes to repay $650.0 million of 5.500% senior notes that matured in September 2019. Any remaining proceeds were used to repay amounts outstanding under our unsecured credit facilities as well as for general corporate purposes. Contemporaneously with this offering, we amended interest rate lock agreements with a notional value of $375.0 million and dedesignated the hedging relationship. There was no ineffectiveness recognized in the termination of these cash flow hedges. In addition, we entered into an offsetting interest rate swap to manage exposure to fluctuations in interest rates associated with the amended agreements. For further detail regarding the effect of our derivative contracts on interest expense, refer to Note 12, Financial Instruments , to our unaudited consolidated financial statements in Item 1 of Part I of this Quarterly Report on Form 10-Q. In 2018, we issued $800.0 million of 3.950% senior notes due 2028 (the 3.950% Notes). We used the net proceeds from the 3.950% Notes to repay $700.0 million of 3.800% senior notes that matured in May 2018, and any remaining proceeds were used for general corporate purposes. In connection with this offering, we terminated interest rate lock agreements with a notional value of $600.0 million, resulting in net proceeds of $31.1 million. There was no ineffectiveness recognized in the termination of these cash flow hedges. Our senior notes and debentures are general unsecured obligations. Interest is payable semi-annually. Tax-Exempt Financings During the second quarter of 2019, we refinanced $35.0 million of tax-exempt financings and issued $30.0 million of new tax-exempt financings. As of September 30, 2019, we had $1,066.3 million of certain variable rate tax-exempt financings outstanding with maturities ranging from 2020 to 2049. As of December 31, 2018, we had $1,036.8 million of certain variable rate tax-exempt financings outstanding with maturities ranging from 2019 to 2044. Approximately 100% of our tax-exempt financings are remarketed quarterly by remarketing agents to effectively maintain a variable yield. The holders of the bonds can put them back to the remarketing agents at the end of each interest period. To date, the remarketing agents have been able to remarket all of our variable rate unsecured tax-exempt bonds. Finance Leases We had finance lease liabilities of $112.4 million and $109.5 million as of September 30, 2019 and December 31, 2018, respectively, with maturities ranging from 2019 to 2049 and 2019 to 2046, respectively. Interest Rate Swap and Lock Agreements Our ability to obtain financing through the capital markets is a key component of our financial strategy. Historically, we have managed risk associated with executing this strategy, particularly as it relates to fluctuations in interest rates, by using a combination of fixed and floating rate debt. From time to time, we also have entered into interest rate swap and lock agreements to manage risk associated with interest rates, either to effectively convert specific fixed rate debt to a floating rate (fair value hedges), or to lock interest rates in anticipation of future debt issuances (cash flow hedges). Fair Value Hedges During the second half of 2013, we entered into various interest rate swap agreements relative to our 4.750% fixed rate senior notes due in May 2023. The goal was to reduce overall borrowing costs and rebalance our debt portfolio's ratio of fixed to floating interest rates. As of September 30, 2019 and December 31, 2018, these swap agreements had a total notional value of $300.0 million and mature in May 2023, which is identical to the maturity of the hedged senior notes. We pay interest at floating rates based on changes in LIBOR and receive interest at a fixed rate of 4.750%. These transactions were designated as fair value hedges because the swaps hedge against the changes in fair value of the fixed rate senior notes resulting from changes in interest rates. As of September 30, 2019 and December 31, 2018, the interest rate swap agreements are reflected at their fair value of $13.1 million and $2.5 million, respectively, and are included in other assets in our consolidated balance sheet. To the extent they are effective, these interest rate swap agreements are included as an adjustment to long-term debt in our consolidated balance sheets. For the three months ended September 30, 2019 and 2018, we recognized a loss of $1.1 million and a gain of $1.9 million, respectively, on the change in fair value of the hedged senior notes attributable to changes in the benchmark interest rate, with an offsetting gain of $1.4 million and an offsetting loss of $2.0 million, respectively, on the related interest rate swaps. For the nine months ended September 30, 2019 and 2018, we recognized a loss of $10.0 million and a gain of $11.1 million, respectively, on the change in fair value of the hedged senior notes attributable to changes in the benchmark interest rate, with an offsetting gain of $10.5 million and an offsetting loss of $11.5 million, respectively, on the related interest rate swaps. The difference of these fair value changes for the nine months ended September 30, 2018 was recorded directly in earnings as other income, net. In accordance with our adoption of ASU 2017-12, the difference of these fair value changes for the nine months ended September 30, 2019 was recorded directly in earnings as an adjustment to interest expense in our consolidated statement of income. For further detail regarding the effect of our fair value hedging on interest expense, refer to Note 12, Financial Instruments , to our unaudited consolidated financial statements in Item 1 of Part I of this Quarterly Report on Form 10-Q. Cash Flow Hedges As of September 30, 2019 and December 31, 2018, our interest rate lock agreements had an aggregate notional value of $575.0 million and $725.0 million, respectively, with fixed interest rates ranging from 1.330% to 3.000% and 1.900% to 3.250%, respectively. We entered into these transactions to manage exposure to fluctuations in interest rates in anticipation of planned future issuances of senior notes in 2019 through 2021. Upon the expected issuance of senior notes, we will terminate the interest rate locks and settle with our counterparties. These transactions were accounted for as cash flow hedges. The fair value of our interest rate locks was determined using standard valuation models with assumptions about interest rates being based on those observed in underlying markets (Level 2 in the fair value hierarchy). The aggregate fair values of the outstanding interest rate locks as of September 30, 2019 were assets of $1.3 million, which were recorded in prepaid expenses and other current assets in our consolidated balance sheet and liabilities of $30.7 million, which were recorded in other accrued liabilities and other long-term liabilities in our consolidated balance sheet. As of December 31, 2018, the aggregate fair values of the outstanding interest rate locks were assets of $10.3 million and were recorded in other assets in our consolidated balance sheet. Total unrealized (loss) gain recognized in other comprehensive income for interest rate locks was $(11.9) million and $4.2 million for the three months ended September 30, 2019 and 2018, respectively. Total unrealized (loss) gain recognized in other comprehensive income for interest rate locks was $(43.0) million and $33.1 million for the nine months ended September 30, 2019 and 2018, respectively. As of September 30, 2019 and December 31, 2018, our previously terminated interest rate locks were recorded as components of accumulated other comprehensive income (loss), net of tax of $(3.5) million and $11.2 million, respectively. The amortization of the terminated interest rate locks is recorded as an adjustment to interest expense over the life of the issued debt using the effective interest method. We expect to amortize approximately $1.9 million of net interest expense, net of tax, over the next 12 months as a yield adjustment of our senior notes. For detail regarding the effect of our cash flow hedging on interest expense, refer to Note 12, Financial Instruments , to our unaudited consolidated financial statements in Item 1 of Part I of this Quarterly Report on Form 10-Q. |