Debt

12 Months Ended

Dec. 31, 2011

9. DEBT

Our notes payable, capital leases and long-term debt at December 31, 2011 and 2010 are listed in the following table, and are presented net of adjustments to fair value related to hedging transactions.


				2011								2010
Maturity	Interest Rate			Principal		Discount			Carry Value			Principal		Discount			Carry Value
Credit facilities:
April 2012		Variable	%	$	-	$	-		$	-		$	25.0	$	-		$	25.0
September 2013		Variable			17.2		-			17.2			50.0		-			50.0
April 2016		Variable			17.2		-			17.2			-		-			-

Senior notes:
February 2011		5.750			-		-			-			262.9		(1.2	)		261.7
April 2011		6.375			-		-			-			216.9		(1.8	)		215.1
August 2011		6.750			-		-			-			392.2		(0.2	)		392.0
May 2016		7.125			-		-			-			600.0		(64.5	)		535.5
June 2017		6.875			750.0		(75.8	)		674.2			750.0		(86.1	)		663.9
May 2018		3.800			700.0		(0.2	)		699.8			-		-			-
September 2019		5.500			650.0		(3.8	)		646.2			650.0		(4.2	)		645.8
March 2020		5.000			850.0		(0.1	)		849.9			850.0		(0.1	)		849.9
November 2021		5.250			600.0		-			600.0			600.0		-			600.0
May 2023		4.750			550.0		(1.4	)		548.6			-		-			-
March 2035		6.086			275.7		(25.5	)		250.2			275.6		(25.8	)		249.8
March 2040		6.200			650.0		(0.5	)		649.5			650.0		(0.5	)		649.5
May 2041		5.700			600.0		(3.4	)		596.6			-		-			-

Debentures:
May 2021		9.250			35.3		(2.0	)		33.3			99.5		(6.1	)		93.4
September 2035		7.400			165.2		(41.9	)		123.3			360.0		(92.4	)		267.6

Other:
2012 - 2035		0.060 - 8.250			1,142.2		(15.8	)		1,126.4			1,173.7		(21.9	)		1,151.8
2012 - 2042		5.000 - 11.900			89.4		-			89.4			92.6		-			92.6

Total Debt					7,092.2		(170.4	)		6,921.8			7,048.4		(304.8	)		6,743.6
Less: Current portion										(34.8	)							(878.5	)

Long-term portion				$	7,092.2	$	(170.4	)	$	6,887.0		$	7,048.4	$	(304.8	)	$	5,865.1

Loss on Extinguishment of Debt

During 2011, 2010 and 2009, we completed financing transactions that resulted in cash paid for premiums and professional fees to repurchase debt as well as the non-cash write-off of unamortized debt discounts and deferred issuance costs. The following table summarizes the loss on extinguishment of debt by securities for the years ended December 31, 2011, 2010, and 2009:


	Principal Repaid		Cash Paid in Loss on Extinguishment of Debt		Non-cash Loss on Extinguishment of Debt		Total Loss on Extinguishment of Debt
2011:
$600.0 million 7.125% senior notes due May 2016	$	600.0	$	21.4	$	61.3	$	82.7
$99.5 million 9.250% debentures due May 2021		64.2		24.2		3.8		28.0
$360.0 million 7.400% debentures due September 2035		194.8		44.7		49.9		94.6
Amendments to credit facilities		-		-		1.7		1.7
Ineffective portion of interest rate lock settlements		-		0.3		-		0.3
Industrial revenue bonds		-		-		3.5		3.5

Loss on extinguishment of debt for the year ended December 31, 2011			$	90.6	$	120.2	$	210.8

2010:
$425.0 million 6.125% senior notes due February 2014	$	425.0	$	8.7	$	44.1	$	52.8
$600.0 million 7.250% senior notes due March 2015		600.0		21.8		57.5		79.3
Accounts receivable securitization program		300.0		-		0.2		0.2
Industrial revenue bonds		-		-		28.5		28.5

Loss on extinguishment of debt for the year ended December 31, 2010			$	30.5	$	130.3	$	160.8

2009:
$350.0 million 6.500% senior notes due November 2010	$	128.4	$	6.3	$	3.7	$	10.0
$400.0 million 5.750% senior notes due February 2011		137.1		6.9		6.6		13.5
$275.0 million 6.375% senior notes due April 2011		58.1		3.2		2.5		5.7
$450.0 million 6.750% senior notes due August 2011		63.0		4.4		0.2		4.6
$450.0 million 7.875% senior notes due April 2013		450.0		11.8		22.6		34.4
$400.0 million of 7.375% senior notes due April 2014		400.0		14.7		31.4		46.1
$230.0 million of 4.250% senior convertible note due April 2034		230.0		-		17.4		17.4
Industrial revenue bonds		-		1.0		1.4		2.4

Loss on extinguishment of debt for the year ended December 31, 2009			$	48.3	$	85.8	$	134.1

Credit Facilities

In April 2011, we amended and restated our $1.0 billion revolving credit facility due April 2012 (the Amended and Restated Credit Facility) to increase the borrowing capacity to $1.25 billion and to extend the maturity to April 2016. The Amended and Restated Credit Facility includes a feature that allows us to increase availability, at our option, by an aggregate amount up to $500 million through increased commitments from existing lenders or the addition of new lenders. At our option, borrowings under the Amended and Restated Credit Facility bear interest at a Base Rate, or a Eurodollar Rate, plus an applicable margin based on our Debt Ratings (all as defined in the agreements). Substantially all of our subsidiaries guarantee all obligations under the Amended and Restated Credit Facility.

Contemporaneous with the execution of the Amended and Restated Credit Facility, we entered into Amendment No. 2 to our existing $1.75 billion credit facility (the Existing Credit Facility and, together with the Amended and Restated Credit Facility, the Credit Facilities), to reduce the commitments under the Existing Credit Facility to $1.25 billion and conform certain terms of the Existing Credit Facility to those of the Amended and Restated Credit Facility. Amendment No. 2 does not extend the maturity date under the Existing Credit Facility, which matures in September 2013. Substantially all of our subsidiaries continue to guarantee all obligations under the Existing Credit Facility.

As of December 31, 2011 and December 31, 2010, the interest rate for our borrowings under our Credit Facilities was 3.25% and 1.56%, respectively. Our Credit Facilities also are subject to facility fees based on applicable rates defined in the agreements and the aggregate commitments, regardless of usage. Availability under our Credit Facilities can be used for working capital, capital expenditures, letters of credit and other general corporate purposes. As of December 31, 2011 and December 31, 2010, we had $34.4 million and $75.0 million of Base Rate—Prime and Eurodollar Rate borrowings, respectively. We had $950.2 million and $1,037.5 million of letters of credit using availability under our Credit Facilities, leaving $1,515.4 million and $1,637.5 million of availability under our Credit Facilities, at December 31, 2011 and December 31, 2010, respectively.

Senior Notes and Debentures

In August 2011, our 6.750% senior notes matured. We used cash on hand and incremental borrowings under our Credit Facilities to repay $387.0 million of principal due on these notes.

In May 2011, we issued $700.0 million of 3.800% senior notes due 2018 (the 3.800% Notes), $550.0 million of 4.750% senior notes due 2023 (the 4.750% Notes) and $600.0 million of 5.700% senior notes due 2041 (the 5.700% Notes, together with the 3.800% Notes and the 4.750% Notes, the 2011 Notes). We used the net proceeds from the 2011 Notes as follows: (i) $621.4 million to fund the redemption of our $600.0 million 7.125% senior notes maturing in 2016; (ii) $81.6 million to purchase $59.2 million of our subsidiary Browning-Ferris Industries, LLC’s 9.250% debentures maturing in 2021; (iii) $221.8 million to purchase $180.7 million of our subsidiary Browning-Ferris Industries, LLC’s 7.400% debentures maturing in 2035; (iv) $619.0 million to repay borrowings under our Credit Facilities; and (v) the remainder for general corporate purposes. In May 2011, our 6.375% senior notes matured. We used cash on hand and incremental borrowings under our Credit Facilities to repay $216.9 million of principal due on these notes.

In February 2011, our 5.750% senior notes matured. We used cash on hand and incremental borrowings under our Credit Facilities to repay $262.9 million of principal due on these notes.

In November 2010, our 6.50% senior notes matured. We used cash on hand and incremental borrowings under our Credit Facilities to repay $221.6 million of principal due on these notes.

In March 2010, we issued $850.0 million of 5.00% senior notes due 2020 (the 2020 Notes), with an unamortized discount of $0.1 million at December 31, 2010, and $650.0 million of 6.20% senior notes due 2040 (the 2040 Notes, and, together with the 2020 Notes, the 2010 Notes). We used the net proceeds from the 2010 Notes as follows: (i) $433.7 million to redeem the 6.125% senior notes due 2014 at a premium of 102.042% ($425.0 million principal outstanding); (ii) $621.8 million to redeem the 7.250% senior notes due 2015 at a premium of 103.625% ($600.0 million principal outstanding); and (iii) the remainder to reduce amounts outstanding under our Credit Facilities and for general corporate purposes. During the first quarter of 2010, we incurred a loss of $132.1 million for premiums paid to repurchase debt, to write off unamortized debt discounts and for professional fees paid to effectuate the repurchase of the senior notes.

Our senior notes are general senior unsecured obligations. Interest is payable semi-annually. These senior notes have a make-whole call provision that is exercisable at any time prior to the respective maturity dates per the debt table above at a stated redemption price.

The 9.250% Debentures are not redeemable prior to maturity and are not subject to any sinking fund requirements. The 7.400% Debentures are not subject to any sinking fund requirements and may be redeemed in whole or in part, at our option at any time. The redemption price is equal to the greater of the principal amount of the debentures and the present value of the future principal and interest payments discounted at a rate specified under the terms of the indenture.

Tax-Exempt Financings

As of December 31, 2011 and 2010, we had $1,126.4 million and $1,151.8 million, respectively, of fixed and variable rate tax-exempt financings outstanding with maturities ranging from 2012 to 2035. As of December 31, 2011 and 2010, the total of the unamortized adjustment to fair value recorded in purchase accounting for the tax-exempt financings assumed from Allied was $15.8 million and $21.9 million, respectively, which is being amortized to interest expense over the remaining terms of the debt.

Approximately 75% of our tax-exempt financings are remarketed quarterly, weekly or daily by a remarketing agent to effectively maintain a variable yield. Certain of these variable rate tax-exempt financings are credit enhanced with letters of credit having terms in excess of one year issued by banks with investment grade credit ratings. The holders of the bonds can put them back to the remarketing agent at the end of each interest period. To date, the remarketing agents have been able to remarket our variable rate unsecured tax-exempt bonds. These bonds have been classified as long term because of our ability and intent to refinance them using availability under our Credit Facilities, if necessary.

As of December 31, 2011, we had $189.6 million of restricted cash and marketable securities, of which $22.5 million represented proceeds from the issuance of tax-exempt bonds and other tax-exempt financings and will be used to fund capital expenditures under the terms of the agreements. Restricted cash and marketable securities also include amounts held in trust as a financial guarantee of our performance.

Other Debt

Other debt primarily includes capital lease liabilities of $88.3 million and $91.8 million as of December 31, 2011 and 2010, respectively, with maturities ranging from 2012 to 2042.

Future Maturities of Debt

Aggregate maturities of notes payable, capital leases and other long-term debt as of December 31, 2011, excluding non-cash discounts, premiums, and adjustments to fair value recorded in purchase accounting totaling $170.4 million, are as follows:


2012	$	30.7
2013		32.7
2014		16.0
2015		25.7
2016		21.7
Thereafter		6,965.4

	$	7,092.2

Fair Value of Debt

The fair value of our fixed rate senior notes using observable market inputs is $6.3 billion and $6.0 billion at December 31, 2011 and 2010, respectively. The carrying value of these notes is $5.7 billion and $5.4 billion at December 31, 2011 and 2010, respectively. The carrying amounts of our remaining notes payable and tax-exempt financing approximate fair value because interest rates are variable and, accordingly, approximate current market rates for instruments with similar risk and maturities. The fair value of our debt is determined as of the balance sheet date and is subject to change.

Guarantees

Substantially all of our subsidiaries have guaranteed our obligations under the Credit Facilities.

Substantially all of our subsidiaries guarantee each series of senior notes issued by our parent company, Republic Services, Inc. Our parent company and substantially all of our subsidiaries guarantee each series of senior notes issued by our subsidiary Allied Waste North America, Inc. (AWNA notes) and each series of senior notes issued by our subsidiary Browning-Ferris Industries, LLC (successor to Browning-Ferris Industries, Inc.) (BFI notes). All of these guarantees would be automatically released upon the release of our subsidiaries from their guarantee obligations under the Credit Facilities, except the guarantee of Allied in the case of the AWNA notes, and the guarantees of Allied and Allied Waste North America, Inc. in the case of the BFI notes.

We have guaranteed some of the tax-exempt bonds of our subsidiaries. If a subsidiary fails to meet its obligations associated with tax-exempt bonds as they come due, we will be required to perform under the related guarantee agreement. No additional liability has been recorded for these guarantees because the underlying obligations are reflected in our consolidated balance sheets.

Interest Paid

Interest paid was $396.2 million, $417.8 million and $471.6 million for the years ended December 31, 2011, 2010 and 2009, respectively. The components of interest expense are as follows:


	2011			2010			2009
Interest expense on debt and capital lease obligations	$	372.9		$	413.2		$	453.5
Accretion of debt discounts		25.6			52.4			92.1
Accretion of remediation and risk reserves		49.8			48.1			58.1
Less: capitalized interest		(8.1	)		(6.3	)		(7.8	)

Total interest expense	$	440.2		$	507.4		$	595.9

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. We also entered into interest rate swap agreements to manage risk associated with fluctuations in interest rates of certain debt obligations. In August 2011 swap agreements with a total notional value of $210.0 million matured. This maturity was identical to our unsecured notes that also matured in August 2011. Under the swap agreements, we paid interest at floating rates based on changes in LIBOR and received interest at a fixed rate of 6.75%. At December 31, 2011 we had no interest rate swap agreements outstanding.

The following table summarizes the reduction to interest expense due to periodic settlements of active swap agreements for the years ended December 31, 2011, 2010 and 2009:


Consolidated Statement of Income Classification	Reduction to interest expense due to periodic settlements of active swap agreements
	2011		2010		2009
Interest expense	$	5.4	$	8.5	$	8.7

From time to time, we enter into treasury and interest rate locks for the purpose of managing exposure to fluctuations in interest rates in anticipation of future debt issuances. During the first and second quarters of 2011, we entered into a number of interest rate lock agreements having an aggregate notional amount of $725.0 million with fixed interest rates ranging from 3.10% to 4.61% to manage exposure to fluctuations in interest rates in anticipation of the planned issuance of the 2011 Notes. Upon issuance of the 2011 Notes in the second quarter of 2011, we terminated the interest rate locks and paid $36.5 million to the counterparties. The effective portion of the interest rate locks, recorded as a component of accumulated other comprehensive income, was $36.2 million, or $21.2 million net of tax. The effective portion of the interest rate locks will be amortized as an increase to interest expense over the life of the issued debt. We expect to amortize $1.5 million over the next twelve months as a yield adjustment of the 2011 Notes. This transaction was accounted for as a cash flow hedge. As of December 31, 2011, no interest rate lock cash flow hedges were outstanding.

During the first quarter of 2010, we entered into interest rate lock agreements having an aggregate notional amount of $500.0 million to hedge interest rates in connection with the issuance of the 2010 Notes. Upon issuance of these notes, we terminated the interest rate locks and paid approximately $7.0 million to the counterparties. The effective portion of the interest rate locks, recorded as a component of accumulated other comprehensive income, was $6.4 million or $3.7 million net of tax. The effective portion of the interest rate locks will be amortized as an increase to interest expense over the life of the issued debt, of which $0.3 million is scheduled to be amortized over the next twelve months as a yield adjustment to the 2010 Notes.

The following table summarizes the loss on our interest rate locks (settlement and amortization) included in other comprehensive income for the year ended December 31, net of tax:


	2011			2010
Interest rate locks	$	(20.4	)	$	(3.4	)

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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