DEBT

The carrying value of our notes payable, capital leases and long-term debt as of June 30, 2018 and December 31, 2017 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.



		June 30, 2018								December 31, 2017
Maturity	Interest Rate	Principal		Adjustments			Carrying Value			Principal		Adjustments			Carrying Value
Credit facilities:
Uncommitted Credit Facility	Variable	$	44.7	$	—		$	44.7		$	—	$	—		$	—
June 2019	Variable	—		—			—			130.0		—			130.0
May 2021	Variable	—		—			—			—		—			—
June 2023	Variable	80.0		—			80.0			—		—			—
Senior notes:
May 2018	3.800	—		—			—			700.0		(0.3		)	699.7
September 2019	5.500	650.0		(1.5		)	648.5			650.0		(2.1		)	647.9
March 2020	5.000	850.0		(1.3		)	848.7			850.0		(1.8		)	848.2
November 2021	5.250	600.0		(1.4		)	598.6			600.0		(1.5		)	598.5
June 2022	3.550	850.0		(4.1		)	845.9			850.0		(4.6		)	845.4
May 2023	4.750	550.0		(10.0		)	540.0			550.0		(1.0		)	549.0
March 2025	3.200	500.0		(4.5		)	495.5			500.0		(4.8		)	495.2
June 2026	2.900	500.0		(4.7		)	495.3			500.0		(5.0		)	495.0
November 2027	3.375	650.0		(6.4		)	643.6			650.0		(7.0		)	643.0
May 2028	3.950	800.0		(18.1		)	781.9			—		—			—
March 2035	6.086	181.9		(14.7		)	167.2			181.9		(14.9		)	167.0
March 2040	6.200	399.9		(3.9		)	396.0			399.9		(3.9		)	396.0
May 2041	5.700	385.7		(5.4		)	380.3			385.7		(5.5		)	380.2
Debentures:
May 2021	9.250	35.3		(0.8		)	34.5			35.3		(1.0		)	34.3
September 2035	7.400	148.1		(34.1		)	114.0			148.1		(34.5		)	113.6
Tax-exempt:
2019 - 2044	1.450 - 5.250	1,042.4		(5.8		)	1,036.6			1,042.4		(6.4		)	1,036.0
Capital leases:
2018 - 2046	3.273 - 12.203	106.4		—			106.4			108.4		—			108.4
Total Debt		$	8,374.4	$	(116.7	)	8,257.7			$	8,281.7	$	(94.3	)	8,187.4
Less: current portion							(41.9		)						(706.7		)
Long-term portion							$	8,215.8							$	7,480.7

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 "Replaced Credit Facilities"). The Credit Facility is unsecured and matures in June 2023. We may request two one-year extensions of the maturity date but none of the lenders are committed to participate in such extension. The Credit Facility also includes a feature that allows us to increase availability, at our option, by an aggregate amount of up to $1.0 billion through increased commitments from existing lenders or the addition of new lenders. At our option, borrowings under the 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 Credit Facility agreement).

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 $1,745.3 million as of June 30, 2018 and under the Replaced Credit Facilities totaled $1,639.1 million as of December 31, 2017. 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 June 30, 2018, we had $80.0 million of borrowings under our Credit Facility and $130.0 million of borrowings under the Replaced Credit Facilities as of December 31, 2017. We had $406.5 million of letters of credit outstanding under our Credit Facility as of June 30, 2018 and $462.7 million of letters of credit outstanding under our Replaced Credit Facilities as of December 31, 2017.

Our Uncommitted Credit Facility 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 $44.7 million of borrowings and no borrowings outstanding under our Uncommitted Credit Facility as of June 30, 2018 and December 31, 2017, respectively.

Senior Notes and Debentures

In May 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. The senior notes have a make-whole provision that is exercisable at any time three months prior to their respective maturity dates at a stated redemption price.

Tax-Exempt Financings

As of June 30, 2018 and December 31, 2017, we had $1,036.6 million and $1,036.0 million, respectively, of fixed and 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 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 Facility, if necessary.

Capital Leases

We had capital lease liabilities of $106.4 million and $108.4 million as of June 30, 2018 and December 31, 2017, respectively, with maturities ranging from 2018 to 2046.

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 have also 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 June 30, 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 June 30, 2018 and December 31, 2017, the interest rate swap agreements are reflected at their fair value of $(1.5) million and $8.0 million, respectively, and are included in other long-term liabilities and other assets. 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. We recognized net interest income of $0.5 million and $1.4 million during the three and six months ended June 30, 2018, respectively, and $1.3 million and $2.6 million during the three and six months ended June 30, 2017, respectively, related to net swap settlements for these interest rate swap agreements, which is included as an offset to interest expense in our unaudited consolidated statements of income.

For the three months ended June 30, 2018 and 2017, we recognized gains (losses) of $2.5 million and $(1.4) million, respectively, on the change in fair value of the hedged senior notes attributable to changes in the benchmark interest rate, and (losses) gains of $(2.7) million and $1.6 million, respectively, on the related interest rate swaps. For the six months ended June 30, 2018 and 2017, we recognized gains of $9.2 million and $0.2 million, respectively, on the change in fair value of the hedged senior notes attributable to changes in the benchmark interest rate, and (losses) gains of $(9.5) million and $0.2 million, respectively, on the related interest rate swaps. The net amount of these fair value changes represents hedge ineffectiveness, which is recorded directly in earnings as other income, net.

Cash Flow Hedges

Our interest rate lock agreements had an aggregate notional amount of $450.0 million as of June 30, 2018 with fixed interest rates ranging from 1.900% to 2.950%. 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 as of June 30, 2018 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 June 30, 2018 and December 31, 2017 were $23.9 million and $19.1 million, respectively, and were recorded in other long term assets in our consolidated balance sheet. No amounts were recognized in other income, net in our consolidated statements of income for the ineffective portion of the changes of fair values during the three and six months ended June 30, 2018 and 2017, respectively.

Total loss recognized in other comprehensive income, net of tax, was $(12.2) million and $(3.4) million for the three months ended June 30, 2018 and 2017.

As of June 30, 2018 and December 31, 2017, the effective portion of our previously terminated interest rate locks, recorded as a component of accumulated other comprehensive income, net of tax, was income of $(11.6) million and loss of $11.8 million, respectively. The effective portion of the interest rate locks is amortized as an adjustment to interest expense over the life of the issued debt using the effective interest method. We expect to amortize approximately $(0.6) million of net interest expense (income) over the next twelve months as a yield adjustment of our senior notes.

The effective portion of the interest rate locks amortized as a net increase to interest expense was $0.3 million and $0.7 million during the three months ended June 30, 2018 and 2017, respectively, and $0.8 million and $1.3 million during the six months ended June 30, 2018 and 2017, respectively.