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LONG-TERM DEBT AND LINES OF CREDIT | 6 Months Ended
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Jun. 30, 2019
Debt Disclosure [Abstract] |
LONG-TERM DEBT AND LINES OF CREDIT | LONG-TERM DEBT AND LINES OF CREDIT As of June 30, 2019 and December 31, 2018, long-term debt consisted of the following:
| June 30, 2019 |  | December 31, 2018
| (in thousands)
Credit Facility: |  |  |
Term loans (face amounts of $4,419,554 and $4,463,643 at June 30, 2019 and December 31, 2018, respectively, less unamortized debt issuance costs of $32,906 and $37,400 at June 30, 2019 and December 31, 2018, respectively) | $ | 4,386,647 |  |  | $ | 4,426,243 |
Revolving Credit Facility | 765,000 |  |  | 704,000 |
Total long-term debt | 5,151,647 |  |  | 5,130,243 |
Less current portion of Credit Facility | 151,062 |  |  | 115,075 |
Long-term debt, excluding current portion | $ | 5,000,585 |  |  | $ | 5,015,168 |
The maturity requirements on long-term debt as of June 30, 2019 are as follows by year (in thousands):
Year ending December 31, |
2019 | $ | 80,087 |
2020 | 159,979 |
2021 | 195,848 |
2022 | 267,587 |
2023 | 4,006,053 |
2024 and thereafter | 475,000 |
Total | $ | 5,184,554 |
Credit Facility We are party to a credit facility agreement with Bank of America, N.A., as administrative agent, and a syndicate of financial institutions as lenders and other agents (as amended from time to time, the "Credit Facility"). As of June 30, 2019, the Credit Facility provided for secured financing comprised of (i) a $1.5 billion revolving credit facility ("Revolving Credit Facility"); (ii) a $1.5 billion term loan ("Term A Loan"); (iii) a $1.37 billion term loan ("Term A-2 Loan"); (iv) a $1.14 billion term loan ("Term B-2 Loan"); and (v) a $500 million term loan ("Term B-4 Loan"). Substantially all of the assets of our domestic subsidiaries are pledged as collateral under the Credit Facility. The Credit Facility provides for an interest rate, at our election, of either London Interbank Offered Rate or a base rate, in each case plus a margin. As of June 30, 2019, the interest rates on the Term A Loan, the Term A-2 Loan, the Term B-2 Loan and the Term B-4 Loan were 3.90%, 3.90%, 4.15% and 4.15%, respectively. As of June 30, 2019, the interest rate on the Revolving Credit Facility was 3.89%. In addition, we are required to pay a quarterly commitment fee with respect to the unused portion of the Revolving Credit Facility at an applicable rate per annum ranging from 0.20% to 0.30% depending on our leverage ratio. The Term A Loan and the Term A-2 Loan mature, and the Revolving Credit Facility expires, on January 20, 2023. The Term B-2 Loan matures on April 22, 2023. The Term B-4 Loan matures on October 18, 2025. The Term A Loan and Term A-2 Loan principal amounts must each be repaid in quarterly installments in the amount of 1.25% of principal through June 2021, increasing to 1.875% of principal through June 2022 and increasing to 2.50% of principal through December 2022, with the remaining principal balance due upon maturity in January 2023. The Term B-2 Loan principal must be repaid in quarterly installments in the amount of 0.25% of principal through March 2023, with the remaining principal balance due upon maturity in April 2023. The Term B-4 Loan principal must be repaid in quarterly installments in the amount of 0.25% of principal through September 2025, with the remaining principal balance due upon maturity in October 2025. We may issue standby letters of credit of up to $100 million in the aggregate under the Revolving Credit Facility. Outstanding letters of credit under the Revolving Credit Facility reduce the amount of borrowings available to us. Borrowings available to us under the Revolving Credit Facility are further limited by the covenants described below under "Compliance with Covenants." The total available commitments under the Revolving Credit Facility at June 30, 2019 were $723.2 million. The portions of deferred debt issuance costs related to the Revolving Credit Facility are included in prepaid expenses and other current assets and other noncurrent assets, and the portion of deferred debt issuance costs related to the term loans is reported as a reduction to the carrying amount of the term loans. Debt issuance costs are amortized as an adjustment to interest expense over the terms of the respective facilities. Compliance with Covenants The Credit Facility agreement contains customary affirmative and restrictive covenants, including, among others, financial covenants based on our leverage and interest coverage ratios, as defined in the agreement. As of June 30, 2019, financial covenants under the Credit Facility Agreement required a leverage ratio no greater than: (i) 5.00 to 1.00 as of the end of any fiscal quarter ending during the period from April 1, 2018 through June 30, 2019; (ii) 4.75 to 1.00 as of the end of any fiscal quarter ending during the period from July 1, 2019 through June 30, 2020; and (iii) 4.50 to 1.00 as of the end of any fiscal quarter ending thereafter. The interest coverage ratio is required to be no less than 3.25 to 1.00. The Credit Facility agreement includes covenants, subject in each case to exceptions and qualifications that may restrict certain payments, including in certain circumstances, the repurchasing of our common stock and paying cash dividends in excess of our current rate of $0.01 per share per quarter. We were in compliance with all applicable covenants as of June 30, 2019. Bridge Facility and New Permanent Financing Arrangements In connection with our entry into the Merger Agreement described in "Note 2—Acquisitions," on May 27, 2019, we obtained commitments for a $2.75 billion, 364-day senior unsecured bridge facility (the "Bridge Facility"). The Bridge Facility was established to refinance the Credit Facility and to refinance TSYS' unsecured revolving credit facility in order to establish an unsecured capital structure under which we can assume certain existing TSYS senior notes. We expect to execute permanent financing of $7.5 billion (a new $3.0 billion revolving credit facility and a new $2.0 billion term loan facility, which we entered into on July 9, 2019, as described below, and is expected to also include $2.5 billion of senior notes) prior to the closing of the Merger that will eliminate the need for the Bridge Facility commitments. Fees associated with the Bridge Facility of $11.7 million were capitalized and will be amortized to interest expense through the expected date of termination of the Bridge Facility commitment. For the three and six months ended June 30, 2019, we recognized $2.9 million of these fees as interest expense. The remaining unamortized portion of $8.8 million is included in prepaid expenses and other current assets on our consolidated balance sheet as of June 30, 2019. On July 9, 2019, we entered into a term loan credit agreement ("Term Loan Credit Agreement") and a credit agreement ("Unsecured Revolving Credit Agreement" and, together with the Term Loan Credit Agreement, the "Agreements"), in each case with a syndicate of financial institutions. Upon entry into the Agreements, the aggregate commitments under the Bridge Facility described above were reduced to approximately $2.1 billion. The Term Loan Credit Agreement provides for a senior unsecured $2.0 billion term loan facility and we, at our discretion, have the ability to seek to increase the term loan capacity by an additional $1.0 billion ("Term Loan Facility"). The Unsecured Revolving Credit Agreement provides for a senior unsecured $3.0 billion revolving credit facility ("Unsecured Revolving Credit Facility"). The Term Loan Facility and the Unsecured Revolving Credit Facility will be available for borrowing on the date on which the Merger becomes effective subject to customary limited conditionality for borrowings related to the Merger. The Unsecured Revolving Credit Facility will be otherwise available subject to customary conditionality. The Term Loan Credit Agreement and the Unsecured Revolving Credit Agreement will mature on the fifth anniversary of the closing date of the Merger. Settlement Lines of Credit In various markets where we do business, we have specialized lines of credit, which are restricted for use in funding settlement. The settlement lines of credit generally have variable interest rates, are subject to annual review and are denominated in local currency but may, in some cases, facilitate borrowings in multiple currencies. For certain of our lines of credit, the available credit is increased by the amount of cash we have on deposit in specific accounts with the lender. Accordingly, the amount of the outstanding line of credit may exceed the stated credit limit. As of June 30, 2019 and December 31, 2018, a total of $68.9 million and $70.6 million, respectively, of cash on deposit was used to determine the available credit. As of June 30, 2019 and December 31, 2018, respectively, we had $736.2 million and $700.5 million outstanding under these lines of credit with additional capacity of $628.1 million as of June 30, 2019 to fund settlement. The weighted-average interest rate on these borrowings was 3.01% and 2.97% at June 30, 2019 and December 31, 2018, respectively. During the three months ended June 30, 2019, the maximum and average outstanding balances under these lines of credit were $873.0 million and $440.5 million, respectively. Derivative Agreements We have interest rate swap agreements with financial institutions to hedge changes in cash flows attributable to interest rate risk on a portion of our variable-rate debt instruments. Net amounts to be received or paid under the swap agreements are reflected as adjustments to interest expense. Since we have designated the interest rate swap agreements as portfolio cash flow hedges, unrealized gains or losses resulting from adjusting the swaps to fair value are recorded as components of other comprehensive income. In addition, in June 2019, in anticipation of the expected issuance of the senior notes in connection with the Merger, as described earlier in this Note, we entered into forward-starting interest rate swap agreements with an aggregate notional amount of $1.0 billion. The forward-starting interest rate swaps, designated as cash flow hedges, are designed to manage the exposure to interest rate volatility with regard to the expected future issuances of senior notes. The effective portion of the gains or losses are reported as a component of other comprehensive loss. Beginning in the period in which the planned issuance occurs and the related derivatives are terminated, the effective portion of the gains or losses will be reclassified into interest expense over the term of the related debt. The fair values of the interest rate swaps were determined based on the present value of the estimated future net cash flows using implied rates in the applicable yield curve as of the valuation date. These derivative instruments were classified within Level 2 of the valuation hierarchy. The table below presents the fair values of our derivative financial instruments designated as cash flow hedges included in the consolidated balance sheets:
|  |  |  |  |  |  |  | Fair Values
Derivative Financial Instruments |  | Balance Sheet Location |  | Weighted-Average Fixed Rate of Interest at June 30, 2019 |  | Range of Maturity Dates at June 30, 2019 |  | June 30, 2019 |  | December 31, 2018
|  |  |  |  |  |  |  | (in thousands)
Interest rate swaps (Notional of $250 million at June 30, 2019 and $750 million at December 31, 2018) |  | Prepaid expenses and other current assets |  | 1.58% |  | December 31, 2019 |  | $ | 582 |  |  | $ | 3,200 |
Interest rate swaps (Notional of $250 million at June 30, 2019 and $550 million at December 31, 2018) |  | Other noncurrent assets |  | 1.34% |  | July 31, 2020 - March 31, 2021 |  | $ | 1,317 |  |  | $ | 8,256 |
Interest rate swaps (Notional of $1.0 billion at June 30, 2019) |  | Accounts payable and accrued liabilities |  | 2.09% |  | December 31, 2019 |  | $ | 14,617 |  |  | $ | — |
Interest rate swaps (Notional of $1.6 billion at June 30, 2019 and $950 million at December 31, 2018) |  | Other noncurrent liabilities |  | 2.57% |  | March 31, 2021 - December 31, 2022 |  | $ | 49,886 |  |  | $ | 14,601 |
The table below presents the effects of our interest rate swaps on the consolidated statements of income and comprehensive income for the three and six months ended June 30, 2019 and 2018:
| Three Months Ended |  | Six Months Ended
| June 30, 2019 |  | June 30, 2018 |  | June 30, 2019 |  | June 30, 2018
| (in thousands)
Amount of net unrealized gains (losses) recognized in other comprehensive income | $ | (42,222 | ) |  | $ | 2,932 |  |  | $ | (56,731 | ) |  | $ | 10,508 |
Amount of net unrealized gains reclassified out of other comprehensive income to interest expense | $ | (893 | ) |  | $ | (1,104 | ) |  | $ | (2,723 | ) |  | $ | (1,167 | )
As of June 30, 2019, the amount of net unrealized gains in accumulated other comprehensive loss related to our interest rate swaps that is expected to be reclassified into interest expense during the next 12 months was approximately $9.7 million. Interest Expense Interest expense was $65.5 million and $48.1 million for the three months ended June 30, 2019 and 2018, respectively, and $123.9 million and $93.5 million for the six months ended June 30, 2019 and 2018, respectively.

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- 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. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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