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LONG-TERM DEBT AND LINES OF CREDIT | 9 Months Ended
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Sep. 30, 2020
Debt Disclosure [Abstract] |
LONG-TERM DEBT AND LINES OF CREDIT | LONG-TERM DEBT AND LINES OF CREDIT As of September 30, 2020 and December 31, 2019, long-term debt consisted of the following:
| September 30, 2020 |  | December 31, 2019
| (in thousands)
3.800% senior notes due April 1, 2021 | $ | 754,398 |  |  | $ | 760,996 |
3.750% senior notes due June 1, 2023 | 563,526 |  |  | 567,330 |
4.000% senior notes due June 1, 2023 | 567,578 |  |  | 572,522 |
2.650% senior notes due February 15, 2025 | 992,688 |  |  | 991,423 |
4.800% senior notes due April 1, 2026 | 812,149 |  |  | 820,623 |
4.450% senior notes due June 1, 2028 | 483,687 |  |  | 486,982 |
3.200% senior notes due August 15, 2029 | 1,236,029 |  |  | 1,234,843 |
2.900% senior notes due May 15, 2030 | 988,664 |  |  | — |
4.150% senior notes due August 15, 2049 | 739,699 |  |  | 739,431 |
Unsecured term loan facility | 1,984,858 |  |  | 1,981,758 |
Unsecured revolving credit facility | — |  |  | 903,000 |
Finance lease liabilities | 65,142 |  |  | 32,996 |
Other borrowings | 80,044 |  |  | 33,597 |
Total long-term debt | 9,268,462 |  |  | 9,125,501 |
Less current portion | 831,500 |  |  | 35,137 |
Long-term debt, excluding current portion | $ | 8,436,962 |  |  | $ | 9,090,364 |
The carrying amounts of our senior notes and term loans in the table above are presented net of unamortized discount and unamortized debt issuance costs, as applicable. At September 30, 2020, unamortized discount on senior notes was $8.7 million, and unamortized debt issuance costs on senior notes and the unsecured term loan facility were $49.4 million. Unamortized debt issuance costs on our senior notes and unsecured term loans at December 31, 2019 were $46.6 million. The portion of unamortized debt issuance costs related to revolving credit facilities is included in other noncurrent assets. At September 30, 2020, unamortized debt issuance costs on the unsecured revolving credit facility were $14.7 million, and, at December 31, 2019, unamortized debt issuance costs on the unsecured revolving credit facility were $17.6 million. The amortization of debt discounts and debt issuance costs is recognized as an increase to interest expense over the terms of the respective debt instruments. Amortization of discounts and debt issuance costs for the three and nine months ended September 30, 2020 was $3.1 million and $8.9 million, respectively. Amortization of discounts and debt issuance costs for the three and nine months ended September 30, 2019 was $3.1 million and $9.2 million, respectively. At September 30, 2020, future maturities of long-term debt (excluding finance lease liabilities) were as follows by year (in thousands):
Year ending December 31, |
2020 | $ | 20,474 |
2021 | 801,167 |
2022 | 58,403 |
2023 | 1,300,000 |
2024 | 1,750,000 |
2025 | 1,000,000 |
2026 and thereafter | 4,200,000 |
Total | $ | 9,130,044 |
Senior Unsecured Notes We have $7.1 billion in aggregate principal amount of senior unsecured notes, as presented in the table above. Interest on the senior notes is payable semi-annually at various dates. Each series of the senior notes is redeemable, at our option, in whole or in part, at any time and from time-to-time at the redemption prices set forth in the related indenture. The difference between the acquisition fair value and face value of senior notes assumed in the Merger is recognized over the terms of the respective notes as a reduction of interest expense. The amortization of this fair value adjustment was $9.0 million and $27.1 million, respectively, for the three and nine months ended September 30, 2020. On May 15, 2020, we issued $1.0 billion in aggregate principal amount of 2.900% senior unsecured notes due May 2030 and received proceeds of $996.7 million. We incurred debt issuance costs of approximately $8.4 million, including underwriting fees, fees for professional services and registration fees, which were capitalized and reflected as a reduction of the related carrying amount of the notes in our consolidated balance sheet at September 30, 2020. Interest on the notes is payable semi-annually in arrears on May 15 and November 15 of each year, commencing November 15, 2020. The notes are unsecured and unsubordinated indebtedness and rank equally in right of payment with all of our other outstanding unsecured and unsubordinated indebtedness. We used the net proceeds from the offering to repay a portion of the outstanding indebtedness on our revolving credit facility and for general corporate purposes. As of September 30, 2020, our senior notes had a total carrying amount of $7.1 billion and an estimated fair value of $7.7 billion. The estimated fair value of our senior notes was based on quoted market prices in an active market and is considered to be a Level 1 measurement of the valuation hierarchy. The fair value of other long-term debt approximated its carrying amount at September 30, 2020. Senior Unsecured Credit Facilities We have a term loan credit agreement ("Term Loan Credit Agreement") and a revolving credit agreement ("Unsecured Revolving Credit Agreement") in each case with Bank of America, N.A., as administrative agent, and a syndicate of financial institutions, as lenders and other agents. The Term Loan Credit Agreement provides for a senior unsecured $2 billion term loan facility, and the Unsecured Revolving Credit Agreement provides for a senior unsecured $3 billion revolving credit facility. Borrowings under the term loan facility were made in U.S. dollars and borrowings under the revolving credit facility are available to be made in U.S. dollars, euros, sterling, Canadian dollars and, subject to specific conditions, certain other currencies at our option. Borrowings in U.S. dollars and certain other LIBOR quoted currencies will bear interest, at our option, at a rate equal to either (1) the rate (adjusted for any statutory reserve requirements for eurocurrency liabilities) for eurodollar deposits in the London interbank market, (2) a floating rate of interest set forth on the applicable LIBOR screen page designated by Bank of America, N.A. or (3) the highest of (a) the federal funds effective rate plus 0.5%, (b) the rate of interest as publicly announced by Bank of America as its "prime rate" or (c) LIBOR plus 1.0%, in each case, plus an applicable margin. As of September 30, 2020, the interest rate on the term loan facility was 1.52%. 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 0.125% to 0.300% depending on our credit rating. Beginning on December 31, 2022, and at the end of each quarter thereafter, the term loan facility must be repaid in quarterly installments in the amount of 2.50% of original principal through the maturity date with the remaining principal balance due upon maturity in September 2024. The revolving credit facility also matures in September 2024. We may issue standby letters of credit of up to $250 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. The amounts available to borrow under the revolving credit facility are also determined by a financial leverage covenant. As of September 30, 2020, the total available commitments under the revolving credit facility were $2.1 billion and there were no outstanding borrowings. Compliance with Covenants The senior unsecured term loan and revolving credit facility contain customary conditions to funding, affirmative covenants, negative covenants, financial covenants and events of default. As of September 30, 2020, financial covenants under the term loan facility required a leverage ratio of 3.50 to 1.00 and an interest coverage ratio of 3.00 to 1.00. We were in compliance with all applicable covenants as of September 30, 2020. Settlement Lines of Credit In various markets where we do business, we have specialized lines of credit, that 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 lines of credit may exceed the stated credit limit. As of September 30, 2020, a total of $58.5 million of cash on deposit was used to determine the available credit. As of September 30, 2020 and December 31, 2019, we had $439.4 million and $463.2 million, respectively, outstanding under these lines of credit with additional capacity to fund settlement of $1,387.3 million as of September 30, 2020. During the three months ended September 30, 2020, the maximum and average outstanding balances under these lines of credit were $560.7 million and $324.6 million, respectively. The weighted-average interest rate on these borrowings was 2.05% and 3.16% at September 30, 2020 and December 31, 2019, 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 (loss). The fair values of our 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 information about 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 September 30, 2020 |  | Range of Maturity Dates at September 30, 2020 |  | September 30, 2020 |  | December 31, 2019
|  |  |  |  |  |  |  | (in thousands)
Interest rate swaps (Notional of $250 million at December 31, 2019) |  | Prepaid expenses and other current assets |  | NA |  | NA |  | $ | — |  |  | $ | 472 |
Interest rate swaps (Notional of $300 million at September 30, 2020) |  | Accounts payable and accrued liabilities |  | 1.91% |  | March 31, 2021 |  | $ | 2,662 |  |  | $ | — |
Interest rate swaps (Notional of $1.55 billion at September 30, 2020 and $1.55 billion at December 31, 2019) |  | Other noncurrent liabilities |  | 2.73% |  | December 31, 2022 |  | $ | 74,102 |  |  | $ | 45,604 |
NA = not applicable. The table below presents the effects of our interest rate swaps on the consolidated statements of income and comprehensive income for the three and nine months ended September 30, 2020 and 2019:
| Three Months Ended |  | Nine Months Ended
| September 30, 2020 |  | September 30, 2019 |  | September 30, 2020 |  | September 30, 2019
| (in thousands)
Net unrealized gains (losses) recognized in other comprehensive income (loss) | $ | 194 |  |  | $ | (40,265) |  |  | $ | (53,332) |  |  | $ | (96,997) |
Net unrealized losses (gains) reclassified out of other comprehensive income (loss) to interest expense | $ | 11,133 |  |  | $ | 1,193 |  |  | $ | 25,786 |  |  | $ | (1,530) |
As of September 30, 2020, the amount of net unrealized losses 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 $40.9 million. Interest Expense Interest expense was $82.1 million and $96.0 million for the three months ended September 30, 2020 and 2019, respectively, and $244.3 million and $221.0 million for the nine months ended September 30, 2020 and 2019, 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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