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LONG-TERM DEBT AND LINES OF CREDIT | 12 Months Ended
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Dec. 31, 2020
Debt Disclosure [Abstract] |
LONG-TERM DEBT AND LINES OF CREDIT | LONG-TERM DEBT AND LINES OF CREDIT As of December 31, 2020 and 2019, long-term debt consisted of the following:
| December 31, 2020 |  | December 31, 2019
| (in thousands)
Long-term Debt |  |  |
3.800% senior notes due April 1, 2021 | $ | 752,199 |  |  | $ | 760,996 |
3.750% senior notes due June 1, 2023 | 562,258 |  |  | 567,330 |
4.000% senior notes due June 1, 2023 | 565,930 |  |  | 572,522 |
2.650% senior notes due February 15, 2025 | 993,110 |  |  | 991,423 |
4.800% senior notes due April 1, 2026 | 809,324 |  |  | 820,623 |
4.450% senior notes due June 1, 2028 | 482,588 |  |  | 486,982 |
3.200% senior notes due August 15, 2029 | 1,236,424 |  |  | 1,234,843 |
2.900% senior notes due May 15, 2030 | 989,025 |  |  | — |
4.150% senior notes due August 15, 2049 | 739,789 |  |  | 739,431 |
Unsecured term loan facility | 1,985,776 |  |  | 1,981,758 |
Unsecured revolving credit facility | 36,000 |  |  | 903,000 |
Finance lease liabilities | 75,989 |  |  | 32,996 |
Other borrowings | 65,352 |  |  | 33,597 |
Total long-term debt | 9,293,764 |  |  | 9,125,501 |
Less current portion | 827,357 |  |  | 35,137 |
Long-term debt, excluding current portion | $ | 8,466,407 |  |  | $ | 9,090,364 |
The carrying amounts of our senior notes and term loans are presented net of unamortized discount and unamortized debt issuance costs, as applicable. At December 31, 2020, unamortized discount on senior notes was $8.5 million, and unamortized debt issuance costs on senior notes and the unsecured term loan facility were $47.4 million. At December 31, 2019, unamortized discount on senior notes was $5.9 million, and unamortized debt issuance costs on our senior notes and unsecured term loans were $46.6 million. The portion of unamortized debt issuance costs related to revolving credit facilities is included in other noncurrent assets. At December 31, 2020, unamortized debt issuance costs on the unsecured revolving credit facility were $13.8 million, and, at December 31, 2019, unamortized debt issuance costs on the secured 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 was $12.0 million, $11.9 million and $11.7 million, respectively, for years ended December 31, 2020, 2019 and 2018. At December 31, 2020, maturities of long-term debt (excluding finance lease liabilities) were as follows by year (in thousands):
Year ending December 31, |
2021 | $ | 806,834 |
2022 | 58,403 |
2023 | 1,300,000 |
2024 | 1,786,000 |
2025 | 1,000,000 |
2026 and thereafter | 4,200,000 |
Total | $ | 9,151,237 |
See "Note 6—Leases" for more information about our finance lease liabilities, including maturities. Senior Unsecured Notes We have $7.1 billion in aggregate principal amount of senior unsecured notes, as presented in the table above, which are comprised of senior notes issued in 2020, senior notes assumed in the Merger and senior notes issued in 2019. 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. 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 December 31, 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. In August 14, 2019, we completed the public offering and issuance of $3.0 billion aggregate principal amount of senior unsecured notes, consisting of the following: (i) $1.0 billion aggregate principal amount of 2.650% senior notes due 2025; (ii) $1.25 billion aggregate principal amount of 3.200% senior notes due 2029; and (iii) $750.0 million aggregate principal amount of 4.150% senior notes due 2049. Interest on the senior notes is payable semi-annually in arrears on each February 15 and August 15, beginning on February 15, 2020. 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. We issued the senior notes at a total discount of $6.1 million and capitalized related debt issuance costs of $29.6 million. From August 14, 2019 until the closing of the Merger on September 18, 2019, the proceeds from the issuance of the senior notes were held in escrow. Upon closing, the funds were released and used together with borrowings under the term loan facility and the revolving credit facility, as well as cash on hand, to repay TSYS' unsecured revolving credit facility, refinance certain of our existing indebtedness, fund cash payments made in lieu of fractional shares and pay transaction fees and costs related to the Merger. In addition, in connection with the Merger, we assumed $3.0 billion aggregate principal amount of senior unsecured notes of TSYS, consisting of the following: (i) $750.0 million aggregate principal amount of 3.800% senior notes due 2021; (ii) $550.0 million aggregate principal amount of 3.750% senior notes due 2023; (iii) $550.0 million aggregate principal amount of 4.000% senior notes due 2023; (iv) $750 million aggregate principal amount of 4.800% senior notes due 2026; and (v) $450 million aggregate principal amount of 4.450% senior notes due 2028. For the 3.800% senior notes due 2021 and the 4.800% senior notes due 2026, interest is payable semi-annually each April 1 and October 1. For the 3.750% senior notes due 2023, the 4.000% senior notes due 2023 and the 4.450% senior notes due 2028, interest is payable semi-annually each June 1 and December 1. The difference between the acquisition-date 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 $36.2 million and $10.5 million for the year ended December 31, 2020 and 2019, respectively. As of December 31, 2020, our senior notes had a total carrying amount of $7.1 billion and an estimated fair value of $7.8 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 December 31, 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 $2.0 billion term loan facility, and the Unsecured Revolving Credit Agreement provides for a senior unsecured $3.0 billion revolving credit facility. We capitalized debt issuance costs of $12.8 million in connection with the issuances of these term loan and revolving credit facilities. As of December 31, 2020, borrowings outstanding under the term loan facility and the revolving credit facility were $2.0 billion and $36.0 million, respectively. 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 certain conditions, certain other currencies at our option. Borrowings in U.S. dollars and certain other London Interbank Offered Rate ("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 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 December 31, 2020, the interest rates on the term loan facility and the revolving credit facility were 1.52% and 1.48%, respectively. 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 December 31, 2020, the total available commitments under the revolving credit facility wer e $2.1 billion. Prior Credit Facility Prior to completion of the Merger, we were 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. The credit facility provided for secured financing comprised of (i) a $1.5 billion revolving credit facility; (ii) a $1.5 billion term loan; (iii) a $1.37 billion term loan; (iv) a $1.14 billion term loan; and (v) a $500.0 million term loan. Upon the consummation of the Merger, all borrowings outstanding and other amounts due under the credit facility were repaid and this credit facility was terminated. In connection with the extinguishment of this credit facility, we wrote off related unamortized debt issuance costs of $16.7 million to interest expense during the year ended December 31, 2019. Bridge Facility On May 27, 2019, in connection with our entry into the Merger Agreement described in "Note 2—Acquisitions," we obtained commitments for a $2.75 billion, 364-day senior unsecured bridge facility (the "Bridge Facility"). On July 9, 2019, upon our entry into the senior unsecured term loan and revolving credit facilities described below, the aggregate commitments under the Bridge Facility were reduced to approximately $2.1 billion. Concurrently with the issuance of our senior unsecured notes, the remaining aggregate commitments under the Bridge Facility were reduced to zero and terminated. During the year ended December 31, 2019, we recognized $11.7 million of fees associated with the Bridge Facility in interest expense. Compliance with Covenants The senior unsecured term loan and revolving credit facilities contain customary conditions to funding, affirmative covenants, negative covenants, financial covenants and events of default. As of December 31, 2020, financial covenants under the term loan facility required a leverage ratio o f 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 December 31, 2020. Settlement Lines of Credit In various markets where our Merchant Solutions segment does 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 December 31, 2020 and 2019, a total of $64.5 million an d $74.5 million, respectively, of cash on deposit was used to determine the available credit. As of December 31, 2020, we h ad $358.7 million outst anding under these lines of credit with additional capacity to fund settlement o f $1,507.6 million. During the year ended December 31, 2020, the maximum and average outstanding balances under these lines of credit were $752.5 million and $341.4 million, respectively. The weighted-average interest rate on these borrowings wa s 2.35% at December 31, 2020. 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). In addition, in June 2019, 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, were designed to manage the exposure to interest rate volatility in anticipation of the issuance of our senior unsecured notes. During the period from the commencement of the swaps through the date upon which our senior unsecured notes were issued, the effective portion of the unrealized losses on the swaps was included in other comprehensive loss. Upon issuance of our senior unsecured notes, we terminated the forward-starting swap agreements and made settlement payments of $48.3 million, which are included in cash flows from operating activities in our consolidated statement of cash flows for the year ended December 31, 2019 within the caption labeled "Other, net." We have and will continue to reclassify the effective portion of the realized loss from accumulated other comprehensive loss into interest expense over the terms of the related senior notes. 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 December 31, 2020, and classified within Level 2 of the valuation hierarchy. The table below presents information about our derivative financial instruments as of December 31, 2020 and 2019:
|  |  |  | Weighted-Average Fixed Rate of Interest at |  | Range of Maturity Dates at |  | Fair Value
Derivative Financial Instruments |  | Balance Sheet Location |  | December 31, 2020 |  | December 31, 2020 |  | December 31, 2020 |  | December 31, 2019
|  |  |  |  |  |  |  | (in thousands)
Interest rate swaps (Notional of $250 million a t December 31, 2019) |  | Prepaid expenses and other current assets |  | N/A |  | N/A |  | $ | — |  |  | $ | 472 |
Interest rate swaps (Notional of $300 million at December 31, 2020) |  | AP & accrued liabilities |  | 1.91% |  | March 31, 2021 |  | $ | 1,330 |  |  | $ | — |
Interest rate swaps (Notional of $1,250 million at December 31, 2020 and $1,550 million at December 31, 2019) |  | Other noncurrent liabilities |  | 2.73% |  | December 31, 2022 |  | $ | 65,490 |  |  | $ | 45,604 |
N/A - not applicable. The table below presents the effects of our interest rate swaps on the consolidated statements of income and comprehensive income for the years ended December 31, 2020, 2019 and 2018:
| Years Ended December 31,
| 2020 |  | 2019 |  | 2018
| (in thousands)
Net unrealized losses recognized in other comprehensive loss | $ | (52,742) |  |  | $ | (90,238) |  |  | $ | (7,553) |
Net unrealized losses (gains) reclassified out of other comprehensive loss to interest expense | $ | 36,510 |  |  | $ | 2,257 |  |  | $ | (4,792) |
At December 31, 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 approximately $39.8 million. Interest Expense Interest expense was $326.8 million, $301.2 million and $195.5 million, respectively, for the years ended December 31, 2020, 2019 and 2018.

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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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