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Long-term debt | 12 Months Ended
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Dec. 31, 2013
Long-term debt |
14. | Long-term debt
Long-term debt was comprised of the following:
|  | December 31, |
|  | 2013 |  |  | 2012 |
Senior Secured Credit Facilities: |  |  |  |  |  |  |  |
Term Loan A |  | $ | 800,000 |  |  | $ | 900,000 |
Term Loan A-3 |  |  | 1,282,500 |  |  |  | 1,350,000 |
Term Loan B |  |  | 1,697,500 |  |  |  | 1,715,000 |
Term Loan B-2 |  |  | 1,633,500 |  |  |  | 1,650,000 |
Senior notes |  |  | 2,800,000 |  |  |  | 2,800,000 |
Acquisition obligations and other notes payable |  |  | 67,352 |  |  |  | 69,527 |
Capital lease obligations |  |  | 152,751 |  |  |  | 96,594 |
Total debt principal outstanding |  |  | 8,433,603 |  |  |  | 8,581,121 |
Discount on long-term debt |  |  | (17,675 | ) |  |  | (21,545 | )
|  |  | 8,415,928 |  |  |  | 8,559,576 |
Less current portion |  |  | (274,697 | ) |  |  | (233,042 | )
|  | $ | 8,141,231 |  |  | $ | 8,326,534 |
Scheduled maturities of long-term debt at December 31, 2013 were as follows:
2014 |  |  | 274,697 |
2015 |  |  | 845,831 |
2016 |  |  | 1,897,554 |
2017 |  |  | 910,263 |
2018 |  |  | 806,339 |
Thereafter |  |  | 3,698,919 |
Term Loans Total outstanding borrowings under Term Loan A, Term Loan A-3, Term Loan B and Term Loan B-2 can consist of various individual tranches that can range in maturity from one month to twelve months (currently all tranches are one month in duration). Each tranche for the Term Loan A and for the Term Loan A-3 bears interest at a London Interbank Offered Rate (LIBOR) rate determined by the duration of such tranche plus an interest rate margin, currently 2.75% for the Term Loan A and 2.50% for the Term Loan A-3. The Term Loan A interest rate margin can range from 2.25% to 2.75% and the Term Loan A-3 interest rate margin can range from 2.00% to 2.50% depending upon the Company’s leverage ratio. The LIBOR variable component of the interest rate for each tranche is reset as such tranche matures and a new tranche is established. At December 31, 2013, the overall weighted average interest rate for the Term Loan A and the Term Loan A-3 was determined based upon the LIBOR interest rates in effect for all of the individual tranches plus the interest rate margin. The Company has several interest rate swap agreements that have the economic effect of fixing all of the Term Loan A and Term Loan A-3 LIBOR variable component of the Company’s interest rate, as described below. At December 31, 2013, the Term Loan B bears interest at LIBOR (floor of 1.50%) plus a margin of 3.00% subject to a ratings based step-down to 2.75% and the Term Loan B-2 bears interest at LIBOR (floor of 1.00%) plus a margin of 3.00%. The Company is subject to these LIBOR-based floors until such time as the LIBOR-based component of the interest rate exceeds 1.50% on the Term Loan B and 1.00% on the Term Loan B-2. At such time, the Company will then be subject to LIBOR-based interest rate volatility on the LIBOR variable component of its interest rate and the overall weighted average interest rate for the Term Loan B and Term Loan B-2 will then be determined based upon the LIBOR interest rates in effect for all individual tranches plus the interest rate margin. The Company has several interest rate cap agreements that have the economic effect of capping the LIBOR variable component of the Company’s interest rate at a maximum of 2.50% on $1,250,000 of outstanding principal debt on the Term Loan B and $1,485,000 of the Company’s Term Loan B-2, as described below. The remaining $447,500 outstanding principal balance of the Term Loan B is subject to LIBOR-based interest rate volatility above a floor of 1.50%. The remaining $148,500 outstanding principal balance of the Term Loan B-2 is subject to LIBOR-based interest rate volatility above a floor of 1.00% In 2013, the Company made principal payments totaling $100,000 on the Term Loan A, $67,500 on the Term Loan A-3, $17,500 on the Term Loan B and $16,500 on the Term Loan B-2. In 2012, the Company made principal payments totaling $50,000 on the Term Loan A and $17,500 on the Term Loan B. In addition, during 2012, the Company made principal payments totaling $1,500 on the Term Loan A-2 prior to paying off the total outstanding balance in 2012. Revolving lines of credit The Company has an undrawn revolving line under the Senior Secured Credit Facilities totaling $350,000, of which approximately $70,000 was committed for outstanding letters of credit. In addition, the Company has approximately $1,000 of committed outstanding letters of credit related to HCP, which is backed by a certificate of deposit. Senior Notes The Company’s senior notes as of December 31, 2013 and 2012, consisted of $775,000 of 6 3/8% senior notes due 2018, $775,000 of 6 5/8% senior notes due 2020 and $1,250,000 of 5 3/4% senior notes due 2022, as discussed below. Interest rate swaps and caps The Company has entered into several interest rate swap agreements as a means of hedging its exposure to and volatility from variable-based interest rate changes as part of its overall interest rate risk management strategy. These agreements are not held for trading or speculative purposes and have the economic effect of converting the LIBOR variable component of the Company’s interest rate to a fixed rate. These swap agreements are designated as cash flow hedges, and as a result, hedge-effective gains or losses resulting from changes in the fair values of these swaps are reported in other comprehensive income until such time as each specific swap tranche is realized, at which time the amounts are reclassified into net income. Net amounts paid or received for each specific swap tranche that have settled have been reflected as adjustments to debt expense. In addition, the Company has entered into several interest rate cap agreements that have the economic effect of capping the Company’s maximum exposure to LIBOR variable interest rate changes on specific portions of the Company’s Term Loan B debt and Term Loan B-2 debt, as described below. Certain cap agreements are also designated as cash flow hedges and, as a result, changes in the fair values of these cap agreements are reported in other comprehensive income. Certain other cap agreements are designated as ineffective cash flow hedges, and as a result, changes in the fair value of these cap agreements are reported in net income. The amortization of the original cap premium is recognized as a component of debt expense on a straight-line basis over the term of the cap agreements. The swap and cap agreements do not contain credit-risk contingent features. As of December 31, 2013, the Company maintains several interest rate swap agreements that were entered into in March 2013 with amortizing notional amounts of these swap agreements totaling $1,282,500. These agreements have the economic effect of modifying the LIBOR variable component of the Company’s interest rate on an equivalent amount of the Company’s Term Loan A-3 to fixed rates ranging from 0.49% to 0.52%, resulting in an overall weighted average effective interest rate of 3.01%, including the Term Loan A-3 margin of 2.50%. The swap agreements expire on September 30, 2016 and require monthly interest payments. During the year ended December 31, 2013, the Company recognized debt expense of $3,255 from these swaps. As of December 31, 2013, the total fair value of these swap agreements was a net asset of approximately $4,386. The Company estimates that approximately $3,415 of existing unrealized pre-tax losses in other comprehensive income at December 31, 2013 will be reclassified into income over the next twelve months. In addition, as of December 31, 2013, the Company also maintains several forward interest rate swap agreements that were entered into in March 2013 with amortizing notional amounts totaling $600,000. These forward swap agreements will be effective September 30, 2014 and will have the economic effect of modifying the LIBOR variable component of the Company’s interest rate on an equivalent amount of the Company’s outstanding debt to fixed rates ranging from 0.72% to 0.75%. These swap agreements expire on September 30, 2016 and will require monthly interest payments beginning in October 2014. Any unrealized gains or losses resulting from changes in the fair value of these swaps is recorded in other comprehensive income. As of December 31, 2013, the total fair value of these swap agreements was a net asset of approximately $1,537. The Company estimates that approximately $666 of existing unrealized pre-tax losses in other comprehensive income at December 31, 2013 will be reclassified into income over the next twelve months. As of December 31, 2013, the Company maintains several interest rate cap agreements that were entered into in March 2013 with notional amounts totaling $1,250,000 on the Company’s Term Loan B debt and $1,485,000 on the Company’s Term Loan B-2 debt. These agreements have the economic effect of capping the LIBOR variable component of the Company’s interest rate at a maximum of 2.50% on an equivalent amount of the Company’s Term Loan B and Term Loan B-2 debt. During the year ended December 31, 2013, the Company recognized debt expense of $1,829 from these caps. The cap agreements expire on September 30, 2016. As of December 31, 2013, the total fair value of these cap agreements was an asset of approximately $7,566. During the year ended December 31, 2013, the Company recorded a loss of $971 in other comprehensive income due to an increase in the unrealized fair value of these cap agreements. As of December 31, 2013, the Company also maintains a total of nine other interest rate swap agreements with amortizing notional amounts totaling $800,000. These agreements had the economic effect of modifying the LIBOR variable component of the Company’s interest rate on an equivalent amount of the Company’s Term Loan A to fixed rates ranging from 1.59% to 1.64%, resulting in an overall weighted average effective interest rate of 4.36%, including the Term Loan A margin of 2.75%. The swap agreements expire on September 30, 2014 and require monthly interest payments. During the year ended December 31, 2013, the Company recognized debt expense of $12,423 from these swaps. As of December 31, 2013, the total fair value of these swap agreements was a liability of approximately $7,988. The Company estimates that approximately $7,988 of existing unrealized pre-tax losses in other comprehensive income at December 31, 2013 will be reclassified into income over the next twelve months. As of December 31, 2013, the Company also maintains five other interest rate cap agreements with notional amounts totaling $1,250,000. These agreements have the economic effect of capping the LIBOR variable component of our interest rate at a maximum of 4.00% on an equivalent amount of our Term Loan B debt. However, as a result of the new interest rate cap agreements that were entered into in March 2013, as described above, these interest rate cap agreements became ineffective cash flow hedges and as a result any changes in the fair value associated with these interest rate cap agreements will be charged to income. During the year ended December 31, 2013, the Company recognized debt expense of $3,589 from these caps. The cap agreements expire on September 30, 2014. As of December 31, 2013, the total fair value of these cap agreements was an asset of approximately $1. The following table summarizes the Company’s derivative instruments as of December 31, 2013 and 2012:
|  | Interest rate swap and cap agreements (liabilities and assets) |
|  | December 31, 2013 |  |  | December 31, 2012 |
Derivatives designated as hedging instruments |  | Balance sheet location |  | Fair value |  |  | Balance sheet location |  | Fair value |
Interest rate swap agreements |  | Other short- term liabilities |  | $ | 12,069 |  |  | Other long- term liabilities |  | $ | 18,994 |
Interest rate swap agreements |  | Other long- term assets |  | $ | 10,004 |  |  | Other long- term assets |  | $ | — |
Interest rate cap agreements |  | Other long- term assets |  | $ | 7,567 |  |  | Other long- term assets |  | $ | 65 |
The following table summarizes the effects of the Company’s interest rate swap and cap agreements for the years ended December 31, 2013, 2012 and 2011:
|  | Amount of gains (losses) recognized in OCI on interest rate swap and cap agreements |  |  | Location of (losses) gains reclassified from accumulated OCI into income |  | Amount of gains (losses) reclassified from accumulated OCI into income |
Derivatives designated as cash flow hedges |  | Years ended December 31, |  |  |  | Years ended December 31, |
| 2013 |  |  | 2012 |  |  | 2011 |  |  |  | 2013 |  |  | 2012 |  |  | 2011 |
Interest rate swap agreements |  | $ | 1,251 |  |  | $ | (8,838 | ) |  | $ | (35,767 | ) |  | Debt expense |  | $ | 15,678 |  |  | $ | (12,989 | ) |  | $ | (12,622 | )
Interest rate cap agreements |  |  | (974 | ) |  |  | (1,316 | ) |  |  | (11,777 | ) |  | Debt expense |  |  | 5,418 |  |  |  | (3,589 | ) |  |  | (3,289 | )
Tax (expense) benefit |  |  | (108 | ) |  |  | 3,950 |  |  |  | 18,495 |  |  |  |  |  | (8,207 | ) |  |  | 6,448 |  |  |  | 6,190 |
Total |  | $ | 169 |  |  | $ | (6,204 | ) |  | $ | (29,049 | ) |  |  |  | $ | 12,889 |  |  | $ | (10,130 | ) |  | $ | (9,721 | )
As of December 31, 2013, interest rates on the Company’s Term Loan B and Term Loan B-2 debt are effectively fixed because of an embedded LIBOR floor which is higher than actual LIBOR as of such date and these term loans are also subject to interest rate caps if LIBOR should rise above 2.50%. See above for further details. Interest rates on the Company’s senior notes are fixed by their terms. The LIBOR variable component of the Company’s interest rates on the Company’s Term Loan A and the Term Loan A-3 are economically fixed as a result of interest rate swaps. As a result of embedded LIBOR floors in some of the Company’s debt agreements and the swap and cap agreements, the Company’s overall weighted average effective interest rate on the Senior Secured Credit Facilities was 4.18%, based upon the current margins in effect of 2.75% for the Term Loan A, 2.50% for the Term Loan A-3 and 3.00% for both the Term Loan B and for the Term Loan B-2, as of December 31, 2013. Senior Secured Credit Facility and 5 3/4% Senior Notes In conjunction with the acquisition of HCP, on November 1, 2012, the Company borrowed an additional $3,000,000 under an amended Credit Agreement. The amended Credit Agreement consists of a five year Term Loan A-3 facility in an aggregate principal amount of $1,350,000 and a seven year Term Loan B-2 facility in an aggregate principal amount of $1,650,000. The Term Loan A-3 initially bears interest at LIBOR plus an interest rate margin of 2.50% subject to adjustment depending upon the Company’s leverage ratio and can range from 2.00% to 2.50%. The Term Loan A-3 requires annual principal payments of $67,500 in 2013 and 2014, $135,000 in 2015, and $202,500 in 2016 with the balance due of $877,500 in 2017. The Term Loan B-2 bears interest at LIBOR (floor at 1.00%) plus an interest rate margin of 3.00%. The Term Loan B-2 requires annual principal payments of $16,500 in 2013 through 2018 with the balance of $1,551,000 due in 2019. The borrowings under the Credit Agreement are guaranteed by substantially all of the Company’s direct and indirect wholly-owned domestic subsidiaries and are secured by substantially all of the Company’s and its guarantors’ assets. In addition, The Company also amended certain financial covenants and various other provisions to provide operating and financial flexibility. However, the amended Credit Agreement still contains certain customary affirmative and negative covenants such as various restrictions on investments, acquisitions, the payment of dividends, redemptions and acquisitions of capital stock, capital expenditures and other indebtedness, as well as limitations on the amount of tangible net assets in non-guarantor subsidiaries. Many of these restrictions will not apply as long the Company’s leverage ratio is below 3.50:1.00. In addition, the Credit Agreement requires compliance with financial covenants including an interest coverage ratio and a leverage ratio that determines the interest rate margins as described above. On August 28, 2012, the Company also issued $1,250,000 of 5 3/4% Senior Notes. The 5 3/4% Senior Notes pay interest on February 15 and August 15 of each year, and the first interest payment date was on February 15, 2013. The 5 3/4% Senior Notes are unsecured senior obligations and rank equally to other unsecured senior indebtedness. The 5 3/4% Senior Notes are guaranteed by certain domestic subsidiaries of the Company. The Company may redeem some or all of the 5 3/4% Senior Notes at any time on or after August 15, 2017 at certain redemption prices and prior to such date at a make-whole redemption price. The Company may also redeem up to 35% of the 5 3/4% Senior Notes at any time prior to August 15, 2015 at certain redemption prices with the proceeds of one or more equity offerings. The Company received total proceeds of $4,250,000 from these additional borrowings, $3,000,000 from the borrowings on the Term Loan A-3 and Term Loan B-2, and an additional $1,250,000 from the 5 3/4% Senior Notes. The Company used a portion of the proceeds to finance the acquisition of HCP, pay-off the Term Loan A-2 outstanding principal balance and to pay off a portion of HCP’s existing debt as well as to pay fees and expenses of approximately $71,840. As a result of these transactions the Company incurred debt refinancing charges of $10,963, which consists of the write-off of deferred financing costs associated with the payoff of the Term Loan A-2, the write-off of a portion of new fees and other debt costs. On August 26, 2011, the Company entered into an Increase Joinder Agreement under its then existing Credit Agreement. Pursuant to the Increase Joinder Agreement, the Company increased the revolving credit facility by $100,000, to a total of $350,000, and entered into an additional $200,000 Term Loan A-2. The Term Loan A-2 was paid off on November 1, 2012 in conjunction with the acquisition of HCP as described above. The Company’s overall weighted average effective interest rate for the year ended December 31, 2013 was 4.84% and as of December 31, 2013 was 4.86%. Debt expense Debt expense consisted of interest expense of $405,010, $272,134 and $227,667, and the amortization and accretion of debt discounts and premiums, amortization of deferred financing costs and the amortization of interest rate cap agreements of $24,933, $16,420 and $13,423 for 2013, 2012 and 2011, respectively. The interest expense amounts are net of capitalized interest.

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- Definition The entire disclosure for long-term debt. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 22 -Article 5 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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