v2.4.1.9

Long-term debt | 12 Months Ended
--- | ---
Dec. 31, 2014
Debt Disclosure [Abstract] |
Long-term debt |
14. | Long-term debt
Long-term debt was comprised of the following:
|  | December 31, |
|  | 2014 |  |  | 2013 |
Senior Secured Credit Facilities: |  |  |  |  |  |  |  |
Term Loan A |  | $ | 975,000 |  |  | $ | 800,000 |
Term Loan A-3 |  |  | — |  |  |  | 1,282,500 |
Term Loan B |  |  | 3,482,500 |  |  |  | 1,697,500 |
Term Loan B-2 |  |  | — |  |  |  | 1,633,500 |
Senior notes |  |  | 3,775,000 |  |  |  | 2,800,000 |
Acquisition obligations and other notes payable |  |  | 69,045 |  |  |  | 67,352 |
Capital lease obligations |  |  | 218,097 |  |  |  | 152,751 |
Total debt principal outstanding |  |  | 8,519,642 |  |  |  | 8,433,603 |
Discount on long-term debt |  |  | (16,208 | ) |  |  | (17,675 | )
|  |  | 8,503,434 |  |  |  | 8,415,928 |
Less current portion |  |  | (120,154 | ) |  |  | (274,697 | )
|  | $ | 8,383,280 |  |  | $ | 8,141,231 |
Scheduled maturities of long-term debt at December 31, 2014 were as follows:
2015 |  |  | 120,154 |
2016 |  |  | 117,193 |
2017 |  |  | 144,161 |
2018 |  |  | 155,750 |
2019 |  |  | 730,084 |
Thereafter |  |  | 7,252,300 |
Term Loans Total outstanding borrowings under Term Loan A and Term Loan B 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 bears interest at a London Interbank Offered Rate (LIBOR) rate determined by the duration of such tranche plus an interest rate margin, currently 1.75%. 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, 2014, the overall weighted average interest rate for the Term Loan A 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 the majority of the Term Loan A LIBOR variable component of the Company’s interest rate, as described below. At December 31, 2014, the Term Loan B bears interest at LIBOR (floor of 0.75%) plus a margin of 2.75%. The Company is subject to a LIBOR-based floor until such time as the LIBOR-based component of the interest rate exceeds 0.75% on the Term Loan B. 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 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 $2,735,000 of outstanding principal debt. The remaining $747,500 outstanding principal balance of the Term Loan B would still be subject to LIBOR-based interest rate volatility above a floor of 0.75%. In addition, the Company maintains several forward interest rate cap agreements with notional amounts totaling $3,500,000 that will be effective September 30, 2016 and will have the economic effect of capping the LIBOR variable component of the Company’s interest rate at a maximum of 3.50% on an equivalent amount of the Company’s debt. See below for further details. During the year ended December 31, 2014, the Company made mandatory principal payments under its then existing Senior Secured Credit Facilities (before entering into a new senior secured credit agreement and repaying all outstanding amounts under the then existing Senior Secured Credit Facilities, as discussed below) totaling $37,500 on the Term Loan A, $16,875 on the Term Loan A-3, $4,375 on the Term Loan B and $4,125 on the Term Loan B-2. During the third and fourth quarters of 2014, the Company made mandatory principal payments under its New Senior Secured Credit Facility (the New Credit Agreement), as described below, totaling $25,000 on the New Term Loan A and $17,500 on the New Term Loan B. 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. Revolving lines of credit The Company has an undrawn revolving line under the Senior Secured Credit Facilities totaling $1,000,000, of which approximately $95,000 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, 2014 , consisted of $1,750,000 5 1/8% senior notes due 2024, as described below, $775,000 of 6 5/8% senior notes due 2020 and $1,250,000 of 5 3/4% senior notes due 2022. In addition, the $775,000 6⅝% senior notes and the $1,250,000 5¾% senior notes are also unsecured obligations and will rank equally in right of payment with the Company’s existing and future unsecured senior indebtedness. These senior notes are guaranteed by substantially all of the Company’s direct and indirect wholly-owned domestic subsidiaries and require semi-annual interest payments. The Company may redeem some or all of the senior notes at any time on or after certain specific dates and at certain specific redemption prices as outlined in each senior note agreement. Senior Secured Credit Facility, 51/8% Senior Notes and 6 ⅜% Senior Notes In June 2014, the Company entered into a $5,500,000 senior secured credit agreement. The New Credit Agreement consists of a five year Revolving Credit Facility in the aggregate principal amount of $1,000,000 (the New Revolver), a five year Term Loan A facility in the aggregate principal amount of $1,000,000 (the New Term Loan A) and a seven year Term Loan B facility in the aggregate principal amount of $3,500,000 (the New Term Loan B and collectively with the New Revolver and the New Term Loan A, the New Loans). In addition, the Company can increase the existing revolving commitments and enter into one or more incremental term loan facilities in an amount not to exceed the sum of $1,500,000 (less the amount of other permitted indebtedness incurred or issued in reliance on such amount), plus an amount of indebtedness such that the senior secured leverage ratio is not in excess of 3.50 to 1.00 after giving effect to such borrowings. The New Revolver and the New Term Loan A initially bear interest at LIBOR plus an interest rate margin of 1.75% which is subject to adjustment depending upon the Company’s leverage ratio and can range from 1.50% to 2.00%. The New Term Loan A requires annual principal payments which began on September 30, 2014 of $25,000 in 2014, $50,000 in 2015, $62,500 in 2016, $87,500 in 2017, and $100,000 in 2018 with the balance of $675,000 due in 2019. The New Term Loan B bears interest at LIBOR (Floor of 0.75%) plus an interest rate margin of 2.75%. The New Term Loan B requires annual principal payments of $17,500 in 2014, and $35,000 for each year from 2015 through 2020, with the balance of $3,272,500 due in 2021. These New Loans under the New Credit Agreement are guaranteed by certain of the Company’s direct and indirect wholly-owned domestic subsidiaries holding most of the Company’s domestic assets and are secured by substantially all of DaVita HealthCare Partners Inc.’s and the guarantors’ assets. The New Credit Agreement contains certain customary affirmative and negative covenants such as various restrictions or limitations on the amount of investments, acquisitions, the payment of dividends and redemptions and the incurrence of other indebtedness. Many of these restrictions and limitations will not apply as long as the Company’s leverage ratio is below 3.50 to 1.00. In addition, the New Credit Agreement places limitations on the amount of tangible net assets of the non-guarantor subsidiaries and also requires compliance with a maximum leverage ratio covenant. In addition, in June 2014, the Company issued $1,750,000 5 1/8% Senior Notes due 2024 (the 5 1/8% Senior Notes). The 5 1/8% Senior Notes pay interest on January 15 and July 15 of each year beginning January 15, 2015. The 5 1/8% Senior Notes are unsecured obligations and will rank equally in right of payment with our existing and future unsecured senior indebtedness. The 5 1/8% Senior Notes are guaranteed by each of the Company’s domestic subsidiaries that guarantees our New Credit Agreement. The Company may redeem up to 35% of the 5 1/8% Senior Notes at any time prior to July 15, 2017 at a certain specified price from the proceeds of one or more equity offerings. In addition, the Company may redeem the 5 1/8% Senior Notes at any time prior to July 15, 2019 at make whole redemption prices and after such date at certain specified redemption prices. The Company received total proceeds from these borrowings of $6,250,000, $4,500,000 from the issuance of the New Term Loans and $1,750,000 from the issuance of the 5 1/8% Senior Notes. The Company used a portion of the proceeds to pay off the total outstanding principal balances under the Company’s then existing Senior Secured Credit Facilities plus accrued interest totaling $5,362,400 and in addition, to purchase pursuant to a cash tender offer $483,100 of the outstanding principal balances of the Company’s $775,000 6 3/8% Senior Notes plus accrued interest and cash tender premium totaling $512,400. The total amount paid for the 6 3/8% Senior Notes from the cash tender offer was $1,051.25 per 1,000 of principal amount which resulted in the Company paying a cash tender premium of $24,800 for the redemption of this portion of the 6 3/8% Senior Notes. The Company also incurred an additional $81,600 in fees, discounts and other professional expenses associated with these transactions. In July 2014, the Company also purchased an additional $188 principal amount of the 6 3/8% Senior Notes plus accrued interest totaling $194 pursuant to the cash tender offer at a price of $1,021.25 per 1,000 of principal amount of the 6 3/8% Senior Notes, which resulted in the Company paying an additional cash tender premium of $4. In addition, in July 2014, the Company redeemed the remaining outstanding principal balance of the 6 3/8% Senior Notes of $291,719 at a redemption price of $1,047.81 per 1,000 of principal amount of the 6 3/8% Senior Notes plus accrued interest and a redemption premium which totaled $309,954. This resulted in an additional redemption premium of $13,947 being recorded as debt refinancing charges. In addition, the Company terminated $1,137,500 notional amounts of amortizing swaps and also terminated $600,000 of forward swaps during June 2014, that resulted in the Company recognizing a loss of $3,100, of which $3,000 was previously recorded in other comprehensive income due to our previously outstanding principal debt being paid-off as described above, and as a result of future forecasted transactions that are no longer probable. The loss is included as a component of the Company’s debt refinancing charges. During the year ended December 31, 2014, the Company recognized debt expense of $6,100 from these swaps. As a result of these transactions, the Company recorded debt refinancing charges of $97,500 that consist of the cash tender premiums, the redemption premium, the write-off of existing deferred financing costs, the write-off of certain new refinancing costs, other professional fees and losses associated with the termination of several of the Company’s interest rate swap agreements. 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 the hedged forecasted cash flows occur, 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 and several forward 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 floating rate 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. 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, 2014, the Company maintains several interest rate swap agreements that were entered into in March 2013 with amortizing notional amounts of these swap agreements totaling $855,000. 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 New Term Loan A to fixed rates ranging from 0.49% to 0.52%, resulting in an overall weighted average effective interest rate of 2.26%, including the New Term Loan A margin of 1.75%. The overall weighted average effective interest rate also includes the effects of $120,000 of unhedged New Term Loan A debt that bears interest at LIBOR plus an interest rate margin of 1.75%. The swap agreements expire on September 30, 2016 and require monthly interest payments. During the year ended December 31, 2014, the Company recognized debt expense of $3,170 from these swaps. As of December 31, 2014, the total fair value of these swap agreements was a net asset of approximately $1,824. The Company estimates that approximately $1,457 of existing unrealized pre-tax losses in other comprehensive income at December 31, 2014 will be reclassified into income over the next twelve months. As of December 31, 2014, the Company maintained several forward interest rate cap agreements that were entered into in November 2014 with notional amounts totaling $3,500,000. These forward cap agreements will be effective September 30, 2016 and will have the economic effect of capping the LIBOR variable component of our interest rate at a maximum of 3.50% on an equivalent amount of our debt. The cap agreements expire on June 30, 2018. As of December 31, 2014, the total fair value of these cap agreements was an asset of approximately $12,340. During the fourth quarter of 2014, the Company recorded a loss of $2,147 in other comprehensive income due to a decrease in the unrealized fair value of these cap agreements. As of December 31, 2014, the Company also maintains several interest rate cap agreements that were entered into in March 2013 with notional amounts totaling $2,735,000 on the Company’s New Term Loan B 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 New Term Loan B. During the year ended December 31, 2014, the Company recognized debt expense of $2,439 from these caps. The cap agreements expire on September 30, 2016. As of December 31, 2014, the total fair value of these cap agreements was an asset of approximately $1,594. During the year ended December 31, 2014, the Company recorded a loss of $5,972 in other comprehensive income due to a decrease in the unrealized fair value of these cap agreements. Previously, the Company maintained five other interest rate cap agreements with notional amounts totaling $1,250,000. These agreements had 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 New Term Loan B debt. However, these interest rate cap agreements expired on September 30, 2014. During the year ended December 31, 2014, the Company recognized $2,691 of debt expense related to these cap agreements. The following table summarizes the Company’s derivative instruments as of December 31, 2014 and 2013:
|  | Interest rate swap and cap agreements (liabilities and assets) |
|  | December 31, 2014 |  |  | December 31, 2013 |
Derivatives designated as hedging instruments |  | Balance sheet location |  | Fair value |  |  | Balance sheet location |  | Fair value |
Interest rate swap agreements |  | Other short- term liabilities |  | $ | 1,457 |  |  | Other short- term liabilities |  | $ | 12,069 |
Interest rate swap agreements |  | Other long- term assets |  | $ | 3,281 |  |  | Other long- term assets |  | $ | 10,004 |
Interest rate cap agreements |  | Other long- term assets |  | $ | 13,934 |  |  | Other long- term assets |  | $ | 7,567 |
The following table summarizes the effects of the Company’s interest rate swap and cap agreements for the years ended December 31, 2014, 2013 and 2012:
|  | Amount of gains (losses) recognized in OCI on interest rate swap and cap agreements |  |  | Location of (losses) gains reclassified from |  | Amount of gains (losses) reclassified from accumulated OCI into income |
|  | Years ended December 31, |  |  | accumulated |  | Years ended December 31, |
Derivatives designated as cash flow hedges |  | 2014 |  |  | 2013 |  |  | 2012 |  |  | OCI into income |  | 2014 |  |  | 2013 |  |  | 2012 |
Interest rate swap agreements |  | $ | (8,390 | ) |  | $ | 1,251 |  |  | $ | (8,838 | ) |  | Debt expense |  | $ | 12,279 |  |  | $ | 15,678 |  |  | $ | (12,989 | )
Interest rate cap agreements |  |  | (8,119 | ) |  |  | (974 | ) |  |  | (1,316 | ) |  | Debt expense |  |  | 5,130 |  |  |  | 5,418 |  |  |  | (3,589 | )
Tax (expense) benefit |  |  | 6,450 |  |  |  | (108 | ) |  |  | 3,950 |  |  |  |  |  | (6,801 | ) |  |  | (8,207 | ) |  |  | 6,448 |
Total |  | $ | (10,059 | ) |  | $ | 169 |  |  | $ | (6,204 | ) |  |  |  | $ | 10,608 |  |  | $ | 12,889 |  |  | $ | (10,130 | )
As of December 31, 2014, the interest rate on the Company’s Term Loan B debt is effectively fixed because of an embedded LIBOR floor which is higher than actual LIBOR as of such date and the New Term Loan B is 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 majority of the LIBOR variable component of the Company’s interest rates on the Company’s Term Loan A 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 3.43%, based upon the current margins in effect of 1.75% for the Term Loan A and 2.75% for the Term Loan B, as of December 31, 2014. The Company’s overall weighted average effective interest rate for the year ended December 31, 2014 was 4.68% and as of December 31, 2014 was 4.46%. Debt expense Debt expense consisted of interest expense of $385,750, $401,140 and $270,107, and the amortization and accretion of debt discounts and premiums, amortization of deferred financing costs and the amortization of interest rate cap agreements of $24,544, $28,803 and $18,447 for 2014, 2013 and 2012, respectively. The interest expense amounts are net of capitalized interest.

X
- Details
Name: | us-gaap_DebtDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for long-term debt. + References Reference 1: 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 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 22 -Article 5 + Details
Name: | us-gaap_LongTermDebtTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration