8.	Long-term debt

Long-term debt was comprised of the following:

	March 31,			December 31,
	2015			2014
Senior Secured Credit Facilities:
Term Loan A	$	962,500		$	975,000
Term Loan B		3,473,750			3,482,500
Senior notes		3,775,000			3,775,000
Acquisition obligations and other notes payable		63,102			69,045
Capital lease obligations		239,439			218,097
Total debt principal outstanding		8,513,791			8,519,642
Discount on long-term debt		(15,562	)		(16,208	)
		8,498,229			8,503,434
Less current portion		(118,076	)		(120,154	)
	$	8,380,153		$	8,383,280

Scheduled maturities of long-term debt at March 31, 2015 were as follows:

2015 (remainder of the year)			92,475
2016			117,586
2017			145,940
2018			156,733
2019			730,811
2020			55,617
Thereafter			7,214,629

During the first three months of 2015, the Company made mandatory principal payments under its Senior Secured Credit Facilities totaling $12,500 on the Term Loan A and $8,750 on the Term Loan B.

In April 2015, the Company issued $1,500,000 5.0% Senior Notes due 2025 (the 5.0% Senior Notes). The 5.0% Senior Notes pay interest on May 1 and November 1 of each year beginning November 1, 2015. The 5.0% Senior Notes are unsecured senior obligations and rank equally in right of payment with the Company’s existing and future unsecured senior indebtedness. The 5.0% Senior Notes are guaranteed by certain of the Company’s domestic subsidiaries. The Company may redeem up to 35% of the 5.0% Senior Notes at any time prior to May 1, 2018 at a certain specified price from the proceeds of one or more equity offerings. In addition, the Company may redeem some or all of the 5.0% Senior Notes at any time prior to May 1, 2020 at make whole redemption prices and on or after such date at certain specified redemption prices. The proceeds from the 5.0% Senior Notes are being used to repurchase all of the outstanding principal balances of the $775,000 6 ⅝% Senior Notes due 2020 through a combination of a tender offer and a redemption process, to pay fees and expenses and for general corporate purposes, which may include future acquisitions and share repurchases.

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. The 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 March 31, 2015, the Company maintains several interest rate swap agreements that were entered into in March 2013 with amortizing notional amounts of these swap agreements totaling $831,250. 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 to fixed rates ranging from 0.49% to 0.52%, resulting in an overall weighted average effective interest rate of 2.26%, including the Term Loan A margin of 1.75%. The overall weighted average effective interest rate also includes the effects of $131,250 of unhedged 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 three months ended March 31, 2015, the Company recognized debt expense of $722 from these swaps. As of March 31, 2015, the total fair value of these swap agreements was a net liability of approximately $148. The Company estimates that approximately $1,439 of existing unrealized pre-tax losses in other comprehensive income at March 31, 2015 will be reclassified into income over the next twelve months.

As of March 31, 2015, 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 the Company’s 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 March 31, 2015, the total fair value of these cap agreements was an asset of approximately $6,820. During the three months ended March 31, 2015, the Company recorded a loss of $5,521 in other comprehensive income due to a decrease in the unrealized fair value of these cap agreements.

As of March 31, 2015, the Company maintains several interest rate cap agreements that were entered into in March 2013 with notional amounts totaling $2,735,000 on the Company’s 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 Term Loan B. During the three months ended March 31, 2015, the Company recognized debt expense of $610 from these caps. The cap agreements expire on September 30, 2016. As of March 31, 2015, the total fair value of these cap agreements was an asset of approximately $357. During the three months ended March 31, 2015, the Company recorded a loss of $1,236 in other comprehensive income due to a decrease in the unrealized fair value of these cap agreements.

The following table summarizes the Company’s derivative instruments as of March 31, 2015 and December 31, 2014:

March 31, 2015

December 31, 2014

Derivatives designated as hedging

Balance sheet

instruments

location

Fair value

location

Fair value

Interest rate swap agreements

Other short-term liabilities

1,439

Other short-term liabilities

1,457

Interest rate swap agreements

Other long-term assets

1,291

Other long-term assets

3,281

Interest rate cap agreements

Other long-term assets

7,177

Other long-term assets

13,934

The following table summarizes the effects of the Company’s interest rate swap and cap agreements for the three months ended March 31, 2015 and 2014:

	Amount of gains							Amount of
	(losses) recognized in							losses reclassified
	OCI on interest rate swap							from accumulated
	and cap agreements						Location of	OCI into income
	Three months ended						losses reclassified	Three months ended
Derivatives designated	March 31,						from accumulated	March 31,
as cash flow hedges	2015			2014			OCI into income	2015			2014
Interest rate swap agreements	$	(2,694	)	$	(2,764	)	Debt expense (including refinancing charges)	$	(722	)	$	(4,006	)
Interest rate cap agreements		(6,757	)		(1,347	)	Debt expense (including refinancing charges)		(610	)		(1,507	)
Tax benefit		3,691			1,606				520			2,154
Total	$	(5,760	)	$	(2,505	)		$	(812	)	$	(3,359	)

As of March 31, 2015, 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 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 LIBOR variable component of the Company’s interest rate on a majority of the Company’s Term Loan A is economically fixed as a result of interest rate swaps.

As a result of embedded LIBOR floors on the Term Loan B debt agreement and the swap and cap agreements, the Company’s overall weighted average effective interest rate on the Senior Secured Credit Facilities was 3.44%, 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 March 31, 2015.

The Company’s overall weighted average effective interest rate during the first quarter of 2015 was 4.48% and as of March 31, 2015 was 4.47%.

As of March 31, 2015, the Company had undrawn revolving credit facilities totaling $1,000,000 of which approximately $95,000 was committed for outstanding letters of credit. In addition, HCP has an outstanding letter of credit of approximately $1,000 that is secured by a certificate of deposit.