INDEBTEDNESS

9 Months Ended

Sep. 30, 2014

NOTE 13. INDEBTEDNESS

The following table summarizes total indebtedness:

			September 30,		December 31,
			2014		2013
2012 Facility			$	-	$	-
Notes Payable:
		4.98% Series 2005-1 Notes, due 2015; includes the fair value of interest rate swap of $10.3 million at 2013		-		310.3
		6.06% Series 2007-1 Notes due 2017		300.0		300.0
	5.50% 2010 Senior Notes, due 2020, net of unamortized discount of $2.0 million in 2014 and $2.2 million in 2013; also includes the fair value of interest rate swap of $2.1 million in 2014			495.9		497.8
	4.50% 2012 Senior Notes, due 2022, net of unamortized discount of $3.2 million in 2014 and $3.5 million in 2013			496.8		496.5
	4.875% 2013 Senior Notes, due 2024, net of unamortized discount of $2.6 million in 2014 and $2.8 million in 2013			497.4		497.2
	2.750% 2014 Senior Notes (5-Year), due 2019, net of unamortized discount of $0.7 million in 2014; also includes the fair value of interest rate swap of $1.3 million in 2014			448.0		-
	5.250% 2014 Senior Notes (30-Year), due 2044, net of unamortized discount of $1.6 million in 2014			298.4		-

Total long-term debt			$	2,536.5	$	2,101.8

The Company has entered into interest rate swaps on the Series 2005-1 Notes, the 2010 Senior Notes and the 2014 Senior Notes (5-Year) which are more fully discussed in Note 6 above.

At September 30, 2014, the Company was in compliance with all covenants contained within all of the debt agreements. In addition to the covenants described above, the 2014 Indenture, the 2012 Facility, the 2005 Agreement, the 2007 Agreement, the 2010 Senior Notes, the 2012 Senior Notes and the 2013 Senior Notes contain cross default provisions. These provisions state that default under one of the aforementioned debt instruments could in turn permit lenders under other debt instruments to declare borrowings outstanding under those instruments to be immediately due and payable. As of September 30, 2014, there were no such cross defaults.

Interest expense, net

The following table summarizes the components of interest as presented in the consolidated statements of operations:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014		2013		2014		2013
Income	$	1.8	$	1.6	$	5.1	$	4.0
Expense on borrowings⁽¹⁾		(38.8)		(23.9)		(90.5)		(65.4)
UTPs and other tax related liabilities ⁽²⁾		(1.7)		(2.1)		(3.2)		(6.7)
Legacy Tax		0.7		-		0.7		-
Capitalized		0.3		-		0.4		-
Total	$	(37.7)	$	(24.4)	$	(87.5)	$	(68.1)

⁽¹⁾ The three and nine months ended September 30, 2014 both include approximately $11 million in net costs related to the prepayment of the Series 2005-1 Notes. (2^{) T}he nine months ended September 30, 2014 amount includes $2.0 million reversal of an interest accrual relating to the favorable resolution of an international tax matter.

	Nine Months Ended
	September 30,
	2014		2013
Interest paid	$	108.4	$	78.7

The Company’s long-term debt is recorded at its carrying amount, which represents the issuance amount plus or minus any issuance premium or discount, except for the Series 2005-1 Notes, the 2010 Senior Notes, and the 2014 Senior Notes (5-Year) which are recorded at the carrying amount adjusted for the fair value of an interest rate swap used to hedge the fair value of the note. The fair value and carrying value of the Company’s long-term debt as of September 30, 2014 and December 31, 2013 are as follows:

	September 30, 2014				December 31, 2013
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Series 2005-1 Notes⁽¹⁾	$	-	$	-	$	310.3	$	319.2
Series 2007-1 Notes		300.0		336.3		300.0		334.7
2010 Senior Notes⁽²⁾		495.9		559.9		497.8		536.6
2012 Senior Notes		496.8		527.6		496.5		497.0
2013 Senior Notes		497.4		538.0		497.2		501.2
2014 Senior Notes (5-Year) ⁽³⁾		448.0		452.5		-		-
2014 Senior Notes (30-Year)		298.4		313.3		-		-
Total	$	2,536.5	$	2,727.6	$	2,101.8	$	2,188.7

The carrying amount for the Series 2005-1 Notes includes a $10.3 million fair value adjustment on an interest rate hedge at December 31, 2013
The carrying amount for the 2010 Senior Notes includes the unamortized discount of $2.0 million and $2.2 million in 2014 and 2013, respectively, and a $2.1 million fair value adjustment on an interest rate hedge at September 30, 2014.
The carrying amount for the 2014 Senior Notes (5-Year) includes the unamortized discount of $0.7 million in 2014 and a ($1.3) million fair value adjustment on an interest rate hedge at September 30, 2014.

The fair value of the Company’s long-term debt is estimated using discounted cash flows with inputs based on prevailing interest rates available to the Company for borrowings with similar maturities.

The Company has the capacity to borrow up to $1 billion under its unsecured revolving credit facility which expires in April 2017. Any future borrowings under this facility would accrue interest at LIBOR plus a premium that can range from 77.5 bps to 120 bps per annum based on the Company’s debt/EBITDA ratio.

On August 7, 2014, the Company prepaid the Series 2005-1 Notes using proceeds from the issuance of the 2014 Senior Notes (30-year) and the 2014 Senior Notes (5-year), which are discussed below.

On July 16, 2014, the Company issued $300 million aggregate principal amount of senior unsecured notes in a public offering. The 2014 Senior Notes (30-year) bear interest at a fixed rate of 5.250% and mature on July 15, 2044. Interest on the 2014 Senior Notes (30-year) will be due semi-annually on January 15 and July 15 of each year, commencing January 15, 2015. The Company may prepay the 2014 Senior Notes (30-year), in whole or in part, at any time at a price equal to 100% of the principal amount being prepaid, plus accrued and unpaid interest and a Make-Whole Amount. Additionally, at the option of the holders of the notes, the Company may be required to purchase all or a portion of the notes upon occurrence of a “Change of Control Triggering Event,” as defined in the 2014 Indenture, at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. The 2014 Indenture contains covenants that limit the ability of the Company and certain of its subsidiaries to, among other things, incur or create liens and enter into sale and leaseback transactions. In addition, the 2014 Indenture contains a covenant that limits the ability of the Company to consolidate or merge with another entity or to sell all or substantially all of its assets to another entity. The 2014 Indenture contains customary default provisions. In addition, an event of default will occur if the Company or certain of its subsidiaries fail to pay the principal of any indebtedness (as defined in the 2014 Indenture) when due at maturity in an aggregate amount of $50 million or more, or a default occurs that results in the acceleration of the maturity of the Company’s or certain of its subsidiaries’ indebtedness in an aggregate amount of $50 million or more. Upon the occurrence and during the continuation of an event of default under the 2014 Indenture, the 2014 Senior Notes (30-year) may become immediately due and payable either automatically or by the vote of the holders of more than 25% of the aggregate principal amount of all of the notes then outstanding.

On July 16, 2014, the Company issued $450 million aggregate principal amount of senior unsecured notes in a public offering. The 2014 Senior Notes (5-year) bear interest at a fixed rate of 2.750% and mature July 15, 2019. Interest on the 2014 Senior Notes (5-year) will be due semi-annually on January 15 and July 15 of each year, commencing January 15, 2015. The Company may prepay the 2014 Senior Notes (5-year), in whole or in part, at any time at a price prior to June 15, 2019, equal to 100% of the principal amount being prepaid, plus accrued and unpaid interest and a Make-Whole Amount. Notwithstanding the immediately preceding sentence, the Company may redeem the 2014 Senior Notes (5-year), in whole or in part, at any time or from time to time on or after June 15, 2019 (one month prior to their maturity), at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding the redemption date. Additionally, at the option of the holders of the notes, the Company may be required to purchase all or a portion of the notes upon occurrence of a “Change of Control Triggering Event,” as defined in the 2014 Indenture, at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. The 2014 Indenture contains covenants that limit the ability of the Company and certain of its subsidiaries to, among other things, incur or create liens and enter into sale and leaseback transactions. In addition, the 2014 Indenture contains a covenant that limits the ability of the Company to consolidate or merge with another entity or to sell all or substantially all of its assets to another entity. The 2014 Indenture contains customary default provisions. In addition, an event of default will occur if the Company or certain of its subsidiaries fail to pay the principal of any indebtedness (as defined in the 2014 Indenture) when due at maturity in an aggregate amount of $50 million or more, or a default occurs that results in the acceleration of the maturity of the Company’s or certain of its subsidiaries’ indebtedness in an aggregate amount of $50 million or more. Upon the occurrence and during the continuation of an event of default under the 2014 Indenture, the 2014 Senior Notes (5-year) may become immediately due and payable either automatically or by the vote of the holders of more than 25% of the aggregate principal amount of all of the notes then outstanding.

The proceeds from both notes issued on July 16, 2014 were used for the aforementioned prepayment of the Series 2005-1 Notes and will also be used for general corporate purposes.

- 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.

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