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Debt
12 Months Ended
Dec. 31, 2016
Debt Disclosure [Abstract]  
Debt
DEBT
The carrying value of our notes payable, capital leases and long-term debt as of December 31, 2016 and 2015 is listed in the following table, and is adjusted for the fair value of interest rate swaps, unamortized discounts, deferred issuance costs and the unamortized portion of adjustments to fair value recorded in purchase accounting. Original issue discounts and adjustments to fair value recorded in purchase accounting are amortized to interest expense over the term of the applicable instrument using the effective interest method.
 
 
 
 
2016
 
2015
Maturity
 
Interest Rate
 
Principal
 
Adjustments
 
Carrying Value
 
Principal
 
Adjustments
 
Carrying Value
Credit facilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Uncommitted Credit Facility
 
Variable
 
$

 
$

 
$

 
$
19.0

 
$

 
$
19.0

Puerto Rico Uncommitted Facility
 
Variable
 

 

 

 

 

 

June 2019
 
Variable
 
140.0

 

 
140.0

 

 

 

May 2021
 
Variable
 
70.0

 

 
70.0

 

 

 

Senior notes:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
May 2018
 
3.800
 
700.0

 
(1.2
)
 
698.8

 
700.0

 
(2.0
)
 
698.0

September 2019
 
5.500
 
650.0

 
(3.3
)
 
646.7

 
650.0

 
(4.4
)
 
645.6

March 2020
 
5.000
 
850.0

 
(2.6
)
 
847.4

 
850.0

 
(3.4
)
 
846.6

November 2021
 
5.250
 
600.0

 
(1.9
)
 
598.1

 
600.0

 
(2.3
)
 
597.7

June 2022
 
3.550
 
850.0

 
(5.6
)
 
844.4

 
850.0

 
(6.5
)
 
843.5

May 2023
 
4.750
 
550.0

 
3.5

 
553.5

 
550.0

 
9.4

 
559.4

March 2025
 
3.200
 
500.0

 
(5.4
)
 
494.6

 
500.0

 
(6.0
)
 
494.0

June 2026
 
2.900
 
500.0

 
(5.5
)
 
494.5

 

 

 

March 2035
 
6.086
 
181.9

 
(15.4
)
 
166.5

 
275.7

 
(23.9
)
 
251.8

March 2040
 
6.200
 
399.9

 
(3.9
)
 
396.0

 
650.0

 
(6.6
)
 
643.4

May 2041
 
5.700
 
385.7

 
(5.6
)
 
380.1

 
600.0

 
(8.9
)
 
591.1

Debentures:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
May 2021
 
9.250
 
35.3

 
(1.1
)
 
34.2

 
35.3

 
(1.4
)
 
33.9

September 2035
 
7.400
 
148.1

 
(35.2
)
 
112.9

 
165.2

 
(39.9
)
 
125.3

Tax-exempt:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2019 - 2044
 
0.750 - 5.625
 
1,079.1

 
(6.4
)
 
1,072.7

 
1,079.1

 
(7.0
)
 
1,072.1

Capital leases:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2017 - 2046
 
3.980 - 12.203
 
108.5

 

 
108.5

 
111.5

 

 
111.5

Total Debt
 
 
 
$
7,748.5

 
$
(89.6
)
 
7,658.9

 
$
7,635.8

 
$
(102.9
)
 
7,532.9

Less: current portion
 
 
 
 
 
 
 
(5.8
)
 
 
 
 
 
(5.5
)
Long-term portion
 
 
 
 
 
 
 
$
7,653.1

 
 
 
 
 
$
7,527.4


Loss on Extinguishment of Debt and Other Related Costs
During 2016, we incurred a loss on the early extinguishment of debt and other related costs. We paid a cash premium of $148.1 million, early tender consideration of $28.7 million and $1.6 million of legal and other fees. We also incurred a non-cash charge related to the proportional share of unamortized discounts and deferred issuance costs of $17.8 million. The unamortized proportional share of certain cash flow hedges reclassified to earnings as non-cash interest expense was $7.2 million.
The following table summarizes the charges incurred during the year ended December 31, 2016:
 
 
 
 
Loss on Extinguishment of Debt
 
 
 
 
Principal Repaid
 
Cash Paid in Loss on Extinguishment of Debt
 
Non-cash Loss on Extinguishment of Debt
 
Total Loss on Extinguishment of Debt
 
Non-cash Interest Expense
$275.7 million 6.09% senior notes due March 2035
 
$
93.8

 
$
26.1

 
$
8.0

 
$
34.1

 
$
(1.1
)
$165.2 million 7.40% debentures due September 2035
 
17.2

 
7.3

 
4.1

 
11.4

 

$650.0 million 6.20% senior notes due March 2040
 
250.1

 
85.3

 
2.6

 
87.9

 
1.0

$600.0 million 5.70% senior notes due May 2041
 
214.3

 
59.7

 
3.1

 
62.8

 
7.3

 
 
 
 
 
 
 
 
 
 
 
Total
 
 
 
$
178.4

 
$
17.8

 
$
196.2

 
$
7.2


Credit Facilities
In May 2016, we entered into a $1.0 billion unsecured revolving credit facility (the Replacement Credit Facility), which replaced our $1.0 billion credit facility maturing in May 2017. The Replacement Credit Facility matures in May 2021 and includes a feature that allows us to increase availability, at our option, by an aggregate amount up to $500.0 million through increased commitments from existing lenders or the addition of new lenders. At our option, borrowings under the Replacement Credit Facility bear interest at a Base Rate, or a Eurodollar Rate, plus an applicable margin based on our Debt Ratings (all as defined in the agreements).
Contemporaneous with the execution of the Replacement Credit Facility, we entered into Amendment No. 1 to our existing $1.25 billion unsecured credit facility (the Existing Credit Facility and, together with the Replacement Credit Facility, the Credit Facilities), to conform certain terms of the Existing Credit Facility with those of the Replacement Credit Facility. Amendment No. 1 does not extend the maturity date of the Existing Credit Facility, which matures in June 2019. The Existing Credit Facility also maintains the feature that allows us to increase availability, at our option, by an aggregate amount of up to $500.0 million through increased commitments from existing lenders or the addition of new lenders.
Our Credit Facilities are subject to facility fees based on applicable rates defined in the credit facility agreements and the aggregate commitments, regardless of usage. Availability under our Credit Facilities totaled $1,543.1 million and $1,727.7 million as of December 31, 2016 and 2015, respectively, and can be used for working capital, capital expenditures, acquisitions, letters of credit and other general corporate purposes. The credit agreements require us to comply with financial and other covenants. We may pay dividends and repurchase common stock if we are in compliance with these covenants. As of December 31, 2016, we had $210.0 million of borrowings under our Credit Facilities and no borrowings as of December 31, 2015. We had $478.4 million and $503.3 million of letters of credit outstanding under our Credit Facilities, as of December 31, 2016 and 2015, respectively.
During 2016, we amended our existing unsecured credit facility agreement (the Uncommitted Credit Facility), to increase the size to $135.0 million, with all other terms remaining unchanged. Our Uncommitted Credit Facility bears interest at LIBOR, plus an applicable margin and is subject to facility fees defined in the agreement, regardless of usage. We can use borrowings under the Uncommitted Credit Facility for working capital and other general corporate purposes. The agreement governing our Uncommitted Credit Facility requires us to comply with covenants. The Uncommitted Credit Facility may be terminated by either party at any time. As of December 31, 2016, we had no borrowings and as of December 31, 2015, we had $19.0 million of borrowings under our Uncommitted Credit Facility.
In January 2015, we entered into a $20.0 million uncommitted credit facility agreement (the Puerto Rico Uncommitted Facility) that matured in January 2016.
Senior Notes and Debentures
During 2016, we priced cash tender offers to purchase up to $575.4 million combined aggregate principal amount of the 6.20% Notes due March 2040, 5.70% Notes due May 2041, 7.40% Debentures due September 2035 and 6.09% Notes due March 2035 (collectively "Existing Notes"), subject to priority levels and the other terms and conditions set forth in the Offer to Purchase. During 2016, we priced an offering of $500.0 million of 2.90% senior notes due 2026 (the 2.90% Notes). The sale of the 2.90% Notes closed on July 5, 2016. We used the net proceeds of the offering, together with borrowing under our credit facilities, to purchase $575.4 million of the combined aggregate principal amount of the Existing Notes tendered as well as premium due of $148.1 million and early tender consideration of $28.7 million.
During 2015, we issued $500.0 million of 3.20% notes due 2025 (the 3.20% Notes). We used the net proceeds from the 3.20% Notes to refinance debt incurred in connection with our acquisition of all of the equity interests of Tervita during 2015.
Our senior notes are general senior unsecured obligations. Interest is payable semi-annually. These senior notes have a make-whole provision that is exercisable at any time prior to the respective maturity dates per the debt table above at a stated redemption price.
Tax-Exempt Financings
As of December 31, 2016 and 2015, we had $1,072.7 million and $1,072.1 million, respectively, of fixed and variable rate tax-exempt financings outstanding with maturities ranging from 2019 to 2044. Approximately 90% of our tax-exempt financings are remarketed quarterly by remarketing agents to effectively maintain a variable yield. The holders of the bonds can put them back to the remarketing agents at the end of each interest period. To date, the remarketing agents have been able to remarket our variable rate unsecured tax-exempt bonds. These bonds have been classified as long-term because of our ability and intent to refinance them using availability under our Credit Facilities, if necessary.
Capital Leases
We had capital lease liabilities of $108.5 million and $111.5 million as of December 31, 2016 and 2015, respectively, with maturities ranging from 2017 to 2046.
Future Maturities of Debt
Aggregate principal maturities of notes payable, capital leases and other long-term debt as of December 31, 2016 follow:
2017
$
5.1

2018
705.7

2019
829.9

2020
926.3

2021
837.5

Thereafter
4,444.0

 
$
7,748.5


Interest Expense and Interest Paid
Interest paid was $330.2 million, $327.6 million and $320.2 million for the years ended December 31, 2016, 2015 and 2014, respectively. The components of interest expense follow:
 
2016
 
2015
 
2014
Interest expense on debt and capital lease obligations
$
324.1

 
$
324.6

 
$
310.3

Accretion of debt discounts
7.6

 
7.4

 
6.6

Accretion of remediation liabilities and other
45.8

 
39.7

 
38.2

Less: capitalized interest
(6.2
)
 
(6.8
)
 
(6.4
)
Total interest expense
$
371.3

 
$
364.9

 
$
348.7


Interest Rate Swap and Lock Agreements
Our ability to obtain financing through the capital markets is a key component of our financial strategy. Historically, we have managed risk associated with executing this strategy, particularly as it relates to fluctuations in interest rates, by using a combination of fixed and floating rate debt. From time to time, we also have entered into interest rate swap and lock agreements to manage risks associated with interest rates, either to effectively convert specific fixed rate debt to a floating rate (fair value hedges), or to lock interest rates in anticipation of future debt issuances (cash flow hedges).
Fair Value Hedges
During the second half of 2013, we entered into various interest rate swap agreements relative to our 4.750% fixed rate senior notes due in May 2023. The goal was to reduce overall borrowing costs and rebalance our debt portfolio's ratio of fixed to floating interest rates. As of December 31, 2016, these swap agreements have a total notional value of $300.0 million and mature in May 2023, which is identical to the maturity of the hedged senior notes. We pay interest at floating rates based on changes in LIBOR and receive interest at a fixed rate of 4.750%. These transactions were designated as fair value hedges because the swaps hedge against the changes in fair value of the fixed rate senior notes resulting from changes in interest rates.
As of December 31, 2016 and 2015, the interest rate swap agreements are reflected at their fair value of $12.1 million and $16.5 million, respectively, and are included in other assets in our consolidated balance sheets. To the extent they are effective, these interest rate swap agreements are included as an adjustment to long-term debt in our consolidated balance sheets. We recognized net interest income of $6.3 million, $7.5 million and $7.7 million, respectively, during 2016, 2015 and 2014 related to net swap settlements for these interest rate swap agreements, which is included as an offset to interest expense in our consolidated statements of income.
For the years ended December 31, 2016, 2015 and 2014, we recognized a (gain) loss of $(6.3) million, $0.8 million and $12.6 million, respectively, on the change in fair value of the hedged senior notes attributable to changes in the benchmark interest rate, with an offsetting loss (gain) of $4.4 million, $(2.3) million and $(14.1) million, respectively, on the related interest rate swaps. The difference of these fair value changes represents hedge ineffectiveness, which is recorded directly in earnings as other income, net.
Cash Flow Hedges
During 2016, we entered into a number of interest rate lock agreements having an aggregate notional amount of $525.0 million with fixed interest rates ranging from 1.900% to 2.280% to manage exposure to fluctuations in interest rates in anticipation of a planned future issuance of senior notes. Upon the expected issuance of the senior notes, we will terminate the interest rate locks and settle with our counterparties. These transactions were accounted for as cash flow hedges. The fair value of our interest rate locks as of December 31, 2016 was determined using standard valuation models with assumptions about interest rates being based on those observed in underlying markets (Level 2 in the fair value hierarchy). The aggregate fair value of the outstanding interest rate locks as of December 31, 2016 was $20.2 million and was recorded in other long-term assets in our consolidated balance sheet. As of December 31, 2016, the effective portion of the interest rate locks recorded as a component of accumulated other comprehensive income (loss), net of tax, was $12.2 million.
During 2015, we entered into a number of interest rate lock agreements having an aggregate notional amount of $200.0 million with fixed interest rates ranging from 2.155% to 2.270% to manage exposure to fluctuations in interest rates in anticipation of the planned issuance of the 3.20% Notes. Upon issuance of the 3.20% Notes, we terminated the interest rate locks and received $1.2 million from the counterparties. This transaction was accounted for as a cash flow hedge.
As of December 31, 2016 and 2015, the effective portion of our previously terminated interest rate locks, recorded as a component of accumulated other comprehensive loss, net of tax, was $13.4 million and $19.4 million as of December 31, 2016 and 2015, respectively. The effective portion of the interest rate locks is amortized as an adjustment to interest expense over the life of the issued debt using the effective interest method. We expect to amortize $1.6 million of net interest expense over the next twelve months as a yield adjustment of our senior notes.
The effective portion of the interest rate locks amortized as a net increase to interest expense during the years ended December 31, 2016, 2015 and 2014 was $9.8 million, $2.5 million and $2.7 million, respectively.