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Debt
12 Months Ended
Dec. 31, 2018
Debt Disclosure [Abstract]  
DEBT
DEBT
 
 
Weighted-Average
Interest Rate
 
 
 
 
 
 
 
 
December 31,
 
 
 
December 31,
 
 
2018
 
2017
 
Maturities
 
2018
 
2017
 
 
 
 
 
 
 
 
(In thousands)
Short-term debt and current portion of long-term debt:
 
 
 
 
 
 
 
 
 
 
Short-term debt
 
2.69
%
 
1.79
%
 

 
$
81,522

 
35,509

Current portion of long-term debt, including capital leases
 
 
 
 
 
 
 
848,430

 
790,560

Total short-term debt and current portion of long-term debt
 
 
 
 
 
 
 
929,952

 
826,069

Total long-term debt:
 
 
 
 
 
 
 
 
 
 
U.S. commercial paper (1)
 
2.78
%
 
1.56
%
 
2023
 
454,397

 
570,218

Canadian commercial paper(1)
 
2.28
%
 
%
 
2023
 
123,491

 

Trade receivables program
 
3.15
%
 
%
 
2019
 
200,000

 

Global revolving credit facility
 
2.25
%
 
2.80
%
 
2023
 
12,581

 
17,328

Unsecured U.S. notes – Medium-term notes (1) (2)
 
3.22
%
 
2.73
%
 
2019-2025
 
4,853,496

 
4,006,899

Unsecured U.S. obligations, principally bank term loans
 
3.50
%
 
2.79
%
 
2019
 
50,000

 
50,000

Unsecured foreign obligations
 
1.61
%
 
1.50
%
 
2020-2021
 
216,719

 
230,380

Asset backed U.S. obligations (3)
 
2.37
%
 
1.85
%
 
2019-2025
 
627,707

 
491,899

Capital lease obligations
 
4.20
%
 
3.53
%
 
2019-2025
 
21,773

 
20,871

Total long-term debt
 
 
 
 
 
 
 
6,560,164

 
5,387,595

 Debt issuance costs
 
 
 
 
 
 
 
(18,088
)
 
(13,453
)
 
 
 
 
 
 
 
 
6,542,076

 
5,374,142

Current portion of long-term debt, including capital leases
 
 
 
 
 
 
 
(848,430
)
 
(790,560
)
Long-term debt
 
 
 
 
 
 
 
5,693,646

 
4,583,582

Total debt
 
 
 
 
 
 
 
$
6,623,598

 
5,409,651

_________________ 
(1)
Amounts are net of unamortized original issue discounts of $7 million and $6 million at December 31, 2018 and 2017, respectively.
(2)
Amounts are inclusive of fair market value adjustments on notes subject to hedging of $10 million and $7 million at December 31, 2018 and 2017, respectively. The notional amount of the executed interest rate swaps designated as fair value hedges was $725 million and $825 million at December 31, 2018 and 2017, respectively. Refer to Note 17, "Derivatives," for additional information.
(3)
Asset-backed U.S. obligations are related to financing transactions backed by a portion of our revenue earning equipment.
 
Maturities of total debt are as follows:
 
 
Capital Leases
 
Debt
 
 
(In thousands)
2019
 
$
7,364

 
922,588

2020
 
4,729

 
1,290,370

2021
 
4,040

 
1,058,104

2022
 
2,732

 
717,413

2023
 
1,213

 
2,334,059

Thereafter
 
5,162

 
297,379

Total
 
25,240

 
6,619,913

Imputed interest
 
(3,467
)
 
 
Present value of minimum capitalized lease payments
 
21,773

 
 
Current portion
 
(7,364
)
 
 
Long-term capitalized lease obligation
 
$
14,409

 
 


Debt Facilities
We maintain a $1.4 billion global revolving credit facility with a syndicate of twelve lending institutions led by Bank of America N.A., MUFG Bank, Ltd., BNP Paribas, Mizuho Bank, Ltd., Royal Bank of Canada, Lloyds Bank Plc, U.S. Bank N.A. and Wells Fargo Bank, N.A. The facility matures in September 2023. The agreement provides for annual facility fees which range from 7.5 basis points to 20 basis points based on Ryder’s long-term credit ratings. The annual facility fee is currently 10 basis points, which applies to the total facility size of $1.4 billion.
The credit facility is used primarily to finance working capital but can also be used to issue up to $75 million in letters of credit (there were no letters of credit outstanding against the facility at December 31, 2018). At our option, the interest rate on borrowings under the credit facility is based on LIBOR, prime, federal funds or local equivalent rates. The credit facility contains no provisions limiting its availability in the event of a material adverse change to Ryder’s business operations; however, the credit facility does contain standard representations and warranties, events of default, cross-default provisions and certain affirmative and negative covenants.
In order to maintain availability of funding, we must maintain a ratio of debt to consolidated net worth of less than or equal to 300%. Net worth, as defined in the credit facility, represents shareholders' equity excluding any accumulated other comprehensive income or loss associated with our pension and other postretirement plans. The ratio at December 31, 2018, was 184%. At December 31, 2018, there was $733 million available under the credit facility.
Our global revolving credit facility enables us to refinance short-term obligations on a long-term basis. Short-term commercial paper obligations not required for working capital needs are classified as long-term as we have both the intent and ability to refinance on a long-term basis. In addition, we have the intent and ability to refinance the current portion of long-term debt on a long-term basis. At December 31, 2018, we classified $578 million of short-term commercial paper, $200 million of trade receivables borrowings, $250 million of the current portion of long-term debt and $50 million of short-term debt as long-term debt. At December 31, 2017, we classified $570 million of short-term commercial paper and $16 million of current portion of long-term debt as long-term debt.
In 2018, we issued $1.5 billion of unsecured medium-term notes maturing in years 2021 through 2023. The proceeds from these notes were used to pay off maturing debt and for general corporate purposes. If these notes are downgraded below investment grade following, or as a result of, a change in control, the note holders can require us to repurchase all or a portion of the notes at a purchase price equal to 101% of principal value plus accrued and unpaid interest.
In 2018, we received $225 million from financing transactions backed by a portion of our revenue earning equipment. The proceeds from these transactions were used for general corporate purposes. We have provided end of term guarantees for the residual value of the revenue earning equipment in these transactions. The transaction proceeds, along with the end of term residual value guarantees, have been included within "asset-backed U.S. obligations" in the preceding table.
We have a trade receivables purchase and sale program, pursuant to which we sell certain of our domestic trade accounts receivable to a bankruptcy remote, consolidated subsidiary of Ryder, that in turn sells, on a revolving basis, an ownership interest in certain of these accounts receivable to a committed purchaser. The subsidiary is considered a VIE and is consolidated based on our control of the entity’s activities. We use this program to provide additional liquidity to fund our operations, particularly when it is cost effective to do so. The costs under the program may vary based on changes in interest rates. The available proceeds that may be received under the program are limited to $225 million. In June 2018, we renewed the trade receivables purchase and sale program. If no event occurs which causes early termination, the 364-day program will expire on June 12, 2019. The program contains provisions restricting its availability in the event of a material adverse change to our business operations or the collectibility of the collateralized receivables. Sales of receivables under this program are accounted for as secured borrowings based on our continuing involvement in the transferred assets. At December 31, 2018, $200 million was outstanding under the program. No amounts were outstanding under the program at December 31, 2017.
The fair value of total debt (excluding capital lease, asset backed U.S. obligations and debt issuance costs) was $5.97 billion at December 31, 2018, and $4.95 billion at December 31, 2017. For publicly-traded debt, estimates of fair value were based on market prices. For other debt, fair value is estimated based on a model-driven approach using rates currently available to us for debt with similar terms and remaining maturities. The fair value measurements of our publicly-traded debt and our other debt were classified within Level 2 of the fair value hierarchy. The carrying amounts reported in the Consolidated Balance Sheets for "Cash and cash equivalents," "Receivables, net" and "Accounts payable" approximate fair value because of the immediate or short-term maturities of these financial instruments.