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Debt
 12 Months Ended
Dec. 31, 2018
Debt Disclosure [Abstract]  
Debt DEBT
The carrying value of our notes payable, capital leases and long-term debt as of December 31, 2018 and 2017 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.
 
 
 
 
2018
 
2017
Maturity
 
Interest Rate
 
Principal
 
Adjustments
 
Carrying Value
 
Principal
 
Adjustments
 
Carrying Value
Credit facilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Uncommitted Credit Facility
 
Variable
 
$
33.4

 
$
—

 
$
33.4

 
$
—

 
$
—

 
$
—

June 2019
 
Variable
 
—

 
—

 
—

 
130.0

 
—

 
130.0

May 2021
 
Variable
 
—

 
—

 
—

 
—

 
—

 
—

June 2023
 
Variable
 
159.0

 
—

 
159.0

 
—

 
—

 
—

Senior notes:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
May 2018
 
3.800
 
—

 
—

 
—

 
700.0

 
(0.3
)
 
699.7

September 2019
 
5.500
 
650.0

 
(0.9
)
 
649.1

 
650.0

 
(2.1
)
 
647.9

March 2020
 
5.000
 
850.0

 
(1.0
)
 
849.0

 
850.0

 
(1.8
)
 
848.2

November 2021
 
5.250
 
600.0

 
(1.2
)
 
598.8

 
600.0

 
(1.5
)
 
598.5

June 2022
 
3.550
 
850.0

 
(3.6
)
 
846.4

 
850.0

 
(4.6
)
 
845.4

May 2023
 
4.750
 
550.0

 
(5.5
)
 
544.5

 
550.0

 
(1.0
)
 
549.0

March 2025
 
3.200
 
500.0

 
(4.3
)
 
495.7

 
500.0

 
(4.8
)
 
495.2

June 2026
 
2.900
 
500.0

 
(4.4
)
 
495.6

 
500.0

 
(5.0
)
 
495.0

November 2027
 
3.375
 
650.0

 
(5.9
)
 
644.1

 
650.0

 
(7.0
)
 
643.0

May 2028
 
3.950
 
800.0

 
(17.3
)
 
782.7

 
—

 
—

 
—

March 2035
 
6.086
 
181.9

 
(14.4
)
 
167.5

 
181.9

 
(14.9
)
 
167.0

March 2040
 
6.200
 
399.9

 
(3.8
)
 
396.1

 
399.9

 
(3.9
)
 
396.0

May 2041
 
5.700
 
385.7

 
(5.3
)
 
380.4

 
385.7

 
(5.5
)
 
380.2

Debentures:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
May 2021
 
9.250
 
35.3

 
(0.7
)
 
34.6

 
35.3

 
(1.0
)
 
34.3

September 2035
 
7.400
 
148.1

 
(33.8
)
 
114.3

 
148.1

 
(34.5
)
 
113.6

Tax-exempt:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2019 - 2044
 
1.970 - 2.500
 
1,042.4

 
(5.6
)
 
1,036.8

 
1,042.4

 
(6.4
)
 
1,036.0

Capital leases:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2019 - 2046
 
3.273 - 12.203
 
109.5

 
—

 
109.5

 
108.4

 
—

 
108.4

Total Debt
 
 
 
$
8,445.2

 
$
(107.7
)
 
8,337.5

 
$
8,281.7

 
$
(94.3
)
 
8,187.4

Less: current portion
 
 
 
 
 
 
 
(690.7
)
 
 
 
 
 
(706.7
)
Long-term portion
 
 
 
 
 
 
 
$
7,646.8

 
 
 
 
 
$
7,480.7


Loss on Extinguishment of Debt and Other Related Costs
During 2018, we incurred a non-cash loss on the early extinguishment of debt of $0.3 million related to the extinguishment of certain financing arrangements.
During 2017, we incurred a non-cash loss on the early extinguishment of debt of $0.8 million related to the early retirement of certain tax-exempt bonds.
During 2016, we incurred a non-cash 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.
Credit Facilities
In June 2018, we entered into a $2.25 billion unsecured revolving credit facility (the Credit Facility), which replaced our $1.0 billion and $1.25 billion unsecured credit facilities that would have matured in May 2021 and June 2019, respectively (the Replaced Credit Facilities). The Credit Facility matures in June 2023. We may request two one-year extensions of the maturity date but none of the lenders are committed to participate in such extension. The Credit Facility also includes a feature that allows us to increase availability, at our option, by an aggregate amount of up to $1.0 billion through increased commitments from existing lenders or the addition of new lenders. At our option, borrowings under the 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 Credit Facility agreement).
The Credit Facility is subject to facility fees based on applicable rates defined in the Credit Facility agreement and the aggregate commitment, regardless of usage. Availability under our Credit Facility totaled $1,694.1 million as of December 31, 2018 and under the Replaced Credit Facilities totaled $1,639.1 million as of December 31, 2017. The Credit Facility can be used for working capital, capital expenditures, acquisitions, letters of credit and other general corporate purposes. The Credit Facility agreement requires 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, 2018, we had $159.0 million of borrowings under our Credit Facility and $130.0 million of borrowings under the Replaced Credit Facilities as of December 31, 2017. We had $379.6 million of letters of credit outstanding under our Credit Facility as of December 31, 2018, and $462.7 million of letters of credit outstanding under our Replaced Credit Facilities as of December 31, 2017.
During 2016, we amended our existing unsecured bi-lateral 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 Uncommitted Credit Facility 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, 2018, we had $33.4 million outstanding under our Uncommitted Credit Facility and no borrowings under our Uncommitted Credit Facility as of December 31, 2017.
Senior Notes and Debentures
In May 2018, we issued $800.0 million of 3.950% senior notes due 2028 (the 3.950% Notes). We used the net proceeds from the 3.950% Notes to repay $700.0 million of 3.800% senior notes that matured in May 2018, and the remaining proceeds were used to repay borrowings under our Replaced Credit Facilities. In connection with this offering we terminated interest rate lock agreements with a notional value of $600.0 million resulting in net proceeds of $31.1 million. The proceeds will amortize over the term of the 3.950% Notes using the effective interest method. There was no ineffectiveness recognized in the termination of these cash flow hedges.
During 2017, we issued $650.0 million of 3.375% notes due 2027 (the 3.375% Notes). We used the net proceeds from the 3.375% Notes to repay amounts borrowed under our Replaced Credit Facilities.
During 2016, we completed 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, the Existing Notes), subject to priority levels and the other terms and conditions set forth in the Offer to Purchase. During 2016, we issued $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.
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, 2018 and 2017, we had $1,036.8 million and $1,036.0 million, respectively, of certain fixed and variable rate tax-exempt financings outstanding with maturities ranging from 2019 to 2044. Approximately 100% 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.
In the fourth quarter of 2017, we retired $86.7 million of 5.25% tax-exempt bonds in advance of the maturity date. Additionally, the California Pollution Control Financing Authority (CPCFA) adopted a resolution approving the issuance and sale of up to $100.0 million of Solid Waste Disposal Revenue Bonds for the Benefit of Republic, under which CPCFA issued $50.0 million of variable-rate tax-exempt debt on our behalf. The proceeds from the issuance were used to fund qualifying landfill-related capital expenditures in the state of California.
Capital Leases
We had capital lease liabilities of $109.5 million and $108.4 million as of December 31, 2018 and 2017, respectively, with maturities ranging from 2019 to 2046.
Future Maturities of Debt
Aggregate principal maturities of notes payable, capital leases and other long-term debt as of December 31, 2018 follow:
2019
$
691.6

2020
926.8

2021
768.4

2022
855.9

2023
918.4

Thereafter
4,284.1

 
$
8,445.2


Interest Paid
Interest paid, excluding net swap settlements for our fair value hedges, was $351.0 million, $326.9 million and $330.2 million for the years ended December 31, 2018, 2017 and 2016, respectively.
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, 2018, 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, 2018 and 2017, the interest rate swap agreements are reflected at their fair value of $2.5 million and $8.0 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 $1.9 million, $4.8 million and $6.3 million, respectively, during 2018, 2017 and 2016 related to net swap settlements for these interest rate swap agreements, which is included as an offset to interest expense in our consolidated statement of income.
We recognized a gain of $5.0 million for the years ended December 31, 2018 and 2017, respectively, and a gain of $6.3 million for the year ended December 31, 2016 on the change in fair value of the hedged senior notes attributable to changes in the benchmark interest rate, with offsetting losses of $5.4 million, $4.2 million, and $4.4 million for the years ended December 31,
2018, 2017, and 2016, 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
As of December 31, 2018, our interest rate lock agreements had an aggregate notional value of $725.0 million with fixed interest rates ranging from 1.900% to 3.250%. As of December 31, 2017 our interest rate lock agreements had an aggregate notional value of $825.0 million with fixed interest rates ranging from 1.900% to 2.418%. We entered into these transactions to manage exposure to fluctuations in interest rates in anticipation of planned future issuances of senior notes in 2019 and 2020. 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 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 values of the outstanding interest rate locks as of December 31, 2018 and 2017 were $10.3 million and $19.1 million, respectively, and were recorded in other long-term assets in our consolidated balance sheets. No amounts were recognized in other income, net in our consolidated statement of income for the ineffective portion of the changes in fair values during the years ended December 31, 2018, 2017, and 2016.
Total (losses) gain recognized in other comprehensive income for interest rate locks were $(6.5) million, $(0.7) million and $12.2 million, net of tax, for the years ended December 31, 2018, 2017, and 2016, respectively.
As of December 31, 2018 and 2017, the effective portion of our previously terminated interest rate locks, recorded as a component of accumulated other comprehensive income, net of tax, was income of $11.2 million and loss of $11.8 million, 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 approximately $0.7 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, 2018, 2017 and 2016 was $0.3 million, $2.7 million and $9.8 million, respectively.