FINANCING ARRANGEMENTS

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

FINANCING ARRANGEMENTS

FINANCING ARRANGEMENTS

Long-term Debt

The following table is a summary of the Company’s long-term debt (in thousands):

Current Portion of Long-Term Debt:	September 30, 2023		December 31, 2022
Secured senior term loans	$	10,000	$	10,000
Long-Term Debt:
Secured senior term loans due June 30, 2024 ("2024 Term Loans")	$	—	$	613,975
Secured senior term loans due October 8, 2028 ("2028 Term Loans")	972,500		980,000
Unsecured senior notes, at 4.875%, due July 15, 2027 ("2027 Notes")	545,000		545,000
Unsecured senior notes, at 5.125%, due July 15, 2029 ("2029 Notes")	300,000		300,000
Unsecured senior notes, at 6.375%, due February 1, 2031 ("2031 Notes")	500,000		—
Long-term debt, at par	$	2,317,500	$	2,438,975
Unamortized debt issuance costs and discount, net	(24,548)		(24,147)
Long-term debt, at carrying value	$	2,292,952	$	2,414,828

Financing Activities

The Company's significant financing arrangements are described in Note 12, "Financing Arrangements," in the Company's Annual Report on Form 10-K for the year ended December 31, 2022 and, other than as noted below, there have been no material changes to the arrangements described therein. As previously disclosed, on January 24, 2023, the Company completed a private placement of $500.0 million aggregate principal amount of unsecured senior notes which mature on February 1, 2031 (collectively referred to with the 2027 and 2029 Notes as the "Notes"). The proceeds from the 2031 Notes, along with a $114.0 million borrowing on the Company's revolving credit facility and available cash, were used to repay the $614.0 million outstanding principal amount of the 2024 Term Loans. In connection with the repayment, the Company recognized a loss on early extinguishment of debt of $2.4 million in the first quarter of 2023.

The Company maintains a $400.0 million revolving credit facility under which the Company had no outstanding loan balance as of September 30, 2023 and December 31, 2022. During the three months ended March 31, 2023, the Company borrowed $114.0 million on the revolving credit facility to repay the outstanding principal amount of the 2024 Term Loans. The Company repaid the full amount of this borrowing on the revolving credit facility. As of September 30, 2023, the Company had $277.6 million available to borrow under the revolving credit facility and outstanding letters of credit were $122.4 million. Subject to certain conditions, this credit facility will expire in October 2025.

As of September 30, 2023 and December 31, 2022, the estimated fair value of the Company’s outstanding long-term debt, including the current portion, was $2.2 billion and $2.4 billion, respectively. The Company’s estimates of fair value of its long-term debt, including the current portion, are based on quoted market prices or other available market data which are considered Level 2 measures according to the fair value hierarchy. Level 2 utilizes quoted market prices in markets that are not active, broker or dealer quotation or alternative pricing sources with reasonable levels of price transparency for similar assets and liabilities.

Upon the phase-out of LIBOR as a referenced rate, the Company has transitioned all of its variable rate debt to a successor rate, namely Term SOFR. As of September 30, 2023, after taking into account the interest rate swaps discussed under the "Cash Flow Hedges" header below, the Company's variable rate debt consists of $382.5 million of the 2028 Term Loans and any borrowings under the revolving credit facility.

In accordance with the October 8, 2021 amendment to the credit agreement, the 2028 Term Loan will generally bear interest at a rate of Term SOFR plus an adjustment of 0.11448%, based upon one-month Term SOFR. The Term Loan Agreement also provides for Term SOFR adjustments for other interest periods; however, the Company expects to elect the one-month Term SOFR for interest payments on that debt. The 2.00% margin applicable to the 2028 Term Loans prior to the phase-out of LIBOR also remains applicable to the interest payments under Term SOFR, so in total, the 2028 Term Loan will bear interest at Term SOFR plus 2.11448%. The Company expects these changes will not be material to future financial results.

On April 28, 2023, the Company entered into an amendment to the credit agreement for the revolving credit facility. As amended, the terms of the agreement are substantially the same as prior to the amendment except for certain updates required to transition the agreement to include a defined LIBOR successor rate. Under the amended agreement, borrowings under the revolving credit facility will bear interest at a rate, at the Company’s option, of either (i) “Term SOFR” (as defined in the amended agreement)

plus an applicable margin ranging from 1.50% to 1.75% per annum based primarily on the level of the Company’s average liquidity for the most recent 30 day period or (ii) Bank of America's base rate plus an applicable margin ranging from 0.50% to 0.75% per annum based primarily on such average liquidity. The amended agreement also continues to provide (i) for an unused line fee payable to the lenders, calculated on the then unused portion of the lenders’ $400.0 million maximum commitments, ranging from 0.25% to 0.375% per annum of the unused commitment, and (ii) for outstanding letters of credit, a fee payable to the lenders equal to the then applicable margin for Term SOFR borrowings described above, and to the issuing banks a standard fronting fee and customary fees and charges in connection with all amendments, extensions, draws and other actions with respect to letters of credit. The Company expects these changes will not be material to future financial results.

Cash Flow Hedges

The Company's strategy to hedge against fluctuations in variable interest rates involves entering into interest rate derivative agreements.

The Company effectively fixed the interest rate on $350.0 million principal of the previously outstanding 2024 Term Loans by entering into interest rate swap agreements in 2018 with a notional amount of $350.0 million ("2018 Swaps"). On January 24, 2023, concurrently with the repayment of the 2024 Term Loans, the Company received a settlement payment of $8.3 million from the counterparties. As a result of the settlement, the Company also reclassified the amounts previously deferred in accumulated other comprehensive loss and recognized a settlement gain of $8.3 million in interest expense during the three months ended March 31, 2023.

In 2022, the Company entered into interest rate swap agreements with a notional amount of $600.0 million ("2022 Swaps") to effectively fix the interest rate on $600.0 million principal of the outstanding 2028 Term Loans. Under the terms of the 2022 Swaps' agreements, the Company receives interest based upon the variable rates on the 2028 Term Loans and pays a fixed amount of interest. The fixed rate on these instruments was 0.931% through June 30, 2023 which, together with the 2.00% interest rate margin for borrowings on the 2028 Term Loans, resulted in an effective annual interest rate of approximately 2.931% through June 30, 2023. The fixed rate on these instruments increased to 1.9645% on July 1, 2023 and the variable rate became linked to Term SOFR to mirror the variable interest payments for the 2028 Term Loans. Including the 2.00% interest rate margin for borrowings on the 2028 Term Loans and the 0.11448% SOFR adjustment per the 2028 Term Loans, beginning July 1, 2023, the effective annual interest rate of this $600.0 million is now 4.07898%. The 2022 Swaps expire September 30, 2027.

At the inception of these instruments, the Company designated both the 2018 Swaps and the 2022 Swaps (collectively referred to as the “Swaps”) as cash flow hedges. As of September 30, 2023, the Company recorded a derivative asset with a fair value of $54.8 million comprised only of the 2022 Swaps as the 2018 Swaps were settled in early 2023, as noted above. The balance of the derivative asset as of December 31, 2022 was $60.6 million, which included both of the Swaps.

No ineffectiveness has been identified on the Swaps and, therefore the change in fair value is recorded in stockholders' equity as a component of accumulated other comprehensive loss. Amounts are reclassified from accumulated other comprehensive loss into interest expense on the consolidated statement of operations in the same period or periods during which the hedged transactions affect earnings.