Long-term debt

6 Months Ended

Jun. 30, 2019

Long-term debt was comprised of the following:



								As of June 30, 2019
	June 30, 2019			December 31, 2018			Maturity date	Interest rate	Estimated fair value ⁽²⁾
Senior Secured Credit Facilities:
Term Loan A⁽¹⁾	$	64,383		$	675,000		12/24/2019	2.00% + LIBOR	$	64,300
Term Loan A-2⁽¹⁾	102,498			995,000			12/24/2019	1.00% + LIBOR	$	103,011
Term Loan B	3,325,000			3,342,500			6/24/2021	2.75% + LIBOR⁽³⁾	$	3,333,313
Revolving line of credit⁽¹⁾	550,000			175,000			12/24/2019	2.00% + LIBOR	$	550,000
Senior Notes:
5 3/4% Senior Notes	1,250,000			1,250,000			8/15/2022	5.75%	$	1,264,000
5 1/8% Senior Notes	1,750,000			1,750,000			7/15/2024	5.125%	$	1,748,250
5% Senior Notes	1,500,000			1,500,000			5/1/2025	5.00%	$	1,479,000
Acquisition obligations and other notes payable⁽⁴⁾	184,170			183,979			2019-2027	5.70%	$	184,170
Financing lease obligations⁽⁵⁾	277,580			282,737			2019-2036	5.43%	$	277,580
Total debt principal outstanding	9,003,631			10,154,216
Discount and deferred financing costs⁽⁶⁾	(34,502		)	(52,000		)
	8,969,129			10,102,216
Less current portion	(3,591,331		)	(1,929,369		)
	$	5,377,798		$	8,172,847


(1)	On May 6, 2019, the Company entered into an agreement to extend the maturity dates of its Term Loan A, Term Loan A-2 and revolving line of credit under its senior secured credit facilities by six months, to December 24, 2019.


(2)	Fair values are based upon quoted market prices for similar instruments, a level 2 input. The balances of acquisition obligations and other notes payable and financing lease obligations are presented in the condensed consolidated financial statements at June 30, 2019 at their approximate fair values due to the short-term nature of their settlements.


(3)	Term Loan B is subject to a LIBOR component floor of 0.75%.


(4)	The interest rate presented for acquisition obligations and other notes payable is their weighted average interest rate based on the current interest rate in effect and assuming no changes to the LIBOR based interest rates.


(5)	The interest rate presented for financing lease obligations is their weighted average discount rate.

(6)

The carrying amount of the Company’s senior secured credit facilities includes a discount of $696 and deferred financing costs of $3,744, and the carrying amount of the Company’s senior notes includes deferred financing costs of $30,062 as of June 30, 2019. The carrying amount of the Company’s senior secured credit facilities included a discount of $6,104 and deferred financing costs of $12,580, and the carrying amount of the Company’s senior notes included deferred financing costs of $33,316 as of December 31, 2018.

Scheduled maturities of long-term debt at June 30, 2019 were as follows:



2019 (remainder of the year)⁽¹⁾	3,564,562
2020	53,182
2021	533,377
2022	1,292,979
2023	54,372
2024	1,785,765
Thereafter	1,719,394


(1)	Includes $2,990,328 of senior secured credit facility debt paid after June 30, 2019 from proceeds of the DMG sale, as described below.

As disclosed in the Company’s current report on Form 8-K filed November 26, 2018, the first amendment to the credit agreement governing the Company’s senior secured credit facilities amended existing covenants to permit the sale of the DMG business and require net cash proceeds from the sale in excess of $750,000 to be used to prepay debt outstanding under the Company’s credit facilities.

The Company closed the DMG sale on June 19, 2019 and, as required by the terms of its senior secured credit agreement, used all of the net proceeds from the sale to prepay term debt outstanding under that credit agreement. Specifically, on June 20, 2019 the Company made initial mandatory principal prepayments of $583,041 on Term Loan A and $892,502 on Term Loan A-2, followed by final mandatory prepayments required under the credit agreement made on July 3, 2019 in the amounts of $64,383 on Term Loan A, $102,498 on Term Loan A-2, and $2,823,447 on Term Loan B, based on elections made by the Term Loan B lenders.

In addition to the mandatory prepayments described above, during the first six months of 2019 the Company made regularly scheduled principal payments of $27,576 on Term Loan A and $17,500 on Term Loan B.

As a result of the principal payments described above, as of July 31, 2019, Term Loan A and Term Loan A-2 have been paid in full and Term Loan B has a remaining balance outstanding of $501,553.

In addition, the Company accelerated the amortization of debt discount and deferred financing costs associated with senior secured credit facility mandatory principal payments made prior to and after June 30, 2019, resulting in an additional charge of $10,668 in the three and six month periods ended June 30, 2019. The Company also recognized expenses of $1,492 associated with the May 6, 2019 amendment to extend the maturity dates for Term Loan A and Term Loan A-2 to December 24, 2019 during the three and six months ended June 30, 2019.

The Company plans to enter into a new credit agreement which is expected to consist of a $1,000,000 senior secured revolving line of credit facility, a $1,750,000 senior secured term loan A facility with a delayed draw feature and a $2,500,000 senior secured term loan B facility. The Company expects to use the funds from the new credit agreement to pay off the remaining balances outstanding under its existing senior credit facilities on Term Loan B and the revolving line of credit, to call the outstanding 5.75% Senior Notes due in 2022, fund the tender offer as described in Note 14 to these condensed consolidated financial statements, and add cash to the balance sheet for potential future share repurchases, acquisitions and other general corporate purposes. These condensed consolidated interim financial statements do not constitute a call notice of the 5.75% Senior Notes. The Company expects the call notice for the 5.75% Senior Notes to be issued following completion of the new credit agreement. However, whether or not the Company enters into the new credit agreement and is able to make borrowings thereunder to fund the proposed redemption of the 5.75% Senior Notes, the repurchase of common stock in the tender offer referred to above or for the other purposes described above is subject to risks and uncertainties, and there can be no assurance that any of the foregoing will occur on the terms currently contemplated, or at all.

As of June 30, 2019, the Company maintains several interest rate cap agreements that have the economic effect of capping the Company's maximum exposure to LIBOR variable interest rate changes on specific portions of the Company's floating rate debt, including all of Term Loan A, Term Loan A-2, and Term Loan B and a portion of the revolving line of credit. The remaining $541,881 outstanding principal balance of the revolving line of credit is subject to LIBOR-based interest rate volatility. The cap agreements are designated as cash flow hedges and, as a result, changes in the fair values of these cap agreements are reported in other comprehensive income. The amortization of the original cap premium is recognized as a component of debt expense on a straight-line basis over the terms of the cap agreements. These cap agreements do not contain credit-risk contingent features.

The following table summarizes the Company’s derivative instruments outstanding as of June 30, 2019 and December 31, 2018, which are classified in "Other long-term assets" on its consolidated balance sheet:



						Six months ended June 30, 2019				Fair value
	Notional amount		LIBOR maximum rate	Effective date	Expiration date	Debt expense		Recorded OCI loss		June 30, 2019		December 31, 2018
October 2015 caps	$	3,500,000	3.5%	6/29/2018	6/30/2020	$	4,326	$	823	$	28	$	851

The following table summarizes the effects of the Company’s interest rate cap agreements for the three and six months ended June 30, 2019 and 2018:



	Amount of unrecognized (losses) gains in OCI on interest rate cap agreements												Income statement location	Reclassification from accumulated other comprehensive income into net income
	Three months ended June 30,						Six months ended June 30,							Three months ended June 30,						Six months ended June 30,
Derivatives designated as cash flow hedges	2019			2018			2019			2018				2019			2018			2019			2018
Interest rate cap agreements	$	(42	)	$	(361	)	$	(823	)	$	1,053		Debt expense	$	2,163		$	2,070		$	4,326		$	4,140
Related income tax	11			93			212			(271		)	Related income tax	(557		)	(533		)	(1,114		)	(1,066		)
Total	$	(31	)	$	(268	)	$	(611	)	$	782			$	1,606		$	1,537		$	3,212		$	3,074

See Note 15 to these condensed consolidated financial statements for further details on amounts recorded and reclassified from accumulated other comprehensive income.

The Company’s weighted average effective interest rate on the senior secured credit facilities at the end of the second quarter of 2019 was 5.31%, based on the current margins in effect for Term Loan A, Term Loan A-2, Term Loan B and the revolving line of credit, as of June 30, 2019, as described above.

The Company’s overall weighted average effective interest rate for the three and six months ended June 30, 2019 was 5.17% and 5.16%, respectively and as of June 30, 2019 was 5.30%.

As of June 30, 2019, the Company’s interest rates are fixed on approximately 54.10% of its total debt.

As of June 30, 2019, the Company had $550,000 drawn on its $1,000,000 revolving line of credit under its senior secured credit facilities. The Company also has approximately $72,763 of outstanding letters of credit under separate bilateral secured letter of credit facilities.