Long-Term Debt

Long-term debt was as follows:



(dollars in millions)	Interest Rate (1)		June 30, 2012		December 31, 2011
Senior secured asset-based revolving credit facility	—	%	$	—	$	—
Senior secured term loan facility	3.9	%	1,339.5		1,540.5
Senior secured notes due 2018	8.0	%	500.0		500.0
Senior notes due 2019	8.5	%	1,305.0		1,175.0
Unamortized premium on senior notes due 2019			5.4		—
Senior subordinated notes due 2017	12.5	%	721.5		721.5
Senior notes due 2015	—	%	—		129.0
Total long-term debt			3,871.4		4,066.0
Less current maturities of long-term debt			—		(201.0		)
Long-term debt, excluding current maturities			$	3,871.4	$	3,865.0

(1)Weighted-average interest rate as of June 30, 2012

As of June 30, 2012, the Company was in compliance with the covenants under its various credit agreements as described below.

Senior Secured Asset-Based Revolving Credit Facility (“Revolving Loan”)

At June 30, 2012, the Company had no outstanding borrowings under the Revolving Loan, $0.7 million of undrawn letters of credit and $247.6 million reserved related to the floorplan sub-facility. The Revolving Loan matures on June 24, 2016.

In connection with the floorplan sub-facility, the Company maintains a Revolving Loan financing agreement. Amounts outstanding under the Revolving Loan financing agreement are unsecured and noninterest bearing. The Company will either pay the outstanding Revolving Loan financing agreement amounts when they become due, or the Revolving Loan's administrative agent will automatically initiate an advance on the Revolving Loan and use the proceeds to pay the balance on the due date. As of June 30, 2012, the Company owed $239.8 million under the Revolving Loan's floorplan sub-facility, which excludes $7.8 million reserved for product in transit. The difference between the total amount reported on the consolidated balance sheet as accounts payable-inventory financing of $251.0 million and the amount reserved related to the floorplan sub-facility of $247.6 million is due to differences in the methodology of calculating product in transit.

Availability under the Revolving Loan is limited to (a) the lesser of the revolving commitment of $900.0 million and the amount of the borrowing base less (b) outstanding borrowings, letters of credit, and amounts outstanding under the Revolving Loan financing agreement plus a reserve of 15% of open orders. At June 30, 2012, the borrowing base was $991.5 million as supported by eligible inventory and accounts receivable balances as of May 31, 2012. The Company could have borrowed up to an additional $651.7 million under the Revolving Loan at June 30, 2012.

Senior Secured Term Loan Facility (“Term Loan”)

At June 30, 2012, the outstanding principal amount of the Term Loan was $1,339.5 million, with $421.3 million of non-extended loans due October 10, 2014 and $918.2 million of extended loans due July 15, 2017.

The Term Loan requires the Company to make certain mandatory prepayments of principal amounts under certain circumstances, including (i) a prepayment in an amount equal to 50% of the Company's excess cash flow for a fiscal year (the percentage rate of which decreases to 25% when the total net leverage ratio, as defined in the governing agreement, is less than or equal to 5.5 but greater than 4.5; and decreases to 0% when the total net leverage ratio is less than or equal to 4.5), and (ii) the net cash proceeds from the incurrence of certain additional indebtedness by the Company or its subsidiaries. The Company was required to make a mandatory prepayment of $201.0 million under the excess cash flow provision with respect to the year ended December 31, 2011. The requirement was satisfied through $180.0 million of optional prepayments in February 2012 and $21.0 million of mandatory prepayments in March 2012. The prepayments were allocated on a pro rata basis between the extended and non-extended loans.

The Term Loan includes a senior secured leverage ratio requirement to be maintained on a quarterly basis. The senior secured leverage ratio for the four quarters ended June 30, 2012 was required to be at or below 7.0. For the four quarters ended June 30, 2012, the senior secured leverage ratio was 2.3.

The Company is required to maintain an interest rate hedge to fix or cap the interest rate on at least 50% of the outstanding principal amount of the Term Loan through maturity, subject to certain limitations currently in effect. The Company utilizes interest rate cap agreements to maintain compliance with this requirement. The Company currently has four interest rate cap agreements in effect through January 14, 2013 with a combined notional amount of $1,100.0 million. The Company also has four forward-starting interest rate cap agreements with a combined notional amount of $500.0 million which will be effective from January 14, 2013 through January 14, 2015. All of the cap agreements entitle the Company to payments from the counterparty of the amount, if any, by which three-month LIBOR exceeds 3.5% during the agreement period. As of June 30, 2012 and December 31, 2011, the fair values of the Company's interest rate cap agreements were $0.1 million and $0.7 million, respectively.

8.0% Senior Secured Notes due 2018 (“Senior Secured Notes”)

The Senior Secured Notes were issued on December 17, 2010 and mature on December 15, 2018. At June 30, 2012, the outstanding principal amount of the Senior Secured Notes was $500.0 million.

11.0% Senior Exchange Notes due 2015 (“Senior Exchange Notes”); 11.50% / 12.25% Senior PIK Election Exchange Notes due 2015 (“PIK Election Notes” together with the Senior Exchange Notes, the “Senior Notes”)

As of June 30, 2012, there were no outstanding Senior Notes.

On February 2, 2012, the Company commenced a tender offer to purchase any and all of the remaining $129.0 million aggregate principal amount of Senior Notes. On February 17, 2012, the Company accepted for purchase $120.6 million aggregate principal amount of the outstanding Senior Notes that were tendered. On March 5, 2012, the Company accepted for purchase an additional $0.1 million aggregate principal amount of the outstanding Senior Notes that were tendered prior to the expiration of the tender offer on March 2, 2012. On March 19, 2012, the Company redeemed the remaining $8.3 million aggregate principal amount that was not tendered.

The Company funded the purchases and redemption of the Senior Notes with the issuance of $130.0 million in aggregate principal amount of 2019 Senior Notes (as defined below) on February 17, 2012. The proceeds from this issuance, together with cash on hand and borrowings under the Revolving Loan, funded the payment of $129.0 million aggregate principal amount of Senior Notes, $7.9 million in tender and redemption premiums and $5.0 million of accrued and unpaid interest, along with transaction fees and expenses.

In connection with these transactions, the Company recorded a loss on extinguishment of long-term debt of $9.4 million in the Company's consolidated statement of operations for the six months ended June 30, 2012. This loss represents $7.9 million in tender and redemption premiums and $1.5 million for the write-off of the remaining unamortized deferred financing costs related to the Senior Notes.

8.5% Senior Notes due 2019 (“2019 Senior Notes”)

On February 17, 2012, the Company issued $130.0 million in aggregate principal amount of additional 2019 Senior Notes at an issue price of 104.375% of par. The $5.7 million premium received is reported on the consolidated balance sheet as an addition to the face amount of the 2019 Senior Notes and will be amortized as a reduction of interest expense over the term of the related debt. As of June 30, 2012, the outstanding principal amount of 2019 Senior Notes was $1,305.0 million, excluding $5.4 million in unamortized premium. The 2019 Senior Notes mature on April 1, 2019.

12.5% Senior Subordinated Exchange Notes due 2017 (“Senior Subordinated Notes”)

At June 30, 2012, the outstanding principal amount of the Company's Senior Subordinated Notes was $721.5 million. The Senior Subordinated Notes mature on October 12, 2017.

Fair Value

The Company's Senior Secured Notes, Senior Notes, 2019 Senior Notes and Senior Subordinated Notes are classified as Level 1 within the fair value hierarchy. The fair value of these debt instruments is estimated using quoted market prices for identical assets or liabilities that are actively traded in over-the-counter secondary markets. The Company's Term Loan is classified as Level 2 within the fair value hierarchy. The fair value of the Term Loan is estimated using dealer quotes for identical assets or liabilities in markets that are not considered active.

The following table presents the fair value of the Company's long-term debt instruments as of June 30, 2012:



(in millions)	Level 1		Level 2		Level 3		Total
Long-term debt	$	2,725.8	$	1,315.6	$	—	$	4,041.4

As of June 30, 2012, the carrying value of the Company's long-term debt was $3,866.0 million, excluding $5.4 million in unamortized premium.