Liquidity

For a description of our outstanding debt as of December 31, 2014, please refer to the “Debt and Financing” footnote to our consolidated financial statements.

Credit Facility Covenants

On February 13, 2014, we completed our 2014 Financing Transactions and refinanced the debt associated with our prior credit facilities. We entered into a Term Loan credit agreement with new financial covenants that, among other things, restricts certain capital expenditures and requires us to maintain a maximum total leverage ratio (defined as Consolidated Total Debt divided by Consolidated Adjusted EBITDA as defined below).

On September 25, 2014, the Company entered into the Credit Agreement Amendment which, among other things, adjusted the maximum permitted total leverage ratio through December 31, 2016 and increased the applicable interest rate over the same period.

The Credit Agreement Amendment resets the total maximum leverage ratio covenants as follows:



Four Consecutive Fiscal Quarters Ending	Maximum Total Leverage Ratio	Four Consecutive Fiscal Quarters Ending	Maximum Total Leverage Ratio
December 31, 2014	5.25 to 1.00	September 30, 2016	3.75 to 1.00
March 31, 2015	5.00 to 1.00	December 31, 2016	3.50 to 1.00
June 30, 2015	4.75 to 1.00	March 31, 2017	3.25 to 1.00
September 30, 2015	4.50 to 1.00	June 30, 2017	3.25 to 1.00
December 31, 2015	4.25 to 1.00	September 30, 2017	3.25 to 1.00
March 31, 2016	4.00 to 1.00	December 31, 2017 and thereafter	3.00 to 1.00
June 30, 2016	3.75 to 1.00

Upon effectiveness of the Credit Agreement Amendment, each consenting lender received a fee equal to 0.25% of their outstanding exposure, resulting in $1.7 million of fees paid in 2014. These fees have been included in ‘Other Assets’ on the consolidated balance sheet and will be amortized over the remaining life of the Term Loan.

Consolidated Adjusted EBITDA, defined in our Credit Agreement Amendment as “Consolidated EBITDA,” is a measure that reflects our earnings before interest, taxes, depreciation, and amortization expense, and is further adjusted for, among other things, letter of credit fees, equity-based compensation expense, net gains or losses on property disposals and certain other items, including restructuring professional fees, expenses associated with certain lump sum payments to our IBT employees and the results of permitted dispositions and discontinued operations. Consolidated Total Debt, as defined in our Credit Agreement Amendment, is the aggregate principal amount of indebtedness outstanding. Our total leverage ratio for the year ending December 31, 2014 was 4.57 to 1.00.

In the event that we fail to comply with any Term Loan covenant or any ABL Facility covenant, we would be considered in default, which would enable applicable lenders to accelerate the repayment of amounts outstanding, require the cash collateralization of letters of credit (in the case of the ABL Facility) and exercise remedies with respect to collateral and we would need to seek an amendment or waiver from the applicable lender groups. In the event that our lenders under our Term Loan or ABL Facility demand payment or cash collateralization (in the case of the ABL Facility), we will not have sufficient cash to repay such indebtedness. In addition, a default under our Term Loan or ABL Facility or the applicable lenders exercising their remedies thereunder could trigger cross-default provisions in our other indebtedness and certain other operating agreements. Our ability to amend our Term Loan or our ABL Facility or otherwise obtain waivers from the applicable lenders depends on matters that are outside of our control and there can be no assurance that we will be successful in that regard.

Risk and Uncertainties Regarding Future Liquidity

Our principal sources of liquidity are cash and cash equivalents, available borrowings under our ABL Facility and any prospective net operating cash flows from operations. As of December 31, 2014, we had cash and cash equivalents and amounts able to be drawn on our ABL Facility totaling $198.2 million. The amount which is actually able to be drawn on our ABL Facility is limited by certain financial covenants in the ABL Facility.

Our principal uses of cash are to fund our operations, including making contributions to our single-employer pension plans and our multi-employer pension funds, and to meet our other cash obligations including, but not limited to, paying cash interest and principal on our funded debt, payments on our equipment leases, letter of credit fees under our credit facilities and funding capital expenditures.

Our ABL Facility credit agreement, among other things, restricts certain capital expenditures and requires that the Company, in effect, maintain availability of at least 10% of the lesser of the aggregate amount of commitments from all lenders or the borrowing base.

We have a considerable amount of indebtedness. As of December 31, 2014, we had $1,116.2 million in aggregate par value of outstanding indebtedness, the majority of which matures in 2019. We also have a considerable amount of future funding obligations for our single-employer pension plans and the multi-employer pension funds. We expect our funding obligations for 2015 for our single-employer pension plans and multi-employer pension funds will be $60.3 million and $91.6 million, respectively. In addition, we also have, and will continue to have, substantial operating lease obligations. As of December 31, 2014, our operating lease obligations for 2015 are $63.6 million. As of December 31, 2014, our operating lease obligations through 2025 totaled $194.5 million and is expected to increase as we lease additional revenue equipment.

Our capital expenditures for the years ended December 31, 2014 and 2013 were $69.2 million and $66.9 million, respectively. These amounts were principally used to fund replacement engines and trailer refurbishments for our revenue fleet, capitalized costs for our network facilities and technology infrastructure. Additionally, for the year ended December 31, 2014, we entered into new operating lease commitments for revenue equipment totaling $65.0 million, with such payments to be made over the average lease term of 5 years. In light of our operating results over the past few years and our liquidity needs, we have deferred certain capital expenditures and expect to continue to do so in the future. As a result, the average age of our fleet is increasing, which may affect our maintenance costs and operational efficiency unless we are able to obtain suitable lease financing to meet our replacement equipment needs.

We believe that our results of operations will provide sufficient liquidity to fund our operations and meet the covenants under our Term Loan for at least the next twelve months.

Our ability to satisfy our liquidity needs and meet future stepped-up covenants beyond the next twelve months is primarily dependent on improving our profitability. Improvements to our profitability primarily include continued successful implementation and realization of productivity and efficiency initiatives including those identified in the modified labor agreement as well as pricing and safety improvements. Some of these are outside of our control.

In the event our operating results indicate we will not meet our maximum total leverage ratio, we will take action to improve our maximum total leverage ratio which will include paying down our outstanding indebtedness with either cash on hand or with cash proceeds from equity issuances. The issuance of equity is outside of our control and there can be no assurance that we will be able to issue additional equity at terms that are agreeable to us or that we would have sufficient cash on hand to meet the maximum total leverage ratio.