Debt and Financing

Our outstanding debt as of September 30, 2015 and December 31, 2014 consisted of the following:



As of September 30, 2015 (in millions)	Par Value			Discount			Book Value			Stated Interest Rate		Average Effective Interest Rate
Term Loan	$	687.8		$	(4.7	)	$	683.1		8.3	%	8.5	%
ABL Facility^(a)	—			—			—			N/A		N/A
Secured Second A&R CDA	44.7			—			44.7			3.3-18.3%		7.3	%
Unsecured Second A&R CDA	73.2			—			73.2			3.3-18.3%		7.3	%
Lease financing obligations	279.8			—			279.8			10.0-18.2%		12.0	%
Total debt	$	1,085.5		$	(4.7	)	$	1,080.8
Current maturities of Term Loan	(7.0		)	—			(7.0		)
Current maturities of lease financing obligations	(8.5		)	—			(8.5		)
Long-term debt	$	1,070.0		$	(4.7	)	$	1,065.3

^(a) There were no amounts drawn on the ABL Facility at any time during the nine months ended September 30, 2015.



As of December 31, 2014 (in millions)	Par Value			Discount			Book Value			Stated Interest Rate		Average Effective Interest Rate
Term Loan	$	693.0		$	(5.7	)	$	687.3		8.3	%	8.5	%
ABL Facility^(a)	—			—			—			N/A		N/A
Series B Notes	17.7			(0.6		)	17.1			10.0	%	25.6	%
Secured Second A&R CDA	47.0			—			47.0			3.3-18.3%		7.3	%
Unsecured Second A&R CDA	73.2			—			73.2			3.3-18.3%		7.3	%
Lease financing obligations	285.1			—			285.1			10.0-18.2%		12.0	%
Other	0.2			—			0.2
Total debt	$	1,116.2		$	(6.3	)	$	1,109.9
Current maturities of Term Loan	(7.0		)	—			(7.0		)
Current maturities of Series B Notes	(17.7		)	0.6			(17.1		)
Current maturities of lease financing obligations	(6.8		)	—			(6.8		)
Current maturities of other	(0.2		)	—			(0.2		)
Long-term debt	$	1,084.5		$	(5.7	)	$	1,078.8

^(a) There were no amounts drawn on the ABL Facility at any time during the twelve months ended December 31, 2014.

ABL Facility Availability

As of September 30, 2015, we had cash and cash equivalents of $210.7 million and the borrowing base and maximum availability on our asset based loan facility (the “ABL Facility”) were $445.1 million and $78.6 million, respectively. The maximum availability is calculated in accordance with the terms of the ABL Facility and is derived by reducing the borrowing base by our $366.5 million of outstanding letters of credit as of September 30, 2015. While our ABL Agreement permits us to access maximum availability outside of certain financial covenant restrictions (which restrictions did not limit our availability as of September 30, 2015), the maximum amount we expect to access on our ABL Facility at any time is maximum availability less the lower of 10% of the borrowing base ($44.5 million at September 30, 2015) or 10% of the collateral line cap ($45.0 million at September 30, 2015). Thus, of the $78.6 million in maximum availability, we expected to access no more than $34.1 million as of September 30, 2015 (“Managed Accessibility”). As a result, we had cash and cash equivalents and Managed Accessibility of $244.8 million as of September 30, 2015.

As of December 31, 2014, we had cash and cash equivalents of $171.1 million and the borrowing base and maximum availability on our ABL Facility were $445.5 million and $71.2 million, respectively. The maximum availability is calculated in accordance with the terms of the ABL Facility and is derived by reducing the borrowing base by our $374.3 million of outstanding letters of credit. As of December 31, 2014, amounts able to be drawn on our ABL Facility (which were limited by certain financial covenant restrictions) were $27.1 million, for a total of cash and cash equivalents and amounts able to be drawn on our ABL Facility of $198.2 million.

Credit Facility Covenants

The credit agreement (the “Term Loan Agreement”) governing our term loan facility (the “Term Loan”) has certain financial covenants, as amended in September 2014, 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).

Our total maximum leverage ratio covenants are as follows:



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

Consolidated Adjusted EBITDA, defined in our Term Loan Agreement 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, restructuring professional fees, nonrecurring consulting fees, expenses associated with certain lump sum payments to our International Brotherhood of Teamsters (“IBT”) employees and the results of permitted dispositions and discontinued operations. Consolidated Total Debt, as defined in our Term Loan Agreement, is the aggregate principal amount of indebtedness outstanding. Our total leverage ratio for the four consecutive fiscal quarters ending September 30, 2015 was 3.15 to 1.00. Additionally, our ABL Facility credit agreement, among other things, restricts certain capital expenditures.

We believe that our results of operations will be sufficient to allow us to comply with the covenants in the Term Loan Agreement, fund our operations, increase working capital as necessary to support our planned revenue growth and fund capital expenditures for at least the next twelve months. In order for us to maintain compliance with the maximum total leverage ratio over the tenor of the Term Loan and satisfy our liquidity needs, we must achieve positive operating results which reflect continuing improvement over our recent results. Improvements to our profitability may include ongoing successful implementation and realization of pricing, productivity and efficiency initiatives, as well as increased volume, some of which are outside of our control.

Series B Exchange

Our 10% Series B Convertible Senior Secured Notes (the “Series B Notes”), which matured on March 31, 2015, were convertible into our Common Stock, at the conversion price per share of approximately $18.5334 and a conversion rate of 53.9567 common shares per $1,000 of the Series B Notes (such conversion price and conversion rate applying also to the Series B Notes make whole premium).

On March 25, 2015, we entered into an exchange agreement with certain holders of our Series B Notes to exchange their outstanding principal and accrued interest balances totaling $17.9 million at conversion price of $18.00 per share for an aggregate 994,689 shares of Common Stock. During the nine months ended September 30, 2015, we recorded $0.6 million of additional expense related to the fair value of the incremental shares provided to those holders who exchanged their outstanding balances. At maturity on March 31, 2015, we repaid the holders of the remaining outstanding Series B Notes approximately $0.3 million of cash.

On January 31, 2014, certain holders of our Series B Notes exchanged their outstanding notes as part of an exchange agreement. Outside of these exchange agreements, during the nine months ended September 30, 2014, $1.2 million of aggregate principal amount of Series B Notes were converted into 75,900 shares of our Common Stock, which includes the make whole premium. Upon conversion, during the nine months ended September 30, 2014, we recorded $0.4 million of additional interest expense representing the $0.2 million make whole premium and $0.2 million of accelerated amortization of the discount on converted Series B Notes. There were no conversions during the three months ended September 30, 2014.

Fair Value Measurement

The carrying amounts and estimated fair values of our long-term debt, including current maturities and other financial instruments, are summarized as follows:



	September 30, 2015				December 31, 2014
(in millions)	Carrying amount		Fair value		Carrying amount		Fair value
Term Loan	$	683.1	$	673.2	$	687.3	$	685.4
Series B Notes	—		—		17.1		17.7
Lease financing obligations	279.8		284.7		285.1		282.2
Other	117.9		115.4		120.4		119.1
Total debt	$	1,080.8	$	1,073.3	$	1,109.9	$	1,104.4

The fair values of the Term Loan, Series B Notes and the Secured and Unsecured Second Amended and Restated Contribution Deferral Agreement (the “Second A&R CDA”) (included in “Other” above) were estimated based on observable prices (level two inputs for fair value measurements). The fair value of the lease financing obligations is estimated using a publicly traded secured loan with similar characteristics (level three input for fair value measurement).

Leases

As of September 30, 2015, our minimum rental expense under operating leases for the remainder of the year was $17.7 million. As of September 30, 2015, our operating lease payment obligations through 2025 totaled $232.1 million and is expected to increase as we lease additional revenue equipment.

Our capital expenditures for the nine months ended September 30, 2015 and 2014 were $71.8 million and $47.6 million, respectively. These amounts were principally used to fund the purchase of used tractors and trailers, to refurbish engines for our revenue fleet, and capitalized costs for technology infrastructure. Additionally, for the nine months ended September 30, 2015, we entered into new operating leases for revenue equipment totaling $102.0 million in future lease payments, payable over an average lease term of five years.