Debt and Financing

Our outstanding debt as of March 31, 2016 consisted of the following:



As of March 31, 2016 (in millions)	Par Value			Discount			Debt Issuance Costs			Book Value			Stated Interest Rate			Average Effective Interest Rate
Term Loan	$	684.3		$	(3.9	)	$	(11.7	)	$	668.7		8.00	%	^(a)	8.20	%
ABL Facility	—			—			—			—			N/A			N/A
Secured Second A&R CDA	44.0			—			(0.3		)	43.7			3.3-18.3%			7.3	%
Unsecured Second A&R CDA	73.2			—			(0.4		)	72.8			3.3-18.3%			7.3	%
Lease financing obligations	276.6			—			(1.6		)	275.0			9.0-18.2%			12.0	%
Total debt	$	1,078.1		$	(3.9	)	$	(14.0	)	$	1,060.2
Current maturities of Term Loan	(7.0		)	—			—			(7.0		)
Current maturities of lease financing obligations	(9.0		)	—			—			(9.0		)
Long-term debt	$	1,062.1		$	(3.9	)	$	(14.0	)	$	1,044.2

^(a) Variable interest rate of 1, 3 or 6-month LIBOR, with a floor of 1.0% plus a fixed margin of 7.0% if the total leverage ratio is equal to or less than 3.25 to 1.00, or 7.25% if the total leverage ratio is higher than 3.25 to 1.00.

ABL Facility Availability

Our principal sources of liquidity are cash and cash equivalents, available borrowings under our ABL Facility and net cash flow from operations. As of March 31, 2016, we had cash and cash equivalents of $184.9 million and the borrowing base and maximum availability on our asset based loan facility (the “ABL Facility”) were $442.9 million and $81.5 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 $361.4 million of outstanding letters of credit. 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 March 31, 2016), 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 ($44.3 million at March 31, 2016) or 10% of the collateral line cap ($45.0 million at March 31, 2016). Thus, of the $81.5 million in maximum availability, we expected to access no more than $37.2 million as of March 31, 2016 (“Managed Accessibility”). As a result, we had cash and cash equivalents and Managed Accessibility of $222.1 million as of March 31, 2016.

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, each 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
March 31, 2016	4.00 to 1.00	March 31, 2017	3.25 to 1.00
June 30, 2016	3.75 to 1.00	June 30, 2017	3.25 to 1.00
September 30, 2016	3.75 to 1.00	September 30, 2017	3.25 to 1.00
December 31, 2016	3.50 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 March 31, 2016 was 3.20 to 1.00.

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 slight 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.

Fair Value Measurement

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



	March 31, 2016				December 31, 2015
(in millions)	Book Value		Fair value		Book Value		Fair value
Term Loan	$	668.7	$	555.0	$	669.0	$	594.6
Lease financing obligations	275.0		253.1		276.3		282.9
Second A&R CDA	116.5		95.1		117.1		102.1
Total debt	$	1,060.2	$	903.2	$	1,062.4	$	979.6

The fair values of the Term Loan and the Secured and Unsecured Second Amended and Restated Contribution Deferral Agreement (the “Second A&R CDA”) 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 March 31, 2016, our minimum rental expense under operating leases for the remainder of the year was $67.2 million. As of March 31, 2016, our operating lease payment obligations through 2030 totaled $290.2 million and is expected to increase as we lease additional revenue equipment. Additionally, for the three months ended March 31, 2016, we entered into new operating leases for revenue equipment totaling $29.5 million in future lease payments, payable over an average lease term of five years.

Our capital expenditures for the three months ended March 31, 2016 and 2015 were $19.8 million and $21.3 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.