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Note 11 - Long-term Debt

6 Months Ended

Jun. 30, 2013

NOTE 11 – LONG-TERM DEBT

Long-term debt consisted of the following:

	(in thousands)
	June 30, 2013			December 31, 2012
Revolving credit agreement (1)	$	80,500		$	83,513
Capitalized lease obligations and other long-term debt (2)		64,994			53,420
		145,494			136,933
Less current maturities		(15,835	)		(14,403	)
Long-term debt and capital leases, less current maturities	$	129,659		$	122,530

(1) On August 24, 2012, we entered into a $125.0 million revolving credit agreement (the “Revolver”) with Wells Fargo Capital Finance, LLC, as Administrative Agent, and PNC Bank, as Syndication Agent. The Revolver, which expires in 2017, is secured by substantially all of our assets, and includes letters of credit not to exceed $15.0 million. In addition, the $125.0 million Revolver has an accordion feature whereby we may elect to increase the size of the Revolver by up to $50.0 million, subject to customary conditions and lender participation. The Revolver is governed by a borrowing base with advances against eligible billed and unbilled accounts receivable and eligible revenue equipment, and has a first priority perfected security interest in all of the business assets (excluding tractors and trailers financed through capital leases and real estate) of the Company. Proceeds from the Revolver were used to pay off the outstanding balance of our credit agreement with a different lender. Proceeds were also used to fund certain fees and expenses associated with the Revolver and will be used to finance working capital, capital expenditures and for general corporate purposes.

The Revolver contains a minimum excess availability requirement equal to 15.0% of the maximum revolver amount (currently $18.8 million) and an annual capital expenditure limit ($71.0 million effective January 1, 2013, with increases thereafter). If a collateral cushion, referred to as suppressed availability, of at least $30.0 million in excess of the maximum facility size is not maintained, the advance rate on eligible revenue equipment is reduced by 5.0% and the value attributable to eligible revenue equipment starts to decline in monthly increments. The Revolver contains a total capital expenditure limitation. The Revolver does not contain any financial maintenance covenants. At June 30, 2013, the Company was in compliance with the terms of the Revolver.

The Revolver bears interest at rates typically based on the Wells Fargo prime rate or LIBOR, in each case plus an applicable margin. The Base Rate is equal to the greatest of (a) the prime lending rate as publicly announced from time to time by Wells Fargo Bank N.A., (b) the Federal Funds Rate plus 1.0%, and (c) the three month LIBOR Rate plus 1.0%. The Base Rate at June 30, 2013 was 1.5%. The LIBOR Rate is the rate at which dollar deposits are offered to major banks in the London interbank market two business days prior to the commencement of the requested interest period. Most borrowings are expected to be based on the LIBOR rate option. The applicable margin ranges from 2.25% to 2.75% based on average excess availability and at June 30, 2013 it was 2.5%.

The Revolver includes usual and customary events of default for a facility of this nature and provides that, upon the occurrence and continuation of an event of default, payment of all amounts payable under the Revolver may be accelerated, and the lenders’ commitments may be terminated. The Revolver contains certain restrictions and covenants relating to, among other things, dividends, liens, acquisitions and dispositions, affiliate transactions and share repurchases. At June 30, 2013, the Company was in compliance with all of the covenants of the Revolver.

Applicable Margin means, as of any date of determination, the following margin based upon the most recent average excess availability calculation; provided, however, that for the period from the closing date through the testing period ended June 30, 2013, the Applicable Margin was at Level II and at any time that an Event of Default exists, the Applicable Margin shall be at Level III.

Level	Average Excess Availability				Applicable Margin in respect of Base Rate Loans under the Revolver		Applicable Margin in respect of LIBOR Rate Loans under the Revolver
I			≥	$50,000,000		1.25%		2.25%
II	<	$50,000,000	but ≥	$30,000,000		1.50%		2.50%
III	<	$30,000,000				1.75%		2.75%

We paid a $1.5 million closing fee. In addition, the Company is required to pay a fee on the unused amount of the Revolver as set forth in the table below, which is due and payable monthly in arrears. For the period from the closing date through June 30, 2013, the unused fee was at Level II.

Level	Average Unused Portion of the Revolver plus Outstanding Letters of Credit		Applicable Unused Revolver Fee Margin
I	>	$60,000,000		0.375%
II	<	$60,000,000		0.500%

There were no overnight borrowings under the Revolver at June 30, 2013. The interest rate including all borrowings made under the Revolver at June 30, 2013 was 2.7%. The weighted average interest rate on the Company’s borrowings under the agreement for the three months ended June 30, 2013 was 3.1%. A quarterly commitment fee is payable on the unused portion of the credit line and at June 30, 2013, the rate was 0.5% per annum. The Revolver is collateralized by all non-leased revenue equipment having a net book value of approximately $182.1 million at June 30, 2013, and all billed and unbilled accounts receivable. As the Company reprices its debt on a monthly basis, the borrowings under the Revolver approximate its fair value. At June 30, 2013, the Company had outstanding $2.7 million in letters of credit and had approximately $23.0 million available under the Revolver (net of the minimum availability we are required to maintain of approximately $18.8 million).

(2) Capitalized lease obligations in the amount of $64.6 million have various termination dates extending through January 2017 and contain renewal or fixed price purchase options. The effective interest rates on the leases range from 1.6% to 4.0% at June 30, 2013. The lease agreements require us to pay property taxes, maintenance and operating expenses.

In May 2012, the Company entered into a long-term financing agreement in the amount of approximately $360,000 for the purchase of information technology related hardware. The agreement, which is scheduled to mature on May 31, 2014, is payable in annual installments of principal and interest of approximately $122,000, due on May 31, 2013 and 2014, and bears imputed interest at 3.16%. The balance of the agreement at June 30, 2013 was approximately $119,000.

In January 2013, the Company entered into a long-term financing agreement in the amount of approximately $295,000 for the purchase of information technology related hardware. The agreement, which is scheduled to mature on January 31, 2017, is payable in annual installments of principal and interest of approximately $63,000, due on January 31st of each year, and bears imputed interest at 3.05%. The balance of the agreement at June 30, 2013 was approximately $236,000.

In April 2013, the Company entered into a long-term financing agreement in the amount of approximately $300,000 for the purchase of information technology related hardware. The agreement, which is scheduled to mature on March 31, 2018, is payable in monthly installments of principal and interest of approximately $5,600 and bears interest at 4.492%. The initial monthly payment of this financing agreement was due on May 1, 2013. The balance of the agreement on June 30, 2013 was approximately $288,400.

The current maturities of the above financing agreements amount to approximately $175,000.