XML 53 R13.htm IDEA: XBRL DOCUMENT

Note 7 - Long-Term Debt

6 Months Ended

Jun. 30, 2014

NOTE 7 – LONG-TERM DEBT

Long-term debt consisted of the following:

	(in thousands)
	June 30,			December 31,
	2014			2013
Revolving credit agreement (1)	$	70,700		$	64,000
Capitalized lease obligations and other long-term debt (2)		54,045			63,868
		124,745			127,868
Less current maturities		(21,743	)		(19,025	)
Long-term debt and capital leases, less current maturities	$	103,002		$	108,843


	(1)	In 2012, we entered into a $125.0 million Revolver with Wells Fargo Capital Finance, LLC, as Administrative Agent, and PNC Bank. The Revolver, which expires in 2017, is collateralized by substantially all of our assets, and includes letters of credit not to exceed $15.0 million. In addition, the 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 are used to finance working capital, to fund 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 ($73.5 million in 2014 and with further increases thereafter). Under the Revolver’s terms, we are required to maintain a minimum collateral cushion above the maximum facility size, referred to as “suppressed availability.” During 2014 (after giving effect to an amendment to the Revolver signed on March 14, 2014, and effective as of December 31, 2013), if we do not maintain the minimum suppressed availability threshold of $30.0 million, our borrowing availability will reduce by the amount of the shortfall below $30.0 million. After 2014, if we do not maintain the minimum suppressed availability threshold, the advance rate on eligible revenue equipment will reduce and a permanent amortization of the revenue equipment portion of our borrowing base at the rate of 1/72nd, or approximately $1.5 million, per month would result based on the June 30, 2014, revenue equipment collateral. At June 30, 2014, our suppressed availability was $41.8 million, which did not reduce our borrowing availability. Future fluctuations in the amount and value of equipment serving as collateral under the Revolver will impact our borrowing availability. If our suppressed availability falls below $20.0 million, there will be additional restrictions on which items of revenue equipment may be included in our eligible revenue equipment. The Revolver does not contain any financial maintenance covenants.

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, 2014 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, 2014, 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 also includes a cross default to other indebtedness with certain monetary threshold and acceleration requirements. Although there are no negative covenants relating to financial ratios or minimum balance sheet requirements, the Revolver contains certain restrictions and covenants relating to, among other things, dividends, liens, acquisitions and dispositions outside of the ordinary course of business and affiliate transactions.

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, 2014, 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 are 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, 2014, 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%

		Overnight borrowings were $0.7 million under the Revolver at June 30, 2014. The interest rate on our overnight borrowings under the Revolver at June 30, 2014 was 4.75%. The interest rate including all borrowings made under the Revolver at June 30, 2014 was 3.0%. The weighted average interest rate on our borrowings under the Revolver for the three months ended June 30, 2014 was 3.0%. The Revolver is collateralized by all non-leased revenue equipment having a net book value of approximately $140.2 million at June 30, 2014, and all billed and unbilled accounts receivable. As we reprice our debt on a monthly basis, the borrowings under the Revolver approximate its fair value. At June 30, 2014, we had outstanding $3.8 million in letters of credit and had approximately $31.7 million available under the Revolver (net of the minimum availability we are required to maintain of approximately $18.8 million).

	(2)	Capitalized lease obligations relating to revenue equipment in the amount of $53.6 million have various termination dates extending through August 2018 and contain renewal or fixed price purchase options. The effective interest rates on the leases range from 1.6% to 3.1% at June 30, 2014. The lease agreements require us to pay property taxes, maintenance and operating expenses.

		In May 2012, we entered into a long-term financing agreement in the amount of approximately $360,000 for the purchase of information technology related hardware. The agreement matured on May 31, 2014, and was payable in annual installments of principal and interest of approximately $122,000, due May 31, 2013 and 2014, and bore imputed interest at 3.2%.

		In January 2013, we 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 3.1%. The balance of the agreement at June 30, 2014 was approximately $179,000.

		In April 2013, we 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 4.5%. The balance of the agreement at June 30, 2014 was approximately $230,000.

		The current maturities of the above financing agreements amount to approximately $118,000.