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Long-Term Debt | 3 Months Ended
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Mar. 31, 2015
Debt Disclosure [Abstract] |
Long-Term Debt | 6. Long-Term Debt Long-term debt consists of the following:
|  |  | March 31, 2015 |  | December 31, 2014 |
|  |  | (In thousands) |
| 2014 Revolving Credit Facility (1) |  | $ - |  | $ - |
| 7.0% Senior Subordinated Notes due 2022 (the "7.0% Notes") |  | 200,000 |  | 200,000 |
| 5.0% Senior Subordinated Notes due 2023 (the "5.0% Notes") |  | 300,000 |  | 300,000 |
| Notes payable to a finance company bearing interest from 9.52% to 10.52% (with |  |  |  |  |
| a weighted average of 10.19%) |  | 3,496 |  | 4,367 |
| Mortgage notes to finance companies-fixed rate, bearing interest from 3.51% to 7.03% |  | 145,732 |  | 147,554 |
| Mortgage notes to finance companies-variable rate, bearing interest |  |  |  |  |
| at 1.25 to 3.50 percentage points above one-month LIBOR |  | 142,305 |  | 118,368 |
| Net debt discount and premium (2) |  | (1,724) |  | (1,761) |
| Other |  | 4,816 |  | 4,884 |
| Total debt |  | $ 794,625 |  | $ 773,412 |
| Less current maturities |  | (38,237) |  | (30,802) |
| Long-term debt |  | $ 756,388 |  | $ 742,610 |
| (1) The interest rate on the 2014 Revolving Credit Facility was 2.25% above LIBOR at March 31, 2015 and December 31, 2014. |
| (2) March 31, 2015 includes a $1.4 million discount associated with the 7.0% Notes, a $0.1 million premium associated with |
| notes payable to a finance company and a $0.4 million discount associated with mortgage notes payable. |
| December 31, 2014 includes a $1.5 million discount associated with the 7.0% Notes, a $0.1 million premium associated with |
| the notes payable to a finance company and a $0.4 million discount associated with mortgage notes payable. |
2014 Credit Facilities On July 23, 2014, Sonic entered into agreements to amend and restate its syndicated revolving credit agreement and syndicated new and used vehicle floor plan credit facilities. The amended and restated syndicated revolving credit agreement (the “2014 Revolving Credit Facility”) and the amended and restated syndicated new and used vehicle floor plan credit facilities (the “2014 Floor Plan Facilities” and, together with the 2014 Revolving Credit Facility, the “2014 Credit Facilities”) are scheduled to mature on August 15, 2019. Availability under the 2014 Revolving Credit Facility is calculated as the lesser of $225.0 million or a borrowing base calculated based on certain eligible assets, less the aggregate face amount of any outstanding letters of credit under the 2014 Revolving Credit Facility (the “Revolving Borrowing Base”). The 2014 Revolving Credit Facility may be increased at Sonic’s option up to $275.0 million upon satisfaction of certain conditions. Based on balances as of March 31, 2015, the Revolving Borrowing Base was approximately $181.8 million. As of March 31, 2015, Sonic had no outstanding borrowings and $25.5 million in outstanding letters of credit under the 2014 Revolving Credit Facility, resulting in total borrowing availability of $156.3 million under the 2014 Revolving Credit Facility. See Note 6, “Long-Term Debt,” of the notes to the consolidated financial statements in Sonic’s Annual Report on Form 10-K for the year ended December 31, 2014 for further discussion. 7.0% Senior Subordinated Notes On July 2, 2012, Sonic issued $200.0 million in aggregate principal amount of unsecured senior subordinated 7.0% Notes which mature on July 15, 2022. The 7.0% Notes were issued at a price of 99.11% of the principal amount thereof, resulting in a yield to maturity of 7.125%. Interest on the 7.0% Notes is payable semi-annually in arrears on January 15 and July 15 of each year. See Note 6, “Long-Term Debt,” of the notes to the consolidated financial statements in Sonic’s Annual Report on Form 10-K for the year ended December 31, 2014 for further discussion. 5.0% Senior Subordinated Notes On May 9, 2013, Sonic issued $300.0 million in aggregate principal amount of unsecured senior subordinated 5.0% Notes which mature on May 15, 2023. The 5.0% Notes were issued at a price of 100.0% of the principal amount thereof. Interest on the 5.0% Notes is payable semi-annually in arrears on May 15 and November 15 of each year. See Note 6, “Long-Term Debt,” of the notes to the consolidated financial statements in Sonic’s Annual Report on Form 10-K for the year ended December 31, 2014 for further discussion. Notes Payable to a Finance Company Three notes payable (due October 2015 and August 2016) were assumed in connection with an acquisition in 2004 (the “Assumed Notes”). Sonic recorded the Assumed Notes at fair value using an interest rate of 5.35%. The interest rate used to calculate the fair value was based on a quoted market price for notes with similar terms as of the date of assumption. As a result of calculating the fair value, a premium of $7.3 million was recorded that is being amortized over the lives of the Assumed Notes. At March 31, 2015, the outstanding principal balance on the Assumed Notes was approximately $3.5 million with a remaining unamortized premium balance of approximately $0.1 million. Mortgage Notes At March 31, 2015, Sonic had mortgage financing totaling approximately $288.0 million related to approximately 30% of its operating properties. These mortgage notes require monthly payments of principal and interest through their respective maturities and are secured by the underlying properties. Maturity dates range between 2015 and 2033. The weighted average interest rate was 3.57% at March 31, 2015. Covenants Sonic was in compliance with the covenants under the 2014 Credit Facilities as of March 31, 2015. Financial covenants include required specified ratios (as each is defined in the 2014 Credit Facilities) of:
|  |  | Covenant |
|  |  |  |  | Minimum |  | Maximum |
|  |  | Minimum |  | Consolidated |  | Consolidated |
|  |  | Consolidated |  | Fixed Charge |  | Total Lease |
|  |  | Liquidity |  | Coverage |  | Adjusted Leverage |
|  |  | Ratio |  | Ratio |  | Ratio |
| Required ratio |  | 1.05 |  | 1.20 |  | 5.50 |
| March 31, 2015 actual |  | 1.21 |  | 1.64 |  | 4.16 |
The 2014 Credit Facilities contain events of default, including cross-defaults to other material indebtedness, change of control events and events of default customary for syndicated commercial credit facilities. Upon the future occurrence of an event of default, Sonic could be required to immediately repay all outstanding amounts under the 2014 Credit Facilities. In addition, many of Sonic’s facility leases are governed by a guarantee agreement between the landlord and Sonic that contains financial and operating covenants. The financial covenants are identical to those under the 2014 Credit Facilities with the exception of one financial covenant related to the ratio of EBTDAR to Rent (as defined in the lease agreements) with a required ratio of no less than 1.50 to 1.00. As of March 31, 2015, the ratio was 3.59 to 1.00. Derivative Instruments and Hedging Activities Sonic has interest rate cash flow swap agreements to effectively convert a portion of its LIBOR-based variable rate debt to a fixed rate. The fair value of these swap positions at March 31, 2015 was a net liability of approximately $12.5 million, with $7.0 million included in other accrued liabilities and $5.5 million included in other long-term liabilities in the accompanying condensed consolidated balance sheets. The fair value of these swap positions at December 31, 2014 was a net liability of approximately $11.1 million, with $8.2 million included in other accrued liabilities and $3.5 million included in other long-term liabilities, offset partially by an asset of approximately $0.6 million included in other assets in the accompanying condensed consolidated balance sheets. Under the terms of these cash flow swaps, Sonic will receive and pay interest based on the following:
| Notional Amount |  | Pay Rate |  | Receive Rate (1) |  | Maturing Date |
| (In millions) |  |  |  |  |  |  |
| $ 2.7 |  | 7.100% |  | one-month LIBOR + 1.50% |  | July 10, 2017 |
| $ 8.5 |  | 4.655% |  | one-month LIBOR |  | December 10, 2017 |
| $ 7.3 | (2) | 6.860% |  | one-month LIBOR + 1.25% |  | August 1, 2017 |
| $ 100.0 |  | 3.280% |  | one-month LIBOR |  | July 1, 2015 |
| $ 100.0 |  | 3.300% |  | one-month LIBOR |  | July 1, 2015 |
| $ 6.3 | (2) | 6.410% |  | one-month LIBOR + 1.25% |  | September 12, 2017 |
| $ 50.0 |  | 3.240% |  | one-month LIBOR |  | July 1, 2015 |
| $ 50.0 |  | 3.070% |  | one-month LIBOR |  | July 1, 2015 |
| $ 100.0 | (3) | 2.065% |  | one-month LIBOR |  | June 30, 2017 |
| $ 100.0 | (3) | 2.015% |  | one-month LIBOR |  | June 30, 2017 |
| $ 200.0 | (3) | 0.788% |  | one-month LIBOR |  | July 1, 2016 |
| $ 50.0 | (4) | 1.320% |  | one-month LIBOR |  | July 1, 2017 |
| $ 250.0 | (5) | 1.887% |  | one-month LIBOR |  | June 30, 2018 |
| $ 25.0 | (4) | 2.080% |  | one-month LIBOR |  | July 1, 2017 |
| $ 100.0 | (3) | 1.560% |  | one-month LIBOR |  | July 1, 2017 |
| (1) The one-month LIBOR rate was approximately 0.179% at March 31, 2015. |
| (2) Changes in fair value are recorded through earnings. |
| (3) The effective date of these forward-starting swaps is July 1, 2015. |
| (4) The effective date of these forward-starting swaps is July 1, 2016. |
| (5) The effective date of this forward-starting swap is July 3, 2017. |
For the interest rate swaps not designated as cash flow hedges (changes in the fair value of these swaps are recognized through earnings) and amortization of amounts in accumulated other comprehensive income (loss) related to terminated cash flow swaps, certain benefits and charges were included in interest expense, other, net, in the accompanying condensed consolidated statements of income. For the three months ended March 31, 2015 and 2014, these items were a benefit of approximately $0.1 million. For the cash flow swaps that qualify as cash flow hedges, the changes in the fair value of these swaps have been recorded in other comprehensive income (loss), net of related income taxes, in the accompanying condensed consolidated statements of comprehensive income and are disclosed in the supplemental schedule of non-cash financing activities in the accompanying condensed consolidated statements of cash flows. The incremental interest expense (the difference between interest paid and interest received) related to these cash flow swaps was approximately $2.3 million and $2.9 million for the three months ended March 31, 2015 and 2014, respectively, and is included in interest expense, other, net, in the accompanying condensed consolidated statements of income and the interest paid amount disclosed in the supplemental disclosures of cash flow information in the accompanying condensed consolidated statements of cash flows. The estimated net expense expected to be reclassified out of accumulated other comprehensive income (loss) into results of operations during the next twelve months is approximately $4.3 million.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 19, 20, 22 -Article 5 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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