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LONG-TERM DEBT AND FINANCING ARRANGEMENTS | 6 Months Ended
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Jun. 30, 2013
LONG-TERM DEBT AND FINANCING ARRANGEMENTS |
LONG-TERM DEBT AND FINANCING ARRANGEMENTS | NOTE F — LONG-TERM DEBT AND FINANCING ARRANGEMENTS Long-Term Debt Obligations Long-term debt consisted of a Term Loan under the Credit Agreement further described in Financing Arrangements within this Note and notes payable and capital lease obligations related to the financing of revenue equipment (tractors and trailers used primarily in ABF’s operations), real estate, and certain other equipment as follows:
|  | June 30 |  | December 31 |
|  | 2013 |  | 2012 |
|  | (in thousands) |
Term Loan (interest rate of 1.7% at June 30, 2013) |  | $ | 90,000 |  | $ | 95,000 |
Notes payable (weighted average interest rate of 3.0% at June 30, 2013) |  | 30,142 |  | 37,756 |
Capital lease obligations (weighted average interest rate of 4.4% at June 30, 2013) |  | 13,834 |  | 23,229 |
|  | 133,976 |  | 155,985 |
Less current portion |  | 37,030 |  | 43,044 |
Long-term debt, less current portion |  | $ | 96,946 |  | $ | 112,941 |
Scheduled maturities of long-term debt obligations as of June 30, 2013 were as follows:
|  |  |  | Term |  | Notes |  | Capital Lease |
|  | Total |  | Loan(1) |  | Payable |  | Obligations(2) |
|  | (in thousands) |
Due in one year or less |  | $ | 39,651 |  | $ | 14,026 |  | $ | 16,728 |  | $ | 8,897 |
Due after one year through two years |  | 31,727 |  | 16,489 |  | 12,741 |  | 2,497 |
Due after two years through three years |  | 23,102 |  | 19,083 |  | 1,586 |  | 2,433 |
Due after three years through four years |  | 46,605 |  | 46,389 |  | — |  | 216 |
Due after four years through five years |  | 222 |  | — |  | — |  | 222 |
Due after five years |  | 365 |  | — |  | — |  | 365 |
Total payments |  | 141,672 |  | 95,987 |  | 31,055 |  | 14,630 |
Less amounts representing interest |  | 7,696 |  | 5,987 |  | 913 |  | 796 |
Long-term debt |  | $ | 133,976 |  | $ | 90,000 |  | $ | 30,142 |  | $ | 13,834 |
(1) The future interest payments included in the scheduled maturities due under the Term Loan are calculated using variable interest rates based on the LIBOR swap curve, plus the anticipated applicable margin (see Term Loan within the Financing Arrangements section of this Note). (2) Minimum payments of capital lease obligations include maximum amounts due under rental adjustment clauses contained in the capital lease agreements. Assets securitized by notes payable or held under capital leases were included in property, plant and equipment as follows:
|  | June 30 |  | December 31 |
|  | 2013 |  | 2012 |
|  | (in thousands) |
Land and structures (terminals) |  | $ | 1,794 |  | $ | 1,794 |
Revenue equipment |  | 73,590 |  | 93,004 |
Service, office, and other equipment |  | 1,503 |  | 1,813 |
|  | 76,887 |  | 96,611 |
Less accumulated amortization(1) |  | 30,519 |  | 35,183 |
Net assets securitized by notes payable or held under capital leases |  | $ | 46,368 |  | $ | 61,428 |
(1) Amortization of assets under capital leases and notes payable is included in depreciation expense. Financing Arrangements Term Loan The Company has a credit agreement (the “Credit Agreement”) with a syndicate of financial institutions. Pursuant to the Credit Agreement, a five-year, $100.0 million secured term loan (the “Term Loan”) was provided to finance a portion of the cost of the acquisition of Panther (see Note C). The Credit Agreement also provides the Company with the right to request revolving commitments thereunder up to an aggregate amount of $75.0 million, subject to the satisfaction of certain additional conditions provided in the agreement. There have been no borrowings under the revolving commitments. The Term Loan is secured by a lien on certain of the Company’s assets and pledges of the equity interests in certain subsidiaries (with these assets and subsidiaries defined in the Credit Agreement). The Term Loan requires quarterly principal payments and monthly interest payments, with remaining amounts outstanding due upon the maturity date of June 15, 2017. Borrowings under the Term Loan can be repaid in whole or in part at any time, without penalty, subject to required notice periods and compliance with minimum prepayment amounts. The Term Loan allows for the election of the interest rate at a base rate or LIBOR plus a margin based on the adjusted leverage ratio, as defined, which is measured at the end of each fiscal quarter. The Credit Agreement contains conditions, representations and warranties, events of default, and indemnification provisions that are customary for financings of this type including, but not limited to, a minimum fixed charge coverage ratio, a maximum adjusted leverage ratio, and limitations on incurrence of debt, investments, liens on assets, transactions with affiliates, mergers, consolidations, and purchases and sales of assets. As of June 30, 2013, the Company was in compliance with the covenants. For the reporting period ended June 30, 2013, the Company’s fixed charge coverage ratio was 1.6 to 1.0, compared to the minimum ratio required by the Credit Agreement of 1.25 to 1.0. Accounts Receivable Securitization Program The Company has an accounts receivable securitization program with PNC Bank which provides for cash proceeds of an amount up to $75.0 million. Under this facility, which matures on June 15, 2015, certain subsidiaries of the Company continuously sell a designated pool of trade accounts receivables to a wholly owned subsidiary which, in turn, may borrow funds on a revolving basis. This wholly owned consolidated subsidiary is a separate bankruptcy-remote entity, and its assets would be available only to satisfy the claims related to the lender’s interest in the trade accounts receivables. Advances under the facility bear interest based upon LIBOR, plus a margin, and an annual facility fee. The securitization agreement contains representations and warranties, affirmative and negative covenants, and events of default that are customary for financings of this type, including a maximum adjusted leverage ratio covenant. As of June 30, 2013, the Company was in compliance with the covenants. There have been no borrowings under this facility. The accounts receivable securitization program includes a provision under which the Company may request and the letter of credit issuer may issue standby letters of credit, primarily in support of workers’ compensation and third-party casualty claims liabilities in various states in which the Company is self-insured. The outstanding standby letters of credit reduce the availability of borrowings under the facility. As of June 30, 2013, standby letters of credit of $19.8 million have been issued under the facility, which reduced the available borrowing capacity to $55.2 million. As previously discussed in Note A, implementation of the 2013 ABF NMFA, the collective bargaining agreement for the contract period ending March 31, 2018, is pending ratification of the remaining supplemental agreements which were not approved by ABF’s IBT member employees on June 27, 2013. Until the collective bargaining agreement for the contract period subsequent to March 31, 2013 is in place, the accounts receivable securitization program requires the Company to maintain $50.0 million of available liquidity, which may consist of unrestricted cash, cash equivalents, and short-term investments on hand, available borrowing capacity under the accounts receivable securitization facility, or any other revolving liquidity facility of the Company. The Company has maintained compliance with this provision, and had $173.7 million of available liquidity, as defined, as of June 30, 2013. Letter of Credit Agreements The Company has agreements with certain financial institutions to provide collateralized facilities for the issuance of letters of credit (“LC Agreements”). These financial institutions issue letters of credit on behalf of the Company primarily in support of the self-insurance program previously discussed within this Note. The Company pays quarterly fees to the financial institutions based on the amount of letters of credit outstanding. The LC Agreements contain no financial ratios or financial covenants which the Company is required to maintain. The LC Agreements require cash or short-term investments to be pledged as collateral for outstanding letters of credit. As of June 30, 2013, the Company had letters of credit outstanding of $22.3 million (including $19.8 million which were issued under the accounts receivable securitization facility previously described within this Note), of which $1.9 million were collateralized by restricted cash under the LC Agreements. The Company had up to $73.1 million available as of June 30, 2013 for issuance of letters of credit, subject to the Company’s compliance with the requirements of issuance. The Company has programs in place with multiple surety companies for the issuance of partially secured or unsecured surety bonds in support of the self-insurance program previously discussed within this Note. As of June 30, 2013, surety bonds outstanding related to the collateralized self-insurance program totaled $13.3 million, which were collateralized by letters of credit of $3.8 million issued under the previously described accounts receivable securitization facility. Under separate uncollateralized bond programs, surety bonds outstanding related to the Company’s self-insurance program totaled $45.2 million as of June 30, 2013.

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- Definition The entire disclosure for debt and capital lease obligations can be reported. 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. Also includes descriptions and amounts of capital leasing arrangements that consist of direct financing, sales type and leveraged leases. Disclosure may include the effect on the balance sheet and the income statement resulting from a change in lease classification for leases that at inception would have been classified differently had guidance been in effect at the inception of the original lease. + References No definition available. + Details
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