NOTE G – LONG‑TERM DEBT AND FINANCING ARRANGEMENTS

Long‑Term Debt Obligations

Long-term debt consisted of borrowings outstanding under the Company’s revolving credit facility and accounts receivable securitization program, both of which are 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 Asset-Based segment operations), real estate, and certain other equipment as follows:


	December 31
	2017		2016
	(in thousands)
Credit Facility (interest rate of 3.1%(1) at December 31, 2017)	$	70,000	$	70,000
Accounts receivable securitization borrowings (interest rate of 2.3% at December 31, 2017)		45,000		35,000
Notes payable (weighted-average interest rate of 2.7% at December 31, 2017)		153,441		138,032
Capital lease obligations (weighted-average interest rate of 5.7% at December 31, 2017)		478		641
		268,919		243,673
Less current portion		61,930		64,143
Long-term debt, less current portion	$	206,989	$	179,530

⁽¹⁾

The interest rate swap mitigates interest rate risk by effectively converting $50.0 million of borrowings under the Credit Facility from variable-rate interest to fixed-rate interest with a per annum rate of 3.35% based on the margin of the Credit Facility as of December 31, 2017 and 2016.

Scheduled maturities of long‑term debt obligations as of December 31, 2017 were as follows:


					Accounts
					Receivable
			Credit		Securitization		Notes		Capital Lease
	Total		Facility(1)		Program(1)		Payable		Obligations(2)
	(in thousands)
2018	$	68,822	$	2,329	$	1,223	$	65,036	$	234
2019		42,156		2,598		1,396		37,922		240
2020		71,393		2,679		45,358		23,329		27
2021		24,343		2,696		—		21,640		7
2022		84,275		71,392		—		12,882		1
Thereafter		404		—		—		404		—
Total payments		291,393		81,694		47,977		161,213		509
Less amounts representing interest		22,474		11,694		2,977		7,772		31
Long-term debt	$	268,919	$	70,000	$	45,000	$	153,441	$	478

⁽¹⁾

The future interest payments included in the scheduled maturities due are calculated using variable interest rates based on the LIBOR swap curve, plus the anticipated applicable margin.

⁽²⁾

Minimum payments of capital lease obligations include maximum amounts due under rental adjustment clauses contained in the capital lease agreements.

Assets securing notes payable or held under capital leases at December 31 were included in property, plant and equipment as follows:


	2017		2016
	(in thousands)
Revenue equipment	$	269,950	$	220,566
Land and structures (service centers)		1,794		1,794
Software		486		—
Service, office, and other equipment		100		7
Total assets securing notes payable or held under capital leases		272,330		222,367
Less accumulated depreciation and amortization(1)		87,691		61,643
Net assets securing notes payable or held under capital leases	$	184,639	$	160,724

⁽¹⁾

Amortization of assets held under capital leases and depreciation of assets securing notes payable are included in depreciation expense.

The Company’s long‑term debt obligations have a weighted‑average interest rate of 2.8% at December 31, 2017. The Company paid interest of $5.8 million, $4.5 million, and $4.0 million in 2017, 2016, and 2015, respectively, net of capitalized interest which totaled $0.9 million, $0.7 million, and $0.2 million for 2017, 2016 and 2015, respectively.

Financing Arrangements

Credit Facility

The Company has a revolving credit facility (the “Credit Facility”) under its second amended and restated credit agreement which was amended and restated in July 2017 (the “Credit Agreement”) to increase the initial maximum credit amount of its Credit Facility from $150.0 million to $200.0 million including a swing line facility of an aggregate amount of up to $20.0 million and a letter of credit sub-facility providing for the issuance of letters of credit up to an aggregate amount of $20.0 million, and to increase the additional revolving commitments or incremental term loans the Company may request under the facility from $75.0 million to $100.0 million, subject to certain additional conditions as provided in the Credit Agreement. The maturity date of the Credit Facility was extended to July 7, 2022. As of December 31, 2017, we had available borrowing capacity of $130.0 million under our Credit Facility.

Principal payments under the Credit Facility are due upon maturity; however, borrowings may be repaid, at the Company’s discretion, in whole or in part at any time, without penalty, subject to required notice periods and compliance with minimum prepayment amounts. Borrowings under the Credit Agreement can either be, at the Company’s election: (i) at an Alternate Base Rate (as defined in the Credit Agreement) plus a spread; or (ii) at a Eurodollar Rate (as defined in the Credit Agreement) plus a spread. The applicable spread is dependent upon the Company’s Adjusted Leverage Ratio (as defined in the Credit Agreement). 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 interest coverage ratio, a maximum adjusted leverage ratio, and limitations on incurrence of debt, investments, liens on assets, certain sale and leaseback transactions, transactions with affiliates, mergers, consolidations, purchases and sales of assets, and certain restricted payments. The Company was in compliance with the covenants under the Credit Agreement at December 31, 2017.

Interest Rate Swaps

The Company has a five-year interest rate swap agreement with a $50.0 million notional amount maturing on January 2, 2020. The Company receives floating‑rate interest amounts based on one-month LIBOR in exchange for fixed-rate interest payments of 1.85% over the life. The interest rate swap mitigates interest rate risk by effectively converting $50.0 million of borrowings under the Credit Facility from variable‑rate interest to fixed‑rate interest with a per annum rate of 3.35% based on the margin of the Credit Facility as of December 31, 2017. The fair value of the interest rate swap of $0.1 million was recorded in other long-term assets and $0.5 million was recorded in other long-term liabilities in the consolidated balance sheet at December 31, 2017 and 2016, respectively. The interest rate swap is subject to certain customary provisions that could allow the counterparty to request immediate payment of the fair value liability upon violation of any or all of the provisions. The Company was in compliance with all provisions of the interest rate swap agreement at December 31, 2017.

In June 2017, the Company entered into a forward-starting interest rate swap agreement with a $50.0 million notional amount which will start on January 2, 2020 upon maturity of the current interest rate swap agreement, and mature on June 30, 2022. The Company will receive floating-rate interest amounts based on one-month LIBOR in exchange for fixed-rate interest payments of 1.99% over the life of the agreement. The interest rate swap mitigates interest rate risk by effectively converting $50.0 million of borrowings under the Credit Facility from variable-rate interest to fixed-rate interest with a per annum rate of 3.49% based on the margin of the Credit Facility as of December 31, 2017. The fair value of the interest rate swap of $0.4 million was recorded in other long-term assets in the consolidated balance sheet at December 31, 2017.

The unrealized gain or loss on the interest rate swap instruments was reported as a component of accumulated other comprehensive loss, net of tax, in stockholders’ equity at December 31, 2017 and 2016, and the change in the unrealized income (loss) on the interest rate swaps for the years ended December 31, 2017 and 2016 was reported in other comprehensive income, net of tax, in the consolidated statement of comprehensive income. The interest rate swaps are subject to certain customary provisions that could allow the counterparty to request immediate payment of the fair value liability upon violation of any or all of the provisions. The Company was in compliance with all provisions of the interest rate swap agreements at December 31, 2017.

Accounts Receivable Securitization Program

In March 2017, the Company entered into a second amendment to extend the maturity date of its accounts receivable securitization program until April 1, 2020 and increase the amount of cash proceeds provided under the facility from $100.0 million to $125.0 million, with an accordion feature allowing the Company to request additional borrowings up to $25.0 million, subject to certain conditions. Under this program, 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. Borrowings under the accounts receivable securitization program 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. The Company borrowed $10.0 million under the accounts receivable securitization program during the second quarter of 2017. As of December 31, 2017 and 2016, $45.0 million and $35.0 million, respectively, was borrowed under the accounts receivable securitization program. The Company was in compliance with the covenants under the accounts receivable securitization program as of December 31, 2017.

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 program. As of December 31, 2017, standby letters of credit of $17.7 million have been issued under the program, which reduced the available borrowing capacity to $62.3 million.

Letter of Credit Agreements and Surety Bond Programs

As of December 31, 2017 and 2016, the Company had letters of credit outstanding of $18.3 million and $19.6 million, respectively, (including $17.7 million and $18.0 million, respectively, issued under the accounts receivable securitization program) of which $1.0 million was collateralized by restricted cash as of December 31, 2016.

The Company has programs in place with multiple surety companies for the issuance of surety bonds in support of its self-insurance program. As of December 31, 2017 and 2016, surety bonds outstanding related to the self-insurance program totaled $60.4 million and $56.5 million, respectively.

Notes Payable

The Asset-Based segment has financed the purchase of certain revenue equipment, other equipment, and software through promissory note arrangements, including $84.2 million, $83.4 million, and $80.6 million for revenue equipment and software in 2017, 2016, and 2015, respectively.