Note 7: Debt

Debt is summarized as follows:



	Effective	June 30	December 31	June 30
in thousands	Interest Rate	2015	2014	2014
Short-term Debt
Bank line of credit (expires 2020) 1	1.75%	$ 138,500	$ 0	$ 0
Total short-term debt		$ 138,500	$ 0	$ 0
Long-term Debt
10.125% notes due 2015 2	9.575%	$ 150,000	$ 150,000	$ 150,000
6.50% notes due 2016	n/a	0	125,001	125,001
6.40% notes due 2017	n/a	0	218,633	218,633
7.00% notes due 2018	7.87%	272,512	400,000	400,000
10.375% notes due 2018	10.625%	250,000	250,000	250,000
7.50% notes due 2021	7.75%	600,000	600,000	600,000
8.85% notes due 2021	8.88%	6,000	6,000	6,000
Industrial revenue bond due 2022 3	0.14%	14,000	14,000	14,000
4.50% notes due 2025	4.65%	400,000	0	0
7.15% notes due 2037	8.05%	240,188	240,188	240,188
Other notes 4	6.21%	613	637	769
Unamortized discounts and debt issuance costs	n/a	(25,975)	(22,716)	(25,146)
Unamortized deferred interest rate swap gain 5	n/a	523	3,036	4,032
Total long-term debt including current maturities 6		$ 1,907,861	$ 1,984,779	$ 1,983,477
Less current maturities		14,124	150,137	158
Total long-term debt		$ 1,893,737	$ 1,834,642	$ 1,983,319
Estimated fair value of long-term debt		$ 2,140,942	$ 2,092,673	$ 2,289,118


1	Borrowings are shown as short-term due to our intent to repay within twelve months. The effective interest rate reflects the margin added to LIBOR for LIBOR-based borrowings. We also pay fees for unused borrowing capacity and standby letters of credit.
2	The 10.125% notes due 2015 are classified as long-term debt (not current maturities) as of June 30, 2015 due to our intent and ability to refinance these notes at maturity using our line of credit.
3	As of June 30, 2015, we had initiated prepayment; as such, this debt is classified as current maturities of long-term debt.
4	Non-publicly traded debt.
5	The unamortized deferred gain was realized upon the August 2011 settlement of interest rate swaps as discussed in Note 6.
6	The debt balances as of December 31, 2014 and June 30, 2014 have been adjusted to reflect our early adoption of ASU 2015-03 and related election as disclosed in Note 17.

Our total debt is presented in the table above net of unamortized discounts from par, unamortized deferred debt issuance costs and unamortized deferred interest rate swap settlement gains from fair value hedges. Discounts, deferred debt issuance costs and deferred swap settlement gains are amortized using the effective interest method over the terms of the respective notes resulting in $2,067,000 of net interest expense for these items for the six months ended June 30, 2015.

The estimated fair value of our debt presented in the table above was determined by: (1) averaging several asking price quotes for the publicly traded notes and (2) assuming par value for the remainder of the debt. The fair value estimates for the publicly traded notes were based on Level 2 information (as defined in Note 5) as of their respective balance sheet dates.

LINE OF CREDIT

In June 2015, we cancelled our secured $500,000,000 line of credit and entered into an unsecured $750,000,000 line of credit that expires in June 2020.

The line of credit contains affirmative, negative and financial covenants customary for an unsecured facility. The primary negative covenant limits our ability to incur secured debt. The financial covenants are: (1) a maximum ratio of debt to EBITDA of 3.5:1 through September 2016 and 3.25:1 thereafter, and (2) a minimum ratio of EBITDA to net cash interest expense of 3.0:1. As of June 30, 2015, we were in compliance with the line of credit covenants.

Borrowings bear interest at either LIBOR plus a credit margin ranging from 1.00% to 2.00%, or SunTrust Bank’s base rate (generally, its prime rate) plus a credit margin ranging from 0.00% to 1.00%. The credit margin for both LIBOR and base rate borrowings is determined by our ratio of debt to EBITDA. Standby letters of credit, which are issued under the line of credit and reduce availability, are charged a fee equal to the credit margin for LIBOR borrowings plus 0.175%. We also pay a commitment fee on the daily average unused amount of the line of credit that ranges from 0.10% to 0.35% based on our ratio of debt to EBITDA. As of June 30, 2015, the credit margin for LIBOR borrowings was 1.75%, the credit margin for base rate borrowings was 0.75% and the commitment fee was 0.25%.

As of June 30, 2015, our available borrowing capacity was $558,281,000 and usage was as follows:

$138,500,000 was borrowed

$53,219,000 was used to provide support for outstanding standby letters of credit

The current borrowings on our line of credit are shown as short-term due to our intent to repay within twelve months.

TERM DEBT

All of our term debt is unsecured. All such debt, other than the $14,000,000 industrial revenue bond and the $613,000 of other notes, is governed by two essentially identical indentures that contain customary investment-grade type covenants. The primary covenant in both indentures limits the amount of secured debt we may incur without ratably securing such debt. As of June 30, 2015, we were in compliance with all of the term debt covenants.

The industrial revenue bond is supported by a standby letter of credit issued under our line of credit. As such, the primary covenants pertaining to the industrial revenue bond are those contained in our line of credit agreement. In June 2015 we issued a notice of our intent to repay the debt in August 2015 (such repayment will not incur any prepayment penalties). As such, the industrial revenue bond is classified as current maturities of long-term debt in the accompanying Condensed Consolidated Balance Sheet as of June 30, 2015.

In March 2015, we issued $400,000,000 of 4.50% senior notes due 2025. Proceeds (net of underwriter fees and other transaction costs) of $395,207,000 were partially used to fund the March 30, 2015 purchase, via tender offer, of $127,303,000 principal amount (32%) of the 7.00% notes due 2018. The March 2015 debt purchase cost $145,899,000, including an $18,140,000 premium above the principal amount of the notes and transaction costs of $456,000. The premium primarily reflects the trading price of the notes relative to par prior to the tender offer commencement. Additionally, we recognized $3,138,000 of non-cash costs associated with the acceleration of a proportional amount of unamortized discounts, deferred debt issuance costs, and deferred interest rate swap settlement gains and losses. The combined first quarter charge of $21,734,000 is presented in the accompanying Condensed Consolidated Statement of Comprehensive Income as a component of interest expense for the six month period ended June 30, 2015.

The remaining net proceeds from the March 2015 debt issuance, together with cash on hand and borrowings under our line of credit, funded: (1) the April 2015 redemption of $218,633,000 principal amount (100%) of the 6.40% notes due 2017, (2) the April 2015 redemption of $125,001,000 principal amount (100%) of the 6.50% notes due 2016 and (3) the April 2015 purchase, via the tender offer commenced in March 2015 of $185,000 principal amount (less than 1%) of the 7.00% notes due 2018. The April 2015 debt purchases cost $385,024,000, including a $41,153,000 premium above the principal amount of the notes and transaction costs of $52,000. The premium primarily reflects the make-whole value of the 2016 notes and the 2017 notes. Additionally, we recognized $4,136,000 of non-cash costs associated with the acceleration of unamortized discounts, deferred debt issuance costs, and deferred interest rate swap settlement gains and losses. The combined second quarter charge of $45,341,000 is presented in the accompanying Condensed Consolidated Statement of Comprehensive Income as a component of interest expense for the six month period ended June 30, 2015.

Consistent with our intent and ability to refinance the 10.125% notes due 2015 via borrowing on our line of credit, such notes are classified as long-term debt in the accompanying Condensed Consolidated Balance Sheet as of June 30, 2015.

In March 2014, we purchased $506,366,000 principal amount of debt through a tender offer as follows: $374,999,000 of 6.50% notes due in 2016 and $131,367,000 of 6.40% notes due in 2017. This debt purchase was funded by the sale of our cement and concrete businesses in the Florida area as described in Note 16. The March 2014 debt purchases cost $579,659,000, including a $71,829,000 premium above the principal amount of the notes and transaction costs of $1,464,000. The premium primarily reflects the trading price of the notes relative to par prior to the tender offer commencement. Additionally, we recognized a net benefit of $344,000 associated with the acceleration of a proportional amount of unamortized discounts, deferred debt issuance costs, and deferred interest rate swap settlement gains and losses. The combined charge of $72,949,000 is presented in the accompanying Condensed Consolidated Statement of Comprehensive Income as a component of interest expense for the six month period ended June 30, 2014.