NOTE N — LONG-TERM DEBT

Long-term debt as of December 31 was as follows:

(in thousands)	2016			2015
Term loan	$	180,000		$	199,688
Term loan B	280,000			—
Revolving credit facility	—			132,000
Senior notes due 2018	—			200,000
Seller notes	11,110			19,838
Financing leases and other	18,245			21,134

Total debt before unamortized discount and debt issuance costs	489,355			572,660
Unamortized discount	(7,511		)	(1,820		)
Debt issuance costs, net	(9,194		)	(4,407		)

Total debt	$	472,650		$	566,433

Reported as:
Current portion of long-term debt	$	30,944		$	30,385
Long-term debt	441,706			536,048

Total debt	$	472,650		$	566,433

In accordance with ASU Nos. 2015-03 and 2015-15 debt issuance costs, net have been reclassified from other assets to a direct deduction from long-term debt as of December 31, 2015.

We apply ASC No. 470-50, Debt - Modifications and Extinguishments (ASC 470-50), which defines a debt modification. ASC 470-50 establishes that a modification be recorded as a debt discount and amortized to interest expense.

Credit Agreement - Revolving Credit Facility and Term Loan

On June 17, 2013, we entered into a five year credit agreement (as amended from time to time, the “Credit Agreement”) that provided senior secured facilities of up to $425.0 million. The Credit Agreement originally included a $200.0 million revolving credit facility and a $225.0 million term loan facility both of which mature on June 17, 2018 and were subject to a leverage-based pricing grid in which the applicable interest rate is dependent on our leverage ratio.

From January 1, 2015 through December 31, 2016, we entered into seven agreements relating to our Credit Agreement that waived certain actual and potential events of default and amended various covenants and other provisions including, among other things, raising the interest rate and reducing the amounts available pursuant to the revolving credit facility.

The Credit Agreement (giving effect to all amendments and waivers) provides for (i) a revolving credit facility with aggregate revolving commitments of $118.3 million as of December 31, 2016 (subject to the mandatory commitment reductions and usage limitations described below) that matures in June 2018, and (ii) a $225.0 million term loan facility due in quarterly principal installments that began at 0.625% of the initial $225.0 million borrowed and then escalated to 1.25% on September 30, 2014, to 1.875% on September 30, 2015, to 2.5% on September 30, 2016, and will escalate to 3.75% on September 30, 2017. A final principal installment of approximately $143.4 million is due at maturity in June 2018. From time to time, mandatory prepayments may be required as a result of the incurrence of certain types of debt, certain asset sales, or other events as defined in the Credit Agreement. No such mandatory prepayments were required during 2016 and 2015.

We previously received $34.1 million in federal income tax refunds with respect to tax year 2015 or earlier, and the effect of those previous receipts has been incorporated into the determination of our $118.3 million in aggregate revolving commitments. If we receive additional federal income tax refunds related to tax year 2015 or earlier, then 50% of our net cash proceeds in respect of those refunds will be applied as a further permanent reduction of the aggregate revolving commitments under the Credit Agreement, except that in no event shall the commitment be reduced to less than $108.0 million as a result of such refunds.

Until such time as (a) we have achieved a leverage ratio (as described below) for our then most recently ended fiscal quarter, of less than or equal to 4.00 to 1.00, and (b) we have delivered financial information and certain related materials for the fiscal periods ended March 31, 2015, June 30, 2015, September 30, 2015, December 31, 2015 and December 31, 2016, the amount that we can borrow under the Credit Agreement in the form of revolving loans, swing line loans and/or letters of credit is reduced by specified revolving usage limitation amounts depending on the fiscal quarter. The aggregate revolving credit commitment of $118.3 million is reduced by $13.9 million for periods from July 15, 2016 to September 30, 2016; $17.3 million for the three months ending December 31, 2016; $10.7 million for the three months ending March 31, 2017; $20.7 million for the nine months ending December 31, 2017; $10.7 million for the three months ending March 31, 2018; and $20.7 million for periods subsequent to March 31, 2018.

Borrowings under the Credit Agreement now bear interest at a variable rate per annum equal to (i) LIBOR plus 5.75%, or (ii) the base rate (which is the highest of (a) the administrative agent’s prime rate, (b) the federal funds rate plus 0.50% or (c) the sum of 1% plus one-month LIBOR) plus 4.75%. Due to various amendments to the debt agreement as mentioned above, the rates have increased from LIBOR plus 2.00% at December 31, 2015 and December 31, 2014. Interest rates on our debt were 5.52%, 2.43% and 2.17% at December 31, 2016, 2015 and 2014, respectively. Upon (a) our delivering the financial information and certain related materials for the fiscal periods ended March 31, 2015, June 30, 2015, September 30, 2015, December 31, 2015 and December 31, 2016, and (b) achievement of a leverage ratio (as described below), for our then most recently ended fiscal quarter, of less than or equal to 4.00 to 1.00, the margin for borrowings based on LIBOR will decrease to 4.00% per annum and the margin for borrowings based on the base rate will decrease to 3.00% per annum.

The Credit Agreement as amended on June 23, 2017 requires us to maintain a maximum consolidated leverage ratio (defined as, with certain adjustments, the ratio of our consolidated indebtedness to consolidated net income before interest, taxes, depreciation, amortization, non-cash charges and certain other items as of the end of any period of four consecutive fiscal quarters, as follows:

5.00 to 1.00 as of the last day of the fiscal quarter ended June 30, 2016;

5.75 to 1.00 as of the last day of the fiscal quarter ended September 30, 2016;

5.00 to 1.00 as of the last day of each fiscal quarter thereafter.

The minimum interest coverage ratio is, as of the end of our fiscal quarter ending:

3.50:1.00 as of the last day of the fiscal quarter ended June 30, 2016;

2:25:1:00 as of the last day of the fiscal quarter ended September 30, 2016;

2:25:1:00 as of the last day of the fiscal quarter ended December 31, 2016;

2:25:1:00 as of the last day of the fiscal quarter ended March 31, 2017;

2:25:1:00 as of the last day of the fiscal quarter ended June 30, 2017;

2:25:1:00 as of the last day of the fiscal quarter ended September 30, 2017;

2:25:1:00 as of the last day of the fiscal quarter ended December 31, 2017;

2:00:1:00 as of the last day of each quarter thereafter.

The Credit Agreement also contains other customary events of default and related remedies. Loans outstanding under the Credit Agreement will bear interest at a rate of 2.00% per annum in excess of the otherwise applicable rate (i) upon acceleration of such loans, (ii) while a payment event of default exists or (iii) upon the lenders’ request, during the continuance of any other event of default.

Subject to certain exceptions, the facilities under the Credit Agreement are senior obligations and are secured by first priority perfected liens and security interests in substantially all our personal property and each subsidiary guarantor.

We had approximately $94.9 million and $10.0 million available under the revolving credit facility as of December 31, 2016 and 2015, respectively. We had outstanding letters of credit against the revolving credit facility of $6.1 million and $4.3 million as of December 31, 2016 and 2015, respectively.

We incur an unused commitment fee on the amount of unused commitments under the Credit Agreement in the amount of 0.375% based on average quarterly utilization. The amounts incurred were $0.3 million, $0.2 million and $0.4 million for the years ended December 31, 2016, 2015 and 2014, respectively.

The unamortized loan discount is being recorded as additional interest expense on a quarterly basis over the term of the credit agreement.

Term B Credit Agreement

On August 1, 2016, we entered into a new Term B Credit Agreement (Term B) providing for a new $280.0 million senior unsecured term loan facility due at maturity on August 1, 2019 bearing interest at 11.5% per annum payable quarterly in arrears. On August 31, 2016, we used approximately $205.3 million of the proceeds from the Term B Credit Agreement and from existing cash on hand to redeem all of the Senior Notes (described below) and satisfy and discharge the Indenture, approximately $81.0 million to pay down the revolving credit facility under the Credit Agreement, approximately $7.9 million to pay Term B issuance costs and bank consent fees, and approximately $1.9 million to pay related legal and professional fees. As a result of the repayment of the Senior Notes and the issuance of the Term B debt, we capitalized $6.7 million, which is being amortized to interest expense over the term of the Term B debt and recorded a loss on extinguishment of debt of $6.0 million for the year ended December 31, 2016.

We may prepay borrowings under the Term B Credit Agreement in whole or in part at any time. Any voluntary prepayment, certain mandatory prepayments and prepayments in connection with certain repricing transactions of the loans will be subject to the following prepayment premiums: (i) if such prepayment is made before February 1, 2018, an amount equal to the discounted present value as of the date of prepayment, utilizing a comparable U.S. Treasury note yield plus 50 basis points, of the sum of (A) the remaining payments of interest on the principal amount prepaid through February 1, 2018, plus (B) 3.00% of the principal amount prepaid, (ii) if such prepayment is made on or after February 1, 2018, but prior to February 1, 2019, an amount equal to 3.00% of the principal amount prepaid, and (iii) if such prepayment is made on or after February 1, 2019, an amount equal to 1.50% of the principal amount prepaid.

The Term B Credit Agreement contains various restrictions and covenants, including restrictions on our ability and certain of our subsidiaries to consolidate or merge, create liens, incur additional indebtedness, dispose of assets, consummate acquisitions, make investments and pay dividends and other distributions. The covenants in the Term B Credit Agreement are similar to those contained in the Credit Agreement, except that the Term B Credit Agreement does not contain any separate financial covenants. Subject to a 90-day grace period, an event of default under the Credit Agreement will cause an event of default under the Term B Credit Agreement. An event of default under the Credit Agreement that results in acceleration of the indebtedness thereunder will cause an immediate event of default under the Term B Credit Agreement.

The Term B Credit Agreement also contains customary events of default and related remedies. Loans outstanding under the Term B Credit Agreement will bear interest at a rate of 2.00% per annum in excess of the otherwise applicable rate (i) upon acceleration of such loans, (ii) while a payment event of default exists or (iii) upon the lenders’ request, during the continuance of any other event of default.

Senior Notes due 2018

The Senior Notes (the “Senior Notes”) were scheduled to mature on November 15, 2018. During 2016 and 2015, we entered into various amendments and waivers related to the Senior Notes, which among other things, raised the interest rate to 9.125% at November 15, 2015 and to 10.625% at May 15, 2016 and waived certain actual and potential events of default.

In securing these amendments and waivers relating to the Credit Agreement and the Senior Notes, we paid $16.8 million and $8.0 million of fees in 2016 and 2015, respectively, to the respective lenders, Senior Note holders and legal and professional advisors. $11.0 million and $3.0 million of these payments were capitalized in 2016 and 2015, respectively, are being amortized over the remaining term of the debt, while $5.8 million and $5.0 million was expensed during 2016 and 2015, respectively.

Subsidiary Guarantees

The obligations under the Credit Agreement and the Term B Credit Agreement are guaranteed by our material domestic subsidiaries, which incorporates subsidiaries that both make up no less than 90% of our total net revenues and make up no less than 90% of our total assets. Separate condensed consolidating information is not included as the parent company does not have independent assets or operations, and the guarantees are full and unconditional and joint and several.

Other Restrictions

The Credit Agreement and the Term B Credit Agreement limits our ability to, among other things, purchase capital assets, incur additional indebtedness, create liens, pay dividends on or redeem capital stock, make certain investments, make restricted payments, make certain dispositions of assets, engage in transactions with affiliates, engage in certain business activities, and engage in mergers, consolidations and certain sales of assets.

Seller Notes

We typically issue subordinated promissory notes (“Seller Notes”) as a part of the consideration transferred when making acquisitions. The Seller Notes are unsecured and are presented net of unamortized discount of $0.6 million and $1.1 million as of December 31, 2016 and 2015, respectively. In accordance with ASC 805, Accounting for Business Combinations, we measure these instruments at their estimated fair values as of the respective acquisition dates. The stated interest rates on these instruments range from 2.00% to 4.00% while the effective interest rate is 6.50%. Principal and interest are payable in monthly, quarterly or annual installments and mature through November 2018.

Financing Leases and Other

Financing leases relate to agreements when we are deemed the owner of a leased building, typically due to significant involvement during the construction period, and which do not qualify for de-recognition under the sale-leaseback accounting guidance due to one or more prohibited forms of continuing involvement in the property. Such forms of continuing involvement include us paying for a more than insignificant portion of project construction costs, us providing a security interest in the tenant’s personal property located at the premises, and/or we have renewal options for a term that comprises 90% or more of the remaining economic life of the property at a price other than estimated fair value. These liabilities have remaining terms ranging from 1 to 20 years with an average inherent interest rate of approximately 13%. Other obligations include equipment under capital leases.

The following tables summarizes for the years ended December 31, 2016 and 2015, the aggregate contractual payments associated with the financing leases and other obligations over the next 5 years and thereafter, including both principal and interest. Included in these amounts are payments for optional renewal periods for which management believes we will exercise our rights to renew, as well as the final non-monetary payment made with the return of the property at the end of the financing term:

(in thousands)	December 31, 2016
2017	$	4,836
2018	3,636
2019	5,097
2020	2,903
2021	2,575
Thereafter	16,546
Less: amount representing interest	(17,348		)

Total	$	18,245

(in thousands)	December 31, 2015
2016	$	3,588
2017	4,771
2018	3,548
2019	5,013
2020	2,864
Thereafter	19,121
Less: amount representing interest	(17,771		)

Total	$	21,134

Maturities of long-term debt at December 31, 2016 and the years thereafter are as follows:

(in thousands)	December 31,
2017	$	34,472
2018	155,749
2019	285,294
2020	1,961
2021	1,209
Thereafter	10,670

Total debt before unamortized discount and debt issuance costs, net	489,355
Unamortized discount	(7,511		)
Debt issuance costs, net	(9,194		)

Total long-term debt	$	472,650

Liquidity and Debt Maturity

Our Credit Facility, which had $180.0 million in principal outstanding at December 31, 2016, matures on June 17, 2018. Given that we do not produce operating cash flow sufficient to retire this obligation through cash sources arising from our normal operations, it will be necessary for us to raise new indebtedness to repay the $143.4 million in remaining principal amount that will become due as of the maturity date, any borrowings under our revolving credit commitment outstanding at that time, and any fees and expenses related to the new borrowings. At December 31, 2017, we had borrowings of $5.0 million outstanding and remaining availability of $86.4 million under the revolving credit commitment of our Credit Facility. Our ability to continue as a going concern is dependent on our ability to refinance such debt.

Additionally, our existing Credit Agreement requires that we provide lenders with our audited financial statements for the year ended December 31, 2017 no later than March 31, 2018. In the event that we are unable to do so, the agreement provides for a thirty-day cure period which would expire on April 30, 2018, at which time we would have an event of default under our Credit Agreement. Should we fail to deliver those audited financial statements by that date, in accordance with their rights and remedies under the Credit Agreement, a majority of the holders of our debt would have the right to accelerate the maturity of our indebtedness.

We are currently in the process of refinancing the amounts outstanding under our Credit Facility and repaying the $280.0 million Term Loan B indebtedness, which would otherwise mature on August 1, 2019. As a part of this refinancing, our new indebtedness is currently being structured as a $505.0 million term loan and $100.0 million revolving credit facility. This financing would extend the financial reporting requirement relating to delivery of our audited financial statements for the year ended December 31, 2017 until July 1, 2018 and would contain affirmative and negative covenants that we believe are usual and customary for a credit agreement. We currently expect to consummate this financing late in the first quarter of 2018. We cannot give assurance that the refinancing will be completed on its currently structured terms on favorable terms or at all.

We have had a history of refinancing our debt including as recently as August 2016 in which we issued $280.0 million of Term B debt to refinance our existing Senior Notes and to pay down on our revolving credit facility. This history, coupled with our relative level of indebtedness to cash flows which will enable us to service the debt we intend to issue has led us to conclude that the successful completion of our refinancing is probable.

ASU 2014-15 Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern requires that we evaluate whether there is substantial doubt about our ability to meet our financial obligations when they become due during the twelve month period from the date these financial statements are available to be issued. Given that we do not believe we will have access to sufficient cash from our operating sources to meet our maturing debt obligation under our Credit Facility, we must then evaluate whether our planned refinancing is probable of being executed prior to our Credit Facility maturity date, and if executed, that such refinancing is probable of mitigating such substantial doubt. We have performed such an evaluation and based on the results of that assessment we believe it is probable that our plan for the refinancing of our indebtedness will be effectively executed late in the first quarter of 2018 which therefore mitigates the relevant conditions or events that raise substantial doubt regarding our ability to continue as a going concern within one year of the date the financial statements are issued.

If we are unsuccessful in (a) completing the refinancing by April 30, 2018, (b) delivering the 2017 audited financial statements to the existing lenders by that date, or (c) obtaining a waiver to the related debt covenant by that date, it could have a material adverse effect on our business, financial condition and operating results.