Financing Agreement

Debt and capital lease obligations and the average related interest rates were as follows (in thousands):



	Average interest rate at December 31, 2014	Maturity	December 31, 2014		December 31, 2013
Revolving loan facility	—	January 2018	—		$	80,500
Senior notes—fixed rate	3.81%	May 2018	$	25,000	25,000
Senior notes—fixed rate	4.60%	May 2021	75,000		75,000
Senior notes—fixed rate	3.13%	December 2020	100,000		100,000
Capital lease obligations	5.02%	Various through 2029	26,148		7,123
Total debt and capital lease obligations			$	226,148	$	287,623
Less: current maturities			2,528		3,281
Total long-term debt and capital lease obligations			$	223,620	$	284,342

Bank financing. In August 2011, Polaris entered into a $350,000,000 unsecured revolving loan facility. In January 2013, Polaris amended the loan facility to provide more beneficial covenant and interest rate terms and extend the expiration date from August 2016 to January 2018. Interest is charged at rates based on LIBOR or “prime.”

In December 2010, the Company entered into a Master Note Purchase Agreement to issue $25,000,000 of unsecured senior notes due May 2018 and $75,000,000 of unsecured senior notes due May 2021 (collectively, the “Senior Notes”). The Senior Notes were issued in May 2011. In December 2013, the Company entered into a First Supplement to Master Note Purchase Agreement, under which the Company issued $100,000,000 of unsecured senior notes due December 2020.

The unsecured revolving loan facility and the amended Master Note Purchase Agreement contain covenants that require Polaris to maintain certain financial ratios, including minimum interest coverage and maximum leverage ratios. Polaris was in compliance with all such covenants as of December 31, 2014.

The following summarizes activity under Polaris’ credit arrangements (dollars in thousands):



	2014			2013			2012
Total borrowings at December 31	$	200,000		$	280,500		$	100,000
Average outstanding borrowings during year	$	361,715		$	138,400		$	100,000
Maximum outstanding borrowings during year	$	500,000		$	411,000		$	100,000
Interest rate at December 31	3.77		%	2.98		%	4.40		%

The carrying amount of the Company’s long-term debt approximates its fair value as December 31, 2014 and 2013.

Letters of credit. At December 31, 2014, Polaris had open letters of credit totaling $24,894,000. The amounts are primarily related to inventory purchases and are reduced as the purchases are received.

Dealer financing programs. Certain finance companies, including Polaris Acceptance, an affiliate (see Note 8), provide floor plan financing to dealers on the purchase of Polaris products. The amount financed by worldwide dealers under these arrangements at December 31, 2014, was approximately $1,337,214,000. Polaris has agreed to repurchase products repossessed by the finance companies up to an annual maximum of no more than 15 percent of the average month-end balances outstanding during the prior calendar year. Polaris’ financial exposure under these arrangements is limited to the difference between the amount paid to the finance companies for repurchases and the amount received on the resale of the repossessed product. No material losses have been incurred under these agreements during the periods presented. As a part of its marketing program, Polaris contributes to the cost of dealer financing up to certain limits and subject to certain conditions. Such expenditures are included as an offset to sales in the accompanying consolidated statements of income.