Financing Agreement

3 Months Ended

Mar. 31, 2021

Financing Agreements

The carrying value of debt, finance lease obligations, and notes payable and the average related interest rates were as follows (in millions):


	Average interest rate at March 31, 2021	Maturity	March 31, 2021		December 31, 2020
Revolving loan facility	—%	July 2023	$	—	$	—
Term loan facility	1.36%	July 2023	925.0		940.0
Senior notes—fixed rate	4.60%	May 2021	75.0		75.0
Senior notes—fixed rate	4.23%	July 2028	350.0		350.0
Finance lease obligations	5.20%	Various through 2029	15.0		16.2
Notes payable and other	4.25%	Various through 2030	73.8		75.0
Debt issuance costs			(5.0)		(5.5)
Total debt, finance lease obligations, and notes payable			$	1,433.8	$	1,450.7
Less: current maturities			142.1		142.1
Total long-term debt, finance lease obligations, and notes payable			$	1,291.7	$	1,308.6

In December 2010, the Company entered into a Master Note Purchase Agreement to issue $75 million of unsecured senior notes due May 2021 (the “Senior Notes”). The Senior Notes were issued in May 2011. In July 2018, the Company entered into a Master Note Purchase Agreement to issue $350 million of unsecured senior notes due July 2028. There are $75 million of the senior notes classified as current maturities in the consolidated balance sheet as of March 31, 2021.

In July 2018, the Company amended its unsecured credit agreement to increase its revolving loan facility (the “revolving loan facility”) to $700 million and increase its term loan facility (the “term loan facility”) to $1,180 million, of which $925 million is outstanding as of March 31, 2021. The expiration date of the facility was extended to July 2023, and interest is charged at rates based on a LIBOR or “prime” base rate. The Company is required to make principal payments under the term loan facility of $59 million over the next 12 months. These payments are classified as current maturities in the consolidated balance sheets.

The credit agreement and the amended Master Note Purchase Agreements contain covenants that require Polaris to maintain certain financial ratios, including minimum interest coverage and maximum leverage ratios. The agreements require the Company to maintain an interest coverage ratio of not less than 3.00 to 1.00 and a leverage ratio of not more than 3.50 to 1.00 on a rolling four quarter basis. Polaris was in compliance with all such covenants at March 31, 2021.

Debt issuance costs are recognized as a reduction in the carrying value of the related long-term debt in the consolidated balance sheets and are being amortized to interest expense in the consolidated statements of income over the expected remaining terms of the related debt.

As a component of the Boat Holdings merger agreement, the Company has committed to make a series of deferred payments to the former owners following the closing date of the merger through July 2030. The original discounted payable was for $76.7 million, of which $66.5 million is outstanding as of March 31, 2021. The outstanding balance is included in long-term debt and current portion of long-term debt in the consolidated balance sheets.

The Company has a mortgage note payable agreement for land, on which Polaris built the Huntsville, Alabama manufacturing facility in 2016. The original mortgage note payable was for $14.5 million, of which $7.3 million is outstanding as of March 31, 2021. The outstanding balance is included in long-term debt and current portion of long-term debt in the consolidated balance sheets. The payment of principal and interest for the note payable is forgivable if the Company satisfies certain job commitments over the term of the note. The Company has met the required commitments to date.