Borrowing Arrangements

3 Months Ended

Mar. 31, 2012

5.	Borrowing Arrangements

CBIZ had two primary debt arrangements at March 31, 2012 that provided the Company with the capital necessary to meet its working capital needs as well as the flexibility to continue with its strategic initiatives, including business acquisitions and share repurchases: the 2010 Convertible Senior Subordinated Notes (“2010 Notes”) totaling $130 million and a $275 million unsecured credit facility. In addition to the discussion below, refer to the Annual Report on Form 10-K for the year ended December 31, 2011 for additional details of CBIZ’s borrowing arrangements.

2010 Convertible Senior Subordinated Notes

On September 27, 2010, CBIZ sold and issued $130.0 million of 2010 Notes to qualified institutional buyers. The 2010 Notes are direct, unsecured, senior subordinated obligations of CBIZ. The 2010 Notes bear interest at a rate of 4.875% per annum, payable in cash semi-annually in arrears on April 1 and October 1. The 2010 Notes mature on October 1, 2015 unless earlier redeemed, repurchased or converted.

CBIZ separately accounts for the debt and equity components of the 2010 Notes. The carrying amount of the debt and equity components at March 31, 2012 and December 31, 2011 were as follow (in thousands):


	March 31,			December 31,
	2012			2011
Principal amount of notes	$	130,000		$	130,000
Unamortized discount		(10,336	)		(10,972	)

Net carrying amount	$	119,664		$	119,028

Additional paid-in-capital, net of tax	$	8,555		$	8,555

The discount is being amortized at an annual effective rate of 7.5% over the term of the 2010 Notes, which is five years from the date of issuance. At March 31, 2012, the unamortized discount had a remaining amortization period of approximately 42 months.

2006 Convertible Senior Subordinated Notes

At March 31, 2012, CBIZ still has $750,000 outstanding of its 3.125% Convertible Senior Subordinated Notes that were issued in 2006 (“2006 Notes”). These 2006 Notes are direct, unsecured, senior subordinated obligations of CBIZ. The 2006 Notes bear interest at a rate of 3.125% per annum, payable in cash semi-annually in arrears on each June 1 and December 1. The 2006 Notes mature on June 1, 2026 unless earlier redeemed, repurchased or converted.

CBIZ separately accounts for the debt and equity components of the 2006 Notes. The carrying amount of the debt and equity components at March 31, 2012 and December 31, 2011 were as follow (in thousands):


	March 31,		December 31,
	2011		2010
Principal amount of notes	$	750	$	750
Unamortized discount		—		—

Net carrying amount	$	750	$	750

Additional paid-in-capital, net of tax	$	11,425	$	11,425

During the three months ended March 31, 2012 and 2011, CBIZ recognized interest expense on the 2010 Notes and 2006 Notes as follows (in thousands):


	Three Months Ended
	March 31,
	2012		2011
Contractual coupon interest	$	1,590	$	1,897
Amortization of discount		636		1,041
Amortization of deferred financing costs		180		232

Total interest expense	$	2,406	$	3,170

Bank Debt

CBIZ maintains a $275 million unsecured credit facility (“credit facility”) with Bank of America as agent for a group of seven participating banks. The balance outstanding under the credit facility was $178.4 million and $145.0 million at March 31, 2012 and December 31, 2011, respectively. Rates for the three months ended March 31, 2012 and 2011 were as follows:


	Three Months Ended March 31,
	2012	2011
Weighted average rates	3.31%	3.97%

Range of effective rates	2.69% - 3.91%	3.25% - 5.75%

CBIZ had approximately $14.6 million of available funds under the credit facility at March 31, 2012. The credit facility provides CBIZ operating flexibility and funding to support seasonal working capital needs and other strategic initiatives such as acquisitions and share repurchases. The maturity date of the credit facility is June 2015. CBIZ believes that it is in compliance with its debt covenants at March 31, 2012.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References+ Details