5.	Borrowing Arrangements

CBIZ had two primary debt arrangements at June 30, 2014 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, 2013 for additional details of CBIZ’s borrowing arrangements.

2010 Convertible Senior Subordinated Notes

On September 27, 2010, CBIZ 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. The holders of the 2010 Notes may convert their 2010 Notes beginning July 1, 2015, or earlier, if the market price per share of CBIZ common stock exceeds 135% of the initial conversion price of $7.41 for at least 20 days during the period of 30 consecutive trading days ending on the final trading day of the preceding quarter.

CBIZ separately accounts for the debt and equity components of the 2010 Notes. The carrying amount of the debt and equity components at June 30, 2014 and December 31, 2013 were as follows (in thousands):


	June 30,			December 31,
	2014			2013
Principal amount of notes	$	130,000		$	130,000
Unamortized discount		(3,994	)		(5,494	)

Net carrying amount	$	126,006		$	124,506

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 June 30, 2014, the unamortized discount had a remaining amortization period of approximately 15 months.

2006 Convertible Senior Subordinated Notes

At June 30, 2014, CBIZ had $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.

During the three and six months ended June 30, 2014 and 2013, CBIZ recognized interest expense on the 2010 Notes and 2006 Notes as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Contractual coupon interest	$	1,590	$	1,590	$	3,181	$	3,181
Amortization of discount		764		710		1,500		1,394
Amortization of deferred financing costs		180		180		360		360

Total interest expense	$	2,534	$	2,480	$	5,041	$	4,935

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 $81.2 million and $48.5 million at June 30, 2014 and December 31, 2013, respectively. Rates for the six months ended June 30, 2014 and 2013 were as follows:


	Six Months Ended June 30,
	2014	2013
Weighted average rates	2.70%	2.96%

Range of effective rates	1.87% - 3.41%	2.66% - 3.91%

CBIZ had approximately $58.6 million of available funds under the credit facility at June 30, 2014, net of outstanding letters of credit and performance guarantees of $4.4 million. 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 is in compliance with its debt covenants at June 30, 2014.