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Debt and Financing Arrangements | 3 Months Ended
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Mar. 31, 2015
Debt Disclosure [Abstract] |
Debt and Financing Arrangements |
5. | Debt and Financing Arrangements
CBIZ had two primary financing arrangements and one additional financing arrangement at March 31, 2015 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:
| • |  | 4.875% Convertible Senior Subordinated Notes (the “2010 Notes”)
| • |  | $400.0 million unsecured credit facility (the “credit facility”)
| • |  | 3.125% Convertible Senior Subordinated Notes (the “2006 Notes”)
The 2010 Notes and the credit facility are the Company’s two primary financing arrangements. On April 10, 2015, CBIZ entered into an Amendment to its Credit Agreement, dated as of July 28, 2014, by and among the Company and Bank of America, N.A., as administrative agent and bank, and other participating banks, to remove certain events from the definition of Change of Control contained therein. This amendment had no impact on the terms of the Credit Agreement (other than as described above), the accompanying Consolidated Balance Sheets, Consolidated Statements of Comprehensive Income and Consolidated Statements of Cash Flows. In addition to the discussion below, refer to the Annual Report on Form 10-K for the year ended December 31, 2014 for additional details of CBIZ’s debt and financing arrangements. 2010 Notes The 2010 Notes mature on October 1, 2015. At March 31, 2015 and December 31, 2014, the 2010 Notes were classified as a non-current liability due to Management’s intention to retire the 2010 Notes during the year ended December 31, 2015 with the funds available under the credit facility. In addition, the Company may repurchase additional 2010 Notes in privately negotiated transactions before the maturity date, but there can be no assurance that additional transactions will be completed or on what terms. During the year ended December 31, 2014, the Company paid cash of $30.6 million and issued 1.5 million shares of CBIZ common stock in exchange for retiring $32.4 million of its outstanding 2010 Notes in privately negotiated transactions. Notes repurchased are deemed to be extinguished. The carrying amount of the 2010 Notes at March 31, 2015 and December 31, 2014 were as follows (in thousands):
|  | March 31, 2015 |  |  | December 31, 2014 |
Principal amount of notes |  | $ | 97,650 |  |  | $ | 97,650 |
Unamortized discount |  |  | (1,235 | ) |  |  | (1,831 | )
Net carrying amount |  | $ | 96,415 |  |  | $ | 95,819 |
The discount on the liability component of the 2010 Notes is being amortized using the effective interest method based upon an annual effective rate of 7.5%, which represented the market rate for similar debt without a conversion option at the issuance date. The discount is being amortized over the term of the 2010 Notes which is five years from the date of issuance. At March 31, 2015, the unamortized discount had a remaining amortization period of approximately six months. Bank Debt CBIZ has a $400.0 million unsecured credit facility with Bank of America as agent for a group of eight participating banks that matures in July 2019. The balance outstanding under the credit facility was $146.8 million and $107.4 million at March 31, 2015 and December 31, 2014, respectively. Rates for the three months ended March 31, 2015 and 2014 (with respect to the Company’s prior credit facility which was terminated on July 28, 2014) were as follows:
|  | Three Months Ended March 31,
|  | 2015 |  | 2014
Weighted average rates |  | 2.21% |  | 2.69%
Range of effective rates |  | 1.88% - 3.25% |  | 1.87% - 3.41%
CBIZ had approximately $150.3 million of available funds under the credit facility at March 31, 2015, net of outstanding letters of credit and performance guarantees of $4.2 million. The credit facility provides CBIZ with operating flexibility and funding to support seasonal working capital needs and other strategic initiatives such as acquisitions and share repurchases. CBIZ is in compliance with its debt covenants at March 31, 2015. 2006 Notes At March 31, 2015, CBIZ had $750 thousand aggregate principal amount outstanding of its 2006 Notes. The 2006 Notes mature on June 1, 2026 unless earlier redeemed, repurchased or converted. At March 31, 2015 and December 31, 2014, the 2006 Notes were classified as a non-current liability due to Management’s intention to retire the 2006 Notes during the year ended December 31, 2015 with the funds available under the credit facility. Interest Expense During the three months ended March 31, 2015 and 2014, CBIZ recognized interest expense on the 2010 Notes and 2006 Notes as follows (in thousands):
|  | Three Months Ended March 31, |
|  | 2015 |  |  | 2014 |
Contractual coupon interest |  | $ | 1,196 |  |  | $ | 1,590 |
Amortization of discount |  |  | 595 |  |  |  | 736 |
Amortization of deferred financing costs |  |  | 135 |  |  |  | 180 |
Total interest expense |  | $ | 1,926 |  |  | $ | 2,506 |

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- 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 Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 19, 20, 22 -Article 5 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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