CDW 2012 Annual Report Download - page 70

Table of Contents CDW CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Senior Secured Asset-Based Revolving Credit Facility (“Revolving Loan”)
At December 31, 2012 , the Company had no outstanding borrowings under the Revolving Loan, $1.7 million of undrawn letters of
credit and $275.9 million reserved related to the floorplan sub-facility.
On June 24, 2011, the Company entered into the Revolving Loan, a new five-year $900.0 million senior secured asset-based revolving
credit facility, with the facility being available to the Company for borrowings, issuance of letters of credit and floorplan financing for
certain vendor products. The Revolving Loan matures on June 24, 2016, subject to an acceleration provision discussed below. The
Revolving Loan replaced the Company's previous revolving loan credit facility that was to mature on October 12, 2012. The Revolving
Loan (i) increased the overall revolving credit facility capacity available to the Company from $800.0 million to $900.0 million , (ii)
increased the maximum aggregate amount of increases that may be made to the revolving credit facility from $100.0 million to $200.0
million , (iii) added a maturity acceleration provision based upon excess cash availability whereby the Revolving Loan may mature 45
days prior to the maturity of the non-extended portion of the Company's senior secured term loan facility, if excess cash availability
does not exceed the outstanding borrowings of the subject maturing debt at the time of the test plus $150.0 million , (iv) increased the
fee on the unused portion of the revolving credit facility from 25 basis points to either 37.5 or 50 basis points, depending on the amount
of utilization, (v) increased the applicable interest rate margin, and (vi) incorporated a $300.0 million floorplan sub-facility, which was
increased to $400.0 million
on August 2, 2011. In connection with the termination of the previous facility, the Company recorded a loss
on extinguishment of long-term debt of $1.6 million in the Company's consolidated statement of operations for the year ended
December 31, 2011, representing a write-off of a portion of unamortized deferred financing costs. Fees of $7.2 million related to the
Revolving Loan were capitalized as deferred financing costs and are being amortized over the term of the facility on a straight-line
basis.
As described in Note 5, the Company has entered into agreements with certain financial intermediaries to facilitate the purchase of
inventory from various suppliers. In connection with the floorplan sub-
facility, the Company entered into the Revolving Loan inventory
financing agreement. Amounts outstanding under the Revolving Loan inventory financing agreement are unsecured and noninterest
bearing. The Company will either pay the outstanding Revolving Loan inventory financing agreement amounts when they become due,
or the Revolving Loan's administrative agent will automatically initiate an advance on the Revolving Loan and use the proceeds to pay
the balance on the due date. As of December 31, 2012 , the financial intermediary reported an outstanding balance of $267.9 million
under the Revolving Loan inventory financing agreement, which did not reflect payments the Company made on December 31, 2012.
The total amount reported on the Company's consolidated balance sheet as accounts payable-inventory financing related to the
Revolving Loan inventory financing agreement is $19.6 million less than the $267.9 million owed to the financial intermediary due to
differences in the timing of reporting activity under the Revolving Loan inventory financing agreement. The outstanding balance
reported by the financial intermediary excludes $8.0 million in reserves for open orders that reduce the availability under the Revolving
Loan. Changes in cash flows from the Revolving Loan inventory financing agreement are reported in financing activities on the
Company's consolidated statement of cash flows.
Borrowings under the Revolving Loan bear interest at a variable interest rate plus an applicable margin. The variable interest rate is
based on one of two indices, either (i) LIBOR, or (ii) the Alternate Base Rate (“ABR”)
with the ABR being the greatest of (a) the prime
rate, (b) the federal funds effective rate plus 50 basis points or (c) the one-month LIBOR plus 1.00% . The applicable margin varies
( 2.00% to 2.50% for LIBOR borrowings and 1.00% to 1.50% for ABR borrowings) depending upon the Company's average daily
excess cash availability under the agreement and is subject to a reduction of 0.25% if, and for as long as, the senior secured leverage
ratio is less than 3.0 . The senior secured leverage ratio is defined as the ratio of senior secured debt (including amounts owed under
certain inventory floorplan arrangements and capital leases) less cash and cash equivalents, to Adjusted EBITDA, a non-GAAP
measure, for the four most recently ended fiscal quarters. For the four quarters ended December 31, 2012 , the senior secured leverage
ratio was 2.4 .
Availability under the Revolving Loan is limited to (a) the lesser of the revolving commitment of $900.0 million and the amount of the
borrowing base less (b) outstanding borrowings, letters of credit, and amounts outstanding under the Revolving Loan inventory
financing agreement plus a reserve of 15% of open orders. The borrowing base is (a) the sum of the products of the applicable advance
rates on eligible accounts receivable and on eligible inventory as defined in the agreement less (b) any reserves. At December 31, 2012
,
the borrowing base was $1,018.2 million
as supported by eligible inventory and accounts receivable balances as of November 30, 2012.
The Company could have borrowed up to an additional $622.4 million under the Revolving Loan at December 31, 2012 .
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