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Table of Contents CDW CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
consolidated balance sheet in Other Assets each period, with changes in fair value recorded directly to interest expense in the
Company’s consolidated statements of operations. The fair value of the Company’s interest rate cap agreements is classified as Level 2
in the fair value hierarchy. The valuation of the interest rate cap agreements is derived by using a discounted cash flow analysis on the
expected cash receipts that would occur if variable interest rates rise above the strike rates of the caps. This analysis reflects the
contractual terms of the interest rate cap agreements, including the period to maturity, and uses observable market-based inputs,
including LIBOR curves and implied volatilities. The Company also incorporates insignificant credit valuation adjustments to
appropriately reflect the respective counterparty’s nonperformance risk in the fair value measurements. The counterparty credit spreads
are based on publicly available credit information obtained from a third party credit data provider.
See Note 20 for a description of the interest rate cap agreements entered into during the first quarter of 2015.
On January 30, 2013, the Company made an optional prepayment of $40.0 million aggregate principal amount outstanding under the
Prior Term Loan Facility. The optional prepayment satisfied the excess cash flow payment provision of the Prior Term Loan Facility
with respect to the year ended December 31, 2012.
CDW LLC is the borrower under the Term Loan. All obligations under the Term Loan are guaranteed by Parent and each of CDW
LLC's direct and indirect, 100% owned, domestic subsidiaries. The Term Loan is collateralized by a second priority interest in
substantially all inventory (excluding inventory collateralized under the inventory floorplan arrangements as described in Note 5),
deposits, and accounts receivable, and by a first priority interest in substantially all other assets. The Term Loan contains negative
covenants that, among other things, place restrictions and limitations on the ability of Parent and each of CDW LLC's direct and
indirect, 100% owned, domestic subsidiaries to dispose of assets, incur additional indebtedness, incur guarantee obligations, prepay
other indebtedness, make distributions or other restricted payments, create liens, make equity or debt investments, make acquisitions,
engage in mergers or consolidations, or engage in certain transactions with affiliates.
8.0% Senior Secured Notes due 2018 (“Senior Secured Notes”)
At December 31, 2014 , there were no outstanding Senior Secured Notes.
On August 5, 2014, the proceeds from the issuance of the 2022 Senior Notes discussed below, along with cash on hand, were deposited
with the trustee to redeem all of the remaining $325.0 million aggregate principal amount of the Senior Secured Notes at a redemption
price of 106.061% of the principal amount redeemed, plus accrued and unpaid interest through the date of redemption. On the same
date, the indenture governing the Senior Secured Notes was satisfied and discharged. The redemption date was September 5, 2014. In
connection with this redemption, the Company recorded a loss on extinguishment of long-term debt of $23.7 million
in the consolidated
statement of operations for the year ended December 31, 2014 , which was comprised of $4.0 million for the write-off of the
unamortized deferred financing fees, a redemption premium of $13.0 million and a make-whole interest payment of $6.7 million .
On July 2, 2013, the Company used a portion of the net proceeds from the IPO to redeem $175.0 million aggregate principal amount of
Senior Secured Notes. The redemption price of the Senior Secured Notes was 108.0% of the principal amount redeemed, plus $0.7
million of accrued and unpaid interest to the date of redemption. The Company used cash on hand to pay such accrued and unpaid
interest. In connection with this redemption, the Company recorded a loss on extinguishment of long-term debt of $16.7 million in the
consolidated statement of operations for the year ended December 31, 2013. This loss represented $14.0 million
in redemption premium
and $2.7 million for the write-off of a portion of the remaining deferred financing costs related to the Senior Secured Notes.
8.5% Senior Notes due 2019 (“2019 Senior Notes”)
At December 31, 2014 , the outstanding principal amount of 2019 Senior Notes was $503.9 million , excluding $1.3 million in
unamortized premium. The 2019 Senior Notes mature on April 1, 2019.
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