NetSpend 2011 Annual Report Download - page 49

Table of Contents
In connection with the acquisition of Skylight on July 15, 2008, we entered into a credit agreement (the "prior credit facility"), which
provided financing of $105.0 million, consisting of a $30.0 million revolving credit facility and a $75.0 million term loan. In September 2010,
we repaid our borrowings under the prior credit facility. The weighted average interest rate for outstanding borrowings under the prior credit
facility was 6.0%.
In September 2010, we entered into a new credit facility with a syndicate of banks with SunTrust Bank as administrative agent. The new
credit facility provides a $135.0 million revolving credit facility with the ability to request increases to the facility of up to $50.0 million. The
initial borrowings under this credit facility of $58.5 million were used to repay the outstanding indebtedness under our prior credit facility and
$1.5 million of debt issuance costs associated with the new credit facility. Our current credit facility has a maturity date in September 2015 and
includes a $5.0 million swingline facility and $15.0 million letter of credit facility. At our option, we may prepay any borrowings in whole or in
part, without any prepayment penalty or premium.
As of December 31, 2011, we owed $58.5 million in outstanding borrowings under our current credit facility. During the year ended
December 31, 2011, the weighted average interest rate applicable to the outstanding borrowings on this credit facility was 2.8%.
The outstanding borrowings under the current credit facility bear interest, at our election, at either a base rate or a Eurodollar loan rate.
Base rate loans bear annual interest at the base rate (the greater of the federal funds rate plus 0.50%, the prime rate or one-month LIBOR plus
1.00%) plus a spread of 1.50% to 2.25%, depending on our leverage ratio. Eurodollar loans bear interest at the adjusted LIBOR for the interest
period in effect for such borrowings plus a spread of 2.50% to 3.25%, depending on our leverage ratio. Our interest rate on Eurodollar loans,
which comprised all of our outstanding borrowings as of December 31, 2011, was 2.8% as of that date.
The agreement related to our current credit facility contains certain financial and non-financial covenants and requirements, including a
leverage ratio, fixed charge ratio and certain restrictions on our ability to make investments, pay dividends or sell assets. It also provides for
customary events of default as defined in the agreement, including failure to pay any principal or interest when due, failure to comply with
covenants and a change of control. We were in compliance with these covenants as of December 31, 2011.
Under our current credit facility, letters of credit may be issued for a period of up to one year (subject to any automatic renewal
provisions), although all such letters of credit must expire at least ten business days prior to the current credit facility's maturity date. As of
December 31, 2011, we had issued $6.2 million in letters of credit to two of our Issuing Banks as security for our settlement obligations.
During 2009, we entered into a capital lease arrangement with a software provider for perpetual database licenses. The capital lease
arrangement resulted in the recording of $3.4 million in capitalized computer software. During 2011, we modified the capital lease
arrangement, extending it for one year and purchasing $1.9 million of additional computer software. During the years ended December 31,
2011, 2010 and 2009, we made payments of $3.3 million, $1.4 million and $0.8 million, respectively, towards the capital lease, which included
interest payments at an effective interest rate of 6.0%. The capital lease was paid in full in 2011.
Off-Balance Sheet Arrangements
Our off-balance sheet arrangements are comprised of settlement indemnifications and overdraft guarantees issued in favor of our Issuing
Banks. We have no off-balance sheet debt, other than operating leases, purchase orders and other commitments entered into in the ordinary
course of business as discussed below and reflected in our contractual obligations and commitments table.
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