CDW 2015 Annual Report Download - page 54

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Table of Contents
Item 7A. Quantitative and Qualitative Disclosures of Market Risks
Interest Rate Risk
Our market risks relate primarily to changes in interest rates. The interest rates on borrowings under our senior secured asset-based revolving credit facility, our
senior secured term loan facility, and the Kelway term loan are floating and, therefore, are subject to fluctuations. In order to manage the risk associated with changes in
interest rates on borrowings under our senior secured term loan facility, we have entered into interest rate caps to add stability to interest expense and to manage our exposure
to interest rate fluctuations.
As of December 31, 2015 we have twenty interest rate cap agreements in effect through January 14, 2017 with a combined notional amount of $1,400.0 million
which entitle us to payments from the counterparty of the amount, if any, by which three-month LIBOR exceeds 2.0% during the agreement period. For additional details,
see Note 8 (Long-Term Debt) to the accompanying Consolidated Financial Statements.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Contractual Obligations” for
information on cash flows, interest rates and maturity dates of our debt obligations.
Foreign Currency Risk
We transact business in foreign currencies other than the U.S. dollar, primarily the Canadian dollar and the British pound, which exposes us to foreign currency
exchange rate fluctuations. Revenue and expenses generated from our international operations are generally denominated in the local currencies of the corresponding
countries. The functional currency of our international operating subsidiaries is the same as the corresponding local currency. Upon consolidation, as results of operations are
translated, operating results may differ from expectations. The direct effect of foreign currency fluctuations on our results of operations has not been material as the majority
of our results of operations are denominated in U.S. dollars.
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