Ingram Micro 2008 Annual Report Download - page 70

receivable, such as receivables remaining assignable and free of liens and dispute or set-off rights. At January 3,
2009, the Company’s actual aggregate available capacity under these programs was approximately $1,290,000
based on eligible trade accounts receivable available, of which $98,035 of such borrowing capacity was used. The
Company’s two revolving trade accounts receivable-backed financing facilities in EMEA are affected by the level
of market demand for commercial paper, and could be impacted by the credit ratings of the third-party issuer of
commercial paper or back-up liquidity providers, if not replaced. In addition, in certain situations, the Company
could lose access to all or part of its financing with respect to the EMEA facility maturing in March 2009, if the
Company’s authorization to collect the receivables is rescinded by the relevant supplier under applicable local law.
In July 2008, the Company entered into a $250,000 senior unsecured term loan facility with a bank syndicate.
The interest rate on this facility is based on one-month LIBOR, plus a variable margin that is based on the
Company’s debt ratings and leverage ratio. Interest is payable monthly. Under the terms of the agreement, the
Company is also required to pay a minimum of $3,125 of principal on the loan on a quarterly basis beginning in
November 2009 and a balloon payment of $215,625 at the end of the loan term in August 2012. The agreement also
contains certain negative covenants, including restrictions on funded debt and interest coverage, as well as
customary representations and warranties, affirmative covenants and events of default. The proceeds of the term
loan were used for general corporate purposes, including refinancing existing indebtedness and funding working
capital.
In connection with the senior unsecured term loan facility above, the Company entered into an interest rate
swap agreement for $200,000 of the term loan principal amount, the effect of which was to swap the LIBOR portion
of the floating-rate obligation for a fixed-rate obligation. The fixed rate including the variable margin is approx-
imately 5%. The notional amount on the interest rate swap agreement reduces by $3,125 quarterly beginning
November 2009, consistent with the amortization schedule of the senior unsecured term loan discussed above. The
Company accounts for the interest rate swap agreement as a cash flow hedge. At January 3, 2009, the mark-to-
market value of the interest rate swap amounted to $11,754 which is recorded in other comprehensive income with
an offsetting adjustment to the hedged debt, bringing the total carrying value of the senior unsecured term loan to
$261,754.
The Company has a $275,000 revolving senior unsecured credit facility with a bank syndicate in North
America, which matures in August 2012. The interest rate on the revolving senior unsecured credit facility is based
on LIBOR, plus a predetermined margin that is based on the Company’s debt ratings and leverage ratio. At
January 3, 2009 and December 29, 2007, the Company had no borrowings under this North American revolving
senior unsecured credit facility. This credit facility may also be used to issue letters of credit. At January 3, 2009 and
December 29, 2007, letters of credit of $9,051 and $41,156, respectively, were issued to certain vendors and
financial institutions to support purchases by its subsidiaries, payment of insurance premiums and flooring
arrangements. The Company’s available capacity under the agreement is reduced by the amount of any issued
and outstanding letters of credit.
In October 2008, the Company terminated its 100 million Australian dollar senior unsecured credit facility
with a bank syndicate, which wasdue to expire in December 2008. During the fourth quarter of 2008, the terminated
facility was replaced with a 20 million Australian dollar, or approximately $14,000 at January 3, 2009, revolving
senior unsecured credit facility, which expires in December 2011. At December 29, 2007, the Company had
borrowings of $934 under the former facility. The Company had no borrowings under the new facility at January 3,
2009.
The Company also has additional lines of credit, short-term overdraft facilities and other credit facilities with
various financial institutions worldwide, which provide for borrowing capacity aggregating approximately
$803,000 at January 3, 2009. Most of these arrangements are on an uncommitted basis and are reviewed
periodically for renewal. At January 3, 2009 and December 29, 2007, the Company had $118,599 and
$134,682, respectively, outstanding under these facilities. The weighted average interest rate on the outstanding
borrowings under these facilities, which may fluctuate depending on geographic mix, was 5.1% and 6.4% per
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INGRAM MICRO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)