Ingram Micro 2010 Annual Report Download - page 45

In connection with the senior unsecured term loan facility, we have an interest rate swap agreement for a
notional amount at January 1, 2011 of $184,375 of the term loan principal amount, the effect of which is to swap the
LIBOR portion of the floating-rate obligation for a fixed-rate obligation. The fixed rate including the variable
margin is approximately 5%. The notional amount on the interest rate swap agreement reduces by $3,125 quarterly
since November 2009 and the swap expires in August 2012, consistent with the maturity schedule of the senior
unsecured term loan. We account for the interest rate swap agreement as a cash flow hedge. At January 1, 2011 and
January 2, 2010, the mark-to-market value of the interest rate swap amounted to $9,252 and $9,662, respectively,
which was recorded as a decrease in other comprehensive income with an offsetting increase to the hedged debt,
bringing the total carrying value of the senior unsecured term loan to $243,627 and $256,537, respectively.
We have 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 our debt ratings and leverage ratio. At January 1, 2011 and January 2, 2010,
we had no borrowings under this North American credit facility. This credit facility may also be used to issue letters
of credit. At both January 1, 2011 and January 2, 2010, letters of credit of $5,000 were issued to certain vendors to
support payment of insurance claims. Our available capacity under the agreement is reduced by the amount of any
issued and outstanding letters of credit.
We have a 20,000 Australian dollar, or approximately $20,000 at January 1, 2011, senior unsecured credit
facility that matures in December 2011. The interest rate on this credit facility is based on Australian or New
Zealand short-term bank indicator rates, depending on the funding currency, plus a predetermined margin that is
based on our debt ratings and our leverage ratio. We had no borrowings outstanding at January 1, 2011 and had $861
outstanding at January 2, 2010 under this Asia Pacific facility.
We also have additional lines of credit, short-term overdraft facilities and other credit facilities with various
financial institutions worldwide, which provide for borrowing capacity aggregating approximately $596,000 at
January 1, 2011. Most of these arrangements are on an uncommitted basis and are reviewed periodically for
renewal. At January 1, 2011 and January 2, 2010, respectively, we had $92,774 and $64,571 outstanding under these
facilities. The weighted average interest rate on the outstanding borrowings under these facilities, which may
fluctuate depending on geographic mix, was 6.8% and 5.1% per annum, respectively, at January 1, 2011 and
January 2, 2010. At January 1, 2011 and January 2, 2010, letters of credit totaling $21,941 and $22,112,
respectively, were issued principally to support the performance by our subsidiaries with respect to certain lease
agreements, vendor purchase obligations, or other operating liabilities. The issuance of these letters of credit
reduces our available capacity under these agreements by the same amount.
Covenant Compliance
We are required to comply with certain financial covenants under the terms of some of our financing facilities,
including restrictions on funded debt and liens and covenants related to tangible net worth, leverage and interest
coverage ratios and trade accounts receivable portfolio performance including metrics related to receivables and
payables. We are also restricted by other covenants, including, but not limited to, restrictions on the amount of
additional indebtedness we can incur, dividends we can pay, and the amount of common stock that we can
repurchase annually. At January 1, 2011, we were in compliance with all material covenants or other material
requirements set forth in our trade accounts receivable-backed programs and credit agreements or other agreements
with our creditors as discussed above.
Trade Accounts Receivable Factoring Programs
In July 2010, we entered into an uncommitted factoring program in North America under which trade accounts
receivable of one large customer may be sold, without recourse, to a financial institution. The program’s total
amount of receivables that may be factored cannot exceed $150,000. In the same month, we also entered into an
uncommitted factoring program in EMEA under which trade accounts receivable of another large customer may be
sold, without recourse, to a financial institution. The program’s total amount of receivables that may be factored
cannot exceed A40,000, or approximately $53,000 at January 1, 2011. Available capacity under these programs is
dependent on the amount of trade accounts receivable already sold to and held by the financial institutions, the level
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