9. Long-Term Debt

USI is a holding company and, as a result, its primary sources of funds are cash generated from operating activities of its direct operating subsidiary, USSC, and from borrowings by USSC. The 2011 Credit Agreement (as defined below), the 2007 Credit Agreement (as defined below), the 2007 Note Purchase Agreement (as defined below) and the current Receivables Securitization Program (as defined below) contain restrictions on the use of cash transferred from USSC to USI.

Long-term debt consisted of the following amounts (in millions):


	As of December 31, 2011		As of December 31, 2010
2011 Credit Agreement	$	361.8	$	—
2007 Credit Agreement—Revolving Credit Facility		—		100.0
2007 Credit Agreement—Term Loan		—		200.0
2007 Master Note Purchase Agreement (Private Placement)		135.0		135.0

Total	$	496.8	$	435.0

In addition to long-term debt, as of December 31, 2010 the Company had an industrial development bond outstanding with a balance of $6.8 million. This bond matured and was paid in December 2011.

As of December 31, 2011, 100% of the Company's outstanding debt is priced at variable interest rates based primarily on the applicable bank prime rate or London InterBank Offered Rate ("LIBOR"). While the Company had primarily all of its outstanding debt based on LIBOR at December 31, 2011, the Company had hedged $435 million of this debt with three separate interest rate swaps further discussed in Note 2, "Summary of Significant Accounting Policies", and Note 20, "Derivative Financial Instruments", to the Consolidated Financial Statements. As of December 31, the overall weighted average effective borrowing rate of the Company's debt was 5%. At December 31, 2011 funding levels based on the Company's unhedged debt of $61.8 million, a 50 basis point movement in interest rates would not result in a material change in annualized interest expense, on a pre-tax basis, nor upon cash flows from operations.

Receivables Securitization Program

On March 3, 2009, USI entered into an accounts receivables securitization program (as amended to date, the "Receivables Securitization Program" or the "Program" or the "Current Program") that replaced the securitization program that USI terminated on March 2, 2009 (the "Prior Receivables Securitization Program" or the "Prior Program"). The parties to the Program are USI, USSC, United Stationers Financial Services ("USFS"), United Stationers Receivables, LLC ("USR"), and Bank of America, National Association (the "Investor"). The Current Program is governed by the following agreements:

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The Transfer and Administration Agreement among USSC, USFS, USR, and the Investors;

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The Receivables Sale Agreement between USSC and USFS;

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The Receivables Purchase Agreement between USFS and USR; and

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The Performance Guaranty executed by USI in favor of USR.

Pursuant to the Receivables Sale Agreement, USSC sells to USFS, on an on-going basis, all the customer accounts receivable and related rights originated by USSC. Pursuant to the Receivables Purchase Agreement, USFS sells to USR, on an on-going basis, all the accounts receivable and related rights purchased from USSC, as well as the accounts receivable and related rights USFS acquired from its then subsidiary, USS Receivables Company, Ltd. ("USSRC"), upon the termination of the Prior Program. Pursuant to the Transfer and Administration Agreement, USR then sells the receivables and related rights to the Investor. The maximum investment to USR at any one time outstanding under the Current Program cannot exceed $100 million. USFS retains servicing responsibility over the receivables. USR is a wholly-owned, bankruptcy remote special purpose subsidiary of USFS. The assets of USR are not available to satisfy the creditors of any other person, including USFS, USSC or USI, until all amounts outstanding under the facility are repaid and the Program has been terminated.

As of December 31, 2011, the Transfer and Administration Agreement prohibited the Company from exceeding a Leverage Ratio of 3.25 to 1.00 and imposed other restrictions on the Company's ability to incur additional debt. It also contained additional covenants, requirements and events of default that are customary for this type of agreement, including the failure to make any required payments when due.

On January 20, 2012, United Stationers Supply Co. ("USSC"), United Stationers Receivables, LLC ("USR"), and United Stationers Financial Services LLC ("USFS") entered into a First Omnibus Amendment to Receivables Sale Agreement, Receivables Purchase Agreement and Transfer and Administration Agreement with Bank of America, N.A. (the "First Omnibus Amendment"). The First Omnibus Agreement amended (i) the Transfer and Administration Agreement, dated as of March 3, 2009 (as amended through the date hereof, the "Transfer Agreement"), between USSC, USR, USFS and Bank of America, (ii) the Receivables Purchase Agreement, dated as of March 3, 2009 (as amended through the date hereof, the "Purchase Agreement"), between USFS and USR, and (iii) the Receivables Sale Agreement, dated as of March 3, 2009 (as amended through the date hereof, the "Sale Agreement"), between USSC and USFS. The First Omnibus Amendment extended the commitment termination date of the Transfer Agreement to January 18, 2013. The Omnibus Amendment also amended the Transfer Agreement to conform the leverage ratio covenant and consolidated net worth covenant in the Transfer Agreement to the corresponding covenants in the Third Amended and Restated Five-Year Revolving Credit Agreement dated September 21, 2011 among United Stationers Supply Co., United Stationers Inc., the lenders from time to time parties thereto and JPMorgan Chase Bank, National Association.

The receivables sold to the Investor will remain on USI's Consolidated Balance Sheets, and amounts advanced to USR by the Investor or any successor Investor will be recorded as debt on USI's Consolidated Balance Sheets. The cost of such debt will be recorded as interest expense on USI's Consolidated Statements of Income. As of December 31, 2011 and December 31, 2010, $421.0 million and $405.5 million, respectively, of receivables had been sold to the Investor. However, no amounts had been borrowed by USR as of those periods.

Credit Agreement and Other Debt

On September 21, 2011, USI and USSC entered into a Third Amended and Restated Five-Year Revolving Credit Agreement (the "2011 Credit Agreement") with U.S. Bank National Association and Wells Fargo Bank, National Association as Syndication Agents; Bank of America, N.A. and PNC Bank, National Association, as Documentation Agents; JPMorgan Chase Bank, National Association, as Administrative Agent, and the lenders identified therein. The 2011 Credit Agreement amends and restates the Second Amended and Restated Five-Year Revolving Credit Agreement with PNC Bank, National Association and U.S. Bank National Association, as Syndication Agents, KeyBank National Association and LaSalle Bank, National Association, as Documentation Agents, and JPMorgan Chase Bank, National Association, as Agent (as amended on December 21, 2007, the "2007 Credit Agreement").

The 2011 Credit Agreement provides for a revolving credit facility with an aggregate committed principal amount of $700 million. The 2011 Credit Agreement also provides a sublimit for the issuance of letters of credit in an aggregate amount not to exceed $100 million at any one time and provides a sublimit for swing line loans in an aggregate outstanding principal amount not to exceed $50 million at any one time. These amounts, as sublimits, do not increase the maximum aggregate principal amount, and any undrawn issued letters of credit and all outstanding swing line loans under the facility reduce the remaining availability under the 2011 Credit Agreement. Subject to the terms and conditions of the 2011 Credit Agreement, USSC may seek additional commitments to increase the aggregate committed principal amount to a total amount of $1 billion.

Borrowings under the 2011 Credit Agreement bear interest at LIBOR for specified interest periods or at the Alternate Base Rate (as defined in the 2011 Credit Agreement), plus, in each case, a margin determined based on the Company's permitted debt to EBITDA ratio (calculated as provided in Section 6.20 of the 2011 Credit Agreement) (the "Leverage Ratio"). In addition, the Company is required to pay the lenders a fee on the unutilized portion of the commitments under the 2011 Credit Agreement at a rate per annum depending on the Company's Leverage Ratio.

Subject to the terms and conditions of the 2011 Credit Agreement, USSC is permitted to incur up to $300 million of indebtedness in addition to borrowings under the 2011 Credit Agreement, plus up to $200 million under the Company's Receivables Securitization Program and up to $135 million in replacement or refinancing of the 2007 Note Purchase Agreement. The 2011 Credit Agreement prohibits the Company from exceeding a Leverage Ratio of 3.50 to 1.00 and imposes limits on the Company's ability to repurchase stock and issue dividends when the Leverage Ratio is greater than 3.00 to 1. The 2011 Credit Agreement contains additional representations and warranties, covenants and events of default that are customary for facilities of this type.

On October 15, 2007, USI and USSC entered into a Master Note Purchase Agreement (the "2007 Note Purchase Agreement") with several purchasers. The 2007 Note Purchase Agreement allows USSC to issue up to $1 billion of senior secured notes, subject to the debt restrictions contained in the 2007 Credit Agreement. Pursuant to the 2007 Note Purchase Agreement, USSC issued and sold $135 million of floating rate senior secured notes due October 15, 2014 at par in a private placement (the "Series 2007-A Notes"). Interest on the Series 2007-A Notes is payable quarterly in arrears at a rate per annum equal to three-month LIBOR plus 1.30%, beginning January 15, 2008. USSC may issue additional series of senior secured notes from time to time under the 2007 Note Purchase Agreement but has no specific plans to do so at this time.

USSC has entered into several interest rate swap transactions to mitigate its floating rate risk on a portion of its total long-term debt. See Note 20, "Derivative Financial Instruments", for further details on these swap transactions and their accounting treatment.

The Company had outstanding letters of credit of $10.3 million under the 2011 Credit Agreement as of December 31, 2011 and $18.6 million under the 2007 Credit Agreement as of December 31, 2010. Approximately $7.0 million of these letters of credit were used to guarantee the industrial development bond as of December 31, 2010.

Obligations of USSC under the 2011 Credit Agreement and the 2007 Note Purchase Agreement are guaranteed by USI and certain of USSC's domestic subsidiaries. USSC's obligations under these agreements and the guarantors' obligations under the guaranties are secured by liens on substantially all Company assets, including accounts receivable, chattel paper, commercial tort claims, documents, equipment, fixtures, instruments, inventory, investment property, pledged deposits and all other tangible and intangible personal property (including proceeds) and certain real property, but excluding accounts receivable (and related credit support) subject to any accounts receivable securitization program permitted under the 2011 Credit Agreement. Also securing these obligations are first priority pledges of all of the capital stock of USSC and the domestic subsidiaries of USSC.

The 2011 Credit Agreement, the 2007 Note Purchase Agreement and the Transfer and Administration Agreement each prohibit the Company from exceeding a Leverage Ratio of 3.50 to 1.00. The 2011 Credit Agreement and the 2007 Note Purchase Agreement also impose limits on the Company's ability to repurchase stock and issue dividends when the Leverage Ratio is greater than 3.00 to 1. The 2011 Credit Agreement, the 2007 Note Purchase Agreement and the Transfer and Administration Agreement contain additional representations and warranties, covenants and events of default that are customary for such facilities.

The 2011 Credit Agreement, 2007 Note Purchase Agreement, and the Transfer and Administration Agreement all contain cross-default provisions. As a result, if a termination event occurs under any of those agreements, the lenders under all of the agreements may cease to make additional loans, accelerate any loans then outstanding and/or terminate the agreements to which they are party. Debt maturities as of December 31, 2011, were as follows (in millions):


Year	Amount
2012	$	—
2013		—
2014		135.0
2015		—
Later years		361.8

Total	$	496.8