5.	Borrowing Arrangements

CBIZ had two primary debt arrangements at September 30, 2013 that provided the Company with the capital necessary to meet its working capital needs as well as the flexibility to continue with its strategic initiatives, including business acquisitions and share repurchases: the 2010 Convertible Senior Subordinated Notes (“2010 Notes”) totaling $130 million and a $275 million unsecured credit facility. In addition to the discussion below, refer to the Annual Report on Form 10-K for the year ended December 31, 2012 for additional details of CBIZ’s borrowing arrangements.

2010 Convertible Senior Subordinated Notes

On September 27, 2010, CBIZ issued $130.0 million of 2010 Notes to qualified institutional buyers. The 2010 Notes are direct, unsecured, senior subordinated obligations of CBIZ. The 2010 Notes bear interest at a rate of 4.875% per annum, payable in cash semi-annually in arrears on April 1 and October 1. The 2010 Notes mature on October 1, 2015 unless earlier redeemed, repurchased or converted.

CBIZ separately accounts for the debt and equity components of the 2010 Notes. The carrying amount of the debt and equity components at September 30, 2013 and December 31, 2012 were as follows (in thousands):


	September 30,			December 31,
	2013			2012
Principal amount of notes	$	130,000		$	130,000
Unamortized discount		(6,230	)		(8,334	)

Net carrying amount	$	123,770		$	121,666

Additional paid-in-capital, net of tax	$	8,555		$	8,555

The discount is being amortized at an annual effective rate of 7.5% over the term of the 2010 Notes, which is five years from the date of issuance. At September 30, 2013, the unamortized discount had a remaining amortization period of approximately 24 months.

2006 Convertible Senior Subordinated Notes

At September 30, 2013, CBIZ had $750,000 outstanding of its 3.125% Convertible Senior Subordinated Notes that were issued in 2006 (“2006 Notes”). These 2006 Notes are direct, unsecured, senior subordinated obligations of CBIZ. The 2006 Notes bear interest at a rate of 3.125% per annum, payable in cash semi-annually in arrears on each June 1 and December 1. The 2006 Notes mature on June 1, 2026 unless earlier redeemed, repurchased or converted.

CBIZ separately accounts for the debt and equity components of the 2006 Notes. The carrying amount of the debt and equity components at September 30, 2013 and December 31, 2012 were as follow (in thousands):


	September 30,		December 31,
	2013		2012
Principal amount of notes	$	750	$	750
Unamortized discount		—		—

Net carrying amount	$	750	$	750

Additional paid-in-capital, net of tax	$	11,425	$	11,425

During the three and nine months ended September 30, 2013 and 2012, CBIZ recognized interest expense on the 2010 Notes and 2006 Notes as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Contractual coupon interest	$	1,590	$	1,590	$	4,771	$	4,771
Amortization of discount		710		659		2,104		1,954
Amortization of deferred financing costs		180		180		540		540

Total interest expense	$	2,480	$	2,429	$	7,415	$	7,265

Bank Debt

CBIZ maintains a $275 million unsecured credit facility (“credit facility”) with Bank of America as agent for a group of seven participating banks. The balance outstanding under the credit facility was $40.0 million and $208.9 million at September 30, 2013 and December 31, 2012, respectively. The significant decrease in the balance outstanding from December 31, 2012 to September 30, 2013 was due to a portion of the proceeds from the sale of MMP being applied to the credit facility. Rates for the nine months ended September 30, 2013 and 2012 were as follows:


	Nine Months Ended September 30,
	2013			2012
Weighted average rates		2.96	%		3.18	%

Range of effective rates		2.40% – 3.91	%		2.68% – 3.91	%

CBIZ had approximately $138.8 million of available funds under the credit facility at September 30, 2013, net of outstanding letters of credit and performance guarantees of $4.4 million. The credit facility provides CBIZ operating flexibility and funding to support seasonal working capital needs and other strategic initiatives such as acquisitions and share repurchases. The maturity date of the credit facility is June 2015. CBIZ believes it is in compliance with its debt covenants at September 30, 2013.