Debt and Financing Arrangements

9 Months Ended

Sep. 30, 2016

5.	Debt and Financing Arrangements

At September 30, 2016, CBIZ’s primary financing arrangement was the $400.0 million unsecured credit facility discussed below, which provides 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. In addition to the discussion below, refer to the Annual Report on Form 10-K for the year ended December 31, 2015 for additional details of CBIZ’s debt and financing arrangements.

Bank Debt

CBIZ has a $400.0 million unsecured credit facility with Bank of America as agent for a group of eight participating banks that matures in July 2019. The balance outstanding under the credit facility was $219.6 million and $205.8 million at September 30, 2016 and December 31, 2015, respectively.

Rates for the nine months ended September 30, 2016 and 2015 were as follows:

	Nine Months Ended
	September 30,
	2016		2015
Weighted average rates		2.43%		2.04%
Range of effective rates	1.82% - 3.50%		1.65% - 3.25%

CBIZ had approximately $99.0 million of available funds under the credit facility at September 30, 2016, net of outstanding letters of credit and performance guarantees of $2.3 million. The credit facility provides CBIZ with operating flexibility and funding to support seasonal working capital needs and other strategic initiatives such as acquisitions and share repurchases. As of September 30, 2016, CBIZ was in compliance with its debt covenants.

3.125% Convertible Senior Subordinated Notes (the “2006 Notes”)

During the second quarter of 2016, CBIZ redeemed the remaining 2006 Notes for $750 thousand in cash plus accrued interest under an optional early redemption provision.

Interest Expense

During the three and nine months ended September 30, 2016 and 2015, CBIZ recognized interest expense as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
Credit facility (1)	$	1,760	$	872	$	5,011	$	3,088
2010 Notes (2)		—		962		—		4,559
2006 Notes		—		6		8		18
Total interest expense	$	1,760	$	1,840	$	5,019	$	7,665

(1)

Components of interest expense related to the credit facility include amortization of deferred financing costs, commitment fees and line of credit fees.

(2)

Components of interest expense related to the 4.875% Convertible Senior Subordinated Notes (the “2010 Notes”) include the contractual coupon interest, amortization of discount and amortization of deferred financing costs.

The 2010 Notes matured on October 1, 2015. As previously disclosed, holders received $1,000 in cash for each $1,000 principal amount of 2010 Notes along with a premium of the conversion value over par value. The $71.8 million conversion value of the 2010 Notes was determined by a cash averaging period that began on October 5, 2015 and ended on October 30, 2015. Cash payments were settled on November 4, 2015 with funds available under the credit facility.