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Note 9 – Line of Credit
The Company entered into a new credit agreement with a syndicate
of banks effective June 25, 2002. As a result of this agreement,
we have a $100.0 million revolving credit facility at an interest
rate that varies with LIBOR and/or the prime rate, and is
based on our leverage ratio, as defined by the agreement.
We are charged a quarterly commitment fee, currently 0.25%
of the facility, that varies with our financial leverage and
is paid on the unused portion of the credit facility. No amounts
were outstanding under the Company’s revolving credit
facility as of June 30, 2002, nor under its predecessor facility
at June 30, 2001. Credit under the facility is available upon
demand, although the credit facility requires us to observe
certain covenants (including requirements for minimum net
worth, which act to restrict dividends, and other financial
and restrictive covenants) and is collateralized with a pledge
of stock of material subsidiaries. At June 30, 2002, and at
each quarter end during the fiscal year, we were in compliance
with all covenants under the credit facility. A portion of
the revolving facility is used to support required letters
of credit issued under the credit line. As a result, $5.8
million of the facility is currently unavailable for operating
needs. We are also charged a fee for outstanding letters of
credit that also fluctuates based on our leverage ratio. The
credit facility is scheduled to mature on June 25, 2005.
Additionally, the Company guarantees a credit facility which provides loans to associates for stock purchased under our former Stock Purchase Program. This program was discontinued in conjunction with our initial public offering in October 2000. As a result, the facility permanently decreases as the loans are repaid. The maximum available borrowings and aggregate outstanding balances under this facility were $2.9 million and $8.5 million at June 30, 2002, and June 30, 2001, respectively. A total of 2,731,000 and 4,598,000 Watson Wyatt & Company Holdings shares were pledged by stockholders to collateralize these loans at June 30, 2002, and June 30, 2001, respectively.
go to note 10
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