American Home Shield 2010 Annual Report Download - page 95

Table of Contents
Notes to the Consolidated Financial Statements (Continued)
Note 12. Long-Term Debt (Continued)
will be adjusted from time to time based on the Consolidated Secured Leverage Ratio (as defined in the Term Facilities agreement) for the previous fiscal
quarter.
In February 2008, the Company entered into two three-year interest rate swap agreements and a four-year interest rate swap agreement, effective
March 3, 2008. The total notional amount of the three-year swap agreements was $250.0 million, and the total notional amount of the four-year swap
agreement was $250.0 million. Under the terms of the agreements, the Company will pay a weighted average fixed rate of interest of 3.15% on the
$250.0 million notional amount under the three-year swap agreements and 3.48% on the $250.0 million notional amount under the four-year swap agreement,
and the Company will receive a floating rate of interest (based on three month LIBOR) on the notional amount. Therefore, during the term of the swap
agreements, the effective interest rate for $500.0 million of the term loans is fixed at a rate between 3.15% and 3.48% plus the incremental borrowing margin
of 2.50% as of December 31, 2010.
In August 2008, the Company entered into two three-year interest rate swap agreements effective September 2, 2008. The total notional amount of the
agreements was $200.0 million. Under the terms of the agreements, the Company will pay a weighted average fixed rate of interest of 3.83% on the
$200.0 million notional amount, and the Company will receive a floating rate of interest (based on one month LIBOR) on the notional amount. Therefore,
during the term of the swap agreements, the effective interest rate for $200.0 million of the term loans is fixed at a rate of 3.83% plus the incremental
borrowing margin of 2.50% as of December 31, 2010.
In September 2008, the Company entered into a four-year interest rate swap agreement effective October 1, 2008. The notional amount of the agreement
was $200.0 million. Under the terms of the agreement, the Company will pay a fixed rate of interest of 3.53% on the $200.0 million notional amount, and the
Company will receive a floating rate of interest (based on one month LIBOR) on the notional amount. Therefore, during the term of the swap agreement, the
effective interest rate for $200.0 million of the term loans is fixed at a rate of 3.53% plus the incremental borrowing margin of 2.50% as of December 31,
2010.
In April 2009, the Company entered into a two-year interest rate swap agreement effective August 2, 2010. The notional amount of the agreement was
$530.0 million. Under the terms of the agreement, the Company will pay a fixed rate of interest of 2.55% on the $530.0 notional amount, and the Company
will receive a floating rate of interest (based on one month LIBOR) on the notional amount. Therefore, during the term of the swap agreement, the effective
interest rate for $530.0 million of the term loans is fixed at a rate of 2.55% plus the incremental borrowing margin of 2.50% as of December 31, 2010.
In June 2010, the Company entered into two two-year interest rate swap agreements effective March 3, 2011. The total notional amount of the
agreements was $250.0 million. Under the terms of the agreements, the Company will pay a weighted average fixed rate of interest of 1.70% on the
$250.0 million notional amount, and the Company will receive a floating rate of interest (based on one month LIBOR) on the notional amount. Therefore,
during the term of the swap agreements, the effective interest rate for $250.0 million of the term loans will be fixed at a rate of 1.70% plus the incremental
borrowing margin of 2.50% as of December 31, 2010.
In June 2010, the Company entered into two two-year interest rate swap agreements effective September 1, 2011. The total notional amount of the
agreements was $200.0 million. Under the terms of the agreements, the Company will pay a weighted average fixed rate of interest of 2.22%
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