American Home Shield 2011 Annual Report Download - page 104

Table of Contents
Notes to the Consolidated Financial Statements (Continued)
Note 12. Long-Term Debt (Continued)
August 15, 1997 be secured. The Term Loan Facility is secured on a pari passu basis with the security interests created in the same collateral securing the
Revolving Credit Facility.
The Term Facilities will mature on July 24, 2014. The interest rates applicable to the loans under the Term Facilities are based on a fluctuating rate of
interest measured by reference to either, at ServiceMaster's option, (i) an adjusted London inter-bank offered rate (adjusted for maximum reserves), plus a
borrowing margin (2.50 percent as of December 31, 2011) or (ii) an alternate base rate, plus a borrowing margin (2.50 percent as of December 31, 2011). The
borrowing margin, in each case, 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.
The Company has entered into various interest rate swap agreements. Under the terms of these agreements, the Company pays a fixed rate of interest on
the stated notional amount and the Company receives a floating rate of interest (based on one month or three month LIBOR) on the stated notional amount.
Therefore, during the term of the swap agreements, the effective interest rate on the portion of the term loans equal to the stated notional amount is fixed at the
stated rate in the interest rate swap agreements plus the incremental borrowing margin (2.50 percent as of December 31, 2011). The changes in interest rate
swap agreements in effect for the years ended December 31, 2011, 2010 and 2009, as well as the cumulative interest rate swaps outstanding as of
December 31, 2011 and 2010 are as follows:
(In thousands)
Notional
Amount
Weighted
Average Fixed
Rate(1)
Interest rate swap agreements in effect as of December 31, 2008 $ 1,430,000 3.89%
Entered into effect —
Expired —
Interest rate swap agreements in effect as of December 31, 2009 1,430,000 3.89%
Entered into effect 530,000
Expired (530,000)
Interest rate swap agreements in effect as of December 31, 2010 1,430,000 3.68%
Entered into effect 450,000
Expired (450,000)
Interest rate swap agreements in effect as of December 31, 2011 $ 1,430,000 2.84%
Before the application of the incremental borrowing margin (2.50 percent as of December 31, 2011).
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(1)