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This excerpt taken from the LEAP 10-Q filed Nov 7, 2008. Item 3. Quantitative and Qualitative Disclosures About Market Risk. Interest Rate Risk. The terms of our Credit Agreement require us to enter into interest rate swap agreements in a sufficient amount so that at least 50% of our total outstanding indebtedness for borrowed money bears interest at a fixed rate. As of September 30, 2008, approximately 78.2% of our indebtedness for borrowed money accrued interest at a fixed rate. The fixed rate debt consisted of $1,100 million of senior notes due 2014 which bear interest at a fixed rate of 9.375% per year, $250 million of convertible senior notes due 2014 which bear interest at a fixed rate of 4.50% per year and $300 million of senior notes due 2015 which bear interest at a fixed rate of 10.0% per year. In addition, $355 million of the $879.8 million in outstanding floating rate debt under our Credit Agreement as of September 30, 2008 was covered by interest rate swap agreements. As of September 30, 2008, we had interest rate swap agreements with respect to $355 million of our debt which effectively fixed the LIBOR interest rate on $150 million of indebtedness at 8.3% and $105 million of indebtedness at 7.3% through June 2009 and which effectively fixed the LIBOR interest rate on $100 million of additional indebtedness at 8.0% through September 2010. In addition to the outstanding floating rate debt under our Credit Agreement, LCW Operations had $39.0 million in outstanding floating rate debt as of September 30, 2008, consisting of two term loans. In 2007, LCW Operations entered into an interest rate cap agreement which effectively caps the three month LIBOR interest rate at 7.0% on $20 million of its outstanding borrowings. As of September 30, 2008, net of the effect of these interest rate swap agreements, our outstanding floating rate indebtedness totaled approximately $563.8 million. The primary base interest rate is three month LIBOR plus an applicable margin (subject to the LIBOR floor of 3.0% per annum). Assuming the outstanding balance on our floating rate indebtedness remains constant over a year, a 100 basis point increase in the interest rate would decrease pre-tax income, or increase pre-tax loss, and cash flow, net of the effect of the interest rate swap agreements, by approximately $5.6 million. Hedging Policy. Our policy is to maintain interest rate hedges to the extent that we believe them to be fiscally prudent, and as required by our credit agreements. We do not engage in any hedging activities for speculative purposes.
62
Table of ContentsThis excerpt taken from the LEAP DEF 14A filed Apr 23, 2008. Quantitative
and Qualitative Disclosures About Market Risk
Interest Rate Risk. The terms of our Credit
Agreement require us to enter into interest rate swap agreements
in a sufficient amount so that at least 50% of our total
outstanding indebtedness for borrowed money bears interest at a
fixed rate. As of December 31, 2007, approximately 72% of
our indebtedness for borrowed money accrued interest at a fixed
rate. The fixed rate debt consisted of $1,100 million of
unsecured senior notes which bear interest at a fixed rate of
9.375% per year. In addition, $355 million of the
$886.5 million in outstanding floating rate debt under our
Credit Agreement is covered by interest rate swap agreements. As
of December 31, 2007, we had interest rate swap agreements
with respect to $355 million of our debt which effectively
fixed the LIBOR interest rate on $150 million of
indebtedness at 8.3% and $105 million of indebtedness at
7.3% through June 2009 and which effectively fixed the LIBOR
interest rate on $100 million of additional indebtedness at
8.0% through September 2010. In addition to the outstanding
floating rate debt under our Credit Agreement, LCW Operations
had $40 million in outstanding floating rate debt as of
December 31, 2007, consisting of two term loans. In January
2007, LCW Operations entered into an interest rate cap agreement
which effectively caps the three month LIBOR interest rate at
7.0% on $20 million of its outstanding borrowings.
As of December 31, 2007, net of the effect of these
interest rate swap agreements, our outstanding floating rate
indebtedness totaled approximately $571.5 million. The
primary base interest rate is three month LIBOR plus an
applicable margin. Assuming the outstanding balance on our
floating rate indebtedness remains constant over a year, a
100 basis point increase in the interest rate would
decrease pre-tax income, or increase pre-tax loss, and cash
flow, net of the effect of the interest rate swap agreements, by
approximately $5.7 million.
As described in Note 6 to the consolidated financial
statements in “Item 8. Financial Statements and
Supplementary Data” of this report, we amended our Credit
Agreement on November 20, 2007. This Second Amendment
increased the primary base interest rate for our term loan to
three month LIBOR plus a margin of 3.0% beginning on
November 20, 2007. In addition, in connection with the
execution of the Second Amendment, we paid a fee equal to
25 basis points on the aggregate principal amount of the
commitments and loans of each lender that executed the Second
Amendment on or before 5:00 p.m. on November 19, 2007,
together with the legal expenses of the administrative agent,
which represented an aggregate payment of $2.7 million.
Hedging Policy. Our policy is to maintain
interest rate hedges to the extent that we believe them to be
fiscally prudent, and as required by our credit agreements. We
do not engage in any hedging activities for speculative purposes.
This excerpt taken from the LEAP DEF 14A filed Apr 6, 2007. Quantitative
and Qualitative Disclosures About Market Risk
Interest Rate Risk. As of December 31,
2006, we had $895.5 million in outstanding floating rate
debt under our Credit Agreement. Changes in interest rates would
not significantly affect the fair value of our outstanding
indebtedness. The terms of our Credit Agreement require us to
enter into interest rate swap agreements in a sufficient amount
so that at least 50% of our outstanding indebtedness for
borrowed money bears interest at a fixed rate. At
December 31, 2006, approximately 66% of our indebtedness
for borrowed money accrued interest at a fixed rate. The fixed
rate debt consisted of $750 million of senior notes and
$355 million of senior secured debt covered by interest
rate swap agreements described below.
We have entered into interest rate swap agreements that
effectively fix the interest rate on $250 million of our
senior secured indebtedness at 6.7% and $105 million of our
senior secured indebtedness at 6.8% through June 2007 and 2009,
respectively. As of December 31, 2006, net of the effect of
the interest rate swap agreements described above, our
outstanding floating rate indebtedness totaled
$581 million. The primary base interest rate is three month
LIBOR. Assuming the outstanding balance on our floating rate
indebtedness remains constant over a year, a 100 basis
point increase in the interest rate would decrease pre-tax
income and cash flow, net of the effect of the swap agreements,
by approximately $5.8 million.
Hedging Policy. Our policy is to maintain
interest rate hedges to the extent that we believe them to be
fiscally prudent, and as required by our credit agreements. We
do not currently engage in any hedging activities against
foreign currency exchange rates or for speculative purposes.
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