Charter 2012 Annual Report Download - page 68

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The table set forth below summarizes the fair values and contract terms of financial instruments subject to interest rate risk
maintained by us as of December 31, 2012 (dollars in millions):
2013 2014 2015 2016 2017 Thereafter Total
Fair Value at
December 31,
2012
Debt:
Fixed Rate $ — $ — $ — $ — $ 1,000 $ 8,250 $ 9,250 $ 9,933
Average Interest
Rate —% —% —% —% 7.25% 6.61% 6.68%
Variable Rate $ 260 $ 411 $ 98 $ 1,556 $ 655 $ 707 $ 3,687 $ 3,695
Average Interest
Rate 2.30% 3.00% 3.23% 4.44% 4.07% 5.76% 4.28%
Interest Rate
Instruments:
Variable to Fixed
Rate $ 900 $ 800 $ 300 $ 250 $ 850 $ — $ 3,100 $ 75
Average Pay Rate 5.21% 5.65% 5.99% 4.89% 4.84% —% 5.27%
Average Receive
Rate 3.57% 3.69% 3.87% 4.69% 5.26% —% 4.18%
At December 31, 2012, we had $3.1 billion in notional amounts of interest rate swaps outstanding. This includes $1.1 billion in
delayed start interest rate swaps that become effective in March 2013 through March 2015. In any future quarter in which a portion
of these delayed start hedges first becomes effective, an equal or greater notional amount of the currently effective swaps are
scheduled to mature. Therefore, the $2.0 billion notional amount of currently effective interest rate swaps will gradually step
down over time as current swaps mature and an equal or lesser amount of delayed start swaps become effective.
The notional amounts of interest rate instruments do not represent amounts exchanged by the parties and, thus, are not a measure
of our exposure to credit loss. The amounts exchanged are determined by reference to the notional amount and the other terms
of the contracts. The estimated fair value is determined using a present value calculation based on an implied forward LIBOR
curve (adjusted for Charter Operating’s or counterparties’ credit risk). Interest rates on variable debt are estimated using the
average implied forward LIBOR for the year of maturity based on the yield curve in effect at December 31, 2012 including
applicable bank spread.
Item 8. Financial Statements and Supplementary Data.
Our consolidated financial statements, the related notes thereto, and the reports of independent accountants are included in this
annual report beginning on page F-1.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
As of the end of the period covered by this report, under the supervision and with the participation of our management, including
our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of the design and operation of our
disclosure controls and procedures with respect to the information generated for use in this annual report. The evaluation was
based in part upon reports and certifications provided by a number of executives. Based upon, and as of the date of that evaluation,
our Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective to
provide reasonable assurances that information required to be disclosed in the reports we file or submit under the Securities