Cleveland Clinic Health System Obligated Group - FMSbonds.com

Cleveland Clinic Health SystemNotes to Consolidated Financial Statements (continued)11. Hospital Revenue Bonds and Interest Rate Swaps (continued)The net fair value of the swap agreements based on current settlement prices is approximately$9.4 million payable to the counterparties (recorded in other noncurrent liabilities) atDecember 31, 2007, and $8.8 million receivable from the counterparty (recorded in othernoncurrent assets) at December 31, 2006. Prior to the adoption of Issue No. G26, the Systemrecorded an increase in unrestricted net assets of $2.0 million for the period January 1 throughMarch 31, 2007 and $7.7 million for the year 2006, which represented the change in the marketvalue on the interest rate swaps that qualified as cash flow hedges. On April 1, 2007, the Systemdedesignated the cash flow swaps. A loss of $20.2 million was recorded in other nonoperatinggains and losses, representing the change in fair value of the interest rate swaps at December 31,2007. The System also amortized $0.3 million from unrestricted net assets to nonoperating gainsand losses based on the accumulated derivative gain in the fair value for those swaps thatqualified as cash flow hedges prior to April 1, 2007.In March 2006, the System entered into an agreement for three interest rate swaps that werecancelled in September 2006. The net proceeds from the cancelled swaps of $1.3 million isrecorded as a nonoperating gain. Additionally, in 2007 the System entered into three new interestrate swap agreements related to operating lease payments that are based on variable rate debt forthe Service Center and Office Complex (Note 14).The following table summarizes the System’s interest rate swap agreements (in thousands):Notional Amount atExpirationDecember 31Swap Type Date System Pays 2007 2006Fixed 2032 4.32% $ 2,874 $ 2,912Fixed 2032 4.33% 5,748 5,823Fixed 2032 3.78% 2,874 2,912Floating 2016 SIFMA Swap Index 30,465 33,030Fixed 2016 5.28% 30,465 33,030Fixed 2030 5.07% 62,500 62,500Fixed 2030 5.06% 62,500 62,500Fixed 2036 4.90% 50,000 50,000Fixed 2036 4.90% 79,375 79,375Fixed 2027 3.56% 152,920 –Fixed 2028 5.12% 45,855 –Fixed 2028 3.51% 34,770 –$ 560,346 $ 332,08228