Long-Term Debt

Borrowings consist of the following:



	December 31,
(in thousands)	2012			2011
Term loan payable in quarterly installments with a final maturity of July 31, 2013	$	53,149		$	127,557
Capitalized lease obligations	—			15
Total	53,149			127,572
Less current portion	(53,149		)	(74,423		)
Long-term debt and capital lease obligations, net of current portion	$	—		$	53,149

On July 31, 2008, ANSYS borrowed $355.0 million from a syndicate of banks. The interest rate on the indebtedness provides for tiered pricing with the initial rate at the prime rate +0.50%, or the LIBOR rate +1.50%, with step downs permitted after the initial six months under the credit agreement down to a flat prime rate or the LIBOR rate +0.75%. Such tiered pricing is determined by the Company’s consolidated leverage ratio. The Company’s consolidated leverage ratio has been reduced to the lowest pricing tier in the debt agreement. During the year ended December 31, 2012, the Company made the required quarterly principal payments of $74.4 million in the aggregate.

The Company entered into an interest rate swap agreement in order to hedge a portion of each of the first eight forecasted quarterly variable rate interest payments on the Company’s term loan. The interest rate swap agreement terminated on June 30, 2010.

For the years ended December 31, 2012, 2011 and 2010, the Company recorded interest expense related to the term loan at average interest rates of 1.22%, 1.05% and 1.53%, respectively. If the Company did not enter into the interest rate swap agreement, the weighted average interest rate would have been 1.08% for the year ended December 31, 2010. The interest expense on the term loan and amortization related to debt financing costs were as follows:



	Year Ended December 31,
	2012				2011				2010
(in thousands)	Interest Expense		Amortization		Interest Expense		Amortization		Interest Expense		Amortization
July 31, 2008 term loan (interest expense includes $0, $0 and $864 loss, respectively, on interest rate swap)	$	1,342	$	698	$	1,605	$	953	$	2,960	$	1,107

The interest rate on the outstanding term loan balance of $53.1 million is set for the quarter ending March 31, 2013 at 1.06%, which is based on LIBOR +0.75%. The required future principal payments on the Company’s term loan as of December 31, 2012 are scheduled as follows:



(in thousands)
March 31, 2013	$	26,574
July 31, 2013 (maturity)	26,575
Term loan balance payable as of December 31, 2012	$	53,149

The credit agreement includes covenants related to the consolidated leverage ratio and the consolidated fixed charge coverage ratio, as well as certain restrictions on additional investments and indebtedness.