Schweser Book 4 SS13 Swaps

Page 54. The manager enter a 2 year swap agreement. Just to understand, so if the spot price in one year is $127.96, why will there be a settlement?

Because when the manager enters into the contract, the fixed price of the contract is 127.42. So, when the price rises, the manager stands to gain because he has locked into the cheaper price. Hence the settlement.