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SPECTRUM BRANDS | 2006 ANNUAL REPORT 45
As of September 30, 2006, the potential change in fair value of
outstanding interest rate derivative instruments, assuming a 1 per-
centage point unfavorable shift in the underlying interest rates,
would be a loss of $13.6 million. The net impact on reported
earnings, after also including the reduction in one year’s interest
expense on the related debt due to the same shift in interest
rates, would be a net loss of $2.9 million. The same hypothetical
shift in interest rates as of September 30, 2005 would have
resulted in a loss of $7.1 million in the fair value of outstanding
interest rate derivative instruments, and the net impact on
reported earnings, after also including the reduction in one year’s
interest expense on the related debt due to the shift in interest
rates, would have been a net loss of $0.5 million.
As of September 30, 2006, the potential change in fair value
of outstanding foreign exchange derivative instruments, assum-
ing a 10% unfavorable change in the underlying exchange rates
would be a loss of $22.8 million. The net impact on reported
earnings, after also including the effect of the change in the
underlying foreign currency-denominated exposures, would be a
net gain of $6.0 million. The same hypothetical shift in exchange
rates as of September 30, 2005 would have had no material effect
on the fair value of outstanding foreign exchange derivative
instruments or reported earnings.
As of September 30, 2006, the potential change in fair value
of outstanding commodity price derivative instruments, assum-
ing a 10% unfavorable change in the underlying commodity
prices would be a loss of $5.0 million. The net impact on reported
earnings, after also including the reduction in cost of one year’s
purchases of the related commodities due to the same change in
commodity prices, would be a net gain of $2.9 million. The same
hypothetical shift in commodity prices as of September 30, 2005
would have resulted in a loss of $0.6 million in the fair value of
outstanding commodity price derivative instruments, and the net
impact on reported earnings, after also including the reduction
in cost of one year’s purchases of the related commodities due to
the same change in commodity prices, would have been a net
gain of $1.8 million.
ITEM 8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA
The information required for this Item is included in this
Annual Report on Form 10-K on pages 60 through 103, inclusive
and is incorporated herein by reference.
ITEM 9. CHANGES IN AND
DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND
PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal
executive offi cer and principal fi nancial offi cer, has evaluated the
effectiveness of our disclosure controls and procedures (as such
term is defi ned in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) pursuant to Rule 13a-15(b) under the Exchange Act as of
the end of the period covered by this Annual Report on Form 10-K.
Based on this evaluation, our Chief Executive Offi cer and Chief
Financial Offi cer have concluded that, as of such date, our disclo-
sure controls and procedures are effective to provide reasonable
assurance that information required to be disclosed by us in
reports that we fi le or submit under the Exchange Act is recorded,
processed, summarized and reported within the time periods
specifi ed in applicable SEC rules and forms, and is accumulated
and communicated to the Company’s management, including the
Company’s Chief Executive Offi cer and Chief Financial Offi cer,
as appropriate to allow timely decisions regarding required
disclosure.
Management’s Annual Report on Internal Control over
Financial Reporting
The Company’s management is responsible for establishing
and maintaining adequate internal control over fi nancial report-
ing (as defi ned in Rule 13a-15(f) and 15d-15(f) under the
Securities Exchange Act of 1934, as amended). The Company’s
management assessed the effectiveness of its internal control
over fi nancial reporting as of September 30, 2006. In making this
assessment, the Company’s management used the criteria set
forth by the Committee of Sponsoring Organizations of the
Treadway Commission (“COSO”) in Internal Control-Integrated
Framework. The Company’s management has concluded that, as of
September 30, 2006, its internal control over fi nancial reporting is
effective based on these criteria. The Company’s independent reg-
istered public accounting fi rm, KPMG LLP, has issued an attesta-
tion report on management’s assessment of the Company’s internal
control over fi nancial reporting.
2006 Form 10-K Annual Report
Spectrum Brands, Inc.