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Notes to Consolidated Financial Statements
Jarden Corporation Annual Report 2010 (Dollars in millions, except per share data and unless otherwise indicated)
dollars. This swap exchanges the variable interest rate bases of the U.S. dollar balance (3-month U.S. LIBOR plus a spread of
175 basis points) and the equivalent Canadian dollar balance (3-month CAD BA plus a spread of 192 basis points). This swap is
designated as fair value hedge on a U.S. dollar-based term loan of a Canadian subsidiary. Changes in the fair market value of this
cross-currency swap are recorded as an offset to the corresponding long-term debt.
Foreign Currency Contracts
The Company uses foreign currency contracts to mitigate the foreign currency exchange rate exposure on the cash flows related to
forecasted inventory purchases and sales and have maturity dates through September 2012. The derivatives used to hedge these
forecasted transactions that meet the criteria for hedge accounting are accounted for as cash flow hedges. The effective portion of
the gains or losses on these derivatives is deferred as a component of AOCI and is recognized in earnings at the same time that the
hedged item affects earnings and is included in the same caption in the statements of operations as the underlying hedged item.
At December 31, 2010, the Company had approximately $559 notional amount of foreign currency contracts outstanding that are
designated as cash flow hedges of forecasted inventory purchases and sales. For 2010, 2009 and 2008, deferred net (losses)/gains of
($10.2), $20.1 and ($7.1) respectively, were reclassified from AOCI and recognized in earnings. At December 31, 2010, the deferred
net losses of $13.3 within AOCI are primarily expected to be reclassified to earnings for the year ending December 31, 2011.
At December 31, 2010, the Company had outstanding approximately $76 notional amount of foreign currency contracts that are not
designated as effective hedges for accounting purposes and have maturity dates through March 2012. Fair market value gains or
losses are included in the results of operations and are classified in SG&A.
In January 2010, the Company entered into foreign currency contracts to purchase C
=125 as a hedge against the Euro purchase price
of the Acquisition (see Note 3). These foreign currency contracts, which matured on April 1, 2010, were not designated as effective
hedges for accounting purposes and an $8.5 fair market value loss was recognized and included in the results of operations.
Commodity Contracts
The Company enters into commodity-based derivatives in order to mitigate the impact that the rising price of these commodities
has on the cost of certain of the Company’s raw materials. These commodity-based derivatives provide the Company with maximum
cost certainty, and in certain instances allow the Company to benefit should the cost of the commodity fall below certain dollar
levels. At December 31, 2010, the Company had outstanding $6.6 notional amount of commodity-based derivatives that are not
designated as effective hedges for accounting purposes and have maturity dates through June 2011. Fair market value gains or
losses are included in the results of operations and are classified in SG&A.
The following table presents the fair value of derivative financial instruments as of December 31, 2010 and December 31, 2009:
2010 2009
Weighted Average
Remaining Term
(years)
Fair Value of Derivatives Fair Value of Derivatives
(In millions) Asset(a) Liability(a) Asset(a) Liability(a)
Derivatives designated as effective hedges:
Cash flow hedges:
Interest rate swaps $ — $ 5.3 $ — $ 15.2 2.2
Foreign currency contracts 4.5 18.9 3.7 10.4 0.6
Fair value hedges:
Interest rate swaps — 10.2 — — 6.3
Cross-currency swaps — 4.1 — 2.8 1.1
Subtotal 4.5 38.5 3.7 28.4
Derivatives not designated as effective hedges:
Interest rate swaps - cash flow hedges — — — 0.9 —
Interest rate swaps - fair value hedges — — — 15.5 —
Foreign currency contracts 1.3 2.6 0.8 1.0 0.3
Commodity contracts 0.9 — 1.3 — 0.2
Subtotal 2.2 2.6 2.1 17.4
Total $ 6.7 $ 41.1 $ 5.8 $ 45.8
(a) Consolidated balance sheet location:
Asset: Other non-current assets
Liability: Other non-current liabilities
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