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Jarden Corporation Annual Report 2013 29
Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of
the Company. The Company may from time to time make written or oral statements that are “forward-looking,” including statements
contained in this report and other lings with the SEC and in reports to its stockholders. Such forward-looking statements include
the Company’s adjusted earnings per share, expected or estimated revenue, the outlook for the Company’s markets and the demand
for its products, estimated sales, segment earnings, net interest expense, income tax provision, earnings per share, reorganization
and other charges, cash ows from operations, consistent protable growth, free cash ow, future revenues and gross operating and
EBITDA margin improvement requirement and expansion, organic net sales growth, bank leverage ratio, the success of new product
introductions, growth in costs and expenses, the impact of commodities, currencies, and transportation costs and the Company’s ability
to manage its risk in these areas, repurchase of shares of common stock from time to time under the Company’s stock repurchase
program or otherwise, and the impact of acquisitions, divestitures, restructurings and other unusual items, including the Company’s
ability to successfully integrate and obtain the anticipated results and synergies from its consummated acquisitions. These statements
are made on the basis of management’s views and assumptions as of the time the statements are made and the Company undertakes
no obligation to update these statements. There can be no assurance, however, that its expectations will necessarily come to pass.
A discussion of factors that could cause results to vary is included in the company’s periodic and other reports led with the SEC.
Quantitative and Qualitative Disclosures About Market Risk
In general, business enterprises can be exposed to market risks including uctuations in interest rates, foreign currency exchange rates
and certain commodity prices, and that can affect the cost of operating, investing and nancing under those conditions. The Company
believes it has moderate exposure to these risks. The Company assesses market risk based on changes in interest rates, foreign
currency rates and commodity prices utilizing a sensitivity analysis that measures the potential loss in earnings, fair values and cash
ows based on a hypothetical 10% change in these rates and prices.
The Company is exposed to interest rate risk on its variable rate debt and price risk on its xed rate debt. As such, the Company
monitors the interest rate environment and uses interest rate swap agreements to manage its interest rate risk and price risk by
balancing its exposure to xed and variable interest rates while attempting to minimize interest costs. As of December31, 2013,
approximately $2.1 billion of the Company’s debt carries a variable rate of interest. The remainder of the debt (approximately $2.6
billion) carries a xed rate of interest either by nature or through the use of interest rate swaps. A hypothetical 10% change in these
interest rates would change interest expense by approximately $4.5 million and the fair values of xed rate debt by approximately $45
million.
While the Company transacts business predominantly in U.S. dollars and most of its revenues are collected in U.S. dollars, a substantial
portion of the Company’s operating costs are denominated in other currencies, such as the Brazilian Real, British Pound, Canadian
dollar, Chinese Renminbi, European Euro, Japanese Yen, Mexican Peso and Venezuelan Bolivar. Changes in the relation of these
and other currencies to the U.S. dollar will affect Company’s sales and protability and could result in exchange losses. For 2013,
approximately 39% of the Company’s sales were denominated in foreign currencies, the most signicant of which were: European
Euro—approximately 11%; and Canadian dollar—approximately 6%. The primary purpose of the Company’s foreign currency hedging
activities is to mitigate the foreign currency exchange rate exposure on the cash ows related to forecasted inventory purchases and
sales. A hypothetical 10% change in foreign currency exchange rates would not have a material effect on foreign currency gains and
losses related to the foreign currency derivatives or the net fair value of the Company’s foreign currency derivatives.
The Company is exposed to the price risk that the rising cost of commodities has on certain of its raw materials. As such, the Company
monitors the commodities markets and from time to time 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. A hypothetical 10%
change in the commodity prices underlying the derivatives would not have a material effect on the fair value commodity derivatives
and the related gains and losses included in the Company’s results of operations.
The Company is exposed to credit loss in the event of non-performance by the counterparties to its derivative nancial instruments, all
of which are highly rated institutions; however, the Company does not anticipate non-performance by such counterparties.
The Company does not enter into derivative nancial instruments for trading purposes.
Management’s Discussion and Analysis
Jarden Corporation Annual Report 2013