Sunbeam 2005 Annual Report Download - page 33

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Quantitative and Qualitative Disclosures About Market Risk
In general, business enterprises can be exposed to market risks including fluctuations in commodity
prices, foreign currency exchange rates and interest rates that can affect the cost of operating, investing and
financing under those conditions. The Company’s exposure to these risks is low.
The Company’s various subsidiaries use a variety of raw materials in the production of their respective
products. The supply and demand for many of these products is cyclical in nature and certain commodities
are subject to price fluctuations and other market factors. This risk is partially mitigated by the Company’s
ability to pass through pricing changes to many of its customers. Additionally, while the Company does not
generally engage in forward contracts for the purchase of its raw materials, it will utilize forward purchase
contracts at times to reduce the exposure of its businesses to commodity price changes.
The Company, from time to time, invests in short-term financial instruments with original maturities
usually less than fifty days.
The Company is exposed to short-term interest rate variations with respect to Eurodollar or Base Rate
on certain of its term and revolving debt obligations and six month LIBOR in arrears on certain of its
interest rate swaps. The spreads on the interest rate swaps range from 523 to 528 basis points. Settlements
on the interest rate swaps are made on May 1 and November 1. The Company is exposed to credit loss in
the event of non-performance by the counter-parties to its current existing swaps with large financial
institutions. However, the Company does not anticipate non-performance by the counter-parties.
Changes in Eurodollar or LIBOR interest rates would affect the earnings of the Company either
positively or negatively depending on the direction of the change. Assuming that Eurodollar and LIBOR
rates each increased 100 basis points over period end rates on the outstanding term debt and interest rate
swaps, the Company’s interest expense would have increased by approximately $6.3 million, $3.3 million
and $2.0 million for 2005, 2004 and 2003, respectively. The amount was determined by considering the
impact of the hypothetical interest rates on the Company’s borrowing cost, short-term investment rates,
interest rate swaps and estimated cash flow. Actual changes in rates may differ from the assumptions used
in computing this exposure.
The Company does not invest or trade in any significant derivative financial or commodity
instruments, nor does it invest in any foreign financial instruments. The Company does not use derivative
instruments for speculative purposes.
NYSE Corporate Governance Disclosure
Jarden Corporation filed as exhibits to its 2005 Annual Report on Form 10-K, the Sarbanes-Oxley Act
Section 302 certifications regarding the quality of Jarden’s public disclosure. The 2004 Annual CEO
certification of Jarden Corporation required pursuant to NYSE Corporate Governance Standards Section
303A.12(a) that the CEO was not aware of any violation by the Company of NYSE’s Corporate Governance
listing standards was submitted to the NYSE.
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