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Jarden Corporation
Notes to Consolidated Financial Statements (cont’d)
December 31, 2005
fixed interest rate of 5.84% and 5.86% per annum (both including a 1.75% applicable margin) for a term of
five years. The swaps have interest payment dates that are the same as the term loan facilities. These
swaps are considered to be cash flow hedges and are also considered to be effective hedges against changes
in future interest payments of the Company’s floating-rate debt obligation for both tax and accounting
purposes.
In January 2005, the Company entered into two interest rate swaps (which were unwound in
November 2005 as described above), effective in January 2005, that converted the floating rate interest
related to an aggregate of $125 million under the Term Loan for a fixed obligation. Such interest rate
swaps, one for $75 million of notional value and the other for $50 million of notional value, carry a fixed
interest rate of 6.025% per annum (including a 2.0% applicable margin) for a term of five years. The swaps
have interest payment dates that are the same as the term loan facilities. These swaps are considered to be
cash flow hedges and are also considered to be effective hedges against changes in future interest payments
of the Company’s floating-rate debt obligation for both tax and accounting purposes.
In December 2004, the Company entered into two interest rate swaps (which were unwound in
November 2005 as described above), effective in January 2005, that converted an aggregate of $300 million
of floating rate interest payments under its term loan facility for a fixed obligation. The first interest rate
swap, for $150 million of notional value, carried a fixed interest rate of 5.625% per annum (including a 2.0%
applicable margin) for a term of three years. The second interest rate swap, also for $150 million of notional
value, carries a fixed interest rate of 6.0675% per annum (including a 2.0% applicable margin) for a term of
five years. The swaps have interest payment dates that are the same as the term loan facilities. The swaps
are considered to be cash flow hedges and are also considered to be effective hedges against changes in
future interest payments of the Company’s floating-rate debt obligations for both tax and accounting
purposes.
On September 30, 2004, the Company’s previous interest rate swap matured. That swap was effective
on April 2, 2003 and converted the floating rate interest payments of $37 million of term loan debt for a
fixed obligation that carried an interest rate, including applicable margin, of 4.25% per annum. The swap
had interest payment dates that were the same as the term loan facility. The swap was considered to be a
cash flow hedge and was also considered to be an effective hedge against changes in the interest payments
of the Company’s floating-rate debt obligation for both tax and accounting purposes.
Gains and losses related to the effective portion of the interest rate swap are reported as a component
of other comprehensive income and are reclassified into earnings in the same period that the hedged
transaction affects earnings. As of December 31, 2005, the fair value of the Replacement Swaps, which was
against the Company in an amount of approximately $0.5 million, is included as an unrealized loss in
“Accumulated Other Comprehensive Income” on the Company’s Consolidated Balance Sheet.
Forward Foreign Exchange Rate Contracts
We utilize forward foreign exchange rate contracts (“Forward Contracts”) to reduce our foreign
currency exchange rate exposures. We designate qualifying Forward Contracts as cash flow hedge
instruments. At December 31, 2005, the fair value of our open Forward Contracts was an asset of
approximately $1.0 million, and is reflected in “Other current assets” in our Consolidated Balance Sheets.
The unrealized change in the fair values of open Forward Contracts from designation date (January 24,
62