Sunbeam 2008 Annual Report Download - page 23

In November 2007, the Company’s Board of Directors authorized a new stock repurchase program that would allow the Company
to repurchase up to $100 million of its common stock. The Company repurchased approximately 1.5 million and 1.1 million shares of its
common stock in 2008 and 2007, respectively, under this plan at an average price per share of $15.12 and $26.58, respectively.
Contractual Obligations and Commercial Commitments
The following table includes aggregate information about the Company’s contractual obligations as of December 31, 2008 and the
periods in which payments are due. Certain of these amounts are not required to be included in its Consolidated Balance Sheets:
Year(s)
(In millions) Total 1 2–3 4–5 After 5
Long-term debt (1) $2,872.2 $ 431.4 $ 1,268.6 $ 514.2 $ 658.0
Operating leases 329.1 54.4 88.9 64.9 120.9
Unconditional purchase obligations 57.0 45.2 9.4 2.4 —
Other current and non-current obligations 44.1 38.2 1.7 1.3 2.9
Total $ 3,302.4 $ 569.2 $ 1,368.6 $ 582.8 $ 781.8
(1) For further information regarding the Company’s debt and interest rate structure, refer to Note 9 – “Debt” and Note 10 “Derivative Financial
Instruments and Fair Value Measurements” to the consolidated financial statements. These amounts reflect scheduled principal payments only.
The table above does not reflect tax reserves and accrued interest thereon of $64.4 million and $8.6 million, respectively, as the
Company cannot reasonably predict the timing of the settlement of the related tax positions beyond 2009. See Note 12 “Taxes on Income”
tothe consolidated financial statements for additional information on the Company’s unrecognized tax benefits at December 31, 2008.
Commercial commitments areitems that the Company could be obligated to pay in the future and are not included in the above
table. As of December 31, 2008, the Company had approximately $24 million in standby and commercial letters of credit, all of which
expire in 2009.
Certain of these amounts are not required to be included in the Company’s Consolidated Balance Sheets.
Risk Management
From time totime the Company may elect to enter into derivative transactions to hedge its exposures to interest rate and foreign
currency fluctuations. The Company does not enter into derivative transactions for speculative purposes.
The Company actively manages its fixed and floating rate debt mix using interest rate swaps. The Company will enter into fixed and
floating rateswaps to alter its exposure to the impact of changing interest rates on its consolidated results of operations and future cash
outflows for interest. Floating rate swaps are used to convert the fixed rates of long-term debt into short-term variable rates to take advan-
tage of current market conditions. Fixed rate swaps are used to reduce the Company’s risk of the possibility of increased interest costs.
Interest rate swap contracts are therefore used by the Company to separate interest rate risk management from the debt funding decision.
During September 2008, the Company terminated $54 million notional amount of forward foreign currency contracts as the counter-
party defaulted on these contracts upon filing for bankruptcy protection. These contracts had previously been designated as cash flow
hedges of forecasted inventory purchases and sales. Gains or losses on these contracts were deferred as a component of accumulated other
comprehensiveincome. At termination the fair market value of these contracts was a net asset of $2.7 million. The Company had provided a
reserve for the entire net asset amount of these contracts, which resulted in the elimination of the amount of previously deferred net gains
included in accumulated other comprehensive income. As part of the settlement with this counterparty subsequent to December 31, 2008,
the entire net asset amount of these contracts was written off against the reserve in January 2009.
Cash Flow Hedges
At December 31, 2008, the Company had approximately $1.1 billion of notional amount outstanding in swap agreements that
exchange variable interest rates (LIBOR) for fixed interest rates over the terms of the agreements and are designated as cash flow hedges of
the interest rate risk attributable to forecasted variable interest payments. The effective portion of the after tax fair value gains or losses on
these swaps is included as a component of accumulated other comprehensive income. The fair market value of these swaps was a liability
of $29.2 million at December 31, 2008.
Management’s Discussion and Analysis
Jarden Corporation Annual Report 2008
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