Sunbeam 2011 Annual Report Download - page 54

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Notes to Consolidated Financial Statements
Jarden Corporation Annual Report 2011 (Dollars in millions, except per share data and unless otherwise indicated)
At December 31, 2011, the Company had $750 notional amount outstanding in swap agreements, which include $350 notional
amount of forward-starting swaps that become effective commencing December 31, 2013, that exchange variable rates of interest
(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 and have maturity dates through December 2015. At December 31, 2011, the
weighted average fixed rate of interest on these swaps, excluding the forward-starting swap, was approximately 1.6%. The effective
portion of the after-tax fair value gains or losses on these swaps is included as a component of AOCI.
During 2011, the Company terminated a $250 notional amount outstanding swap agreement that exchanged a variable rates of
interest (LIBOR) for a fixed interest rate. This fixed rate swap, which was to mature on December 31, 2011, was designated as cash
flow hedge of the interest rate risk attributable to forecasted variable interest.
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 2013. 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, 2011, the Company had approximately $477 notional amount of foreign currency contracts outstanding that are
designated as cash flow hedges of forecasted inventory purchases and sales.
At December 31, 2011, the Company had outstanding approximately $159 notional amount of foreign currency contracts that are
not designated as effective hedges for accounting purposes and have maturity dates through December 2012. Fair market value
gains or losses are included in the results of operations and are classified in SG&A.
Commodity Contracts
The Company enters into commodity-based derivatives in order to mitigate the risk that the rising price of these commodities
could have on the cost of certain of the Company’s raw materials. These commodity-based derivatives provide the Company with
cost certainty, and in certain instances allow the Company to benefit should the cost of the commodity fall below certain dollar
thresholds. At December 31, 2011, the Company had outstanding approximately $18.8 notional amount of commodity-based
derivatives that are not designated as effective hedges for accounting purposes and have maturity dates through March 2014. 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, 2011 and 2010:
2011 2010
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 $ — $ 8.4 $ — $ 5.3 2.9
Foreign currency contracts 12.2 8.1 4.5 18.9 0.6
Fair value hedges:
Interest rate swaps — — — 10.2 —
Cross-currency swaps — — — 4.1 —
Subtotal 12.2 16.5 4.5 38.5
Derivatives not designated as effective hedges:
Foreign currency contracts 1.1 1.7 1.3 2.6 0.5
Commodity contracts 1.0 0.3 0.9 — 0.7
Subtotal 2.1 2.0 2.2 2.6
Total $ 14.3 $ 18.5 $ 6.7 $ 41.1
(a) Consolidated balance sheet location:
Asset: Other non-current assets
Liability: Other non-current liabilities