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30 Jarden Corporation Annual Report 2014
Contingencies
The Company is involved in various legal disputes and other legal proceedings that arise from time to time in the ordinary course of
business. In addition, the Company or various of its subsidiaries have been identied by the United States Environmental Protection
Agency or a state environmental agency as a Potentially Responsible Party pursuant to the federal Superfund Act and/or state
Superfund laws comparable to the federal law at various sites. Based on currently available information, the Company does not believe
that the disposition of any of the legal or environmental disputes the Company or its subsidiaries are currently involved in will have a
material adverse effect on the consolidated nancial condition, results of operations or cash ows of the Company. It is possible, that
as additional information becomes available, the impact on the Company of an adverse determination could have a different effect.
New and Pending Accounting Pronouncements
During 2014, 2013 and 2012, the Company adopted various accounting standards. A description of these standards and their effect on
the consolidated nancial statements are described in Note 2 to the consolidated nancial statements.
Pending standards and their estimated effect on the Company’s consolidated nancial statements are described in Note 2 to the
consolidated nancial statements.
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 earnings per share, adjusted diluted earnings per share, expected or estimated revenue, meeting nancial goals, the
outlook for the Company’s markets and the demand for its products, estimated sales, segment earnings, net interest expense, income
tax provision, restructuring 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, performance trends,
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, our ability to raise new debt, 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, 2014,
approximately $2.8 billion of the Company’s debt carries a variable rate of interest. The remainder of the debt (approximately $2.3
billion) carries a xed rate of interest either by nature or through the use of interest rate swaps. Based upon the Company’s debt
structure at December31, 2014, a hypothetical 10% change in these interest rates would change interest expense by approximately $9
million and the fair values of xed rate debt by approximately $55 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 2014,
approximately 39% of the Company’s sales were denominated in foreign currencies, the most signicant of which were: European
Euro—approximately 18%; and Canadian dollar—approximately 5%. 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.
Management’s Discussion and Analysis
Jarden Corporation Annual Report 2014