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The Company’s financial instruments consist primarily
of cash held at financial institutions, accounts receivable,
debt, interest rate swaps and forward foreign currency contracts.
The carrying amounts for cash and cash equivalents, accounts
receivable and short-term debt approximate fair value due to
the short-term nature of these instruments. The carrying and
fair values of long-term debt were $921.8 million and $959.5
million, respectively, at December 31, 2002 and $956.1 million
and $978.6 million, respectively, at December 31, 2001. The
fair value of the long-term fixed rate debt was estimated based
on current quotes from bond traders making a market in the debt
instrument. The fair value of debt with variable rates approximates
the net carrying value. As of December 31, 2002, the Company
had approximately $12.2 million of outstanding foreign currency
forward and option contracts. There were no outstanding forward
foreign currency contracts as of December 31, 2001. The fair
value of these contracts was insignificant at December 31, 2002.
The Company also had off-balance-sheet standby letters of credit
with notional amounts of $27.2 million and $54.2 million with
no unrealized gain or loss at December 31, 2002 and 2001, respectively.
As of December 31, 2001, the Company was a party to five interest-rate
swap agreements in which the Company exchanged its floating-rate
obligation on (a) $40.0 million denominated in U.S. dollars
for a fixed-rate payment obligation of 5.669 percent per annum
through January 21, 2004, (b) $141.9 million denominated in
U.S. dollars for a fixed rate obligation of 5.669 percent per
annum through December 31, 2003, (c) $22.0 million denominated
in British pounds for a fixed-rate payment obligation of 5.850
percent per annum through January 21, 2004, and (d) $7.9 million
denominated in Canadian dollars for a fixed-rate payment obligation
of 5.6675 percent per annum through January 21, 2004. The notional
amount of each interest-rate swap agreement matched the repayment
schedule of the Term Facility through the maturity date of the
respective interest-rate swap agreements (see Note 13–Debt).
The fair values of interest-rate swap agreements are the estimated
amounts that the Company would pay or receive to terminate the
agreements at the reporting date, taking into account current
interest rates, the market expectation for future interest rates
and the current creditworthiness of the Company. The fair value
of outstanding interest-rate swap agreements as of December
31, 2001, based upon quoted market prices, reflected an unrealized
loss of $9.6 million. In April 2002, the Term Facility was repaid
in full and the Company recorded a charge in the amount of $7.1
million for fixed-swap unwind costs.
None of the Company’s financial instruments represents
a concentration of credit risk as the Company deals with a variety
of major banks worldwide, and its accounts receivable are spread
among a number of customers and geographic areas. |
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