Sunbeam 2002 Annual Report Download - page 34

Jarden Corporation
Notes to Consolidated Financial Statements (Continued)
discontinued operations to be displayed in discontinued operations in the period(s) in which the losses are
incurred. SFAS No. 144 was effective for the Company beginning with the first quarter of 2002 and its adoption
did not have a material impact on the Company’s results of operations or financial position.
In April 2002, the FASB issued SFAS No. 145, Recision of SFAS Nos. 4, 44 and 64, Amendment of SFAS
No. 13, and Technical Corrections as of April 2000. SFAS No. 145 revises the criteria for classifying the
extinguishment of debt as extraordinary and the accounting treatment of certain lease modifications. SFAS No.
145 is effective in fiscal 2003 and is not expected to have a material impact on the Company’s consolidated
financial statements.
In July 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal
Activities. SFAS No. 146 provides guidance on the timing of the recognition of costs associated with exit or
disposal activities. The new guidance requires costs associated with exit or disposal activities to be recognized
when incurred. Previous guidance required recognition of costs at the date of commitment to an exit or disposal
plan. The provisions of the statement are to be adopted prospectively for exit activities after December 31, 2002.
Although SFAS No. 146 may impact the accounting for costs related to exit or disposal activities the Company
may enter into in the future, particularly the timing of recognition of these costs, the adoption of the statement
will not have an impact on the Company’s present financial condition or results of operations.
In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based Compensation – Transition
and Disclosure. SFAS No. 148 amends SFAS No. 123, Accounting for Stock-Based Compensation, to provide
alternative methods of transition for a voluntary change to the fair value based methods of accounting for
stock-based employee compensation. In addition, SFAS No. 148 amends the disclosure requirements of SFAS
No. 123 to require more prominent disclosures in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and the effect of the method used on reported
results. The additional disclosure requirements of SFAS No. 148 are effective for fiscal years ending after
December 15, 2002. As provided for in SFAS No. 148, we have elected to continue to follow the intrinsic value
method of accounting as prescribed by APB Opinion No. 25, Accounting for Stock Issued to Employees, to
account for stock options.
3. Acquisitions and Divestitures
On April 24, 2002, the Company completed its acquisition of the business of Tilia International, Inc. and
its subsidiaries (collectively ‘‘Tilia’’), pursuant to an asset purchase agreement (the ‘‘Acquisition’’). Based in San
Francisco, California, Tilia is a developer, manufacturer and marketer of a patented vacuum packaging system
for home use, primarily for food storage, under the FoodSaver® brand. The Acquisition was entered into as part
of the Company’s plan to pursue growth in food preservation and branded consumer products.
Pursuant to the Acquisition, the Company acquired Tilia for approximately $145 million in cash and $15
million in seller debt financing. In addition, the Acquisition includes an earn-out provision with a potential
payment in cash or Company common stock of up to $25 million payable in 2005, provided that certain
earnings performance targets are met. If these earnings performance targets are met, the Company will
capitalize the cost of the earn-out provision. As of December 31, 2002, the Company had incurred transaction
fees in conjunction with the Acquisition in the amount of approximately $4.5 million, including transaction
bonuses paid to certain officers in the aggregate amount of $0.9 million, principally consisting of transaction
bonuses paid to Martin E. Franklin, our Chairman and Chief Executive Officer, in the amount of $0.5 million
and Ian Ashken, our Vice Chairman, Chief Financial Officer, and Secretary, in the amount of $0.3 million. See
Note 9 for a description of the financing of the Acquisition.
Due to the Company having effective control of the business of Tilia as of April 1, 2002, the results of Tilia
have been included in the Company’s results from such date. During 2002, the Company recorded $0.6 million
of imputed interest expense to reflect the financing that would have been required for the period from the
effective date (April 1, 2002) to the date of closing (April 24, 2002). The imputed interest expense reduced the
amount of goodwill recorded.
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