Sunbeam 2010 Annual Report Download - page 33

Notes to Consolidated Financial Statements
Jarden Corporation Annual Report 2010 (Dollars in millions, except per share data and unless otherwise indicated)
1. Business and Significant Accounting Policies
Business
Jarden Corporation and its subsidiaries (hereinafter referred to as the “Company” or “Jarden”) is a leading provider of a broad
range of consumer products. Jarden’s three primary business segments, Outdoor Solutions, Consumer Solutions and Branded
Consumables, manufacture or source, market and distribute a number of well-recognized brands, including: Outdoor Solutions:
Abu Garcia®, Aerobed®, Berkley®, Campingaz®, Coleman®, Fenwick®, Gulp!®, K2®, Marker®, Marmot®, Mitchell®, Penn®,
Rawlings®, Shakespeare®, Stearns®, Stren®, Trilene®, Völkl® and Zoot®; Consumer Solutions: Bionaire®, Crock-Pot®,
FoodSaver®, Health o meter®, Holmes®, Mr. Coffee®, Oster®, Patton®, Rival®, Seal-a-Meal®, Sunbeam®, VillaWare® and White
Mountain®; and Branded Consumables: Ball®, Bee®, Bicycle®, Billy Boy®, Crawford®, Diamond®, Dicon®, Fiona®, First Alert®,
First Essentials®, Forster®, Hoyle®, Kerr®, Lehigh®, Leslie-Locke®, Lillo®, Loew-Cornell®, Mapa®, NUK®, Pine Mountain®,
Quickie®, Spontex® and Tigex®. The Company’s growth strategy is based on introducing new products, as well as on expanding
existing product categories, which is supplemented through opportunistically acquiring businesses with highly recognized brands,
innovative products and multi-channel distribution.
Basis of Presentation
The consolidated financial statements include the consolidated accounts of the Company and have been prepared in accordance
with generally accepted accounting principles in the United States of America (“GAAP”).
All significant intercompany transactions and balances have been eliminated upon consolidation. Unless otherwise indicated,
references in the consolidated financial statements to 2010, 2009 and 2008 are to the Company’s calendar years ended
December 31, 2010, 2009 and 2008, respectively.
Certain reclassifications have been made in the Company’s consolidated financial statements of prior years to conform to the
current year presentation. These reclassifications have no impact on previously reported net income. Subsequent events have been
evaluated through the filing date of these consolidated financial statements.
Supplemental Information
Stock-based compensation costs, which are included in selling, general and administrative expenses (“SG&A”), were $24.3, $41.3
and $20.6 for 2010, 2009 and 2008, respectively.
Interest expense is net of interest income of $4.9, $7.8 and $6.5 for 2010, 2009 and 2008, respectively.
Foreign Operations
The functional currency for most of the Company’s consolidated foreign operations is the local currency. Assets and liabilities are
translated at year-end exchange rates; and income and expenses are translated at average exchange rates during the year. Net
unrealized exchange adjustments arising on the translation of foreign currency financial statements are reported as cumulative
translation adjustments within accumulated other comprehensive income. Foreign currency transaction gains and losses are
included in the results of operation and are generally classified in selling, general and administrative expenses. Foreign currency
transaction gains/(losses) for 2010, 2009 and 2008, were $8.7, $18.9 and ($14.3), respectively.
The U.S. dollar is the functional currency for certain foreign subsidiaries that conduct their business primarily in U.S. dollars. As such,
monetary items are translated at current exchange rates, and non-monetary items are translated at historical exchange rates.
Venezuela Operations
Effective January 1, 2010, the Company’s subsidiaries operating in Venezuela are considered under GAAP to be operating in a
highly inflationary economy based on the use of the blended National Consumer Price Index (a blend of the National Consumer
Price Index subsequent to January 1, 2008 and the Consumer Price Index for Caracas and Maracaibo prior to January 1, 2008),
as the Venezuela economy exceeded the three year cumulative inflation rate of 100%. The Company’s financial statements of its
subsidiaries operating in Venezuela are remeasured as if their functional currency were the U.S. dollar. As such, gains and losses
resulting from the remeasurement of monetary assets and liabilities are reflected in current earnings.
On January 8, 2010, the Venezuelan government announced its intention to devalue its currency (Bolivar) relative to the U.S. dollar.
The official exchange rate for imported goods classified as essential, such as food and medicine, changed from 2.15 to 2.60 Bolivars
per U.S. dollar, while payments for other non-essential goods moved to an official exchange rate of 4.30 Bolivars per U.S. dollar. As
such, beginning in 2010, the financial statements of the Company’s subsidiaries operating in Venezuela are remeasured at and are
reflected in the Company’s consolidated financial statements at the official exchange rate of 4.30, which is the Company’s expected
settlement rate.
As a result of the change in the official exchange rate to 4.30 Bolivars per U.S. dollar, the Company recorded a non-cash pre-tax loss
of $14.0 in 2010, primarily reflecting the write-down of monetary assets as of January 1, 2010. This charge is classified in SG&A.
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