Sunbeam 2010 Annual Report Download - page 34

Notes to Consolidated Financial Statements
Jarden Corporation Annual Report 2010 (Dollars in millions, except per share data and unless otherwise indicated)
In March 2010, the SEC provided guidance on certain exchange rate issues specific to Venezuela. This SEC guidance, in part,
requires that any differences between the amounts reported for financial reporting purposes and actual U.S. dollar denominated
balances that may have existed prior to the application of the highly inflationary accounting requirements (effective January 1,
2010 for the Company) should be recognized in the income statement. As a result of applying this SEC guidance, the results of
operations for 2010 include a non-cash charge of $56.6 related to remeasuring $32.0 of U.S. dollar denominated assets at the
parallel exchange rate and subsequently translating at the official exchange rate. This charge is classified in SG&A. At December 31,
2009, and prior to the application of the accounting guidance for operating in a highly inflationary economy, the $56.6 was deferred
and recorded in other assets. This SEC guidance was codified by the Financial Accounting Standards Board (the “FASB”) in May
2010, with the issuance of Accounting Standards Update (“ASU”) 2010-19.
Use of Estimates
The preparation of the consolidated financial statements in accordance with GAAP requires estimates and assumptions that affect
amounts reported and disclosed in the consolidated financial statements and accompanying notes. Actual results could differ
materially from those estimates. Significant accounting estimates and assumptions are used for, but not limited to, the allowance
for doubtful accounts; assets impairments; useful lives of tangible and intangible assets; pension and postretirement liabilities; tax
valuation allowances and unrecognized tax benefits; reserves for sales returns and allowances; product warranty; product liability;
excess and obsolete inventory; and litigation and environmental liabilities.
Concentrations of Credit Risk
Substantially all of the Company’s trade receivables are due from retailers and distributors located throughout Asia, Canada,
Europe, Latin America and the United States. Approximately 21%, 23% and 19% of the Company’s consolidated net sales in
2010, 2009 and 2008, respectively, were to a single customer who purchased product from the Company’s three primary business
segments: Outdoor Solutions, Consumer Solutions and Branded Consumables.
Cash and Cash Equivalents
The Company considers highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.
Accounts Receivable
The Company provides credit, in the normal course of business, to its customers. The Company maintains an allowance for doubtful
customer accounts for estimated losses that may result from the inability of the Company’s customers to make required payments.
That estimate is based on a variety of factors, including historical collection experience, current economic and market conditions,
and a review of the current status of each customer’s trade accounts receivable. The Company charges actual losses when incurred
to this allowance.
Leasehold Improvements
Leasehold improvements are recorded at cost less accumulated amortization. Improvements are amortized over the shorter of the
remaining lease term (and any renewal period if such a renewal is reasonably assured at inception) or the estimated useful lives of
the assets.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost less accumulated depreciation. Maintenance and repair costs are charged to
expense as incurred, and expenditures that extend the useful lives of assets are capitalized. The Company reviews property, plant
and equipment for impairment whenever events or circumstances indicate that carrying amounts may not be recoverable through
future undiscounted cash flows. If the Company concludes that impairment exists, the carrying amount is reduced to fair value.
The Company provides for depreciation primarily using the straight-line method in amounts that allocate the cost of property, plant
and equipment over the following ranges of useful lives:
Goodwill and Intangible Assets
Goodwill and certain intangibles (primarily trademarks and tradenames) are not amortized; however, they are subject to evaluation
for impairment using a fair value based test. This evaluation is performed annually, during the fourth quarter or more frequently if
facts and circumstances warrant. The fair value based test for goodwill is a two-step test. The first step involves comparing the fair
value of each of its reporting units to the carrying value of those reporting units. If the carrying value of a reporting unit exceeds
Buildings and improvements 5 to 45 years
Machinery, equipment and tooling (includes capitalized software) 3 to 25 years
Furniture and fixtures 3 to 10 years
Land is not depreciated
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