Sunbeam 2013 Annual Report Download - page 44

40 Jarden Corporation Annual Report 2013
Advertising Costs
Advertising costs consist primarily of ad demo, media placement and promotions, and are expensed as incurred. The amounts charged
to advertising and included in SG&A in the consolidated statements of operations for 2013, 2012 and 2011 were $172, $156 and $143,
respectively.
Product Liability Reserves
The Company has a self-insurance program for product liability that includes reserves for self-retained losses and certain excess
and aggregate risk transfer insurance. The estimated product liability reserve incorporates historical loss experience combined with
actuarial evaluation methods, review of signicant individual les and the application of risk transfer programs. The Company’s
actuarial evaluation methods considers claims incurred, but not reported when determining the product liability reserve.
Product Warranty Costs
The Company recognizes warranty costs based on an estimate of amounts required to meet future warranty obligations arising as a
cost of the sale of its products. The Company accrues an estimated liability at the time of a product sale based on historical claim rates
applied to current period sales, as well as any information applicable to current product sales that may indicate a deviation from such
historical claim rate trends. Warranty reserves are included within “Other current liabilities” and “Other non-current liabilities” in the
Company’s consolidated balance sheets.
Sales Incentives and Trade Promotion Allowances
The Company offers various sales incentives and trade promotional programs to its reseller customers from time to time in the normal
course of business. These sales incentives and trade promotion programs typically include arrangements known as slotting fees,
cooperative advertising and buydowns. These arrangements are recorded as a reduction to net sales in the Company’s consolidated
statements of operations.
Income Taxes
Deferred taxes are provided for differences between the nancial statement and tax basis of assets and liabilities using enacted tax
rates. The Company established a valuation allowance against a portion of the net tax benet associated with all carryforwards and
temporary differences in a prior year, as it was more likely than not that these would not be fully utilized in the available carryforward
period. A portion of this valuation allowance remained as of December31, 2013 and 2012 (see Note 12).
The Company recognizes tax benets for certain tax positions based upon judgments as to whether it is more likely than not that a
tax position will be sustained upon examination. The measurement of tax positions that meet the more-likely-than-not recognition
threshold are based in part on estimates and assumptions as to be the probability of an outcome, along with estimated amounts to be
realized upon any settlement.
Components of accumulated other comprehensive income (loss) (“AOCI”) are presented net of tax at the applicable statutory rates
and are primarily generated domestically.
Disclosures about Fair Value of Financial Instruments and Credit Risk
The carrying values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their fair
market values due to the short-term maturities of these instruments. The fair market value (Level 1 measurement) of the Company’s
senior notes and senior subordinated notes are based upon quoted market prices. The fair market value (Level 2 measurement) of the
Company’s other long-term debt is estimated using interest rates currently available to the Company for debt with similar terms and
maturities (see Note9).
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Unless otherwise disclosed in the notes to the consolidated nancial statements, the estimated fair value of nancial assets and
liabilities approximates carrying value.
Financial instruments that potentially subject the Company to credit risk consist primarily of trade receivables and interest-bearing
investments. Trade receivable credit risk is limited due to the diversity of the Company’s customers and the Company’s ongoing credit
review procedures. Collateral for trade receivables is generally not required. The Company places its interest-bearing cash equivalents
with major nancial institutions.
The Company is exposed to credit loss in the event of non-performance by the counterparties to its derivative nancial instruments, all
of which are highly rated nancial institutions; however, the Company does not anticipate non-performance by such counterparties.
Notes to Consolidated Financial Statements
Jarden Corporation Annual Report 2013 (Dollars in millions, except per share data and unless otherwise indicated)