Graco 2007 Annual Report Download - page 34

Newell Rubbermaid Inc. 2007 Annual Report
32
The following table summarizes the effect that lease and other material contractual obligations listed below are expected to have on the Company’s
cash flow in the indicated period. In addition, the table reflects the timing of principal and interest payments on borrowings outstanding as of December 31,
2007. Additional details regarding these obligations are provided in the Notes to Consolidated Financial Statements (in millions):
Payments Due by Period
Less than 1–3 3–5 More than
Total 1 Year Years Years 5 Years
Debt (1) $2,169.6 $ 972.2 $505.1 $253.2 $439.1
Interest on debt (2) 635.1 112.2 106.8 71.7 344.4
Operating lease obligations (3) 363.1 81.7 111.1 70.8 99.5
Purchase obligations (4) 306.3 275.8 30.5
— —
Total contractual obligations (5) $3,474.1 $1,441.9 $753.5 $395.7 $883.0
(1) Amounts represent contractual obligations based on the earliest date that the obligation may become due, excluding interest, based on borrowings outstanding as of December 31, 2007.
For further information relating to these obligations, see Footnotes 9 and 10 of the Notes to Consolidated Financial Statements.
(2) Amounts represent estimated interest expense on borrowings outstanding as of December 31, 2007 based on the earliest date that the obligation may become due. Interest on floating debt
was estimated using the index rate in effect as of December 31, 2007. For further information, see Footnotes 9 and 10 of the Notes to Consolidated Financial Statements.
(3) Amounts represent contractual minimum lease obligations on operating leases as of December 31, 2007. For further information relating to this obligation, see Footnote 12 of the Notes to
Consolidated Financial Statements.
(4) Primarily consists of purchase commitments entered into as of December 31, 2007 for finished goods, raw materials, components and services and joint venture interests pursuant to legally
enforceable and binding obligations, which include all significant terms. The Company is obligated to purchase the minority interest of a majority owned subsidiary in 2009. The estimated
purchase price of that commitment is included in the purchase obligations amount shown in the table above.
(5) Total does not include contractual obligations reported on the December 31, 2007 balance sheet as current liabilities, except for current portion of long-term debt.
The Company also has liabilities for uncertain tax liabilities and unrecognized tax benefits. As a large taxpayer, the Company is under continual audit
by the Internal Revenue Service and other taxing authorities on several open tax positions, and it is possible that the amount of the liability for uncertain tax
liabilities and unrecognized tax benefits could change in the coming year. While it is possible that one or more of these examinations may be resolved in the
next year, the Company is not able to reasonably estimate the timing or the amount by which the liability will increase or decrease over time; therefore, the
$164.4 million in unrecognized tax benefits at December 31, 2007 is excluded from the preceding table. See Footnote 16 of the Notes to Consolidated
Financial Statements for additional information.
Additionally, the Company has obligations with respect to its pension and postretirement medical benefit plans. See Footnote 13 of the Notes to
Consolidated Financial Statements for additional information.
As of December 31, 2007, the Company had $87.6 million in standby letters of credit primarily related to the Company’s self-insurance programs,
including workers’ compensation, product liability and medical. See Footnote 19 of the Notes to Consolidated Financial Statements for further information.
As of December 31, 2007, the Company did not have any significant off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC
Regulation S-K.
CRITICAL ACCOUNTING POLICIES
The Company’s accounting policies are more fully described in Footnote 1 of the Notes to Consolidated Financial Statements. As disclosed in that footnote,
the preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions
about future events that affect the amounts reported in the financial statements and accompanying footnotes. Future events and their effects cannot be
determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results inevitably will differ from
those estimates, and such differences may be material to the Consolidated Financial Statements. The following sections describe the Company’s critical
accounting policies.
Sales Recognition
Sales of merchandise and freight billed to customers are recognized when title passes and all substantial risks of ownership change, which generally occurs
either upon shipment or upon delivery based upon contractual terms. Sales are net of provisions for cash discounts, returns, customer discounts (such as
volume or trade discounts), cooperative advertising and other sales related discounts.