Sunbeam 2002 Annual Report Download

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2002 ANNUAL REPORT

Table of contents

  • Page 1
    2 0 02 A N N U A L R E P O R T

  • Page 2
    ... corporate profile and strategy chairman's letter branded consumables home vacuum packaging plastic consumables other selected financial data management's discussion and analysis financial statements Winners of Jarden's 2002 Annual Report Cover Design contest: Milton Murphy, Plant Manager, Plastic...

  • Page 3
    ... In North America, Jarden is the market leader in several categories, including home canning, home vacuum packaging, kitchen matches, branded retail plastic cutlery and toothpicks. Jarden also manufactures zinc strip and a wide array of plastic products for third party consumer product and medical...

  • Page 4
    ... 2002, the leading manufacturer and marketer of home vacuum packaging systems under the FoodSaver® brand in North America. This acquisition was a natural extension of Jarden's market leading position in another area of home food preservation, home canning. The synergies between these two businesses...

  • Page 5
    ... coverage in January 2003. The company's new strategic direction, as well as our strong financial results, helped Jarden's shares rise by over 200% in 2002, a performance that led to Jarden being listed as the number one performing stock in 2002 according to Investors Business Daily. We are proud of...

  • Page 6
    ... as a fun, home-based, canning experience for the whole family. Our Diamond® and Forster® branded retail plastic cutlery is available in a variety of different counts and sizes to suit the differing needs of our customers. Pickling is a popular home canning activity and this new kit makes it...

  • Page 7
    ...Kerr® brand names. Several of our leading branded consumable products such as Diamond® kitchen matches and Ball® jars have been in continuous use for over 100 years. We have long-standing relationships with a diverse group of retail, wholesale and institutional customers in North America. We sell...

  • Page 8
    Our bags and bag rolls sold for use with the home vacuum packaging machines represent a recurring revenue source and a competitive advantage. We have created the home vacuum packaging category at most of our retailers and actively work with them to promote the FoodSaver® and home vacuum packaging ...

  • Page 9
    ... also sell through direct-to-consumer channels, primarily infomercials. Our customers include Bed Bath and Beyond, Costco, Kohl's, Target and Wal-Mart, among others. Our marketing department is implementing a strategy to drive sustained growth over the next few years. Advertising and brand-building...

  • Page 10
    Consumer products packaging. Yorker® closures. Refrigerator door liners and other plastic parts. PG. 8 PLASTIC CONSUMABLES We manufacture, market and distribute a wide variety of plastic products for industrial and manufacturing customers including closures, contact lens packaging, refrigerator...

  • Page 11
    ... background in the field of metallurgy, who focus on leveraging our core capabilities in zinc metallurgy and electrochemistry to capitalize on new market opportunities. The sales and marketing staff work closely with our engineering and technical services group to deliver products to the customer.

  • Page 12
    ..., 2002, 2001, 2000, 1999 and 1998. The selected financial data set forth below has been derived from our audited consolidated financial statements and related notes for the respective fiscal years. The selected financial data should be read in conjunction with ''Management's Discussion and Analysis...

  • Page 13
    Jarden Corporation Selected Financial Data (Continued) 2002 (a) (b) As of and for the year ended December 31, 2001 2000 1999 (c) (d) (e) (in thousands) 1998 (f) OTHER FINANCIAL DATA: EBITDA (i) ...Cash flows from operations ...Depreciation and amortization ...Capital expenditures ...BALANCE SHEET ...

  • Page 14
    ..., Tilia was 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 our plan to pursue growth in branded consumer products. We acquired the business of Tilia for...

  • Page 15
    ... a constant operating income percentage of net sales in 2002. From April 1, 2002 onwards, our home vacuum packaging segment, which consists of the newly acquired Tilia business, generated operating income of $31.7 million. Operating income for our branded consumables and plastic consumables segments...

  • Page 16
    ... than the statutory federal rate primarily because it includes a valuation allowance for tax benefits associated with the loss on the sale of the TPD Assets. The effective rate for 2000 reflects the recognition of a tax benefit from exiting the Central European home canning test market. PG. 14

  • Page 17
    Jarden Corporation Management's Discussion and Analysis (Continued) Financial Condition, Liquidity and Capital Resources During 2002, we made the following changes to our capital resources in connection with the financing of the Acquisition: ț completed an offering of $150 million of 93⁄4% senior...

  • Page 18
    ...New Credit Agreement. As a result of the losses arising from the sale of the TPD Assets, we recovered in January 2002 approximately $15.7 million of federal income taxes paid in 1999 and 2000 by utilizing the carryback of a tax net operating loss generated in 2001. On March 9, 2002, The Job Creation...

  • Page 19
    ...new financing relationships discussed above; and È› the receipt of $22.3 million of tax refunds which had not been included in working capital in 2001. Cash flow generated from operations, excluding net income tax refunds was approximately $31.0 million for the year ended December 31, 2002. Capital...

  • Page 20
    ..., and/or require management's significant judgments and estimates: Revenue recognition and product returns We recognize revenue when title transfers. In most cases, title transfers at the time product is shipped to customers. We allow customers to return defective or damaged products as well as...

  • Page 21
    ..., but are subject to annual impairment tests in accordance with the statements. Other intangible assets continue to be amortized over their useful lives. We applied the new rules on accounting for goodwill and other intangible assets beginning in the first quarter of 2002. We have performed the...

  • Page 22
    ...25, Accounting for Stock Issued to Employees, to account for stock options. Forward-Looking Statements From time to time, we may make or publish forward-looking statements relating to such matters as anticipated financial performance, business prospects, technological developments, new products, and...

  • Page 23
    Jarden Corporation Management's Discussion and Analysis (Continued) We may be adversely affected by the trend towards retail trade consolidation; Sales of some of our products are seasonal and weather related; Competition in our industries may hinder our ability to execute our business strategy, ...

  • Page 24
    ... cost, short-term investment rates, interest rate swap and estimated cash flow. Actual changes in rates may differ from the assumptions used in computing this exposure. The Company does not invest or trade in any derivative financial or commodity instruments, nor does it invest in any foreign...

  • Page 25
    ... balance sheets of Jarden Corporation and subsidiaries as of December 31, 2002 and 2001, and the related consolidated statements of operations, comprehensive income, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2002. These financial statements are...

  • Page 26
    Jarden Corporation Consolidated Statements of Operations (in thousands, except per share amounts) Year ended December 31, 2002 2001 2000 Net sales ...Costs and expenses: Cost of sales ...Selling, general and administrative expenses ...Goodwill amortization ...Special charges (credits) and ...

  • Page 27
    Jarden Corporation Consolidated Balance Sheets Assets Current assets: Cash and cash equivalents ...Accounts receivable, net of allowances of $6,095 and $778 ...Income taxes receivable ...Inventories, net ...Deferred taxes on income ...Prepaid expenses and other current assets ...Total current assets...

  • Page 28
    ... of treasury stock ...Other ...Net cash provided by (used in) financing activities ...Cash flows from investing activities Additions to property, plant, and equipment ...Insurance proceeds from property casualty ...Acquisitions of businesses, net of cash acquired of $28,374 in 2002 ...Purchase of...

  • Page 29
    ... Net income ...Stock options exercised and stock plan purchases ...Shares issued for non-cash compensation ...Shares reissued from treasury Shares tendered for stock options and taxes ...Cumulative translation adjustment ...Tax benefit related to stock option exercises ...Loans to executive officers...

  • Page 30
    Jarden Corporation Consolidated Statements of Comprehensive Income (in thousands) Year ended December 31, 2002 2001 2000 Net income (loss) ...Foreign currency translation: Translation adjustment during period ...Translation adjustment recorded to net income (loss) due to liquidation of investment ...

  • Page 31
    Jarden Corporation Notes to Consolidated Financial Statements 1. Significant Accounting Policies Basis of Presentation The Company is a leading provider of niche, branded consumer products used in the home, including home canning and home vacuum packaging. The Company also manufactures a wide array ...

  • Page 32
    ... goodwill and intangible assets recorded in connection with brand names and manufacturing processes expertise. Goodwill represents the excess of the purchase prices of acquired businesses over the estimated fair values of the net assets acquired. In conjunction with new accounting guidance (see Note...

  • Page 33
    ... subject to annual impairment tests in accordance with the statements. Other intangible assets continue to be amortized over their useful lives. The Company applied the new rules on accounting for goodwill and other intangible assets beginning in the first quarter of 2002. The Company has performed...

  • Page 34
    ...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...

  • Page 35
    .... The unaudited pro forma financial information presented does not exclude special charges (credits) and reorganization expenses for the year ended December 31, 2001 or the net $4.4 million income tax valuation allowance released in 2002: (in thousands, except per share data) Year Ended December 31...

  • Page 36
    ...retail outlets. In the home vacuum packaging segment, which was acquired in April 2002, the Company is a developer, manufacturer and marketer of the FoodSaver® line which is the U.S. market leader in home vacuum packaging systems and accessories. The plastic consumables segment manufactures plastic...

  • Page 37
    ...combined basis accounted for 18.7% of the Company's 2002 net revenues. The Company's major customers are located within the United States and Canada. Net sales of the Company's products in Canada, including home food preservation products, vacuum packaging systems, coinage and plastic parts were $28...

  • Page 38
    ... of the corporate office function from Indianapolis, Indiana to Rye, New York and Muncie, Indiana, costs to reincorporate in Delaware and to hold a special meeting of stockholders, and other costs including professional fees. Of this amount, $0.6 million remained unpaid as of December 31, 2002. In...

  • Page 39
    ...2002. Certain working capital and deferred tax balances are preliminary and will be finalized by the Company during the first quarter of 2003. The intangible assets recorded are fully deductible for income tax purposes. The only intangible asset currently subject to amortization is the manufacturing...

  • Page 40
    ... provisions and the transfer restrictions applicable to the Notes are not applicable to the New Notes. As of December 31, 2002, the New Notes trade at a premium, resulting in an estimated fair value, based upon quoted market prices, of approximately $154.5 million. The New Credit Agreement matures...

  • Page 41
    ... Corporation Notes to Consolidated Financial Statements (Continued) The New Credit Agreement contains certain restrictions on the conduct of the Company's business, including, among other things restrictions, generally, on: incurring debt; making investments; exceeding certain agreed upon capital...

  • Page 42
    Jarden Corporation Notes to Consolidated Financial Statements (Continued) 10. Taxes on Income The components of the provision (benefit) for income taxes attributable to continuing operations were as follows for the years ended December 31: (in thousands) 2002 2001 2000 Current income tax expense (...

  • Page 43
    Jarden Corporation Notes to Consolidated Financial Statements (Continued) The difference between the federal statutory income tax rate and the Company's effective income tax rate as a percentage of income from continuing operations for the years ended December 31, 2002, 2001 and 2000 is reconciled ...

  • Page 44
    Jarden Corporation Notes to Consolidated Financial Statements (Continued) The following table is a reconciliation of the benefit obligation and the fair value of plan assets as of December 31: (in thousands) 2002 2001 Change in benefit obligation: Benefit obligation at beginning of year ...Service ...

  • Page 45
    Jarden Corporation Notes to Consolidated Financial Statements (Continued) The status of the Company's unfunded postretirement benefit obligation at December 31, 2002 and 2001 was as follows: (in thousands) 2002 2001 Change in benefit obligation: Benefit obligation at beginning of year ...Service ...

  • Page 46
    ... the 1993 and 1996 Stock Option Plans for Non-employee Directors. These plans were discontinued in 2002. The remaining shares available for grant under these two stock option plans were subsequently canceled at the time the plans were discontinued. PG. 44 A summary of stock option activity for the...

  • Page 47
    Jarden Corporation Notes to Consolidated Financial Statements (Continued) The Company also grants restricted stock to key employees. During 2002, restricted shares of common stock in the aggregate amount of 143,500 were issued to certain officers and key employees of the Company under its 1998 Long-...

  • Page 48
    ... in the fair value of the Company's fixed-rate debt obligation for both tax and accounting purposes. Effective September 12, 2002, the Company entered into an agreement, whereby it unwound the Initial Swap and contemporaneously entered into a new $75 million interest rate swap (''Replacement Swap...

  • Page 49
    ...the business of Diamond Brands, a manufacturer and distributor of kitchen matches, toothpicks and retail plastic cutlery under the Diamond® and Forster® trademarks, pursuant to an asset purchase agreement. The purchase price of this transaction was approximately $86 million in cash, net of cash on...

  • Page 50
    ..., includes $1.5 million of income (net of tax) related to the discharge of deferred compensation obligations, a $0.7 million gain (net of tax) related to an insurance recovery associated with a property casualty and $0.9 million of costs (net of tax) associated with the Company's evaluation of its...

  • Page 51
    ... Executive Officer Huffy Corporation Willkie Farr & Gallagher New York, New York Lynda W. Popwell (1) Retired President, Carolina Eastman Division Eastman Chemical Company T R A N S F E R A G E N T: National City Bank Cleveland, Ohio 800-622-6757 President: Linda Graebner Plastic Consumables...

  • Page 52