Sunbeam 2003 Annual Report Download - page 19

Jarden Corporation
Management’s Discusson and Analysis (continued)
Net interest expense increased to $19.2 million in 2003 compared to $12.6 million in 2002. This
increase resulted from higher levels of outstanding debt in 2003 compared to the same period in 2002,
principally due to (i) the principal on the $150 million of our 9
3
⁄ 4 % senior subordinated notes (“Notes”)
issued in connection with the Tilia Acquisition being outstanding for the entire twelve months of 2003 as
compared to only nine months of 2002, (ii) the additional respective financings in 2003 in connection
with the Diamond Acquisition and the Lehigh Acquisition, and (iii) the issuance of an additional $30
million principal amount of Notes in 2003. Our weighted average interest rate in 2003 of 6.2% was lower
than our weighted average interest rate of 7.0% in 2002.
Our effective tax rate in 2003 was 39.2% compared to an effective tax rate of 30.8% in 2002. At
December 31, 2001, we had federal net operating losses that were recorded as a deferred tax asset with a
valuation allowance of $5.4 million. Due to the impact of the Job Creation Act and the tax refunds that
we received as a result, a net $4.4 million of this valuation allowance was released in 2002 resulting in an
income tax provision of $16.2 million. Excluding the release of this valuation allowance our effective tax
rate would also have been approximately 39.2% in 2002.
Net income in 2003 increased 41% to $45.1 million, or $1.91 per diluted share, excluding the non-
cash restricted stock charge and related tax benefit discussed above, compared to net income in 2002 of
$31.9 million, or $1.48 per diluted share, which excludes the tax benefit resulting from the net release of
the $4.4 million valuation allowance that is also discussed above.
The reconciliation of these non-GAAP financial measures to the most directly comparable GAAP
financial measures is as follows:
Year ended December 31,
2003 2002
(in thousands, except per
share amounts)
Net income ................................................... $31,778 $36,309
Add back: non-cash restricted stock charge, net of related tax benefit of
$8,559 ..................................................... 13,274 —
Less: net release of tax valuation allowance ......................... — (4,395)
Net income, excluding non-cash restricted stock charge and related tax
benefit and net release of tax valuation allowance ................. $45,052 $31,914
Diluted earnings per share, excluding non-cash restricted stock charge
and related tax benefit and net release of tax valuation allowance .... $ 1.91 $ 1.48
Results of Operations – Comparing 2002 to 2001
We reported net sales of $367.1 million in 2002, an increase of 20.6% from net sales of $304.3
million in 2001. From April 1, 2002 until December 31, 2002, our consumer solutions segment, which
consisted of the newly acquired Tilia business, generated net sales of $145.3 million. Our branded
consumables segment reported net sales of $111.2 million in 2002 compared to $119.9 million in 2001.
Net sales were $8.7 million or 7.3% lower than 2001, principally due to severe drought weather
conditions during summer 2002 in the South, Southeast and West Central regions of the United States.
Our plastic consumables segment reported net sales of $70.6 million in 2002 compared to $139.9 million
in 2001. The principal cause of the $69.3 million decrease was the divestiture of the TPD Assets and
Microlin, which accounted for $63.3 million of such change (after adjusting for $1.2 million of
intercompany sales to these businesses). The remaining $6.0 million is principally due to lower tooling
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