Sunbeam 2003 Annual Report Download - page 29

Jarden Corporation
Management’s Discusson and Analysis (continued)
Allowance for inventory obsolescence
We write down our inventory for estimated obsolescence or unmarketable inventory equal to the
difference between the cost of the inventory and the estimated market value based upon assumptions
about future demand and market conditions. If actual market conditions are less favorable than those
projected by us, additional inventory write-downs may be required resulting in a charge to income in the
period such determination was made. Conversely, if actual market conditions are more favorable than
those projected by us, a reduction in the write down may be required resulting in an increase in income
in the period such determination was made.
Deferred tax assets
We record a valuation allowance to reduce our deferred tax assets to the amount that we believe is
more likely than not to be realized. While we have considered future taxable income and ongoing
prudent and feasible tax planning strategies in assessing the need for the valuation allowance, in the
event we were to determine that we would not be able to realize all or part of our net deferred tax assets
in the future, an adjustment to the deferred tax assets would be charged to income in the period such
determination was made. Likewise, should we determine that we would be able to realize our deferred
tax assets in the future in excess of our net recorded amount, an adjustment to the deferred tax assets
would increase income in the period such determination was made.
Intangible assets
We have significant intangible assets on our balance sheet that include goodwill, trademarks and
other intangibles fair valued in conjunction with acquisitions. The valuation and classification of these
assets and the assignment of amortizable lives involves significant judgments and the use of estimates.
The testing of these intangibles under established guidelines for impairment also requires significant use
of judgment and assumptions (such as cash flows, terminal values and discount rates). Our assets are
tested and reviewed for impairment on an ongoing basis under the established accounting guidelines.
Changes in business conditions could potentially require adjustments to these asset valuations.
Contingencies
We are involved in various legal disputes in the ordinary course of business. In addition, the
Environmental Protection Agency has designated our Company as a potentially responsible party, along
with numerous other companies, for the clean up of several hazardous waste sites. Based on currently
available information, we do not believe that the disposition of any of the legal or environmental
disputes our Company is currently involved in will require material capital or operating expenditures or
will otherwise have a material adverse effect upon the financial condition, results of operations, cash
flows or competitive position of our Company. It is possible, that as additional information becomes
available, the impact on our Company of an adverse determination could have a different effect.
New Accounting Pronouncements
In April 2002, the Financial Accounting Standards Board (“FASB”) issued Statements of Financial
Accounting Standards (“SFAS”) No. 145, Recision of SFAS Nos. 4, 44 and 64, Amendment of SFAS No.
13, and Technical Corrections as of April 2000. SFAS No. 145 revises the criteria for classifying the
extinguishment of debt as extraordinary and the accounting treatment of certain lease modifications.
SFAS No. 145 was effective in fiscal 2003 and did not have a material impact on our consolidated
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