Sunbeam 2003 Annual Report Download - page 40

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Jarden Corporation
Notes to Consolidated Financial Statements (continued)
Prepaid Media and Advertising Costs
Direct advertising costs (primarily media expenses) related to infomercial sales are recorded as
prepaid assets when paid in advance. The expense is recognized when the infomercial is aired. All
production expenses related to the infomercials are expensed upon first showing of the infomercial.
The Company’s other advertising costs, consisting primarily of ad demo and cooperative advertising,
media placement and promotions are expensed as incurred. The Company incurred advertising costs in
the approximate amounts of $25.9 million, $17.8 million and $1.0 million for the years 2003, 2002 and
2001, respectively. Amounts of $0.5 million and $0.4 million were included in the Company’s Prepaid
Expenses and Other Current Assets in the Consolidated Balance Sheet as of December 31, 2003 and
2002, respectively.
Cash and Cash Equivalents
Cash equivalents include financial investments with a maturity of three months or less when
purchased.
Accounts Receivable
The Company provides credit, in the normal course of business, to its customers. The Company
maintains an allowance for doubtful customer accounts for estimated losses that may result from the
inability of the Company’s customers to make required payments. That estimate is based on historical
collection experience, current economic and market conditions, and a review of the current status of
each customer’s trade accounts receivable. The Company charges actual losses when incurred to this
allowance.
Inventories
Inventories are stated at the lower of cost, determined on the first-in, first-out method, or market.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost. Maintenance and repair costs are charged to
expense as incurred, and expenditures that extend the useful lives of the assets are capitalized. The
Company reviews property, plant and equipment for impairment whenever events or circumstances
indicate that carrying amounts may not be recoverable through future undiscounted cash flows,
excluding interest cost.
Depreciation
Depreciation is calculated on the straight-line basis in amounts sufficient to amortize the cost of the
assets over their estimated useful lives (buildings — 30 to 50 years; machinery and equipment — 3 to 20
years).
Intangible Assets
Intangible assets consist principally of 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. The Company’s
goodwill and intangible assets that are deemed to have indefinite lives are no longer amortized under
page 38