Sunbeam 2003 Annual Report Download - page 42

Jarden Corporation
Notes to Consolidated Financial Statements (continued)
price of the Company’s stock options equals the market price of the underlying stock on the date of
grant. Under the Company’s 2001 Stock Option Plan, however, the Company did recognize a one-time
charge of compensation cost in 2001 because stockholder approval of the plan was required subsequent
to the grant date (see Note 12).
Had compensation cost for the Company’s stock option plans been determined based on the fair
value at the grant dates for awards under those plans, the Company’s net income (loss) and earnings
(loss) per share would have been adjusted to the pro forma amounts indicated:
Year Ended December 31,
2003 2002 2001
(in thousands, except per share amounts)
Net income (loss), as reported ............................. $ 31,778 $ 36,309 $(85,429)
Deduct: Total stock-based employee compensation expense
determined under fair value based method for all awards,
net of related tax effects ............................ 2,032 1,037 295
Pro forma net income (loss) ............................... $ 29,746 $ 35,272 $(85,724)
Basic earnings (loss) per share:
As reported ..................................... $ 1.40 $ 1.74 $ (4.48)
Pro forma ...................................... 1.31 1.69 (4.49)
Diluted earnings (loss) per share:
As reported ..................................... $ 1.35 $ 1.68 $ (4.48)
Pro forma ...................................... 1.26 1.63 (4.49)
The fair value of each option granted is estimated on the date of grant using the Black-Scholes
option-pricing model with the following weighted-average assumptions used for grants in 2003, 2002 and
2001, respectively: no dividend yield for all years, expected volatility of 37, 44 and 37 percent, risk-free
interest rates of 1.6, 2.0 and 4.8 percent and expected lives of 7.6, 7.5 and 7.5 years. The average fair
value of each option granted in 2003, 2002 and 2001 was $9.11, $6.19 and $1.93, respectively.
2. Adoption of New Accounting Pronouncements
In April 2002, the FASB issued 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 for the Company beginning in fiscal 2003. The adoption of
SFAS No. 145 did not have a material impact on the Company’s consolidated financial statements.
In July 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal
Activities. SFAS No. 146 provides guidance on the timing of the recognition of costs associated with exit
or disposal activities. The new guidance requires costs associated with exit or disposal activities to be
recognized when incurred. Previous guidance required recognition of costs at the date of commitment
to an exit or disposal plan. The provisions of the statement were effective for any exit or disposal
activities initiated after December 31, 2002. The adoption of SFAS 146 did not have an impact on the
Company’s financial condition or results of operations.
In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on Derivative
Instruments and Hedging Activities. SFAS No. 149 amends and clarifies accounting for derivative
instruments, including certain derivative instruments embedded in other contracts, and for hedging
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