Sunbeam 2005 Annual Report Download - page 45

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Jarden Corporation
Notes to Consolidated Financial Statements (cont’d)
December 31, 2005
Foreign Operations
Assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange
rates existing at the respective balance sheet dates. Income and expense items are translated at the average
exchange rates during the respective periods. Translation adjustments resulting from fluctuations in
exchange rates are recorded as a separate component of “Other comprehensive income (loss)” within
stockholders’ equity. The balance of the cumulative translation adjustment was $6.7 million and $1.1
million as of December 31, 2005 and 2004, respectively.
Use of Estimates
The preparation of the consolidated financial statements in accordance with GAAP requires estimates
and assumptions that affect amounts reported and disclosed in the financial statements and accompanying
notes. Actual results could differ materially from those estimates. Significant accounting estimates include
the establishment of the allowance for doubtful accounts, tax valuation allowances, reserves for sales
returns and allowances, product warranty, product liability, excess and obsolete inventory, litigation and
environmental exposures.
Concentrations of Credit Risk
Substantially all of the Company’s trade receivables are due from retailers and distributors located
throughout the United States, Europe, Latin America, Canada and Japan. Approximately 22.5%, 17.7% and
20.5% of the Company’s consolidated net sales in 2005, 2004 and 2003, respectively, were to a single
customer who purchased product from three of the Company’s business segments including branded
consumables, consumer solutions and outdoor solutions.
Cash and Cash Equivalents
The Company considers highly liquid investments purchased with an original maturity of three
months or less to be cash equivalents.
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 a variety of
factors, including 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-or-market with cost being determined principally by the
first-in, first-out method (“FIFO”), and are comprised of the following at December 31, 2005 and 2004 (in
millions):
2005 2004
Raw materials and supplies ........................................... $108.4 $ 20.6
Work in process .................................................... 24.9 10.9
Finished goods ..................................................... 433.0 122.7
Total inventories ............................................... $566.3 $154.2
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