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Jarden Corporation
Notes to Consolidated Financial Statements (cont’d)
December 31, 2005
Pension and Postretirement Plans
The Company records annual amounts relating to its pension and postretirement plans based on
calculations which include various actuarial assumptions, including discount rates, assumed rates of return,
compensation increases, turnover rates and healthcare cost trend rates. The Company reviews its actuarial
assumptions on an annual basis and makes modifications to the assumptions based on current rates and
trends when it is deemed appropriate to do so. The effect of modifications is generally recorded or
amortized over future periods. The Company believes that the assumptions utilized in recording its
obligations under its plans are reasonable based on its experience, market conditions and input from its
actuaries and investment advisors.
Computation of Net Income per Share
Basic net income per share is computed using the weighted-average number of common shares
outstanding during the period. Diluted net income per share is computed using the weighted-average
number of common shares and dilutive potential common shares outstanding during the period. Dilutive
potential common shares primarily consist of stock options and restricted stock awards.
SFAS No. 128, “Earnings Per Share,” requires that Company’s employee stock options, nonvested
restricted stock and similar equity instruments be treated as potential common shares outstanding in
computing diluted earnings per share. Diluted shares outstanding include the dilutive effect of
in-the-money options which is calculated based on the average share price for each fiscal period using the
treasury stock method.
New Accounting Standards
In November 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 151,
“Inventory Costs”, an amendment of ARB No. 43, Chapter 4 (“SFAS 151”). SFAS 151 requires the
exclusion of certain costs from inventories and the allocation of fixed production overheads to inventories to
be based on normal capacity of the production facilities. The provisions of SFAS 151 are effective for costs
incurred during fiscal years beginning after June 15, 2005. Earlier adoption is permitted for inventory costs
incurred during fiscal years beginning after the issuance date of SFAS 151. The Company is currently
evaluating the effect that the adoption of SFAS 151 will have on its consolidated financial statements but
does not expect SFAS 151 to have a material effect.
In December 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets—an
amendment of APB Opinion No. 29” (“SFAS No. 153”). The guidance in APB Opinion No. 29,
“Accounting for Nonmonetary Transactions,” (“Opinion No. 29”) is based on the principle that exchanges
of nonmonetary assets should be measured based on the fair value of the assets exchanged. The guidance
in Opinion No. 29, however, included certain exceptions to that principle. SFAS No. 153 amends Opinion
No. 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it
with a general exception for exchanges of nonmonetary assets that do not have commercial substance. A
nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to
change significantly as a result of the exchange. SFAS No. 153 is effective for nonmonetary asset exchanges
occurring in fiscal periods beginning after June 15, 2005. The Company has evaluated the impact of
adoption of SFAS No. 153, and does not believe the impact will be significant to the Company’s overall
consolidated results of operations or financial position.
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