Sunbeam 2005 Annual Report Download - page 52

Jarden Corporation
Notes to Consolidated Financial Statements (cont’d)
December 31, 2005
In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Correction,” effective
for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005.
SFAS No. 154 supersedes APB Opinion No. 20, “Accounting Changes” and SFAS No. 3, “Reporting
Accounting Changes in Interim Financial Statements” and requires retrospective application to prior
periods of any voluntary changes to alternatively permitted accounting principles, unless impracticable.
2. Adoption of New Accounting Pronouncements
In December 2004, the FASB issued SFAS 123R, which requires companies to expense the value of
share based payment awards. Under SFAS 123R, share-based payment awards result in compensation cost
that will be measured at fair value on the grant date of the awards, based on the estimated number of
awards expected to vest, and is recognized over the requisite service periods. Compensation cost for awards
that vest would not be reversed if the awards expire without being exercised, and compensation cost would
not be reversed for awards where service periods have been rendered but market or performance criterion
are not met. The Company adopted SFAS 123R effective October 1, 2005 using the modified prospective
transition method for all unvested and outstanding share awards as of the date of adoption, and as such, the
Company’s consolidated financial statements for the three months ended December 31, 2005 reflect the
impact of SFAS 123R. Under this method, the Company did not restate its financial statements for prior
periods to reflect compensation cost under SFAS 123R. During the three months ended December 31,
2005, the Company recorded compensation costs related to this pronouncement, which included the effects
of any grants made during the quarter, of approximately $31.8 million. The impact of this cumulative effect
of change in accounting principle, net of taxes, was $0.1 million attributable to estimated forfeitures on
restricted stock awards for prior periods.
On November 10, 2005, the FASB issued FASB Staff Position (“FSP”) No. FAS 123(R)-3 “Transition
Election Related to Accounting for Tax Effects of Share-Based Payment Awards.” The Company elected
to adopt the alternative transition method provided in this FSP for calculating the tax effects of stock-based
compensation pursuant to SFAS 123R, which method includes simplified methods to establish the
beginning balance of the additional paid-in capital pool (“APIC pool”) related to the tax effects of
employee stock-based compensation, and to determine the subsequent impacts on the APIC pool and
Consolidated Statements of Cash Flows of the tax effects of employee stock-based compensation awards
that are outstanding upon adoption of SFAS 123R.
In March 2005, the FASB issued Interpretation No. 47, “Accounting for Conditional Asset Retirement
Obligations” (“FIN No. 47”), an interpretation of SFAS No. 143 “Asset Retirement Obligations.” FIN
No. 47 is effective for fiscal years ending after December 15, 2005. For the year ending December 31, 2005,
the Company determined there was no significant impact on the consolidated financial position, results of
operations and cash flows on the Company as a result of adopting the provisions of FIN No. 47.
3. Acquisitions
2005 Activity
On July 18, 2005, the Company completed the acquisition of The Holmes Group, Inc. (“Holmes” and
the “THG Acquisition”) for approximately $420 million in cash and 6.15 million shares of the Company’s
common stock. Holmes is a leading manufacturer and distributor of select home environment and small
kitchen electrics under well-recognized consumer brands, including Bionaire®, Crock-Pot®, Harmony®,
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