Sunbeam 2005 Annual Report Download - page 67

Jarden Corporation
Notes to Consolidated Financial Statements (cont’d)
December 31, 2005
when it is both probable that a liability has been incurred and the amount can be reasonably estimated.
The accruals are based upon the Company’s assessment, after consultation with counsel (if deemed
appropriate), of probable loss based on the facts and circumstances of each case, the legal issues involved,
the nature of the claim made, the nature of the damages sought and any relevant information about the
plaintiffs and other significant factors that vary by case. The Company believes that anticipated probable
costs of litigation matters have been adequately reserved to the extent determinable. Based on current
information, the Company believes that the ultimate conclusion of the various pending litigation of the
Company, in the aggregate, will not have a material adverse effect on the Company’s consolidated financial
position, results of operations or cash flows.
Product Liability Matters
As a consumer goods manufacturer and distributor, the Company and/or its subsidiaries face the risk of
product liability and related lawsuits involving claims for substantial money damages, product recall actions
and higher than anticipated rates of warranty returns or other returns of goods.
The Company and/or its subsidiaries are therefore party to various personal injury and property
damage lawsuits relating to their products and incidental to its business. Annually, the Company sets its
product liability insurance program which is an occurrence-based program based on the Company and its
subsidiaries’ current and historical claims experience and the availability and cost of insurance. The
Company’s product liability insurance program generally is comprised of a self-insurance retention per
occurrence and an aggregate limit on exposure.
Cumulative amounts estimated to be payable by the Company with respect to pending and potential
claims for all years in which the Company is liable under its self-insurance retention have been accrued as
liabilities. Such accrued liabilities are based on estimates (which include actuarial determinations made by
an independent actuarial consultant as to liability exposure, taking into account prior experience, number
of claims and other relevant factors); thus, the Company’s ultimate liability may exceed or be less than the
amounts accrued. The methods of making such estimates and establishing the resulting liability are
reviewed on a regular basis and any adjustments resulting therefrom are reflected in current operating
results.
Based on current information, the Company believes that the ultimate conclusion of the various
pending product liability claims and lawsuits of the Company, in the aggregate, will not have a material
adverse effect on the Company’s consolidated financial position, results of operations or cash flows.
Securities and Related Litigation
In January and February of 2006, purported class action lawsuits were filed in the Federal District
Court for the Southern District of New York against the Company and certain Company officers alleging
violations of the federal securities laws. The actions purport to be filed on behalf of purchasers of our
common stock during the period from June 29, 2005 (the date the Company announced the signing of the
agreement to acquire Holmes) through January 12, 2006.
The complaints, which are substantially similar to one another, allege, among other things, that the
plaintiffs were injured by reason of certain allegedly false and misleading statements made by us relating to
the expected benefits of the THG Acquisition. To date the Company has been served with only one of
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