Sunbeam 2005 Annual Report Download - page 70

Jarden Corporation
Notes to Consolidated Financial Statements (cont’d)
December 31, 2005
At December 31, 2005, the Company had NOLs of approximately $1.2 billion for domestic tax
purposes, virtually all of these losses succeeded through acquisitions. Of this amount, $1.1 billion are
subject to an annual Sec. 382 limitation of $31.0 million and these NOLs begin expiring in 2012 with final
expiration in 2025.
The Company also has either accumulated or acquired through acquisitions $90.0 million of foreign
NOLs. Of the foreign NOLs, approximately $1.0 million expires in the year ended December 31, 2006, and
$3.0 million will expire in years ending December 31, 2007 through 2009, respectively. Of the remaining
foreign NOLs, $6.0 million will expire in years subsequent to 2009, and $80.0 million have an unlimited
life.
The Company’s federal income tax returns for its fiscal year ended December 31, 2002 are under
examination by the Internal Revenue Service (“IRS”), and the Company has been told that such
examination will also be expanded to include its December 31, 2003 fiscal year tax return. In addition, one
of the Company’s acquired subsidiaries has recently been under examination by the IRS for its fiscal year
ended September 30, 2004. The Company and/or its subsidiaries are also subject to state and foreign
income tax audits. The Company believes that adequate amounts have been reserved for any adjustments
that may ultimately result from these examinations.
On October 22, 2004, the American Jobs Creation Act of 2004 (“Act”) was signed into law. The Act
created a special one-time dividends received deduction on the repatriation of certain foreign earnings to a
United States taxpayer, provided certain criteria are met. The Act provides for a special 85% dividends
received deduction of certain foreign earnings that are repatriated (as defined in the Act) prior to
December 31, 2005. In December of 2005, the Company distributed cash from its foreign subsidiaries and
will report an extraordinary dividend of approximately $114 million and a related tax liability of
approximately $6.7 million in its calendar year 2005 tax returns. The total effect on income tax expense in
2005 for amounts repatriated under the Act is approximately $1.0 million. In addition, the tax effect of such
repatriation increased goodwill by approximately $5.8 million.
The distribution does not change the Company’s intention to indefinitely reinvest undistributed
earnings of certain of its foreign subsidiaries outside the United States. As a result the Company has not
provided for U.S. income taxes on undistributed foreign earnings of approximately $171.2 million at
December 31, 2005. The Company intends to permanently reinvest these earnings in the future growth of
its foreign businesses.
Total income tax payments made by the Company during the years ended December 31, 2005, 2004
and 2003 were $ 21.3 million, $17.0 million and $11.2 million, respectively.
9. Equity and Stock Option Plans
2003 Stock Incentive Plan
The Company maintains the 2003 Stock Incentive Plan, as amended and restated (the “2003 Plan”),
which allows for grants of stock options, restricted stock and short-term cash awards. During the year ended
December 31, 2005, the Company awarded 1,241,780 stock options under the 2003 Plan, and there were
approximately 2,668,215 shares available for grant under this long-term equity incentive plan at
December 31, 2005.
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