Sunbeam 2006 Annual Report Download - page 30

2005 Activity
On July 18,2005,the Company completed its acquisition of Holmes, a privately held company, for approximately $420
million in cash and 6.15 million shares of its common stock. Holmes is a leading manufacturer and distributor of home envi-
ronment and small kitchen electrics under brand names such as Bionaire®, Crock-Pot®, Harmony®, Holmes®, Patton®,
Rival®, Seal-a-Meal® and White Mountain™. Effective on the acquisition date, the Holmes business was integrated within its
existing Consumer solutions segment. Financing for the THG Acquisition is discussed in “Financial Condition, Liquidity and
Capital Resources” below.
On January 24,2005,the Company completed its acquisition of AHI, a privately held company, for approximately
$745.6million for the equity and the repayment of approximately $100 million of indebtedness. Of the equity portion of the
purchase price, the Company held back $40 million from the sellers to cover potential indemnification claims against the sell-
ers of AHI. Effective on the acquisition date, the legacy Sunbeam Products business was integrated within its existing
Consumer solutions segment and the Coleman business formed a new segment named Outdoor solutions. Financing for the
AHI Acquisition is discussed in “Financial Condition, Liquidity and Capital Resources” below.
2004 Activity
On June 28,2004 the Company acquired approximately 75.4%of the issued and outstanding stock of USPC and subse-
quently acquired the remaining 24.6%pursuant to a put/call agreement (“Put/Call Agreement”) on October 4,2004.USPC
is a manufacturer and distributor of playing cards and related games and accessories. The aggregate purchase price was
approximately $238 million, including transaction expenses and deferred consideration amounts.
The USPC Acquisition includes an earn-out provision. The Company has concluded that the maximum potential contin-
gent consideration of $10 million was earned by the Sellers and accordingly has accrued such amounts as of December 31,
2006.The Company intends to pay this contingent consideration in cash and to capitalize such payment.
During the first quarter of 2004,the Company completed the tuck-in acquisition of Loew-Cornell, a leading marketer
and distributor of paintbrushes and other arts and crafts products. The Loew-Cornell Acquisition includes an earn-out pro-
vision with a payment in cash based on earnings performance targets. As of December 31,2006, a portion of the contingent
earn-out was not determinable beyond a reasonable doubt. However, the Company has accrued $3.5million, representing the
portion of the contingent consideration which is determinable and due to seller.
As discussed further hereafter, the results of operations for 2006 versus 2005 include the results of Holmes and AHI from
their respective acquisition dates. The differences in operating results in 2006 versus 2005 are primarily due to these acquisi-
tions (the “Acquisitions”).
Years Ended December 31,
(in millions) 2006 2005 2004
Net sales $3,846.3$3,189.1$838.6
Cost of sales 2,904.02,402.3 563.2
Selling, general and administrative expenses 604.9 571.7 179.4
Reorganization and acquisition-related integration costs 36.8 29.10.—
Operating earnings 300.6 186.096.0
Interest expense, net 112.684.227.6
Loss on early extinguishment of debt 0.—6.10.—
Income before taxes 188.095.768.4
Income tax provision 82.035.026.0
Net income 106.0 60.7 42.4
Paid-in-kind dividends on Series B and C preferred stock 0.—(9.7)0.—
Charges from beneficial conversions of Series B and C preferred stock 0.— (38.9)0.—
Income available to common stockholders $ 106.0$12.1$42.4
Management’s Discussion and Analysis
Jarden Corporation 2006 Annual Report
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