Sunbeam 2006 Annual Report Download - page 32

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The Company’s effective tax rate for the year ended December 31,2006 and 2005 was approximately 43.6% and 36.5%,
respectively. The increase in the tax provision results principally from a $13.6million tax charge recorded in association with
the internal legal reorganization of the domestic Consumer solutions businesses, offset by lower tax rates assessed on a greater
percentage of foreign earnings.
Net earnings available to common stockholders for the year ended December 31,2006 increased $93.9million to $106
million versus the same period in the prior year. The increase in net earnings was primarily due to charges recorded in 2005
related to the conversion of the Company’s Series B and C preferred stock ($48.6million), the adjustment for the fair value
of inventory related to the AHI Acquisition and THG Acquisition ($14.2million) and the loss on early extinguishment of
debt ($3.9million). Improved operating results for the period were also attributable to increased volumes related to the
acquisitions and benefits achieved from prior year integration initiatives and lower stock-based compensation expense, par-
tially offset by increased reorganization costs.
For the year ended December 31,2006 earnings per share were $1.59 per diluted share versus $0.22 per diluted share for
2005.In addition to the items above, the earnings per sharewas favorably impacted as a result of the two million shares of the
Company’s common stock repurchased in March 2006 through a privately negotiated transaction for $50 million, partially
offset by the sale of four million shares in November 2006.
RESULTS OF OPERATIONS—COMPARING 2005 TO 2004
Net Sales
Years ended December 31,
(in millions) 2005 2004
Branded consumables $ 685.0$473.1
Consumer solutions 1,518.3 222.2
Outdoor solutions 820.70.—
Process solutions 233.6 195.6
Corporate / Unallocated 0.—0.—
Intercompany eliminations(1) (68.5) (52.3)
$3,189.1$838.6
(1) Intersegment sales are recorded at cost plus an agreed upon intercompany profit on intersegment sales.
The Company reported net sales of $3.2billion for the year ended December 31,2005, a 280%increase from net sales of
$839 million in the same period for 2004.Branded consumables increased $212 million, principally due to the USPC
Acquisition ($60.3million). Consumer solutions increase was primarily due to the AHI Acquisition and THG Acquisition
($1.5billion), partially offset by a $45 million decrease in sales of FoodSaver®. Process solutions increased $38 million, princi-
pally due to higher sales of plastic cutlery and Ball® freezer jars and higher third party sales of low denomination coinage.
Gross margin percentages on a consolidated basis decreased to 24.7%in the year ended December 31,2005 compared to
32.8%in the year ended December 31,2004.The gross margin decline was primarily due to adjustments for manufacturer’s
profit in acquired inventory and write-offs of inventory related to reorganization and acquisition-related integration initia-
tives ($24.9million) and the acquisitions of AHI and Holmes product lines, which have lower gross margins than the product
lines included in the same period in the prior year.
Selling, general and administrative expenses increased to $572 million in the year ended December 31,2005 from $179
million in the year ended December 31,2004.On a percentage of net sales basis, selling, general and administrative expenses
decreased to 18%in 2005 from 21%to 2004.The increase in dollar terms was principally the result of the acquisitions com-
pleted during 2005 and 2004.The decrease in percentage terms was principally due to the inclusion of the acquired business-
es which allow the leveraging of these expenses over a larger revenue base and cost saving initiatives.
Management’s Discussion and Analysis
Jarden Corporation 2006 Annual Report
30