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ANNUAL REPORT
2007

Table of contents

  • Page 1
    ANNUAL REPORT 2007

  • Page 2
    ...RESULTS • HAVE FUN, WORK HARD, EXECUTE • ENHANCE THE COMMUNITIES WE SERVE Winners of Jarden's 2007 Annual Report Cover Design Concept: Patrick Reilly, Coleman and Shawn VanDaele, Jarden Consumer Solutions For a reconciliation of Segment Earnings to GAAP please see the Company's enclosed Form 10...

  • Page 3
    ... consumer products company. Three developments in 2007 underpinned this important progression: the acquisitions of K2 and Pure Fishing helped grow Jarden to a Fortune 500 business; a number of the investments we made over the last three years in new product development and brand support started...

  • Page 4
    ... management team at JCS, many of whom have worked together for over 10 years, as well as their disciplined and focused approach to driving margin expansion through new product development and brand support. While this is a common theme across all Jarden's businesses, the execution of this strategy...

  • Page 5
    ... a new medium term goal. The new goal we established in 2007 is to progress continuing EPS to $5.00 by the end of 2011. We expect to reach this objective through executing on our strategy of investing in our people, our products, and our brands to drive profitable growth. As I state every year, our...

  • Page 6
    OUTDOOR SOLUTIONS We aspire to be the premier active outdoor equipment company in the world, delivering advantaged products that enable our consumers to have superior experiences, improved performance, greater safety and more fun. We strive to do this with inspired teams and leaders, with true ...

  • Page 7
    ...improve the experience that consumers have in the kitchen, while our portfolio also serves the pet, health and wellness and hospitality markets. We design, manufacture and market, nationally and internationally, a diverse portfolio of consumer products under world-class brands such as Arius Eickert...

  • Page 8
    BRANDED CONSUMABLES We are committed to developing and providing the market with the finest and most innovative products in the niche markets we serve. With a focus on everyday convenience, our products are designed to enhance the lives, and meet the daily needs, of consumers. We provide the smoke ...

  • Page 9
    PROCESS SOLUTIONS Jarden Process Solutions is a customer-focused producer of value-added manufacturing services, providing creative nylon, plastic and zinc solutions to large OEM customers globally. Our customers' success is our passion. We are also a market leader in communication aerials for the ...

  • Page 10
    ...New York, New York Securities Listing Jarden's common stock is listed on the New York Stock Exchange. Symbol: JAH Investor Relations Financial Dynamics Business Communications New York, New York 212-850-5600 NYSE Corporate Governance Disclosure Jarden Corporation filed as exhibits to its 2007 Annual...

  • Page 11
    ... As of December 31, 2007, the aggregate market value of the registrant's common stock held by non-affiliates of the registrant was $1.7 billion based upon the closing market price on such date as reported on the New York Stock Exchange. All (i) executive officers and directors of the registrant and...

  • Page 12
    ... ...Item 9B. Other Information ...Part III Item 10. Item 11. Item 12. Item 13. Item 14. Part IV Item 15. Directors, Executive Officers and Corporate Governance ...Executive Compensation ...Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters ...Certain...

  • Page 13
    ... new product categories. We operate three primary business segments: Outdoor Solutions, Consumer Solutions and Branded Consumables. In the Outdoor Solutions segment, the Company manufactures or sources, markets and distributes consumer active lifestyle products worldwide for use outside the home...

  • Page 14
    ... vacuum packaging to consumers. As a leading provider of small kitchen appliances, we work directly with retailers, often as the category manager, to identify and support consumers' needs. Our Mr. Coffee®, Crock-Pot®, Oster® and Sunbeam® brands hold leading or significant positions in a number...

  • Page 15
    ..., boats, kayaks and related products. Jarden sells its alpine skis under a number of brands including K2®, Völkl® and Line®, and its alpine ski bindings under the name Marker® in the three major ski markets of the world-North America, Europe and Japan. The Company sells snowboards, boots...

  • Page 16
    ... active lifestyle products for outdoor and outdoor related activities. This dedication to these activities was a driving force behind the Company's acquisitions of K2 and Pure Fishing, Inc. K2 is a leading provider of branded consumer products in the global sports equipment market that sells fishing...

  • Page 17
    ... product support from design to after-market customer service; cross-sell our brands across various business segments to our extensive combined customer bases; leverage strong established European, Latin American and Pacific Rim distribution channels; and establish new distribution channels...

  • Page 18
    .... ("Coleman") and the businesses of the aforementioned 2007 acquisitions of K2 and Pure Fishing. The Outdoor Solutions segment, manufactures or sources, markets and distributes worldwide consumer active lifestyle products for outdoor and outdoor related activities. Coleman, is a leading, worldwide...

  • Page 19
    ...Dick's Sporting Goods, Kmart, REI, Target, The Sports Authority and Wal-Mart. Sales and Marketing The sales force is deployed by geographic region: United States, Canada, Europe, Latin America and the Pacific Rim. We are positioning Coleman as "The Outdoor Companyâ„¢," an outdoor lifestyle brand, by...

  • Page 20
    ... The markets in which our Outdoor Solutions business operates are generally highly competitive, based primarily on product quality, product innovation, price and customer service and support, although the degree and nature of such competition vary by location and product line. Igloo Corporation and...

  • Page 21
    ... Crock-Pot®, Health o meter®, Holmes®, Mr. Coffee®, Patton®, Oster® and Sunbeam® brand names, our principal products include clippers and trimmers for professional use in the beauty and barber and animal segments; electric blankets, mattress pads and throws; household kitchen appliances, such...

  • Page 22
    ...developing brands. The sales force is allocated by geographic region: United States, Canada, Latin America and Europe with sub-groups to sell different product lines. We operate in an integrated model with the business and operational teams to ensure consistency and fulfillment of marketing strategy...

  • Page 23
    ...product quality, product innovation, price and customer service and support, although the degree and nature of such competition vary by location and product line. Our FoodSaver® and Seal-a-Meal® appliances and bags compete with marketers of "conventional" food storage solutions, such as non-vacuum...

  • Page 24
    ... our hospitality business are NACCO Industries, Inc. (Hamilton Beach) and the Andis Company. In portable air cleaning products, our primary competitors are DeLonghi America, Inc., Kaz, Incorporated, Hunter Fan Company, Sharper Image Corporation and Ionic Pro, LLC. In vaporizers and humidifiers, our...

  • Page 25
    ...Wal-Mart and also key customer groups such as casinos. Our marketing and sales departments work closely together to develop pricing and distribution strategies and to design packaging and develop product line extensions and new products. We have employed a two-tier marketing strategy for our line of...

  • Page 26
    ... products or product lines related to such trademarks. Pursuant to the terms of the 1993 distribution agreement with Ball Corporation ("Ball"), we were granted a perpetual, royalty-free license to use the Ball® brand name for our Branded Consumables. In the event of a change of control of Jarden...

  • Page 27
    ...for marine, citizen band and military applications, is also reported within this Process Solutions segment. We sell our plastic products primarily to major original equipment manufacturer companies in the healthcare and consumer products industries. Our leading customers include CIBA Vision, Johnson...

  • Page 28
    ... Securities and Exchange Commission. In addition, information concerning purchases and sales of our equity securities by our executive officers and directors is posted on our website, by the end of the business day after filing. Our website also includes the following corporate governance materials...

  • Page 29
    ... of our common stock involves a number of risks and uncertainties. Potential investors should carefully consider the risks and uncertainties described below and the other information in this Form 10-K and Annual Report before deciding whether to invest in our securities. Our business, financial...

  • Page 30
    ...in meeting customer demand for timely delivery of quality products. We typically do not enter into long-term contracts with our primary vendors and suppliers. Instead, most parts and products are supplied on a "purchase order" basis. As a result, we may be subject to unexpected changes in pricing or...

  • Page 31
    ...customer demands for lower prices could result in lower sale prices and, to the extent we have existing inventory, lower margins. As a result, fluctuations in raw material prices could have a material adverse effect on our business, results of operations and financial condition. Some of the products...

  • Page 32
    ... companies. Competition in the markets in which we operate is based primarily on product quality, product innovation, price and customer service and support, although the degree and nature of such competition vary by location and product line. In the Outdoor Solutions segment, Igloo Corporation...

  • Page 33
    ... companies that manufacture industrial and commercial vacuum packaging products. In more mature small household appliance categories outside of home vacuum packaging, including blenders, toasters and irons, among others, our key competitors in the United States and Canada include Conair Corporation...

  • Page 34
    ... condition. We anticipate that any future acquisitions we pursue as part of our business strategy may be financed through a combination of cash on hand, operating cash flow, availability under our senior credit facility and new capital market offerings. If new debt is added to current debt levels...

  • Page 35
    ... two directives relating to chemical substances in electronic products. The Waste Electrical and Electronic Equipment Directive requires producers of electrical goods to pay for specified collection, recycling, treatment and disposal of past and future covered products. EU governments were required...

  • Page 36
    ...We believe these officers' experience in the branded consumer products industry and our business, and with strategic acquisitions of complementary businesses within our primary business segments, has been important to our historical growth and is important to our future growth strategy. We currently...

  • Page 37
    ... pursue as part of our growth strategy or potential stock repurchase programs may be financed through a combination of cash on hand, operating cash flow, availability under our existing credit facilities and new capital market offerings. If new debt is added to current debt levels, the related risks...

  • Page 38
    ... monetary, tax and/or lending policies, encouraging foreign investment or foreign trade by our host countries. Should any of these risks occur, our ability to export our products or repatriate profits could be impaired and we could experience a loss of sales and profitability from our international...

  • Page 39
    ...in the retail industry and markets for consumer products affecting our customers or retailing practices could negatively impact existing customer relationships and our results of operations. We sell our Outdoor Solutions', Consumer Solutions' and Branded Consumables' products to retailers, including...

  • Page 40
    ...®, Mr. Coffee®, Oster®, Patton®, Rival®, Seal-a-Meal®, Sunbeam® and VillaWare®. Our other brands used include Health at Home®, Mixmaster®, Osterizer®, Hydrosurge® and The Blanket with a Brain®. In our Branded Consumables segment, these include the Ball®, Bee®, Bernardin®, Bicycle...

  • Page 41
    ... to procure our products from our factories and suppliers, transport them to our distribution facilities, store them and deliver them to our customers on time and in the correct amounts. Failure to successfully implement our reorganization and acquisition-related projects timely and economically...

  • Page 42
    ... or governing bodies due to ambiguities related to practice, our reputation may be harmed. Item 1B. Unresolved Staff Comments Not Applicable. Item 2. Properties Our corporate office is located in a leased office space in Rye, New York. In addition, at December 31, 2007, the Company and its...

  • Page 43
    ... of New York against the Company and certain Company officers alleging violations of the federal securities laws. The actions were filed on behalf of purchasers of the Company's common stock during the period from June 29, 2005 (the date the Company announced the signing of the agreement to acquire...

  • Page 44
    ... S-K is hereby included in Part I of this Annual Report on Form 10-K. The executive officers of our Company as of January 31, 2008 are as follows: Martin E. Franklin, age 43, is Chairman and Chief Executive Officer of our Company. Mr. Franklin was appointed to our Board of Directors on June 25, 2001...

  • Page 45
    ... 25, 2001 and became Vice Chairman, Chief Financial Officer and Secretary effective September 24, 2001. Mr. Ashken is also a principal and executive officer of a number of private investment entities. Mr. Ashken was the Vice Chairman of the Board of Directors of Bollé, Inc. from December 1998 until...

  • Page 46
    ... of business on June 20, 2005. All references in this Annual Report on Form 10-K to the number of shares outstanding, per share amounts, issued shares, sale price of Jarden's common stock, restricted stock and stock option data of Jarden's common shares have been restated to reflect the effect of...

  • Page 47
    ... of dividends, if applicable. The stock performance shown on the graphs below are based on historical data and are not indicative of, or intended to forecast, possible future performance of the Company's common stock. COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG JARDEN CORPORATION, S&P 500...

  • Page 48
    ...employees to surrender shares of stock earned as part of their awards as payment towards the tax withholding obligations in connection with the vesting of such awards. On November 7, 2007, an aggregate of 366,850 shares of the Company's common stock were tendered to the Company in return for payment...

  • Page 49
    ... previously reported net income. As of and for the Years Ended December 31, 2007(b)(c) 2006(c) 2005(b)(c) 2004(b) 2003(b) STATEMENTS OF INCOME DATA (in millions, except per share data): Net sales ...Operating earnings(a) ...Interest expense, net ...Loss on early extinguishment of debt ...Income tax...

  • Page 50
    ...reorganization and acquisition-related integration costs, the elimination of manufacturer's profit in inventory, fair value inventory adjustments, non-cash stock-based compensation costs, and loss on early extinguishment of debt. This non-GAAP financial measure, is presented in this Annual Report on...

  • Page 51
    ...is supplemented through acquiring businesses with highly recognized brands, innovative products and multi-channel distribution. In the Outdoor Solutions segment, the Company manufactures or sources, markets and distributes consumer active lifestyle products worldwide for use outside the home or away...

  • Page 52
    ...on the New York Stock Exchange ("NYSE") during the five-day trading period ending two trading days after the date that the number of shares of Jarden common stock to be received by K2 stockholders was finalized, which was August 6, 2007. The total purchase price of $777 million, which is net of cash...

  • Page 53
    ...as "Jarden Consumer Solutions" or "JCS"), leading producers of global consumer products through brands such as BRK®, Campingaz®, Coleman®, First Alert®, Health o meter®, Mr. Coffee®, Oster® and Sunbeam®. Of the equity portion of the purchase price, $40 million was held back by the Company to...

  • Page 54
    ...and Pure Fishing ($199 million), incremental stock based compensation expense ($41 million) and increased advertising, marketing and product development costs, as well as the benefits from prior year reorganization and integration initiatives. Reorganization and acquisition-related integration costs...

  • Page 55
    ... with the internal legal reorganization of the domestic Consumer Solution businesses. The Company believes that its long-term reported tax rate will be approximately 36%. Net income for 2007 decreased $77.9 million to $28.1 million versus 2006. For 2007, diluted earnings per share were $0.38...

  • Page 56
    ...and Pure Fishing, combined with favorable working capital improvements primarily resulting from disciplined inventory management. Net cash provided by financing activities was $681 million and $4.4 million for 2007 and 2006, respectively. The change is primarily due to the issuance of long-term debt...

  • Page 57
    ..., partially offset by approximately $793 million in long-term debt payments in 2007. Net cash used in investing activities was $973 million versus $278 million for 2007 and 2006, respectively. Cash used for the acquisition of businesses for 2007 increased approximately $700 million over the same...

  • Page 58
    ... the Note if after one year from issuance the closing price of Jarden's common stock exceeds $45.32 per share for a period of three consecutive trading days. On August 28, 2006, the Company completed a $250 million receivables purchase agreement, which is subject to annual renewal, bears interest at...

  • Page 59
    ...predict the timing of the settlement of the related tax positions beyond 2008. See Note 12 "Taxes on Income" to the Consolidated Financial Statements for additional information on the Company's unrecognized tax benefits at December 31, 2007. Commercial commitments are items that the Company could be...

  • Page 60
    ...million notional amount of foreign currency contracts that were acquired in connection with the acquisitions of K2 and Pure Fishing. These foreign currency contracts, which are not designated as effective hedges, have maturity dates through 2008. Fair market value gains or losses are included in the...

  • Page 61
    ... management's significant judgments and estimates. Revenue recognition and allowance for product returns The Company recognizes revenues at the time of product shipment or delivery, depending upon when title passes, to unaffiliated customers, and when all of the following have occurred: a firm sales...

  • Page 62
    ... 2007 measured at December 31 are the obligations resulting from the acquisitions of K2 and Pure Fishing. The Company employs a total return investment approach for its pension and postretirement benefit plans whereby a mix of equities and fixed income investments are used to maximize the long-term...

  • Page 63
    ... health care cost trend rates would have the following effects (in millions): Accumulated postretirement benefit obligation ...Aggregate of the service and interest cost components net postretirement benefit cost ...Product liability As a consumer goods manufacturer and distributor, the Company...

  • Page 64
    .... Such forward-looking statements include the Company's repurchase of shares of common stock from time to time under the Company's repurchase program, the outlook for Jarden's markets and the demand for its products, earnings per share, estimated sales, segment earnings, cash flows from operations...

  • Page 65
    ...which it operates. The primary purpose of the foreign currency hedging activities is to mitigate the foreign currency exchange rate exposure on the cash flows related to forecasted inventory purchases and sales. The Company assessed market risk based on changes in interest rates and foreign currency...

  • Page 66
    ... Board (United States), the consolidated balance sheets of Jarden Corporation and subsidiaries as of December 31, 2007 and 2006, and the related consolidated statements of income, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2007, and our report...

  • Page 67
    ... Corporation and subsidiaries (the "Company") as of December 31, 2007 and 2006, and the related consolidated statements of income, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2007. Our report also included the financial statement schedule listed...

  • Page 68
    JARDEN CORPORATION CONSOLIDATED STATEMENTS OF INCOME (In millions, except per share amounts) Years Ended December 31, 2007 2006 2005 Net sales ...Cost of sales ...Selling, general and administrative expenses (including stock-based compensation of $64.0, $23.0 and $62.4 for the years ended December ...

  • Page 69
    ... current liabilities ...Long-term debt ...Deferred taxes on income ...Other non-current liabilities ...Total liabilities ...Commitments and contingencies ...Stockholders' equity: Preferred stock ($0.01 par value, 5 shares authorized, no shares issued and outstanding at December 31, 2007 and 2006...

  • Page 70
    ... cash provided by financing activities ...Cash flows from investing activities: Additions to property, plant and equipment ...Acquisition of businesses, net of cash acquired ...Proceeds form sale of assets and other ...Net cash used in investing activities ...Effect of exchange rate changes on cash...

  • Page 71
    ... income ...Restricted stock awards, stock options exercised and stock plan purchases ...Restricted stock awards canceled and shares tendered for stock options and taxes ...Shares reissued from treasury . . Non cash compensation charges ...Tax benefit related to stock option exercises ...Shares...

  • Page 72
    JARDEN CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (continued) (in millions) Accumulated Additional Other Common Stock Treasury Stock Preferred Stock Paid-In Retained Comprehensive Shares Amount Shares Amount Shares Amount Capital Earnings Income (Loss) Balance, December ...

  • Page 73
    ...is also reported within this Process Solutions segment. See Note 17 "Segment Information" for additional detail. On August 8, 2007, the Company acquired all of the outstanding shares of K2 Inc. (the "Acquisition"), a leading provider of branded consumer products in the global sports equipment market...

  • Page 74
    ... Europe, Latin America, Canada and Japan. Approximately 20%, 22% and 23% of the Company's consolidated net sales in 2007, 2006 and 2005, respectively, were to a single customer who purchased product from the Company's three primary business segments: Outdoor Solutions, Consumer Solutions and Branded...

  • Page 75
    ... additional shares resulting from the stock split. Revenue Recognition The Company recognizes revenues at the time of product shipment or delivery, depending upon when title passes, to unaffiliated customers, and when all of the following have occurred: a firm sales agreement is in place, pricing is...

  • Page 76
    ... charged to advertising and included in selling, general and administrative ("SG&A") expenses in the Consolidated Statements of Income for 2007, 2006 and 2005 were $104.3, $68.4 and $58.1, respectively. Product Warranty Costs The Company recognizes warranty costs based on an estimate of amounts...

  • Page 77
    ... the market price of the underlying stock exceeds the exercise price of the Company's stock options on the date of grant. The fair value of stock options was determined using the Black-Scholes option-pricing model which was previously used for disclosing the Company's pro forma information under...

  • Page 78
    ... or market vesting conditions, the Company excludes these awards from diluted earning per share computations until the contingency is met as of the end of that reporting period. Had stock-based compensation costs been recognized using the fair value method for all of 2005, pro forma net income...

  • Page 79
    ...any adjustments related to pre-existing tax contingencies for prior acquisitions to be recorded in the income statement. SFAS 141(R) is generally effective for business combination transactions for which the acquisition date is on or after the beginning of the first annual reporting period beginning...

  • Page 80
    ...effective for fiscal years beginning after September 15, 2006. The adoption of this statement in 2007 had no material impact on the Company's financial position, results of operations or cash flows. In June 2006, the FASB issued FASB interpretation No. 48, "Accounting for Uncertainty in Income Taxes...

  • Page 81
    ... of the acquired business may be paid and at December 31, 2007, $25 of this amount is accrued for payment in 2008. The Pure Fishing acquisition is consistent with the Company's strategy of purchasing leading, niche consumer-oriented brands with attractive cash flows and strong management. 69

  • Page 82
    ... the New York Stock Exchange ("NYSE") during the five-day trading period ending two trading days after the date that the number of shares of Jarden common stock to be received by K2 stockholders was finalized, which was August 6, 2007. The total purchase price of $777, which is net of cash acquired...

  • Page 83
    ... Company's strategy of acquiring branded consumer products businesses with leading market positions. During 2005, the Company completed three tuck-in acquisitions within the Branded Consumables segment. Pro forma financial information The aggregate value of the Pure Fishing and tuck-in acquisitions...

  • Page 84
    ... Goodwill at December 31, 2007 and 2006 is as follows (in millions): Foreign Exchange and Other Adjustments Net Book Value at January 1, 2007 Acquisitions Net Book Value at December 31, 2007 Goodwill Branded Consumables ...Consumer Solutions ...Outdoor Solutions ... $ 497.8 489.7 236.2 $1,223...

  • Page 85
    ... 236.2 $1,223.7 The $102.8 decrease in the Consumer Solutions goodwill primarily relates to finalizing the purchase price allocation related to the Holmes acquisition. Goodwill was decreased when the customer relationships and brand names valuations attributable to Holmes were finalized increasing...

  • Page 86
    ... of the following at December 31, 2007 and 2006 (in millions): 2007 2006 Cooperative advertising, customer rebates and allowances ...Warranty and product liability reserves ...Accrued environmental and other litigation ...Deferred consideration for acquisitions ...Other ...Total other current...

  • Page 87
    ... million shares of Jarden common stock and approximately $10 in cash. Senior Credit Facility Effective February 13, 2007, the Company amended its Senior Credit Facility (the "Facility") to, among other things: allow for the aforementioned purchase of the Senior Subordinated Notes; reduce applicable...

  • Page 88
    ...agreement, substantially all of the Company's Outdoor Solutions and Consumer Solutions accounts receivable are sold to a special purpose entity, Jarden Receivables, LLC ("JRLLC"), which is a wholly-owned consolidated subsidiary of the Company. JRLLC funds these purchases with borrowings under a loan...

  • Page 89
    ... are directly or indirectly 100% owned by the Company. The Company's debt maturities, including capital leases, securitization facility and other short-term debt for the five years following December 31, 2007 and thereafter are as follows (in millions): Years Ending December 31, Amount 2008 ...2009...

  • Page 90
    ...(in millions): Notional Amount Fair Value Asset (Liability) Weighed Average Maturity (years) December 31, 2007 Cash flow hedges: Interest rate swaps ...Forward foreign exchange rate contracts ...Fair value hedges: Cross-currency swaps ...Derivatives not designated as effective hedges: Interest rate...

  • Page 91
    ... designated as effective hedges. Fair market value gains or losses are included in the results of operations. Aside from the contracts acquired in connection with the Pure Fishing acquisition, at December 31, 2007, the Company had $925 of notional amount outstanding in swap agreements that exchange...

  • Page 92
    ... on a straight line basis over the term of the lease, and expire at various dates through 2021. Also, certain equipment used in Company operations is leased under operating leases. Operating lease commitments at December 31, 2007 are as follows (in millions): Years Ended December 31, Amount 2008...

  • Page 93
    ... or cash flows. Product Liability 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...

  • Page 94
    ... of New York against the Company and certain Company officers alleging violations of the federal securities laws. The actions were filed on behalf of purchasers of the Company's common stock during the period from June 29, 2005 (the date the Company announced the signing of the agreement to acquire...

  • Page 95
    ... with the sale of its Anthony Pools Division, K2 received certain distributions in 1997 and 1998 from a corporation in which it held a minority interest. On March 30, 2007, K2 received a notice of liability from the Internal Revenue Service asserting transferee liability for federal income taxes of...

  • Page 96
    ...the Company's reported income tax rate as a percentage of income from continuing operations is reconciled as follows: Years Ended December 31, 2007 2006 2005 Federal statutory tax rate ...Increase (decrease) in rates resulting from: State and local taxes, net ...Foreign rate differences ...Internal...

  • Page 97
    ... Service ("IRS") audit of the Company's federal income tax returns for its fiscal years ended December 31, 2003 and 2004 was closed in the fourth quarter of 2007. Adjustments have been fully recorded in the Company's tax contingency account. Additionally, IRS audits of two of the Company's acquired...

  • Page 98
    ... unrecognized tax benefits at adoption as a result of purchase accounting are approximately $46. The amount of gross unrecognized tax benefits recorded at the date of acquisition of K2 and Pure Fishing were approximately $26 and $3, respectively. During 2007, the Company paid federal income tax of...

  • Page 99
    ... audit related to the pre-acquisition period of an acquired business. At December 31, 2007, the amount of gross unrecognized tax benefits that, if recognized, would affect the reported tax rate are approximately $31 and the amount of gross unrecognized tax benefits as a result of purchase accounting...

  • Page 100
    ...$12.07 The Company does not use cash to settle any of its options or restricted share awards and when available issues shares from its treasury stock instead of issuing new shares. The total intrinsic value of options exercised for 2007, 2006 and 2005, based upon the average market price during the...

  • Page 101
    ... awards. As part of these awards, in May 2007, the Company's board of directors approved the granting of an aggregate of 0.4 million restricted shares of the Company's common stock to certain executive officers of the Company. The grant date fair value of these restricted share awards was $39...

  • Page 102
    ... yet lapsed and these shares vest on the date on which certain Jarden common stock price targets are achieved in accordance with the terms of the related agreements. As of December 31, 2007, there was approximately $34 of unrecognized compensation cost related to non-vested share-based awards. Those...

  • Page 103
    ... Stock and C Preferred Stock and the closing market price of the Company's common stock on September 17, 2004, the last business day before the execution of the transaction documents ("Execution Date"). However, the terms of the preferred and common stock issuances to the Private Equity Investors...

  • Page 104
    ... exceeded the average market price of the Company's common stock for the three months ended December 31, 2007, 2006 and 2005, respectively. As such, these share-based awards did not affect the computation of diluted earnings per share. Additionally, 0.5 million shares of common stock related to the...

  • Page 105
    ... 2007 2006 2005 Service cost ...Interest cost ...Amortization: Prior service benefit ...Net actuarial (gain)/loss ...Net periodic cost ...Curtailments ...Total expense ...Assumptions Weighted average assumption used to calculate net periodic cost: Discount rate ...Rate of compensation increase...

  • Page 106
    The amount of accumulated other comprehensive income expected to be recognized in net periodic benefit cost for the year ending December 31, 2008 is as follows: Pension Benefits Domestic Foreign Total Postretirement Prior service cost (benefit) ...Net actuarial loss (gain) ... $- - $- $- - $- $- ...

  • Page 107
    ...31, 2007 and 2006 (in millions): Pension Benefits 2007 Domestic Foreign Total 2006 Domestic Foreign Total Postretirement Benefits 2007 2006 Change in benefit obligation: Benefit obligation at beginning of year ...$254.3 $ 14.7 $269.0 $267.8 $14.2 $282.0 $ Acquisition ...67.9 21.4 89.3 - - - Service...

  • Page 108
    ... plan's investments. The Company's investment strategy for its defined benefit pension plans is to maximize the long-term rate of return on plans assets within an acceptable level of risk in order to minimize the cost of providing pension benefits. The Company's target asset allocation for 2007 and...

  • Page 109
    ... plans in amounts consistent with applicable laws and regulations and expects to make cash contributions of approximately $2.8 in 2008. Information about the expected benefit payments for the Company's pension and postretirement plans are as follows (in millions): Years ended December 31, Pension...

  • Page 110
    ... and are included in the allocation of the cost to acquire K2 (see Note 3) and are accrued within the Outdoor Solution segment. Branded Consumables Segment Reorganization In 2007, the Company initiated a plan to consolidate certain non-manufacturing processes across the segment platform. This plan...

  • Page 111
    ...these initiatives, which is primarily remaining lease obligations. Outdoor Solutions Segment Reorganization During 2007, the Company initiated a plan to integrate certain businesses acquired from K2 and Pure Fishing. This plan includes in part, facility closings and headcount reductions. During 2006...

  • Page 112
    ... costs as of and for the years ended December 31, 2007 and 2006 (in millions): Capitalized Reorganization Accrual Reorganization and Cash Accrual Balance at and acquisition Acquisition Payments Foreign Balance at December 31, Related costs, Related and Non-cash Currency December 31, 2006 net Costs...

  • Page 113
    ... in Canada, China, Europe, Japan and Latin America. In the Outdoor Solutions segment, the Company manufactures or sources, markets and distributes consumer active lifestyle products worldwide for use outside the home or away from the home under well-known brand names. The Company sells products for...

  • Page 114
    ... Total Branded Consumer Outdoor Process Intercompany Operating Corporate/ Consumables Solutions Solutions Solutions Eliminations Segments Unallocated Consolidated Year ended December 31, 2007 Net sales ...Segment earnings (loss) ...Adjustments to reconcile to reported operating earnings (loss): Fair...

  • Page 115
    Total Branded Consumer Outdoor Process Intercompany Operating Corporate/ Consumables Solutions Solutions Solutions Eliminations Segments Unallocated Consolidated Year ended December 31, 2005 Net sales ...Segment earnings (loss) ...Adjustments to reconcile to reported operating earnings (loss): Fair ...

  • Page 116
    ... financial statements of the Company ("Parent"), the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries on a consolidated basis as of and for the years ended December 31, 2007, 2006 and 2005. Condensed Consolidating Statements of Income (in millions) Year Ended December 31, 2007 Guarantor Non...

  • Page 117
    ... Balance Sheets (in millions): Guarantor Subsidiaries As of December 31, 2007 Non-Guarantor Subsidiaries Eliminations Parent Consolidated Assets Current assets ...Investment in subsidiaries ...Non-current assets ...Total assets ...Liabilities and stockholders' equity Current liabilities...

  • Page 118
    ... Consolidating Statements of Cash Flows (in millions): Parent Year Ended December 31, 2007 Guarantor Non-Guarantor Subsidiaries Subsidiaries Eliminations Consolidated Net cash provided by (used in) operating activities, net ...$ (157.7) $ 386.1 Financing activities: Net change in short-term debt...

  • Page 119
    ... Acquisition of business, net of cash acquired . . (1,311.1) Other ...- Net cash provided by (used in) investing activities . . (1,312.0) Effect of exchange rate changes on cash ...Net increase (decrease) in cash and cash equivalents ...Cash and cash equivalents at beginning of year ...Cash and cash...

  • Page 120
    ...that the Company maintained effective internal control over financial reporting as of December 31, 2007 On August 8, 2007, the Company acquired all the outstanding shares K2, a publicly traded company. The Company has excluded K2's internal controls over financial reporting for fiscal year 2007 from...

  • Page 121
    ... controls over financial reporting. Pure Fishing constituted approximately 10% of the Company's consolidated assets at December 31, 2007 and 5% of the Company's net sales for the year ended December 31, 2007. The effectiveness of the Company's internal control over financial reporting as of December...

  • Page 122
    ... Item 10. Directors, Executive Officers and Corporate Governance Information regarding executive officers is included in Part I of this Form 10-K as permitted by General Instruction G(3). Jarden Corporation has adopted a "Business Conduct and Ethics Policy" ("Code") for all its employees, including...

  • Page 123
    .... 001-13665. Exhibit Number Description of Exhibit 2.1 Securities Purchase Agreement, dated as of September 19, 2004, by and among American Household, Inc., Jarden Corporation, Morgan Stanley Senior Funding, Inc., Wachovia Bank National Association, Banc of America Strategic Solutions, Inc., Jerry...

  • Page 124
    Exhibit Number Description of Exhibit 2.5 Agreement and Plan of Merger dated as of April 24, 2007 by and among Jarden Corporation, K2 Merger Sub, Inc. and K2 Inc. (filed as Exhibit 2.1 to the Company's Current Report on Form 8-K, filed with the Commission on April 27, 2007, and incorporated ...

  • Page 125
    ... herein by reference). List of Directors and Executive Officers party to Exhibit 10.6 (filed as Exhibit 10.10 to the Company's Annual Report on Form 10-K, filed with the Commission on March 31, 1996, and incorporated herein by reference). Alltrista Corporation 1998 Long Term Equity Incentive Plan...

  • Page 126
    ...and Desiree DeStefano (filed as Exhibit 10.2 to the Company's Current Report on Form 8-K, filed with the Commission on March 14, 2007, and incorporated herein by reference). Restricted Stock Award Agreement, dated January 2, 2002, between the Company and Martin E. Franklin (filed as Exhibit 10.18 to...

  • Page 127
    Exhibit Number Description of Exhibit †10.23 Amendment No. 1, dated as of September 4, 2003, to the Restricted Stock Award Agreement, dated as of May 8, 2003, between the Company and Martin E. Franklin (filed as Exhibit 10.2 to the Company's Current Report on Form 8-K, filed with the Commission...

  • Page 128
    ... and Ian G.H. Ashken (filed as Exhibit 10.7 to the Company's Current Report on Form 8-K, filed with the Commission on May 25, 2007, and incorporated herein by reference). Restricted Stock Award Agreement, dated as of May 24, 2007, between the Company and James E. Lillie (filed as Exhibit 10.8 to the...

  • Page 129
    ... Current Report on Form 8-K, filed with the Commission on December 19, 2007, and incorporated herein by reference). Jarden Corporation 2003 Employee Stock Purchase Plan (incorporated by reference from Annex C to the Company's 2003 Definitive Proxy Statement with respect to the Company's 2003 Annual...

  • Page 130
    ...dated February 24, 2006 by and among the Company and CIBC, as Administrative Agent (filed as Exhibit 10.53 to the Company's Annual Report on Form 10K... as Exhibit 10.1 to the Company's Current Report on Form 8-K, filed with the Commission on August 14, 2007 and incorporated herein by reference). 118...

  • Page 131
    ... 4.2 to the Company's Current Report on Form 8-K, filed with the Commission on February 16, 2007 and incorporated herein by reference). Stock Purchase Agreement dated as of April 6, 2007, by and among Pure Fishing Holdings, LLC, Outdoor Technologies Corporation, Jarden Corporation, and the other...

  • Page 132
    ... caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. JARDEN CORPORATION (Registrant) By: /S/ MARTIN E. FRANKLIN Martin E. Franklin Chairman and Chief Executive Officer February 25, 2008 We, the undersigned directors and officers of Jarden Corporation, hereby...

  • Page 133
    Schedule II JARDEN CORPORATION VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (in millions) Balance at beginning of period Charges to costs and expense Deductions from reserves Balance at end of period Other(1) Reserves against accounts receivable: 2007 ...2006 ...2005 ... $(47.3) (41.2) (14.2) ...

  • Page 134
    ..., dated December 7, 2007 among the Company, the guarantors party thereto and The Bank of New York, as Trustee. Amendment No. 1 to the amended and restated Loan Agreement, dated as of November 16, 2007, by and among Jarden Receivables LLC, as borrower, Jarden Corporation, as initial servicer, Three...

  • Page 135
    ...party hereto and The Bank of New York, as trustee under the Indenture referred to below (the "Trustee"). WITNESSETH WHEREAS, the Company has heretofore executed and delivered to the Trustee the Base Indenture, dated as of February 13, 2007, by and between the Company and the Trustee, as supplemented...

  • Page 136
    ... it is the view of the SEC that such a waiver is against public policy. 5. NEW YORK LAW TO GOVERN. THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE...

  • Page 137
    ... this Supplemental Indenture to be duly executed, all as of the date first above written. THE COMPANY : JARDEN CORPORATION By: /s/ John E. Capps Name: John E. Capps Title: Senior Vice President, General Counsel and Secretary THE TRUSTEE : THE BANK OF NEW YORK, as Trustee By: /s/ Robert A. Massimillo...

  • Page 138
    ... INTERNATIONAL HOLDINGS, LLC COLEMAN WORLDWIDE CORPORATION FIRST ALERT, INC FISHING SPIRIT, INC. HEARTHMARK, LLC HOLMES MOTOR CORPORATION JARDEN ACQUISITION I, INC. JARDEN ZINC PRODUCTS, INC. KANSAS ACQUISITION CORP. L.A. SERVICES, INC. LASER ACQUISITION CORP. LEHIGH CONSUMER PRODUCTS CORPORATION...

  • Page 139
    ... Loan Agreement dated as of August 8, 2007 (as amended, restated, supplemented or otherwise modified from time to time, the "Loan Agreement"), by and among JARDEN RECEIVABLES, LLC, a Delaware limited liability company, as "Borrower", JARDEN CORPORATION, a Delaware corporation, as "Servicer", THREE...

  • Page 140
    ...in full force and effect and is hereby ratified and confirmed. 5. GOVERNING LAW. THIS WAIVER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF NEW YORK. 6. Counterparts. This Amendment may be executed in any number of counterparts...

  • Page 141
    ... duly authorized as of the day and year first above written. JARDEN RECEIVABLES, LLC, AS BORROWER By: /s/ Richard T. Sansone Name: Richard T. Sansone Title: Vice President, Sunbeam Products, Inc. (Managing Member) JARDEN CORPORATION, AS INITIAL SERVICER By: /s/ Richard T. Sansone Name: Richard...

  • Page 142
    THREE PILLARS FUNDING LLC, AS LENDER By: /s/ Doris J. Hearn Name: Doris J. Hearn Title: Vice President SUNTRUST ROBINSON HUMPHREY, INC., AS ADMINISTRATOR By: /s/ Michael G. Maza Name: Michael G. Maza Title: Managing Director

  • Page 143
    ... 12.1 Jarden Corporation Ratio of Earnings to Fixed Charges Calculation 2003 For the Years Ended December 31, 2004 2005 2006 2007 Earnings Before Fixed Charges: Net income Add: Income tax provision Less/add: Equity (income) loss of minority-owned companies Add: Amortization of capitalized interest...

  • Page 144
    ... Hong Kong Limited Coleman International Holdings, LLC Coleman Japan Company, Ltd. Coleman UK Holdings Limited Coleman UK Limited Coleman Worldwide Corporation Coleman Vostok LLC Desarrollo Industrial Fitec, S. De R.L. de C.V. Dicon Global, Inc. Dicon Safety Products (Europe) Limited Dongguan Holmes...

  • Page 145
    ... Alert, Inc. Fishing Spirit, Inc. Hearthmark, LLC ** Holmes Motor Corporation Holmes Products (Europe) Limited Holmes Products (Far East) Limited International Playing Card Company, Ltd. JRC Products Limited Jarden Acquisition ETVE, S.L. Jarden Acquisition I, LLC Jarden Consumer Solutions of India...

  • Page 146
    ... Inc. Sunbeam AG Sunbeam Americas Holdings, LLC Sunbeam Consumer Products Far East Ltd. Sunbeam Corporation (Canada) Limited Sunbeam de Costa Rica SCR Limitada Sunbeam del Peru, S.A. Sunbeam Holdings, S.A. de C.V. Sunbeam International (Asia) Limited Sunbeam Latin America, LLC Sunbeam Mexicana...

  • Page 147
    Sunbeam Uruguay S.A. Uruguay

  • Page 148
    ... GmbH Völkl Purchase & Service GmbH Völkl Sports GmbH & Co. KG The Wallingford Insurance Company Ltd. Zero Degree DBA) Jarden Plastic Solutions (DBA) Jarden Home Brands (Assumed Name) K2 Sports (DBA) Jarden Consumer Solutions State of Incorporation/Organization Canada Delaware Delaware Delaware...

  • Page 149
    ... financial statements and financial statement schedule of Jarden Corporation and the effectiveness of internal control over financial reporting of Jarden Corporation, included in this Annual Report (Form 10-K) for the year ended December 31, 2007. /s/ Ernst & Young LLP New York, New York February...

  • Page 150
    ... financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; The registrant's other certifying officer and...

  • Page 151
    ... financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; The registrant's other certifying officer and...

  • Page 152
    ... In connection with the Annual Report of Jarden Corporation (the "Company") on Form 10-K for the year ended December 31, 2007 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Martin E. Franklin, Chief Executive Officer of the Company, certify, pursuant to 18...

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