Sunbeam 2007 Annual Report Download - page 93

formal plan of action. The Company accrues its best estimate of investigation and remediation costs based upon
facts known at such dates and because of the inherent difficulties in estimating the ultimate amount of
environmental costs, which are further described below, these estimates may materially change in the future as a
result of the uncertainties described below. Estimated costs, which are based upon experience with similar sites
and technical evaluations, are judgmental in nature and are recorded at discounted amounts without considering
the impact of inflation and are adjusted periodically to reflect changes in applicable laws or regulations, changes
in available technologies and receipt by the Company of new information. It is difficult to estimate the ultimate
level of future environmental expenditures due to a number of uncertainties surrounding environmental
liabilities. These uncertainties include the applicability of laws and regulations, changes in environmental
remediation requirements, the enactment of additional regulations, uncertainties surrounding remediation
procedures including the development of new technology, the identification of new sites for which the Company
and various of its subsidiaries could be a PRP, information relating to the exact nature and extent of the
contamination at each Environmental Site and the extent of required cleanup efforts, the uncertainties with
respect to the ultimate outcome of issues which may be actively contested and the varying costs of alternative
remediation strategies.
Due to the uncertainty described above, the Company’s ultimate future liability with respect to sites at
which remediation has not been completed may vary from the amounts reserved as of December 31, 2007.
The Company believes that the costs of completing environmental remediation of all sites for which the
Company has a remediation responsibility have been adequately reserved and that the ultimate resolution of these
matters will not have a material adverse effect upon the Company’s consolidated financial position, results of
operations or cash flows.
Litigation
The Company and/or its subsidiaries are involved in various lawsuits arising from time to time that the
Company considers ordinary routine litigation incidental to its business. Amounts accrued for litigation matters
represent the anticipated costs (damages and/or settlement amounts) in connection with pending litigation and
claims and related anticipated legal fees for defending such actions. The costs are accrued 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. When it is not possible to estimate a specific expected cost to be incurred, the Company evaluates the range
of probable loss and records the minimum end of the range. 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
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 includes a self-insurance retention per occurrence.
81