Sunbeam 2008 Annual Report Download

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Table of contents

  • Page 1

  • Page 2
    ... created by the winners of our 2008 Annual Report cover competition, Janine Laudicina, Angelo Rombley, Adam Rutstein and Aaron Stowell, a talented team of Jarden Consumer Solutions employees, based on a concept developed by the supply chain team. The JAH-Man name incorporates our ticker symbol, and...

  • Page 3
    ... to deliver continued long-term growth and consistent results for our shareholders. Corporate Profile: Jarden Corporation is a leading provider of niche consumer products. Jarden operates in three primary business segments through a number of well recognized brands, including: Outdoor Solutions: Abu...

  • Page 4
    Martin E. Franklin Chairman of the Board and Chief Executive Officer "Our record segment earnings are the result of investments carefully deployed over the last three years." 5-Year Financial Highlights ($ in millions) Net Sales $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 0 .2% = 59 R G CA $3,846 ...

  • Page 5
    .... The development of a diversified consumer products company that specializes in market leading positions in niche markets has created a very powerful foundation to succeed in uncertain times. After years of rapid growth between 2002 and 2007, Jarden has not made a significant acquisition in over...

  • Page 6
    "I believe that in five years time, when we look back at our business and evaluate its resilience during this recessionary time, Jarden's diversified business model and portfolio of market leading brands will deserve a premium valuation as a defensive, as well as a growth company." 4

  • Page 7
    ... to meet our long term margin goals and the relief on the cost side should help us continue this progression. While our strategy has been to grow sales and earnings on the back of new product development, we have not ignored the priorities of cash flow maximization and balance sheet strength. Since...

  • Page 8
    6

  • Page 9
    ... awardwinning products, offering form, fashion and functionality at affordable price points; our ski portfolio won top honors across all 12 categories in SKI Magazine's 2009 'Gear of the Year' List. We are expanding in new geographies, such as China and Latin America, and are actively pursuing...

  • Page 10
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  • Page 11
    ... in categories such as animal solutions, cooking, health, personal care and sleep enhancement. Our portfolio includes animal grooming products, blenders, cleaning products, coffeemakers, fans and heaters, heating pads, home vacuum packaging machines and slow cookers, to name a few. In the face...

  • Page 12
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  • Page 13
    ...expansion, licensing initiatives and international growth opportunities in key areas such as Latin America and Japan. We are focused on continuing product innovation and new product development, recent examples of which include Ball® "Make Jam in Your Freezer" products, which simplifies the canning...

  • Page 14
    ...a line of industrial zinc products for use in plumbing, automotive, electrical component and architectural markets. As we look forward, we are focused on leveraging our low cost manufacturing base to service our existing and related branded and proprietary product categories. 12 FY 2008 Sales $349...

  • Page 15
    ...preferred stock Income (loss) available to common stockholders (a) Basic earnings (loss) per share (a) Diluted earnings (loss) per share (a) OTHER FINANCIAL DATA (In millions) Segment earnings (a)(d) Cash flows from operations Depreciation and amortization Capital expenditures BALANCE SHEET DATA (In...

  • Page 16
    Selected Financial Data Jarden Corporation Annual Report 2008 (b) The results of The United States Playing Card Company, American Household, Inc., The Holmes Group, Inc., Pure Fishing, Inc. and K2 Inc. are included from their dates of acquisition June 28, 2004, January 24, 2005, July 18, 2005, April...

  • Page 17
    ...household kitchen appliances, such as blenders, coffeemakers, irons, mixers, slow cookers, toasters, toaster ovens and vacuum packaging machines; personal care and wellness products, such as air purifiers, fans, heaters and humidifiers, for home use; products for the hospitality industry; and scales...

  • Page 18
    ... the Company acquired all the outstanding shares of K2 Inc. (the "Acquisition"), a leading provider of branded consumer products in the global sports equipment market in exchange for consideration of $10.85 in cash per share of K2 Inc. ("K2") common stock and 0.1118 of a share of Jarden common stock...

  • Page 19
    ... purchase accounting entry for the elimination of manufacturer's profit in inventory related to the K2 and Pure Fishing acquisitions. The fair value of the inventory acquired was valued at the sales price of the finished inventory, less costs to complete and a reasonable profit allowance for selling...

  • Page 20
    ...related to the purchase accounting adjustment for the elimination of manufacturer's profit in inventory related to the K2 and Pure Fishing acquisitions ($119 million). Results of Operations-Comparing 2007 to 2006 Net Sales Years Ended December 31, (In millions) 2007 2006 Outdoor Solutions Consumer...

  • Page 21
    ...$119 million charge related to the purchase accounting adjustment for the elimination of manufacturer's profit in inventory related to the K2 and Pure Fishing acquisitions (versus $10.4 million in 2006). The fair value of the inventory acquired was valued at the sales price of the finished inventory...

  • Page 22
    ... $45.32 per share for a period of three consecutive trading days. The Company was not in default of any of its debt covenants (see Note 9 to the consolidated financial statements) as of December 31, 2008. The Company maintains cash balances which at times may be significant, at various international...

  • Page 23
    ... Analysis Jarden Corporation Annual Report 2008 In November 2007, the Company's Board of Directors authorized a new stock repurchase program that would allow the Company to repurchase up to $100 million of its common stock. The Company repurchased approximately 1.5 million and 1.1 million shares of...

  • Page 24
    ... Jarden Corporation Annual Report 2008 At December 31, 2008, the Company had outstanding a $40 million notional amount swap agreement that exchanges a variable interest rate (LIBOR) for fixed rate of interest over the term of the agreement that is not designated as an effective hedge for accounting...

  • Page 25
    ... financial statements for further information regarding taxes. Goodwill and Indefinite-Lived Intangibles The application of the purchase method of accounting for business combinations requires the use of significant estimates and assumptions in determining the fair value of assets acquired...

  • Page 26
    ... 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 return of pension and postretirement plan...

  • Page 27
    ... manufacturer and distributor, the Company faces the risk of product liability and related damages for substantial money damages, product recall actions and higher than anticipated rates of warranty returns or other returns of goods. Each year the Company sets its product liability insurance program...

  • Page 28
    ... limit Jarden's ability to pay dividends. (See "Management's Discussion and Analysis of Financial Condition and Results of Operations"). Cash generated from operations will be used for general corporate purposes, which may include acquisitions, supporting organic growth, paying down debt and share...

  • Page 29
    Market for Registrant's Common Equity Jarden Corporation Annual Report 2008 The table below sets forth the intraday high and low sales prices of the Company's common stock as reported on the New York Stock Exchange for the periods indicated: Quarter First Second Third Fourth 2008 High Low 2007 High...

  • Page 30
    ...reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements. • Because of its inherent limitations, internal control over financial reporting may not prevent or...

  • Page 31
    ... Registered Public Accounting Firm Jarden Corporation Annual Report 2008 To the Board of Directors and Stockholders of Jarden Corporation In our opinion, the accompanying consolidated balance sheet and related consolidated statements of income, stockholder's equity and cash flows present fairly, in...

  • Page 32
    ... in Income Taxes, an interpretation of SFAS No. 109. As discussed in Note 2, effective December 31, 2006, the Company adopted SFAS No. 158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB statements No. 87, 88, 106 and 132(R). New York, New York...

  • Page 33
    ... Statement of Income Jarden Corporation Annual Report 2008 Years Ended December 31, (In millions, except per share amounts) 2008 2007 2006 Net sales Cost of sales Gross profit Selling, general and administrative expenses (including stock-based compensation of $20.6, $64.0 and $23.0 for the years...

  • Page 34
    Consolidated Balance Sheets Jarden Corporation Annual Report 2008 As of December 31, (In millions, except per share amounts) 2008 2007 Assets Current assets: Cash and cash equivalents Accounts receivable, net of allowances of $65.2 in 2008, $72.3 in 2007 Inventories Deferred taxes on income Prepaid...

  • Page 35
    ... shares tendered for taxes Debt issuance costs Other, net Net cash provided by financing activities Cash flows from investing activities: Additions to property, plant and equipment Acquisitions and earnout payments, net of cash acquired Other Net cash used in investing activities Effect of exchange...

  • Page 36
    ... of Changes in Stockholder's Equity Jarden Corporation Annual Report 2008 Common Stock (In millions) Shares Amount Treasury Stock Shares Amount Preferred Stock Shares Amount Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Balance, December 31...

  • Page 37
    ... in Stockholder's Equity (continued) Jarden Corporation Annual Report 2008 Common Stock (In millions) Shares Amount Treasury Stock Shares Amount Preferred Stock Shares Amount Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Balance, December...

  • Page 38
    ... Canada, Europe, Latin America and the United States. Approximately 19%, 20% and 21% of the Company's consolidated net sales in 2008, 2007 and 2006, respectively, were to a single customer who purchased product from the Company's three primary business segments: Outdoor Solutions, Consumer Solutions...

  • Page 39
    ... provides for depreciation primarily using the straight-line method in amounts that allocate the cost of property, plant and equipment over the following ranges of useful lives: Buildings and improvements Machinery, equipment and tooling (includes capitalized software) Furniture and fixtures Land is...

  • Page 40
    ... Annual Report 2008 (Dollars in millions, except per share data and unless otherwise indicated) historical claim rate trends. Warranty reserves are included within "Other current liabilities" and "Other non-current liabilities" in the Company's Consolidated Balance Sheets. Sales Incentives and Trade...

  • Page 41
    ... on quoted market prices in actively traded markets. Stock-Based Compensation The Company estimates the fair value of share-based awards on the date of grant, which is generally the date the award is approved by the Board of Directors. The fair value of stock options is determined using the Black...

  • Page 42
    ...-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 on or after December 15, 2008...

  • Page 43
    ... cash flows and strong management. On August 8, 2007, the Company acquired all the outstanding shares of K2, a leading provider of branded consumer products in the global sports equipment market in exchange for consideration $10.85 in cash per share of K2 common stock and 0.1118 of a share of Jarden...

  • Page 44
    ... Activity During 2006, the Company completed four tuck-in acquisitions, three in the Branded Consumables segment and one in the Consumer Solutions segment. Pro forma financial information The aggregate value of the Pure Fishing and tuck-in acquisitions did not have a material effect on the Company...

  • Page 45
    ...Book Value at December 31, 2007 Acquisitions Purchase Accounting Adjustments (1) Impairment Charge Foreign Exchange and Other Adjustments Net Book Value Value At December 31, 2008 Goodwill Outdoor Solutions Consumer Solutions Branded Consumables Process Solutions $ 630.3 484.2 496.3 - $ 1,610...

  • Page 46
    ...Report 2008 (Dollars in millions, except per share data and unless otherwise indicated) Foreign Exchange and Other Adjustments (2) (In millions) Net Book Value at December 31, 2006 Acquisitions Net Book Value at December 31, 2007 Goodwill Outdoor Solutions Consumer Solutions Branded Consumables...

  • Page 47
    ... of macroeconomic conditions has on such cash flows. In the Consumer Solutions segment the impairment charge recorded relates to certain tradenames within this segment's small kitchen and household appliance businesses. The impairment within the Consumer Solutions segment is primarily due to: the...

  • Page 48
    ... Jarden Corporation Annual Report 2008 (Dollars in millions, except per share data and unless otherwise indicated) 7. Other Current Liabilities Other current liabilities are comprised of the following at December 31, 2008 and 2007: (In millions) 2008 2007 Cooperative advertising, customer...

  • Page 49
    ... the Company's Outdoor Solutions, Consumer Solutions and Branded Consumables domestic 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 50
    Notes to Consolidated Financial Statements Jarden Corporation Annual Report 2008 (Dollars in millions, except per share data and unless otherwise indicated) • the Company may make restricted payments during any fiscal year not otherwise permitted, provided that certain applicable thresholds are ...

  • Page 51
    ...Jarden Corporation Annual Report 2008 (Dollars in millions, except per share data and unless otherwise indicated) Weighed Average Maturity (years) December 31, 2007 Notional Amount Net Fair Value Asset (Liability) Cash flow hedges: Interest rate swaps Forward foreign exchange rate contracts Fair...

  • Page 52
    ... estate taxes, common area maintenance, insurance and certain other expenses. Lease terms may have escalating rent provisions and rent holidays which are expensed on a straight line basis over the term of the lease, and expire at various dates through 2020. Also, certain equipment used in Company...

  • Page 53
    ... 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 54
    ...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 between June 29, 2005 (the date the Company announced the signing of the agreement to acquire The Holmes Group...

  • Page 55
    ... Jarden Corporation Annual Report 2008 (Dollars in millions, except per share data and unless otherwise indicated) The difference between the federal statutory income tax rate and the Company's reported income tax rate as a percentage of income (loss) from operations is reconciled as follows: Years...

  • Page 56
    ... Internal Revenue 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 and payment of assessments was made by the Company in 2008. Additionally, the IRS audits of two of the Company's acquired...

  • Page 57
    ... 15.31 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 2008, 2007 and 2006, based upon the average market price during the...

  • Page 58
    ... grant date fair value of each award was $7.44 per share with an aggregate fair value of $6.5 for the grant. The Awards vest ratably over the explicit service period. Restricted Shares of Common Stock The Company issues restricted share awards whose restrictions lapse upon either the passage of time...

  • Page 59
    ... in connection with the Pure Fishing acquisition (see Note 3) grants the holder the right to at any time after the one year from the date of issue to purchase approximately 2.2 million shares of Jarden common stock at an initial purchase price of $45.32 per share (subject to adjustment as provided...

  • Page 60
    ... market price of the Company's common stock for the three months ended December 31, 2008, 2007 and 2006, respectively. As such, these share-based awards did not affect the computation of diluted earnings per share. 15. Employee Benefit Plans The Company maintains defined benefit pension plans...

  • Page 61
    Notes to Consolidated Financial Statements Jarden Corporation Annual Report 2008 (Dollars in millions, except per share data and unless otherwise indicated) Postretirement Benefits (In millions) 2008 2007 2006 Service cost Interest cost Amortization: Prior service benefit Net actuarial (gain)/loss ...

  • Page 62
    ... apply the measurement date provisions of FASB Statement No. 158 Foreign currency translation and other Benefit obligation at end of year (1) Change in plan assets: Fair value of plan assets at beginning of year Acquisition Actual return on plan assets Company contributions Settlements Participant...

  • Page 63
    ...and expected future market conditions, risk and active management premiums. The expected long-term rate of return is adjusted when there are fundamental changes in expected returns on the Company's defined benefit pension plan's investments. The Company's target asset allocation for 2008 and 2007 is...

  • Page 64
    Notes to Consolidated Financial Statements Jarden Corporation Annual Report 2008 (Dollars in millions, except per share data and unless otherwise indicated) Domestic Contributions In 2009, the Company expects to make cash contributions of approximately $24 and $1.1 to its domestic pension and ...

  • Page 65
    ... recorded the following reorganization and acquisition-related integration costs: Employee Terminations Other Charges (In millions) Impairment Total 2008 Charged to Results of Operations: Outdoor Solutions Consumer Solutions Branded Consumables Process Solutions Corporate Subtotal Capitalized...

  • Page 66
    ... facilitate long-term cost savings and improve management and reporting capabilities. Specific cost savings initiatives include the utilization of certain shared distribution and warehousing services and information systems platforms and outsourcing the manufacturing of certain kitchen products...

  • Page 67
    ... professional fees, are primarily due to the integration of certain corporate functions related to the Acquisition. The following table sets forth the details and the activity related to reorganization and acquisition-related integration costs as of and for the years ended December 31, 2008...

  • Page 68
    ...household kitchen appliances, such as blenders, coffeemakers, irons, mixers, slow cookers, toasters, toaster ovens and vacuum packaging machines; personal care and wellness products, such as air purifiers, fans, heaters and humidifiers, for home use; products for the hospitality industry; and scales...

  • Page 69
    ... Jarden Corporation Annual Report 2008 (Dollars in millions, except per share data and unless otherwise indicated) Segment information as of and for the years ended December 31, 2008, 2007 and 2006 is as follows: Year ended December 31, 2008 Total Operating Segments (In millions) Outdoor Solutions...

  • Page 70
    ... 2008 (Dollars in millions, except per share data and unless otherwise indicated) Year ended December 31, 2006 Outdoor Solutions Consumer Solutions Branded Consumables Process Intercompany Solutions Eliminations Total Operating Segments Corporate/ Unallocated (In millions) Consolidated Net sales...

  • Page 71
    ... 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, 2008, 2007 and 2006. Condensed Consolidating Statements of Income: Year Ended December 31, 2008 (In millions) Parent...

  • Page 72
    ... Annual Report 2008 (Dollars in millions, except per share data and unless otherwise indicated) Condensed Consolidating Balance Sheets: As of December 31, 2008 (In millions) Parent Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Assets Current assets Investment...

  • Page 73
    ... on long-term debt Issuance (repurchase) of common stock, net Other Net cash provided by (used in) financing activities Investing activities: Additions to property, plant and equipment Acquisition of business, net of cash acquired Other Net cash used in investing activities Effect of exchange rate...

  • Page 74
    ... on long-term debt Issuance (repurchase) of common stock, net Other Net cash provided by (used in) financing activities Investing activities: Additions to property, plant and equipment Acquisition of business, net of cash acquired Other Net cash used in investing activities Effect of exchange rate...

  • Page 75
    ... 603-298-7836 Corporate Counsel Kane Kessler, PC New York, New York Willkie Farr & Gallagher LLP New York, New York Consumer Solutions Bionaire®, Crock-Pot®, FoodSaver®, Health o meter®, Holmes®, Mr. Coffee®, Oster®, Rival®, Seal-a-Meal®, Sunbeam®, VillaWare® Boca Raton, FL 561-912-4100...

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