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Management’s Discussion and Analysis
Jarden Corporation Annual Report 2008
The Company’s annual impairment test resulted in a non-cash charge of $111 million to reflect impairment of intangible assets related
to certain of the Company’s tradenames. The impairment charge was allocated to the Company’s reporting segments as follows:
Year Ended
(In millions) December 31, 2008
Impairment of intangibles
Outdoor Solutions $ 11.7
Consumer Solutions 76.3
Branded Consumables 22.9
$110.9
In the Outdoor Solutions segment the impairment charge recorded relates primarily to certain tradenames within this segment’s
snow sports and paintball businesses. The impairment within the Outdoor Solutions segment was due to an overall decline in the paintball
market, as well as a decrease in the fair value of forecasted cash flows, resulting from the impact that the continued deterioration of macro-
economic conditions has on such cash flows. In the Consumer Solutions segment the impairment charge recorded relates to certain trade-
names within this segment’s small kitchen and household appliance businesses. The impairment within the Consumer Solutions segment
is primarily due to: the Company’s decision to strategically realign certain brand names; increased competition in certain markets; and the
impactof continued deterioration of macroeconomic conditions. In the Branded Consumables segment the impairment charge recorded
relates to certain tradenames associated with this segment’s Firelog, Lehigh and United States Playing Cards businesses. The impairment
within the Branded Consumables segment was due to a decrease in the fair value of forecasted cash flows, resulting from the impact that
the continued deterioration of macroeconomic conditions has on such cash flows.
Net interest expense increased by $29.0 million for 2008 versus 2007. This increase was principally due to higher levels of outstanding
debt versus the prior year as a results of the acquisitions of K2 and Pure Fishing. The weighted average interest rate for 2008 decreased to
6.4% from 7.0% in 2007.
The Company’s effective tax rate for the years ended December 31, 2008 and 2007 was (80.7%) and 57.7%, respectively. The differ-
ence from the statutory tax rate to the effective rate for 2008 results principally from the tax charge related to the impairment of goodwill
($33.4 million) and from U.S. tax expense ($8.0 million) recognized on undistributed foreign income. The 2007 increase from the statutory tax
rate tothe reported rate results principally from the settlement of 2003 and 2004 Internal Revenue Service Audits ($4.7 million), the tax
effect of non-deductible compensation expense ($4.4 million), and the tax effect of foreign earnings that will not be permanently reinvested.
The Company believes that its long-term tax rate will be approximately 36.0%.
Net income (loss) in 2008 decreased $87.0 million to a net loss of $58.9 million, versus 2007. For the 2008 and 2007 diluted earnings
(loss) per sharewere ($0.78) and $0.38, respectively. The decrease in net income (loss) was primarily due to the charge recorded in 2008 for
the impairment of goodwill and intangibles of $283 million, offset by incremental earnings resulting from volume increases and margin
expansion due to acquisitions and the charge recorded during 2007 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 $1,698.6 $ 901.0
Consumer Solutions 1,869.2 1,892.2
Branded Consumables 806.2 812.0
Process Solutions 353.6 309.4
Intercompany eliminations (67.5) (68.3)
$4,660.1 $ 3,846.3
Net sales in 2007 increased $814 million, or 21%, to $4.7 billion versus 2006. The overall increase in net sales was due to the acquisi-
tions of K2 and Pure Fishing (combined revenue $863 million). Net sales in the Outdoor Solutions segment increased $798 million as a result
of the K2 and PureFishing acquisitions, offset by decreases in the domestic Coleman business, primarily due to inventory reduction
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