Sunbeam 2008 Annual Report Download - page 27

Aone percentage point decrease in the assumed health care cost trend rates would have the following effects:
(In millions)
Postretirement benefit obligation $(0.1)
Service and interest cost components of postretirement benefit cost (0.1)
Product liability
As a consumer goods 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, which is an occurrence-based program based on current and historical claims
experience and the availability and cost of related insurance.
Product liabilities are based on estimates (which include actuarial determinations made by an independent actuarial consultant as to
liability exposure, taking into account prior experience, number of claims and other relevant factors); thus, the Company’s ultimate liability
may exceed or be less than the amounts accrued. The methods of making such estimates and establishing the resulting liability are
reviewed on a regular basis and any adjustments resulting therefrom are reflected in current operating results.
Stock-Based Compensation
The fair value of stock options is determined using the Black-Scholes option-pricing. The fair value of the market-based restricted
stock awards is determined using a Monte Carlo simulation embedded in a lattice model, and for all other restricted stock awards are based
on the closing price of the Company’scommon stock on the date of grant. The determination of the fair value of the Company’s stock
option awards and restricted stock awards is based on a variety of factors including, but not limited to, the Company’s common stock price,
expected stock price volatility over the expected life of awards, and actual and projected exercise behavior. Additionally, the Company
estimates forfeiture for options and restricted stock awards at the grant date of the award based on historical experience and are adjusted as
necessaryif actual forfeitures differ from these estimates. Certain performance awards require management’s judgement as to whether
performance targets will be achieved.
Product Warranty Costs
The Company recognizes warranty costs based on an estimate of amounts required to meet future warranty obligations arising as
partof the sale of its products. In accordance with SFAS No. 5 “Accounting for Contingencies,” the Company accrues an estimated liability at
the time of a product sale based on historical claim rates applied to current period sales, as well as any information applicable to current
product sales that may indicate a deviation from such historical claim rate trends.
Contingencies
The Company is involved in various legal disputes and other legal proceedings that arise from time to time in the ordinary course of
business. In addition, the Company or various of its subsidiaries have been identified by the United States Environmental Protection Agency
or a state environmental agency as a Potentially Responsible Party pursuant to the federal Superfund Act and/or state Superfund laws com-
parable to the federal law at various sites. Based on currently available information, the Company does not believe that the disposition of
anyof the legal or environmental disputes the Companyor its subsidiaries are currently involved in will have a material adverse effect upon
the financial condition, results of operations, cash flows or competitive position of the Company. It is possible, that as additional information
becomes available, the impact on the Company of an adverse determination could have a different effect.
New and Pending Accounting Pronouncements
During 2008, 2007 and 2006, the Company adopted various accounting standards. A description of these standards and their effect
on the consolidated financial statements are described in Note 2 to the consolidated financial statements.
Pending standards and their estimated effect on the Company’s consolidated financial statements are described in Note 1 to the
consolidated financial statements.
Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of
the Company.The Company may from time to time make written or oral statements that are “forward-looking,” including statements con-
tained in this report and other filings with the Securities and Exchange Commission and in reports to its shareholders. 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, the renewability of our
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Management’s Discussion and Analysis
Jarden Corporation Annual Report 2008