Sunbeam 2008 Annual Report Download - page 39

customer accounts for estimated losses that may result from the inability of the Company’s customers to make required payments. That esti-
mate is based on a variety of factors, including historical collection experience, current economic and market conditions, and a review of the
current status of each customer’s trade accounts receivable. The Company charges actual losses when incurred to this allowance.
Leasehold Improvements
Leasehold improvements are recorded at cost less accumulated amortization. Improvements are amortized over the shorter of the
remaining lease term (and any renewal period if such a renewal is reasonably assured at inception) or the estimated useful lives of the assets.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost less accumulated depreciation. Maintenance and repair costs are charged to
expense as incurred, and expenditures that extend the useful lives of assets are capitalized. The Company reviews property, plant and equipment
for impairment whenever events or circumstances indicate that carrying amounts may not be recoverable through future undiscounted
cash flows. If the Company concludes that impairment exists, the carrying amount is reduced to fair value.
The Company 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 5 to 45 years
Machinery, equipment and tooling (includes capitalized software) 3 to 25 years
Furniture and fixtures 3to 10 years
Land is not depreciated.
Goodwill and Intangible Assets
Goodwill and certain intangibles (primarily trademarks and tradenames) are not amortized; however, they are subject to evaluation
for impairment using a fair value based test. This evaluation is performed annually, during the fourth quarter or more frequently if facts and
circumstances warrant. The fair value based test for goodwill is a two-step test. The first step involves comparing the fair value of each of its
reporting units to the carrying value of those reporting units. If the carrying value of a reporting unit exceeds the fair value of the reporting
unit, the Company is required to proceed to the second step. In the second step, the fair value of the reporting unit would be allocated to
the assets (including unrecognized intangibles) and liabilities of the reporting unit, with any residual representing the implied fair value of
goodwill. An impairment loss would be recognized if, and to the extent that, the carrying value of goodwill exceeded the implied value.
During 2008, the Company recorded an impairment charge of $283 for goodwill and intangibles (see Note 6). For 2007 and 2006, the
Companydid not experience anyimpairments.
Amortization
Deferred debt issue costs are amortized over the term of the related debt. Identifiable intangible assets are recognized apart from
goodwill and are amortized over their estimated, useful lives, except for identifiable intangible assets with indefinite lives, which are
not amortized.
Revenue Recognition
The Company recognizes revenues at the time of product shipment or delivery, depending upon when title and risk of loss passes,
to unaffiliated customers, and when all of the following have occurred: a firm sales agreement is in place, pricing is fixed or determinable,
and collection is reasonably assured. Revenue is recognized as the net amount estimated to be received after deducting estimated amounts
for product returns, discounts and allowances. The Company estimates future product returns based upon historical return rates and its
reasonable judgment.
Cost of Sales
The Company’s cost of sales includes the costs of raw materials and finished goods purchases, manufacturing costs and warehouse
and distribution costs.
Advertising Costs
Advertising costs consist primarily of ad demo, cooperative advertising, media placement and promotions, and are expensed as
incurred.The amounts charged to advertising and included in selling, general and administrative (“SG&A”) expenses in the Consolidated
Statements of Income for 2008, 2007 and 2006 were $124.5, $104.3 and $68.4, respectively.
Product Warranty Costs
The Company recognizes warranty costs based on an estimate of amounts required to meet future warranty obligations arising as
acost of the sale of its products. 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
Notes to Consolidated Financial Statements
Jarden Corporation Annual Report 2008 (Dollars in millions, except per share data and unless otherwise indicated)
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