Sunbeam 2008 Annual Report Download - page 66

Notes to Consolidated Financial Statements
Jarden Corporation Annual Report 2008 (Dollars in millions, except per share data and unless otherwise indicated)
Capitalized Reorganization and Impairment Charges
In connection with the Acquisition, management approved and initiated plans to restructure the operations of K2. These plans were
contemplated at the time of the Acquisition and include in part, the elimination of certain duplicative functions and vacating redundant
facilities in order to reduce the combined cost structure of the Company. The capitalized costs incurred during 2008 and 2007 primarily
relate to workforce reductions associated with the elimination of duplicative functions and other exit costs resulting from the Acquisition.
These costs were recognized as a liability assumed in the Acquisition and are included in the allocation of the cost to acquire K2 (see Note 3)
and are accrued within the Outdoor Solutions segment.
Outdoor Solutions Segment Reorganization
During 2007, the Company initiated a plan to integrate certain businesses acquired from K2 and Pure Fishing. This plan includes
in part, facility closings and headcount reductions. Prior to 2007, the Company implemented various strategic initiatives in the Outdoor
Solutions segment. These initiatives included both rationalizing and outsourcing certain European manufacturing facilities and the reorgani-
zation of the domestic sales force. Employee termination charges 2008, 2007 and 2006 relate to the implementation of these initiatives.
For 2008 and 2007, other charges relate to the integration of K2 and Pure Fishing and include professional fees ($5.7 and $1.8,
respectively), contract termination fees ($0.6 and $0.8, respectively), lease and move costs ($3.7 and $2.2, respectively) and other costs ($7.9
and $1.8, respectively).
As of December 31, 2008, $5.3 of severance and other employee related costs and $5.7 of other costs remain accrued for these initiatives.
Consumer Solutions Segment Reorganization
As part of the acquisition of American Household, Inc. (the “AHI Acquisition”) and The Holmes Group, Inc. (the “THG Acquisition”),
each in 2005, it was determined that, due to similarities between the combined Consumer Solutions segment customer base, distribution
channels and operations,significant cost savings could be achieved by integrating certain functions of these businesses, such as distribution
and warehousing, information technology and certain administrative functions. In order to leverage a shared infrastructure, the Company
initiated certain reorganization plans prior to 2006. This initiative was largely completed during 2007. Employee termination charges for 2007
and 2006 primarily relate to this plan.
For 2007, other charges primarily consist of lease termination costs ($8.0) and professional fees, employee relocation and other
charges ($4.8). For 2006, other charges primarily consist of facility closing costs, ($4.2), retention bonuses ($4.3), professional fees ($4.8), travel
expenses ($1.7) and of relocation costs ($0.6).
As of December 31, 2008, $9.5 of costs, primarily lease obligations, remain accrued for these initiatives.
Branded Consumables Segment Reorganization
In2007, the Companyinitiated a plan to consolidate certain non-manufacturing processes across this segment’s platform. This plan
includes headcount reduction and facility consolidation. Prior to 2007, the Company began implementing a strategic plan to reorganize its
Branded Consumables segment and thereby 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. Employee termination charges in 2007, and 2006 primarily relate to these plans
and all employees under this plan have been terminated.
For 2008 and 2007, other charges primarily consist of facility closing costs ($0.9 and $1.8, respectively) and other costs for professional
fees and employee relocation, primarily related to the consolidation of certain non-manufacturing processes across the segment platform
($2.4 and $6.2, respectively). For 2006, other charges primarily consisted of inventory moving costs ($1.6).
Impairment costs for 2007 relate to the exit of the casino chip business, which resulted in a goodwill impairment charge ($2.9) and
the write off of certain other assets related to this business ($1.4).
Process Solutions Segment Reorganization
During 2007, the Company initiated a plan to consolidate manufacturing facilities related to the plastics business. The plan was
expected to result in facility closures and headcount reductions. Employee termination and other charges for 2008 primarily relate to this
plan and $2.8 of cost remained accrued at December 31, 2008.
The impairment charge in 2008 primarily relates to the write down of long-lived assets attributable to a plant closure announced
in 2008.
The impairment charge in 2007 primarily relates to the write down of long-lived assets used in the production process for certain
unprofitable product-lines that wereexited during 2007.
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