Sunbeam 2009 Annual Report Download - page 34

Management’s Discussion and Analysis
Jarden Corporation Annual Report 2009
experience and are adjusted as necessary if actual forfeitures differ from these estimates. Certain performance awards require management’s
judgment 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
part 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
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
any of the legal or environmental disputes the Company or its subsidiaries are currently involved in will have a material adverse effect on the
consolidated financial condition, results of operations or cash flows 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 2009, 2008 and 2007, 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
contained in this report and other filings with the Securities Exchange Commission (“Commission”) and in reports to its shareholders. Such
forward-looking statements include the Company’s adjusted earnings per share, repurchase of shares of common stock from time to time
under the Company’s repurchase program, the outlook for the Company’s markets and the demand for its products, estimated sales,
segment earnings, earnings per share, cash flows from operations, free cash flow, future revenues and gross operating and EBITDA margin
improvement requirement and expansion, leverage, organic growth, the amount of reorganization charges, the success of new product
introductions, growth or savings in costs and expenses, the impact of commodities and transportation costs, the Company’s ability to
consummate, and the impact of announced acquisitions and the impact of acquisitions, divestitures, restructurings and other unusual
items, including the Company’s ability to successfully integrate and obtain the anticipated results and synergies from its acquisitions. These
statements are made on the basis of management’s views and assumptions as of the time the statements are made and the Company
undertakes no obligation to update these statements. There can be no assurance, however, that its expectations will necessarily come to
pass. A discussion of factors that could cause results to vary is included in the Company’s periodic and other reports filed with the
Commission.
Quantitative and Qualitative Disclosures About Market Risk
In general, business enterprises can be exposed to market risks including fluctuations in interest rates, foreign currency exchange
rates and certain commodity prices, and that can affect the cost of operating, investing and financing under those conditions. The Company
believes it has moderate exposure to these risks. The Company assesses market risk based on changes in interest rates, foreign currency
rates and commodity prices utilizing a sensitivity analysis that measures the potential loss in earnings, fair values and cash flows based on a
hypothetical 10% change in these rates and prices. At December 31, 2009, the interest rate on approximately 53% of the Company’s debt
was fixed by either the nature of the obligation or through interest rate swap contracts.
The Company is exposed to interest rate risk on its variable rate debt and price risk on its fixed rate debt. As such, the Company mon-
itors the interest rate environment and uses interest rate swap agreements to manage its interest rate risk and price risk by balancing its
exposure to fixed and variable interest rates while attempting to minimize interest costs. As of December 31, 2009, approximately $1.3 billion
of Company’s debt is comprised of variable-rate debt. The remainder of the debt carries a fixed rate either by nature or through the use of
interest rate swaps. A hypothetical 10% change in these interest rates would change interest expense by approximately $4.9 million and the
fair values of fixed rate debt by approximately $40 million.
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