Sunbeam 2009 Annual Report Download - page 46

Notes to Consolidated Financial Statements
Jarden Corporation Annual Report 2009 (Dollars in millions, except per share data and unless otherwise indicated)
exchange rate of 2.15. At December 31, 2009, the Company’s subsidiaries in Venezuela have approximately $32 in cash denominated in U.S.
dollars and approximately $25 of cash held in Bolivars converted at the official exchange rate of 2.15.
Use of Estimates
The preparation of the consolidated financial statements in accordance with GAAP requires estimates and assumptions that affect
amounts reported and disclosed in the consolidated financial statements and accompanying notes. Actual results could differ materially
from those estimates. Significant accounting estimates and assumptions are used for, but not limited to: the allowance for doubtful
accounts; assets impairments; useful lives of tangible and intangible assets; pension and postretirement liabilities; tax valuation allowances
and unrecognized tax benefits; reserves for sales returns and allowances; product warranty; product liability; excess and obsolete inventory;
and litigation and environmental liabilities.
Concentrations of Credit Risk
Substantially all of the Company’s trade receivables are due from retailers and distributors located throughout Asia, Canada, Europe,
Latin America and the United States. Approximately 23%, 19% and 20% of the Company’s consolidated net sales in 2009, 2008 and 2007,
respectively, were to a single customer who purchased product from the Company’s three primary business segments: Outdoor Solutions,
Consumer Solutions and Branded Consumables.
Cash and Cash Equivalents
The Company considers highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.
Accounts Receivable
The Company provides credit, in the normal course of business, to its customers. The Company maintains an allowance for doubtful
customer accounts for estimated losses that may result from the inability of the Company’s customers to make required payments. That
estimate 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 3 to 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 2009 and 2008, the Company recorded an impairment charge of $22.9 and $283, respectively, for goodwill and intangibles (see Note
6). For 2007, the Company did not experience any impairment charges.
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