Sunbeam 2009 Annual Report Download - page 47

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 and title and risk of loss has passed. 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, discounts and
allowances 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 expenses in the consolidated statements
of income for 2009, 2008 and 2007 were $108.1, $124.5 and $104.3, respectively.
Product Warranty Costs
The Company recognizes warranty costs based on an estimate of amounts required to meet future warranty obligations arising as a
cost 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. Warranty reserves are included within “Other current liabilities” and “Other non-current liabilities” in the
Company’s consolidated balance sheets.
Sales Incentives and Trade Promotion Allowances
The Company offers sales incentives and promotional programs to its reseller customers from time to time in the normal course of
business. These incentives and promotions typically include arrangements known as slotting fees, cooperative advertising and buydowns.
The majority of such arrangements are recorded as a reduction to net sales in the Company’s Consolidated Statements of Income. However,
the Company does include consideration granted in certain of these transactions as SG&A expenses in its Consolidated Statements of
Income.
Income Taxes
Deferred taxes are provided for differences between the financial statement and tax basis of assets and liabilities using enacted tax
rates. The Company established a valuation allowance against a portion of the net tax benefit associated with all carryforwards and tempo-
rary differences in a prior year, as it was more likely than not that these would not be fully utilized in the available carryforward period. A
portion of this valuation allowance remained as of December 31, 2009 and 2008 (see Note 12).
Components of “Accumulated other comprehensive income” are presented net of tax at the applicable statutory rates and are
primarily generated domestically.
Disclosures about Fair Value of Financial Instruments and Credit Risk
The carrying values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their fair
market values due to the short-term maturities of these instruments. The fair market value of the Company’s 8% Senior Notes and 7 1/2 %
Senior Subordinated Notes was determined based on quoted market prices. The fair market value of the Company’s other long-term debt
was estimated using interest rates currently available to the Company for debt with similar terms and maturities (see Note 9).
Unless otherwise disclosed in the notes to the consolidated financial statements, the estimated fair value of financial assets and
liabilities approximates carrying value.
Financial instruments that potentially subject the Company to credit risk consist primarily of trade receivables and interest-bearing
investments. Trade receivable credit risk is limited due to the diversity of the Company’s customers and the Company’s ongoing credit
review procedures. Collateral for trade receivables is generally not required. The Company places its interest-bearing cash equivalents with
major financial institutions.
The Company is exposed to credit loss in the event of non-performance by the counterparties to its derivative financial instruments,
all of which are highly rated institutions; however, the Company does not anticipate non-performance by such counterparties.
Notes to Consolidated Financial Statements
Jarden Corporation Annual Report 2009 (Dollars in millions, except per share data and unless otherwise indicated)
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