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Management’s Discussion and Analysis
Jarden Corporation Annual Report 2010
In the fourth quarter of 2009, the Company’s impairment test resulted in a non-cash charge of $12.8 million to reflect impairment
of goodwill in the Company’s Branded Consumables segment. The impairment charge was recorded within the Arts and Crafts
business unit. The impairment was due to a decrease in the fair value of forecasted cash flows, reflecting the deterioration of
revenues and margins in the business.
The Company’s impairment test in 2009 resulted in a non-cash charge of $10.1 million to reflect impairment of intangible assets
related to certain of the Company’s tradenames. The impairment charge was allocated to the Company’s reporting segments
as follows:
In the Outdoor Solutions segment, the impairment charge recorded relates primarily to certain tradenames within this segment’s
snow sports business, primarily a result of the abandonment of a minor tradename. In the Branded Consumables segment
the impairment charge recorded relates to certain tradenames associated with this segment’s Firelog and Safety and Security
businesses. The impairment within the Branded Consumables segment was due to a decrease in the fair value of forecasted cash
flows, resulting from the deterioration of revenues and margins related to these tradenames.
Net interest expense for 2009 decreased by $31.2 million to $148 million versus the same prior year period, primarily due to a
decrease in the weighted average interest rate for 2009 to 5.4% from 6.4% in 2008. The decrease in the weighted average interest
rate was due to a decline in short-term variable interest rates (LIBOR) combined with the maturity of $725 million notional amount of
fixed rate interest rate swaps during 2009.
The Company’s reported tax rate for 2009 and 2008 was 46.2% and (80.7%), respectively. The difference from the statutory tax rate to
the reported tax rate for 2009 results principally from the U.S. tax expense of $25.7 million recognized on the undistributed foreign
income, and $18.5 million recognized on the distributed foreign income, less a $12.9 million benefit attributable to local Venezuela
inflationary adjustments and tax-exempt earnings. The difference from the statutory tax rate to the reported tax rate for 2008
results principally from the tax charge related to the impairment of goodwill ($33.4 million) and from U.S. tax expense ($14.0 million)
recognized on undistributed foreign income.
Net income for 2009 increased $188 million to $129 million versus the same prior year period. For 2009 and 2008 diluted earnings
(loss) per share were $1.52 and ($0.78), respectively. The increase in net income (loss) was primarily due to the incremental decrease
in 2009 of the charge recorded for the impairment of goodwill and intangibles ($260 million), the aforementioned decreases in
SG&A and interest expense, partially offset the increase in the diluted weighed average shares outstanding in 2009 resulting from
the issuance of 12.0 million shares of common stock from the Company’s equity offering in April 2009.
Financial Condition, Liquidity and Capital Resources
LIQUIDITY
The Company believes that its cash and cash equivalents, cash generated from operations and the availability under its senior
secured credit facility (the “Facility”) and the credit facilities of certain foreign subsidiaries as of December 31, 2010, provide
sufficient liquidity to support working capital requirements, planned capital expenditures, debt obligations, completion of current
and future reorganization and acquisition-related integration programs and pension plan contribution requirements and for the
foreseeable future.
In August 2010, the Company increased its liquidity as it entered into an amendment to the Facility that, in part, extended the
maturity date of approximately $364 million principal amount of existing term loans from January 2012 to January 2015 through the
creation of a new Term B5 tranche of the Facility; increased the gross availability under the existing revolving credit facility from $100
million to $150 million; and extended the maturity date of the revolving credit facility until January 2015. The Term B5 loans bear
interest of LIBOR plus 3.25%.
(In millions)
Year Ended
December 31, 2009
Impairment of intangibles:
Outdoor Solutions $ 0.8
Branded Consumables 9.3
$ 10.1
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