Sunbeam 2010 Annual Report Download - page 16

Management’s Discussion and Analysis
Jarden Corporation Annual Report 2010
Cash Flows from Operating Activities
Net cash provided by operating activities was $289 million and $641 million for 2010 and 2009, respectively. The change is primarily
due to a higher year over year inventory build as the Company returns to growing its sales, which results in higher inventory levels;
the impact of the $27.4 million purchase accounting adjustment for the elimination of manufacturer’s profit in inventory that requires
the fair value of the inventory acquired to be valued at the sales price of the finished inventory, less costs to complete and a
reasonable profit allowance for selling effort; and an increase in pension contributions of approximately $34 million, which includes
approximately $14 million related to the settlement of a domestic pension plan, partially offset by improved operating results and
the impact of the Acquisition. The Company’s inventory at December 31, 2009 was maintained at lower levels, as a result of the
anticipated demand decline due to the global recessionary environment.
Cash Flows from Financing Activities
Net cash provided by (used in) financing activities for 2010 and 2009 was $480 million and ($32.5) million, respectively. The change
is primarily due the proceeds from the issuance of long-term debt in excess of payments on long-term debt ($525 million) during
2010 and the impact of the incremental net change in short-term debt on a year-over-year basis ($210 million), partially offset by
the proceeds from issuance of common stock, net of transaction fees, during 2009 ($203 million) and the year-over-year increase
in the repurchase of the Company’s common stock and shares tendered for taxes ($38.7 million) and the year-over-year increase of
dividends paid ($22.1 million).
Cash Flows from Investing Activities
Net cash used in investing activities was $883 million and $131 million for 2010 and 2009, respectively. Cash used for the acquisition
of businesses, net of cash acquired and earnout payments for 2010 increased approximately $742 million over the same period
due to acquisitions. For 2010, capital expenditures were $138 million versus $107 million in 2009. The Company has historically
maintained capital expenditures at less than 2% of net sales. Subsequent to the Acquisition, the annualized capital expenditure run-
rate is expected to be approximately 2.5% of net sales.
Dividends
In September 2009, the Company announced that the Board had decided to initiate a quarterly cash dividend. In December
2010, the Board declared a quarterly cash dividend of $0.0825 per share of the Company’s common stock, or $7.3 million, paid on
January 31, 2011 to stockholders of record as of the close of business on January 3, 2011. Cash dividends paid to stockholders in
2010 and 2009 were $28.7 million and $6.6 million, respectively. For 2010, the Company’s total annual dividend of $0.33 per share of
common stock represents a 10% increase over the 2009 annualized run rate. The actual declaration of any future cash dividends, and
the establishment of record and payment dates, will be subject to final determination by the Board each quarter after its review of
the Company’s financial performance.
CAPITAL RESOURCES
At December 31, 2010 and 2009, the Company had cash and cash equivalents of $695 million and $827 million, respectively. At
December 31, 2010, there was no amount outstanding under the revolving credit portion of the Facility. At December 31, 2010, net
availability under the Facility was approximately $102 million, after deducting approximately $48 million of outstanding standby and
commercial letters of credit. The Company is required to pay commitment fees on the unused balance of the revolving portion of
the Facility. At December 31, 2010, the annual commitment fee on unused balances was 0.375%.
In November 2010, the Company completed a registered public offering for $300 million aggregate principal amount of 6 1/8%
senior notes due 2022 and received approximately $294 million in net proceeds. The net proceeds will be used for general
corporate purposes. Beginning in November 2015, the Company may redeem all or part of these 6 1/8% senior notes due 2022 at
specified redemption prices ranging from approximately 100% to 103% of the principal amount, plus accrued and unpaid interest to
the date of redemption. These notes are subject to similar restrictive and financial covenants as the Company’s existing senior notes
and senior subordinated notes.
On January 20, 2010, the Company completed a registered public offering for $492 million aggregate principal amount of 7 1/2%
senior subordinated notes due 2020 and received approximately $476 million in net proceeds. The offering consisted of two
tranches: a U.S. dollar tranche with aggregate principal amount of $275 million and a Euro dollar tranche with aggregate principal
amount of C
=150 or approximately $217 million. The Company used the net proceeds to repay $250 million of the Facility term loans,
with the balance to be used for general corporate purposes. Beginning in January 2015, the Company may redeem all or part of
these 7 1/2% senior subordinated notes due 2020 at specified redemption prices ranging from approximately 100% to 104% of the
principal amount, plus accrued and unpaid interest to the date of redemption. These notes are subject to similar restrictive and
financial covenants as the Company’s existing senior notes and senior subordinated notes.
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