Sunbeam 2010 Annual Report Download - page 37

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Notes to Consolidated Financial Statements
Jarden Corporation Annual Report 2010 (Dollars in millions, except per share data and unless otherwise indicated)
At December 31, 2010 and 2009, goodwill of certain reporting units and certain intangible assets are recorded at fair value based
upon the Company’s impairment testing and as circumstances require.
The Company’s goodwill and indefinite-lived intangibles are fair valued using discounted cash flows and market multiple methods.
Goodwill impairment testing requires significant use of judgment and assumptions including the identification of reporting units; the
assignment of assets and liabilities to reporting units; and the estimation of future cash flows, business growth rates, terminal values
and discount rates. The testing of indefinite-lived intangibles under established guidelines for impairment also requires significant
use of judgment and assumptions, such as the estimation of cash flow projections, terminal values and discount rates.
Stock-Based Compensation
The Company estimates the fair value of share-based awards on the date of grant, which is generally the date the award is approved
by the Board of Directors of the Company (the “Board”) or committee thereof. The fair value of stock options is determined using
the Black-Scholes option-pricing model. The fair value of the market-based restricted stock awards is determined using a Monte
Carlo simulation embedded in a lattice model, and for all other restricted stock awards based on the closing price of the Company’s
common stock on the date of grant. The determination of the fair value of the Company’s stock option awards and restricted stock
awards is based on a variety of factors including, but not limited to, the Company’s common stock price, expected stock price
volatility over the expected life of awards, and actual and projected exercise behavior (see Note 13). Additionally the Company has
estimated forfeitures for share-based awards at the dates of grant based on historical experience. The forfeiture estimate is revised
as necessary if actual forfeitures differ from these estimates.
The Company issues restricted share awards whose restrictions lapse upon either the passage of time (service vesting), achieving
performance targets, attaining Company common stock price thresholds, or some combination of these restrictions. For those
restricted share awards with only service conditions, the Company recognizes compensation cost on a straight-line basis over the
explicit service period. For those restricted share awards with market conditions, the Company recognizes compensation cost
on a straight-line basis over the derived service period unless the market condition is satisfied prior to the end of the derived
service period. For performance only awards, the Company recognizes compensation cost on a straight-line basis over the implicit
service period which represents the Company’s best estimates for when the target will be achieved. If it becomes apparent the
original service periods are no longer accurate, the remaining unrecognized compensation cost will be recognized over the revised
remaining service periods. For restricted share awards that contain both service and market or performance vesting conditions,
compensation cost is recognized over the shorter of the two conditions if only one of the conditions must be met or the longer of
the two conditions if both conditions must be met.
For restricted awards that contain performance or market vesting conditions, the Company excludes these awards from diluted
earning per share computations until the contingency is met as of the end of that reporting period.
Pension and Postretirement Benefit Plans
The Company records annual amounts relating to its pension and postretirement benefit plans based on calculations which include
various actuarial assumptions, including discount rates, assumed rates of return, compensation increases, turnover rates and
healthcare cost trend rates. The Company reviews its actuarial assumptions on an annual basis and makes modifications to the
assumptions based on current rates and trends when it is deemed appropriate to do so. The effect of modifications is generally
recorded or amortized over future service periods. The assumptions utilized in recording its obligations under its plans are based on
its experience, market conditions and input from its actuaries and investment advisors.
Reorganization and Acquisition-Related Integration Costs
Reorganization and acquisition-related integration costs include costs associated with exit or disposal activities, including costs for
employee and lease terminations, facility closings or other exit activities. Additionally, these costs include expenses directly related
to integrating and reorganizing acquired businesses and include items such as employee retention costs, recruiting costs, certain
moving costs and certain duplicative costs during integration and asset impairments.
The following table summarizes the assets that are measured at Level 3 fair value on a non-recurring basis at December 31, 2010 and 2009:
(In millions) 2010 2009
Goodwill $ 6.4 $ 23.7
Intangible assets 3.6 30.9
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