Sunbeam 2011 Annual Report Download - page 19

17
Management’s Discussion and Analysis
Jarden Corporation Annual Report 2011
distributor of primarily baby care and home care products with leading market positions in Argentina, Brazil and Europe in the core
categories it serves. Its baby care portfolio includes feeding bottles, soothers, teats and other infant accessories sold primarily under
the Fiona®, First Essentials®, Lillo®, NUK® and Tigex® brands; and health care products, including condoms sold under the Billy
Boy® brand. Its home care portfolio includes sponges, rubber gloves and related cleaning products for industrial, professional
and retail uses sold primarily under the Mapa® and Spontex® brands. Mapa Spontex is reported in the Company’s Branded
Consumables segment and is included in the Company’s results of operations from April 1, 2010 (the “Acquisition Date”).
In addition, the Company completed three tuck-in acquisitions during 2010, including the acquisition of Aero Products International,
Inc. (“Aero”) on October 1, 2010 and the acquisition of Quickie Manufacturing Corporation (“Quickie”) on December 17, 2010.
Aero is a leading provider of premium, air-filled mattresses under brand names including Aero®, Aerobed® and Aero Sport®. Aero
is reported in the Company’s Outdoor Solutions segment and is included in the Company’s results of operations from October 1,
2010. Quickie is a leading supplier and distributor of innovative cleaning tools and supplies. Quickie designs, manufactures and
distributes cleaning products including mops, brooms, dusters, dust pans, brushes, buckets and other supplies for traditional
in-home use, as well as commercial and contractor-grade applications, sold primarily under the leading brands Quickie Original®,
Quickie Home-Pro®, Quickie Professional®, Quickie Microban® and Quickie Green Cleaning®. Quickie is reported in the
Company’s Branded Consumables segment and is included in the Company’s results of operations from December 17, 2010. The
combined cash purchase price, net of cash acquired, for the Aero and Quickie acquisitions was approximately $270 million, subject
to certain adjustments. Additionally, during 2010, the Company completed another tuck-in acquisition. All three tuck-in acquisitions
were complementary to the Company’s core businesses and from an accounting standpoint were not significant.
As discussed hereinafter, the Company’s results of operation for 2011 and 2010 have been affected in varying degrees by the
inclusion of Mapa Spontex, Aero and Quickie from their respective acquisition dates of April 1, 2010, October 1, 2010 and
December 17, 2010, respectively. Furthermore, during 2011, the integration of Aero into the operating results of the Company’s
existing Coleman business was completed.
2009 Activity
During 2009, the Company completed three tuck-in acquisitions that by nature are complementary to the Company’s core
businesses and from an accounting standpoint were not significant.
Venezuela Operations
In January 2010, the Venezuelan government announced its intention to devalue its currency (Bolivar) relative to the U.S. dollar. The
official exchange rate for imported goods classified as essential, such as food and medicine, changed from 2.15 to 2.60 Bolivars
per U.S. dollar, while payments for other non-essential goods moved to an official exchange rate of 4.30 Bolivars per U.S. dollar. As
such, beginning in 2010, the financial statements of the Company’s subsidiaries operating in Venezuela are remeasured at and are
reflected in the Company’s consolidated financial statements at the official exchange rate of 4.30, which is the Company’s expected
settlement rate.
As a result of the change in the official exchange rate to 4.30 Bolivars per U.S. dollar, the results of operations for 2010 include a
non-cash charge of approximately $14.0 million, primarily reflecting the write-down of monetary assets as of January 1, 2010. This
charge is classified in selling, general and administrative costs (“SG&A”).
In March 2010, the Securities and Exchange Commission (the “SEC”) provided guidance on certain exchange rate issues specific to
Venezuela. This SEC guidance, in part, requires that any differences between the amounts reported for financial reporting purposes
and actual U.S. dollar-denominated balances that may have existed prior to the application of the highly inflationary accounting
requirements (effective January 1, 2010 for the Company) should be recognized in the statement of operations. As a result of
applying this SEC guidance, the results of operations for 2010 include a non-cash charge of $56.6 million related to remeasuring U.S.
dollar-denominated assets at the parallel exchange rate and subsequently translating at the official exchange rate. This charge is
classified in SG&A.
The transfers of funds out of Venezuela are subject to restrictions, and historically, payments for certain imported goods and
services have been required to be transacted by exchanging Bolivars for U.S. dollars through securities transactions in the more
unfavorable parallel market rather than at the more favorable official exchange rate. During the third quarter of 2010, the parallel
market was discontinued and replaced with the newly created and government-regulated System of Transactions in Foreign
Currency Denominated Securities (“SITME”) market. Historically, the majority of the Company’s purchases have qualified for the
official exchange rate. As such, the Company has been able to convert Bolivars at the official exchange rate and, based upon this
ability, the Company does not expect further changes in the SITME market to have a material impact on the consolidated financial
position, results of operations or cash flows of the Company. While the timing of government approval for settlement of payables
at the official exchange rate varies, the Company believes these payables will ultimately be approved and settled at the official
exchange rate based on past experience. However, if in the future, further restrictions require the Company’s subsidiaries operating
in Venezuela to convert an increasing amount of the Bolivar cash balances into U.S. dollars using the more unfavorable exchange
rate, it could result in currency exchange losses that may be material to the Company’s results of operations. At December 31, 2011,
the Company’s subsidiaries operating in Venezuela have approximately $15 million in cash denominated in U.S. dollars and cash of
approximately $53 million held in Bolivars converted at the official exchange rate.