Sunbeam 2011 Annual Report Download - page 22

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Management’s Discussion and Analysis
Jarden Corporation Annual Report 2011
Net Sales
Net sales for 2010 increased $870 million, or 16.9%, to $6.0 billion versus the same prior year period. The overall increase in net
sales was primarily due to the Acquisition (approximately $539 million), improved retail environment, favorable weather conditions,
improved point of sale in certain product categories, expanded product offerings, and increased demand internationally, partially
offset by unfavorable foreign currency translation of approximately $42 million, which includes the unfavorable foreign currency
translation of approximately $88 million related to the currency devaluation in Venezuela (see “Venezuela Operations”). Net sales
in the Outdoor Solutions segment increased $207 million, or 9.0%, primarily as the result of improved sales in the Coleman and
fishing businesses; improved sales in the winter sports and technical apparel businesses, due primarily to increased category
space at certain major domestic retailers; expanded product offerings; increased point of sales; increased demand internationally;
overall economic improvement; favorable weather conditions and favorable foreign currency translation (approximately $14
million); partially offset by the exiting of two business lines (approximately $54 million). Net sales in the Consumer Solutions
segment increased $33.7 million, or 1.8%, primarily as the result of increased demand domestically, especially in the beverage
Results of Operations—Comparing 2010 to 2009
Net Sales
Operating Earnings
(Loss)
Years Ended December 31,
(In millions) 2010 2009 2010 2009
Outdoor Solutions $ 2,518.7 $ 2,311.8 $ 228.6 $ 161.6
Consumer Solutions 1,869.6 1,835.9 233.4 260.4
Branded Consumables 1,345.3 792.1 109.0 60.0
Process Solutions 342.7 262.6 25.0 18.7
Corporate — — (188.7) (113.8)
Intercompany eliminations (53.6) (49.8) — —
$ 6,022.7 $ 5,152.6 $ 407.3 $ 386.9
In the fourth quarter of 2011, the Company’s annual impairment test, in connection with fourth quarter triggering events, resulted in
non-cash charges of $43.4 million to reflect impairment of goodwill and intangible assets in the Company’s Branded Consumables
segment. The most significant of which was a non-cash charge of $41.9 million, primarily related to the impairment of goodwill within
the United States Playing Cards business and was due to a decrease in the fair value of forecasted cash flows, reflecting lower levels
of revenues and margins in the business than originally forecast. During 2011, the Company also recorded a $9.1 million impairment
charge within the Branded Consumables segment related to the impairment of an equity basis investment.
Interest Expense
Net interest expense for 2011 increased by $1.9 million to $180 million versus the same prior year period due to higher average
levels of outstanding debt versus the same prior year period, partially offset by a decrease in the weighted average interest rate for
2011 to 5.4% from 5.8% in 2010.
Income Taxes
The Company’s reported tax rate for 2011 and 2010 was 38.0% and 53.5%, respectively. The increase from the statutory tax rate
to the reported tax rate for 2011 results principally from the U.S. tax expense ($12.3 million) related to U.S. goodwill impairment.
The increase from the statutory tax rate to the reported tax rate for 2010 results principally from the tax expense ($29.7 million)
due to non-deductible charges primarily related to the currency devaluation in Venezuela and from the translation of U.S. dollar-
denominated net assets in Venezuela (see “Venezuela Operations”) and a tax charge ($7.2 million) related to non-deductible
transaction costs attributable to the Acquisition, partially offset by the tax benefit ($14.2 million) related to the reversal of a deferred
tax liability attributable to the reduction of Venezuelan earnings considered as not permanently reinvested.
Net Income
Net income for 2011 increased $98 million to $205 million versus the same prior year period. For 2011 and 2010, earnings per diluted
share were $2.31 and $1.19, respectively. The increase in net income was primarily due to the $70.6 million non-cash charge recorded
in 2010 related to the Company’s Venezuela operations (see “Venezuela Operations”), a $20.5 million period-over-period decrease
in the charge recorded for the purchase accounting adjustment for the elimination of manufacturer’s profit in inventory; incremental
earnings from acquisitions; and the gross profit impact of higher sales, partially offset by the period-over-period increase in the
impairment charges for goodwill, intangibles and other assets ($32.8 million), increased reorganization costs ($23.4 million) and the
loss on early extinguishment of debt ($12.8 million) recorded in 2011.