Sunbeam 2011 Annual Report Download - page 24

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Management’s Discussion and Analysis
Jarden Corporation Annual Report 2011
Income Taxes
The Company’s reported tax rate for 2010 and 2009 was 53.5% and 46.2%, respectively. 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. 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.
Net Income
Net income for 2010 decreased $22.0 million to $107 million versus the same prior year period. For 2010 and 2009, diluted earnings
per share were $1.19 and $1.52, respectively. The decrease in net income was primarily due to the non-cash charges related to the
Company’s Venezuela operations ($70.6 million), the purchase accounting adjustment for the elimination of manufacturer’s profit
in inventory ($27.4 million), acquisition-related and other charges ($42.3 million) and an increase in interest expense ($30.3 million),
partially offset by higher sales, incremental earnings from the Acquisition and a decrease in reorganization costs ($52.3 million).
Financial Condition, Liquidity and Capital Resources
LIQUIDITY
At December 31, 2011 and 2010, the Company had cash and cash equivalents of $808 million and $695 million, respectively. The Company
believes that its cash and cash equivalents, cash generated from operations and the availability under the Facility, the securitization facility,
as amended (see “Capital Resources’) and the credit facilities of certain foreign subsidiaries as of December 31, 2011 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 for the foreseeable future, as
well as fund a portion of the potential repurchase of shares of the Company’s common stock under the accelerated stock repurchase
program (see “Capital Resources”), which the Company expects to fund from a combination of cash on hand and new debt.
As of December 31, 2011, the amount of cash held by our non-U.S. subsidiaries was approximately $458 million, of which
approximately $385 million is considered to be indefinitely reinvested overseas, such that no provision for U.S. federal and state income
taxes has been made in the Company’s consolidated statements of operations. If this intention changes, any distribution of these non-
U.S. earnings may be subject to both U.S. federal and state income taxes.
Cash Flows from Operating Activities
Net cash provided by operating activities was $427 million and $289 million for 2011 and 2010, respectively. The change is primarily
due to improved operating results in 2011; the impact of acquisitions; favorable working capital changes, primarily due to the timing
of the purchase of seasonal inventory in certain businesses and the corresponding effect on accounts payable; a $20.5 million
period-over-period decrease in the purchase accounting adjustment for the elimination of manufacturer’s profit in inventory; a
decrease in pension contributions of approximately $13 million, which is primarily due to the settlement of a domestic pension plan
in 2010, partially offset by an increase in cash interest paid of approximately $22 million.
Cash Flows from Financing Activities
Net cash provided by (used in) financing activities for 2011 and 2010 was ($197) million and $480 million, respectively. The change
is primarily due to the period-over-period decrease in the proceeds from the issuance of long-term debt in excess of payments on
long-term debt ($611 million), the period-over-period decrease in the net change in short-term debt ($55.2 million) and the increase
in the repurchase of common stock and of shares tendered for taxes ($37.7 million).
Cash Flows from Investing Activities
Net cash used in investing activities was $113 million and $883 million for 2011 and 2010, respectively. Cash used for the acquisition
of businesses, net of cash acquired and earnout payments for 2011 decreased approximately $741 million over the same period due
to the acquisitions in 2010. For 2011, capital expenditures were $127 million versus $138 million in 2010. The Company expects to
maintain capital expenditures at an annualized run-rate in the range of approximately 2.0% to 2.5% of net sales.
Dividends
In December 2011, the Board declared a quarterly cash dividend of $0.08625 per share of the Company’s common stock, or $7.5
million, paid on January 31, 2012 to stockholders of record as of the close of business on January 3, 2012. Cash dividends paid to
stockholders in 2011 and 2010 were $30.1 million and $28.7 million, respectively. In January 2012, in connection with the acceleration
of the stock repurchase program (see “Capital Resources”), the Company announced that the Board had decided to suspend its
dividend program following the dividend paid on January 31, 2012.