Sunbeam 2012 Annual Report Download - page 24

22 Jarden Corporation Annual Report 2012
Management’s Discussion and Analysis
Jarden Corporation Annual Report 2012
Interest Expense
Net interest expense for 2011 increased by $1.9 million to $180 million versus the prior year, primarily 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 prior year. 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.
Financial Condition, Liquidity and Capital Resources
LIQUIDITY
At December 31, 2012 and 2011, the Company had cash and cash equivalents of $1.0 billion and $808 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, 2012 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 the potential repurchase of shares of the Company’s common stock under the Company’s stock repurchase program.
As of December 31, 2012, the amount of cash held by our non-U.S. subsidiaries was approximately $463 million, of which approximately
$398 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 these funds are needed for our operations in the United States, any
distribution of these non-U.S. earnings may be subject to both U.S. federal and state income taxes, as adjusted for non-U.S. tax credits,
if any, and withholding taxes payable to the various non-U.S. countries. However, we do not have any current needs or foreseeable plans
other than to indefinitely reinvest these funds within our non-U.S. subsidiaries.
Cash Flows from Operating Activities
Net cash provided by operating activities was $480 million and $427 million for 2012 and 2011, respectively. The change is primarily
due to improved operating results and favorable working capital movements, primarily related to the timing of the purchase of
comparatively lower seasonal inventory levels in certain businesses and the corresponding effect on accounts payable.
Cash Flows from Financing Activities
Net cash provided by (used in) financing activities for 2012 and 2011 was $165 million and ($197) 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 ($715 million) and the period-over-period decrease in the net change in short-term debt ($74 million), partially offset
by the increase in the payments for the issuance (repurchase) of common stock, net ($477 million).
Cash Flows from Investing Activities
Net cash used in investing activities was $428 million and $113 million for 2012 and 2011, respectively. Cash used for the acquisition
of businesses, net of cash acquired for 2012 increased $272 million versus the same prior year period. For 2012, capital expenditures
were $155 million versus $127 million in 2011. 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.