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Annual Report 2013

Table of contents

  • Page 1
    Annual Report 2013

  • Page 2

  • Page 3
    3,500% 3,000% 2,500% 2,000% 1,500% 1,000% 500%

  • Page 4
    ... as senior management on 9/24/2001. 2. Each year Jarden employees submit creative ideas for the cover of our annual report. The winners of this year's annual report cover contest were Mike Braun-Jarden Consumer Solutions, Boca Raton, Florida and Todd Paliulis-Yankee Candle Company, South Deerfield...

  • Page 5
    ... and Communities Jarden's Market Leading Brands Jarden's Business System Continuous Innovation Financial Discipline Historical Performance Charts Selected Financial Data Management's Discussion and Analysis Financial Statements 2 5 6 8 10 11 12 13 15 33 Jarden Corporation Annual Report 2013 1

  • Page 6
    ...) Chief Executive Officer Dear Fellow W Shareholders e are delighted that 2013 was a year of record revenue, record adjusted gross margin, record segment earnings, record operating cash flow and record adjusted earnings per share. Since September 24, 2001 (the day we assumed leadership of Jarden...

  • Page 7
    .... In 2013, brand equity investment reached a new record of approximately 6% of sales, or over $415 million. It is this consistent focus on driving new product innovation that we believe sets the foundation for Jarden to continue its leadership positions in the vast majority of its target markets for...

  • Page 8
    ... five years. We believe the Company is well positioned in its core markets, and that our leadership teams have the tools and resources to win with our customers. Our priorities remain unchanged; to deliver innovative products through leading brands that consumers desire and trust, to capitalize on...

  • Page 9
    ... products to the market which genuinely enhance the everyday lives of consumers who use them. This is reflected in the wide range of marketplace accolades and awards Jarden products receive each year. We are proud to share a sample of recent awards. Best Buy 2014 Retail Customers Retail Customer...

  • Page 10
    ... indicated otherwise. * Category includes aggregate sales of pacifiers, sippy cups, bottles and other oral development and feeding products. ** Home-use gloves and sponges in EU G5 market. ***Household stick and smallware cleaning supplies in U.S. market. 6 Jarden Corporation Annual Report 2013

  • Page 11
    .... Consumer Solutions 1 in Blenders # # # 1 in Coffee Makers 1 IN CATEGORY # 1 in Slow Cookers # 1 in Vacuum Packaging # 1 in Air Purifiers & Humidifiers # 1 in Warming Blankets Global provider of products designed to simplify the daily lives of consumers in and around the home, making...

  • Page 12
    ... Channels New Products Margin Expansion Investment (Mktg, R&D and CapEx) International Growth Targeted Growth Initiatives 5 Year Roadmap 2018 Disciplined Operational Analysis & Management Assessment and approval of "Base Business" and "Target Growth Initiatives" drive Jarden's long-term Financial...

  • Page 13
    ... In-Person Meeting • Knowledge Sharing • Data Collection Collaboration Leverage Advisory Transportation Team Marketing Council Sourcing Council 2007-2008 2009-2010 2011-2012 2013 Helmet Council MATURITY vs. KEY FOCUS LATAM/APAC Logistics Manufacturing Council Retail Council Customs & Trade...

  • Page 14
    ...day on product research, development and marketing. For the last two years, our brand equity investment level reached approximately 6% of net sales, increasing from less than 4% in 2005. With over 140,000 SKUs in the market, Jarden builds brand devotees by continuously re-imagining product solutions...

  • Page 15
    ... days year-over-year, largely driven by inventory day reduction. Labor Efficiency: Labor efficiency measures the difference between the standard hours used for making products and the actual hours. Jarden's labor efficiency rate improved by 12% from 2012 to 2013. Jarden Corporation Annual Report...

  • Page 16
    ... 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Note: For a reconciliation of Segment Earnings to GAAP Operating Earnings please see pages 79 and 80. 1. Non-GAAP-excluding restructuring, non-operational and non-cash charges and credits. 12 Jarden Corporation Annual Report 2013

  • Page 17
    ... Data Jarden Corporation Annual Report 2013 The following tables set forth the Company's selected financial data as of and for the years ended December 31, 2013, 2012, 2011, 2010 and 2009. The selected financial data set forth below has been derived from the audited consolidated financial statements...

  • Page 18
    Selected Financial Data Jarden Corporation Annual Report 2013 (b) The results of Yankee Candle Investments LLC, Mapa Spontex Baby Care and Home Care businesses, Aero Products International, Inc. and Quickie Manufacturing Corporation are included from their dates of acquisition of October 3, 2013, ...

  • Page 19
    ...kitchen appliances, such as blenders, coffeemakers, irons, mixers, slow cookers, tea kettles, toasters, toaster ovens and vacuum packaging machines; home environmental products, such as air purifiers, fans, heaters and humidifiers; clippers, trimmers and other hair care products for professional use...

  • Page 20
    ...zinc products marketed globally for use in the architectural, automotive, construction, electrical component and plumbing markets. Summary of Significant 2013 Activities • On October 3, 2013, the Company acquired Yankee Candle Investments LLC ("Yankee Candle"), a leading specialty-branded premium...

  • Page 21
    ...with attractive cash flows and strong management. Yankee Candle will be reported in the Company's Branded Consumables segment and was included in the Company's results of operations from October 3, 2013. 2012 Activity During 2012, the Company completed three tuck-in acquisitions that by nature were...

  • Page 22
    ... Latin America, which contributed to an increase in net sales of approximately 6%, primarily due to increased point of sale, improved product distribution and successful pricing strategies. Net sales domestically increased slightly on a year-over-year basis, 18 Jarden Corporation Annual Report 2013

  • Page 23
    Management's Discussion and Analysis Jarden Corporation Annual Report 2013 as an increase in sales in certain home environment categories was partially offset by a decline in sales in certain small appliance categories. Unfavorable foreign currency translation accounted for a decrease of ...

  • Page 24
    Management's Discussion and Analysis Jarden Corporation Annual Report 2013 Net Income Net income for 2013 decreased $40.0 million to $203.9 million versus the prior year. For 2013 and 2012, earnings per diluted share were $1.77 and $2.06, respectively. The decrease in net income was primarily due to...

  • Page 25
    ... the diluted weighted average shares outstanding decreased approximately 11%, primarily due to the Company's Stock Repurchase Program (see "Capital Resources"). Financial Condition, Liquidity and Capital Resources LIQUIDITY At December 31, 2013 and 2012, the Company had cash and cash equivalents of...

  • Page 26
    ... 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 financing activities for 2013 and 2012...

  • Page 27
    ..., as the Company cannot reasonably predict the timing of the settlement of the related tax positions beyond 2014. See Note 12 to the consolidated financial statements for additional information on the Company's unrecognized tax benefits at December 31, 2013. Jarden Corporation Annual Report 2013 23

  • Page 28
    ... of commodity-based derivatives that are not designated as effective hedges for accounting purposes and have maturity dates through December 2014. Fair market value gains or losses are included in the results of operations and are classified in SG&A. 24 Jarden Corporation Annual Report 2013

  • Page 29
    Management's Discussion and Analysis Jarden Corporation Annual Report 2013 The following table presents the fair value of derivative financial instruments as of December 31, 2013: December 31, 2013 (In millions) Derivatives designated as effective hedges: Cash flow hedges: Interest rate swaps ...

  • Page 30
    ... of 2011, the Company's annual impairment test, in connection with fourth quarter triggering events, resulted in a non-cash charge of $43.4 million to reflect the impairment of goodwill and intangible assets in the Company's Branded Consumables segment. 26 Jarden Corporation Annual Report 2013

  • Page 31
    Management's Discussion and Analysis Jarden Corporation Annual Report 2013 While some of the Company's businesses experienced a revenue decline and decreased profitability in 2013, the Company believes that its long-term growth strategy supports its fair value conclusions. For both goodwill and ...

  • Page 32
    Management's Discussion and Analysis Jarden Corporation Annual Report 2013 pension plans' projected benefit obligation by approximately $41 million. The healthcare cost trend rates used in valuing the Company's postretirement benefit obligation are established based upon actual healthcare cost ...

  • Page 33
    Management's Discussion and Analysis Jarden Corporation Annual Report 2013 Forward-Looking Statements The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of the Company. The Company may from time to time make written or oral...

  • Page 34
    ... for Registrant's Common Equity Jarden Corporation Annual Report 2013 Market; Market Price; and Dividends for Registrant's Common Equity Jarden Corporation's (the "Company" or "Jarden") common stock is traded on the New York Stock Exchange ("NYSE") under the symbol "JAH." As of February 18, 2014...

  • Page 35
    ...-Oxley Act of 2002, management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2013. In making this assessment, management used the criteria set forth in the Internal Control-Integrated Framework (1992) issued by the Committee of Sponsoring...

  • Page 36
    ...Public Accounting Firm Jarden Corporation Annual Report 2013 To the Board of Directors and Stockholders of Jarden Corporation: In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, comprehensive income, stockholders' equity and cash flows...

  • Page 37
    Consolidated Statements of Operations Jarden Corporation Annual Report 2013 Years Ended December 31, (In millions, except per share amounts) Net sales Cost of sales Gross profit Selling, general and administrative expenses Reorganization costs, net Impairment of goodwill, intangibles and other ...

  • Page 38
    Consolidated Balance Sheets Jarden Corporation Annual Report 2013 (In millions, except per share amounts) Assets: Cash and cash equivalents Accounts receivable, net of allowances of $97.0 in 2013, $79.7 in 2012 Inventories Deferred taxes on income Prepaid expenses and other current assets Total ...

  • Page 39
    ... tax benefits from stock-based compensation Other, net Net cash provided by (used in) financing activities Cash flows from investing activities: Additions to property, plant and equipment Acquisition of businesses, net of cash acquired Other Net cash used in investing activities Effect of exchange...

  • Page 40
    ...' Equity Jarden Corporation Annual Report 2013 (In millions) Balance, December 31, 2010 Comprehensive income Restricted stock awards, stock options exercised and stock plan purchases Restricted stock awards cancelled and shares tendered for stock options and taxes Dividends declared Stock-based...

  • Page 41
    ... Annual Report 2013 1. Business and Significant Accounting Policies Business Jarden Corporation and its subsidiaries (hereinafter referred to as the "Company" or "Jarden") is a leading provider of a diverse range of consumer products with a portfolio of over 120 trusted, quality brands sold...

  • Page 42
    Notes to Consolidated Financial Statements Jarden Corporation Annual Report 2013 (Dollars in millions, except per share data and unless otherwise indicated) Company's consolidated financial statements at the official exchange rate of 6.30 Bolivars per U.S. dollar, which is the Company's expected ...

  • Page 43
    ... Jarden Corporation Annual Report 2013 Property, Plant and Equipment Property, plant and equipment are recorded at cost less accumulated depreciation. Maintenance and repair costs are charged to expense as incurred, and expenditures that extend the useful lives of assets are capitalized. The Company...

  • Page 44
    ... in the consolidated statements of operations for 2013, 2012 and 2011 were $172, $156 and $143, respectively. (Dollars in millions, except per share data and unless otherwise indicated) Product Liability Reserves The Company has a self-insurance program for product liability that includes reserves...

  • Page 45
    Notes to Consolidated Financial Statements Jarden Corporation Annual Report 2013 Fair Value Measurements GAAP defines three levels of inputs that may be used to measure fair value and requires that the assets or liabilities carried at fair value be disclosed by the input level under which they were ...

  • Page 46
    ... to Consolidated Financial Statements Jarden Corporation Annual Report 2013 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...

  • Page 47
    ... effect on the consolidated financial position, results of operations or cash flows of the Company. 3. Acquisitions 2013 Activity On October 3, 2013, the Company acquired Yankee Candle Investments LLC ("Yankee Candle"), a leading specialty-branded premium scented candle company for a purchase price...

  • Page 48
    ... pro forma financial information for 2012 also includes $82.6 of non-recurring charges related to the YCC Acquisition, which are comprised of charges for the fair market value adjustment for manufacturer's profit in inventory and other transaction costs. 44 Jarden Corporation Annual Report 2013

  • Page 49
    ...Consolidated Financial Statements Jarden Corporation Annual Report 2013 Other For 2013 and 2012, cost of sales includes charges of $89.8 and $6.0, respectively, for the purchase accounting adjustment for the elimination of manufacturer's profit in inventory related to acquisitions. For 2013 and 2012...

  • Page 50
    ... at December 31, 2012 Amortization Periods (years) (In millions) Intangibles Patents Manufacturing process and expertise Brand names Customer relationships and distributor channels Trademarks and tradenames 46 Jarden Corporation Annual Report 2013 Additions Accumulated Amortization...

  • Page 51
    Notes to Consolidated Financial Statements Jarden Corporation Annual Report 2013 (Dollars in millions, except per share data and unless otherwise indicated) In 2011, in connection with its annual impairment test, the Company recorded within the Branded Consumables segment a non-cash charge of $1.5 ...

  • Page 52
    Notes to Consolidated Financial Statements Jarden Corporation Annual Report 2013 9. Debt Debt is comprised of the following at December 31, 2013 and 2012: (In millions) Senior Secured Credit Facility Term Loans 8% Senior Notes due 2016 6 1⁄8% Senior Notes due 2022 (a) 7 1⁄2% Senior Subordinated ...

  • Page 53
    ... or rights to purchase our securities, which distribution has a per share value exceeding 10% of the closing sale price of the Company's common stock on the trading day immediately preceding the declaration date for such distribution, or if the Company engages in certain other corporate transactions...

  • Page 54
    Notes to Consolidated Financial Statements Jarden Corporation Annual Report 2013 (Dollars in millions, except per share data and unless otherwise indicated) per share. The 2018 Convertible Notes are not subject to redemption at the Company's option prior to the maturity date. Prior to June 1, 2018,...

  • Page 55
    ... Financial Statements Jarden Corporation Annual Report 2013 (Dollars in millions, except per share data and unless otherwise indicated) The Company's debt maturities for the five years following December 31, 2013 and thereafter are as follows: Years Ending December 31, 2014 2015 2016 2017...

  • Page 56
    ...Consolidated Financial Statements Jarden Corporation Annual Report 2013 Foreign Currency Contracts The Company uses forward foreign currency contracts to mitigate the foreign currency exchange rate exposure on the cash flows related to forecasted inventory purchases and sales and have maturity dates...

  • Page 57
    ... Financial Statements Jarden Corporation Annual Report 2013 (Dollars in millions, except per share data and unless otherwise indicated) The following table presents gain and loss activity (on a pretax basis) for 2013, 2012 and 2011 related to derivative financial instruments designated as effective...

  • Page 58
    ... Jarden Corporation Annual Report 2013 11. Commitments and Contingencies Operating Leases The Company conducts its operations in various leased facilities under leases that are classified as operating leases for financial statement purposes. Certain leases provide for payment of real estate taxes...

  • Page 59
    ... that the ultimate conclusion of the various pending product liability claims and lawsuits of the Company, in the aggregate, will not have a material adverse effect on the consolidated financial position, results of operations or cash flows of the Company. Jarden Corporation Annual Report 2013 55

  • Page 60
    Notes to Consolidated Financial Statements Jarden Corporation Annual Report 2013 12. Taxes on Income The components of the provision for income taxes attributable to continuing operations for 2013, 2012 and 2011 are as follows: (In millions) Current income tax expense: U.S. federal Foreign State and...

  • Page 61
    ... Consolidated Financial Statements Jarden Corporation Annual Report 2013 (Dollars in millions, except per share data and unless otherwise indicated) Deferred tax assets (liabilities) at December 31, 2013 and 2012 are comprised of the following: (In millions) Intangibles Goodwill Financial reporting...

  • Page 62
    ... Financial Statements Jarden Corporation Annual Report 2013 (Dollars in millions, except per share data and unless otherwise indicated) The following table sets forth the details and the activity related to unrecognized tax benefit as of and for the years ended December 31, 2013 and 2012...

  • Page 63
    ... Financial Statements Jarden Corporation Annual Report 2013 (Dollars in millions, except per share data and unless otherwise indicated) 13. Stockholders' Equity and Share-Based Awards The Company maintains the 2013 Stock Incentive Plan, which allows for grants of stock options, restricted stock...

  • Page 64
    Notes to Consolidated Financial Statements Jarden Corporation Annual Report 2013 (Dollars in millions, except per share data and unless otherwise indicated) For those restricted stock awards with common stock price thresholds, the weighted average grant date fair values of these awards were $33.80,...

  • Page 65
    ... Financial Statements Jarden Corporation Annual Report 2013 14. Earnings Per Share A computation of the weighted average shares outstanding for 2013, 2012 and 2011 is as follows: (In millions) Weighted average shares outstanding: Basic Dilutive share-based awards Convertible debt Diluted 2013...

  • Page 66
    ... Consolidated Financial Statements Jarden Corporation Annual Report 2013 (In millions) Service cost Interest cost Amortization: Prior service benefit Net actuarial gain Net periodic cost (credit) Curtailments and settlements Total expense (credit) Assumptions Weighted average assumption used...

  • Page 67
    Notes to Consolidated Financial Statements Jarden Corporation Annual Report 2013 Funded Status The following table provides a reconciliation of the benefit obligation, plan assets and the funded status of the pension and postretirement plans as of December 31, 2013 and 2012: (In millions) Change...

  • Page 68
    ... expected future market conditions, risk and active management premiums. The expected long-term rate of return is adjusted when there are fundamental changes in expected returns on the Company's defined benefit pension plan's investments. The Company's target asset allocation for 2013 and 2012 is as...

  • Page 69
    Notes to Consolidated Financial Statements Jarden Corporation Annual Report 2013 (In millions) Asset Category Equity securities and funds: Domestic International Fixed income securities and funds Alternative investments Cash and other Total (In millions) Asset Category Equity securities ...

  • Page 70
    ... Financial Statements Jarden Corporation Annual Report 2013 (In millions) Balance, December 31, 2011 Actual return on plan assets: Relating to assets held at year-end Relating to assets sold during the period Purchases, sales, settlements and other, net Balance, December 31, 2012 Actual return...

  • Page 71
    ...Financial Statements Jarden Corporation Annual Report 2013 16. Reorganization Costs Reorganization costs for 2013, 2012 and 2011 are as follows: (In millions) Outdoor Solutions Consumer Solutions Branded Consumables Total (In millions) Outdoor Solutions Consumer Solutions Branded Consumables...

  • Page 72
    ...kitchen appliances, such as blenders, coffeemakers, irons, mixers, slow cookers, tea kettles, toasters, toaster ovens and vacuum packaging machines; home environmental products, such as air purifiers, fans, heaters and humidifiers; clippers, trimmers and other hair care products for professional use...

  • Page 73
    ... Financial Statements Jarden Corporation Annual Report 2013 (Dollars in millions, except per share data and unless otherwise indicated) animal categories; electric blankets, mattress pads and throws; products for the hospitality industry; and scales for consumer use. The Consumer Solutions...

  • Page 74
    ... Financial Statements Jarden Corporation Annual Report 2013 (Dollars in millions, except per share data and unless otherwise indicated) 2012 Corporate/ Unallocated (In millions) Net sales Segment earnings (loss) Adjustments to reconcile to reported operating earnings (loss): Fair...

  • Page 75
    ... adjustment Derivative financial instruments Accrued benefit cost Unrealized gain on investment Income tax (provision) benefit related to OCI $ 2013 - 2012 2011 - (5.8) 12.1 (0.1) 6.2 (2.3) (14.5 16.8) 0.7 3.3 (0.2) $ 3.8 Jarden Corporation Annual Report 2013 71

  • Page 76
    ... Income tax provision (benefit) Equity earnings of subsidiaries Net income (loss) Other comprehensive income (loss), net of tax Comprehensive income (loss Parent (Dollars in millions, except per share data and unless otherwise indicated) Year Ended December 31, 2013 Guarantor Subsidiaries Non...

  • Page 77
    Notes to Consolidated Financial Statements Jarden Corporation Annual Report 2013 (In millions) Net sales Cost of sales Gross profit Selling, general and administrative expenses Reorganization costs, net Impairment of goodwill and intangibles Operating earnings Interest expense, net Loss on early ...

  • Page 78
    Notes to Consolidated Financial Statements Jarden Corporation Annual Report 2013 Condensed Consolidating Balance Sheets (In millions) Assets: Cash and cash equivalents Accounts receivable Inventories Other current assets Total current assets Property, plant and equipment, net Goodwill Intangibles...

  • Page 79
    ... to Consolidated Financial Statements Jarden Corporation Annual Report 2013 (In millions) Assets: Cash and cash equivalents Accounts receivable Inventories Other current assets Total current assets Property, plant and equipment, net Goodwill Intangibles, net Intercompany receivables Investment in...

  • Page 80
    Notes to Consolidated Financial Statements Jarden Corporation Annual Report 2013 Condensed Consolidating Statements of Cash Flows (In millions) Net cash provided by (used in) operating activities: Financing activities: Net change in short-term debt (Payments on) proceeds from intercompany ...

  • Page 81
    ... from issuance of long-term debt Payments on long-term debt Issuance (repurchase) of common stock, net Excess tax benefits from stock-based compensation Other Net cash provided by (used in) financing activities Investing activities: Additions to property, plant and equipment Acquisition of business...

  • Page 82
    ... Financial Statements Jarden Corporation Annual Report 2013 (In millions) Net cash provided by (used in) operating activities: Financing activities: Net change in short-term debt (Payments on) proceeds from intercompany transactions Proceeds from issuance of long-term debt Payments on long-term...

  • Page 83
    ... to Non-GAAP Measures Jarden Corporation Annual Report 2013 We use certain non-GAAP financial measures in this Annual Report because they are a basis upon which the Company's management has assessed its financial performance in the years presented. Additionally, the Company uses non-GAAP financial...

  • Page 84
    ... in February 2013; $34.7 million of integration related costs primarily associated with the rationalization of international manufacturing facilities; $17.1 million net gain primarily associated with the gain on the sale of an investment; $38.8 million of a non-cash stock compensation adjustment...

  • Page 85
    ... Registered Public Accounting Firm PricewaterhouseCoopers LLP New York, New York Securities Listing Jarden's common stock is listed on the New York Stock Exchange. Symbol: JAH Investor Relations ICR, Inc. Norwalk, CT 203-682-8200 NYSE Corporate Governance Disclosure Jarden Corporation filed...

  • Page 86