Sunbeam 2014 Annual Report Download - page 24

22 Jarden Corporation Annual Report 2014
Selling, General and Administrative Costs
SG&A for 2013 increased $199 million, or 15.1%, to $1.5 billion versus the prior year. The change is primarily due to the impact of
acquisitions (approximately $128 million), an increase in stock-based compensation (approximately $29 million) and an increase in
marketing and product development costs (approximately $20million) related to the Company’s investment in brand equity. The
Venezuela devaluation-related charges (approximately $29 million) were mostly offset by a net gain on the sale of certain assets
(approximately $21million). Favorable foreign currency translation (approximately $25 million) was essentially offset by other items.
Operating Earnings
Operating earnings for 2013 in the Branded Consumables segment increased $44.5 million, or 21.2%, versus the prior year, primarily due
to the YCC Acquisition; and an increase in gross prot (approximately $39million), in part due to the gross margin impact of higher
sales; partially offset by the purchase accounting adjustment for the elimination of manufacturer’s prot in inventory (approximately
$82 million), primarily due to the YCC Acquisition; and an increase in restructuring costs (approximately $7 million) and an increase
in SG&A (approximately $16 million), excluding the impact of the YCC Acquisition. Operating earnings for 2013 in the Consumer
Solutions segment increased $37.7 million, or 16.2%, versus the prior year, primarily due to a gross prot increase (approximately $41
million), primarily due to the gross margin impact of higher sales and improved gross margins and a decrease in restructuring costs
(approximately $11 million), partially offset by an increase in SG&A ($14 million). Operating earnings for 2013 in the Outdoor Solutions
segment decreased $54.6million, or 21.8%, versus the prior year, primarily due to an increase in SG&A (approximately $34million) and
a decrease in gross prot (approximately $21 million), primarily due to slightly lower gross margins, net of the gross margin impact
of higher sales. Operating earnings in the Process Solutions segment for 2013 increased $6.8 million, or 20.2%, versus the prior year,
primarily due to an increase in gross prot, due to higher sales and improved gross margins.
Restructuring Costs
Restructuring costs for 2013 decreased $5.1 million to $22.0 million versus the prior year, primarily related to restructuring plans
initiated in the Branded Consumables, Consumer Solutions and Outdoor Solutions segments to rationalize certain international
operating processes, primarily through headcount reductions. Restructuring costs of $7.0 million, $3.3 million and $11.7 million were
recorded in the Branded Consumables, Consumer Solutions and Outdoor Solutions segments, respectively.
Interest Expense
Net interest for 2013 increased $10.1 million to $195 million versus the prior year, primarily due to higher average debt levels.
Income Taxes
The Company’s reported tax rate for the 2013 and 2012 was 42.1% and 37.7%, respectively. The difference from the statutory tax rate
to the reported tax rate for 2013 results principally due to the currency devaluation in Venezuela and from the translation of U.S. dollar
denominated net assets in Venezuela and the tax effects of non-deductible compensation expense. The increase from the statutory tax
rate to the reported tax rate for 2012 results principally from U.S. tax expense related to the taxation of foreign income and tax expense
related to foreign tax audit adjustments.
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 $1.18 and $1.38, respectively. The decrease in net income was primarily due to the Venezuela devaluation-related charges ($29.0
million), the loss on the extinguishment of debt related to the Tender Offer and the Facility amendment in March 2013 ($25.9 million)
and the purchase accounting adjustment for the elimination of manufacturer’s prot in inventory ($89.8 million), partially offset by the
gross margin impact of higher sales and incremental earnings from the YCC Acquisition.
Financial Condition, Liquidity and Capital Resources
LIQUIDITY
At December31, 2014 and 2013, the Company had cash and cash equivalents of $1.2 billion and $1.1billion, respectively. The Company
believes that its cash and cash equivalents, cash generated from operations and the availability under the Facility, the securitization
facility and the credit facilities of certain foreign subsidiaries as of December31, 2014 provide sufcient liquidity to support working
capital requirements, planned capital expenditures, debt obligations, completion of current and future restructuring 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, 2014, the amount of cash held by our non-U.S. subsidiaries was approximately $426million, of which approximately
$415 million is considered to be indenitely 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 U.S., 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 indenitely reinvest these funds within our non-U.S. subsidiaries.
Management’s Discussion and Analysis
Jarden Corporation Annual Report 2014