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42 Jarden Corporation Annual Report 2014
Cost of Sales
The Company’s cost of sales includes the costs of raw materials and nished goods purchases, manufacturing costs and warehouse and
distribution costs.
Advertising Costs
Advertising costs consist primarily of ad demo, media placement and promotions, and are expensed as incurred. The amounts charged
to advertising and included in SG&A in the consolidated statements of operations for 2014, 2013 and 2012 were $189, $172 and $156,
respectively.
Product Liability Reserves
The Company has a self-insurance program for product liability that includes reserves for self-retained losses and certain excess
and aggregate risk transfer insurance. The estimated product liability reserve incorporates historical loss experience combined with
actuarial evaluation methods, review of signicant individual les and the application of risk transfer programs. The Company’s
actuarial evaluation methods consider claims incurred, but not reported when determining the product liability reserve.
Product Warranty Costs
The Company recognizes warranty costs based on an estimate of amounts required to meet future warranty obligations arising as a
cost of the sale of its products. The Company accrues an estimated liability at the time of a product sale based on historical claim rates
applied to current period sales, as well as any information applicable to current product sales that may indicate a deviation from such
historical claim rate trends. Warranty reserves are included within “Other current liabilities” and “Other non-current liabilities” in the
Company’s consolidated balance sheets.
Sales Incentives and Trade Promotion Allowances
The Company offers various sales incentives and trade promotional programs to its reseller customers from time to time in the normal
course of business. These sales incentives and trade promotion programs typically include arrangements known as slotting fees,
cooperative advertising and buydowns. These arrangements are recorded as a reduction to net sales in the Company’s consolidated
statements of operations.
Income Taxes
Deferred taxes are provided for differences between the nancial statement and tax basis of assets and liabilities using enacted tax
rates. The Company established a valuation allowance against a portion of the net tax benet associated with all carryforwards and
temporary differences in a prior year, as it was more likely than not that these would not be fully utilized in the available carryforward
period. A portion of this valuation allowance remained as of December31, 2014 and 2013 (see Note 12).
The Company recognizes tax benets for certain tax positions based upon judgments as to whether it is more likely than not that a
tax position will be sustained upon examination. The measurement of tax positions that meet the more-likely-than-not recognition
threshold are based in part on estimates and assumptions as to be the probability of an outcome, along with estimated amounts to be
realized upon any settlement.
Components of accumulated other comprehensive income (loss) (“AOCI”) are presented net of tax at the applicable statutory rates
and are primarily generated domestically.
Disclosures about Fair Value of Financial Instruments and Credit Risk
The carrying values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their fair
market values due to the short-term maturities of these instruments. The fair market value (Level 1 measurement) of the Company’s
senior notes and senior subordinated notes are based upon quoted market prices. The fair market value (Level 2 measurement) of the
Company’s other long-term debt is estimated using interest rates currently available to the Company for debt with similar terms and
maturities (see Note9).
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Unless otherwise disclosed in the notes to the consolidated nancial statements, the estimated fair value of nancial assets and
liabilities approximates carrying value.
Notes to Consolidated Financial Statements
Jarden Corporation Annual Report 2014 (Dollars in millions, except per share data and unless otherwise indicated)