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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2012
or
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 001-13665
Jarden Corporation
(Exact name of registrant as specified in its charter)
Delaware | 35-1828377 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
555 Theodore Fremd Avenue, Rye, New York | 10580 | |
(Address of principal executive offices) | (Zip code) |
(914) 967-9400
(Registrant’s telephone number, including area code)
None
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation ST (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | x | Accelerated filer | ¨ | |||
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | ¨ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class | Outstanding at October 22, 2012 | |
Common Stock, par value $0.01 per share | 78,122,000 shares |
Table of Contents
Quarterly Report on Form 10-Q
For the three and nine months ended September 30, 2012
INDEX
Page Number | ||||||
PART I. | 3 | |||||
Item 1. | 3 | |||||
3 | ||||||
4 | ||||||
Condensed Consolidated Balance Sheets at September 30, 2012 and December 31, 2011 | 5 | |||||
6 | ||||||
7 | ||||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 23 | ||||
Item 3. | 31 | |||||
Item 4. | 31 | |||||
PART II. | 32 | |||||
Item 1. | 32 | |||||
Item 1A. | 32 | |||||
Item 2. | 33 | |||||
Item 6. | 34 | |||||
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Item 1. | Financial Statements |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In millions, except per share amounts)
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
Net sales | $ | 1,705.9 | $ | 1,784.7 | $ | 4,876.9 | $ | 4,941.9 | ||||||||
Cost of sales | 1,204.9 | 1,267.7 | 3,459.9 | 3,545.6 | ||||||||||||
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Gross profit | 501.0 | 517.0 | 1,417.0 | 1,396.3 | ||||||||||||
Selling, general and administrative | 322.9 | 326.0 | 961.0 | 951.7 | ||||||||||||
Reorganization costs, net | 9.3 | 6.2 | 9.3 | 6.2 | ||||||||||||
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Operating earnings | 168.8 | 184.8 | 446.7 | 438.4 | ||||||||||||
Interest expense, net | 46.1 | 43.7 | 135.8 | 134.8 | ||||||||||||
Loss on early extinguishment of debt | — | — | — | 12.8 | ||||||||||||
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Income before taxes | 122.7 | 141.1 | 310.9 | 290.8 | ||||||||||||
Income tax provision | 45.8 | 50.4 | 115.7 | 107.2 | ||||||||||||
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Net income | $ | 76.9 | $ | 90.7 | $ | 195.2 | $ | 183.6 | ||||||||
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Earnings per share: | ||||||||||||||||
Basic | $ | 1.00 | $ | 1.03 | $ | 2.46 | $ | 2.08 | ||||||||
Diluted | $ | 1.00 | $ | 1.03 | $ | 2.45 | $ | 2.06 | ||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 76.6 | 87.7 | 79.3 | 88.4 | ||||||||||||
Diluted | 77.2 | 88.2 | 79.8 | 88.9 |
See accompanying notes to condensed consolidated financial statements.
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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(In millions, except per share amounts)
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
Comprehensive income: | ||||||||||||||||
Net income | $ | 76.9 | $ | 90.7 | $ | 195.2 | $ | 183.6 | ||||||||
Other comprehensive income (loss), before tax: | ||||||||||||||||
Cumulative translation adjustment | 25.6 | (68.3 | ) | 9.5 | (20.6 | ) | ||||||||||
Derivative financial instruments | (7.6 | ) | 12.6 | (10.6 | ) | 9.5 | ||||||||||
Accrued benefit cost | 1.5 | 1.4 | 4.8 | 8.8 | ||||||||||||
Unrealized gain (loss) on investment | 1.0 | (0.4 | ) | 1.0 | (0.4 | ) | ||||||||||
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Total other comprehensive income (loss), before tax | 20.5 | (54.7 | ) | 4.7 | (2.7 | ) | ||||||||||
Income tax (provision) benefit related to other comprehensive income (loss) | 1.5 | (4.0 | ) | 1.1 | (6.1 | ) | ||||||||||
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Comprehensive income | $ | 98.9 | $ | 32.0 | $ | 201.0 | $ | 174.8 | ||||||||
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See accompanying notes to condensed consolidated financial statements.
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CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions, except per share amounts)
September 30, 2012 | December 31, 2011 | |||||||
Assets | ||||||||
Cash and cash equivalents | $ | 886.7 | $ | 808.3 | ||||
Accounts receivable, net of allowances of $81.8 and $83.9 at September 30, 2012 and December 31, 2011, respectively | 1,194.1 | 1,080.5 | ||||||
Inventories | 1,546.8 | 1,274.4 | ||||||
Deferred taxes on income | 191.6 | 181.6 | ||||||
Prepaid expenses and other current assets | 152.9 | 148.7 | ||||||
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Total current assets | 3,972.1 | 3,493.5 | ||||||
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Property, plant and equipment, net | 614.2 | 615.9 | ||||||
Goodwill | 1,793.0 | 1,717.1 | ||||||
Intangibles, net | 1,209.8 | 1,156.5 | ||||||
Other assets | 145.3 | 133.7 | ||||||
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Total assets | $ | 7,734.4 | $ | 7,116.7 | ||||
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Liabilities | ||||||||
Short-term debt and current portion of long-term debt | $ | 502.4 | $ | 269.3 | ||||
Accounts payable | 652.5 | 557.5 | ||||||
Accrued salaries, wages and employee benefits | 188.2 | 181.1 | ||||||
Taxes on income | 11.8 | 22.3 | ||||||
Other current liabilities | 451.9 | 433.5 | ||||||
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Total current liabilities | 1,806.8 | 1,463.7 | ||||||
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Long-term debt | 3,313.1 | 2,890.1 | ||||||
Deferred taxes on income | 552.0 | 507.8 | ||||||
Other non-current liabilities | 365.8 | 343.1 | ||||||
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Total liabilities | 6,037.7 | 5,204.7 | ||||||
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Commitments and contingencies (see Note 9) | — | — | ||||||
Stockholders’ equity: | ||||||||
Preferred stock ($0.01 par value, 5.0 shares authorized, no shares issued at September 30, 2012 and December 31, 2011) | — | — | ||||||
Common stock ($0.01 par value, 300 shares authorized, 92.7 shares issued at September 30, 2012 and December 31, 2011) | 0.9 | 0.9 | ||||||
Additional paid-in capital | 1,520.0 | 1,424.6 | ||||||
Retained earnings | 789.6 | 594.4 | ||||||
Accumulated other comprehensive income (loss) | (50.9 | ) | (56.7 | ) | ||||
Less: Treasury stock (14.7 and 1.8 shares, at cost, at September 30, 2012 and December 31, 2011, respectively) | (562.9 | ) | (51.2 | ) | ||||
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Total stockholders’ equity | 1,696.7 | 1,912.0 | ||||||
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Total liabilities and stockholders’ equity | $ | 7,734.4 | $ | 7,116.7 | ||||
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See accompanying notes to condensed consolidated financial statements.
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)
Nine months ended September 30, | ||||||||
2012 | 2011 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 195.2 | $ | 183.6 | ||||
Reconciliation of net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 109.9 | 121.7 | ||||||
Loss on early extinguishment of debt | — | 12.8 | ||||||
Excess tax benefits from stock-based compensation | (42.7 | ) | — | |||||
Other non-cash items | 26.5 | 84.7 | ||||||
Changes in operating assets and liabilities, net of effects from acquisitions: | ||||||||
Accounts receivable | (96.9 | ) | (129.5 | ) | ||||
Inventory | (235.0 | ) | (288.6 | ) | ||||
Accounts payable | 81.1 | 66.3 | ||||||
Other assets and liabilities | 43.3 | (26.5 | ) | |||||
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Net cash provided by operating activities | 81.4 | 24.5 | ||||||
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Cash flows from financing activities: | ||||||||
Net change in short-term debt | 83.6 | 2.7 | ||||||
Proceeds from issuance of long-term debt | 800.6 | 1,025.0 | ||||||
Payments on long-term debt | (153.2 | ) | (1,102.8 | ) | ||||
Issuance (repurchase) of common stock, net | (536.6 | ) | (84.1 | ) | ||||
Dividends paid | (7.5 | ) | (22.6 | ) | ||||
Debt issuance costs | (17.4 | ) | (12.3 | ) | ||||
Excess tax benefits from stock-based compensation | 42.7 | — | ||||||
Other | — | 7.1 | ||||||
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Net cash provided by (used in) financing activities | 212.2 | (187.0 | ) | |||||
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Cash flows from investing activities: | ||||||||
Additions to property, plant and equipment | (76.9 | ) | (79.4 | ) | ||||
Acquisition of businesses, net of cash acquired and earnout payments | (155.2 | ) | (13.4 | ) | ||||
Other | 9.8 | 4.8 | ||||||
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Net cash used in investing activities | (222.3 | ) | (88.0 | ) | ||||
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Effect of exchange rate changes on cash and cash equivalents | 7.1 | 1.4 | ||||||
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Net increase (decrease) in cash and cash equivalents | 78.4 | (249.1 | ) | |||||
Cash and cash equivalents at beginning of period | 808.3 | 695.4 | ||||||
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Cash and cash equivalents at end of period | $ | 886.7 | $ | 446.3 | ||||
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See accompanying notes to condensed consolidated financial statements.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share data and unless otherwise indicated)
(Unaudited)
1. Basis of Presentation and Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated interim financial statements of Jarden Corporation and its subsidiaries (hereinafter referred to as the “Company” or “Jarden”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These unaudited condensed consolidated interim financial statements reflect all adjustments that are, in the opinion of management, normal and recurring and necessary for a fair presentation of the results for the interim period. The Condensed Consolidated Balance Sheet at December 31, 2011 has been derived from the audited financial statements as of that date, but does not include all of the information and footnotes required by GAAP for complete financial statements. These unaudited condensed consolidated interim financial statements should be read in conjunction with the consolidated financial statements and the related notes thereto included in the Company’s latest Annual Report on Form 10-K for the fiscal year ended December 31, 2011. Certain reclassifications have been made in the Company’s financial statements of the prior year to conform to the current year presentation. These reclassifications have no impact on previously reported net income.
Supplemental Information
Stock-based compensation costs, which are included in selling, general and administrative expenses (“SG&A”), were $5.6 and $3.2 for the three months ended September 30, 2012 and 2011, respectively, and $30.2 and $22.1 for the nine months ended September 30, 2012 and 2011, respectively. The condensed consolidated statement of cash flows for the six months ended June 30, 2012 was revised to present the tax benefit generated by certain stock-based compensation as a decrease to net cash flows provided by operating activities and an offsetting decrease to net cash used in financing activities of $16.6. This revision had no impact on cash flows from investing activities or net change in cash and cash equivalents in the condensed consolidated statements of cash flows, nor did it impact the condensed consolidated balance sheets or condensed consolidated statements of operations. The revision is fully reflected in the condensed consolidated statement of cash flows for the nine months ended September 30, 2012 and will have no impact on the consolidated financial statements as of and for the year ended December 31, 2012. Interest expense is net of interest income of $1.7 and $2.7 for the three months ended September 30, 2012 and 2011, respectively, and $4.8 and $5.3, for the nine months ended September 30, 2012 and 2011, respectively.
Acquisitions
During 2012, the Company completed two tuck-in acquisitions that by nature were complementary to the Company’s core businesses and from an accounting standpoint were not significant.
New Accounting Guidance
In July 2012, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2012-02 “Testing Indefinite-Lived Intangible Assets for Impairment” (“ASU 2012-02”). ASU 2012-02 allows a company to first assess qualitative factors to determine whether it is more-likely-than-not that an indefinite-lived intangible asset is impaired. The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent. If based on its qualitative assessment, a company concludes that it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount, then quantitative impairment testing is required. However, if a company concludes otherwise, quantitative impairment testing is not required. ASU 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012 with early adoption permitted. The adoption of the provisions of ASU 2012-02 is not expected to have a material effect on the consolidated financial position, results of operations or cash flows of the Company.
In December 2011, the FASB issued ASU No. 2011-11, “Disclosures about Offsetting Assets and Liabilities” (“ASU 2011-11”). ASU 2011-11 enhances disclosures regarding financial instruments and derivative instruments and requires companies to provide both net information and gross information for these assets and liabilities in order to enhance comparability between those companies that prepare their financial statements in accordance with GAAP and those companies that prepare their financial statements in accordance with International Financial Reporting Standards. ASU 2011-11 is effective for annual reporting periods beginning on or after January 1, 2013 and interim periods within those annual periods. Since ASU 2011-11 requires only additional disclosures, the adoption of ASU 2011-11 will not affect the consolidated financial position, results of operations or cash flows of the Company.
Adoption of New Accounting Guidance
In June 2011, the FASB issued ASU 2011-05, “Presentation of Comprehensive Income” (“ASU 2011-05”). ASU 2011-05 requires companies to present the total of comprehensive income, the components of net income and the components of other comprehensive
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income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The provisions of ASU 2011-05 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. Since ASU 2011-05 amends the disclosure requirements concerning comprehensive income, the adoption of ASU 2011-05 did not affect the consolidated financial position, results of operations or cash flows of the Company. In December 2011, the FASB deferred indefinitely certain provisions of ASU 2011-05 that would require companies to present reclassification adjustments by component in both the statement where net income is presented and the statement where other comprehensive income is presented for both interim and annual financial statements.
In June 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (“ASU 2011-04”). ASU 2011-04 requires expansion of the disclosures required for Level 3 measurements of fair value and provides updates to the existing measurement guidance. The provisions of ASU 2011-04 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The adoption of ASU 2011-04 had no affect on the consolidated financial position, results of operations or cash flows of the Company.
2. Inventories
Inventories are comprised of the following at September 30, 2012 and December 31, 2011:
(in millions) | September 30, 2012 | December 31, 2011 | ||||||
Raw materials and supplies | $ | 234.3 | $ | 219.4 | ||||
Work-in-process | 87.4 | 89.6 | ||||||
Finished goods | 1,225.1 | 965.4 | ||||||
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Total inventories | $ | 1,546.8 | $ | 1,274.4 | ||||
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3. Property, Plant and Equipment
Property, plant and equipment, net, consist of the following at September 30, 2012 and December 31, 2011:
(in millions) | September 30, 2012 | December 31, 2011 | ||||||
Land | $ | 49.2 | $ | 47.2 | ||||
Buildings | 320.1 | 286.7 | ||||||
Machinery and equipment | 1,095.9 | 1,032.4 | ||||||
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1,465.2 | 1,366.3 | |||||||
Less: Accumulated depreciation | (851.0 | ) | (750.4 | ) | ||||
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Total property, plant and equipment, net | $ | 614.2 | $ | 615.9 | ||||
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Depreciation of property, plant and equipment was $34.6 and $35.6 for the three months ended September 30, 2012 and 2011, respectively, and $97.2 and $107.6 for the nine months ended September 30, 2012 and 2011, respectively.
4. Goodwill and Intangibles
Goodwill activity for the nine months ended September 30, 2012 is as follows:
September 30, 2012 | ||||||||||||||||||||||||
(in millions) | Net Book Value at December 31, 2011 | Additions | Foreign Exchange and Other Adjustments | Gross Carrying Amount | Accumulated Impairment Charges | Net Book Value | ||||||||||||||||||
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Outdoor Solutions | $ | 687.7 | $ | 32.6 | $ | — | $ | 738.8 | $ | (18.5 | ) | $ | 720.3 | |||||||||||
Consumer Solutions | 492.3 | 39.5 | 2.6 | 534.4 | — | 534.4 | ||||||||||||||||||
Branded Consumables | 515.6 | — | 1.0 | 742.4 | (225.8 | ) | 516.6 | |||||||||||||||||
Process Solutions | 21.5 | 0.2 | — | 21.7 | — | 21.7 | ||||||||||||||||||
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$ | 1,717.1 | $ | 72.3 | $ | 3.6 | $ | 2,037.3 | $ | (244.3 | ) | $ | 1,793.0 | ||||||||||||
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Intangibles activity for the nine months ended September 30, 2012 is as follows:
(in millions) | Gross Carrying Amount at December 31, 2011 | Additions | Accumulated Amortization and Foreign Exchange | Net Book Value at September 30, 2012 | Amortization Periods (years) | |||||||||||||||
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Patents | $ | 7.5 | $ | — | $ | (2.7 | ) | $ | 4.8 | 12-30 | ||||||||||
Manufacturing process and expertise | 42.1 | 2.1 | (37.5 | ) | 6.7 | 3-7 | ||||||||||||||
Brand names | 18.3 | — | (5.6 | ) | 12.7 | 4-20 | ||||||||||||||
Customer relationships and distributor channels | 253.6 | 14.2 | (50.9 | ) | 216.9 | 10-35 | ||||||||||||||
Trademarks and tradenames | 922.0 | 50.2 | (3.5 | ) | 968.7 | indefinite | ||||||||||||||
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$ | 1,243.5 | $ | 66.5 | $ | (100.2 | ) | $ | 1,209.8 | ||||||||||||
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Amortization of intangibles was $4.1 and $4.7 for the three months ended September 30, 2012 and 2011, respectively, and $12.7 and $14.1 for the nine months ended September 30, 2012 and 2011, respectively.
5. Warranty Reserve
The warranty reserve activity for the nine months ended September 30, 2012 is as follows:
(in millions) | 2012 | |||
Warranty reserve at January 1, | $ | 84.8 | ||
Provision for warranties issued | 101.1 | |||
Warranty claims paid | (109.1 | ) | ||
Acquisitions and other adjustments | 7.5 | |||
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Warranty reserve at September 30, | $ | 84.3 | ||
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6. Debt
Debt is comprised of the following at September 30, 2012 and December 31, 2011:
(in millions) | September 30, 2012 | December 31, 2011 | ||||||
Senior Secured Credit Facility Term Loans | $ | 1,254.1 | $ | 1,001.6 | ||||
8% Senior Notes due 2016 (a) | 295.4 | 294.6 | ||||||
6 1/8% Senior Notes due 2022 (a) | 300.0 | 300.0 | ||||||
7 1/2% Senior Subordinated Notes due 2017 (b) | 655.6 | 656.5 | ||||||
7 1/2% Senior Subordinated Notes due 2020 (b) | 464.4 | 464.0 | ||||||
1 7/8% Senior Subordinated Convertible Notes due 2018 | 418.0 | — | ||||||
Securitization Facility | 383.8 | 300.0 | ||||||
2% Subordinated Note | — | 99.7 | ||||||
Non-U.S. borrowings | 37.1 | 35.6 | ||||||
Other | 7.1 | 7.4 | ||||||
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Total debt | 3,815.5 | 3,159.4 | ||||||
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Less: current portion | (502.4 | ) | (269.3 | ) | ||||
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Total long-term debt | $ | 3,313.1 | $ | 2,890.1 | ||||
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(a) | Collectively, the “Senior Notes.” |
(b) | Collectively, the “Senior Subordinated Notes.” |
In September 2012, the Company completed a private offering for the sale of $500 aggregate principal amount of 1 7/8% senior subordinated convertible notes due 2018 (the “Convertible Notes”) to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and received net proceeds of approximately $487, after deducting fees and expenses. Upon closing, the Company used approximately $100 of the net proceeds to repurchase the Company’s common stock in privately negotiated transactions pursuant to its stock repurchase program (see note 10). The remainder of the net proceeds will be used for general corporate purposes. The conversion rate is approximately 14.115 shares of the Company’s common stock (subject to customary adjustments, including in connection with a fundamental change transaction) per $1 thousand principal amount of the Convertible Notes, which is equivalent to a conversion price of approximately $70.85 per share. The Convertible Notes are not subject to redemption at the Company’s option prior to the maturity date. If the Company undergoes a fundamental change (as defined in the Indenture) prior to maturity, holders of the Convertible Notes will have the right, at their option, to require the Company to repurchase for cash some or all of their Convertible Notes at a repurchase price equal to 100% of the principal amount of the Convertible Notes being repurchased, plus accrued and unpaid interest.
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The Convertible Notes will be convertible only under the following circumstances:
• | Prior to June 1, 2018, on any date during any calendar quarter (and only during such calendar quarter) if the closing sale price of the Company’s common stock was more than 130% of the then current conversion price for at least 20 trading days (whether or not consecutive) in the period of the 30 consecutive trading days ending on the last trading day of the previous calendar quarter; |
• | prior to June 1, 2018, if the Company distributes to all or substantially all holders of its common stock rights, options or warrants entitling them to purchase, for a period of 60 calendar days or less from the declaration date for such distribution, shares of its common stock at a price per share less than the average closing sale price of its common stock for the ten consecutive trading days immediately preceding, but excluding, the declaration date for such distribution; |
• | prior to June 1, 2018, if the Company distributes to all or substantially all holders of its common stock cash, other assets, securities or rights to purchase its securities, which distribution has a per share value exceeding 10% of the closing sale price of its common stock on the trading day immediately preceding the declaration date for such distribution, or if the Company engages in certain other corporate transactions as described herein; |
• | prior to June 1, 2018, during the five consecutive business-day period following any ten consecutive trading-day period in which the trading price per $1 thousand principal amount of Convertible Notes for each trading day during such ten trading-day period was less than 98% of the closing sale price of its common stock for each trading day during such ten trading-day period multiplied by the then current conversion rate; or |
• | on or after June 1, 2018, and on or prior to the close of business on the second scheduled trading day immediately preceding the maturity date, without regard to the foregoing conditions. |
Upon conversion, holders will receive, at the Company’s discretion, cash, shares of the Company’s common stock or a combination thereof. It is the Company’s intent to settle the principal amount and accrued interest on the Convertible Notes with cash. At the date of issuance, the estimated fair value of the liability and equity components of the Convertible Notes was approximately $418 and $82, respectively, resulting in an effective annual interest rate, considering debt issuance costs, of approximately 5.5%. The amount allocated to the equity component is recorded as a discount to the original aggregate principal amount of the Convertible Notes.
In February 2012, the Company entered into an amendment to and borrowed $300 under its senior secured credit facility (the “Facility”), which is comprised of $150 under the existing senior secured term loan A facility that matures in March 2016 and bears interest at LIBOR plus a spread of 225 basis points, and $150 under the existing senior secured term loan B facility that matures in January 2017 and bears interest at LIBOR plus a spread of 300 basis points. The proceeds were used, in part, to repurchase shares of the Company’s common stock under the Company’s accelerated stock repurchase program (see Note 10).
In February 2012, the Company entered into an amendment to its securitization facility that, in part, increased maximum borrowings from $300 to $400 and extended the maturity date from May 2014 until February 2015. Following the renewal, the borrowing rate margin is 0.90% and the unused line fee is 0.45% per annum.
At September 30, 2012 and December 31, 2011, the carrying value of total debt approximates fair market value. The fair market value (Level 1 measurement) of the Senior Notes and Senior Subordinated Notes are based upon quoted market prices. The fair market value (Level 2 measurement) for all other debt instruments is estimated using interest rates currently available to the Company for debt with similar terms and maturities.
7. Derivative and Other Hedging Financial Instruments
Interest Rate Contracts
The Company manages its fixed and floating rate debt mix using interest rate swaps. The Company uses fixed and floating rate swaps to alter its exposure to the impact of changing interest rates on its consolidated results of operations and future cash outflows for interest. Floating rate swaps are used, depending on market conditions, to convert the fixed rates of long-term debt into short-term variable rates. Fixed rate swaps are used to reduce the Company’s risk of the possibility of increased interest costs. Interest rate swap contracts are therefore used by the Company to separate interest rate risk management from the debt funding decision.
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Cash Flow Hedges
During the three months ended September 30, 2012, the Company entered into an aggregate $150 notional amount of interest rate swaps that exchange variable rates of interest (LIBOR) for an average fixed interest rate of approximately 0.75% over the term of the agreements, which mature on December 31, 2015. These swaps are forward-starting and are effective commencing December 31, 2013. The Company has designated these swaps as cash flow hedges of the interest rate risk attributable to forecasted variable interest (LIBOR) payments.
At September 30, 2012, the Company had $900 notional amount outstanding in swap agreements, which included $500 notional amount of forward-starting swaps that will become effective commencing December 31, 2013 that exchange variable rates of interest (LIBOR) for fixed interest rates over the terms of the agreements and are designated as cash flow hedges of the interest rate risk attributable to forecasted variable interest payments and have maturity dates through December 2015. At September 30, 2012, the weighted average fixed rate of interest on these swaps, excluding the forward-starting swaps, was approximately 1.6%. The effective portion of the after-tax fair value gains or losses on these swaps is included as a component of accumulated other comprehensive income (loss) (“AOCI”).
Forward Foreign Currency Contracts
The Company uses 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 through June 2014. The derivatives used to hedge these forecasted transactions that meet the criteria for hedge accounting are accounted for as cash flow hedges. The effective portion of the gains or losses on these derivatives is deferred as a component of AOCI and is recognized in earnings at the same time that the hedged item affects earnings and is included in the same caption in the statements of operations as the underlying hedged item. At September 30, 2012, the Company had approximately $485 notional amount of foreign currency contracts outstanding that are designated as cash flow hedges of forecasted inventory purchases and sales.
At September 30, 2012, the Company had outstanding approximately $257 notional amount of foreign currency contracts that are not designated as effective hedges for accounting purposes and have maturity dates through December 2013. Fair market value gains or losses are included in the results of operations and are classified in SG&A.
Commodity Contracts
The Company enters into commodity-based derivatives in order to mitigate the risk that the rising price of these commodities could have on the cost of certain of the Company’s raw materials. These commodity-based derivatives provide the Company with cost certainty, and in certain instances, allow the Company to benefit should the cost of the commodity fall below certain dollar thresholds. At September 30, 2012, the Company had outstanding approximately $7 notional amount of commodity-based derivatives that are not designated as effective hedges for accounting purposes and have maturity dates through March 2014. Fair market value gains or losses are included in the results of operations and are classified in SG&A.
The following table presents the fair value of derivative financial instruments as of September 30, 2012 and December 31, 2011:
September 30, 2012 | December 31, 2011 | |||||||||||||||
Fair Value of Derivatives | Fair Value of Derivatives | |||||||||||||||
(in millions) | Asset (a) | Liability (a) | Asset (a) | Liability (a) | ||||||||||||
Derivatives designated as effective hedges: | ||||||||||||||||
Cash flow hedges: | ||||||||||||||||
Interest rate swaps | $ | — | $ | 13.8 | $ | — | $ | 8.4 | ||||||||
Foreign currency contracts | 4.5 | 6.8 | 12.2 | 8.1 | ||||||||||||
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Subtotal | 4.5 | 20.6 | 12.2 | 16.5 | ||||||||||||
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Derivatives not designated as effective hedges: | ||||||||||||||||
Foreign currency contracts | 0.2 | 4.9 | 1.1 | 1.7 | ||||||||||||
Commodity contracts | 0.1 | 0.1 | 1.0 | 0.3 | ||||||||||||
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Subtotal | 0.3 | 5.0 | 2.1 | 2.0 | ||||||||||||
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Total | $ | 4.8 | $ | 25.6 | $ | 14.3 | $ | 18.5 | ||||||||
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(a) | Consolidated balance sheet location: |
Asset: Other current and non-current assets
Liability: Other non-current liabilities
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The following table presents gain and loss activity (on a pretax basis) for the three and nine months ended September 30, 2012 and 2011 related to derivative financial instruments designated as effective hedges:
Three months ended September 30, 2012 | Three months ended September 30, 2011 | |||||||||||||||||||||||
Gain/(Loss) | Gain/(Loss) | |||||||||||||||||||||||
(in millions) | Recognized in OCI (a) (effective portion) | Reclassified from AOCI to Income | Recognized in Income (b) | Recognized in OCI (a) (effective portion) | Reclassified from AOCI to Income | Recognized in Income (b) | ||||||||||||||||||
Derivatives designated as effective hedges: | ||||||||||||||||||||||||
Cash flow hedges: | ||||||||||||||||||||||||
Interest rate swaps | $ | (2.4 | ) | $ | — | $ | — | $ | (1.2 | ) | — | $ | — | |||||||||||
Foreign currency contracts | (5.1 | ) | 0.1 | (5.5 | ) | 8.2 | (5.6 | ) | 2.7 | |||||||||||||||
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Total | $ | (7.5 | ) | $ | 0.1 | $ | (5.5 | ) | $ | 7.0 | (5.6 | ) | $ | 2.7 | ||||||||||
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Location of gain/(loss) in the consolidated results of operations: | ||||||||||||||||||||||||
Sales | $ | (0.9 | ) | $ | — | $ | (0.6 | ) | $ | — | ||||||||||||||
Cost of Sales | 1.0 | — | (5.0 | ) | — | |||||||||||||||||||
SG&A | — | (5.5 | ) | — | 2.7 | |||||||||||||||||||
Interest expense | — | — | — | — | ||||||||||||||||||||
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Total | $ | 0.1 | $ | (5.5 | ) | $ | (5.6 | ) | $ | 2.7 | ||||||||||||||
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Nine months ended September 30, 2012 | Nine months ended September 30, 2011 | |||||||||||||||||||||||
Gain/(Loss) | Gain/(Loss) | |||||||||||||||||||||||
(in millions) | Recognized in OCI (a) (effective portion) | Reclassified from AOCI to Income | Recognized in Income (b) | Recognized in OCI (a) (effective portion) | Reclassified from AOCI to Income | Recognized in Income (b) | ||||||||||||||||||
Derivatives designated as effective hedges: | ||||||||||||||||||||||||
Cash flow hedges: | ||||||||||||||||||||||||
Interest rate swaps | $ | (5.2 | ) | $ | — | $ | — | $ | (3.7 | ) | $ | — | $ | — | ||||||||||
Foreign currency contracts | (2.8 | ) | 2.6 | (6.3 | ) | (3.5 | ) | (16.2 | ) | (2.9 | ) | |||||||||||||
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| |||||||||||||
Total | $ | (8.0 | ) | $ | 2.6 | $ | (6.3 | ) | $ | (7.2 | ) | $ | (16.2 | ) | $ | (2.9 | ) | |||||||
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Location of gain/(loss) in the consolidated results of operations: | ||||||||||||||||||||||||
Sales | $ | (0.9 | ) | $ | — | $ | (1.0 | ) | $ | — | ||||||||||||||
Cost of Sales | 3.5 | — | (15.2 | ) | — | |||||||||||||||||||
SG&A | — | (6.3 | ) | — | (2.9 | ) | ||||||||||||||||||
Interest expense | — | — | — | — | ||||||||||||||||||||
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Total | $ | 2.6 | $ | (6.3 | ) | $ | (16.2 | ) | $ | (2.9 | ) | |||||||||||||
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(a) | Represents effective portion recognized in Other Comprehensive Income (“OCI”). |
(b) | Represents portion excluded from effectiveness testing. |
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At September 30, 2012, deferred net gains of approximately $3.6 within AOCI are expected to be reclassified to earnings over the next twelve months.
The following table presents gain and loss activity (on a pretax basis) for the three and nine months ended September 30, 2012 and 2011 related to derivative financial instruments not designated as effective hedges:
Gain/(Loss) Recognized in Income (a) | ||||||||||||||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
(in millions) | 2012 | 2011 | 2012 | 2011 | ||||||||||||
Derivatives not designated as effective hedges: | ||||||||||||||||
Cash flow hedges: | ||||||||||||||||
Foreign currency contracts | $ | (4.5 | ) | $ | (0.1 | ) | $ | (7.7 | ) | $ | (1.0 | ) | ||||
Commodity contracts | 0.7 | (1.6 | ) | (0.2 | ) | (1.6 | ) | |||||||||
Fair value derivatives: | ||||||||||||||||
Interest rate swaps | — | 0.2 | — | 0.2 | ||||||||||||
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Total | $ | (3.8 | ) | $ | (1.5 | ) | $ | (7.9 | ) | $ | (2.4 | ) | ||||
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(a) | Classified in SG&A. |
Net Investment Hedge
The Company designated its Euro-denominated 7 1/2% senior subordinated notes due 2020, with an aggregate principal balance of €150 (the “Hedging Instrument”), as a net investment hedge of the foreign currency exposure of its net investment in certain Euro-denominated subsidiaries. Foreign currency gains and losses on the Hedging Instrument are included as a component of AOCI. At September 30, 2012, $2.9 of deferred losses have been recorded in AOCI.
8. Fair Value Measurements
The following table summarizes assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2012 and December 31, 2011:
September 30, 2012 | December 31, 2011 | |||||||||||||||||||||||
Fair Value Asset (Liability) | Fair Value Asset (Liability) | |||||||||||||||||||||||
(in millions) | Level 1 | Level 2 | Total | Level 1 | Level 2 | Total | ||||||||||||||||||
Derivatives: | ||||||||||||||||||||||||
Assets | $ | — | $ | 0.2 | $ | 0.2 | $ | — | $ | 4.4 | $ | 4.4 | ||||||||||||
Liabilities | — | (21.0 | ) | (21.0 | ) | — | (8.6 | ) | (8.6 | ) | ||||||||||||||
Available for sale securities | — | 20.5 | 20.5 | — | 19.5 | 19.5 |
Derivative assets and liabilities relate to interest rate swaps, foreign currency contracts and commodity contracts. Fair values are determined by the Company using market prices obtained from independent brokers or determined using valuation models that use as their basis readily observable market data that is actively quoted and can be validated through external sources, including independent pricing services, brokers and market transactions. Available-for-sale securities include inflation protected bonds and are valued based on quoted market prices.
9. Contingencies
The Company is involved in various legal disputes and other legal proceedings that arise from time to time in the ordinary course of business. In addition, the Company or certain of its subsidiaries have been identified by the United States Environmental Protection Agency (“EPA”) or a state environmental agency as a Potentially Responsible Party (“PRP”) pursuant to the federal Superfund Act and/or state Superfund laws comparable to the federal law at various sites. Based on currently available information, the Company does not believe that the disposition of any of the legal or environmental disputes the Company or its subsidiaries are currently involved in will have a material adverse effect upon the consolidated financial condition, results of operations or cash flows of the Company. It is possible that, as additional information becomes available, the impact on the Company of an adverse determination could have a different effect.
Environmental
The Company’s operations are subject to certain federal, state, local and foreign environmental laws and regulations in addition to laws and regulations regarding labeling and packaging of products and the sales of products containing certain environmentally sensitive materials.
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In addition to ongoing environmental compliance at its operations, the Company also is actively engaged in environmental remediation activities, the majority of which relates to divested operations and sites. Various of the Company’s subsidiaries have been identified by the EPA or a state environmental agency as a PRP pursuant to the federal Superfund Act and/or state Superfund laws comparable to the federal law at various sites (collectively, the “Environmental Sites”). The Company has established reserves to cover the anticipated probable costs of investigation and remediation based upon periodic reviews of all sites for which they have, or may have, remediation responsibility. The Company accrues environmental investigation and remediation costs when it is probable that a liability has been incurred, the amount of the liability can be reasonably estimated and their responsibility for the liability is established. Generally, the timing of these accruals coincides with the earlier of a formal commitment to an investigation plan, completion of a feasibility study or a commitment to a formal plan of action. The Company accrues its best estimate of investigation and remediation costs based upon facts known at such dates, and because of the inherent difficulties in estimating the ultimate amount of environmental costs, which are further described below, these estimates may materially change in the future as a result of the uncertainties described below. Estimated costs, which are based upon experience with similar sites and technical evaluations, are judgmental in nature and are recorded at discounted amounts without considering the impact of inflation and are adjusted periodically to reflect changes in applicable laws or regulations, changes in available technologies and receipt by the Company of new information. It is difficult to estimate the ultimate level of future environmental expenditures due to a number of uncertainties surrounding environmental liabilities. These uncertainties include the applicability of laws and regulations, changes in environmental remediation requirements, the enactment of additional regulations, uncertainties surrounding remediation procedures including the development of new technology, the identification of new sites for which various of the Company’s subsidiaries could be a PRP, information relating to the exact nature and extent of the contamination at each Environmental Site and the extent of required cleanup efforts, the uncertainties with respect to the ultimate outcome of issues which may be actively contested and the varying costs of alternative remediation strategies.
Due to the uncertainties described above, the Company’s ultimate future liability with respect to sites at which remediation has not been completed may vary from the amounts reserved as of September 30, 2012.
The Company believes that the costs of completing environmental remediation of all sites for which the Company has a remediation responsibility have been adequately reserved and that the ultimate resolution of these matters will not have a material adverse effect on the consolidated financial position, results of operations or cash flows of the Company.
Litigation
The Company and/or its subsidiaries are involved in various lawsuits arising from time to time that the Company considers ordinary routine litigation incidental to its business. Amounts accrued for litigation matters represent the anticipated costs (damages and/or settlement amounts) in connection with pending litigation and claims and related anticipated legal fees for defending such actions. The costs are accrued when it is both probable that a liability has been incurred and the amount can be reasonably estimated. The accruals are based upon the Company’s assessment, after consultation with counsel (if deemed appropriate), of probable loss based on the facts and circumstances of each case, the legal issues involved, the nature of the claim made, the nature of the damages sought and any relevant information about the plaintiffs and other significant factors that vary by case. When it is not possible to estimate a specific expected cost to be incurred, the Company evaluates the range of probable loss and records the minimum end of the range. The Company believes that anticipated probable costs of litigation matters have been adequately reserved to the extent determinable. Based on current information, the Company believes that the ultimate conclusion of the various pending litigation 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.
Product Liability
As a consumer goods manufacturer and distributor, the Company and/or its subsidiaries face the risk of product liability and related lawsuits involving claims for substantial money damages, product recall actions and higher than anticipated rates of warranty returns or other returns of goods.
The Company and/or its subsidiaries are therefore party to various personal injury and property damage lawsuits relating to their products and incidental to their business. Annually, the Company sets its product liability insurance program, which is an occurrence-based program based on the Company and its subsidiaries’ current and historical claims experience and the availability and cost of insurance. The Company’s product liability insurance program generally includes a self-insurance retention per occurrence.
Cumulative amounts estimated to be payable by the Company with respect to pending and potential claims for all years in which the Company is liable under its self-insurance retention have been accrued as liabilities. Such accrued liabilities are based on estimates (which include actuarial determinations made by an independent actuarial consultant as to liability exposure, taking into account prior
14
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experience, number of claims and other relevant factors); thus, the Company’s ultimate liability may exceed or be less than the amounts accrued. The methods of making such estimates and establishing the resulting liability are reviewed on a regular basis and any adjustments resulting therefrom are reflected in current operating results.
Based on current information, the Company believes 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.
10. Stockholders’ Equity
In January 2012, the Company commenced a “modified Dutch auction” self-tender offer (the “Offer”) to purchase up to $500 in value of its common stock. In March 2012, pursuant to the terms of the Offer, the Company repurchased approximately 12.1 million shares of its common stock for a total purchase price of approximately $435 or $36.00 per share. The repurchase of shares of common stock under the Offer was made pursuant to the Company’s existing stock repurchase program (the “Stock Repurchase Program”), pursuant to which the Company was then authorized to repurchase up to $500 aggregate amount of outstanding shares of common stock at prevailing market prices or in privately-negotiated transactions.
On September 11, 2012, the Company’s Board of Directors authorized an increase in the then available amount under the Stock Repurchase Program to allow for the repurchase of up to $250 in aggregate of the Company’s common stock.
In September 2012, pursuant to the Stock Repurchase Program, the Company used approximately $100 of the net proceeds from the Convertible Notes offering to repurchase approximately 1.9 million shares of its common stock at a per share price of $52.87 through privately negotiated transactions.
During the nine months ended September 30, 2012, the Company repurchased 14.0 million shares of its common stock under the Stock Repurchase Program at a per share average price of $38.43.
11. Earnings Per Share
The computations of the weighted average shares outstanding for the three and nine months ended September 30, 2012 and 2011 are as follows:
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
(in millions) | 2012 | 2011 | 2012 | 2011 | ||||||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 76.6 | 87.7 | 79.3 | 88.4 | ||||||||||||
Dilutive share-based awards | 0.6 | 0.5 | 0.5 | 0.5 | ||||||||||||
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Diluted | 77.2 | 88.2 | 79.8 | 88.9 | ||||||||||||
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Because it is the Company’s intention to redeem the principal amount of the Convertible Notes in cash, the treasury stock method is used for determining potential dilution in the diluted earnings per share computation. For the three months ended September 30, 2012, the Convertible Notes have been excluded from the computation of diluted earnings per share as the effect would be antidilutive as the conversion price of the Convertible Notes exceeded the average market price of the Company’s common stock for the three months ended September 30, 2012. Additionally, stock options and warrants to purchase approximately 2.4 million shares of the Company’s common stock at September 30, 2011 had exercise prices that exceeded the average market price of the Company’s common stock for the three months ended September 30, 2011. As such, these share-based awards did not affect the computation of diluted earnings per share.
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12. Employee Benefit Plans
The components of pension and postretirement benefit expense for the three and nine months ended September 30, 2012 and 2011 are as follows:
Pension Benefits | ||||||||||||||||||||||||
Three months ended September 30, | ||||||||||||||||||||||||
2012 | 2011 | |||||||||||||||||||||||
(in millions) | Domestic | Foreign | Total | Domestic | Foreign | Total | ||||||||||||||||||
Service cost | $ | — | $ | 0.5 | $ | 0.5 | $ | — | $ | 0.5 | $ | 0.5 | ||||||||||||
Interest cost | 3.6 | 0.6 | 4.2 | 4.0 | 0.7 | 4.7 | ||||||||||||||||||
Expected return on plan assets | (4.1 | ) | (0.3 | ) | (4.4 | ) | (3.9 | ) | (0.4 | ) | (4.3 | ) | ||||||||||||
Amortization, net | 1.8 | 0.1 | 1.9 | 0.8 | 0.1 | 0.9 | ||||||||||||||||||
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Net periodic expense | 1.3 | 0.9 | 2.2 | 0.9 | 0.9 | 1.8 | ||||||||||||||||||
Curtailments and settlements | — | — | — | 1.6 | — | 1.6 | ||||||||||||||||||
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Total expense | $ | 1.3 | $ | 0.9 | $ | 2.2 | $ | 2.5 | $ | 0.9 | $ | 3.4 | ||||||||||||
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Nine months ended September 30, | ||||||||||||||||||||||||
2012 | 2011 | |||||||||||||||||||||||
(in millions) | Domestic | Foreign | Total | Domestic | Foreign | Total | ||||||||||||||||||
Service cost | $ | 0.1 | $ | 1.4 | $ | 1.5 | $ | 0.1 | $ | 1.4 | $ | 1.5 | ||||||||||||
Interest cost | 10.9 | 1.9 | 12.8 | 12.0 | 2.1 | 14.1 | ||||||||||||||||||
Expected return on plan assets | (12.2 | ) | (1.0 | ) | (13.2 | ) | (11.7 | ) | (1.1 | ) | (12.8 | ) | ||||||||||||
Amortization, net | 5.3 | 0.2 | 5.5 | 2.4 | 0.1 | 2.5 | ||||||||||||||||||
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Net periodic expense | 4.1 | 2.5 | 6.6 | 2.8 | 2.5 | 5.3 | ||||||||||||||||||
Curtailments and settlements | — | — | — | 1.6 | — | 1.6 | ||||||||||||||||||
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Total expense | $ | 4.1 | $ | 2.5 | $ | 6.6 | $ | 4.4 | $ | 2.5 | $ | 6.9 | ||||||||||||
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Postretirement Benefits | ||||||||||||||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
(in millions) | 2012 | 2011 | 2012 | 2011 | ||||||||||||
Service cost | $ | — | $ | 0.1 | $ | — | $ | 0.3 | ||||||||
Interest cost | 0.1 | 0.2 | 0.3 | 0.6 | ||||||||||||
Amortization, net | (0.1 | ) | (0.3 | ) | (0.4 | ) | (0.7 | ) | ||||||||
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Net periodic expense | — | — | (0.1 | ) | 0.2 | |||||||||||
Curtailments and settlements | — | (7.3 | ) | — | (7.3 | ) | ||||||||||
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Total expense (credit) | $ | — | $ | (7.3 | ) | $ | (0.1 | ) | $ | (7.1 | ) | |||||
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13. Reorganization Costs
Reorganization costs for the three and nine months ended September 30, 2012 and 2011 are as follows:
Three months ended September 30, 2012 | ||||||||||||
(in millions) | Employee Terminations | Other Charges | Total | |||||||||
Outdoor Solutions | $ | — | $ | 9.3 | $ | 9.3 | ||||||
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Total | $ | — | $ | 9.3 | $ | 9.3 | ||||||
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Three months ended September 30, 2011 | ||||||||||||
(in millions) | Employee Terminations | Other Charges | Total | |||||||||
Outdoor Solutions | $ | — | $ | 3.8 | $ | 3.8 | ||||||
Branded Consumables | 0.6 | 1.8 | 2.4 | |||||||||
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Total | $ | 0.6 | $ | 5.6 | $ | 6.2 | ||||||
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Nine months ended September 30, 2012 | ||||||||||||
(in millions) | Employee Terminations | Other Charges | Total | |||||||||
Outdoor Solutions | $ | — | $ | 9.3 | $ | 9.3 | ||||||
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Total | $ | — | $ | 9.3 | $ | 9.3 | ||||||
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Nine months ended September 30, 2011 | ||||||||||||
(in millions) | Employee Terminations | Other Charges | Total | |||||||||
Outdoor Solutions | $ | — | $ | 3.8 | $ | 3.8 | ||||||
Branded Consumables | 0.6 | 1.8 | 2.4 | |||||||||
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Total | $ | 0.6 | $ | 5.6 | $ | 6.2 | ||||||
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Outdoor Solutions Segment Reorganization Costs
During 2012, the Company initiated a plan to reorganize certain manufacturing facilities in the Far East within the winter sport business. Reorganization costs for the three and nine months ended September 30, 2012 relate to this plan.
For the three and nine months ended September 30, 2012, other charges are primarily comprised of contract termination fees.
During 2011, the Company initiated a plan to consolidate certain distribution and manufacturing processes within the Outdoor Solutions segment. This plan primarily consists of a facility consolidation in the Far East. Reorganization costs for the three and nine months ended September 30, 2011 relate to this plan.
Branded Consumables Segment Reorganization Costs
During 2011, the Company initiated a plan to consolidate certain manufacturing processes within the Branded Consumables segment. This plan includes headcount reduction and facility consolidation. Reorganization costs for the three and nine months ended September 30, 2011 relate to this plan.
Accrued Reorganization Costs
Details and activity related to accrued reorganization costs as of and for the nine months ended September 30, 2012 are as follows:
(in millions) | Accrual Balance at December 31, 2011 | Reorganization Costs, net | Payments | Foreign Currency and Other | Accrual Balance at September 30, 2012 | |||||||||||||||
Severance and other employee-related | $ | 7.3 | $ | — | $ | (6.5 | ) | $ | — | $ | 0.8 | |||||||||
Other costs | 9.9 | 9.3 | (5.7 | ) | — | 13.5 | ||||||||||||||
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Total | $ | 17.2 | $ | 9.3 | $ | (12.2 | ) | $ | — | $ | 14.3 | |||||||||
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14. Segment Information
The Company reports four business segments: Outdoor Solutions, Consumer Solutions, Branded Consumables and Process Solutions. The Company’s sales are principally within the United States. The Company’s international operations are mainly based in Asia, Canada, Europe and Latin America. The Company and its chief operating decision maker use “segment earnings” to measure segment operating performance.
The Outdoor Solutions segment manufactures or sources, markets and distributes global consumer active lifestyle products for outdoor and outdoor-related activities. For general outdoor activities, Coleman® is a leading brand for active lifestyle products, offering an array of products that include camping and outdoor equipment such as air beds, camping stoves, coolers, foldable furniture, gas grills, lanterns and flashlights, sleeping bags, tents and water recreation products such as inflatable boats, kayaks and tow-behinds. The Outdoor Solutions segment is also a leading provider of fishing equipment under brand names such as Abu Garcia®, All Star®, Berkley®, Fenwick®, Gulp!®, JRC™, Mitchell®, Penn®, Pflueger®, Sebile®, Sevenstrand®, Shakespeare®, Spiderwire®, Stren®, Trilene®, Ugly Stik® and Xtools®. Team sports equipment for baseball, softball, football, basketball, field hockey and lacrosse products are sold under brand names such as deBeer®, Gait®, Miken®, Rawlings® and Worth®. Alpine and nordic skiing, snowboarding, snowshoeing and in-line skating products are sold under brand names such as Atlas®, Full Tilt®, K2®, Line®, Little Bear®, Madshus®, Marker®, Morrow®, Ride®, Tubbs®, Völkl® and 5150 Snowboards®. Water sports equipment, personal flotation devices and all-terrain vehicle gear are sold under brand names such as Helium®, Hodgman®, Mad Dog Gear®, Sevylor®, Sospenders® and Stearns®. The Company also sells high performance technical and outdoor apparel and equipment under brand names such as CAPP3L®, Ex Officio®, K2®, Marker®, Marmot®, Planet Earth®, Ride®, Völkl® and Zoot®, and premium air beds under brand names including Aero®, Aerobed® and Aero Sport®.
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Table of Contents
The Consumer Solutions segment manufactures or sources, markets, and distributes a diverse line of household products, including kitchen appliances and home environment products. This segment maintains a strong portfolio of globally-recognized brands including Bionaire®, Breville®, Crock-Pot®, FoodSaver®, Health o meter®, Holmes®, Mr. Coffee®, Oster®, Patton®, Rival®, Seal-a-Meal®, Sunbeam®, skybar® and Villaware®. The principal products in this segment include: clippers and trimmers for professional use in the beauty and barber and animal categories; electric blankets, mattress pads and throws; household kitchen appliances, such as blenders, coffeemakers, irons, mixers, slow cookers, toasters, toaster ovens and vacuum packaging machines; home environment products, such as air purifiers, fans, heaters and humidifiers; products for the hospitality industry; and scales for consumer use.
The Branded Consumables segment manufactures or sources, markets and distributes a broad line of branded consumer products, many of which are affordable, consumable and fundamental household staples, including arts and crafts paint brushes, brooms, brushes, buckets, children’s card games, clothespins, collectible tins, condoms, cord, rope and twine, dusters, dust pans, feeding bottles, fencing, fire extinguishing products, firelogs and firestarters, home canning jars and accessories, kitchen matches, mops, other craft items, pacifiers, plastic cutlery, playing cards and accessories, rubber gloves and related cleaning products, safes, security cameras, security doors, smoke and carbon monoxide alarms, soothers, sponges, storage organizers and workshop accessories, teats, toothpicks, window guards and other accessories. This segment markets our products under the Aviator®, Ball®, Bee®, Bernardin®, Bicycle®, Billy Boy®, BRK®, Crawford®, Diamond®, Dicon®, Fiona®, First Alert®, First Essentials®, Hoyle®, Java-Log®, KEM®, Kerr®, Lehigh®, Lillo®, Loew-Cornell®, Mapa®, NUK®, Pine Mountain®, Quickie Green Cleaning®, Quickie Home-Pro®, Quickie Microban®, Quickie Original®, Quickie Professional®, Spontex®, Tigex® and Wellington® brand names, among others.
The Process Solutions segment manufactures, markets and distributes a wide variety of plastic products including closures, contact lens packaging, medical disposables, plastic cutlery and rigid packaging. Many of these products are consumable in nature or represent components of consumer products. This segment’s materials business produces specialty nylon polymers, conductive fibers and monofilament used in various products, including woven mats used by paper producers and weed trimmer cutting line, as well as fiberglass radio antennas for marine, citizen band and military applications. This segment is also the largest North American producer of niche products fabricated from solid zinc strip and is the sole source supplier of copper-plated zinc penny blanks to the United States Mint and a major supplier to the Royal Canadian Mint, as well as a supplier of brass, bronze and nickel-plated finishes on steel and zinc for coinage to other international markets. In addition, the Company manufactures a line of industrial zinc products marketed globally for use in the architectural, automotive, construction, electrical component and plumbing markets.
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Table of Contents
Segment information as of and for the three and nine months ended September 30, 2012 and 2011 is as follows:
Three months ended September 30, 2012 | ||||||||||||||||||||||||||||||||
(in millions) | Outdoor Solutions | Consumer Solutions | Branded Consumables | Process Solutions | Intercompany Eliminations | Total Operating Segments | Corporate/ Unallocated | Consolidated | ||||||||||||||||||||||||
Net sales | $ | 657.6 | $ | 509.6 | $ | 459.0 | $ | 97.6 | $ | (17.9 | ) | $ | 1,705.9 | $ | — | $ | 1,705.9 | |||||||||||||||
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Segment earnings (loss) | 96.2 | 79.0 | 72.3 | 12.9 | — | 260.4 | (25.1 | ) | 235.3 | |||||||||||||||||||||||
Adjustments to reconcile to reported operating earnings (loss): | ||||||||||||||||||||||||||||||||
Fair value adjustment to inventory | (2.8 | ) | (3.2 | ) | — | — | — | (6.0 | ) | — | (6.0 | ) | ||||||||||||||||||||
Reorganization costs | (9.3 | ) | — | — | — | — | (9.3 | ) | — | (9.3 | ) | |||||||||||||||||||||
Acquisition-related and other costs | (3.9 | ) | (1.6 | ) | (1.4 | ) | — | — | (6.9 | ) | (5.6 | ) | (12.5 | ) | ||||||||||||||||||
Depreciation and amortization | (13.8 | ) | (10.2 | ) | (10.8 | ) | (3.0 | ) | — | (37.8 | ) | (0.9 | ) | (38.7 | ) | |||||||||||||||||
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Operating earnings (loss) | $ | 66.4 | $ | 64.0 | $ | 60.1 | $ | 9.9 | $ | — | $ | 200.4 | $ | (31.6 | ) | $ | 168.8 | |||||||||||||||
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Other segment data: | ||||||||||||||||||||||||||||||||
Total assets | $ | 2,943.0 | $ | 2,116.0 | $ | 1,854.4 | $ | 197.7 | $ | — | $ | 7,111.1 | $ | 623.3 | $ | 7,734.4 | ||||||||||||||||
Three months ended September 30, 2011 | ||||||||||||||||||||||||||||||||
(in millions) | Outdoor Solutions | Consumer Solutions | Branded Consumables | Process Solutions | Intercompany Eliminations | Total Operating Segments | Corporate/ Unallocated | Consolidated | ||||||||||||||||||||||||
Net sales | $ | 707.3 | $ | 522.4 | $ | 477.8 | $ | 92.4 | $ | (15.2 | ) | $ | 1,784.7 | $ | — | $ | 1,784.7 | |||||||||||||||
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Segment earnings (loss) | 104.6 | 74.7 | 76.2 | 7.7 | — | 263.2 | (23.9 | ) | 239.3 | |||||||||||||||||||||||
Adjustments to reconcile to reported operating earnings (loss): | ||||||||||||||||||||||||||||||||
Fair value adjustment to inventory | — | — | (1.6 | ) | — | — | (1.6 | ) | — | (1.6 | ) | |||||||||||||||||||||
Reorganization costs | (3.8 | ) | — | (2.4 | ) | — | — | (6.2 | ) | — | (6.2 | ) | ||||||||||||||||||||
Acquisition-related and other costs | (1.4 | ) | — | (1.3 | ) | — | — | (2.7 | ) | (3.7 | ) | (6.4 | ) | |||||||||||||||||||
Depreciation and amortization | (15.7 | ) | (8.1 | ) | (12.7 | ) | (3.1 | ) | — | (39.6 | ) | (0.7 | ) | (40.3 | ) | |||||||||||||||||
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Operating earnings (loss) | $ | 83.7 | $ | 66.6 | $ | 58.2 | $ | 4.6 | $ | — | $ | 213.1 | $ | (28.3 | ) | $ | 184.8 | |||||||||||||||
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Nine months ended September 30, 2012 | ||||||||||||||||||||||||||||||||
(in millions) | Outdoor Solutions | Consumer Solutions | Branded Consumables | Process Solutions | Intercompany Eliminations | Total Operating Segments | Corporate/ Unallocated | Consolidated | ||||||||||||||||||||||||
Net sales | $ | 2,075.0 | $ | 1,260.5 | $ | 1,300.7 | $ | 292.7 | $ | (52.0 | ) | $ | 4,876.9 | $ | — | $ | 4,876.9 | |||||||||||||||
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Segment earnings (loss) | 263.5 | 176.0 | 193.0 | 39.3 | — | 671.8 | (87.4 | ) | 584.4 | |||||||||||||||||||||||
Adjustments to reconcile to reported operating earnings (loss): | ||||||||||||||||||||||||||||||||
Fair value adjustment to inventory | (2.8 | ) | (3.2 | ) | — | — | — | (6.0 | ) | — | (6.0 | ) | ||||||||||||||||||||
Reorganization costs | (9.3 | ) | — | — | — | — | (9.3 | ) | — | (9.3 | ) | |||||||||||||||||||||
Acquisition-related and other costs | (3.9 | ) | (1.6 | ) | (1.4 | ) | — | — | (6.9 | ) | (5.6 | ) | (12.5 | ) | ||||||||||||||||||
Depreciation and amortization | (38.0 | ) | (25.9 | ) | (33.8 | ) | (9.7 | ) | — | (107.4 | ) | (2.5 | ) | (109.9 | ) | |||||||||||||||||
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Operating earnings (loss) | $ | 209.5 | $ | 145.3 | $ | 157.8 | $ | 29.6 | $ | — | $ | 542.2 | $ | (95.5 | ) | $ | 446.7 | |||||||||||||||
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Nine months ended September 30, 2011 | ||||||||||||||||||||||||||||||||
(in millions) | Outdoor Solutions | Consumer Solutions | Branded Consumables | Process Solutions | Intercompany Eliminations | Total Operating Segments | Corporate/ Unallocated | Consolidated | ||||||||||||||||||||||||
Net sales | $ | 2,157.6 | $ | 1,258.4 | $ | 1,297.9 | $ | 273.7 | $ | (45.7 | ) | $ | 4,941.9 | $ | — | $ | 4,941.9 | |||||||||||||||
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Segment earnings (loss) | 288.2 | 172.3 | 183.5 | 27.1 | — | 671.1 | (91.5 | ) | 579.6 | |||||||||||||||||||||||
Adjustments to reconcile to reported operating earnings (loss): | ||||||||||||||||||||||||||||||||
Fair value adjustment to inventory | — | — | (6.9 | ) | — | — | (6.9 | ) | — | (6.9 | ) | |||||||||||||||||||||
Reorganization costs | (3.8 | ) | — | (2.4 | ) | — | — | (6.2 | ) | — | (6.2 | ) | ||||||||||||||||||||
Acquisition-related and other costs | (1.4 | ) | — | (1.3 | ) | — | — | (2.7 | ) | (3.7 | ) | (6.4 | ) | |||||||||||||||||||
Depreciation and amortization | (45.7 | ) | (22.8 | ) | (42.2 | ) | (9.1 | ) | — | (119.8 | ) | (1.9 | ) | (121.7 | ) | |||||||||||||||||
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Operating earnings (loss) | $ | 237.3 | $ | 149.5 | $ | 130.7 | $ | 18.0 | $ | — | $ | 535.5 | $ | (97.1 | ) | $ | 438.4 | |||||||||||||||
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19
Table of Contents
15. Condensed Consolidating Financial Data
The Company’s Senior Notes, Senior Subordinated Notes and Convertible Notes (see Note 6) are fully guaranteed, jointly and severally, by certain of the Company’s domestic subsidiaries (“Guarantor Subsidiaries”). The guarantees of the Guarantor Subsidiaries are subject to release only in certain limited circumstances. The Company’s non-United States subsidiaries and those domestic subsidiaries who are not guarantors (“Non-Guarantor Subsidiaries”) are not guaranteeing these notes. Presented below is the condensed consolidating financial data of the Company (“Parent”), the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries on a consolidated basis as of September 30, 2012 and December 31, 2011 and for the three and nine months ended September 30, 2012 and 2011.
Condensed Consolidating Results of Operations
Three months ended September 30, 2012 | ||||||||||||||||||||
(in millions) | Parent | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Net sales | $ | — | $ | 1,089.7 | $ | 819.3 | $ | (203.1 | ) | $ | 1,705.9 | |||||||||
Costs and expenses | 42.6 | 973.1 | 724.5 | (203.1 | ) | 1,537.1 | ||||||||||||||
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Operating (loss) earnings | (42.6 | ) | 116.6 | 94.8 | — | 168.8 | ||||||||||||||
Other expense, net | 82.2 | (10.9 | ) | 20.6 | — | 91.9 | ||||||||||||||
Equity in the income of subsidiaries | 201.7 | 65.9 | — | (267.6 | ) | — | ||||||||||||||
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Net income (loss) | $ | 76.9 | $ | 193.4 | $ | 74.2 | $ | (267.6 | ) | $ | 76.9 | |||||||||
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Comprehensive income (loss) | $ | 98.9 | $ | 220.8 | $ | 103.7 | $ | (324.5 | ) | $ | 98.9 | |||||||||
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Three months ended September 30, 2011 | ||||||||||||||||||||
(in millions) | Parent | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Net sales | $ | — | $ | 1,022.5 | $ | 799.0 | $ | (36.8 | ) | $ | 1,784.7 | |||||||||
Costs and expenses | 12.1 | 918.5 | 706.1 | (36.8 | ) | 1,599.9 | ||||||||||||||
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Operating (loss) earnings | (12.1 | ) | 104.0 | 92.9 | — | 184.8 | ||||||||||||||
Other expense, net | 76.2 | 8.6 | 9.3 | — | 94.1 | |||||||||||||||
Equity in the income of subsidiaries | 179.0 | 79.5 | — | (258.5 | ) | — | ||||||||||||||
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Net income (loss) | $ | 90.7 | $ | 174.9 | $ | 83.6 | $ | (258.5 | ) | $ | 90.7 | |||||||||
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Comprehensive income (loss) | $ | 32.0 | $ | 103.2 | $ | 15.8 | $ | (119.0 | ) | $ | 32.0 | |||||||||
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Nine months ended September 30, 2012 | ||||||||||||||||||||
(in millions) | Parent | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Net sales | $ | — | $ | 3,158.2 | $ | 2,259.1 | $ | (540.4 | ) | $ | 4,876.9 | |||||||||
Costs and expenses | 108.1 | 2,833.7 | 2,028.8 | (540.4 | ) | 4,430.2 | ||||||||||||||
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Operating (loss) earnings | (108.1 | ) | 324.5 | 230.3 | — | 446.7 | ||||||||||||||
Other expense, net | 209.7 | 5.9 | 35.9 | — | 251.5 | |||||||||||||||
Equity in the income of subsidiaries | 513.0 | 175.6 | — | (688.6 | ) | — | ||||||||||||||
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Net income (loss) | $ | 195.2 | $ | 494.2 | $ | 194.4 | $ | (688.6 | ) | $ | 195.2 | |||||||||
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Comprehensive income (loss) | $ | 201.0 | $ | 508.9 | $ | 200.6 | $ | (709.5 | ) | $ | 201.0 | |||||||||
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20
Table of Contents
Nine months ended September 30, 2011 | ||||||||||||||||||||
(in millions) | Parent | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Net sales | $ | — | $ | 2,872.9 | $ | 2,186.5 | $ | (117.5 | ) | $ | 4,941.9 | |||||||||
Costs and expenses | 93.1 | 2,540.4 | 1,987.5 | (117.5 | ) | 4,503.5 | ||||||||||||||
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Operating (loss) earnings | (93.1 | ) | 332.5 | 199.0 | — | 438.4 | ||||||||||||||
Other expense, net | 196.8 | 24.8 | 33.2 | — | 254.8 | |||||||||||||||
Equity in the income of subsidiaries | 473.5 | 158.6 | — | (632.1 | ) | — | ||||||||||||||
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Net income (loss) | $ | 183.6 | $ | 466.3 | $ | 165.8 | $ | (632.1 | ) | $ | 183.6 | |||||||||
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Comprehensive income (loss) | $ | 174.8 | $ | 456.7 | $ | 157.8 | $ | (614.5 | ) | $ | 174.8 | |||||||||
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Condensed Consolidating Balance Sheets | ||||||||||||||||||||
As of September 30, 2012 | ||||||||||||||||||||
(in millions) | Parent | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Assets | ||||||||||||||||||||
Current assets | $ | 508.9 | $ | 1,047.5 | $ | 2,415.7 | $ | — | $ | 3,972.1 | ||||||||||
Investment in subsidiaries | 6,020.7 | 1,832.5 | — | (7,853.2 | ) | — | ||||||||||||||
Non-current assets | 2,074.4 | 5,622.6 | 3,647.7 | (7,582.4 | ) | 3,762.3 | ||||||||||||||
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Total assets | $ | 8,604.0 | $ | 8,502.6 | $ | 6,063.4 | $ | (15,435.6 | ) | $ | 7,734.4 | |||||||||
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Liabilities and stockholders’ equity | ||||||||||||||||||||
Current liabilities | $ | 267.8 | $ | 576.3 | $ | 962.7 | $ | — | $ | 1,806.8 | ||||||||||
Non-current liabilities | 6,639.5 | 2,199.3 | 2,974.5 | (7,582.4 | ) | 4,230.9 | ||||||||||||||
Stockholders’ equity | 1,696.7 | 5,727.0 | 2,126.2 | (7,853.2 | ) | 1,696.7 | ||||||||||||||
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Total liabilities and stockholders’ equity | $ | 8,604.0 | $ | 8,502.6 | $ | 6,063.4 | $ | (15,435.6 | ) | $ | 7,734.4 | |||||||||
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As of December 31, 2011 | ||||||||||||||||||||
(in millions) | Parent | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Assets | ||||||||||||||||||||
Current assets | $ | 359.0 | $ | 995.9 | $ | 2,140.0 | $ | (1.4 | ) | $ | 3,493.5 | |||||||||
Investment in subsidiaries | 5,688.8 | 1,748.1 | — | (7,436.9 | ) | — | ||||||||||||||
Non-current assets | 114.5 | 4,003.9 | 914.0 | (1,409.2 | ) | 3,623.2 | ||||||||||||||
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Total assets | $ | 6,162.3 | $ | 6,747.9 | $ | 3,054.0 | $ | (8,847.5 | ) | $ | 7,116.7 | |||||||||
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Liabilities and stockholders’ equity | ||||||||||||||||||||
Current liabilities | $ | 260.8 | $ | 589.0 | $ | 614.1 | $ | (0.2 | ) | $ | 1,463.7 | |||||||||
Non-current liabilities | 3,989.5 | 507.0 | 654.9 | (1,410.4 | ) | 3,741.0 | ||||||||||||||
Stockholders’ equity | 1,912.0 | 5,651.9 | 1,785.0 | (7,436.9 | ) | 1,912.0 | ||||||||||||||
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Total liabilities and stockholders’ equity | $ | 6,162.3 | $ | 6,747.9 | $ | 3,054.0 | $ | (8,847.5 | ) | $ | 7,116.7 | |||||||||
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Condensed Consolidating Statements of Cash Flows
Nine months ended September 30, 2012 | ||||||||||||||||
(in millions) | Parent | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Consolidated | ||||||||||||
Net cash provided by (used in) operating activities | $ | (225.8 | ) | $ | 272.6 | $ | 34.6 | $ | 81.4 | |||||||
Financing activities: | ||||||||||||||||
Net change in short-term debt | — | — | 83.6 | 83.6 | ||||||||||||
Proceeds (payments) from (to) intercompany transactions | 245.8 | (252.6 | ) | 6.8 | — | |||||||||||
Proceeds from issuance of long-term debt | 800.0 | 0.5 | 0.1 | 800.6 | ||||||||||||
Payments on long-term debt | (147.4 | ) | (0.3 | ) | (5.5 | ) | (153.2 | ) | ||||||||
Issuance (repurchase) of common stock, net | (536.6 | ) | — | — | (536.6 | ) | ||||||||||
Dividends paid | (7.5 | ) | — | — | (7.5 | ) | ||||||||||
Excess tax benefits from stock-based compensation | 42.7 | — | — | 42.7 | ||||||||||||
Other | (16.9 | ) | — | (0.5 | ) | (17.4 | ) | |||||||||
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Net cash provided by (used in) financing activities | 380.1 | (252.4 | ) | 84.5 | 212.2 | |||||||||||
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Investing activities: | ||||||||||||||||
Additions to property, plant and equipment | (4.2 | ) | (40.3 | ) | (32.4 | ) | (76.9 | ) | ||||||||
Acquisition of businesses, net of cash acquired and earnout payments | (0.9 | ) | (5.4 | ) | (148.9 | ) | (155.2 | ) | ||||||||
Other | 2.3 | 4.0 | 3.5 | 9.8 | ||||||||||||
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Net cash used in investing activities | (2.8 | ) | (41.7 | ) | (177.8 | ) | (222.3 | ) | ||||||||
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Effect of exchange rate changes on cash | — | — | 7.1 | 7.1 | ||||||||||||
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Net increase (decrease) in cash and cash equivalents | 151.5 | (21.5 | ) | (51.6 | ) | 78.4 | ||||||||||
Cash and cash equivalents at beginning of period | 335.4 | 23.8 | 449.1 | 808.3 | ||||||||||||
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Cash and cash equivalents at end of period | $ | 486.9 | $ | 2.3 | $ | 397.5 | $ | 886.7 | ||||||||
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Nine months ended September 30, 2011 | ||||||||||||||||
(in millions) | Parent | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Consolidated | ||||||||||||
Net cash provided by (used in) operating activities | $ | (335.9 | ) | $ | 363.4 | $ | (3.0 | ) | $ | 24.5 | ||||||
Financing activities: | ||||||||||||||||
Net change in short-term debt | — | — | 2.7 | 2.7 | ||||||||||||
Proceeds (payments) from (to) intercompany transactions | 338.4 | (286.5 | ) | (51.9 | ) | — | ||||||||||
Proceeds from issuance of long-term debt | 1,025.0 | — | — | 1,025.0 | ||||||||||||
Payments on long-term debt | (1,102.8 | ) | — | — | (1,102.8 | ) | ||||||||||
Issuance (repurchase) of common stock, net | (84.1 | ) | — | — | (84.1 | ) | ||||||||||
Dividends paid | (22.6 | ) | — | — | (22.6 | ) | ||||||||||
Other | (5.2 | ) | — | — | (5.2 | ) | ||||||||||
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Net cash provided by (used in) financing activities | 148.7 | (286.5 | ) | (49.2 | ) | (187.0 | ) | |||||||||
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Investing Activities: | ||||||||||||||||
Additions to property, plant and equipment | (1.5 | ) | (67.1 | ) | (10.8 | ) | (79.4 | ) | ||||||||
Acquisition of businesses, net of cash acquired and earnout payments | (0.9 | ) | (12.5 | ) | — | (13.4 | ) | |||||||||
Other | — | — | 4.8 | 4.8 | ||||||||||||
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Net cash used in investing activities | (2.4 | ) | (79.6 | ) | (6.0 | ) | (88.0 | ) | ||||||||
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Effect of exchange rate changes on cash | — | — | 1.4 | 1.4 | ||||||||||||
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Net decrease in cash and cash equivalents | (189.6 | ) | (2.7 | ) | (56.8 | ) | (249.1 | ) | ||||||||
Cash and cash equivalents at beginning of period | 287.1 | 15.5 | 392.8 | 695.4 | ||||||||||||
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Cash and cash equivalents at end of period | $ | 97.5 | $ | 12.8 | $ | 336.0 | $ | 446.3 | ||||||||
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The amounts reflected as proceeds (payments) from (to) intercompany transactions represent cash flows originating from transactions conducted between Guarantor Subsidiaries, Non-Guarantor Subsidiaries and Parent in the normal course of business operations.
Comprehensive income presented in the condensed consolidating financial data for the quarterly periods ended March 31, 2012 and 2011 and the quarterly and year-to-date periods ended June 30, 2012 and 2011, were revised to present the proper classification of changes in the cumulative translation adjustments. The effect of the revision on the previously reported amounts of comprehensive income are as follows:
(in millions) | Three months ended March 31, 2012 | Three months ended June 30, 2012 | Six months ended June 30, 2012 | Three months ended March 31, 2011 | Three months ended June 30, 2011 | Six months ended June 30, 2011 | ||||||||||||||||||
Increase/(Decrease) | ||||||||||||||||||||||||
Comprehensive Income: | ||||||||||||||||||||||||
Parent | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Guarantor | 1.1 | 0.7 | 1.8 | 8.3 | 2.4 | 10.7 | ||||||||||||||||||
Non-Guarantor | 27.4 | (50.0 | ) | (22.6 | ) | 39.9 | 21.2 | 61.1 | ||||||||||||||||
Elimination | (28.5 | ) | 49.3 | 20.8 | (48.2 | ) | (23.6 | ) | (71.8 | ) | ||||||||||||||
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Consolidated | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
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The revisions also had no impact on the condensed consolidated balance sheets, condensed consolidated statements of operations, condensed consolidated statements of comprehensive income or condensed consolidated statements of cash flows for any of those periods. The revision is fully reflected in the condensed consolidating financial data for the three and nine months ended September 30, 2012 and will have no impact on the consolidated financial statements as of and for the year ended December 31, 2012.
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Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Forward-Looking Information
From time to time, the Company may make or publish forward-looking statements relating to such matters as anticipated financial performance, business prospects, technological developments, new products and similar matters. Such statements are necessarily estimates reflecting management’s best judgment based on current information. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. Such statements are usually identified by the use of words or phrases such as “believes”, “anticipates”, “expects”, “estimates”, “planned”, “outlook” and “goal”. Because forward-looking statements involve risks and uncertainties, the Company’s actual results could differ materially. In order to comply with the terms of the safe harbor, the Company notes that a variety of factors could cause the Company’s actual results and experience to differ materially from the anticipated results or other expectations expressed in forward-looking statements. All statements addressing trends, events, developments, operating performance, potential acquisitions or liquidity that the Company anticipates or expects will occur in the future are forward-looking statements.
Achievement of future results is subject to risks, uncertainties and inaccurate assumptions. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could vary materially from past results and anticipated, estimated or projected results. Investors should bear this in mind as they consider forward-looking statements.
The Company undertakes no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures the Company makes on related subjects in the Company’s Forms 10-K, 10-Q and 8-K reports to the United States Securities and Exchange Commission (“SEC”). Please see the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 for a list of factors which could cause the Company’s actual results to differ materially from those projected in the Company’s forward-looking statements and certain risks and uncertainties that may affect the operations, performance and results of the Company’s businesses. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties.
The following “Overview” section is a brief summary of the significant items addressed in Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”). Investors should read the relevant sections of this MD&A for a complete discussion of the items summarized below.
Overview
The Company is a leading provider of a broad range of consumer products. The Company reports four business segments: Outdoor Solutions, Consumer Solutions, Branded Consumables and Process Solutions. The Company’s sales are principally within the United States. The Company’s international operations are mainly based in Asia, Canada, Europe and Latin America.
The Company distributes its products globally, primarily through club stores; craft stores; direct-to-consumer channels, primarily consisting of infomercials; department stores; drugstores; grocery retailers; home improvement stores; mass merchandisers; on-line; specialty retailers and wholesalers. The markets in which the Company’s businesses operate are generally highly competitive, based primarily on product quality, product innovation, price and customer service and support, although the degree and nature of such competition vary by location and product line. Since the Company operates primarily in the consumer products markets, it is generally affected, by among other factors, overall economic conditions and the related impact on consumer confidence.
The Outdoor Solutions segment manufactures or sources, markets and distributes global consumer active lifestyle products for outdoor and outdoor-related activities. For general outdoor activities, Coleman® is a leading brand for active lifestyle products, offering an array of products that include camping and outdoor equipment such as air beds, camping stoves, coolers, foldable furniture, gas grills, lanterns and flashlights, sleeping bags, tents and water recreation products such as inflatable boats, kayaks and tow-behinds. The Outdoor Solutions segment is also a leading provider of fishing equipment under brand names such as Abu Garcia®, All Star®, Berkley®, Fenwick®, Gulp!®, JRC™, Mitchell®, Penn®, Pflueger®, Sebile®, Sevenstrand®, Shakespeare®, Spiderwire®, Stren®, Trilene®, Ugly Stik® and Xtools®. Team sports equipment for baseball, softball, football, basketball, field hockey and lacrosse products are sold under brand names such as deBeer®, Gait®, Miken®, Rawlings® and Worth®. Alpine and nordic skiing, snowboarding, snowshoeing and in-line skating products are sold under brand names such as Atlas®, Full Tilt®, K2®, Line®, Little Bear®, Madshus®, Marker®, Morrow®, Ride®, Tubbs®, Völkl® and 5150 Snowboards®. Water sports equipment, personal flotation devices and all-terrain vehicle gear are sold under brand names such as Helium®, Hodgman®, Mad Dog Gear®, Sevylor®, Sospenders® and Stearns®. The Company also sells high performance technical and outdoor apparel and equipment under brand names such as CAPP3L®, Ex Officio®, K2®, Marker®, Marmot®, Planet Earth®, Ride®, Völkl® and Zoot®, and premium air beds under brand names including Aero®, Aerobed® and Aero Sport®.
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The Consumer Solutions segment manufactures or sources, markets, and distributes a diverse line of household products, including kitchen appliances and home environment products. This segment maintains a strong portfolio of globally-recognized brands including Bionaire®, Breville®, Crock-Pot®, FoodSaver®, Health o meter®, Holmes®, Mr. Coffee®, Oster®, Patton®, Rival®, Seal-a-Meal®, Sunbeam®, skybar® and Villaware®. The principal products in this segment include: clippers and trimmers for professional use in the beauty and barber and animal categories; electric blankets, mattress pads and throws; household kitchen appliances, such as blenders, coffeemakers, irons, mixers, slow cookers, toasters, toaster ovens and vacuum packaging machines; home environment products, such as air purifiers, fans, heaters and humidifiers; products for the hospitality industry; and scales for consumer use.
The Branded Consumables segment manufactures or sources, markets and distributes a broad line of branded consumer products, many of which are affordable, consumable and fundamental household staples, including arts and crafts paint brushes, brooms, brushes, buckets, children’s card games, clothespins, collectible tins, condoms, cord, rope and twine, dusters, dust pans, feeding bottles, fencing, fire extinguishing products, firelogs and firestarters, home canning jars and accessories, kitchen matches, mops, other craft items, pacifiers, plastic cutlery, playing cards and accessories, rubber gloves and related cleaning products, safes, security cameras, security doors, smoke and carbon monoxide alarms, soothers, sponges, storage organizers and workshop accessories, teats, toothpicks, window guards and other accessories. This segment markets our products under the Aviator®, Ball®, Bee®, Bernardin®, Bicycle®, Billy Boy®, BRK®, Crawford®, Diamond®, Dicon®, Fiona®, First Alert®, First Essentials®, Hoyle®, Java-Log®, KEM®, Kerr®, Lehigh®, Lillo®, Loew-Cornell®, Mapa®, NUK®, Pine Mountain®, Quickie Green Cleaning®, Quickie Home-Pro®, Quickie Microban®, Quickie Original®, Quickie Professional®, Spontex®, Tigex® and Wellington® brand names, among others.
The Process Solutions segment manufactures, markets and distributes a wide variety of plastic products including closures, contact lens packaging, medical disposables, plastic cutlery and rigid packaging. Many of these products are consumable in nature or represent components of consumer products. This segment’s materials business produces specialty nylon polymers, conductive fibers and monofilament used in various products, including woven mats used by paper producers and weed trimmer cutting line, as well as fiberglass radio antennas for marine, citizen band and military applications. This segment is also the largest North American producer of niche products fabricated from solid zinc strip and is the sole source supplier of copper-plated zinc penny blanks to the United States Mint and a major supplier to the Royal Canadian Mint, as well as a supplier of brass, bronze and nickel-plated finishes on steel and zinc for coinage to other international markets. In addition, the Company manufactures a line of industrial zinc products marketed globally for use in the architectural, automotive, construction, electrical component and plumbing markets.
Summary of Significant 2012 Activities
• | In February 2012, the Company entered into an amendment to and borrowed $300 million under its senior secured credit facility (the “Facility”), which is comprised of $150 million under its existing senior secured term loan A facility and $150 million under its existing senior secured term loan B facility. |
• | In February 2012, the Company entered into an amendment to its securitization facility that, in part, increased maximum borrowings from $300 million to $400 million and extended the maturity date from May 2014 until February 2015. |
• | In March 2012, the Company repurchased approximately 12.1 million shares of its common stock for a total purchase price of approximately $435 million under its accelerated stock repurchase program (see “Capital Resources”). |
• | In September 2012, the Company completed a private offering for the sale of $500 million aggregate principal amount of 1 7/8% senior subordinated convertible notes due 2018 (the “Convertible Notes”) to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”) and received net proceeds of approximately $487 million, after deducting fees and expenses. |
Acquisitions
Consistent with the Company’s historical acquisition strategy, to the extent the Company pursues future acquisitions, the Company intends to focus on businesses with product offerings that provide geographic or product diversification, or expansion into related categories that can be marketed through the Company’s existing distribution channels or provide us with new distribution channels for its existing products, thereby increasing marketing and distribution efficiencies. Furthermore, the Company expects that acquisition candidates would demonstrate a combination of attractive margins, strong cash flow characteristics, category leading positions and products that generate recurring revenue. The Company anticipates that the fragmented nature of the consumer products market will continue to provide opportunities for growth through strategic acquisitions of complementary businesses. However, there can be no assurance that the Company will complete an acquisition in any given year or that any such acquisition will be significant or successful. The Company will only pursue a candidate when it is deemed to be fiscally prudent and meets the Company’s acquisition criteria. The Company anticipates that any future acquisitions would be financed through any combination of cash on hand, operating cash flow, availability under its existing credit facilities and new capital market offerings.
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Table of Contents
2012 Activity
During 2012, the Company completed two tuck-in acquisitions that by nature were complementary to the Company’s core businesses and from an accounting standpoint were not significant.
2011 Activity
During 2011, the Company did not complete any significant acquisitions.
Venezuela Operations
The Company’s subsidiaries operating in Venezuela are considered under generally accepted accounting principles in the United States of America (“GAAP”) to be operating in a highly inflationary economy. As such, the Company’s financial statements of its subsidiaries operating in Venezuela are remeasured as if their functional currency were the U.S. dollar and gains and losses resulting from the remeasurement of monetary assets and liabilities are reflected in current earnings. The financial statements of the Company’s subsidiaries operating in Venezuela are remeasured at and are reflected in the Company’s consolidated financial statements at the official exchange rate of 4.30 Bolivars per U.S. dollar, which is the Company’s expected settlement rate.
The transfers of funds out of Venezuela are subject to restrictions, and historically, payments for certain imported goods and services have been required to be transacted by exchanging Bolivars for U.S. dollars through government-regulated markets at exchange rates that are more unfavorable than the official exchange rate of 4.30 Bolivars per U.S. dollar. The current foreign currency exchange system is the System of Transactions in Foreign Currency Denominated Securities (“SITME”) market. Historically, the majority of the Company’s purchases have qualified for the official exchange rate. As such, the Company has been able to convert Bolivars at the official exchange rate and, based upon this ability, the Company does not expect changes in the SITME market to have a material impact on the consolidated financial position, results of operations or cash flows of the Company. While the timing of government approval for settlement of payables at the official exchange rate varies, the Company believes these payables will ultimately be approved and settled at the official exchange rate based on past experience. However, if in the future, further restrictions require the Company’s subsidiaries operating in Venezuela to convert an increasing amount of the Bolivar cash balances into U.S. dollars using the more unfavorable exchange rate, it could result in currency exchange losses that may be material to the Company’s results of operations. At September 30, 2012, the Company’s subsidiaries operating in Venezuela have approximately $15 million in cash denominated in U.S. dollars and cash of approximately $57 million denominated in Bolivars converted at the official exchange rate.
Results of Operations—Comparing 2012 to 2011
Net Sales | Operating Earnings (Loss) | |||||||||||||||
Three months ended September 30, | Three months ended September 30, | |||||||||||||||
(in millions) | 2012 | 2011 | 2012 | 2011 | ||||||||||||
Outdoor Solutions | $ | 657.6 | $ | 707.3 | $ | 66.4 | $ | 83.7 | ||||||||
Consumer Solutions | 509.6 | 522.4 | 64.0 | 66.6 | ||||||||||||
Branded Consumables | 459.0 | 477.8 | 60.1 | 58.2 | ||||||||||||
Process Solutions | 97.6 | 92.4 | 9.9 | 4.6 | ||||||||||||
Corporate | — | — | (31.6 | ) | (28.3 | ) | ||||||||||
Intercompany eliminations | (17.9 | ) | (15.2 | ) | — | — | ||||||||||
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$ | 1,705.9 | $ | 1,784.7 | $ | 168.8 | $ | 184.8 | |||||||||
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Note: Changes in net sales on a currency-neutral basis that are presented hereafter are provided to enhance visibility of the underlying operations by excluding the impact of foreign currency translation.
Three Months Ended September 30, 2012 versus the Three Months Ended September 30, 2011
Net sales for three months ended September 30, 2012 decreased $78.8 million, or 4.4%, to $1.7 billion versus the same period in the prior year. Unfavorable foreign currency translation accounted for a decrease in net sales of approximately 3%. Excluding the impact of certain exited product categories and acquisitions, net sales on a currency-neutral basis decreased 1.8%, primarily due to weakness in certain product categories, the timing of seasonal sales in certain categories and decreased demand in Europe due to unfavorable economic conditions, partially offset by increased demand internationally in certain categories, primarily in Latin America.
Net sales in the Outdoor Solutions segment decreased $49.7 million, or 7.0%. Unfavorable foreign currency translation accounted for a decrease in net sales of approximately 3%. Excluding the impact of certain exited product categories and acquisitions, net sales on a currency-neutral basis decreased approximately 3%, largely due to decreased sales on a currency-neutral basis in the winter sports and outdoor businesses of approximately 5%, primarily due to decreased sales in the winter sports business following the mild winter from 2011/2012, decreased demand in Europe due to unfavorable economic conditions and domestically lower reorders of seasonal items, partially offset by an approximate 2% increase in net sales on a currency-neutral basis in the team sports and technical apparel businesses, largely related to expanded product offerings and increased point of sale.
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Net sales in the Consumer Solutions segment decreased $12.8 million, or 2.5%. Unfavorable foreign currency translation accounted for a decrease in net sales of approximately 1%. Excluding the net favorable impact of certain exited product categories and acquisitions (approximately 2%), net sales on a currency-neutral basis decreased by approximately 4%. The decrease is primarily due to a decrease in domestic net sales of approximately 8%, primarily as a result of reduced inventory reorders in the mass channel at retail; partially offset by increased demand internationally, primarily in Latin America which contributed to an increase in net sales of approximately 5%, primarily due to increased point of sale, expanded distribution and new product offerings.
Net sales in the Branded Consumables segment decreased $18.8 million, or 3.9%. Unfavorable foreign currency translation accounted for a decrease of approximately 4% in net sales. Net sales on a currency-neutral basis were essentially flat on a period-over-period basis as increased sales in the baby care and home care businesses, which provided an increase in net sales of approximately 1% were offset by a decline in the safety and security business due to higher regulatory sales in 2011.
Net sales in the Process Solutions segment increased 5.6% on a period-over-period basis, primarily due to an increase in coinage and monofilament sales.
Cost of Sales
Cost of sales decreased $62.8 million, or 5.0%, to $1.2 billion for the three months ended September 30, 2012 versus the same prior year period. The decrease is primarily due to foreign currency translation (approximately $30 million) and approximately $30 million related to the net impact on cost of sales of lower sales, partially offset by improved margins, primarily driven by manufacturing improvement projects, stable commodity prices and new products and product mix. Cost of sales as a percentage of net sales for the three months ended September 30, 2012 and 2011 was 70.6% and 71.0%, respectively.
Selling, General and Administrative Costs
Selling, general and administrative costs (“SG&A”) decreased $3.1 million, or 1.0%, to $323 million for the three months ended September 30, 2012 versus the same prior year period. The change is primarily due to favorable foreign currency translation (approximately $10 million), partially offset by approximately $9 million in acquisition-related and other costs.
Reorganization Costs
For the three and nine months ended September 30, 2012, reorganization costs were $9.3 million and relate to a plan initiated in the Outdoor Solutions segment to reorganize certain manufacturing facilities in the Far East within the winter sport business. For the three and nine months ended September 30, 2011, reorganization costs were $6.2 million, primarily related to reorganization plans initiated in the Outdoor Solutions and Branded Consumables segments. Reorganization costs of $3.8 million were recorded in the Outdoor Solutions segment related to a plan to consolidate certain international manufacturing processes and a plan to rationalize the overall cost structure of this segment through headcount reductions. Reorganization costs of $2.4 million were recorded in the Branded Consumables segment related to a plan to consolidate certain distribution and manufacturing processes though headcount reduction and facility consolidation and a plan to rationalize the overall cost structure of this segment through headcount reduction.
Operating Earnings
Operating earnings for the three months ended September 30, 2012 in the Outdoor Solutions segment decreased $17.3 million, or 20.7%, versus the same prior year period, primarily due to a gross profit decrease (approximately $28 million), primarily due to the gross margin impact of lower sales and the impact of the fair market value adjustments to inventory related to the tuck-in acquisitions; and an increase in reorganization costs (approximately $6 million), partially offset by a decrease in SG&A (approximately $16 million). Operating earnings for the three months ended September 30, 2012 in the Consumer Solutions segment decreased $2.6 million, or 3.9%, versus the same prior year period, primarily due to an increase in SG&A (approximately $6 million), partially offset by a gross profit increase (approximately $3 million). Operating earnings for the three months ended September 30, 2012 in the Branded Consumables segment increased $1.9 million, or 3.3%, versus the same prior year period, primarily due to a slight decrease in net operating expenses. Operating earnings in the Process Solutions segment for the three months ended September 30, 2012 increased $5.3 million, or 115%, versus the same prior year period, primarily due to an increase in gross profit (approximately $7 million), primarily due to improved margins.
Interest Expense
Net interest increased by $2.4 million to $46.1 million for the three months ended September 30, 2012 versus the same prior year period primarily due to higher average debt levels, partially offset by a decrease in the weighted average interest rate for 2012 to 5.1% from 5.4% in 2011.
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Income Taxes
The Company’s reported tax rate for the three months ended September 30, 2012 and 2011 was 37.3 % and 35.6%, respectively. The increase from the statutory tax rate to the reported tax rate for the three months ended September 30, 2012 results principally from tax expense related to certain foreign tax audit adjustments. The reported tax rate for the three months ended September 30, 2011 approximates the Company’s statutory rate as the U.S. tax expense related to the taxation of foreign income was mostly offset by a decrease in tax expense related to the release of a foreign valuation allowance and other items.
Net Income
Net income for the three months ended September 30, 2012 decreased $13.8 million to $76.9 million versus the same prior year period. For the three months ended September 30, 2012 and 2011, earnings per diluted share were $1.00 and $1.03, respectively. The decrease in net income was primarily due to a gross profit decrease (approximately $16 million), primarily due to lower sales, partially offset by increased margins. On a period-over-period basis, the diluted weighted average shares outstanding decreased approximately 12%, primarily due to the Company’s accelerated stock repurchase program (see “Capital Resources”).
Nine months Ended September 30, 2012 versus the Nine months Ended September 30, 2011
Net Sales | Operating Earnings (Loss) | |||||||||||||||
Nine months ended September 30, | Nine months ended September 30, | |||||||||||||||
(in millions) | 2012 | 2011 | 2012 | 2011 | ||||||||||||
Outdoor Solutions | $ | 2,075.0 | $ | 2,157.6 | $ | 209.5 | $ | 237.3 | ||||||||
Consumer Solutions | 1,260.5 | 1,258.4 | 145.3 | 149.5 | ||||||||||||
Branded Consumables | 1,300.7 | 1,297.9 | 157.8 | 130.7 | ||||||||||||
Process Solutions | 292.7 | 273.7 | 29.6 | 18.0 | ||||||||||||
Corporate | — | — | (95.5 | ) | (97.1 | ) | ||||||||||
Intercompany eliminations | (52.0 | ) | (45.7 | ) | — | — | ||||||||||
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$ | 4,876.9 | $ | 4,941.9 | $ | 446.7 | $ | 438.4 | |||||||||
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Note: Changes in net sales on a currency-neutral basis that are presented hereafter are provided to enhance visibility of the underlying operations by excluding the impact of foreign currency translation.
Net sales for the nine months ended September 30, 2012 decreased $65.0 million, or 1.3%, to $4.9 billion versus the same period in the prior year. Unfavorable foreign currency translation accounted for a decrease in net sales of approximately 2%. Excluding the impact of certain exited product categories and acquisitions, net sales on a currency-neutral basis increased 1.5%, primarily due to increased sell-through in certain categories and expanded product offerings, partially offset by weakness in certain product categories and the timing of seasonal sales in certain categories.
Net sales in the Outdoor Solutions segment decreased $82.6 million, or 3.8%. Unfavorable foreign currency translation accounted for a decrease in net sales of approximately 2%. Excluding the net unfavorable impact of certain exited product categories and acquisitions (approximately 2%), net sales on a currency-neutral basis were essentially flat on a period-over-period basis as increased sales on a currency-neutral basis in the fishing and technical apparel businesses, which provided an increase in net sales of approximately 2%, largely related to expanded product offerings, increased point of sale and favorable weather conditions in North America were offset by a decrease in net sales on a currency-neutral basis in the camping and outdoor, team sports and winter sports businesses, primarily due to weakness in certain product categories, decreased demand in Europe due to unfavorable economic conditions and the absence of higher tsunami-related sales recorded in the second quarter of 2011, combined with softness in the winter sports business, which was negatively affected by unfavorable winter weather conditions.
Net sales in the Consumer Solutions segment increased $2.1 million, or 0.2%. On a currency-neutral basis, net sales increased by approximately 1%. The increase is primarily due to increased demand internationally, primarily in Latin America, which accounted for an increase in net sales of approximately 4%, primarily due to increased point of sale, expanded distribution and new product offerings; partially offset by a decrease in domestic net sales, which accounted for a decrease in net sales of approximately 3%, due to weakness in certain product categories and reduced inventory reorders in the mass channel at retail.
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Net sales in the Branded Consumables segment increased $2.8 million, or 0.2%. Unfavorable foreign currency translation accounted for a decrease of approximately 4% in net sales. Increased sales on a currency-neutral basis in the baby care, home care, leisure and entertainment and safety and security businesses provided an increase in net sales of approximately 4%, in part due to increased sales in certain product categories, especially the food preservation category, primarily due to increased point of sale, favorable weather conditions and expanded distribution, partially offset by softness in firelog sales, which were negatively affected by unfavorable weather conditions.
Net sales in the Process Solutions segment increased 6.9% on a period-over-period basis, primarily due to increased sales within each of its business units.
Cost of Sales
Cost of sales decreased $85.7 million, or 2.4%, to $3.5 billion for nine months ended September 30, 2012 versus the same prior year period. The decrease is primarily due to foreign currency translation (approximately $65 million) and approximately $15 million related to the net impact on cost of sales of lower sales, partially offset by improved margins, primarily driven by manufacturing improvement projects, stable commodity prices and new products and product mix. Cost of sales as a percentage of net sales for the nine months ended September 30, 2012 and 2011 was 70.9% and 71.7%, respectively.
Selling, General and Administrative Costs
SG&A increased $9.3 million, or 1.0%, to $961 million for the nine months ended September 30, 2012 versus the same prior year period. SG&A for the nine months ended September 30, 2012 includes, in part, an increase in marketing and product development costs (approximately $12 million) related to the Company’s investment in brand equity, an increase in stock-based compensation (approximately $8 million), approximately $9 million in acquisition-related and other costs and favorable foreign currency translation (approximately $24 million).
Operating Earnings
Operating earnings for the nine months ended September 30, 2012 in the Outdoor Solutions segment decreased $27.8 million, or 11.7%, versus the same prior year period, primarily due to a gross profit decrease (approximately $25 million), primarily due to the gross margin impact of lower sales and an increase in reorganization costs (approximately $6 million), partially offset by a decrease in SG&A (approximately $3 million). Operating earnings for the nine months ended September 30, 2012 in the Consumer Solutions segment decreased $4.2 million, or 2.8%, versus the same prior year period, primarily due to an increase in SG&A (approximately $13 million), partially offset by a gross profit increase (approximately $9 million), primarily due to improved margins. Operating earnings for the nine months ended September 30, 2012 in the Branded Consumables segment increased $27.1 million, or 20.7%, versus the same prior year period, primarily due to a gross profit increase (approximately $25 million), primarily due to improved margins. Operating earnings in the Process Solutions segment for the nine months ended September 30, 2012 increased $11.6 million, or 64.4%, versus the same prior year period, primarily due to an increase in gross profit, primarily due to improved margins and the gross margin impact of higher sales.
Interest Expense
Net interest increased $1.0 million to $136 million for the nine months ended September 30, 2012 versus the same prior year period primarily due to higher average debt levels, partially offset by a decrease in the weighted average interest rate for 2012 to 5.2% from 5.4% in 2011.
Income Taxes
The Company’s reported tax rate for the nine months ended September 30, 2012 and 2011 was 37.2 % and 36.8%, respectively. The increase from the statutory tax rate to the reported tax rate for the nine months ended September 30, 2012 results principally from U.S. tax expense related to the taxation of foreign income and tax expense related to foreign tax audit adjustments. The increase from the statutory tax rate to the reported tax rate for the nine months ended September 30, 2011 results principally from U.S. tax expense related to the taxation of foreign income, net of the decrease in expense related to foreign valuation allowance adjustments.
Net Income
Net income for the nine months ended September 30, 2012 increased $11.6 million to $195 million versus the same prior year period. For the nine months ended September 30, 2012 and 2011, earnings per diluted share were $2.45 and $2.06, respectively. The increase in net income was primarily due to a gross profit increase (approximately $21 million). On a period-over-period basis, the diluted weighted average shares outstanding decreased approximately 10%, primarily due to the Company’s accelerated stock repurchase program (see “Capital Resources”).
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LIQUIDITY AND CAPITAL RESOURCES
LIQUIDITY
At September 30, 2012, the Company had cash and cash equivalents of $887 million, of which approximately $397 million was held by the Company’s non-U.S. subsidiaries. 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 September 30, 2012 provide sufficient liquidity to support working capital requirements, planned capital expenditures, debt obligations, completion of current and future reorganization programs and pension plan contribution requirements for the foreseeable future.
Cash Flows from Operating Activities
Net cash provided by operating activities was $81.4 million and $24.5 million for the nine months ended September 30, 2012 and 2011, respectively. The change is primarily due to favorable working capital movements, which are in part, due to the timing of the purchase of comparatively lower seasonal inventory levels in certain businesses, as inventory levels at September 30, 2012, excluding the impact of the tuck-in acquisitions, were approximately 3% lower than the comparable prior period-end.
Cash Flows from Financing Activities
Net cash provided by (used in) financing activities was $212 million and ($187) million for the nine months ended September 30, 2012 and 2011, respectively. The change is primarily due to the period-over-period increase in the proceeds from the issuance of long-term debt in excess of payments on long-term debt ($725 million) and the period-over-period increase in the net change in short-term debt ($80.9 million), partially offset by a $453 million increase in the payments for the issuance (repurchase) of common stock, net.
Cash Flows from Investing Activities
Net cash used in investing activities was $222 million and $88.0 million for the nine months ended September 30, 2012 and 2011, respectively. Cash used for the acquisition of businesses, net of cash acquired and earnout payments for the nine months ended September 30, 2012 increased $142 million over the same period in 2011. For the nine months ended September 30, 2012, capital expenditures were $76.9 million versus $79.4 million for the same prior year period. 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.
CAPITAL RESOURCES
In September 2012, the Company completed a private offering for the sale of $500 million aggregate principal amount of 1 7/8% senior subordinated convertible notes due 2018 (the “Convertible Notes”) to qualified institutional buyers pursuant to Rule 144A under the Securities Act and received net proceeds of approximately $487 million after deducting fees and expenses. Upon closing, the Company used approximately $100 million of the net proceeds to repurchase the Company’s common stock in privately negotiated transactions pursuant to its stock repurchase program. The remainder of the net proceeds will be used for general corporate purposes. The conversion rate is approximately 14.115 shares of the Company’s common stock (subject to customary adjustments, including in connection with a fundamental change transaction) per $1 thousand principal amount of the Convertible Notes, which is equivalent to a conversion price of approximately $70.85 per share. The Convertible Notes are not subject to redemption at the Company’s option prior to the maturity date. Prior to June 1, 2018, the Convertible Notes will be convertible only upon the occurrence of certain events and during certain periods, and thereafter, at any time until the second scheduled trading day immediately preceding the maturity date. If the Company undergoes a fundamental change (as defined in the Indenture) prior to maturity, holders of the Convertible Notes will have the right, at their option, to require the Company to repurchase for cash some or all of their Convertible Notes at a repurchase price equal to 100% of the principal amount of the Convertible Notes being repurchased, plus accrued and unpaid interest.
In February 2012, the Company entered into an amendment to and borrowed $300 million under the Facility, which is comprised of $150 million under its existing senior secured term loan A facility that matures in March 2016 and bears interest at LIBOR plus a spread of 225 basis points; and $150 million under its existing senior secured term loan B facility that matures in January 2017 and bears interest at LIBOR plus a spread of 300 basis points. The proceeds were used, in part, to repurchase shares of the Company’s common stock under its accelerated stock repurchase program.
At September 30 2012, there was no amount outstanding under the Company’s $250 million senior secured revolving credit facility (the “Revolver”) that matures in 2016. The Revolver bears interest at certain selected rates, including LIBOR plus a spread of 225 basis points. At September 30, 2012, the commitment fee on unused balances was 0.38% per annum.
The Company maintains a $400 million receivables purchase agreement (the “Securitization Facility”) that matures in February 2015. At September 30, 2012, the borrowing rate margin and the unused line fee on the Securitization Facility were 0.90% and 0.45% per annum, respectively. At September 30, 2012, the Securitization Facility had outstanding borrowings totaling $384 million.
At September 30, 2012, net availability under the Revolver and the Securitization Facility was approximately $233 million, after deducting approximately $33 million of outstanding standby and commercial letters of credit.
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Certain foreign subsidiaries of the Company maintain working capital lines of credit with their respective local financial institutions for use in operating activities. At September 30, 2012, the aggregate amount available under these lines of credit totaled approximately $102 million.
The Company was not in default of any of its debt covenants at September 30, 2012.
In January 2012, the Company commenced a “modified Dutch auction” self-tender offer (the “Offer”) to purchase up to $500 million in value of its common stock. In March 2012, pursuant to the terms of the Offer, the Company repurchased 12.1 million shares of its common stock for a total purchase price of approximately $435 million or $36.00 per share. The repurchase of shares of common stock under the Offer was made pursuant to the Company’s existing stock repurchase program (the “Stock Repurchase Program”), pursuant to which the Company was then authorized to repurchase up to $500 million aggregate amount of outstanding shares of common stock at prevailing market prices or in privately-negotiated transactions.
On September 11, 2012, the Company’s Board of Directors authorized an increase in the then available amount under the Stock Repurchase Program to allow for the repurchase of up to $250 million in aggregate of the Company’s common stock.
In September 2012, pursuant to the Stock Repurchase Program, the Company used approximately $100 million of the net proceeds from the Convertible Notes offering to repurchase approximately 1.9 million shares of its common stock at a price per share of $52.87 through privately negotiated transactions.
During the three and nine months ended September 30, 2012, the Company repurchased 1.9 million and 14.0 million shares, respectively, of its common stock under the Stock Repurchase Program at a per share average price of $52.87 and $38.43, respectively. At September 30, 2012, approximately $150 million remains available under the Stock Repurchase Program.
Risk Management
Interest Rate Contracts
The Company manages its fixed and floating rate debt mix using interest rate swaps. The Company uses fixed and floating rate swaps to alter its exposure to the impact of changing interest rates on its consolidated results of operations and future cash outflows for interest. Floating rate swaps are used, depending on market conditions, to convert the fixed rates of long-term debt into short-term variable rates. Fixed rate swaps are used to reduce the Company’s risk of the possibility of increased interest costs. Interest rate swap contracts are therefore used by the Company to separate interest rate risk management from the debt funding decision.
Cash Flow Hedges
During the three months ended September 30, 2012, the Company entered into an aggregate $150 million notional amount of interest rate swaps that exchange variable rates of interest (LIBOR) for an average fixed interest rate of approximately 0.75% over the term of the agreements, which mature on December 31, 2015. These swaps are forward-starting and are effective commencing December 31, 2013. The Company has designated these swaps as cash flow hedges of the interest rate risk attributable to forecasted variable interest (LIBOR) payments.
At September 30, 2012, the Company had $900 million notional amount outstanding in swap agreements, which included $500 million notional amount of forward-starting swaps that will become effective commencing December 31, 2013, that exchange variable rates of interest (LIBOR) for fixed interest rates over the terms of the agreements and are designated as cash flow hedges of the interest rate risk attributable to forecasted variable interest payments and have maturity dates through December 2015. At September 30, 2012, the weighted average fixed rate of interest on these swaps, excluding the forward-starting swaps, was approximately 1.6%. The effective portion of the after-tax fair value gains or losses on these swaps is included as a component of accumulated other comprehensive income (loss) (“AOCI”).
Forward Foreign Currency Contracts
The Company uses 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 through June 2014. The derivatives used to hedge these forecasted transactions that meet the criteria for hedge accounting are accounted for as cash flow hedges. The effective portion of the gains or losses on these derivatives is deferred as a component of AOCI and is recognized in earnings at the same time that the hedged item affects earnings and is included in the same caption in the statements of operations as the underlying hedged item. At September 30, 2012, the Company had approximately $485 million notional amount of foreign currency contracts outstanding that are designated as cash flow hedges of forecasted inventory purchases and sales.
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At September 30, 2012, the Company had outstanding approximately $257 million notional amount of foreign currency contracts that are not designated as effective hedges for accounting purposes and have maturity dates through December 2013. Fair market value gains or losses are included in the results of operations and are classified in SG&A.
Commodity Contracts
The Company enters into commodity-based derivatives in order to mitigate the risk that the rising price of these commodities could have on the cost of certain of the Company’s raw materials. These commodity-based derivatives provide the Company with cost certainty, and in certain instances, allow the Company to benefit should the cost of the commodity fall below certain dollar thresholds. At September 30, 2012, the Company had outstanding approximately $7 million notional amount of commodity-based derivatives that are not designated as effective hedges for accounting purposes and have maturity dates through March 2014. Fair market value gains or losses are included in the results of operations and are classified in SG&A.
The following table presents the fair value of derivative financial instruments as of September 30, 2012:
September 30, 2012 | ||||
(in millions) | Asset (Liability) | |||
Derivatives designated as effective hedges: | ||||
Cash flow hedges: | ||||
Interest rate swaps | $ | (13.8 | ) | |
Foreign currency contracts | (2.3 | ) | ||
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| |||
Subtotal | (16.1 | ) | ||
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| |||
Derivatives not designated as effective hedges: | ||||
Foreign currency contracts | (4.7 | ) | ||
Commodity contracts | — | |||
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| |||
Subtotal | (4.7 | ) | ||
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| |||
Total | $ | (20.8 | ) | |
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Net Investment Hedge
The Company designated its Euro-denominated 7 1/2% senior subordinated notes due 2020, with an aggregate principal balance of €150 million (the “Hedging Instrument”), as a net investment hedge of the foreign currency exposure of its net investment in certain Euro-denominated subsidiaries. Foreign currency gains and losses on the Hedging Instrument are included as a component of AOCI. At September 30, 2012, $2.9 million of deferred losses have been recorded in AOCI.
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Other than as discussed above, there have been no material changes from the information previously reported under Part II, Item 7A. in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011.
Item 4. | Controls and Procedures |
As required by Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of its disclosure controls and procedures as of the end of the period covered by this quarterly report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) were effective as of the end of the period covered by this quarterly report.
As required by Rule 13a-15(d) under the Exchange Act, the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the Company’s internal control over financial reporting to determine whether any changes occurred during the quarter covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Based on that evaluation, there have been no such changes during the quarter covered by this quarterly report.
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Item 1. | Legal Proceedings |
The Company is involved in various legal disputes and other legal proceedings that arise from time to time in the ordinary course of business. In addition, the Company or certain of its subsidiaries have been identified by the United States Environmental Protection Agency (“EPA”) or a state environmental agency as a Potentially Responsible Party pursuant to the federal Superfund Act and/or state Superfund laws comparable to the federal law at various sites. Based on currently available information, the Company does not believe that the disposition of any of the legal or environmental disputes the Company or its subsidiaries are currently involved in will have a material adverse effect upon the consolidated financial condition, results of operations or cash flows of the Company. It is possible that, as additional information becomes available, the impact on the Company of an adverse determination could have a different effect.
Litigation
The Company and/or its subsidiaries are involved in various lawsuits arising from time to time that the Company considers ordinary routine litigation incidental to its business. Amounts accrued for litigation matters represent the anticipated costs (damages and/or settlement amounts) in connection with pending litigation and claims and related anticipated legal fees for defending such actions. The costs are accrued when it is both probable that a liability has been incurred and the amount can be reasonably estimated. The accruals are based upon the Company’s assessment, after consultation with counsel (if deemed appropriate), of probable loss based on the facts and circumstances of each case, the legal issues involved, the nature of the claim made, the nature of the damages sought and any relevant information about the plaintiffs and other significant factors that vary by case. When it is not possible to estimate a specific expected cost to be incurred, the Company evaluates the range of probable loss and records the minimum end of the range. The Company believes that anticipated probable costs of litigation matters have been adequately reserved to the extent determinable. Based on current information, the Company believes that the ultimate conclusion of the various pending litigation 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.
Product Liability
As a consumer goods manufacturer and distributor, the Company and/or its subsidiaries face the risk of product liability and related lawsuits involving claims for substantial money damages, product recall actions and higher than anticipated rates of warranty returns or other returns of goods.
The Company and/or its subsidiaries are therefore party to various personal injury and property damage lawsuits relating to their products and incidental to their business. Annually, the Company sets its product liability insurance program, which is an occurrence-based program based on the Company and its subsidiaries’ current and historical claims experience and the availability and cost of insurance. The Company’s product liability insurance program generally includes a self-insurance retention per occurrence.
Cumulative amounts estimated to be payable by the Company with respect to pending and potential claims for all years in which the Company is liable under its self-insurance retention have been accrued as liabilities. Such accrued liabilities are based on estimates (which include actuarial determinations made by an independent actuarial consultant as to liability exposure, taking into account prior experience, number of claims and other relevant factors); thus, the Company’s ultimate liability may exceed or be less than the amounts accrued. The methods of making such estimates and establishing the resulting liability are reviewed on a regular basis and any adjustments resulting therefrom are reflected in current operating results.
Based on current information, the Company believes 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.
Item 1A. | Risk Factors |
There have been no material changes in our risk factors from those disclosed in Part I, Item 1A. of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011.
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Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
The following table provides information about purchases by the Company during the three months ended September 30, 2012 of equity securities of the Company:
Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased As Part of a Publicly Announced Repurchase Program (1) | Approximate Dollar Value of Shares that May Yet be Purchased Under the Repurchase Program (1) | ||||||||||||
July 1 – July 31 | — | $ | — | — | $ | 65,116,000 | ||||||||||
August 1 – August 31 | — | — | — | $ | 65,116,000 | |||||||||||
September 1 – September 30 | 1,895,000 | 52.87 | 1,895,000 | $ | 149,811,000 | (3) | ||||||||||
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| |||||||||
Total | 1,895,000 | 52.87 | 1,895,500 | |||||||||||||
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(1) | In August 2011, the Board of Directors (the “Board”) authorized a stock repurchase program allowing the Company to repurchase up to $500 million of its common stock at prevailing market prices or in privately-negotiated transactions (the “Stock Repurchase Program”). In January 2012, the Board authorized an increase in the then available repurchase capacity of the Stock Repurchase Program to $500 million (the “January Increase”). In September 2012, the Board authorized an increase in the then available repurchase capacity of the Stock Repurchase Program to $250 million (the “September Increase”). |
(2) | Represents amounts subsequent to the January Increase. |
(3) | Represents amounts subsequent to the September Increase. |
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Item 6. | Exhibits |
The following exhibits are filed as part of this Quarterly Report on Form 10-Q:
Exhibit | Description | |
3.1 | Restated Certificate of Incorporation of the Company (filed as Exhibit 3.1 to the Company’s Annual Report on Form 10-K, filed on March 27, 2002, and incorporated herein by reference). | |
3.2 | Certificate of Amendment of the Restated Certificate of Incorporation of the Company (filed as Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed on June 4, 2002, and incorporated herein by reference). | |
3.3 | Certificate of Amendment of the Restated Certificate of Incorporation of the Company (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on June 15, 2005, and incorporated herein by reference). | |
3.4 | Certificate of Amendment of the Restated Certificate of Incorporation of the Company (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on June 17, 2011, and incorporated herein by reference). | |
3.5 | Second Amended and Restated Bylaws of the Company (filed as Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed on June 17, 2011, and incorporated herein by reference). | |
4.1 | Indenture related to Jarden Corporation’s 1 7/8% Senior Subordinated Convertible Notes due 2018, dated as of September 18, 2012, among Jarden Corporation, subsidiary guarantors party thereto and Wells Fargo Bank, National Association, as trustee (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed on September 21, 2012, and incorporated herein by reference). | |
4.2 | Form of 1 7/8% Senior Subordinated Convertible Note due 2018 (filed as Exhibit A to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed on September 21, 2012, and incorporated herein by reference). | |
†10.1 | Fifth Amended and Restated Employment Agreement, dated as of July 23 2012, between the Company and Martin E. Franklin (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on July 27, 2012, and incorporated herein by reference). | |
†10.2 | Fifth Amended and Restated Employment Agreement, dated as of July 23 2012, between the Company and Ian G.H. Ashken (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed on July 27, 2012, and incorporated herein by reference). | |
†10.3 | Fourth Amended and Restated Employment Agreement, dated as of July 23 2012, between the Company and James E. Lillie (filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed on July 27, 2012, and incorporated herein by reference). | |
†10.4 | Amended and Restated Employment Agreement, dated as of July 23, 2012, between the Company and John E. Capps (filed as Exhibit 10.4 to the Company’s Current Report on Form 8-K, filed on July 27, 2012, and incorporated herein by reference). | |
†10.5 | Amended and Restated Employment Agreement, dated as of July 23, 2012, between the Company and Richard T. Sansone (filed as Exhibit 10.5 to the Company’s Current Report on Form 8-K, filed on July 27, 2012, and incorporated herein by reference). | |
10.6 | Purchase Agreement, dated September 12, 2012, among the Company, the subsidiary guarantors named therein, and Barclays Capital Inc. and J.P. Morgan Securities LLC, as representatives of the initial purchasers (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on September 13, 2012, and incorporated herein by reference). | |
*31.1 | Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
*31.2 | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
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Exhibit | Description | |
*32.1 | Certifications Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101 | The following materials from the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2012, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2012 and 2011, (ii) the Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2012 and 2011, (iii) the Condensed Consolidated Balance Sheets at September 30, 2012 and December 31, 2011, (iv) the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2012 and 2011, and (v) and Notes to Condensed Consolidated Financial Statements. |
* | Filed herewith. |
† | This Exhibit represents a management contract or compensatory plan. |
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: November 5, 2012 | ||
JARDEN CORPORATION | ||
(Registrant) | ||
By: | /s/ James L. Cunningham III | |
Name: | James L. Cunningham III | |
Title: | Vice President and Chief Accounting Officer (Principal Accounting Officer) |
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*31.1 | Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
*31.2 | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
*32.1 | Certifications Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101 | The following materials from the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2012, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2012 and 2011, (ii) the Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2012 and 2011, (iii) the Condensed Consolidated Balance Sheets at September 30, 2012 and December 31, 2011, (iv) the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2012 and 2011, and (v) and Notes to Condensed Consolidated Financial Statements. |
* | Filed herewith |