MAIL STOP 03-08
April 8, 2005
Martin E. Franklin, Chief Executive Officer
Jarden Corporation
555 Theodore Fremd Avenue
Rye, NY 10580
RE: Jarden Corporation
Registration Statement on Form S-3
Filed March 9, 2005
File No. 333-123218
Annual Report on Form 10-K for the fiscal year ended
December 31, 2004
Filed March 2, 2005
Amendment No. 1 to Current Report on Form 8-K
Filed March 24, 2005
Preliminary Proxy Statement on Schedule 14A
Filed April 6, 2005
File No. 1-13665
Dear Mr. Franklin:
We have reviewed your filings and have the following
comments.
Where indicated, we think you should revise your documents in
response to these comments. If you disagree, we will consider
your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
Form S-3
Calculation of Registration Fee Table
1. Please confirm your understanding that you may not rely on Rule
416 for the registration of shares issued in excess of the amount
named in the registration fee table that result by operation of
your
conversion ratios. Please revise or remove the statement
appearing
in footnote (2) as appropriate. See Telephone Interpretation #3S
under Securities Act Sections of the March 1999 supplement to the
Manual of Publicly-Available Telephone Interpretations.
Forward-Looking Statements, page ii
2. We note disclosure in the last paragraph under this caption
that
the information in the prospectus "...may prove to be inaccurate
because of the method by which we obtained some of the data for
our
estimates or because this information cannot always be verified
with
complete certainty...." It appears from this disclosure that you
are
disclaiming responsibility for the information in the prospectus.
Please revise to avoid any suggestion that you are not responsible
for the accuracy of the disclosure in the prospectus.
3. Please relocate this section, the Incorporation of Certain
Documents by Reference section, and the information appearing
under
the caption "The Company," to appear after the forepart of the
prospectus. Only the cover page, summary, and risk factors
sections
should appear in the forepart of the prospectus.
Risk Factors, page 5
4. Please revise your risk factor subheadings to concisely state
the
specific material risk each risk factor presents to your company
or
investors and the consequences should that risk factor occur.
Avoid
simply referring to a fact about your company or a future event in
your subheadings. Stating that the risk may "adversely affect"
your
business does not adequately address the potential consequences.
For
example, the following risk factor subheadings should be revised
accordingly:
* "We may be adversely affected by the trend towards retail trade
consolidation and private-labeling."
* "Sales of some of our products are seasonal and weather
related."
* "We depend on suppliers in Asia."
* "We depend on a single manufacturing facility for certain
products."
* "We cannot be certain that our product innovations and marketing
successes will continue."
* "We may experience difficulty in integrating acquired
businesses...,"
* "Our operations are subject to a number of federal, state and
local
environmental regulations."
* "We may be adversely affected by remediation obligations...,"
* "Our resources may be insufficient to manage the demands imposed
by
our growth."
* "We depend upon key personnel."
* "Our significant indebtedness could adversely affect our
financial
health."
* "We will require a significant amount of cash to service our
indebtedness..."
* "Our business could be adversely affected because of risks which
are particular to international operations."
* "Our business could be adversely affected by currency
fluctuations
in our international operations."
* "Our performance can fluctuate with the financial condition of
the
retail industry."
* "Our failure to successfully protect our intellectual property
rights..."
* "Our business could be adversely affected by complications
resulting from our implementation of new operating software
systems..."
* "We may not be able to implement successfully our restructuring
projects."
* "Certain of our employees are represented by labor unions."
* "Delaware law may limit possible takeovers."
5. Some of your risk factors appear generic because the
information
could apply to many companies in your industry or even in other
industries. Please revise to specifically indicate how the stated
risk applies to your company, or delete these risk factors. For
example, in the risk factor where you state that you depend upon
key
personnel, discuss whether you have formalized employment
agreements
with these officers. Revise or delete the following risk factors
accordingly:
* Our operations are dependent upon third-party suppliers and
services providers..., page 6. For example, do you have any
contracts with your primary suppliers and service providers?
* Competition in our industries may hinder our ability to
execute...,
page 8. For example, identify primary competitors in your
industry
and discuss the competitive environment.
* Our resources may be insufficient to manage the demands imposed
by
our growth, page 10. For example, do you expect rapid growth in
the
near future?
* We depend upon key personnel, page 10. For example, do the key
personnel you identify possess unique skills that can not be
replaced?
* Our significant indebtedness could adversely affect our
financial
health, page 10. For example, do you have current plans to incur
additional indebtedness?
* We enter into contracts with the United States government, page
11.
For example, is the United States government a primary customer of
your goods and services?
* Our business could be adversely affected by currency
fluctuations
in our international operations, page 11. For example, describe
in
more specific terms how currency fluctuations affect you.
* Our failure to successfully protect our intellectual property
rights. For example, identify any key intellectual property
rights
you possess.
* The market price for our common stock may be highly volatile.
For
example, will your convertible securities increase the volatility
in
your common stock price?
The sale of a substantial amount of our common stock..., page 15
6. Due to the significant potential of dilution resulting from the
preferred stock, you must provide risk factors discussing in
specific
detail the effects on the market price of the common stock and
dilution to common stockholders resulting from the conversion of
the
preferred stock. Accordingly, please discuss clearly under
separate
captions the following items:
(1) As of the latest date practicable, the amount of common shares
that you would issue assuming full conversion of all of the
existing
preferred stock, the percentage of the total outstanding common
shares these amounts represent, and that you do not know at
present
the exact number of shares that you will issue upon conversion.
(2) To the extent stockholders convert and then sell common stock,
the common stock price may decrease due to the additional shares
in
the market.
(3) The significant downward pressure on the price of the common
stock as the selling stockholder converts and sells material
amounts
of common stock could encourage short sales if not by the selling
stockholders then by others. This could place significant
downward
pressure on the price of the common stock. In this regard,
explain
the meaning and significance of short selling.
(4) The conversion of the securities may result in a substantial
dilution to the interests of other holders of common stock since
the
holders of convertible preferred stock may ultimately convert and
sell the full amount issuable on conversion.
(5) The possibility of a change of control resulting from the
issuance of the common and preferred stock to Warburg Pincus and
Catterton.
Selling Stockholders, page 16
7. We note disclosure indicating that the proceeds from the sale
of
securities under your purchase agreement with Warburg Pincus were
placed in escrow. Disclosure in your Form 10-K, however,
indicates
that the proceeds were released from escrow in January 2005.
Please
clarify here whether or not the proceeds are still held in escrow.
8. As currently drafted, the disclosure here regarding the terms
of
convertible securities is difficult to understand. Please revise
the
last full paragraph on page 16 and the carry-over paragraph on
pages
16-17 to more clearly and concisely discuss the terms and effect
of
the preferred stock. As part of your revisions, we suggest you
avoid
legalistic presentations, run-on sentences, and embedded lists.
We
also suggest you consider the following:
* The calculation for the number of shares of common stock into
which
preferred stock is convertible is confusing.
* Explain the possible adjustments rather than alluding to
"adjustments from time to time," or "subject to adjustment upon
certain changes of control."
* Disclose the dividend rate on the preferred stock and whether
the
dividends are payable in cash or additional preferred or common
stock.
* What is the current trading price of your common shares in
relation
to the 175% threshold for exercising the right to require holders
of
Series B Preferred Stock to convert into shares of common stock?
* What is the stockholder approval necessary to modify the
conversion
of the Series C Preferred Stock?
* Are there any standstill limitations, and if so whether they may
be
waived, in connection with the conversion terms?
These are only examples. We may have further comment based
upon your revisions.
9. In future periodic reports, we remind you to please discuss -
in
the Management`s Discussion and Analysis - the material terms and
possible depressive effects of the securities you are registering
here to the extent any of those securities remain unconverted.
10. Please identify the beneficial owners of the selling
stockholders
referenced in this section.
11. Disclose whether any of the selling stockholders are
registered
broker-dealers or affiliates of broker-dealers. For all selling
stockholders that are broker-dealers, disclose that they are
"underwriters" within the meaning of the Securities Act of 1933.
You
should revise the Plan of Distribution to state the names of the
selling stockholders who are broker-dealers, and to state that
they
are also underwriters with respect to the shares that they are
offering for resale.
12. For selling stockholders who are affiliates of broker-dealers,
disclose, if true, that:
* The seller purchased in the ordinary course of business, and
* At the time of the purchase of the securities to be resold, the
seller had no agreements or understandings, directly or
indirectly,
with any person to distribute the securities.
If these statements are not true for any selling stockholder, then
the prospectus must state that the selling stockholder is an
underwriter.
Plan of Distribution, page 21
13. We note disclosure indicating that selling stockholders may
sell
shares of your common stock short. Please discuss the effect of
short-selling on the market price of your common shares.
Where You Can Find More Information, page 23
14. Please delete your reference to our Chicago regional office as
we
no longer maintain that office. See Item 101(e) of Regulation S-
K.
Form 10-K
Business, page 3
Intellectual Property, page 14
15. We note that you entered into a settlement agreement with
Applica
Incorporated and Applica Consumer Products, Inc. to resolve patent
infringement litigation. To the extent the settlement is
material,
please disclose all material terms of the settlement agreement and
file the settlement agreement as a material exhibit. See Item 601
of
Regulation S-K.
Selected Financial Data, page 23
16. Please revise your presentation of selected financial data to
balance the presentation of EBITDA and operating cash flows with
cash
flows from investing and financing activities. See Question 12 of
the Frequently Asked Questions Regarding the Use of Non-GAAP
Financial Measures which may be found on our website.
Management`s Discussion and Analysis . . . , page 25
Results of Operations, page 28
17. You disclose the business reasons for the change during fiscal
2004 in overall net sales and net sales by segment, the change in
gross margin percentage as well as the change within expense line
items such as selling, general and administrative expenses.
However,
when the change between periods is due to more than one reason,
you
generally do not provide the dollar amounts or other data to
quantify
the impact of each business reason. In future filings, please
revise
to quantify the incremental impact of each individual business
reason
discussed relating to the overall change in the line item in
circumstances where there is more than one business reason that
caused the change between periods. In periods such as recently
where
several acquisitions may represent a principal reason for the
change,
you should consistently quantify in dollars or percent what
portion
of the change relates to new businesses acquired for each line
item
affected. See Item 303(a)(3) of Regulation S-K.
18. Please discuss the implications of general economic and
industry
conditions on your results of operations, liquidity and capital
resources. Disclose any known trends or uncertainties in the
economy
and industries in which you conduct business that are reasonably
likely to have a material effect on your financial condition or
results or operations. Please see Securities Act Interpretative
Release 33-8350 dated December 29, 2003 for further guidance.
19. Please disclose in tabular form for each period presented the
amount or percentage of total revenue contributed by each class of
similar products or services.
Financial Condition, Liquidity and Capital Resources, page 30
Cash and Financing Availability, page 36
20. You disclose that you have evaluated and take into account the
AHI acquisition and its related financing in January 2005 and
believe
you can fund cash requirements for the foreseeable future.
Supplementally please tell us what you mean by the phrase " the
foreseeable future." Supplementally please provide in tabular
format
a summary of the additional cash requirements you are now required
to
fund as a result of the contractual obligations and commercial
commitments accruing from the acquisition of AHI.
Contractual Obligations and Commercial Commitments, page 37
21. We note your disclosure in the table of amounts relating to
other
non-current liabilities. Supplementally please tell us if you have
reflected in this line item your cash requirements relating to
anticipated post retirement obligations and material management
compensation agreements that may require cash for the periods
presented.
Consolidated Financial Statements
Consolidated Statements of Income, page 48
22. Please be aware that it is not appropriate to present a
separate
line item for compensation that is based solely on the form of
compensation, such as restricted stock. Please revise your income
statement to include the charges associated with restricted stock
in
the appropriate expense line classification. You may disclose
either
on the face of the income statement or in a note the amount of
non-
cash compensation expense included in each line item on the income
statement.
23. Please present interest income and interest expense in
separate
line items or disclose in a footnote for each period presented the
amounts of interest income and interest expense that reconciles to
the interest expense, net line item. See paragraphs 7 and 9 of
Rule
5-03 of Regulation S-X.
Notes to Consolidated Financial Statements
Note 1 - Significant Accounting Policies
24. Refer to your disclosure of the classification of distribution
costs. Please tell us and revise your disclosure to include in a
footnote the types of the other amounts included in the cost of
sales
line item and the types of amounts included in the selling,
general
and administrative expenses line item.
25. Supplementally please tell us if you pay slotting fees,
engage
in cooperative advertising, have buy-down programs, or make other
payments or provide other promotions to resellers. If so, please
tell us and revise your disclosure to include your accounting
policy
for each of these types of arrangements, including the statement
of
income line item that each type of arrangement is included in.
For
each expense line item that includes these types of arrangements,
please disclose the related amounts included in that line item.
For
each type of arrangement treated as an expense rather than as a
reduction of revenues, please tell us how this arrangement meets
the
requirements of EITF 01-9. Please also discuss in Management
Discussion and Analysis any significant estimates resulting from
these arrangements.
Revenue Recognition, page 53
26. You disclose that revenue is recognized when title transfers
which, in most cases, occurs at the time when products are shipped
to
customers. Supplementally please tell us and expand your
disclosure
in future filings to clarify how your accounting policy for
revenue
recognition on product sales complies with the requirements of SAB
Topic 13A.3 - Delivery and Performance. If your shipping terms
determine risk of loss during shipment and/or title transfer,
please
explain them to us and disclose such terms in future filings.
Depreciation, page 54
27. We note your disclosure in Note 12 that you lease certain
assets.
Supplementally please tell us and disclose in future filings the
useful life used to calculate amortization of leasehold
improvements.
Please also tell us your basis if you include any option years in
your determination of the useful life of these assets.
Note 2 - Adoption of New Accounting Pronouncements, pages 55-57
28. Please tell us and provide SAB 74 disclosure for FIN 46 and
FIN
46R.
Note 7 - Intangibles, page 64
29. We note your disclosure of the allocation of cost to
intangible
assets such as trademarks acquired during fiscals 2003 and 2004.
Supplementally please explain to us your basis and the reason why
you
did not allocate a portion of the excess purchase price of any of
the
acquisition to other identifiable intangible assets, other than
goodwill, such as contracts and customer lists. Refer to
paragraphs
A14 to A28 of SFAS 141.
Note 8 - Debt and Interest, pages 64 -67
30. Supplementally please tell us and revise your disclosure in
future filings to indicate if you are in compliance with all
covenants and the repercussions of not meeting them. Please also
disclose the existence of any cross-default provisions. Refer to
Rule 4-08(c) of Regulation S-X.
31. You disclose on page 65 that your Amended Credit Agreement as
of
December 31, 2004 included certain debt covenants that include
restrictions on dividends and certain transactions with
affiliates.
Supplementally please tell us and revise your disclosure in future
filings to include the specific nature of the restrictions on
dividends by you as required by Rule 4-08(e)(1) of Regulation S-X.
Also, please tell us if there are specific restrictions on any
transfer of assets of your subsidiaries to you in the form of
loans,
advances or cash dividends without the consent of a third party.
If
so, please provide us with the detailed computations you performed
demonstrating that the restricted assets do not exceed the 25%
threshold. If the restricted assets exceed the 25% threshold,
revise
your financial statements to include the disclosure required by
Rule
4-08(e)(3) of Regulation S-X and Schedule I, which are discussed
under Rules 5-04 and 12-04 of Regulation S-X.
Controls and Procedures, page 79
32. We note that you have excluded from the evaluation of internal
controls the impact of the recent acquisition of Bicycle Holding,
Inc. and its subsidiary United States Playing Card Company.
Please
disclose any changes that have resulted from the acquisitions or,
alternatively, confirm to us that no change has occurred within
the
scope of Item 308(c).
Exhibits, Financial Statement Schedules and Reports on Form 8-K
Schedule II - Valuation and Qualifying Accounts and Reserves, page
94
33. Supplementally please tell us and revise your disclosure in
future filings to include amounts for sales returns and allowances
for all periods presented. Also, in light of the fact that
revenues
increased 43% during fiscal 2004 and 60% during fiscal 2003,
please
explain to us how you factored into your calculations and analysis
of
sales returns and allowance the impact of significant increases in
revenues the past two fiscal years.
Exhibits 31.1 and 31.2
34. It appears that these certifications do not comply with the
requirements of Item 601(b)(31) of Regulation S-K. In particular,
the certifications do not include paragraph 4(b), which is
required
when management provides its report on internal controls over
financial reporting. Please amend your Form 10-K to provide the
full
certification for both the Chief Executive Officer and Chief
Financial Officer as required by Item 601(b)(31) of Regulation S-
K.
Please be aware that compliance with this comment requires that
you
refile the Form 10-K in its entirety.
Form 8-K
Unaudited Pro Forma Condensed Consolidated Financial Statements
35. Your disclosure suggests that there may be revisions to the
preliminary purchase price allocations. Please provide us with a
summary of the changes and related reasons.
36. We note the adjustment relating to goodwill and intangible
assets
of $297.8 million for the AHI acquisition. Supplementally provide
us
with a summary of the type and amounts relating to intangible
assets
and your basis for these allocations. See paragraphs A14 to A28
of
SFAS 141.
Preliminary Proxy Statement
37. Please revise to comply with the above comments as applicable.
* * * *
As appropriate, please amend your registration statement,
annual report, and preliminary proxy statement in response to
these
comments. You may wish to provide us with marked copies of the
amendments to expedite our review. Please furnish a cover letter
with your amendments that keys your responses to our comments and
provides any requested supplemental information. Detailed cover
letters greatly facilitate our review. Please understand that we
may
have additional comments after reviewing your amendments and
responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
Notwithstanding our comments, in the event the company
requests
acceleration of the effective date of the pending registration
statement, it should furnish a letter, at the time of such
request,
acknowledging that:
* should the Commission or the staff, acting pursuant to delegated
authority, declare the filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;
* the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve the company from its full responsibility for the adequacy
and
accuracy of the disclosure in the filing; and
* the company may not assert staff comments and the declaration of
effectiveness as a defense in any proceeding initiated by the
Commission or any person under the federal securities laws of the
United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in connection with our review of
your
filing or in response to our comments on your filing.
We will consider a written request for acceleration of the
effective date of the registration statement as a confirmation of
the
fact that those requesting acceleration are aware of their
respective
responsibilities under the Securities Act of 1933 and the
Securities
Exchange Act of 1934 as they relate to the proposed public
offering
of the securities specified in the above registration statement.
We
will act on the request and, pursuant to delegated authority,
grant
acceleration of the effective date.
We direct your attention to Rules 460 and 461 regarding
requesting acceleration of a registration statement. Please allow
adequate time after the filing of any amendment for further review
before submitting a request for acceleration. Please provide this
request at least two business days in advance of the requested
effective date.
You may contact Milwood Hobbs, Staff Accountant, at (202)
942-
2846 or Mike Moran, Accounting Branch Chief, at (202) 942-2823 if
you
have questions regarding comments on the financial statements and
related matters. Please contact Matthew Benson, Staff Attorney,
at
(202) 942-2824, or David Mittelman, Legal Branch Chief, at (202)
942-
1921 with any other questions you may have.
Sincerely,
H. Christopher Owings
Assistant Director
cc: Robert L. Lawrence, Esq.
Kane Kessler, P.C.
Via Fax - (212) 245-3009
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Jarden Corporation
April 8, 2005
Page 12