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Jarden Corp. Reports Operating Results (10-K)
Posted by: gurufocus (IP Logged)
Date: February 23, 2012 10:12PM
Jarden Corp. (JAH) filed Annual Report for the period ended 2011-12-31. Jarden Corp has a market cap of $3.13 billion; its shares were traded at around $35.27 with a P/E ratio of 10.1 and P/S ratio of 0.5. The dividend yield of Jarden Corp stocks is 1%. Jarden Corp had an annual average earning growth of 21% over the past 10 years. GuruFocus rated Jarden Corp the business predictability rank of 2.5-star.
Highlight of Business Operations:Net income for 2011 increased $98 million to $205 million versus the same prior year period. For 2011 and 2010, earnings per diluted share were $2.31 and $1.19, respectively. The increase in net income was primarily due to the $70.6 million non-cash charge recorded in 2010 related to the Companys Venezuela operations (see Venezuela Operations), a $20.5 million period-over-period decrease in the charge recorded for the purchase accounting adjustment for the elimination of manufacturers profit in inventory; incremental earnings from acquisitions; and the gross profit impact of higher sales, partially offset by the period-over-period increase in the impairment charges for goodwill, intangibles and other assets ($32.8 million), increased reorganization costs ($23.4 million) and the loss on early extinguishment of debt ($12.8 million) recorded in 2011.
Cost of sales for 2010 increased $657 million, or 17.6%, to $4.4 billion versus the same prior year period. The increase is primarily due to the Acquisition (approximately $342 million), improved sales and the inclusion of a $27.4 million charge during 2010, related to a purchase accounting adjustment, primarily due to the Acquisition, for the elimination of manufacturers profit in inventory that requires the fair value of the inventory acquired to be valued at the sales price of the finished inventory, less costs to complete and a reasonable profit allowance for selling effort. Cost of sales as a percentage of net sales for 2010 and 2009 was 72.8% and 72.3%, respectively (72.3% for 2010 excluding the charge for the elimination of manufacturers profit in inventory). Cost of sales as a percentage of net sales for 2010 was negatively affected as a result of the currency devaluation in Venezuela (see Venezuela Operations). Cost of sales as a percentage of net sales for 2009 was also negatively affected by the sell-through during the first quarter of 2009 of higher cost inventory that was built in 2008 during a significant rise in commodity prices.
The Companys reported tax rate for 2010 and 2009 was 53.5% and 46.2%, respectively. The increase from the statutory tax rate to the reported tax rate for 2010 results principally from the tax expense ($29.7 million) due to non-deductible charges primarily related to the currency devaluation in Venezuela and from the translation of U.S. dollar-denominated net assets in Venezuela (see Venezuela Operations) and a tax charge ($7.2 million) related to non-deductible transaction costs attributable to the Acquisition, partially offset by the tax benefit ($14.2 million) related to the reversal of a deferred tax liability attributable to the reduction of Venezuelan earnings considered as not permanently reinvested. The difference from the statutory tax rate to the reported tax rate for 2009 results principally from the U.S. tax expense of $25.7 million recognized on the undistributed foreign income, and $18.5 million recognized on the distributed foreign income, less a $12.9 million benefit attributable to local Venezuela inflationary adjustments and tax-exempt earnings.
Net income for 2010 decreased $22.0 million to $107 million versus the same prior year period. For 2010 and 2009, diluted earnings per share were $1.19 and $1.52, respectively. The decrease in net income was primarily due to the non-cash charges related to the Companys Venezuela operations ($70.6 million), the purchase accounting adjustment for the elimination of manufacturers profit in inventory ($27.4 million), acquisition-related and other charges ($42.3 million) and an increase in interest expense ($30.3 million), partially offset by higher sales, incremental earnings from the Acquisition and a decrease in reorganization costs ($52.3 million).
Net cash used in investing activities was $113 million and $883 million for 2011 and 2010, respectively. Cash used for the acquisition of businesses, net of cash acquired and earnout payments for 2011 decreased approximately $741 million over the same period due to the acquisitions in 2010. For 2011, capital expenditures were $127 million versus $138 million in 2010. 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.
Stocks Discussed: JAH,