Sunbeam 2001 Annual Report Download - page 28

corporate risk-management policies and do not
create additional risk because gains and losses
on derivative contracts offset losses and gains
on the assets, liabilities and transactions being
hedged. As derivative contracts are initiated,
the Company designates the instruments indi-
vidually as either a fair value hedge or a cash
flow hedge. Management reviews the correla-
tion and effectiveness of its derivatives on a
periodic basis.
The Company uses interest rate swaps to
manage a portion of its exposure to short-term
interest rate variations with respect to the Lon-
don Interbank Offered Rate on its term debt
obligations. The Company has designated the
interest rate swaps as cash flow hedges. Gains
and losses related to the effective portion of the
interest rate swaps are reported as a component
of other comprehensive income and reclassi-
fied into earnings in the same period the hedged
transaction affects earnings. Because the terms
of the swaps exactly match the terms of the
underlying debt, the swaps are perfectly effec-
tive. The interest rate swap agreements expire
in March 2002.
15. Related Party Transactions
On May 7, 2001, the Company entered
into a letter of intent (the ‘‘Letter’’) with Marlin
Partners II, LP (‘‘Marlin’’), Catterton Partners,
L.P. and Alpha Private Equity Group (collec-
tively, the ‘‘Other Investors’’) for the acquisi-
tion by Marlin and the Other Investors of all of
the issued and outstanding common stock of
the Company. At the time, Marlin was a related
party due to its ownership of approximately 10
percent of the issued and outstanding common
stock of the Company. Mr. Martin Franklin and
Mr. Ian Ashken, the Company’s current Chair-
man and CEO, and Vice Chairman and CFO,
respectively, were the managing partners of
Marlin. According to the terms of the Letter,
Marlin was reimbursed approximately $480,000
of expenses related to the contemplated trans-
action. On June 24, 2001, Messrs. Franklin and
Ashken became Directors of the Company and
on September 24, 2001, Messrs. Franklin and
Ashken became executive officers of the Com-
pany.
16. Earnings Per Share
Basic earnings per share are computed by
dividing net income by the weighted average
number of common shares outstanding for the
period. Diluted earnings per share are calcu-
lated based on the weighted average number of
outstanding common shares plus the dilutive
effect of stock options as if they were exercised.
Due to the net loss for 2001, the effect of the
potential exercise of stock options was not con-
sidered in the diluted earnings per share calcu-
lation for that year since it would be antidilu-
tive.
A computation of earnings per share is as
follows for the years ended December 31:
(in thousands, except per share
amounts) 2001 2000 1999
Income (loss) from
continuing operations.... $(85,429) $4,922 $30,307
Discontinued operations . . . — — (87)
Extraordinary loss from
early extinguishment of
debt .................... — — (1,028)
Net income (loss) .......... $(85,429) $4,922 $29,192
Weighted average shares
outstanding ............. 6,363 6,338 6,734
Additional shares assuming
conversion of stock
options ................. — 45 85
Weighted average shares
outstanding assuming
conversion .............. 6,363 6,383 6,819
Basic earnings (loss) per
share:
Income (loss) from
continuing operations.... $ (13.43) $ 0.78 $ 4.50
Discontinued operations . . . — — (0.01)
Extraordinary loss from
early extinguishment of
debt .................... — — (0.15)
Net income (loss) .......... $ (13.43) $ 0.78 $ 4.34
Diluted earnings (loss) per
share — assuming
conversion:
Income (loss) from
continuing operations.... $ (13.43) $ 0.77 $ 4.44
Discontinued operations . . . — — (0.01)
Extraordinary loss from
early extinguishment of
debt .................... — — (0.15)
Net income (loss) .......... $ (13.43) $ 0.77 $ 4.28
Alltrista
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