Graco 2011 Annual Report Download - page 61

NEWELL RUBBERMAID 2011 Annual Report 59
2011 Financial Statements and Related Information
The medium-term note balances at December 31, 2011 and 2010 include mark-to-market adjustments of $35.8 million and
$42.3 million, respectively, to record the fair value of the hedges of the fixed-rate debt, and the mark-to-market adjustments had the
effect of increasing the reported value of the medium-term notes. The unamortized amount as of December 31, 2011 associated with
the termination of the interest rate swaps, $15.8 million, is included in the value of the medium-term notes. Compared to the stated
rates of the underlying medium-term notes, the interest rate swaps, including amortization of settled interest rate swaps, had the effect
of reducing interest expense by $31.5 million, $30.3 million and $26.1 million for 2011, 2010 and 2009, respectively.
In connection with the Capital Structure Optimization Plan (the “Plan”), the Company completed the offering and sale of
$550.0 million aggregate principal amount of 4.70% senior unsecured notes with a maturity of August 2020 (the “Notes”) in August 2010.
The net proceeds from this offering were $544.9 million, which together with cash on hand and short-term borrowings were used to
fund the repurchase of $500.0 million of shares of the Company’s common stock through an accelerated buyback program and to
complete a cash tender offer for any and all of the $300.0 million principal amount of outstanding 10.60% notes due 2019. The Notes
are unsecured and unsubordinated obligations of the Company and equally rank with all of its existing and future senior unsecured debt.
The Notes may be redeemed by the Company at any time, in whole or in part, at a redemption price plus accrued and unpaid interest to
the date of redemption. The redemption price is equal to the greater of (1) 100% of the principal amount of the Notes being redeemed
on the redemption date and (2) the sum of the present values of the remaining scheduled payments of principal and interest thereon
(not including any portion of any payments of interest accrued through the date of the redemption), discounted to the date of redemption
on a semiannual basis at a specified rate. The Notes also contain a provision that allows holders of the Notes to require the Company to
repurchase all or any part of the Notes if a change of control triggering event occurs. Under this provision, the repurchase of the Notes
will occur at a purchase price of 101% of the outstanding principal amount, plus accrued and unpaid interest, if any, on such Notes to
the date of repurchase. The Notes are classified as long-term debt in the Company’s Consolidated Balance Sheet at December 31, 2011
based on their maturity date.
In March 2009, the Company completed the offering and sale of $300.0 million aggregate principal amount of 10.60% senior
unsecured notes with a maturity of April 2019 (the “10.60% Notes”). Interest on the Notes is payable semiannually on April 15 and
October 15. The Company realized net proceeds from the offering of the 10.60% Notes of $290.2 million, which were used to complete
the 2009 Tender Offers (as such term is defined below) and for general corporate purposes. In connection with the Plan, the Company
conducted and completed a cash tender offer (the “Tender Offer”) in August 2010 through which it repurchased $279.3 million of the
$300.0 million aggregate principal amount outstanding of 10.60% Notes. The Company repurchased the 10.60% Notes at a fixed cash
purchase price of $1,437.50 per $1,000 principal amount of the 10.60% Notes and also paid all accrued and unpaid interest on the
10.60% Notes repurchased pursuant to the Tender Offer. As a result of premiums paid and fee as incurred associated with the Tender
Offer and the write-off of unamortized issuance costs, the Company recorded a pretax loss of $131.4 million, which is reflected in losses
related to extinguishments of debt in the Consolidated Statement of Operations for 2010. The $402.2 million cash paid to complete the
Tender Offer is included as payments on and for the settlement of notes payable and debt in the Consolidated Statement of Cash Flows
for 2010. The remaining $20.7 million principal amount outstanding of the 10.60% Notes is classified as long-term debt due to its
maturity in 2019.
In 2009, the Company conducted and completed tender offers through which it repurchased $180.1 million of the $250.0 million
aggregate principal amount outstanding of 4.625% notes due December 2009 and $144.9 million of the $250.0 million aggregate
principal amount outstanding of 4.000% notes due May 2010 (the “2009 Tender Offers”). As a result of premiums paid and fees
incurred associated with the 2009 Tender Offers, the Company recorded a pretax loss of $4.7 million, which is included in losses related
to extinguishments of debt in the Consolidated Statement of Operations for 2009. The $329.7 million paid to complete the 2009 Tender
Offers is included as payments on and for the settlement of notes payable and debt in the Consolidated Statement of Cash Flows for
2009. The Company repaid the remaining $69.9 million principal amount outstanding of the $250.0 million 4.625% notes in December
2009 and the remaining $105.1 million principal amount outstanding of the $250.0 million 4.000% notes in May 2010.
As of December 31, 2011, the current portion of long-term debt includes $250.0 million principal amount of the 6.75% senior notes
due March 2012.
Term Loan
In September 2008, the Company entered into a $400.0 million credit agreement (the “Agreement”), under which the Company
received an unsecured three-year term loan in the amount of $400.0 million (the “Term Loan”). The Company repaid $100.0 million
of the principal amount of the Term Loan in September 2010 and made a $100.0 million prepayment of the principal amount in
December 2010. During 2011, the Company repaid the remaining $150.0 million outstanding principal amount of the Term Loan based
on the maturity date. Borrowings under the Agreement bore interest at a rate of LIBOR plus a spread that was determined based on the
credit rating of the Company, and interest was payable no less frequently than monthly.
Convertible Notes
In March 2009, the Company issued $345.0 million of Convertible Notes. The Convertible Notes bear interest at a rate of 5.5% per year,
which is payable semiannually, and the Convertible Notes mature on March 15, 2014. The Convertible Notes are convertible at an initial
conversion rate of 116.198 shares of the Company’s common stock per $1,000 principal amount of Convertible Notes (representing an
initial conversion price of approximately $8.61 per share of common stock), subject to adjustment in certain circumstances. Upon
conversion, a holder will receive cash up to the aggregate principal amount of the Convertible Notes converted, and cash, shares of
common stock or a combination thereof (at the Company’s election) in respect of the conversion value above the Convertible Notes’
principal amount, if any. The Company entered into convertible note hedge transactions upon issuance to reduce the Company’s cost of
the conversion option (see Footnote 10). Net proceeds from this offering were used to complete the convertible note hedge transactions
and the 2009 Tender Offers and to repay debt and for general corporate purposes.