Rayovac 2005 Annual Report Download - page 101

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The terms of both the $350,000 81
/2% and
$700,000 73
/8% Senior Subordinated Notes permit
the holders to require the Company to repurchase all
or a portion of the notes in the event of a customary
event of default, including a change of control.
In addition, the terms of the notes restrict or limit
the ability of the Company and its subsidiaries to,
among other things: (i) pay dividends or make other
restricted payments, (ii) incur additional indebted-
ness and issue preferred stock, (iii) create liens,
(iv) enter into mergers, consolidations, or sales of
all or substantially all of the assets of the Company,
(v) make asset sales, (vi) enter into transactions
with affi liates, and (vii) issue or sell capital stock of
wholly owned subsidiaries of the Company. Payment
obligations of the notes are fully and unconditionally
guaranteed on a joint and several basis by all of the
Company’s domestic subsidiaries.
The Company was in compliance with all covenants
associated with the Senior Credit Facilities and
Senior Subordinated Notes that were in effect as of
and during the period ended September 30, 2005.
(7) Shareholders’ Equity
The Company granted approximately 1,242 shares
of restricted stock during 2005. Of these grants,
approximately 538 shares will vest over a three-year
period, with fi fty percent of the shares vesting on a
pro rata basis over the three-year period and the
remaining fi fty percent vesting based on the Com-
pany’s performance during the three-year period or
one year after if performance criteria are not met.
Approximately 317 shares granted will be 100%
vested on February 7, 2008 if specifi ed performance
targets are met. If those performance targets are
not met, the shares will vest on February 7, 2012.
The remaining 387 shares vest at varying dates
through 2009, including 293 that vest in 2008. All
vesting dates are subject to the recipient’s contin-
ued employment with the Company. The total market
value of the restricted shares on the date of grant
was approximately $41,924 which has been
recorded as unearned restricted stock compensa-
tion, a separate component of Shareholders’ equity.
Unearned compensation is being amortized to
expense over the appropriate vesting period.
In addition, the Company issued 13,750 shares
of common stock from treasury as partial consid-
eration for the United acquisition (see Note 16,
Acquisitions, where the United acquisition is further
described). The value of these shares was calcu-
lated at a share price of $31.94. The share price of
$31.94 was based on a fi ve-day average beginning
on December 30, 2004.
During 2004, the Company granted approximately
449 shares of restricted stock to certain members
of management. The total market value of the
restricted shares granted was approximately $9,746
which was recorded as a separate component of
shareholders’ equity. Unearned compensation is
being amortized to expense over the appropriate
vesting period of up to three years. During 2004, the
Company recognized the forfeiture of approximately
12 shares of restricted stock. The total market value
of the forfeited shares on the date of grant was
approximately $216 which was recorded as an
adjustment to unearned compensation.
On October 1, 2002, the Company granted
approximately 393 shares of restricted stock to cer-
tain members of management. The total market
value of the restricted shares on date of grant was
approximately $4,790 which was recorded as
unearned compensation as a separate component
of shareholders’ equity. During 2003, the Company
recognized the forfeiture of approximately 28
restricted shares of stock. The total market value on
the date of grant for the forfeited shares was approx-
imately $347 which was recorded as an adjustment
to unearned compensation. Approximately 101 of
these shares vested on September 30, 2004, 243
shares vested on September 30, 2005, and 21
shares vest on September 30, 2006, if the recipient
is still employed by the Company. Unearned com-
pensation is being amortized to expense over the
appropriate vesting period.
On August 16, 2002, the Company granted
approximately 24 shares of restricted stock to a cer-
tain member of management. These shares vested
on September 30, 2003, as the recipient was still
employed with the Company. The total market value
of the restricted shares on the date of grant was
approximately $313 which was recorded as unearned
compensation as a separate component of share-
holders’ equity. Unearned compensation was
amortized over the 13-month vesting period.
2005 Form 10-K Annual Report
Spectrum Brands, Inc.
2005 ANNUAL REPORT 81