Rayovac 2008 Annual Report Download - page 155

Table of Contents
Index to Financial Statements
SPECTRUM BRANDS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In thousands, except per share amounts)
dividends on or redeem or repurchase its equity interests, make certain investments, expand into unrelated businesses, create liens on assets, merge or consolidate
with another company, transfer or sell all or substantially all of its assets, and enter into transactions with affiliates.
In addition, the indentures governing the Senior Subordinated Notes each provide for customary events of default, including failure to make required
payments, failure to comply with certain agreements or covenants, failure to make payments on or acceleration of certain other indebtedness, and certain events
of bankruptcy and insolvency. Events of default under the respective indentures arising from certain events of bankruptcy or insolvency will automatically cause
the acceleration of the amounts due under the notes subject to that indenture. If any other event of default under an indenture occurs and is continuing, the trustee
for that indenture or the registered holders of at least 25% in the then aggregate outstanding principal amount of those notes, may declare the acceleration of the
amounts due under those notes.
As of September 30, 2008, the Company was in compliance with all covenants under the Senior Subordinated Notes and the respective indentures. The
Company, however, is subject to certain limitations as a result of the Company’s Fixed Charge Coverage Ratio under each of the indentures being below 2:1.
Until the test is satisfied, the Company and certain of its subsidiaries are limited in their ability to make significant acquisitions or incur significant additional
senior credit facility debt beyond the Senior Credit Facilities. The Company does not expect its inability to satisfy the Fixed Charge Coverage Ratio test to impair
its ability to provide adequate liquidity to meet the short-term and long-term liquidity requirements of its existing businesses, although no assurance can be given
in this regard.
(8) Shareholders’ Equity
The Company granted approximately 408 shares of restricted stock during Fiscal 2008. Of these grants, 158 shares are time-based and vest on a pro rata basis
over a three year period and 250 are purely performance-based and vest only upon achievement of certain performance goals. All vesting dates are subject to the
recipient’s continued employment with the Company, except as otherwise permitted by the Company’s Board of Directors or if the employee is terminated
without cause. The total market value of the restricted shares on the date of grant was approximately $2,165.
The Company granted approximately 1,689 shares of restricted stock during Fiscal 2007. Of these grants, approximately 194 shares are time-based and
vest either 100% after three years or on a pro rata basis over a three-year period and 1,495 shares are purely performance-based and vest only upon achievement
of certain performance goals. The total market value of the restricted shares on the date of grant was approximately $12,750. Unearned compensation is being
amortized to expense over the appropriate vesting period. All vesting dates are subject to the recipient’s continued employment with the Company, except as
otherwise permitted by the Company’s Board of Directors or Compensation Committee or if the employee is terminated without cause.
The Company granted approximately 965 shares of restricted stock during Fiscal 2006. Of these grants, approximately 415 shares are time-based and vest
on a pro rata basis over either a three or four-year period and 390 shares are performance-based and vest upon achievement of certain performance goals. If the
performance targets are not met, the performance component of a restricted stock award will automatically vest one year after the originally scheduled vesting
date, effectively making the award time-based. The remaining 160 shares vest at specific dates throughout 2008 and 2009. The total market value of the restricted
shares on the date of grant was
150
Source: Spectrum Brands, Inc, 10-K, December 10, 2008