Sunbeam 2002 Annual Report Download - page 18

Jarden Corporation
Management’s Discussion and Analysis (Continued)
The New Credit Agreement matures on April 24, 2007. The revolving credit facility and the term loan
facility bear interest at a rate equal to (i) the Eurodollar Rate pursuant to an agreed formula or (ii) a Base Rate
equal to the higher of (a) the Bank of America prime rate and (b) the federal funds rate plus .50%, plus, in each
case, an applicable margin ranging from 2.00% to 2.75% for Eurodollar Rate loans and from .75% to 1.5% for
Base Rate loans.
The New Credit Agreement contains certain restrictions on the conduct of our business, including, among
other things restrictions, generally, on:
앫incurring debt;
앫making investments;
앫exceeding certain agreed upon capital expenditures;
앫creating or suffering liens;
앫completing certain mergers;
앫consolidations and sales of assets and, with permitted exceptions, acquisitions;
앫declaring dividends;
앫redeeming or prepaying other debt; and
앫certain transactions with affiliates.
The New Credit Agreement also requires us to maintain certain financial covenants.
During 2002, we incurred costs in connection with the issuance of the Notes, the New Notes and the New
Credit Agreement of approximately $7.4 million.
The seller debt financing for the Acquisition consists of a non-interest bearing note in the principal
amount of $10 million that is due on March 31, 2003 and a note in the principal amount of $5 million, bearing
interest at 5%, which is due on April 24, 2004. For accounting purposes, we have imputed an interest rate of
5% on the $10 million non-interest bearing note.
Until it was replaced by the New Credit Agreement on April 24, 2002, our senior credit facility, as amended
(‘‘Old Credit Agreement’’), provided for a revolving credit facility of $40 million and a term loan which
amortized periodically as required by the terms of the agreement. Interest on borrowings under the Old Credit
Agreement’s term loan and the revolving credit facilities were based upon fixed increments over adjusted
LIBOR or the agent bank’s alternate borrowing rate as defined in the agreement. The agreement also required
the payment of commitment fees on the unused balance. During the first quarter of 2002, approximately $38
million of tax refunds we received were used to repay a portion of the outstanding amounts under the Old Credit
Agreement.
In May 1999, we entered into a three-year interest rate swap with an initial notional value of $90 million.
The swap effectively fixed the interest rate on approximately 60% of our term debt at a maximum rate of 7.98%
for the three-year period. The swap matured and was terminated in March 2002.
As of December 31, 2002, we had $47.5 million outstanding under the term loan facility of the New Credit
Agreement, with a weighted average interest rate of 4.3%. As of December 31, 2002, we had not drawn down
any of the $50 million available under the revolving credit facility of the New Credit Agreement, although we
have used approximately $4.2 million of availability for the issuance of letters of credit. See ‘‘Recent
Developments’’ below, for a discussion of the recent amendment to our New Credit Agreement.
As a result of the losses arising from the sale of the TPD Assets, we recovered in January 2002
approximately $15.7 million of federal income taxes paid in 1999 and 2000 by utilizing the carryback of a tax
net operating loss generated in 2001. On March 9, 2002, The Job Creation and Workers Assistance Act of 2002
was enacted which provides, in part, for the carryback of 2001 net operating losses for five years instead of the
previous two year period. As a result, we filed for an additional refund of $22.8 million, of which $22.2 million
was received in March 2002 and the remainder was received in April 2002.
PG. 16