Sunbeam 2004 Annual Report Download - page 24

Management’s Discussion and Analysis of Financial Condition and Results of Operations
(cont’d)
In August 2004, our board of directors (“Board”) approved the granting of an aggregate of 140,000
restricted shares of our common stock to three of our executive officers. The restrictions on these shares
were to lapse ratably over a three-year period commencing January 1, 2005, and would lapse immediately
in the event of a change in control.
Following the signing of the AHI transaction, during October 2004, our Board amended the terms
of all of the 140,000 restricted shares of common stock issued in August 2004 to lapse immediately. Also
in conjunction with the AHI transaction, in October 2004, our Board accelerated the granting of an
aggregate amount of 735,000 restricted shares of common stock under our 2003 Stock Incentive Plan to
two of our executive officers that would otherwise have been granted to these executive officers in 2005-
2007 pursuant to such executives’ respective employment agreements. The Board approved that the
restrictions on these shares lapse upon issuance. We record non-cash compensation expense for our
issued and outstanding restricted stock either when the restrictions lapse or ratably over time, when the
passage of time is the only restriction. As such, we recorded a non-cash compensation expense for all
these restricted stock issuances and restriction lapses of approximately $32.4 million in the fourth
quarter of 2004.
In July 2004, our Board approved a grant of 10,000 restricted shares of our common stock to Mr.
Jonathan Franklin, who was a consultant to us and who is a brother of Mr. Martin E. Franklin, our
Chairman and Chief Executive Officer. The restrictions on 5,000 of these shares lapsed immediately and
we recorded a non-cash compensation charge based on the fair market value of our common stock on
the date of grant. The restrictions on the remaining 5,000 of these shares lapse ratably over a four year
period. Non-cash compensation expense is being recognized on these shares based on the market value
of our common stock at the time of the lapsing. All of the shares which still have a restriction remaining
will have the restrictions lapse immediately upon the event of a change in control.
In April 2004, we repaid the remaining seller debt financing incurred in connection with the Tilia
Acquisition, which included both principal and accrued interest thereon, in the amount of
approximately $5.4 million.
During 2004, we incurred costs in connection with the issuance of the Second Amended Credit
Agreement of approximately $2.3 million.
In addition, during 2004, we issued 70,080 restricted shares of our common stock to certain other
officers and employees under our 2003 Stock Incentive Plan. The restrictions on 26,750 of these shares
will lapse ratably over five years of employment with us. The restrictions on the remaining 43,330 of
these shares will lapse upon the latter of either our stock price achieving a volume weighted average of
$64 per share for ten consecutive business days or November 1, 2008.
We issued all of the restricted shares discussed above out of our treasury account.
2003 Activity
On September 30, 2003, we completed a public offering (“Offering”) of approximately 4.8 million
shares of our common stock at $24.67 per share. Proceeds from the Offering, net of underwriting fees
and related expenses, totaled approximately $112.3 million. The net proceeds of the Offering were used
for a combination of general corporate purposes, acquisitions and debt repayment.
During 2003, we amended and restated our existing senior credit facility (“Amended Credit
Agreement”). The Amended Credit Agreement provided for up to $280 million of senior secured loans,
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