Sunbeam 2004 Annual Report Download - page 25

Management’s Discussion and Analysis of Financial Condition and Results of Operations
(cont’d)
consisting of a $70 million revolving credit facility, a $60 million term loan facility, and a new $150
million five-year term loan facility. The new term loan facility bore interest at a rate equal to (i) the
Eurodollar Rate (as determined by the Administrative Agent) 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
0.50%, plus, in each case, an applicable margin of 2.75% per annum for Eurodollar loans and 1.75% per
annum for Base Rate loans. The pricing and principal of the revolving credit facility and the previously
existing term loan did not change. The revolving credit facility continued to have a $15 million letters of
credit sublimit and a $10 million swing line loans sublimit. On September 2, 2003, we drew down the full
amount of the new $150 million term loan facility, which funds were used principally to pay the majority
of the cash consideration for the Lehigh Acquisition. Our Amended Credit Agreement was scheduled to
mature on April 24, 2008.
The Amended Credit Agreement contained certain restrictions on the conduct of our business,
including, among other things restrictions, generally, on:
‰incurring debt;
‰disposing of certain assets;
‰making investments;
‰exceeding certain agreed upon capital expenditures;
‰creating or suffering liens;
‰completing certain mergers;
‰consolidations and sales of assets and, with permitted exceptions, acquisitions;
‰declaring dividends;
‰redeeming or prepaying other debt; and
‰certain transactions with affiliates.
The Amended Credit Agreement also included financial covenants that required us to maintain
certain leverage and fixed charge ratios and a minimum net worth.
On May 8, 2003, we issued an additional $30 million of Notes (bringing to a total $180 million of
Notes issued and outstanding, including the 2002 issuance discussed below). The net proceeds of the
offering were used to reduce the outstanding revolver balances under our senior credit facility. The
Notes were issued at a price of 106.5% of face value and we received approximately $32.0 million in
gross proceeds from the issuance. As a result of an exchange offer completed on December 2, 2003, all
of the Notes are governed by an indenture, dated as of April 24, 2002, as supplemented (“April 2002
Indenture”). Significant terms of the Notes and the April 2002 Indenture are discussed under “2002
Activity.”
On May 6, 2003, we entered into a $30 million interest rate swap (“New Swap”) to receive a fixed
rate of interest and pay a variable rate of interest based upon LIBOR. The New Swap is a swap against
our Notes.
During the fourth quarter of 2003, we recorded a non-cash restricted stock charge of approximately
$21.8 million related to the lapsing of restrictions over all the restricted stock issuances to three of our
executive officers, discussed immediately below and in “2002 Activity” also below. We received a tax
deduction for this non-cash restricted stock charge.
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