Sunbeam 2004 Annual Report Download - page 30

Management’s Discussion and Analysis of Financial Condition and Results of Operations
(cont’d)
(1) The debt amounts are based on the principal payments that will be due upon their maturity as well
as scheduled interest payments. Interest payments on our variable debt have been calculated based on
their scheduled payment dates and using the weighted average interest rate on our variable debt as of
December 31, 2004. Interest payments on our fixed rate debt are calculated based on their scheduled
payment dates. The debt amounts exclude approximately $3.2 million of non-debt balances arising from
the interest rate swap transactions described in Item 8., Note 15., Financial Statements and
Supplementary Data.
Commercial commitments are items that we could be obligated to pay in the future and are not
included in the above table:
‰As of December 31, 2004, we had $25.8 million in standby and commercial letters of credit of
which $20.0 million expire in 2006, with the remainder expiring in 2005;
‰In connection with a 2003 acquisition, we may be obligated to make future payments of up to
approximately $1.5 million in 2005;
‰In connection with the Tilia Acquisition, we are obligated to pay an earn-out in cash or our
common stock, at our discretion, of up to $25 million in 2005, provided that certain earnings
performance targets are met. At December 31, 2004, we estimated that the earn-out payment,
payable in the second quarter of 2005, could be approximately $17.3 million and we have
accrued this amount in Deferred Consideration for Acquisitions on our Consolidated Balance
Sheet;
‰In connection with the Lehigh Acquisition, we may be obligated to pay contingent consideration
in cash or our common stock, at our discretion, of up to $25 million in 2006, provided that
certain earnings performance targets are met;
‰In connection with the USPC Acquisition, we may be obligated to pay an earn-out provision with
a potential payment in cash of up to $2 million and an additional potential payment of up to $8
million (for a potential total of up to $10 million) in either cash or our common stock in 2007,
at our discretion, provided that certain earnings performance targets are met;
‰In connection with the Loew-Cornell Acquisition, we may be obligated to pay an earn-out
provision with a potential payment in cash or our common stock, at our discretion, beginning
with advance payments in 2005 and 2006. As of December 31, 2004, an amount of $0.5 million
in relation to this earn-out was accrued in Deferred Consideration for Acquisitions on our
Consolidated Balance Sheet. The balance on the earn-out is to be paid during 2007 through
2009 based on a defined formula as applied to Loew-Cornell’s earnings; and
‰In connection with a contract we have entered into to acquire additional intellectual property,
we may be obligated to pay up to $7.0 million between 2005 and 2010, providing certain
contractual obligations, including the issuance of patents amongst other things, are satisfied.
Other than as discussed specifically above, these amounts are not required to be included in our
Consolidated Balance Sheet.
Off-Balance-Sheet Arrangements
As of December 31, 2004, we did not have any significant off-balance-sheet arrangements, as defined
in Item 303(a)(4)(ii) of SEC Regulation S-K.
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