Sunbeam 2005 Annual Report Download - page 23

Management’s Discussion and Analysis of Financial Condition and
Results of Operations (cont’d)
Financial Condition, Liquidity and Capital Resources
2005 Activity
During the year ended December 31, 2005, the following changes were made to our capital resources:
‰we issued term debt (the “Term Loan”) under a new senior credit facility of which $1.3 billion
remains outstanding as of December 31, 2005; the proceeds were used to repay the Second
Amended Credit Agreement and to partially fund a portion of the cash consideration for the AHI
Acquisition and the THG Acquisition; the new senior credit facility also includes a $200 million
revolving credit facility;
‰we financed the AHI Acquisition primarily through our senior credit facility and the issuance of
$350 million of equity securities pursuant to a purchase agreement (“Equity Purchase
Agreement”);
‰we awarded 1,241,780 stock options and 2,996,011 restricted shares of common stock to certain
members of management and employees under our 2003 Stock Incentive Plan, as amended and
restated (the “2003 Plan”). A total of 2,175,000 of the restricted shares issued were awarded to
certain of our executive officers pursuant to the 2003 Plan (the “Executive Award”); and
‰we entered into a number of interest rate swaps which converted approximately $625 million of our
floating rate interest payments related to our term loan facility for a fixed obligation. Most of these
swaps were unwound and replaced in November 2005.
During 2005, we awarded 1,241,780 stock options and 2,996,011 restricted shares of common stock to
certain members of management and employees under our 2003 Plan.
Through the year ended December 31, 2005, the Company repurchased shares in the following
transactions:
‰In July and August of 2005, we repurchased 158,900 shares in the open market at an average price
per share of $37.83;
‰On October 18, 2005, we repurchased 400,000 shares of Company common stock for $33.25 per
share from a private investor; and
‰On November 1, 2005, we increased our treasury stock 460,317 shares that were tendered to us in
return for payment of withholding taxes relating to lapsing of certain shares of the Executive
Award.
From time to time we may elect to enter into derivative transactions to hedge our exposures to interest
rate and foreign currency fluctuations. We do not enter into derivative transactions for speculative
purposes.
As part of the foreign repatriation transactions, on December 21, 2005, in connection with Sunbeam
Corporation (Canada) Limited (“Sunbeam Canada”) legal reorganization and IRC §965 dividend, Sunbeam
Canada obtained a senior secured term loan facility (“Canadian Term Loan”) of $43 million U.S. dollars.
Sunbeam Canada chose to limit the foreign currency exchange exposure of this US dollar loan funded by a
Canadian dollar based entity by entering into a cross-currency interest rate swap that fixes the exchange
rate of the amortizing loan balance for the life of the loan. The swap instrument exchanges the variable
interest rate bases of the U.S. dollar balance (3-month U.S. LIBOR plus a spread of 175 basis points) and
the equivalent Canadian dollar balance (3-month CAD BA plus a spread of 192 basis points). This swap
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