Sunbeam 2007 Annual Report Download - page 57

2007 which resulted in approximately $1.3 billion of proceeds, the increase of short-term debt of approximately
$216 million, partially offset by approximately $793 million in long-term debt payments in 2007.
Net cash used in investing activities was $973 million versus $278 million for 2007 and 2006, respectively.
Cash used for the acquisition of businesses for 2007 increased approximately $700 million over the same period
in 2006 due to the aforementioned acquisitions of K2 and Pure Fishing. For 2007, capital expenditures were
$81.2 million versus $68.8 million for the same period in 2006. The Company has historically maintained capital
expenditures at less than 2% of net sales and expects that capital expenditures for 2008 will be consistent with
this threshold.
CAPITAL RESOURCES
In connection with the Acquisition, the Company incurred approximately $891 million of additional debt
from its senior credit facility and its securitization facility, increased its revolving loan commitment by $25
million to a total of $225 million and amended the securitization facility to include additional domestic entities.
The additional debt is primarily comprised of the following: an incremental term loan (Term Loan B3) of $700
million that matures in 2012 and bears interest at LIBOR plus 250 basis points; and $185 million under the
securitization facility.
The aggregate consideration to the K2 shareholders was approximately $701 million and was comprised of a
cash payment of approximately $517 million and the issuance of approximately 5.3 million common shares of
the Company with a fair value of approximately $184 million. Additionally, the Company assumed and repaid
certain of K2’s debt, including accrued interest and make-whole premiums for approximately $341 million.
During February 2007, the Company completed a registered public offering for $650 million aggregate
principal amount of 7
1
⁄ 2 % Senior Subordinated Notes due 2017 (the “Senior Notes”) and received net proceeds
of approximately $637 million. Of these proceeds, approximately $195 million was used to purchase the entire
principal amount outstanding of the Company’s 9
3
⁄ 4 % Senior Subordinated Notes due 2012 (the “Senior
Subordinated Notes”) plus the tender premium and accrued interest. As a result of the purchase of Senior
Subordinated Notes, the Company recorded a $15.3 million loss on the extinguishment of debt for the year ended
December 31, 2007. This loss is primarily comprised of a $10.1 million tender premium, a loss of $4.5 million
related to the termination of $105 million notional amount of interest rate swaps that were designated as fair
value hedges against the Senior Subordinated Notes, the write off of $3.7 million of deferred debt issuance costs,
and the recognition of $3.7 million of deferred gains that resulted from previously terminated interest rate swaps.
Effective February 13, 2007, the Company amended its senior credit facility to: allow for the
aforementioned purchase of the Senior Subordinated Notes; reduce applicable margins on term and revolver
borrowings; add the ability of the Company to enter into additional incremental term loans not to exceed, in
aggregate, $750 million (of which $50 million is available at December 31, 2007), which includes the ability to
increase its revolving loan commitments in an aggregate principal amount not to exceed $150 million; appoint a
new administrative agent; and modify certain of its restrictive and financial covenants, among other things.
Subsequent to this amendment, during February, 2007, the Company voluntarily prepaid $200 million on its
principal outstanding under the Term Loan portion of the senior credit facility. At December 31, 2007, there were
no outstanding borrowings under the revolving credit portion of the senior credit facility. At December 31, 2007,
net availability under the senior credit facility was $190 million, after deducting $35 million of outstanding
letters of credit. The Company is required to pay commitment fees on the unused balance of the revolving credit
facility. At December 31, 2007, the annual commitment fee on unused balances was 0.375%.
In accordance with the senior credit facility, the Company was required to repay $19.3 million of principal
outstanding under its senior credit facility Term Loans and Foreign Senior Debt as a result of the proceeds
received from its November 2006 equity offering (see Note 13). Additionally, during December 2007 and 2006,
the Company made voluntary principal prepayments on its foreign senior debt of $22.3 million of $4.8 million,
respectively.
45