HWCC » Topics » Changes in Connection with Becoming a Public Company

This excerpt taken from the HWCC 10-K filed Mar 14, 2007.

Changes in Connection with Becoming a Public Company

In June 2006 we completed our initial public offering, in which we sold 4,250,000 shares of common stock for approximately $49.9 million in net proceeds, which we used to reduce indebtedness under our credit facility. In connection with the offering, we terminated a management agreement between us and an affiliate of Code Hennessy & Simmons, under which we previously paid an annual $500,000 management fee.

As a public company, we have incurred significant additional operating expenses such as increased audit fees, professional fees, directors’ and officers’ insurance costs, compensation for our board of directors, and expenses related to hiring additional personnel and expanding our administrative functions. Many of these expenses were not incurred or were incurred at a lower level by us as a private company and are not included in our prior results of operations. We began to incur certain of these expenses during 2006, and we expect that these expenses will continue to increase. We expect these additional expenses to be in the range of $1.25 million to $1.75 million per year.

On December 30, 2005, we paid a special dividend of $20.0 million to our common stockholders and funded the payment by borrowing under our existing credit facilities. Due to the interest payable on these borrowings, our net earnings, and earnings per share, in 2006 were lower than they would have been had we not paid the special dividend.



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