CAPITAL STOCK TRANSACTIONS

12 Months Ended

Dec. 31, 2013

Equity [Abstract]

CAPITAL STOCK TRANSACTIONS

CAPITAL STOCK TRANSACTIONS

Common Stock

In September 2013, Kennedy Wilson completed an offering of 6.9 million shares of its common stock, which raised $122.0 million of net proceeds.

In March 2013, Kennedy Wilson completed an offering of 9.0 million shares of its common stock, which raised $133.8 million of net proceeds. In April 2013, Kennedy Wilson issued approximately 1.4 million shares of its common stock as a result of the underwriters fully exercising their option to purchase additional shares, which resulted in net proceeds of $20.1 million.

In July 2012, Kennedy Wilson completed a follow-on offering of 8.6 million shares of its common stock, which raised $106.2 million of net proceeds.

During 2011, Kennedy Wilson issued 4.4 million shares of the its common stock to an institutional investor for $10.70 per share when the market value was $12.20 per share. In addition, as a result of its contractual rights, the preferred shareholder also acquired 400,000 shares for $10.70 per share, representing a $0.6 million discount. Because the discount was the result of the preferred shareholder's contractual rights, it is reflected as additional preferred dividend in the accompanying consolidated statements of operations.

During 2011, Kennedy Wilson completed a follow-on offering of 6.9 million shares of its common stock, which raised $71.7 million of net proceeds.

Preferred Stock

During 2010, Kennedy Wilson issued two series of Convertible Cumulative Preferred Stock (together “the Preferred Stock”) at $1,000 per share, series A (100,000 shares) and series B (32,550 shares), for total proceeds less issuance costs of $99.8 million and $32.5 million. The series A Preferred Stock is convertible into common stock at any time at the option of the holder prior to May 19, 2015 at a price of $12.41 per share and is mandatorily convertible into common stock on May 19, 2015. The series B Preferred Stock is convertible into common stock at any time at the option of the holder prior to November 3, 2018 at a price of $10.70 per share and is mandatorily convertible into common stock on November 3, 2018. The series A and series B Preferred Stock have dividend rates of 6.0% and 6.452% payable quarterly.

The certificate of designations of the Preferred Stock contain provisions that require Kennedy Wilson to commence an offer to purchase all shares of the Preferred Stock at a purchase price in cash per share of Preferred Stock equal to $1,150 plus all accumulated and accrued dividends upon the occurrence of a fundamental change, defined as a change of control. The parties have agreed that a change of control is deemed to occur when any person or group other than the purchaser of the Preferred Stock and its affiliates, or any officer or director of Kennedy Wilson as of the issue date of the Preferred Stock, acquires directly or indirectly voting control or direction over more than 35% of the voting control of Kennedy Wilson for a period of seven consecutive days following the earlier of the date the Company becomes aware of such acquisition and the date such person or group files a Schedule 13D. This change of control provision is within Kennedy Wilson’s control as the Board of Directors, at its discretion, would be able to issue blank check Preferred Stock at any time for any reason which could dilute the person or group to below the 35% of the voting control threshold. As such, Kennedy Wilson has concluded that the change of control is within the control of Kennedy Wilson and therefore has classified the Preferred Stock as permanent equity in the accompanying consolidated balance sheets.

In connection with the issuance of the Preferred Stock, Kennedy Wilson entered into registration rights agreements that allow for the holders of the Preferred Stock, with at least a 51% vote, to demand registration of the Preferred Stock (or converted common stock) on or after November 13, 2010. If Kennedy Wilson does not satisfy the demand for registration, the holders of the Preferred Stock (or converted common stock) would be entitled to receive a payment in an amount equal to 1.50% per annum of the liquidation preference of $1,000 per share. There are sufficient shares of unregistered common stock authorized and unissued to accommodate the conversion feature.

Warrants

In April 2010, the Board of Directors authorized a warrant repurchase program enabling Kennedy Wilson to repurchase up to 12.5 million of its outstanding warrants. The warrants carry an exercise price of $12.50 with an expiration date of November 14, 2014. On December 20, 2013, Kennedy Wilson redeemed 6,963 warrants at a price of $0.01 per warrant since the share price of its common stock exceeded $19.50 per share for 20 trading days within a 30 trading day period ending on the third business day prior to the notice of redemption to warrant holders.

During the years ended December 31, 2013 and 2012, Kennedy Wilson repurchased a total of 0.4 million and 0.6 million of its outstanding warrants for total consideration of $1.4 million and $1.6 million. The Company received $15.4 million from warrant holders due to the exercise of 2.7 million warrants during 2013. There are 2.7 million warrants outstanding as of December 31, 2013.

Dividend Distributions

Kennedy Wilson declared and paid the following cash dividends on its common and preferred stock:

(Dollars in millions)	Year Ended December 31, 2013				Year Ended December 31, 2012
	Declared		Paid		Declared		Paid
Preferred Stock
Series A	$	6.0	$	6.0	$	6.0	$	6.0
Series B	2.1		2.1		2.1		2.1
Total Preferred Stock	8.1		8.1		8.1		8.1
Common Stock	21.8		16.0		11.7		13.8
Total (1)	$	29.9	$	24.1	$	19.8	$	21.9

—————

⁽¹⁾ The difference between declared and paid is the amount accrued on the consolidated balance sheets.

Accumulated Other Comprehensive Income

The following table summarizes the changes in each component of accumulated other comprehensive income (loss) ("AOCI"), net of 40% estimated tax:

	Foreign Currency Translation			Forward Contract Foreign Currency			Total Accumulated Other Comprehensive Income
Balance at December 31, 2012	$	10.8		$	1.8		$	12.6
Unrealized (losses) gains, arising during the period	(13.7		)	5.2			(8.5		)
Amounts reclassified out of AOCI during the period	2.8			—			2.8
Taxes on unrealized (losses) gains, arising during the period	4.4			(2.1		)	2.3
Balance at December 31, 2013	$	4.3		$	4.9		$	9.2

The local currencies for our interests in foreign operations include the euro, the British pound sterling, and the Japanese yen. The related amounts on our balance sheets are translated into U.S. dollars at the exchange rates at the respective financial statement date, while amounts on our statements of operations are translated at the average exchange rates during the respective period. The increase in the unrealized losses on foreign currency translation is a result of the strengthening of the U.S. dollar against the Japanese yen which was offset by the weakening of U.S. dollar against the euro and British pound sterling during the year ended December 31, 2013.

In order to manage currency fluctuations, KWR entered into forward foreign currency contracts to hedge a portion of its Japanese yen-based investments. During the year ended December 31, 2013, the Company recognized an unrealized gain of $12.9 million related to these hedges from its portion of the hedge. The Company also has currency forward contracts to manage its exposure to currency fluctuations between its functional currency (U.S. dollars) and the functional currency (euros and GBP) of certain of its investments in Europe (see note 7 for more detail). During the year ended December 31, 2013, the Company recognized a gross unrealized loss of $5.3 million and $2.6 million related to its hedges on the euro and GBP currencies.

Additionally, during the year, KWR settled several Japanese yen-related hedges resulting in cash proceeds of $23.1 million, of which the Company received $10.8 million. The cash received as a result of unwinding these hedges will not be realized in our statement of operations until the underlying investment is substantially liquidated.

As a result of the substantial liquidation of U.K. Loan Pool, Kennedy Wilson has reclassified $2.8 million out of AOCI and recognized a loss in foreign currency translations in the accompanying consolidated statements of operations.

Noncontrolling Interests

Noncontrolling interests consist of the ownership interests of noncontrolling shareholders in consolidated subsidiaries,

and are presented separately on the balance sheet. As of December 31, 2013 and 2012 the Company has noncontrolling interest of $50.6 million and $9.1 million. The increase in noncontrolling interests during 2013 is primarily due to the Company's consolidation of the Ritz Carlton, Lake Tahoe during the fourth quarter. Kennedy Wilson recorded a $20.3 million increase to noncontrolling interest relating to the equity of the noncontrolling shareholders. In addition, there was an increase to noncontrolling interest of $20.3 million relating to the net income associated with the noncontrolling shareholders primarily due to the acquisition-related gain from the consolidation of the Ritz Carlton, Lake Tahoe. See note 4.