Stockholders' Equity

6 Months Ended

Jun. 30, 2014

Equity [Abstract]

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

Common Stock

In January 2014, Kennedy Wilson completed an offering of 9.2 million shares of its common stock, which raised $190.7 million of net proceeds.

Dividend Distributions

During the following periods, Kennedy Wilson declared and paid the following cash distributions on its common and preferred stock:

	Six Months Ended June 30, 2014				Six Months Ended June 30, 2013
(Dollars in millions)	Declared		Paid		Declared		Paid
Preferred Stock
Series A (1)	$	3.0	$	3.0	$	3.0	$	3.0
Series B (2)	1.1		1.1		1.1		1.1
Total Preferred Stock	4.1		4.1		4.1		4.1
Common Stock (3)	16.4		14.0		10.3		5.0
Total (4)	$	20.5	$	18.1	$	14.4	$	9.1

⁽¹⁾ 6.00% Series A, 100,000 shares issued and outstanding as of June 30, 2014 and 2013, mandatorily convertible on May 19, 2015, or earlier at the option of the holders thereof.

⁽²⁾ 6.45% Series B, 32,550 shares issu ed and outstanding as of June 30, 2014 and 2013, mandatorily convertible on November 3, 2018, or earlier at the option of the holders thereof, or, in certain circumstances, at our election on or after May 3, 2017.

⁽³⁾ $0.0001 par value per share, 200,000,000 and 125,000,000 shares authorized as of June 30, 2014 and 2013, respectively.

⁽⁴⁾ Common stock dividends were declared at the end of each quarter and paid in the following quarter. The amount declared and not paid is accrued on the consolidated balance sheet.

Stock-based Compensation

During each of three months ended June 30, 2014 and 2013, Kennedy Wilson recognized $1.7 million of compensation expense related to the vesting of previously issued restricted stock grants. During each of the six months ended June 30, 2014 and 2013, Kennedy Wilson recognized $3.4 million of compensation expense related to the vesting of previously issued restricted stock grants.

Accumulated Other Comprehensive Income

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

	Foreign Currency Translation			Forward Contract Foreign Currency			Total Accumulated Other Comprehensive Income
(Dollars in millions)
Balance at December 31, 2013	$	4.3		$	4.9		$	9.2
Unrealized gains (losses), arising during the period	35.8			(5.2		)	30.6
Amounts reclassified out of AOCI during the period(1)	(0.3		)	(6.8		)	(7.1		)
Taxes on unrealized losses, arising during the period	(13.9		)	1.6			(12.3		)
Noncontrolling interest	(18.8		)	—			(18.8		)
Balance at June 30, 2014	$	7.1		$	(5.5	)	$	1.6

⁽¹⁾ Amounts reclassified out of accumulated other comprehensive income relate to the consolidation of investments previously accounted for under the equity method. Pursuant to FASB ASC 805-10, Business Combinations, these amounts are included in the calculation of gain or loss as of the acquisition date. Please refer to Note 4 - Real Estate for further discussion on consolidated acquisitions.    

The functional 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 gains on foreign currency translation is a result of the strengthening of the U.S. dollar against the euro, the British pound and the Japanese yen during the six months ended June 30, 2014.

In order to manage currency fluctuations, the Company entered into forward foreign currency contracts to hedge a portion of its Japanese yen-based investments. During the six months ended June 30, 2014, the Company recognized a gross unrealized loss of $1.6 million related to these hedges. Kennedy Wilson also has a currency forward contract 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 wholly-owned and consolidated subsidiaries (see note 6 for more detail). During the six months ended June 30, 2014, the Company recognized a gross unrealized gain of $0.1 million related to its hedges on the euro and a gross unrealized loss of $4.1 million related to its hedges on the GBP.

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 June 30, 2014 and December 31, 2013 the Company had noncontrolling interest of $1.8 billion and $50.6 million, respectively.

The Company currently owns approximately 13.2% of KWE’s total issued share capital as of June 30, 2014.  Due to the terms provided in the investment management agreement between KWE and a wholly-owned subsidiary of the Company, the Company consolidates KWE’s results in its consolidated financial statements.  See Note 1 for additional details.  During the six months ended June 30, 2014, the Company recorded a $1.4 billion increase to non-controlling interest, net of issuance costs, relating to the equity of the noncontrolling shareholders of KWE.  The Company’s share of the issuance costs was $6.5 million.

As further discussed in Note 4, the Company was required to consolidate the assets and liabilities of seven operating properties and recorded an increase of $291.8 million to noncontrolling interest relating to the equity of the noncontrolling shareholders of these properties. See note 4.