STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2013

STOCKHOLDERS EQUITY [Abstract]

STOCKHOLDERS' EQUITY

NOTE 11 ¾STOCKHOLDERS’ EQUITY

In May 2013 Capstead completed a public offering of 6.8 million shares ($170.0 million face amount) of its 7.50% Series E Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share.  The Series E preferred shares are redeemable at the Company’s option for $25.00 per share, plus any accumulated and unpaid dividends, on or after May 13, 2018.  The Company and Series E stockholders have special redemption and conversion rights upon the occurrence of a change in control.  Net proceeds of the offering, after underwriting fees and other costs, totaled $164.3 million and together with $42.7 million of cash on hand were used to fund the June 2013 redemption of 77,000 and 16.5 million of the Company’s Series A and B perpetual preferred shares, respectively.  Holders of the remaining 109,000 Series A and 32,000 Series B shares that were outstanding prior to the redemptions exercised conversion rights resulting in the issuance of 181,000 and 20,000 common shares, respectively.  Series A and B preferred shares that were redeemed had redemption preferences aggregating $207.0 million, a total of $19.9 million in excess of these shares’ recorded amounts on the Company’s balance sheet.  This redemption preference premium is reflected as a $0.21 per common share reduction in net income available to common stockholders on the face of the Company’s Statement of Income for the year ended December 31, 2013.

In late 2013 the Company issued an additional 61,000 Series E preferred shares through an at-the-market continuous offering program for net proceeds of $1.4 million, net of expenses.  During 2012 and 2011, the Company raised $142.0 million and $231.7 million in new common equity capital, after underwriting discounts and offering expenses, by issuing 10.5 million and 17.8 million common shares, respectively, through a similar program.  Also during 2012 and 2011, the Company raised $4.5 million and $5.2 million, net of expenses, in preferred equity capital by issuing 309,000 and 365,000 Series B preferred shares, respectively, through a similar program.

In October 2012 the Company announced a common share repurchase program of up to $100 million of its outstanding common shares and suspended its common equity continuous offering program until further notice.  Pursuant to this authorization, repurchases totaled 3.0 million shares at an average cost of $11.80 per share for $35.1 million by December 31, 2012.  An additional 638,000 shares were repurchased in early January 2013 at an average cost of $11.43 per share for a total cost of $7.3 million.  The authorization does not obligate the Company to acquire any particular amount of common shares and the program may be suspended or discontinued at the Company’s discretion without prior notice.  Upon suspension of the repurchase program, issuances of common shares under the continuous offering program or by any other means may resume if conditions warrant, subject to compliance with federal securities laws, market conditions and blackout periods associated with the dissemination of earnings and dividend announcements and other important Company-specific news.

During 2013, 2012 and 2011, additions to common equity capital related to equity-based awards to directors and employees totaled $1.8 million, $4.4 million and $3.2 million, respectively, consisting primarily of amounts related to stock awards and also including net proceeds from the exercise of option awards.  See NOTE 12 for further information pertaining to long-term equity-based awards.

Capstead’s charter provides that if its board of directors determines in good faith that the direct or indirect ownership of the common shares has become concentrated to an extent which would cause Capstead REIT to fail to qualify as a REIT, the Company may redeem or repurchase, at fair market value, any number of common or preferred shares sufficient to maintain or bring such ownership into conformity with the Code.  In addition, the Company may refuse to transfer or issue common or preferred shares to any person whose ownership of the shares would result in Capstead REIT being unable to comply with the requirements of the Code.  Finally, the charter provides that the Company may redeem or refuse to transfer any of its shares to prevent the imposition of a penalty tax as a result of ownership of such shares by certain disqualified organizations, including governmental bodies and tax-exempt entities that are not subject to tax on unrelated business taxable income.