Document/Exhibit Description Pages Size
1: 10-K/A Amendment to Annual Report 68 415K
2: EX-3.B Articles of Incorporation/Organization or By-Laws 10 41K
3: EX-4.E Instrument Defining the Rights of Security Holders 7 27K
5: EX-10.BB Material Contract 8 29K
6: EX-10.CC Material Contract 8 33K
7: EX-10.DD Material Contract 11 52K
8: EX-10.EE Material Contract 11 51K
4: EX-10.F Material Contract 15 80K
9: EX-10.FF Material Contract 11 50K
10: EX-10.GG Material Contract 9 46K
11: EX-10.HH Material Contract 3 14K
12: EX-10.II Material Contract 3 14K
13: EX-10.JJ Material Contract 19 64K
14: EX-27 Financial Data Schedule (Pre-XBRL) 1 11K
15: EX-99.C Miscellaneous Exhibit 3 14K
16: EX-99.D Miscellaneous Exhibit 12 38K
17: EX-99.E Miscellaneous Exhibit 5 28K
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 28, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
FOR THE TRANSITION PERIOD FROM TO .
COMMISSION FILE NUMBER 0001-000052
[SUNBEAM LOGO]
SUNBEAM CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 25-1638266
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION)
1615 S. CONGRESS AVENUE, SUITE 200
DELRAY BEACH, FLORIDA 33445
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(561) 243-2100
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
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TITLE OF EACH CLASS: NAME OF EACH EXCHANGE ON WHICH REGISTERED:
COMMON STOCK, $0.01 PAR VALUE NEW YORK STOCK EXCHANGE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ ] No [x]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (/section/229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K/A or any amendment to this Form 10-K/A. [x]
The aggregate market value of all classes of the registrant's voting stock
held by non-affiliates as of November 4, 1998 was approximately $454,049,039.
On November 4, 1998, there were 100,857,462 shares of the registrant's
Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the 1998 Annual Meeting of
Shareholders are incorporated by reference in Part III hereof.
================================================================================
SUNBEAM CORPORATION AND SUBSIDIARIES
ANNUAL REPORT
ON FORM 10-K/A
TABLE OF CONTENTS
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PAGE
-----
PART I
SIGNIFICANT FINANCIAL AND BUSINESS DEVELOPMENTS .......... 1
ITEM 3. LEGAL PROCEEDINGS ........................................ 4
PART II
ITEM 6. SELECTED FINANCIAL DATA .................................. 8
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 9
CONDITION AND RESULTS OF OPERATIONS ......................
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA .............. 20
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS 20
ON FORM 8-K ..............................................
SIGNATURES ....................................................... 23
PART I
SIGNIFICANT FINANCIAL AND BUSINESS DEVELOPMENTS
1997 RESTRUCTURING
During 1997, Sunbeam Corporation (the "Company" or "Sunbeam") completed a
restructuring, resulting in a significant reduction in employees and
facilities. As a part of the restructuring, the Company divested certain of its
businesses and assets, including its furniture, time and temperature,
decorative bedding, gas heaters and logs, Counselor/registered trademark/ and
Borg/registered trademark/ scale businesses and its Biddeford, Maine textile
mill.
The Company's restructuring included the closure of 18 factories, 43
warehouses and 5 headquarters, resulting in the consolidation of all corporate
offices into a single headquarters office located in Delray Beach, Florida and
an operations center at its Hattiesburg manufacturing and distribution
facility. The number of manufacturing facilities was reduced from twenty-six to
eight (four in the US and four international).
COLEMAN, SIGNATURE BRANDS AND FIRST ALERT ACQUISITIONS
On March 2, 1998, the Company announced that it had entered into three
separate agreements to acquire The Coleman Company, Inc., Signature Brands USA,
Inc. and First Alert, Inc.
The Coleman Company, Inc. ("Coleman"), with 1997 revenues of approximately
$1.1 billion, is a leading manufacturer and marketer of outdoor recreational
products. It manufactures and distributes widely diversified product lines for
camping, leisure time and hardware markets, under the Coleman/registered
trademark/, Powermate/registered trademark/, Camping Gaz/registered trademark/
and Eastpak/registered trademark/ brand names. On March 30, 1998, the Company
acquired indirect beneficial ownership of 44,067,520 shares of Coleman common
stock, which represented approximately 81% of the total number of then
outstanding shares, from a subsidiary of MacAndrews & Forbes Holdings, Inc.
("M&F"), in exchange for 14,099,749 shares of the Company's common stock,
approximately $160 million in cash and the assumption of $1,016 million in
debt. The Company's agreement for the acquisition of the remaining publicly
held Coleman shares pursuant to a merger transaction (the "Coleman Merger")
provides that the remaining Coleman shareholders will receive .5677 shares of
the Company's common stock and $6.44 in cash for each share of Coleman common
stock outstanding. In addition, unexercised options under Coleman's stock
option plans will be cashed out at a price per share equal to the difference
between $27.50 per share and the exercise price of such options. The Company
now expects to complete the Coleman Merger during the first quarter of 1999.
See "Settlement of Coleman-Related Claims" below for information regarding the
settlement of certain claims relating to the Coleman acquisition, the terms of
which involve the issuance of warrants to purchase shares of the Company's
common stock at $7.00 per share.
On April 3, 1998, the Company acquired a more than 90% interest in
Signature Brands USA, Inc. ("Signature Brands") and First Alert, Inc. ("First
Alert") pursuant to cash tender offers for each company's outstanding shares.
The Company completed its acquisitions of the remaining publicly held shares of
each of Signature Brands and First Alert pursuant to merger transactions
consummated on April 6, 1998. Signature Brands, with 1997 revenues of
approximately $279 million, is a leading manufacturer of a comprehensive line
of consumer and professional products, including coffee makers marketed under
the Mr. Coffee/registered trademark/ brand name and consumer health products
marketed under the Health-o-Meter/registered trademark/, Counselor/registered
trademark/ and Borg/registered trademark/ brand names. First Alert, with
revenues of approximately $187 million, is the worldwide leader in residential
safety equipment including smoke and carbon monoxide detectors marketed under
the First Alert/registered trademark/ brand name. The consideration for the
Signature Brands and First Alert transactions was approximately $253 million
and $178 million, respectively, consisting of cash and the assumption of debt.
1
ISSUANCE OF ZERO COUPON CONVERTIBLE DEBENTURES AND NEW BANK CREDIT FACILITY
In order to finance the acquisitions of Coleman, Signature Brands and
First Alert and to repay substantially all of the outstanding indebtedness of
the Company and the three acquired companies, the Company completed an offering
of Zero Coupon Convertible Senior Subordinated Debentures due 2018 (the
"Debentures") at a yield to maturity of 5% (or approximately $2,014 million
principal amount at maturity) on March 25, 1998, which netted approximately
$730 million of proceeds to the Company, and the Company borrowed approximately
$1,325 million under a new bank credit facility (the "New Credit Facility").
The Company was required to file a registration statement with the SEC to
register the Debentures by June 23, 1998, which registration statement has not
been filed. From June 23, 1998 until the day on which the registration
statement is filed and declared effective, the Company is required to pay to
the Debenture holders cash liquidated damages accruing, for each day during
such period, at a rate per annum equal to 0.25% during the first 90 days and
0.50% thereafter multiplied by the total of the issue price of the Debentures
plus the original issue discount thereon on such day. The Company made its
first payment of approximately $525,000 to the Debenture holders on September
25, 1998.
The New Credit Facility provided for aggregate borrowings of up to $1.7
billion pursuant to (A) a revolving credit facility in an aggregate principal
amount of up to $400 million, (B) an $800 million term loan maturing on March
31, 2005, and (C) a $500 million term loan maturing on September 30, 2006.
Pursuant to the New Credit Facility, interest accrues, at the Company's option:
(A) at the London Interbank Offered Rate ("LIBOR") plus an agreed upon interest
margin, or (B) at the base rate of the administrative agent (generally the
higher of the prime commercial lending rate of the administrative agent or the
Federal Funds Rate plus 1/2 of 1%) plus an agreed upon interest margin which
varies depending upon the Company's leverage ratio, as defined, and other
items. At June 30, 1998, the Company was not in compliance with the financial
covenants and ratios. The Company and its lenders entered into an agreement
dated June 30, 1998, which provided that compliance with the covenants would be
waived through December 31, 1998. Borrowings under the New Credit Facility are
secured by certain of the Company's assets, including its stock interest in
Coleman and certain other subsidiaries and certain of the Company's tangible
and intangible personal property. The New Credit Facility contains certain
covenants, including limitations on the ability of the Company and its
subsidiaries to engage in certain transactions and the requirement to maintain
certain financial covenants and ratios. Pursuant to an amendment dated October
19, 1998, the Company is not required to comply with the original financial
covenants and ratios under the New Credit Facility until April 10, 1999, but
will be required to comply with an earnings before interest, taxes,
depreciation and amortization covenant, the amounts of which are to be
determined, beginning February 1999. Concurrent with each of these amendments,
interest margin was increased. The margin continues to increase monthly through
March 1999 to a maximum of 400 basis points over LIBOR. At September 30, 1998,
following the scheduled repayment of a portion of the term loan, the New Credit
Facility was reduced to $1,698 million in total, of which approximately $1,453
million was outstanding and approximately $245 million was available. In
addition, the Company's cash balance at September 30, 1998 was approximately
$43 million.
The Company is working closely with its bank lenders and hopes to reach
agreement with the bank lenders on a further amendment to the New Credit
Facility containing revised financial covenants which the bank lenders and the
Company find mutually acceptable. There can be no assurance that such an
amendment, or a further waiver of the existing financial covenants, will be
entered into with the bank lenders by April 10, 1999. The failure to obtain
such an amendment or further waiver would result in a violation of the existing
covenants, which would permit the bank lenders to accelerate the maturity of
all outstanding borrowings under the New Credit Facility.
PRESS RELEASES RELATING TO THE COMPANY'S FIRST QUARTER 1998 RESULTS
On March 19, 1998, the Company issued a press release announcing the
possibility that its net sales for the first quarter of 1998 might be lower
than the range of Wall Street analysts' estimates of $285
2
million to $295 million, but were expected to exceed the $253.4 million in net
sales achieved by the Company for the first quarter of 1997. On April 3, 1998,
the Company issued a press release announcing that the Company then expected
its net sales for the first quarter of 1998 would be approximately 5% lower
than those achieved in the first quarter of 1997 and that the Company would
report a loss for the quarter. On May 11, 1998, the Company announced results
for the first quarter of 1998, including revenues of $244.3 million, a net loss
from continuing operations of $7.8 million and a net loss of 52 cents per
share, and stated that it expected earnings per share in the range of $1.00 for
1998 and $2.00 for 1999. On June 15, 1998, the Company announced that such
forecasts should not be relied upon. Following each of these press releases,
the market price of the Company's stock fell substantially. The Company
subsequently issued a press release restating operating results for the first
quarter of 1998. See "Restatement of Financial Results" and Item 3--Legal
Proceedings, below.
MANAGEMENT AND BOARD CHANGES
On June 15 and 18, 1998, the Company announced the terminations of Albert
J. Dunlap as Chairman and Chief Executive Officer of the Company and Russell A.
Kersh as Vice-Chairman and Chief Financial Officer of the Company,
respectively. Messrs. Dunlap and Kersh resigned from the Board of Directors of
the Company effective August 5, 1998, and William T. Rutter resigned from the
Board of Directors effective July 8, 1998. On June 15, 1998, the Company also
announced that Jerry W. Levin had been elected as the Chief Executive Officer
and that Peter A. Langerman of Franklin Mutual Advisers, Inc., the investment
adviser to Franklin Mutual Series Fund, Inc., had been elected non-executive
Chairman of the Board of the Company. Mr. Levin and Howard Gittis of M&F and
Lawrence Sondike of Franklin Mutual Advisers, Inc. have been appointed to the
Board to fill the vacancies thereon and Director Faith Whittelsey has been
elected to fill the vacancy on the Audit Committee resulting from Mr. Rutter's
resignation. See "Executive Officers of the Registrant," below.
SEC INVESTIGATION
By letter dated June 17, 1998, the staff of the Division of Enforcement of
the SEC advised the Company that it was conducting an informal inquiry into the
Company's accounting policies and procedures and requested that the Company
produce certain documents. On July 2, 1998, the SEC issued a Formal Order of
Private Investigation, designating officers to take testimony and pursuant to
which a subpoena duces tecum was served on the Company requiring the production
of certain documents. On November 4, 1998, another SEC subpoena duces tecum
requiring the production of further documents was received by the Company. The
Company has provided numerous documents to the SEC staff and continues to
cooperate fully with the SEC staff.
RESTATEMENT OF FINANCIAL RESULTS
On June 25, 1998, the Company announced that its auditor, Arthur Andersen
LLP, would not consent to the inclusion of its opinion on the Company's 1997
financial statements in a registration statement the Company was planning to
file with the SEC. On June 30, 1998, the Company announced that the Audit
Committee of the Board of Directors would conduct a review of the Company's
prior financial statements and that therefore, those financial statements
should not be relied upon. The Company also announced that Deloitte & Touche
LLP had been retained to assist the Audit Committee and Arthur Andersen in
their review of the Company's prior financial statements. On August 6, 1998,
the Company announced that the Audit Committee of the Board of Directors had
determined that the Company would be required to restate its financial
statements for 1997, the first quarter of 1998, and possibly 1996, and that the
adjustments, while not then quantified, would be material. On October 20, 1998,
the Company announced the restatement of its financial results for a
six-quarter period from the fourth quarter of 1996 through the first quarter of
1998. See Part II.
SETTLEMENT OF COLEMAN-RELATED CLAIMS
On August 12, 1998, the Company announced that, following investigation
and negotiation conducted by a Special Committee of the Board, consisting of
four outside directors not affiliated with
3
M&F, the Company had entered into a settlement agreement with a subsidiary of
M&F pursuant to which the Company was released from certain threatened claims
of M&F and its affiliates arising from the Coleman acquisition and M&F agreed
to provide certain management personnel and assistance to the Company in
exchange for the issuance to the M&F subsidiary of five-year warrants to
purchase up to 23 million shares of the Company's common stock at an exercise
price of $7.00 per share, subject to anti-dilution provisions.
On October 21, 1998, the Company announced that it had entered into a
Memorandum of Understanding to settle, subject to court approval, certain class
actions brought by shareholders of Coleman challenging the proposed Coleman
Merger. Under the terms of the proposed settlement, the Company will issue to
the Coleman public shareholders five-year warrants to purchase 4.98 million
shares of the Company's common stock at $7.00 per share. These warrants will
generally have the same terms as the warrants previously issued to M&F's
subsidiary and will be issued when the Coleman Merger is consummated, which is
now expected to be in the first quarter of 1999. There can be no assurance that
the court will approve the settlement as proposed.
OTHER MATTERS
By letter dated May 22, 1998, the Company was advised by the New York
Stock Exchange (the "NYSE") that the Company did not meet the continuing
listing standards of the NYSE because the Company did not have tangible net
assets of at least $12 million and average annual net income of at least
$600,000 for 1995, 1996 and 1997. The Company has met with NYSE officials;
intends to provide to the NYSE a plan demonstrating the Company's ability to
get back into compliance with the NYSE's listing standards; and anticipates
that the Company's stock will continue to be listed on the NYSE.
In early August 1998, the Company entered into agreements with Messrs.
Dunlap and Kersh pursuant to which the parties agreed to exchange certain
information relating to the shareholder litigation against them and not to
assert any claims against each other for a period of at least six months. The
Company also has paid to Messrs. Dunlap and Kersh amounts related to vacation
and employment benefits. The Company has also agreed, pursuant to the Company's
Bylaws, to advance them defense costs subject to an undertaking received from
each of them to repay all amounts so advanced if it is determined that they did
not meet the applicable standard of conduct for indemnification under Delaware
law.
On October 13, 1998, Coleman completed the sale of the stock of its wholly
owned subsidiary, Coleman Spas, Inc. to MAAX, Inc. for a purchase price of
approximately $18 million, subject to certain post closing adjustments.
ITEM 3. LEGAL PROCEEDINGS
On April 23, 1998, two class action lawsuits were filed on behalf of
purchasers of the Company's common stock in the U. S. District Court for the
Southern District of Florida against the Company and certain of its present and
former officers and directors alleging violations of the federal securities
laws as discussed below (the "Consolidated Federal Actions"). Since that date,
at least fifteen similar class actions have been filed in the same Court. One
of the lawsuits also names as defendant Arthur Andersen LLP, the Company's
independent accountants.
The complaints in the Consolidated Federal Actions allege to varying
degrees that the defendants (i) failed to disclose that the Company pre-sold
approximately $50 million of products pursuant to its "early buy" marketing
program in an effort to boost its 1997 sales and net income figures and (ii)
made material misrepresentations regarding the Company's business operations,
future prospects and anticipated earnings per share, in an effort to
artificially inflate the price of the Company stock long enough for the Company
to complete a $2 billion debt financing (supported with stock incentives)
necessary to complete the acquisitions of Coleman, Signature Brands and First
Alert, and for the individual defendants to enter into lucrative long-term
employment agreements with the Company. Each complaint alleges two counts of
securities fraud; one count against all defendants and one count against the
individual defendants.
4
On June 16, 1998, the Court entered an Order consolidating all such filed
and all such subsequently filed class actions and providing time periods for
the filing of a Consolidated Amended Complaint and defendants' response
thereto. On June 22, 1998, two groups of plaintiffs made motions to be
appointed lead plaintiffs and to have their selection of counsel approved as
lead counsel. On July 20, 1998, the Court entered an Order appointing lead
plaintiffs and lead counsel (the "Smith Plaintiffs' Group"). This Order also
stated that it "shall apply to all subsequently filed actions which are
consolidated herewith". On August 28, 1998, plaintiffs in one of the
subsequently filed actions filed an objection to having their action
consolidated pursuant to the June 16, 1998 Order, arguing that the class period
in their action differs from the class periods in the originally filed
consolidated actions. On September 29, 1998, the Smith Plaintiffs' Group filed
its memorandum in opposition to this objection.
On April 7, 1998, a purported derivative action was filed in the Circuit
Court for the Fifteenth Judicial Circuit in and for Palm Beach County, Florida
against the Company and certain of its present and former officers and
directors. The action alleged that the individual defendants breached their
fiduciary duties and wasted corporate assets when the Company granted stock
options to three of its officers and directors on or about February 2, 1998 at
an exercise price of $36.85. On June 25, 1998, all defendants filed a motion to
dismiss the complaint for failure to make a presuit demand on the board of
directors of the Company. On October 22, 1998, plaintiff filed an amended
complaint against all but one of the defendants named in the original
complaint. The amended complaint no longer challenges the stock options, but
instead alleges that the individual defendants breached their fiduciary duties
by failing to have in place adequate accounting and sales controls, which
failure caused the inaccurate reporting of financial information to the public,
thereby causing an artificial inflation of the Company's financial statements
and stock price.
On June 25, 1998, four purported class actions were filed in the Court of
Chancery of the State of Delaware in New Castle County by minority shareholders
of Coleman against Coleman, certain of the Company's present and former
officers and directors and, as a nominal party, the Company. An additional
class action was filed on August 10, 1998, against the same parties. All of the
plaintiffs are represented by the same Delaware counsel and have agreed to
consolidate the class actions. These actions allege, in essence, that the
existing exchange ratio for the proposed merger between the Company and Coleman
is no longer fair to Coleman shareholders as a result of the recent decline in
the market value of the Company stock. On or about October 21, 1998, the
parties signed a memorandum of understanding to settle these class actions,
subject to court approval. See "SIGNIFICANT FINANCIAL AND BUSINESS
DEVELOPMENTS," above.
During the months of August and October 1998, purported class and
derivative actions were filed in the Court of Chancery of the State of Delaware
in New Castle County and in the U. S. District Court for the Southern District
of Florida by shareholders of the Company against the Company, M&F and certain
of the Company's present and former directors. These complaints allege that the
defendants breached their fiduciary duties when the Company entered into a
settlement agreement whereby M&F released the Company from any claims it may
have had arising out of the Company's acquisition of its interest in Coleman
and agreed to provide management support to the Company (the "Settlement
Agreement"). Pursuant to the Settlement Agreement, a M&F subsidiary was granted
five-year warrants to purchase up to an additional 23 million shares of the
Company's common stock at an exercise price of $7.00 per share. These
complaints also allege that the rights of the public shareholders have been
compromised, as the settlement would normally require shareholder approval
under the rules and regulations of the New York Stock Exchange ("NYSE"). The
Audit Committee of the Company's board determined that obtaining such
shareholder approval would have seriously jeopardized the financial viability
of the Company which is an allowable exception to the NYSE shareholder approval
requirement. An amended complaint has been filed in this action.
On September 16, 1998, an action was filed in the 56th Judicial District
Court of Galveston County, Texas alleging various claims in violation of the
Texas Securities Act and Texas Business and Commercial Code as well as common
law fraud as a result of the Company's alleged misstatements and omissions
regarding the Company's financial condition and prospects during a period
beginning May 1,
5
1998 and ending June 16, 1998, in which the plaintiffs engaged in transactions
in the Company's stock. The Company is the only named defendant in this action.
The complaint requests recovery of compensatory damages, punitive damages and
expenses in an unspecified amount. This action has been removed to the U.S.
District Court for the Southern District of Texas and the Company has filed a
motion for consolidation of this case with the Consolidated Federal Actions.
Plaintiffs have moved to remand the case to Texas state court.
On October 30, 1998, a class action lawsuit was filed on behalf of certain
purchasers of the Company's Debentures in the U.S. District Court of the
Southern District of Florida against the Company and its prior Chief Executive
Officer and Chief Financial Officer, alleging violations of the federal
securities laws and common law fraud. The complaint alleges that the Company's
offering memorandum used for the marketing of the Debentures contained false
and misleading information regarding the Company's financial position and that
the defendants engaged in a plan to inflate the Company's earnings for the
purpose of defrauding the plaintiffs and others. The Company has not yet been
served with this complaint.
The Company intends to vigorously defend each of the foregoing lawsuits,
but cannot predict the outcome and is not currently able to evaluate the
likelihood of the Company's success in each case or the range of potential
loss. However, if the foregoing actions were determined adversely to the
Company, such judgments would likely have a material adverse effect on the
Company's financial position, results of operations and cash flow.
On July 2, 1998, the American Insurance Company ("American") filed suit
against the Company in the U.S. District Court for the Southern District of New
York requesting a declaratory judgment of the court that the directors' and
officers' liability insurance policy for excess coverage issued by American was
invalid and/or had been properly cancelled by American. The Company has moved
to transfer such action to the federal district court in which the Consolidated
Federal Actions are currently pending; American is opposing such motion. On
October 20, 1998, an action was filed by Federal Insurance Company in the U.S.
District Court for the Middle District of Florida requesting the same relief as
that requested by American in the previously filed action as to additional
coverage levels under the Company's directors' and officers' liability
insurance policy. The Company intends to pursue recovery from all of its
insurers if damages are awarded against the Company or its indemnified officers
and/or directors under any of the foregoing actions. The Company's failure to
obtain such insurance recoveries following an adverse judgement in any of the
lawsuits referred to above could have a material adverse effect on the
Company's financial position, results of operations and cash flow.
The Company and its subsidiaries are also involved in various lawsuits
arising from time to time which the Company considers to be ordinary routine
litigation incidental to its business. In the opinion of the Company, the
resolution of these routine matters, and of certain matters relating to prior
operations of the Company's predecessor, individually or in the aggregate, will
not have a material adverse effect upon the financial position or results of
operations of the Company.
See "Environmental Matters" under Item 1 and Note 12 to the Consolidated
Financial Statements for a description of certain legal proceedings related to
environmental matters, which description is incorporated herein by reference.
6
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company are as follows:
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NAME AGE TITLE
--------------------------- ----- ----------------------------------------------------------
Jerry W. Levin ............ 54 President, Chief Executive Officer and Director
Paul E. Shapiro ........... 57 Executive Vice President and Chief Administrative Officer
Bobby G. Jenkins .......... 36 Executive Vice President and Chief Financial Officer
Karen K. Clark ............ 38 Vice President, Finance
Janet G. Kelley ........... 45 Vice President & General Counsel
Jack D. Hall .............. 53 President, International
Jerry W. Levin was appointed President and Chief Executive Officer of
Sunbeam Corporation in June of 1998. Prior to that, Mr. Levin was Chairman and
Chief Executive Officer of The Coleman Company, Inc. as well as Chairman of
Revlon, Inc. and The Cosmetic Center, Inc. Mr. Levin was appointed Chairman and
Chief Executive Officer of Coleman in February 1997. He served as Chief
Executive Officer of Revlon, Inc. and Revlon Consumer Products Corporation from
1992 until January 1997. He had been President of Revlon from 1991 to 1992.
Prior to that, from 1989 to 1991, Mr. Levin was Chairman of The Coleman
Company, Inc. Mr. Levin has been Executive Vice President of MacAndrews &
Forbes Holding, Inc. since March 1989. For 15 years prior to joining MacAndrews
& Forbes, Mr. Levin held various senior executive positions with the Pillsbury
Company. Mr. Levin is a member of the Boards of Directors of Sunbeam
Corporation; Revlon, Inc.; The Coleman Company, Inc.; The Cosmetic Center,
Inc.; Ecolab, Inc. and U.S. Bancorp.
Paul E. Shapiro joined Sunbeam in June of 1998. He was Executive Vice
President and General Counsel of The Coleman Company from July 1997 until its
sale in March 1998. Before joining Coleman, he was Executive Vice President,
General Counsel and Chief Administrative Officer of Marvel Entertainment Group.
He had previously spent over 25 years in private law practice and as a business
executive, most recently as a shareholder in the law firm of Greenberg Traurig.
Mr. Shapiro is a member of the Boards of Directors of the Coleman Company, Inc.
and of Toll Brothers, Inc.
Bobby G. Jenkins joined Sunbeam in June 1998. He serves as Executive Vice
President and Chief Financial Officer of Sunbeam Corporation. Mr. Jenkins was
Chief Financial Officer of The Coleman Company's Outdoor Recreation division
from September 1997 to May 1998. Mr. Jenkins was Executive Vice President and
Chief Financial Officer of Marvel Entertainment Group, Inc. from December 1993
through June 1997. Mr. Jenkins was Assistant Vice President of Finance at
Turner Broadcasting System from August 1992 to November 1993. Prior to that,
Mr. Jenkins was with Price Waterhouse, last serving as Senior Audit Manager.
Karen Clark joined Sunbeam in April of 1998 as Vice President, Operations
Finance. She was previously the Vice President Finance of The Coleman Company,
a position she held since 1997. Prior to that, she was Corporate Controller for
Precision Castparts Corp. from 1994 and from 1990 to 1994, held various
positions with Tektronix.
Janet G. Kelley joined Sunbeam in March 1994 and was named General Counsel
in April of 1998. From 1994 to 1998, Ms. Kelley served as Group Counsel and
Associate General Counsel. Prior to joining Sunbeam, she was a partner in the
law firm of Wyatt, Tarrant & Combs in Louisville, Kentucky.
Jack D. Hall joined Sunbeam in October 1998. Prior to joining Sunbeam, Mr.
Hall held various positions with Revlon Inc., most recently serving as
Executive Vice President, Worldwide Sales and Marketing Development. Prior to
joining Revlon, he spent six years with International Playtex Inc. in a variety
of sales positions.
7
PART II
ITEM 6. SELECTED FINANCIAL DATA
The following is a summary of certain financial information relating to
the Company. The summary should be read in conjunction with the Consolidated
Financial Statements of the Company included in this report. All amounts in the
table are expressed in millions, except per share data.
[Enlarge/Download Table]
FISCAL YEARS ENDED
---------------------------------------------------------------------------------
DECEMBER 28, DECEMBER 29, DECEMBER 31, JANUARY 1, JANUARY 2,
1997 1996(2) 1995 1995 1994
---------------- --------------- -------------- ------------- -----------
(AS RESTATED-- (AS RESTATED--
SEE NOTE (1)) SEE NOTE (1))
STATEMENTS OF OPERATIONS DATA:
Net sales ................................. $ 1,073.1 $ 984.2 $ 1,016.9 $ 1,044.3 $ 927.5
Cost of goods sold ........................ 831.0 896.9 809.1 764.4 674.2
Selling, general and administrative
expense ................................. 152.7 221.7 137.5 128.9 119.3
Restructuring, and asset
impairment (benefit) charges ............ (14.6) 110.1 -- -- --
---------- ---------- ---------- ---------- ---------
Operating earnings (loss) ................. $ 104.1 $ (244.5) $ 70.3 $ 151.0 $ 134.0
========== ========== ========== ========== =========
Earnings (loss) from continuing
operations .............................. $ 52.3 $ (170.2) $ 37.6 $ 85.3 $ 76.9
Earnings from discontinued
operations, net of taxes(3) ............. -- 0.8 12.9 21.7 11.9
Loss on sale of discontinued
operations, net of taxes(3) ............. (14.0) (39.1) -- -- --
Net earnings (loss) ....................... $ 38.3 $ (208.5) $ 50.5 $ 107.0 $ 88.8
EARNINGS (LOSS) PER SHARE DATA(4):
Average common and common
equivalent shares outstanding--
diluted ................................. 87.5 82.9 82.8 82.6 87.9
Diluted earnings (loss) per share
from continuing operations .............. $ 0.60 $ (2.05) $ 0.45 $ 1.03 $ 0.87
Diluted earnings (loss) per share ......... $ 0.44 $ (2.51) $ 0.61 $ 1.30 $ 1.01
Cash dividends declared per share ......... $ 0.04 $ 0.04 $ 0.04 $ 0.04 $ 0.04
BALANCE SHEET DATA (AT PERIOD END):
Working capital ........................... $ 369.1 $ 359.9 $ 411.7 $ 294.8 $ 261.4
Total assets .............................. 1,058.9 1,059.4 1,158.7 1,008.9 928.8
Long-term debt ............................ 194.6 201.1 161.6 124.0 133.4
Shareholders' equity ...................... 472.1 415.0 601.0 454.7 370.0
----------------
(1) The financial data as of and for the fiscal years ended December 28, 1997
and December 29, 1996 was restated as described in Notes 1 and 13 to the
Consolidated Financial Statements.
(2) Includes special charges of $239.2 million before taxes. See Notes 8 and 9
to Notes to Consolidated Financial Statements.
(3) Represents earnings from the Company's furniture business, net of taxes and
the estimated loss on disposal. See Note 9 in the Consolidated Financial
Statements.
(4) Reflects the adoption of SFAS No. 128, EARNINGS PER SHARE.
8
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
On June 30, 1998, the Company announced that the Audit Committee of the
Board of Directors was initiating a review into the accuracy of prior financial
statements. The Audit Committee's review has since been completed and, as a
result of its findings, the Company has restated its previously issued
Consolidated Financial Statements for 1996 and 1997. (See Notes 1, 13, 14 and
15 to the Consolidated Financial Statements.)
OVERVIEW
In November 1996, the Company announced the details of a restructuring
plan. By July 1997, the Company completed the major phases of the restructuring
plan. The plan included the consolidation of administrative functions, a
reduction in manufacturing and warehouse facilities (including a reduction in
the number of production facilities from 26 to 8 and warehouses from 61 to 18),
the elimination of over 6,000 positions (including 3,300 from the divestiture
of certain businesses described below and approximately 2,800 other positions,
some of which were outsourced), the centralization of the Company's procurement
function and the reduction of the Company's product offerings and stock keeping
units ("SKU's"). The restructuring plan also included the elimination of
certain businesses and product lines. In fiscal 1997, Sunbeam's core product
categories were Appliances, Health at Home, Personal Care and Comfort, Outdoor
Cooking and Away From Home. Other product categories and businesses were
divested in 1997, including the Company's furniture business and its time and
temperature, decorative bedding and Counselor/registered trademark/ and
Borg/registered trademark/ scale product lines. In addition, the Company sold
its textile mill in Biddeford, Maine in 1997, while entering into a supply
agreement with the mill for future production of blanket shells.
The Company's operating results for 1996 include pre-tax Restructuring and
Asset Impairment Charges of $110.1 million recorded for the restructuring plan
(see Note 8 to the Consolidated Financial Statements). Approximately $29.3
million of these charges were paid in cash in 1996 and 1997, primarily for
severance and other employee termination benefits, lease obligations and other
exit costs associated with facility closures. The Company estimates that
approximately $5.2 million will be expended in the future, primarily for lease
obligations. The amounts accrued at December 29, 1996, for Restructuring and
Asset Impairment Charges recorded in fiscal 1996, exceeded amounts ultimately
required. Accordingly, the fiscal 1997 Consolidated Statement of Operations
reflects the reversal of accruals no longer required and resulted in a
Restructuring and Asset Impairment Benefit of $14.6 million.
In 1996, in conjunction with the initiation of the restructuring plan, the
Company recorded additional charges totaling $129.1 million, reflected in Cost
of Sales; Selling, General and Administrative Expense ("SG&A"); and Loss on
Sale of Discontinued Operations. These charges related largely to inventory
write-downs as a result of the reduction in SKU's, costs related to outsourcing
and the divestiture of the furniture business. In 1997, the Company incurred
$38.3 million of expenses related to the restructuring effort undertaken in
1996. These expenses were primarily for equipment movement, package redesign,
employee relocation and recruiting, and an additional pre-tax loss on the sale
of discontinued operations due primarily to lower than anticipated sales
proceeds. (See Notes 8 and 9 to the Consolidated Financial Statements.)
9
The charges and benefit described above are included in the following
categories in the 1997 and 1996 Consolidated Statements of Operations (in
millions):
[Download Table]
1997 1996
----------- -----------
Restructuring and impairment (benefit) charge .......... $ (14.6) $ 110.1
Cost of goods sold ..................................... -- 60.8
Selling, general and administrative expenses ........... 15.8 10.1
Loss on sale of discontinued operations ................ 22.5 58.2
------- --------
$ 23.7 $ 239.2
======= ========
These charges and benefit consisted of the following (in millions):
[Enlarge/Download Table]
1997 1996
--------- --------
Write-downs:
Fixed assets held for disposal, not in use ............................... $ -- $ 34.8
Fixed assets held for disposal, used until disposed ...................... -- 14.8
Inventory on hand ........................................................ -- 60.8
Other assets, principally trademarks and intangible assets ............... -- 19.1
------- ------
-- 129.5
------- ------
Restructuring accruals (including amounts expended in 1996):
Employee severance pay and fringes ....................................... (7.9) 24.7
Lease payments and termination fees ...................................... (6.7) 12.6
Other exit activity costs, principally facility closure expenses ......... -- 4.1
------- ------
(14.6) 41.4
------- ------
Other related costs incurred:
Employee relocation; equipment relocation and installation and other ..... 11.8 3.2
Transitional fees related to outsourcing arrangements .................... -- 4.9
Package redesign ......................................................... 4.0 2.0
------- ------
15.8 10.1
------- ------
Charges included in continuing operations ................................ 1.2 181.0
Loss on sale of discontinued operations .................................. 22.5 58.2
------- ------
$ 23.7 $239.2
======= ======
At December 29, 1996, the net carrying value of inventory written-down as
part of the restructuring and asset impairment charges approximated $37.3
million. During 1997, this inventory, a portion of which was product of
discontinued operations, was sold for an amount substantially equivalent to its
net carrying value.
As further described in Note 12 to the Consolidated Financial Statements,
during the fourth quarter of 1996, the Company charged SG&A for increases of
$9.0 million in environmental reserves and $12.0 million in litigation
reserves. As described in Note 2 to the Consolidated Financial Statements, the
Company also charged $7.7 million to SG&A expenses in 1996 for compensation
costs associated with restricted stock awards and other costs related to the
employment of the then new senior management team.
During the first, second, third and fourth quarters of 1997, approximately
$0.5 million, $4.5 million, $1.5 million and $21.5 million, respectively, of
pre-tax liabilities provided in prior years and determined to be no longer
required were reversed and taken into income. Included in these reserves was
$8.1 million related to the litigation reserve increase in 1996. (See Note 12
to the Consolidated Financial Statements.)
10
Additionally, effective in the second quarter of fiscal 1997, the Company
began capitalizing manufacturing supplies inventories, whereas, previously
these inventories were charged to operations when purchased. This change
increased operating earnings in fiscal 1997 by $2.8 million.
A reconciliation of earnings (loss) from continuing operations for 1997
and 1996, on an adjusted basis follows (in millions):
[Enlarge/Download Table]
1997 1996
--------- ------------
Operating earnings (loss), as reported .................................... $ 104.1 $ (244.5)
Add (deduct):
Restructuring, asset impairment and other related charges ................ 1.2 181.0
Environmental reserve increase principally related to
divested operations .................................................... -- 9.0
Litigation reserve increase relating to divested operation ............... -- 12.0
Restricted stock and other management compensation ....................... -- 7.7
Reversals of accruals no longer required ................................. (28.0) --
Capitalization of manufacturing supplies inventories ..................... (2.8) --
------- --------
Adjusted operating earnings (loss) ........................................ 74.5 (34.8)
Interest expense ......................................................... 11.4 13.6
Other expense, net ....................................................... -- 3.7
------- --------
Adjusted earnings (loss) from continuing operations before income taxes ... 63.1 (52.1)
Adjusted income taxes (benefit) .......................................... 56.3 (18.2)
------- --------
Adjusted earnings (loss) from continuing operations ....................... $ 6.8 $ (33.9)
======= ========
After consideration of the adjustments above, 1996 results from continuing
operations reflect a loss and 1997 continuing operations are marginally
profitable. Due to a variety of factors, including sales in 1997 which
increased inventory positions at certain customers, distribution losses during
1997 and other items, as discussed below, the results for 1997 are not
indicative of future results. As discussed in Liquidity and Capital Resources,
below, and in Note 15 to the Consolidated Financial Statements, the 1998
results are expected to be impacted materially by charges related to, among
other items, a provision for excess inventory, a change in management, changes
in business operations resulting in part from acquisitions made in 1998, higher
interest costs related to higher debt levels, costs associated with litigation
and restructuring and asset impairment costs, as well as costs related to Year
2000 issues.
YEAR ENDED DECEMBER 28, 1997 COMPARED TO THE YEAR ENDED DECEMBER 29, 1996
Net sales for 1997 were $1,073.1 million, an increase of $88.9 million or
9% over 1996. After excluding: (i) $4.2 million and $30.8 million in 1997 and
1996, respectively, related to divested product lines which are not classified
as discontinued operations (time and temperature products, decorative bedding
and Counselor/registered trademark/ and Borg/registered trademark/ branded
scales), (ii) $31.3 million of sales in 1997 of discontinued inventory which
resulted primarily from the reduction of SKU's as part of the 1996
restructuring plan and for which the inventory carrying value was substantially
equivalent to the sales value, and (iii) a $5.4 million benefit from the
reduction of cooperative advertising accruals no longer required in 1997
(cooperative advertising costs are recorded as deductions in determining net
sales), net sales on an adjusted basis ("Adjusted Sales") increased 8% over the
prior year.
Adjusted Sales, on a worldwide basis, increased during 1997 primarily from
new product introductions, expanded distribution (particularly with the
Company's top ten customers), international geographic expansion and increased
inventory positions at certain customers. Adjusted Sales growth was
approximately 19% in the Appliance category and approximately 12% in Outdoor
Cooking. In the Health at Home category, Adjusted Sales increased approximately
5% while Adjusted Sales in the Personal Care and Comfort category decreased
approximately 13% during 1997. As customers reduce inventories to normal
levels, 1998 sales are expected to be adversely impacted.
11
Sales increases in Appliances were driven by new products, such as
re-designed blenders and mixers, coffeemakers, irons, deep fryers and toasters,
and by increased distribution with large national mass retailers, combined with
higher inventory levels at certain customers. Sales of Outdoor Cooking products
increased in 1997 attributed to increased merchandising and advertising
programs, new distribution and higher inventory levels at certain customers.
During 1997, the Company lost a significant portion of its Outdoor Cooking
products distribution, including the majority of its grill accessory products
distribution. Accessories, which accounted for just over 10% of the Outdoor
Cooking sales volume in 1997, generate significantly better margins than the
average margins on sales of grills. These distribution changes are expected to
adversely impact Outdoor Cooking sales and margins in the future, until such
time as the distribution is regained.
Sales of Personal Care and Comfort products suffered during the fourth
quarter of 1997 as a result of lower than expected retail sell through of
electric blankets in key northern markets in late 1997 coupled with the
inability to service demand for king and queen sized blankets due to shortages
of blanket shells. The Company has shifted to a more level production for
blankets in 1998 in order to more adequately service the seasonal demand for
bedding products. Health at Home category sales increased as a result of new
products and improved distribution in the drug store channels. Both Personal
Care and Comfort and Health at Home sales were impacted by increased inventory
positions at customers in 1997. Away from Home sales increased in 1997 as a
result of new products, including cordless clippers and titanium blades,
coupled with increased distribution of commercially rated appliances. Also
contributing to the Company's sales growth in 1997 were its new retail outlet
stores, of which 22 were open by the end of 1997.
International sales, which represented 21% of total revenues in 1997, grew
25% during the year. This sales growth was driven primarily by 54 new 220 volt
product introductions and a general improvement in demand in export operations
and in Mexico. Net sales growth of approximately 35% was achieved in the Latin
American export sales organization. Most of this growth came from increased
business with three exporters. In Mexico and Venezuela, sales grew 30% and 24%,
respectively. Canada accounted for the majority of the remaining international
sales growth.
Excluding the effect of: (i) charges to cost of sales related to the
restructuring plan in 1996, (ii) the benefit of reducing reserves no longer
required in 1997, and (iii) the benefit in 1997 of capitalizing manufacturing
supplies inventories, gross margin as a percent of Adjusted Sales would have
been approximately 22% in 1997, an improvement of approximately 6 percentage
points from 16% in 1996. This increase reflects the results of lower overhead
spending, improved factory utilization and labor cost benefits resulting from
the Company's restructuring plan, coupled with reductions in certain materials
costs. The lower overhead spending resulted from a reduction in the number of
facilities operated by the Company. With fewer facilities used for production
purposes, the capacity of the remaining plants was more fully utilized. The
labor cost benefits were realized principally from shifting production to
Mexico. In addition, a broad based program to obtain lower costs for materials
contributed to the 1997 margin improvement.
Excluding the impact of: (i) the restructuring and asset impairment
charges to SG&A in 1997 and 1996, (ii) the 1996 charges for the environmental
accrual, litigation accrual, and restricted stock grant compensation, and (iii)
the 1997 benefit from the reversal of reserves no longer required, SG&A
improved to 14% of Adjusted Sales in 1997, down 5 percentage points from 19% in
1996. This improvement was partially the result of benefits from the
consolidation of six divisional and regional headquarters into one corporate
headquarters and one administrative operations center, reduced staffing levels,
a reduction in the number of warehouses, and Company-wide cost control
initiatives. Higher expenditures in 1996 for market research, new packaging and
other discretionary charges and higher bad debt expenses associated with
certain of the Company's customers also contributed to the decrease in SG&A
costs from 1996 to 1997.
Operating results for 1997 and 1996, on a comparable basis as described
above, were earnings of $74.5 million in 1997 and a loss of $34.8 million in
1996. On the same basis, operating margin increased
12
11 percentage points to 7% of Adjusted Sales in 1997 versus a loss of 4% in
1996. This improvement resulted from the factors discussed above.
Interest expense decreased from $13.6 million in 1996 to $11.4 million in
1997 primarily as a result of lower average borrowing levels in 1997.
The 1997 effective income tax rate for continuing operations was higher
than the federal statutory income tax rate primarily due to state and local
taxes plus the effect of foreign earnings taxed at other rates and the increase
to the valuation reserve for deferred tax assets, offset in part by the
reversal of tax liabilities no longer required. For 1996, the effective income
tax rate for continuing operations equaled the federal statutory income tax
rate. For a reconciliation of income taxes computed at the federal statutory
tax rate to the amounts provided, see Note 10 to the Consolidated Financial
Statements.
The Company's diluted earnings per share from continuing operations was
$0.60 per share in 1997 versus a loss per share from continuing operations in
1996 of $2.05. The Company's share base utilized in the diluted earnings per
share calculation increased approximately 6% during 1997 as a result of an
increase in the number of shares of common stock outstanding due to the
exercise of stock options in 1997 and the inclusion of common stock equivalents
in the 1997 calculation.
The Company's discontinued furniture business, which was sold in March
1997, had revenues of $51.6 million in the first quarter of 1997 prior to the
sale and nominal earnings. In 1996, the discontinued furniture business had net
income of $0.8 million on revenues of $227.5 million and an estimated loss on
disposal of the business of $39.1 million, net of applicable income tax
benefits. The sale of the Company's furniture business assets (primarily
inventory, property, plant and equipment) was completed in March 1997.
The Company received $69.0 million in cash, retained approximately $50.0
million in accounts receivable and retained certain liabilities related to the
furniture business. The final purchase price for the furniture business was
subject to a post-closing adjustment based on the terms of the Asset Purchase
Agreement and in the first quarter of 1997, after completion of the sale, the
Company recorded an additional loss on disposal of $22.5 million pre-tax. See
discussion of Restructuring and Asset Impairment (Benefit) Charges in Note 8
and Discontinued Operations and Assets Held For Sale in Note 9 to the Company's
Consolidated Financial Statements for further information regarding sale of the
furniture business.
YEAR ENDED DECEMBER 29, 1996 COMPARED TO THE YEAR ENDED DECEMBER 31, 1995
As described above, the Company's operating results for 1996 include: (i)
a pre-tax charge of $239.2 million recorded in conjunction with the
restructuring plan (see Notes 8 and 9 to the Consolidated Financial
Statements), (ii) charges related to increases in environmental ($9.0 million)
and litigation ($12.0 million) reserves (see Note 12 to the Consolidated
Financial Statements), and (iii) $7.7 million of charges related to restricted
stock grants made to the then new management team (see Note 2 to the
Consolidated Financial Statements).
Net sales in 1996 of $984.2 million represent a decrease of $32.7 million,
or 3%, from 1995. Domestic sales represented approximately 80% of total sales
of the Company in 1996 and decreased $28.5 million or 3% from 1995. This sales
decline was driven by lower sales of outdoor cooking products, which declined
7% and lower sales of bedding products which declined 9% from 1995, attributed
primarily to lower decorative bedding sales (divested in December 1996).
Domestic sales of appliance products were flat with sales increases from new
products such as vegetable steamers and toaster ovens being offset by reduced
pricing on breadmakers. Sales of other product categories such as health and
personal care products and time and temperature products (divested in March
1997) were either flat or declined slightly from 1995 levels.
The Company's loss from continuing operations was $170.2 million or $2.05
per share for 1996 versus earnings from continuing operations of $37.6 million
or $0.45 per share (diluted) in 1995 largely
13
as a result of the restructuring activities discussed above. The net loss for
1996 was $208.5 million, or $2.51 per share, compared to net earnings of $50.5
million, or $0.61 per share (diluted), for 1995. Excluding the impact in 1996
of the charges discussed above, operating earnings decreased from $70.2 million
in 1995 to a loss of $34.8 million in 1996.
International sales decreased $4.2 million or 2% from 1995 primarily as a
result of lower sales in Latin America which was attributed to political and/or
economic instability in several countries such as Ecuador, Peru, Columbia and
Venezuela (which suffered a Bolivar devaluation in April 1996), a sales decline
of 11% in Canada as a result of the bankruptcy filing of the Company's then
largest Canadian customer offset by a 55% increase in sales in Mexico as a
result of a more stable economic environment in 1996.
The Company's gross margin percentage, excluding the impact of
restructuring and other charges, was 15% of sales in 1996, down from 20% in
1995, primarily from higher manufacturing costs and excess manufacturing
capacity.
SG&A expenses, excluding the impact of the charges described above, were
19% of sales in 1996 compared with 14% of sales in 1995. The higher 1996
expenses were due in part to higher than normal spending for market research,
advertising and similar programs and higher bad debt charges associated with
certain of the company's customers.
Operating losses, excluding the restructuring and special charges in 1996,
were $34.8 million in 1996, or 4% of sales, as compared with 1995's operating
earnings of $70.2 million, or 7% of sales. The decrease in operating results
between years is primarily a result of the factors discussed above.
Interest expense increased from $9.4 million in 1995 to $13.6 million in
1996 as a result of increased indebtedness of the Company for working capital
requirements and interest capitalized in 1995 related to the construction of
the Hattiesburg manufacturing and distribution center.
The effective income tax rate for 1996 equaled the federal statutory
income tax rate. In 1995, the effective income tax rate exceeded the federal
statutory income tax rate primarily due to state and local taxes plus the
effect of foreign earning and dividends taxes at other rates. For a
reconciliation of income taxes computed at the federal statutory tax rate to
the amounts provided, see Note 10 in the Notes to Consolidated Financial
Statements.
The Company's discontinued furniture business had revenues of $227.5
million in 1996, up 23% from $185.6 million in 1995. This revenue growth was
attributed primarily to the acquisition of the Samsonite/registered trademark/
furniture business in November 1995. Excluding the impact of this acquisition,
furniture business sales declined 2%. Earnings from the discontinued furniture
business, net of taxes, declined from $12.9 million in 1995 to $0.8 million in
1996 primarily as a result of lower gross margins from reduced pricing,
underabsorption of higher manufacturing costs and higher raw material costs. In
addition, SG&A costs increased due to the inclusion of the Samsonite/registered
trademark/ furniture business, higher distribution and warehousing costs,
particularly with resin furniture products and higher bad debt expenses. (See
Note 9 to the Consolidated Financial Statements.)
FOREIGN OPERATIONS
During 1997 approximately 90% of the Company's business was conducted in
U.S. dollars (including both domestic sales, U.S. dollar denominated export
sales primarily to certain Latin American markets, Asian sales and the majority
of European sales). The Company's exposure to market risk from changes in
foreign currency and interest rates is generally insignificant. The Company's
non-U.S. dollar denominated sales are made principally by subsidiaries in
Mexico, Venezuela and Canada. Venezuela is considered a hyperinflationary
economy for accounting purposes for 1995, 1996 and 1997 and Mexico reverted to
hyperinflationary status for accounting purposes in 1997; therefore,
translation adjustments related to Venezuelan and Mexican net monetary assets
are included as a component of net earnings. Such translation adjustments were
not material to 1995, 1996 and 1997 operating results.
14
On a limited basis, the Company selectively uses derivatives (foreign
exchange option and forward contracts) to manage foreign exchange exposures
that arise in the normal course of business. No derivative contracts are
entered into for trading or speculative purposes. The use of derivatives did
not have a material impact on the Company's financial results in 1995, 1996 and
1997. (See Note 4 to the Consolidated Financial Statements.)
SEASONALITY
On a consolidated basis, the Company's sales do not exhibit substantial
seasonality; however, sales are strongest during the fourth quarter of the
calendar year. Additionally, sales of Outdoor Cooking products are strongest in
the first half of the year, while sales of Appliances and Personal Care and
Comfort products are strongest in the second half of the year. Furthermore,
sales of a number of the Company's products, including warming blankets,
vaporizers, humidifiers and grills may be impacted by unseasonable weather
conditions.
LIQUIDITY AND CAPITAL RESOURCES
As of December 28, 1997, the Company had cash and cash equivalents of
$52.3 million, working capital excluding cash and cash equivalents of $316.8
million and total debt of $195.2 million. Cash used in operating activities
during 1997 was $6.0 million compared to $14.2 million provided by operating
activities in 1996. This decrease is primarily attributable to increased
inventory levels in 1997 and spending in 1997 related to the restructuring
initiatives accrued for in 1996, largely offset by an increase in cash
generated by earnings in 1997 and an income tax refund (net of tax payments) in
1997. Cash used in operating activities reflects proceeds of $58.9 million from
the Company's revolving trade accounts receivable securitization program
entered into in December 1997 as more fully described in Note 3 to the
Consolidated Financial Statements. The Company anticipates that cash used in
operating activities will increase during 1998, largely from increases in
inventory levels. As certain inventories built in 1997 in anticipation of 1998
sales volumes exceed the actual requirements, it will be necessary to dispose
of some portions of excess inventories at amounts less than cost. The Company
expects to continue to use the securitization program to finance a portion of
its accounts receivable.
Capital spending totaled $60.5 million in 1997 and was primarily for
capacity expansion initiatives and equipment and tooling for new products and
cost reduction. The new product capital spending in 1997 principally related to
the Appliance Category and included costs related to blenders, toasters,
standmixers, slow cookers and a soft serve ice cream product. Capital spending
in 1996 was $75.3 million (including $14.5 million related to the discontinued
furniture business) and was primarily attributable to equipment for new product
development, cost reduction initiatives and a $5.0 million warehouse expansion
financed with a capital lease. Capital spending in 1995 included approximately
$59.4 million associated with the Hattiesburg facility, $27.4 million related
to new product development and $10.8 million attributable to the discontinued
furniture business. The remaining 1995 capital spending was related to cost
reduction projects, productivity initiatives and environmental compliance
including $14.4 million for a powder coat paint system for Outdoor Cooking
products. The Company anticipates 1998 capital spending to be approximately 5%
of sales and primarily related to new product introductions, capacity additions
and certain facility rationalization initiatives.
Cash provided by investing activities also reflects $91.0 million in
proceeds from sales of businesses, assets and product categories as part of the
1996 restructuring plan. Cash used in investing activities for 1995 includes
the purchase of a portion of the Company's furniture business, which was
subsequently divested in full in March 1997.
Cash provided by financing activities totaled $16.4 million in 1997 and
reflects net borrowings of $5.0 million under the Company's revolving credit
facility, $12.2 million of debt repayments related to the divested furniture
business and other assets sold and $26.6 million in cash proceeds from the
exercise of stock options, substantially all by former employees of the
Company. In 1996, cash provided by financing activities of $45.3 million was
primarily from increased revolving credit facility borrowings
15
to support working capital and capital spending requirements, $11.5 million in
new issuances of long-term debt and $4.6 million in proceeds from the sale of
treasury shares to certain executives of the Company. In 1995, cash provided by
financing activities of $27.8 million was primarily from increased revolving
credit facility borrowings of $40.0 million, offset by $13.1 million used for
the purchase of the Company's common stock for treasury. In July 1997, the
Company reduced the amount of available borrowings under its September 1996
unsecured five year revolving credit facility from $500 million to $250
million. In early 1998, the Company refinanced substantially all of the then
outstanding debt (see Note 15 to the Consolidated Financial Statements).
The Company is a party to various environmental proceedings. Substantially
all of the environmental proceedings of the Company, before consideration of
the acquisitions discussed below, related to previously divested operations. In
1996, a review of environmental exposures was undertaken as a result of the
Company's intent to accelerate the resolution and settlement of certain
environmental claims. This review and change in strategy resulted in additional
environmental reserves being recorded in 1996 as more fully described in Note
12 to the Consolidated Financial Statements. In management's opinion, the
ultimate resolution of these environmental matters will not have a material
adverse effect upon the Company's financial condition or results of operations.
On March 30, 1998, the Company, through a wholly-owned subsidiary,
acquired approximately 81% of the total number of then outstanding shares of
common stock of The Coleman Company, Inc. ("Coleman"), in exchange for
14,099,749 shares of the Company's common stock and approximately $160 million
in cash, as well as the assumption of $1,016 million in debt. The Company
expects to acquire the remaining equity interest in Coleman pursuant to a
merger transaction for approximately 6.7 million shares of common stock and
approximately $87 million in cash. In addition, as a result of litigation
related to the merger consideration, the Company has entered into a memorandum
of understanding (subject to court approval) pursuant to which the holders of
the remaining equity interest in Coleman will also receive five-year warrants
to purchase 4.98 million shares of Sunbeam common stock at $7.00 per share.
There can be no assurance that the court will approve the settlement as
proposed. (See Part I--Significant Financial and Business Developments, Item
3--Legal Proceedings and Note 15 to the Consolidated Financial Statements.)
Coleman is a leading manufacturer and marketer of consumer products for the
worldwide outdoor recreation market. Coleman's products have been sold
domestically and internationally under the Coleman registered trademark brand
name since the 1920's. The Company expects to acquire the remaining equity
interest in Coleman in the first quarter of 1999.
On April 6, 1998, the Company completed the cash acquisitions of First
Alert, Inc. ("First Alert"), a leading manufacturer of smoke and carbon
monoxide detectors, and Signature Brands USA, Inc. ("Signature Brands"), a
leading manufacturer of a comprehensive line of consumer and professional
products. The First Alert and the Signature Brands acquisitions were valued at
approximately $178 million and $253 million, respectively, including the
assumption of debt.
In order to finance the above acquisitions, and refinance substantially
all of the indebtedness of the Company, Coleman, First Alert and Signature
Brands, the Company consummated: (i) an offering of Zero Coupon Convertible
Senior Subordinated Debentures due 2018 (the "Debentures") at a yield to
maturity of 5% (approximately $2,014 million principal amount at maturity) in
March 1998, which resulted in approximately $730 million of net proceeds and,
(ii) entered into a revolving and term credit facility ("New Credit Facility")
in April 1998, which provided for an aggregate borrowing of up to $1.7 billion.
In March, 1998, the Company prepaid a $75.0 million 7.85% industrial
revenue bond related to its Hattiesburg facility originally due in 2009. In
connection with the early extinguishment of this debt, the Company will record
a charge of $8.6 million in the first quarter of 1998. Also, as a result of
repayment of certain indebtedness assumed in the Coleman acquisition, the
Company will recognize an extraordinary charge of approximately $104 million in
the second quarter of 1998.
At June 30, 1998, the Company was not in compliance with the covenants and
ratios under the New Credit Facility. The Company and its lenders entered into
an agreement dated June 30, 1998, which
16
provided that compliance with the covenants would be waived through December
31, 1998. Subsequently, pursuant to an amendment dated October 19, 1998, the
Company is not required to comply with the original financial covenants and
ratios under the New Credit Facility until April 10, 1999, but will be required
to comply with an earnings before interest, taxes, depreciation and
amortization covenant, the amounts of which are to be determined, beginning
February 1999. At September 30, 1998, following the scheduled repayment of a
portion of the term loan, the New Credit Facility was reduced to $1,698 million
in total, of which approximately $1,453 million was outstanding and
approximately $245 million was available. In addition, the Company's cash
balance at September 30, 1998 was approximately $43 million.
The Company is working closely with its bank lenders and hopes to reach
agreement with the bank lenders on a further amendment to the New Credit
Facility containing revised financial covenants which the bank lenders and the
Company find mutually acceptable. There can be no assurance that such an
amendment, or a further waiver of the existing financial covenants, will be
entered into with the bank lenders by April 10, 1999. The failure to obtain
such an amendment or further waiver would result in a violation of the existing
covenants, which would permit the bank lenders to accelerate the maturity of
all outstanding borrowings under the New Credit Facility.
In December 1997, the Company entered into a revolving trade accounts
receivable securitization program, which expires December, 1998, to sell
without recourse, through a wholly-owned subsidiary, certain trade accounts
receivable, up to a maximum of $70.0 million. The Company, as agent for the
purchaser of the receivables, retains collection and administrative
responsibilities for the purchased receivables. At September 30, 1998, the
Company had sold approximately $20.0 million of accounts receivable under this
program.
At December 28, 1997, standby letters of credit aggregating $29 million
were outstanding, primarily for insurance, environmental and workers'
compensation issues. At September 30, 1998, the standby letters of credit
aggregated $56 million, including $5 million related to an acquired company,
and were predominately for insurance, pension, environmental and workers'
compensation issues.
For additional information relating to the Acquisitions, Debentures and
New Credit Facility, see Note 15 to the Consolidated Financial Statements.
The Company believes its borrowing capacity under the New Credit
Agreement, cash flow from the combined operations of the Company and its
acquired companies, existing cash and cash equivalent balances, and its
receivable securitization program will be sufficient to support working capital
needs, capital spending, and debt service for the foreseeable future. However,
if the Company is unable to satisfactorily amend the financial covenants and
ratio requirements of the New Credit Facility or obtain a further waiver of the
existing covenants and ratio requirements prior to April 10, 1999, the Company
expects it would, at that time, be in default of the requirements under the New
Credit Facility and, as noted above, the lenders could then require the
repayment of all amounts then outstanding under the New Credit Facility.
See, also, Item 3, "Legal Proceedings," above.
NEW ACCOUNTING STANDARDS
See Notes 1 and 15 to the Company's consolidated financial statements for
a discussion of Statement of Financial Accounting Standards ("SFAS") No. 130,
REPORTING COMPRESHENSIVE INCOME, SFAS No. 131, DISCLOSURES ABOUT SEGMENTS OF AN
ENTERPRISE AND RELATED INFORMATION, SFAS No. 133, ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES, Statement of Position ("SOP") 98-1,
ACCOUNTING FOR THE COSTS OF COMPUTER SOFTWARE DEVELOPED OR OBTAINED FOR
INTERNAL USE and SOP 98-5, REPORTING ON THE COSTS OF START-UP ACTIVITIES, which
are required to be adopted for periods beginning after June 15, 1997. The
adoption of these standards is not expected to
17
have a material effect on the Company's consolidated results of operations,
financial position, or cash flows, although actual charges incurred may be
material due to Year 2000 issues, as discussed below.
YEAR 2000
The Company is continuing the process of assessing the impact of the Year
2000 on its operations, including those of its subsidiaries Coleman, First
Alert and Signature Brands which were acquired by the Company in the spring of
1998. The Company established a Year 2000 Program Management Office in the
third quarter of 1998 to manage such continuing assessment and the design and
remediation of the systems with assistance from three consulting firms. The
Company's continuing assessment encompasses the Company's information
technology functions along with the impact of the effects of noncompliance by
its vendors, service providers, customers, and financial institutions.
Additionally, the Company is assessing the impact of noncompliance of embedded
microprocessors in its products as well as equipment, such as security and
telephone systems and controls for lighting, heating/ventilation, and facility
access.
The Company relies on its information technology functions to perform many
tasks that are critical to its operations. Significant transactions that could
be impacted by Year 2000 noncompliance include, among others, purchases of
materials, production management, order entry and fulfillment, and payroll
processing. Systems and applications that have been identified by the Company
to date as not currently Year 2000 compliant and which are critical to the
Company's operations include its financial software systems, which process the
order entry, purchasing, production management, general ledger, accounts
receivable, and accounts payable functions, and critical applications in the
Company's manufacturing and distribution facilities, such as the warehouse
management application. The Company plans to complete corrective work with
respect to the Company's systems by the second quarter of 1999 with final
testing and implementation of such systems occurring in the third quarter of
1999. Management believes that, although there are significant systems that
will need to be modified or replaced, the Company's information systems
environment will be made Year 2000 compliant prior to January 1, 2000. The
Company's failure to timely complete such corrective work could have a material
adverse impact on the Company. The Company is not able to estimate possible
lost profits arising from such failure.
The Company is in the process of contacting its vendors and suppliers of
products and services to determine their Year 2000 readiness and plans. This
review includes third party providers to whom the Company has outsourced the
processing of its cash receipt and cash disbursement transactions and its
payroll. The Company plans to complete this review during the fourth quarter of
1998. The failure of certain of these third party suppliers to become Year 2000
compliant could have a material adverse impact on the Company.
Based on a reassessment of the Year 2000 project scope and approach, as
well as the time frame remaining to implement a solution for the Year 2000
issue, and an assessment of the requirements for operating information systems
in the Company, the current estimate of the total costs to address and remedy
Year 2000 issues and to enhance the Company's operating systems, including
costs for the acquired companies, is approximately $50 million. This estimate
includes the costs of software and hardware modifications and replacements and
fees to third party consultants, but excludes internal resources which are not
separately tracked by the Company with respect to the allocation of time to the
Year 2000 issues. The Company expects these expenditures to be financed through
operating cash flows or borrowings, as applicable. As of December 28, 1997, the
Company had expended less than $1 million related to new systems and
remediation to address Year 2000 and other systems issues, of which the
majority was for software licenses and was therefore recorded as capital
expenditures. Of the remaining estimated expenditures, it is anticipated that
approximately 25% will be incurred in 1998, with the remainder in 1999. As the
Company continues its assessment of the Year 2000 issues and its information
requirements to execute its business plans, the actual expenditures incurred or
to be incurred may differ materially from the amounts shown above.
18
As part of the assessment of the Year 2000 on its operations, the Company
plans to establish a contingency plan for addressing any effects of the Year
2000 on its operations, whether due to noncompliance of the Company's systems
or those of third parties. The Company expects to complete such contingency
plan by September 30, 1999; such contingency plan will address alternative
processes, such as manual procedures to replace those processed by noncompliant
systems, potential alternative service providers, and plans to address
compliance issues as they arise. Subject to the nature of the systems and
applications which are not made Year 2000 compliant, the impact of such
non-compliance on the Company's operations could be material if appropriate
contingency plans cannot be developed prior to January 1, 2000.
EFFECTS OF INFLATION
For each of the three years in the period ended December 28, 1997, the
Company's cost of raw materials and other product remained relatively stable.
To the extent possible, the Company's objective is to offset the impact of
inflation through productivity enhancements, cost reductions and price
increases.
SUBSEQUENT EVENTS
See Note 15 to the Consolidated Financial Statements for subsequent events
information relating to, among other matters, a change in management,
litigation, change in fiscal year end and employment contracts entered into
with the former Chairman and Chief Executive Officer and other former senior
executives of the Company.
CAUTIONARY STATEMENTS
Certain statements in this Annual Report on Form 10-K/A may constitute
"forward-looking" statements within the meaning of the Private Securities
Litigation Reform Act of 1995, as the same may be amended from time to time
(herein the "Act") and in releases made by the Securities and Exchange
Commission ("SEC") from time to time. Such forward-looking statements involve
known and unknown risks, uncertainties and other factors which may cause the
actual results, performance, or achievements of the Company to be materially
different from any future results, performance, or achievements expressed or
implied by such forward-looking statements. When used in this Annual Report on
Form 10-K/A, the word "estimate," "project," "intend," "expect" and similar
expressions, when used in connection with the Company, including its
management, are intended to identify forward-looking statements. These
forward-looking statements were based on various factors and were derived
utilizing numerous important assumptions and other important factors that could
cause actual results to differ materially from those in the forward-looking
statements. These Cautionary Statements are being made pursuant to the Act,
with the intention of obtaining the benefits of the "Safe Harbor" provisions of
the Act. The Company cautions investors that any forward-looking statements
made by the Company are not guarantees of future performance. Important
assumptions and other important factors that could cause actual results to
differ materially from those in the forward-looking statements with respect to
the Company include, but are not limited to risks associated with (i) high
leverage, (ii) Sunbeam's ability to enter into an amendment to its credit
agreement containing financial covenants which it and its bank lenders find
mutually acceptable, or to continue to obtain waivers from its bank lenders
with respect to its compliance with the existing covenants contained in such
agreement, and to continue to have access to its revolving credit facility,
(iii) Sunbeam's ability to integrate the recently acquired Coleman, Signature
Brands and First Alert companies and expenses associated with such integration,
(iv) Sunbeam's sourcing of products from international vendors, including the
ability to select reliable vendors and to avoid delays in shipments, (v)
Sunbeam's ability to maintain and increase market share for its products at
anticipated margins, (vi) Sunbeam's ability to successfully introduce new
products and to provide on-time delivery and a satisfactory level of customer
service, (vii) changes in laws and regulations, including changes in tax rates,
accounting standards, environmental laws, occupational, health and safety laws,
(viii) access to foreign markets together with foreign economic conditions,
including currency fluctuations, (ix) uncertainty as to the effect of
competition in existing and potential
19
future lines of business, (x) fluctuations in the cost and availability of raw
materials and/or products, (xi) changes in the availability and relative costs
of labor, (xii) effectiveness of advertising and marketing programs, (xiii)
economic uncertainty in Japan, Korea and other Asian countries, as well as in
Mexico, Venezuela, and other Latin American countries, (xiv) product quality,
including excess warranty costs, product liability expenses and costs of
product recalls, (xv) weather conditions which can have an unfavorable impact
upon sales of Sunbeam's products, (xvi) the numerous lawsuits against the
Company and the SEC investigation into the Company's accounting practices and
policies, and uncertainty regarding the Company's available coverage on its
directors' and officers' liability insurance, (xvii) the possibility of a
recession in the United States or other countries resulting in a decrease in
consumer demands for the Company's products, and (xviii) failure of the Company
and/or its suppliers of goods or services to timely complete the remediation of
computer systems to effectively process Year 2000 information and the costs
associated with such remediation. Other factors and assumptions not included in
the foregoing may cause the Company's actual results to materially differ from
those projected. The Company assumes no obligation to update any
forward-looking statements or these Cautionary Statements to reflect actual
results or changes in other factors affecting such forward-looking statements.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this item appears in Item 14(a) of this report.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. The consolidated financial statements, related notes thereto and
the report of independent certified public accountants required by Item 8 are
listed on page F-1 herein.
2. The listing of financial statement schedules appears on page F-1
herein.
3. The exhibits listed in the accompanying index to exhibits are filed
as part of this report and include the management contracts or compensatory
plans or arrangements required pursuant to Item 601, which are designated as
Exhibits 10a to 10g and 10dd to 10gg.
[Enlarge/Download Table]
EXHIBIT
NO. DESCRIPTION
-------- ------------------------------------------------------------------------------------------
3.a Amended and Restated Certificate of Incorporation of Sunbeam(3)
3.b By-laws of Sunbeam, as amended*
4.a Indenture dated as of March 25, 1998, by and among the Company and Bank of New York,
Trust, with respect to the Zero Coupon Convertible Senior Subordinated Debentures due
2018(8)
4.b Registration Rights Agreement dated March 25, 1998, by and among the Company and
Morgan Stanley & Co., Inc., with respect to the Zero Coupon Convertible Senior
Subordinated Debentures due 2018(8)
4.c Registration Rights Agreement, dated as of March 29, 1998, between the Company and
Coleman (Parent) Holdings, Inc.(9)
4.d Settlement Agreement, dated as of August 12, 1998, by and between the Company and
Coleman (Parent) Holdings, Inc.(10)
4.e Amendment to Registration Rights Agreement, dated as of August 12, 1998, between the
Company and Coleman (Parent) Holding, Inc.*
10.a Employment Agreement dated as of February 20, 1998, by and between Sunbeam and Albert
J. Dunlap(7)
10.b Employment Agreement dated as of February 20, 1998, by and between Sunbeam and Russell
A. Kersh(7)
10.c Employment Agreement dated as of February 20, 1998, by and between Sunbeam and David
C. Fannin(7)
20
[Enlarge/Download Table]
EXHIBIT
NO. DESCRIPTION
-------- ----------------------------------------------------------------------------------------------
10.d Employment Agreement dated as of January 1, 1997, by and between Sunbeam and Donald
Uzzi(5)
10.e Sunbeam Executive Benefit Replacement Plan(7)
10.f Amended and Restated Sunbeam Corporation Stock Option Plan*
10.g Performance Based Compensation Plan(7)
10.h Tax Sharing Agreement dated as of October 31, 1990, by and among Sunbeam, SAIL, SOHO,
Montey and the subsidiaries of Sunbeam listed therein(1)
10.i Guarantee Agreement, dated as of June 1, 1994, between Sunbeam and Continental Bank,
N.A., as Trustee(2)
10.j Trust Indenture, dated as of June 1, 1994, between Mississippi Business Finance Corporation
("MBFC"), and Continental Bank, N.A., as Trustee(2)
10.k Loan Agreement, dated as of June 1, 1994, between MBFC and Sunbeam(2)
10.l $75 million Sunbeam promissory note, dated as of June 21, 1994, payable to MBFC(2)
10.m Leasehold Deed of Trust and Security Agreement, dated as of June 1, 1994, among Sunbeam,
Jim B. Tohill, as Trustee, and MBFC(2)
10.n Credit Agreement dated as of September 16, 1996, among the Company, The Chase
Manhattan Bank and the Lenders named therein(4)
10.o First Amendment dated as of November 21, 1996 to the Credit Agreement dated as of
September 16, 1996, among the Company, The Chase Manhattan Bank and the Lenders
named therein(5)
10.p Second Amendment dated as of January 31, 1997 to the Credit Agreement dated as of
September 16, 1996, among the Company, The Chase Manhattan Bank and the Lenders
named therein(5)
10.q Third Amendment dated as of November 6, 1997, to the Credit Agreement dated as of
September 16, 1996, among the Company, The Chase Manhattan Bank and the Lenders
named therein(7)
10.r Receivables Sale and Contribution Agreement dated as of December 4, 1997, between
Sunbeam Products, Inc. and Sunbeam Asset Diversification, Inc.(7)
10.s Receivables Purchase and Servicing Agreement dated as of December 4, 1997, between
Sunbeam Products, Inc., Llama Retail, L.P., Capital USA, LLC and Sunbeam Asset
Diversification, Inc.(7)
10.t Agreement and Plan of Merger among Sunbeam Corporation, Laser Acquisition Corp., CLN
Holdings, Inc., and Coleman (Parent) Holdings, Inc. dated as of February 27, 1998(7)
10.u Agreement and Plan of Merger among Sunbeam Corporation, Camper Acquisition Corp., and
The Coleman Company, Inc. dated as of February 27, 1998(7)
10.v Agreement and Plan of Merger between Sunbeam Corporation, Java Acquisition Corp., and
Signature Brands USA, Inc. dated as of February 28, 1998(7)
10.w Stock Purchase Agreement among Java Acquisition Corp. and the Sellers named therein dated
as of February 28, 1998(7)
10.x Agreement and Plan of Merger by and among Sunbeam Corporation, Sentinel Acquisition
Corp., and First Alert, Inc. dated as of February 28, 1998(7)
10.y Stock Sale Agreement among Sunbeam Corporation and the Shareholders named therein
dated as of February 28, 1998(7)
10.z Credit Agreement dated as of March 30, 1998, among Sunbeam Corporation, the Borrowers
referred to therein, the Lenders party thereto, Morgan Stanley Senior Funding, Inc., Bank of
America National Trust and Savings Association and First Union National Bank(8)
10.aa First Amendment to Credit Agreement dated as of May 8, 1998, among Sunbeam Corporation,
the Subsidiary Borrowers referred to therein, the Lenders party thereto, Morgan Stanley
Senior Funding, Inc., Bank America National Trust and Savings Association and First Union
National Bank(8)
10.bb Second Amendment to Credit Agreement dated as of March 30, 1998, among the Company,
the Subsidiary Borrowers referred to therein, the Lenders party thereto, Morgan Stanley
Senior Funding, Inc., Bank America National Trust and Savings Association and First Union
National Bank*
21
[Enlarge/Download Table]
EXHIBIT
NO. DESCRIPTION
-------- --------------------------------------------------------------------------------------------
10.cc Third Amendment to Credit Agreement dated as of October 19, 1998, among the Company,
the Subsidiary Borrowers referred to therein, the Lenders party thereto, Morgan Stanley
Senior Funding, Inc., Bank America National Trust and Savings Association and First Union
National Bank*
10.dd Employment Agreement between the Company and Jerry W. Levin dated as of August 12,
1998*
10.ee Employment Agreement between the Company and Paul Shapiro dated as of August 12, 1998*
10.ff Employment Agreement between the Company and Bobby Jenkins dated as of August 12,
1998*
10.gg Agreement between the Company and David Fannin dated August 20, 1998*
10.hh First Amendment to Receivables Sale and Contribution Agreement dated April 2, 1998,
between Sunbeam Products, Inc. and Sunbeam Asset Diversification, Inc.*
10.ii First Amendment to Receivables Purchase and Servicing Agreement dated April 2, 1998,
between Llama Retail Funding, L.P., Capital USA, L.L.C., Sunbeam Products, Inc. and
Sunbeam Asset Diversification, Inc.*
10.jj Second Amendment to Receivables Purchase and Servicing Agreement dated July 29, 1998,
between Llama Retail Funding, L.P., Capital USA, L.L.C., Sunbeam Products, Inc. and
Sunbeam Asset Diversification, Inc.*
21. Subsidiaries of the Registrant(7)
27. Financial Data Schedule, submitted electronically to the Securities and Exchange Commission
for information only and not filed.
99.a Press Release dated January 28, 1997 regarding Sunbeam's 1997 earnings(7)
99.b Press Release dated March 2, 1998 regarding Sunbeam's acquisitions of The Coleman
Company, Inc., Signature Brands USA, Inc. and First Alert, Inc.(7)
99.c Press Release dated August 12, 1998, regarding issuance of warrants to MacAndrews & Forbes
Holding, Inc.*
99.d Press Release dated August 24, 1998 regarding the Company's new strategy and senior
management team*
99.e Press Release dated October 20, 1998 regarding the Company's restatement of its financial
results*
----------------
(1) Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended September 30, 1990.
(2) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the quarter ended July 3, 1994.
(3) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1996.
(4) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the quarter ended September 29, 1996.
(5) Incorporated by reference to the Company's Annual report on Form 10-K for
the fiscal year ended December 29, 1996.
(6) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the quarter ended March 30, 1997.
(7) Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended December 28, 1997.
(8) Incorporated by reference to the Company's Report on Form 10-Q for the
quarter ended March 30, 1998.
(9) Incorporated by reference to the Company's Report on Form 8-K filed April
13, 1998.
(10) Incorporated by reference to the Company's Report on Form 8-K filed August
14, 1998.
* Filed with this Report.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the fourth quarter of 1997.
(c) The exhibits required by Item 601 are filed herewith.
(d) The Financial Statement Schedules required by Regulation S-X are filed
herewith.
22
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
SUNBEAM CORPORATION
BY: /s/ BOBBY G. JENKINS
----------------------------------
Bobby G. Jenkins
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
Dated: November 12, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
[Download Table]
NAME AND SIGNATURE TITLE DATE
------------------------------- ------------------------------- ------------------
/s/ PETER A. LANGERMAN Chairman of the Board November 12, 1998
-------------------------------
Peter A. Langerman
/s/ JERRY W. LEVIN President and November 12, 1998
------------------------------- Chief Executive Officer
Jerry W. Levin (Principal Executive Officer)
/s/ CHARLES M. ELSON Director November 12, 1998
-------------------------------
Charles M. Elson
/s/ HOWARD GITTIS Director November 12, 1998
-------------------------------
Howard Gittis
/s/ HOWARD G. KRISTOL Director November 12, 1998
-------------------------------
Howard G. Kristol
/s/ LAWRENCE SONDIKE Director November 12, 1998
-------------------------------
Lawrence Sondike
/s/ FAITH WHITTLESEY Director November 12, 1998
-------------------------------
Faith Whittlesey
/s/ KAREN CLARK Vice President, Finance November 12, 1998
------------------------------- (Principal Accounting Officer)
Karen Clark
23
SUNBEAM CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
[Enlarge/Download Table]
PAGE
-----
FINANCIAL STATEMENTS:
Report of Independent Certified Public Accountants .................................... F-2
Consolidated Statements of Operations
for the Fiscal Years Ended December 28, 1997, December 29, 1996 and December 31, 1995 F-3
Consolidated Balance Sheets as of December 28, 1997 and December 29, 1996 ............. F-4
Consolidated Statements of Shareholders' Equity
for the Fiscal Years Ended December 28, 1997, December 29, 1996 and December 31, 1995 F-5
Consolidated Statements of Cash Flows
for the Fiscal Years Ended December 28, 1997, December 29, 1996 and December 31, 1995 F-6
Notes to Consolidated Financial Statements ............................................ F-7
FINANCIAL STATEMENT SCHEDULE:*
II. Valuation and Qualifying Accounts ................................................. F-42
----------------
* All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required
under the related instructions or are inapplicable, and therefore not
included herein.
F-1
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of
Sunbeam Corporation:
We have audited the accompanying consolidated balance sheets of Sunbeam
Corporation (a Delaware corporation) and subsidiaries as of December 29, 1996
and December 28, 1997 and the related consolidated statements of operations,
shareholders' equity and cash flows for each of the three fiscal years in the
period ended December 28, 1997 (1997 and 1996 restated - see Notes 1 and 13).
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Sunbeam Corporation and
subsidiaries as of December 29, 1996 and December 28, 1997, and the results of
their operations and their cash flows for each of the three fiscal years in the
period ended December 28, 1997 in conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The Schedule (1997 and 1996 restated)
listed in the Index to Financial Statements and Financial Statement Schedule is
presented for the purpose of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
Schedule has been subjected to the auditing procedures applied in the audits of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Fort Lauderdale, Florida,
October 16, 1998, except with respect
to the matters discussed in Further Actions
in Note 15, as to which the date
is October 30, 1998.
F-2
SUNBEAM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
[Enlarge/Download Table]
FISCAL YEARS ENDED
-----------------------------------------------
DECEMBER 28, DECEMBER 29, DECEMBER 31,
1997 1996 1995
-------------- -------------- -------------
AS RESTATED, AS RESTATED,
SEE NOTE 13 SEE NOTE 13
Net sales ..................................................... $1,073,090 $ 984,236 $1,016,883
Cost of goods sold ............................................ 830,956 896,938 809,130
Selling, general and administrative expense ................... 152,653 221,655 137,508
Restructuring and asset impairment (benefit) charges .......... (14,582) 110,122 --
---------- ----------- ----------
Operating earnings (loss) ..................................... 104,063 (244,479) 70,245
Interest expense .............................................. 11,381 13,588 9,437
Other expense, net ............................................ 12 3,738 173
---------- ----------- ----------
Earnings (loss) from continuing operations before
income taxes ................................................. 92,670 (261,805) 60,635
Income taxes (benefit):
Current ...................................................... 1,528 (22,419) (2,105)
Deferred ..................................................... 38,824 (69,206) 25,146
---------- ----------- ----------
40,352 (91,625) 23,041
---------- ----------- ----------
Earnings (loss) from continuing operations .................... 52,318 (170,180) 37,594
Earnings from discontinued operations, net of taxes ........... -- 839 12,917
Loss on sale of discontinued operations, net of taxes ......... (14,017) (39,140) --
---------- ----------- ----------
Net earnings (loss) ........................................... $ 38,301 $ (208,481) $ 50,511
========== =========== ==========
Earnings (loss) per share of common stock from
continuing operations:
Basic ....................................................... $ 0.62 $ (2.05) $ 0.46
========== =========== ==========
Diluted ..................................................... 0.60 (2.05) 0.45
========== =========== ==========
(Loss) earnings from discontinued operations:
Basic ....................................................... $ (0.17) $ (0.46) $ 0.16
========== =========== ==========
Diluted ..................................................... (0.16) (0.46) 0.16
========== =========== ==========
Net earnings (loss) per share of common stock:
Basic ....................................................... $ 0.45 $ (2.51) $ 0.62
========== =========== ==========
Diluted ..................................................... 0.44 (2.51) 0.61
========== =========== ==========
Weighted average common shares outstanding:
Basic ....................................................... 84,945 82,925 81,626
========== =========== ==========
Diluted ..................................................... 87,542 82,925 82,819
========== =========== ==========
See Notes to Consolidated Financial Statements.
F-3
SUNBEAM CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
[Enlarge/Download Table]
DECEMBER 28, DECEMBER 29,
1997 1996
-------------- -------------
AS RESTATED, AS RESTATED,
SEE NOTE 13 SEE NOTE 13
ASSETS
Current assets:
Cash and cash equivalents ............................................... $ 52,298 $ 11,526
Receivables, net ........................................................ 228,460 209,754
Inventories ............................................................. 304,900 164,345
Net assets of discontinued operations and other assets
held for sale ......................................................... -- 92,524
Deferred income taxes ................................................... -- 85,067
Prepaid expenses and other current assets ............................... 16,584 38,381
---------- ----------
Total current assets ................................................. 602,242 601,597
Property, plant and equipment, net ....................................... 249,524 229,393
Trademarks, trade names, goodwill and other, net ......................... 207,162 228,458
---------- ----------
$1,058,928 $1,059,448
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt ....................................... $ 668 $ 921
Accounts payable ........................................................ 108,374 104,113
Restructuring accrual ................................................... 5,186 51,725
Other current liabilities ............................................... 118,899 84,986
---------- ----------
Total current liabilities ............................................ 233,127 241,745
Long-term debt ........................................................... 194,580 201,115
Other long-term liabilities ............................................. 154,300 149,247
Deferred income taxes ................................................... 4,842 52,308
Commitments and contingencies (Notes 5, 12 and 15)
Shareholders' equity:
Preferred stock (2,000,000 shares authorized, none outstanding) ......... -- --
Common stock (issued 89,984,425 and 88,441,479 shares) .................. 900 884
Paid-in capital ......................................................... 479,200 447,948
Retained earnings ....................................................... 89,801 54,899
Other ................................................................... (34,777) (25,310)
---------- ----------
535,124 478,421
Treasury stock, at cost (4,454,394 and 4,478,814 shares) ................ (63,045) (63,388)
---------- ----------
Total shareholders' equity ........................................... 472,079 415,033
---------- ----------
$1,058,928 $1,059,448
========== ==========
See Notes to Consolidated Financial Statements.
F-4
SUNBEAM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
[Enlarge/Download Table]
COMMON PAID-IN RETAINED OTHER TREASURY
STOCK CAPITAL EARNINGS (NOTE 2) STOCK
-------- ------------ ------------ ------------- --------------
Balance at January 1, 1995 ....................... $ 932 $ 461,876 $ 285,990 $ (20,118) $ (174,070)
Net earnings .................................... -- -- 50,511 -- --
Common dividends ($0.04 per share)............... -- -- (3,268) -- --
Exercise of stock options ....................... 20 17,013 -- -- --
Amortization of unearned compensation ........... -- -- -- 582 --
Retirement of treasury shares ................... (74) (37,103) (66,535) -- 103,712
Purchase of common stock for treasury ........... -- -- -- -- (13,091)
Minimum pension liability ....................... -- -- -- (199) --
Translation adjustments ......................... -- -- -- (5,145) --
----- --------- ---------- --------- ----------
Balance at December 31, 1995 ..................... 878 441,786 266,698 (24,880) (83,449)
----- --------- ---------- --------- ----------
Net loss (as restated, see Note 13) ............. -- -- (208,481) -- --
Common dividends ($0.04 per share)............... -- -- (3,318) -- --
Exercise of stock options ....................... 6 7,313 -- -- --
Grant of restricted stock ....................... -- (1,120) -- (14,346) 15,466
Amortization of unearned compensation ........... -- -- -- 7,707 --
Minimum pension liability ....................... -- -- -- 4,963 --
Retirement and sale of treasury shares .......... -- (31) -- -- 4,595
Translation adjustments ......................... -- -- -- 1,246 --
----- --------- ---------- --------- ----------
Balance at December 29, 1996
(as restated, see Note 13) ..................... 884 447,948 54,899 (25,310) (63,388)
----- --------- ---------- --------- ----------
Net earnings (as restated, see Note 13) ......... -- -- 38,301 -- --
Common dividends ($0.04 per share)............... -- -- (3,399) -- --
Exercise of stock options ....................... 16 30,496 -- -- --
Amortization of unearned compensation ........... -- -- -- 5,322 --
Minimum pension liability ....................... -- -- -- (14,050) --
Other stock issuances ........................... -- 756 -- -- 343
Translation adjustments ......................... -- -- -- (739) --
----- --------- ---------- --------- ----------
Balance at December 28, 1997
(as restated, see Note 13) ..................... $ 900 $ 479,200 $ 89,801 $ (34,777) $ (63,045)
===== ========= ========== ========= ==========
See Notes to Consolidated Financial Statements.
F-5
SUNBEAM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
[Enlarge/Download Table]
FISCAL YEARS ENDED
-----------------------------------------------
DECEMBER 28, DECEMBER 29, DECEMBER 31,
1997 1996 1995
-------------- -------------- -------------
AS RESTATED, AS RESTATED,
SEE NOTE 13 SEE NOTE 13
OPERATING ACTIVITIES:
Net earnings (loss) ........................................... $ 38,301 $ (208,481) $ 50,511
Adjustments to reconcile net earnings (loss) to net cash
(used in) provided by operating activities:
Depreciation and amortization ............................... 39,757 47,429 44,174
Restructuring and asset impairment (benefit) charges......... (14,582) 110,122 --
Other non-cash special charges .............................. -- 70,847 --
Loss on sale of discontinued operations, net of taxes ....... 14,017 39,140 --
Deferred income taxes ....................................... 38,824 (69,206) 25,146
Increase (decrease) in cash from changes in operating
assets and liabilities from continuing operations:
Receivables, net ............................................ (57,843) (845) (4,499)
Proceeds from accounts receivable securitization ............ 58,887 -- --
Inventories ................................................. (140,555) 11,289 (4,874)
Account payable ............................................. 4,261 11,029 9,245
Restructuring accrual ....................................... (31,957) -- --
Prepaid expenses and other current assets and
liabilities ................................................ (16,092) 39,657 (8,821)
Income taxes payable ........................................ 52,052 (21,942) (18,452)
Payment of other long-term and non-operating liabilities ...... (1,401) (27,089) (21,719)
Other, net .................................................... 10,288 12,213 10,805
---------- ---------- ----------
Net cash (used in) provided by
operating activities .................................... (6,043) 14,163 81,516
---------- ---------- ----------
INVESTING ACTIVITIES:
Capital expenditures .......................................... (60,544) (75,336) (140,053)
Decrease in investments restricted for plant construction ..... -- -- 45,755
Proceeds from sale of divested operations and other assets..... 90,982 -- --
Purchase of businesses ........................................ -- -- (13,053)
Other, net .................................................... -- (860) --
---------- ---------- ----------
Net cash provided by (used in)
investing activities .................................... 30,438 (76,196) (107,351)
---------- ---------- ----------
FINANCING ACTIVITIES:
Net borrowings under revolving credit facility ................ 5,000 30,000 40,000
Issuance of long-term debt .................................... -- 11,500 --
Payments of debt obligations .................................. (12,157) (1,794) (5,417)
Proceeds from exercise of stock options ....................... 26,613 4,684 9,818
Purchase of common stock for treasury ......................... -- -- (13,091)
Sale of treasury stock ........................................ -- 4,578 --
Payments of dividends on common stock ......................... (3,399) (3,318) (3,268)
Other financing activities .................................... 320 (364) (264)
---------- ---------- ----------
Net cash provided by financing activities .................. 16,377 45,286 27,778
---------- ---------- ----------
Net increase (decrease) in cash and
cash equivalents ........................................ 40,772 (16,747) 1,943
Cash and cash equivalents at beginning of year ................. 11,526 28,273 26,330
---------- ---------- ----------
Cash and cash equivalents at end of year ....................... $ 52,298 $ 11,526 $ 28,273
========== ========== ==========
See Notes to Consolidated Financial Statements.
F-6
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Sunbeam Corporation ("Sunbeam" or the "Company") is a leading manufacturer
and marketer of branded consumer products. The Sunbeam/registered trademark/
and Oster/registered trademark/ brands have been household names for
generations, and the Company is a market share leader in many of its product
categories.
The Company markets its products through virtually every category of
retailer including mass merchandisers, catalog showrooms, warehouse clubs,
department stores, catalogs, television shopping channels, Company-owned outlet
stores, hardware stores, home centers, drug and grocery stores, pet supply
retailers, as well as independent distributors and the military. The Company
also sells its products to commercial end users such as hotels and other
institutions.
Approximately 80% of total Company sales are generated in the United
States. The remaining sales are generated primarily in Latin America.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and all majority-owned subsidiaries that it controls. All material intercompany
balances and transactions have been eliminated.
PRESENTATION OF FISCAL PERIODS
The Company's fiscal year ends on the Sunday nearest December 31. Fiscal
years 1997, 1996 and 1995 ended on December 28, 1997, December 29, 1996, and
December 31, 1995 respectively, which encompassed 52-week periods (see Note
15).
RESTATEMENT
On June 30, 1998, the Company announced that the Audit Committee of the
Board of Directors was initiating a review into the accuracy of prior financial
statements. The Audit Committee's review has since been completed and, as a
result of its findings, the Company has restated its previously issued
Consolidated Financial Statements for 1996 and 1997. (See Notes 13, 14 and 15.)
USE OF ESTIMATES
The preparation of the consolidated financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the consolidated
financial statements and accompanying notes. Actual results could differ from
those estimates. Significant accounting estimates include the establishment of
the allowance for doubtful accounts, reserves for sales returns and allowances,
product warranty, product liability, excess and obsolete inventory, litigation
and environmental exposures.
CASH AND CASH EQUIVALENTS
The Company considers highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.
F-7
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
CONCENTRATIONS OF CREDIT RISK
Substantially all of the Company's trade receivables are due from
retailers and distributors located throughout the United States, Latin America
and Canada. Approximately 35% of the Company's sales in 1997 were to its five
largest customers. The Company establishes its credit policies based on an
ongoing evaluation of its customers' creditworthiness and competitive market
conditions and establishes its allowance for doubtful accounts based on an
assessment of exposures to credit losses at each balance sheet date. The
Company believes its allowance for doubtful accounts is sufficient based on the
credit exposures outstanding at December 28, 1997. However, certain retailers
filed for bankruptcy protection in the last several years and it is possible
that additional credit losses could be incurred if the trends of retail
consolidation continue.
INVENTORIES
Inventories are stated at the lower of cost or market with cost being
determined principally by the first-in, first-out method.
In certain instances, the Company receives rebates from vendors based on
the volume of merchandise purchased. Vendor rebates are recorded as reductions
in the price of the purchased merchandise and are recognized in operations as
the related inventories are sold.
Effective in fiscal 1997, the Company began capitalizing manufacturing
supplies inventories, whereas previously these inventories were charged to
operations when purchased. This change increased pre-tax operating earnings in
fiscal 1997 by $2.8 million.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost. The Company provides for
depreciation using primarily the straight-line method in amounts that allocate
the cost of property, plant and equipment over the following useful lives:
[Download Table]
Buildings and improvements ............... 20 to 40 years
Machinery, equipment and tooling ......... 3 to 15 years
Furniture and fixtures ................... 3 to 10 years
Leasehold improvements are amortized on a straight-line basis over the
shorter of its estimated useful life or the term of the lease.
LONG-LIVED ASSETS
The Company accounts for long-lived assets pursuant to Statement of
Financial Accounting Standards ("SFAS") No. 121, ACCOUNTING FOR THE IMPAIRMENT
OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF. The Company
continually evaluates factors, events and circumstances which include, but are
not limited to, the historical and projected operating performance of the
business operations, specific industry trends and general economic conditions
to assess whether the remaining estimated useful lives of long-lived assets may
warrant revision or whether the remaining asset values are recoverable through
future operations. When such factors, events or circumstances indicate that
F-8
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
long-lived assets should be evaluated for possible impairment, the Company uses
an estimate of undiscounted cash flows over the remaining lives of the assets
to measure the recoverability. See Note 8 for a discussion of asset impairment
charges in 1996 and Note 15 for a discussion of asset impairment charges
anticipated in 1998.
CAPITALIZED INTEREST
Interest costs for the construction of certain long-term assets are
capitalized and amortized over the related assets' estimated useful lives.
Total interest costs during 1997 and 1996 amounted to $12.3 million and $14.0
million respectively, of which $0.9 million and $0.4 million respectively, was
capitalized into the construction cost of the long-term assets.
AMORTIZATION PERIODS
Trademarks, trade names and goodwill are being amortized on a
straight-line basis over 20 to 40 years.
REVENUE RECOGNITION
The Company recognizes sales and related cost of goods sold from product
sales when title passes to the customers which is generally at the time of
shipment. Net sales is comprised of gross sales less provisions for estimated
customer returns, discounts, promotional allowances, cooperative advertising
allowances and costs incurred by the Company to ship product to customers.
Reserves for estimated returns are established by the Company concurrently with
the recognition of revenue. Reserves are established based on a variety of
factors, including historical return rates, estimates of customer inventory
levels, the market for the product and projected economic conditions. The
Company monitors these reserves and makes adjustment to them when management
believes that actual returns or costs to be incurred differ from amounts
recorded. In some situations, the Company has shipped product with the right of
return where the Company is unable to reasonably estimate the level of returns
and/or the sale is contingent upon the resale of the product. In these
situations, the Company does not recognize revenue upon product shipment, but
rather when it is reasonably expected the product will not be returned.
WARRANTY COSTS
The Company provides for warranty costs in amounts it estimates will be
needed to cover future warranty obligations for products sold during the year.
Estimates of warranty costs are periodically reviewed and adjusted, when
necessary, to consider actual experience.
PRODUCT LIABILITY
The Company provides for product liability costs it estimates will be
needed to cover future product liability costs for product sold during the
year. Estimates of product liability costs are periodically reviewed and
adjusted, when necessary, to consider actual experience, changes in product
design, warranty rates and other relevant factors.
INCOME TAXES
The Company accounts for income taxes under the liability method in
accordance with SFAS No. 109, ACCOUNTING FOR INCOME TAXES. The provision for
income taxes includes deferred income taxes
F-9
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
resulting from items reported in different periods for income tax and financial
statement purposes. Deferred tax assets and liabilities represent the expected
future tax consequences of the differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. The effects of changes in tax rates on deferred tax assets and
liabilities are recognized in the period that includes the enactment date. No
provision has been made for U.S. income taxes on approximately $45.6 million of
cumulative undistributed earnings of foreign subsidiaries at December 28, 1997
since it is the present intention of management to reinvest the undistributed
earnings indefinitely in foreign operations.
ADVERTISING COSTS
Media advertising costs included in Selling, General and Administrative
Expense ("SG&A") are expensed as incurred. Allowances provided to customers for
cooperative advertising are charged to operations, as earned, based on revenues
and are included as a deduction from gross sales in determining net sales.
FOREIGN CURRENCY TRANSLATION
The assets and liabilities of subsidiaries, other than those operating in
highly inflationary economies, are translated into U.S. dollars at year-end
exchange rates, with resulting translation gains and losses accumulated in a
separate component of shareholders' equity. Income and expense items are
converted into U.S. dollars at average rates of exchange prevailing during the
year.
For subsidiaries operating in highly inflationary economies (Venezuela and
Mexico), inventories and property, plant and equipment are translated at the
rate of exchange on the date the assets were acquired, while other assets and
liabilities are translated at year-end exchange rates. Translation adjustments
for those operations are included in "Other Expense, net" in the accompanying
Consolidated Statements of Operations.
STOCK-BASED COMPENSATION PLANS
SFAS No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION allows either
adoption of a fair value method for accounting for stock-based compensation
plans or continuation of accounting under Accounting Principles Board ("APB")
Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, and related
interpretations with supplemental disclosures.
The Company has chosen to account for its stock options using the
intrinsic value based method prescribed in APB Opinion No. 25 and, accordingly,
does not recognize compensation expense for stock option grants made at an
exercise price equal to or in excess of the fair market value of the stock at
the date of grant. Pro forma net income and earnings per share amounts as if
the fair value method had been adopted are presented in Note 5. SFAS No. 123
does not impact the Company's results of operations, financial position or cash
flows.
F-10
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
EARNINGS (LOSS) PER SHARE OF COMMON STOCK
In 1997, the Company adopted SFAS No. 128, EARNINGS PER SHARE. Basic
earnings per common share calculations are determined by dividing earnings
available to common shareholders by the weighted average number of shares of
common stock outstanding. Diluted earnings per share are determined by dividing
earnings available to common shareholders by the weighted average number of
shares of common stock and dilutive common stock equivalents outstanding (all
related to outstanding stock options and restricted stock discussed in Note 5).
The Company's reported primary earnings per share for 1995 has been restated to
comply with the requirements of SFAS No. 128. SFAS No. 128 had no impact on the
Company's reported loss per share for 1996 and no impact on the diluted
earnings per share reported in 1995. The effect of this accounting change on
previously reported earnings per share (EPS) for 1995 was as follows:
[Download Table]
Earnings per share from continuing operations
Primary EPS as reported .................... $0.45
Effect of SFAS No. 128 ..................... 0.01
Basic EPS as restated ...................... 0.46
Earnings per share
Primary EPS as reported .................... $0.61
Effect of SFAS No. 128 ..................... 0.01
Basic EPS as restated ...................... 0.62
The following reconciles the weighted average common basic and diluted
shares outstanding at the fiscal period ends (in thousands of shares):
[Download Table]
1997 1996 1995
---------- -------- ---------
Basic average common shares outstanding ............ 84,945 82,925 81,626
Dilutive effect of stock options ................... 2,718 -- 737
Dilutive effect of stock warrants .................. -- -- 456
Effect of restricted stock ......................... (121) -- --
------ ------ ------
Diluted average common shares outstanding .......... 87,542 82,925 82,819
====== ====== ======
For the year ended December 29, 1996, 1,552,684 shares related to stock
options and 78,654 shares related to restricted stock were not included in the
diluted average common shares outstanding, as the effect would have been
antidilutive.
RECLASSIFICATION
Certain prior year amounts have been reclassified to conform with the 1997
presentation.
NEW ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 130, REPORTING COMPREHENSIVE INCOME. SFAS No. 130 establishes
standards for reporting and display of comprehensive income and its components
in the financial statements. SFAS No. 130 is effective for fiscal years
beginning after December 15, 1997. Reclassification of financial statements for
earlier periods provided for comparative purposes is required. The adoption of
SFAS No. 130 will have no impact on the Company's consolidated results of
operations, financial position or cash flows.
F-11
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
In June 1997, the FASB issued SFAS No. 131, DISCLOSURES ABOUT SEGMENTS OF
AN ENTERPRISE AND RELATED INFORMATION. SFAS No. 131 establishes standards for
the way that public business enterprises report information about operating
segments in annual financial statements and requires that those enterprises
report selected information about operating segments in interim financial
reports issued to shareholders. It also establishes standards for related
disclosures about products and services, geographic areas, and major customers.
SFAS No. 131 is effective for financial statements for fiscal years beginning
after December 15, 1997. Financial statement disclosures for prior periods are
required to be restated. The Company is in the process of evaluating the
disclosure requirements. The adoption of SFAS No. 131 will have no impact on
consolidated results of operations, financial position or cash flow.
See Note 15 for new accounting standards issued subsequent to December 28,
1997.
2. SHAREHOLDERS' EQUITY
At December 28, 1997, the Company had 200,000,000 shares of $.01 par value
common stock authorized and there were 9,404,068 shares of common stock
reserved for issuance upon the exercise of outstanding stock options.
In June 1995, the Company retired 7,376,395 shares of common stock held in
treasury, and such shares were returned to the status of authorized but
unissued shares. As a result, $103.7 million assigned to treasury stock has
been eliminated with a corresponding decrease to common stock, paid-in capital
and retained earnings. In 1995, the Company repurchased 905,600 shares of its
common stock at a total cost of $13.1 million.
In July 1996, the Company sold 321,786 shares of common stock for total
proceeds of approximately $4.6 million, and granted 1,100,000 shares of
restricted stock in connection with the employment of a new Chairman and Chief
Executive Officer and certain other officers of the Company. Compensation
expense attributable to the restricted stock awards is being amortized to
expense beginning in 1996 over the periods in which the restrictions lapse
(which in the case of 333,333 shares, was immediately upon the date of grant,
in the case of 666,667 shares, is equally over two years from the date of grant
and in the case of the remaining restricted shares, is equally over three years
from the dates of grant). The restricted stock award resulted in a $7.7 million
charge to SG&A in 1996.
On February 20, 1998 the Company entered into new three-year employment
agreements with its then Chairman and Chief Executive Officer and two other
senior officers of the Company. These agreements replaced previous employment
agreements entered into in July 1996 that were scheduled to expire in July
1999. Refer to Note 15 for additional information regarding the new employment
contracts, including the acceleration of vesting of the 1996 restricted stock
grants discussed above.
F-12
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
2. SHAREHOLDERS' EQUITY--(CONTINUED)
Information regarding other changes in shareholders' equity is summarized
below (in thousands):
[Enlarge/Download Table]
CURRENCY MINIMUM
TRANSLATION PENSION UNEARNED
ADJUSTMENTS LIABILITY COMPENSATION TOTAL
------------- ------------- -------------- -------------
Balance at January 1, 1995 ..................... $ (8,212) $ (10,927) $ (979) $ (20,118)
Amortization of unearned compensation ......... -- -- 582 582
Increase in minimum pension liability
(net of tax of $127) ........................ -- (199) -- (199)
Translation adjustments ....................... (5,145) -- -- (5,145)
--------- --------- --------- ---------
Balance at December 31, 1995 ................... (13,357) (11,126) (397) (24,880)
Grant of restricted stock ..................... -- -- (14,346) (14,346)
Amortization of unearned compensation ......... -- -- 7,707 7,707
Decrease in minimum pension liability
(net of tax of $2,672) ...................... -- 4,963 -- 4,963
Translation adjustments ....................... 1,246 -- -- 1,246
--------- --------- --------- ---------
Balance at December 29, 1996 ................... (12,111) (6,163) (7,036) (25,310)
Amortization of unearned compensation ......... -- -- 5,322 5,322
Increase in minimum pension liability (net
of tax of $0. See Note 10)................... -- (14,050) -- (14,050)
Translation adjustments ....................... (739) -- -- (739)
--------- --------- --------- ---------
Balance at December 28, 1997 ................... $ (12,850) $ (20,213) $ (1,714) $ (34,777)
========= ========= ========= =========
3. CREDIT FACILITIES AND LONG-TERM DEBT
In 1994, the Mississippi Business Finance Corporation ("MBFC") issued $75
million of 7.85% Industrial Development Revenue Notes (the "Notes") maturing
serially in eleven equal annual installments beginning June 1999 to certain
institutional investors through a private placement. The MBFC loaned the
proceeds of the Notes to a subsidiary of the Company under a loan agreement
(the "Hattiesburg Loan") restricting the use of such funds to the acquisition,
design, construction and equipping of the Hattiesburg, Mississippi
manufacturing and distribution center. The Notes are guaranteed by the Company
and the Hattiesburg Loan is secured by the Hattiesburg facility. The Notes were
repaid in March 1998. (See Note 15.)
In September 1996 (as subsequently amended), the Company entered into a
$500 million syndicated unsecured five year revolving credit facility (the
"Credit Agreement") which replaced a previous credit facility of $500 million.
In July 1997, the Company reduced the amount of available borrowings under the
facility to $250 million. Under the Credit Agreement, the Company can borrow
under a competitive bid option, or at a spread above LIBOR (.5% at December 28,
1997) or at a bank base rate. In addition, the Company pays an annual facility
fee (.25% at December 28, 1997). The Credit Agreement contains certain
financial covenants. In 1998, the Credit Agreement was refinanced and
additional debt was incurred as discussed in Note 15, Subsequent Events.
During 1997, the Company repaid $12.2 million of long-term borrowings
related to the divested furniture operations and other assets sold.
F-13
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
3. CREDIT FACILITIES AND LONG-TERM DEBT--(CONTINUED)
At December 28, 1997, the aggregate annual principal payments on long-term
debt, excluding amounts outstanding under the Credit Agreement, due in each of
the years 1998-2002, were $0.7 million, $7.5 million, $7.6 million, $7.6
million and $7.7 million, respectively.
Long-term debt at the end of each fiscal year consists of the following
(in thousands):
[Enlarge/Download Table]
1997 1996
----------- -----------
Revolving credit facility, weighted average interest rate of 5.99% and
5.60% for 1997, and for 1996, respectively .......................... $110,000 $105,000
Hattiesburg industrial revenue bond due 2009, fixed interest rate
of 7.85% ............................................................ 75,000 75,000
Other long-term borrowings, due through 2012, weighted average
interest rate of 3.92% and 4.95%, at December 28, 1997 and
December 29, 1996, respectively ..................................... 10,248 22,036
-------- --------
195,248 202,036
Less current portion of long-term debt ............................... 668 921
-------- --------
Long-term debt ....................................................... $194,580 $201,115
======== ========
In December 1997, the Company entered into a revolving trade accounts
receivable securitization program, which expires December, 1998 to sell without
recourse, through a wholly-owned subsidiary, certain trade accounts receivable,
up to a maximum of $70.0 million. At December 28, 1997, the Company had
received approximately $58.9 million from the sale of trade accounts
receivable, of which $39.1 million related to sales recorded in fiscal 1997 and
the balance related to sales to be recognized in the first quarter of 1998.
Accordingly, at December 28, 1997, the accompanying Consolidated Balance Sheet
reflects a reduction in accounts receivable of $39.1 million and an increase in
other current liabilities of $19.8 million. The proceeds from the sale were
used to reduce borrowings under the Company's revolving credit facility. Costs
of the program, which primarily consist of the purchaser's financing cost of
issuing commercial paper backed by the receivables, totaled $0.2 million during
1997, and have been classified as interest expense in the accompanying
Consolidated Statements of Operations. The Company, as agent for the purchaser
of the receivables, retains collection and administrative responsibilities for
the purchased receivables.
4. FINANCIAL INSTRUMENTS
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of the Company's financial instruments as of December
28, 1997 approximate market values based upon the following methods and
assumptions:
CASH AND CASH EQUIVALENTS--The carrying amount of cash and cash
equivalents is assumed to approximate fair value as cash equivalents include
all highly liquid, short-term investments with original maturities of three
months or less.
SHORT AND LONG TERM DEBT--The carrying value of the Company's various debt
outstanding as of December 28, 1997 approximates market. The fair value of the
Company's fixed rate debt is estimated
F-14
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
4. FINANCIAL INSTRUMENTS--(CONTINUED)
using discounted cash flow analysis, based upon the market yield of public debt
securities of comparable credit quality and maturity. The carrying value of the
Company's variable rate debt is assumed to approximate market based upon
periodic adjustments of the interest rate to the current market rate in
accordance with the terms of the debt agreements.
LETTERS OF CREDIT--The Company utilizes stand-by letters of credit to back
certain financing instruments and insurance policies and commercial letters of
credit guaranteeing various international trade activities. The contract
amounts of the letters of credit approximate their fair value.
DERIVATIVE FINANCIAL INSTRUMENTS
The Company selectively uses derivatives to manage interest rate and
foreign exchange exposures that arise in the normal course of business. The use
of derivatives did not have a material impact on the Company's results of
operations in 1997, 1996 and 1995. No derivatives are entered into for trading
or speculative purposes. Foreign exchange option and forward contracts are used
to hedge a portion of the Company's underlying exposures denominated in foreign
currency. Although the market value of derivative contracts at any single point
in time will vary with changes in interest and/or foreign exchange rates, the
difference between the carrying value and fair value of such contracts at
December 29, 1996 and December 31, 1995 is not considered to be material,
either individually or in the aggregate. The Company had no derivative
financial instruments outstanding at December 28, 1997. The Company enters into
derivative contracts with counterparties that it believes to be creditworthy.
The Company does not enter into any leveraged derivative transactions.
As of December 29, 1996, $10.0 million of the Company's outstanding
floating rate debt was subject to interest rate swap agreements which expired
in 1997.
In order to mitigate the transaction exposures that may arise from changes
in foreign exchange rates, the Company purchases foreign currency option
contracts to hedge anticipated transactions. The option contracts typically
expire within one year. Any realized gains on options are not deferred but are
recognized in income in the period when the hedged exposure is recognized. The
Company purchased options with a notional value of $16.6 million in 1997, $18.2
million in 1996 and $11.7 million in 1995. Options with notional value of $17.9
million, $25.4 million and $3.2 million expired in 1997, 1996 and 1995,
respectively. The Company held purchased option contracts with a notional value
of $1.4 million at December 29, 1996.
5. EMPLOYEE STOCK OPTIONS AND AWARDS
The Company has one stock-based compensation plan, the Amended and
Restated Sunbeam Corporation Stock Option Plan (the "Plan"). Under the Plan,
all employees are eligible for grants of options to purchase up to an aggregate
of 11,300,000 shares of the Company's common stock at an exercise price equal
to or in excess of the fair market value of the stock on the date of grant. The
term of each option commences on the date of grant and expires on the tenth
anniversary of the date of grant subject to earlier cancellation. Options
generally become exercisable over a three to five year period.
The Plan also provides for the grant of restricted stock awards of up to
200,000 shares, in the aggregate, to employees and non-employee directors. See
Note 2 for a discussion of restricted stock awards made outside the Plan.
F-15
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
5. EMPLOYEE STOCK OPTIONS AND AWARDS--(CONTINUED)
In July 1996, options to purchase an aggregate of 3,000,000 shares (of
which 2,750,000 options were outstanding at December 28, 1997) were granted
outside of the Plan at exercise prices equal to the fair market value of the
Company's common stock on the dates of grant in connection with the employment
of a then new Chairman and Chief Executive Officer and certain other executive
officers of the Company. These outstanding options have terms of ten years and,
with respect to options for 2,500,000 shares, are exercisable in three annual
installments beginning July 17, 1996. Options for the remaining 250,000 shares
still outstanding are exercisable in three annual installments beginning on the
first anniversary of the July 22, 1996 grant date. On February 20, 1998 the
vesting provisions of the options granted outside the Plan were accelerated.
Additional restricted stock grants were made in February 1998, with a portion
thereof subsequently terminated. See further description in Note 15.
The Company applies APB Opinion No. 25 and related interpretations in
accounting for its stock options. Accordingly, no compensation cost has been
recognized for outstanding stock options. Had compensation cost for the
Company's outstanding stock options been determined based on the fair value at
the grant dates for those options consistent with SFAS No. 123, the Company's
net earnings (loss) and diluted earnings (loss) per share would have been
reduced to the pro forma amounts indicated below (in thousands except per share
amounts):
[Download Table]
1997 1996 1995
---------- -------------- ----------
Net earnings/(loss)
As reported .................... $38,301 $ (208,481) $50,511
Pro forma ...................... $14,524 $ (218,405) $49,731
Diluted earnings/(loss) per share
As reported .................... $ 0.44 $ (2.51) $ 0.61
Pro forma ...................... $ 0.16 $ (2.63) $ 0.60
The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option-pricing model with the following
weighted-average assumptions:
[Download Table]
1997 1996 1995
---------- ---------- ----------
Expected volatility .............. 34.19% 36.78% 36.78%
Risk-free interest rate .......... 6.36% 6.34% 6.34%
Dividend yield ................... .1% .1% .1%
Expected life .................... 6 years 5 years 5 years
F-16
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
5. EMPLOYEE STOCK OPTIONS AND AWARDS--(CONTINUED)
A summary of the status of the Company's outstanding stock options as of
December 28, 1997, December 29, 1996 and December 31, 1995, and changes during
the years ending on those dates is presented below:
[Enlarge/Download Table]
1997 1996 1995
-------------------------------- -------------------------------- -------------------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
SHARES EXERCISE PRICE SHARES EXERCISE PRICE SHARES EXERCISE PRICE
--------------- ---------------- --------------- ---------------- --------------- ---------------
PLAN OPTIONS
Outstanding at
beginning of year ......... 6,271,837 $19.43 4,610,387 $16.67 5,230,221 $14.85
Granted ..................... 3,105,263 32.40 4,061,450 20.39 1,928,500 18.61
Exercised ................... (1,549,196) 17.20 (622,994) 7.51 (1,142,348) 6.32
Canceled .................... (1,173,836) 21.10 (1,777,006) 18.64 (1,405,986) 21.06
---------- ---------- ----------
Outstanding at
end of year ............... 6,654,068 25.61 6,271,837 19.43 4,610,387 16.67
========== ========== ==========
Options exercisable
at year-end ............... 1,547,198 $19.13 1,655,450 $16.13 1,539,836 $11.47
Weighted-average fair
value of options
granted during
the year .................. $ 15.46 $ 14.76 $ 8.28
OPTIONS OUTSIDE PLAN
Outstanding at
beginning of year ......... 2,750,000 $12.43 692,500 $16.70 750,000 $16.70
Granted ..................... -- -- 3,000,000 12.65 -- --
Exercised ................... -- -- -- -- (57,500) 16.70
Canceled .................... -- -- (942,500) 16.27 -- --
------------ ------------ ------------
Outstanding at
end of year ............... 2,750,000 12.43 2,750,000 12.43 692,500 16.70
============ ============ ============
Options exercisable
at year-end ............... 1,750,000 $12.35 833,333 $12.25 505,000 $16.70
Weighted-average fair
value of options
granted during
the year .................. $ N/A $ 5.99 $ N/A
F-17
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
5. EMPLOYEE STOCK OPTIONS AND AWARDS--(CONTINUED)
The following table summarizes information about stock options outstanding
at December 28, 1997:
[Enlarge/Download Table]
OPTIONS OUTSTANDING
--------------------------------------------------------------
NUMBER WEIGHTED-AVERAGE
RANGE OF OUTSTANDING REMAINING WEIGHTED-AVERAGE
EXERCISE PRICES AT 12/28/97 CONTRACTUAL LIFE (YEARS) EXERCISE PRICE
----------------------------- ------------- -------------------------- -----------------
$5.00 to $14.99 ......... 3,514,556 8.2 $12.50
$15.00 to $19.99 ......... 485,240 7.4 16.30
$20.00 to $24.99 ......... 2,090,187 8.2 22.39
$25.00 to $29.99 ......... 1,786,007 9.0 25.99
$30.00 to $34.99 ......... 448,468 9.3 32.01
$35.00 to $39.99 ......... 336,820 9.5 38.77
$40.00 to $44.99 ......... 680,290 9.7 42.99
$45.00 and over .......... 62,500 9.7 46.22
--------- --- ------
$5.00 to $49.71 ......... 9,404,068 8.5 $21.76
========= === ======
[Download Table]
OPTIONS EXERCISABLE
---------------------------------
NUMBER
RANGE OF EXERCISABLE WEIGHTED-AVERAGE
EXERCISE PRICES AT 12/28/97 EXERCISE PRICE
----------------------------- ------------- -----------------
$5.00 to $14.99 ......... 2,108,255 $12.08
$15.00 to $19.99 ......... 219,466 16.50
$20.00 to $24.99 ......... 842,601 22.27
$25.00 and over........... 126,876 26.41
--------- ------
$5.00 to $27.36 ......... 3,297,198 $15.54
========= ======
See Note 15 for certain items related to employee stock options and awards
occurring subsequent to December 28, 1997.
6. EMPLOYEE BENEFIT PLANS
RETIREMENT PLANS
The Company sponsors several defined benefit pension plans covering
eligible U.S. salaried and hourly employees. Benefit accruals under such plans
covering all U.S. salaried employees were frozen, effective December 31, 1990.
Therefore no credit in the pension formula is given for service or compensation
after that date. However, employees continue to earn service toward vesting in
their interest in the frozen plans as of December 31, 1990. Employees of
non-U.S. subsidiaries generally receive retirement benefits from Company
sponsored plans or from statutory plans administered by governmental agencies
in their countries.
F-18
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
6. EMPLOYEE BENEFIT PLANS--(CONTINUED)
The funded status of the Company's U.S. defined benefit pension plans at
the end of each fiscal year follows (in thousands):
[Enlarge/Download Table]
1997 1996
----------- -----------
Actuarial present value of benefit obligations:
Vested ............................................................. $ 126,941 $ 122,379
Non-vested ......................................................... 288 375
--------- ---------
Accumulated benefit obligations ..................................... 127,229 122,754
Plan assets at fair value ........................................... 116,485 116,522
--------- ---------
Accumulated benefit obligations in excess of plan assets ............ 10,744 6,232
Unrecognized net loss ............................................... (25,192) (19,537)
Additional minimum liability ........................................ 25,192 10,255
--------- ---------
Pension liability (prepaid) recognized on the balance sheet ......... $ 10,744 $ (3,050)
========= =========
Net periodic pension cost for the Company's U.S. defined benefit pension
plans for each fiscal year include the following components (in thousands):
[Enlarge/Download Table]
1997 1996 1995
------------ ----------- ------------
Service cost-benefits earned during the period .......... $ 157 $ 411 $ 331
Interest cost-accumulated benefit obligations ........... 8,970 9,071 10,620
Actual return on plan assets ............................ (12,511) (816) (20,985)
Net amortization and deferral ........................... 4,338 (7,518) 11,332
--------- -------- ---------
Net periodic pension cost ............................... $ 954 $ 1,148 $ 1,298
========= ======== =========
Assumptions:
Discount rate .......................................... 7.25% 7.75% 7.25%
Long-term rate of return on assets ..................... 7.25% 7.75% 9.50%
The Company funds its pension plans in amounts consistent with applicable
laws and regulations. Pension plan assets include corporate and U.S. government
bonds and cash equivalents.
The assets, liabilities and pension costs of the Company's non-U.S.
defined benefit retirement plans are not material to the consolidated financial
statements.
OTHER POSTRETIREMENT BENEFITS
The Company provides health care and life insurance benefits to certain
former employees who retired from the Company prior to March 31, 1991. The
Company has consistently followed a policy of funding the cost of
postretirement health care and life insurance benefits on a pay-as-you-go
basis.
Effective July 1993, various amendments to the Company's postretirement
benefits program were adopted. The amendments included increases in retiree
contribution levels for certain retiree groups and the discontinuation of
medical and/or life insurance coverage for certain retirees who qualify for
Medicare. These amendments resulted in an unrecognized reduction in prior
service cost which is being amortized over future years.
F-19
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
6. EMPLOYEE BENEFIT PLANS--(CONTINUED)
The following table presents the funded status reconciled with the amounts
recognized in the Company's consolidated balance sheet at the end of each
fiscal year (in thousands):
[Download Table]
1997 1996
---------- ----------
Accumulated postretirement benefit obligation .......... $14,220 $14,555
Plan assets ............................................ -- --
------- -------
Accumulated postretirement benefit obligation in excess
of plan assets ........................................ 14,220 14,555
Unrecognized reduction in prior service cost ........... 15,934 18,877
Unrecognized net gain .................................. 240 95
------- -------
Accrued postretirement benefit obligation recognized
on the balance sheet .................................. $30,394 $33,527
======= =======
Net periodic postretirement benefit cost for each fiscal year includes the
following components (in thousands):
[Download Table]
1997 1996
----------- -----------
Interest cost ............................................ $ 983 $ 1,042
Amortization of reduction in prior service cost .......... (2,943) (2,943)
-------- --------
Net periodic postretirement benefit credit ............... $ (1,960) $ (1,901)
======== ========
The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation is 8.8% for 1998 and is assumed to decrease
gradually to 6% by 2003 and remain at that level thereafter. A one percentage
point increase in the assumed health care cost trend rate for each year would
increase the accumulated postretirement benefit obligation as of December 28,
1997 and the net periodic postretirement benefit cost for 1997 by approximately
8%. The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 7.25% at December 28, 1997 and December
29, 1996.
DEFINED CONTRIBUTION PLANS
The Company sponsors defined contribution profit sharing plans covering
eligible employees. Company contributions to these plans include employer
matching contributions as well as discretionary profit sharing contributions
depending on the performance of the Company, in an amount up to 10% of eligible
compensation. The Company provided $1.8 million in 1997, $1.7 million in 1996
and $4.1 million in 1995 for its defined contribution plans.
F-20
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
7. SUPPLEMENTARY FINANCIAL STATEMENT DATA
Supplementary Balance Sheet data at the end of each fiscal year is as
follows (in thousands):
[Download Table]
1997 1996
------------- -------------
Receivables:
Trade ............................................. $ 250,699 $ 227,043
Sundry ............................................ 7,794 2,412
---------- ----------
258,493 229,455
Valuation allowance ............................... (30,033) (19,701)
---------- ----------
$ 228,460 $ 209,754
========== ==========
Inventories:
Finished goods .................................... $ 193,864 $ 86,681
Work in process ................................... 25,679 25,392
Raw materials and supplies ........................ 85,357 52,272
---------- ----------
$ 304,900 $ 164,345
========== ==========
Property, plant and equipment:
Land .............................................. $ 1,793 $ 2,524
Buildings and improvements ........................ 98,054 95,619
Machinery and equipment ........................... 248,138 259,460
---------- ----------
Furniture and fixtures ............................ 7,327 8,044
---------- ----------
355,312 365,647
---------- ----------
Accumulated depreciation and amortization ......... (105,788) (136,254)
---------- ----------
$ 249,524 $ 229,393
========== ==========
Trademarks, trade names, goodwill and other:
Trademarks and trade names ........................ $ 237,095 $ 245,307
Goodwill .......................................... 24,687 38,823
Accumulated amortization .......................... (56,880) (57,261)
---------- ----------
204,902 226,869
Other assets ...................................... $ 2,260 $ 1,589
---------- ----------
$ 207,162 $ 228,458
========== ==========
Inventory and property, plant and equipment in 1996 exclude assets of
discontinued operations and other assets held for sale.
(See Note 15 regarding asset valuation / impairment in 1998.)
F-21
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
7. SUPPLEMENTARY FINANCIAL STATEMENT DATA--(CONTINUED)
[Download Table]
1997 1996
---------- ----------
Other current liabilities:
Payrolls, commissions and employee benefits .......... $ 12,227 $ 16,779
Advertising and sales promotion ...................... 34,749 23,815
Product warranty ..................................... 21,498 23,883
Accounts receivable securitization liability ......... 19,750 --
Sales returns ........................................ 7,846 6,058
Other ................................................ 22,829 14,451
-------- --------
$118,899 $ 84,986
======== ========
Other long-term liabilities:
Accrued postretirement benefit obligation ............ $ 30,394 $ 33,527
Accrued pension ...................................... 10,744 --
Product liability and workers compensation ........... 41,901 34,870
Other ................................................ 71,261 80,850
-------- --------
$154,300 $149,247
======== ========
Supplementary Statements of Operations and Cash Flows data for each fiscal
year are summarized as follows (in thousands):
[Enlarge/Download Table]
1997 1996 1995
------------ ------------ ------------
Other expense, net:
Interest income .......................... $ (2,561) $ (1,255) $ (3,657)
Other, net ............................... 2,573 4,993 3,830
--------- -------- --------
$ 12 $ 3,738 $ 173
========= ======== ========
Advertising and sales promotion ........... $ 71,151 $ 72,313 $ 57,274
========= ======== ========
Cash paid (received) during the period for:
Interest (net of capitalization) ......... $ 13,058 $ 13,397 $ 12,555
========= ======== ========
Income taxes (net of refunds) ............ $ (44,508) $ (540) $ 13,936
========= ======== ========
NON-CASH TRANSACTIONS
In connection with a warehouse expansion related to the electric blanket
business, the Company entered into a $5 million capital lease obligation in
1996.
8. RESTRUCTURING AND ASSET IMPAIRMENT (BENEFIT) CHARGES
In November 1996, the Company announced the details of a restructuring
plan. The plan included the consolidation of administrative functions within
the Company, the reduction of manufacturing and warehouse facilities, the
centralization of the Company's procurement function, and reduction of the
Company's product offerings and stock keeping units ("SKU's"). The Company also
announced plans to divest several lines of business (see Note 9).
As part of the restructuring plan, the Company consolidated six divisional
and regional headquarters functions into a single worldwide corporate
headquarters in Delray Beach, Florida and
F-22
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
8. RESTRUCTURING AND ASSET IMPAIRMENT (BENEFIT) CHARGES--(CONTINUED)
outsourced certain back office activities resulting in a reduction in total
back-office/administrative headcount. Overall, the restructuring plan called
for a reduction in the number of production facilities from 26 to 8 and the
elimination of over 6,000 positions from the Company's workforce, including
3,300 from the disposition of certain business operations and the elimination
of approximately 2,800 other positions. The Company completed the major phases
of the restructuring plan by July 1997.
In conjunction with the implementation of the restructuring plan, the
Company recorded a pre-tax charge of approximately $239.2 million in the fourth
quarter of 1996. This amount is recorded as follows in the accompanying
Consolidated Statement of Operations: $110.1 million in Restructuring and Asset
Impairment Charges, as further described below; $60.8 million in Cost of Goods
Sold related principally to inventory write-downs as a result of a reduction in
SKU's and costs of inventory liquidation programs; $10.1 million in Selling,
General and Administrative Expense, principally for costs relating to
outsourcing and package redesign, and $58.2 million ($39.1 million net of
taxes) in Loss on Sale of Discontinued Operations related to the divestiture of
its furniture business. In 1997, upon completion of the sale of the furniture
business, the Company recorded an additional pre-tax loss of $22.5 million from
discontinued operations ($14.0 million net of taxes) due primarily to lower
than anticipated sales proceeds. (See Note 9.)
The amounts accrued at December 29, 1996, relating to Restructuring and
Asset Impairment Charges recorded in fiscal 1996, exceeded amounts ultimately
required. Accordingly, the fiscal 1997 Consolidated Statement of Operations
includes $14.6 million of benefit related to the reversal of accruals no longer
required. Of the total benefit, $5.8 million was recorded in the third quarter
and $8.8 million in the fourth quarter of 1997.
Amounts included in Restructuring and Asset Impairment Charges in 1996 in
the accompanying Consolidated Statement of Operations include cash items such
as severance and other employee costs of $24.7 million, lease obligations and
other exit costs associated with facility closures of $16.7 million, and other
costs related to the implementation of the restructuring plan. Non-cash
Restructuring and Asset Impairment Charges in 1996 included $68.7 million
related to asset write-downs to net realizable value for disposals of excess
facilities and equipment and certain product lines, write-offs of redundant
computer systems from the administrative back-office consolidations and
outsourcing initiatives and intangible, packaging and other asset write-downs
related to exited product lines and SKU reductions. The following table sets
forth the details and the cumulative activity in the restructuring accrual as
of December 28, 1997 (in millions):
[Enlarge/Download Table]
ACCRUAL BALANCE ACCRUAL BALANCE
AT DECEMBER 29, CASH NON-CASH AT DECEMBER 28,
1996 REDUCTIONS REDUCTIONS REVERSALS 1997
----------------- ------------ ------------ ----------- ----------------
Severance and other
employee costs ............................ $19.1 $10.0 $ -- $ 7.9 $1.2
Closure and consolidation of
facilities and related exit costs ......... 32.6 11.2 10.7 6.7 4.0
----- ----- ----- ----- ----
Total ....................................... $51.7 $21.2 $10.7 $14.6 $5.2
===== ===== ===== ===== ====
During 1997, the Company recorded SG&A charges of $15.8 million for
equipment relocation, severance, package redesign and other items related to
the 1996 restructuring plan.
F-23
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
9. DISCONTINUED OPERATIONS AND OTHER ASSETS HELD FOR SALE
As part of the restructuring plan, the Company also announced the
divestiture of the furniture business, by a sale of assets. In February 1997,
the Company entered into an agreement to sell the business to U.S. Industries,
Inc. which was completed on March 17, 1997. In connection with the sale of
these assets (primarily inventory, property, plant and equipment), the Company
received $69 million in cash. The Company retained accounts receivable related
to the furniture business of approximately $50.0 million as of the closing date
and retained certain liabilities.
In connection with the furniture divestiture, the Company recorded a
provision for estimated losses to be incurred on the sale of $39.1 million in
1996, net of applicable income tax benefits of $19.9 million and an additional
loss of $14.0 million, net of applicable income tax benefits of $8.5 million in
the first quarter of 1997 predominately as a result of lower than anticipated
sales proceeds. Although the discontinued furniture operations were profitable,
net income had declined from $21.7 million in 1994 to $0.8 million in 1996.
This decline, along with the Company's announcement that it intended to divest
this line of business contributed to the loss on sale. Results of operations
from the discontinued furniture business were $0.8 million in 1996 and $12.9
million in 1995, net of applicable income taxes of $0.5 million and $7.9
million, respectively. Earnings from the discontinued furniture business in
1997 were not material. Revenues for the discontinued furniture business were
$51.6 million in 1997, $227.5 million in 1996 and $185.6 million in 1995.
Revenues and expenses related to the furniture business are excluded from
results from continuing operations and are presented as a single line item,
Earnings from Discontinued Operations, net of taxes, in the Consolidated
Statements of Operations.
At December 29, 1996, the Net Assets of Discontinued Operations and Other
Assets Held for Sale as presented in the accompanying Consolidated Balance
Sheet were (in thousands):
[Download Table]
Current assets ............................ $ 40,435
Property, plant and equipment ............. 62,412
--------
Total assets ............................. 102,847
Current liabilities ....................... 10,323
--------
Total liabilities ........................ 10,323
--------
Net Assets of Discontinued Operations
and Other Assets Held for Sale ......... $ 92,524
========
In addition to the furniture business divestiture, the Company also
completed the sale of other product lines and assets in 1997 as part of its
restructuring plan, including time and temperature products,
Counselor/registered trademark/ and Borg/registered trademark/ scales and a
textile facility. Losses incurred on the disposal of these assets, which
consist primarily of write-downs of assets to net realizable value, are
included in Restructuring and Asset Impairment Charges in 1996 in the
Consolidated Statements of Operations as described in Note 8.
F-24
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
10. INCOME TAXES
Earnings (loss) from continuing operations before income taxes for each
fiscal year is summarized as follows (in thousands):
[Download Table]
1997 1996 1995
---------- -------------- ----------
Domestic .......... $80,946 $ (244,255) $54,646
Foreign ........... 11,724 (17,550) 5,989
------- ---------- -------
$92,670 $ (261,805) $60,635
======= ========== =======
Income tax provisions include current and deferred taxes (tax benefits)
for each fiscal year as follows (in thousands):
[Download Table]
1997 1996 1995
------------ ------------- ------------
Current:
Federal ......... $ (3,421) $ (22,924) $ (1,329)
State ........... 3,266 (202) (1,402)
Foreign ......... 1,683 707 626
-------- --------- --------
1,528 (22,419) (2,105)
-------- --------- --------
Deferred:
Federal ......... 30,554 (57,211) 23,127
State ........... 3,962 (11,050) 1,962
Foreign ......... 4,308 (945) 57
-------- --------- --------
38,824 (69,206) 25,146
-------- --------- --------
$ 40,352 $ (91,625) $ 23,041
======== ========= ========
A reconciliation of income tax expense (benefit) with the expected income
tax computed by applying the federal statutory income tax rate to earnings
(loss) from continuing operations before income taxes for each fiscal year is
as follows (in thousands):
[Enlarge/Download Table]
1997 1996 1995
------------ ------------- ----------
Income tax computed at the federal statutory
tax rate ................................................... $ 32,435 $ (91,631) $21,222
State and local taxes (net of federal benefit) .............. 4,698 (7,313) 364
Foreign earnings and dividends taxed at other rates ......... 1,888 5,967 419
Valuation allowance ......................................... 18,900 -- --
Reversal of tax liabilities no longer required .............. (13,333) -- --
Other, net .................................................. (4,236) 1,352 1,036
--------- --------- -------
$ 40,352 $ (91,625) $23,041
========= ========= =======
F-25
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
10. INCOME TAXES--(CONTINUED)
The major components of the Company's net current deferred tax asset and
net long-term deferred tax liability at the end of each fiscal year are as
follows (in thousands):
[Enlarge/Download Table]
1997 1996
------------------------------- ------------------------------
CURRENT LONG-TERM CURRENT LONG-TERM
DEFERRED TAX DEFERRED TAX DEFERRED TAX DEFERRED TAX
ASSET LIABILITY ASSET LIABILITY
-------------- -------------- -------------- -------------
Operating reserves and accruals ......... $ 16,701 $ 33,514 $51,685 $ 28,447
Book/tax basis difference in
intangible assets ...................... -- (70,881) -- (72,587)
Book/tax basis difference in
other assets ........................... 10,047 (24,842) 19,276 (13,406)
Reserves and accruals for
divested operations .................... 3,872 20,832 8,905 24,043
Valuation allowances .................... (39,772) 16,561 -- --
Other ................................... 9,152 19,974 5,201 (18,805)
--------- --------- ------- ---------
$ -- $ (4,842) $85,067 $ (52,308)
========= ========= ======= =========
The Company establishes valuation allowances in accordance with the
provisions of Statement of Financial Accounting Standards No. 109, ACCOUNTING
FOR INCOME TAXES. The Company continually reviews the adequacy of the valuation
allowances and recognizes tax benefits when it is more likely than not that the
benefits will be realized. In the fourth quarter of 1997, the Company increased
the valuation allowance by $23.2 million reflecting management's assessment
that it is more likely than not that the net deferred tax asset will not be
realized through future taxable income. Of this amount, approximately $18.9
million related to deferred tax assets, the majority of which was recognized as
a benefit in the first three quarters of 1997. The remainder, or $4.3 million,
related to minimum pension liabilities and was therefore recorded as an
adjustment in shareholders' equity.
11. CUSTOMER AND GEOGRAPHIC DATA
Classes of products which contributed more than 10% to consolidated net
sales were outdoor home use durable products and indoor home use durable
products. Sales of outdoor home use durable products amounted to $292.1 million
in 1997, $256.9 million in 1996 and $269.0 million in 1995. Sales of indoor
home use durable products were $781.0 million in 1997, $680.7 million in 1996
and $688.3 million in 1995.
The Company's largest customer accounted for approximately 20% of
consolidated net sales in 1997 and 19% in 1996 and 1995.
F-26
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
11. CUSTOMER AND GEOGRAPHIC DATA--(CONTINUED)
The Company's operations are conducted in the United States and
international markets, principally in Latin America. Information about the
Company's domestic and international operations for each fiscal year is as
follows (in thousands):
[Enlarge/Download Table]
1997 1996 1995
------------- -------------- -------------
Net sales:
Domestic ........................................... $ 843,518 $ 800,969 $ 829,423
International (includes U.S. export sales) ......... 229,572 183,267 187,460
---------- ---------- ----------
$1,073,090 $ 984,236 $1,016,883
========== ========== ==========
Operating earnings (loss):
Domestic ........................................... $ 91,108 $ (207,765) $ 70,423
International (includes U.S. export sales) ......... 43,011 (3,078) 24,301
---------- ---------- ----------
134,119 (210,843) 94,724
Unallocated expenses and eliminations .............. (30,056) (33,636) (24,479)
---------- ---------- ----------
$ 104,063 $ (244,479) $ 70,245
========== ========== ==========
Identifiable assets:
Domestic ........................................... $ 862,399 $ 768,282 $1,040,591
International ...................................... 129,883 73,675 67,563
---------- ---------- ----------
992,282 841,957 1,108,154
Corporate assets ................................... 66,646 217,491 50,530
---------- ---------- ----------
$1,058,928 $1,059,448 $1,158,684
========== ========== ==========
Unallocated expenses and eliminations include corporate administrative
expenses, intangible amortization, certain pension and postretirement benefit
costs or credits, and eliminations of intercompany income and expense.
Identifiable assets are those used directly in the operations, and exclude
non-operating corporate and deferred tax assets. Sales between geographic areas
are not material and are made primarily at cost plus a markup.
F-27
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
12. COMMITMENTS AND CONTINGENCIES
ENVIRONMENTAL MATTERS
The Company's operations, like those of comparable businesses, are subject
to certain federal, state, local and foreign environmental laws and
regulations. As of December 28, 1997, the Company had been identified as a
potentially responsible party ("PRP") in connection with seven sites subject to
the federal Superfund law and two sites subject to state Superfund laws
comparable to the federal law (collectively the "Environmental Sites"),
exclusive of sites at which the Company has been designated (or expects to be
designated) as a de minimis (less than 1%) participant. Substantially all of
these sites relate to divested operations of the Company.
The Company currently is engaged in active remediation activities at nine
sites, four of which are among the Environmental Sites referred to above, and
five of which have not been designated as Superfund sites under federal or
state law. In addition, the Company is engaged in environmental remediation
activities at a site in Newburgh Heights, Ohio, where a subsidiary formerly
conducted operations. The Company has been actively cooperating with the United
States Nuclear Regulatory Commission and state regulatory authorities in
developing a plan for remediation of this site; which remediation is expected
to be substantially completed during 1998.
The Company has established reserves, in accordance with SFAS No. 5,
Accounting for Contingencies, to cover the anticipated probable costs of
remediation, based upon periodic reviews of all sites for which the Company
has, or may have remediation responsibility. As of December 28, 1997, and
December 29, 1996, the amount of such reserves was less than 5% of the
Company's total liabilities as set forth in the consolidated financial
statements. Liability under the Superfund law is joint and several and is
imposed on a strict basis, without regard to degree of negligence or
culpability. As a result, the Company recognizes its responsibility to
determine whether other PRP's at a Superfund site are financially capable of
paying their respective shares of the ultimate cost of remediation of the site.
Whenever the Company has determined that a particular PRP is not financially
responsible, it has assumed for purposes of establishing reserve amounts that
such PRP will not pay its respective share of the costs of remediation. To
minimize the Company's potential liability with respect to the Environmental
Sites, the Company has actively participated in steering committees and other
groups of PRP's established with respect to such sites. The Company continues
to pursue the recovery of some environmental remediation costs from certain of
its liability insurance carriers; however, such potential recoveries have not
been offset against potential liabilities and have not been considered in
determining the Company's environmental reserves.
Due to uncertainty over remedial measures to be adopted at some sites, the
possibility of changes in environmental laws and regulations and the fact that
joint and several liability with the right of contribution is possible at
federal and state Superfund sites, the Company's ultimate future liability with
respect to sites at which remediation has not been completed may vary from the
amounts reserved as of December 28, 1997. In the fourth quarter of 1996 a
comprehensive review of all environmental exposures was performed, and the
Company accelerated its strategy for the resolution and settlement of certain
environmental claims. As a result, the Company recorded additional
environmental reserves of approximately $9.0 million in the fourth quarter of
1996. The Company believes, based on existing information, that the costs of
completing environmental remediation of all sites for which the Company has a
remediation responsibility have been adequately reserved, and that the ultimate
resolution of these matters will not have a material adverse effect upon the
Company's financial condition, results of operations or cash flows.
F-28
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
12. COMMITMENTS AND CONTINGENCIES--(CONTINUED)
LEASES
The Company rents certain facilities, equipment and retail stores under
operating leases. Rental expense for operating leases amounted to $7.4 million
in 1997, $8.0 million for 1996 and $8.6 million for 1995. The minimum future
rentals due under noncancelable operating leases as of December 28, 1997
aggregated $30.9 million. The amounts payable in each of the years 1998-2002
and thereafter are $4.8 million, $4.6 million, $4.2 million, $3.9 million, $3.4
million and $10.0 million, respectively.
LETTERS OF CREDIT
At December 28, 1997, standby letters of credit aggregating $29 million
were outstanding, primarily for insurance, environmental and workers'
compensation issues.
CERTAIN DEBT OBLIGATIONS
Responsibility for servicing certain debt obligations of the Company's
predecessor were assumed by third parties in connection with the acquisition of
former businesses, although the Company's predecessor remained the primary
obligor in accordance with the respective loan documents. Such obligations,
which amounted to approximately $19.0 million at December 28, 1997, and the
corresponding receivables from the third parties, are not included in the
consolidated balance sheets since these transactions occurred prior to the
issuance of SFAS No. 76, Extinguishment of Debt. Management believes that the
third parties will continue to meet their obligations pursuant to the
assumption agreements.
LITIGATION
The Company is involved in various lawsuits arising from time to time in
the ordinary course of business and/or related to divested operations of the
Company. The Company has established reserves, in accordance with SFAS No. 5,
Accounting for Contingencies, to cover the anticipated probable costs of
litigation matters, based upon periodic reviews of all cases.
In the fourth quarter of 1996, the Company recorded a $12.0 million charge
related to a case for which an adverse development arose near year-end. In
1997, this case was favorably resolved and, as a result, $8.1 million of the
charge established in 1996 was reversed into income primarily in the fourth
quarter of 1997.
The Company believes, based on existing information, that anticipated
probable costs of litigation matters existing as of December 31, 1997 have been
adequately reserved, and that the ultimate resolution of these matters will not
have a material adverse effect upon the Company's financial condition, results
of operations or cash flows. See Note 15 for additional information regarding
litigation.
PRODUCT LIABILITY MATTERS
The Company is party to various personal injury and property damage
lawsuits relating to its products and incidental to its business. Annually, the
Company sets its product liability insurance program based on the Company's
current and historical claims experience and the availability and cost of
insurance. The Company's program for 1997 was comprised of a self-insurance
retention of $1 million per occurrence.
F-29
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
12. COMMITMENTS AND CONTINGENCIES--(CONTINUED)
Cumulative amounts estimated to be payable by the Company with respect to
pending and potential claims for all years in which the Company is liable under
its self-insurance retention have been accrued as liabilities. Such accrued
liabilities are necessarily based on estimates (which include actuarial
determinations made by independent actuarial consultants as to liability
exposure, taking into account prior experience, numbers of claims and other
relevant factors); thus, the Company's ultimate liability may exceed or be less
than the amounts accrued. The methods of making such estimates and establishing
the resulting liability are reviewed continually and any adjustments resulting
therefrom are reflected in current operating results.
Historically, product liability awards have rarely exceeded the Company's
individual per occurrence self-insured retention. There can be no assurance,
however, that the Company's future product liability experience will be
consistent with its past experience. Based on existing information, the Company
believes that the ultimate conclusion of the various pending product liability
claims and lawsuits of the Company, individually or in the aggregate, will not
have a material adverse effect on the financial position, results of operations
or cash flows of the Company.
PURCHASE COMMITMENT
In conjunction with the sale of the Biddeford, Maine textile mill in 1997,
the Company entered into a five-year agreement to purchase blanket shells from
the mill. The agreement provides for a minimum purchase commitment each year of
the contract. As of December 28, 1997, the Company had remaining minimum
commitments under the contract of approximately $107 million.
F-30
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
13. RESTATEMENT
Subsequent to the issuance of the Company's Consolidated Financial
Statements for the fiscal years ended December 28, 1997 and December 29, 1996,
it was determined that the reported results generally inflated 1997 results at
the expense of 1996 results. Upon examination, it was determined certain
revenue was improperly recognized (principally "bill and hold" and guaranteed
sales transactions), certain costs and allowances were not accrued or were
improperly recorded (principally allowances for returns, cooperative
advertising, and customer charge-backs as well as deductions and reserves for
product liability and warranty expense) and certain costs were inappropriately
included in, and subsequently charged to, restructuring, asset impairment and
other costs within the Consolidated Statement of Operations. As a result, the
accompanying Consolidated Financial Statements as of December 28, 1997 and
December 29, 1996, and for the years then ended, present the restated results.
A summary of the effects of the restatement follows (in thousands, except
per share data):
[Enlarge/Download Table]
CONSOLIDATED STATEMENTS OF OPERATIONS
FISCAL YEARS ENDED
---------------------------------------------------------------
DECEMBER 28, DECEMBER 29,
1997 1996
------------------------------ ------------------------------
AS AS
PREVIOUSLY AS PREVIOUSLY AS
REPORTED RESTATED REPORTED RESTATED
-------------- ------------- -------------- -------------
Net sales ........................................... $1,168,182 $1,073,090 $ 984,236 $ 984,236
Cost of goods sold .................................. 837,683 830,956 900,573 896,938
Selling, general and administrative expense ......... 131,056 152,653 214,029 221,655
Restructuring and asset impairment
(benefit) charges ................................. -- (14,582) 154,869 110,122
---------- ---------- ---------- ----------
Operating earnings (loss) ........................... 199,443 104,063 (285,235) (244,479)
Interest expense .................................... 11,381 11,381 13,588 13,588
Other (income) expense, net ......................... (1,218) 12 3,738 3,738
---------- ---------- ---------- ----------
Earnings (loss) from continuing operations
before income taxes ............................... 189,280 92,670 (302,561) (261,805)
Income taxes (benefit) .............................. 66,152 40,352 (105,890) (91,625)
---------- ---------- ---------- ----------
Earnings (loss) from continuing operations .......... 123,128 52,318 (196,671) (170,180)
Loss from discontinued operations, net .............. (13,713) (14,017) (31,591) (38,301)
---------- ---------- ---------- ----------
Net earnings (loss) ................................. $ 109,415 $ 38,301 $ (228,262) $ (208,481)
========== ========== ========== ==========
Earnings (loss) per share of common stock
from continuing operations:
Basic .............................................. $ 1.45 $ 0.62 $ (2.37) $ (2.05)
Diluted ............................................ $ 1.41 $ 0.60 $ (2.37) $ (2.05)
Loss from discontinued operations:
Basic .............................................. $ (0.16) $ (0.17) $ (0.38) $ (0.46)
Diluted ............................................ $ (0.16) $ (0.16) $ (0.38) $ (0.46)
Net earnings (loss) per share of common stock:
Basic .............................................. $ 1.29 $ 0.45 $ (2.75) $ (2.51)
Diluted ............................................ $ 1.25 $ 0.44 $ (2.75) $ (2.51)
F-31
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
13. RESTATEMENT--(CONTINUED)
[Enlarge/Download Table]
CONSOLIDATED BALANCE SHEETS
---------------------------------------------------------------
AS OF DECEMBER 28, AS OF DECEMBER 29,
1997 1996
------------------------------ ------------------------------
AS AS
PREVIOUSLY AS PREVIOUSLY AS
REPORTED RESTATED REPORTED RESTATED
-------------- ------------- -------------- -------------
ASSETS
Cash and cash equivalents ............................ $ 52,378 $ 52,298 $ 11,526 $ 11,526
Receivables, net ..................................... 295,550 228,460 213,438 209,754
Inventories .......................................... 256,180 304,900 162,252 164,345
Net assets of discontinued operations and
other assets held for sale ......................... -- -- 102,847 92,524
Deferred income taxes ................................ 36,706 -- 93,689 85,067
Prepaid expenses and other current assets ............ 17,191 16,584 40,411 38,381
---------- ---------- ---------- ----------
Total current assets ............................... 658,005 602,242 624,163 601,597
Property, plant and equipment, net ................... 240,897 249,524 220,088 229,393
Trademarks, trade names, goodwill and
other net .......................................... 221,382 207,162 228,458 228,458
---------- ---------- ---------- ----------
Total assets ....................................... $1,120,284 $1,058,928 $1,072,709 $1,059,448
========== ========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current portion of long-term debt .................... $ 668 $ 668 $ 921 $ 921
Accounts payable ..................................... 105,580 108,374 107,319 104,113
Restructuring accrual ................................ 10,938 5,186 63,834 51,725
Other current liabilities ............................ 80,913 118,899 99,509 84,986
---------- ---------- ---------- ----------
Total current liabilities .......................... 198,099 233,127 271,583 241,745
Long-term debt ....................................... 194,580 194,580 201,115 201,115
Other long-term liabilities .......................... 141,109 154,300 152,451 149,247
Deferred income taxes ................................ 54,559 4,842 52,308 52,308
Preferred stock ...................................... -- -- -- --
Common stock ......................................... 900 900 884 884
Paid-in capital ...................................... 483,384 479,200 447,948 447,948
Retained earnings .................................... 141,134 89,801 35,118 54,899
Other ................................................ (30,436) (34,777) (25,310) (25,310)
Treasury stock ....................................... (63,045) (63,045) (63,388) (63,388)
---------- ---------- ---------- ----------
Total shareholders' equity ......................... 531,937 472,079 395,252 415,033
---------- ---------- ---------- ----------
Total liabilities and shareholders' equity ......... $1,120,284 $1,058,928 $1,072,709 $1,059,448
========== ========== ========== ==========
F-32
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
14. UNAUDITED QUARTERLY FINANCIAL DATA
[Enlarge/Download Table]
FISCAL 1997(A)
----------------------------------------------------------------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
----------------------- ----------------------- ----------------------- ----------------------
AS AS AS AS
PREVIOUSLY AS PREVIOUSLY AS PREVIOUSLY AS PREVIOUSLY AS
REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED
------------ ---------- ------------ ---------- ------------ ---------- ------------ ---------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
Net sales ......................... $ 253.5 $ 252.5 $287.6 $271.4 $289.0 $286.8 $338.1 $262.4
Gross profit ...................... 67.7 58.3 74.5 55.3 88.8 76.5 99.5 52.1
Operating earnings ................ 34.7 17.1 43.0 16.8 54.9 45.1 66.8 25.1
Earnings from
continuing operations ............ 20.6 9.0 26.2 8.7 34.6 27.5 41.7 7.1
Basic earnings per share from
continuing operations(c) ......... $ 0.24 $ 0.11 $ 0.31 $ 0.10 $ 0.41 $ 0.32 $ 0.49 $ 0.08
Diluted earnings per share from
continuing operations(c) ......... 0.24 0.11 0.30 0.10 0.39 0.31 0.47 0.08
Earnings from discontinued
operations, net of taxes ......... -- -- -- -- -- -- -- --
(Loss) benefit on sale of
discontinued operations,
net of taxes ..................... (13.7) (13.7) -- -- -- (2.7) -- 2.4
Net earnings (loss) ............... 6.8 (4.7) 26.2 8.7 34.6 24.8 41.8 9.5
Basic earnings (loss) benefit
per share(c) ..................... 0.08 (0.06) 0.31 0.10 0.41 0.29 0.49 0.11
Diluted earnings (loss)
per share(c) ..................... 0.08 (0.06) 0.30 0.10 0.39 0.28 0.47 0.11
[Enlarge/Download Table]
FISCAL 1996(A)
-----------------------------------------------
FIRST SECOND
QUARTER QUARTER
----------------------- -----------------------
AS AS
PREVIOUSLY AS PREVIOUSLY AS
REPORTED RESTATED REPORTED RESTATED
------------ ---------- ------------ ----------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
Net sales ............................. $229.7 $229.7 $253.9 $253.9
Gross profit (loss) ................... 48.1 48.1 47.2 47.2
Operating earnings (loss)(b) .......... 15.5 15.5 9.2 9.2
Earnings (loss) from
continuing operations ................ 6.7 6.7 2.8 2.8
Basic earnings (loss) per share
from continuing operations(c) ........ $ 0.08 $ 0.08 $ 0.03 $ 0.03
Diluted earnings (loss) per share
from continuing operations(c) ........ 0.08 0.08 0.03 0.03
Earnings (loss) from discontinued
operations, net of taxes ............. 10.7 10.7 4.4 4.4
Loss on sale of discontinued
operations, net of taxes ............. -- -- -- --
Net earnings (loss) ................... 17.4 17.4 7.2 7.2
Basic earnings (loss)
per shares(c) ........................ 0.21 0.21 0.09 0.09
Diluted earnings
(loss) pershare(c) ................... 0.21 0.21 0.09 0.09
FISCAL 1996(A)
-----------------------------------------------------
THIRD FOURTH
QUARTER QUARTER
----------------------- -----------------------------
AS AS
PREVIOUSLY AS PREVIOUSLY AS
REPORTED RESTATED REPORTED RESTATED
------------ ---------- ----------------- -----------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
Net sales ............................. $ 231.8 $ 231.8 $ 268.8 $ 268.8
Gross profit (loss) ................... 28.8 28.8 (40.5) (36.8)
Operating earnings (loss)(b) .......... (20.7) (20.7) (289.2)(b) (248.4)
Earnings (loss) from
continuing operations ................ (15.8) (15.8) (190.4) (163.9)
Basic earnings (loss) per share
from continuing operations(c) ........ $ (0.19) $ (0.19) $ (2.29) $ (1.97)
Diluted earnings (loss) per share
from continuing operations(c) ........ (0.19) (0.19) (2.29) (1.97)
Earnings (loss) from discontinued
operations, net of taxes ............. (2.3) (2.3) (12.0) (12.0)
Loss on sale of discontinued
operations, net of taxes ............. -- -- (32.4) (39.1)
Net earnings (loss) ................... (18.1) (18.1) (234.8) (215.0)
Basic earnings (loss)
per shares(c) ........................ (0.22) (0.22) (2.83) (2.59)
Diluted earnings
(loss) pershare(c) ................... (0.22) (0.22) (2.83) (2.59)
----------------
(a) Each quarter consists of a 13-week period.
(b) Refer to Notes 8 and 9 regarding the Company's 1996 restructuring plan.
(c) Reflects the adoption of SFAS No. 128, EARNINGS PER SHARE.
F-33
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
14. UNAUDITED QUARTERLY FINANCIAL DATA--(CONTINUED)
During the first, second, third and fourth quarters of fiscal 1997,
approximately $0.5 million, $4.5 million, $1.5 million and $21.5 million,
respectively, of pre-tax liabilities no longer required were reversed and taken
into income. Included in these reserves is the $8.1 million litigation reserve
reversal discussed in Note 12. Additionally, during the fourth quarter of
fiscal 1997, approximately $13.3 million of tax liabilities no longer required
were reversed and taken into income.
15. SUBSEQUENT EVENTS (UNAUDITED)
NEW EMPLOYMENT AGREEMENTS
On February 20, 1998 the Company entered into new three-year employment
agreements with its then Chairman and Chief Executive Officer and two other
senior officers of the Company. These agreements replaced previous employment
agreements entered into in July 1996 that were scheduled to expire in July
1999.
The new employment agreement for the Company's then Chairman provided for,
among other items, the acceleration of vesting of 200,000 shares of restricted
stock and the forfeiture of the remaining 133,333 shares of unvested restricted
stock granted under the July 1996 agreement as further described in Note 2, a
new equity grant of 300,000 shares of unrestricted stock, a new grant of a
ten-year option to purchase 3,750,000 shares of the Company's common stock with
an exercise price equal to the fair market value of the stock at the date of
grant and exercisable in three equal annual installments beginning on the date
of grant and the acceleration of vesting of 833,333 outstanding stock options
granted under the July 1996 agreement as further described in Note 5. In
addition, the new employment agreement with the then Chairman and Chief
Executive Officer provided for income tax gross-ups with respect to any tax
assessed on the equity grant and acceleration of vesting of restricted stock.
The new employment agreements with the two other then senior officers
provided for, among other items, the grant of a total of 180,000 shares of
restricted stock that vest in four equal annual installments beginning the date
of grant, the acceleration of vesting of 44,000 shares of restricted stock and
the forfeiture of the remaining 29,332 shares of unvested restricted stock
granted under the July 1996 agreements, new grants of ten-year options to
purchase a total of 1,875,000 shares of the Company's common stock with an
exercise price equal to the fair market value of the stock at the date of grant
and exercisable in four equal annual installments beginning on the date of
grant and the acceleration of vesting of 383,334 outstanding stock options
granted under the July 1996 agreements. In addition, the new employment
agreements provided for income tax gross-ups with respect to any tax assessed
on the restricted stock grants and acceleration of vesting of restricted stock.
Compensation expense attributed to the equity grant, the acceleration of
vesting of restricted stock and the related income tax gross-ups will be
recognized in the first quarter of 1998 and compensation expense related to the
new restricted stock grants and related tax gross-ups will be amortized to
expense beginning in the first quarter of 1998 over the period in which the
restrictions lapse. Total compensation expense to be recognized in the first
quarter of 1998 related to these items is expected to be approximately $31
million.
On June 15, 1998, the Company's Board of Directors announced the removal
of the then Chairman and Chief Executive Officer and subsequently announced the
removal or resignation of other senior
F-34
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
15. SUBSEQUENT EVENTS (UNAUDITED)--(CONTINUED)
officers, including the Company's Chief Financial Officer. In connection with
the removal or resignation of the senior officers and the termination of their
restricted stock grants the unamortized portion of the deferred compensation
expense attributable to the restricted stock grants, will be reversed and
compensation expense of approximately $0.9 million recognized in the first
quarter for unvested restricted stock grants will be reversed into income in
the second and third quarters of 1998. Other costs related to the resignations
and terminations will be recognized, as appropriate, in 1998. The Company and
certain of its former officers are in disagreement as to the Company's
obligations to these individuals under prior employment agreements and arising
from their terminations. The Board of Directors has installed a new Chief
Executive Officer and senior management team.
ACQUISITIONS
On March 30, 1998, the Company, through a wholly-owned subsidiary,
acquired approximately 81% of the total number of then outstanding shares of
common stock of The Coleman Company, Inc. ("Coleman"), from a subsidiary of
MacAndrews & Forbes Holdings, Inc. ("M&F"), in exchange for 14,099,749 shares
of the Company's common stock and approximately $160 million in cash as well as
the assumption of $1,016 million in debt. Coleman is a leading manufacturer and
marketer of consumer products for the worldwide outdoor recreation market. Its
products have been sold domestically under the Coleman/registered trademark/
brand name since the 1920's.
On August 12, 1998, the Company announced that, following investigation
and negotiation conducted by a Special Committee of the Board consisting of
four outside directors not affiliated with M&F, the Company had entered into a
settlement agreement with a subsidiary of M&F pursuant to which the Company was
released from certain threatened claims of M&F and its affiliates arising from
the Coleman acquisition and M&F agreed to provide certain management personnel
and assistance to the Company in exchange for the issuance to the M&F
subsidiary of five-year warrants to purchase up to 23 million shares of the
Company's common stock at an exercise price of $7.00 per share, subject to
anti-dilution provisions. The financial statement impact of the settlement,
which will be material in amount, will be recorded in the third quarter of
1998.
The Company expects to acquire the remaining equity interest in Coleman
pursuant to a merger transaction in which the existing Coleman minority
shareholders will receive .5677 shares of the Company's common stock and $6.44
in cash for each share of Coleman common stock outstanding. In addition,
unexercised options under Coleman's stock option plans will be cashed out at a
price per share equal to the difference between $27.50 and the exercise price
of such options. The Company expects to issue approximately 6.7 million shares
of common stock and expend approximately $87 million in cash to complete the
Coleman acquisition. (See Litigation and Further Actions below.)
On April 6, 1998, the Company completed the cash acquisitions of First
Alert, Inc. ("First Alert"), a leading manufacturer of smoke and carbon
monoxide detectors, and Signature Brands USA, Inc. ("Signature Brands"), a
leading manufacturer of a comprehensive line of consumer and professional
products. The First Alert and the Signature Brands acquisitions were valued at
approximately $178 million and $253 million, respectively, including the
assumption of debt.
The above acquisitions will be accounted for by the purchase method of
accounting and the results of operations of the acquired entities will be
included in the Company's Consolidated Statement of Operations from the
respective acquisition dates.
F-35
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
15. SUBSEQUENT EVENTS (UNAUDITED)--(CONTINUED)
DEBENTURES AND NEW CREDIT FACILITY
In order to finance the above acquisitions, and refinance substantially
all of the indebtedness of the Company, Coleman, First Alert, and Signature
Brands, the Company consummated: (i) an offering (the "Offering") of Zero
Coupon Convertible Senior Subordinated Debentures due 2018 (the "Debentures")
at a yield to maturity of 5% (approximately $2,014 million principal amount at
maturity) in March 1998, which resulted in approximately $730 million of net
proceeds and, (ii) entered into a revolving and term credit facility ("New
Credit Facility") in April 1998.
The Debentures are exchangeable for shares of the Company's common stock
at an initial conversion rate of 6.575 shares for each $1,000 principal amount
at maturity of the Debentures, subject to adjustment upon occurrence of certain
events. The Company was required to file a registration statement with the
Securities and Exchange Commission to register the Debentures by June 23, 1998,
which registration statement has not been filed. From June 23, 1998 until the
day on which the registration statement is filed and declared effective, the
Company is required to pay to the Debenture holders cash liquidated damages
accruing, for each day during such period, at a rate per annum equal to 0.25%
during the first 90 days and 0.50% thereafter multiplied by the total of the
issue price of the Debentures plus the original issue discount thereon on such
day. The Company made its first payment of approximately $525,000 to the
Debenture holders on September 25, 1998.
The New Credit Facility provided for an aggregate borrowings of up to $1.7
billion pursuant to: (i) a revolving credit facility in an aggregate principal
amount of up to $400 million, maturing March 31, 2005; (ii) an $800 million
term loan maturing on March 31, 2005, and (iii) a $500 million term loan
maturing September 30, 2006. Interest accrues at a rate selected at the
Company's option of: (i) the London Interbank Offered Rate ("LIBOR") plus an
agreed upon interest margin which varies depending upon the Company's leverage
ratio, as defined, and other items or, (ii) the base rate of the administrative
agent (generally the higher of the prime commercial lending rate of the
administrative agent or the Federal Funds Rate plus 1/2 of 1%), plus an agreed
upon interest margin which varies depending upon the Company's leverage ratio,
as defined, and other items. At June 30, 1998, the Company was not in
compliance with the financial covenants and ratios required. The Company and
its lenders entered into an agreement dated June 30, 1998, which provided that
compliance with the covenants would be waived through December 31, 1998.
Borrowings under the New Credit Facility are secured by certain of the
Company's assets, including its stock interest in Coleman and certain other
subsidiaries and certain of the Company's tangible and intangible personal
property. The New Credit Facility contains certain covenants, including
limitations on the ability of the Company and its subsidiaries to engage in
certain transactions and the requirement to maintain certain financial
covenants and ratios. Pursuant to an amendment dated October 19, 1998, the
Company is not required to comply with the original financial covenants and
ratios under the New Credit Facility until April 10, 1999, but will be required
to comply with an earnings before interest, taxes, depreciation and
amortization covenant, the amounts of which are to be determined, beginning
February 1999. Concurrent with each of these amendments, interest margin was
increased. The margin continues to increase monthly through March 1999 to a
maximum of 400 basis points over LIBOR. At September 30, 1998, following the
scheduled repayment of a portion of the term loan, the New Credit Facility was
reduced to $1,698 million in total, of which approximately $1,453 million was
outstanding and approximately $245 million was available. In addition, the
Company's cash balance at September 30, 1998 was approximately $43 million.
F-36
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
15. SUBSEQUENT EVENTS (UNAUDITED)--(CONTINUED)
The Company is working closely with its bank lenders and hopes to reach
agreement with the bank lenders on a further amendment to the New Credit
Facility containing revised financial covenants which the bank lenders and the
Company find mutually acceptable. There can be no assurance that such an
amendment, or a further waiver of the existing financial covenants, will be
entered into with the bank lenders by April 10, 1999. The failure to obtain
such an amendment or further waiver would result in a violation of the existing
covenants, which would permit the bank lenders to accelerate the maturity of
all outstanding borrowings under the New Credit Facility.
In March, 1998, the Company prepaid a $75.0 million 7.85% industrial
revenue bond related to its Hattiesburg facility originally due in 2009. In
connection with the early extinguishment of this debt, the Company will record
a charge of $8.6 million in the first quarter of 1998. Also, as a result of
repayment of certain indebtedness assumed in the Coleman acquisition, the
Company will recognize an extraordinary charge of approximately $104 million in
the second quarter of 1998.
At September 30, 1998, the standby letters of credit aggregated $56
million, including $5 million related to an acquired company, and were
predominately for insurance, pension, environmental and workers' compensation
issues.
SEC INVESTIGATION
By letter dated June 17, 1998, the staff of the Division of Enforcement of
the SEC advised the Company that it was conducting an informal inquiry into the
Company's accounting policies and procedures and requested that the Company
produce certain documents. On July 2, 1998, the SEC issued a Formal Order of
Private Investigation, designating officers to take testimony and pursuant to
which a subpoena duces tecum was served on the Company requiring the production
of certain documents. The Company has provided numerous documents to the SEC
staff and continues to cooperate fully with the SEC staff. The Company cannot
predict the term of such investigation or its potential outcome.
LITIGATION
On April 23, 1998, two class action lawsuits were filed on behalf of
purchasers of the Company's common stock in the U. S. District Court for the
Southern District of Florida against the Company and certain of its present and
former officers and directors alleging violations of the federal securities
laws as discussed below (the "Consolidated Federal Actions"). Since that date,
at least fifteen similar class actions have been filed in the same Court. One
of the lawsuits also names as defendant Arthur Andersen LLP, the Company's
independent accountants.
The complaints in the Consolidated Federal Actions allege to varying
degrees that the defendants (i) failed to disclose that the Company pre-sold
approximately $50 million of products pursuant to its "early buy" marketing
program in an effort to boost its 1997 sales and net income figures and (ii)
made material misrepresentations regarding the Company's business operations,
future prospects and anticipated earnings per share, in an effort to
artificially inflate the price of the Company stock long enough for the Company
to complete a $2 billion debt financing (supported with stock incentives)
necessary to complete the acquisitions of Coleman, Signature Brands and First
Alert, and for the individual defendants to enter into lucrative long-term
employment agreements with the Company. Each complaint alleges two counts of
securities fraud; one count against all defendants and one count against the
individual defendants.
F-37
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
15. SUBSEQUENT EVENTS (UNAUDITED)--(CONTINUED)
On June 16, 1998, the Court entered an Order consolidating all such filed
and all such subsequently filed class actions and providing time periods for
the filing of a Consolidated Amended Complaint and defendants' response
thereto. On June 22, 1998, two groups of plaintiffs made motions to be
appointed lead plaintiffs and to have their selection of counsel approved as
lead counsel. On July 20, 1998, the Court entered an Order appointing lead
plaintiffs and lead counsel (the "Smith Plaintiffs' Group"). This Order also
stated that it "shall apply to all subsequently filed actions which are
consolidated herewith". On August 28, 1998, plaintiffs in one of the
subsequently filed actions filed an objection to having their action
consolidated pursuant to the June 16, 1998 Order, arguing that the class period
in their action differs from the class periods in the originally filed
consolidated actions. On September 29, 1998, the Smith Plaintiffs' Group filed
its memorandum in opposition to this objection.
On April 7, 1998, a purported derivative action was filed in the Circuit
Court for the Fifteenth Judicial Circuit in and for Palm Beach County, Florida
against the Company and certain of its present and former officers and
directors. The action alleged that the individual defendants breached their
fiduciary duties and wasted corporate assets when the Company granted stock
options to three of its officers and directors on or about February 2, 1998 at
an exercise price of $36.85. On June 25, 1998, all defendants filed a motion to
dismiss the complaint for failure to make a presuit demand on the board of
directors of the Company. (See Further Actions, below.)
On June 25, 1998, four purported class actions were filed in the Court of
Chancery of the State of Delaware in New Castle County by minority shareholders
of Coleman against Coleman, certain of the Company's present and former
officers and directors and, as a nominal party, the Company. An additional
class action was filed on August 10, 1998, against the same parties. All of the
plaintiffs are represented by the same Delaware counsel and have agreed to
consolidate the class actions. These actions allege, in essence, that the
existing exchange ratio for the proposed merger between the Company and Coleman
is no longer fair to Coleman shareholders as a result of the recent decline in
the market value of the Company stock. (See Further Actions, below.)
During the months of August and October 1998, purported class and
derivative actions were filed in the Court of Chancery of the State of Delaware
in New Castle County and in the U. S. District Court for the Southern District
of Florida by shareholders of the Company against the Company, M&F and certain
of the Company's present and former directors. These complaints allege that the
defendants breached their fiduciary duties when the Company entered into a
settlement agreement with M&F whereby M&F released the Company from any claims
it may have had arising out of the Company's acquisition of its interest in
Coleman and agreed to provide management support to the Company (the
"Settlement Agreement"). Pursuant to the Settlement Agreement, a subsidiary of
M&F was granted five-year warrants to purchase up to an additional 23 million
shares of the Company's common stock at an exercise price of $7.00 per share.
These complaints also allege that the rights of the public shareholders have
been compromised, as the settlement would normally require shareholder approval
under the rules and regulations of the New York Stock Exchange ("NYSE"). The
Audit Committee of the Company's board determined that obtaining such
shareholder approval would have seriously jeopardized the financial viability
of the Company which is an allowable exception to the NYSE shareholder approval
requirements.
On September 16, 1998, an action was filed in the 56th Judicial District
Court of Galveston County, Texas alleging various claims in violation of the
Texas Securities Act and Texas Business and Commercial Code as well as common
law fraud as a result of the Company's alleged misstatements and
F-38
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
15. SUBSEQUENT EVENTS (UNAUDITED)--(CONTINUED)
omissions regarding the Company's financial condition and prospects during a
period beginning May 1, 1998 and ending June 16, 1998, in which the plaintiffs
engaged in transactions in the Company's stock. The Company is the only named
defendant in this action. The complaint requests recovery of compensatory
damages, punitive damages and expenses in an unspecified amount. This action
has been removed to the U.S. District Court for the Southern District of Texas
and the Company has filed a motion for consolidation of this case with the
Consolidated Federal Actions. Plaintiffs have moved to remand the case to Texas
state court.
The Company intends to vigorously defend each of the foregoing lawsuits,
as well as the Debentures purchasers' lawsuit reflected under Further Actions,
below, but cannot predict the outcome and is not currently able to evaluate the
likelihood of the Company's success in each case or the range of potential
loss. However, if the foregoing actions were determined adversely to the
Company, such judgments would likely have a material adverse effect on the
Company's financial position, results of operations and cash flows.
On July 2, 1998, the American Insurance Company ("American") filed suit
against the Company in the U.S. District Court for the Southern District of New
York requesting a declaratory judgment of the court that the directors' and
officers' liability insurance policy for excess coverage issued by American was
invalid and/or had been properly cancelled by American. The Company has moved
to transfer such action to the federal district court in which the Consolidated
Federal Actions are currently pending; American is opposing such motion. (See
Further Actions, below). The Company intends to pursue recovery from all of its
insurers if damages are awarded against the Company or its indemnified officers
and/or directors under any of the foregoing actions. The Company's failure to
obtain such insurance recoveries following an adverse judgement in any of the
foregoing shareholder lawsuits or the Debentures purchasers' lawsuit referred
to under Further Actions, below, could have a material adverse impact on the
Company's financial position, results of operations and cash flow.
The Company and its subsidiaries are also involved in various lawsuits
arising from time to time which the Company considers to be ordinary routine
litigation incidental to its business. In the opinion of the Company, the
resolution of these routine matters, and of certain matters relating to prior
operations of the Predecessor, individually or in the aggregate, will not have
a material adverse effect upon the financial position or results of operations
of the Company.
FURTHER ACTIONS
On October 22, 1998, the plaintiff in the case filed April 7, 1998,
amended the complaint against all but one of the defendants named in the
original complaint. The amended complaint no longer challenges the stock
options, but instead alleges that the individual defendants breached their
fiduciary duties by failing to have in place adequate accounting and sales
controls, which failure caused the inaccurate reporting of financial
information to the public, thereby causing an artificial inflation of the
Company's financial statements and stock price.
On October 21, 1998, the Company announced that it had entered into a
Memorandum of Understanding to settle, subject to court approval, certain class
actions brought by shareholders of Coleman challenging the proposed Coleman
Merger. Under the terms of the proposed settlement, the Company will issue to
the Coleman public shareholders five-year warrants to purchase 4.98 million
shares of the Company's common stock at $7.00 per share. These warrants will
generally have the same
F-39
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
15. SUBSEQUENT EVENTS (UNAUDITED)--(CONTINUED)
terms as the warrants previously issued to a subsidiary of M&F and will be
issued when the Coleman Merger is consummated, which is now expected to be in
the first quarter of 1999. There can be no assurance that the Court will
approve the settlement as proposed.
On October 20, 1998, an action was filed by Federal Insurance Company in
the U.S. District Court for the Middle District of Florida requesting the same
relief as that requested by American in the previously filed action as to
additional coverage levels under the Company's directors' and officers'
liability insurance policy.
On October 30, 1998, a class action lawsuit was filed on behalf of certain
purchasers of the Company's Debentures in the U.S. District Court of the
Southern District of Florida against the Company and its prior Chief Executive
Officer and Chief Financial Officer, alleging violations of the federal
securities laws and common law fraud. The complaint alleges that the Company's
offering memorandum used for the marketing of the Debentures contained false
and misleading information regarding the Company's financial position and that
the defendants engaged in a plan to inflate the Company's earnings for the
purpose of defrauding the plaintiffs and others. The Company has not yet been
served with this complaint.
RESTRUCTURING AND ASSET IMPAIRMENT
In 1998, as a result of decisions to outsource a substantial number of
products previously made by the Company, certain facilities and equipment will
either no longer be used or will be used in a significantly different manner.
Accordingly, certain assets recorded at December 28, 1997 will be written down
in 1998 to reflect the fair market value of items held for disposition or to
reflect impairment for items where the future utility is altered by the
sourcing change. Personnel at the Mexico City manufacturing plant were notified
in the second quarter of 1998 that the plant is scheduled for closure at
year-end 1998. Accordingly, a liability related to plant closure will be
recorded in the second quarter of 1998.
ANNUAL MEETING ACTIONS
At the Company's annual meeting held May 12, 1998, the shareholders
approved the following actions: (i) to amend the Company's Certificate of
Incorporation increasing the authorized common stock to 500 million shares;
(ii) to amend the Company's stock option plan to increase the number of
available shares to 16.5 million; and (iii) to grant stock options to certain
of the Company's now former officers. (See New Employment Agreements, above.)
OPTIONS REPRICING
In August, 1998 the Company approved a plan to reprice outstanding common
stock options held by the Company's employees. The repricing program provides
for outstanding options with exercise prices in excess of $10.00 per share to
be exchanged on a voluntary basis in an exchange ratio ranging from
approximately 2 to 3 old options for one new option, (as determined by
reference to a Black-Scholes model) with the exercise price of the new options
set at $7.00 per share.
CHANGE IN FISCAL YEAR END
To standardize the fiscal period ends of the Company and its acquired
entities, effective with its 1998 fiscal year, the Company has changed its
fiscal year end from the Sunday nearest December 31 to a calendar year.
Accordingly, quarterly reporting will follow the calendar quarters.
F-40
SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
15. SUBSEQUENT EVENTS (UNAUDITED)--(CONTINUED)
NEW ACCOUNTING STANDARDS
In March 1998, the American Institute of Certified Public Accountants
("AICPA") issued Statement of Position 98-1, ACCOUNTING FOR THE COSTS OF
COMPUTER SOFTWARE DEVELOPED OR OBTAINED FOR INTERNAL USE ("SOP 98-1"). SOP 98-1
requires computer software costs associated with internal use software to be
expensed as incurred until certain capitalization criteria are met. The Company
will adopt SOP 98-1 prospectively beginning January 1, 1999. Adoption of this
Statement is not expected to have a material impact on the Company's
consolidated financial position or results of operations, although actual
charges incurred may be material due to Year 2000 issues.
In April 1998, the AICPA issued Statement of Position 98-5, REPORTING ON
THE COSTS OF START-UP ACTIVITIES ("SOP 98-5"). SOP 98-5 requires all costs
associated with pre-opening, pre-operating and organization activities to be
expensed as incurred. The Company will adopt SOP 98-5 beginning January 1,
1998. Adoption of the Statement is not expected to have a material impact on
the Company's consolidated financial position or results of operations.
In June 1998, the FASB issued SFAS No. 133, ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES for fiscal years beginning after June 15,
1999. SFAS No. 133 requires the recognition of all derivatives in the
consolidated balance sheet as either assets or liabilities measured at fair
value. The Company will adopt SFAS No. 133 effective for the 2000 calendar year
end. The Company has not yet determined the impact SFAS No. 133 will have on
its financial position or results of operations when such statement is adopted.
F-41
SUNBEAM CORPORATION AND SUBSIDIARIES
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
FISCAL YEARS 1997, 1996 AND 1995
(DOLLARS IN THOUSANDS)
[Enlarge/Download Table]
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND END OF
DESCRIPTION OF PERIOD EXPENSES DEDUCTIONS PERIOD
--------------------------------------------------- ------------ ------------ ------------------ -----------
Allowance for doubtful accounts and cash discounts:
$ (2,000)(a)
Fiscal year ended 8,948 (b)
December 28, 1997 (as restated) ................ $19,701 $17,297 17 (c) $30,033
======= ======= ========= =======
$ (233)(a)
Fiscal year ended 19,911 (b)
December 29, 1996 (as restated) ................ $12,326 $27,053 -- (c) $19,701
======= ======= ========= =======
$ 715(a)
Fiscal year ended 6,988 (b)
December 31, 1995 .............................. $ 9,416 $10,651 38 (c) $12,326
======= ======= ========= =======
----------------
Notes: (a) Reclassified to/from accrued liabilities for customer deductions.
(b) Accounts written off as uncollectible.
(c) Foreign currency translation adjustment.
[Enlarge/Download Table]
ADDITIONS ENDING
BEGINNING CHARGED CASH NON-CASH ACCRUAL
DESCRIPTION ACCRUAL TO INCOME REDUCTIONS REDUCTIONS REVERSALS BALANCE
----------------------- ----------- ----------- ------------ ------------ ----------- --------
Restructuring accrual:
1997 $51.7 $ -- $21.2 $10.7 $14.6 $ 5.2
1996 13.8 110.1 8.1 64.1 -- 51.7
1995 16.2 -- 2.4 -- -- 13.8
[Download Table]
ADDITIONS ENDING
BEGINNING CHARGED CASH NON-CASH ACCRUAL
DESCRIPTION ACCRUAL TO INCOME REDUCTIONS REDUCTIONS BALANCE
------------- ----------- ----------- ------------ ------------ --------
Allowances and Reserves for Loss on Discontinued Operations:
1997 $58.2 $ 22.5 $6.1 $71.6 $ 3.0
1996 -- 58.2 -- -- 58.2
1995 -- -- -- -- --
F-42
EXHIBIT INDEX
[Enlarge/Download Table]
EXHIBIT
NO. DESCRIPTION
-------- --------------------------------------------------------------------------------------------
3.b By-laws of Sunbeam, as amended
4.e Amendment to Registration Rights Agreement, dated as of August 12, 1998, between the
Company and Coleman (Parent) Holding, Inc.
10.f Amended and Restated Sunbeam Corporation Stock Option Plan
10.bb Second Amendment to Credit Agreement dated as of March 30, 1998, among the Company,
the Subsidiary Borrowers referred to therein, the Lenders party thereto, Morgan Stanley
Senior Funding, Inc., Bank America National Trust and Savings Association and First Union
National Bank
10.cc Third Amendment to Credit Agreement dated as of October 19, 1998, among the Company,
the Subsidiary Borrowers referred to therein, the Lenders party thereto, Morgan Stanley
Senior Funding, Inc., Bank America National Trust and Savings Association and First Union
National Bank
10.dd Employment Agreement between the Company and Jerry W. Levin dated as of August 12,
1998
10.ee Employment Agreement between the Company and Paul Shapiro dated as of August 12, 1998
10.ff Employment Agreement between the Company and Bobby Jenkins dated as of August 12,
1998
10.gg Agreement between the Company and David Fannin dated August 20, 1998
10.hh First Amendment to Receivables Sale and Contribution Agreement dated April 2, 1998,
between Sunbeam Products, Inc. and Sunbeam Asset Diversification, Inc.
10.ii First Amendment to Receivables Purchase and Servicing Agreement dated April 2, 1998,
between Llama Retail Funding, L.P., Capital USA, L.L.C., Sunbeam Products, Inc. and
Sunbeam Asset Diversification, Inc.
10.jj Second Amendment to Receivables Purchase and Servicing Agreement dated July 29, 1998,
between Llama Retail Funding, L.P., Capital USA, L.L.C., Sunbeam Products, Inc. and
Sunbeam Asset Diversification, Inc.
27. Financial Data Schedule, submitted electronically to the Securities and Exchange Commission
for information only and not filed.
99.c Press Release dated August 12, 1998, regarding issuance of warrants to MacAndrews & Forbes
Holding, Inc.
99.d Press Release dated August 24, 1998 regarding the Company's new strategy and senior
management team
99.e Press Release dated October 20, 1998 regarding the Company's restatement of its financial
results
Dates Referenced Herein and Documents Incorporated by Reference
| Referenced-On Page |
|---|
| This ‘10-K/A’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| | 9/30/06 | | 4 | | 61 |
| | 3/31/05 | | 4 | | 61 |
| | 1/1/00 | | 20 | | 21 |
| | 9/30/99 | | 21 | | | | | 10-Q, NT 10-Q |
| | 6/15/99 | | 66 |
| | 4/10/99 | | 4 | | 62 |
| | 1/1/99 | | 66 |
| | 12/31/98 | | 4 | | 61 | | | 10-K, 10-K/A, 11-K, NT 10-K |
| | 11/13/98 |
| Filed on: | | 11/12/98 | | 25 |
| | 11/4/98 | | 1 | | 5 |
| | 10/30/98 | | 8 | | 65 |
| | 10/22/98 | | 7 | | 64 |
| | 10/21/98 | | 6 | | 64 |
| | 10/20/98 | | 5 | | 68 |
| | 10/19/98 | | 4 | | 68 |
| | 10/16/98 | | 27 |
| | 10/13/98 | | 6 |
| | 9/30/98 | | 4 | | 62 | | | 10-Q, NT 10-Q |
| | 9/29/98 | | 7 | | 63 |
| | 9/25/98 | | 4 | | 61 |
| | 9/16/98 | | 7 | | 63 |
| | 8/28/98 | | 7 | | 63 |
| | 8/24/98 | | 24 | | 68 |
| | 8/20/98 | | 24 |
| | 8/14/98 | | 24 | | | | | 8-K, SC 13D/A |
| | 8/12/98 | | 5 | | 68 | | | 8-K |
| | 8/10/98 | | 7 | | 63 |
| | 8/6/98 | | 5 |
| | 8/5/98 | | 5 |
| | 7/29/98 | | 24 | | 68 |
| | 7/20/98 | | 7 | | 63 |
| | 7/8/98 | | 5 |
| | 7/2/98 | | 5 | | 64 |
| | 6/30/98 | | 4 | | 61 | | | 10-Q, 11-K, NT 10-Q, NT 11-K |
| | 6/25/98 | | 5 | | 63 |
| | 6/23/98 | | 4 | | 61 |
| | 6/22/98 | | 7 | | 63 |
| | 6/17/98 | | 5 | | 62 | | | SC 13D/A |
| | 6/16/98 | | 7 | | 64 | | | SC 13D |
| | 6/15/98 | | 5 | | 59 |
| | 5/22/98 | | 6 |
| | 5/12/98 | | 65 | | | | | DEF 14A, PRE 14A |
| | 5/11/98 | | 5 | | | | | 8-K/A, S-4, SC 13E3 |
| | 5/8/98 | | 23 |
| | 5/1/98 | | 64 |
| | 4/23/98 | | 6 | | 62 |
| | 4/13/98 | | 24 | | | | | 8-K |
| | 4/7/98 | | 7 | | 64 |
| | 4/6/98 | | 3 | | 60 | | | DEF 14A, SC 13D/A, SC 14D1/A |
| | 4/3/98 | | 3 | | 5 | | | 3, SC 13D/A |
| | 4/2/98 | | 24 | | 68 |
| | 3/30/98 | | 3 | | 68 | | | 8-K, 8-K/A |
| | 3/29/98 | | 22 |
| | 3/25/98 | | 4 | | 22 |
| | 3/19/98 | | 4 |
| | 3/2/98 | | 3 | | 24 |
| | 2/28/98 | | 23 |
| | 2/27/98 | | 23 |
| | 2/20/98 | | 22 | | 59 |
| | 2/2/98 | | 7 | | 63 |
| | 1/1/98 | | 66 |
| | 12/31/97 | | 54 | | | | | 11-K, NT 11-K |
| For Period End: | | 12/28/97 | | 1 | | 67 | | | 10-K405 |
| | 12/15/97 | | 36 | | 37 |
| | 12/4/97 | | 23 |
| | 11/6/97 | | 23 |
| | 6/15/97 | | 19 |
| | 3/30/97 | | 24 | | | | | 10-Q, 10-Q/A |
| | 3/17/97 | | 49 |
| | 1/31/97 | | 23 |
| | 1/28/97 | | 24 |
| | 1/1/97 | | 23 |
| | 12/29/96 | | 10 | | 67 | | | 10-K |
| | 12/28/96 | | 48 |
| | 11/21/96 | | 23 |
| | 9/29/96 | | 24 | | | | | 10-Q |
| | 9/16/96 | | 23 |
| | 7/22/96 | | 41 |
| | 7/17/96 | | 41 |
| | 6/30/96 | | 24 | | | | | 10-Q |
| | 12/31/95 | | 15 | | 67 | | | 11-K |
| | 1/1/95 | | 30 | | 38 |
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Filing Submission 0000950170-98-002145 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)
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