Contacts: INVESTMENT COMMUNITY MEDIA
Marc R. Shiffman George Sard/Maureen Bailey
Sunbeam Corporation Sard Verbinnen & Co.
(561) 243-2142 (212) 687-8080
SUNBEAM TO RESTATE FINANCIAL RESULTS;DISCLOSES ADJUSTMENTS FOR 1996, 1997 AND FIRST QUARTER OF 1998
-- Lenders Agree to Modify Covenants Through April 10, 1999 --
DELRAY BEACH, FL, OCTOBER 20, 1998--Sunbeam Corporation (NYSE: SOC) today
announced that the Audit Committee of its Board of Directors, Arthur Andersen
LLP, Deloitte & Touche LLP, and Sunbeam's management have completed the
previously announced review of the Company's financial statements for 1996, 1997
and the first quarter of 1998. Based on their findings, Sunbeam will restate
financial results for a six-quarter period from the fourth quarter of 1996
through the first quarter of 1998.
Arthur Andersen is Sunbeam's auditor and was its auditor during the periods
which were reviewed. Deloitte & Touche was retained as a consultant to assist in
the review. On August 6, 1998, Sunbeam announced that it would be necessary to
restate results for 1997, the 1998 first quarter and possibly 1996, and that the
adjustments, while not then quantified, would be material.
Sunbeam today said previously issued financial statements generally
overstated the loss for 1996, overstated the profits for 1997 and understated
the loss for the first quarter of 1998. Sunbeam concluded, based upon its
review, that for certain periods revenue was incorrectly recognized (principally
"bill and hold" and guaranteed sales transactions), certain costs and allowances
were not accrued or were incorrectly recorded (principally allowances for sales
returns, co-op advertising, customer deductions and reserves for product
liability and warranty expense) and certain costs were incorrectly included in
and charged to restructuring, asset impairment and other costs.
Howard Kristol, Chairman of the Sunbeam Board's Audit Committee, said,
"Today's announcement results from an intensive review conducted by the Audit
management over a period of nearly four months with assistance from two
international accounting firms. We are satisfied that Sunbeam's restated
financial results are fairly presented. The Company is putting in place controls
and procedures to ensure the integrity of its financial data in the future."
Jerry W. Levin, President and Chief Executive Officer of Sunbeam, said,
"With the restatement behind us, we will now be able to fully focus our efforts
on growing the business and restoring profitability. Our financial results for
the remainder of 1998 will be negatively affected by significant charges related
to operational changes, excess inventory and other non-recurring items. The
adjustments being announced today and the charges for this year will be largely
non-cash and therefore will not have a significant effect on Sunbeam's
liquidity. In addition, an agreement with our lenders to modify covenant
requirements through April 10, 1999 will provide financial resources to run our
businesses and allow us to meet our obligations."
Results are being restated as follows:
Sunbeam will restate its fourth quarter 1996 loss from continuing
operations to $163.9 million, or $1.98 per share, versus the originally reported
loss of $190.4 million, or $2.29 per share. The restated fourth quarter net loss
is $215.0 million, or $2.59 per share, versus the originally reported net loss
of $234.8 million, or $2.83 per share. The restated 1996 loss from continuing
operations is $170.2 million, or $2.05 per share, versus the originally reported
loss from continuing operations of $196.7 million, or $2.37 per share. The
restated 1996 net loss is $208.5 million, or $2.51 per share, versus the
originally reported 1996 net loss of $228.3 million or $2.75 per share. The
restated 1996 results from continuing operations include $181.0 million of
restructuring, restructuring-related and other one-time pretax charges. Without
these items, Sunbeam would have reported income from continuing operations of
$10.8 million, or $0.13 per share. In 1996, basic and diluted earnings per share
were the same.
Sunbeam will restate 1997 revenue to $1,073.1 million, versus the
originally reported $1,168.2 million. Restated 1997 earnings from continuing
operations are $52.3 million, or $0.62 per basic share and $0.60 per diluted
share, versus the originally reported 1997 earnings from continuing operations
of $123.1 million, or $1.45 per basic share and $1.41 per diluted share. The
restated 1997 net income is $38.3 million, or $0.45 per basic share and $0.44
share, versus the originally reported 1997 net income of $109.4 million, or
$1.29 per basic share and $1.25 per diluted share. Additionally, 1997 earnings
from continuing operations includes approximately $59 million of non-recurring
benefit primarily from the reversal of restructuring and certain operating and
tax accruals. Excluding these items, Sunbeam would have reported a loss from
continuing operations in 1997 of $6.4 million, $0.08 per share.
FIRST QUARTER 1998
Sunbeam will restate first quarter 1998 revenue to $247.6 million, versus
the originally reported $244.3 million. The loss from continuing operations is
restated to $45.5 million or $0.53 cents per share, versus the originally
reported loss from continuing operations of $39.0 million or $0.45 per share.
The restated first quarter 1998 net loss is $54.1 million, or $0.63 per share,
versus the originally reported net loss of $44.6 million, or $0.52 per share.
Additionally, the first quarter loss from continuing operations includes $3.0
million of non-recurring benefit from the reversal of an operating accrual.
Excluding this item, the loss from continuing operations would have been $48.5
million, or $0.56 per share. Basic and diluted per share results were the same
in the period.
A summary of the effects of the restatement for the relevant periods is
Within the next several weeks, Sunbeam expects to file with the Securities
and Exchange Commission an amended Form 10-K for the year ended December 28,1997 (which will include restated results for 1996 and 1997) and an amended Form
10-Q for the quarter ended March 31, 1998 (which will include restated results
for the quarter ended March 30, 1997.) Shortly thereafter, the Company expects
to report results for the second quarter ended June 30, 1998, and for the third
quarter ended September 30, 1998 (which will include restated results for the
same periods in the prior year.)
Sunbeam also announced that it has reached an agreement with its lenders to
modify covenant requirements in Sunbeam's credit agreement through April 10,1999. As a result, Sunbeam will continue to have access to its revolving credit
Sunbeam Corporation is a leading consumer products company that designs,
manufactures and markets, nationally and internationally, a diverse portfolio of
consumer products under such world-class brands as Sunbeam/registered
trademark/, Oster/registered trademark/, Grillmaster/registered trademark/,
Coleman/registered trademark/, Mr. Coffee/registered trademark/), First
Alert/registered trademark/, Powermate/registered trademark/, Health o
meter/registered trademark/, Eastpak/registered trademark/ and
CAUTIONARY STATEMENTSCERTAIN STATEMENTS IN THIS PRESS RELEASE CONSTITUTE "FORWARD-LOOKING STATEMENTS"WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH
FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE, OR ACHIEVEMENTS OF SUNBEAM TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE, OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENTS DUE
TO VARIOUS FACTORS, INCLUDING THOSE SET FORTH UNDER THE CAPTIONS "CAUTIONARYSTATEMENTS" IN THE COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 1997, AND THE FORM 10-Q FOR THE QUARTER ENDED MARCH 1998, AS SUCH
MAY BE AMENDED.
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