<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the quarterly period ended MARCH 31, 1997
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or
[ ] Transition Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission File Number: 1-988
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THE COLEMAN COMPANY, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 13-3639257
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1767 DENVER WEST BLVD., GOLDEN, COLORADO 80401
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(Address of principal executive offices) (Zip Code)
303-202-2400
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(Registrant's telephone number, including area code)
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
requirement for the past 90 days. X Yes No
--- ---
The number of shares outstanding of the registrant's par value $.01 common stock
was 53,357,256 shares as of May 5, 1997, of which 44,067,520 shares were held by
an indirect wholly-owned subsidiary of Mafco Holdings Inc.
Exhibit Index on Page 11.
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THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION Page
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Item 1. Condensed Consolidated Financial Statements:
Condensed Consolidated Statements of Operations
Three months ended March 31, 1997 and 1996 3
Condensed Consolidated Balance Sheets
March 31, 1997 and December 31, 1996 4
Condensed Consolidated Statements of Cash Flows
Three months ended March 31, 1997 and 1996 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
2
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THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months
Ended March 31,
-----------------------
1997 1996
-------- --------
Net revenues $295,464 $273,560
Cost of sales 214,422 192,594
-------- --------
Gross profit 81,042 80,966
Selling, general and administrative expenses 65,873 46,737
Interest expense, net 10,712 8,081
Amortization of goodwill and deferred charges 2,865 2,247
Other expense, net 271 30
-------- --------
Earnings before income taxes and minority interest 1,321 23,871
Income tax expense 510 8,832
Minority interest in earnings of Camping Gaz 112 --
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Net earnings $ 699 $ 15,039
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-------- --------
Earnings per common share $ .01 $ .28
-------- --------
-------- --------
Weighted average common shares outstanding 53,231 53,165
-------- --------
-------- --------
See Notes to Condensed Consolidated Financial Statements
3
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THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
March 31, December 31,
1997 1996
---------- ----------
ASSETS
Current assets:
Cash and cash equivalents $ 12,866 $ 17,299
Accounts and notes receivable, less allowance
of $9,934 in 1997 and $11,512 in 1996 286,278 231,603
Inventories 288,166 287,502
Deferred tax assets 39,895 40,466
Prepaid assets and other 16,529 14,767
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Total current assets 643,734 591,637
Property, plant and equipment, net 194,739 199,182
Intangible assets related to businesses
acquired, net 334,012 341,715
Deferred tax assets and other 32,577 27,552
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$1,205,062 $1,160,086
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---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts and notes payable $ 194,462 $ 132,841
Other current liabilities 115,329 113,653
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Total current liabilities 309,791 246,494
Long-term debt 568,034 582,866
Other liabilities 75,711 76,173
Minority interest 1,549 1,608
Contingencies
Stockholders' equity:
Common stock 532 532
Additional paid-in capital 169,495 166,690
Retained earnings 83,531 82,832
Currency translation adjustment (3,128) 3,176
Minimum pension liability adjustment (453) (285)
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Total stockholders' equity 249,977 252,945
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$1,205,062 $1,160,086
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---------- ----------
See Notes to Condensed Consolidated Financial Statements
4
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THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months
Ended March 31,
---------------------
1997 1996
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 699 $ 15,039
-------- ---------
Adjustments to reconcile net earnings to net cash flows
from operating activities:
Depreciation and amortization 9,590 7,588
Minority interest in earnings of Camping Gaz 112 --
Change in assets and liabilities:
Increase in receivables (60,454) (84,659)
Increase in inventories (5,258) (28,420)
Increase in accounts payable 18,655 8,741
Other, net (4,383) (11,145)
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(41,738) (107,895)
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Net cash used by operating activities (41,039) (92,856)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (6,313) (6,866)
Purchases of businesses, net of cash acquired -- (60,132)
Proceeds from sale of fixed assets 2,126 186
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Net cash used by investing activities (4,187) (66,812)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Net (payments of) proceeds from revolving credit
agreement borrowings (8,959) 125,713
Net change in short-term borrowings 48,996 29,611
Repayment of long-term debt (64) (172)
Debt issuance and refinancing costs (718) --
Purchases of Company common stock -- (2,329)
Proceeds from stock options exercised 197 967
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Net cash provided by financing activities 39,452 153,790
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Effect of exchange rate changes on cash 1,341 629
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Net decrease in cash and cash equivalents (4,433) (5,249)
Cash and cash equivalents at beginning of the period 17,299 12,065
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Cash and cash equivalents at end of the period $ 12,866 $ 6,816
-------- ---------
-------- ---------
See Notes to Condensed Consolidated Financial Statements
5
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THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share data)
(Unaudited)
1. BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
The Coleman Company, Inc. ("Coleman" or "Company") include the accounts of the
Company and its subsidiaries after elimination of all material intercompany
accounts and transactions, and have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three months ended March 31, 1997 are not necessarily indicative
of the results that may be expected for the year ended December 31, 1997. The
balance sheet at December 31, 1996 has been derived from the audited financial
statements for that date but does not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's annual
report on Form 10-K for the year ended December 31, 1996.
2. INVENTORIES
The components of inventories consist of the following:
March 31, December 31,
1997 1996
-------- --------
Raw material and supplies $ 83,710 $ 82,399
Work-in-process 16,036 12,878
Finished goods 188,420 192,225
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$288,166 $287,502
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-------- --------
3. OTHER CHARGES
During the three months ended March 31, 1997, the Company recorded certain
other charges totaling $2,435, net of tax, primarily related to severance costs
associated with recent executive changes.
4. RELATED PARTY TRANSACTION
During the three months ended March 31, 1997, the Company agreed to
purchase an inactive subsidiary from an affiliate for $1,000. The Company
expects to realize certain foreign tax benefits from this transaction in future
years. The Company has accounted for this transaction in a manner similar to a
pooling-of-interests due to the Mafco Holdings Inc. common control over each
of the parties involved in the transaction. The $2,608 excess value of tax
benefits acquired over the purchase price has been accounted for as a capital
contribution.
5. SUBSEQUENT EVENT
In April 1997, the Company announced its intentions to (i) close its
corporate headquarters in Golden, Colorado, (ii) close its Geneva, Switzerland
international headquarters, (iii) reduce the Company's workforce by
approximately 10% and (iv) close or relocate three domestic factories and close
one international factory. Most of the
6
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THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share data)
(Unaudited)
costs associated with these actions will be reflected in the results of
operations for the quarter ended June 30, 1997.
6. RECENTLY ISSUED ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings per Share" ("FAS 128"),
which specifies the computation, presentation, and disclosure requirements for
earnings per share with the objective to simplify the computation of earnings
per share. FAS 128 is effective for financial statements for periods ending
after December 15, 1997 and earlier application is not permitted. After the
effective date, all prior period earnings per share data shall be restated to
conform with the provisions of FAS 128. The adoption of FAS 128 is not expected
to have a material impact on the Company's earnings per share data.
7
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THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
As part of its strategy to improve its business processes, the Company has
announced several restructuring initiatives designed to reduce costs
and improve profitability and competitiveness. In March 1997, the Company
announced that it would close its executive offices in Golden, Colorado, with
most of its administrative functions expected to return to its Wichita, Kansas
facility. In April 1997, the Company announced its intention to (i) eliminate
700 employees, which represent approximately 10% of its current work force, (ii)
close or relocate three domestic factories and close one international factory,
(iii) close its Geneva, Switzerland international headquarters, (iv) rationalize
its product lines, including a significant reduction in SKUs, and (v) sell its
pressure washer business. In addition, the Company may sell other non-strategic
businesses if suitable opportunities arise. The Company has already begun to
implement its new restructuring plan. The Company has announced plans to close
its Hastings, Nebraska factory which was used in the manufacturing of portable
power generators and pressure washers. The Company expects to incur certain
restructuring and other charges in connection with these initiatives during
1997. The Company recorded other charges of approximately $2.4 million, net of
taxes, for the first quarter of 1997 and expects to record a significantly
greater amount of restructuring and other charges for the second quarter of
1997. There can be no assurance as to the amount of the restructuring and other
charges to be recorded in the second quarter of 1997 or that restructuring and
other charges will not be recorded in subsequent periods.
THREE MONTHS ENDED MARCH 31, 1997 COMPARED WITH THE THREE MONTHS ENDED MARCH 31,
1996
Net revenues of $295.5 million in 1997 were $21.9 million or 8.0% greater
than in 1996 with outdoor recreation products increasing $29.2 million or 15.5%
and hardware products decreasing $7.3 million or 8.6%. Geographically, United
States and Canadian revenues decreased 7.9% while international revenues
increased 60.6%.
Outdoor recreation products revenues increased $29.2 million or 15.5%. The
sales increase includes the effects of Camping Gaz, a business acquired in
March 1996. Excluding the estimated effects of the Camping Gaz acquisition and
the strengthening of the US dollar, sales decreased approximately 3.9%
reflecting the Company's initiatives to reduce its dependence on promotional
programs. Hardware products revenues decreased $7.3 million or 8.6% due to
the decline in pressure washer sales, a result of the Company's decision to
exit the electric pressure washer business.
Gross margins decreased as a percent of sales by 2.2 percentage points from
29.6% in 1996. The decrease is driven by the effect of lower production levels
and to a lesser extent increased resin costs associated with the Company's
plastics business. The closing or relocating of three domestic factories and
the closing of one international factory as part of the Company's restructuring
initiatives is intended to reduce manufacturing costs in the latter part of
1997.
Selling, general and administrative ("SG&A") expenses were $65.9 million in
1997 compared to $46.7 million in 1996, an increase of 40.9%. The increase in
SG&A expenses reflects SG&A expenses associated with the Camping Gaz acquisition
and severance costs associated with recent executive changes.
Interest expense was $10.7 million in 1997 compared with $8.1 million in
1996, an increase of $2.6 million. This increase was primarily the result of
higher borrowings to fund the Camping Gaz acquisition and to a lesser extent
higher interest rates.
8
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COLEMAN COMPANY, INC. AND SUBSIDIARIES
Minority interest represents the interest of minority shareholders in
certain subsidiary operations of Camping Gaz.
The Company recorded a provision for income tax expense of $0.5 million or
38.6% of pre-tax earnings in 1997 compared to a provision for income tax expense
of $8.8 million or 37.0% of pre-tax earnings in 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company's operating activities used $41.0 million and $92.9 million of
cash during the three months ended March 31, 1997 and 1996. During the 1997
period, receivables increased $60.5 million as a result of the seasonality of
the Company's sales and an increase in the overall level of the Company's sales.
Despite the seasonality of the business, inventories were approximately equal to
the levels at December 31, 1996 as a result of the Company's initiatives to
reduce inventory. The Company's net cash used for investing activities was $4.2
million and $66.8 million for the three months ended March 31, 1997 and 1996,
respectively. The Company's capital expenditures were $6.3 million in the three
months ended March 31, 1997. Net cash provided by financing activities for the
three months ended March 31, 1997 consisted primarily of an increase in
short-term borrowings to finance the seasonal increase in working capital.
The Company's working capital requirements are currently funded by cash
flow from operations and domestic and foreign bank lines of credit.
Availability under the Company's domestic revolving credit agreement, as amended
(the "Company Credit Agreement"), is reduced by any commercial paper borrowings
outstanding. The Company Credit Agreement is available to the Company until
April 30, 2001. At March 31, 1997, $135.1 million was available for borrowings
under the Company Credit Agreement. However, debt instruments of Coleman
Worldwide Corporation ("Coleman Worldwide") and Coleman Holdings Inc. ("Coleman
Holdings") contain certain provisions that by their terms restrict the Company's
ability to, among other things, incur debt. Accordingly, to the extent that
borrowings by the Company of amounts otherwise available under the Company
Credit Agreement exceed the level of borrowings permitted by such holding
company debt instruments, a default will result under such debt instruments.
The outstanding loans under the Company Credit Agreement bear interest at
either of the following rates, as selected by the Company from time to time:
(i) the higher of the agent's base lending rate or the federal funds rate plus
.50% or (ii) the London Inter-Bank Offered Rate ("LIBOR") plus a margin ranging
from .25% to 2.125% based on the Company's financial performance. If there is a
default, the interest rate otherwise in effect will be increased by 2% per
annum. The Company Credit Agreement also bears an overall facility fee ranging
from .15% to .375% based on the Company's financial performance.
The Company Credit Agreement contains various restrictive covenants
including, without limitation, requirements for the maintenance of specified
financial ratios, levels of consolidated net worth and profits, and certain
other provisions limiting the incurrence of additional debt, purchase or
redemption of the Company's common stock, issuance of preferred stock of the
Company, and also prohibits the Company from paying any dividends until on or
after January 1, 1999, and limits the amount of dividends the Company may pay
thereafter. The Company Credit Agreement also provides for a specific
requirement relating to the Company's financial leverage at December 31, 1997,
which, if not achieved, will result in the Company Credit Agreement becoming
secured by the Company's assets. For purposes of determining the Company's
compliance with certain of such covenants, the Company Credit Agreement
excludes up to $30.0 million of charges in connection with the Company's
restructuring initiatives.
Substantially all of the shares of the Company's common stock owned by
Coleman Worldwide are pledged to secure indebtedness of Coleman Worldwide and of
its parent, Coleman Holdings. On May 6, 1997, Coleman Worldwide and Coleman
Holdings jointly announced that Coleman Holdings intends to redeem its Senior
Secured
9
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COLEMAN COMPANY, INC. AND SUBSIDIARIES
Discount Notes due 1998 (the "Holdings Notes") on or about July 15, 1997, and
that Coleman Worldwide intends to retire its Liquid Yield Option-TM- Notes due
2013 (the "LYONs-TM-"). Coleman Worldwide will make an offer to pay cash for
the LYONs in excess of the market value of the shares of the Company's common
stock for which the LYONs may be exchanged. Coleman Worldwide expects to
commence the offer as soon as reasonably practicable and to redeem any
remaining LYONs on May 27, 1998. Redemption of the Holdings Notes and
retirement of the LYONs will be made with the proceeds from the issuance of
debt securities (the "Notes") by a newly formed holding company. Upon the
redemption of the Holdings Notes and retirement of the LYONs, the Notes are
expected to be secured by the shares of the Company's common stock owned by
Coleman Worldwide.
The Company's ability to meet its current cash operating requirements,
including projected capital expenditures, tax sharing payments and other
obligations is dependent upon a combination of cash flows from operations and
borrowings under the Company Credit Agreement. The Company's ability to borrow
under the terms of the Company Credit Agreement is subject to the Company's
continuing requirement to meet the various restrictive covenants, including
without limitation, those described above. If the Company fails to meet the
various restrictive covenants of the Company Credit Agreement, the Company will
need to renegotiate its current Company Credit Agreement, and/or enter into
alternative financing arrangements. There is no assurance that the terms and
conditions of such agreements would be as favorable as those now contained in
the Company Credit Agreement.
The Company periodically uses a variety of derivative financial instruments
to manage its foreign currency and interest rate exposures. The Company does
not speculate on interest rates or foreign currency rates. Instead it uses
derivatives when implementing its risk management strategies to reduce the
possible effects of these exposures.
With respect to foreign currency exposures, the Company principally uses
forward and option contracts to reduce risks arising from firm commitments,
anticipated intercompany sales transactions and intercompany receivable and
payable balances. The Company generally uses interest rate swaps and interest
rate caps to fix certain of its variable rate debt. The Company manages credit
risk related to these derivative contracts through credit approvals, exposure
limits and other monitoring procedures.
SEASONALITY
The Company's sales generally are highest in the second quarter of the year
and lowest in the fourth quarter. As a result of this seasonality, the Company
has generally incurred a loss in the fourth quarter. The Company's sales may be
affected by weather conditions, especially during the second and third quarters
of the year. The Company's annual results are generally dependent on its
results during the second quarter. Furthermore, the Company has announced and
is in the process of implementing certain restructuring initiatives, which the
Company expects to have an impact on its results during the remainder of 1997.
There can be no assurance as to the Company's success in implementing such
initiatives or the results therefrom or as to any adverse impact of the
Company's restructuring initiatives.
FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for certain forward-looking statements. The forward-looking statements
contained in this Form 10-Q are subject to certain risks and uncertainties.
Actual results could differ materially from current expectations. Among the
factors which could affect the Company's actual results and could cause results
to differ from those contained in the forward-looking statements contained
herein are (i) the success of the Company's restructuring programs, (ii)
negative external factors like adverse weather in North America or other
regions, (iii) possible continued consumer spending decline
10
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COLEMAN COMPANY, INC. AND SUBSIDIARIES
in Japan, (iv) the possibility the Company may be required to renegotiate its
credit agreements, and (v) difficulties or delays in executing the sale of
the Notes, the proceeds from which will be used to redeem the Holdings Notes
and retire the LYONs, as well as other difficulties in effecting such
redemption and retirement.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT INDEX DESCRIPTION
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10.1*+ Letter Agreement dated as of March 15, 1997
between the Company and Frederick J. Fritz.
27+ Financial Data Schedule
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* Management Contracts and Compensatory Plans
+ Filed herewith
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
March 31, 1997.
11
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COLEMAN COMPANY, INC. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements 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.
THE COLEMAN COMPANY, INC.
(Registrant)
Date: May 12, 1997 By: /s/ Steven F. Kaplan
----------------------------------
Steven F. Kaplan
Executive Vice President and
Chief Financial Officer
12
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EXECUTION COPY
March 15, 1997
Frederick J. Fritz
The Coleman Company, Inc.
250 North St. Francis Street
Wichita, KS 67201
Dear Mr. Fritz:
This letter will set forth our agreement regarding termination of your
employment with The Coleman Company, Inc. ("Coleman"):
1. TERMINATION. Your employment with Coleman and its affiliates (the
"Company") will terminate as of March 15, 1997. The employment
agreement dated January 20, 1995 between you and Coleman is terminated
as of that date and is of no further effect, with the exception of
Section 8(a), (b) and (d) thereof, which shall continue in full force.
2. PAYMENTS. Coleman shall pay to you $262,500 per year, payable monthly
in arrears, for the period beginning on the date hereof and ending on
March 15, 1998. In addition, you shall be entitled to receive an
amount equal to the amount of target incentive bonus (based on a rate
of $183,759 per year) you would have earned (based on actual 1997
results), if any, for the period up to and including March 15, 1997,
payable under Coleman's regular incentive bonus plan terms and at the
normal time for payment of such bonus. The amounts payable hereunder
are not subject to any mitigation or offset on account of any other
earnings or compensation you may have. In the event of your death,
any amounts due hereunder shall be paid to your estate.
Coleman will pay you $2,000 eight days after the execution of this
Agreement, subject to applicable withholding, provided that you have
not exercised your right to revoke the ADEA release provided in
Section 6(b).
3. STOCK OPTIONS. The Company shall cause you to become fully vested as
of March 15, 1997, in all of the 130,000 options which have been
granted to you pursuant to Coleman's stock option plans and currently
remain outstanding. You may exercise such options at any time within
three months following March 15, 1997, (i.e., through June 15, 1997),
in accordance with the terms of such options. After June 15, 1997,
your unexercised options shall automatically expire and shall no
longer be exercisable.
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2
Notwithstanding anything to the contrary in the agreements governing
the stock options, you agree that: if you wish to exercise a stock
option, you will provide Coleman with written advance notice stating
your intention and identifying an option exercise date at least seven
days after the date that such advance notice is received by Coleman;
within three days after the receipt by Coleman of any such advance
notice, Coleman may in its sole discretion determine to pay you cash
in lieu of allowing you to exercise some or all of the stock options
with respect to which you have provided such advance notice of
intention to exercise; if Coleman determines to exercise its rights
under this Section, Coleman shall provide to you, within such three
day period, a written notice identifying the stock options as to which
Coleman has determined to so exercise its rights and the number of
shares under each such stock option as to which Coleman has so
determined to exercise its rights; any such cash payment shall be paid
to you within five days after the option exercise date set forth in
your advance notice; and the amount of such cash payment shall (on an
option-by-option basis) equal (i) the number of shares to which you
would otherwise would have become entitled (the "Shares") on exercise
of the stock option in respect of which Coleman has determined to
exercise its rights under this Section, multiplied by (ii) the closing
price of a Share on the New York Stock Exchange on the date on which
you would (pursuant to your notice) have exercised your stock option
(but for Coleman's exercise of its rights under this Section) minus
the per share exercise price of such Stock Option.
4. VACATION. As soon as practicable after March 15, 1997, you will be
paid for four weeks of accrued vacation in accordance with the
Company's regular policies.
5. FRINGE BENEFITS. You shall continue to receive all employee benefits
currently provided to you by Coleman hereof through March 15, 1997,
including participation in all life insurance programs provided to you
by Coleman. You will not be required to reimburse Coleman for any
premiums heretofore paid by Coleman with respect to the so-called GRIP
life insurance policy provided to you. If you elect COBRA
continuation coverage effective March 15, 1997 with respect to Cole-
man's group medical plan, Coleman will, through March 15, 1998, pay a
portion of your premiums on account of such COBRA coverage so that the
amount payable by you during such period does not exceed the amount
payable under such plan by similarly situated active employees.
Coleman shall also continue to allow you to use the Company-paid
automobile currently provided to you through March 15, 1998.
As soon as practicable after the execution of this Agreement, Coleman
will sell to you, for the amount of $10, the laptop computer and
cellular telephone which were provided for your use by Coleman and
which are currently in your possession. You acknowledge that you
understand that you may be taxable on the value you receive on account
of this sale.
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3
Coleman shall continue to allow you to use the Company-paid membership
at Crestview Country Club in Wichita, Kansas which was provided for
your use until the earlier of March 15, 1998 and the date on which
your principal residence is no longer in Wichita, Kansas. Coleman
agrees to pay any dues and membership fees (but not other fees, such
as food and beverage charges) with respect to such club membership
during the period you are entitled to use such club membership. You
agree to cooperate with Coleman (including signing such documents as
Coleman may request) to transfer such club membership as of and after
the date the Company is no longer required to provide such club
membership for your use.
6. EXECUTIVE RELEASES.
(a) GENERAL. You release and discharge the Company from any and all
charges, claims and causes of action of any kind, whether known or
unknown and whenever arising, including, but not limited to, all
claims arising at any time, directly or indirectly, out of your
employment or the termination of your employment with the Company,
PROVIDED, HOWEVER, that you do not waive, and such released claims
shall not include, any of your rights to receive payments and benefits
under this Agreement or otherwise enforce this Agreement.
(b) AGE AND SEX DISCRIMINATION, ETC. You realize there are many laws and
regulations prohibiting employment discrimination pursuant to which
you may have rights or claims. These include, without limitation, the
Age Discrimination in Employment Act of 1967, as amended ("ADEA"); the
National Labor Relations Act, as amended; the Civil Rights Act of
1991; 42 U.S.C. 1981, as amended; the Americans With Disabilities Act
of 1990; Title VII of the Civil Rights Act of 1964, as amended; the
Employee Retirement Income Security Act of 1974, as amended; and
various other federal, state and local human rights laws. You also
understand there may be other statutes and laws of contract and tort,
otherwise relating to your employment. By signing this Agreement you
acknowledge that you intend to waive and release any rights known or
unknown you may have under these laws, as provided in paragraph 6(a)
(subject to your limited rights of revocation under Section 6(b)).
You understand that the Company has offered to give you 21 days to
consider the ADEA release given under this Agreement and the
consideration offered on account thereof. You acknowledge that you
are voluntarily waiving this 21-day period. You acknowledge that you
have read this Agreement carefully, have been advised to consult an
attorney and any other advisors of your choice, and fully understand
that by signing below you are giving up certain rights which you may
have to sue or assert a claim against the Company. You acknowledge
that you
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4
have not been forced or pressured in any manner whatsoever to sign
this Agreement and you agree to all of its terms voluntarily.
You shall have seven days from the date of this Agreement to revoke
the release you are giving in this Section, but only to the extent it
relates to any claim you may have arising under the ADEA. If you
revoke such release, you will be deemed not to have released any claim
arising under ADEA, you shall not be entitled to the Company's payment
of $2,000 under Section 2.
7. COMPANY RELEASE. The Company forever releases you, your family, your
estate, your agents, successors and assigns from any and all claims,
demands, causes of action, controversies, agreements, promises and
remedies, in connection with or in relationship to your capacity as an
employee or officer or director of the Company, whenever arising,
whether known or unknown, PROVIDED, HOWEVER, that the Company does not
release any of its rights arising under this Agreement.
8. CONFIDENTIALITY. As a senior executive of the Company, you
acknowledge that you have had access to proprietary information of the
Company and confidential information regarding the Company, its
personnel policies and its personnel. You agree that you and your
spouse will hold, and that you will use your best efforts to cause
your family and counsel to hold, all such information in a fiduciary
capacity for the benefit of the Company and you will not disclose to
any third party or use for your or their benefit or that of any third
party, any such information except to the extent required by law or
agreed to by the Company.
9. SCOPE. The release herein covers both claims that you and Coleman
know about and those that are unknown. Both parties expressly waive
all rights and protection afforded by any statute which limits the
effect of a release with respect to unknown claims.
10. MISCELLANEOUS. This letter constitutes the entire Agreement and
under-standing of the parties hereto relating to the subject matter
hereof, and supersedes all prior agreements and understandings,
written or oral, except as specifically written herein. This letter
may not be amended or modified except by written instrument executed
by the parties hereto. The failure of either party at any time to
require performance of any provision hereof shall in no manner affect
the right at a later time to enforce that provision. No waiver by
either party of the breach of any term in this letter, whether by
conduct or otherwise, shall be deemed to be a further or continuing
waiver of any such breach hereof.
<PAGE>
5
11. TAXES. You shall be responsible for the payment of any and all
required federal, state, local and foreign taxes incurred, or to be
incurred, in connection with any amounts payable to you under this
Agreement. Notwithstanding any other provision of this Agreement, the
Company may withhold from amounts payable under this Agreement all
federal, state, local and foreign taxes that are required to withheld
by applicable laws and regulations.
12. GOVERNING LAW. This Agreement will be construed and enforced in
accordance with the internal laws of the State of New York, without
regard to the principles of conflict of laws.
AGREED: THE COLEMAN COMPANY, INC.
/s/ Frederick J. Fritz By: /s/ Jerry W. Levin
- -------------------------- ---------------------------------------
Frederick J. Fritz Jerry W. Levin
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS FILED IN THE COMPANY'S FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 12,866
<SECURITIES> 0
<RECEIVABLES> 281,551
<ALLOWANCES> 9,934
<INVENTORY> 288,166
<CURRENT-ASSETS> 643,734
<PP&E> 294,734
<DEPRECIATION> 99,995
<TOTAL-ASSETS> 1,205,062
<CURRENT-LIABILITIES> 309,791
<BONDS> 568,034
0
0
<COMMON> 532
<OTHER-SE> 249,445
<TOTAL-LIABILITY-AND-EQUITY> 1,205,062
<SALES> 294,023
<TOTAL-REVENUES> 295,464
<CGS> 214,422
<TOTAL-COSTS> 214,422
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 455
<INTEREST-EXPENSE> 10,712
<INCOME-PRETAX> 1,321
<INCOME-TAX> 510
<INCOME-CONTINUING> 699
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 699
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
