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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the fiscal year ended DECEMBER 31, 1996
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.
-------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 13-3639257
------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1767 DENVER WEST BLVD., GOLDEN, COLORADO 80401
- ----------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
1526 COLE BLVD., GOLDEN, COLORADO 80401
- ----------------------------------------------- ----------
(Former address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 303-202-2400
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- ---------------------
COMMON STOCK, $.01 PAR VALUE NEW YORK STOCK EXCHANGE
SAME CLASS THE PACIFIC STOCK EXCHANGE
(unlisted trading privileges)
SAME CLASS MIDWEST STOCK EXCHANGE
(unlisted trading privileges)
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.
[X] Yes ___ No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K 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 or any amendment to this Form 10-K.
[ ]
The aggregate market value of the voting stock of the registrant held by
non-affiliates, based upon the closing sale price of the common stock on
March 10, 1997, was approximately $122,349,993.
As of March 10, 1997, there were 53,235,970 shares of the registrant's
common stock outstanding, of which 44,067,520 shares were held by an indirect
wholly-owned subsidiary of Mafco Holdings Inc.
INCORPORATED BY REFERENCE
Portions of the Company's Proxy Statement for the Annual Meeting of
Shareholders to be held on May 13, 1997, which is to be filed within 120 days
of the end of the fiscal year, are incorporated by reference into Part III of
this Annual Report on Form 10-K.
Exhibit Index at pages 20 through 27.
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THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
1996 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
PART I Page
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Item 1. Business........................................................... 3
Item 2. Properties......................................................... 9
Item 3. Legal Proceedings.................................................. 10
Item 4. Submission of Matters to a Vote of Security Holders ............... 11
PART II
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters..................................... 12
Item 6. Selected Financial Data........................................... 13
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations....................................... 14
Item 8. Financial Statements and Supplementary Data....................... 19
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure........................................ 19
PART III
Item 10. Directors and Executive Officers of the Registrant ............... 19
Item 11. Executive Compensation............................................ 19
Item 12. Security Ownership of Certain Beneficial Owners and Management ... 19
Item 13. Certain Relationships and Related Transactions ................... 19
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.. 20
Signatures........................................................ 28
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PART I
ITEM 1. BUSINESS
OVERVIEW
The Coleman Company, Inc. ("Coleman" or the "Company") is a leading
manufacturer and marketer of consumer products for the outdoor recreation and
hardware markets on a global basis. The Company's products have been sold
domestically and internationally under the Coleman brand name since the
1920s. The Company believes that its strong market position is attributable
primarily to its well-recognized trademarks, particularly the Coleman brand
name, broad product line, product quality and innovation, and marketing,
distribution and manufacturing expertise.
BACKGROUND
Coleman was formed in December 1991 to succeed to the assets and
liabilities of the outdoor products business of New Coleman Holdings Inc.
("Holdings") an indirect wholly-owned subsidiary of Mafco Holdings Inc.
("Mafco"). Holdings (then named The Coleman Company, Inc.) was acquired (the
"Acquisition") in 1989 by MacAndrews & Forbes Holdings Inc. ("MacAndrews
Holdings", and, together with Mafco, "MacAndrews & Forbes"), a corporation
wholly owned through Mafco by Ronald O. Perelman. Currently, Coleman is a
subsidiary of Coleman Worldwide Corporation ("Coleman Worldwide"), which is
an indirect wholly-owned subsidiary of Holdings. In March 1992, the Company
completed an initial public offering of its common stock, and currently
Coleman Worldwide's ownership interest in the Company is approximately 83%.
The Company has made several acquisitions in recent years designed to
expand its product lines in the outdoor recreation market. In 1996, the
Company acquired the French company Application des Gaz ("ADG" or "Camping
Gaz"), which is a leader in the European camping equipment market. In 1995,
the Company acquired Sierra Corporation of Fort Smith, Inc. ("Sierra"), a
manufacturer of portable outdoor and recreational folding furniture and
accessories. In 1994, the Company acquired substantially all of the assets
of Eastpak, Inc. and all of the capital stock of M.G. Industries, Inc.
(together, "Eastpak"), a leading designer, manufacturer and distributor of
branded daypacks, sports bags and related products. In 1993, the Company
acquired substantially all of the assets associated with the butane business
of the Taymar Group ("Taymar") in the United Kingdom and substantially all of
the assets of S.V.B. Caravan Camping S.p.a. and Cadia S.r.l. (together,
"S.V.B.") in Italy. Taymar manufactures and distributes lightweight butane
camping lanterns and stoves, as well as butane gas torches and other
accessories. S.V.B. manufactures and distributes a wide range of products
for the camping and hardware markets under the S.V.B. brand name.
The Company also restructured certain operations in the outdoor
recreation market. In 1994, the Company restructured its German
manufacturing operations (the "German Restructuring"), including selling its
plastic cooler business located in Inheiden, Germany and Loucka, Czech
Republic. And, in 1996, the Company closed the Brazilian manufacturing
operations it had acquired from Metal Yanes, Ltda. in 1994.
The Company has also expanded its presence in the hardware market
through its acquisition in 1996 of the assets of Seatt Corporation ("Seatt"),
a leading designer, manufacturer and distributor of smoke alarms, thermostats
and carbon monoxide detectors, its acquisition in 1995 of substantially all
of the assets of Active Technologies, Inc. ("ATI"), a manufacturer of
technologically advanced lightweight generators and battery charging
equipment, and its acquisition in 1994 of substantially all of the assets of
Sanborn Manufacturing Company ("Sanborn"), a manufacturer of a broad line of
portable and stationary air compressors.
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PRODUCTS
The Company participates in two primary markets, outdoor recreation and
hardware.
OUTDOOR RECREATION
The Company's principal products include a comprehensive line of
lanterns and stoves for outdoor recreational use, fuel-related products such
as disposable fuel cartridges, a broad range of coolers and jugs, sleeping
bags, backpacks, tents, outdoor folding furniture, portable electric lights,
spas, camping accessories and other products for recreational use. These
products are distributed predominantly through mass merchandisers, sporting
goods chains and outdoor specialty stores.
LANTERNS AND STOVES. Coleman believes it is the leading manufacturer of
lanterns and stoves for outdoor recreational use in the world. Coleman's
liquid fuel appliances include single and dual fuel-powered lanterns and
stoves. Coleman also manufactures a broad range of propane- and
butane-fueled lanterns and stoves, which allow the user to regulate the
intensity of light or heat. These products are manufactured at the Company's
facilities located in the United States and Europe and are marketed under the
Coleman, Camping Gaz and Peak 1 brand names.
FUEL. The Company is a leading supplier to the worldwide camping and
outdoor recreation market of propane and butane cartridges and camping fuel.
In addition to manufacturing and filling disposable propane cartridges and
refillable LPG cylinders, Coleman sells camping fuel that is refined and
canned to its specifications by various suppliers, fills butane gas
cartridges and purchases butane-filled gas cartridges from third-party
vendors for sale to customers throughout the world. These products are
marketed under the Coleman, Camping Gaz and Peak 1 brand names.
COOLERS AND JUGS. The Company manufactures and sells a wide variety of
insulated coolers and jugs and reusable ice substitutes. The Company's
cooler line includes personal coolers for camping, picnics or lunch box use;
large coolers; beverage coolers for use at work sites and recreational and
social events; and soft-sided coolers. Coleman's cooler products are
manufactured predominantly at the Company's facilities located in the United
States and are marketed under the Coleman brand name worldwide and under the
Camping Gaz brand name in Europe. In addition, the Company also manufactures
coolers and jugs for third parties to be given away as promotions or sold
with the customer's own products as a premium.
RECREATIONAL SOFT GOODS. The Company designs, manufactures or sources,
and markets textile products, including tents, sleeping bags, backpacks,
daysacks, sports bags, duffle bags and rucksacks. These products are
manufactured at the Company's facilities located in the United States and
Puerto Rico or sourced from third-party vendors who manufacture them to the
Company's specifications. The Company's tents and sleeping bags are marketed
under the Coleman and Peak 1 brand names, while its daysacks, sport bags and
related products are marketed under the Coleman, Eastpak and newly licensed
Timberland brand names. In addition to mass merchandisers, sporting goods
chains and outdoor specialty stores, the Company distributes daysacks, sports
bags and duffle bags through college bookstores and luggage shops.
OUTDOOR FURNITURE. The Company manufactures and markets aluminum- and
steel-framed, portable, outdoor, folding furniture under the Coleman and
Sierra Trails brand names. These products are manufactured predominantly at
the Company's facilities located in the United States.
ELECTRIC LIGHTS. The Company designs and markets electric lighting
products that are manufactured by others and sold under the Coleman,
Powermate, Job-Pro and Camping Gaz brand names. These products include
portable electric lights such as hand held spotlights, flashlights and
fluorescent lanterns and a line of rechargeable lanterns and flashlights.
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SPAS. The Company manufactures and markets a wide range of spas, which
are made primarily from acrylic, for residential applications. These
products are manufactured at the Company's facility located in the United
States and are distributed through a nationwide dealer network.
CAMPING ACCESSORIES. The Company designs, sources and markets a variety
of small accessories for camping and outdoor use, such as cookware and
utensils. These products are manufactured by third-party vendors to
Coleman's specifications and are marketed under the Coleman brand name.
HARDWARE
The Company's principal products include portable generators, portable
and stationary air compressors, pressure washers, and safety and security
products such as smoke alarms, carbon monoxide detectors and thermostats.
GENERATORS. The Company is a leading manufacturer and distributor of
portable generators in the United States and worldwide. These products are
manufactured by the Company, using engines manufactured by Tecumseh, Briggs &
Stratton, Vanguard, Honda and Kawasaki, at its facilities located in the
United States, are marketed under the Coleman Powermate brand name and are
distributed predominantly through mass merchandisers and home center chains.
With its acquisition of ATI, the Company now produces advanced, light weight
generators.
AIR COMPRESSORS. The Company's air compressors are manufactured at its
facilities located in the United States, are marketed under the Coleman
Powermate brand name and are distributed predominantly through mass
merchandisers and home center chains.
PRESSURE WASHERS. The Company offers a line of pressure washers
manufactured at its facilities located in the United States and distributed
predominantly through mass merchandisers and home center chains under the
Coleman Powermate brand name.
SAFETY AND SECURITY PRODUCTS. The Company manufactures a range of
safety and security products for residential use, primarily smoke alarms,
carbon monoxide detectors and thermostats. The Company manufactures these
products at its facilities located in Mexico and markets them under the
Firex, Code 1 and Coleman Sheltra brand names. These products are
distributed predominantly through electrical wholesalers, mass merchandisers,
and home center chains in North America and selected foreign countries,
primarily Australia and the United Kingdom.
BUSINESS STRATEGY
The Company's business strategy is to build upon its reputation as a
leading manufacturer and marketer of high quality brand name consumer
products for the outdoor recreation and hardware markets. The specific
operating strategies include:
FOCUS ON QUALITY AND SERVICE
Since the business of the Company was founded in the early 1900's,
Coleman has built a reputation for its quality products and superior customer
service. The Company is committed to continuing, and building upon, this
reputation.
INTRODUCING NEW PRODUCTS
The Company plans to continue introducing new products. Management
intends to focus on leveraging the Company's existing technologies, processes
and expertise to maximize the speed and efficiency of new product development
and introductions.
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DEVELOPING EXISTING BRANDS
The Company believes it has some of the more prominent brand names in
the outdoor recreation and hardware markets and plans to strengthen these
brands through superior product design, advertising, and promotion.
EXPANDING INTERNATIONAL MARKETS
Coleman is currently a market leader in several product categories in
Europe and Japan. The Company plans to utilize its well-established
infrastructures in Europe and Japan to expand in other core product
categories and to invest appropriately to develop and build businesses in new
geographic markets.
DEVELOPING HUMAN RESOURCES
The Company plans to continue developing, training, and motivating its
personnel at all levels to achieve excellence, including developing and
building its team of experienced managers.
OPERATING EFFICIENCY
The Company plans to continue seeking ways to further improve the
quality and efficiency of its business processes in order to ensure quality
and realize cost savings, including, among other things, exiting low margin
product lines and businesses and consolidating manufacturing, distribution
and administrative facilities.
SALES AND MARKETING
The following table sets forth the net revenues by class of products
for the years ended December 31, 1996, 1995 and 1994.
1996 1995 1994
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(In millions)
Outdoor Recreation.................... $ 859.6 $688.9 $563.7
Hardware.............................. 360.6 244.7 187.9
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Total............................... $1,220.2 $933.6 $751.6
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In the United States and Canada, the Company's outdoor recreation
products are sold by the Company's own sales force and, to a lesser extent,
by sales representatives that serve specialty markets and related
distribution channels. Spa products, however, are sold by independent sales
representatives to a nation wide dealer network and, to a lesser extent, by
regional sales managers employed by the Company. The Company's hardware
products are sold by Company and independent sales representatives.
The Company promotes its products through national and local advertising
campaigns, frequently coordinating with retailers' promotions to maximize the
benefits of its advertising efforts.
Coleman's major customers include Canadian Tire, Home Depot, Kmart,
Price/Costco, Target, and Wal-Mart. Wal-Mart and its affiliates accounted
for approximately 15% of the Company's 1996 consolidated net revenues.
Although the loss of Wal-Mart as a customer could have an adverse effect on
the Company, the Company believes its relationship with Wal-Mart is
satisfactory and the Company has no reason to believe Wal-Mart will not
continue as a customer.
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International sales represented 32%, 24% and 23% of net revenues for the
years ended December 31, 1996, 1995 and 1994, respectively. For 1996,
approximately 79% of the Company's international sales were in Japan and
Europe, with the balance in Latin America, Asia-Pacific, Africa and the
Middle East. The Company has sales administration offices and warehouse and
distribution facilities in Australia, Austria, Belgium, Brazil, the Czech
Republic, France, Germany, Hungary, Italy, Japan, The Netherlands, Portugal,
Spain, Switzerland, the United Arab Emirates and the United Kingdom. Each
office is responsible for sales and distribution of the Company's products in
the territories assigned to that office. The Company's direct export
operations market its products directly to international customers in certain
other markets through Company sales managers, independent distributors, and
commissioned sales representatives. In total, the Company sells its products
in more than 100 countries.
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.
COMPETITION
The markets in which the Company operates are highly competitive, based
primarily on product quality, product innovation, price and customer service
and support. The Company's competitors vary according to product lines. The
Company believes that no other company produces and markets the breadth
of camping and outdoor recreation products marketed by the Company. Lanterns
and stoves compete with, among others, products offered by Century Primus (a
unit of Century Tool & Manufacturing Inc.), American Camper (a unit of
Brunswick Corporation) and Dayton Hudson Corporation. The Company's
insulated cooler and jug products compete with products offered by Rubbermaid
Incorporated, Igloo Products Corp. (a unit of Brunswick Corporation) and The
Thermos Company (a unit of Nippon Sanso KK). The Company's sleeping bags
compete with, among others, American Recreation and Slumberjack (units of
Kellwood Company), Academy Broadway Corp. and MZH Inc. (a unit of Brunswick
Corporation), as well as certain private label manufacturers. In the tent
market, the Company competes with, among others, Sears, Wenzel (a unit of
Kellwood Company), Eureka (a unit of Johnson Worldwide Associates, Inc.) and
Mountain Safety Research (a unit of Thaw Corporation), as well as certain
private label manufacturers. The Company's backpack products compete with,
among others, American Camper (a unit of Brunswick Corporation), JanSport (a
unit of VF Corporation), Nike, Outdoor Products and Kelty (a unit of Kellwood
Company), as well as certain private label manufacturers. The Company's
competition in the electric light business includes among others, Eveready (a
unit of Ralston Purina Company) and Rayovac Corporation. The Company's spas
compete with, among others, Watkins Manufacturing Corporation (d.b.a. Hot
Springs, a unit of Masco Corporation) and Clark Manufacturing Company, Inc.
(d.b.a. Sundance Spas). The Company's camping accessories compete primarily
with Coughlan's. The Company's primary competitors in the
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generator business are Generac Corporation, Honda Motor Co., Ltd., Kawasaki
and Yamaha. Primary competitors in the air compressor business include
DeVilbiss and Campbell Hausfield. Alfred Karcher, Inc. and Sears are the
Company's primary competitors in pressure washers. The Company's safety and
security products compete primarily with First Alert, American Sensor and
Nighthawk (a unit of Williams Holding PLC). In addition, the Company
competes with various other entities in international markets.
PATENTS, TRADEMARKS, AND LICENSES
The Company's operations are not significantly dependent upon any single
or related group of patents. While the Company does not believe any single
trademark is material to its business other than the "Coleman" word mark and
the "Coleman in parallelogram with lantern symbol" logo mark, it believes its
trademarks taken as a whole are material to its business. Accordingly, the
Company has taken, and will continue to take, actions to protect its
interests in all such trademarks.
The Company licenses the Coleman name and logo under two types of
licensing arrangements: general merchandise licenses and licenses to
purchasers of businesses divested by Holdings. The Company's general
merchandise licensing activities involve licensing the Coleman name and logo,
for a royalty fee, to certain companies that manufacture and sell products
that complement the Company's product lines. In connection with the
divestitures of certain businesses after the Acquisition, Holdings entered
into trademark license agreements with the purchasers of these businesses.
The Company and Holdings receive no direct financial remuneration from the
use of the Coleman name by the purchasers of the divested businesses. The
Company's licensing activities are not material to the results of operations
of the Company.
RESEARCH AND DEVELOPMENT
The Company's research and development efforts are linked to the process
of marketing its products. New products and improvements to existing products
are developed based upon the perceived needs and demands of consumers. The
Company's research and development is performed primarily by an in-house team
of marketing managers, engineers, draftsmen and product testers using tools
such as computer-assisted design and a variety of consumer research
techniques.
INDUSTRY SEGMENTS, FOREIGN AND DOMESTIC OPERATIONS
The Company operates in a single business segment. Certain information
concerning geographic segments of the Company is set forth in Note 17 of the
Notes to Consolidated Financial Statements contained elsewhere in this Form
10-K Annual Report.
EMPLOYEES
As of December 31, 1996 the Company employed approximately 4,200 persons
full time in the United States and 2,800 persons internationally. None of
the Company's United States employees are represented by unions. The
Company's Canadian warehouse employees are represented by a union. All of
the approximately 350 production employees at the Company's operations in
France and Italy and the approximately 1,100 production employees at the
Company's operations in Mexico are represented by unions. The Company
believes that its relations with its employees are satisfactory and that its
employees, many of whom have long experience with the Company, represent a
valuable resource.
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ITEM 2. PROPERTIES
The Company's principal properties as of December 31, 1996 are as follows:
BUILDING
SQUARE
LOCATION PRINCIPAL USE FOOTAGE
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St Genis Manufacture of lanterns and stoves, 2,070,000
Laval, France filling of gas cylinders, and assembly
of barbeques; office and warehouse
Wichita, KS Manufacture of lanterns and stoves 1,162,000
and insulated coolers and jugs;
research and development and design
operations; office and warehouse
New Braunfels, TX Manufacture of insulated coolers 338,000
and other plastic products
Lake City, SC Manufacture of sleeping bags 168,000
Springfield, MN Manufacture of air compressors 166,000
Cedar City, UT Manufacture of sleeping bags 160,000
Kearney, NE Manufacture/assembly of portable 155,000
generators and pressure washers;
office and warehouse
Pacola, OK Manufacture of outdoor folding furniture 123,000
Maize, KS Manufacture of propane cylinders and 116,000
machined parts
Chihuahua, Mexico Manufacture of smoke alarms and carbon 110,000
monoxide detectors
Hastings, NE Manufacture of pressure washers and 103,000
generators
New Ulm, MN Manufacture of air compressors 90,000
Morovis and Manufacture of daypacks, sports bags, 80,000
Orocovis, and related products
Puerto Rico
Chandler, AZ Manufacture of acrylic spas; office and 78,000
warehouse
Centenaro di Manufacture of butane lanterns, stoves 77,000
Lonato, Italy and heaters; office and warehouse
Stockport, England Manufacture of butane cylinders, torches, 60,000
lanterns and stoves; office and warehouse
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The Wichita, Kansas; New Braunfels, Texas; Lake City, South Carolina;
Cedar City, Utah; Pacola, OK; Chandler, Arizona; New Ulm and Springfield,
Minnesota; Centenaro di Lonato, Italy; and Stockport, England facilities are
owned by the Company. The owned facilities at Kearney, Nebraska reside on
land leased under three leases that expire in 2007 with options to extend for
three additional ten-year periods. The Maize, Kansas facility is leased by
the Company under leases that terminate in 2005. The Company has an option
to purchase this facility at the end of the lease period. The Hastings,
Nebraska facility is leased by the Company for a term that expires in 1999
with options to extend the lease for three additional one-year periods and an
option to purchase the facility during the lease term including renewal
periods. The Puerto Rico facilities in Morovis and Orocovis are leased for
terms that expire in 1999 and 2007, respectively. The warehouse portion of
St. Genis Laval, France is leased for terms that expire in 1998, the
remaining facility is owned. 48,000 square feet of the Chihuahua, Mexico
property are leased for terms that expire in 1998, and the remaining facility
is owned.
ITEM 3. LEGAL PROCEEDINGS
ENVIRONMENTAL MATTERS
GILBERT AND MOSLEY SITE. As a result of investigations undertaken in
1986, the Kansas Department of Health and Environment ("KDHE") discovered
that groundwater in the downtown Wichita area (the "Gilbert and Mosley Site")
was contaminated with volatile organic chemicals ("VOCs"). Coleman occupied
a facility within the boundaries of the Gilbert and Mosley Site. Subsequent
investigations in the area, including investigations in November 1988 by
Coleman, indicated that the groundwater beneath the Coleman property is
contaminated with VOCs. Coleman is in the process of remediating the
contamination on its property.
The City of Wichita has entered into a voluntary agreement with KDHE in
which the City agreed to investigate and then remediate contamination in the
Gilbert and Mosley Site. Coleman has entered into an agreement with KDHE in
which Coleman agreed to perform a similar study for the Coleman property and
to implement remedial activities at its property. In addition, Coleman
entered into an agreement with the City of Wichita in which Coleman agreed to
fund its proportionate share of the City's study and remediation of the
Gilbert and Mosley site.
All previously filed lawsuits alleging that properties in the downtown
Wichita area were diminished in value as a result of discharges of volatile
organic chemicals from Coleman's downtown Wichita facility have been settled
and dismissed.
MAIZE SITE. Coleman has undertaken a soil and groundwater investigation
at its facility in Maize, Kansas (the "Maize Site"). Results indicate that
limited VOC contamination is present in the groundwater under and to the
southeast of the facility. The data has been reported to the KDHE, and
Coleman has entered into an agreement with KDHE to implement appropriate
remedial actions. The remediation system has been installed, and Coleman is
in the process of remediating the contaminated groundwater.
NORTHEAST SITE. In 1990 Coleman undertook a soil and groundwater
investigation of its facility in northeast Wichita (the "Northeast Site").
Results indicated the presence of VOCs in the groundwater and soils. Although
some of the contamination may be a result of Coleman's operations at the
facility, the data also indicated that contamination was migrating onto the
Coleman property from up gradient sources. Coleman reported the initial
results of its study to KDHE. Coleman has also provided copies of all data
to the United States Environmental Protection Agency (the "EPA"), at its
request. The EPA has not initiated any actions against the Company with
respect to the Northeast Site. An agreement has been entered into with KDHE
to undertake additional investigatory activities, and an interim remediation
system has been installed. Additions to the interim remediation system are
planned for installation during 1997.
LAKE CITY SITE. In 1992 Coleman undertook a soil and groundwater
investigation of its facility in Lake City, South Carolina (the "Lake City
Site"). Results indicated limited VOC and fuel oil contamination in the soil
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and groundwater. In both instances the contamination appears to relate to
the activities of a previous occupant of the Lake City Site. The results of
the investigation have been reported to the appropriate South Carolina
environmental agency. Coleman has demanded that the prior owner and occupant
undertake appropriate action. At the state's request, Coleman has undertaken
additional investigations. Coleman has also commenced legal proceedings
against the prior owner.
The Company has adopted an environmental policy designed to ensure that
the Company operates in full compliance with applicable environmental
regulations and, where appropriate, the Company's own internal standards.
Coleman has also undertaken an environmental compliance audit program. The
Company makes expenditures that it believes are necessary to comply with
environmental management practices. Environmental expenditures that relate to
current operations are expensed or capitalized as appropriate and were not
significant in 1996 and are not expected to be significant in the foreseeable
future. Coleman has established reserves for environmental matters,
including the investigations, remedial activities and litigation described
above.
OTHER
The Company and Holdings are involved in various claims and legal
actions arising in the ordinary course of business, including environmental
matters and product liability lawsuits that are incidental to its business.
The Company believes the ultimate disposition of these matters is not
expected to have a material adverse effect on the Company's consolidated
financial condition or results of operations. The Company has entered into a
cross-indemnification agreement with Holdings pursuant to which it will
indemnify Holdings against all liabilities related to businesses transferred
to the Company, and Holdings will indemnify the Company against all
liabilities of Holdings other than liabilities related to the businesses
transferred to the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
fourth quarter of 1996.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is listed and traded on the New York Stock
Exchange under the symbol "CLN" and has unlisted trading privileges on the
Midwest Stock Exchange and the Pacific Stock Exchange. The following table
sets forth the high and low sales prices as reported on the NYSE Composite
Tape for the Company's Common Stock for each quarter in 1996 and 1995 as
adjusted retroactively for the June 1996 stock split effected in the form of
a dividend of one share of common stock for each outstanding share of common
stock.
1996 HIGH LOW
---- --------- ---------
First Quarter........................ $ 26 $ 16 5/16
Second Quarter....................... 23 1/4 19 13/16
Third Quarter........................ 21 5/8 13 3/4
Fourth Quarter....................... 15 1/4 11 3/4
1995
----
First Quarter........................ $ 19 15/16 $ 16 1/4
Second Quarter....................... 19 1/8 15 1/2
Third Quarter........................ 19 9/16 17 11/16
Fourth Quarter....................... 18 3/4 16 3/8
As of the close of business on March 10, 1997, there were approximately
800 holders of record of the Company's Common Stock.
The Company has not declared a cash dividend on its Common Stock
subsequent to the IPO and does not anticipate that any dividends will be
declared on its Common Stock in the foreseeable future. The declaration and
payment of dividends are subject to the discretion of the Board of Directors
of the Company and subject to certain limitations under Delaware law, and are
also limited by the terms of the Company's Credit Agreement. The Company's
Credit Agreement contains various restrictive covenants, including without
limitation, requirements for the maintenance of specified financial ratios
and 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 did not sell any unregistered securities during 1996.
12
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The selected financial data for the years presented in the table below
have been derived from the Consolidated Financial Statements. The selected
financial data should be read in conjunction with the Consolidated Financial
Statements and the notes thereto included elsewhere in this Form 10-K Annual
Report.
<TABLE>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED DECEMBER 31,
------------------------------------------------------
1996 1995 1994 1993 1992
---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Net revenues...................... $1,220,216 $933,574 $751,580 $575,415 $505,815
Cost of sales (a)................. 928,497 649,427 535,710 400,052 350,141
---------- -------- -------- -------- --------
Gross profit...................... 291,719 284,147 215,870 175,363 155,674
Selling, general and
administrative expenses (a)...... 291,669 174,688 128,466 102,038 92,409
Asset impairment charge (b)....... -- 12,289 -- -- --
Restructuring expense (c)......... -- -- 18,456 -- --
Interest expense, net............. 38,727 24,545 13,374 7,706 7,655
Amortization of goodwill and
deferred charges................. 10,473 7,745 6,209 5,330 5,474
Other expense, net................ 1,151 334 1,138 746 1,275
---------- -------- -------- -------- --------
(Loss) earnings before income
taxes, minority interest and
extraordinary item............... (50,301) 64,546 48,227 59,543 48,861
Income tax (benefit) expense (a).. (10,927) 24,479 14,747 24,569 21,506
Minority interest................. 1,872 -- -- -- --
---------- -------- -------- -------- --------
(Loss) earnings before
extraordinary item............... (41,246) 40,067 33,480 34,974 27,355
Extraordinary loss on early
extinguishment of debt, net of
income taxes..................... (647) (787) (677) -- --
---------- -------- -------- -------- --------
Net (loss) earnings............... $ (41,893) $ 39,280 $ 32,803 $ 34,974 $ 27,355
---------- -------- -------- -------- --------
---------- -------- -------- -------- --------
Net (loss) earnings
per common share................. $ (0.79) $ 0.74 $ 0.61 $ 0.65 $ 0.52
---------- -------- -------- -------- --------
---------- -------- -------- -------- --------
Weighted average common
shares outstanding............... 53,197 53,226 53,436 53,909 52,676
---------- -------- -------- -------- --------
---------- -------- -------- -------- --------
December 31,
------------------------------------------------------
1996 1995 1994 1993 1992
---------- -------- -------- -------- --------
BALANCE SHEET DATA:
Total assets...................... $1,160,086 $844,487 $712,265 $526,706 $443,552
Long-term debt
(including current portions)..... 583,613 355,257 291,175 168,858 127,098
Total stockholders' equity........ 252,945 292,342 253,363 228,104 200,929
</TABLE>
_____________
(a) During 1996, the Company recorded restructuring and certain other charges
totaling $52,516, net of tax. Cost of sales includes a pre-tax charge of
$44,005, selling, general and administrative expenses include a pre-tax
charge of $30,195, and the provision for income tax benefit includes
$21,684 of net tax benefits resulting from these charges.
(b) Asset impairment charge reflects primarily the non-recurring charge taken
in connection with the adoption of FAS 121.
(c) Restructuring expense reflects primarily the non-recurring charge taken in
connection with the German Restructuring which includes severance costs,
commitments to third parties and write-downs of leasehold improvements and
other assets to estimated realizable values.
13
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
Consolidated Financial Statements and the notes thereto included, or
incorporated by reference, elsewhere in this Form 10-K Annual Report.
RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996 COMPARED WITH THE YEAR ENDED DECEMBER 31, 1995
Net revenues in 1996 and 1995 were $1,220.2 million and $933.6 million,
respectively, an increase of $286.6 million, or 30.7% with outdoor recreation
products increasing by $170.7 million or 24.8% and hardware products
increasing $115.9 million or 47.4%. Geographically, United States and Canada
revenues increased 15.6%, while international revenues increased 79.5%.
Outdoor recreation products revenues increased $170.7 million or 24.8%.
Excluding the impact of the Camping Gaz and Sierra acquisitions, the effect of
a weaker yen in 1996 as compared to 1995 and the one-time 1995 thermo-electric
cooler premium promotion, comparable outdoor recreation product revenues
increased approximately 6.4%. Significant revenue gains were experienced in
the backpack, tent and sleeping bag businesses, primarily in international
markets. In addition, the Company successfully introduced a new line of
camping accessories and expanded its heater and light businesses. These gains
were substantially offset by poor weather conditions during the camping season
in North America and the economic downturn experienced in Japan, both of
which adversely affected the demand for the Company's camping products.
Hardware products revenues increased 47.4% or $115.9 million. Excluding the
impact of the Seatt acquisition, comparable hardware products revenues increased
approximately 13.8%, driven by strong generator and pressure washer sales.
Gross margins, excluding the impact of restructuring and other charges
totaling $44.0 million which are more fully discussed below, decreased as a
percent of sales by 2.9 percentage points from 30.4% in 1995 to 27.5% in 1996.
This decrease is primarily the result of lower margins associated with the
Company's backpack business and the unfavorable effects of product mix
including significantly higher sales of pressure washers at lower gross margin
percentages and lower sales of camping products which tend to have higher
gross margin percentages than the Company's average.
Selling, General and Administrative ("SG&A") expenses, excluding $30.2
million of restructuring and other charges as discussed more fully below, were
$261.5 million in 1996 compared to $174.7 million in 1995, an increase of
49.7%. The increase in SG&A expenses primarily reflects SG&A expenses
associated with the Camping Gaz and Seatt business acquisitions and to a
lesser extent increased advertising and marketing expenses.
During 1996, the Company recorded restructuring and certain other charges
totaling $52.5 million net of tax. The restructuring charges total $45.1
million, net of tax, and consist of charges to a) integrate the Camping Gaz
and Coleman operations into a single global recreation products business, b)
exit the low-end electric pressure washer business, c) exit a portion of the
Company's battery powered light business and settle certain litigation with
respect to this business, and d) increase the valuation reserve for certain
foreign deferred income tax assets. Other charges of $7.4 million, net of
tax, relate to certain asset write-offs and other tax matters. These other
charges were incurred in the Company's normal course of business, although the
amounts involved are higher than similar charges that the Company has recorded
in prior periods. Cost of sales includes a pre-tax charge of $44.0 million,
SG&A expenses includes a pre-tax charge of $30.2 million, and the provision
for income tax expense includes $21.7 million of tax benefits resulting
from these charges, net of the effect of an increase in the valuation reserve
related to certain foreign deferred tax assets and other foreign tax charges.
14
<PAGE>
Interest expense was $38.7 million in 1996 compared with $24.5 million in
1995, an increase of $14.2 million. This increase was primarily the result of
higher borrowings to fund business acquisitions and support the increased
working capital.
The Company recorded an income tax benefit in 1996 of $10.9 million, which
includes the net tax benefits of $21.7 million associated with restructuring
and other charges discussed above. Excluding the net tax benefit from
restructuring and other charges, the provision for income taxes would have
been $10.8 million or 45.0% of pre-tax earnings, excluding restructuring and
other charges, as compared to a provision for income tax expense of $24.5
million or 37.9% of pre-tax earnings in 1995. The increase is primarily due
to losses of certain foreign subsidiaries for which the Company has not
recognized a tax benefit and the impact of non-deductible goodwill
amortization.
The Company obtained control of approximately 70% of Camping Gaz in March
1996 and obtained control of the remaining 30% in July 1996. Accordingly, the
minority interest for 1996 primarily represents the minority shareholders'
approximate 30% proportionate share of the results of operations of Camping
Gaz for the period March through June of 1996. Minority interest also
includes the interests of minority shareholders in certain subsidiary
operations of Camping Gaz.
During the second quarter of 1996, in connection with the renegotiation of
its then existing credit agreement, the Company recorded an extraordinary loss
of $1.1 million ($0.6 million after taxes, or $0.01 per share) which
represents a write-off of the related unamortized financing costs associated
with its then existing credit agreement. During the third quarter of 1995,
the Company completed a $200.0 million private placement debt issue. In
connection with the private placement, the Company renegotiated its previous
credit agreement and recorded an extraordinary loss of $1.3 million ($0.8
million after taxes, or $0.01 per share) which represents a write-off of the
related unamortized financing costs associated with its previous credit
agreement.
YEAR ENDED DECEMBER 31, 1995 COMPARED WITH THE YEAR ENDED DECEMBER 31, 1994
Net revenues in 1995 and 1994 were $933.6 million and $751.6 million,
respectively, an increase of $182.0 million, or 24.2% with outdoor recreation
products increasing by $125.2 million or 22.2% and hardware products
increasing $56.8 million or 30.2%. Geographically, United States and Canada
revenues increased 24.0%, while international revenues increased 25.1%.
Outdoor recreation products revenues increased $125.2 million or 22.2%.
The sales increase includes the effects of a full twelve months of the
Eastpak business, a business acquired in November 1994. The sales increase
also reflects strong performance in the sleeping bag, tent, and the core
camping businesses, particularly in Japan. Sales of coolers and jugs
increased overall in part due to a thermo-electric cooler premium promotion
that began in early 1995. In addition, price increases in selected areas
also helped to compensate for the loss of revenues attributable to the German
operations which were sold in the third quarter of 1994. Hardware products
revenues increased 30.2% or $56.8 million. The sales increase includes the
effects of a full twelve months of the compressor business, a business
acquired in April of 1994. Pressure washer unit sales continued to increase
although per unit sales prices declined somewhat in the latter half of 1995
in response to a more competitive market. In addition, generator sales were
up primarily as a result of storm activity in the latter half of 1995.
Gross margins increased as a percent of sales by 1.7 percentage points
from in 28.7% in 1994 to 30.4% in 1995. The margin improvement is due to the
favorable effects of the mix of products sold including higher margin new
products. Gross margins were negatively impacted in 1995 due to manufacturing
inefficiencies, integration costs and pricing issues at the Company's
Brazilian operations. Cost of sales in 1995 also includes a $6.3 million
benefit resulting from the effects of marking to market the Company's forward
exchange contracts pursuant to the guidance of the Emerging Issues Task Force
(the "EITF") in its consensus opinion of EITF 95-2 "Determination of What
Constitutes a Firm Commitment for Foreign Currency Transactions Not Involving
a Third Party", which was adopted in the fourth quarter of 1995. Prior to the
adoption of EITF 95-2, the Company routinely used forward exchange contracts
to hedge certain intercompany commitments and deferred recognition
15
<PAGE>
of forward exchange contract gains and losses until the component of the
related hedge transaction was completed and recognized in income. Cost of
sales in 1994 also includes a $2.2 million charge resulting from an increase
in the Company's reserves for estimated costs of environmental remediation
efforts.
SG&A expenses were $174.7 million in 1995, compared to $128.5 million in
1994, an increase of 36.0%. The increase in SG&A expenses is primarily
related to the Company's selling and marketing organization, SG&A expenses
associated with the businesses acquired in 1994, and expenses associated with
the relocation of Corporate, certain International and Hardware offices.
Reduced annual expenses associated with certain insurance programs helped
reduce the overall increase in SG&A.
During the fourth quarter of 1995, the Company adopted Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of" ("FAS 121"). In
connection with the adoption of FAS 121 the Company recognized an asset
impairment charge of $12.3 million ($9.9 million, $0.19 per share, after tax)
related to its Brazilian operations. The Brazilian operations had not
performed to the Company's expectations since acquisition of this business in
April of 1994, and, in the fourth quarter of 1995, the Company initiated
actions to reduce the operating losses in Brazil. These actions included
replacing management, increasing prices, dramatically downsizing the
manufacturing operations and reducing SG&A and other overhead. Because of
these actions, the Company performed an impairment review pursuant to the
guidelines set forth in FAS 121 and concluded that a recognition of an asset
impairment charge was appropriate.
During September 1994, the Company restructured its German manufacturing
operations in a move to strengthen its European business and eliminate
unprofitable operations. The German restructuring resulted in a one-time
charge of approximately $18.0 million before tax and included severance costs
of $1.5 million, commitments to third parties of approximately $5.5 million,
and write-downs of leasehold improvements and other assets to estimated
realizable values aggregating $11.0 million. In connection with the
restructuring, the Company recognized tax benefits of approximately $10.9
million relating to the write-off of the Company's investment in its German
operations. The Company also announced a plan to change from manufacturing to
sourcing for certain textile product lines and to exit the market for personal
flotation devices. This plan resulted in a $0.5 million pretax charge.
Interest expense was $24.5 million in 1995 and $13.4 million in 1994, an
increase of $11.1 million. This increase was primarily the result of higher
borrowings in 1995 necessary to support the Company's acquisitions and
increased working capital needs related to the growth of the Company and, to a
lesser extent, higher interest rates in 1995.
The Company's effective income tax rate was 37.9% in 1995 compared with
30.6% in 1994. The increase in the effective tax rate in 1995 as compared to
1994 is primarily due to higher taxes on foreign earnings in the 1995 period
as compared to the 1994 period which was favorably impacted by the tax benefits
arising from permanent basis differences associated with the restructuring of
the German operations. The effective income tax rate in 1995 also reflects
the favorable impact of tax benefits associated with the Company's
manufacturing operations in Puerto Rico, which were acquired in late 1994.
During the third quarter of 1995, the Company completed a $200.0 million
private placement debt issue. In connection with the private placement, the
Company renegotiated its previous credit agreement and recorded an
extraordinary loss of $1.3 million ($0.8 million after taxes, or $0.01 per
share), which represents a write-off of the related unamortized financing
costs associated with its previous credit agreement. During the second
quarter of 1994, in connection with the renegotiation of its then existing
credit agreement, the Company recorded an extraordinary loss of $1.1 million
($0.7 million after taxes, or $0.01 per share) which represents a write-off of
the related unamortized financing costs associated with its then existing
credit agreement.
16
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's operating activities used $9.3 million of cash during the
year ended December 31, 1996 and provided $2.2 million and $19.9 million for
the years ended December 31, 1995 and 1994, respectively. At December 31,
1996, receivables were approximately equal to 1995 year-end levels, excluding
the amount acquired in connection with the Camping Gaz and Seatt acquisitions
and the effect of the restructuring and other charges described above.
Inventories, excluding the amount acquired in connection with the Camping Gaz
and Seatt acquisitions and the effect of the restructuring and other charges
described above, increased by $42.4 million during the 1996 period primarily
because of lower than expected sales as described above. The Company's net
cash used for investing activities was $200.3 million, $61.5 million, and
$130.0 million for the years ended December 31, 1996, 1995 and 1994,
respectively. The Company's capital expenditures were $41.3 million in the
year ended December 31, 1996, and the Company used $161.9 million of cash for
business acquisitions during the year ended December 31, 1996. For 1997, the
Company expects capital expenditures to be within the range of $30.0 to $40.0
million.
Net cash provided by financing activities was $210.5 million for the year
ended December 31, 1996 and consisted primarily of increases in long-term
borrowings. The Company paid $2.3 million to acquire 100,000 shares of its
common stock in the open market during 1996.
The Company's working capital requirements are currently funded by cash
flow from operations and domestic and foreign bank lines of credit. In April
1996, the Company amended its credit agreement to: a) provide a term loan of
French Franc 385.1 million ($75.0 million at the then current exchange rates),
b) provide an unsecured revolving credit facility in an amount of $275.0
million, c) allow for the Camping Gaz acquisition and d) extend the maturity
of the credit agreement (as amended, the "Company Credit Agreement"). Due to
the restructuring and other charges as discussed previously and lower than
expected operating results, the Company further amended the Company Credit
Agreement in October 1996 and again in March 1997.
Availability under 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 December 31, 1996, $128.1
million would have been available for borrowings under the Company Credit
Agreement. 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. In addition, 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 Inc.
The indentures governing this indebtedness contain various covenants including
a covenant placing certain limitations on the Company's indebtedness.
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
17
<PAGE>
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.
Coleman financed the acquisition of the shares of Camping Gaz with the net
proceeds from (i) a private placement issuance and sale of $85.0 million
aggregate principal amount of 7.10% Senior Notes, Series A, due 2006 (the
"Notes due 2006") and (ii) a private placement issuance and sale of $75.0
million aggregate principal amount of 7.25% Senior Notes, Series B, due 2008
(the "Notes due 2008"). The Notes due 2006 bear interest at the rate of 7.10%
per annum payable semiannually, and the principal amount is payable in annual
installments of $12.1 million commencing June 13, 2000 with a final payment
due on June 13, 2006. If there is a default, the interest rate will be the
greater of (i) 9.10% or (ii) 2% above the prime interest rate. The Notes due
2008 bear interest at the rate of 7.25% per annum payable semiannually, and
the principal amount is payable in annual installments of $15.0 million
commencing June 13, 2004 with a final payment due on June 13, 2008. If there
is a default, the interest rate will be the greater of (i) 9.25% or (ii) 2%
above the prime interest rate. The Notes due 2006 and the Notes due 2008 are
unsecured and are subject to various restrictive covenants, including without
limitation, requirements for the maintenance of specified financial ratios and
levels of consolidated net worth and certain other provisions limiting the
incurrence of additional debt and sale and leaseback transactions under the
terms of the Note Purchase Agreement. The Notes due 2006 and the Notes due
2008 and the Company's 7.26% Senior Notes due 2007 shall become secured if the
Company Credit Agreement becomes secured as discussed above.
The Company's international operations are located primarily in Japan,
Europe, and Canada, which are not considered to be highly inflationary
environments. The Company 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.
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-K are subject to certain risks and
uncertainties. Actual results could differ materially from current
expectations. Among the factors that could affect the Company's actual
results and could cause results to differ from those contained in the
forward-looking statements are the success of the Company's restructuring
programs, negative external factors like adverse weather in North America or
other regions and possible consumer spending decline in Japan, and the
possibility the Company may be required to renegotiate its credit agreements.
Other factors could also cause actual results to vary materially from the
future results covered in such forward-looking statements.
INFLATION
In general, manufacturing costs are affected by inflation and the effects
of inflation may be experienced by the Company in future periods. Management
believes, however, that such effect has not been material to the Company
during the past three years.
18
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See the consolidated financial statements listed in the accompanying List
of Financial Statements and Schedules on Page F-1 herein. Information
required by schedules called for under Regulation S-X is either not applicable
or is included in the consolidated financial statements or notes thereto.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
The information required by Part III, Items 10 through 13, of Form 10-K is
incorporated by reference from the registrant's definitive proxy statement for
its 1997 annual meeting of shareholders, which is to be filed pursuant to
Regulation 14A no later than 120 days following the end of the fiscal year
reported upon.
19
<PAGE>
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1) and (2) Financial Statements and Schedule.
See List of Financial Statements and Schedules which appears on page
F-1 herein.
(3) Exhibits
Exhibit No. Description
- ----------- -----------
3.1 Certificate of Incorporation of The Coleman Company, Inc.,
filed with the Secretary of State of Delaware on December 17,
1991 (incorporated by reference to Exhibit 3.1 to The Coleman
Company, Inc. 1993 Annual Report on Form 10-K (the "1993
Coleman 10-K")).
3.2 Bylaws of The Coleman Company, Inc., as adopted December 18, 1991
(incorporated by reference to Exhibit 3.2 to the 1993 Coleman
10-K).
4.1 Amended and Restated Credit Agreement dated as of August 3,
1995 among the Company, the Lenders party thereto, the Issuing
Bank, the Agent, and the Co-Agents (the "Company Credit
Agreement") (incorporated by reference to Exhibit 4.2 to The
Coleman Company Inc. Form 10-Q for the period ended June 30,
1995 (the "Company's June 30, 1995 Form 10-Q")).
4.2 Amendment No. 1 dated as of April 30, 1996 to the Company
Credit Agreement (incorporated by reference to Exhibit 4.1 to
The Coleman Company, Inc. Form 10-Q for the period ended March
31, 1996 (the "Company's March 31, 1996 Form 10-Q")).
4.3 Amendment No. 2 dated as of April 30, 1996 to the Company
Credit Agreement (incorporated by reference to Exhibit 4.2 to
the Company's March 31, 1996 Form 10-Q).
4.4 Amendment No. 3 dated as of May 29, 1996 to the Company Credit
Agreement (incorporated by reference to Exhibit 4.1 to The
Coleman Company, Inc. Form 10-Q for the period ended September
30, 1996 (the "Company's September 30, 1996 Form 10-Q").
4.5 Amendment No. 4 dated as of October 25, 1996 to the Company
Credit Agreement (incorporated by reference to Exhibit 4.2 to
the Company's September 30, 1996 Form 10-Q).
4.6X Amendment No. 5 dated as of March 7, 1997 to the Company Credit
Agreement.
4.7 Purchase Agreement dated as of August 3, 1995 among the Company
and Purchasers party thereto (the "Notes Agreement")
(incorporated by reference to Exhibit 4.3 to the Company's June
30, 1995 Form 10-Q).
4.8 Note Purchase Agreement dated as of May 1, 1996 among the
Company and Purchasers party thereto (incorporated by reference
to Exhibit 4.1 to the Company's Current Report on Form 8-K
dated June 28, 1996).
20
<PAGE>
4.9 Specimen copy of definitive certificate of Common Stock of The
Coleman Company, Inc., par value $.01 per share (incorporated
by reference to Exhibit 4.4 to The Coleman Company, Inc. 1992
Annual Report on Form 10-K (the "1992 Coleman 10-K")).
10.1 Cross-Indemnification Agreement dated as of February 26, 1992
among New Coleman Holdings Inc., Coleman Finance Holdings Inc.,
the Company and certain subsidiaries of New Coleman Holdings
Inc. and the Company (the "Cross Indemnification Agreement")
(incorporated by reference to Exhibit 10.1 to the 1992 Coleman
10-K).
10.2 Amendment No. 1 dated as of December 30, 1992 to the
Cross-Indemnification Agreement (incorporated by reference to
Exhibit 10.2 to the 1992 Coleman 10-K).
10.3 Reimbursement Agreement dated as of February 26, 1992 between
the Company and MacAndrews Holdings (incorporated by reference
to Exhibit 10.4 to the 1992 Coleman 10-K).
10.4 Subordination Agreement dated as of March 4, 1992 among New
Coleman Holdings Inc., Coleman Powermate, Inc., Coleman Spas,
Inc., the Company, the Lenders party to the Company Credit
Agreement and Credit Suisse, as agent (the "Subordination
Agreement") (incorporated by reference to Exhibit 10.17 to the
1992 Coleman 10-K).
10.5 Amendment No. 1 dated as of December 30, 1992, to the
Subordination Agreement (incorporated by reference to Exhibit
10.18 to the 1992 Coleman 10-K).
10.6 Tax Allocation Agreement dated as of August 24, 1990 among
MacAndrews Holdings, New Coleman Holdings Inc. and subsidiaries
of New Coleman Holdings Inc. (incorporated by reference to
Exhibit 10.29 to the 1992 Coleman 10-K).
10.7 Amendment No. 1 dated as of February 26, 1992 to the Tax
Allocation Agreement (incorporated by reference to Exhibit
10.30 to the 1992 Coleman 10-K).
10.8 Amendment No. 2 dated as of December 30, 1992 to the Tax
Allocation Agreement (incorporated by reference to Exhibit
10.31 to the 1992 Coleman 10-K).
10.9 Amendment No. 3 dated as of May 27, 1993 to the Tax Allocation
Agreement (incorporated by reference to Exhibit 10.45 to the
Coleman Holdings Inc. S-1, filed on August 6, 1993 (the
"Holdings S-1")).
10.10 Tax Sharing Agreement II dated as of February 26, 1992, among
Mafco, Coleman Finance Holdings Inc., the Company and certain
subsidiaries of the Company (incorporated by reference to
Exhibit 10.25 to the 1992 Coleman 10-K).
10.11 Amendment No. 1 dated as of December 30, 1992 to the Tax
Sharing Agreement II (incorporated by reference to Exhibit
10.26 to the 1992 Coleman 10-K).
10.12 Supplemental Tax Sharing Agreement dated as of February 26,
1992, between the Company and MacAndrews Holdings (incorporated
by reference to Exhibit 10.32 to the 1992 Coleman 10-K).
10.13 Tax Sharing Agreement III dated as of February 26, 1992 among
Mafco, New Coleman Holdings Inc., Coleman Finance Holdings Inc.
and subsidiaries of Coleman
21
<PAGE>
Finance Holdings Inc. (incorporated by reference to Exhibit
10.27 to the 1992 Coleman 10-K).
10.14 Amendment No. 1 dated as of December 30, 1992 to the Tax
Sharing Agreement III (incorporated by reference to Exhibit
10.28 to the 1992 Coleman 10-K).
10.15 Tax Sharing Agreement V dated as of May 27, 1993 among Mafco,
Coleman Worldwide, the Company and certain subsidiaries of the
Company (incorporated by reference to Exhibit 10.38 to the
Holdings S-1).
10.16 Tax Sharing Agreement VI dated as of May 27, 1993 between Mafco
and Coleman Worldwide (incorporated by reference to Exhibit
10.39 to the Holdings S-1).
10.17 Tax Sharing Termination Agreement dated as of May 27, 1993
among Mafco, New Coleman Holdings Inc., Coleman Finance
Holdings Inc., the Company and subsidiaries of the Company and
Coleman Finance Holdings Inc. (incorporated by reference to
Exhibit 10.40 to the Holdings S-1).
10.18 Registration Rights Agreement dated as of March 4, 1992 among
the Company, Coleman Finance Holdings Inc. and Credit Suisse,
as agent (incorporated by reference to Exhibit 10.33 to the
1992 Coleman 10-K).
10.19 Worldwide Registration Rights Agreement dated as of May 27,
1993 among Coleman Worldwide, the Company, the Lenders Party
thereto and the Agent (incorporated by reference to Exhibit
10.47 to the Holdings S-1).
10.20 Asset Purchase Agreement dated as of October 10, 1994, by and
among E. Acquisition Corporation, the Company, Eastpak, Inc.
and Mark Goldman (incorporated by reference to Exhibit 10.1 to
the Company's Current Report on Form 8-K dated November 2, 1994
(the "Coleman 8-K")).
10.21 Stock Purchase Agreement dated as of October 10, 1994, by and
among M. Acquisition Corporation, the Company and Mark Goldman
(incorporated by reference to Exhibit 10.2 to the Coleman 8-K).
10.22 Contingent Payment Agreement dated as of October 10, 1994, by
and among E. Acquisition Corporation, M. Acquisition
Corporation, the Company and Mark Goldman (incorporated by
reference to Exhibit 10.3 to the Coleman 8-K).
10.23 Agreement for Purchase and Sale of Assets of Seatt Corporation
dated October 26, 1995 by and among James McCrink, Seatt
Corporation, Seller, and The Coleman Company, Inc., Purchaser
(incorporated by reference to Exhibit 10.1 to the Company's
Current Report on Form 8-K dated January 26, 1996).
10.24 Share Purchase Agreement dated as of February 27, 1996 by and
among Butagaz S.N.C. and Bafiges S.A. (incorporated by
reference to Exhibit 10.26 to The Coleman Company, Inc. 1995
Annual Report on Form 10-K (the "1995 Coleman 10-K")).
10.25 Amendment to the Share Purchase Agreement dated as of February
27, 1996 by and among Bafiges S.A. and Butagaz S.N.C.
(incorporated by reference to Exhibit 10.27 to the 1995 Coleman
10-K).
22
<PAGE>
10.26 Shareholders Agreement dated as of February 27, 1996 by and
among Butagaz S.N.C., The Coleman Company, Inc. and Bafiges
S.A. (incorporated by reference to Exhibit 10.28 to the 1995
Coleman 10-K).
10.27 Agreement dated as of February 27, 1996 by and between Shell
International Petroleum Company Limited, Butagaz S.N.C. on the
first part, and Bafiges S.A. and The Coleman Company, Inc. on
the second part (incorporated by reference to Exhibit 10.29 to
the 1995 Coleman 10-K).
10.28* Non-Competition, Confidentiality and Release Agreement between
the Company and Robert L. Ring, dated as of February 11, 1994
(incorporated by reference to Exhibit 10.46 to the 1993 Coleman
10-K).
10.29* Employment Agreement dated as of January 1, 1996 between the
Company and George Mileusnic (incorporated by reference to
Exhibit 10.44 to the 1995 Coleman 10-K).
10.30* First Amendment dated August 1, 1996 to Employment Agreement
effective as of January 1, 1996, by and between The Coleman
Company, Inc. and George Mileusnic (incorporated by reference
to Exhibit 10.5 to the Company's September 30, 1996 Form 10-Q).
10.31* Employment Agreement dated as of January 1, 1996 between the
Company and Larry E. Sanford (incorporated by reference to
Exhibit 10.46 to the 1995 Coleman 10-K).
10.32* First Amendment dated August 1, 1996 to Employment Agreement
effective as of January 1, 1996, by and between The Coleman
Company, Inc. and Larry E. Sanford (incorporated by reference
to Exhibit 10.7 to the Company's September 30, 1996 Form 10-Q).
10.33* Employment Agreement dated as of January 1, 1996 between the
Company and Michael N. Hammes (incorporated by reference to
Exhibit 10.47 to the 1995 Coleman 10-K.
10.34* Corrected and Restated Employment Agreement dated as of January
1, 1996 between the Company and Michael N. Hammes (incorporated
by reference to Exhibit 10.2 to the Company's March 31, 1996
Form 10-Q).
10.35* First Amendment dated July 1, 1996 to Employment Agreement
effective January 1, 1996 between the Company and Michael N.
Hammes (incorporated by reference to Exhibit 10.4 to the
Company's June 30, 1996 Form 10-Q).
10.36* Second Amendment dated August 1, 1996 to Employment Agreement
effective as of January 1, 1996, by and between The Coleman
Company, Inc. and Michael N. Hammes (incorporated by reference
to Exhibit 10.3 to the Company's September 30, 1996 Form 10-Q).
10.37* Letter Agreement between the Company and Lawrence M. Jones
dated as of January 14, 1994 (incorporated by reference to
Exhibit 10.57 to the 1993 Coleman 10-K).
10.38* Employment Agreement dated as of January 20, 1995 between the
Company and Frederick J. Fritz (incorporated by reference to
Exhibit 10.41 to the 1994 Coleman 10-K).
23
<PAGE>
10.39* Employment Agreement dated as of January 1, 1996 between the
Company and Gerald E. Brown (incorporated by reference to
Exhibit 10.48 to the 1995 Coleman 10-K).
10.40* First Amendment dated August 1, 1996 to Employment Agreement
effective as of January 1, 1996, by and between The Coleman
Company, Inc. and Gerry E. Brown (incorporated by reference to
Exhibit 10.8 to the Company's September 30, 1996 Form 10-Q).
10.41* Employment Agreement dated as of January 1, 1996 between the
Company and Patrick McEvoy (incorporated by reference to
Exhibit 10.1 to the Company's March 31, 1996 Form 10-Q).
10.42* First Amendment dated August 1, 1996 to Employment Agreement
effective as of January 1, 1996, by and between The Coleman
Company, Inc. and Patrick McEvoy (incorporated by reference to
Exhibit 10.6 to the Company's September 30, 1996 Form 10-Q).
10.43* Employment Agreement dated as of January 1, 1996 between the
Company and David Stearns (incorporated by reference to Exhibit
10.50 to the 1995 Coleman 10-K).
10.44* First Amendment dated August 1, 1996 to Employment Agreement
effective as of January 1, 1996, by and between The Coleman
Company, Inc. and David Stearns (incorporated by reference to
Exhibit 10.4 to the Company's September 30, 1996 Form 10-Q).
10.45* Employment Agreement dated as of May 1, 1996 between the
Company and Frederik van den Bergh (incorporated by reference
to Exhibit 10.1 to the Company's June 30, 1996 Form 10-Q).
10.46* First Amendment dated August 1, 1996 to Employment Agreement
effective as of May 1, 1996, by and between The Coleman
Company, Inc. and Frederik van den Bergh (incorporated by
reference to Exhibit 10.2 to the Company's September 30, 1996
Form 10-Q).
10.47*X Second Amendment dated August 1, 1996 to Employment Agreement
effective as of May 1, 1996, by and between The Coleman
Company, Inc. and Frederik van den Bergh.
10.48* Employment Agreement dated as of August 1, 1996 between the
Company and Steven F. Kaplan (incorporated by reference to
Exhibit 10.2 to the Company's June 30, 1996 Form 10-Q).
10.49* Addendum dated August 3, 1996 and effective August 1, 1996 to
Employment Agreement dated as of August 1, 1996 between the
Company and Steven F. Kaplan (incorporated by reference to
Exhibit 10.3 to the Company's June 30, 1996 Form 10-Q).
10.50* First Amendment dated August 1, 1996 to Employment Agreement
effective as of August 1, 1996, by and between The Coleman
Company, Inc. and Steven F. Kaplan (incorporated by reference
to Exhibit 10.1 to the Company's September 30, 1996 Form 10-Q).
24
<PAGE>
10.51* The Coleman Company, Inc. Performance Incentive Plan for 1996
(incorporated by reference to Exhibit 10.53 to the 1995 Coleman
10-K).
10.52* The Coleman Company, Inc. Executive Annual Incentive Plan for
1995 (incorporated by reference to Exhibit 10.49 to the 1994
Coleman 10-K).
10.53*X The Coleman Company, Inc. 1996 Stock Option Plan, as amended.
10.54* The Coleman Retirement Salaried Incentive Savings Plan
(incorporated by reference to Exhibit 10.3 to the Company's
March 31, 1996 Form 10Q).
10.55* The Coleman Retirement Incentive Savings Plan (the "Savings
Plan") (incorporated by reference to Exhibit 10.54 to the 1995
Coleman 10-K).
10.56* First Amendment dated as of October 11, 1994 to the Savings
Plan (incorporated by reference to Exhibit 10.55 to the 1995
Coleman 10-K).
10.57* Second Amendment dated as of January 1, 1995 to the Savings
Plan (incorporated by reference to Exhibit 10.56 to the 1995
Coleman 10-K).
10.58* Third Amendment dated as of December 14, 1995 to the Savings
Plan (incorporated by reference to Exhibit 10.57 to the 1995
Coleman 10-K).
10.59* Fourth Amendment dated as of December 14, 1995 to the Savings
Plan (incorporated by reference to Exhibit 10.58 to the 1995
Coleman 10-K).
10.60* Fifth Amendment dated as of January 1, 1996 to the Savings Plan
(incorporated by reference to Exhibit 10.59 to the 1995 Coleman
10-K).
10.61* Amendment dated as of December 14, 1995 to the Savings Plan
(incorporated by reference to Exhibit 10.60 to the 1995 Coleman
10-K).
10.62* Amendment dated as of December 14, 1995 to the Savings Plan
(incorporated by reference to Exhibit 10.61 to the 1995 Coleman
10-K).
10.63* Amendment dated as of January 1, 1996 to the Savings Plan
(incorporated by reference to Exhibit 10.62 to the 1995 Coleman
10-K).
10.64* New Coleman Holdings Inc. Excess Benefit Plan dated as of
January 1, 1995 (incorporated by reference to Exhibit 10.1 to
the Company's June 30, 1995 Form 10-Q).
10.65* The New Coleman Company, Inc. Retirement Plan for Salaried
Employees (the "Retirement Plan") (incorporated by reference to
Exhibit 10.63 to the 1995 Coleman 10-K).
10.66* Amendment dated as of October 17, 1994 to the Retirement Plan
(incorporated by reference to Exhibit 10.64 to the 1995 Coleman
10-K).
10.67* Amendment dated as of December 14, 1995 to the Retirement Plan
(incorporated by reference to Exhibit 10.65 to the 1995 Coleman
10-K).
25
<PAGE>
10.68* Amendment dated as of December 14, 1995 to the Retirement Plan
(incorporated by reference to Exhibit 10.66 to the 1995 Coleman
10-K).
10.69* Amendment dated as of October 12, 1995 to the Retirement Plan
(incorporated by reference to Exhibit 10.67 to the 1995 Coleman
10-K).
10.70* Amendment dated as of January 1, 1996 to the Retirement Plan
(incorporated by reference to Exhibit 10.68 to the 1995 Coleman
10-K).
10.71* Amendment dated as of December 31, 1995 to the Retirement Plan
(incorporated by reference to Exhibit 10.69 to the 1995 Coleman
10-K).
10.72* The Coleman Company, Inc. Special Executive Retirement Plan for
the benefit of Robert L. Ring, dated as of April 11, 1994
(incorporated by reference to Exhibit 10.2 to the Company's
March 31, 1994 Form 10-Q).
10.73* The Coleman Company, Inc. Consolidated Supplemental Retirement
Plan, dated as of January 1, 1996 (incorporated by reference to
Exhibit 10.73 to the 1995 Coleman 10-K).
10.74* First Amendment dated July 1, 1996 to the Consolidated
Supplemental Retirement Plan adopted January 1, 1996
(incorporated by reference to Exhibit 10.5 to the Company's
June 30, 1996 Form 10-Q).
10.75* The Coleman Company, Inc. Executive Employees Deferred
Compensation Plan, as amended by the First Amendment thereto
(incorporated by reference to Exhibit 10.11 to the Coleman S-1).
10.76* The Coleman Company, Inc. 1992 Stock Option Plan (incorporated
by reference to Exhibit 10.13 to Amendment No. 2 to the Coleman
S-1).
10.77* The Coleman Company, Inc. 1993 Stock Option Plan (incorporated
by reference to Exhibit 10.18 to The Coleman Company, Inc.
Quarterly Report on Form 10-Q for the quarter ended September
30, 1993, filed on November 15, 1993).
10.78* The Coleman Company, Inc. 1996 Stock Option Plan (incorporated
by reference to Exhibit 10.78 to the 1995 Coleman 10-K).
10.79*X Employment Agreement dated as of November 1, 1994 between E.
Acquisition Corporation and Mark Goldman.
10.80*X Employment Agreement dated as of November 1, 1994 between M.
Acquisition Corporation and Mark Goldman.
10.81*X Letter Agreement dated as of February 28, 1997 between the Company
and Michael N. Hammes.
21.1X Subsidiaries of the Company.
23.1X Consent of Independent Auditors.
26
<PAGE>
24.1X Powers of Attorney executed by Ronald O. Perelman, Donald G.
Drapkin, Jordan L. Haines, Lawrence M. Jones, Robert J. Lanigan,
Robert S. Miller, John A. Moran, Bruce Slovin, William H. Spoor.
27X Financial Data Schedule
- ------------------------
* Management Contracts and Compensatory Plans
X Filed herewith
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended December
31, 1996.
27
<PAGE>
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: March 27, 1997 By: /s/ JERRY W. LEVIN
-------------------- ---------------------------------
Jerry W. Levin
Chairman of the Board,
Acting Chief Executive
Officer, and Director
Date: March 27, 1997 By: /s/ STEVEN F. KAPLAN
-------------------- ---------------------------------
Steven F. Kaplan
Executive Vice President and
Chief Financial Officer
Date: March 27, 1997 By: /s/ MICHAEL A. ZAWALSKI
-------------------- ---------------------------------
Michael A. Zawalski
Vice-President Finance
Date: March 27, 1997 By: /s/ LYNN E. FELDKAMP
-------------------- ---------------------------------
Lynn E. Feldkamp
Controller
Pursuant to the requirements of the Securities and 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 dates indicated.
Date: March 27, 1997 By: RONALD O. PERELMAN *
-------------------- ---------------------------------
Ronald O. Perelman
Director
Date: March 27, 1997 By: DONALD G. DRAPKIN *
-------------------- ---------------------------------
Donald G. Drapkin
Director
Date: March 27, 1997 By: JORDAN L. HAINES *
-------------------- ---------------------------------
Jordan L. Haines
Director
28
<PAGE>
Date: March 27, 1997 By: LAWRENCE M. JONES*
-------------------- ---------------------------------
Lawrence M. Jones
Director
Date: March 27, 1997 By: ROBERT J. LANIGAN*
-------------------- ---------------------------------
Robert J. Lanigan
Director
Date: March 27, 1997 By: ROBERT S. MILLER *
-------------------- ---------------------------------
Robert S. Miller
Director
Date: March 27, 1997 By: JOHN A. MORAN *
-------------------- ---------------------------------
John A. Moran
Director
Date: March 27, 1997 By: BRUCE SLOVIN *
-------------------- ---------------------------------
Bruce Slovin
Director
Date: March 27, 1997 By: WILLIAM H. SPOOR *
-------------------- ---------------------------------
William H. Spoor
Director
* Executed on behalf of the named director pursuant to a power of attorney.
Date: March 27, 1997 By: /s/ LARRY E. SANFORD
-------------------- ---------------------------------
Larry E. Sanford
Attorney-in-fact
29
<PAGE>
ANNUAL REPORT ON FORM 10-K
ITEM 8, ITEM 14(a)(1) AND (2) AND (d)
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
YEAR ENDED DECEMBER 31, 1996
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
The following consolidated financial statements of The Coleman Company,
Inc. and Subsidiaries are included in Item 8:
PAGE
----
Consolidated Balance Sheets as of December 31, 1996 and 1995.... F-3
Consolidated Statements of Operations
for the years ended December 31, 1996, 1995 and 1994........... F-4
Consolidated Statements of Stockholders' Equity
for the years ended December 31, 1996, 1995 and 1994........... F-5
Consolidated Statements of Cash Flows
for the years ended December 31, 1996, 1995 and 1994........... F-6
Notes to Consolidated Financial Statements...................... F-7
Consolidated financial statement schedules of The Coleman Company, Inc.
and Subsidiaries included in Item 14(d):
All schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable and,
therefore, have been omitted.
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Stockholders and Board of Directors
The Coleman Company, Inc.
We have audited the accompanying consolidated balance sheets of The
Coleman Company, Inc. and subsidiaries as of December 31, 1996 and 1995, and
the related consolidated statements of operations, stockholders' equity, and
cash flows for each of the three years in the period ended December 31, 1996.
These 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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of The Coleman Company, Inc. and subsidiaries at December 31, 1996 and 1995,
and the consolidated results of their operations and their cash flows for
each of the three years in the period ended December 31, 1996, in conformity
with generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
Denver, Colorado
March 10, 1997
F-2
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
December 31,
--------------------
1996 1995
---------- --------
ASSETS
Current assets:
Cash and cash equivalents.............................. $ 17,299 $ 12,065
Accounts receivable, less allowance of $11,512
in 1996 and $3,115 in 1995............................ 182,418 148,765
Notes receivable....................................... 27,524 16,544
Inventories............................................ 287,502 216,236
Income tax refunds receivable - affiliate.............. 21,661 2,400
Deferred tax assets.................................... 40,466 20,481
Prepaid assets and other............................... 14,767 22,308
---------- --------
Total current assets................................. 591,637 438,799
Property, plant and equipment, net....................... 199,182 162,691
Intangible assets related to businesses acquired, net.... 341,715 217,289
Deferred tax assets and other............................ 27,552 25,708
---------- --------
$1,160,086 $844,487
---------- --------
---------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt...................... $ 747 $ 1,051
Short-term borrowings.................................. 33,935 19,302
Accounts payable....................................... 98,906 71,377
Accrued expenses....................................... 112,906 58,137
---------- --------
Total current liabilities............................ 246,494 149,867
Long-term debt........................................... 582,866 354,206
Other liabilities........................................ 76,173 48,072
Minority interest........................................ 1,608 --
Commitments and contingencies............................
Stockholders' equity:
Preferred stock, par value $.01 per share;
20,000,000 shares authorized, no shares
issued or outstanding............................ -- --
Common stock, par value $.01 per share; 80,000,000
shares authorized; 53,222,420 shares issued and
outstanding in 1996; and 53,177,280 shares issued
and outstanding in 1995.............................. 532 532
Additional paid-in capital............................. 166,690 165,466
Retained earnings...................................... 82,832 126,179
Currency translation adjustment........................ 3,176 165
Minimum pension liability adjustment................... (285) --
---------- --------
Total stockholders' equity........................... 252,945 292,342
---------- --------
$1,160,086 $844,487
---------- --------
---------- --------
See Notes to Consolidated Financial Statements
F-3
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
Year Ended December 31,
--------------------------------
1996 1995 1994
---------- -------- --------
<S> <C> <C> <C>
Net revenues................................... $1,220,216 $933,574 $751,580
Cost of sales.................................. 928,497 649,427 535,710
---------- -------- --------
Gross profit................................... 291,719 284,147 215,870
Selling, general and administrative
expenses...................................... 291,669 174,688 128,466
Asset impairment charge........................ -- 12,289 --
Restructuring expense.......................... -- -- 18,456
Interest expense, net.......................... 38,727 24,545 13,374
Amortization of goodwill and
deferred charges.............................. 10,473 7,745 6,209
Other expense, net............................. 1,151 334 1,138
---------- -------- --------
(Loss) earnings before income taxes,
minority interest and extraordinary item...... (50,301) 64,546 48,227
Income tax (benefit) expense................... (10,927) 24,479 14,747
Minority interest in earnings of Camping Gaz... 1,872 -- --
---------- -------- --------
(Loss) earnings before extraordinary item...... (41,246) 40,067 33,480
Extraordinary loss on early extinguishment of
debt, net of income tax benefit of $431 in
1996, $503 in 1995, and $435 in 1994.......... (647) (787) (677)
---------- -------- --------
Net (loss) earnings............................ $ (41,893) $ 39,280 $ 32,803
---------- -------- --------
---------- -------- --------
(Loss) earnings per share:
(Loss) earnings before extraordinary item..... $ (0.78) $ 0.75 $ 0.62
Extraordinary item............................ (0.01) (0.01) (0.01)
---------- -------- --------
Net (loss) earnings......................... $ (0.79) $ 0.74 $ 0.61
---------- -------- --------
---------- -------- --------
Weighted average common shares outstanding..... 53,197 53,226 53,436
---------- -------- --------
---------- -------- --------
</TABLE>
See Notes to Consolidated Financial Statements
F-4
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
Common Stock
------------------- Additional Currency Minimum
Number Paid-In Retained Translation Pension
of Shares Amount Capital Earnings Adjustment Liability
---------- ------ ---------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993....... 53,615,770 $536 $167,514 $60,597 $ (543) $ --
Purchases of common stock......... (597,600) (6) (5,224) (4,341) -- --
Stock issued under stock
option plan...................... 53,362 1 538 -- -- --
Stock option tax benefits......... -- -- 45 -- -- --
Net earnings...................... -- -- -- 32,803 -- --
Currency translation adjustment... -- -- -- -- 1,443 --
---------- ---- -------- ------- ------ -----
Balance at December 31, 1994....... 53,071,532 531 162,873 89,059 900 --
Purchases of common stock......... (220,000) (2) (1,924) (2,160) -- --
Stock issued under stock
option plan...................... 325,748 3 3,935 -- -- --
Stock option tax benefits......... -- -- 582 -- -- --
Net earnings...................... -- -- -- 39,280 -- --
Currency translation adjustment... -- -- -- -- (735) --
---------- ---- -------- ------- ------ -----
Balance at December 31, 1995....... 53,177,280 532 165,466 126,179 165 --
Purchases of common stock......... (100,000) (1) (874) (1,454) -- --
Stock split issuance costs........ -- -- (93) -- -- --
Stock issued under stock
option plan...................... 145,140 1 1,737 -- -- --
Stock option tax benefits......... -- -- 454 -- -- --
Net loss ......................... -- -- -- (41,893) -- --
Currency translation adjustment... -- -- -- -- 3,011 --
Minimum pension liability
adjustment, net of tax........... -- -- -- -- -- (285)
---------- ---- -------- ------- ------ -----
Balance at December 31, 1996....... 53,222,420 $532 $166,690 $82,832 $3,176 $(285)
---------- ---- -------- ------- ------ -----
---------- ---- -------- ------- ------ -----
</TABLE>
See Notes to Consolidated Financial Statements
F-5
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
Year Ended December 31,
--------------------------------
1996 1995 1994
--------- -------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) earnings.......................... $ (41,893) $ 39,280 $ 32,803
--------- -------- ---------
Adjustments to reconcile net (loss)
earnings to net cash flows from
operating activities:
Depreciation and amortization............. 36,358 26,523 22,755
Non-cash restructuring and other charges.. 48,269 12,289 10,950
Extraordinary loss on early
extinguishment of debt................... 1,078 1,290 1,112
Minority interest in earnings of
Camping Gaz.............................. 1,872 -- --
Change in assets and liabilities:
Decrease (increase) in receivables...... 976 (37,833) (22,122)
Increase in inventories................. (42,402) (49,396) (10,852)
(Decrease) increase in accounts
payable............................... (12,308) 13,825 (1,403)
Other, net.............................. (1,279) (3,789) (13,302)
--------- -------- ---------
32,564 (37,091) (12,862)
--------- -------- ---------
Net cash (used) provided by operating
activities.................................. (9,329) 2,189 19,941
--------- -------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures......................... (41,334) (29,053) (34,915)
Purchases of businesses, net of cash
acquired.................................... (161,875) (33,385) (99,587)
Proceeds from sale of fixed assets........... 2,924 928 4,471
--------- -------- ---------
Net cash used by investing activities........ (200,285) (61,510) (130,031)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in short-term borrowings.......... (11,043) 3,106 6,867
Net (payments of) proceeds from revolving
credit agreement borrowings................. (2,779) (61,289) 129,274
Proceeds from issuance of long-term debt..... 235,000 200,000 --
Repayment of long-term debt.................. (6,648) (73,884) (10,796)
Debt issuance and refinancing costs.......... (3,902) (3,569) (1,955)
Purchases of Company common stock............ (2,329) (4,086) (9,571)
Proceeds from stock options exercised
including tax benefits...................... 2,192 4,520 584
--------- -------- ---------
Net cash provided by financing activities.... 210,491 64,798 114,403
--------- -------- ---------
Effect of exchange rate changes on cash...... 4,357 (1,731) (1,587)
--------- -------- ---------
Net increase in cash and cash equivalents.... 5,234 3,746 2,726
Cash and cash equivalents at beginning
of the year................................. 12,065 8,319 5,593
--------- -------- ---------
Cash and cash equivalents at end
of the year................................. $ 17,299 $ 12,065 $ 8,319
--------- -------- ---------
--------- -------- ---------
See Notes to Consolidated Financial Statements
F-6
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE DATA)
1. SIGNIFICANT ACCOUNTING POLICIES
BACKGROUND:
The Coleman Company, Inc. ("Coleman" or the "Company") was formed in
December 1991 to succeed to the assets and liabilities of the outdoor
products business of New Coleman Holdings Inc. ("Holdings") an indirect
wholly-owned subsidiary of Mafco Holdings Inc. ("Mafco"). Holdings (then
named The Coleman Company, Inc.) was acquired in 1989 by MacAndrews & Forbes
Holdings Inc. ("MacAndrews Holdings", and, together with Mafco, "MacAndrews &
Forbes"), a corporation wholly owned through Mafco by Ronald O. Perelman.
Coleman is a subsidiary of Coleman Worldwide Corporation ("Coleman
Worldwide"), which is an indirect wholly-owned subsidiary of Holdings. In
March 1992, the Company completed an initial public offering of its common
stock. MacAndrews & Forbes indirectly holds 44,067,520 shares of the common
stock of Coleman, which represents approximately 83% of the outstanding
Coleman common stock as of December 31, 1996.
PRINCIPLES OF CONSOLIDATION:
The consolidated financial statements include the accounts of the
Company and its subsidiaries after elimination of all material intercompany
accounts and transactions.
CASH EQUIVALENTS:
Cash equivalents (primarily investments in money market funds and
commercial paper which are purchased with original maturities of three months
or less) are carried at cost, which approximates fair value.
INVENTORIES:
Inventories are valued at the lower of cost or market. Cost is
principally determined by the first-in, first-out ("FIFO") method.
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment is recorded at cost and depreciated on a
straight-line basis over the estimated useful lives of such assets as
follows: land improvements, 5 to 25 years; buildings and building
improvements, 7 to 45 years; and machinery and equipment, 3 to 15 years.
Leasehold improvements are amortized over their estimated useful lives or the
terms of the leases, whichever is shorter. Repairs and maintenance are
charged to operations as incurred, and significant expenditures for additions
and improvements are capitalized.
INTANGIBLE ASSETS:
Intangible assets represent goodwill which is being amortized on a
straight-line basis over periods not in excess of 40 years. Accumulated
amortization aggregated $38,851 and $29,261 at December 31, 1996 and 1995,
respectively. The carrying amount of goodwill is reviewed if facts and
circumstances suggest it may be impaired. If this review indicates goodwill
will not be recoverable over the remaining amortization period, as determined
based on the estimated undiscounted cash flows of the entity acquired, the
carrying amount of the goodwill is reduced to estimated fair value based on
market value or discounted cash flows, as appropriate.
F-7
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
REVENUE RECOGNITION:
The Company recognizes net revenues upon shipment of merchandise. Net
revenues comprise gross revenues less customer returns and allowances.
ADVERTISING AND PROMOTION EXPENSE:
Production costs of future media advertising are deferred until the
advertising occurs. All other advertising and promotion costs are expensed
when incurred. The amounts charged against operations for the years ended
December 31, 1996, 1995 and 1994 were $58,823, $37,544 and $30,831,
respectively.
RESEARCH AND DEVELOPMENT:
Research and development expenditures are expensed as incurred. The
amounts charged against operations for the years ended December 31, 1996,
1995 and 1994 were $11,082, $6,548, and $5,230, respectively.
SELF INSURANCE:
The Company participates in insurance programs maintained by Holdings. The
Company estimates its liability for the self-insured portions of the risks
covered by such programs and accrues appropriate reserves. (See Note 11.)
FOREIGN CURRENCY TRANSLATION:
The Company's international operations, other than its Brazilian and
Mexican operations, are conducted in economic environments which the Company
does not consider to be highly inflationary. Assets and liabilities of
international operations generally are translated into U.S. dollars at the
rates of exchange in effect at the balance sheet date, and income and expense
items generally are translated at the average exchange rates prevailing
during the period presented. Gains and losses resulting from the translation
of these financial statements are recorded as a component of stockholders'
equity. Gains and losses resulting from foreign currency transactions and
translation of the financial statements of the Company's Brazilian and
Mexican operations are included in the results of operations and have not
been significant for the years ended December 31, 1996, 1995 and 1994.
FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK:
The Company periodically enters into a variety of foreign currency
exchange agreements in the management of foreign currency exposure related
primarily to firm commitments, intercompany foreign sales transactions
expected to occur within the next twelve months and intercompany accounts
receivables and payables.
At December 31, 1996, the Company did not have any outstanding foreign
currency exchange agreements related to firm commitments. At December 31,
1995, the Company had a forward exchange contract to buy $15,000 of Italian
lira maturing on May 31, 1996 and had an unrecognized gain of $93. The gains
and losses from this contract are accounted for under the deferral method and
are recognized and included in income in the same period as a component of
the related hedged transactions. In the event it is no longer probable the
transactions will be consummated, the gains and losses are recognized
immediately in income under the fair value
F-8
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
method. At December 31, 1995, the Company had outstanding option contracts
for the purchase or sale of Italian lira totaling $10,500, which contracts
expired during 1996.
During the fourth quarter of 1995, the Company elected to adopt the
provisions of the Emerging Issues Task Force Issue No. 95-2, "Determination
of What Constitutes a Firm Commitment for Foreign Currency Transactions Not
Involving a Third Party" ("EITF 95-2") which narrowed the scope of
intercompany foreign currency commitments eligible to be hedged for financial
reporting purposes. Under EITF 95-2, the Company reflects the carrying value
of its forward currency contract positions relating to intercompany foreign
sales transactions on a mark-to-market basis and accounts for the resulting
unrecognized gains or losses in income as a component of cost of sales. As a
result of this change, the Company increased net income by $3,796 in the
fourth quarter of 1995. Prior to the adoption of EITF 95-2, the gains and
losses associated with these contracts were accounted for under the deferral
method. At December 31,1996, the Company had forward exchange contracts to
sell $8,500 in Canadian dollars maturing on February 28, 1997, for which the
Company has recognized a net gain of $40 as a component of cost of sales. At
December 31,1995, the Company had forward exchange contracts to sell $22,969
in foreign currencies, which contracts matured at various dates in 1996 and
for which the Company has recognized a net gain of $7,599 as a component of
cost of sales.
The Company also enters into option contracts to hedge intercompany
foreign sales transactions. Gains and losses on these contracts are deferred
and recognized as an adjustment to cost of sales upon the sale of the
related inventory. At December 31, 1996 and 1995, the Company had
outstanding option contracts for the sale of Japanese yen at fixed exchange
rates totaling $20,038 and $24,926 for specified periods of time which expire
during 1997 and 1996, respectively. Net unrealized gains deferred at
December 31, 1996 and 1995 were $653 and $125, respectively.
With respect to intercompany accounts receivable and payables, at
December 31, 1996, the Company had forward exchange contracts to sell $26,623
and to buy $3,898 in foreign currencies, which contracts matured at various
dates in 1997, and had deferred a net gain of $185. At December 31, 1995,
the Company had forward exchange contracts to sell $31,152 and to buy $1,712
in foreign currencies, which contracts matured at various dates in 1996 and
had deferred a net gain of $56. The gains and losses from these contracts
are accounted for under the deferral method and are recognized and included
in income in the same period as a component of the related hedged
transactions.
The Company periodically enters into interest rate swap and cap
agreements as a hedge against interest rate exposure of variable rate debt.
At December 31, 1996, $25,000 of the Company's outstanding long-term debt was
subject to an interest rate swap agreement and $25,000 of the Company's
outstanding long-term debt was subject to an interest rate cap. Under the
interest rate swap agreement, the Company pays the counterparty interest at a
fixed rate of 6.115%, and the counterparty pays the Company interest at a
variable rate equal to the three month LIBOR for a seven year period
commencing January 2, 1996. The agreement is with a major financial
institution which is expected to fully perform under the terms of the
agreement, thereby mitigating the credit risk from the transaction. The
differences to be paid or received on interest rate swap agreements
designated as hedges are included in interest expense as payments are made or
received. The interest rate cap agreement entitles the Company to receive
from a major financial institution the amount, if any, by which the Company's
interest payments on $25,000 of its variable rate debt exceed 7.35%. The
$509 premium paid for this interest rate cap agreement is included in other
assets and is amortized to interest expense over the three-year term of the
cap, which commenced January 3, 1995. Payments received as a result of the
cap are accrued as a reduction of interest expense on the variable rate debt.
In the event the interest rate swap or cap agreements are terminated early
and the related debt remains outstanding, the amounts paid or received upon
the early
F-9
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
termination, along with any unamortized premium, will continue to be
amortized over the terms of the original interest rate swap and cap
agreements.
CREDIT RISK:
Financial instruments which potentially subject the Company to
concentrations of credit risk consist primarily of trade receivables and
derivative financial instruments. Credit risk on trade receivables is
minimized as a result of the large and diversified nature of the Company's
worldwide customer base. Although the Company has one significant customer
(See Note 14), there have been no credit losses related to this customer.
With respect to its derivative contracts, the Company is also subject to
credit risk of non performance by counterparties and its maximum potential
loss may exceed the amount recognized in the financial statements. The
Company controls its exposure to credit risk through credit approvals, credit
limits and monitoring procedures. Collateral is generally not required for
the Company's financial instruments.
FAIR VALUE OF FINANCIAL INSTRUMENTS:
The following methods and assumptions were used by the Company in
estimating its fair value disclosures for financial instruments:
CASH AND CASH EQUIVALENTS: The carrying amount reported in the balance
sheet for cash and cash equivalents approximates its fair value.
LONG- AND SHORT-TERM DEBT: The carrying amounts of the Company's
borrowings under its foreign bank lines of credit, revolving credit
agreement and other variable rate debt approximate their fair value. The
fair value of the Company's senior notes issues (see Note 9) are estimated
using discounted cash flow analysis based on the Company's estimated
current borrowing rate for similar types of borrowing arrangements.
FOREIGN CURRENCY EXCHANGE AGREEMENTS: The fair values of the Company's
foreign currency agreements are estimated based on quoted market prices
of comparable agreements, adjusted through interpolation where necessary
for maturity differences.
INTEREST RATE SWAP AND CAP AGREEMENTS: The fair values of interest rate
swap and cap agreements are the amounts at which they could be terminated,
based on estimates obtained from dealers.
F-10
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
The carrying amounts and fair values of the Company's financial
instruments at December 31, 1996 and 1995 are as follows:
<TABLE>
December 31, 1996 December 31, 1995
------------------------- -------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
of Asset/ of Asset/ of Asset/ of Asset/
(Liability) (Liability) (Liability) (Liability)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Cash and cash equivalents.................. $ 17,299 $ 17,299 $ 12,065 $ 12,065
Short-term debt............................ (33,935) (33,935) (19,302) (19,302)
Long-term debt excluding capital leases.... (583,019) (578,921) (354,480) (370,322)
Foreign currency exchange agreements....... 940 1,629 8,026 8,287
Interest rate swap agreements.............. -- 296 -- (635)
Interest rate cap agreement................ 170 1 340 18
</TABLE>
USE OF ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
RECLASSIFICATIONS:
Certain amounts in the prior years' financial statements have been
reclassified to conform to the current year presentation.
ACCOUNTING FOR STOCK-BASED COMPENSATION:
The Company accounts for its stock compensation arrangements under the
provisions of Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" ("APB 25") and related pronouncements. Under the
provisions of APB 25, no compensation expense is recognized when stock
options are granted with exercise prices equal to or greater than market
value on the date of grant.
IMPAIRMENT OF LONG-LIVED ASSETS:
In March 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of" ("FAS 121"),
which requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted
cash flows estimated to be generated by those assets are less than the
assets' carrying amount. FAS 121 also addresses the accounting for
long-lived assets expected to be disposed of. The Company adopted FAS 121 in
the fourth quarter of 1995. The effect of the adoption of FAS 121 is
described in Note 3.
2. ACQUISITIONS
During April 1994, the Company purchased substantially all the assets of
Sanborn Manufacturing Company ("Sanborn") in Eden Prairie, Minnesota, a
manufacturer of a broad line of portable and stationary air
F-11
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
compressors for consumer and commercial markets distributed primarily through
warehouse clubs, home centers and mass merchants in North America, and
substantially all the assets and business of Metal Yanes, Ltda. ("Yanes") in
Sao Paulo, Brazil, a manufacturer of camping products, including propane and
butane fueled lanterns, camp stoves, tents, lantern mantles and fuel. The
Sanborn and Yanes acquisitions, which were accounted for under the purchase
method of accounting, were completed for the following consideration: (a)
approximately $41,066 in cash financed through borrowings under the Company
Credit Agreement (as defined in Note 9), (b) assumption of liabilities in the
amount of $22,193, and (c) a note payable of $2,999. During 1995, in
connection with the Sanborn acquisition, the Company entered into a
settlement agreement with the predecessor owners which resolved certain
disputes between the parties as well as fulfilled certain obligations owed
and anticipated to be owed by the Company to the predecessor owners. These
anticipated obligations related to a requirement to make additional payments
of up to $4,000 based upon the achievement of certain annual sales levels
during the five year period ending December 31, 1998 by Coleman Powermate
Compressors, Inc. ("Compressors"), the Company's subsidiary that acquired the
Sanborn assets (the "Sales Agreement"). As a result of the settlement,
goodwill was increased by $3,282. For 1994, approximately $671 was earned
under the terms of the Sales Agreement based on the 1994 sales levels of
Compressors, and this amount was recorded as additional goodwill in 1994. The
results of operations of these businesses have been included in the
consolidated financial statements from the dates of acquisitions.
On November 2, 1994, the Company purchased substantially all the assets
of Eastpak, Inc. and all of the capital stock of M.G. Industries, Inc.
(collectively, "Eastpak"), a leading designer, manufacturer and distributor
of branded daypacks, sports bags and related products. The Eastpak
acquisition, which was accounted for under the purchase method, was completed
for approximately $57,850 in cash financed through borrowings under the
Company Credit Agreement, and assumption of certain liabilities in the amount
of $4,130. The Company also entered into an agreement with the predecessor
owner of Eastpak to make additional payments based upon the achievement of
certain annual sales levels of Eastpak products and other products
substantially similar to the Eastpak products during the years ended December
31, 1995, 1996, and 1997. For 1995 and 1996, a total of approximately
$11,000 was recorded under the terms of this agreement. An additional amount
of up to $12,000 may be earned during the year ended December 31, 1997.
These amounts are recorded as additional goodwill. The results of operations
of Eastpak have been included in the consolidated financial statements from
the date of acquisition.
In connection with the final purchase price allocations of the Sanborn
and Eastpak acquisitions, the Company recorded goodwill of approximately
$53,000. The Company is amortizing these amounts over 40 years. The
goodwill of approximately $7,700 associated with the Yanes acquisition was
included in the 1995 asset impairment charge of $12,289 related to the
Company's operations in Brazil, which is further discussed in Note 3.
During 1995, the Company purchased all of the outstanding shares of
capital stock of Sierra Corporation of Fort Smith, Inc. ("Sierra"), a
manufacturer of portable outdoor and recreational folding furniture and
accessories, and substantially all of the assets of Active Technologies, Inc.
("ATI"), a manufacturer of technologically advanced lightweight generators
and battery charging equipment. The aggregate purchase price for these
acquisitions was $19,516 including fees and expenses. These acquisitions
were accounted for using the purchase method of accounting. The purchase
price and expenses associated with these acquisitions exceeded the fair value
of net assets acquired by $11,186 and the excess has been assigned to
goodwill and is being amortized over 20 to 30 years on the straight-line
basis. In connection with the ATI purchase, the Company may also be required
to record an additional amount of up to $18,750 based on the Company's sales
of ATI related products and royalties received by the Company for licensing
arrangements related to ATI patents. For 1995 and
F-12
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
1996, the amounts earned under the terms of this agreement were immaterial.
Amounts earned under the terms of the agreement are recorded as additional
goodwill. The results of operations of these companies on a pro forma basis
as if their acquisitions had occurred at the beginning of 1995 and 1994,
respectively, individually and in the aggregate were not significant to the
Company.
On January 2, 1996, the Company purchased substantially all the assets
and assumed certain liabilities of Seatt Corporation ("Seatt"), a leading
designer, manufacturer and distributor of safety and security related
electronic products for residential and commercial applications. The Seatt
acquisition, which was accounted for under the purchase method, was completed
for approximately $65,300 including fees and expenses. The results of
operations of Seatt have been included in the consolidated financial
statements from the date of acquisition. In connection with the
purchase price allocation of the Seatt acquisition, the Company recorded
goodwill of approximately $38,800. The Company is amortizing this amount
over 40 years on the straight-line method.
On February 28, 1996, the Company and Butagaz S.N.C. ("Butagaz"), a
subsidiary of Societe de Petroles Shell S.A., jointly announced they had
entered into an agreement (the "Share Purchase Agreement") in connection with
the sale to Coleman of approximately 70% of the outstanding shares of
Application des Gaz, S.A. ("ADG" or "Camping Gaz"). Camping Gaz is a leading
manufacturer and distributor of camping appliances in Europe. On June 24,
1996, Coleman commenced a public tender offer for the purchase of all the
publicly traded outstanding shares of ADG, or approximately 30% of the
outstanding shares. The tender offer period expired in July 1996 with
approximately 94% of the outstanding publicly traded shares of ADG tendered
for purchase. The Company completed the necessary steps to acquire the
remaining publicly held stock during the third quarter of 1996. The cost of
acquiring all the shares of ADG was approximately $100,000 including fees and
expenses.
The acquisition of Camping Gaz is being accounted for under the purchase
method. In connection with the allocation of purchase price to the fair
values of assets acquired and liabilities assumed, the Company recorded
goodwill of approximately $84,200, which is being amortized over 40 years on
the straight-line method. The Company also recognized liabilities in the
amount of $21,898 representing severance and other termination benefits for
production and administrative employees of Camping Gaz who will be
terminated. The Company paid termination costs of approximately $4,385 during
1996 and anticipates all remaining termination costs will be paid during 1997.
The Company has included the results of operations of Camping Gaz in the
consolidated financial statements from March 1, 1996, the date on which the
Company obtained control of Camping Gaz, and has recognized minority interest
related to the publicly traded shares for the period March 1, 1996 through
June 30, 1996.
The following summarized, unaudited pro forma results of operations for
the years ended December 31, 1996 and 1995 assume the acquisition of Seatt
and the acquisition of all the outstanding shares of Camping Gaz occurred as
of the beginning of the respective periods. The pro forma results include
certain adjustments, primarily reflecting increased amortization and interest
expense and a lower income tax provision, and are not necessarily indicative
of what the results of operations would have been had the Seatt and Camping
Gaz acquisitions occurred at the beginning of the respective periods.
Moreover, the pro forma information is not intended to be indicative of
future results of operations.
F-13
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
Year Ended
December 31,
-----------------------
1996 1995
---------- ----------
Net revenues................................. $1,246,370 $1,193,295
(Loss) earnings before extraordinary item.... (41,407) 39,153
Net (loss) earnings.......................... (42,054) 38,366
(Loss) earnings per common share:
(Loss) earnings before extraordinary item.. $ (0.78) $ 0.73
Net (loss) earnings........................ (0.79) 0.72
3. RESTRUCTURING, ASSET IMPAIRMENT AND OTHER CHARGES
During 1996, the Company recorded restructuring and certain other
charges totaling $52,516, net of tax. The restructuring charges total
$45,086, net of tax, and consist of charges to a) integrate the Camping Gaz
and Coleman operations into a single global recreation products business, b)
exit the low end electric pressure washer business, c) exit a portion of the
Company's battery powered light business and settle certain litigation with
respect to this business, and d) increase the valuation reserve for certain
foreign deferred income tax assets. Other charges of $7,430, net of tax,
relate to certain asset write-offs and other tax matters. These other
charges were incurred in the Company's normal course of business, although
the amounts involved are higher than similar charges the Company has recorded
in prior periods. Cost of sales includes a pre-tax charge of $44,005,
selling, general and administrative expenses includes a pre-tax charge of
$30,195, and the provision for income tax expense includes $21,684 of tax
benefits resulting from these charges, net of the effect of an increase in
the valuation reserve related to certain foreign deferred tax assets and
other foreign tax charges.
During 1995, in connection with the adoption of FAS 121, the Company
recognized an asset impairment charge of $12,289 related to its Brazilian
operations. The Brazilian operations had not performed to the Company's
expectations since acquisition of this business in April of 1994, and in the
fourth quarter of 1995, the Company initiated actions to reduce the operating
losses in Brazil. These actions included replacing management, increasing
prices, downsizing the manufacturing operations and reducing SG&A and other
expenses. Because of these actions, the Company performed an impairment
review pursuant to the guidelines set forth in FAS 121 and concluded
recognition of an asset impairment charge was appropriate. The basis of the
fair values used in the computation of the charge were appraisals for
property and equipment and estimated discounted cash flows for goodwill. The
charge has been included in the statement of operations under the caption
"Asset Impairment Charge".
During September 1994, the Company restructured its German manufacturing
operations. The German Restructuring included the sale of the low margin
plastic cooler business located in Inheiden, Germany and Loucka, Czech
Republic, including inventory, to a management group. The German
Restructuring resulted in a one-time charge of approximately $17,956 before
tax and included severance costs of $1,541, commitments to third parties of
approximately $5,465 and write-downs of leasehold improvements and other
assets to estimated realizable values aggregating $10,950. As a result of
the restructuring, the German work force was reduced by about 150 employees
from a pre-restructuring level of approximately 250 employees. The
restructuring was substantially completed in 1994. In connection with the
restructuring, the Company recognized tax benefits of approximately $10,900
relating to the write-off of the Company's investment in its German
operations. The Company also announced a plan to change from manufacturing
to sourcing for certain textile product lines and to exit the market for
personal flotation devices. This plan resulted in a $500 pre-tax charge.
F-14
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
4. INVENTORIES
Inventories consisted of the following:
December 31,
-------------------
1996 1995
-------- --------
Raw material and supplies............. $ 82,399 $ 57,653
Work-in-process....................... 12,878 5,389
Finished goods........................ 192,225 153,194
-------- --------
$287,502 $216,236
-------- --------
-------- --------
Generally, inventory costs are determined by the FIFO method; however,
approximately 13% and 10% of total inventories at December 31, 1996 and
1995, respectively, are determined using the last-in, first-out ("LIFO")
method. If such inventories were stated using the FIFO method, such amounts
would approximate the LIFO carrying values.
5. PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment, net consisted of the following:
December 31,
-------------------
1996 1995
-------- --------
Land and land improvements............ $ 8,772 $ 6,318
Buildings and building improvements... 78,760 67,989
Machinery and equipment............... 194,714 142,941
Construction-in-progress.............. 15,519 13,105
-------- --------
297,765 230,353
Accumulated depreciation.............. (98,583) (67,662)
-------- --------
$199,182 $162,691
-------- --------
-------- --------
Depreciation expense was $25,770, $19,142, and $16,793 for the years
ended December 31, 1996, 1995 and 1994, respectively.
6. ACCRUED EXPENSES
Accrued expenses consisted of the following:
December 31,
-------------------
1996 1995
-------- -------
Compensation and related benefits..... $ 29,331 $14,201
Other................................. 83,575 43,936
-------- -------
$112,906 $58,137
-------- -------
-------- -------
F-15
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
7. OTHER LIABILITIES
Other liabilities consisted of the following:
December 31,
--------------------
1996 1995
-------- --------
Pensions and other postretirement benefits.... $ 52,229 $ 40,240
Other......................................... 23,944 7,832
-------- --------
$ 76,173 $ 48,072
-------- --------
-------- --------
8. SHORT-TERM BORROWINGS
The Company maintained foreign bank lines of credit aggregating
$119,101, and $64,375, of which $33,935 and $19,302 were outstanding at
December 31, 1996 and 1995, respectively. The weighted average interest rate
on amounts borrowed was approximately 2.4% and 7.1% at December 31, 1996 and
1995, respectively.
Outstanding letters of credit aggregated approximately $32,897 and
$40,036 at December 31, 1996 and 1995, respectively.
9. LONG-TERM DEBT
Long-term debt consisted of the following:
December 31,
-----------------------
1996 1995
--------- ---------
7.26% Senior Notes due 2007 (a)....... $ 200,000 $ 200,000
7.10% Senior Notes due 2006 (b)....... 85,000 --
7.25% Senior Notes due 2008 (c)....... 75,000 --
Revolving credit facility (d)......... 146,350 150,150
Term loan (d)......................... 73,478 --
Other................................. 3,785 5,107
--------- ---------
583,613 355,257
Less current portion ................. 747 1,051
--------- ---------
$ 582,866 $ 354,206
--------- ---------
--------- ---------
(a) On August 8, 1995, the Company completed a private placement issuance
and sale of $200,000 aggregate principal amount of 7.26% Senior Notes
due 2007 (the "2007 Notes"). Interest on the 2007 Notes is payable
semiannually, and the principal is payable in annual installments of
$40,000 each commencing August 8, 2003, with a final installment
payment of $40,000 due on August 8, 2007. If there is a default, the
interest rate will be the greater of (i) 9.26% or (ii) 2.0% above the
prime interest rate.
The 2007 Notes are unsecured and are subject to various restrictive
covenants including, without limitation, requirements for the
maintenance of specified financial ratios and levels of consolidated
net worth and certain other provisions limiting the incurrence of
additional debt and
F-16
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
sale and leaseback transactions under the terms of the note purchase
agreement. The 2007 Notes shall become secured if the Company Credit
Agreement becomes secured as discussed in (d) below.
(b) On June 13, 1996, the Company completed a private placement issuance
and sale of $85,000 aggregate principal amount of 7.10% Senior Notes
due 2006 (the "2006 Notes"). Interest on the 2006 Notes is payable
semiannually, and the principal is payable in annual installments of
$12,143 each commencing June 13, 2000, with a final installment
payment of $12,143 due on June 13, 2006. If there is a default, the
interest rate will be the greater of (i) 9.10% or (ii) 2.0% above
the prime interest rate.
The 2006 Notes are unsecured and are subject to various restrictive
covenants including, without limitation, requirements for the
maintenance of specified financial ratios and levels of consolidated
net worth and certain other provisions limiting the incurrence of
additional debt and sale and leaseback transactions under the terms
of the note purchase agreement. The 2006 Notes shall become secured
if the Company Credit Agreement becomes secured as discussed in
(d) below.
(c) On June 13, 1996, the Company completed a private placement issuance
and sale of $75,000 aggregate principal amount of 7.25% Senior Notes
due 2008 (the "2008 Notes"). Interest on the 2008 Notes is payable
semiannually, and the principal is payable in annual installments of
$15,000 each commencing June 13, 2004, with a final installment
payment of $15,000 due on June 13, 2008. If there is a default, the
interest rate will be the greater of (i) 9.25% or (ii) 2.0% above
the prime interest rate.
The 2008 Notes are unsecured and are subject to various restrictive
covenants including, without limitation, requirements for the
maintenance of specified financial ratios and levels of consolidated
net worth and certain other provisions limiting the incurrence of
additional debt and sale and leaseback transactions under the terms
of the note purchase agreement. The 2008 Notes shall become secured
if the Company Credit Agreement becomes secured as discussed in
(d) below.
(d) In April 1996, the Company amended its credit agreement to: a) provide
a term loan of French Franc 385,125 ($73,478 at current exchange
rates), b) provide an unsecured revolving credit facility in an
amount of $275,000, c) allow for the Camping Gaz acquisition and d)
extend the maturity of the credit agreement (as amended, the "Company
Credit Agreement"). In connection with the Company recording the
restructuring and other charges as discussed in Note 3 and lower than
expected operating results, the Company further amended the Company
Credit Agreement in October 1996 and again in March 1997.
The Company Credit Agreement is available to the Company until
April 30, 2001. 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
F-17
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
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.
In addition, 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 Inc. The
indentures governing this indebtedness contain various covenants
including a covenant placing certain limitations on the Company's
indebtedness.
The aggregate scheduled amounts of long-term debt maturities in the
years 1997 through 2001 are $747, $500, $2,357, $12,207, and $232,005,
respectively.
10. INCOME TAXES
The Company is included in the consolidated federal income tax return of
Mafco and certain state tax returns of Mafco or its affiliates. For all
periods presented, federal and state income taxes are provided as if the
Company filed its own income tax returns. The accompanying consolidated
balance sheet includes approximately $21,661 and $2,400 of federal and state
income taxes receivable from affiliate at December 31, 1996 and 1995,
respectively.
For financial reporting purposes, (loss) earnings before income taxes,
minority interest and extraordinary item include the following components:
<TABLE>
Year Ended December 31,
-------------------------------
1996 1995 1994
-------- -------- ---------
<S> <C> <C> <C>
(Loss) earnings before income taxes, minority
interest and extraordinary item:
Domestic................................... $(29,532) $ 78,980 $ 70,602
Foreign.................................... (20,769) (14,434) (22,375)
-------- -------- ---------
$(50,301) $ 64,546 $ 48,227
-------- -------- ---------
-------- -------- ---------
</TABLE>
F-18
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
Significant components of the provision for income tax (benefit) expense
were as follow:
Year Ended December 31,
-------------------------------
1996 1995 1994
--------- -------- --------
Current:
Federal............................ $ (709) $ 18,415 $ 6,782
State.............................. (334) 3,825 1,574
Foreign............................ 3,454 3,853 2,248
--------- -------- --------
Total current.................... 2,411 26,093 10,604
--------- -------- --------
Deferred:
Federal............................ (10,686) (3,104) 6,069
State.............................. (2,178) (725) 1,114
Foreign............................ (474) 2,215 (3,040)
--------- -------- --------
Total deferred................... (13,338) (1,614) 4,143
--------- -------- --------
$ (10,927) $ 24,479 $ 14,747
--------- -------- --------
--------- -------- --------
The effective tax rate on (loss) earnings before income taxes, minority
interest and extraordinary item varies from the current statutory federal
income tax rate as follows:
Year Ended December 31,
------------------------
1996 1995 1994
----- ----- -----
(Benefit) provision at statutory rate.......... (35.0)% 35.0% 35.0%
State taxes, net............................... (4.6) 2.5 3.6
Recognition of permanent basis differences
related to loss on restructuring of
foreign investment........................... -- -- (10.3)
Nondeductible amortization .................... 5.0 2.9 3.4
Foreign operations............................. 4.3 (0.1) (2.5)
Valuation allowance............................ 7.0 -- --
Puerto Rico operations......................... 0.4 (2.6) --
Other, net..................................... 1.2 0.2 1.4
----- ----- -----
Effective tax rate (benefit) provision ........ (21.7)% 37.9% 30.6%
----- ----- -----
----- ----- -----
F-19
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of the Company's deferred tax liabilities and assets are as follows:
December 31,
-----------------
1996 1995
------- -------
Deferred tax assets:
Postretirement benefits other than pensions..... $12,370 $11,986
Reserves for self-insurance and warranty costs.. 6,678 4,777
Pension liabilities............................. 8,828 4,942
Inventory....................................... 8,245 5,579
Net operating loss carryforwards................ 14,875 3,103
Impaired assets................................. -- 10,068
Other, net...................................... 24,026 5,555
------- -------
Total deferred tax assets.................... 75,022 46,010
Valuation allowance............................... (7,501) --
------- -------
Net deferred tax assets................... 67,521 46,010
------- -------
Deferred tax liabilities:
Depreciation................................... 18,248 17,611
Other, net..................................... 7,675 5,125
------- -------
Total deferred tax liabilities............... 25,923 22,736
------- -------
Net deferred tax assets................... $41,598 $23,274
------- -------
------- -------
During 1996, the Company increased the valuation allowance related to
certain foreign deferred tax assets due to uncertainties over realization. At
December 31, 1996, the Company had net operating loss carryforwards ("NOL's")
of approximately $42,677 for certain foreign income tax purposes. These NOL's
expire beginning in 1999.
The Company has not provided for taxes on undistributed foreign earnings
of approximately $16,904 at December 31, 1996 as the Company intends to
permanently reinvest these earnings in the future growth of the business.
Determination of the amount of unrecognized deferred U.S. income tax liability
is not practicable because of the complexities associated with its
hypothetical calculation.
11. RELATED PARTY TRANSACTIONS
In 1996, the Company entered into an agreement with an affiliate in which
the Company realized approximately $1,800 of net tax benefits associated with
certain foreign tax net operating loss carry forwards that had not previously
been recognized.
The Company provided management services to certain affiliates pursuant to
a management agreement through June 30, 1995. The consolidated financial
statements reflect the management fees as a reduction in selling, general and
administration expenses. For the years ended December 31, 1995 and 1994,
management fees earned by the Company were $2,400 and $4,800, respectively.
F-20
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
MacAndrews & Forbes provides the Company, at the Company's request, with
certain allocated services, pursuant to a services agreement. These allocated
services are purchased by MacAndrews & Forbes from third party providers on
behalf of the Company. Such services include professional services, such as
legal and accounting, insurance coverage and other services. The Company
reimburses MacAndrews & Forbes for that portion of amounts due to third party
providers as is allocable to the services purchased for and provided to the
Company and reimburses MacAndrews & Forbes for their other out-of-pocket
expenses incurred in connection with providing such services. The Company
participates in certain of Holdings' insurance programs, including health and
life insurance, workers compensation, and liability insurance. The Company's
expense represents its expected costs for self-insured retentions and premiums
for excess coverage insurance. The expense was $13,923, $9,874, and $10,586
for the years ended December 31, 1996, 1995 and 1994, respectively.
The Company purchases and sells products from and to certain affiliates.
These amounts are not, in the aggregate, material.
12. EMPLOYEE BENEFIT PLANS
PENSION PLANS:
Holdings maintains pension and other retirement plans in various forms
covering employees of the Company who meet eligibility requirements. The U.S.
salaried retirement plan is a non-contributory defined benefit plan and
provides benefits based on a formula of each participant's final average pay
and years of service. The U.S. hourly pension plan is a non-contributory
defined benefit plan and contains a flat benefit formula. The salaried and
hourly plans provide reduced benefits for early retirement and the salaried
plan takes into account offsets for Social Security benefits. The Company's
policy is to contribute annually the minimum amount required pursuant to the
Employee Retirement Income Security Act, as amended.
F-21
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
Holdings also has an unfunded excess benefit plan covering certain of the
Company's U.S. employees whose benefits under the plans described above are
limited by provisions of the Internal Revenue Code. The following table
reconciles the funded status of the pension plans with the amount recognized
in the Company's consolidated balance sheets as of the dates indicated:
December 31,
--------------------
1996 1995
-------- --------
Actuarial present value of benefit obligation:
Accumulated benefit obligation, including
vested benefits of $18,686 and $15,282........ $(21,933) $(17,588)
-------- --------
-------- --------
Projected benefit obligation for service
rendered to date................................ $(37,092) $(32,284)
Plan assets at fair value........................ 16,197 9,696
-------- --------
Projected benefit obligation in excess
of plan assets.................................. (20,895) (22,588)
Unrecognized prior service cost.................. 50 57
Unrecognized net loss............................ 7,999 8,869
-------- --------
Accrued pension cost............................. (12,846) (13,662)
-------- --------
Amount reflected as an intangible asset.......... (288) --
Amount reflected as minimum pension
liability adjustment............................ (470) --
-------- --------
Amount reflected as pension liability............ $(13,604) $(13,662)
-------- --------
-------- --------
The weighted-average discount rate used in determining the actuarial
present value of the projected benefit obligation was 7.5% and 7.25% as of
December 31, 1996 and 1995, respectively. The rate of increase in future
compensation levels reflected in such determination was 5% as of December 31,
1996 and 1995. The expected long-term rate of return on assets was 9% as of
December 31, 1996, 1995 and 1994. Plan assets consist primarily of common
stock, mutual funds and fixed income securities stated at fair market value,
and cash equivalents stated at cost, which approximates fair market value.
Unrecognized items are being recognized over the estimated remaining service
lives of active employees.
Net pension expense includes the following components:
Year Ended December 31,
--------------------------
1996 1995 1994
------- ------- ------
Service cost-benefits attributed to
service during the year............... $3,098 $ 2,125 $2,051
Interest cost on projected
benefit obligation.................... 2,442 2,004 1,554
Actual return on plan assets........... (1,490) (1,347) 391
Net amortization and deferrals......... 844 834 (750)
------- ------- ------
Net pension expense.................... $ 4,894 $ 3,616 $3,246
------- ------- ------
------- ------- ------
SAVINGS PLAN:
In January 1990, Holdings initiated an employee savings plan under Section
401(k) of the Internal Revenue Code. This plan covers substantially all of
the Company's full-time U.S. employees and allows employees to contribute up
to 10% of their salary to the plan. The Company matches, at a 33 1/3% rate,
employee contributions
F-22
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
of up to 6% of their salary. Amounts charged to expense for matching
contributions were $1,314, $1,165, and $927 for the years ended December
31,1996, 1995 and 1994, respectively.
RETIREE HEALTH CARE AND LIFE INSURANCE:
The Company, through Holdings, provides certain unfunded health and life
insurance benefits for certain retired employees. Approximately 53 percent
of the Company's U.S. employees may become eligible for these benefits if
they reach retirement age while working for the Company.
The following table reconciles the funded status of the Company's
allocable portion of Holdings' postretirement benefit plans with the amount
recognized in the Company's consolidated balance sheets as of the dates
indicated:
December 31,
--------------------
1996 1995
-------- --------
Accumulated postretirement benefit obligation:
Retirees....................................... $ (6,682) $ (6,660)
Fully eligible active plan participants........ (3,015) (2,991)
Other active plan participants................. (10,664) (10,904)
-------- --------
Total accumulated postretirement benefit
obligation...................................... (20,361) (20,555)
Unrecognized transition benefit.................. (3,973) (4,239)
Unrecognized prior service cost.................. (492) (580)
Unrecognized net (gain) loss..................... (976) 936
-------- --------
Net postretirement benefit liability............. $(25,802) $(24,438)
-------- --------
-------- --------
Net periodic postretirement benefit expense includes the following
components:
Year Ended December 31,
------------------------
1996 1995 1994
------ ------ ------
Service cost-benefits attributed to service
during the year.............................. $1,044 $ 756 $ 901
Interest cost on accumulated postretirement
benefit obligation........................... 1,454 1,352 1,268
Amortization of transition benefit
and other net gains.......................... (354) (455) (354)
------ ------ ------
Net periodic postretirement benefit expense... $2,144 $1,653 $1,815
------ ------ ------
------ ------ ------
The discount rate used in determining the accumulated postretirement
benefit obligation ("APBO") was 7.5% and 7.25% as of December 31, 1996 and
1995, respectively. The assumed health care cost trend rate used in measuring
the APBO at December 31, 1996 was 8% starting in 1997, then gradually
decreasing to 5% by the year 2003 and remaining at that level thereafter. The
health care cost trend rate assumption has a significant effect on the amount
of the obligation and periodic benefit expense reported. An increase in the
assumed health care cost trend rates by 1% in each year would increase the
APBO as of December 31, 1996 by approximately 18% and the service and interest
cost components of net periodic postretirement benefit expense by
approximately 23%.
F-23
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
STOCK OPTION PLAN:
The Company adopted The Coleman Company, Inc. 1992 Stock Option Plan
(the "1992 Stock Option Plan") prior to the effective date of the IPO.
During 1993, the shareholders approved the 1993 Stock Option Plan (the "1993
Stock Option Plan") and during 1996, the shareholders approved The Coleman
Company, Inc. 1996 Stock Option Plan (the "1996 Stock Option Plan"). Under
the terms of the 1992 Stock Option Plan, the 1993 Stock Option Plan and the
1996 Stock Option Plan (collectively the "Stock Option Plans"), incentive
stock options ("ISOs"), non-qualified stock options ("NQSOs") and stock
appreciation rights ("SARs") may be granted to key employees of the Company
and any of its affiliates from time to time. Stock options have been granted
under the Stock Option Plans with vesting terms and maximum terms of
approximately five years and ten years, respectively. The aggregate number
of shares of common stock as to which options and rights may be granted under
the Stock Option Plans may not exceed 4,700,000.
The following table summarizes the stock option transactions under the
Stock Option Plans:
<TABLE>
1996 1995 1994
---------------------- ---------------------- ----------------------
Weighted- Weighted- Weighted-
Average Average Average
Exercise Exercise Exercise
Options Price Options Price Options Price
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Outstanding - January 1, 2,572,930 $15.25 2,310,888 $ 14.03 1,256,540 $12.61
Granted:
at market price 294,000 19.73 637,000 17.89 1,272,450 15.13
above market price 381,000 15.00 - - - -
Exercised (154,890) 12.17 (325,748) 12.09 (53,362) 10.12
Forfeited (75,410) 14.19 (49,210) 13.14 (164,740) 12.98
--------- --------- ---------
Outstanding - December 31, 3,017,630 15.84 2,572,930 15.25 2,310,888 14.03
--------- --------- ---------
--------- --------- ---------
Exercisable - December 31, 513,440 13.25 413,526 12.84 488,488 12.15
--------- --------- ---------
--------- --------- ---------
Weighted-average fair
value of options granted
during the year:
at market price $ 6.62 $ 7.13
--------- ---------
--------- ---------
above market price $ 3.21 -
--------- ---------
--------- ---------
</TABLE>
The following table summarizes information concerning currently
outstanding and exercisable options at December 31, 1996:
Options Outstanding Options Exercisable
- ---------------------------------------------------- ----------------------
Weighted-
Average Weighted- Weighted-
Range of Remaining Average Average
Exercise Number Contractual Exercise Number Exercise
Prices Outstanding Life Price Exercisable Price
- ------------- ----------- ----------- --------- ----------- ---------
$ 9.75-$14.32 770,630 1.59 years $ 13.05 393,440 $ 12.71
$14.33-$15.13 606,000 7.32 14.98 120,000 15.06
$15.14-$16.30 755,000 7.92 16.06 - -
$16.31-$23.13 886,000 8.86 18.65 - -
--------- -------
$ 9.75-$23.13 3,017,630 6.46 513,440
--------- -------
--------- -------
F-24
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
As described in Note 1, the Company follows APB 25 in accounting for its
stock compensation arrangements. Pro forma financial information regarding
net income and earnings per share is required by FASB Statement No. 123,
"Accounting for Stock-Based Compensation" ("FAS 123"), and has been
determined as if the Company had accounted for its employee stock options
under the fair value method of FAS 123. The fair value of ISOs and NQSOs
granted during 1996 and 1995 were estimated at the date of grant using the
Black-Scholes option pricing model with the following weighted-average
assumptions: risk-free interest rates of 6.11% and 5.91 % for 1996 and 1995,
respectively, dividend yield of 0.0%, volatility of the expected market price
of the Company's common stock of 20.2% and 30.8% for 1996 and 1995,
respectively, and a weighted-average expected life of the option of 5.5 years.
FAS 123 requires the use of option valuation models, one of which is the
Black-Scholes model, that were not developed for use valuing ISOs or NQSOs.
Further, these option valuation models require the input of highly subjective
assumptions, including the expected stock price volatility. In management's
opinion, based on the above, the existing models do not necessarily provide a
reliable single measure of the fair value of its ISOs or NQSOs.
The following summarized, unaudited pro forma results of operations
assume the estimated fair value of the ISOs and NQSOs granted in 1996 and
1995 is amortized to expense over the ISOs' and NQSOs' vesting period. FAS
123 does not require disclosure of the effect of any grants of stock based
compensation prior to 1995 and, therefore, the pro forma effect on net
earnings of FAS 123 is not representative of the pro forma effect on net
earnings in future years.
Year Ended December 31,
-----------------------
1996 1995
-------- -------
Pro forma net (loss) earnings.......... $(42,760) $39,009
Pro forma net (loss) earnings per
common share.......................... $ (0.80) $ 0.73
13. COMMITMENTS AND CONTINGENCIES
LEASES:
The Company leases manufacturing, administrative and sales facilities and
various types of equipment under operating lease agreements expiring through
2007. Rental expense was $14,164, $11,526, and $9,520 for the years ended
December 31, 1996, 1995 and 1994, respectively. Minimum rental commitments
under all noncancellable operating leases with remaining lease terms in
excess of one year from December 31, 1996, aggregated $43,573; such
commitments for each of the five years subsequent to December 31, 1996 are
$12,379, $11,135, $6,189, $4,296, and $2,619, respectively, and $6,955
thereafter.
The Company leases its Hastings, Nebraska facility and the corporate
office building in Denver, Colorado under agreements which give the Company
the right, subject to certain qualifications, to renew, terminate, or
purchase the properties. Upon termination, the Company has guaranteed the
lessor certain residual values.
F-25
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
ENVIRONMENTAL MATTERS:
The Company is subject to various environmental regulations and has
adopted an environmental policy designed to ensure the Company operates in
full compliance with applicable environmental regulations and, where
appropriate, the Company's own internal standards. Coleman has also
undertaken an environmental compliance audit program. The Company makes
expenditures it believes are necessary to comply with environmental
management practices. Environmental expenditures that relate to current
operations are expensed or capitalized as appropriate, were not significant
in 1996, and are not expected to be significant in the foreseeable future.
Coleman has established reserves for various environmental matters to cover
the estimated costs of the investigations, remedial activities and
litigation.
OTHER:
The Company and Holdings are involved in various claims and legal
actions arising in the ordinary course of business. The Company believes the
ultimate disposition of these matters is not expected to have a material
adverse effect on the Company's consolidated financial condition or results
of operations. The Company has entered into a cross-indemnification
agreement with Holdings pursuant to which it will indemnify Holdings against
all liabilities related to businesses transferred to the Company, and
Holdings will indemnify the Company against all liabilities of Holdings other
than liabilities related to the businesses transferred to the Company.
The Company is also party to a license agreement which requires payments
of minimum guaranteed royalties aggregating to $8,225 at December 31, 1996;
such commitments for each of the four years remaining under the agreement
subsequent to December 31, 1996 are $933, $1,768, $2,454, and $3,070,
respectively.
14. SIGNIFICANT CUSTOMERS
The Company's U.S. and Canadian operations have one significant customer
which accounted for approximately 15%, 19%, and 21% of net revenues in the
years ended December 31, 1996, 1995 and 1994, respectively.
15. CASH FLOW REPORTING
The Company uses the indirect method to report cash flows from operating
activities. Interest paid was $37,608, $23,976, and $11,933 and income taxes
paid were $7,041, $12,246, and $27,411 for the years ended December 31, 1996,
1995 and 1994, respectively. Certain non-cash transactions relating to
acquisitions and the issuance of long-term debt have been reported in Notes 2
and 9.
16. PREFERRED STOCK
The Company has authorized 20,000,000 shares of preferred stock, par
value $0.01 per share. The Company's Certificate of Incorporation authorizes
the Board of Directors to provide for the issuance of a series of preferred
stock, to establish the number of shares of each such series and to fix the
designation, powers, preferences and rights of the shares of each such series
and any qualifications, limitations or restrictions thereof.
F-26
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
17. GEOGRAPHIC SEGMENTS
The Company designs, manufactures and markets a wide variety of multiuse
products and accessories, which are primarily marketed through independent
retail markets, for the outdoor recreation and hardware consumers. The
Company is a leading manufacturer and marketer of brand name consumer
products for the camping and related outdoor recreation markets in the United
States, Canada, Europe, and Japan.
Operating profit, as indicated below, represents net revenues less
operating expenses and amortization of goodwill. Generally, sales between
geographic areas are made at cost plus a share of operating profit.
Identifiable assets are those used by each geographic segment. Corporate
assets are principally cash, certain property and equipment, income tax
refunds receivable - affiliate, and deferred charges. The geographic segment
presentation has been restated for the years ended December 31, 1995 and 1994
to reflect the European segment which became a significant segment for the
year ended December 31, 1996, primarily due to the impact of the Camping Gaz
operations.
Information related to the Company's geographic segments is as follows:
Year Ended December 31,
----------------------------------
1996 1995 1994
---------- ---------- --------
Net revenues:
Domestic - U.S. .......... $ 916,260 $ 716,018 $566,098
- Export......... 91,125 90,434 93,917
Europe.................... 168,780 52,233 52,461
Other foreign............. 219,350 169,836 121,545
Eliminations.............. (175,299) (94,947) (82,441)
---------- ---------- --------
$1,220,216 $ 933,574 $751,580
---------- ---------- --------
---------- ---------- --------
Operating profit:
Domestic (a).............. $ 19,915 $ 120,915 $ 94,773
Europe (b)................ (17,505) (3,241) (23,203)
Other foreign (c)......... 4,027 (10,540) 2,222
---------- ---------- --------
6,437 107,134 73,792
Corporate expenses.......... (18,011) (18,043) (12,191)
Interest expense............ (38,727) (24,545) (13,374)
---------- ---------- --------
(Loss) earnings before income
taxes, minority interest and
extraordinary item........ $ (50,301) $ 64,546 $ 48,227
---------- ---------- --------
---------- ---------- --------
Identifiable assets:
Domestic.................. $ 782,373 $ 696,681 $559,599
Europe.................... 247,412 70,478 72,908
Other foreign............. 83,033 59,107 54,573
Corporate................. 47,268 18,221 25,185
---------- ---------- --------
$1,160,086 $ 844,487 $712,265
---------- ---------- --------
---------- ---------- --------
- -------------------
(a) Includes $49,257 of restructuring and other charges in 1996.
(b) Includes $20,002 of restructuring and other charges in 1996 and $17,956
related to the German Restructuring in 1994.
(c) Includes $4,941 of restructuring and other charges in 1996 and $12,289
of asset impairment charges in 1995.
F-27
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONCLUDED)
(IN THOUSANDS, EXCEPT SHARE DATA)
18. QUARTERLY FINANCIAL SUMMARIES (UNAUDITED)
Summarized quarterly financial data for 1996 and 1995 are as follow:
Quarter Ended
-------------------------------------------------
Septem- Decem-
March 31, June 30, ber 30,(a) ber 31,(b)(c)
--------- -------- ---------- -------------
1996
- ----
Net revenues................ $273,560 $452,654 $269,607 $224,395
Gross profit................ 80,966 137,538 39,894 33,321
Earnings (loss) before
extraordinary item......... 15,039 28,046 (48,458) (35,873)
Net earnings (loss)......... 15,039 27,399 (48,458) (35,873)
Earnings (loss) per share:
Earnings (loss) before
extraordinary item....... $ 0.28 $ 0.53 $ (0.91) $ (0.67)
Net earnings (loss)....... 0.28 0.52 (0.91) (0.67)
1995
- ----
Net revenues................ $224,024 $311,281 $211,817 $186,452
Gross profit................ 68,496 99,575 65,932 50,144
Earnings (loss) before
extraordinary item......... 13,247 27,594 9,056 (9,830)
Net earnings (loss)......... 13,247 27,594 8,269 (9,830)
Earnings (loss) per share:
Earnings (loss) before
extraordinary item....... $ 0.25 $ 0.52 $ 0.17 $ (0.18)
Net earnings (loss)....... 0.25 0.52 0.16 (0.18)
- -------------------
(a) For the third quarter of 1996, the gross profit amount includes $33,567
of restructuring and other charges. The loss before extraordinary item
and net loss amounts include an after tax charge of $44,495 related to
restructuring and other charges.
(b) For the fourth quarter of 1996, the gross profit amount includes $10,438
of restructuring and other charges. The loss before extraordinary item
and net loss amounts include an after tax charge of $8,021 related to
restructuring and other charges.
(c) For the fourth quarter of 1995, the gross profit amount includes $7,599
of income as a result of adopting the provisions of EITF 95-2. The loss
before extraordinary item and net loss amounts include an after tax asset
impairment charge of $9,856 as a result of adopting FAS 121 and an after
tax credit of $3,796 as a result of adopting the provisions of EITF 95-2.
F-28
<PAGE>
AMENDMENT NO. 5
This AMENDMENT NO. 5 (this "Amendment") to the Credit Agreement (as
defined below) is entered into as of March 7, 1997 by and among The Coleman
Company, Inc. (the "Company"), certain foreign subsidiaries of the Company
party thereto (each a "Foreign Borrower" and, collectively, together with the
Company, the "Borrowers"), the Lenders (as defined below) party hereto and
Credit Suisse First Boston, New York Branch, as agent for the Lenders (in
such capacity, the "Agent") and as the issuing bank of certain letters of
credit (the "Issuing Bank").
WHEREAS, the Borrowers, certain lenders (the "Lenders"), the
Issuing Bank and the Agent are party to the Amended and Restated Credit
Agreement dated as of August 3, 1995 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"; capitalized terms used
but not defined herein shall have their respective meanings specified in the
Credit Agreement); and
WHEREAS, the Borrowers have requested that the Lenders, the Issuing
Bank and the Agent agree, and the Lenders party hereto, the Issuing Bank and
the Agent are willing, to amend the Credit Agreement, on the terms and
conditions of this Amendment.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
SECTION
1. AMENDMENTS TO THE CREDIT AGREEMENT. Subject to the satisfaction
of the conditions to effectiveness specified in Section 7 hereof, the Credit
Agreement is hereby amended as follows:
(a) AMENDMENTS TO SECTION 1.01 (CERTAIN DEFINED TERMS).
(i) Section 1.01 shall be amended by inserting each of the following
definitions in its appropriate alphabetic location:
"'CAPITAL EXPENDITURES' means, for any Person for any period, the
sum, without duplication, of (a) all expenditures made, directly or
indirectly,
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<PAGE>
by such Person or any of its Subsidiaries during such period for
equipment, fixed assets, real property or improvements, or for
replacements or substitutions therefor or additions thereto, that have
been or should be, in accordance with GAAP, reflected as additions to
property, plant or equipment on a balance sheet of such Person or any
such Subsidiary, PLUS (b) other amounts that would, in accordance with
GAAP, be set forth as capital expenditures on a statement of cash flows
or similar statement of such Person or any of its Subsidiaries for such
period, PLUS (c) the aggregate principal amount of all Debt (including
Debt under Capitalized Leases) assumed or incurred in connection with any
such expenditures."
"'COLLATERAL DOCUMENTS' means any security agreement, pledge
agreement, mortgage, deed of trust or collateral assignment or other
document made by the Company or any of its Subsidiaries under which any
Lien is created or arises that secures the Obligation of any Borrower
hereunder or the Obligations of the Guarantors under the Subsidiary
Guaranty."
"'QUALIFIED CASH' means, as of any date, the aggregate amount in
excess of $5,000,000 as of such date of cash held for, and of any
Permitted Investment described in clause (h) of the definition thereof
by, the Company and any of its Domestic Subsidiaries that is a Guarantor,
up to a maximum aggregate amount of $20,000,000 for such date, which cash
or Permitted Investment shall not be subject to any Lien or escrow and
shall be held free and clear of any adverse claim other than (i) any
right of set-off arising under this Agreement or (ii) any Lien referred
to in Section 5.01(q); PROVIDED that any cash included in such amount in
excess of $5,000,000 is held by a Lender."
(ii) The definition of "Applicable Margin" in Section 1.01 shall be
amended as follows:
(A) the table that sets forth the Applicable LIBOR Loan Margin
opposite the Total Debt to EBITDA Ratio shall be deleted in its entirety,
and the table set forth on Attachment I shall be substituted therefor;
and
(B) the table that sets forth the Applicable LIBOR Loan Margin for
Local Loans opposite the Total Debt to EBITDA Ratio shall be deleted in
its entirety, and the table set forth on Attachment II shall be
substituted therefor.
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<PAGE>
(iii) The definition of "EBITDA" in Section 1.01 shall be amended by
deleting the definition thereof in its entirety and substituting the
following therefor:
"'EBITDA'" means, for any fiscal period of the Company and its
consolidated Subsidiaries, net income (or net loss) PLUS the sum of (a)
interest expense, net of interest and other investment income, (b) income
tax expense, (c) depreciation expense, (d) amortization expense, (e)
non-cash write-downs or write-offs of depreciable or amortizable items
and other non-cash charges included in determining net income, (f) net
extraordinary losses included in determining net income, (g) net losses
on the sale of assets other than asset sales in the ordinary course of
business and (h) (i) with respect to any period that includes the third
or the fourth fiscal quarter of 1996, restructuring charges in an amount
not to exceed $64,800,000 taken in such fiscal periods, and (ii) with
respect to any period that includes any quarter in fiscal year 1997,
restructuring and rationalization charges recognized in such fiscal
quarters of fiscal year 1997 in an amount that, when aggregated with all
such charges recognized in fiscal year 1997 pursuant to this clause
(h)(ii), does not exceed $30,000,000 (PROVIDED that in connection, and
concurrent, with the recognition of charges described in this clause
(h)(ii), the Company shall provide to the Agent, with copies for each
Lender, a detailed description of such charges and an explanation of the
Company's recognition of such charge in such fiscal year, certified by
the chief financial officer of the Company), LESS the sum of (a) net
extraordinary gains included in net income, (b) net gains on the sale of
assets other than asset sales in the ordinary course of business, and (c)
non-cash credits included in determining net income."
(iv) The definition of "Loan Documents" in Section 1.01 shall be deleted
in its entirety and the following shall be substituted therefor:
"'LOAN DOCUMENTS' means, collectively, this Agreement, the Company
Guaranty, the Subsidiary Guaranty, the Collateral Documents, if any, and
each Trade Letter of Credit Agreement."
(v) The definition of "Total Debt to EBITDA Ratio" in Section 1.01 shall
be amended by inserting the following immediately prior to the final
period thereof:
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<PAGE>
"; PROVIDED that, with respect to the calculation pursuant to this
definition of the amount of Debt of the Company and its Subsidiaries as
at any date, such amount may be reduced by the amount of Qualified Cash
as of such date"
(b) AMENDMENT TO SECTION 2.02(d)(i) (LETTERS OF CREDIT). Section
2.02(d)(i) of the Credit Agreement shall be amended by deleting from the
fourth sentence thereof the number "$20,000,000" and substituting
"$75,000,000" therefor.
(c) AMENDMENT TO SECTION 5.01(k) (MAINTENANCE OF TOTAL DEBT TO
EBITDA RATIO). Section 5.01(k) of the Credit Agreement shall be amended by
(i) inserting immediately after the words "each fiscal quarter of the
Company" the words "THAT ENDS DURING A PERIOD SET FORTH BELOW" and (ii)
deleting in its entirety the table that sets forth the Total Debt to EBITDA
Ratio, and the table set forth on Attachment III shall be substituted
therefor.
(d) AMENDMENT TO SECTION 5.01(l) (MAINTENANCE OF INTEREST COVERAGE
RATIO). Section 5.01(l) of the Credit Agreement shall be amended by (i)
deleting in its entirety the table that sets forth the Interest Coverage
Ratio, and the table set forth on Attachment IV shall be substituted therefor
and (ii) inserting immediately after such table the following words:
"PROVIDED THAT, with respect to any such determination that is to be
made as of the end of any of the first three fiscal quarters in fiscal
year 1997 of the Company, such determination shall be made for the period
from January 1, 1997 to the end of such fiscal quarter."
(e) AMENDMENT TO SECTION 5.01(n) (REPORTING REQUIREMENTS). Section 5.01(n)
of the Credit Agreement shall be amended by:
(i) deleting from clause (B) of paragraph (iii) thereof the reference
"Sections 5.01(j), (k), (l) and (m)" and substituting "Sections 5.01(j),
(k), (l), (m), (o), (p) and (q) and Sections 5.02(b), (e), (f) and (q)"
therefor; and (ii) deleting from clause (B) of paragraph (iv) thereof the
reference "Sections 5.01(j), (k), (l) and (m) and Section 5.02(b), (e) and
(f)" and substituting "Sections 5.01(j), (k), (l), (m), (o), (p) and (q)
and Sections 5.02(b), (e), (f) and (q)" therefor.
(f) FURTHER AMENDMENTS TO SECTION 5.01. Section 5.01 of the Credit
Agreement shall be further amended by inserting the following immediately
after Section 5.01(n):
"(O) MAINTENANCE OF MINIMUM CUMULATIVE EBITDA. Maintain EBITDA,
determined as of the end of each fiscal quarter of the Company, the end
of which occurs on a date set forth below, for the fiscal period
(treated as one accounting period) commencing on January 1, 1997 and
ending on a date set forth below, of not less than the amount set forth
below opposite the date on which the end of such fiscal quarter occurs:
4
<PAGE>
Cumulative
End of Fiscal Quarter EBITDA
---------------------------- --------------------------
March 31, 1997 $ 25,000,000
June 30, 1997 $ 80,000,000
September 30, 1997 $100,000,000
December 31, 1997 $110,000,000
PROVIDED that with respect to any disposition of any Subsidiary of
the Company, or any line of business of the Company or any of its
Subsidiaries, at least 75% of the proceeds of which disposition are Net
Cash Proceeds that are applied in accordance with Section 2.09(b)(i)
without giving effect to the first parenthetical thereof, the EBITDA
required by this Section 5.01(o) for any fiscal period ending after such
disposition shall be reduced by an amount, which, (i) when aggregated
with all other such amounts, shall not exceed $10,000,000, and (ii) is
equal to the EBITDA that was attributable to such Subsidiary or line of
business for the portion of the immediately preceding fiscal year that
corresponds to the portion of the then current fiscal year for which the
results of such Subsidiary or line of business are not included in the
consolidated financial statements of the Company due to such disposition,
and the Company shall provide to the Agent, with copies for each Lender,
a detailed description of such amounts, certified by the chief financial
officer of the Company.
(p) MAINTENANCE OF MAXIMUM TOTAL DEBT. Have Debt (other than
Excluded Debt) of the Company and its Subsidiaries, determined as at the
end of each fiscal quarter of the Company, the end of which occurs on a
date set forth below, of not more than the amount set forth below
opposite the date on which the end of such fiscal quarter occurs:
5
<PAGE>
Fiscal Quarter
------------------ ----------
Ending On or About Total Debt
------------------ ----------
6
<PAGE>
March 31, 1997 $730,000,000
June 30, 1997 $710,000,000
September 30, 1997 $640,000,000
December 31, 1997 $630,000,000
PROVIDED that, with respect to the calculation pursuant to this
Section 5.01(p) of the amount of Debt of the Company and its Subsidiaries
as at any date, such amount may be reduced by the amount of Qualified Cash
as of such date.
(q) COLLATERAL. If, as of the end of fiscal quarter of the Company
ending on December 31, 1997, the ratio of Debt (other than Excluded Debt)
of the Company and its Subsidiaries outstanding as of such date to
consolidated EBITDA of the Company for the period of four (4) fiscal
quarters then ended exceeds 5.70, the Company and each of its Domestic
Subsidiaries shall grant a Lien on substantially all of the assets of
such Person to secure the Obligations of such Person under any Loan
Document to which such Person is party, and the Company and each of its
Domestic Subsidiaries shall promptly (and in any event within 30 days) of
the earlier of the date of delivery to the Agent of the financial
statements of the Company with respect to such quarter or the date on
which such delivery is required under Section 5.01(n), (i) execute and
deliver to the Agent such Collateral Documents as the Agent shall
reasonably deem necessary or advisable to grant to the Agent, for the
benefit of the Lenders and the Issuing Bank, a Lien on such assets, each
such Collateral Document being in form and in substance reasonably
satisfactory to the Agent, (ii) take all actions necessary or reasonably
advisable to cause such Liens to be duly perfected to the extent required
by such Collateral Documents in accordance with all applicable law
including, without limitation, the filing of financing statements in such
jurisdictions as may be reasonably requested by the Agent and the
delivery to the Agent of certificated securities and other instruments
required to be pledged in accordance with such Collateral Documents,
(iii) deliver to the Agent legal opinions relating to the matters
described in the immediately preceding clauses (i) and (ii), which
opinions shall be in form and in substance, and from counsel, reasonably
satisfactory to the Agent and (iv) execute and deliver such further
documents and do such other acts as the Agent may reasonably request,
including, without limitation, providing for the Agent, for the benefit
of the Lenders, to be named as beneficiary on such insurance policies
with respect to any assets as to which such a Lien is granted, as the
Agent may reasonably request; PROVIDED that, with respect to
7
<PAGE>
the calculation pursuant to this Section 5.01(q) of the amount of Debt of
the Company and its Subsidiaries as at any date, such amount may be
reduced by the amount of Qualified Cash as of such date. In connection
with the granting by any Person of any Lien under this Section 5.01(q),
if, and to the extent, required to do so under any outstanding Long-Term
Note or any outstanding Additional Long-Term Note, in each case issued by
the Company on or prior to June 25, 1996, such Person may make provision
to secure any such Long-Term Note or any such Additional Long-Term Note
equally and ratably with the Obligations secured pursuant to this Section
5.01(q). Notwithstanding the foregoing, none of the Company or any
Domestic Subsidiary shall be required to pledge more than 66% of the
capital stock of any Foreign Subsidiary held by such Person."
(g) AMENDMENT TO SECTION 5.02 (NEGATIVE COVENANTS). Section 5.02 of
the Credit Agreement shall be further amended by inserting the following after
Section 5.02(p) thereof:
"(q) CAPITAL EXPENDITURES. Make, or permit any of its Subsidiaries
to make, any Capital Expenditures that would cause the aggregate of all
such Capital Expenditures made by the Company and any of its Subsidiaries
in any fiscal year of the Company set forth below to exceed the amount
set forth below for such fiscal year:
FISCAL YEAR AMOUNT
----------- -----------
1997 $35,000,000
1998 $37,000,000
PROVIDED, HOWEVER, that the amount set forth above for the 1998
fiscal year of the Company may be increased by a maximum of $7,000,000 by
carrying over to such fiscal year the amount of Capital Expenditures
permitted hereunder to be made in the Company's 1997 fiscal year that are
not made in such fiscal year.
(r) FISCAL YEAR. Permit any fiscal quarter of the Company to end
on a day other than the last day of March, June, September or December,
or permit the fiscal year of the Company to end on a day other than the
last day of December."
(h) AMENDMENT TO SECTION 6.01 (EVENTS OF DEFAULT). Section 6.01 of the
Credit Agreement shall be amended by deleting clause (i) of paragraph (c)
thereof in its entirety and substituting the following therefor:
(i) Any Borrower shall fail to perform or observe any term,
covenant or agreement contained in Section 5.01(c), 5.01(d), 5.01(i),
5.01(j), 5.01(k), 5.01(l), 5.01(m), 5.01(n)(i), 5.01(o), 5.01(p), 5.01(q)
or 5.02 of this Agreement; or
8
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SECTION 1. FURTHER AMENDMENTS TO THE CREDIT AGREEMENT. Subject to the
satisfaction of the conditions to effectiveness specified in Section 8 hereof,
the Credit Agreement is hereby amended as follows:
(a) AMENDMENT TO SECTION 1.01 (CERTAIN DEFINED TERMS). Section 1.01
shall be amended by inserting the following definition in its appropriate
alphabetic location:
"'SUPERMAJORITY LENDERS' means, at any time, Lenders (other than
Affiliates of the Company) holding an Equivalent Dollar Amount of Term
Loans and having aggregate Revolving Credit Commitments (or, after
termination of the Revolving Credit Commitments, having an outstanding
principal amount of Revolving Credit Loans, after giving effect to
Section 2.14) in excess of 66-2/3% of the sum of (a) the Equivalent
Dollar Amount of the aggregate principal amount of Term Loans then
outstanding PLUS (b) the then-effective Revolving Credit Facility (or,
after termination of the Revolving Credit Facility, the aggregate
principal amount of Revolving Credit Loans outstanding, after giving
effect to Section 2.14) (in each case excluding Term Loans and Revolving
Credit Loans held by, and Revolving Credit Commitments of, Lenders that
are Affiliates of the Company)."
(b) AMENDMENT TO SECTION 8.01 (AMENDMENTS, ETC.). Section 8.01 of the
Credit Agreement shall be amended by inserting the following words immediately
prior to the final period thereof:
"; provided, further, that no amendment, waiver or consent shall, unless
in writing and signed by or consented to by Supermajority Lenders, waive
or amend Section 5.01(q)"
SECTION 2. WAIVER. Subject to the satisfaction of the conditions to
effectiveness specified in Section 7 hereof, application of Section 5.02(e) is
hereby waived solely with respect: (i) the payment to ADG by the Company or
any Subsidiary of an aggregate amount not in excess of $2,700,000 with respect
to the transfer of substantially all of the outstanding capital stock of
Camping Gaz International Deutschland GmbH to the Company or any Wholly-Owned
Subsidiary of the Company, (ii) the payment to ADG by the Company or any
Subsidiary of an aggregate amount not in excess of $900,000 with respect to
the transfer of substantially all of the outstanding capital stock of Camping
Gaz Great Britain Ltd. to the Company or any Wholly-Owned Subsidiary of the
Company, and (iii) the payment to ADG by the Company or any Subsidiary of an
aggregate amount not in excess of $500,000 with respect to the transfer of
substantially all of the outstanding capital stock of Camping Gaz Italie
S.r.l. to the Company or any Wholly-Owned Subsidiary of the Company.
9
<PAGE>
SECTION 0. REPRESENTATIONS AND WARRANTIES. Each Borrower represents and
warrants as of the date hereof that: (a) this Amendment has been duly executed
and delivered by such Borrower and that this Amendment constitutes such
Borrower's legal, valid and binding obligation, enforceable against such
Borrower in accordance with its terms, (b) after giving effect the amendments
contemplated hereby, no Default has occurred and is continuing and (c) the
representations and warranties in Article IV of the Credit Agreement are true
and correct in all material respects on and as of the date hereof (or, if any
such representation or warranty is expressly stated to have been made as of a
specific earlier date, as of such date). It shall be an Event of Default for
all purposes of the Credit Agreement if any of the representations and
warranties made herein shall be, or shall prove to have been, false or
misleading as of the time made in any material respect.
SECTION 0. CONFIRMATION OF COMPANY GUARANTY. The Company hereby (a)
reaffirms and restates as of the date hereof the obligations of the Company
pursuant to the Company Guaranty, (b) confirms that the Guaranteed Obligations
(as defined in the Company Guaranty) shall include, without limitation, the
Obligations of each Foreign Borrower under the Credit Agreement and each other
Loan Document, as each may be amended hereby and (c) agrees that each
reference to the Credit Agreement or words of similar import in each Loan
Document shall be a reference to the Credit Agreement as amended hereby.
SECTION 0. NO OTHER CONSENTS, WAIVERS OR AMENDMENTS. Except as
specifically provided in this Amendment, no other consents, waivers or
amendments are made or permitted hereby to the Credit Agreement. All other
terms and conditions of the Credit Agreement remain in full force and effect
and apply fully to this Amendment.
SECTION 0. EFFECTIVENESS. This Amendment (other than Section 2 hereof)
shall become effective on the date (the "Amendment Effective Date") that the
following conditions precedent shall have been satisfied:
(a) The receipt by the Agent of all fees of the Agent and the Lenders
that are due to the extent such fees have been presented to a Borrower
for payment;
(b) The receipt by the Agent of the following documents (each document
to be received by the Agent shall be in form and substance satisfactory
to the Agent):
(i) a copy of this Amendment, duly executed by the
Borrowers, the Agent and Required Lenders;
(ii) a copy of the Confirmation of Subsidiary Guaranty
that follows the signature pages hereof, duly executed by each of
the Subsidiaries party to the Subsidiary Guaranty; and
(iii) such other approvals, opinions or documents as the
Required Lenders or the Agent may reasonably request.
(c) Each of the representations and warranties made by each Borrower in
Section 4 hereof shall be true and correct.
10
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(d) No event has occurred and is continuing that constitutes a Default
under the Credit Agreement on the date hereof or on the Amendment
Effective Date, in each case after giving effect to this Amendment.
Upon such effectiveness, the Agent shall promptly notify the Company and each
of the Lenders of such effectiveness.
Section 7. EFFECTIVENESS OF SECTION 2. Section 2 of this Amendment
shall become effective on the date that the following conditions precedent
shall have been satisfied:
(a) The Amendment Effective Date shall have occurred; and
(b) The receipt by the Agent of a copy of this Amendment, duly executed
by the Borrowers, the Agent and each Lender.
Upon such effectiveness, the Agent shall promptly notify the Company and each
of the Lenders of such effectiveness.
SECTION 0. COUNTERPARTS. This Amendment may be executed in any number
of counterparts, each of which shall be identical and all of which, when taken
together, shall constitute one and the same instrument, and any of the parties
hereto may execute this Amendment by signing any such counterpart.
SECTION 0. BINDING EFFECT. This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
SECTION 0. GOVERNING LAW. This Amendment shall be governed by, and
construed in accordance with, the laws of the State of New York.
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and year first above written.
THE COLEMAN COMPANY, INC., as a
Borrower
By: /s/ LARRY E. SANFORD
------------------------------------
Name: Larry E. Sanford
Title: Executive Vice President
COLEMAN JAPAN CO., LTD., as a Borrower
By: /s/ LARRY E. SANFORD
------------------------------------
Name: Larry E. Sanford
Title: Director
COLEMAN (DEUTSCHLAND) GmbH, as a
Borrower
By: /s/ LARRY E. SANFORD
------------------------------------
Name: Larry E. Sanford
Title: Managing Director
COLEMAN TAYMAR LIMITED, as a Borrower
By: /s/ LARRY E. SANFORD
------------------------------------
Name: Larry E. Sanford
Title: Director
COLEMAN UK PLC, as a Borrower
By: /s/ LARRY E. SANFORD
------------------------------------
Name: Larry E. Sanford
Title: Director
12
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COLEMAN SVB S.r.l., as a Borrower
By: /s/ ANTHONY LENDERS
------------------------------------
Name: Anthony Lenders
Title: Director
CREDIT SUISSE FIRST BOSTON,
New York Branch, as Agent, Issuing
Bank and a Lender
By: /s/ JOEL GLODOWSKI
------------------------------------
Name: Joel Glodowski
Title: Managing Director
By: /s/ CHRIS T. HORGAN
------------------------------------
Name: Chris T. Horgan
Title: Associate
THE CHASE MANHATTAN BANK, as a Lender
By: /s/ NEIL R. BOYLAN
------------------------------------
Name: Neil R. Boylan
Title: Vice President
13
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Citibank, N.A., as a Lender
By: /s/ JAMES BUCHANAN
------------------------------------
Name: James Buchanan
Title: Attorney-In-Fact
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a Lender
By: /s/ AMBRISH D. THANAWALA
------------------------------------
Name: Ambrish D. Thanawala
Title: Vice President
THE LONG TERM CREDIT BANK OF JAPAN, LTD.,
LOS ANGELES AGENCY, as a Lender
By: /s/ PAUL B. CLIFFORD
------------------------------------
Name: Paul B. Clifford
Title: Deputy General Manager
NATIONSBANK (CAROLINAS), N.A., as a
Lender
By: /s/ PAUL F. MURPHY
------------------------------------
Name: Paul F. Murphy
Title: Associate
TORONTO DOMINION (TEXAS), INC.,
as a Lender
By: /s/ NEVA NESBITT
------------------------------------
Name: Neva Nesbitt
Title: Vice President
14
<PAGE>
BOATMEN'S NATIONAL BANK, as a Lender
By: /s/ Signature illegible
------------------------------------
Name: Signature illegible
Title:
THE YASUDA TRUST & BANKING COMPANY,
LIMITED, CHICAGO BRANCH, as a Lender
By: /s/ JOSEPH C. MEEK
------------------------------------
Name: Joseph C. Meek
Title: Deputy General Manager
THE FIRST NATIONAL BANK OF BOSTON,
as a Lender
By: /s/ RICHARD D. HALL, JR.
------------------------------------
Name: Richard D. Hall, Jr.
Title: Director
THE FUJI BANK LIMITED, as a Lender
By: /s/ TEIJI TERAMOTO
------------------------------------
Name: Teiji Teramoto
Title: Vice President
15
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ISTITUTO BANCARIO SAN PAOLO DI
TORINO S.P.A., as a Lender
By: /s/ CARLO PERSICO
------------------------------------
Name: Carlo Persico
Title: Deputy General Manager
By: /s/ JIM GIROLAMO
------------------------------------
Name: Jim Girolamo
Title: Vice President
THE NIPPON CREDIT BANK, LTD., as a
Lender
By: /s/ WOSHIHIDE WATANABE
------------------------------------
Name: Woshihide Watanabe
Title: Vice President and Manager
THE BANK OF NEW YORK, as a Lender
By: /s/ ROBERT LOUK
------------------------------------
Name: Robert Louk
Title: Vice President
INDUSTRIAL BANK OF JAPAN, as a Lender
By: /s/ TAKUYA HONJO
------------------------------------
Name: Takuya Honjo
Title: Sr. Vice President
16
<PAGE>
UNION BANK OF CALIFORNIA, N.A., as a
Lender
By: /s/ WANDA HEADRICK
------------------------------------
Name: Wanda Headrick
Title: Vice President
BANQUE FRAN AISE DU COMMERCE EXTERIEUR,
as a Lender
By: /s/ G. KEVIN DOOLEY
------------------------------------
Name: G. Kevin Dooley
Title: Vice President
By: /s/ WILLIAM C. MAIER
------------------------------------
Name: William C. Maier
Title: Vice President - Group Manager
17
<PAGE>
THE SUMITOMO BANK, LIMITED, NEW YORK
BRANCH, as a Lender
By: /s/ JOHN C. KISSINGER
------------------------------------
Name: John C. Kissinger
Title: Joint General Manager
FIRST BANK NATIONAL ASSOCIATION, as a
Lender
By: /s/ ELLIOT JAFFEE
------------------------------------
Name: Elliot Jaffee
Title: Vice President
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ATTACHMENT I
APPLICABLE MARGIN
TOTAL DEBT TO APPLICABLE LIBOR
EBITDA RATIO LOAN MARGIN
------------- ----------------
Below 2.00 0.25%
At or above 2.00,
but below 2.50 0.325%
At or above 2.50,
but below 2.75 0.425%
At or above 2.75,
but below 3.25 0.50%
At or above 3.25,
but below 3.50 0.575%
At or above 3.50,
but below 3.75 0.80%
At or above 3.75,
but below 4.00 0.925%
At or above 4.00,
but below 4.25 1.125%
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At or above 4.25,
but below 4.50 1.375%
At or above 4.50,
but below 4.75 1.625%
At or above 4.75,
but below 5.25 1.875%
At or above 5.25 2.125%
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ATTACHMENT II
APPLICABLE MARGIN FOR LOCAL LOANS
TOTAL DEBT TO APPLICABLE LIBOR
EBITDA RATIO LOAN MARGIN
------------- ----------------
Below 2.00 0.35%
At or above 2.00,
but below 2.50 0.425%
At or above 2.50,
but below 2.75 0.525%
At or above 2.75,
but below 3.25 0.60%
At or above 3.25,
but below 3.50 0.675%
At or above 3.50,
but below 3.75 0.90%
At or above 3.75,
but below 4.00 1.025%
At or above 4.00,
but below 4.25 1.225%
21
<PAGE>
At or above 4.25,
but below 4.50 1.475%
At or above 4.50,
but below 4.75 1.725%
At or above 4.75,
but below 5.25 1.975%
At or above 5.25 2.225%
22
<PAGE>
ATTACHMENT III
MAINTENANCE OF TOTAL DEBT TO EBITDA RATIO
Period Ratio
--------------------------- -----
October 1, 1996 to and 6.25
including December 31, 1996
January 1, 1998 to and 5.75
including March 31, 1998
April 1, 1998 to and 5.50
including June 30, 1998
July 1, 1998 to and 5.00
including September 30, 1998
October 1,1998 to and 4.25
including June 30, 1999
July 1, 1999 to and 3.50
including December 31, 1999
January 1, 2000 and 3.00
thereafter
23
<PAGE>
ATTACHMENT IV
MAINTENANCE OF INTEREST COVERAGE RATIO
Period Ratio
--------------------------- -----
October 1, 1996 to and 2.50
including December 31, 1996
January 1, 1997 to and 2.10
including March 31, 1997
April 1, 1997 to and 3.00
including June 30, 1997
July 1, 1997 to and 2.75
including September 30, 1997
October 1, 1997 to and 2.35
including December 31, 1997
January 1, 1998 to and 2.25
including March 31, 1998
April 1, 1998 to and 2.75
including June 30, 1998
July 1, 1998 to and 3.00
including September 30, 1998
October 1, 1998 to and 3.50
including June 30, 1999
July 1, 1999 and 4.00
thereafter
24
<PAGE>
25
<PAGE>
1
<PAGE>
CONFIRMATION OF SUBSIDIARY GUARANTY
Each of the undersigned (the "Guarantors") hereby (i) approves, ratifies,
confirms and acknowledges the attached Amendment (the "Amendment"; terms
defined therein being used herein as therein defined), (ii) reaffirms and
restates as of the date hereof the obligations of such Guarantor pursuant to
the Subsidiary Guaranty dated as of May 4, 1994 (as supplemented by Supplement
No. 1 thereto dated as of March 9, 1995, by Supplement No. 2 thereto dated as
of July 14, 1995, by Supplement No. 3 thereto dated as of December 21, 1995
and by Supplement No. 4 thereto dated as of October 31, 1996, the "Subsidiary
Guaranty") by the Guarantors in favor of the Agent and (iii) agrees that each
reference to the Credit Agreement or words of similar import in each Loan
Document to which such Guarantor is party shall be a reference to the Amended
and Restated Credit Agreement, as amended by the Amendment. Each of the
undersigned further represents and warrants to each Lender and the Agent that
(a) this acknowledgment has been duly executed and delivered by such Guarantor
and constitutes such Guarantor's legal, valid and binding obligation,
enforceable in accordance with its terms, and, (b) immediately after giving
effect to the Amended and Restated Credit Agreement, as amended by the
Amendment, (i) no Default has occurred and is continuing and (ii) the
representations and warranties made by such Guarantor in Section 5 of the
Subsidiary Guaranty are true, correct and complete in all material respects as
if made on and as of the date hereof, except that any such representation or
warranty stated to relate to a specific earlier date is true and correct as of
such earlier date. It shall be an Event of Default for all purposes of the
Subsidiary Guaranty and the other Loan Documents if any of the representations
and warranties made herein shall be, or shall prove to have been, false or
misleading as of the time made in any material respect. Dated: March 7, 1997
GUARANTORS
AUSTRALIAN COLEMAN, INC.
BEACON EXPORTS, INC.
COLEMAN COUNTRY, LTD.
COLEMAN POWERMATE, INC.
COLEMAN POWERMATE COMPRESSORS, INC.
COLEMAN SPAS, INC.
COLEMAN VENTURE CAPITAL, INC.
KANSAS ACQUISITION CORP.
NIPPON COLEMAN, INC.
COLEMAN SAFETY & SECURITY PRODUCTS, INC.
SIERRA CORPORATION OF FORT SMITH, INC.
GENERAL ARCHERY INDUSTRIES, INC.
PEARSON HOLDINGS INCORPORATED
WOODCRAFT EQUIPMENT COMPANY
RIVER VIEW CORPORATION OF BARLING, INC.
COLEMAN ARGENTINA, INC.
2
<PAGE>
By: /s/ LARRY E. SANFORD
--------------------------------
Name: Larry E. Sanford
Title: Vice President and Secretary
EASTPAK CORPORATION
EASTPAK MANUFACTURING CORPORATION
By: /s/ LARRY E. SANFORD
--------------------------------
Name: Larry E. Sanford
Title: Executive Vice President-Law,
Administration & Development
and Secretary
3
<PAGE>
AMENDMENT TO
EMPLOYMENT AGREEMENT
SECOND AMENDMENT dated as of August 1, 1996 to Employment Agreement
effective as of May 1, 1996, by and between The Coleman Company, Inc. A
Delaware corporation (the "Company") and Frederik van den Bergh (the
"Executive").
WHEREAS, the parties entered an Employment Agreement effective as of May
1, 1996 (the "Employment Agreement"); and
WHEREAS, the parties wish to amend the Employment Agreement as set forth
herein.
NOW THEREFORE, the parties agree as follows:
1. Section 4(a) is hereby amended in its entirety and replaced with the
following:
4. (a) SALARY During the term of the Executive's employment hereunder,
the Corporation will pay to the Executive a salary at the rate of $500,000 per
annum, in substantially equal installments in accordance with normal payroll
practices of the Corporation, but not less frequently than monthly. The salary
shall be sourced from the U.S. payroll, and expensed equally on an intercompany
basis between the Switzerland, Japan, and United Arab Emirates strategic
business units. The base salary may be increased by the Board from time to
time, in its discretion, but in no event shall such base salary be reduced from
the rate previously in effect. The base salary in effect from time to time
hereunder is referred to as the "Base Salary."
2. The parties agree that as except as expressly amended hereby, the
Agreement shall be in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment to the
Employment Agreement as of the date first above written.
THE COLEMAN COMPANY, INC.
BY: /s/ LARRY E. SANFORD
---------------------------------
NAME: Larry E. Sanford
TITLE: Executive Vice President
/s/ FREDERIK VAN DEN BERGH
------------------------------------
Frederik van den Bergh
<PAGE>
As Amended February 11, 1997
THE COLEMAN COMPANY, INC.
1996 STOCK OPTION PLAN
1. PURPOSE.
This 1996 Stock Option Plan (the "Plan") is intended to encourage stock
ownership by employees of The Coleman Company, Inc. (the "Company") and
employees of Affiliated Corporations (as defined in Section 2(a)
hereof), so that they may acquire or increase their proprietary
interest in the Company, and to encourage such employees to remain in
the employ of the Company and to put forth maximum efforts for the
success of the business. It is further intended that options granted
by the Committee (as defined herein) pursuant to Section 6 of this Plan
shall constitute "incentive stock options" ("Incentive Stock Options")
within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended, and the regulations issued thereunder (the "Code"), and
options granted by the Committee pursuant to Section 7 of this Plan
shall constitute "nonqualified stock options" ("Nonqualified Stock
Options"). Options granted under the Plan ("Options") may be
accompanied by stock appreciation rights ("Rights"), as hereinafter
set forth. Rights may also be granted alone.
2. DEFINITIONS.
As used in this Plan, the following words and phrases shall have the
meanings indicated:
(a) "Affiliate Corporation" or "Affiliate" shall mean any corporation,
directly or indirectly, through one or more intermediaries,
controlling, controlled by, or under common control with the Company.
(b) "Disability" shall mean an inability of an Optionee (as defined
herein) to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment that can be
expected to result in death or that has lasted or can be expected to
last for a continuous period of not less than twelve months.
(c) "Change of Control" shall mean that any of the following events will
be deemed to have taken place:
(i) any "person" (as defined in Section 3(a)(9) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and as
modified in Sections 13(d) and 14(d) of the Exchange Act) other
than (A) the Corporation or any of its subsidiaries, (B) any
employee benefit plan of the Corporation or one of its
subsidiaries, or (C) MacAndrews & Forbes
1
<PAGE>
Holdings Inc. or any affiliate thereof (collectively, "MAFCO"),
(D) a corporation owned, directly or indirectly, by shareholders
of the Corporation in substantially the same proportions as their
ownership of the Corporation, or (E) an underwriter temporarily
holding securities pursuant to an offering of such securities (a
"Person"), becomes a "beneficial owner" (as defined in Rule
13(d)(3) of the Exchange Act), directly or indirectly, of
securities of the Corporation representing 20% or more of the
shares of common stock of the Corporation then outstanding, and
such Person's beneficial ownership level then exceeds the
percentage of the Corporation's outstanding shares beneficially
owned by MAFCO;
(ii) the consummation of any merger or consolidation of the
Corporation or one of its subsidiaries with or into another
corporation, other than a merger or consolidation which would
result in the holders of the voting securities of the Corporation
outstanding immediately prior thereto holding securities which
represent immediately after such merger or consolidation more
than 80% of the combined voting power of the voting securities
of the Corporation or the surviving corporation or the parent of
such surviving corporation;
(iii) the shareholders of the Corporation approve a plan of complete
liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all of
the Corporation's assets; or
(iv) a majority of the Board of Directors votes in favor of a decision
that a Change of Control has occurred.
(d) "Fair Market Value" per share as of a particular date shall mean (i)
the closing sales price per share of Common Stock (as defined herein)
on a specified date which is on or after the date on which a
resolution is adopted to expressly grant an Option, or (ii) if the
shares of Common Stock are then traded on an over-the-counter market,
the average of the closing bid and asked prices for the shares of
Common Stock in such over-the-counter market for the last preceding
date on which there was a sale of such Common Stock in such market,
or (iii) if the shares of Common Stock are not then listed on a
national securities exchange or traded in an over-the-counter market,
such value as the Committee in its discretion may determine.
(e) "Parent Corporation" shall mean any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company
if, at the time of granting an Option, each of such corporations
(other than the Company) owns stock possessing fifty percent or more
of the total combined voting power of all classes of stock in one of
the other corporations in such chain.
(f) "Subsidiary Corporation" shall mean any corporation (other than the
Company) in an unbroken chain of corporations beginning with the
Company if, at the time of
2
<PAGE>
granting an Option, each of such corporations other than the last
corporation in an unbroken chain owns stock possessing fifty percent
or more of the total combined voting power of all classes of stock in
one of the other corporations in such chain.
(g) "Ten Percent Stockholder" shall mean an Optionee who, at the time an
Incentive Stock Option is granted, owns stock possessing more than ten
percent of the total combined voting power of all classes of stock of
the Company or of its Parent Corporations or Subsidiary Corporations.
3. ADMINISTRATION.
The Plan shall be administered by the Management Compensation and Stock
Option Committee (the "Committee"), consisting of at least two members of
the Board of Directors of the Company (the "Board"), none of whom is or
shall have been for at least one year prior to such appointment granted or
awarded equity securities pursuant to the Plan or any other plan of the
Company or any of its Affiliates entitling the participants therein to
acquire stock, stock options or stock appreciation rights of the Company or
any of its Affiliates.
The Committee shall have the authority in its discretion, subject to and
not inconsistent with the express provisions of the Plan, to administer
the Plan and to exercise all the powers and authorities either specifically
granted to it under the Plan or necessary or advisable in the
administration of the Plan, including, without limitation, the authority
to grant Options; to determine which Options shall constitute Incentive
Stock Options and which Options shall constitute Nonqualified Stock
Options; to determine which Options (if any) shall be accompanied by
Rights; to determine the purchase price of the shares of Common Stock
covered by each Option (the "Option Price"); to determine the persons to
whom, and the time or times at which, Options shall be granted; to
determine the number of shares to be covered by each Option; to interpret
the Plan; to prescribe, amend and rescind rules and regulations relating to
the Plan; to determine the terms and provisions relating to the Plan; to
determine the terms and provisions of the Option Agreements (which need not
be identical) entered into in connection with Options granted under the
Plan; and to make all other determinations deemed necessary or advisable
for the administration of the Plan. The Committee may delegate to one or
more of its members or to one or more agents such administrative duties as
it may deem advisable, and the Committee or any person to whom it has
delegated duties as aforesaid may employ one or more persons to render
advice with respect to any responsibility the Committee or such person may
have under the Plan.
No member of the Board or Committee shall be liable for any action taken
or determination made in good faith with respect to the Plan or any Option
or Right granted hereunder.
3
<PAGE>
4. ELIGIBILITY.
Options or Rights, or both, may be granted to key employees
(including, without limitation, officers and directors who are
employees) of the Company or its present or future Affiliate
Corporations, except that Incentive Stock Options shall be granted
only to individuals who, on the date of such grant, are employees of
the Company or a Parent Corporation or a Subsidiary Corporation. In
determining the persons to whom Options and Rights shall be granted
and the number of shares to be covered by each Option and any Rights,
the Committee shall take into account the duties of the respective
persons, their present and potential contributions to the success of
the Company and such other factors as the Committee shall deem
relevant in connection with accomplishing the purpose of the Plan. A
person to whom an Option has been granted hereunder is sometimes
referred to herein as an "Optionee."
An Optionee shall be eligible to receive more than one grant of an
Option during the term of the Plan, but only on the terms and subject
to the restrictions hereinafter set forth.
5. STOCK.
The stock subject to Options and Rights hereunder shall be shares of the
Company's common stock, par value $0.01 per share ("Common Stock"). Such
shares may, in whole or in part, be authorized but unissued shares or
shares that shall have been or that may be reacquired by the Company. The
aggregate number of shares of Common Stock as to which Options and Rights
may be granted from time to time under the Plan shall not exceed 1,000,000.
The limitation established by the preceding sentence shall be subject to
adjustment as provided in Section 8(h) hereof.
In the event that any outstanding Option under the Plan for any reason
expires or is terminated without having been exercised in full or without
having been surrendered in full in connection with the exercise of a Right,
the shares of Common Stock allocable to the unexercised portion of such
Option shall (unless the Plan shall have been terminated) become available
for subsequent grants of Options and Rights under the Plan.
6. INCENTIVE STOCK OPTIONS.
Options granted pursuant to this Section 6 are intended to constitute
Incentive Stock Options and shall be subject to the following special
terms and conditions, in addition to the general terms and conditions
specified in Section 8 hereof.
(a) VALUE OF SHARES. The aggregate Fair Market Value (determined as of
the date the Incentive Stock Option is granted) of the shares of
Common stock with respect to which Options granted under this Plan
and all other option plans of the Company,
4
<PAGE>
any Parent Corporation and any Subsidiary Corporation become
exercisable for the first time by an Optionee during any calendar
year shall not exceed $100,000.
(b) TEN PERCENT STOCKHOLDER. In the case of an Incentive Stock Option
granted to a Ten Percent Stockholder, (i) the Option Price shall not
be less than one hundred ten percent of the Fair Market Value of a
share of Common Stock of the Company on the date of grant of such
Incentive Stock Option, and (ii) the exercise period shall not exceed
five years from the date of grant of such Incentive Stock Options.
7. NONQUALIFIED STOCK OPTIONS.
Options granted pursuant to this Section 7 are intended to constitute
Nonqualified Stock Options and shall be subject only to the general terms
and conditions specified in Section 8 hereof.
8. TERMS AND CONDITIONS OF OPTIONS.
Each Option granted pursuant to the Plan shall be evidenced by a written
Option Agreement between the company and the Optionee, which agreement
shall comply with and be subject to the following terms and conditions:
(a) NUMBER OF SHARES. Each Option Agreement shall state the number of
shares of Common Stock to which the Option relates. The maximum
number of shares that can be granted to an Optionee in a particular
calendar year is 150,000 shares.
(b) OPTION PRICE. Each Option Agreement shall state the Option Price per
share of Common Stock, which, in the case of Incentive Stock Options,
shall be not less than one hundred percent of the Fair Market Value
of a share of Common Stock of the Company on the date of grant of the
Option. The Option Price shall be subject to adjustment as provided
in Section 8(h) hereof. The date on which the Committee adopts a
resolution expressly granting an Option shall be considered the day on
which such Option is granted, unless a subsequent date is specified in
such resolution.
(c) MEDIUM AND TIME OF PAYMENT. The Option Price shall be paid in full,
at the time of exercise, in cash or in shares of Common Stock having
a Fair Market Value equal to such Option Price or in a combination of
cash and such shares, and may be effected in whole or in part (i)
with monies borrowed from the Company pursuant to repayment terms
and conditions as shall be determined from time to time by the
Committee, in its discretion, separately with respect to each exercise
of Options and each Optionee; provided, however, that each such method
and time for payment and each such borrowing and terms and conditions
of security, if any, and repayment shall be permitted by and be in
compliance with applicable law.
5
<PAGE>
(d) TERM AND EXERCISE OF OPTIONS. Options shall be exercisable over the
exercise period as and at the times and upon the conditions that the
Committee may determine, as reflected in the Option Agreement;
provided, however, that the Committee shall have the authority to
accelerate the exercisability of any outstanding Option at such time
and under such circumstances as it, in its sole discretion, deems
appropriate. The exercise period shall be determined by the
Committee; provided, however, that in the case of an Incentive Stock
Option, such exercise period shall not exceed ten years from the date
of grant of such Incentive Stock Option. The exercise period shall be
subject to earlier termination as provided in Section 8(e) and 8(f)
hereof. An Option may be exercised, as to any or all full shares of
Common Stock as to which the Option has become exercisable, by giving
written notice of such exercise to the Committee; provided, however,
that an Option may not be exercised at any time as to fewer than one
hundred shares (or such number of shares as to which the Option is
then exercisable if such number of shares is less than one hundred).
(e) TERMINATION OF EMPLOYMENT. Except as provided in this Section 8(e)
and in Section 8(f) hereof, an Option may not be exercised unless the
Optionee is then in the employ of (1) the Company, (2) an Affiliate
Corporation or (3) a corporation issuing or assuming the Option in a
transaction to which Section 424(a) of the Code applies or a parent
corporation or subsidiary corporation of the corporation described in
this Clause 3, and unless the Optionee has remained continuously so
employed since the date of grant of the Option. In the event that the
employment of an Optionee shall terminate (other than by reason of
death, Disability or retirement), all Options of such Optionee that
are exercisable at the time of such termination may, unless earlier
terminated in accordance with their terms, be exercised within three
months after such termination. Nothing in the Plan or in any Option
or Right granted pursuant hereto shall confer upon an individual any
right to continue in the employ of the Company or any of its Affiliate
Corporations or interfere in any way with the right of the Company or
any such Affiliate Corporation to terminate such employment at any
time.
(f) DEATH, DISABILITY OR RETIREMENT OF OPTIONEE. If an Optionee shall die
while employed by the Company or an Affiliate Corporation, or within
three months after the termination of such Optionee's employment, or
if the Optionee's employment shall terminate by reason of Disability
or retirement, all Options previously granted to such Optionee, except
those that have previously terminated, or those that have been
exercised, may be exercised by the Optionee or by the person or
persons to whom the Optionee's rights pass, at any time within one
year after the date of death, Disability or retirement of the
Optionee.
(g) NONTRANSFERABILITY OF OPTIONS. Options granted under the Plan shall
not be transferable otherwise than by will or by the laws of descent
and distribution, and Options may be exercised, during the lifetime of
the Optionee, only by the Optionee or by the guardian or legal
representative of the Optionee.
6
<PAGE>
(h) EFFECT OF CERTAIN CHANGES.
(1) If there is any change in the number of shares of Common Stock
through the declaration of stock dividends, or through
recapitalization resulting in stock splits, or combinations or
exchanges of such shares, the number of shares of Common Stock
available for Options and Rights, the number of shares covered
by outstanding Options and Rights, THE MAXIMUM NUMBER OF SHARES
THAT CAN BE GRANTED TO AN OPTIONEE IN A PARTICULAR CALENDAR YEAR,
and the price per share of such Options or the applicable market
value of Rights, shall be proportionately adjusted by the
Committee to reflect any increase or decrease in the number of
issued shares of Common Stock.
(2) In the event of a change in the Common Stock of the Company as
presently constituted, which is limited to a change of all of
its authorized shares with par value into the same number of
shares with a different par value or without par value, the
shares resulting from any such change shall be deemed to be the
Common Stock within the meaning of the Plan.
(3) To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustments shall be made by the
Committee, whose determination in that respect shall be final,
binding and conclusive, provided that each Incentive Stock Option
granted pursuant to this Plan shall not be adjusted in a manner
that causes such option to fail to continue to qualify as an
Incentive Stock Option within the meaning of Section 422 of the
Code.
(4) In the event of a Change of Control (as defined in Section 2(c)
above), all previously granted options, except those that have
been previously terminated or exercised, become immediately
exercisable by an Optionee or an Optionee's transferee.
(i) RIGHTS AS A STOCKHOLDER. An Optionee or a transferee of an Option
shall have no rights as a stockholder with respect to any shares
covered by the Option until the date of the issuance of a stock
certificate to him for such shares. No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or
other property) or distribution of other rights for which the record
date is prior to the date such stock certificate is issued, except as
provided in Section 8(h) hereof.
(j) OTHER PROVISIONS. The Option Agreements authorized under the Plan
shall contain such other provisions, including, without limitations,
(i) the granting of Rights, (ii) the imposition of restrictions upon
the exercise of an Option, and (iii) in the case of an Incentive Stock
Option, the inclusion of any condition not inconsistent with such
Options qualifying as Incentive Stock Options, as the Committee shall
deem advisable.
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<PAGE>
9. STOCK APPRECIATION RIGHTS.
(a) GRANT AND EXERCISE. Rights may be granted either alone ("Free
Standing Rights") or in conjunction with all or part of any Stock
Option granted under the Plan ("Related Rights"). In the case of a
Nonqualified Stock Option, Related Rights may be granted either at or
after the time of the grant of such Stock Option. In the case of an
Incentive Stock Option, Related Rights may be granted only at the time
of the grant of the Incentive Stock Option.
A Related Right or applicable portion thereof granted with respect to
a given Stock Option shall terminate and no longer be exercisable upon
the termination or exercise of the related Stock Option, except that,
unless otherwise provided by the Committee at the time of grant, a
Related Right granted with respect to less than the full number of
shares covered by a related Stock Option shall only be reduced if and
to the extent that the number of shares covered by the exercise of
termination of the related Stock Option exceeds the number of shares
not covered by the Right.
A Related Right may be exercised by an Optionee, in accordance with
paragraph (b) of this Section 9, by surrendering the applicable
portion of the related Stock Option. Upon such exercise and
surrender, the Optionee shall be entitled to receive an amount
determined in the manner prescribed in paragraph (b) of this Section
9. Stock Options which have been so surrendered, in whole or in part,
shall no longer be exercisable to the extent the Related Rights have
been exercised.
(b) TERMS AND CONDITIONS. Rights shall be subject to such terms and
conditions, not inconsistent with the provisions of the Plan, as shall
be determined from time to time by the Committee, including the
following:
(1) Rights which are Related Rights shall be exercisable only at such
time or times and to the extent that the Options to which they
relate shall be exercisable in accordance with the provisions of
Sections 6, 7, 8 and this Section 9 of the Plan; provided,
however, that any Related Right shall not be exercisable during
the first six months of the term of the Related Right, except
that this additional limitation shall not apply in the event of
death or Disability of the Optionee prior to the expiration of
the six-month period.
(2) Upon the exercise of a Related Right, an Optionee shall be
entitled to receive up to, but not more than, an amount in cash
or shares of Common Stock equal in value to the excess of the
Fair Market Value as of the date of exercise of one share of
Common Stock over the option price per share specified in the
related Option multiplied by the number of shares in respect of
which the Related Right shall have been exercised, with the
Committee having the right to determine the form of payment.
(3) Related Rights shall be transferable only when and to the extent
that the
8
<PAGE>
underlying Option would be transferable under paragraph (g) of
Section 8 of the Plan.
(4) Upon the exercise of a Related Right, the Option or part thereof
to which such Related Right is related shall be deemed to have
been exercised for the purpose of the limitation set forth in
Section 5 of the Plan on the number of shares of Common Stock
to be issued under the Plan, but only to the extent of the number
of shares issued under the Related Right.
(5) [Not used]
(6) Rights which are Free Standing Rights shall be exercisable at
such time or times and subject to such terms and conditions as
shall be determined by the Committee at or after grant; provided,
however, that Free Standing Rights shall not be exercisable
during the first six months of the term of the Free Standing
Right, except that this limitation shall not apply in the event
of death or Disability of the recipient of the Free Standing
Right prior to the expiration of the six-month period.
(7) The term of each Free Standing Right shall be fixed by the
Committee, but no Free Standing Right shall be exercisable more
than ten years after the date such right is granted.
(8) Upon the exercise of a Free Standing Right, a recipient shall be
entitled to receive up to, but not more than, an amount in cash
or shares of Common Stock equal in value to the excess of the
Fair Market Value as of the date of exercise of one share of
Common Stock over the price per share specified in the Free
Standing Right (which shall be no less than one hundred percent
of the Fair Market Value of the Common Stock on the date of
grant) multiplied by the number of shares in respect to which
the Right is being exercised, with the Committee having the right
to determine the form of payment.
(9) No Free Standing Right shall be transferable by the recipient
otherwise than by will or by the laws of descent and
distribution, and all such Rights shall be exercisable, during
the recipient's lifetime, only by the recipient or his legal
guardian or legal representative.
(10) In the event of the termination of employment of a recipient of
a Free Standing Right, such Right shall be exercisable to the
same extent that an Option would have been exercisable in the
event of the termination of employment of an Optionee.
10. AGREEMENT BY OPTIONEE REGARDING WITHHOLDING TAXES.
If the Committee shall so require, as a condition of exercise, each
Optionee shall agree that
(a) no later than the date of exercise of any Option or Right granted
hereunder, the Optionee will pay to the Company or make arrangements
satisfactory to the Committee regarding payment of any Federal, state
or local taxes of any kind required by law to be withheld upon the
exercise of such Option or Right; and
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<PAGE>
(b) the Company shall, to the extent permitted or required by law, have
the right to deduct from any payment of any kind otherwise due to
the Optionee, Federal, state and local taxes of any kind required by
law to be withheld upon the exercise of such Option or Right.
11. TERM OF PLAN.
Options and Rights may be granted pursuant to the Plan from time to time
within a period of ten years from the date the Plan is adopted by the
Board.
12. AMENDMENT AND TERMINATION OF THE PLAN.
The Board at any time and from time to time may suspend, terminate, modify
or amend the Plan. Except as provided in Section 8 hereof, no suspension,
termination, modification or amendment of the Plan may adversely affect
any Option or Right previously granted, unless the written consent of the
Optionee is obtained.
13. APPROVAL OF STOCKHOLDERS.
The Plan shall take effect upon its adoption by the Board of Directors but
shall be subject to the approval of the holders of a majority of the issued
and outstanding shares of Common Stock of the Company, which approval must
occur within twelve months after the date the Plan is adopted by the Board.
14. EFFECT OF HEADINGS.
The section and subsection headings contained herein are for convenience
only and shall not affect the construction hereof.
February 14, 1997
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EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of [November 1], 1994 between E. Acquisition
Corporation, a Delaware corporation (the "Company") and Mark Goldman (the
"Executive").
The Company wishes to employ the Executive, and the Executive wishes to
accept such employment, on the terms and conditions set forth in this Agreement.
Accordingly, the Company and the Executive hereby agree as follows:
EMPLOYMENT, DUTIES AND ACCEPTANCE.
1.1 EMPLOYMENT, DUTIES. The Company hereby employs the Executive for
the Term (as defined in Section 2.1), to render exclusive and full-time services
to the Company as President and Chief Operating Officer or in such other
executive position as may be mutually agreed upon by the Company and the
Executive, and to perform such other duties consistent with such position as may
be assigned to the Executive by the Board of Directors or any officer of the
Company senior to the Executive.
1.2 ACCEPTANCE. The Executive hereby accepts such employment and
agrees to render the services described above. During the Term, the Executive
agrees to serve the Company faithfully and to the best of the Executive's
ability, to devote the Executive's entire business time, energy and skill to
such employment, and to use the Executive's best efforts, skill and ability to
promote the Company's interests. The Executive further agrees to accept
election, and to serve during all or any part of the Term, as an officer or
director of the Company and of any subsidiary or affiliate of the Company,
without any compensation therefor other than that specified in this Agreement,
if elected to any such position by the shareholders or by the Board of Directors
of the Company or of any subsidiary or affiliate, as the case may be.
1.3 LOCATION. The duties to be performed by the Executive hereunder
shall be performed primarily at the office of the Company in Massachusetts or
Puerto Rico, subject to reasonable travel requirements on behalf of the Company.
<PAGE>
2. TERM OF EMPLOYMENT;-CERTAIN POST-TERM BENEFITS.
2.1 THE TERM. The term of the Executive's employment under this
Agreement (the "Term") shall commence on November 1, 1994 and shall end on
December 31, 1997.
2.2 SPECIAL CURTAILMENT. The Term shall end earlier than the
original December 31, 1997 termination date provided in Section 2.1 if sooner
terminated pursuant to Section 4. Non-extension of the Term shall not be deemed
to be a wrongful termination of the Term or this Agreement by the Company
pursuant to Section 4.4.
3. COMPENSATION; BENEFITS.
3.1 SALARY. As compensation for all services to be rendered pursuant
to this Agreement, the Company agrees to pay the Executive during the Term a
base salary, payable semi-monthly in arrears, at the annual rate of not less
than $50,000, less such deductions or amounts to be withheld as required by
applicable law and regulations (the "Base Salary"). In the event that the
Company, in its sole discretion, from time to time determines to increase the
Base Salary, such increased amount shall, from and after the effective date of
the increase, constitute "Base Salary" for purposes of this Agreement.
3.2 DISCRETIONARY BONUS. In addition to the amounts to be paid to
the Executive pursuant to Section 3.1, the Executive will be eligible upon the
decision of the Board of Directors and in the Board's sole discretion, to
receive a discretionary bonus with respect to each year of the Term in such
amount as the Board in its sole discretion may determine.
3.3 BUSINESS EXPENSES. The Company shall pay or reimburse the
Executive for all reasonable expenses actually incurred or paid by the
Executive during the Term in the performance of the Executive's services under
this Agreement, upon presentation of expense statements or vouchers or such
other supporting information as the Company customarily may require of its
officers PROVIDED, HOWEVER, that the maximum amount available for such
expenses during any period may be fixed in advance by the Chairman or Vice
Chairman of the Board of Directors, the President of the Company, or the Board
of Directors.
3.4 VACATION. During the Term, the Executive shall be entitled to a
vacation period or periods of four weeks taken in accordance with the vacation
policy of the Company during each year of the Term. Vacation time
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not used by the end of a year shall be forfeited.
3.5 FRINGE BENEFITS. During the Term, the Executive shall be
entitled to all benefits for which the Executive shall be eligible under any
qualified pension plan, 401(k) plan, group insurance or other so-called "fringe"
benefit plan which the Company provides to its employees generally, together
with executive medical benefits for the Executive, the Executive's spouse and
the Executive's children as from time to time in effect for officers of the
Company generally.
4. TERMINATION.
4.1 DEATH. If the Executive shall die during the Term, the Term
shall terminate and no further amounts or benefits shall be payable hereunder,
except that the Executive's legal representatives shall be entitled to receive
continued payments in an amount equal to 60% of the Base Salary, in the manner
specified in Section 3.1, until the end of the Term (as in effect immediately
prior to the Executive's death).
4.2 DISABILITY. If during the Term the Executive shall become
physically or mentally disabled, whether totally or partially, such that the
Executive is unable to perform the Executive's services hereunder for (i) a
period of six consecutive months or (ii) for shorter periods aggregating six
months during any twelve month period, the Company may at any time after the
last day of the six consecutive months of disability or the day on which the
shorter periods of disability shall have equaled an aggregate of six months,
by written notice to the Executive (but before the Executive has recovered from
such disability), terminate the Term and no further amounts or benefits shall
be payable hereunder, except that the Executive shall be entitled to receive
continued payments in an amount equal to 60% of the Base Salary, in the manner
specified in Section 3.1, until the end of the Term (as in effect immediately
prior to such termination), such payments to be offset by the amount, if any,
received by the Executive from any long-term disability plan maintained by the
Company. If the Executive shall die before receiving all payments to be made
by the Company in accordance with the foregoing, such payments shall be made to
a beneficiary designated by the Executive on a form prescribed for such purpose
by the Company, or in the absence of such designation to the Executive's legal
representative.
4.3 CAUSE. In the event of gross neglect by the Executive of the
Executive's duties hereunder, conviction of the Executive of any serious felony
committed
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intentionally by the Executive (including any crime or offense involving the
property of the Company or any of its subsidiaries or affiliates), the
Company may at any time by written notice to the Executive terminate the Term
and, upon such termination, this Agreement shall terminate and the Executive
shall be entitled to receive no further amounts or benefits hereunder, except
any as shall have been earned to the date of such termination; PROVIDED,
HOWEVER, that in the event of gross neglect by the Executive of the
Executive's duties hereunder, the Company shall provide the Executive with
prior notice (the "Company Notice") of its intent to terminate the Executive
including its reasons for such termination and the Executive shall have 45
days or such other amount of time as determined by the Board of Directors of
the Company to correct all such matters set forth in the Company Notice.
Notwithstanding the foregoing, prior to any termination of the Term pursuant
to the provisions of this Section 4.3, the Company shall deliver to Executive
a copy of a resolution duly adopted by the affirmative vote of three-quarters
or more of the Board of Directors of The Coleman Company, Inc. then in office
at a meeting of the Board called and held for such purpose (after reasonable
notice to Executive and an opportunity for Executive, together with his
counsel, to be heard before the Board), finding that in the good faith
opinion of the Board, Executive was guilty of the conduct set forth in this
Section 4.3 and specifying the particulars thereof in detail.
4.4 COMPANY BREACH. In the event of the breach of any material
provision of this Agreement by the Company, the Executive shall be entitled
to terminate the Term upon 60 days' prior written notice to the Company.
Upon such termination, or in the event the Company terminates the Term or
this Agreement other than pursuant to the provisions of Section 4.2 or 4.3,
the Company shall continue to provide the Executive (i) payments of Base
Salary, in the manner and amount specified in Section 3.1 and (ii) fringe
benefits and additional benefits in the manner and amounts specified in
Sections 3.S and 3.6 until the end of the Term (as in effect immediately
prior to such termination) (the "Damage Period"). The Company's obligations
pursuant to this Section 4.4 are subject to the Executive's duty to mitigate
damages by seeking other employment PROVIDED, HOWEVER, that the Executive
shall not be required to accept a position of lesser importance or of
substantially different character than the position held with the Company
immediately prior to the effective date of termination or in a location
outside of Puerto Rico. To the extent that the Executive shall earn
compensation during the Damage Period (without regard to when such
compensation is paid), the Base Salary payments to be made by the Company
pursuant to this Section 4.4 shall be correspondingly reduced.
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4.5 LITIGATION EXPENSES. Except as provided for in Section 5.7,
if the Company and the Executive become involved in any action, suit or
proceeding relating to the alleged breach of this Agreement by the Company or
the Executive, and if a judgment in such action, suit or proceeding is
rendered in favor of the Executive, the Company shall reimburse the Executive
for all expenses (including reasonable attorneys' fees) incurred by the
Executive in connection with such action, suit or proceeding. Such costs
shall be paid to the Executive promptly upon presentation of expense
statements or other supporting information evidencing the incurrence of such
expenses.
5. PROTECTION OF CONFIDENTIAL INFORMATION; NON-COMPETITION.
5.1 In view of the fact that the Executive's work for the Company
will bring the Executive into close contact with many confidential affairs of
the Company not readily available to the public, and plans for future
developments, the Executive agrees:
5.1.1 To keep and retain in the strictest confidence all
confidential matters of the Company, including, without limitation, "know
how", trade secrets, customer lists, pricing policies, operational methods,
technical processes, formulae, inventions and research projects, and other
business affairs of the Company, learned by the Executive hereafter, and not
to disclose them to anyone outside of the Company, either during or after the
Executive's employment with the Company, except in the course of performing
the Executive's duties hereunder or with the Company's express written
consent; and
5.1.2 To deliver promptly to the Company on termination of
the Executive's employment by the Company, or at any time the Company may so
request, all memoranda, notes, records, reports, manuals, drawings,
blueprints and other documents (and all copies thereof) relating to the
Company's business and all property associated therewith, which the Executive
may then possess or have under the Executive's control.
5.2 During the Term, the Executive shall not, directly or
indirectly, enter the employ of, or render any services to, any person, firm
or corporation engaged in any business competitive with the business of the
Company or of any of its subsidiaries or affiliates; the Executive shall not
engage in such business on the Executive's own account; and the Executive
shall not become interested in any such business, directly or indirectly, as
an individual, partner, shareholder, director, officer, principal,
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agent, employee, trustee, consultant, or in any other relationship or
capacity PROVIDED, HOWEVER, that nothing contained in this Section 5.2 shall
be deemed to prohibit the Executive from acquiring, solely as an investment,
up to five percent (5%) of the outstanding shares of capital stock of any
public corporation.
5.3 If the Executive commits a breach, or threatens to commit a
breach, of any of the provisions of Sections 5.1 or 5.2 hereof, the Company
shall have the following rights and remedies:
5.3.1 The right and remedy to have the provisions of this
Agreement specifically enforced by any court having equity jurisdiction, it
being acknowledged and agreed that any such breach or threatened breach will
cause irreparable injury to the Company and that money damages will not
provide an adequate remedy to the Company; and
5.3.2 The right and remedy to require the Executive to
account for and pay over to the Company all compensation, profits, monies,
accruals, increments or other benefits (collectively "Benefits") derived or
received by the Executive as the result of any transactions constituting a
breach of any of the provisions of the preceding paragraph, and the Executive
hereby agrees to account for and pay over such Benefits to the Company.
Each of the rights and remedies enumerated above shall be independent of the
other, and shall be severally enforceable, and all of such rights and
remedies shall be in addition to, and not in lieu of, any other rights and
remedies available to the Company under law or in equity.
5.4 If any of the covenants contained in Sections 5.1 or 5.2, or
any part thereof, hereafter are construed to be invalid or unenforceable, the
same shall not affect the remainder of the covenant or covenants, which shall
be given full effect, without regard to the invalid portions.
5.5 If any of the covenants contained in Sections 5.1 or 5.2, or
any part thereof, are held to be unenforceable because of the duration of
such provision or the area covered thereby, the parties agree that the court
making such determination shall have the power to reduce the duration and/or
area of such provision and, in its reduced form, said provision shall then be
enforceable.
5.6 The parties hereto intend to and hereby confer jurisdiction to
enforce the covenants contained in Sections 5.1 and 5.2 upon the courts of
any state within
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the geographical scope of such covenants. In the event that the courts of
any one or more of such states shall hold such covenants wholly unenforceable
by reason of the breadth of such covenants or otherwise, it is the intention
of the parties hereto that such determination not bar or in any way affect
the Company's right to the relief provided above in the courts of any other
states within the geographical scope of such covenants as to breaches of such
covenants in such other respective jurisdictions, the above covenants as they
relate to each state being for this purpose severable into diverse and
independent covenants.
5.7 In the event that any action, suit or other proceeding in law
or in equity is brought to enforce the covenants contained in Sections 5.1
and 5.2 or to obtain money damages for the breach thereof, and such action
results in the award of a judgment for money damages or in the granting of
any injunction in favor of the Company, all expenses (including reasonable
attorneys, fees) of the Company in such action, suit or other proceeding
shall (on demand of the Company) be paid by the Executive. In the event the
Company fails to obtain a judgment for money damages or an injunction in
favor of the Company, all expenses (including reasonable attorneys, fees) of
the Executive in such action, suit or other proceeding shall (on demand of
the Executive) be paid by the Company.
6. INVENTIONS AND PATENTS.
6.1 The Executive agrees that all processes, technologies and
Inventions (collectively, "Inventions"), including new contributions,
improvements, ideas and discoveries, whether patentable or not, conceived,
developed, invented or made by him during the Term shall belong to the
Company, provided that such Inventions grew out of the Executive's work with
the Company or any of its subsidiaries or affiliates, are related in any
manner to the business (commercial or experimental) of the Company or any of
its subsidiaries or affiliates or are conceived or made on the Company's time
or with the use of the Company's facilities or materials. The Executive
shall further: (a) promptly disclose such Inventions to the Company; (b)
assign to the Company, without additional compensation, all patent and other
rights to such Inventions for the United States and foreign countries; (c) sign
all papers necessary to carry out the foregoing; and (d) give testimony in
support of the Executive's inventorship.
6.2 If any Invention is described in a patent application or is
disclosed to third parties, directly or indirectly, by the Executive within
two years after the termination of the Executive's employment by the
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Company, it is to be presumed that the Invention was conceived or made during
the Term.
6.3 The Executive agrees that the Executive will not assert any
rights to any Invention as having been made or acquired by the Executive
prior to the date of this Agreement, except for Inventions, if any, disclosed
to the Company in writing prior to the date hereof.
7. INTELLECTUAL PROPERTY.
The Company shall be the sole owner of all the products and proceeds of
the Executive's services hereunder, including, but not limited to, all
materials, ideas, concepts, formats, suggestions, developments, arrangements,
packages, programs and other intellectual properties that the Executive may
acquire, obtain, develop or create in connection with and during the Term,
free and clear of any claims by the Executive (or anyone claiming under the
Executive) of any kind or character whatsoever (other than the Executive's
right to receive payments hereunder). The Executive shall, at the request of
the Company, execute such assignments, certificates or other instruments as
the Company may from time to time deem necessary or desirable to evidence,
establish, maintain, perfect, protect, enforce or defend its right, title or
interest in or to any such properties.
8. INDEMNIFICATION.
The Company will indemnify the Executive, to the maximum extent permitted
by applicable law, against all costs, charges and expenses incurred or sustained
by the Executive in connection with any action, suit or proceeding to which the
Executive may be made a party by reason of the Executive being an officer,
director or employee of the Company or of any subsidiary or affiliate of the
Company. This indemnity shall not, however, extend to any action, suit or
proceeding relating to or arising under the Stock Purchase Agreement by and
among E. Acquisition Corporation, The Coleman Company, Inc. and Mark Goldman,
and the Asset Purchase Agreement by and among E. Acquisition Corporation, The
Coleman Company, Inc., Eastpak, Inc. and Mark Goldman, and the Contingent
Payment Agreement by and among E. Acquisition Corporation, E. Acquisition
Corporation, The Coleman Company, Inc. and Mark Goldman.
9. NOTICES.
All notices, requests, consents and other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to
have been duly given
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if delivered personally, sent by overnight courier or mailed first class,
postage prepaid, by registered or certified mail (notices mailed shall be
deemed to have been given on the date mailed), or by facsimile transmission,
as follows (or to such other address as either party shall designate by
notice in writing to the other in accordance herewith):
If to the Company, to:
E. Acquisition Corporation
c/o The Coleman Company, Inc.
250 North St. Francis Street
Wichita, Kansas 67202
Attention: General Counsel
If to the Executive, to:
Mark Goldman
1221 Luchetti Street
Apt. 11
Santurce, Puerto Rico 00907
10. GENERAL.
10.1 This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely in New York.
10.2 The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation
of this Agreement.
10.3 This Agreement sets forth the entire agreement and
understanding of the parties relating to the subject matter hereof, and
supersedes all prior agreements, arrangements and understandings, written or
oral, relating to the subject matter hereof. No representation, promise or
inducement has been made by either party that is not embodied in this
Agreement, and neither party shall be bound by or liable for any alleged
representation, promise or inducement not so set forth.
10.4 This Agreement, and the Executive's rights and obligations
hereunder, may not be assigned by the Executive. The Company may assign its
rights, together with its obligations, hereunder (i) to any affiliate or
(ii) to third parties in connection with any sale, transfer or other
disposition of all or substantially all of its business or assets; in any
event the obligations of the
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Company hereunder shall be binding on its successors or assigns, whether by
merger, consolidation or acquisition of all or substantially all of its
business or assets.
10.5 This Agreement may be amended, modified, superseded,
canceled, renewed or extended and the terms or covenants hereof may be
waived, only by a written instrument executed by both of the parties hereto,
or in the case of a waiver, by the party waiving compliance. The failure of
either party at any time or times to require performance of any provision
hereof shall in no manner affect the right at a later time to enforce the
same. No waiver by either party of the breach of any term or covenant
contained in this Agreement, whether by conduct or otherwise, in any one or
more instances, shall be deemed to be, or construed as, a further or
continuing waiver of any such breach, or a waiver of the breach of any other
term or covenant contained in this Agreement.
11. SUBSIDIARIES AND AFFILIATES.
11.1 As used herein, the term "subsidiary" shall mean any
corporation or other business entity controlled directly or indirectly by
the corporation or other business entity in question, and the term
"affiliate" shall mean and include any corporation or other business entity
directly or indirectly controlling, controlled by or under common control
with the corporation or other business entity in question.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
E. ACQUISITION CORPORATION
By: /s/ LARRY E. SANFORD
--------------------------------
Name: Larry E. Sanford
Title: Executive Vice President
/s/ MARK GOLDMAN
-----------------------------------
Mark Goldman
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EXHIBIT A
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of [November 1], 1994 between M.
Acquisition Corporation, a Delaware corporation (the "Company") and Mark
Goldman (the "Executive").
The Company wishes to employ the Executive, and the Executive wishes to
accept such employment, on the terms and conditions set forth in this
Agreement.
Accordingly, the Company and the Executive hereby agree as follows:
EMPLOYMENT, DUTIES AND ACCEPTANCE.
1.1 EMPLOYMENT, DUTIES. The Company hereby employs the Executive
for the Term (as defined in Section 2.1), to render exclusive and full-time
services to the Company as President and Chief Operating Officer or in such
other executive position as may be mutually agreed upon by the Company and
the Executive, and to perform such other duties consistent with such position
as may be assigned to the Executive by the Board of Directors or any officer
of the Company senior to the Executive.
1.2 ACCEPTANCE. The Executive hereby accepts such employment and
agrees to render the services described above. During the Term, the
Executive agrees to serve the Company faithfully and to the best of the
Executive's ability, to devote the Executive's entire business time, energy
and skill to such employment, and to use the Executive's best efforts, skill
and ability to promote the Company's interests. The Executive further agrees
to accept election, and to serve during all or any part of the Term, as an
officer or director of the Company and of any subsidiary or affiliate of the
Company, without any compensation therefor other than that specified in this
Agreement, if elected to any such position by the shareholders or by the
Board of Directors of the Company or of any subsidiary or affiliate, as the
case may be.
1.3 LOCATION. The duties to be performed by the Executive
hereunder shall be performed primarily at the office of the Company in Puerto
Rico, subject to reasonable travel requirements on behalf of the Company.
<PAGE>
2. TERM OF EMPLOYMENT;-CERTAIN POST-TERM BENEFITS.
2.1 THE TERM. The term of the Executive's employment under this
Agreement (the "Term") shall commence on November 1, 1994 and shall end on
December 31, 1997.
2.2 SPECIAL CURTAILMENT. The Term shall end earlier than the
original December 31, 1997 termination date provided in Section 2.1 if sooner
terminated pursuant to Section 4. Non-extension of the Term shall not be
deemed to be a wrongful termination of the Term or this Agreement by the
Company pursuant to Section 4.4.
3. COMPENSATION; BENEFITS.
3.1 SALARY. As compensation for all services to be rendered
pursuant to this Agreement, the Company agrees to pay the Executive during
the Term a base salary, payable semi-monthly in arrears, at the annual rate
of not less than $200,000, less such deductions or amounts to be withheld as
required by applicable law and regulations (the "Base Salary"). In the event
that the Company, in its sole discretion, from time to time determines to
increase the Base Salary, such increased amount shall, from and after the
effective date of the increase, constitute "Base Salary" for purposes of this
Agreement.
3.2 DISCRETIONARY BONUS. In addition to the amounts to be paid to
the Executive pursuant to Section 3.1, the Executive will be eligible upon
the decision of the Board of Directors and in the Board's sole discretion, to
receive a discretionary bonus with respect to each year of the Term in such
amount as the Board in its sole discretion may determine.
3.3 BUSINESS EXPENSES. The Company shall pay or reimburse the
Executive for all reasonable expenses actually incurred or paid by the
Executive during the Term in the performance of the Executive's services
under this Agreement, upon presentation of expense statements or vouchers or
such other supporting information as the Company customarily may require of
its officers PROVIDED, HOWEVER, that the maximum amount available for such
expenses during any period may be fixed in advance by the Chairman or Vice
Chairman of the Board of Directors, the President of the Company, or the
Board of Directors.
3.4 VACATION. During the Term, the Executive shall be entitled to
a vacation period or periods of four weeks taken in accordance with the
vacation policy of the Company during each year of the Term. Vacation time
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not used by the end of a year shall be forfeited.
3.5 FRINGE BENEFITS. During the Term, the Executive shall be
entitled to all benefits for which the Executive shall be eligible under any
qualified pension plan, 401(k) plan, group insurance or other so-called
"fringe" benefit plan which the Company provides to its employees generally,
together with executive medical benefits for the Executive, the Executive's
spouse and the Executive's children as from time to time in effect for
officers of the Company generally.
4. TERMINATION.
4.1 DEATH. If the Executive shall die during the Term, the Term
shall terminate and no further amounts or benefits shall be payable hereunder,
except that the Executive's legal representatives shall be entitled to receive
continued payments in an amount equal to 60% of the Base Salary, in the manner
specified in Section 3.1, until the end of the Term (as in effect immediately
prior to the Executive's death).
4.2 DISABILITY. If during the Term the Executive shall become
physically or mentally disabled, whether totally or partially, such that the
Executive is unable to perform the Executive's services hereunder for (i) a
period of six consecutive months or (ii) for shorter periods aggregating six
months during any twelve month period, the Company may at any time after the
last day of the six consecutive months of disability or the day on which the
shorter periods of disability shall have equaled an aggregate of six months,
by written notice to the Executive (but before the Executive has recovered
from such disability), terminate the Term and no further amounts or benefits
shall be payable hereunder, except that the Executive shall be entitled to
receive continued payments in an amount equal to 60% of the Base Salary, in
the manner specified in Section 3.1, until the end of the Term (as in effect
immediately prior to such termination), such payments to be offset by the
amount, if any, received by the Executive from any long-term disability plan
maintained by the Company. If the Executive shall die before receiving all
payments to be made by the Company in accordance with the foregoing, such
payments shall be made to a beneficiary designated by the Executive on a form
prescribed for such purpose by the Company, or in the absence of such
designation to the Executive's legal representative.
4.3 CAUSE. In the event of conviction of the Executive of any
serious felony committed intentionally by the Executive (including any crime
or offense involving
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the property of the Company or any of its subsidiaries or affiliates), the
Company may at any time by written notice to the Executive terminate the Term
and, upon such termination, this Agreement shall terminate and the Executive
shall be entitled to receive no further amounts or benefits hereunder, except
any as shall have been earned to the date of such termination; PROVIDED,
HOWEVER, that in the event of gross neglect by the Executive of the
Executive's duties hereunder, the Company shall provide the Executive with
prior notice (the "Company Notice") of its intent to terminate the Executive
including its reasons for such termination and the Executive shall have 45
days or such other amount of time as determined by the Board of Directors of
the Company to correct all such matters set forth in the Company Notice.
Notwithstanding the foregoing, prior to any termination of the Term pursuant
to the provisions of this Section 4.3, the Company shall deliver to Executive
a copy of a resolution duly adopted by the affirmative vote of three-quarters
or more of the Board of Directors of The Coleman Company, Inc. then in office
at a meeting of the Board called and held for such purpose (after reasonable
notice to Executive and an opportunity for Executive, together with his
counsel, to be heard before the Board), finding that in the good faith
opinion of the Board, Executive was guilty of the conduct set forth in this
Section and specifying the particulars thereof in detail.
4.4 COMPANY BREACH. In the event of the breach of any material
provision of this Agreement by the Company, the Executive shall be entitled
to terminate the Term upon 60 days' prior written notice to the Company.
Upon such termination, or in the event the Company terminates the Term or
this Agreement other than pursuant to the provisions of Section 4.2 or 4.3,
the Company shall continue to provide the Executive (i) payments of Base
Salary, in the manner and amount specified in Section 3.1 and (ii) fringe
benefits and additional benefits in the manner and amounts specified in
Sections 3.5 and 3.6 until the end of the Term (as in effect immediately
prior to such termination) (the "Damage Period"). The Company's obligations
pursuant to this Section 4.4 are subject to the Executive's duty to mitigate
damages by seeking other employment PROVIDED, HOWEVER, that the Executive
shall not be required to accept a position of lesser importance or of
substantially different character than the position held with the Company
immediately prior to the effective date of termination or in a location
outside of Puerto Rico. To the extent that the Executive shall earn
compensation during the Damage Period (without regard to when such
compensation is paid), the Base Salary payments to be made by the Company
pursuant to this Section 4.4 shall be correspondingly reduced.
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4.5 LITIGATION EXPENSES. Except as provided for in Section 5.7,
if the Company and the Executive become involved in any action, suit or
proceeding relating to the alleged breach of this Agreement by the Company or
the Executive, and if a judgment in such action, suit or proceeding is
rendered in favor of the Executive, the Company shall reimburse the Executive
for all expenses (including reasonable attorneys' fees) incurred by the
Executive in connection with such action, suit or proceeding. Such costs
shall be paid to the Executive promptly upon presentation of expense
statements or other supporting information evidencing the incurrence of such
expenses.
5. PROTECTION OF CONFIDENTIAL INFORMATION; NON-COMPETITION.
5.1 In view of the fact that the Executive's work for the Company
will bring the Executive into close contact with many confidential affairs of
the Company not readily available to the public, and plans for future
developments, the Executive agrees:
5.1.1 To keep and retain in the strictest confidence all
confidential matters of the Company, including, without limitation, "know
how", trade secrets, customer lists, pricing policies, operational methods,
technical processes, formulae, inventions and research projects, and other
business affairs of the Company, learned by the Executive hereafter, and not
to disclose them to anyone outside of the Company, either during or after the
Executive's employment with the Company, except in the course of performing
the Executive's duties hereunder or with the Company's express written
consent; and
5.1.2 To deliver promptly to the Company on termination of
the Executive's employment by the Company, or at any time the Company may so
request, all memoranda, notes, records, reports, manuals, drawings,
blueprints and other documents (and all copies thereof) relating to the
Company's business and all property associated therewith, which the Executive
may then possess or have under the Executive's control.
5.2 During the Term, the Executive shall not, directly or
indirectly, enter the employ of, or render any services to, any person, firm
or corporation engaged in any business competitive with the business of the
Company or of any of its subsidiaries or affiliates; the Executive shall not
engage in such business on the Executive's own account; and the Executive
shall not become interested in any such business, directly or indirectly, as
an individual, partner, shareholder, director, officer, principal,
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agent, employee, trustee, consultant, or in any other relationship or
capacity PROVIDED, HOWEVER, that nothing contained in this Section 5.2 shall
be deemed to prohibit the Executive from acquiring, solely as an investment,
up to five percent (5%) of the outstanding shares of capital stock of any
public corporation.
5.3 If the Executive commits a breach, or threatens to commit a
breach, of any of the provisions of Sections 5.1 or 5.2 hereof, the Company
shall have the following rights and remedies:
5.3.1 The right and remedy to have the provisions of this
Agreement specifically enforced by any court having equity jurisdiction, it
being acknowledged and agreed that any such breach or threatened breach will
cause irreparable injury to the Company and that money damages will not
provide an adequate remedy to the Company; and
5.3.2 The right and remedy to require the Executive to
account for and pay over to the Company all compensation, profits, monies,
accruals, increments or other benefits (collectively "Benefits") derived or
received by the Executive as the result of any transactions constituting a
breach of any of the provisions of the preceding paragraph, and the Executive
hereby agrees to account for and pay over such Benefits to the Company.
Each of the rights and remedies enumerated above shall be independent of the
other, and shall be severally enforceable, and all of such rights and
remedies shall be in addition to, and not in lieu of, any other rights and
remedies available to the Company under law or in equity.
5.4 If any of the covenants contained in Sections 5.1 or 5.2, or
any part thereof, hereafter are construed to be invalid or unenforceable, the
same shall not affect the remainder of the covenant or covenants, which shall
be given full effect, without regard to the invalid portions.
5.5 If any of the covenants contained in Sections 5.1 or 5.2, or
any part thereof, are held to be unenforceable because of the duration of
such provision or the area covered thereby, the parties agree that the court
making such determination shall have the power to reduce the duration and/or
area of such provision and, in its reduced form, said provision shall then be
enforceable.
5.6 The parties hereto intend to and hereby confer jurisdiction to
enforce the covenants contained in Sections 5.1 and 5.2 upon the courts of
any state within
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the geographical scope of such covenants. In the event that the courts of
any one or more of such states shall hold such covenants wholly unenforceable
by reason of the breadth of such covenants or otherwise, it is the intention
of the parties hereto that such determination not bar or in any way affect
the Company's right to the relief provided above in the courts of any other
states within the geographical scope of such covenants as to breaches of such
covenants in such other respective jurisdictions, the above covenants as they
relate to each state being for this purpose severable into diverse and
independent covenants.
5.7 In the event that any action, suit or other proceeding in law
or in equity is brought to enforce the covenants contained in Sections 5.1
and 5.2 or to obtain money damages for the breach thereof, and such action
results in the award of a judgment for money damages or in the granting of
any injunction in favor of the Company, all expenses (including reasonable
attorneys' fees) of the Company in such action, suit or other proceeding
shall (on demand of the Company) be paid by the Executive. In the event the
Company fails to obtain a judgment for money damages or an injunction in
favor of the Company, all expenses (including reasonable attorneys' fees) of
the Executive in such action, suit or other proceeding shall (on demand of
the Executive) be paid by the Company.
6. INVENTIONS AND PATENTS.
6.1 The Executive agrees that all processes, technologies and
inventions (collectively, "Inventions"), including new contributions,
improvements, ideas and discoveries, whether patentable or not, conceived,
developed, invented or made by him during the Term shall belong to the
Company, provided that such Inventions grew out of the Executive's work with
the Company or any of its subsidiaries or affiliates, are related in any
manner to the business (commercial or experimental) of the Company or any of
its subsidiaries or affiliates or are conceived or made on the Company's time
or with the use of the Company's facilities or materials. The Executive
shall further: (a) promptly disclose such Inventions to the Company; (b)
assign to the Company, without additional compensation, all patent and other
rights to such Inventions for the United States and foreign countries; (c) sign
all papers necessary to carry out the foregoing; and (d) give testimony in
support of the Executive's inventorship.
6.2 If any Invention is described in a patent application or is
disclosed to third parties, directly or indirectly, by the Executive within
two years after the termination of the Executive's employment by the
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Company, it is to be presumed that the Invention was conceived or made during
the Term.
6.3 The Executive agrees that the Executive will not assert any
rights to any Invention as having been made or acquired by the Executive
prior to the date of this Agreement, except for Inventions, if any, disclosed
to the Company in writing prior to the date hereof.
7. INTELLECTUAL PROPERTY.
The Company shall be the sole owner of all the products and proceeds of
the Executive's services hereunder, including, but not limited to, all
materials, ideas, concepts, formats, suggestions, developments, arrangements,
packages, programs and other intellectual properties that the Executive may
acquire, obtain, develop or create in connection with and during the Term,
free and clear of any claims by the Executive (or anyone claiming under the
Executive) of any kind or character whatsoever (other than the Executive's
right to receive payments hereunder). The Executive shall, at the request of
the Company, execute such assignments, certificates or other instruments as
the Company may from time to time deem necessary or desirable to evidence,
establish, maintain, perfect, protect, enforce or defend its right, title or
interest in or to any such properties.
8. INDEMNIFICATION.
The Company will indemnify the Executive, to the maximum extent permitted
by applicable law, against all costs, charges and expenses incurred or sustained
by the Executive in connection with any action, suit or proceeding to which the
Executive may be made a party by reason of the Executive being an officer,
director or employee of the Company or of any subsidiary or affiliate of the
Company. This indemnity shall not, however, extend to any action, suit or
proceeding relating to or arising under the Stock Purchase Agreement by and
among M. Acquisition Corporation, The Coleman Company, Inc. and Mark Goldman,
and the Asset Purchase Agreement by and among E. Acquisition Corporation, The
Coleman Company, Inc., Eastpak, Inc. and Mark Goldman, and the Contingent
Payment Agreement by and among E. Acquisition Corporation, M. Acquisition
Corporation, The Coleman Company, Inc. and Mark Goldman.
9. NOTICES.
All notices, requests, consents and other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to
have been duly given
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if delivered personally, sent by overnight courier or mailed first class,
postage prepaid, by registered or certified mail (notices mailed shall be
deemed to have been given on the date mailed), or by facsimile transmission,
as follows (or to such other address as either party shall designate by
notice in writing to the other in accordance herewith):
If to the Company, to:
M. Acquisition Corporation
c/o The Coleman Company, Inc.
250 North St. Francis Street
Wichita, Kansas 67202
Attention: General Counsel
If to the Executive, to:
Mark Goldman
1221 Luchetti Street
Apt. 11
Santurce, Puerto Rico 00907
10. GENERAL.
10.1 This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely in New York.
10.2 The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation
of this Agreement.
10.3 This Agreement sets forth the entire agreement and understanding
of the parties relating to the subject matter hereof, and supersedes all prior
agreements, arrangements and understandings, written or oral, relating to the
subject matter hereof. No representation, promise or inducement has been made
by either party that is not embodied in this Agreement, and neither party shall
be bound by or liable for any alleged representation, promise or inducement not
so set forth.
10.4 This Agreement, and the Executive's rights and obligations
hereunder, may not be assigned by the Executive. The Company may assign its
rights, together with its obligations, hereunder (i) to any affiliate or (ii)
to third parties in connection with any sale, transfer or other disposition
of all or substantially all of its business or assets; in any event the,
obligations of the
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<PAGE>
Company hereunder shall be binding on its successors or assigns, whether by
merger, consolidation or acquisition of all or substantially all of its
business or assets.
10.5 This Agreement may be amended, modified, superseded, canceled,
renewed or extended and the terms or covenants hereof may be waived, only by a
written instrument executed by both of the parties hereto, or in the case of a
waiver, by the party waiving compliance. The failure of either party at any
time or times to require performance of any provision hereof shall in no manner
affect the right at a later time to enforce the same. No waiver by either party
of the breach of any term or covenant contained in this Agreement, whether by
conduct or otherwise, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such breach, or a waiver of
the breach of any other term or covenant contained in this Agreement.
11. SUBSIDIARIES AND AFFILIATES.
11.1 As used herein, the term "subsidiary" shall mean any corporation
or other business entity controlled directly or indirectly by the corporation or
other business entity in question, and the term "affiliate" shall mean and
include any corporation or other business entity directly or indirectly
controlling, controlled by or under common control with the corporation or
other business entity in question.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
M. ACQUISITION CORPORATION
By: /s/ LARRY E. SANFORD
------------------------------
Name: Larry E. Sanford
Title: Executive Vice President
/s/ MARK GOLDMAN
---------------------------------
Mark Goldman
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Exhibit to Coleman 10-K
Exhibit # 10.81
EXECUTION COPY
THE COLEMAN COMPANY, INC.
February 28, 1997
Mr. Michael N. Hammes
2720 Castle Glen Court
Castle Rock, Colorado 80104
Dear Mr. Hammes:
This letter is intended to fully settle all of our differences arising
out of or relating to your employment with The Coleman Company, Inc. ("Coleman")
and the "Company" (as hereinafter defined) and your separation from such
employment.
You will continue to serve the Company until your "Severance Date,"
which means February 28, 1997. On your Severance Date you will, by our mutual
agreement and consent, cease to be an employee and director of the Company.
Certain amounts will become payable to or in respect of you, and you will be
entitled to certain rights and benefits, on account of your separation from the
Company's employ, as described below.
The term "Severance Period" as used in this Agreement means the period
from the Severance Date through February 28, 1999, or if earlier, the end of the
month in which your death occurs.
1. SALARY, SEVERANCE, UNEMPLOYMENT COMPENSATION:
(a) Through the Severance Date, you will be paid a monthly
salary at your current annual rate of $700,000 and you will
be entitled to continue to participate in all retirement,
health and other fringe benefit plans in which you currently
participate on a basis equivalent to Company executives of
similar stature.
(b) During the Severance Period, Coleman will make severance
payments to you at the rate of $700,000 per year, payable
monthly in arrears, beginning March, 1997 and ending with
the payment for the last month of the Severance Period.
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2
(c) If you apply for, and are awarded, unemployment compensation
benefits during the Severance Period, your compensation
specified in Section 1(b) will be reduced by the amount of
unemployment compensation you receive. The decision to
apply for state unemployment compensation is your own.
2. SPECIAL PAYMENTS:
(a) Coleman will pay you $450,000 eight days after the execution
of this Agreement, and an additional $450,000 on the last
day of the Severance Period, subject to applicable
withholding, provided that you have not exercised your right
to revoke the ADEA Release (as defined herein) as provided
in Section 16(b). It is understood that any payment made
under this Section 2(a) shall be a special inducement to you
not to revoke such release.
(b) Coleman will transfer to you title, free and clear of all
liens and encumbrances, to the Porsche Carrera which is
currently in your possession as soon as practicable after
the execution of this Agreement. After the Severance Date
you will be responsible for all future payments and expenses
incurred in connection with such automobile, including
insurance.
(c) Coleman agrees to assign to you its rights and obligations
under the Lease, effective January 1, 1995, between Coleman
and William N. Johnson, as amended, and you agree to accept
such assignment. You acknowledge that you will be
responsible for all future payments, expenses and
liabilities in connection therewith from and after the
Severance Date, including but not limited to the annual
rental payments due and payable after the Severance Date.
(d) After the Severance Date, you agree to be responsible for
payment of any future dues and membership fees with respect
to any clubs of which you are a member, including but not
limited to Maroon Creek Club, Castle Pines, Stillroven Farms
and Wichita Country Club. Coleman will use its best efforts
to transfer, as soon as practicable and at your expense, any
corporate club membership to an individual membership in
your name.
(e) Eight days after execution of this Agreement, Coleman shall
pay to Butzel Long P.C. the sum of $25,000 in
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3
partial reimbursement of your legal fees incurred in the
negotiation and preparation of this Agreement provided that
you have not exercised your right to revoke the ADEA Release
(as defined herein) as provided in Section 16(b). It is
understood that any payment made under this Section 2(e)
shall be a special inducement to you not to revoke such
release.
3. PENSION BENEFITS:
(a) THE NEW COLEMAN COMPANY, INC. RETIREMENT PLAN FOR SALARIED
EMPLOYEES (THE "PENSION PLAN")/THE COLEMAN TAX-QUALIFIED
401(K) PLAN (THE "401(K) PLAN") (COLLECTIVELY, THE
"QUALIFIED PLANS").
You will continue to accrue service credit as an active
employee through the Severance Date for all applicable
purposes under the Qualified Plans and you will continue to
be eligible to make contributions and have contributions
made on your behalf as an active employee pursuant to the
terms of the Qualified Plans.
After the Severance Date you will no longer be an employee
of the Company and you will no longer accrue service credit
or have contributions made on your behalf under the
Qualified Plans. You will be entitled to all benefits
accrued, to the extent vested, under the Qualified Plans in
accordance with the terms of the Qualified Plans.
(b) OTHER RETIREMENT PLANS.
You are a participant in certain "nonqualified" retirement
plans including, but not necessarily limited to, the New
Coleman Holdings, Inc. Excess Benefit Plan and the Coleman
Company, Inc. Consolidated Supplemental Retirement Plan (the
"Nonqualified Plans"). In lieu of any benefits to which
you, your spouse or beneficiary may be entitled under the
Nonqualified Plans, Coleman agrees to pay you a pension of
$14,583.33 per month, beginning on March 1, 1999 and ending
with the payment for the month in which your death occurs.
Alternatively, you may elect in a separate notice to Coleman
in accordance with the notice provisions set forth herein,
on or before December 31, 1998, to receive this benefit in
the form of an actuarially equivalent 100% joint and
survivor annuity rather than as a lifetime annuity. If you
elect the 100% joint and survivor annuity: (a) your
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4
monthly benefit will be $12,565 and after your death, if your
current wife survives you, she will be paid a pension
beginning in the month following your death for the rest of
her life in a monthly amount equal to 100% of the monthly
amount you were receiving prior to your death; and (b) if
your spouse dies after March 1, 1999, no adjustment shall be
made to the amount of pension you were receiving. If (x)
you die before March 1, 1999, (y) your current wife survives
you, and (z) she was still married to you immediately before
your death, in lieu of the foregoing, Coleman will pay her a
pension of $87,500 per annum, to be paid in equal monthly
amounts beginning on the first of the month after the month
of your death and ending with the payment for the month
which includes her death. Whether you elect to receive
payments in the form of a life annuity or a 100% joint and
survivor annuity shall be your decision and shall not
require notice to, or the consent of, any other person
(including your spouse).
4. VACATION:
As soon as practicable after your Severance Date, you will be paid for
any unused accrued vacation in accordance with the Company's regular policies.
5. MEDICAL AND WELFARE BENEFITS:
(a) Through the last day of the Severance Period, you will
continue to be eligible to participate in Coleman's medical
program available to Coleman's senior-most executives. You
and the Company acknowledge that, after the end of the
Severance Period you will be eligible to participate in
Coleman's "Basic" Retiree Medical Program (available to
employees who retire at or after age 55 with one year of
service) until you reach age 65, at which time you will be
eligible to participate in Coleman's Retiree Medical Program
applicable to employees after age 65. You acknowledge that
you will not at any time be eligible to participate in
Coleman's "Special" Retiree Medical Program (available to
employees who retire at or after age 55 with ten years of
service). Notwithstanding the foregoing, or any other
provision of this Agreement, Coleman shall not be required
to continue to provide any of its Retiree Medical Programs,
at their current rate of benefits or otherwise; you
acknowledge that you shall be entitled only to such
coverage, if any, as is provided to similarly situated
retired employees from time to time.
<PAGE>
5
Through the Severance Date, you will continue to be eligible
to participate in the Company's other welfare programs
(including group life insurance) available to Coleman's
senior-most executives.
If you engage in regular employment after the Severance Date
(whether as an executive or as a self-employed person), any
employee welfare benefits received by you or your spouse in
consideration of such employment which are similar in nature
to the employee welfare benefits provided by Coleman will
relieve Coleman of its obligation under this Section 5 to
provide comparable medical or other welfare benefits to the
extent of the benefits so received. You will promptly
notify Coleman of your receipt of any such benefits.
(b) After the Severance Date, neither you nor your spouse will
be eligible to participate in any Company medical or welfare
plans except as provided above, and such coverage shall be
in lieu of coverage otherwise available to either you or
your spouse under the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA") or any other applicable
continuation of coverage laws. The benefits provided by
this Section 5 shall be contingent on the execution by you
and your spouse of such acknowledgments of the foregoing,
including any waivers of your and your spouse's rights under
COBRA, as the Company may reasonably request, including a
waiver in the form of Attachment B.
6. DISABILITY, AD&D AND LIFE INSURANCE COVERAGE:
Short-term disability, long-term disability and Accidental Death and
Dismemberment coverage ("AD&D"), will be provided by Coleman as currently in
effect and will end on the Severance Date, except with respect to the so-called
GRIP life insurance policy provided to you, for which no additional premiums
shall be paid by Coleman after the Severance Date but with respect to which you
may continue to maintain. You will not be required to reimburse Coleman for any
premiums heretofore paid by Coleman with respect to such policy. You
acknowledge that you are the owner of such policy with a current coverage amount
of $3,100,000 and that the coverage amount of such policy will be reduced to
$2,700,000 unless you take and satisfactorily pass a physical examination in
accordance with the requirements of such policy. You may determine to keep or
to cancel such policy, in your discretion.
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6
7. STOCK OPTIONS:
With respect to the options to purchase shares of Coleman ("Stock
Options") previously granted to you: the Stock Options granted to you in
December 1996 shall expire immediately on the Severance Date, one half of the
Stock Options granted to you in December 1994 shall be immediately exercisable
on the Severance Date and one half of the Stock Options granted to you in
December 1994 shall expire immediately on the Severance Date and all of the
Stock Options granted to you in 1993 and 1995 shall be immediately 100%
exercisable on the Severance Date. All Stock Options that have not expired on
the Severance Date in accordance with the preceding sentence shall expire 90
days after the Severance Date or, if earlier, the otherwise scheduled expiration
date of such Stock Options.
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 (in the manner described in
Section 23 of this Agreement) 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 7, 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 7, multiplied
by (ii) the closing price of a Share on the New York Stock Exchange on the date
on which you would have exercised your Stock Option (but for Coleman's exercise
of its rights under this Section 7) minus the per share exercise price of such
Stock Option.
8. OFFSET:
If there shall ever be any amount due to the Company on account of
claims which are not covered by the release provided herein, the Company shall
be entitled to offset against any amount payable to or in respect of you
hereunder, any sums owed by you to the Company; provided that any such offset
shall be made only at the direction of an arbitrator conducting an arbitration
pursuant to Section 27 of this Agreement.
<PAGE>
7
9. WAIVER, MUTUAL RELEASE, ETC.:
(a) 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) 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;
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 9(a) (subject to
your limited rights under Section 16(b)).
(c) You have not filed, nor will you initiate or cause to be
initiated on your behalf, any complaint, charge, claim or
proceeding against the Company before any local, state or
federal agency, court or other body relating to your
employment or the resignation thereof (each individually a
"Proceeding"), nor will you participate in any Proceeding,
in each case, except as required by law. You represent that
you are not aware of any basis on which such a Proceeding
could reasonably be instituted. You waive any right you may
have to benefit in any manner from any relief (whether
monetary or otherwise) arising out of any Proceeding,
including any Proceeding conducted by the Equal Employment
Opportunity Commission ("EEOC"). You understand that by
entering into this Agreement, you will be limiting the
availability of certain remedies that
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8
you may have against the Company and limiting also your
ability to pursue certain claims against the Company.
(d) 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.
(e) As referred to in this Agreement, the Company includes any
or all of Coleman, its subsidiaries and other affiliates,
divisions, respective successors and assigns, the directors,
officers, representatives, shareholders, agents, employees
of any of them and, in the case of individuals, their
respective heirs and personal representatives. References
in this Agreement to a person's employment include not only
common law employment but also service as a director or
other service as an independent contractor.
10. COOPERATION; NO RE-EMPLOYMENT:
(a) In consideration of the payments to be made under Section
1(b) and the other provisions of this Agreement, during the
Severance Period you agree to make reasonable efforts to
cooperate with the Company, if requested by Coleman, in the
handling or investigation of any administrative charges,
government inquiries or lawsuits involving the Company that
relate to matters that arose while you were an employee or
director of the Company and to consult with the Company and
its advisors, as reasonably requested, on business inquiries
related to any such matters. The Company will reimburse you
for any reasonable out-of-pocket expenses you incur by
reason of such cooperation.
(b) You agree that you will not, at any time, reapply for
employment with the Company in any capacity. You expressly
waive any right or claim you may have for employment or
reemployment with the Company. You covenant that you will
not bring any suit or claim against the Company should you
seek to obtain employment with the Company in the future and
are denied such employment and you agree that this release
shall be a
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9
complete bar to your entitlement to any legal, equitable,
or administrative relief based upon any such denial of
employment.
11. DOCUMENTS, NON-SOLICITATION AND CONFIDENTIALITY:
(a) Promptly following the Severance Date, you agree to return
to the Company all originals and copies of papers, notes,
and documents (in any medium, including computer disks),
whether Company property or not, prepared, received or
obtained by you or your counsel during the course of your
employment with the Company, and all equipment and property
of the Company which may be in your possession or under your
control, whether or not relating to the claims released
hereby, including all such papers, work papers, notes,
documents and equipment in the possession of your family and
counsel. You agree that you, your family and counsel shall
not retain copies of any such papers, work papers, notes and
documents. Notwithstanding the foregoing, you may keep
copies of any employment or benefits agreements between you
and the Company, this Agreement, any publicly filed
materials and any employee benefit plan and stock option
plan materials distributed generally to participants in any
such plan by the Company.
(b) You also agree that during the Severance Period you will not
solicit, entice or encourage any employee or officer of the
Company, or any independent contractor, to terminate his or
her relationship with the Company or to initiate or to
threaten to initiate any legal process against the Company,
and you shall not approach any such person for such purposes
or authorize or knowingly approve the taking of such actions
by any third party.
(c) 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
<PAGE>
10
required by law or agreed to by the Company. Without
limiting the foregoing, you agree that you will not at
any time divulge to any other entity or person any
confidential information acquired by you concerning the
Company's financial affairs or business processes or
methods or their research, development or marketing
programs or plans, any other of its or their trade
secrets, any information regarding customers or customer
lists, any information regarding personal matters of any
shareholders, directors, officers, employees or agents of
the Company or their respective family members, any
information concerning this Agreement or the terms
thereof, or any information concerning the circumstances
of your employment with and the termination of your
employment from the Company, or any information regarding
discussions related to any of the foregoing or make,
write, publish, produce or in any way participate in
placing into the public domain any statement, opinion or
information with respect to any of the foregoing or which
reflects adversely upon or would reasonably impair the
reputation or best interests of the Company or any of its
shareholders, directors, officers, employees or agents or
their respective family members, except in each case
information which is required to be disclosed by court
order, subpoena or other judicial or governmental
administrative process. The foregoing prohibitions shall
include, without limitation, directly or indirectly
publishing (or causing, participating in, assisting or
providing any statement, opinion or information in
connection with the publication of) any diary, memoir,
letter, story, photograph, interview, article, essay,
account or description (whether fictionalized or not)
concerning any of the foregoing, publication being deemed
to include any presentation or reproduction of any
written, verbal or visual material in any communication
medium, including any book, magazine, newspaper,
theatrical production or movie, or television or radio
programming or commercial. In addition to any and all
other remedies available to the Company for any violation
of this Section 11(c), you agree to immediately remit and
disgorge to the Company any and all payments paid or
payable to you in connection with or as a result of
engaging in any of the above acts. In the event that you
are required to make disclosure under any court order,
subpoena or other judicial or governmental administrative
process, you will promptly notify the Company, take all
reasonable steps (at the Company's expense) requested by
the Company to defend
<PAGE>
11
against the compulsory disclosure and permit the Company to
participate with counsel of its choice and at its expense in
any proceeding relating to the compulsory disclosure. You
acknowledge that all information the disclosure of which is
prohibited by this Section is of a confidential and
proprietary character and of great value to the Company.
(d) Nothing in this Agreement is intended to prevent you from
(x) using on your behalf your general knowledge or
experience in any area of professional activity, whether or
not involving your service with the Company; (y) referring
to your performance of services for the Company as
descriptive of your abilities and qualifications for
employment or engagement by any other person; or (z)
disclosing (on a confidential basis) information concerning
the financial terms of this Agreement to your legal or tax
advisors, or members of your immediate family.
(e) Coleman agrees that it will not, and it will use reasonable
efforts to cause the senior executive officers and directors
of Coleman and New Coleman Holdings, Inc. to not, at any
time denigrate you, in connection with your employment or
otherwise, through adverse or disparaging communication,
written or oral, whether true or not, including without
limitation, the expression of personal views, opinions or
judgments. The preceding sentence shall not apply to any
communication or disclosure which is required to be made by
court order, subpoena or other judicial or governmental
administrative process.
12. INVENTIONS; NONCOMPETITION:
(a) All inventions, whether or not patentable, conceived or
developed by you, alone or with others, during your
employment by the Company are the property of the Company
and have been or will be promptly and fully disclosed by you
to the Company. You will perform all necessary acts to vest
title fully to any such invention in the Company and to
enable the Company, at its expense, to secure and maintain
domestic and/or foreign patents or any other rights for such
inventions.
(b) For a period of six months following the Severance Date, you
will not serve as officer, director or employee or be
associated in any other capacity with any corporation,
<PAGE>
12
partnership or other entity or person which is a competitor
of the Company, its subsidiaries, or affiliated corporations
or entities. During such period you will have no financial
interest in any corporation, partnership or other entity
which is a competitor of the Company, its subsidiaries, or
affiliated corporations or entities, except participation
solely as a stockholder owning not more than 5% of the
outstanding shares of a publicly owned business.
13. REMEDIES:
(a) You agree that disgorgement is not a complete or adequate
remedy at law and the Company will be entitled, in addition
to any other right and remedy it may have at law or in
equity related to breaches of this Agreement, including,
without limitation, disgorgement, to an injunction, without
the posting of any bond or other security, enjoining or
restraining you from any violation or threatened violation
thereof.
(b) Without denigrating the importance or materiality of the
other provisions of this Agreement, you acknowledge and
agree that the provisions of Sections 10(b) and 11(c) are
material and any breach of them would be a material breach
of this Agreement and shall, in addition to claims for
damages and any other remedy available under this Agreement,
cause a recoupment and/or forfeiture of $1 million of past
and future payments under Section 1(b), all without
abrogating the release granted herein.
14. NO ADMISSIONS:
Neither this Agreement nor any actions taken pursuant to them shall in
any event be construed as or deemed to be evidence of an admission or concession
by any party on any matter leading up to this Agreement. In addition, neither
the fact of this Agreement nor any of its provisions shall be offered or
received in evidence in any action or proceeding as an admission or concession
of liability or wrongdoing by any party or for any other purpose.
15. NON-WAIVER OF VESTED OR LEGAL RIGHTS; NON-RETALIATION:
In the event you do not sign this Agreement, you should understand
that you will still receive the benefits to which you are legally entitled under
the Company's benefit plans and/or applicable law (like COBRA).
<PAGE>
13
16. ADDITIONAL ACKNOWLEDGMENTS; LIMITED REVOCATION:
(a) You acknowledge that you have been given twenty-one (21)
days from the date of receipt of this Agreement to consider
this Agreement. 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 have not been forced
or pressured in any manner whatsoever to sign this Agreement
and you agree to all of its terms voluntarily.
(b) You shall have seven days from the date of this Agreement to
revoke the release (the "ADEA Release") you are giving in
Section 9(a) and (b), but only to the extent it relates to
any claim you may have arising under the Age Discrimination
in Employment Act of 1967, as amended ("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 payments described in Sections 2(a) and 2(e) and you
shall not be entitled to any payment otherwise required
hereunder after February 28, 1999.
17. NO MITIGATION:
You are under no obligation to seek other employment during the
Severance Period. In the event that you do become employed during the Severance
Period (including self-employment), payments under this Agreement shall not be
reduced by any compensation payable to you as a result of such other employment.
18. ENFORCEABILITY:
In the event that any provision of this Agreement is determined to be
invalid or unenforceable, the remaining terms and conditions of this Agreement
shall be unaffected and shall remain in full force and effect. In addition, if
any provision is determined to be invalid or unenforceable due to its duration
and/or scope, the duration and/or scope of such provision, as the case may be,
shall be reduced, such reduction to be to the smallest extent necessary to
comply with applicable law, and such provision shall be enforceable, in its
reduced form, to the fullest extent permitted by applicable law.
19. INDEMNIFICATION:
<PAGE>
14
Except as provided otherwise in this Agreement, Coleman shall indemnify
you to the fullest extent permitted by applicable law and the existing
By-Laws and Certificate of Incorporation of Coleman, against all costs,
charges and expenses whatsoever ("Losses") incurred or sustained by you in
connection with any action, suit or proceeding to which you may be made a
party by reason of your having been a director, officer or employee of the
Company. If any greater indemnification rights shall be provided under any
change in Coleman's By-Laws or Certificate of Incorporation, you shall be
entitled to such greater rights to the same extent as other directors,
officers or employees who had terminated their relationship with Coleman on
or before February 28, 1997. You shall hold the Company harmless against all
Losses which arise out of any claims by your spouse or any beneficiary
relating to payment or benefit obligations released or waived pursuant to
this Agreement.
20. TAXATION:
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.
21. FURTHER ACKNOWLEDGMENTS:
You agree to execute such further documents evidencing the termination
of your employment by, and directorships of, the Company as may be reasonably
requested by the Company, including a letter substantially in the form of
Attachment A.
22. EXCISE TAX:
(a) In the event that any payment or benefit received or to be
received by you in connection with the termination of your employment (whether
pursuant to the terms of this Agreement or any other plan, arrangement or
agreement with Coleman) (all such payments and benefits being hereinafter called
"Total Payments") will be subject (in whole or part) to the excise tax (the
"Excise Tax") imposed under Section 4999 of the Internal Revenue Code of 1986,
as amended (the "Code"), then, subject to the provisions of Section 22(b)
hereof, Coleman will pay to you an additional amount (the "Gross-Up Payment")
such that the net amount retained by you, after deduction of any Excise Tax on
the Total Payments and any federal, state and local income tax and Excise Tax
upon the payment provided for by this Section 22, will be equal to the Total
Payments. For purposes of determining the amount of the Gross-Up Payment, you
will be deemed to pay federal income taxes at the highest marginal rate of
federal income taxation in the calendar year in which the Gross-Up Payment is to
be made and state and local income taxes at the highest marginal rate of
taxation in the state and locality of your residence on such date, net of the
maximum
<PAGE>
15
reduction in federal income taxes which could be obtained from deduction of
such state and local taxes.
(b) In the event that, after giving effect to any redeterminations
described in Section 22(d) hereof, a reduction in the Total Payments to the
largest amount that would result in no portion of the Total Payments being
subject to the Excise Tax (after taking into account any reduction in the Total
Payments provided by reason of Section 280G of the Code in such other plan,
arrangement or agreement) would produce a net amount (after deduction of the net
amount of federal, state and local income tax on such reduced Total Payments)
that would be greater than the net amount of unreduced Total Payments (after
deduction of the net amount of federal, state and local income tax and the
amount of Excise Tax to which you would be subject in respect of such Total
Payments), then Section 22(a) hereof will not apply and the Total Payments will
be so reduced.
(c) For purposes of determining whether any of the Total Payments
will be subject to the Excise Tax and the amount of such Excise Tax, (i) all of
the Total Payments will be treated as "parachute payments" within the meaning of
Section 280G(b)(2) of the Code, unless in the opinion of tax counsel selected by
Coleman's independent auditors and reasonably acceptable to you ("Tax Counsel"),
such other payments or benefits (in whole or in part) do not constitute
parachute payments, including by reason of Section 280G(b)(4)(A) of the Code,
(ii) all "excess parachute payments" within the meaning of Section 280G(b)(1) of
the Code will be treated as subject to the Excise Tax, unless in the opinion of
Tax Counsel such excess parachute payments (in whole or in part) represent
reasonable compensation for services actually rendered, within the meaning of
Section 280G(b)(4)(B) of the Code, in excess of the base amount (as defined in
Section 280G(b)(3) of the Code) allocable to such reasonable compensation, or
are otherwise not subject to the Excise Tax, and (iii) the value of any noncash
benefits or any deferred payment or benefit will be determined by Coleman's
independent auditors in accordance with the principles of Sections 280G(d)(3)
and (4) of the Code. Coleman will provide you with its calculation of the
amounts referred to in this Section 22 and such supporting materials as are
reasonably necessary for you to evaluate Coleman's calculations. If you dispute
Coleman's calculations (in whole or in part), the reasonable opinion of Tax
Counsel with respect to the matter in dispute will prevail.
(d) In the event that (i) the Excise Tax is subsequently determined
to be less than the amount taken into account hereunder at the time of payment
of the Total Payments and (ii) after giving effect to such redetermination, the
Total Payments are reduced pursuant to Section 22(b) hereof, you will repay to
Coleman, at the time that the amount of such reduction in Excise Tax is finally
determined, the portion of the Gross-Up Payment attributable to such reduction
(plus that portion of the Gross-Up Payment attributable to the Excise Tax and
federal, state and local income tax imposed on the Gross-Up Payment being repaid
by you to the extent that such repayment results in a reduction in the Excise
Tax and/or a federal, state or local income tax deduction) plus interest on the
amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the
Code. In the event, that (x) the Excise Tax is determined to
<PAGE>
16
exceed the amount taken into account hereunder at the time of the termination
of your employment (including by reason of any payment the existence or
amount of which cannot be determined at the time of the Gross-Up Payment) and
(y) after giving effect to such redetermination, the Total Payments are not
reduced pursuant to Section 22(b) hereof, Coleman will make an additional
Gross-Up Payment in respect of such excess and in respect of any portion of
the Excise Tax with respect to which Coleman had not previously made a
Gross-Up Payment (plus any interest, penalties or additions payable by you
with respect to such excess and such portion) at the time that the amount of
such excess is finally determined.
23. NOTICES:
You agree that you will not communicate with the Company for any
reason, directly or indirectly, including, if necessary, any notice of stock
option exercise, except by notice to the Company, Attention: General Counsel and
all such notices shall be sent marked "Confidential", and a telefacsimile copy
thereof shall be sent the same date to Robert C. Fleder, Esq., Paul, Weiss,
Rifkind, Wharton & Garrison, 1285 Avenue of the Americas, New York, New York,
10019, (212) 757-3000.
24. ENTIRE AGREEMENT:
This Agreement supersedes any and all other agreements between you and
the Company and/or any other persons relating to your employment by the Company,
including, but not limited to, the Employment Agreement dated as of January 1,
1996 between you and Coleman, including the First Amendment thereto dated July
1, 1996, whether written or oral, between the parties with respect to the
subject matter hereof and contains all of the agreements between the parties
with respect thereto. You, your spouse and beneficiaries are not eligible for
any benefits from the Company including, but not limited to, severance benefits,
except as specifically provided for herein.
25. NO ORAL MODIFICATION:
This Agreement may not be modified or changed orally and may be
modified and changed only by a written instrument executed by you and Coleman.
26. STATE 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.
<PAGE>
17
27. RESOLUTION OF DISPUTES:
Any disputes arising under or in connection with your employment with
the Company, or this Agreement shall be resolved by binding, confidential
arbitration to be held in Denver, Colorado in a confidential, closed session in
accordance with the rules and procedures of the American Arbitration
Association. The arbitrators may assess expenses, including reasonable
attorneys' fees, to either or both parties, taking into account the
circumstances of the case. Except as assessed by the arbitrator pursuant to the
previous sentence, each party shall bear its own expenses, including attorneys'
fees, in connection with any such dispute.
28. COUNTERPARTS; FACSIMILE SIGNATURES:
This Agreement may be executed in counterparts, each of which shall be
considered part of the same Agreement. Signatures to this Agreement may be
supplied by telefacsimile signature, which shall be considered an original
signature for purposes hereof.
Very truly yours,
THE COLEMAN COMPANY, INC.
By: /s/ JERRY W. LEVIN
-----------------------------------
Jerry W. Levin, Its Duly Authorized
Acting Chief Executive Officer
Encl.
<PAGE>
18
I have read this letter Agreement and I understand all of its terms.
I enter into and sign this AGREEMENT knowingly and voluntarily, with full
knowledge of what it means.
/s/ MICHAEL N. HAMMES
---------------------------------
Michael N. Hammes
<PAGE>
EXHIBIT 21.1
SUBSIDIARIES
The following is a list of all the subsidiaries of The Coleman Company, Inc.
JURISDICTION OF ASSUMED
NAME INCORPORATION NAME
---- --------------- -------
Application des Gaz, S.A. France
Australian Coleman, Inc. Kansas
Bafiges S.A. France
Beacon Exports, Inc. Kansas
Camping Gaz (Brazil) Brasil
Camping Gaz (Gb) Limited United Kingdom
Camping Gaz (Hong Kong) Hong Kong
Camping Gaz (India) Pvt. Ltd. India
Camping Gaz (Poland) Poland
Camping Gaz AG Switzerland
Camping Gaz Cs, Spol. S.r.l. Czech Republic
Camping Gaz GmbH Austria
Camping Gaz International Germany
Camping Gaz International Hellas Sarl Greece
Camping Gaz International (Portugal) Ltda Portugal
Camping Gaz K.K. Japan
Camping Gaz Kft Hungary
Camping Gaz Philippines, Inc. Philippines
Camping Gaz Senegal Senegal
<PAGE>
SUBSIDIARIES, CONTINUED
JURISDICTION OF ASSUMED
NAME INCORPORATION NAME
---- --------------- -------
Camping Gaz Srl Italy
Campiran SA Iran
The Canadian Coleman Company, Limited Ontario (Canada) La Compagnie
Canadien Coleman
Coleman Argentina, Inc. Delaware
Coleman Belgium N.V. Belgium
Coleman do Brasil Ltda. Brazil
Coleman Country, Ltd. Kansas Coleman Dubai
Coleman (Deutschland) GmbH Germany
Coleman Holland B.V. The Netherlands
Coleman Japan Co., Ltd. Japan
Coleman Mexico S. A. de C.V. Mexico
Coleman Powermate Compressors, Inc. Delaware
Coleman Powermate, Inc. Nebraska
Coleman Powermate, Ltd. Manitoba (Canada)
Coleman Safety & Security Products, Inc. Delaware
Coleman SARL France
Coleman SARL Switzerland
Coleman Spas, Inc. California
Coleman SVB S.r.l. Italy
Coleman Taymar Limited United Kingdom
Coleman U.K. Holdings Limited United Kingdom
<PAGE>
SUBSIDIARIES, CONTINUED
JURISDICTION OF ASSUMED
NAME INCORPORATION NAME
---- --------------- -------
Coleman U.K. PLC United Kingdom
Coleman Venture Capital, Inc. Kansas
Crosman Arms Canada, Ltd. Canada
Eastpak Corporation Delaware American
Lifestyles
Group
Eastpak Manufacturing Corporation Delaware
Epigas International Limited United Kingdom
General Archery Industries, Inc. Arkansas
Jasan Products Ltd. Bermuda
Kansas Acquisition Corp. Delaware
Neves Caria & Ca Ltda Portugal
Nippon Coleman, Inc. Kansas
Pearson Holdings, Inc. Arkansas
Productos Coleman, S.A. Spain
PT Camping Gaz Indonesia
River View Corporation of Barling, Inc. Arkansas
Seatt de Mexico, S.A. de C.V. Mexico
Sierra Canada, Ltd. Ontario (Canada) Thomas L. Clark
Manufacturing
Company
Sierra Corporation of Fort Smith, Inc. Arkansas
Taymar Gas Limited United Kingdom
Tsana Internacional, S.A. Costa Rica
Woodcraft Equipment Company Missouri
<PAGE>
Exhibit 23.1
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement
dated May 20, 1993 (Form S-3 No. 33-61346) of The Coleman Company, Inc. and
in the related Prospectus, in the Registration Statement dated February 25,
1993 (Form S-8 No. 33-58726) pertaining to The Coleman Company, Inc. 1992
Stock Option Plan and in the related Prospectus and in the Registration
Statement dated January 18, 1994 (Form S-8 No. 33-74144) pertaining to The
Coleman Company, Inc. 1993 Stock Option Plan and in the related Prospectus of
our report dated March 10, 1997, with respect to the consolidated financial
statements of The Coleman Company, Inc. included in the Annual Report (Form
10-K) for the year ended December 31, 1996.
/s/ Ernst & Young LLP
Ernst & Young LLP
Denver, Colorado
March 27, 1997
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Lynn E. Feldkamp, Steven F. Kaplan, Larry E.
Sanford and Laurence Winoker or any of them, each acting alone, his true and
lawful attorney-in-fact and agent, with full power of substitution, for him
and in his name, place and stead, in any and all capacities, in connection
with THE COLEMAN COMPANY, INC. (the "Corporation") Annual Report on Form 10-K
for the year ended December 31, 1996 under the Securities Exchange Act of
1934, as amended, including, without limiting the generality of the
foregoing, to sign the Form 10-K in the name of and on behalf of the
Corporation or on behalf of the undersigned as a director or officer of the
Corporation, and any amendments to the Form 10-K and any instrument,
contract, document or other writing, of or in connection with the Form 10-K
or amendments thereto, and to file the same, with all exhibits thereto, and
other documents in connection therewith, including this power of attorney,
with the Securities and Exchange Commission and any applicable securities
exchange or securities self-regulatory body, granting unto said
attorneys-in-fact and agents, each acting alone, full power and authority to
do and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these presents this
27th day of March, 1997.
/s/ RONALD O. PERELMAN
------------------------------------
Ronald O. Perelman
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Lynn E. Feldkamp, Steven F. Kaplan, Larry E.
Sanford and Laurence Winoker or any of them, each acting alone, his true and
lawful attorney-in-fact and agent, with full power of substitution, for him
and in his name, place and stead, in any and all capacities, in connection
with THE COLEMAN COMPANY, INC. (the "Corporation") Annual Report on Form 10-K
for the year ended December 31, 1996 under the Securities Exchange Act of
1934, as amended, including, without limiting the generality of the
foregoing, to sign the Form 10-K in the name of and on behalf of the
Corporation or on behalf of the undersigned as a director or officer of the
Corporation, and any amendments to the Form 10-K and any instrument,
contract, document or other writing, of or in connection with the Form 10-K
or amendments thereto, and to file the same, with all exhibits thereto, and
other documents in connection therewith, including this power of attorney,
with the Securities and Exchange Commission and any applicable securities
exchange or securities self-regulatory body, granting unto said
attorneys-in-fact and agents, each acting alone, full power and authority to
do and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these presents this
27th day of March, 1997.
/s/ DONALD G. DRAPKIN
------------------------------------
Donald G. Drapkin
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Larry E. Sanford, Irwin Engelman, Laurence
Winoker and Lynn E. Feldkamp or any of them, each acting alone, his true and
lawful attorney-in-fact and agent, with full power of substitution, for him
and in his name, place and stead, in any and all capacities, in connection
with THE COLEMAN COMPANY, INC. (the "Corporation") Annual Report on Form 10-K
for the year ended December 31, 1996 under the Securities Exchange Act of
1934, as amended, including, without limiting the generality of the foregoing,
to sign the Form 10-K in the name of and on behalf of the Corporation or on
behalf of the undersigned as a director or officer of the Corporation, and any
amendments to the Form 10-K and any instrument, contract, document or other
writing, of or in connection with the Form 10-K or amendments thereto, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, including this power of attorney, with the Securities and Exchange
Commission and any applicable securities exchange or securities
self-regulatory body, granting unto said attorneys-in-fact and agents, each
acting alone, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, each
acting alone, or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these presents this
19th day of February, 1997.
/s/ JORDAN L. HAINES
------------------------------------
Jordan L. Haines
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Larry E. Sanford, Irwin Engelman, Laurence
Winoker and Lynn E. Feldkamp or any of them, each acting alone, his true and
lawful attorney-in-fact and agent, with full power of substitution, for him
and in his name, place and stead, in any and all capacities, in connection
with THE COLEMAN COMPANY, INC. (the "Corporation") Annual Report on Form 10-K
for the year ended December 31, 1996 under the Securities Exchange Act of
1934, as amended, including, without limiting the generality of the foregoing,
to sign the Form 10-K in the name of and on behalf of the Corporation or on
behalf of the undersigned as a director or officer of the Corporation, and any
amendments to the Form 10-K and any instrument, contract, document or other
writing, of or in connection with the Form 10-K or amendments thereto, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, including this power of attorney, with the Securities and Exchange
Commission and any applicable securities exchange or securities
self-regulatory body, granting unto said attorneys-in-fact and agents, each
acting alone, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, each
acting alone, or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these presents this
19th day of February, 1997.
/s/ ROBERT J. LANIGAN
------------------------------------
Robert J. Lanigan
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Lynn E. Feldkamp, Steven F. Kaplan, Larry E.
Sanford and Laurence Winoker or any of them, each acting alone, his true and
lawful attorney-in-fact and agent, with full power of substitution, for him
and in his name, place and stead, in any and all capacities, in connection
with THE COLEMAN COMPANY, INC. (the "Corporation") Annual Report on Form 10-K
for the year ended December 31, 1996 under the Securities Exchange Act of
1934, as amended, including, without limiting the generality of the
foregoing, to sign the Form 10-K in the name of and on behalf of the
Corporation or on behalf of the undersigned as a director or officer of the
Corporation, and any amendments to the Form 10-K and any instrument,
contract, document or other writing, of or in connection with the Form 10-K
or amendments thereto, and to file the same, with all exhibits thereto, and
other documents in connection therewith, including this power of attorney,
with the Securities and Exchange Commission and any applicable securities
exchange or securities self-regulatory body, granting unto said
attorneys-in-fact and agents, each acting alone, full power and authority to
do and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these presents this
27th day of March, 1997.
/s/ JERRY W. LEVIN
------------------------------------
Jerry W. Levin
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Larry E. Sanford, Irwin Engelman, Laurence
Winoker and Lynn E. Feldkamp or any of them, each acting alone, his true and
lawful attorney-in-fact and agent, with full power of substitution, for him
and in his name, place and stead, in any and all capacities, in connection
with THE COLEMAN COMPANY, INC. (the "Corporation") Annual Report on Form 10-K
for the year ended December 31, 1996 under the Securities Exchange Act of
1934, as amended, including, without limiting the generality of the foregoing,
to sign the Form 10-K in the name of and on behalf of the Corporation or on
behalf of the undersigned as a director or officer of the Corporation, and any
amendments to the Form 10-K and any instrument, contract, document or other
writing, of or in connection with the Form 10-K or amendments thereto, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, including this power of attorney, with the Securities and Exchange
Commission and any applicable securities exchange or securities
self-regulatory body, granting unto said attorneys-in-fact and agents, each
acting alone, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, each
acting alone, or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these presents this
19th day of February, 1997.
/s/ LAWRENCE M. JONES
------------------------------------
Lawrence M. Jones
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Larry E. Sanford, Irwin Engelman, Laurence
Winoker and Lynn E. Feldkamp or any of them, each acting alone, his true and
lawful attorney-in-fact and agent, with full power of substitution, for him
and in his name, place and stead, in any and all capacities, in connection
with THE COLEMAN COMPANY, INC. (the "Corporation") Annual Report on Form 10-K
for the year ended December 31, 1996 under the Securities Exchange Act of
1934, as amended, including, without limiting the generality of the foregoing,
to sign the Form 10-K in the name of and on behalf of the Corporation or on
behalf of the undersigned as a director or officer of the Corporation, and any
amendments to the Form 10-K and any instrument, contract, document or other
writing, of or in connection with the Form 10-K or amendments thereto, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, including this power of attorney, with the Securities and Exchange
Commission and any applicable securities exchange or securities
self-regulatory body, granting unto said attorneys-in-fact and agents, each
acting alone, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, each
acting alone, or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these presents this
19th day of February, 1997.
/s/ ROBERT S. MILLER
------------------------------------
Robert S. Miller
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Larry E. Sanford, Irwin Engelman, Laurence
Winoker and Lynn E. Feldkamp or any of them, each acting alone, his true and
lawful attorney-in-fact and agent, with full power of substitution, for him
and in his name, place and stead, in any and all capacities, in connection
with THE COLEMAN COMPANY, INC. (the "Corporation") Annual Report on Form 10-K
for the year ended December 31, 1996 under the Securities Exchange Act of
1934, as amended, including, without limiting the generality of the foregoing,
to sign the Form 10-K in the name of and on behalf of the Corporation or on
behalf of the undersigned as a director or officer of the Corporation, and any
amendments to the Form 10-K and any instrument, contract, document or other
writing, of or in connection with the Form 10-K or amendments thereto, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, including this power of attorney, with the Securities and Exchange
Commission and any applicable securities exchange or securities
self-regulatory body, granting unto said attorneys-in-fact and agents, each
acting alone, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, each
acting alone, or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these presents this
19th day of February, 1997.
/s/ JOHN A. MORAN
------------------------------------
John A. Moran
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Lynn E. Feldkamp, Steven F. Kaplan, Larry E.
Sanford and Laurence Winoker or any of them, each acting alone, his true and
lawful attorney-in-fact and agent, with full power of substitution, for him
and in his name, place and stead, in any and all capacities, in connection
with THE COLEMAN COMPANY, INC. (the "Corporation") Annual Report on Form 10-K
for the year ended December 31, 1996 under the Securities Exchange Act of
1934, as amended, including, without limiting the generality of the
foregoing, to sign the Form 10-K in the name of and on behalf of the
Corporation or on behalf of the undersigned as a director or officer of the
Corporation, and any amendments to the Form 10-K and any instrument,
contract, document or other writing, of or in connection with the Form 10-K
or amendments thereto, and to file the same, with all exhibits thereto, and
other documents in connection therewith, including this power of attorney,
with the Securities and Exchange Commission and any applicable securities
exchange or securities self-regulatory body, granting unto said
attorneys-in-fact and agents, each acting alone, full power and authority to
do and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these presents this
27th day of March, 1997.
/s/ BRUCE SLOVIN
------------------------------------
Bruce Slovin
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Larry E. Sanford, Irwin Engelman, Laurence
Winoker and Lynn E. Feldkamp or any of them, each acting alone, his true and
lawful attorney-in-fact and agent, with full power of substitution, for him
and in his name, place and stead, in any and all capacities, in connection
with THE COLEMAN COMPANY, INC. (the "Corporation") Annual Report on Form 10-K
for the year ended December 31, 1996 under the Securities Exchange Act of
1934, as amended, including, without limiting the generality of the foregoing,
to sign the Form 10-K in the name of and on behalf of the Corporation or on
behalf of the undersigned as a director or officer of the Corporation, and any
amendments to the Form 10-K and any instrument, contract, document or other
writing, of or in connection with the Form 10-K or amendments thereto, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, including this power of attorney, with the Securities and Exchange
Commission and any applicable securities exchange or securities
self-regulatory body, granting unto said attorneys-in-fact and agents, each
acting alone, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, each
acting alone, or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these presents this
19th day of February, 1997.
/s/ WILLIAM H. SPOOR
------------------------------------
William H. Spoor
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS AS FILED IN THE COMPANY'S ANNUAL REPORT ON
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 17,299
<SECURITIES> 0
<RECEIVABLES> 221,454
<ALLOWANCES> 11,512
<INVENTORY> 287,502
<CURRENT-ASSETS> 591,637
<PP&E> 297,765
<DEPRECIATION> 98,583
<TOTAL-ASSETS> 1,160,086
<CURRENT-LIABILITIES> 246,494
<BONDS> 582,866
0
0
<COMMON> 532
<OTHER-SE> 252,413
<TOTAL-LIABILITY-AND-EQUITY> 1,160,086
<SALES> 1,215,865
<TOTAL-REVENUES> 1,220,216
<CGS> 928,497
<TOTAL-COSTS> 928,497
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 5,225
<INTEREST-EXPENSE> 38,727
<INCOME-PRETAX> (50,301)
<INCOME-TAX> (10,927)
<INCOME-CONTINUING> (41,246)
<DISCONTINUED> 0
<EXTRAORDINARY> (647)
<CHANGES> 0
<NET-INCOME> (41,893)
<EPS-PRIMARY> (.79)
<EPS-DILUTED> (.79)
</TABLE>
