\<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended JUNE 30, 1998
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
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.)
2111 E. 37TH STREET NORTH, WICHITA, KANSAS 67219
------------------------------------------ ----------
(Address of principal executive offices) (Zip Code)
316-832-2700
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirement for the past 90 days. X Yes No
--- ---
The number of shares outstanding of the registrant's par value $.01 common stock
was 55,827,490 shares as of July 28, 1998, of which 44,067,520 shares were held
by Coleman Worldwide Corporation, an indirect wholly-owned subsidiary of Sunbeam
Corporation.
Exhibit Index on Page 18.
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION Page
----
Item 1. Condensed Consolidated Financial Statements:
Condensed Consolidated Statements of Operations
Three months ended June 30, 1998 and 1997 and
Six months ended June 30, 1998 and 1997................... 3
Condensed Consolidated Balance Sheets
June 30, 1998 and December 31, 1997........................ 4
Condensed Consolidated Statements of Cash Flows
Six months ended June 30, 1998 and 1997.................... 5
Notes to Condensed Consolidated Financial Statements.......... 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations..................................... 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings................................................ 18
Item 6. Exhibits and Reports on Form 8-K................................. 18
Signatures....................................................... 20
2
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
------------------- -------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net revenues................................... $326,407 $383,514 $570,906 $678,978
Cost of sales.................................. 232,707 281,601 408,484 496,023
-------- -------- -------- --------
Gross profit................................... 93,700 101,913 162,422 182,955
Selling, general and administrative expenses... 67,010 70,111 141,865 135,984
Interest expense, net.......................... 8,879 11,027 17,923 21,739
Amortization of goodwill and deferred charges.. 2,733 2,762 5,667 5,627
Loss (gain) on sale of business................ 1,447 -- (24,690) --
Other (income) expense, net.................... (317) 526 1,544 797
-------- -------- -------- --------
Earnings before income taxes,
minority interest and extraordinary item.... 13,948 17,487 20,113 18,808
Income tax expense............................. 8,672 6,637 16,190 7,147
Minority interest.............................. 179 731 240 843
-------- -------- -------- --------
Earnings before extraordinary item............. 5,097 10,119 3,683 10,818
Extraordinary loss on early extinguishment
of debt, net of income tax benefit........... (16,306) -- (17,538) --
-------- -------- -------- --------
Net (loss) earnings............................ $(11,209) $ 10,119 $(13,855) $ 10,818
-------- -------- -------- --------
-------- -------- -------- --------
Basic and diluted (loss) earnings per share:
Earnings before extraordinary item........... $ 0.09 $ 0.19 $ 0.07 $ 0.20
Extraordinary item........................... (0.29) -- (0.32) --
-------- -------- -------- --------
Net (loss) earnings........................ $ (0.20) $ 0.19 $ (0.25) $ 0.20
-------- -------- -------- --------
-------- -------- -------- --------
Weighted average common shares outstanding:
Basic........................................ 55,823 53,338 54,783 53,285
-------- -------- -------- --------
-------- -------- -------- --------
Dilutive..................................... 56,053 53,560 55,215 53,422
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
See Notes to Condensed Consolidated Financial Statements
3
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
---------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................ $ 19,995 $ 13,031
Accounts and notes receivable, less allowance
of $9,702 in 1998 and $8,930 in 1997............... 258,454 194,616
Inventories.......................................... 223,569 236,327
Deferred tax assets.................................. 24,976 26,378
Prepaid assets and other............................. 17,316 21,344
---------- ----------
Total current assets............................... 544,310 491,696
Property, plant and equipment, net...................... 157,073 175,494
Intangible assets related to businesses acquired, net... 289,542 332,468
Deferred tax assets and other........................... 40,944 42,106
---------- ----------
$1,031,869 $1,041,764
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts and notes payable........................... $ 153,723 $ 158,878
Debt to affiliate.................................... 453,932 --
Other current liabilities............................ 94,586 94,319
---------- ----------
Total current liabilities.......................... 702,241 253,197
Long-term debt.......................................... 216 477,276
Other liabilities....................................... 60,761 69,586
Minority interest....................................... 631 1,236
Contingencies...........................................
Stockholders' equity:
Common stock......................................... 558 534
Additional paid-in capital........................... 217,594 172,072
Retained earnings.................................... 66,441 80,296
Accumulated other comprehensive loss................. (16,573) (12,433)
---------- ----------
Total stockholders' equity......................... 268,020 240,469
---------- ----------
$1,031,869 $1,041,764
---------- ----------
---------- ----------
</TABLE>
See Notes to Condensed Consolidated Financial Statements
4
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended June 30,
--------------------
1998 1997
--------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) earnings............................................ $ (13,855) $ 10,818
Adjustments to reconcile net (loss) earnings to
net cash flows from operating activities:
Depreciation and amortization............................. 18,306 19,393
Non-cash restructuring and other charges.................. 3,890 9,897
Minority interest in earnings of Camping Gaz.............. 240 843
Gain on sale of business.................................. (24,690) --
Extraordinary loss on early extinguishment of debt........ 29,012 --
Change in assets and liabilities, net of effects
from sale of business:
Increase in receivables................................. (85,166) (83,057)
(Increase) decrease in inventories...................... (9,708) 27,526
Increase in accounts payable............................ 5,414 19,992
Other, net.............................................. (2,792) 3,272
--------- --------
Net cash (used) provided by operating activities............... (79,349) 8,684
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures........................................... (13,567) (12,660)
Net proceeds from sale of business and fixed assets............ 98,210 2,815
--------- --------
Net cash provided (used) by investing activities............... 84,643 (9,845)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net payments of revolving credit agreement borrowings.......... (52,578) (49,959)
Net change in short-term borrowings............................ (236) 51,594
Repayment of long-term debt, including redemption costs........ (446,839) (2,376)
Increase in borrowings from affiliate.......................... 453,932 --
Debt refinancing costs......................................... -- (766)
Proceeds from stock options exercised including tax benefits... 45,546 1,443
--------- --------
Net cash used by financing activities.......................... (175) (64)
--------- --------
Effect of exchange rate changes on cash........................ 1,845 973
--------- --------
Net increase (decrease) in cash and cash equivalents........... 6,964 (252)
Cash and cash equivalents at beginning of the period........... 13,031 17,299
--------- --------
Cash and cash equivalents at end of the period................. $ 19,995 $ 17,047
--------- --------
--------- --------
</TABLE>
See Notes to Condensed Consolidated Financial Statements
5
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share data)
(Unaudited)
1. BACKGROUND
The Coleman Company, Inc. ("Coleman" or the "Company") is a leading
manufacturer and marketer of consumer products for outdoor recreation and home
hardware use on a global basis.
Coleman is a subsidiary of Coleman Worldwide Corporation ("Coleman
Worldwide"). Coleman Worldwide is a subsidiary of Laser Acquisition Corp.
("Laser"), a wholly-owned subsidiary of Sunbeam Corporation ("Sunbeam"). Coleman
Worldwide owns 44,067,520 shares of the common stock of Coleman which represent
approximately 79% of the outstanding Coleman common stock as of June 30, 1998.
On February 27, 1998, CLN Holdings Inc. ("CLN Holdings") and Coleman
(Parent) Holdings Inc. ("Parent Holdings"), the then parent company of CLN
Holdings, entered into an Agreement and Plan of Merger (as amended, the
"Holdings Merger Agreement") with Sunbeam and Laser. On March 30, 1998, pursuant
to the Holdings Merger Agreement, CLN Holdings was merged with and into Laser,
with Laser continuing as the surviving corporation and as a wholly-owned
subsidiary of Sunbeam (the "Holdings Merger"). In the Holdings Merger, Parent
Holdings received 14,099,749 shares of Sunbeam Common Stock and $159,957 in cash
in exchange for all of the outstanding shares of CLN Holdings. As a result of
the Holdings Merger, Sunbeam became the indirect owner of the 44,067,520 shares
of Coleman common stock held by Coleman Worldwide (the "Sunbeam Acquisition").
Coincident with the execution of the Holdings Merger Agreement, the
Company, Sunbeam and Camper Acquisition Corp. ("CAC"), a wholly-owned
subsidiary of Sunbeam, entered into an Agreement and Plan of Merger (the
"Coleman Merger Agreement" and with the Holdings Merger Agreement,
collectively, the "Merger Agreements"), providing that among other things,
CAC will be merged with and into Coleman, with Coleman continuing as the
surviving corporation (the "Coleman Merger"). Pursuant to the Coleman Merger
Agreement, each share of the Company's common stock issued and outstanding
immediately prior to the effective time of the Coleman Merger (other than
shares held indirectly by Sunbeam and dissenting shares, if any) will be
converted into the right to receive (a) 0.5677 of a share of Sunbeam common
stock, with cash paid in lieu of fractional shares, and (b) $6.44 in cash,
without interest. In addition, outstanding stock options of Coleman
immediately vested upon consummation of the Holdings Merger, and stock
options outstanding at the time of the Coleman Merger will be cashed out by
Sunbeam at a price per share equal to the difference between $27.50 and the
exercise price of such option less any applicable withholding taxes.
The consummation of the Coleman Merger is contingent upon several
conditions including, among other things, the filing of a registration statement
on Form S-4 under the Securities Act of 1933 (the "Securities Act") for the
purpose of registering the shares of Sunbeam common stock to be issued in the
Coleman Merger (the "Registration Statement") and that the Registration
Statement shall have become effective in accordance with the provisions of the
Securities Act. Sunbeam has filed a preliminary Registration Statement which has
not yet become effective. Coleman is unable to estimate when the Registration
Statement will become effective but anticipates that the earliest possible
effective date will not be before the fourth quarter of 1998. Upon consummation
of the Coleman Merger, Coleman will become an indirect wholly-owned subsidiary
of Sunbeam. As a result of the Sunbeam Acquisition, all previous arrangements
with Parent Holdings and its affiliates for the provision of services were
terminated.
6
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share data)
(Unaudited)
2. BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
Coleman include the accounts of the Company and its subsidiaries after
elimination of all material intercompany accounts and transactions, and have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals and one-time adjustments related to the acquisition
of Coleman by Sunbeam) considered necessary for a fair presentation have been
included. Operating results for the six months ended June 30, 1998 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1998. The balance sheet at December 31, 1997 has been derived from
the audited financial statements for that date but does not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended December 31, 1997.
3. INVENTORIES
The components of inventories consist of the following:
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
-------- ------------
<S> <C> <C>
Raw material and supplies............... $ 50,106 $ 59,406
Work-in-process......................... 6,595 7,813
Finished goods.......................... 166,868 169,108
-------- --------
$223,569 $236,327
-------- --------
-------- --------
</TABLE>
4. LONG-TERM AND AFFILIATE DEBT
In March 1998, in connection with the Sunbeam Acquisition, the Company
repaid all outstanding indebtedness under the Company's credit agreement and the
credit agreement was terminated. In connection with the termination of this
agreement, the Company recorded an extraordinary loss of $2,038 which represents
a write-off of the related unamortized financing costs associated with the
credit agreement.
In addition, the Company's various senior notes aggregating $360,000 were
redeemed on April 21, 1998 at a cost of $383,395. The $23,395 of redemption
costs in excess of carrying value along with the write-off of the related
unamortized financing costs of $2,694 and unamortized deferred interest rate
swap losses of $885 are reflected as an extraordinary loss on early
extinguishment of debt in the second quarter of 1998.
The Company relies upon borrowings from Sunbeam for the Company's liquidity
needs. Amounts advanced from Sunbeam are due on demand and bear interest at a
floating rate which is equal to the weighted average interest rate incurred by
Sunbeam on its outstanding convertible debt and borrowings under its bank credit
facility. The weighted average interest rate charged by Sunbeam on amounts
advanced during the six months ended June 30, 1998 was 6.7%. Sunbeam also
charged to Coleman a pro-rata share of amortized debt issuance costs and unused
bank credit facility commitment fees totaling $323. Net amounts advanced from
7
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share data)
(Unaudited)
Sunbeam along with the related unpaid interest and other costs are reflected
as affiliate debt in the condensed consolidated balance sheet. Sunbeam has
recently announced certain matters that could negatively affect its ability
to continue to make loans or capital contributions to the Company. These
announcements have included (i) Sunbeam's necessity to obtain waivers of
non-compliance on certain debt covenants, which waivers have been obtained
through December 31, 1998, (ii) certain shareholder lawsuits, (iii) an
investigation by the Securities and Exchange Commission, and (iv) the
statement that the Audit Committee of the Board of Directors of Sunbeam has
determined that Sunbeam will be required to restate certain historical
financial statements. No assurance can be given that Sunbeam will be able or
willing to continue to make capital contributions or loans to the Company
should they be needed.
5. SALE OF BUSINESS
On March 24, 1998, the Company sold Coleman Safety & Security Products,
Inc. ("CSS"), a wholly-owned subsidiary of the Company, which manufactures and
sells safety and security products, to Ranco Incorporated of Delaware ("Ranco"),
a wholly-owned subsidiary of Siebe plc, for approximately $96,189, net of fees
and expenses. In connection with the sale of CSS, the Company recorded a pre-tax
gain of $26,137 during the first quarter of 1998. The net proceeds from the sale
of CSS were reduced as a result of post-closing adjustments during the second
quarter of 1998, which reduced the recorded gain by $1,447. Other post-closing
issues amounting to approximately $1,800 remain unresolved and could result in a
further adjustment to the recorded gain.
6. RESTRUCTURING AND OTHER CHARGES
During the six months ended June 30, 1998, the Company recorded charges
totaling $23,642 which included (i) $7,242 of costs associated with the
acquisition of Coleman by Sunbeam, (ii) the write-off of $3,890 of capitalized
costs associated with the installation of a company-wide enterprise resource
computer software system which was abandoned following the Sunbeam Acquisition,
(iii) $2,225 of costs to terminate a licensing services agreement with an
affiliate of Parent Holdings, (iv) $8,145 of severance benefits related to
approximately 76 employees whose employment with the Company was terminated
following the Sunbeam Acquisition, (v) $1,071 of severance benefits for
approximately 110 employees at the Company's manufacturing facility in Cedar
City, Utah which was closed during June 1998, (vi) recognition of a net gain of
$71 related to the disposition of the Company's manufacturing facility in Cedar
City, Utah, and (vii) certain other adjustments in the amount of $1,140. During
the six months ended June 30, 1997, the Company recorded pre-tax charges
totaling $22,551 which consisted of (i) $10,045 to close and relocate certain
administrative and sales offices, (ii) $8,353 to exit various low margin
products, including pressure washers, and (iii) $4,153 to close several
manufacturing facilities.
7. INCOME TAXES
The provision for income taxes for the six months ended June 30, 1998
reflects, among other things, (i) the write-off of approximately $5.5 million
of deferred tax assets that became unrealizable as a result of the Sunbeam
Acquisition, (ii) $0.4 million of tax expense due to the impact of decreased
foreign tax rates on deferred tax assets, and (iii) the impact of $7.2 million
of non-deductible costs associated with the Sunbeam Acquisition. Excluding
these items, the provision for income taxes would have resulted in an
effective income tax rate of approximately 38% for the 1998 period compared
to an effective income tax rate of approximately 38% for the
8
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share data)
(Unaudited)
1997 period. In each period, the comparable effective income tax rates differ
from the federal statutory rate of 35% primarily due to state income taxes,
foreign operations and the effect of certain expenses that are not deductible
for income tax purposes.
8. COMPREHENSIVE INCOME
As of January 1, 1998, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income." SFAS
No. 130 establishes standards for the reporting and display of comprehensive
income and its components in financial statements; however, the adoption of this
Statement had no impact on the Company's net income or shareholders' equity.
SFAS No. 130 requires foreign currency translation adjustments and minimum
pension liability adjustments, which prior to adoption were reported separately
in shareholders' equity, to be included in other comprehensive income. The
components of the Company's comprehensive loss are as follows:
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
------------------ ------------------
1998 1997 1998 1997
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Net (loss) income........................ $(11,209) $10,119 $(13,855) $10,818
Foreign currency translation adjustment,
net of tax.............................. (1,385) (1,486) (3,803) (7,790)
Minimum pension liability adjustment,
net of tax.............................. (169) (168) (337) (337)
-------- ------- -------- -------
Comprehensive (loss) income.............. $(12,763) $ 8,465 $(17,995) $ 2,691
-------- ------- -------- -------
-------- ------- -------- -------
</TABLE>
9. BASIC AND DILUTED EARNINGS (LOSS) PER COMMON SHARE
In February 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 128, "Earnings Per Share," which establishes new standards for
computing and presenting basic and diluted earnings per share. As required by
SFAS No. 128, the Company adopted the provisions of the new standard with
retroactive effect beginning in 1997. Accordingly, all net earnings (loss) per
common share amounts for all prior periods have been restated to comply with
SFAS No. 128.
The basic earnings (loss) per common share has been computed based upon the
weighted average shares of outstanding common stock. Diluted earnings (loss) per
common share has been computed based upon the sum of the weighted average shares
of outstanding common stock and the weighted average incremental shares that
would have been outstanding assuming dilutive potential common stock had been
issued. The Company's outstanding common stock options represent the only
dilutive potential common stock. The amounts of earnings (loss) used in the
calculations of basic and diluted earnings (loss) per common share were the same
for all periods presented. The number of shares used in the calculation of
diluted earnings per common share included 230,225 and 221,920 incremental
shares for the three month periods ended June 30, 1998 and 1997, respectively,
and included 431,898 and 137,160 incremental shares for the six month periods
ended June 30, 1998 and 1997, respectively, to recognize the effect of dilutive
stock options.
9
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share data)
(Unaudited)
10. RELATED PARTY TRANSACTIONS
In connection with the Sunbeam Acquisition, the Company terminated a
licensing services agreement with an affiliate of Parent Holdings and recorded
$2,000 of loss related to payments to be made under the terms of the termination
agreement and $225 of loss related to certain receivables from an affiliate of
Parent Holdings which were forgiven as part of the same termination agreement.
During the second quarter of 1998, the Company provided certain management
services to Sunbeam and its affiliates and also received certain management
services from Sunbeam and its affiliates. These services included, among other
things, (i) general administrative, legal and financial services, (ii) factory
management and inventory control services, and (iii) sales and marketing
services. The cost of the services provided by the Company and charged to
Sunbeam and its affiliates in the amount of $226 has been reflected as a
reduction in selling, general and administration ("SG&A") expenses and the $578
of charges to Coleman for services received by Coleman from Sunbeam and its
affiliates has been included in SG&A expenses. The cost of the services are
assessed based on actual usage or other allocation methods which management
believes are reasonable.
11. RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information". SFAS No. 131 establishes standards for
reporting information about operating segments in annual financial statements
and requires those enterprises report selected information about operating
segments in interim financial reports. It also establishes standards for related
disclosures about products and services, geographic areas, and major customers.
The Company will apply the provisions of SFAS No. 131 beginning January 1, 1998;
however, financial statement disclosures for interim periods in 1998 are not
required to be presented in interim financial statements issued in 1998.
12. CONTINGENCIES
On June 25 and July 16, 1998, four purported class actions were filed by
alleged Coleman shareholders in the Delaware Court of Chancery (the "Court").
Deutscher v. Dunlap et al., Del. Ch., C.A. No. 16486-NC; Wolf v. Kersh, et al.,
Del. Ch., C.A. No. 16487-NC; Steinberg v. Dunlap et al., Del. Ch., C.A. No.
16488-NC; Shaev v. Dunlap et al., Del. Ch., C.A. No. 165120NC. The named
defendants in these actions are Sunbeam and Coleman as well as alleged members
of Coleman's board of directors during the alleged class period. Each of these
actions seeks injunctive relief and monetary damages in an unspecified amount.
On July 7, 1998, the plaintiff in the Deutscher action filed an amended
complaint.
The complaints allege, in essence, that the exchange ratio of the Coleman
Merger is no longer fair to Coleman shareholders as a result of the decline in
the market value of Sunbeam stock after the Coleman Merger Agreement was
announced. The complaints allege that the individual defendants suffer from
conflicting interests in serving as directors of both Sunbeam and Coleman, and
that they have breached their fiduciary duties to Coleman shareholders by
refusing to renegotiate or terminate the Coleman Merger Agreement. The Wolf
complaint and the amended Deutscher complaint also allege that Sunbeam's
financial statements did not conform with generally accepted accounting
principles and did not fairly present Sunbeam's financial condition at the time
the Coleman Merger Agreement was negotiated, contrary to Sunbeam's
representation in the Coleman Merger Agreement.
10
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share data)
(Unaudited)
Pursuant to an agreement with plaintiff's counsel, the defendants are not
obligated to respond to any of these complaints until an order of consolidation
is entered in the case, which proposed order has not yet been presented to the
Court for approval.
11
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
On February 27, 1998, CLN Holdings Inc. ("CLN Holdings") and Coleman
(Parent) Holdings Inc. ("Parent Holdings"), the then parent company of CLN
Holdings, entered into an Agreement and Plan of Merger (as amended, the
"Holdings Merger Agreement") with Sunbeam Corporation ("Sunbeam") and Laser
Acquisition Corp. ("Laser"), a wholly-owned subsidiary of Sunbeam. On March 30,
1998, pursuant to the Holdings Merger Agreement, CLN Holdings was merged with
and into Laser, with Laser continuing as the surviving corporation and as a
wholly-owned subsidiary of Sunbeam (the "Holdings Merger"). In the Holdings
Merger, Parent Holdings received 14,099,749 shares of Sunbeam Common Stock and
$160.0 million in cash in exchange for all of the outstanding shares of CLN
Holdings. As a result of the Holdings Merger, Sunbeam became the indirect owner
of the 44,067,520 shares of Coleman common stock held by Coleman Worldwide
Corporation ("Coleman Worldwide") (the "Sunbeam Acquisition").
Coincident with the execution of the Holdings Merger Agreement, the
Company, Sunbeam and Camper Acquisition Corp. ("CAC"), a wholly-owned
subsidiary of Sunbeam, entered into an Agreement and Plan of Merger (the
"Coleman Merger Agreement" and with the Holdings Merger Agreement,
collectively, the "Merger Agreements"), providing that among other things,
CAC will be merged with and into Coleman, with Coleman continuing as the
surviving corporation (the "Coleman Merger"). Pursuant to the Coleman Merger
Agreement, each share of the Company's common stock issued and outstanding
immediately prior to the effective time of the Coleman Merger (other than
shares held indirectly by Sunbeam and dissenting shares, if any) will be
converted into the right to receive (a) 0.5677 of a share of Sunbeam common
stock, with cash paid in lieu of fractional shares, and (b) $6.44 in cash,
without interest. In addition, outstanding stock options of Coleman
immediately vested upon consummation of the Holdings Merger, and stock
options outstanding at the time of the Coleman Merger will be cashed out by
Sunbeam at a price per share equal to the difference between $27.50 and the
exercise price of such option less any applicable withholding taxes.
The consummation of the Coleman Merger is contingent upon several
conditions including, among other things, the filing of a registration statement
on Form S-4 under the Securities Act of 1933 (the "Securities Act") for the
purpose of registering the shares of Sunbeam common stock to be issued in the
Coleman Merger (the "Registration Statement") and that the Registration
Statement shall have become effective in accordance with the provisions of the
Securities Act. Sunbeam has filed a preliminary Registration Statement; however,
it has not yet become effective and Coleman is unable to estimate when the
Registration Statement will become effective. In addition, outstanding, unvested
stock options of Coleman immediately vested upon consummation of the Holdings
Merger and outstanding stock options at the time of the Coleman Merger will be
cashed out by Sunbeam at a price per share equal to the difference between
$27.50 and the exercise price of such option. Upon consummation of the Coleman
Merger, Coleman will become an indirect wholly-owned subsidiary of Sunbeam. As
a result of the Sunbeam Acquisition, all previous arrangements with Parent
Holdings and its affiliates for the provision of services were terminated.
Four purported class actions have been filed by Coleman shareholders in the
Delaware Court of Chancery. The named defendants in these actions are Sunbeam
and Coleman as well as alleged members of Coleman's board of directors during
the alleged class period. Each of these actions seeks injunctive relief and
monetary damages in an unspecified amount. See "Item 1. Legal Proceedings" in
"Part II. Other Information".
RESULTS OF OPERATIONS
Restructuring and Other Charges
- -------------------------------
During first six months of 1997, the Company undertook several
restructuring initiatives to strengthen its business operations, including (i)
exiting various low-margin products, including pressure washers, (ii) closing
and relocating certain administrative and sales offices, and (iii) closing
several manufacturing facilities. During the first quarter of 1997, the Company
recorded restructuring and other charges of $4.0 million, primarily in
12
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
selling, general and administrative ("SG&A") expenses, related primarily to
severance costs. During the second quarter of 1997, the Company recorded total
restructuring charges of $18.6 million. The 1997 second quarter restructuring
charges included $12.9 million related to exiting certain products and
facilities of which $10.3 million was reflected in cost of sales and $2.6
million in SG&A expenses. This $12.9 million restructuring charge included $8.6
million of charges related primarily to the write down of inventory and fixed
assets to estimated realizable value and $4.3 million of liabilities for other
exit costs, including carrying costs of idle facilities and relocation costs.
The costs associated with the second quarter restructuring charge of $18.6
million also included $5.7 million of termination costs for 389 factory and
administrative employees of which $1.1 was reflected in cost of sales and $4.6
million in SG&A expenses.
During the first quarter of 1998, the Company increased its estimate of
costs to complete the restructuring initiatives previously announced in 1997 by
$0.7 million. In addition, as a result of the Sunbeam Acquisition, Coleman
recorded $12.9 million of other charges in SG&A which included (i) $7.1 million
of costs associated with the acquisition of Coleman by Sunbeam, (ii) the
write-off of $3.6 million of capitalized costs associated with the installation
of a company-wide enterprise resource computer software system which was
abandoned following the Sunbeam Acquisition, and (iii) $2.2 million of costs to
terminate a licensing services agreement with an affiliate of Parent Holdings.
At the end of the first quarter of 1998, the majority of Coleman common stock
was acquired by Sunbeam. Subsequent to the Sunbeam Acquisition, the Company
terminated certain employees, adopted a different focus in information system
planning and implemented certain other strategies. As a result of these actions,
the Company recorded $9.0 million of restructuring and other charges in SG&A
which included (i) $8.2 million of severance benefits related to approximately
76 employees whose employment with the Company was terminated following the
Sunbeam Acquisition, (ii) an increase in severance benefits related to employees
terminated during 1997 in the amount of $0.4 million, and (iii) additional costs
associated with the Sunbeam Acquisition, including an abandoned software system,
in the amount of $0.4 million. In addition, the Company recorded a charge to
cost of sales in the amount of $1.0 million related to $1.1 million of severance
benefits for approximately 110 employees at the Company's manufacturing facility
in Cedar City, Utah which was closed during June 1998, partially offset by a
recognition of a net gain of $0.1 million related to the disposition of the
company's manufacturing facility in Cedar City, Utah. An analysis of the
reserves for restructuring and other charges is outlined in the following table
(dollars in millions):
<TABLE>
<CAPTION>
1998 Charges During
Balance at Additional Six Months Ended Balance at
12/31/97 Reserves 6/30/98 6/30/98
---------- ---------- ---------------- ----------
<S> <C> <C> <C> <C>
Impairment of fixed assets............. $ 8.1 $(0.2) $ (1.3) $ 6.6
Inventory and other asset impairments.. 8.4 3.9 (7.2) 5.1
Termination costs...................... 2.8 10.1 (3.7) 9.2
Idle facilities, relocation and other
exit costs............................ 8.7 9.8 (13.5) 5.0
----- ----- ------ -----
$28.0 $23.6 $(25.7) $25.9
----- ----- ------ -----
----- ----- ------ -----
</TABLE>
The Company expects to incur additional restructuring and other charges
as a result of the Sunbeam Acquisition. During the second quarter of 1998,
certain restructuring initiatives involving Coleman's operations were
announced. These initiatives may continue to evolve and change as current
management clarifies its plan for the Coleman operations. The restructuring
initiatives related to Coleman include, among other things, (i) combining the
Company's headquarters with Sunbeam's headquarters in Florida, (ii) the
consolidation of certain factories, warehouses, and sales offices, and (iii)
the divestiture of the spa business. Until such time as the final steps are
taken to complete the Sunbeam Acquisition, some of the restructuring and
other initiatives may be modified or delayed in implementation.
13
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
Three months ended June 30, 1998 compared with the three months ended
- ---------------------------------------------------------------------
June 30, 1997
-------------
Net revenues of $326.4 million in the three-month period ended June 30,
1998 were $57.1 million or 14.9% less than in the three-month period ended June
30, 1997 with outdoor recreation products decreasing $29.0 million or 9.4% and
hardware products decreasing $28.1 million or 37.9%. Geographically, United
States and Canadian revenues decreased 18.4% while international revenues
decreased 6.1%.
Outdoor recreation products revenues decreased $29.0 million or 9.4%. The
sales decrease occurred in nearly all product categories, primarily reflecting
the effects of the SKU reduction program in 1997, softness in demand resulting
from the domestic retail channel's efforts to lower inventory levels, and
adverse economic conditions in Japan and Southeast Asia. The hardware products
revenues decrease of $28.1 million reflects the loss of pressure washer revenues
due to exiting this business in 1997 and the loss of Coleman Safety & Security
Products, Inc. ("CSS") revenues in 1998 due to the sale of this business in
March 1998. Excluding the revenues of each of these operations, the hardware
products revenues in 1998 would have decreased by $0.3 million as compared to
1997 revenues as an increase in generator revenues was offset by a decline in
compressor revenues.
Gross margins, excluding the impact of restructuring and other charges of
$1.0 million in 1998 and $11.4 million in 1997, which are more fully described
above, decreased as a percent of sales by 0.5 percentage points to 29.0% in 1998
from 29.5% in 1997. The decrease is driven by an increase in the Company's
inventory reserves for slow moving product of $3.2 million partially offset by
favorable effects of the mix of products sold, in part, due to the SKU reduction
program which removed low or no-margin SKUs.
SG&A expenses, excluding the impact of restructuring and other charges of
$9.0 million in 1998 and $7.2 million in 1997, which are more fully described
above, were $58.0 million in 1998 compared to $62.9 million in 1997, a decrease
of $4.9 million which is primarily due to the sale of CSS in March 1998.
On March 24, 1998, the Company sold CSS, a wholly-owned subsidiary of the
Company which manufactures and sells safety and security products, to Ranco
Incorporated of Delaware ("Ranco"), a wholly-owned subsidiary of Siebe plc,
for approximately $96.2 million, net of fees and expenses. In connection with
the sale of CSS, the Company recorded a pre-tax gain of $26.1 million during
the first quarter of 1998. The net proceeds from the sale of CSS were reduced
as a result of post-closing adjustments during the second quarter of 1998,
which reduced the recorded gain by $1.4 million. Other post-closing issue
amounting to $1.8 million remain unresolved and could result in a further
adjustment to the recorded gain.
Interest expense was $8.9 million in 1998 compared with $11.0 million in
1997, a decrease of $2.1 million. The decrease in interest expense reflects
(i) the favorable effects of lower borrowings as the proceeds from the sale
of CSS were primarily used to reduce outstanding debt and (ii) a decrease in
the Company's weighted average interest rates from approximately 7.5% in 1997
to 6.9% in 1998.
Minority interest represents the interest of minority shareholders in
certain subsidiary operations of Camping Gaz.
The Company recorded a provision for income tax expense of $8.7 million in
1998 compared to a provision for income tax expense of $6.6 million in 1997. The
1998 income tax provision reflects, among other things, the write-off of
approximately $3.7 million of deferred tax assets that became unrealizable as a
result of the Sunbeam Acquisition. Excluding these items, the 1998 effective
income tax rate would have been approximately 35%.
14
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
In April 1998, as a result of the Holdings Merger, the Company repaid the
$360.0 million outstanding indebtedness under the Company's various senior
notes. The $23.4 million of redemption costs in excess of carrying value along
with the write-off of related unamortized financing costs of $2.7 million and
unamortized deferred interest rate swap losses of $0.9 million are reflected as
extraordinary loss on early extinguishment of debt. The total $27.0 million of
charges were reduced by $10.7 million of tax benefits for a net after-tax charge
of $16.3 million or $0.29 per share.
Six months ended June 30, 1998 compared with the six months ended June 30, 1997
- -------------------------------------------------------------------------------
Net revenues of $570.9 million in the six-month period ended June 30, 1998
were $108.1 million or 15.9% less than in the six-month period ended June 30,
1997 with outdoor recreation products decreasing $69.0 million or 13.1% and
hardware products decreasing $39.1 million or 25.4%. Geographically, United
States and Canadian revenues decreased 17.3% while international revenues
decreased 12.8%.
Outdoor recreation products revenues decreased $69.0 million or 13.1%. The
sales decrease occurred in nearly all product categories, primarily reflecting
the effects of the SKU reduction program in 1997, softness in demand resulting
from the domestic retail channel's efforts to lower inventory levels, and
adverse economic conditions in Japan and Southeast Asia. The hardware products
revenues decrease of $39.1 million reflects the loss of pressure washer revenues
due to exiting this business in 1997 and the loss of CSS revenues in 1998 due to
the sale of this business in March 1998. Excluding the revenues of each of these
operations, the hardware products revenues would show an increase of $2.6
million, or 2.7%, over comparable 1997 revenues reflecting an increase in
generator revenues as a result of winter storms which were partially offset by a
decline in compressor revenues.
Gross margins, excluding the impact of restructuring and other charges of
$1.0 million in 1998 and $11.0 million in 1997, which are more fully described
above, remained constant at 28.6% of sales.
SG&A expenses, excluding the impact of restructuring and other charges of
$22.6 million in 1998 and $11.6 million in 1997, which are more fully described
above, were $119.3 million in 1998 compared to $124.4 million in 1997, a
decrease of $5.1 million which is primarily due to the sale of CSS in March
1998.
On March 24, 1998, the Company sold CSS to Ranco for approximately $96.2
million, net of fees and expenses. In connection with the sale of CSS, the
Company recorded a pre-tax gain of $26.1 million during the first quarter of
1998. The net proceeds from the sale of CSS were reduced as a result of
post-closing adjustments during the second quarter of 1998, which reduced the
recorded gain by $1.4 million. Other post-closing issues amounting to $1.8
million remain unresolved and could result in a further adjustment to the
recorded gain.
Interest expense was $17.9 million in 1998 compared with $21.7 million in
1997, a decrease of $3.8 million. The decrease in interest expense reflects
(i) the favorable effects of lower borrowings as the proceeds from the sale of
CSS were primarily used to reduce outstanding debt and from improvements in
managing working capital and a (ii) decrease in the Company's weighted average
interest rates from approximately 7.4% in 1997 to 7.2% in 1998.
Minority interest represents the interest of minority shareholders in
certain subsidiary operations of Camping Gaz.
The Company recorded a provision for income tax expense of $16.2 million in
1998 compared to a provision for income tax expense of $7.1 million in 1997. The
1998 income tax provision reflects, among other things, (i) the write-off of
approximately $5.5 million of deferred tax assets that became unrealizable as a
result
15
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
of the Sunbeam Acquisition, (ii) $0.4 million of tax expense due to the impact
of decreased foreign tax rates on deferred tax assets, and (iii) the impact of
$7.2 million of non-deductible costs associated with the Sunbeam Acquisition.
Excluding these items, the 1998 effective income tax rate would have been
approximately 38%.
In March 1998, in connection with the Holdings Merger, the Company repaid
all outstanding indebtedness under the Company's credit agreement and the credit
agreement was terminated. In connection with the termination of this agreement,
the Company recorded an extraordinary loss of $2.0 million which represents a
write-off of the related unamortized financing costs associated with the credit
agreement. In April 1998, as a result of the Holdings Merger, the Company repaid
the $360.0 million outstanding indebtedness under the Company's various senior
notes. The $23.4 million of redemption costs in excess of carrying value along
with the write-off of related unamortized financing costs of $2.7 million and
unamortized deferred interest rate swap losses of $0.9 million are reflected as
extraordinary loss on early extinguishment of debt. The total $29.0 million of
charges were reduced by $11.5 million of tax benefits for a net after-tax charge
of $17.5 million or $0.32 per share.
LIQUIDITY AND CAPITAL RESOURCES
The Company's operating activities used $79.3 million and provided $8.7
million of cash during the six months ended June 30, 1998 and 1997,
respectively. Lower earnings and higher working capital levels for the first
half of 1998 were primarily responsible for the decrease in cash from
operations. During the 1998 period, receivables increased $85.2 million as a
result of the seasonality of the Company's sales and inventories increased
approximately $9.7 million primarily as a result of unanticipated softness in
the demand for the Company's products. The Company's capital expenditures were
$13.6 million in the six months ended June 30, 1998. During the first six months
of 1998, the $45.5 million of proceeds from stock option exercises along with
$454.7 million of borrowings from Sunbeam and the proceeds from the sale of the
Company's safety and security business and sales of fixed assets of $98.2
million of cash were used to, among other things, (i) repay the $116.0 million
outstanding indebtedness under the Company's credit agreement (ii) redeem the
Company's various senior notes at a cost of $383.4 million, and (iii) fund the
Company's operating activities and capital expenditures.
The Company's ability to meet its current cash operating requirements,
including projected capital expenditures and other obligations, is dependent
upon a combination of cash flows from operations and capital contributions or
loans to the Company from Sunbeam or its affiliates. Sunbeam has recently
announced certain matters that could negatively affect its ability to continue
to make loans or make capital contributions to the Company. These announcements
have included (i) Sunbeam's necessity to obtain waivers of non-compliance on
certain debt covenants, which waivers have been obtained through December 31,
1998, (ii) certain shareholder lawsuits, (iii) an investigation by the
Securities and Exchange Commission, and (iv) the statement that the Audit
Committee of the Board of Directors of Sunbeam has determined that Sunbeam will
be required to restate certain historical financial statements. No assurance can
be given that Sunbeam will be able or willing to continue to make capital
contributions or loans to the Company should they be needed.
The Company periodically uses a variety of derivative financial instruments
to manage its foreign currency exposures. The Company does not speculate on
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 manages credit risk related to these derivative contracts
through credit approvals, exposure limits and other monitoring procedures.
16
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
SEASONALITY
The Company's sales generally are highest in the second quarter of the year
and lowest in the fourth quarter. As a result of this seasonality, the Company
has generally incurred a loss in the fourth quarter. The Company's sales may be
affected by weather conditions, especially during the second and third quarters
of the year. The Company's annual results are generally dependent on its results
during the second quarter.
FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for certain forward-looking statements. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of the Company to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. When used in this Form 10-Q, the
words, "estimate", "project", "intend", "expect", and similar expressions, used
in connection with the Company, including its management, are intended to
identify forward-looking statements. Such forward-looking statements were based
on various factors and were derived utilizing numerous important assumptions and
other important factors that could cause actual results to differ materially
from those in the forward-looking statements. The forward-looking statements
contained in this Form 10-Q are subject to certain risks and uncertainties.
Actual results could differ materially from current expectations. The factors
that could affect the Company's actual results and could cause results to differ
materially from those contained in the forward-looking statements include, but
are not limited to (i) unanticipated costs or delays in developing new products,
(ii) a decrease in the public's interest in camping and related activities,
(iii) economic softness in Japan, Korea, and other Asian countries, (iv) weather
conditions which are adverse to the specific businesses of the Company, (v)
significant adverse market or economic conditions which negatively affect demand
for the Company's products, (vi) disruptions or delays resulting from the
transactions contemplated by the Merger Agreements, (vii) changes in Sunbeam's
ability to provide financing to the Company, and (viii) changes in operating
philosophy following the consummation of the Holdings Merger and the Company
Merger. Other factors could also cause actual results to vary materially from
the future results covered in such forward-looking statements.
IMPACT OF YEAR 2000
Some of the Company's older computer programs were written using two digits
rather than four to represent the applicable year. As a result, those computer
programs recognize a date represented by "00" as the year 1900 rather than the
year 2000. This situation, known as the "Year 2000" issue, could cause a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices, or
engage in similar normal business activities.
Based on ongoing assessments of the Company's operations, the Company has
determined it will be required to modify or replace portions of its computer
software so the computer systems will function properly with respect to dates in
the year 2000 and thereafter. The Company believes that, in most instances, with
modifications to existing software, the Year 2000 issue will not pose
significant operational problems for its computer systems. The Company, however,
has identified one location with significant Year 2000 software issues. Failure
to complete a timely conversion of this location to a Year 2000 compliant system
could have a material impact on the operations of the Company. The Company is
unable to estimate the costs of becoming Year 2000 compliant.
17
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
The Company has begun a program of formal communications with some of its
significant suppliers and large customers to determine the extent to which the
Company's interface systems are vulnerable to those third parties' failure to
remedy their own Year 2000 issues. There can be no guarantee that the systems
of other companies on which the Company's systems rely will be timely converted
and would not have an adverse effect on the Company's systems.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On June 25 and July 16, 1998, four purported class actions were filed by
alleged Coleman shareholders in the Delaware Court of Chancery (the "Court").
Deutscher v. Dunlap et al., Del. Ch., C.A. No. 16486-NC; Wolf v. Kersh, et al.,
Del. Ch., C.A. No. 16487-NC; Steinberg v. Dunlap et al., Del. Ch., C.A. No.
16488-NC; Shaev v. Dunlap et al., Del. Ch., C.A. No. 165120NC. The named
defendants in these actions are Sunbeam and Coleman as well as alleged members
of Coleman's board of directors during the alleged class period. Each of these
actions seeks injunctive relief and monetary damages in an unspecified amount.
On July 7, 1998, the plaintiff in the Deutscher action filed an amended
complaint.
The complaints allege, in essence, that the exchange ratio of the Coleman
Merger is no longer fair to Coleman shareholders as a result of the decline in
the market value of Sunbeam stock after the Coleman Merger Agreement was
announced. The complaints allege that the individual defendants suffer from
conflicting interests in serving as directors of both Sunbeam and Coleman, and
that they have breached their fiduciary duties to Coleman shareholders by
refusing to renegotiate or terminate the Coleman Merger Agreement. The Wolf
complaint and the amended Deutscher complaint also allege that Sunbeam's
financial statements did not conform with generally accepted accounting
principles and did not fairly present Sunbeam's financial condition at the time
the Coleman Merger Agreement was negotiated, contrary to Sunbeam's
representation in the Coleman Merger Agreement.
Pursuant to an agreement with plaintiff's counsel, the defendants are not
obligated to respond to any of these complaints until an order of consolidation
is entered in the case, which proposed order has not yet been presented to the
Court for approval.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No. Description
----------- -----------
27 Financial Data Schedule, submitted electronically
to the Securities and Exchange Commission for
information only and not filed.
(b) Reports on Form 8-K
A Current Report on Form 8-K was filed on April 3, 1998 to
disclose that Sunbeam Corporation had acquired indirect beneficial
ownership of the 44,067,520 shares of common stock of the Company.
18
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
A Current Report on Form 8-K was filed on April 3, 1998 to disclose
that the Company had completed the sale of all of the outstanding shares of
capital stock of Coleman Safety & Security Products, Inc., a wholly-owned
subsidiary of the Company, to Ranco Incorporated of Delaware, a
wholly-owned subsidiary of Siebe plc, as of March 24, 1998.
A Current Report on Form 8-K/A was filed on April 9, 1998 to amend the
Company's Current Report on Form 8-K filed on April 3, 1998 to include the
pro forma financial information regarding the sale of all of the
outstanding shares of capital stock of Coleman Safety & Security Products,
Inc.
19
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
THE COLEMAN COMPANY, INC.
(Registrant)
Date: August 14, 1998 By: /s/ Gwen C. Wisler
------------------- --------------------------------
Gwen C. Wisler
Chief Financial Officer
20
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS FILED IN THE COMPANY'S FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 19,995
<SECURITIES> 0
<RECEIVABLES> 261,029
<ALLOWANCES> 9,702
<INVENTORY> 223,569
<CURRENT-ASSETS> 544,310
<PP&E> 273,068
<DEPRECIATION> 115,995
<TOTAL-ASSETS> 1,031,869
<CURRENT-LIABILITIES> 702,241
<BONDS> 216
0
0
<COMMON> 558
<OTHER-SE> 267,462
<TOTAL-LIABILITY-AND-EQUITY> 1,031,869
<SALES> 565,201
<TOTAL-REVENUES> 570,906
<CGS> 408,484
<TOTAL-COSTS> 408,484
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,555
<INTEREST-EXPENSE> 17,923
<INCOME-PRETAX> 20,113
<INCOME-TAX> 16,190
<INCOME-CONTINUING> 3,683
<DISCONTINUED> 0
<EXTRAORDINARY> (17,538)
<CHANGES> 0
<NET-INCOME> (13,855)
<EPS-PRIMARY> (.25)
<EPS-DILUTED> (.25)
</TABLE>
