<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
/X/ Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange
Act of 1934 For the quarterly period ended MARCH 31, 1999
---------------------
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 May 12, 1999 of which 44,067,520 shares were held by
Coleman Worldwide Corporation, an indirect wholly-owned subsidiary of Sunbeam
Corporation.
Exhibit Index on Page 28
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
INDEX
<TABLE>
PART I. FINANCIAL INFORMATION PAGE Page
----
<S> <C>
Item 1. Financial Statements:
Condensed Consolidated Statements of Operations
Three months ended March 31, 1999 and 1998..................... 3
Condensed Consolidated Balance Sheets
March 31, 1999 and December 31, 1998........................... 4
Condensed Consolidated Statements of Cash Flows
Three months ended March 31, 1999 and 1998..................... 5
Notes to Condensed Consolidated Financial Statements.............. 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations......................................... 16
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.................................................... 28
Item 6. Exhibits and Reports on Form 8-K..................................... 28
Signatures ......................................................... 29
</TABLE>
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
Ended March 31,
-----------------------------
1999 1998
------------ ------------
<S> <C> <C>
Net revenues................................................................ $ 280,690 $ 244,499
Cost of sales............................................................... 198,371 175,777
------------ ------------
Gross profit................................................................ 82,319 68,722
Selling, general and administrative expenses................................ 61,362 74,140
Restructuring (credits) charges............................................. (2) 715
Interest expense, net....................................................... 7,575 9,044
Amortization of goodwill and deferred charges............................... 2,564 2,934
Gain on sale of business.................................................... -- (26,137)
Other (income) expense, net................................................. (531) 1,861
------------ ------------
Earnings before income taxes,
minority interest and extraordinary item............................... 11,351 6,165
Income tax expense.......................................................... 4,540 7,518
Minority interest........................................................... 70 61
------------ ------------
Earnings (loss) before extraordinary item................................... 6,741 (1,414)
Extraordinary loss on early extinguishment
of debt, net of income tax benefit........................................ -- (1,232)
------------ ------------
Net earnings (loss)......................................................... $ 6,741 $ (2,646)
------------ ------------
------------ ------------
Basic and diluted earnings (loss) per share:
Earnings (loss) before extraordinary item................................. $ 0.12 $ (0.03)
Extraordinary item........................................................ -- (0.02)
------------ ------------
Net earnings (loss)..................................................... $ 0.12 $ (0.05)
------------ ------------
------------ ------------
Weighted average common shares outstanding:
Basic and diluted ........................................................ 55,827 53,732
------------ ------------
------------ ------------
</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>
March 31, December 31,
1999 1998
------------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................................ $ 18,508 $ 23,413
Accounts and notes receivable, less allowance
of $8,695 in 1999 and $8,894 in 1998............................... 222,453 162,108
Inventories.......................................................... 253,409 230,126
Deferred tax assets.................................................. 28,403 26,926
Prepaid expenses and other current assets............................ 17,524 19,627
------------- ------------
Total current assets............................................... 540,297 462,200
Property, plant and equipment, less accumulated depreciation............
of $125,613 in 1999 and $122,868 in 1998........................... 141,028 145,823
Goodwill, net........................................................... 274,262 282,015
Deferred tax assets and other assets.................................... 36,645 43,219
------------- ------------
$ 992,232 $ 933,257
------------- ------------
------------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts and notes payable........................................... $ 160,619 $ 146,064
Other current liabilities............................................ 106,370 101,224
------------- ------------
Total current liabilities.......................................... 266,989 247,288
Debt payable to affiliate............................................... 407,771 365,063
Long-term debt.......................................................... 435 362
Other liabilities....................................................... 74,315 75,231
Minority interest....................................................... 8,000 6,698
Contingencies...........................................................
Stockholders' equity:
Common stock......................................................... 558 558
Additional paid-in capital........................................... 223,245 221,730
Retained earnings.................................................... 28,718 21,977
Accumulated other comprehensive loss................................. (17,799) (5,650)
------------- ------------
Total stockholders' equity......................................... 234,722 238,615
------------- ------------
$ 992,232 $ 933,257
------------- ------------
------------- ------------
</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>
Three Months
Ended March 31,
-----------------------------
1999 1998
------------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss)............................................................. $ 6,741 $ (2,646)
Adjustments to reconcile net earnings (loss) to net cash flows
from operating activities:
Depreciation and amortization.............................................. 8,138 9,508
Minority interest.......................................................... 70 61
Gain on sale of business................................................... -- (26,137)
Extraordinary loss on early extinguishment of debt......................... -- 2,038
Changes in assets and liabilities, net of effects from sale of business:
Increase in receivables.............................................. (65,104) (34,531)
Increase in inventories.............................................. (28,832) (31,043)
Increase in accounts payable......................................... 15,466 4,177
Other, net........................................................... 14,541 (5,036)
------------- ------------
Net cash used by operating activities........................................... (48,980) (83,609)
------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures............................................................ (3,919) (9,698)
Net proceeds from sale of business and fixed assets............................. 568 98,264
------------- ------------
Net cash (used) provided by investing activities................................ (3,351) 88,566
------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net payments of revolving credit agreement borrowings........................... -- (52,578)
Net change in short-term borrowings............................................. 5,468 (3,352)
Repayment of long-term debt, including redemption costs......................... (53) (63,416)
Net increase in borrowings from affiliate....................................... 42,708 90,711
Proceeds from stock options exercised including tax benefits.................... -- 31,805
------------- ------------
Net cash provided by financing activities....................................... 48,123 3,170
------------- ------------
Effect of exchange rate changes on cash......................................... (697) 340
------------- ------------
Net (decrease) increase in cash and cash equivalents............................ (4,905) 8,467
Cash and cash equivalents at beginning of the period............................ 23,413 13,031
------------- ------------
Cash and cash equivalents at end of the period.................................. $ 18,508 $ 21,498
------------- ------------
------------- ------------
</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 global
manufacturer and marketer of consumer products for outdoor recreation and
home hardware use.
Coleman is a subsidiary of Coleman Worldwide Corporation ("Coleman
Worldwide"). Coleman Worldwide is an indirect wholly-owned subsidiary of
Laser Acquisition Corp. ("Laser"), an indirect wholly-owned subsidiary of
Sunbeam Corporation ("Sunbeam"). Coleman Worldwide owns 44,067,520 shares of
the common stock of Coleman which represented approximately 79% of the
outstanding Coleman common stock as of March 31, 1999.
Coleman, Sunbeam and Camper Acquisition Corp. ("CAC"), a wholly-owned
subsidiary of Sunbeam, have entered into an Agreement and Plan of Merger (the
"Coleman Merger Agreement"), 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 shares, if any, for which appraisal rights have
been exercised) will be converted into the right to receive (i) 0.5677 of a
share of Sunbeam common stock, with cash paid in lieu of fractional shares,
and (ii) $6.44 in cash, without interest. In addition, unexercised 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 per share and the
exercise price of such options. In October 1998, Coleman and Sunbeam entered
into a memorandum of understanding to settle, subject to court approval,
certain class actions brought by minority shareholders of Coleman against
Coleman, Sunbeam and certain of their current and former officers and
directors challenging the proposed Coleman Merger. Under the terms of the
proposed settlement, if approved by the court, Sunbeam will issue to the
Coleman public shareholders and plaintiff's counsel warrants to purchase up
to approximately 4.98 million shares of Sunbeam common stock at $7.00 per
share, subject to certain anti-dilution adjustments. Any shareholder who does
not exercise appraisal rights under Delaware law will receive the warrants.
These warrants will be issued when the Coleman Merger is consummated, which
is now expected to be during the second half of 1999. There can be no
assurance, however, that the court will approve the settlement as proposed,
although such approval is not a condition to the consummation of the Coleman
Merger.
The consummation of the Coleman Merger is conditional upon a
registration statement under the Securities Act of 1933 (the "Securities
Act") to register the shares of Sunbeam common stock to be issued in the
Coleman Merger (the "Registration Statement") becoming effective in
accordance with the provisions of the Securities Act. Sunbeam has filed the
Registration Statement, but is uncertain when the Registration Statement will
become effective. However, it is anticipated the Coleman Merger will be
completed during the second half of 1999. Upon consummation of the Coleman
Merger, Coleman will become an indirect wholly-owned subsidiary of Sunbeam
and Coleman will cease to be a separate reporting company. However, in the
event Coleman's separate consolidated financial statements are included in a
Securities and Exchange Commission filing for periods subsequent to the
consummation of the Coleman Merger, those separate consolidated financial
statements would reflect the allocation of the purchase price paid by
Sunbeam, for all of
6
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share data)
(Unaudited)
Coleman's common stock, to the fair value (determined by independent
appraisals) of Coleman's tangible and intangible assets acquired and
liabilities assumed under the purchase method of accounting.
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,
these statements include all adjustments necessary for a fair presentation of
results of operations, financial position and cash flows. The balance sheet
at December 31, 1998 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/A for the year ended December 31, 1998. Operating results for the
three months ended March 31, 1999 are not necessarily indicative of the
results that may be expected for future periods including the year ended
December 31, 1999.
3. INVENTORIES
The components of inventories consist of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
--------------- ---------------
<S> <C> <C>
Raw material and supplies......................... $ 48,818 $ 45,395
Work-in-process................................... 8,370 6,539
Finished goods.................................... 196,221 178,192
--------------- ---------------
$ 253,409 $ 230,126
--------------- ---------------
--------------- ---------------
</TABLE>
4. DEBT PAYABLE TO AFFILIATE
Sunbeam's credit facility (the "Sunbeam Credit Facility") provides that
Sunbeam will not contribute capital to Coleman or, with some exceptions,
permit Coleman to borrow money from any source other than Sunbeam. Therefore,
the Company's ability to meet its cash operating requirements, including
capital expenditures and other obligations, is dependent upon a combination
of cash flows from operations and loans to the Company from Sunbeam. Sunbeam
has informed the Company it has the positive intent and ability to fund the
Company's requirements for borrowed funds through April 10, 2000. Amounts
loaned by Sunbeam are represented by a promissory note (the "Intercompany
Note") which totaled $407,771 at March 31, 1999 and until the amendment and
restatement of the Intercompany Note described below, were due on demand. For
1998 and through
7
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share data)
(Unaudited)
April 15, 1999, the Intercompany Note bore interest at a floating rate
equivalent 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 for amounts borrowed
under the Intercompany Note during the three months ended March 31, 1999 was
7.3% and the total interest charged by Sunbeam to Coleman was $7,173. Sunbeam
also charged to Coleman a pro-rata share of amortized debt issuance costs and
unused bank credit facility commitment fees totaling $277. Net amounts
advanced from Sunbeam along with the related unpaid interest and other costs
are reflected as debt payable to affiliate in the Company's condensed
consolidated balance sheet. Coleman is also a borrower under the Sunbeam
Credit Facility for purposes of letters of credit issued for its account.
On April 15, 1999, Coleman, Sunbeam and, as to certain agreements, the
lenders under the Sunbeam Credit Facility, amended and restated the
Intercompany Note (the "Amended Intercompany Note"), entered into
intercompany security and pledge agreements, and entered into an amendment to
the Sunbeam Credit Facility and certain other agreements (collectively, the
"Agreements"). The Amended Intercompany Note is due April 15, 2000. The
Amended Intercompany Note bears interest at an annual rate equal to (i) 4% if
the three month London Interbank Offering Rate ("LIBOR") quoted on the
Telerate system is less than 6%, or (ii) 5% if the three month LIBOR quoted
on the Telerate system is 6% or higher, subject to increases during an event
of default, and interest will be payable by adding the amount of such
interest to the principal balance of the Amended Intercompany Note. In
addition, the Amended Intercompany Note provides that an event of default
under the Sunbeam Credit Facility will constitute an event of default under
the Amended Intercompany Note and that in certain circumstances the payment
on the Amended Intercompany Note will be subordinate to Coleman's obligations
under the Sunbeam Credit Facility. Pursuant to the Agreements, Coleman has
pledged to Sunbeam substantially all of its domestic assets, other than its
real property, including 66% of its ownership interest in its direct foreign
subsidiaries and domestic holding companies for its foreign subsidiaries and
all of its ownership interest in its other direct domestic subsidiaries (but
Coleman's subsidiaries have not pledged their assets or stock of their
subsidiaries), as security for the Amended Intercompany Note. Sunbeam has
pledged the Amended Intercompany Note as security for the Sunbeam Credit
Facility and assigned to such lenders the security pledged by Coleman for the
Amended Intercompany Note. Under the Agreements, Coleman also agreed to give
the lenders a direct pledge of the assets securing the Amended Intercompany
Note to secure the obligations under the Sunbeam Credit Facility, subject to
a cap equal to the balance due from time to time on the Amended Intercompany
Note.
The Sunbeam Credit Facility provides for a revolving credit facility in
an aggregate principal amount of up to $400,000 (subject to certain
reductions) maturing March 30, 2005. In addition, pursuant to the Sunbeam
Credit Facility, at March 31, 1999, Sunbeam had approximately $1,260,000
outstanding debt consisting of two tranches of term loans with scheduled
repayments through maturity on March 30, 2005 and September 30, 2006. As a
result of Sunbeam's operating losses during 1998, among other things, Sunbeam
was not in compliance with the financial covenants and other terms contained
in the Sunbeam Credit Facility. As of June 30, 1998, Sunbeam entered into an
agreement with its bank lenders which waived Sunbeam's compliance through
December 31, 1998. On October 19, 1998, Sunbeam's bank lenders agreed to
extend this waiver through April 10, 1999. In April 1999, the waiver was
extended to April 10, 2000, and the Sunbeam Credit Facility
8
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share data)
(Unaudited)
was amended and added certain financial covenants and other terms and waived
compliance with certain other financial covenants and other terms through
April 10, 2000. Interest accrues at a rate selected at Sunbeam's option of:
(i) LIBOR plus an interest rate margin which varies depending upon the
occurrence of specified events or, (ii) the base rate of the administrative
agent (generally the higher of the prime commercial lending rate of the
administrative agent or the Federal Funds Rate plus one-half of 1%), plus an
interest rate margin which varies depending upon the occurrence of specified
events.
Borrowings under the Sunbeam Credit Facility are secured by a pledge of
the stock of Sunbeam's material subsidiaries and by a security interest in
substantially all of the assets of Sunbeam and its material domestic
subsidiaries (other than Coleman and its subsidiaries, except as otherwise
described herein), including the Amended Intercompany Note. Sunbeam has
pledged its shares of Coleman common stock and its shares of Sunbeam
Corporation (Canada) Limited ("Sunbeam Canada") common stock owned by it as
security under the Sunbeam Credit Facility. In addition, borrowings under the
Sunbeam Credit Facility are guaranteed by a number of Sunbeam's wholly-owned
material United States subsidiaries (but not Coleman) and such subsidiary
guarantees are secured as described above. Coleman has pledged its inventory
(but not that of its subsidiaries) and the proceeds from the sale of such
inventory as collateral for letters of credit issued for its account under
the Sunbeam Credit Facility.
The Sunbeam Credit Facility contains covenants customary for credit
facilities of a similar nature, including limitations on the ability of
Sunbeam and its subsidiaries, including Coleman, to, among other things, (i)
declare dividends or repurchase stock, (ii) prepay, redeem or repurchase
debt, incur liens and engage in sale-leaseback transactions, (iii) make loans
and investments, (iv) incur additional debt, including revolving loans under
the Sunbeam Credit Facility, (v) amend or otherwise alter material agreements
or enter into restrictive agreements, (vi) make capital and Year 2000
compliance expenditures, (vii) engage in mergers, acquisitions and asset
sales, (viii) engage in certain transactions with affiliates, (ix) alter its
fiscal year or accounting policies, (x) enter into hedging agreements, (xi)
settle certain litigation, (xii) alter its cash management system and (xiii)
alter the businesses they conduct. Sunbeam is also required to comply with
specified financial covenants and ratios. The Sunbeam Credit Facility
provides for events of default customary for transactions of this type,
including nonpayment, misrepresentation, breach of covenant, cross-defaults,
bankruptcy, material adverse change arising from compliance with ERISA,
material adverse judgments, entering into guarantees, and change of ownership
and control. The Sunbeam Credit Facility, as amended, also provides it is an
event default if the registration statement for the shares of Sunbeam common
stock to be issued in the Coleman Merger is not declared effective by October
30, 1999, (effective as of October 25, 1999, the bank lenders agreed to
extend this date to November 30, 1999), if Sunbeam fails to complete the
Coleman Merger within 25 business days after the related registration
statement is declared effective by the SEC, or if Sunbeam has to pay more
than $87,500 (excluding expenses) in cash to complete the Coleman Merger
(including any payments made with respect to appraisal rights).
9
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share data)
(Unaudited)
5. RESTRUCTURING CHARGES ( DOLLARS IN MILLIONS )
The Company reviews the adequacy of its restructuring reserves and
adjusts the reserves as the various activities are completed or additional
information becomes available which allows the Company to refine its
estimates. During the three months ended March 31, 1999 and 1998, the Company
increased its existing reserves by $0.1 million and $0.7 million,
respectively, as a result of these reviews.
The following tables provide an analysis of the changes in the Company's
restructuring reserves since December 31, 1998. For a detailed description of
the Company's restructuring activities, see Note 3 to the consolidated
financial statements included in the Company's Annual Report on Form 10-K/A
for the year ended December 31, 1998.
INTEGRATION OF CAMPING GAZ AND COLEMAN
<TABLE>
<CAPTION>
Balance at Balance at
December 31, Cash Non-Cash March 31,
1998 Reductions Reductions 1999
----------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
Charges included in cost of sales:
Write-down of inventory...................... $ .4 $ -- $ -- $ .4
--------- -------- ------- ------
Total included in cost of sales............ .4 -- -- .4
--------- -------- ------- ------
Charges included in restructuring:
Write-downs:
Fixed assets held for disposal,
not in use............................... 7.5 -- .7 6.8
Other assets............................... .2 -- -- .2
--------- -------- ------- ------
7.7 -- .7 7.0
--------- -------- -------- ------
Restructuring accruals:
Employee severance pay and fringes......... .1 -- -- .1
Other exit activity costs, including
sales agent termination costs and
claims brought by terminated
employees................................ .7 .2 .1 .4
--------- --------- -------- ------
.8 .2 .1 .5
--------- --------- -------- ------
Totals included in restructuring......... 8.5 .2 .8 7.5
--------- --------- -------- ------
Totals ........................................ $ 8.9 $ .2 $ .8 $ 7.9
--------- --------- -------- ------
--------- --------- -------- ------
</TABLE>
The reserves remaining at March 31, 1999, principally relate to the
write down of a vacated warehouse and an accrual for claims brought by
foreign employees terminated as part of the restructuring plan. The timing of
the resolution of the claims brought by foreign employees will vary depending
upon local practices. The Company continues to assess the propriety of the
carrying value of the related balances and make adjustments to the recorded
amounts as appropriate given current facts and circumstances. The remaining
reserves for inventory and other assets relate to residual activity to be
completed by the end of 1999.
10
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share data)
(Unaudited)
EXIT LOW-MARGIN PRODUCT LINES
<TABLE>
<CAPTION>
Balance at Charges Balance at
December 31, to Cash March 31,
1998 Income Reductions 1999
---------------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Charges included in cost of sales:
Write-down of inventory................... $ .4 $ .1 $ .4 $ .1
--------- --------- -------- ------
Total included in cost of sales......... .4 .1 .4 .1
--------- --------- -------- ------
Charges included in restructuring:
Write-downs:
Fixed assets held for disposal,
not in use............................ .1 -- -- .1
--------- -------- ------- ------
.1 -- -- .1
--------- -------- ------- ------
Restructuring accruals:
Other exit activity costs, primarily
product buyback costs................. .6 -- .1 .5
--------- -------- -------- ------
.6 -- .1 .5
--------- -------- -------- ------
Totals included in restructuring...... .7 -- .1 .6
--------- -------- -------- ------
Totals ...................................... $ 1.1 $ .1 $ .5 $ .7
--------- -------- -------- ------
--------- -------- -------- ------
</TABLE>
The remaining reserves at March 31, 1999, relate to anticipated losses
on final disposal of the remaining inventory and fixed assets and the
projected remaining pressure washer buyback costs. The Company estimates the
remaining activity will be completed by the end of 1999.
CLOSE AND RELOCATE CERTAIN ADMINISTRATIVE AND SALES OFFICES
<TABLE>
<CAPTION>
Balance at Balance at
December 31, Cash March 31,
1998 Reductions 1999
--------- --------- --------
<S> <C> <C> <C>
Restructuring accruals:
Employee severance pay and fringes........... $ 3.4 $ .2 $ 3.2
--------- --------- --------
Totals ........................................ $ 3.4 $ .2 $ 3.2
--------- --------- --------
--------- --------- --------
</TABLE>
The unpaid severance costs at March 31, 1999 are expected to be paid by
December 31, 2000.
CLOSE FACILITIES
<TABLE>
<CAPTION>
Balance at Balance at
December 31, Cash March 31,
1998 Reductions 1999
---------- ---------- -----------
<S> <C> <C> <C>
Charges included in restructuring:
Write-downs:
Fixed assets held for disposal,
not in use............................... $ .2 $ -- $ .2
--------- --------- -------
.2 -- .2
--------- --------- -------
11
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share data)
(Unaudited)
Restructuring accruals:
Employee severance pay and fringes......... 1.3 .1 1.2
Other exit activity costs,
primarily lease termination costs........ .6 .1 .5
--------- --------- --------
1.9 .2 1.7
--------- --------- --------
Totals included in restructuring......... 2.1 .2 1.9
--------- --------- --------
Totals ........................................ $ 2.1 $ .2 $ 1.9
--------- --------- --------
--------- --------- --------
</TABLE>
During the three months ended March 31, 1999, of those employees
expected to be terminated, 1 employee left the Company and 17 employees
remain to be terminated. Remaining termination costs are expected to be paid
by December 31, 2000 in accordance with the long-term severance arrangements.
The fixed assets held for disposal at March 31, 1999, will be disposed of
during 1999. The remaining reserve balance for other exit activity costs at
March 31, 1999, principally relates to leases with fixed terms running
through 2001.
EMPLOYEE TERMINATION AND SEVERANCE
<TABLE>
<CAPTION>
Balance at Balance at
December 31, Cash March 31,
1998 Reductions 1999
---------- ---------- -----------
<S> <C> <C> <C>
Charges included in restructuring:
Restructuring accruals:
Employee severance pay and fringes......... $ 3.4 $ 1.6 $ 1.8
--------- --------- --------
Totals ........................................ $ 3.4 $ 1.6 $ 1.8
--------- --------- --------
--------- --------- --------
</TABLE>
During the three months ended March 31, 1999, of those employees
expected to be terminated, 1 employee left the Company and 7 employees remain
to be terminated. The 7 remaining employees are expected to be terminated
during 1999. Remaining termination costs are expected to be paid by December
31, 2000, and no additional charges are anticipated in future periods.
6. OTHER CHARGES
During the first three months of 1998, the Company recorded other
charges totaling $12,931 which consisted of (i) $7,128 of costs associated
with the acquisition of the Company by Sunbeam including advisory fees, (ii)
$3,578 of charges associated with abandoning a company-wide enterprise
resource computer software system, and (iii) $2,225 of costs associated with
terminating a licensing services agreement with an affiliate of Coleman
(Parent) Holdings, Inc., the then indirect parent company of Coleman
Worldwide. These costs were recorded in selling, general and administrative
expenses.
12
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share data)
(Unaudited)
7. COMPREHENSIVE LOSS
The components of the Company's comprehensive loss are as follows:
<TABLE>
<CAPTION>
Three Months
Ended March 31,
-----------------------------
1999 1998
------------- ------------
<S> <C> <C>
Net earnings (loss)............................................ $ 6,741 $ (2,646)
Foreign currency translation adjustment, net of tax............ (12,149) (2,418)
Minimum pension liability adjustment, net of tax............... -- (168)
------------- ------------
Comprehensive loss............................................. $ (5,408) $ (5,232)
------------- ------------
------------- ------------
</TABLE>
8. BASIC AND DILUTED EARNINGS PER COMMON SHARE
Basic earnings per share is computed using the weighted average number
of shares of outstanding common stock. Diluted earnings per share for the
three months ended March 31, 1999 is based only on the weighted average
number of common shares outstanding during the three months ended March 31,
1999 because there were no dilutive common share equivalents. Stock options
to purchase 923,670 shares of common stock were outstanding at March 31, 1999
but were not included in the computation of common share equivalents because
the option exercise price was greater than the average market price of
Coleman's common stock during the three months ended March 31, 1999. Diluted
earnings per share for the three months ended March 31, 1998 is based only on
the weighted average number of common shares outstanding during the three
months ended March 31, 1998 as the inclusion of 633,571 common share
equivalents would have been antidilutive.
9. RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities". SFAS No. 133 establishes
accounting and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts, (collectively
referred to as derivatives) and for hedging activities. It requires an entity
to recognize all derivatives as either assets or liabilities in the statement
of financial position and measure those instruments at fair value. SFAS No.
133 will be effective for the Company's fiscal year beginning January 1,
2000. Earlier application of the provisions of SFAS No. 133 is encouraged;
however, the Company has not determined if it will apply the provisions of
SFAS No. 133 prior to January 1, 2000, nor has the Company estimated the
impact of applying the provisions of SFAS No. 133 on the Company's statement
of financial position or on the statement of operations.
13
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share data)
(Unaudited)
10. SEGMENT INFORMATION
For detailed information regarding the Company's reportable segments,
see Note 19 to the consolidated financial statements included in the
Company's Annual Report on Form 10-K/A for the year ended December 31, 1998.
INFORMATION ABOUT SEGMENT REVENUES, PROFITS AND ASSETS
<TABLE>
<CAPTION>
Outdoor All
Recreation Powermate Eastpak International Other Total
---------- --------- --------- ------------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Three Months Ended March 31, 1999:
Revenues from external customers.... $ 95,146 $ 64,518 $ 3,083 $ 116,497 $ 1,446 $ 280,690
Intersegment revenues................ 24,782 5,664 11,035 64 -- 41,545
Segment profit (loss)................ 8,233 9,324 (3,095) 9,317 (1,605) 22,174
Segment assets....................... 239,405 138,071 88,061 382,450 5,395 853,382
Three Months Ended March 31, 1998:
Revenues from external customers..... 75,062 51,154 3,457 90,287 24,539 244,499
Intersegment revenues................ 20,635 295 10,000 80 -- 31,010
Segment profit (loss)................ 1,963 3,269 (3,310) 6,494 2,230 10,646
Segment assets....................... 275,428 133,654 96,702 342,209 15,706 863,699
</TABLE>
RECONCILIATION OF SELECTED SEGMENT INFORMATION TO THE COMPANY'S CONSOLIDATED
TOTALS
<TABLE>
<CAPTION>
Three Months
Ended March 31,
---------------------------
1999 1998
------------ -------------
<S> <C> <C>
REVENUES:
Total revenues for reportable segments..................................... $ 320,789 $ 250,970
Other revenues............................................................. 1,446 24,539
Elimination of intersegment revenues....................................... (41,545) (31,010)
------------ -------------
Total consolidated revenues.............................................. $ 280,690 $ 244,499
------------ -------------
------------ -------------
PROFIT OR LOSS:
Total segment profit....................................................... $ 22,174 $ 10,646
Unallocated items:
Corporate expenses....................................................... (1,215) (16,064)
Corporate restructuring charges.......................................... -- (715)
Interest expense, net.................................................... (7,575) (9,044)
Amortization of goodwill and deferred charges............................ (2,564) (2,934)
Gain on sale of business................................................. -- 26,137
Other income (expense), net.............................................. 531 (1,861)
------------ -------------
Earnings before income taxes, minority interest
and extraordinary item............................................. $ 11,351 $ 6,165
------------ -------------
------------ -------------
</TABLE>
14
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share data)
(Unaudited)
11. SUBSEQUENT EVENT
On July 12, 1999, Coleman Worldwide acquired 3,000,000 shares of a newly
created series of Coleman voting preferred stock for an aggregate purchase
price of approximately $31,061. These shares, together with the shares of
Coleman common stock owned by Coleman Worldwide, enable Coleman Worldwide to
exercise 80.01% of the total voting power of Coleman's outstanding capital
stock as of July 12, 1999. Coleman created these shares of preferred stock
and Coleman Worldwide acquired them in order to enable Coleman and Sunbeam to
file consolidated federal income tax returns and, in certain jurisdictions,
consolidated state income tax returns prior to the consummation of the
Coleman Merger. The issue price per share of the voting preferred stock was
equal to 110% of the average closing price per share of common stock of
Coleman over the five trading days prior to the date of issuance of the
voting preferred stock. Except for as required by law, the holders of the
voting preferred stock vote as a single class with the holders of the Coleman
common stock on all matters submitted to a vote of the holders of Coleman
common stock, with each share of voting preferred stock and each share of
Coleman common stock having one vote. The voting preferred stock has an
annual dividend equal to 7% of $10.35, the issue price of the voting
preferred stock, which accrues but will not be paid in cash unless a
liquidation occurs or certain transactions are consummated as described
below. In addition, the voting preferred stock will participate ratably with
the Coleman common stock in all other dividends and distributions (other than
liquidating distributions) made by Coleman to the holders of its common
stock. The voting preferred stock will participate with the Coleman common
stock in any merger, consolidation, or any other transaction (other than a
merger of a wholly owned subsidiary of Sunbeam with Coleman, including the
Coleman Merger) and will receive on a per share basis the same type and
amount of consideration as the Coleman common stock. On liquidations: (1) the
holders of the voting preferred stock would receive a preferential
distribution equal to $10.35, plus accrued and unpaid dividends, (2) next,
the holders of the Coleman common stock would receive an amount equal to
$10.35 per share of common stock and (3) any assets remaining after such
distributions would be shared by the holders of the voting preferred stock
and the Coleman common stock on a share for share basis. In connection with
the issuance of the shares of preferred stock, Coleman entered into a tax
sharing agreement with Sunbeam pursuant to which Coleman will pay to Sunbeam
amounts equal to the federal and state income taxes that would have been
payable by Coleman had Coleman not been included in the consolidated income
tax return of Sunbeam. The terms of the voting preferred stock, their issue
price and the terms of the tax sharing agreement were approved on Coleman's
behalf by Coleman's sole independent director. The net proceeds from the
issuance of the shares by Coleman of its voting preferred stock to Coleman
Worldwide were used by Coleman to make a partial repayment of loans
outstanding from Sunbeam under the Amended Intercompany Note.
15
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the
condensed consolidated financial statements and the related footnotes
included elsewhere in this quarterly report on Form 10-Q/A, as well as the
consolidated financial statements and related notes, and management's
discussion and analysis of financial condition and results of operations in
the Company's Annual Report on Form 10-K/A for the year ended December 31,
1998.
RESULTS OF OPERATIONS
RESTRUCTURING CHARGES
The Company reviews the adequacy of its restructuring reserves and
adjusts the reserves as the various activities are completed or additional
information becomes available which allows the Company to refine its
estimates. During the three months ended March 31, 1999 and 1998, the Company
increased its existing reserves by $0.1 million and $0.7 million,
respectively, as a result of these reviews.
The following tables (dollars in millions) provide an analysis of the
changes in the Company's restructuring reserves since December 31, 1998. For
a detailed description of the Company's restructuring activities see Note 3
to the consolidated financial statements included in the Company's Annual
Report on Form 10-K/A for the year ended December 31, 1998.
INTEGRATION OF CAMPING GAZ AND COLEMAN
<TABLE>
<CAPTION>
Balance at Balance at
December 31, Cash Non-Cash March 31,
1998 Reductions Reductions 1999
------------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
Charges included in cost of sales:
Write-down of inventory................... $ .4 $ -- $ -- $ .4
--------- -------- ------- ------
Total included in cost of sales......... .4 -- -- .4
--------- -------- ------- ------
Charges included in restructuring:
Write-downs:
Fixed assets held for disposal,
not in use............................ 7.5 -- .7 6.8
Other assets............................ .2 -- -- .2
--------- -------- -------- ------
7.7 -- .7 7.0
--------- -------- -------- ------
Restructuring accruals:
Employee severance pay and fringes...... .1 -- -- .1
Other exit activity costs, including
sales agent termination costs and
claims brought by terminated
employees............................. .7 .2 .1 .4
--------- --------- -------- ------
.8 .2 .1 .5
--------- --------- -------- ------
Totals included in restructuring...... 8.5 .2 .8 7.5
--------- --------- -------- ------
Totals ...................................... $ 8.9 $ .2 $ .8 $ 7.9
--------- --------- -------- ------
--------- --------- -------- ------
</TABLE>
16
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
The reserve remaining at March 31, 1999, principally relates to the
write down of a vacated warehouse and an accrual for claims brought by
foreign employees terminated as part of the restructuring plan. The timing of
the resolution of the claims brought by foreign employees will vary depending
upon local practices. The Company continues to assess the propriety of the
carrying value of the related balances and make adjustments to the recorded
amounts as appropriate given current facts and circumstances. The remaining
reserves for inventory and other assets relate to residual activity to be
completed by the end of 1999.
EXIT LOW-MARGIN PRODUCT LINES
<TABLE>
<CAPTION>
Balance at Charges Balance at
December 31, to Cash March 31,
1998 Income Reductions 1999
---------------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Charges included in cost of sales:
Write-down of inventory................... $ .4 $ .1 $ .4 $ .1
--------- --------- -------- ------
Total included in cost of sales......... .4 .1 .4 .1
--------- --------- -------- ------
Charges included in restructuring:
Write-downs:
Fixed assets held for disposal,
not in use............................ .1 -- -- .1
--------- -------- ------- ------
.1 -- -- .1
--------- -------- ------- ------
Restructuring accruals:
Other exit activity costs, primarily
product buyback costs................. .6 -- .1 .5
--------- -------- -------- ------
.6 -- .1 .5
--------- -------- -------- ------
Totals included in restructuring...... .7 -- .1 .6
--------- -------- -------- ------
Totals ...................................... $ 1.1 $ .1 $ .5 $ .7
--------- -------- -------- ------
--------- -------- -------- ------
</TABLE>
The remaining reserves at March 31, 1999, relate to anticipated losses
on final disposal of the remaining inventory and fixed assets and the
projected remaining pressure washer buyback costs. The Company estimates the
remaining activity will be completed by the end of 1999.
CLOSE AND RELOCATE CERTAIN ADMINISTRATIVE AND SALES OFFICES
<TABLE>
<CAPTION>
Balance at Balance at
December 31, Cash March 31,
1998 Reductions 1999
---------- ---------- -----------
<S> <C> <C> <C>
Restructuring accruals:
Employee severance pay and fringes........... $ 3.4 $ .2 $ 3.2
--------- --------- --------
Totals ........................................ $ 3.4 $ .2 $ 3.2
--------- --------- --------
--------- --------- --------
</TABLE>
The unpaid severance costs at March 31, 1999 are expected to be paid by
December 31, 2000.
17
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
CLOSE FACILITIES
<TABLE>
<CAPTION>
Balance at Balance at
December 31, Cash March 31,
1998 Reductions 1999
---------- ---------- -----------
<S> <C> <C> <C>
Charges included in restructuring:
Write-downs:
Fixed assets held for disposal,
not in use............................... $ .2 $ -- $ .2
--------- --------- --------
.2 -- .2
--------- --------- --------
Restructuring accruals:
Employee severance pay and fringes......... 1.3 .1 1.2
Other exit activity costs,
primarily lease termination costs........ .6 .1 .5
--------- --------- --------
1.9 .2 1.7
--------- --------- --------
Totals included in restructuring......... 2.1 .2 1.9
--------- --------- --------
Totals ........................................ $ 2.1 $ .2 $ 1.9
--------- --------- --------
--------- --------- --------
</TABLE>
During the three months ended March 31, 1999, of those employees
expected to be terminated, 1 employee left the Company and 17 employees
remain to be terminated. Remaining termination costs are expected to be paid
by December 31, 2000 in accordance with the long-term severance arrangements.
The fixed assets held for disposal at March 31, 1999, will be disposed of
during 1999. The remaining reserve balance for other exit activity costs at
March 31, 1999, principally relates to leases with fixed terms running
through 2001.
EMPLOYEE TERMINATION AND SEVERANCE
<TABLE>
<CAPTION>
Balance at Balance at
December 31, Cash March 31,
1998 Reductions 1999
---------- ---------- -----------
<S> <C> <C> <C>
Charges included in restructuring:
Restructuring accruals:
Employee severance pay and fringes......... $ 3.4 $ 1.6 $ 1.8
--------- --------- --------
Totals ........................................ $ 3.4 $ 1.6 $ 1.8
--------- --------- --------
--------- --------- --------
</TABLE>
During the three months ended March 31, 1999, of those employees
expected to be terminated, 1 employee left the Company and 7 employees remain
to be terminated. The 7 remaining employees are expected to be terminated
during 1999. Remaining termination costs are expected to be paid by December
31, 2000, and no additional charges are anticipated in future periods.
OTHER CHARGES
During the first quarter of 1998, the Company recorded other charges
totaling $12.9 million which consisted of (i) $7.1 million of costs
associated with the acquisition of the Company by Sunbeam including advisory
fees, (ii) $3.6 million of charges associated with abandoning a company-wide
enterprise resource computer software system, and (iii) $2.2 million of costs
associated with terminating a licensing services agreement with an affiliate
of Coleman (Parent) Holdings, Inc., the then indirect parent company of
Coleman Worldwide. These costs were recorded in selling, general and
administrative ("SG&A") expenses.
18
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 1998
Net revenues of $280.7 million for the three months ended March 31, 1999
were $36.2 million, or 14.8%, greater than for the three months ended March
31, 1998. The outdoor recreation products revenues, reflecting both United
States and foreign non-hardware products, increased $33.6 million, or 19.1%,
and occurred in nearly all product categories, primarily reflecting strong
retail replenishment demand. The Company experienced unusually weak retail
replenishment demand in the first quarter of 1998. The hardware products
revenues increase of $2.6 million includes the impact of the loss of revenues
from the Company's safety and security business in 1999 due to the sale of
this business in March 1998. Excluding the revenues of this business, the
hardware products revenues reflected an increase of $18.9 million, or 36.2%,
over comparable 1998 revenues reflecting an increase in generator revenues
attributable to increased awareness of power shortages arising from poor
weather conditions and other events partially offset by a decline in
compressor revenues. Geographically, United States revenues increased $15.5
million, or 10.4%, and foreign revenues increased $20.7 million, or 21.6%.
The United States revenues for the 1998 period includes revenues from the
Company's safety and security business and spa business, both of which were
sold during 1998. Excluding these revenues from the 1998 period, United
States revenues in 1999 reflected an increase of $36.8 million or 28.9%.
Gross profit for the three months ended March 31, 1999 was $82.3 million
as compared to $68.7 million for the three months ended March 31, 1998.
Higher sales volume and favorable manufacturing efficiencies resulting from
higher production levels associated with the higher sales volume in the 1999
period accounted for primarily all of the increase in gross profit.
SG&A expenses, excluding the impact of $12.9 million of other charges in
1998 as described above, were $61.4 million or 21.9% of net revenues in 1999
compared to $61.2 million or 25.0% of net revenues in 1998. The overall
dollar increase in SG&A expenses is primarily due to increased selling costs
associated with the increase in 1999 sales partially offset by the reduction
in SG&A expenses associated with the Company's safety and security business
and spa business, both of which were sold during 1998, and whose total SG&A
expenses during the first quarter of 1998 were $5.4 million. SG&A expenses as
a percent of net revenues decreased to 21.9% in 1999 from 25.0% in 1998 as
revenues grew faster than SG&A expenses.
Interest expense was $7.6 million in 1999 compared with $9.0 million in
1998, a decrease of $1.4 million. The decrease in interest expense reflects
the favorable effects of lower borrowings.
Minority interest represents the interest of minority shareholders in
the Company's subsidiary operations in the Philippines, Indonesia, and Canada.
The Company recorded a provision for income tax expense of $4.5 million
or 40.0% of pre-tax earnings in 1999 compared to a provision for income tax
expense of $7.5 million in 1998. The 1998 income tax provision reflects,
among other things, (i) the write-off of approximately $1.7 million 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 $7.1 million
non-deductible costs associated with the Sunbeam Acquisition. Excluding these
items, the 1998 effective income tax rate would have been approximately 40.8%.
19
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
LIQUIDITY AND CAPITAL RESOURCES
Cash used in operating activities during the three months ended March
31, 1999 was $49.0 million compared to $83.6 million for the three months
ended March 31, 1998. This decrease is attributable to higher earnings before
non-cash charges and gain on sale of business. During the three months ended
March 31, 1999, receivables increased $65.1 million and inventories increased
approximately $28.8 million as a result of the seasonality of the Company's
sales. The Company's capital expenditures were $3.9 million during the three
months ended March 31, 1999.
The Company's uses of cash for 1999 are expected to be primarily for
working capital and capital expenditure requirements. The Sunbeam Credit
Facility provides that Sunbeam will not contribute capital to Coleman or,
with some exceptions, permit Coleman to borrow money from any source other
than Sunbeam. Therefore, the Company's ability to meet its cash operating
requirements, including capital expenditures and other obligations, is
dependent upon a combination of cash flows from operations and loans to the
Company from Sunbeam. Sunbeam has informed the Company it has the positive
intent and ability to fund the Company's requirements for borrowed funds
through April 10, 2000. Amounts loaned by Sunbeam are represented by the
Intercompany Note which totaled $407.8 million at March 31, 1999 and, until
the amendment and restatement of the Intercompany Note described below, were
due on demand. For 1998 and through April 15, 1999, the Intercompany Note
bore interest at a floating rate equivalent to the weighted average interest
rate incurred by Sunbeam on its outstanding convertible debt and borrowings
under its bank credit facility which during the three months ended March 31,
1999 was 7.3%. Coleman is a borrower under the Sunbeam Credit Facility for
purposes of letters of credit borrowings.
On April 15, 1999, Coleman, Sunbeam and, as to certain agreements, the
lenders under the Sunbeam Credit Facility, amended and restated the
Intercompany Note (the "Amended Intercompany Note"), entered into
intercompany security and pledge agreements, and entered into an amendment to
the Sunbeam Credit Facility and certain other agreements (collectively, the
"Agreements"). The Amended Intercompany Note is due April 15, 2000. The
Amended Intercompany Note bears interest at an annual rate equal to (i) 4% if
the three month LIBOR quoted on the Telerate system is less than 6%, or (ii)
5% if the three month LIBOR quoted on the Telerate system is 6% or higher,
subject to increases during an event of default, and interest will be payable
by adding the amount of such interest to the principal balance of the Amended
Intercompany Note. In addition, the Amended Intercompany Note provides that
an event of default under the Sunbeam Credit Facility will constitute an
event of default under the Amended Intercompany Note and in certain
circumstances the payment on the Amended Intercompany Note will be
subordinate to Coleman's obligations under the Sunbeam Credit Facility.
Pursuant to the Agreements, Coleman has pledged to Sunbeam substantially all
of its domestic assets, other than its real property, including 66% of its
ownership interest in its direct foreign subsidiaries and domestic holding
companies for its foreign subsidiaries and all of its ownership interest in
its other direct domestic subsidiaries (but Coleman's subsidiaries have not
pledged their assets or stock of their subsidiaries), as security for the
Amended Intercompany Note. Sunbeam has pledged the Amended Intercompany Note
as security for the Sunbeam Credit Facility and assigned to such lenders the
security pledged by Coleman for the Amended Intercompany Note. Under the
Agreements, Coleman also agreed to give the lenders a direct pledge of the
assets securing the Amended Intercompany Note to secure the obligations under
the Sunbeam Credit Facility, subject to a cap equal to the balance due from
time to time on the Amended Intercompany Note.
20
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
The Sunbeam Credit Facility provides for a revolving credit facility in
an aggregate principal amount of up to $400.0 million (subject to certain
reductions) maturing March 30, 2005. In addition, pursuant to the Sunbeam
Credit Facility, at March 31, 1999, Sunbeam had approximately $1,260.0
million outstanding debt consisting of two tranches of term loans with
scheduled repayments through maturity on March 31, 2005 and September 30,
2006. As a result of Sunbeam's operating losses during 1998, among other
things, Sunbeam was not in compliance with the financial covenants and other
terms contained in the Sunbeam Credit Facility. As of June 30, 1998, Sunbeam
entered into an agreement with its bank lenders which waived Sunbeam's
compliance through December 31, 1998. On October 19, 1998, Sunbeam's bank
lenders agreed to extend this waiver through April 10, 1999. In April 1999,
the waiver was extended to April 10, 2000, and the Sunbeam Credit Facility
was amended and added certain financial covenants and other terms and waived
compliance with certain other financial covenants and other terms through
April 10, 2000. At the end of March 1999, approximately $230.0 million was
available to the Company under the Sunbeam Credit Facility either through
letters of credit borrowings or loans from Sunbeam.
Borrowings under the Sunbeam Credit Facility are secured by a pledge of
the stock of Sunbeam's material subsidiaries and by a security interest in
substantially all of the assets of Sunbeam and its material domestic
subsidiaries (other than Coleman and its subsidiaries, except as otherwise
described herein), including the Amended Intercompany Note. Sunbeam has
pledged its shares of Coleman common stock and its shares of Sunbeam Canada
common stock owned by it as security under the Sunbeam Credit Facility. In
addition, borrowings under the Sunbeam Credit Facility are guaranteed by a
number of Sunbeam's wholly-owned material United States subsidiaries (but not
Coleman) and such subsidiary guarantees are secured as described above.
Coleman has pledged its inventory (but not that of its subsidiaries) and the
proceeds from the sale of such inventory as collateral for letters of credit
issued for its account under the Sunbeam Credit Facility.
The Sunbeam Credit Facility contains covenants customary for credit
facilities of a similar nature, and events of default customary for
transactions of this type. Sunbeam is also required to comply with specified
financial covenants and ratios. If an event of default occurs under the
Sunbeam Credit Facility or Sunbeam is unable to refinance the Sunbeam Credit
Facility or obtain another waiver or amendment of certain financial covenants
and other terms by the time its existing waiver expires on April 10, 2000,
the Company may be required to reduce, delay or cancel capital or other
expenditures and/or seek loans or capital contributions from, or sell assets
or capital stock to, lending institutions and/or other third parties or
affiliates. There can be no assurance that any of such transactions could be
consummated or if consummated, would be on favorable terms or in amounts
sufficient to permit the Company to meets its cash requirements, or that any
of such transactions would be permitted under Sunbeam's debt instruments then
in effect. See Note 14 to the Consolidated Financial Statements in the
Company's Annual Report on Form 10-K/A for the year ended December 31, 1998.
In April 1999, the New York Stock Exchange ("NYSE") advised Coleman that
it did not meet the NYSE's continuing listing standards because Coleman did
not have tangible net assets of at least $12.0 million at September 30, 1998
and average annual net income of at least $0.6 million for fiscal years 1997,
1996 and 1995. At that time, Coleman requested the NYSE to continue to list
the Coleman common stock until completion of the Coleman Merger. The NYSE
subsequently advised Coleman that Coleman also failed to satisfy certain
non-financial continuing listing standards. On August 5, 1999, the NYSE
advised Coleman that the NYSE had revised its continuing listing standards,
and that Coleman is in compliance with the revised financial standards.
Coleman and the
21
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NYSE have agreed upon a program whereby Coleman will correct the deficiencies
in its non-financial continuing listing standards by the end of 1999. Coleman
is currently complying with such program. If Coleman were to be delisted from
the NYSE, it could adversely affect the market price of Coleman's common
stock and Coleman's ability to sell its capital stock to third parties.
However, Sunbeam's bank credit facility currently restricts Coleman from
taking such actions.
In May 1998, the NYSE advised Sunbeam that it did not meet the NYSE's
continuing listing standards because Sunbeam did not have tangible net assets
of $12.0 million at December 31, 1997 and average annual net income of at
least $0.6 million for fiscal years 1997, 1996 and 1995. Sunbeam
representatives met with NYSE officials, and in March 1999, the NYSE informed
Sunbeam that Sunbeam common stock would not be delisted at that time,
although the NYSE would, however, continue to monitor Sunbeam's financial
condition and operations. On August 5, 1999, the NYSE advised Sunbeam that
the NYSE had revised its continuing listing standards, and that Sunbeam is in
compliance with the revised standards.
On July 12, 1999, Coleman Worldwide acquired 30,000,000 shares of a
newly created series of Coleman voting preferred stock for an aggregate
purchase price of approximately $31.1 million. These shares, together with
the shares of Coleman common stock owned by Coleman Worldwide, enable Coleman
Worldwide to exercise 80.01% of the total voting power of Coleman's
outstanding capital stock as of July 12, 1999. Coleman created these shares
of preferred stock and Coleman Worldwide acquired them in order to enable
Coleman and Sunbeam to file consolidated federal income tax returns and, in
certain jurisdictions, consolidated state income tax returns prior to the
consummation of the Coleman Merger. In connection with the issuance of the
shares of preferred stock, Coleman entered into a tax sharing agreement with
Sunbeam pursuant to which Coleman will pay to Sunbeam amounts equal to the
federal and state income taxes that would have been payable by Coleman had
Coleman not been included in the consolidated income tax return of Sunbeam.
The net proceeds from the issuance of the shares by Coleman of its voting
preferred stock to Coleman Worldwide were used by Coleman to make a partial
repayment of loans outstanding from Sunbeam under the Amended Intercompany
Note.
EXPOSURE TO MARKET RISK
QUALITATIVE INFORMATION
Coleman uses a variety of derivative financial instruments to manage its
foreign currency and interest rate exposures. Coleman 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. See also Note 12 to the Consolidated Financial Statements in
the Company's Annual Report on Form 10-K/A for the year ended December 31,
1998.
The Company's international operations are located primarily in Europe,
Japan and Canada, which are not considered to be highly inflationary
environments. 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. Coleman is most vulnerable to
changes in United States dollar/Japanese yen (JPY), United States
dollar/Canadian dollar (CAD), United States dollar/German Deutschemark (DM),
and United States dollar/British Pound (GBP) exchange rates.
22
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
The Company's interest income and expense are most sensitive to changes
in the general level of U.S. interest rates. In this regard, changes in U.S.
interest rates affect the interest earned on the Company's cash equivalents
and short-term investments as well as interest paid on its debt. To mitigate
the impact of fluctuations in U.S. interest rates, the Company maintains a
portion of its debt as fixed rate in nature by entering into interest rate
swap transactions.
Coleman manages credit risk related to its derivative instruments
through credit approvals, exposure limits, threshold amounts and other
monitoring procedures.
QUANTITATIVE INFORMATION
Set forth below are tabular presentations of certain information related
to Coleman's investments in market risk sensitive instruments. All of the
instruments set forth in the following tables have been entered into by
Coleman for purposes other than trading.
INTEREST RATE SENSITIVITY. The table below provides information about
Coleman's derivative financial instruments and other financial instruments
that are sensitive to changes in interest rates, including interest rate
swaps and debt obligations.
For debt obligations, the table presents principal cash flows by
expected maturity date and related March 31, 1999 weighted average interest
rates. For interest rate swaps, the table presents notional amounts and
weighted average interest rates for the contracts at March 31, 1999. Notional
amounts are used to calculate the contractual payments to be exchanged under
the contracts.
<TABLE>
<CAPTION>
Expected Maturity Date
Balance -----------------------------------------------------------
at There- Fair
3/31/99 1999 2000 2001 2002 2003 After Total Value
------- ------ ----- ----- ---- ---- ------- ------ -----
(US$ Equivalent in Millions)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Long-Term Debt:
Fixed Rate.................... $ 0.6 $ 0.1 $ 0.2 $ 0.1 $ 0.1 $ 0.1 $ -- $ 0.6 $ 0.6
Average Interest Rate......... 2.91%
Interest Rate Derivatives:
Interest Rate Swaps:
Variable to Fixed (US$).. $ 25.0 $ -- $ -- $ -- $ -- $ 25.0 $ -- $ 25.0 $(0.6)
Average Pay Rate......... 6.12%
Average Receive Rate..... 5.08%
</TABLE>
EXCHANGE RATE SENSITIVITY. The table below provides information about
Coleman's foreign currency derivative financial instruments and other
financial instruments, including forward exchange agreements, by functional
currency and presents such information in U.S. dollar equivalents. The table
summarizes information on instruments and transactions that are sensitive to
foreign currency exchange rates, including foreign currency variable rate
credit lines, foreign currency forward exchange agreements and foreign
currency purchased put option contracts. For debt obligations, the table
represents principal cash flows and related weighted average interest rates
by expected maturity dates. For foreign currency forward exchange agreements
and foreign currency put option contracts, the table presents the notional
amounts and weighted average exchange rates by expected (contractual)
maturity dates. These notional amounts generally are used to calculate the
contractual payments to be exchanged under the contract.
23
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Balance
at Fair
3/31/99 (1) Value
----------- -----
(US$ Equivalent in Millions)
<S> <C> <C>
Foreign Currency Short-Term Debt:
Variable Rate Credit Lines (Europe, Japan and Asia)... $ 48.4 $ 48.4
Weighted Average Interest Rate........................ 2.8%
Forward Exchange Agreements:
(Receive US$/Pay DM)
Contract Amount................................... $ 9.0 $ 9.9
Average Contractual Exchange Rate................. 1.62
(Receive US$/Pay JPY)
Contract Amount................................... $ 9.0 $ 9.2
Average Contractual Exchange Rate................. 114.73
(Receive US$/Pay GBP)
Contract Amount................................... $ 3.5 $ 3.6
Average Contractual Exchange Rate................. .60
Purchased Put Option Agreements:
(Receive US$/Pay DM)
Contract Amount................................... $ 15.8 $ 0.4
Average Strike Price.............................. 1.80
(Receive US$/Pay JPY)
Contract Amount................................... $ 12.4 $ 0.3
Average Strike Price.............................. 125.0
(Receive US$/Pay GBP)
Contract Amount................................... $ 1.4 $ 0.0
Average Strike Price.............................. .62
(Receive US$/Pay CAD)
Contract Amount................................... $ 15.0 $ 0.1
Average Strike Price.............................. 1.54
</TABLE>
- --------------------
(1) None of the instruments listed in the table have maturity dates beyond 1999.
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 unseasonable weather conditions.
YEAR 2000 READINESS DISCLOSURE
The Company is continuing the process of assessing the impact of the
Year 2000 on its operations. The Company is being assisted in its review and
remediation work by Sunbeam's Year 2000 Program Management Office and
consulting firms employed by Sunbeam. The Company has completed an inventory
of its hardware and software systems, manufacturing equipment, electronic
data interchange, telecommunications and other technical assets potentially
subject to Year 2000 problems, such as security and telephone systems and
controls for lighting, heating, ventilation and
24
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
facility access. Additionally, the Company is assessing the effects of
noncompliance by its vendors, service providers, customers and financial
institutions.
The Company relies on its information technology functions to perform
many tasks critical to its operations. Significant transactions that could be
impacted by Year 2000 noncompliance include, among others, purchases of
materials, production management, order entry and fulfillment, and payroll
processing. Systems and applications that have been identified by the Company
to date as not currently Year 2000 compliant that are critical to the
Company's operations include certain of its financial software systems, which
process the order entry, purchasing, production management, general ledger,
accounts receivable, and accounts payable functions, and critical
applications in the Company's manufacturing and distribution facilities.
The Company's corrective work to achieve Year 2000 compliance has
included the following: (i) installation of Year 2000 compliant JD Edwards
software which has recently been completed in one location and is scheduled
to be completed in another location in September of 1999; (ii) the
installation of Year 2000 compliant JBA software in one location which is
scheduled to be completed by June 1999; and (iii) remediation of software
codes for existing programs in another location which is scheduled to be
completed by July of 1999. The Company has identified one of these locations
as possessing significant Year 2000 issues. Coleman's failure to complete a
timely conversion of this location to a Year 2000 compliant system could have
a material impact on the Company's operations. Management believes, although
there are significant systems that are being or will be modified or replaced,
Coleman's information systems environment will be made Year 2000 compliant
prior to January 1, 2000.
As of March 31, 1999, the Company had expended approximately $6.0
million related to remediation of Year 2000 issues, of which approximately
$5.0 million was recorded as SG&A expenses and the remainder as capital
expenditures. The Company's preliminary assessment of the total costs to
address and remedy Year 2000 issues is approximately $12.0 million. This
estimate includes the costs of software and hardware modifications and
replacements, and fees to third party consultants, but excludes the costs
associated with Company employees. The Company expects these expenditures to
be financed through operating cash flows or borrowings, as applicable. There
can be no assurance that these preliminary estimates will not change as the
Company completes its assessment of the Year 2000 issues. Additionally, the
Sunbeam Credit Facility does not permit Sunbeam and its subsidiaries,
including Coleman and its subsidiaries, to spend more than $50.0 million in
the aggregate on Year 2000 testing and remediation during the year ended
December 31, 1999. Sunbeam currently expects that for 1999, Year 2000 testing
and remediation spending for Sunbeam and its subsidiaries, including Coleman
and its subsidiaries, will total approximately $41.0 million.
With the exception of certain aspects of the Company's Year 2000
readiness program, the Company did not engage an independent third party to
verify the program's overall approach or total cost. However, the Company
believes through its use of various external consulting firms which perform
significant roles within the program, the Company's exposure in this regard
is mitigated. In addition, through the use of external third party diagnostic
tools which helped to identify potential Year 2000 issues in the software
code which the Company is remediating, the Company believes it has also
mitigated its risk by validating and verifying key program components.
25
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
The Company has contacted its major vendors and suppliers of products
and services to determine their Year 2000 readiness, and is continuing to
monitor their status with respect to such plans. This review includes third
party providers to whom the Company has outsourced the processing of its cash
receipt and cash disbursement transactions and its payroll. The Company is
currently assessing the vendor responses and will conduct additional reviews,
including on-site meetings, if deemed necessary, with any major suppliers who
have not indicated their readiness for the Year 2000. The failure of certain
of these third party suppliers to become Year 2000 compliant could have a
material adverse impact on the Company. The Company will also contact its
customers to determine if they are prepared for Year 2000 issues. Their
failure to evaluate and prepare for Year 2000 issues could have a material
adverse effect on Coleman's operations.
The Company plans to establish a contingency plan for addressing any
effects of the Year 2000 on its operations, whether due to noncompliance of
the Company's systems or those of third parties. The Company expects to
complete such contingency plan by September 30, 1999 and expects such
contingency plan will include an analysis of the Company's worst case
scenario and will address alternative processes, such as manual procedures to
replace those processed by noncompliant systems, potential alternative
service providers, and plans to address compliance issues as they arise. At
this time, the Company believes the most likely "worst-case" scenario
relating to Year 2000 issues generally involves potential disruptions in
areas in which the Company's operations must rely on vendors, suppliers and
customers whose systems may not work properly after January 1, 2000. While
such failures could either directly or indirectly affect important operations
of the Company and its subsidiaries in a significant manner, the Company
cannot at present estimate either the likelihood or the potential cost of
such failures. However, subject to the nature of the systems and applications
of the Company or third parties which are not made Year 2000 compliant, the
impact of such non-compliance on the Company's operations could be material
if appropriate contingency plans cannot be developed prior to January 1, 2000.
Because Year 2000 readiness is critical to the business, the Company has
redeployed some resources from non-critical system enhancements to address
Year 2000 issues. In addition, due to the importance of information systems
to the Company's business, management has deferred non-mission-critical
systems enhancements as much as possible. The Company does not expect these
redeployments and deferrals to have a material impact on the Company's
financial condition or results of operations.
CAUTIONARY STATEMENTS
Certain statements in this Quarterly Report on Form 10-Q/A may
constitute "forward-looking" statements within the meaning of the Private
Securities Litigation Reform Act of 1995, as the same may be amended from
time to time (the "Act") and in releases made by the Securities and Exchange
Commission from time to time. Such forward-looking statements involve known
and unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. Statements that are not
historical facts, including statements about the Company's beliefs and
expectations, are forward-looking statements. Forward-looking statements can
be identified by, among other things, the use of forward-looking language,
such as "believe," "expects," "estimates", "projects", "may," "will,"
"should," "seeks," "plans," "scheduled to," "anticipates" or "intends" or the
negative of those terms, or other variations of those terms or comparable
language, or by discussions of strategy or intentions.
26
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
Forward-looking statements speak only as of the date they are made, and the
Company undertakes no obligation to update them. These forward-looking
statements were based on various factors and were derived utilizing numerous
important assumptions and other important factors that could cause actual
results to differ materially from those in the forward-looking statements.
These cautionary statements are being made pursuant to the Act, with the
intention of obtaining the benefits of the "Safe Harbor" provisions of the
Act. The Company cautions investors that any forward-looking statements made
by the Company are not guarantees of future performance. Important
assumptions and other important factors that could cause actual results to
differ materially from those contained in the forward-looking statements with
respect to the Company include, but are not limited to risks associated with:
- high leverage,
- Sunbeam having sufficient borrowing capacity or other funds to lend to
the Company to satisfy the Company's cash needs,
- unavailability of sufficient cash flows from operations and borrowings
from Sunbeam, and the inability of the Company to secure loans or
capital contributions from, or sell assets or capital stock to,
lending institutions and/or other third parties or affiliates,
- Sunbeam's ability to comply with the terms of the Sunbeam Credit
Facility, or to continue to obtain waivers from its bank lenders with
respect to compliance with the existing covenants contained in the
Sunbeam Credit Facility, and to continue to have access to its
revolving credit facility,
- Coleman's ability to maintain and increase market shares for its
products at acceptable margins,
- Coleman's ability to successfully introduce new products and to
provide on-time delivery and a satisfactory level of customer service,
- changes in domestic and/or foreign laws and regulations, including
changes in tax laws, accounting standards, environmental laws,
occupational, health and safety laws,
- access to foreign markets together with foreign economic and political
conditions, including currency fluctuations, and trade, monetary,
fiscal and/or tax policies,
- uncertainty as to the effect of competition in existing and potential
future lines of business,
- fluctuations in the cost and/or availability of raw materials and/or
products,
- changes in the availability and/or costs of labor,
- effectiveness of advertising and marketing programs,
- product quality, including excess warranty costs, product liability
expenses and costs of product recalls,
- weather conditions which are adverse to the specific businesses of
Coleman,
- the possibility of a recession in the United States or other countries
resulting in a decrease in consumer demands for Coleman's products,
- ability of third party service providers that have been engaged to
provide services such as factory maintenance and certain back office
administrative services to timely and accurately provide their
services to the Company,
- changes in consumer preferences or a decrease in the public's interest
in camping and related activities,
- combinations or other actions by retail customers that adversely
affect sales or profitability,
27
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
- actions by competitors including business combinations, new product
offerings and marketing and promotional activities, and
- failure of Coleman and/or its customers and suppliers of goods or
services to timely complete the remediation of computer systems to
effectively process Year 2000 information.
Other factors and assumptions not included in the foregoing may cause
the Company's actual results to materially differ from those projected. The
Company assumes no obligation to update any forward-looking statements or
these cautionary statements to reflect actual results or changes in other
factors affecting such forward-looking statements.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
4.1 Intercompany Pledge and Security Agreement,
dated as of April 15, 1999, between The Coleman
Company, Inc. and Sunbeam Corporation
(incorporated by reference to Exhibit 4.1
to The Coleman Company, Inc. Form 10-Q for the
period ended March 31, 1999).
4.2 Intercompany Security Agreement dated as of
April 15, 1999, between The Coleman Company,
Inc. and Sunbeam Corporation (incorporated by
reference to Exhibit 4.2 to The Coleman Company,
Inc. Form 10-Q for the period ended March 31,
1999).
27 Financial Data Schedule, submitted
electronically to the Securities and Exchange
Commission for information only and only and not
filed.
</TABLE>
-------------------
(b) Report on Form 8-K
No reports on Form 8-K were filed during the quarter ended March
31, 1999.
28
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
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.
Date: November 4, 1999 By: /s/ Gwen C. Wisler
------------------------- ------------------------------------
Gwen C. Wisler
Executive Vice President and
Chief Financial Officer
29
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF THE COLEMAN COMPANY, INC. FOR THE
QUARTERS ENDED MARCH 31, 1999 AND 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-START> JAN-01-1999 JAN-01-1998
<PERIOD-END> MAR-31-1999 MAR-31-1998
<CASH> 18,508 21,498
<SECURITIES> 0 0
<RECEIVABLES> 230,129 212,086
<ALLOWANCES> 8,695 8,051
<INVENTORY> 253,409 246,343
<CURRENT-ASSETS> 540,297 531,345
<PP&E> 266,641 275,373
<DEPRECIATION> 125,613 114,235
<TOTAL-ASSETS> 992,232 1,021,979
<CURRENT-LIABILITIES> 266,989 328,386
<BONDS> 435 360,231
0 0
0 0
<COMMON> 558 552
<OTHER-SE> 234,164 266,490
<TOTAL-LIABILITY-AND-EQUITY> 992,232 1,021,979
<SALES> 280,451 240,310
<TOTAL-REVENUES> 280,690 244,499
<CGS> 198,371 175,777
<TOTAL-COSTS> 198,371 175,777
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 1,892 663
<INTEREST-EXPENSE> 7,575 9,044
<INCOME-PRETAX> 11,351 6,165
<INCOME-TAX> 4,540 7,518
<INCOME-CONTINUING> 6,741 (1,414)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 (1,232)
<CHANGES> 0 0
<NET-INCOME> 6,741 (2,646)
<EPS-BASIC> 0.12 (0.05)
<EPS-DILUTED> 0.12 (0.05)
</TABLE>
