SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report: NOVEMBER 12, 1996
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SUNBEAM CORPORATION
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(Exact Name of Registrant as Specified in Its Charter)
DELAWARE
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(State or Other Jurisdiction of Incorporation)
1-52 25-1638266
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(Commission File Number) (I.R.S. Employer Identification No.)
2100 NEW RIVER CENTER, 200 EAST LAS OLAS BLVD.,
FORT LAUDERDALE, FLORIDA 33301
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(Address of Principal Executive Offices) (Zip Code)
(954) 767-2100
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(Registrant's Telephone Number, Including Area Code)
N/A
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(Former Name or Former Address, if Changed Since Last Report)
Exhibit Index is located on page 4
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ITEM 5. OTHER EVENTS.
The Company issued a press release today regarding the adoption of a
restructuring plan. The information contained in such press release, a copy of
which is attached hereto as Exhibit 99.1, is incorporated herein by reference.
In connection with the announcement of such restructuring plan, the
Company is filing herewith certain "Cautionary Statements" for the purpose of
establishing a readily available document which may be referenced pursuant to
the "safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. Such Cautionary Statements are attached hereto as Exhibit 99.2 and
incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
Exhibit 99.1 - Press Release dated November 12, 1996, regarding
restructuring plan.
Exhibit 99.2 - Cautionary Statements.
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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 hereunto duly authorized.
SUNBEAM CORPORATION
Date: November 12, 1996 /s/ Janet G. Kelley
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Janet G. Kelley, Vice President
and Associate General Counsel
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EXHIBIT INDEX
NUMBER DESCRIPTION
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Exhibit 99.1 Press Release dated November 12, 1996, regarding
restructuring plan.
Exhibit 99.2 Cautionary Statements.
Page 4
EXHIBIT 99.1
SUNBEAM [LOGO]
FOR IMMEDIATE RELEASE:
SUNBEAM CORPORATION ANNOUNCES $225 MILLION COST
REDUCTION PROGRAM - SETS AGGRESSIVE GROWTH TARGETS
FORT LAUDERDALE, FL - November 12, 1996 - Sunbeam Corporation
(NYSE:SOC) announced today the details of its highly anticipated restructuring
and growth plan. The Company stated that this restructuring initiative is
projected to generate approximately $225 million in annual savings for its
businesses. Sunbeam anticipates that approximately 75% of these annual savings
will be realized in 1997 and the remaining 25% in 1998. The savings will result
primarily from the consolidation of administrative functions within the Company,
the rationalization of facilities/headquarters, the centralization of the
Company's procurement function and the reduction of the Company's product
offerings. The facilities/headquarters rationalization entails the consolidation
or sale of 39 of the Company's 53 facilities, including 18 of the Company's 26
factories, which will leave Sunbeam with 4 domestic factories and 4 factories
outside of the United States. The Company also plans to reduce the number of
warehouses it utilizes from 61 to 24.
Correspondingly, the Company announced plans to divest several lines of
business which it has determined are not core for Sunbeam, including furniture,
time and temperature, the COUNSELOR and BORG scale lines and the decorative
bedding business. Sunbeam is actively seeking purchasers for these lines of
business and has appointed Chase Securities, Inc. to market them. A purchaser
will also be sought for the Company's textile mill in Biddeford, Maine. Sunbeam
expects to source blanket shells for its electric blanket business from the
purchaser of this textile operation.
The Company's new core product categories will be: (1) Kitchen
Appliances; (2) Personal Care and Comfort; (3) Health Care; (4) Outdoor
Cooking and (5) Professional Care.
Sunbeam Chairman and CEO, Albert J. Dunlap, stated, "As we have
repeatedly advised investors, Sunbeam required a massive effort to reduce costs
and grow the business in order to
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restore higher levels of profitability and provide the kinds of returns our
shareholders have a right to expect." Dunlap added, "We have stayed on an
aggressive schedule, having assembled our new Management Team by the end of
September and having completely analyzed the Company's strengths and weaknesses
over the past 90 days through the joint efforts of internal personnel and a team
of consolidation and cost reduction specialists from Coopers & Lybrand. We
committed to unveil our plan by November 15, and we are ahead of schedule. Our
goal is to essentially complete the restructuring initiatives within the next 45
days. Therefore, the Company has every intention of meeting its previously
stated goal of beginning 1997 as a new company."
Sunbeam expects to consolidate its current divisional and regional
headquarters functions in Chicago, Nashville, Miami, Schaumburg, IL, Neosho, MO
and Fort Lauderdale, FL into a single worldwide corporate headquarters in Delray
Beach, FL, as was previously announced. As a result, headquarters personnel will
be reduced from 308 to 123 persons, a reduction of 60%. In addition to the
headquarters consolidation, Sunbeam will consolidate specific back office
administrative functions, including certain finance, risk management and
customer service operations, into its Hattiesburg manufacturing facility. The
total headquarters and administrative consolidations will result in a 50%
reduction of administrative personnel, from approximately 1,400 to 700.
The restructuring and growth plan includes reducing Sunbeam facilities
from 53 to 14, including reducing the number of production facilities from 26
to 8. Twelve production facilities are expected to be eliminated or sold in
connection with the disposition of non-core business operations reducing
headcount by 3,300 jobs. The Company also plans to eliminate excess production
capacity in its core businesses by closing 6 additional production facilities
and reducing its production workforce by an additional 2,100 persons or 28%.
As a result of the rationalization and overhead consolidation efforts, total
Company headcount will be reduced 50% from approximately 12,000 employees
to 6,000.
Sunbeam formerly maintained separate purchasing functions for its
operating divisions, preventing maximization of savings in procurement. The
Company expects to generate substantial savings in raw material purchases which
are used in all of its operations.
Sunbeam also plans to substantially reduce the number of stock keeping
units ("SKUs") and, in many cases, the associated packaging, tooling and related
expenses associated with these products. The Company expects to eliminate 87% of
finished goods SKUs or nearly 10,000 SKUs, of which 5,500 pertain to the
Company's core businesses and 4,500 pertain to the divestiture of its furniture
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business. The reduction in SKUs is not expected to affect the Company's core
businesses or significantly reduce sales.
In conjunction with the implementation of the restructuring plan, the
Company expects to record a one-time pre-tax special charge estimated to be $300
million. Only 25%, or $75 million, of this special charge will impact cash
through the payment of severance and other employee costs, lease obligations and
other plant costs associated with the rationalization of excess facilities. The
remaining special charges will be non-cash in nature consisting primarily of
asset and inventory write-downs, losses anticipated to be incurred from
divestiture of non-core businesses and increases in several reserve categories.
Sunbeam also announced the development of a comprehensive three year
growth plan for the Company's core businesses. The Company's goal is for
revenues to double, reaching $2 billion, by 1999, with operating margins
improve to 20% of sales, a substantial increase from the 2.5% operating margin
realized through the first nine months of 1996. The Company's goal is for Return
on Equity to grow to 25%, up from 1% over the past twelve months. Additionally,
the Company anticipates generating substantial cash flows over the next three
years from the divestiture of non-core businesses and the reduction in capital
spending and working capital requirements. In fact, Sunbeam anticipates being
net debt free within the coming year.
The revenue growth goal will be driven, in large part, by the
development and introduction of new innovative products and the globalization of
the Company. Management's goal is to triple International sales to $600 million
by 1999. The International thrust will come from adding distributors and
completing licensing agreements and joint ventures in certain key regions of the
world, namely Asia, Latin America and Europe. The Company expects to add 15
International distributors and/or licensing agreements over the next 5 months.
These agreements will provide the Company with access to such countries as
China, Thailand, Malaysia, Indonesia, the Philippines, Taiwan, Brazil and
Australia. The Company also expects to introduce 40 new 220 volt products into
International markets over the next 5 months. These introductions are a
milestone for the Company as they are the first products the Company has
actually engineered for 220 volt capability.
In addition to the new 220 volt product introductions, the Company has
a goal to introduce at least 30 new products a year for its domestic markets.
Mr. Dunlap added, "I fully expect by 1999, that new product sales will account
for 30% or more of our total sales. We will be a leader in new
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product development. These new innovations will focus on products which are more
relevant to the lifestyles and concerns of both individuals and families as the
21st Century approaches. We will introduce new Sunbeam "Logic" products that do
the thinking for you, including products such as the Toast Logic
Toaster/trademark/, Blanket with a Brain/trademark/, Auto Shut-off Steam
Master/registered trademark/ Iron and the Custom Blend Coffee Maker.
Additionally, the Company will focus on its new "Healthy Home" concept which
targets the health-conscious consumer with new products such as our Rotisserie
which is currently sold out."
Both International expansion and new product introductions will be
supported by a significant investment in a major new advertising program that is
geared to rebuilding SUNBEAM/registered trademark/ and OSTER/registered
trademark/ brand awareness in the marketplace. The new campaign, which will
refocus the Company's advertising dollars on consumer marketing, will begin next
week. The Company has also designed new, more powerful packaging for its
SUNBEAM/registered trademark/ and OSTER/registered trademark/ branded products.
Finally, Sunbeam will venture into emerging new professional channels
of distribution and "direct to the consumer" channels such as catalogs, the
Internet and factory outlet stores. The plan includes the opening of two new
outlet stores by the end of next month and 20 more in 1997.
CEO Al Dunlap stated, "Our bold restructuring plan not only
dramatically reduces costs, but also enhances the long term growth of the
Company. We have exciting plans for growing our domestic and international
businesses under the marketing and sales leadership of P. Newton White, Don
Uzzi, Lee Griffith and Dixon Thayer. Growth of Sunbeam's core businesses
involves more rapid product development, international expansion and investing
in supporting our brands. Sunbeam is committed to a marketing and sales strategy
that is CONSUMER FOCUSED."
In conclusion, Mr. Dunlap added, "With renewed emphasis on our core
businesses, a renewed emphasis on international expansion and reduction of the
development cycle time on introduction of new products, Sunbeam will be an
exciting consumer products company. As our new advertising campaign highlights,
"There's a New Sunbeam Shining."
Sunbeam Corporation is a leading consumer products company that
designs, manufactures and markets, nationally and internationally, a diverse
portfolio of brand name products. The Company's SUNBEAM/registered trademark/
and OSTER/registered trademark/ brands have been household names for
generations, both domestically and abroad, and the Company is a market leader in
many of its product categories.
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CAUTIONARY STATEMENTS - Statements contained in this release, including
statements relating to the Company's expectations regarding anticipated
performance in the future, are "forward looking statements," as such term is
defined in the Private Securities Litigation Reform Act of 1995. Actual results
could differ materially from the Company's statements in this release regarding
its expectations, goals, or projected results, due to various factors, including
those set forth in the Company's Cautionary Statements included in Sunbeam's
report on Form 8-K, filed with the Securities and Exchange Commission on today's
date.
CONFERENCE CALL - Sunbeam plans to hold a conference call for investors
and analysts at 2:30 p.m. (EDT) today. The phone number for the call is (312)
864-5041.
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Contact: Media: Investor Relations:
Pete Judice John DeSimone
Burson-Marsteller Director, Investor Relations
New York Sunbeam Corporation
(212) 614-4506 (954) 767-2100
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EXHIBIT 99.2
CAUTIONARY STATEMENTS
Information provided by Sunbeam Corporation (the "Company") from time to
time may contain certain "forward-looking" information, as that term is defined
in the Private Securities Litigation Reform Act of 1995, as the same may be
amended (herein the "Act") and in releases made by the Securities and Exchange
Commission ("SEC") from time to time. 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 and that actual results may differ materially from those in the
forward-looking statements as a result of various factors.
These Cautionary Statements are being made and filed with the SEC
contemporaneously with the Company's release of a detailed restructuring plan
(the "Plan") for the Company. Success of the Plan depends upon the successful
completion of a number of actions which the Company expects will improve its
future financial performance. It is possible, however, that certain of these
actions may not be successfully completed for a variety of reasons, and
therefore that future financial results may differ materially from those
anticipated by the Company. The Company wishes to advise investors of the
following risks to the Plan:
-The Company plans to close various facilities, reduce employment levels
and consolidate production capacity. These actions are scheduled to be completed
on an accelerated timetable. If the Company is unable to complete such actions
within anticipated time frames, the full benefits of cost reductions may not be
realized as quickly as anticipated by the Company or possibly may not be
realized at all. Many factors could delay or materially affect realization of
the anticipated benefits of cost reduction initiatives, including failure of
Company personnel or of third parties to perform in a timely manner, events of
force majeure or other circumstances which could prevent or delay
implementation. Any material failure of the Company to reduce costs to the
extent anticipated by the Company (or within the time frames anticipated by the
Company) would likely have an adverse effect on anticipated future financial
results, which effect could be material.
-The Company has announced plans to sell certain non-core businesses to
third parties. It anticipates receiving proceeds from these sales and also
anticipates that the sales will further reduce the costs of its ongoing
business. If the Company is unsuccessful in disposing of any or all of these
non-core businesses, or if it fails to realize disposition proceeds in amounts
anticipated by the Company, or if such dispositions are not completed within the
time frames anticipated by the Company, such events would likely have an adverse
effect on future financial results, which effect could be material.
-The Company expects to substantially increase the amount of business
conducted by it outside North America. If the Company fails to achieve
anticipated market penetration in areas of the world into which the Company
currently expects to expand its sales, such event is likely to have an adverse
effect on the Company's future financial performance, which effect could be
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material. Expansion of the Company's sales in foreign markets depends upon many
factors, including the states of economies in foreign countries, the strength of
consumer demand in those countries for products which the Company sells (or
expects to sell in those markets), the strength of competition from other global
consumer products companies and other factors which may negatively affect the
Company's anticipated performance in those markets.
The Company currently has significant sales in such economies as those
of Mexico and Venezuela, both of which economies have been unstable or
hyperinflationary in recent years. The economies of other foreign countries
important to the Company's expansion plans could suffer similar instability in
the future. Such factors as new tariffs, changes in monetary policies,
inflation, governmental instability and similar matters could negatively affect
the Company's anticipated performance in foreign markets. The occurrence of any
of these circumstances could have an adverse effect on future financial
performance, which effect could be material.
-A significant portion of the cost of goods manufactured by the Company
in North America is raw material cost. The Company is implementing changes in
its purchasing function which the Company anticipates will enable it to purchase
raw materials more efficiently and economically than it has in the past. The
success of the Company purchasing initiatives may be affected by many factors
beyond the Company's control, such as commodity pricing generally and higher
prices for the specific raw materials required by the Company. In addition, the
Company's initiatives to reduce the cost of raw materials simply may not achieve
savings in amounts which the Company anticipates. A material failure by the
Company to achieve the anticipated reductions in raw material costs would likely
have an adverse effect on anticipated future financial performance, which effect
could be material.
-The Company anticipates realizing price increases for certain of its
products. The Company operates in a highly competitive industry, and its ability
to realize price increases may be limited due to competitive pressures. If there
is a material failure to realize anticipated price increases, margins likely
will be lower than anticipated by the Company, and this will likely have an
adverse effect on future financial performance, which effect could be material.
-The Company anticipates that it will in the future more fully utilize
its Advanced Manufacturing and Distribution Center (AMDC), constructed in
1994-95 in Hattiesburg, Mississippi, as well as other key facilities being
retained by the Company. If the Company fails to achieve full utilization of
these facilities, particularly the AMDC, this will likely have an adverse effect
on future financial performance, which effect could be material.
-The Company anticipates that it will be able to more rapidly develop
and introduce a substantial number of new and innovative products in the future.
However, the Company may prove unable to meet its more aggressive schedules for
future product development. Failure to develop and manufacture new products in
the amounts anticipated or a failure to reduce the cycle time for new product
introductions would likely have an adverse effect on future financial
performance, which effect could be material. The anticipated rapid development
cycle also may result in higher than anticipated warranty returns, which also
could have a materially adverse effect on future financial performance.
-The Company competes in a highly competitive environment with
numerous competitors which are financially strong and capable of competing
effectively with the Company
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in the marketplace. Such competitors may take actions to meet the Company's new
product introductions and other initiatives. Some competitors may be willing to
accept lower margins and to reduce prices to compete with the Company. As a
result, the Company could fail to achieve anticipated sales increases, to
realize anticipated price increases, or otherwise fail to meet its anticipated
results. Any of such circumstances would likely have an adverse effect on future
financial performance, which effect could be material.
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