SUNBEAM CORP/FL/, 10-Q, 1999-06-11

SUNBEAM CORP/FL/
10-Q, 1999-06-11
ELECTRIC HOUSEWARES & FANS

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================================================================================

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

[X] Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

For the period ended March 31, 1999

[ ] Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

For the transition period from ___________ to ___________

Commission File No. 1-000052

[SUNBEAM LOGO]
Sunbeam Corporation
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 25-1638266
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION)

2381 EXECUTIVE CENTER DRIVE
BOCA RATON, FLORIDA 33431
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

(561) 912-4100
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

NOT APPLICABLE
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR,
IF CHANGED SINCE LAST REPORT)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes [X] No [ ]

On June 9, 1999 there were 100,894,892 shares of the registrant's
Common Stock ($.01 par value) outstanding.

================================================================================

<PAGE>

SUNBEAM CORPORATION AND SUBSIDIARIES

QUARTERLY REPORT
ON FORM 10-Q
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Consolidated Statements of Operations (Unaudited)
for the three months ended March 31, 1999 and March 31, 1998....................... 2

Condensed Consolidated Balance Sheets (Unaudited)
as of March 31, 1999 and December 31, 1998......................................... 3

Condensed Consolidated Statements of Cash Flows (Unaudited)
for the three months ended March 31, 1999 and March 31, 1998....................... 4

Notes to Condensed Consolidated Financial Statements (Unaudited)................... 5

Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations......................................................... 13

PART II. OTHER INFORMATION

Item 1. Legal Proceedings..................................................................20

Item 6. Exhibits and Reports on Form 8-K ................................................. 22

SIGNATURES ........................................................................................... 23
</TABLE>

<PAGE>

PART I. FINANCIAL INFORMATION

<TABLE>
<CAPTION>
SUNBEAM CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

THREE MONTHS ENDED
-------------------------
MARCH 31, MARCH 31,
1999 1998
--------- ----------
<S> <C> <C>
Net sales .................................................................... $ 523,946 $ 247,601
Cost of goods sold ........................................................... 400,791 213,828
Selling, general and administrative expense .................................. 137,949 71,139
--------- ---------
Operating loss ............................................................... (14,794) (37,366)
Interest expense ............................................................. 41,906 5,073
Other expense, net ........................................................... 808 3,165
--------- ---------
Loss before income taxes, minority interest and extraordinary charge ......... (57,508) (45,604)

Income tax (benefit) provision:
Current .................................................................... (151) 327
Deferred ................................................................... 1,893 (449)
--------- ---------
1,742 (122)
--------- ---------
Minority interest ............................................................ 1,489 --
--------- ---------
Loss before extraordinary charge ............................................. (60,739) (45,482)
Extraordinary charge from early extinguishment of debt ....................... -- (8,624)
--------- ---------
Net loss ..................................................................... $ (60,739) $ (54,106)
========= =========
Basic and diluted loss per share:
Loss from continuing operations ........................................... $ (0.60) $ (0.53)
Extraordinary charge ...................................................... -- (0.10)
--------- ---------
Net loss .................................................................. $ (0.60) $ (0.63)
========= =========
Weighted average common shares outstanding ................................... 100,740 86,390
Dividends declared per share of common stock ................................. $ -- $ 0.01
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

<PAGE>

<TABLE>
<CAPTION>
SUNBEAM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(AMOUNTS IN THOUSANDS)

MARCH 31, DECEMBER 31,
1999 1998
----------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ................................................ $ 46,163 $ 61,432
Restricted investments ................................................... 72,351 74,386
Receivables, net ......................................................... 396,783 361,774
Inventories .............................................................. 534,555 519,189
Prepaid expenses, deferred income taxes and other current assets ......... 69,889 74,187
----------- -----------
Total current assets ................................................. 1,119,741 1,090,968
Property, plant and equipment, net .......................................... 452,343 455,172
Trademarks, trade names, goodwill and other, net ............................ 1,827,019 1,859,377
----------- -----------
$ 3,399,103 $ 3,405,517
=========== ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt and current portion of long-term debt .................... $ 119,276 $ 119,103
Accounts payable ......................................................... 177,478 162,173
Other current liabilities ................................................ 318,972 321,185
----------- -----------
Total current liabilities ............................................ 615,726 602,461
Long-term debt, less current portion ........................................ 2,207,999 2,142,362
Other long-term liabilities ................................................. 234,834 248,459
Deferred income taxes ....................................................... 99,691 100,473
Minority interest ........................................................... 50,620 51,325

Commitments and contingencies (Note 9)

Shareholders' equity:
Preferred stock (2,000,000 shares authorized, none outstanding) ..........
Common stock (100,739,053 shares issued) ................................. 1,007 1,007
Additional paid-in capital ............................................... 1,123,419 1,123,457
Accumulated deficit ...................................................... (870,736) (809,997)
Accumulated other comprehensive loss ..................................... (63,457) (54,030)
----------- -----------
Total shareholders' equity ........................................... 190,233 260,437
----------- -----------
$ 3,399,103 $ 3,405,517
=========== ===========
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

<PAGE>

<TABLE>
<CAPTION>
SUNBEAM CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(AMOUNTS IN THOUSANDS)

THREE MONTHS ENDED
-----------------------
MARCH 31, MARCH 31,
1999 1998
--------- --------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss ............................................................. $ (60,739) $ (54,106)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization ..................................... 32,394 10,414
Non-cash interest charges ......................................... 11,271 1,526
Deferred income taxes ............................................. 1,893 (449)
Extraordinary charge from early extinguishment of debt ............ -- 8,624
Non-cash compensation charges ..................................... -- 24,290
Minority interest ................................................. 1,489 --
(Gain) loss on the sale of property, plant and equipment .......... (568) 4
Changes in working capital and other, net of acquisitions ......... (43,224) (125,029)
--------- ---------
Net cash used in operating activities .................. (57,484) (134,726)
--------- ---------
INVESTING ACTIVITIES:
Capital expenditures, net ........................................... (16,288) (19,480)
Acquisition of Coleman, including acquisition costs,
net of cash acquired .............................................. -- (160,612)
Other, net ........................................................... (165) --
--------- ---------
Net cash used in investing activities .................. (16,453) (180,092)
--------- ---------
FINANCING ACTIVITIES:
Issuance of convertible subordinated debentures, net of
financing fees .................................................... -- 729,622
Net borrowings under revolving credit facilities ..................... 61,468 --
Payments of debt obligations, including prepayment penalties ......... (2,500) (266,672)
Other debt financing fees ............................................ (234) (25,075)
Proceeds from exercise of stock options .............................. -- 19,045
Other, net ........................................................... (66) (857)
--------- ---------
Net cash provided by financing activities .............. 58,668 456,063
--------- ---------
Net (decrease) increase in cash and cash equivalents ...................... (15,269) 141,245
Cash and cash equivalents at beginning of period .......................... 61,432 52,298
--------- ---------
Cash and cash equivalents at end of period ................................ $ 46,163 $ 193,543
========= =========
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

<PAGE>

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1. OPERATIONS AND BASIS OF PRESENTATION

ORGANIZATION

Sunbeam Corporation ("Sunbeam" or the "Company") is a leading designer,
manufacturer and marketer of branded consumer products. The Company's primary
business is the manufacturing, marketing and distribution of durable household
and outdoor leisure consumer products through mass market and other distribution
channels in the United States and internationally. The Company also sells its
products to professional and commercial end users such as small businesses,
health care providers, hotels and other institutions. The Company's principal
products include household kitchen appliances; health monitoring and care
products for home use; scales for consumer and professional use for weight
management and business uses; electric blankets and throws; clippers and
trimmers for consumer, professional and animal uses; smoke and carbon monoxide
detectors; outdoor barbecue grills; camping equipment such as tents, lanterns,
sleeping bags and stoves; coolers; backpacks and book bags; and portable
generators and compressors.

In 1998 the Company acquired an indirect controlling interest in The
Coleman Company, Inc. ("Coleman") and all the outstanding common stock of
Signature Brands USA, Inc. ("Signature Brands") and First Alert, Inc. ("First
Alert").

BASIS OF PRESENTATION

The Condensed Consolidated Balance Sheet of the Company as of March 31,
1999 and the Condensed Consolidated Statements of Operations and Cash Flows for
the three months ended March 31, 1999 and March 31, 1998 are unaudited. The
unaudited condensed consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions of Form 10-Q and Rule 10-01 of Regulation
S-X. The December 31, 1998 Condensed Consolidated Balance Sheet was derived from
the consolidated financial statements contained in the Company's Annual Report
on Form 10-K for the year ended December 31, 1998. The condensed consolidated
financial statements contained herein should be read in conjunction with the
consolidated financial statements and related notes contained in the Company's
1998 Annual Report on Form 10-K. In the opinion of management, the unaudited
condensed consolidated financial statements contained herein include all
adjustments (consisting of only recurring adjustments) necessary for a fair
presentation of the results of operations for the interim periods presented.
These interim results of operations are not necessarily indicative of results
for the entire year or future periods.

BASIC AND DILUTED LOSS PER SHARE OF COMMON STOCK

Loss per common share calculations are determined by dividing loss
attributable to common shareholders by the weighted average number of shares of
common stock outstanding. Loss per share for the three months ended March 31,
1999 and March 31, 1998, respectively, is based only on the weighted average
number of common shares outstanding as potential common shares have been
excluded as a result of the loss from operations during both periods presented.
Loss per share for the three months ended March 31, 1999 and 1998 excluded
26,877 and 4,758,565 shares related to stock options, respectively, as their
effect would have been anti-dilutive. Stock options to purchase 15,372,693
common shares and 4,622,989 common shares at March 31, 1999 and 1998,
respectively, were excluded from potential common shares as the option exercise
prices were greater than the average market price of the Company's common stock
during each of the respective periods presented. Diluted average common shares
outstanding as of March 31, 1999 and March 31, 1998, respectively excluded
13,242,050 shares issuable upon the conversion of the Zero Coupon Convertible
Senior Subordinated Debentures due 2018 (the "Debentures"). In addition, diluted
average common shares outstanding as of March 31, 1999 excluded 23,000,000
shares issuable on the exercise of warrants. Diluted average common shares
outstanding as of March 31, 1998 also excluded (58,065) shares related to
restricted stock.

<PAGE>

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)

1. OPERATIONS AND BASIS OF PRESENTATION -- (CONTINUED)

NEW ACCOUNTING STANDARDS

Effective January 1, 1999, the Company adopted Statement of Position
98-1, ACCOUNTING FOR THE COSTS OF COMPUTER SOFTWARE DEVELOPED OR OBTAINED FOR
INTERNAL USE ("SOP 98-1"). SOP 98-1 requires computer software costs associated
with internal use software to be expensed as incurred until certain
capitalization criteria are met. Adoption of this statement did not have a
material impact on the Company's consolidated financial position, results of
operations, or cash flows.

In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133 ("SFAS No. 133"), ACCOUNTING FOR
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES, which is effective for fiscal
years beginning after June 15, 1999. SFAS No. 133 requires the recognition of
all derivatives in the Consolidated Balance Sheets as either assets or
liabilities measured at fair value. The Company has not yet determined the
impact SFAS No. 133 will have on its consolidated financial position, results of
operations, or cash flows.

RECLASSIFICATIONS

Certain prior year amounts have been reclassified to conform with the
1999 presentation.

2. ACQUISITIONS

On August 12, 1998, the Company announced that, following investigation
and negotiation conducted by a Special Committee of the Board consisting of four
outside directors not affiliated with M&F, the Company had entered into a
settlement agreement with an affiliate of M&F pursuant to which the Company was
released from certain threatened claims of M&F and its affiliates arising from
the Coleman acquisition and M&F agreed to provide certain management personnel
and assistance to the Company in exchange for the issuance to the M&F affiliate
of a five-year warrant to purchase up to 23 million shares of the Company's
common stock at a cash exercise price of $7.00 per share, subject to
anti-dilution adjustments.

The Company expects to acquire the remaining equity interest in Coleman
pursuant to a merger transaction in which the existing Coleman minority
shareholders will receive 0.5677 share of the Company's common stock and $6.44
in cash for each share of Coleman common stock outstanding. In addition,
unexercised options under Coleman's stock option plans will be cashed out at a
price per share equal to the difference between $27.50 and the exercise price of
such options. The Company expects to issue approximately 6.7 million shares of
common stock and expend approximately $87 million in cash to complete the
Coleman acquisition. Although there can be no assurance, it is anticipated the
Coleman merger will occur in the second half of 1999. The acquisition of the
remaining outstanding shares of Coleman common stock will be accounted for under
the purchase method of accounting from the date of consummation of the Coleman
merger.

On October 21, 1998, the Company announced that it had entered into a
Memorandum of Understanding to settle, subject to Court approval, class action
claims made by minority shareholders of Coleman relating to the Coleman merger.
Under the terms of the proposed settlement, if approved by the Court, the
Company will issue to the Coleman public shareholders, and plaintiff's counsel
in this action, warrants to purchase up to 4.98 million shares of the Company's
common stock at a cash exercise price of $7.00 per share, subject to certain
anti-dilution provisions. These warrants would generally have the same terms as
the warrants issued to an affiliate of M&F and will be issued when the Coleman
merger is consummated. Issuance of these warrants will be accounted for as
additional purchase consideration. There can be no assurance that the Court will
approve the settlement as proposed.

On April 6, 1998, the Company completed the acquisitions of First
Alert, valued at approximately $182 million (including $133 million of cash and
$49 million of assumed debt) and Signature Brands valued at $255 million,
(reflecting cash paid, including the required retirement or defeasance of debt).

6
<PAGE>

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)

2. ACQUISITIONS -- (CONTINUED)

All of these acquisitions were accounted for by the purchase method of
accounting. Accordingly, the results of operations of the acquired entities are
included in the accompanying Condensed Consolidated Statements of Operations
from their respective dates of acquisition.

The following unaudited pro forma financial information for the Company
gives effect to the Coleman and Signature Brands acquisitions as if they had
occurred at the beginning of the periods presented. No pro forma adjustments
have been made for the First Alert acquisition as its effects are not
significant. These pro forma results have been prepared for informational
purposes only and do not purport to be indicative of the results of operations
which actually would have occurred had the acquisitions been consummated on the
dates indicated, or which may result in the future. The unaudited pro forma
results follow (in millions, except per share data):

THREE MONTHS ENDED
MARCH 31, 1998
------------------
Net sales................................................... $ 509.4
Loss before extraordinary charge............................ (71.0)
Basic and diluted loss per share from continuing operations
before extraordinary charge ............................. (0.79)

3. DEBT

In order to finance the acquisitions described in Note 2 and refinance
substantially all the indebtedness of the Company and the acquired entities, the
Company consummated an offering of the Debentures at a yield to maturity of 5.0%
(approximately $2,014 million principal amount at maturity) in March 1998, which
resulted in approximately $730 million of net proceeds and entered into a
revolving and term credit facility ("New Credit Facility").

The Company was required to file a registration statement with the
Securities and Exchange Commission ("SEC") to register the Debentures by June
23, 1998. This registration statement was filed February 4, 1999 and the SEC has
not declared the registration statement effective. Sunbeam's failure to file the
registration statement by June 23, 1998 did not constitute a default under the
terms of the Debentures. The Company has filed an amendment to this registration
statement. From June 23, 1998 until the registration statement is declared
effective, the Company is required to pay to the Debenture holders cash
liquidated damages accruing, for each day during such period, at a rate per
annum equal to 0.25% during the first 90 days and 0.50% thereafter multiplied by
the total of the issue price of the Debentures plus the original issue discount
thereon on such day. The Company made payments of approximately $2.5 million to
the Debenture holders through the end of the first quarter, including a payment
of approximately $2.0 million made in March 1999.

Concurrent with the Debenture offering, the Company replaced its $250
million syndicated unsecured five-year revolving credit facility with the New
Credit Facility. The New Credit Facility, as amended, provides for aggregate
borrowings of up to $1.7 billion. As a result of its operating losses incurred
in fiscal 1998, among other things, the Company was not in compliance with
certain covenants set forth in the New Credit Facility. The Company and its
lenders entered into agreements as of June 30, 1998, October 19, 1998 and April
10, 1999, in each case providing for waivers of compliance with such covenants
and other terms of the New Credit Facility. Effective April 15, 1999, Sunbeam
and its lenders entered into an agreement which waived compliance with such
covenants and other terms through April 10, 2000 and provided for new financial
covenants. The Company intends to negotiate with its lenders on an amendment to
the New Credit Facility, negotiate further waiver of such covenants and other
terms or refinance the New Credit Facility. There can be no assurance that an
amendment, further waiver of existing covenants and other terms, or refinancing
will be entered into by April 10, 2000. The failure to obtain such an amendment,
further waiver or debt refinancing would likely result in violation of the
existing covenants and compliance with other terms, which would permit the bank
lenders to accelerate the maturity of all outstanding borrowings under the New
Credit Facility. Accordingly, debt related to the New Credit Facility and all
debt containing cross-default provisions will be classified as current in the
Condensed Consolidated Balance Sheet in the second quarter of 1999.

<PAGE>

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)

3. DEBT - (CONTINUED)

The New 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, (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) settle certain
litigation, (x) alter its cash management system and (xi) alter the businesses
they conduct. Sunbeam is also required to comply with specified financial
covenants and ratios. The New 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. It is also an
event of default under the New Credit Facility if Sunbeam's registration
statement in connection with the Coleman merger is not declared effective by the
SEC on or before October 30, 1999 or if the merger does not occur within 25
business days of the effectiveness of the registration statement or if the cash
consideration (including any payments on account of the exercise of any
appraisal rights, but excluding related legal, accounting and other customary
fees and expenses) to consummate the Coleman merger exceeds $87.5 million.
Although there can be no assurance, the Company anticipates that it will satisfy
these conditions. Unless waived by the bank lenders, the failure to satisfy
these requirements (as with the occurrence of any other event of default) would
permit the bank lenders to accelerate the maturity of all outstanding borrowings
under the New Credit Facility. The New Credit Facility also includes conditions
for the deferral of the 1999 scheduled term loan payments of $69.3 million.
These conditions were met, and the scheduled loan payments were extended until
April 10, 2000.

In March 1998, the Company prepaid a $75.0 million 7.85% industrial
revenue bond related to its Hattiesburg facility originally due in 2009. In
connection with the early extinguishment of this debt, the Company recognized an
extraordinary charge of $8.6 million in the first quarter of 1998. This
extraordinary charge consisted primarily of redemption premiums.

4. ACCOUNTS RECEIVABLE SECURITIZATION

The Company has entered into a receivables securitization program that
expires in March 2000. The Company has received approximately $60.1 million and
$34.8 million for the sale of trade accounts receivable in the first quarter of
1999 and 1998, respectively. Trade accounts receivable at March 31, 1999 and
1998 reflect a reduction of $29.5 million and $34.4 million, respectively, for
receivables sold under this program. Costs of the program, which primarily
consist of the purchaser's financing cost of issuing commercial paper backed by
the receivables, totaled $0.4 million and $0.6 million during the first quarter
of 1999 and 1998, respectively, and have been classified as interest expense in
the accompanying Condensed Consolidated Statements of Operations. The Company,
through a wholly-owned subsidiary, retains collection and administrative
responsibilities for the purchased receivables. This agreement contains
cross-default provisions that provide the purchaser of the receivables an option
to cease purchasing receivables from the Company if the Company is in default
under the New Credit Facility.

5. COMPREHENSIVE LOSS

The components of the Company's comprehensive loss are as follows (in
thousands):

<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------
MARCH 31, MARCH 31,
1999 1998
--------- ---------
<S> <C> <C>
Net loss ...................................................... $(60,739) $(54,106)

Foreign currency translation adjustment, net of taxes ......... (9,427) 183
-------- --------
Comprehensive loss ............................................ $(70,166) $(53,923)
======== ========
</TABLE>

As of March 31, 1999 and December 31, 1998, "Accumulated other
comprehensive loss," as reflected in the Condensed Consolidated Balance Sheets
is comprised of the following:

<TABLE>
<CAPTION>
CURRENCY MINIMUM
TRANSLATION PENSION
ADJUSTMENTS LIABILITY TOTAL
----------- ---------- ----------
<S> <C> <C> <C>
Balance at March 31, 1999................. $ (21,449) $ (42,008) $ (63,457)
Balance at December 31, 1998 ........... (12,022) (42,008) (54,030)
</TABLE>

<PAGE>

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)

6. SUPPLEMENTARY FINANCIAL STATEMENT DATA

Supplementary Balance Sheet data at the end of each period is as
follows (in thousands):
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
--------- ------------
<S> <C> <C>
Receivables:
Trade .............................. $ 440,006 $ 407,452
Sundry ............................. 9,590 7,347
--------- ---------
449,596 414,799
Valuation allowance ................ (52,813) (53,025)
--------- ---------
$ 396,783 $ 361,774
========= =========
Inventories:
Finished goods ..................... $ 361,185 $ 370,622
Work in process .................... 57,981 39,143
Raw materials and supplies ......... 115,389 109,424
--------- ---------
$ 534,555 $ 519,189
========= =========
</TABLE>

Supplementary Statements of Cash Flows data is as follows (in
thousands):

<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------
MARCH 31, MARCH 31,
1999 1998
--------- ---------
<S> <C> <C>
Cash paid during the period for:
Interest ........................... $29,668 $ 5,442
======= =======
Income taxes, net of refunds ....... $ 184 $ 381
======= =======
</TABLE>

7. COMPENSATORY STOCK GRANTS

On February 20, 1998, the Company entered into new three-year
employment agreements with its then Chairman and Chief Executive Officer and two
other senior officers of the Company (the "February 1998 Employment
Agreements"). These agreements replaced previous employment agreements entered
into in July 1996 that were scheduled to expire in July 1999. The new employment
agreements provided for, among other items, the acceleration of vesting of
restricted stock and the forfeiture of unvested restricted stock that had been
granted under the July 1996 agreement, new restricted stock grants and options
to purchase common shares. In addition, the new employment agreements provided
for income tax gross-ups with respect to any tax assessed on the restricted
stock grants and acceleration of vesting of restricted stock.

Compensation expense attributed to the equity grant, the acceleration
of vesting of restricted stock and the related income tax gross-ups was
recognized in the first quarter of 1998 and compensation expense related to the
new restricted stock grants and related tax gross-ups was amortized to expense
beginning in the first quarter of 1998 with amortization to continue over the
period in which the restrictions lapse. Total compensation expense recognized in
the first quarter of 1998 related to these items was approximately $31 million.

<PAGE>

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)

8. SEGMENT, CUSTOMER AND GEOGRAPHIC DATA

The following tables include selected financial information with
respect to Sunbeam's four operating segments. Corporate expenses include, among
other items, expenses for services which are provided in varying levels to the
three operating groups and for Year 2000 efforts. The increase from 1998 to 1999
relates to an expansion of centralized services related to the acquisitions,
Year 2000 expenses, and increased costs associated with outside services and
insurance.

<TABLE>
<CAPTION>
OUTDOOR
THREE MONTHS ENDED MARCH 31, 1999 HOUSEHOLD LEISURE INTERNATIONAL CORPORATE TOTAL
--------- --------- ------------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net sales to unaffiliated customers .... $ 164,078 $ 218,733 $ 139,557 $ 1,578 $ 523,946
Intersegment net sales ................. 19,192 42,664 4,750 -- 66,606
Segment earnings (loss) ................ 8,520 9,169 9,777 (28,449) (983)
Segment assets.......................... 801,008 1,826,434 435,345 336,316 3,399,103
Segment depreciation expense ........... 6,545 9,259 1,297 1,482 18,583

THREE MONTHS ENDED MARCH 31, 1998
Net sales to unaffiliated customers .... $ 98,597 $ 85,985 $ 60,750 $ 2,269 $ 247,601
Intersegment net sales ................. 20,673 4,967 19,731 -- 45,371
Segment (loss) earnings ................ (3,239) (3,393) 12,422 (9,980) (4,190)
Segment assets.......................... 474,329 1,908,312 514,878 457,646 3,355,165
Segment depreciation expense ........... 4,685 2,598 107 1,048 8,438
</TABLE>

Reconciliation of selected segment information to Sunbeam's consolidated totals
for the three months ended:

<TABLE>
<CAPTION>
MARCH 31, 1999 MARCH 31, 1998
-------------- --------------
<S> <C> <C>
Net sales:

Net sales for reportable segments ..................... $ 590,552 $ 292,972
Elimination of intersegment net sales ................. (66,606) (45,371)
--------- ---------
Consolidated net sales ........................... $ 523,946 $ 247,601
========= =========
Segment loss:

Total loss for reportable segments .................... $ (983) $ (4,190)
Unallocated amounts:
Interest expense .................................. (41,906) (5,073)
Other expense, net ................................ (808) (3,165)
Amortization of intangible assets ................. (13,811) (1,976)
Former employees deferred
compensation and severance (Note 7) .......... -- (31,200)
--------- ---------
(56,525) (41,414)
--------- ---------
Consolidated loss before income taxes,
minority interest and extraordinary charge .... $ (57,508) $ (45,604)
========= =========
</TABLE>

<PAGE>

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)

9. COMMITMENTS AND CONTINGENCIES

LITIGATION

On April 7, 1998, a purported derivative action was filed in the
Circuit Court for the Fifteenth Judicial Circuit in and for Palm Beach County,
Florida against the Company and some of its present and former directors and
former officers. The action alleged that the individual defendants breached
their fiduciary duties and wasted corporate assets when the Company granted
stock options at an exercise price of $36.85 to three of its officers and
directors (who were subsequently terminated) on or about February 2, 1998. On
June 25, 1998, all defendants filed a motion to dismiss the complaint for
failure to make a presuit demand on Sunbeam's Board of Directors. On October 22,
1998, the plaintiff amended the complaint against all but one of the defendants
named in the original complaint. On February 19, 1999, plaintiff filed a second
amended derivative complaint nominally on behalf of Sunbeam against some of its
present and former directors and former officers and the Company's former
auditor, Arthur Andersen. The second amended complaint alleges, among other
things, that Messrs. Dunlap and Kersh (the Company's former Chairman and Chief
Executive Officer and Chief Financial Officer, respectively) caused Sunbeam to
employ fraudulent accounting procedures in order to enable them to secure new
employment contracts, and seeks an award of damages and other declaratory and
equitable relief. On May 14, 1999, the defendants filed a motion to dismiss.

On September 16, 1998, an action was filed in the 56th Judicial
District Court of Galveston County, Texas alleging various claims in violation
of the Texas Securities Act and Texas Business & Commercial Code as well as
common law fraud as a result of the Company's alleged misstatements and
omissions regarding the Company's financial condition and prospects during a
period beginning May 1, 1998 and ending June 16, 1998, in which the plaintiffs
engaged in transactions in the Company's common stock. The Company is the only
named defendant in this action. The complaint requests recovery of compensatory
damages, punitive damages and expenses in an unspecified amount. This action was
removed to the United States District Court for the Southern District of Texas
and subsequently transferred to the Southern District of Florida and
consolidated with the class action lawsuits that were filed on behalf of
purchasers of the Company's common stock in the U.S. District Court for the
Southern District of Florida against the Company and some of its present and
former directors and former officers alleging violations of the federal
securities laws (the "Consolidated Federal Actions"). Plaintiffs in this action
have objected to the consolidation and have sought reconsideration by the
Southern District of Florida of the order of the Southern District of Texas
denying plaintiffs' motion to remand the case to state court and transferring it
to Florida.

The Company has been named as a defendant in an action filed in the
District Court of Tarrant County, Texas, 48th Judicial District, on November 20,
1998 which was served on the Company through the Secretary of State of Texas on
January 15, 1999. The plaintiffs in this action are purchasers of the
Debentures. The plaintiffs allege that the Company violated the Texas Securities
Act and the Texas Business & Commercial Code and committed state common law
fraud by materially misstating the financial position of the Company in
connection with the offering and sale of the Debentures. The complaint seeks
rescission, as well as compensatory and exemplary damages in an unspecified
amount. The Company specially appeared to assert an objection to the Texas
Court's exercise of personal jurisdiction over the Company, and a hearing on
this objection was held on April 15, 1999. On April 23, 1999, the court entered
an order granting the Company's special appearance and dismissing the case
without prejudice. The plaintiffs moved for reconsideration of the court's
order, which motion the court denied on May 24, 1999. The plaintiffs have
appealed the order dismissing the case to the Texas Court of Appeals. Briefs on
the appeal have not yet been submitted.

On April 12, 1999, a class action lawsuit was filed in the U.S.
District Court for the Southern District of Florida. The lawsuit was filed on
behalf of persons who purchased Debentures during the period of March 20, 1998
through June 30, 1998, inclusive, but after the initial offering of such
Debentures. The complaint asserts that Sunbeam made material omissions and
misrepresentations that had the effect of inflating the market price of the
Debentures. The complaint names as defendants the Company, Arthur Andersen and
two former Company officers, Messrs. Dunlap and Kersh. The plaintiff is an
institution which allegedly acquired in excess of $150,000,000 face amount of
the Debentures and now seeks unspecified money damages. The Company was served
on April 16, 1999 in connection with this pending lawsuit. The Company has
requested that this action be coordinated with the Consolidated Federal Actions.

11
<PAGE>

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)

9. COMMITMENTS AND CONTINGENCIES - (CONTINUED)

On March 26, 1999, Messrs. Dunlap and Kersh filed a response in
opposition to the motions for injunctive relief. A hearing on the motions for
injunctive relief has been held and, as a result of the Company's motion for
preliminary injunction, administration of the arbitrations was suspended until
May 10, 1999. On May 11, 1999, the Court denied the motions for a preliminary
injunction filed by the Company and the plaintiff. The Company has answered the
arbitration demands of Messrs. Dunlap and Kersh and has filed counterclaims
seeking, among other things, the return of all consideration paid, or to be
paid, under the February 1998 Employment Agreements between the Company and
Messrs. Dunlap and Kersh. An answer to the Company's counterclaim is due on June
17, 1999. No date has been set for the arbitration hearing.

On March 23, 1999, Messrs. Dunlap and Kersh filed a complaint in the
Court of Chancery of the State of Delaware seeking an order directing the
Company to advance attorneys' fees and other expenses incurred in connection
with various state and federal class and derivative actions and an investigation
instituted by the SEC. The complaint alleges that such advancements are required
by the Company's by-laws and by a forbearance agreement entered into between
the Company and Messrs. Dunlap and Kersh in August 1998. The Company filed its
answer to the complaint and the Court of Chancery has scheduled a trial of this
summary proceeding to be held on June 16, 1999.

On May 24, 1999, an action naming the Company as defendant was filed in
the Circuit Court for Ozaukee County, Wisconsin. The Company has not yet been
served with the complaint in this action. The plaintiffs in this action are
purchasers of the Debentures. They allege that the Company violated the
Wisconsin Uniform Securities Act and committed acts of false advertising and
misrepresentation in connection with the offering and sale of the Debentures.
The plaintiffs seek rescission, as well as compensatory and exemplary damages in
an unspecified amount.

On July 2, 1998, the American Alliance Insurance Company ("American")
filed suit against the Company in the U.S. District Court for the Southern
District of New York requesting a declaratory judgment of the Court that the
directors' and officers' liability insurance policy for excess coverage issued
by American was invalid and/or had been properly canceled by American. The
Company's motion to transfer such action to the federal district court in which
the Consolidated Federal Actions are currently pending was denied. The case is
now in discovery. On October 20, 1998, an action was filed by Federal Insurance
Company in the U.S. District Court for the Middle District of Florida requesting
the same relief as that requested by American in the previously filed action as
to additional coverage levels under the Company's directors' and officers'
liability insurance policy. This action has been transferred to the U.S.
District Court for the Southern District of Florida and is currently in
discovery. The Company has filed a notice of pendency seeking transfer of this
action to the judge who is presiding over the Consolidated Federal Actions. On
December 22, 1998, an action was filed by Executive Risk Indemnity, Inc. in the
Circuit Court of the Seventeenth Judicial Circuit in and for Broward County,
Florida requesting the same relief as that requested by American and Federal in
their previously filed actions as to additional coverage levels under the
Company's directors' and officers' liability insurance policy. On April 15,
1999, the Company filed an action in the U.S. District Court for the Southern
District of Florida against the National Union Fire Insurance Company of
Pittsburgh, PA, Gulf Insurance Company and St. Paul Mercury Insurance Company
requesting, among other things, a declaratory judgment that National Union is
not entitled to rescind its liability insurance policy to the Company and a
declaratory judgment that the Company is entitled to coverage from these
insurance companies for various lawsuits described herein under liability
insurance policies issued by each of the defendants. None of the defendants,
other than St. Paul Mercury Insurance Company, have responded to the Company's
complaint. On June 7, 1999, St. Paul Mercury Insurance Company answered the
Company's complaint and asserted counterclaims which seeks recission and
declaratory relief that no coverage is available to the Company. The Company
intends to pursue recovery from all of its insurers if damages are awarded
against the Company or its indemnified officers and/or directors under any of
the foregoing actions. The Company's failure to obtain such insurance recoveries
following an adverse judgement in any of the foregoing actions could have a
material adverse effect on the Company's financial position, results of
operations, and cash flows.

The Company intends to vigorously defend each of the foregoing
lawsuits, but cannot predict the outcome and is not currently able to evaluate
the likelihood of the Company's success in each case or the range of potential
loss. However, if the foregoing actions were determined adversely to the
Company, such judgments would likely have a material adverse effect on the
Company's financial position, results of operations, and cash flows.

ENVIRONMENTAL MATTERS

With respect to one of seven sites at which the Company has been
identified by the United States Environmental Protection Agency ("EPA") as a
potentially responsible party ("PRP"), the Company received notice from the EPA
that the Company has completed all required removal activities and that such
removal activities were completed to EPA's satisfaction. EPA's approval of the
Company's removal activities at this site effectively concludes its obligations
to EPA at this site.

12
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following discussion should be read in conjunction with the
accompanying condensed consolidated financial statements and the related
footnotes included in this quarterly report on Form 10-Q, as well as the
consolidated financial statements, related footnotes and management's discussion
and analysis of financial condition and results of operations in the Company's
Annual Report on Form 10-K for the year ended December 31, 1998.

1998 ACQUISITIONS

On March 30, 1998, the Company, through a wholly-owned subsidiary,
acquired approximately 81% of the total number of then outstanding shares of
common stock of Coleman from an affiliate of M&F, in exchange for 14,099,749
shares of the Company's common stock and approximately $160 million in cash. In
addition, the Company assumed approximately $1,016 million in debt. Immediately
thereafter, as a result of the exercise of employee stock options, Sunbeam's
indirect beneficial ownership of Coleman decreased to approximately 79% of the
total number of the outstanding shares of Coleman common stock. The Company's
agreement for the acquisition of the remaining publicly held Coleman shares
pursuant to a merger transaction provides that the remaining Coleman
shareholders will receive approximately 6.7 million shares of Sunbeam common
stock (0.5677 share for each outstanding Coleman share) and approximately $87
million in cash ($6.44 for each outstanding Coleman share and the cash-out of
unexercised Coleman options for an amount equal to the difference between $27.50
per share and the exercise price of such options). The Company expects to
complete the Coleman merger during the second half of 1999, although there can
be no assurance that the merger will occur during that time.

On April 6, 1998, the Company completed the cash acquisitions of First
Alert, a leading manufacturer of smoke and carbon monoxide detectors, and
Signature Brands, a leading manufacturer of consumer and professional products.
The First Alert and the Signature Brands acquisitions were valued at
approximately $182 million (including $133 million of cash and $49 million of
assumed debt) and $255 million (reflecting cash paid, including the required
retirement or defeasance of debt), respectively.

The acquisitions were recorded under the purchase method of accounting
and accordingly, the financial position and results of operations of each
acquired entity are included in the Condensed Consolidated Financial Statements
from the respective dates of acquisition. The purchase prices of the acquired
entities have been allocated to individual assets acquired and liabilities
assumed based on estimates of fair values (determined by independent appraisals)
at the dates of acquisition.

THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 1998

Results of operations for the three months ended March 31, 1999 include
the results of the three acquired companies for the entire period as compared to
results of operations for the three months ended March 31, 1998, which only
included the results of Coleman from March 30, 1998. The acquired entities
generated net sales of $347.8 million for the three months ended March 31, 1999,
with a corresponding gross margin of $99.9 million, or 28.7% of net sales.
Selling, General and Administrative ("SG&A") costs recorded by the acquired
entities were $84.7 million in the period, yielding operating income of $15.2
million. Results for the first quarter of 1998 included net sales from Coleman
of approximately $15 million, with a corresponding gross margin of approximately
$4 million, and SG&A expenses of approximately $4 million.

For the acquired entities, net sales for the three months ended March
31, 1999 were approximately $30 million higher than their results for the full
first quarter a year ago. This increase was attributable to increased net sales
at Coleman (approximately $26 million) and Signature Brands (approximately $5
million), partially offset by a decrease in net sales at First Alert
(approximately $1 million). Excluding the revenue of Coleman's safety and
security business and spa business, both of which were sold in 1998, Coleman's
net sales in the first three months of 1999 would have been approximately $47
million higher than the same period in 1998. The increase in Coleman net sales
is reflective of strong retail replenishment demand in its outdoor recreation
products as compared with unusually weak retail replenishment demand in the
first quarter of 1998. Additionally, increased generator revenues attributable
to increased awareness of power shortages from poor weather conditions and other
events contributed to the higher net sales. Excluding: (i) the effects of
purchase accounting of approximately $9 million recognized in 1999; (ii)
acquisition costs of approximately $18 million which were incurred in the first
quarter of 1998; and (iii) approximately $3 million of costs recorded in 1999
related to Year 2000 compliance efforts, operating profit for these three
companies improved by approximately $36 million as compared to the same period
in the prior year, resulting primarily from higher net sales and a reduction in
expenses largely attributable to reduced headcount and the centralization of
certain management and administration functions, resulting from the acquisition
by Sunbeam.

13
<PAGE>

Consolidated net sales for the three months ended March 31, 1999 were
$523.9 million, an increase of $276.3 million versus the three months ended
March 31, 1998. After excluding $347.8 million of net sales generated by the
acquired entities in the 1999 period and approximately $15 million in the 1998
period, as discussed above, net sales of $176.1 million decreased approximately
24% from net sales of $233.0 million in 1998. The Company believes the decrease
in product sales were largely driven by increases in retail inventory levels
from channel loading which took place in the first quarter of 1998, but not in
the 1999 period. The adverse effect of the 1998 channel loading was partially
offset by lower estimated provisions for customer returns and customer
allowances of approximately $7 million.

Domestic sales, excluding the acquired companies, declined
approximately 15% or $26 million from 1998. The Company believes this sales
decline is attributable to the channel loading that took place in the first
quarter of 1998 versus no similar loading in the same period in 1999. The
channel loading that took place in 1998 led to relatively lower sales of
appliances, primarily blenders, breadmakers, handmixers and irons in 1999, as
well as lower sales of outdoor cooking products. Partially offsetting the
adverse effects of channel loading was a benefit from reduced costs in 1999 from
customer returns and allowances.

International sales, excluding the acquired companies, represented 17%
of net sales for 1999 and decreased approximately $31 million as compared with
the net sales for the same period a year ago. The Company believes this sales
decline was largely attributable to the previously discussed impact of
increasing retail inventory levels in the first quarter of 1998. Sales were also
adversely impacted in 1999 by a decision to stop selling to certain export
distributors in Latin America. Additionally, poor economic conditions in that
region contributed to lower sales in 1999.

Excluding the effect of the gross margin generated from the inclusion
of the acquired entities' operations of $99.9 million in 1999 and approximately
$4 million in 1998, as discussed above, gross margin was $23.2 million or 13.2%
of sales for 1999 versus a gross margin of $29.7 million or 12.7% of net sales
for 1998. Lower sales volume and unfavorable manufacturing efficiencies
resulting from lower production levels in 1999 accounted for approximately $18
million of the change between years. This was partially offset by a lower
relative rate of product returns, reduced customer allowances of approximately
$7 million, and improved product mix of approximately $2 million during the
first quarter of 1999 as compared to the same period in 1998.

Excluding the effects of: (i) $84.7 million of SG&A charges in 1999 and
approximately $4 million in 1998 resulting from the inclusion of the acquired
entities; (ii) approximately $31 million of 1998 compensation expense recorded
in connection with new employment agreements with the three former senior
officers; (iii) a $3.0 million benefit in 1998 from the reversal of reserves no
longer required, and (iv) $5.3 million of costs recorded in the 1999 period
related to Year 2000 compliance efforts, SG&A expenses were approximately $47.9
million in the first quarter of 1999, 22.0% higher than the same period in 1998.
This increase of approximately $9 million is primarily due to an increase in
corporate administrative costs of approximately $5 million, reflecting
additional personnel and related relocation, travel and related costs and
increases in postretirement benefit costs. Increases in insurance and higher
costs associated with outside services account for the remainder of the increase
in SG&A.

Operating results for the first quarters of 1999 and 1998 for the
Sunbeam business before the 1998 acquisitions on a comparable basis as described
above, were a loss of $24.7 million in 1999 and a loss of $9.6 million in 1998.
On the same basis, operating margins as a percent of net sales decreased to a
loss of 15.0% from a loss of 4.1% in the prior year. This change resulted from
the factors discussed above.

Interest expense increased from $5.1 million in the first quarter of
1998 to $41.9 million in the first quarter of 1999 primarily related to higher
borrowing levels in 1999 resulting from borrowings for the acquisitions that
were outstanding for the entire quarter.

Other expense, net of $0.8 million for the first three months of 1999
included approximately $1.0 million relating to liquidating damages expensed
related to holders of the Zero Coupon Convertible Senior Subordinated Debentures
due 2018 (the "Debentures") (see Note 3 to the condensed consolidated financial
statements), partially offset by favorable foreign exchange. Other expense, net
of $3.2 million for the first three months of 1998 primarily represents foreign
exchange losses, largely arising from Sunbeam's operations in Mexico.

The minority interest reported in 1999 relates to the minority interest
held in Coleman by public shareholders.

The Company provided for deferred tax expense in 1999 primarily due to
taxable income in foreign jurisdictions. Deferred tax assets resulting from
operating losses, incurred predominantly in domestic jurisdictions, were
recorded and valuation allowances were established for substantially all such
deferred tax assets. The Company's losses and related valuation allowances
caused the reported tax rate to differ from the statutory rate.

In 1998, the Company prepaid an industrial revenue bond related to its
Hattiesburg facility. In connection with this early extinguishment of debt, the
Company recognized an extraordinary charge of $8.6 million, consisting primarily
of redemption premiums.

FOREIGN OPERATIONS

Approximately 75% of the Company's business is conducted in U.S.
dollars (including both domestic sales, U.S. dollar denominated export sales,
primarily to certain Latin American markets, Asian sales and the majority of
European sales). The Company's non-U.S. dollar denominated sales are made
principally by subsidiaries in Europe, Canada, Japan, Latin America and Mexico.
Mexico reverted to a hyperinflationary status for accounting purposes in 1997;
therefore, translation adjustments related to Mexican net monetary assets were
included as a component of net (loss) earnings. Mexico is not considered
hyperinflationary as of January 1, 1999. This change in

14
<PAGE>

Mexico's hyperinflationary status is not expected to have a material effect on
the Company's financial results. Translation adjustments resulting from the
Company's non-U.S. denominated subsidiaries have not had a material impact on
the Company's financial condition, results of operations, or cash flows.

While revenues generated in Asia have traditionally not been
significant, economic instability in this region is expected to have a negative
effect on earnings. Economic instability and the political environment in Latin
America have also affected sales in that region. It is anticipated that sales in
and exports to these regions will continue to be impacted so long as the
economic environments in those regions remain unsettled.

On a limited basis, the Company selectively uses derivatives (foreign
exchange option and forward contracts) to manage foreign exchange exposures that
arise in the normal course of business. No derivative contracts are entered into
for trading or speculative purposes. The use of derivatives has not had a
material impact on the Company's financial results.

SEASONALITY

Sunbeam's sales, prior to the acquisitions, have not traditionally
exhibited substantial seasonality; however, sales have been strongest during the
fourth quarter of the calendar year. Additionally, sales of outdoor cooking
products are strongest in the first half of the year, while sales of appliances,
personal care and blanket products are strongest in the second half of the year.
After considering the seasonality of the acquired entities, Sunbeam's
consolidated sales are not expected to exhibit substantial seasonality; however,
sales are expected to be strongest during the second quarter of the calendar
year. Furthermore, sales of a number of products, including warming blankets,
vaporizers, humidifiers, grills, First Alert products, camping and generator
products may be impacted by unseasonable weather conditions.

LIQUIDITY AND CAPITAL RESOURCES

In order to finance the acquisition of Coleman, First Alert and
Signature Brands and to refinance substantially all of the indebtedness of the
Company and the three acquired entities, the Company consummated the offering of
the Debentures at a yield to maturity of 5% (approximately $2,014 million
principal amount at maturity) in March 1998, which resulted in approximately
$730 million of net proceeds, and entered into the New Credit Facility.

The Company was required to file a registration statement with the
Securities and Exchange Commission ("SEC") to register the Debentures by June
23, 1998. This registration statement was filed on February 4, 1999 and the SEC
has not declared the registration statement effective. Sunbeam's failure to file
the registration statement by June 23, 1998 did not constitute default under the
terms of the Debentures. The Company has filed an amendment to this registration
statement. From June 23, 1998 until the registration statement is declared
effective, the Company is required to pay to the Debenture holders cash
liquidated damages accruing, for each day during such period, at a rate per
annum equal to 0.25% during the first 90 days and 0.50% thereafter multiplied by
the total of the issue price of the Debentures plus the original issue discount
thereon on such day. The Company made its first payment of approximately $0.5
million to the Debenture holders on September 25, 1998 and an additional $2.0
million was made on March 25, 1999.

The New Credit Facility provided for aggregate borrowings of up to $1.7
billion pursuant to: (i) a revolving credit facility in an aggregate principal
amount of up to $400 million maturing March 30, 2005 ($52.5 million of which may
only be used to complete the Coleman merger if the Coleman merger is not
completed prior to August 31, 1999); (ii) $800 million in term loans maturing on
March 30, 2005 (of which $35.0 million may only be used to complete the Coleman
merger) and (iii) a $500 million term loan maturing September 30, 2006. As of
March 31, 1999, approximately $1.5 billion was outstanding and $0.2 billion was
available for borrowing under the New Credit Facility.

Pursuant to the New Credit Facility, interest accrues, at the Company's
option: (i) at the London Interbank Offered Rate ("LIBOR"), or (ii) at the base
rate of the administrative agent which is generally the higher of the prime
commercial lending rate of the administrative agent or the Federal Funds Rate
plus 0.50%, in each case plus an agreed upon interest margin which is currently
3.25% for LIBOR borrowings and 2.00% for base rate borrowings. The applicable
interest margin is subject to downward adjustment upon the occurrence of certain
events. Borrowings under the New Credit Facility are secured by a pledge of the
stock of the Company's material subsidiaries, including Coleman, and by a
security interest in substantially all of the assets of Sunbeam and its material
domestic subsidiaries, other than Coleman and its material subsidiaries except
as described below. Currently, Coleman's inventory and related assets are
pledged to secure its obligations for letters of credit issued for its account
under the New Credit Facility. Additionally, as security for Coleman's note
payable to the Company, Coleman pledged substantially all of its domestic
assets, other than real property, including 66% of the stock of its

15
<PAGE>

direct foreign subsidiaries and domestic holding companies for its foreign
subsidiaries, and all of the stock of its other direct domestic subsidiaries
(but not the assets of Coleman's subsidiaries). The pledge runs in favor of
Sunbeam's lending banks, to which the Coleman note has been pledged as security
for Sunbeam's obligations to them. Upon completion of the Coleman merger,
substantially all of Coleman's assets and the assets of Coleman's domestic
subsidiaries will be pledged to secure the obligations under the New Credit
Facility. In addition, borrowings under the New Credit Facility are guaranteed
by a number of the Company's wholly owned material domestic subsidiaries and
these subsidiary guarantees are secured as described above. Upon completion of
the Coleman merger, Coleman and each of its United States subsidiaries will
become guarantors of the obligations under the New Credit Facility. To the
extent borrowings are made by any subsidiaries of the Company, the obligations
of such subsidiaries are guaranteed by the Company.

It is an event of default under the New Credit Facility if Sunbeam's
registration statement in connection with the Coleman merger is not declared
effective by the SEC on or before October 30, 1999 or if the merger does not
occur within 25 business days of the effectiveness of the registration statement
or if the cash consideration (including any payments on account of the exercise
of any appraisal rights, but excluding related legal, accounting and other
customary fees and expenses) to consummate the Coleman merger exceeds $87.5
million. Although there can be no assurance, the Company anticipates that it
will satisfy these conditions. Unless waived by the bank lenders, the failure to
satisfy these requirements (as with the occurrence of any other event of
default) would permit the bank lenders to accelerate the maturity of all
outstanding borrowings under the New Credit Facility. The New Credit Facility
also includes provisions for the deferral of the 1999 scheduled term loan
payments of $69.3 million, subject to delivery of certain collateral documents
and the filing of an amendment to the Company's registration statement on Form
S-4 relating to the Coleman merger. These conditions have been met and the
scheduled loan payments were extended until April 10, 2000. (See Note 3 of Notes
to Condensed Consolidated Financial Statements.)

As of March 31, 1999, the Company had cash and cash equivalents of
$46.2 million, working capital excluding cash and cash equivalents of $385.5
million and total debt of $2.3 billion. Cash used in operating activities during
the first quarter of 1999 was $57.5 million compared to $134.7 million in the
first quarter of 1998. This change is primarily attributable to working capital
improvements partially offset by lower earnings after giving effect to non-cash
charges. The majority of the working capital improvements are attributable the
Company's management of inventory levels and accounts receivable. Inventories
and receivables increased $65.9 million and $57.1 million, respectively, in the
first quarter of 1998 as compared to $20.9 million and $35.8 million,
respectively, in the first quarter of 1999. In 1998, the Company built inventory
levels in anticipation of sales volumes that did not materialize and offered
extended credit terms to its customers. The increase in inventory during the
first quarter of 1999 is largely due to the seasonal inventory build in the
Company's Outdoor Leisure division. The Company participates in an accounts
receivable securitization program to finance a portion of its accounts
receivable. (See Note 4 of Notes to Condensed Consolidated Financial
Statements.)

In the first quarter of 1999, cash used in investing activities was
driven by capital expenditures of $16.3 million, primarily for information
systems and equipment and tooling for new products. Capital spending in the
comparable 1998 period was $19.5 million and was primarily for capacity
expansion initiatives, including the Neosho grill manufacturing facility, and
equipment and tooling for new products. The new product capital spending in the
1998 period principally related to the appliance category and included costs
related to water and air filtration products, blenders, standmixers and irons.
Cash used in investing activities in the first quarter of 1998 reflects $160.6
million for the acquisition of approximately 81% of Coleman. The Company
anticipates 1999 capital spending to be approximately 4% to 5% of net sales,
primarily related to information systems and related support, including
expenditures for Year 2000 readiness, new product introductions and capacity
additions.

Cash provided by financing activities totaled $58.7 million in the
first quarter of 1999 and reflects net borrowings under the Company's New Credit
Facility. Cash provided by financing activities in the first quarter of 1998 was
$456.1 million and reflects net proceeds from the Debentures of $729.6 million,
the cancellation and repayment of all outstanding balances under the Company's
$250 million September 1996 revolving credit facility, the repayment of certain
Coleman debt and the early extinguishment of the $75.0 million Hattiesburg bond.
In addition, cash provided by financing activities is net of $25.1 million of
financing fees related to the Company's $1.7 billion New Credit Facility and
$19.0 million of proceeds from the exercise of stock options. (See Note 3 to the
condensed consolidated financial statements.)

The Company expects to acquire the remaining equity interest in Coleman
pursuant to a merger transaction in which the existing Coleman minority
shareholders will receive 0.5677 share of the Company's common stock, $6.44 in
cash for each share of Coleman common stock outstanding and, subject to court
approval, warrants to purchase common stock of the Company at a cash exercise
price of $7.00 per share. In addition, unexercised options under Coleman's stock
option plans will be cashed out at a price per share equal to the difference
between $27.50 and the exercise price of such options. The Company expects to
issue approximately 6.7 million shares of common stock and expend approximately
$87 million in cash, including cash paid to option holders, to complete the
Coleman transaction. Although there can be no assurance, it is anticipated that
the Coleman merger will occur in the second half of fiscal 1999.

The Company believes its borrowing capacity under the New Credit
Facility, cash flow from the combined operations of the Company and its acquired
companies, existing cash and cash equivalent balances, and its receivable
securitization program will be sufficient to support working capital needs,
capital and Year 2000 compliance spending, and debt service through April 10,
2000. The Company intends to negotiate with its lenders on an amendment to the
New Credit Facility, negotiate with its lenders on further waiver of such
covenants and other terms, or refinance the New Credit Facility. Any decisions
with respect to such amendment, waiver, or refinancing will be made based on a
review from time to time of the advisability of particular transactions. There
can be no assurance that an amendment, further waiver of existing covenants and
other terms, or refinancing will be entered into by April 10, 2000. The failure
to obtain such an amendment, further waiver or debt refinancing would likely
result in violation of the existing covenants and compliance

16
<PAGE>

with other terms, which would permit the bank lenders to accelerate the maturity
of all outstanding borrowings under the New Credit Facility. Accordingly, debt
related to the New Credit Facility and all debt containing cross-default
provisions will be classified as current in the Condensed Consolidated Balance
Sheet in the second quarter of 1999.

NEW ACCOUNTING STANDARDS

Effective January 1, 1999, the Company adopted Statement of Position
98-1, ACCOUNTING FOR THE COSTS OF COMPUTER SOFTWARE DEVELOPED OR OBTAINED FOR
INTERNAL USE ("SOP 98-1"). SOP 98-1 requires computer software costs associated
with internal use software to be expensed as incurred until certain
capitalization criteria are met. Adoption of this statement did not have a
material impact on the Company's condensed consolidated financial position,
results of operations, or cash flows.

YEAR 2000 READINESS DISCLOSURE

The Company is preparing for the impact of the Year 2000 on its
operations. Year 2000 issues could include potential problems in the information
technology ("IT") and non-IT systems that the Company uses in its operations and
problems in the Company's products. Year 2000 system failures could affect
routine but critical operations such as forecasting, purchasing, production,
order processing, inventory control, shipping, billing and collection. In
addition, system failures could affect the Company's security, payroll
operations, or employee safety. The Company may also be exposed to potential
risks from third parties with whom the Company interacts who fail to adequately
address their own Year 2000 issues.

SUNBEAM'S APPROACH TO YEAR 2000 ISSUES

While the Company's Year 2000 readiness planning has been underway for
over one year, during the third quarter of 1998 the Company established a
cross-functional project team consisting of senior managers, assisted by three
external consulting firms which were retained to provide consulting services and
to assist the Company in implementing its Year 2000 strategy. This team is
sponsored by the Company's Chief Financial Officer who reports directly to the
Company's Chief Executive Officer on this issue. The Audit Committee of the
Board of Directors is advised periodically on the status of the Company's Year
2000 readiness program.

The Year 2000 project team has developed a phased approach to identify
and resolve Year 2000 issues with many of these activities conducted in
parallel. The Company's approach and the anticipated timing of each phase are
described below.

PHASE 1 - INVENTORY AND ASSESSMENT: During the first phase of Sunbeam's
Year 2000 readiness program, the Company established a Year 2000 Program
Management Office ("PMO") to centralize the management of all of the Company's
Year 2000 projects. Through this office, the Company developed a corporate-wide,
uniform strategy for assessing and addressing the Year 2000 issues.

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 systems and controls for lighting, air conditioning,
ventilation and facility access. This inventory was then entered into the
Company's Year 2000 database along with a determination of the item's level of
criticality to operations. For those inventory items anticipated to have a
significant effect on the business if not corrected, the Company's Year 2000
program envisions repair or replacement and testing of such items. All
information relative to each item is being tracked in the Company's Year 2000
database. The Company completed most of this phase during the third and fourth
quarters of 1998. The Company has completed a review of the readiness of
embedded microprocessors in its products and determined that none of the
Company's products have Year 2000 date sensitive systems.

PHASE 2 - CORRECTION AND TESTING: The second phase of Sunbeam's Year
2000 readiness program is structured to replace, upgrade or remediate (as
necessary) those items identified during Phase 1 as requiring corrective action.

Sunbeam relies on its IT functions to perform many tasks that are
critical to its operations. Significant transactions that could be impacted by
not being ready for any Year 2000 issues include, among others, purchases of
materials, production management, order entry and fulfillment, and payroll
processing. Systems and applications that have been identified by Sunbeam to
date as not currently Year 2000 ready and which are critical to Sunbeam's
operations include its financial software systems, which process the order
entry, purchasing, production management, general ledger, accounts receivable,
and accounts payable functions, payroll applications, and critical applications
in the Company's manufacturing and distribution facilities, such as warehouse
management applications. In 1997, the Company began implementing a uniform
international business and accounting information system to improve internal
reporting processes. Based upon representations from the manufacturer that the
current version of this uniform information system is Year 2000 ready, the
Company has been actively upgrading its business sites that currently utilize
this uniform system to the Year 2000 ready version. A small number of other
Company business locations are replacing their current non-Year 2000 ready
systems with this new uniform system.

17
<PAGE>

The Company is also actively replacing and/or upgrading legacy business
systems that are not Year 2000 ready, including those that use localized
business system packages which were not candidates to be replaced by the uniform
business and accounting information system. With respect to the Company's non-IT
systems (for example, time and attendance, security, and in-line manufacturing
hardware) the Company is actively analyzing these items to assess any Year 2000
issues. To date, no material issues have been discovered, and the Company will
continue to review, test and correct, if necessary, such items.

Sunbeam plans to complete the corrective work described above with
respect to its systems by the second quarter of 1999 with final testing and
implementation of such systems occurring in the second and third quarters of
1999.

PHASE 3 - CUSTOMERS, SUPPLIERS AND BUSINESS PARTNERS: The third phase
of Sunbeam's Year 2000 readiness program which was initiated during the third
and fourth quarters of 1998 is designed to assess and interact with the
Company's customers, suppliers, and business partners. As part of this effort,
the Company surveyed 1,100 vendors and suppliers determined to be critical to
the Company. Based on the survey, the Company believes that there is only a low
to medium risk of Year 2000 issues for approximately three-quarters of its
vendors; however, a small number of vendors have been identified as high risk
(less than 5%) and approximately one-quarter of the vendors did not respond
fully to the survey. The Company will continue its vendor evaluation and
assessment process through 1999, including direct contact with high and medium
risk vendors and vendors who have not responded fully to the Company's survey.
The Company has not independently verified the responses of vendors and does not
anticipate undertaking such independent verification process.

Beginning in the second quarter of 1999, Sunbeam will also contact its
major customers to confirm their preparations for Year 2000 issues. The Company
has already responded to numerous customer inquiries and believes that all of
the Company's major customers have established programs to deal with Year 2000
issues. In order to improve the Company's communication with its customers,
suppliers and business partners, the Company has set up a Sunbeam Year 2000
telephone number and is in the process of providing Year 2000 information on a
Company web site.

PHASE 4 - CONTINGENCY PLANNING: This phase will involve contingency
planning for unresolved Year 2000 issues, particularly any issues arising with
third party suppliers. The Company's Year 2000 readiness program is ongoing and
its ultimate scope, as well as the consideration of contingency plans, will
continue to be evaluated as new information becomes available. As a
precautionary measure, Sunbeam plans to establish a contingency plan for
addressing any effects of the Year 2000 on its operations, whether due to
Sunbeam's systems or those of third parties not being ready for any Year 2000
issues. Sunbeam expects to complete such contingency plan by September 30, 1999;
such contingency plan will address alternative processes, such as manual
procedures, electronic spreadsheets, potential alternative service providers,
and plans to address Year 2000 readiness issues as they arise.

THE RISKS OF SUNBEAM'S YEAR 2000 APPROACH

The independent consultants assisting the Company in its Year 2000
readiness program have reviewed and concurred with the Company's approach, have
assisted in developing cost estimates and have monitored costs for the largest
single component (upgrade or installation of the Company's uniform system) of
the Company's Year 2000 program. As a result, although the Company did not
engage an independent third party to verify the program's overall approach or
total cost, the Company believes that 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 one significant business
operation, the Company believes that it has also mitigated its risk by
validating and verifying key program components.

Management believes that, although there are significant systems that
are being modified or replaced, Sunbeam's information systems environment will
be made Year 2000 ready prior to January 1, 2000. Sunbeam's failure to timely
complete such corrective work could have a material adverse impact on the
Company.

With respect to customers, suppliers and business partners, the failure
of certain of these third parties to become Year 2000 ready could also have a
material adverse impact on Sunbeam. For example, the failure of certain of the
Company's principal suppliers to have Year 2000 ready internal systems could
impact the Company's ability to manufacture and/or ship its products or to
maintain adequate inventory levels for production.

At this time, the Company believes that the most likely "worst-case"
scenario relating to Year 2000 involves potential disruptions in areas in which
the Company's operations must rely on third parties, such as suppliers, whose
systems may not work properly after January 1, 2000. While such system 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. Subject
to the nature of the goods or services provided to the Company by third parties
whose operations are not made ready for Year 2000 issues, the impact on
Sunbeam's operations could be material if appropriate contingency plans cannot
be developed prior to January 1, 2000.

The nature and focus of the Company's efforts to address the Year 2000
problem may be revised periodically as interim goals are achieved or new issues
are identified. In addition, it is important to note that the description of the
Company's efforts and assessments necessarily involves estimates and projections
with respect to activities required in the future. These estimates and
projections are subject to change as work continues, and such changes may be
substantial.

18
<PAGE>

THE COSTS TO ADDRESS THE COMPANY'S YEAR 2000 ISSUES

During the quarter ended March 31, 1999, Sunbeam had expended
approximately $17 million to address Year 2000 issues of which approximately 50%
was recorded as capital expenditures and the remainder as SG&A expense.
Sunbeam's current assessment of the total costs to address and remedy Year 2000
issues and enhance its operating systems, including costs for the acquired
companies, is approximately $60 million. The amount to be incurred for Year 2000
issues during 1999 of approximately $41 million represents over 50% of the
Company's total 1999 budget for information systems and related support,
including Year 2000 costs. A large majority of these costs are expected to be
incremental expenditures that will not recur in the Year 2000 or thereafter.
Fees and expenses related to third party consultants, who are involved in the
PMO as well as the modification and replacement of software, represent
approximately 75% of the total estimated cost. The balance of the total
estimated cost relates primarily to software license fees and new hardware, but
excludes the costs associated with Company employees. Sunbeam expects these
expenditures to be financed through operating cash flows or borrowings, as
applicable. A significant portion of these expenditures will enhance Sunbeam's
operating systems in addition to resolving the Year 2000 issues. As Sunbeam
completes its assessment of the Year 2000 issues, the actual expenditures
incurred or to be incurred may differ materially from the amounts shown above.

Because Year 2000 readiness is critical to the business, Sunbeam has
redeployed some resources from non-critical system enhancements to address Year
2000 issues. In addition, due to the importance of IT systems to the Company's
business, management has deferred non-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, results of operations,
or cash flows.

CAUTIONARY STATEMENTS

Certain statements in this Quarterly Report on Form 10-Q 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
(herein the "Act") and in releases made by the SEC 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 fact are forward-looking statements.
Forward-looking statements can be identified by, among other things, the use of
forward-looking language, such as the word "estimate," "project," "intend,"
"expect," "believe," "may," "well," "should," "seeks," "plans," "scheduled to,"
"anticipates," or "intends," or the negative of these terms or other variations
of these terms or comparable language, or by discussions of strategy or
intentions, when used in connection with the Company, including its management.
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 in the forward-looking statements with respect to the Company
include, but are not limited to risks associated with (i) high leverage, (ii)
Sunbeam's ability to comply with the terms of its credit agreement, including
financial covenants and covenants relating to the completion of the Coleman
merger, or to enter into an amendment to its credit agreement containing
financial covenants which it and its bank lenders find mutually acceptable, or
to continue to obtain waivers from its bank lenders with respect to its
compliance with the existing covenants contained in such agreement, and to
continue to have access to its revolving credit facility, (iii) Sunbeam's
ability to integrate the recently acquired Coleman, Signature Brands and First
Alert companies and expenses associated with such integration, (iv) Sunbeam's
sourcing of products from international vendors, including the ability to select
reliable vendors and to avoid delays in shipments, (v) Sunbeam's ability to
maintain and increase market share for its products at anticipated margins, (vi)
Sunbeam's ability to successfully introduce new products and to provide on-time
delivery and a satisfactory level of customer service, (vii) changes in domestic
and/or foreign laws and regulations, including changes in tax rates, accounting
standards, environmental laws, occupational, health and safety laws, (viii)
access to foreign markets together with foreign economic conditions, including
currency fluctuations and trade, monetary and/or tax policies, (ix) uncertainty
as to the effect of competition in existing and potential future lines of
business, (x) fluctuations in the cost and availability of raw materials and/or
products, (xi) changes in the availability and costs of labor, (xii)
effectiveness of advertising and marketing programs, (xiii) economic uncertainty
in Japan, Korea and other Asian countries, as well as in Mexico, Venezuela, and
other Latin American countries, (xiv) product quality, including excess warranty
costs, product liability expenses and costs of product recalls, (xv) weather
conditions which can have an unfavorable impact upon sales of certain of
Sunbeam's products, (xvi) the numerous lawsuits against the Company and the SEC
investigation into the Company's accounting practices and policies, and
uncertainty regarding the Company's available coverage on its directors' and
officers' liability insurance, (xvii) the possibility of a recession in the
United States or other countries resulting in a decrease in consumer demands for
the Company's products, (xviii) actions by competitors including business
combinations, new product offerings and marketing and promotional activities,
and (xix) failure of the Company and/or its 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.

19
<PAGE>

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On February 9, 1999, Messrs. Dunlap and Kersh filed with the American
Arbitration Association demands for arbitration of claims under their respective
employment agreements with the Company. Messrs. Dunlap and Kersh are requesting
a finding by the arbitrator that they were terminated by the Company without
cause and should be awarded the corresponding benefits set forth in their
respective employment agreements. On March 12, 1999, the Company asked the
Circuit Court for the Fifteenth Judicial Circuit in and for Palm Beach County,
Florida to issue an injunction prohibiting Messrs. Dunlap and Kersh from
pursuing their arbitration proceedings against the Company on the ground, among
others, that the simultaneous litigation of the April 7, 1998 action and these
arbitration proceedings would subject Sunbeam to the threat of inconsistent
adjudications with respect to certain rights to compensation asserted by Messrs.
Dunlap and Kersh. On March 19, 1999, the plaintiff in the April 7, 1998 action
discussed above moved for a similar injunction. On March 26, 1999, Messrs.
Dunlap and Kersh filed a response in opposition to the motions for injunctive
relief. A hearing on the motions for injunctive relief has been held and, as a
result of the Company motion for preliminary injunction, administration of the
arbitrations were suspended until May 10, 1999. On May 11, 1999, the Court
denied the motions for a preliminary injunction filed by the Company and the
plaintiff. The Company has answered the arbitration demands of Messrs. Dunlap
and Kersh and has filed counterclaims seeking, among other things, the return of
all consideration paid, or to be paid, under the February 1998 Employment
Agreements between the Company and Messrs. Dunlap and Kersh. An answer to the
Company's counterclaim is due on June 17, 1999. No date has been set for the
arbitration hearing.

20
<PAGE>

On March 23, 1999, Messrs. Dunlap and Kersh filed a complaint in the
Court of Chancery of the State of Delaware seeking an order directing the
Company to advance attorneys' fees and other expenses incurred in connection
with various state and federal class and derivative actions and an investigation
instituted by the SEC. The complaint alleges that such advancements are required
by the Company 's by-laws and by a forbearance agreement entered into between
the Company and Messrs. Dunlap and Kersh in August 1998. The Company filed its
answer to the complaint and the Court of Chancery has scheduled a trial of this
summary proceeding to be held on June 16, 1999.

ENVIRONMENTAL MATTERS

<PAGE>

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

(a) Exhibits

EXHIBIT NO. DESCRIPTION
----------- -----------

27 Financial Data Schedule, submitted electronically to the
Securities and Exchange Commission for information only
and not filed

(b) Reports on Form 8-K

No reports on Form 8-K were filed during the quarter ended March 31,
1999.

22
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

SUNBEAM CORPORATION

BY: /S/ BOBBY G. JENKINS
------------------------
Bobby G. Jenkins
Executive Vice President, and
Chief Financial Officer
(Principal Financial Officer)

Dated: June 11, 1999

23
<PAGE>

EXHIBIT INDEX

EXHIBIT DESCRIPTION
- ------- -----------

27 Financial Data Schedule

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE SUNBEAM
CORPORATION FINANCIAL STATEMENTS FOR THE PERIODS ENDED MARCH 31, 1999 AND MARCH
30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> DEC-31-1998
<PERIOD-END> MAR-31-1999
<CASH> 46,163
<SECURITIES> 72,351
<RECEIVABLES> 449,596
<ALLOWANCES> 52,813
<INVENTORY> 534,555
<CURRENT-ASSETS> 1,119,741
<PP&E> 604,230
<DEPRECIATION> 151,887
<TOTAL-ASSETS> 3,399,103
<CURRENT-LIABILITIES> 615,726
<BONDS> 2,207,999
0
0
<COMMON> 1,007
<OTHER-SE> 189,226
<TOTAL-LIABILITY-AND-EQUITY> 3,399,103
<SALES> 523,946
<TOTAL-REVENUES> 523,946
<CGS> 400,791
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 808
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 41,906
<INCOME-PRETAX> (57,508)
<INCOME-TAX> 1,742
<INCOME-CONTINUING> (60,739)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (60,739)
<EPS-BASIC> (0.60)
<EPS-DILUTED> (0.60)

</TABLE>