SUNBEAM CORP/FL/, 10-Q, 2000-11-17

SUNBEAM CORP/FL/
10-Q, 2000-11-17
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 September 30, 2000

[ ] 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 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 33431
Boca Raton, FL (Zip Code)
(Address of principal executive offices)
(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 November 16, 2000 there were 107,303,692 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>
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements Page
----
<S> <C>
Condensed Consolidated Statements of Operations (Unaudited)
for the three months and nine months ended September 30, 2000
and September 30, 1999........................................................... 2

Condensed Consolidated Balance Sheets (Unaudited)
as of September 30, 2000 and December 31, 1999................................... 3

Condensed Consolidated Statements of Cash Flows (Unaudited)
for the nine months ended September 30, 2000 and September 30, 1999.............. 4

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

Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations........................................................ 23

PART II. OTHER INFORMATION

Item 1. Legal Proceedings................................................................ 39

Item 6. Exhibits and Reports on Form 8-K................................................. 43

SIGNATURE .......................................................................................... 44
</TABLE>

-1-
<PAGE>

PART I. FINANCIAL INFORMATION

Item 2. Financial Statements

SUNBEAM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Amounts in thousands, except per share amounts)

<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------------- ------------------------------
September 30, September 30, September 30, September 30,
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales...................................... $ 466,230 $ 601,554 $ 1,614,926 $ 1,786,428
Cost of goods sold............................. 361,110 438,789 1,224,473 1,323,483
Selling, general and administrative expense.... 137,444 158,455 443,629 459,957
------------ ------------ ------------ ------------
Operating (loss) income........................ (32,324) 4,310 (53,176) 2,988
Interest expense, net.......................... 54,798 48,334 160,659 136,631
Other (income) expense, net.................... (2,032) (5,219) 2,669 (4,619)
------------ ------------ ------------ ------------
Loss before income taxes and minority
interest.................................. (85,090) (38,805) (216,504) (129,024)
Income tax (benefit) provision:
Current..................................... 1,208 (5,276) 5,110 1,370
Deferred.................................... (2,214) 8,928 1,823 11,291
------------ ------------ ------------ ------------
(1,006) 3,652 6,933 12,661

Minority interest.............................. -- 4,897 255 13,354
------------ ------------ ------------ ------------
Net loss....................................... $ (84,084) $ (47,354) $ (223,692) $ (155,039)
============ ============ ============ ============

Basic and diluted net loss per share........... $ (0.78) $ (0.47) $ (2.08) $ (1.54)
============ ============ ============ ============

Basic and diluted weighted average common
shares outstanding.......................... 107,423 100,746 107,301 100,743
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

-2-
<PAGE>

SUNBEAM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Amounts in thousands)

<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------- --------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................................ $ 23,388 $ 40,799
Receivables, net..................................................... 244,050 364,338
Inventories.......................................................... 488,346 460,680
Prepaid expenses, deferred income taxes and other current assets..... 61,553 72,130
-------------- ---------------
Total current assets........................................... 817,337 937,947
Property, plant and equipment, net...................................... 430,507 447,116
Trademarks, tradenames, goodwill and other, net......................... 1,712,019 1,747,286
-------------- ---------------
$ 2,959,863 $ 3,132,349
============== ===============

LIABILITIES AND SHAREHOLDERS' DEFICIENCY
Current liabilities:
Short-term debt and current portion of long-term debt................ $ 1,572,556 $ 139,806
Accounts payable..................................................... 149,709 185,610
Other current liabilities............................................ 271,414 300,809
-------------- ---------------
Total current liabilities...................................... 1,993,679 626,225
Long-term debt, less current portion.................................... 858,332 2,164,002
Other long-term liabilities............................................. 240,213 241,264
Deferred income taxes................................................... 109,288 93,288
Minority interest....................................................... -- 66,910

Commitments and contingencies (Note 9)

Shareholders' deficiency:
Preferred stock (2,000,000 shares authorized, none outstanding)...... -- --
Common stock (107,422,500 and 100,746,400 shares issued)............. 1,074 1,007
Additional paid-in capital........................................... 1,179,629 1,122,455
Accumulated deficit.................................................. (1,333,208) (1,109,516)
Accumulated other comprehensive loss................................. (89,144) (73,286)
-------------- ---------------

Total shareholders' deficiency ...................................... (241,649) (59,340)
-------------- ---------------
$ 2,959,863 $ 3,132,349
============== ===============
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

-3-
<PAGE>

SUNBEAM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Amounts in thousands)

<TABLE>
<CAPTION>
Nine Months Ended
-----------------------------------------
September 30, September 30,
2000 1999
-------------- ---------------
<S> <C> <C>
Operating Activities:
Net loss............................................................ $ (223,692) $ (155,039)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization................................... 94,720 93,917
Non-cash interest charges....................................... 34,743 34,120
Deferred income taxes........................................... 1,823 11,291
Minority interest............................................... 255 13,354
Gain on sale of property, plant and equipment................... (969) (3,405)
Changes in working capital and other, net of acquisitions....... (4,809) (67,409)
-------------- ---------------
Net cash used in operating activities..................... (97,929) (73,171)
-------------- ---------------

Investing Activities:
Capital expenditures................................................ (43,137) (63,205)
Net proceeds from sale of Eastpak assets............................ 102,609 --
Net purchase of Coleman minority interest........................... (80,941) --
Net proceeds from other asset sales................................. 9,512 5,517
Other............................................................... (597) (679)
-------------- ---------------
Net cash used in investing activities..................... (12,554) (58,367)
-------------- ---------------

Financing Activities:
Net borrowings under revolving credit facilities.................... 141,904 105,025
Net repayments of term credit facilities............................ (45,949) (2,940)
Other............................................................... (2,883) (2,891)
-------------- ---------------
Net cash provided by financing activities................. 93,072 99,194
-------------- ---------------

Net decrease in cash and cash equivalents............................... (17,411) (32,344)
Cash and cash equivalents at beginning of period........................ 40,799 61,432
-------------- ---------------
Cash and cash equivalents at end of period.............................. $ 23,388 $ 29,088
============== ===============
</TABLE>

See Notes to Condensed Consolidated Financial Statements

-4-
<PAGE>

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

1. Operations and Basis of Presentation

Organization

Sunbeam Corporation and its wholly-owned subsidiaries ("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 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. The Company, through its Thalia
Products Inc. ("Thalia") subsidiary, is developing Home Linking Technology (TM),
or HLT (TM), which is designed to allow products to communicate with each other.

See Note 3 for information relevant to management's plan to fund its capital and
debt service requirements.

Basis of Presentation

The Condensed Consolidated Balance Sheet of the Company as of September 30, 2000
and the Condensed Consolidated Statements of Operations and Cash Flows for the
three and nine months ended September 30, 2000 and 1999 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, 1999 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, 1999. 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
1999 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 future periods.

Basic and Diluted Loss Per Share of Common Stock

Basic 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. Diluted loss per share is determined by dividing loss
attributable to common shareholders by the weighted average number of shares of
common stock and dilutive common stock equivalents outstanding (all related to
outstanding stock options, warrants and the Zero Coupon Convertible Senior
Subordinated Debentures due 2018 (the "Debentures")).

For the nine months ended September 30, 2000 and 1999, respectively, 10,909 and
78,562 shares related to stock options were not included in diluted average
common shares outstanding because their effect would be antidilutive. Stock
options to purchase 22,892,810 and 19,420,292 common shares were excluded from
potential common shares at September 30, 2000 and 1999, respectively, as the
option exercise prices were greater than the average market price of the
Company's common stock during the period. Diluted average common shares
outstanding as of September 30, 2000 and 1999 excludes 13,242,050 shares
issuable upon conversion of the Debentures and 27,480,549 and 23,000,000 shares
issuable on the exercise of warrants as of September 30, 2000 and September 30,
1999, respectively, due to antidilution.

-5-
<PAGE>

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)

1. Operations and Basis of Presentation - (Continued)

New Accounting Standards

In September 2000, the FASB issued SFAS No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities (a replacement
of FASB Statement No. 125). This Statement is effective for transfers and
servicing of financial assets and extinguishments of liabilities occurring after
March 31, 2001. This Statement is effective for recognition and reclassification
of collateral and for disclosures relating to securitization transactions and
collateral for fiscal years ending after December 15, 2000. Disclosures about
securitization and collateral accepted need not be reported for periods ending
on or before December 15, 2000, for which financial statements are presented for
comparative purposes. The Company has not yet determined the effect of SFAS No.
140 on the consolidated financial position, results of operations or cash flows.

In July 2000, the FASB issued SFAS No. 138, Accounting for Certain Derivative
Instruments and Hedging Activities (an amendment of FASB Statement No. 133)
which amends SFAS No. 133, to provide additional guidance and to exclude certain
provisions, which were determined by the FASB to be a burden on corporations.
SFAS No. 133 requires the recognition of all derivatives in the Company's
Consolidated Balance Sheets as either assets or liabilities measured at fair
value and is effective for fiscal years beginning after June 15, 2000. It
further provides criteria for derivative instruments to be designated as fair
value, cash flow or foreign currency hedges and establishes accounting standards
for reporting changes in the fair value of the derivative instruments.
Derivatives that are not designated as part of a hedging relationship must be
adjusted to fair value through income. If the derivative is a hedge, depending
on the nature of the hedge, the effective portion of the hedge's change in fair
value is either (1) offset against the change in fair value of the hedged asset,
liability or firm commitment through income or (2) held in equity until the
hedged item is recognized in income. The ineffective portion of a hedge's change
in fair value is immediately recognized in income. Upon adoption, the Company
will be required to adjust hedging instruments to fair value in the balance
sheet and recognize the offsetting gains or losses as adjustments to be reported
in net income, or other comprehensive income, as appropriate.

Sunbeam has a cross-disciplinary implementation team in place to address SFAS
No. 133 related issues. The team has been implementing a SFAS No. 133 compliant
risk management policy, globally educating both financial and non-financial
personnel, inventorying embedded derivatives and addressing other various SFAS
No. 133 related issues. The Company will adopt SFAS No. 133 for the 2001 fiscal
year. Although the Company continues to review the effect of the implementation
of SFAS No. 133, the Company does not currently believe its adoption will have a
material impact on its consolidated financial position, results of operations or
cash flows. However, the impact of adoption of SFAS No. 133 on the Company's
results of operations is dependent upon the fair values of the Company's
derivatives and related financial instruments at the date of adoption and may
result in more pronounced quarterly fluctuations in other income and expense.

In December 1999, the Securities and Exchange Commission ("SEC") issued Staff
Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial
Statements." In June 2000, the SEC staff amended SAB 101 to provide registrants
with additional time to implement SAB 101. The Company will be required to adopt
SAB 101 by the fourth quarter of fiscal 2000. The Company does not believe that
SAB 101 will have a material impact on its consolidated financial position,
results of operations or cash flows.

Reclassifications

Certain prior year amounts have been reclassified to conform with the 2000
presentation.

-6-
<PAGE>

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)

2. Acquisitions and Divestitures

Acquisitions

On March 30, 1998, pursuant to a merger agreement dated as of February 27, 1998,
the Company, through a wholly-owned subsidiary, acquired approximately 81% of
the total number of then outstanding shares of common stock of The Coleman
Company, Inc. ("Coleman") from an affiliate of MacAndrews & Forbes Holdings Inc.
("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, the Company's indirect beneficial ownership
of Coleman decreased to approximately 79% of the total number of the outstanding
shares of Coleman common stock.

In January 2000, pursuant to a merger agreement dated as of February 27, 1998,
the Company acquired the remaining publicly held Coleman shares in a merger
transaction in which the remaining Coleman stockholders (other than stockholders
who are seeking appraisal rights under Delaware law) received 0.5677 of a share
of the Company's common stock and $6.44 in cash for each share of Coleman common
stock they owned, aggregating approximately 6.7 million shares of the Company's
common stock and $87 million in cash. The approximate $87 million aggregate cash
payment included $4.8 million related to the cash out of remaining Coleman
employee options, in accordance with the merger agreement, which occurred in
December 1999. In addition, pursuant to a court approved settlement of claims by
Coleman public stockholders the Company issued to such Coleman public
stockholders (other than such stockholders who are seeking appraisal rights
under Delaware law), warrants expiring August 24, 2003 to purchase 4.98 million
shares of the Company's common stock at $7.00 per share less approximately
498,000 warrants issued to the plaintiffs' attorneys for their fees and
expenses. These warrants, which generally have the same terms as the warrants
previously issued to M&F's subsidiary (see Note 9), were issued when the
consideration was paid for the Coleman merger. The total consideration given for
the purchase of the remaining publicly held Coleman shares was valued at $146
million.

The acquisition of Coleman was accounted for using the purchase method of
accounting, and accordingly, the financial position and results of operations of
Coleman are included in the accompanying Condensed Consolidated Statements of
Operations from the respective dates of acquisition. Prior to the completion of
the merger on January 6, 2000, approximately 20% of Coleman's results of
operations and net equity allocable to the public shareholders was reported as
minority interest.

The purchase price paid for the publicly held Coleman shares has been allocated
based on the estimated fair value of tangible and identified intangible assets
acquired and liabilities assumed as follows (in millions):

Value of common stock issued...................................... $ 44
Value of warrants issued.......................................... 14
Cash paid including expenses net of cash acquired................. 88
-------

Net cash paid and equity issued................................... 146
Fair value of total liabilities assumed........................... 19
-------

165
Fair value of assets acquired..................................... 157
-------

Excess of purchase price over fair value of net assets acquired... $ 8
=======

The excess of purchase price over the fair value of net assets acquired has been
classified as goodwill. Goodwill related to the Coleman acquisition is being
amortized on a straight-line basis over 40 years. Approximately $1.1 billion of
goodwill was recorded by the Company in connection with the acquisition of
Coleman. Goodwill has been allocated to the various operating businesses of
Coleman based on the estimated fair value of Coleman's component businesses.

-7-
<PAGE>

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)

2. Acquisitions and Divestitures (continued)

As of the date of the acquisition of approximately 81% of Coleman, in March
1998, the then management of the Company determined that approximately 117
employees of Coleman would need to be involuntarily terminated in order to
eliminate duplicate activities and functions and fully integrate Coleman into
the Company's operations. The Company recognized a liability of approximately $8
million representing severance and benefit costs related to the 117 employees
pursuant to the termination plan. This liability was included in the allocation
of purchase price. As of June 30, 2000, the Company had paid all of the
severance benefits and no additional charges are anticipated in future periods
related to this matter.

The following unaudited pro forma financial information for the Company gives
effect to the purchase of the publicly held shares of Coleman common stock as if
the transaction had occurred at the beginning of the period presented. No pro
forma information has been presented for the period ending September 30, 2000
because the transaction occurred at the beginning of the period. The pro forma
results for the period ending September 30, 1999 have been prepared for
informational purposes only and do not purport to be indicative of the results
of operations that actually would have occurred had the acquisition been
consummated on the date indicated, or which may result in the future. The
unaudited pro forma results follow (in millions, except per share data):

Nine Months Ended
September 30, 1999
------------------

Net sales.................................................... $ 1,786.4
Net loss..................................................... (150.9)
Basic and diluted loss per share from continuing operations.. (1.40)

Divestitures

On August 14, 2000, the Company announced that it intends to sell its
Professional Clippers business, which manufacturers and markets professional
barber, beauty and animal grooming products under the Oster(R) brand name
("Professional Clippers"). The Company is currently conducting the sale process
for the sale of such business.

In January 2000, the Company entered into a long-term licensing agreement with
Helen of Troy Ltd. that will allow this company to market and distribute Sunbeam
branded retail human hair clippers and trimmers. In connection with this
agreement, Helen of Troy Ltd. purchased the inventory of these retail clippers
and trimmers in the first quarter of 2000 for $4.4 million. Helen of Troy Ltd.
also entered into a licensing agreement to market and distribute Oster(R)
branded retail hair clippers and trimmers through April 30, 2001. The Company
also agreed to continue to manufacture Oster branded retail hair clippers and
trimmers until December 31, 2000. Helen of Troy Ltd., a marketing and
distribution company in the personal care industry, also holds licenses for
other Sunbeam branded personal care products, including hair dryers, curling
irons and personal spa products. The foregoing retail hair clippers and trimmers
are referred to as "Retail Clippers".

See Note 7 for discussion related to the sale of the Eastpak business.

3. Debt

In March 1998, the Company replaced its $250 million syndicated unsecured
five-year revolving credit facility with a revolving and term credit facility
(the "Credit Facility"). The Credit Facility provided for aggregate borrowings
of up to $1.7 billion and in addition to other customary covenants, required the
Company to maintain specified consolidated leverage, interest coverage and fixed
charge coverage ratios as of the end of each fiscal quarter occurring after
March 31, 1998 and on or prior to the latest stated maturity date for any of the
borrowings under the Credit Facility.

-8-
<PAGE>

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)

3. Debt (continued)

As a result of, among other things, its operating losses incurred during the
first half of 1998, the Company did not achieve the specified financial ratios
for June 30, 1998 and it appeared unlikely that the Company would achieve the
specified financial ratios for September 30, 1998. Consequently, the Company and
its lenders entered into an agreement dated as of June 30, 1998 that waived
through December 31, 1998 all defaults arising from the failure of the Company
to satisfy the specified financial ratios for June 30, 1998 and September 30,
1998. Pursuant to an agreement with the Company dated as of October 19, 1998,
the Company's lenders extended all of the waivers through April 10, 1999 and
also waived through such date all defaults arising from any failure by the
Company to satisfy the specified financial ratios for December 31, 1998. In
April 1999, such waivers were extended through April 10, 2000 and on April 10,
2000, such waivers were extended through April 14, 2000.

On April 14, 2000, the Company and its lenders entered into an amendment to the
Credit Facility that, among other things, waived until April 10, 2001 all
defaults arising from any failure by the Company to satisfy certain financial
ratios for any fiscal quarter end occurring through March 31, 2001. As part of
the April 14, 2000 amendment, the Company agreed to a minimum cumulative
earnings before interest, taxes, depreciation and amortization ("EBITDA")
covenant that is based on consolidated EBITDA and is tested at the end of each
month occurring on or prior to March 31, 2001. Because the existing waiver
expires on April 10, 2001, debt related to the Credit Facility and all debt
containing cross-default provisions is classified as current in the September
30, 2000 Condensed Consolidated Balance Sheet.

The Company and its lenders entered into an amendment to the Credit Facility on
August 10, 2000 in order to (i) adjust downwards the cumulative EBITDA test for
July 31, 2000 and each remaining month-end through March 31, 2001 and (ii)
provide the Company with a supplemental $50 million reducing revolving credit
facility (the "Supplemental Revolver") having a final maturity date of December
31, 2000. Prior to the November 10, 2000 amendment described below, the
availability under the Supplemental Revolver provided that it reduced by $10
million on the last day of each month commencing on August 31, 2000 and that
outstanding loans under the Supplemental Revolver could not exceed at any time
the lesser of the availability under the Supplemental Revolver or a borrowing
base calculated by reference to the domestic inventory of the Company's
Powermate subsidiary and outdoor cooking strategic business unit. The Company
paid a facility fee to its lenders of $62,500 for the Supplemental Revolver.

As a result of continuing sales declines and operating losses during the third
quarter of 2000, the Company did not achieve the specified cumulative EBITDA
test required by the Credit Facility for September 30, 2000 and it appeared
unlikely that the Company would achieve the test going forward. Consequently,
the Company and its lenders entered into an amendment to the Credit Facility
dated as of November 10, 2000 that (i) waives all defaults arising from the
failure of the Company to satisfy the cumulative EBITDA test for any period
ending on or prior to December 31, 2000; (ii) provides that, on or before
December 31, 2000, the Company and the lenders will amend the cumulative EBITDA
test to establish monthly EBITDA levels for the 2001 calendar year which are
reasonably satisfactory to the lenders and which will be based on the Company's
2001 business plan to be provided to the Company's lenders in December 2000;
(iii) provides that availability under the Supplemental Revolver is increased to
$50 million without the monthly $10 million reduction or the limitation based on
the borrowing base; and (iv) extends the maturity date for the Supplemental
Revolver to April 10, 2001. The November 10, 2000 amendment also provides that
the payment dates for the $19.1 million term loan payment and the $8.5 million
amendment fee for the previously agreed to April 15, 1999 amendment, both of
which were originally scheduled to be paid November 30, 2000, are deferred until
April 10, 2001. If the Company is unable to satisfy the adjusted cumulative
EBITDA covenant for any of the months of January through March 2001, the Company
would be required to seek a waiver or amendment to such covenant from its
lenders and there can be no assurance that the Company could obtain a waiver or
amendment or that any such waiver or amendment would be on terms favorable to
the Company. In addition, the November 10, 2000 amendment provides that, after
making the $27.6 million payment of principal and fees

-9-
<PAGE>

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)

3. Debt (continued)

due April 10, 2001, the Company may use the remaining net proceeds from asset
sales to repay the revolving credit facility without reducing the lenders'
commitments under such facility and subject, to the terms of the Credit
Facility, the Company may reborrow such proceeds. However, the lenders' consent
is required for certain asset sales and they may refuse to consent or condition
their consent on not allowing the Company full access to the net proceeds
thereon.

The following description of the Credit Facility reflects the significant terms
of the Credit Facility as amended to date.

In addition to the Supplemental Revolver, the 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 was used to complete the Coleman merger which
occurred on January 6, 2000); (ii) up to $800 million in term loans maturing on
March 30, 2005 (all of which has been borrowed, of which $35.0 million was used
to complete the Coleman merger which occurred on January 6, 2000 and of which
$78.0 million has been repaid) and (iii) a $500 million term loan maturing
September 30, 2006 (all of which has been borrowed and of which $7.9 million has
been repaid). As of September 30, 2000 after giving effect to the November 10,
2000 amendment which increased the amounts available under the Supplemental
Revolver described below, of the remaining $1.664 billion Credit Facility,
$1.538 billion was outstanding under the Credit Facility and approximately $68
million would have been available for borrowing. The remaining $58.1 million of
the $1.664 billion Credit Facility was committed for outstanding letters of
credit.

Pursuant to the 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 interest margin which was 3.00% for LIBOR borrowings and
1.75% for base rate borrowings at September 30, 2000. The applicable interest
margins are subject to further downward adjustment upon the reduction of the
aggregate borrowings under the Credit Facility. Borrowings under the Credit
Facility are secured by a pledge of the stock of the Company's material
subsidiaries and by a security interest in substantially all of the assets of
the Company and its material domestic subsidiaries. In addition, borrowings
under the Credit Facility are guaranteed by a number of the Company's
wholly-owned material domestic subsidiaries and these subsidiary guarantees are
secured by substantially all of the material domestic subsidiaries' assets. To
the extent extensions of credit are made to any subsidiaries of the Company, the
obligations of such subsidiaries are guaranteed by the Company. In addition to
being entitled to the benefits of the foregoing described collateral and
guaranties, outstanding borrowings from time to time under the Supplemental
Revolver are secured by substantially all of the assets and 100% of the stock of
the Company's Canadian subsidiary and are guaranteed by the Canadian subsidiary.

Under terms of the April 14, 2000 amendment to the Credit Facility, the Company
was obligated to pay the bank lenders an amendment fee for the April 14, 2000
amendment of 0.50% of the commitments under the Credit Facility as of April 14,
2000, totaling $8.5 million. This fee was paid on May 26, 2000, the closing date
of the sale of the Company's Eastpak business ("Eastpak"). (See Note 7.) On
April 10, 2001, the Company also must pay an amendment fee previously agreed to
for the April 15, 1999 amendment equal to 0.50% of the commitments under the
Credit Facility as of April 15, 1999, totaling $8.5 million. An additional
amendment fee relating to the April 15, 1999 amendment equal to $8.5 million
will be payable to the bank lenders if the aggregate loan and commitment
exposure under the Credit Facility is equal to or more than $1.2 billion on
November 30, 2000, with such fee being payable on June 30, 2001. The $17 million
amendment fee associated with the April 15, 1999 amendment was amortized to
interest expense using the straight-line method over the one-year term of the
amendment. The $8.5 million amendment fee associated with the April 14, 2000
amendment is being amortized to interest expense using the straight-line method
over the one year term of that amendment.

-10-
<PAGE>

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)

3. Debt (continued)

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. Furthermore, the
Credit Facility requires the Company to prepay loans under the Credit Facility
on December 31, 2000 to the extent that cash on hand in the Company's
concentration accounts plus the aggregate amount of unused revolving loan
commitments on that date exceed $185.0 million.

Unless waived by the bank lenders, the failure of the Company to satisfy any of
the financial ratios and tests contained in the Credit Facility or the
occurrence of any other event of default under the Credit Facility would entitle
the bank lenders to (a) receive a 2.00% increase in the interest rate applicable
to outstanding loans and increase the trade letter of credit fees to 1.00% and
(b) declare the outstanding borrowings under the Credit Facility immediately due
and payable and exercise all or any of their other rights and remedies. Any such
acceleration or other exercise of rights and remedies would likely have a
material adverse effect on the Company.

Pursuant to the April 14, 2000 amendment, term loan payments originally
scheduled for September 30, 1999 and March 31, 2000 in the amount of $69.3
million on each date are to be made as follows: (i) $69.3 million upon sale of
Eastpak, which occurred May 26, 2000, (ii) $30.8 million on November 30, 2000
($11.7 million of which has already been paid with the proceeds of the sale of
Eastpak and certain other asset sales) and (iii) $38.5 million on April 10,
2001. The April 14, 2000 amendment also provided that the payment dates for the
$69.3 million term loan payments originally scheduled for each of September 30,
2000 and March 31, 2001 be deferred until April 10, 2001. The November 10, 2000
amendment provides that the November 30, 2000 term loan payment ($19.1 million)
and the amendment fee payment ($8.5 million) be deferred until April 10, 2001.

In March 1998, the Company completed an offering of Debentures due 2018 at a
yield to maturity of 5.0% (approximately $2,014 million principal amount at
maturity) which resulted in approximately $730 million of net proceeds. The
Debentures are exchangeable for shares of the Company's common stock at an
initial conversion rate of 6.575 shares for each $1,000 principal amount at
maturity of the Debentures, subject to adjustment upon occurrence of certain
events. The Debentures are subordinated in right of payment to all existing and
future senior indebtedness of the Company. The Debentures are not redeemable by
the Company prior to March 25, 2003. On or after such date, the Debentures are
redeemable for cash with at least 30 days notice, at the option of the Company.
The Company is required to purchase Debentures at the option of the holder as of
March 25, 2003, March 25, 2008 and March 25, 2013, at purchase prices equal to
the issue price plus accrued original discount to such dates. The Company may,
at its option, elect to pay any such purchase price in cash or common stock, or
any combination thereof. However, the Credit Facility prohibits the Company from
redeeming or repurchasing debentures for cash.

In July 2000, the Company announced an offer to acquire all of the currently
outstanding Debentures in exchange for secured notes and shares of Sunbeam
common stock (the "Exchange Offer"). On September 12, 2000, the Company withdrew
its offer to exchange all of the outstanding Debentures without accepting and
paying for any tendered Debentures. The holders of the Debentures were unwilling
to participate in the Exchange Offer under the terms proposed. As a result of
the termination of the Exchange Offer, the Company recognized a charge of $5.4
million in the third quarter of 2000. This charge included investment banking
fees and legal and accounting fees incurred through September 30, 2000 relating
to the proposed transaction. See additional discussion at "Exchange Offer"
within Item 2.

As discussed in Note 2, the Company announced it intends to sell its
Professional Clippers business. However, there can be no assurance as to whether
or when such sale will be consummated. Moreover, the terms, timing and use of
the net proceeds from such sale is subject to the approval of the lenders under
the Credit Facility, and there can be no assurance that the lenders will consent
to any sale or as to the terms of any consent provided.

As described below in Note 4, the purchaser under the Sunbeam Receivables
Program has determined to cease operations and consequently will cease
purchasing receivables from the Company on January 15, 2001. The Company intends
to seek a replacement receivables program, although there can be no assurance
that the Company will be able to obtain a replacement program or that the terms
of any such replacement program will be favorable to the Company. In addition,
the Coleman Receivable Program contains cross-default provisions that provide
the purchasers of the receivables an option to cease purchasing receivables if
the Company is in default under the Credit Facility. In addition, these
agreements contain various other covenants customary for these types of
programs, including financial covenants. While the Company was in compliance
with such covenants through September 30, 2000, the Company anticipates that it
will be required to obtain a waiver or an amendment for certain covenants
contained in the Coleman Receivable Program early in 2001 due primarily to the
anticipated financial performance of Coleman and Powermate during 2000. The
Company believes that such waiver or modification can be obtained, although
there can be no assurance that any such waiver or amendment would be obtained or
if obtained, would be on terms favorable to the Company.

-11-
<PAGE>

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)

3. Debt (continued)

The Company believes its borrowing capacity under the Credit Facility including
its Supplemental Revolver, foreign working capital lines, cash flow from the
operations of the Company, existing cash and cash equivalent balances, proceeds
from its receivable securitization programs, the portion of the proceeds from
the proposed sale of the Professional Clippers business which the Company may
retain as described above and net proceeds from the sale of other non-core
assets will be sufficient to support planned working capital needs and planned
capital expenditures through April 2001. However, as described above, there are
uncertainties regarding the terms and timing of the sale of the Professional
Clipper business, the Company's ability to obtain lender consent to allow the
Company access to all or most of the proceeds thereof (after payment of the
$27.6 million in principal and fees due April 10, 2001) and the Company's
ability to obtain a replacement receivables program for the Sunbeam Receivables
Program. Given these and other uncertainties there can be no assurance that the
aforementioned sources of funds will be sufficient to meet the Company's cash
requirements on a consolidated basis. If the Company is unable to satisfy such
cash requirements, the Company could be required to adopt one or more
alternatives, such as reducing or delaying capital expenditures, borrowing
additional funds, restructuring indebtedness, selling other assets or operations
and/or reducing expenditures for new product development, cutting other costs,
and some of such actions would require the consent of the lenders under the
Credit Facility. There can be no assurance that any of such actions could be
effected, or if so, on terms favorable to the Company, that such actions would
enable the Company to continue to satisfy its cash requirements and/or that such
actions would be permitted under the terms of the Credit Facility. See
"Cautionary Statements".

4. Accounts Receivable Securitization

The Company has entered into a receivable securitization program, which expires
March 2001, to sell without recourse, through a wholly-owned subsidiary, certain
trade accounts receivable (the "Sunbeam Receivables Program"). In March 2000,
the Company entered into an amendment to such receivables program to increase
this program to $100 million from $70 million. In mid-November 2000, the
purchaser under the Sunbeam Receivables Program informed the Company that it
intends to cease its operations in mid-February 2001, and consequently will
cease purchasing account receivables from the Company on January 15, 2001. The
Company intends to seek a replacement receivables program for the Sunbeam
Receivables Program, although there can be no assurance that the Company will be
able to obtain a replacement program (which inability may be an event of default
under the Credit Agreement, unless waived by the Company's lenders (see Note
3)), or that the terms of any such replacement program will be favorable to the
Company.

In April 2000, the Company's Coleman and Powermate subsidiaries entered into an
additional revolving trade accounts receivable securitization program (the
"Coleman Receivables Program") to sell, without recourse, through a wholly-owned
subsidiary of Coleman, up to a maximum of $95 million in trade accounts
receivable. These trade accounts receivable programs contain cross-default
provisions that provide the purchasers of the receivables an option to cease
purchasing receivables if the Company is in default under the Credit Facility.
In addition, these agreements contain various other covenants customary for
these types of programs, including financial covenants. While the Company was in
compliance with such covenants through September 30, 2000, the Company
anticipates that it will be required to obtain a waiver or an amendment for
certain covenants contained in the Coleman Receivable Program early in 2001 due
primarily to the anticipated financial performance of Coleman and Powermate
during 2000. The Company believes that such waiver or modification can be
obtained, although there can be no assurance that any such waiver or amendment
would be obtained or if obtained, would be on terms favorable to the Company.
During the nine months ended September 30, 2000 and 1999, the Company received
approximately $667.1 million and $228.4 million, respectively, under these
arrangements. At September 30, 2000 and 1999, the Company had reduced accounts
receivable by approximately $98.4 million and $36.9 million, respectively, for
receivables sold under these programs. Costs of the programs, which primarily
consist of the purchasers' financing cost of issuing commercial paper backed by
the receivables, totaled $5.4 million and $1.7 million during the nine months
ended September 30, 2000 and 1999, respectively, and have been classified as
interest expense in the accompanying Condensed Consolidated Statements of
Operations. The Company, through wholly-owned subsidiaries, retains collection
and administrative responsibilities for the purchased receivables.

-12-
<PAGE>

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)

5. Comprehensive Loss

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

<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
---------------------------- ----------------------------
September 30, September 30, September 30, September 30,
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net loss................................................. $ (84,084) $ (47,354) $(223,692) $(155,039)
Foreign currency translation adjustment, net of taxes.... (9,108) 528 (15,858) (10,150)
---------- ---------- ---------- ----------
Comprehensive loss....................................... $ (93,192) $ (46,826) $(239,550) $(165,189)
========== ========== ========== ==========
</TABLE>

As of September 30, 2000 and December 31, 1999, "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 September 30, 2000....................... $ (41,103) $(48,041) $ (89,144)
Balance at December 31, 1999........................ (25,245) (48,041) (73,286)
</TABLE>

6. Supplementary Financial Statement Data

Supplementary Balance Sheet data at the end of each period is as follows (in
thousands):

<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
----------- -----------
<S> <C> <C>
Receivables:
Trade....................................................... $ 276,963 $ 404,905
Sundry...................................................... 8,816 3,777
----------- -----------
285,779 408,682
Valuation allowance......................................... (41,729) (44,344)
----------- -----------
$ 244,050 $ 364,338
=========== ===========
Inventories:
Finished goods.............................................. $ 346,047 $ 330,179
Work in process............................................. 42,708 30,691
Raw materials and supplies.................................. 99,591 99,810
----------- -----------
$ 488,346 $ 460,680
=========== ===========
</TABLE>

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

<TABLE>
<CAPTION>
Nine Months Ended
---------------------------
September 30, September 30,
2000 1999
---------- ----------
<S> <C> <C>
Cash paid during the period for:
Interest..................................................... $ 99,944 $ 124,981
========== ==========
Income taxes, net of refunds................................. $ 2,207 $ 2,145
========== ==========
</TABLE>

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)

7. Asset Impairment and Other Charges

The Company is in the process of evaluating a restructuring plan related to its
European operations. The restructuring plan will include, but will not be
limited to, the reduction of warehouse and distribution centers, manufacturing
headcount and the reduction of the Company's product offerings and stock keeping
units ("SKU's). As of September 30, 2000, the restructuring plan has not been
finalized; however, the Company expects to finalize the plan and record a charge
relating to such activities in the fourth quarter of 2000. The Company is unable
to estimate the expected charge related to this restructuring, as the evaluation
process has not been completed.

-13-
<PAGE>

7. Asset Impairment and Other Charges (continued)

In March 2000, the Company announced its intention to shut down operations at
its Glenwillow facility, which manufactures and distributes Mr. Coffee brand
coffee makers and coffee filters. These operations were fully consolidated into
other existing facilities and the Glenwillow facility was closed as of June 30,
2000. As a result of this decision, the Company recorded a charge of $5.1
million ($3.3 million and $1.8 million in the first and second quarters,
respectively) primarily related to the write-off of fixed assets and leasehold
improvements, severance costs and contract and lease termination fees. This
charge was recorded in SG&A ($0.6 million in each of the first and second
quarters of 2000) and Cost of Goods Sold ($2.7 million and $1.2 million in the
first and second quarters of 2000, respectively). The closing of this facility
resulted in the elimination of approximately 300 positions. The Company incurred
additional incremental costs during the second quarter of 2000 of approximately
$2.5 million (included in Cost of Goods Sold), primarily related to relocation
of certain manufacturing equipment and machinery to other Company manufacturing
locations and higher warehousing costs as a result of increased inventory levels
to avoid customer supply issues during the plant shut-down. Such amounts were
charged to operations as incurred. At September 30, 2000, the accrual balance
relating to the closing of the Glenwillow facility was insignificant.

In the first quarter of 2000, in connection with the Company's on-going review
of its businesses, the decision was made to close the remaining Sunbeam retail
stores. As a result of this decision, a charge of $2.5 million, primarily
related to the write-off of leasehold improvements, severance and lease
termination fees was recorded in the first quarter of 2000. This charge was
recorded in SG&A ($2.2 million) and Cost of Goods Sold ($0.3 million). The
majority of these stores were closed during the second quarter of 2000 and
resulted in the elimination of approximately 60 positions. The Company does not
anticipate incurring future additional incremental costs. At September 30, 2000
the accrual balance relating to the closing of Sunbeam's retail stores was
insignificant.

During the fourth quarter of 1999, the Company announced its intent to sell
Eastpak. As a result of this change in the Company's business strategy for
Eastpak, an evaluation for impairment of Eastpak's long-lived assets was
performed pursuant to SFAS No. 121. Based upon this analysis, the Company
determined that the fair market value of Eastpak's long-lived assets, including
intangibles, was less than the carrying value. Accordingly, during the fourth
quarter of 1999, the Company adjusted the carrying value of Eastpak's net assets
to its estimated fair value (less estimated costs of sale) resulting in a
non-cash impairment charge of $52 million. This charge reduced the goodwill
associated with Eastpak. The fair market value of Eastpak was determined based
upon the purchase price in the Eastpak Sale Agreement (before adjustment). This
charge is reflected in SG&A in the fourth quarter of 1999 Consolidated
Statements of Operations.

In March 2000, the Company entered into the Eastpak Sale Agreement with VF
Corporation, which provided for the sale of Eastpak. The sale of Eastpak closed
on May 26, 2000, resulting in net proceeds of $89.9 million. The final purchase
price was subject to certain post-closing adjustments and retention of certain
liabilities. During the third quarter of 2000, the Company received the
post-closing settlement for the sale of Eastpak of $10.2 million and finalized
the accounting for the transaction. The post-closing settlement resulted in
total proceeds from the sale of $102.6 million and a reduction of $3.2 million
to the asset impairment charge previously recognized for Eastpak. This reduction
in the impairment charge resulted primarily from the Company's ability to sell
certain of the Eastpak manufacturing facilities rather than closing such
facilities as was assumed in the original valuation. Accordingly, the estimated
costs of the transaction were reduced. This adjustment was reflected in SG&A in
the Condensed Consolidated Statement of Operations during the third quarter of
2000. Eastpak, a wholly-owned subsidiary of Coleman, was acquired by the Company
in March 1998. Net sales from Eastpak were approximately 5% of consolidated net
sales in the first nine months of both 2000 and 1999. Operating income in the
first nine months of 2000 and 1999 was not significant. Eastpak's results of
operations are included in the Company's Outdoor Leisure business group through
May 26, 2000.

-14-
<PAGE>

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)

7. Asset Impairment and Other Charges (continued)

In the fourth quarter of 1999, in connection with the completion of the
Company's strategic planning process for 2000, the decision was made to
discontinue a number of products, primarily scales, humidifiers and certain
camping stoves, lights and air mattresses, resulting in equipment and tooling
that will no longer be utilized by the Company and inventory levels in excess of
anticipated sales volume. In addition, as part of the business planning process,
which was completed in the fourth quarter of 1999, the Company identified
certain other assets that would no longer be required for ongoing operations.
Accordingly, a charge of $8.0 million was recorded in the fourth quarter of 1999
in Cost of Goods Sold to write certain of these fixed assets down to their
estimated fair market values. Substantially all of this charge related to
machinery, equipment and tooling at the Company's Hattiesburg, Mississippi
manufacturing facility. These assets were taken out of service at the time of
the write-down and were not depreciated further after the write-down. These
assets had either a nominal salvage value or no significant remaining carrying
value as of December 31, 1999 and had been disposed of by September 30, 2000.
Depreciation expense associated with these assets approximated $0.9 million for
the year ended 1999. During the fourth quarter of 1999 the Company also decided
to discontinue certain grill and grill accessory SKUs. As a result of this
decision, the Company reduced the economic useful life associated with the
machinery, equipment and tooling used for these SKUs. Approximately $3 million
of additional depreciation expense was recorded over the fourth quarter of 1999
from the time the decision was made to exit the product line until production
ceased at December 31, 1999 and resulted in the affected assets being fully
depreciated. Depreciation expense associated with these assets was $4.6 million
for the year ended 1999. These assets were disposed of during the first half of
2000, and the Company did not generate significant proceeds as a result of the
disposals. Additionally, as a result of the Company's decision to discontinue
certain camping stoves, lights, air mattresses, scales and humidifiers, a $3.0
million charge was recorded during the fourth quarter of 1999 to properly state
this inventory at the lower-of-cost-or-market. The Company also recognized
approximately $0.8 million related to certain other product lines to properly
state the inventory at the lower-of-cost-or-market. These charges for excess
inventories were based upon management's best estimate of net realizable value.

At September 30, 2000 and December 31, 1999, the Company had $0.5 and $0.9
million of restructuring accruals, respectively relating to its 1996
restructuring plan. The $0.5 million accrued at September 30, 2000 was comprised
of $0.4 million relating to lease payments and termination fees and $0.1 million
relating to discontinued operations. It is anticipated that the remaining
restructuring accrual of $0.5 million will be paid through 2006.

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 including Year 2000 efforts during the nine months ended
September 30, 1999.

<TABLE>
<CAPTION>
Outdoor
Household Leisure International Corporate Total
--------- ------- ------------- --------- -----
<S> <C> <C> <C> <C> <C>
Nine Months Ended September 30, 2000
Net sales to unaffiliated customers.......... $ 519,307 $ 665,968 $ 425,070 $ 4,581 $ 1,614,926
Intersegment net sales....................... 54,158 103,355 1,627 -- 159,140
Segment earnings (loss)...................... 15,892 24,189 33,529 (60,394) 13,216
Segment depreciation expense................. 18,195 26,850 4,000 6,618 55,663

Nine Months Ended September 30, 1999
Net sales to unaffiliated customers.......... $ 555,207 $ 774,698 $ 444,305 $ 12,218 $ 1,786,428
Intersegment net sales....................... 57,070 126,681 6,896 -- 190,647
Segment earnings (loss)...................... 16,087 74,540 46,839 (64,603) 72,863
Segment depreciation expense................. 19,436 27,654 4,034 4,392 55,516

Segment Assets
September 30, 2000........................... $ 638,905 $ 1,640,476 $ 334,580 $ 345,902 $ 2,959,863
December 31, 1999............................ 707,436 1,707,559 385,200 332,154 3,132,349
</TABLE>

-15-
<PAGE>

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)

8. Segment, Customer and Geographic Data (continued)

Reconciliation of selected segment information to Sunbeam's consolidated totals:

<TABLE>
<CAPTION>
Nine Months Ended
September 30, 2000 September 30, 1999
------------------ ------------------
<S> <C> <C>
Net sales:
Net sales for reportable segments............................................... $ 1,774,066 $ 1,977,075
Elimination of intersegment net sales........................................... (159,140) (190,647)
------------ ------------
Consolidated net sales....................................................... $ 1,614,926 $ 1,786,428

Segment earnings:
Total earnings for reportable segments.......................................... $ 13,216 $ 72,863
Unallocated amounts:
Interest expense............................................................. (160,659) (136,631)
Other income, net............................................................ 539 4,619
Amortization of intangible assets............................................ (39,057) (38,401)
Year 2000 related expenses................................................... -- (20,301)
Restatement related litigation expense....................................... (23,157) (4,792)
Environmental and other certain litigation expenses.......................... (789) (4,226)
Insurance recovery........................................................... 10,000 --
Glenwillow closing (Note 7).................................................. (7,572) --
Retail Store closings (Note 7)............................................... (2,544) --
Purchase accounting adjustment............................................... (4,280) --
Exchange offer expenses...................................................... (5,409) --
Asset impairment (Note 7)................................................... 3,208 --
Other charges................................................................ -- (2,155)
----------- ------------
(229,720) (201,887)
------------ ------------
Consolidated loss before income taxes and minority interest.................. $ (216,504) $ (129,024)
============ ============
</TABLE>

9. Commitments and Contingencies

Litigation

On April 23, 1998, two class action lawsuits 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
as discussed below. After that date, approximately fifteen similar class actions
were filed in the same court. One of the lawsuits also named as defendant Arthur
Andersen LLP ("Arthur Andersen"), the Company's independent accountants for the
period covered by the lawsuit.

On June 16, 1998, the court entered an order consolidating all these suits and
all similar class actions subsequently filed (collectively, the "Consolidated
Federal Actions"). On January 6, 1999, plaintiffs filed a consolidated amended
class action complaint against the Company, some of its present and former
directors and former officers, and Arthur Andersen. The consolidated amended
class action complaint alleges, among other things, that defendants made
material misrepresentations and omissions regarding the Company's business
operations and future prospects in an effort to artificially inflate the price
of the Company's common stock and call options, and that, in violation of
section 20(a) of the Exchange Act, the individual defendants exercised influence
and control over the Company, causing the Company to make material
misrepresentations and omissions. The consolidated amended complaint seeks an
unspecified award of money damages. In February 1999, plaintiffs moved for an
order certifying a class consisting of all persons and entities who purchased
the Company's common stock or who purchased call options or sold put options
with respect to the Company's common stock during the period April 23, 1997
through June 30, 1998, excluding the defendants, their affiliates, and employees
of the Company. Defendants have opposed that motion. In March 1999, all
defendants who had been served with the consolidated amended class action
complaint moved to dismiss it and the court granted the motion only as to
certain non-employee current and former directors and a former officer, and
denied it as to the other defendants. Arthur Andersen has filed counterclaims
against the Company, and a third-party complaint against a former director of
the Company and against unnamed third party corporations. On July 31, 2000, the
court dismissed the former director from Arthur Andersen's counterclaims. On
June 30, 2000, the plaintiffs filed a second amended complaint against most of
the same defendants (although two of the Company's former outside directors were
not included as defendants in the second amended complaint) alleging the same
principal claims as the prior amended complaint described above.

-16-
<PAGE>

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)

9. Commitments and Contingencies (continued)

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 in
February 1998 to three of its now former officers and directors. In June 1998,
all defendants filed a motion to dismiss the complaint for failure to make a
pre-suit demand on the Company's board of directors. In February 1999,
plaintiffs filed an amended derivative complaint nominally on behalf of the
Company against some of its present and former directors and former officers and
Arthur Andersen. This amended complaint alleges, among other things, that
Messrs. Dunlap and Kersh, the Company's former Chairman and Chief Executive
Officer and former Chief Financial Officer, respectively, caused the Company to
employ fraudulent accounting procedures in order to enable them to secure new
employment contracts, and seeks a declaration that the individual defendants
have violated fiduciary duties, an injunction against the payment of
compensation to Messrs. Dunlap and Kersh or the imposition of a constructive
trust on such payments, and unspecified money damages. The defendants have each
moved to dismiss the amended complaint in whole or in part.

During 1998, purported class action and derivative lawsuits were filed in the
Court of Chancery of the State of Delaware in New Castle County and in the U.S.
District Court for the Southern District of Florida by stockholders of the
Company against the Company, MacAndrews & Forbes and some of the Company's
present and former directors. These complaints allege, among other things, that
the defendants breached their fiduciary duties when the Company entered into a
settlement agreement with the MacAndrews & Forbes subsidiary that sold the
Company a controlling interest in Coleman. In such settlement agreement, the
MacAndrews & Forbes subsidiary released the Company from threatened claims
arising out of the Company's acquisition of its interest in Coleman, and
MacAndrews & Forbes agreed to provide management support to the Company. Under
the settlement agreement, the MacAndrews & Forbes subsidiary was granted a
warrant expiring August 24, 2003 to purchase up to an additional 23 million
shares of the Company's common stock at an exercise price of $7 per share,
subject to anti-dilution provisions. The derivative actions filed in the
Delaware Court of Chancery were consolidated. The plaintiffs voluntarily
dismissed this action. The action filed in the U.S. District Court for the
Southern District of Florida has been dismissed. In April 2000, a complaint was
filed in the U.S. District Court for the Southern District of Florida against
the Company, certain current and former directors, Messrs. Dunlap and Kersh and
MacAndrews & Forbes alleging, among other things, that certain of the defendants
breached their fiduciary duty when the Company entered into a settlement
agreement with MacAndrews & Forbes, and certain of the defendants breached their
fiduciary duty and wasted corporate assets by, among other things, issuing
materially false and misleading statements regarding the Company's financial
condition. The plaintiff in this action seeks, among other things, recission of
the warrants issued to MacAndrews & Forbes and an injunction preventing the
issuance of warrants and damages. Each of the defendants has filed a motion to
dismiss this complaint.

In September 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 U.S. National Bank of Galveston,
Kempner Capital Management, Inc. and Legacy Trust Company engaged in
transactions in the Company's common stock on their own behalf and on behalf of
their respective clients. 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 subsequently
transferred to the U.S. District Court for the Southern District of Florida and
consolidated with the Consolidated Federal Actions.

-17-
<PAGE>

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)

9. Commitments and Contingencies (continued)

In October 1998, a class action lawsuit was filed in the U.S. District Court for
the Southern District of Florida on behalf of certain purchasers of the
Debentures against the Company and certain of the Company's former officers and
directors. In April 1999, a class action lawsuit was filed in the U.S. District
Court for the Southern District of Florida 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 against the Company, Arthur
Andersen, the Company's former auditor, and certain former officers and
directors. The court consolidated the two cases and the plaintiffs have filed a
consolidated class action on behalf of persons who purchased Debentures in the
initial offering and in the market during the period March 20, 1998 through June
30, 1998. The amended complaint alleges, among other things, violations of the
federal and state securities laws and common law fraud. The plaintiffs seek,
among other things, either unspecified monetary damages or rescission of their
purchase of the Debentures. This action is coordinated with the Consolidated
Federal Actions.

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.
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 took place in April 1999. Following
the hearing, the court entered an order granting the Company's special
appearance and dismissing the case without prejudice. The plaintiffs appealed,
which appeal was denied. The plaintiffs have appealed to the Texas Supreme
Court. In October 2000, the plaintiffs also filed a complaint against the
Company's subsidiary Sunbeam Products, Inc. in the District Court for Dallas
County alleging substantially the same allegations as the complaint filed
against the Company in Tarrant County.

Messrs. Dunlap and Kersh have commenced an action against the Company in the
Chancery Court for the State of Delaware seeking advancement from the Company of
their alleged expenses incurred in connection with defending themselves in the
various actions described above in which they are defendants and the
investigation by the SEC described below. The Company has denied their claims.
Discovery has commenced, and no trial date has been set.

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 the Company terminated their employment without
cause and that they should be awarded certain benefits based upon their
respective employment agreements. 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 was filed by Messrs. Dunlap and Kersh generally denying the
Company's counterclaim. The arbitration hearings have commenced and hearings are
scheduled on various dates through April 2001.

On September 13, 1999, an action naming the Company and Arthur Andersen as
defendants was filed in the Circuit Court for Montgomery County, Alabama. The
plaintiffs in this action are purchasers of the Company's common stock during
the period March 19, 1998 through May 6, 1998. The plaintiffs allege, among
other things, that the defendants violated the Alabama Securities Laws. The
plaintiffs seek compensatory and punitive damages in an unspecified amount.
Arthur Andersen has filed a cross claim against the Company for contribution and
indemnity. The Company has filed a motion to dismiss. In May 2000, the
plaintiffs in this action filed an amended complaint, which added allegations of
violations of the federal securities laws. This action was transferred to and
consolidated with the Consolidated Federal Actions.

In September 2000, an action naming the Company as a defendant was filed in the
Circuit Court for Ozaukee County, Wisconsin. The plaintiffs allege that the
Company violated the federal securities laws in connection with the offering and
sale of the Debentures. The plaintiffs seek recission and damages. The Company
has removed the action to Federal Court.

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, if any.
However, if the Company were to lose one or more of these lawsuits, judgments
would likely have a material adverse effect on the Company's consolidated
financial position, results of operations or cash flows.

-18-
<PAGE>

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)

9. Commitments and Contingencies (continued)

In July 1998, the American Alliance Insurance Company ("American Alliance")
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 Alliance was invalid and/or had been properly canceled by American
Alliance. As a result of a motion made by the Company, this case has been
transferred to the U.S. District Court for the Southern District of Florida for
coordination and consolidation of pre-trial proceedings with the various actions
pending in that court. In October 1998, an action was filed by Federal Insurance
Company ("Federal Insurance") in the U.S. District Court for the Middle District
of Florida requesting the same relief as that requested by American Alliance 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.
Discovery in the cases brought by American Alliance and Federal Insurance is
underway and coordinated with the discovery in the Consolidated Federal Actions.
In December 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 Alliance and
Federal Insurance in their previously filed actions as to additional coverage
levels under the Company's directors' and officers' liability insurance policy.
In April 1999, the Company filed an action in the U.S. District Court for the
Southern District of Florida against National Union Fire Insurance Company of
Pittsburgh, PA ("National Union"), Gulf Insurance Company ("Gulf") and St. Paul
Mercury Insurance Company ("St. Paul") requesting, among other things, a
declaratory judgment that National Union is not entitled to rescind its
directors' and officers' liability insurance policies to the Company and a
declaratory judgment that the Company is entitled to coverage from these
insurance companies for the various lawsuits described herein under directors'
and officers' liability insurance policies issued by each of the defendants. The
Company has settled its litigation with National Union. In response to the
Company's complaint, defendants St. Paul and Gulf have answered and asserted
counterclaims seeking rescission 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 and to recover attorneys'
fees covered under those policies. The Company's failure to obtain such
insurance recoveries following an adverse judgment in any of the actions
described above could have a material adverse effect on the Company's financial
position, results of operations or cash flows.

By letter dated June 17, 1998, the staff of the Division of Enforcement of the
SEC advised the Company that it was conducting an informal inquiry into the
Company's accounting policies and procedures and requested that the Company
produce certain documents. In July 1998, the SEC issued a Formal Order of
Private Investigation, designating SEC officers to take testimony and pursuant
to which a subpoena was served on the Company requiring the production of
certain documents. In November 1998, another SEC subpoena requiring the
production of additional documents was received by the Company. The Company has
provided numerous documents to the SEC staff and continues to cooperate with the
SEC staff. The Company has, however, declined to provide the SEC with material
that the Company believes is subject to the attorney-client privilege and the
work product immunity. The staff of the SEC has informed the Company that its
has completed its investigation, and intends to recommend to the SEC that
enforcement action be taken against the Company. The Company and the staff of
the SEC are in discussions regarding the foregoing. The Company cannot predict
at this time the outcome of these discussions.

The Company and its subsidiaries are also involved in various other lawsuits
arising from time to time which the Company considers to be ordinary routine
litigation incidental to its business. In the opinion of the Company, the
resolution of these routine matters, and of certain matters relating to prior
operations, individually or in the aggregate, will not have a material adverse
effect upon the financial position, results of operations or cash flows of the
Company.

-19-
<PAGE>

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)

9. Commitments and Contingencies (continued)

Amounts accrued for litigation matters represent the anticipated costs (damages
and/or settlement amounts) in connection with pending litigation and claims and
related anticipated legal fees for defending such actions. The costs are accrued
when it is both probable that an asset has been impaired or a liability has been
incurred and the amount can be reasonably estimated. The accruals are based upon
the Company's assessment, after consultation with counsel, of probable loss
based on the facts and circumstances of each case, the legal issues involved,
the nature of the claim made, the nature of the damages sought and any relevant
information about the plaintiffs and other significant factors which vary by
case. When it is not possible to estimate a specific expected cost to be
incurred, the Company evaluates the range of probable loss and records the
minimum end of the range. As of September 30, 2000, the Company had established
accruals for litigation matters of $32.4 million (representing $6.5 million and
$25.9 million for estimated damages or settlement amounts and legal fees,
respectively), and $24.3 million as of December 31, 1999 (representing $9.6
million and $14.7 million for estimated damages or settlement amounts and legal
fees, respectively). It is anticipated that the $32.4 million accrual at
September 30, 2000 will be paid as follows: $7.5 million in 2000, $24.4 million
in 2001 and $0.5 million in 2002. The Company believes, based on information
available on September 30, 2000, that anticipated probable costs of litigation
matters existing as of September 30, 2000 have been adequately reserved to the
extent determinable.

The Company recorded an additional $23.2 million and $4.8 million for the fiscal
nine months of 2000 and 1999, respectively, for defense costs for
restatement-related litigation. The $23.2 million charge reflects the Company's
current estimate of additional defense costs through June 2001. The Company's
estimate of the additional defense costs was based primarily upon actual defense
costs experienced in the second and third quarters of 2000 and a projection of
expected future costs through the various trial dates of such litigations based
on such costs to date (which are considered to be representative of the expected
future costs).

Environmental Matters

The Company's operations, like those of comparable businesses, are subject to
certain federal, state, local and foreign environmental laws and regulations in
addition to laws and regulations regarding labeling and packaging of products
and the sales of products containing certain environmentally sensitive
materials. The Company believes it is in substantial compliance with all
environmental laws and regulations which are applicable to its operations.
Compliance with environmental laws and regulations involves certain continuing
costs; however, such costs of ongoing compliance have not resulted, and are not
anticipated to result, in a material increase in the Company's capital
expenditures or to have a material adverse effect on the Company's competitive
position, results of operations, financial condition or cash flows.

In addition to ongoing environmental compliance at its operations, the Company
also is actively engaged in environmental remediation activities, many of which
relate to divested operations. As of September 30, 2000, the Company has been
identified by the United States Environmental Protection Agency ("EPA") or a
state environmental agency as a potentially responsible party ("PRP") in
connection with six sites subject to the federal Superfund Act and eight sites
subject to state Superfund laws comparable to the federal law (collectively the
"Environmental Sites"), exclusive of sites at which the Company has been
designated (or expects to be designated) as a de minimis (less than 1%)
participant.

The Superfund Act, and related state environmental remediation laws, generally
authorize governmental authorities to remediate a Superfund site and to assess
the costs against the PRPs or to order the PRPs to remediate the site at their
expense. Liability under the Superfund Act is joint and several and is imposed
on a strict basis, without regard to degree of negligence or culpability. As a
result, the Company recognizes its responsibility to determine whether other
PRPs at a Superfund site are financially capable of paying their respective
shares of the ultimate cost of remediation of the site. Whenever the Company has
determined that a particular PRP is not financially responsible, it has assumed
for purposes of establishing reserve amounts that such PRP will not pay its
respective share of the costs of remediation. To minimize the Company's
potential liability with respect to the Environmental Sites, the Company has
actively participated in steering committees and other groups of PRPs
established with respect to such sites. The Company currently is engaged in
active remediation activities at thirteen sites, seven of which are among the
Environmental Sites referred to above, and six of which have not been designated
as Superfund sites under federal or state law. The remediation efforts in which
the Company is involved include facility investigations, including soil and
groundwater investigations, corrective measure studies, including feasibility
studies, groundwater monitoring, extraction and treatment and soil sampling,
excavation and

-20-
<PAGE>

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)

9. Commitments and Contingencies (continued)

treatment relating to environmental clean-ups. In certain instances, the Company
has entered into agreements with governmental authorities to undertake
additional investigatory activities and in other instances has agreed to
implement appropriate remedial actions. The Company has also established reserve
amounts for certain non-compliance matters including those involving air
emissions.

The Company has established reserves to cover the anticipated probable costs of
investigation and remediation, based upon periodic reviews of all sites for
which the Company has, or may have remediation responsibility. The Company
accrues environmental investigation and remediation costs when it is probable
that a liability has been incurred, the amount of the liability can be
reasonably estimated and the Company's responsibility for the liability is
established. Generally, the timing of these accruals coincides with the earlier
of formal commitment to an investigation plan, completion of a feasibility study
or the Company's commitment to a formal plan of action. As of September 30, 2000
and December 31, 1999, the Company's environmental reserves were $19.4 million
(representing $18.0 million for the estimated costs of facility investigations,
corrective measure studies, or known remedial measures, and $1.4 million for
estimated legal costs) and $19.9 million (representing $18.2 million for the
estimated costs of facility investigations, corrective measure studies, or known
remedial measures, and $1.7 million for estimated legal costs), respectively. It
is anticipated that the $19.4 million accrual at September 30, 2000 will be paid
as follows: $1.6 million in 2000, $3.6 million in 2001, $2.6 million in 2002,
$0.8 million in 2003, $0.7 million in 2004 and $10.1 million thereafter. The
Company has accrued its best estimate of investigation and remediation costs
based upon facts known to the Company at such dates and because of the inherent
difficulties in estimating the ultimate amount of environmental costs, which are
further described below, these estimates may materially change in the future as
a result of the uncertainties described below. Estimated costs, which are based
upon experience with similar sites and technical evaluations, are judgmental in
nature and are recorded at undiscounted amounts without considering the impact
of inflation and are adjusted periodically to reflect changes in applicable laws
or regulations, changes in available technologies and receipt by the Company of
new information. It is difficult to estimate the ultimate level of future
environmental expenditures due to a number of uncertainties surrounding
environmental liabilities. These uncertainties include the applicability of laws
and regulations, changes in environmental remediation requirements, the
enactment of additional regulations, uncertainties surrounding remediation
procedures including the development of new technology, the identification of
new sites for which the Company could be a PRP, information relating to the
exact nature and extent of the contamination at each site and the extent of
required cleanup efforts, the uncertainties with respect to the ultimate outcome
of issues which may be actively contested and the varying costs of alternative
remediation strategies. The Company continues to pursue the recovery of some
environmental remediation costs from certain of its liability insurance
carriers; however, such potential recoveries have not been offset against
potential liabilities and have not been considered in determining the Company's
environmental reserves.

Due to uncertainty over remedial measures to be adopted at some sites, the
possibility of changes in environmental laws and regulations and the fact that
joint and several liability with the right of contribution is possible at
federal and state Superfund sites, the Company's ultimate future liability with
respect to sites at which remediation has not been completed may vary from the
amounts reserved as of September 30, 2000.

The Company believes, based on information available as of September 30, 2000
for sites where costs are estimable, that the costs of completing environmental
remediation of all sites for which the Company has a remediation responsibility
have been adequately reserved and that the ultimate resolution of these matters
will not have a material adverse effect upon the Company's financial condition,
results of operations or cash flows.

Product Liability Matters

As a consumer goods manufacturer and distributor, the Company and/or its
subsidiaries face the constant risks of product liability and related lawsuits
involving claims for substantial money damages, product recall actions and
higher than anticipated rates of warranty returns or other returns of goods.
These claims could result in liabilities that could have a material adverse
effect on the Company's consolidated financial position, results of operations
or cash flows. Some of the product lines the Company acquired in the 1998
acquisitions have increased its exposure to product liability and related
claims.

-21-
<PAGE>

SUNBEAM CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)

9. Commitments and Contingencies (continued)

The Company is party to various personal injury and property damage lawsuits
relating to its products and incidental to its business. Annually, the Company
sets its product liability insurance program which is an occurrence based
program based on the Company's current and historical claims experience and the
availability and cost of insurance. The Company's program for 2000 is comprised
of a self-insurance retention of $3.5 million per occurrence, and is limited to
$28.0 million in the aggregate.

Cumulative amounts estimated to be payable by the Company with respect to
pending and potential claims for all years in which the Company is liable under
its self-insurance retention have been accrued as liabilities. Such accrued
liabilities are necessarily based on estimates (which include actuarial
determinations made by independent actuarial consultants as to liability
exposure, taking into account prior experience, numbers of claims and other
relevant factors); thus, the Company's ultimate liability may exceed or be less
than the amounts accrued. The methods of making such estimates and establishing
the resulting liability are reviewed on a regular basis and any adjustments
resulting therefrom are reflected in current operating results.

Historically, product liability awards have rarely exceeded the Company's
individual per occurrence self-insured retention. There can be no assurance,
however, that the Company's future product liability experience will be
consistent with its past experience. Based on existing information, the Company
believes that the ultimate conclusion of the various pending product liability
claims and lawsuits of the Company, individually or in the aggregate, will not
have a material adverse effect on the financial position, results of operations
or cash flows of the Company.

-22-
<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, 1999.

European Restructuring

The Company is in the process of evaluating a restructuring plan related to its
European operations. The restructuring plan will include, but will not be
limited to, the reduction of warehouse and distribution centers, manufacturing
headcount and the reduction of the Company's product offerings and stock keeping
units ("SKU's"). As of September 30, 2000, the restructuring plan has not been
finalized, however, the Company expects to finalize the plan and record a charge
relating to such activities in the fourth quarter of 2000. The Company is unable
to estimate the expected charge related to this restructuring as the evaluation
process has not been completed.

Exchange Offer

In July 2000, the Company announced an offer to acquire all of the currently
outstanding zero coupon debentures due 2018 (the "Debentures") in exchange (the
"Exchange Offer") for senior secured subordinated debentures and shares of
Sunbeam common stock. On September 12, 2000, the Company withdrew its offer to
exchange all of the outstanding Debentures without accepting and paying for any
tendered Debentures. The holders of the Debentures were unwilling to participate
in the Exchange Offer under the terms proposed. As a result of the termination
of the Exchange Offer, the Company recognized a charge of $5.4 million in the
third quarter of 2000. This charge included investment banking fees and legal
and accounting fees incurred through September 30, 2000 relating to the proposed
transaction.

Acquisitions

On March 30, 1998, pursuant to a merger agreement dated as of February 27, 1998,
the Company, through a wholly-owned subsidiary, acquired approximately 81% of
the total number of then outstanding shares of common stock of The Coleman
Company, Inc. ("Coleman") from an affiliate of MacAndrews & Forbes ("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 of Coleman and its parent corporations. Immediately thereafter,
as a result of the exercise of Coleman employee stock options, the Company's
indirect beneficial ownership of Coleman decreased to approximately 79%.

In January 2000, pursuant to a merger agreement dated as of February 27, 1998,
the Company acquired the remaining publicly held Coleman shares in a merger
transaction in which the remaining Coleman stockholders (other than stockholders
who are seeking appraisal rights under Delaware law) received 0.5677 of a share
of the Company's common stock and $6.44 in cash for each share of Coleman common
stock they owned, aggregating approximately 6.7 million shares of the Company's
common stock and $87 million in cash. The approximate $87 million aggregate cash
payment included $4.8 million related to the cash out of remaining Coleman
employee options, in accordance with the merger agreement, which occurred in
December 1999. In addition, pursuant to a court approved settlement of claims by
Coleman public stockholders the Company issued to such Coleman public
stockholders (other than such stockholders who are seeking appraisal rights
under Delaware law), warrants expiring August 24, 2003 to purchase 4.98 million
shares of the Company's common stock at $7.00 per share less approximately
498,000 warrants issued to the plaintiffs' attorneys for their fees and
expenses. These warrants, which generally have the same terms as the warrants
previously issued to M&F's subsidiary (see Note 9 to the Condensed Consolidated
Financial Statements) were issued when the consideration was paid for the
Coleman merger. The total consideration given for the purchase of the remaining
publicly held Coleman shares was valued at $146 million.

The acquisition of Coleman was accounted for using the purchase method of
accounting, and accordingly, the financial position and results of operations of
Coleman are included in the accompanying Condensed Consolidated Statements of
Operations from the respective dates of acquisition. Prior to the completion of
the merger on January 6, 2000, the approximate 20% of Coleman's results of
operations and net equity allocable to the public shareholders was reported as
minority interest.

-23-
<PAGE>

Divestitures

Clippers Businesses

Eastpak Business

-24-
<PAGE>

Significant and Unusual Charges

Consolidated operating results for 2000 and 1999 were impacted by a number of
significant and unusual charges. Operating (loss) income, adjusted for these
items, is summarized in the following table and succeeding narrative.

Gross margin - As reported................ 105.1 162.8 390.5 462.9
Divested businesses.................. 0.4 (14.3) (14.4) (32.4)
Significant and unusual adjustments:
Glenwillow plant closure............. -- -- 6.4 --
Retail store closings................ -- -- 0.3 --
Purchase accounting.................. -- -- 4.3 --
------------- ------------- ------------- -------------
Adjusted gross margin............ 105.5 148.5 387.1 430.5
Adjusted gross margin percentage. 22.8% 26.4% 24.7% 25.4%

Selling, general and administrative
expense ("SG&A") - As reported.......... 137.4 158.5 443.6 460.0
Divested businesses.................. (0.3) (11.9) (13.8) (29.7)
Significant and unusual adjustments:
Asset impairment..................... 3.2 -- 3.2 --
Exchange Offer expense............... (5.4) -- (5.4) --
Glenwillow plant closure............. -- -- (1.2) --
Retail store closings................ -- -- (2.2) --
Restatement related litigation....... (1.2) (1.1) (23.2) (4.8)
Certain litigation and environmental
reserve adjustments................ (0.5) (3.7) (0.8) (4.2)
Insurance recovery................... -- -- 10.0 --
Year 2000 and systems initiatives
expenses........................... -- (6.8) -- (20.3)
Contract termination expense and other -- (0.8) -- (2.2)
------------- ------------- ------------- -------------
Adjusted SG&A expense............ 133.2 134.2 410.2 398.8
------------- ------------- ------------- -------------

Adjusted operating (loss) income.......... $ (27.7) $ 14.3 $ (23.1) $ 31.7
============== ============= ============== =============
</TABLE>

The results from operations for the three and nine month periods ending
September 30, 2000 and 1999 are adjusted to exclude the results of the Retail
Clippers business and the Eastpak business, which were divested in the first and
second quarters of 2000, respectively. Presentation of results for the periods
presented excluding the divested businesses is provided to enhance comparability
between the periods presented.

Glenwillow plant closure
------------------------

-25-
<PAGE>

Such amounts were charged to operations as incurred. At September 30, 2000, the
accrual balance relating to the closing of the Glenwillow facility was
insignificant.

Retail store closings
---------------------

Purchase accounting
-------------------

The Company recorded the Coleman acquisition using the purchase method of
accounting. In accordance with this accounting method, inventory pertaining to
the acquisition of the remaining approximately 20% minority interest in Coleman
was recorded at fair value. The fair value of the inventory exceeded the book
value reflected on the balance sheet of the acquired company as of the
acquisition date. The excess of the fair value of inventory over its
pre-acquisition book value was recorded in cost of sales as the inventory was
sold. The non-recurring impact of this purchase accounting adjustment was $4.3
million in the first quarter of 2000.

Asset Impairment
----------------

See "Eastpak Business" within this Item 2 - "Management's Discussion and
Analysis of Financial Condition and Results of Operations".

Exchange Offer expense
----------------------

See "Exchange Offer" within this Item 2 - "Management's Discussion and Analysis
of Financial Condition and Results of Operations".

Restatement-related litigation
------------------------------

By letter dated June 17, 1998, the staff of the Division of Enforcement of the
Securities and Exchange Commission ("SEC") advised the Company that it was
conducting an informal inquiry into the Company's accounting policies. The
Company is also involved in significant litigation, including class and
derivative actions relating to events which led to the restatement of its
consolidated financial statements, the issuance of the warrant to M&F, the sale
of the Debentures and the employment agreements of Messrs. Dunlap and Kersh. The
foregoing investigation and litigation are collectively referred to as
"restatement-related litigation". The Company has recorded aggregate charges of
$23.2 million in the first nine months of 2000 ($22.0 million in the second
quarter and $1.2 million in the third quarter) and $4.8 million in the first
nine months of 1999 ($3.7 million in the second quarter and $1.1 million in the
third quarter) for defense costs for restatement-related litigation. The charges
recorded reflect the Company's current estimate as of September 30, 2000 of
additional defense costs through the expected or scheduled trial dates or
termination dates for such restatement-related litigation. The Company's
estimate of the additional defense costs was based primarily upon actual defense
costs experienced and a projection of expected future costs through the various
trial dates of such litigations based on such costs to date (which are
considered to be representative of the expected future costs).

Certain litigation and environmental reserve adjustments
--------------------------------------------------------

During the first nine months of 2000 and 1999, the Company recorded additional
environmental reserves of $0.8 million ($0.3 million in the second quarter and
$0.5 million in the third quarter) and $1.2 million ($0.5 million in the second
quarter and $0.7 million in the third quarter), respectively, primarily related
to divested operations. Additionally, during the third quarter of 1999, the
Company recorded a charge of $3.0 million related to a litigation matter arising
out of circumstances the Company believes are not likely to reoccur.

-26-
<PAGE>

Insurance recovery
------------------

In the first quarter of 2000, the Company settled one of its claims related to
its directors' and officers' liability insurance policies pursuant to which,
among other things, the insurer reimbursed the Company for $10 million of
defense costs, which was the limit of the policy at issue. This reimbursement is
included in SG&A in the first quarter of 2000.

Year 2000 and systems initiatives expenses
------------------------------------------

Through September 30, 2000, including costs incurred in 1999 and 1998, the
Company had expended approximately $67 million to address Year 2000 systems
issues of which approximately 50% was recorded as capital expenditures and the
remainder as SG&A expense. During the first nine months of 1999, the Company
incurred $20.3 million ($8.1 million in the first quarter, $5.4 million in the
second quarter, and $6.8 million in the third quarter) in costs to address Year
2000 issues. No significant costs have been incurred during 2000 and the Company
does not expect to incur material additional costs related to Year 2000.

Contract termination and other
------------------------------

In the first quarter of 1999, the Company recorded a charge of $0.8 million
relating to the renegotiations of a contract with one of the Company's trademark
licensees. In addition, approximately $0.9 million was recorded ($0.3 million in
each the first, second and third quarters of 1999) as a result of management's
strategic decision to close a warehouse in Mexico.

In the third quarter of 1999, the Company recognized severance costs of $0.5
million related to the Company's decision to consolidate management of its
strategic business units.

Three Months Ended September 30, 2000 Compared to Three Months Ended September
30, 1999

Consolidated net sales for the three months ended September 30, 2000 and 1999
were $466.2 million and $601.6 million respectively, a decrease of $135.4
million or approximately 23%. Excluding the impact of divested businesses, net
sales for the third quarter of 2000 decreased $100.3 million or 17.8% as
compared to the same period in the prior year. This variance was primarily due
to a decrease in revenue from products with unusually high 1999 sales that the
Company believes were driven by year 2000 concerns ("Year 2000 Products") in the
Outdoor Leisure business. Additionally, a lower level of severe storm activity
in 2000 impacted sales of Year 2000 Products. The Company also believes that
sales of its products across all businesses were adversely affected by retailer
purchasing patterns during the third quarter of 2000. Consumer take away during
this time period out-paced retailer replenishment, resulting in part from
uncertain and potentially weakening domestic retail conditions. The Company
expects that during the fourth quarter of 2000, this purchasing trend by
retailers will continue, as well as lower overall consumer purchases. Net sales
for the Outdoor Leisure group decreased $82.5 million to $140.9 million in the
third quarter of 2000. Excluding the domestic net sales of Eastpak for the 1999
period, net sales decreased $71.3 million or 33.6% as compared to the third
quarter of 1999. This decrease is largely attributable to the reduction in sales
of Year 2000 Products, specifically Powermate(R) generators and Coleman cooking
and lighting products. The Company believes that the decline in revenue from
Powermate is a result of a combination of factors that have impacted the
portable generator category generally during 2000, including weather conditions
(lack of storm activity) and the effect of Year 2000 related sales in the second
half of 1999. The decline in Coleman's revenue was also impacted by the effect
of the aforementioned Year 2000 related sales as well as the impact of
unseasonably cold weather during the second and third quarters of 2000, which
adversely impacted sales of outdoor products. Sales of Year 2000 Products by
Powermate and Coleman are expected to continue to lag behind 1999 for the
balance of the year as a result of the positive impact that Year 2000 related
concerns and storm activity had on 1999 sales levels. Excluding divested
operations and Year 2000 Products sales from both periods presented, revenue for
the Outdoor Leisure group was approximately $8.1 million or 9% lower in the 2000
period as compared to the same quarter in the prior year. This decrease was
across all product categories and is largely due to the impact of the
aforementioned impact of consumer and retailer purchasing patterns. Household
net sales decreased $21.5 million, or 9.0%, to $218.3 million in the third
quarter of 2000 as compared to the same period in the prior year. Excluding the
net sales of the Retail Clippers business for both the 2000 and 1999 periods,
net sales decreased $18.2 million or approximately 8% as compared to the third
quarter of 1999. This decrease in revenue in the 2000 period is attributable to
decreases primarily in bedding and health products. Partially offsetting this
decrease is continued improvement in sales of appliances, primarily driven by
increased sales of toasters and Mr. Coffee products. The Company believes that
net sales in the Household segment in the third quarter of 2000 as compared to
the 1999 period were adversely affected by the impact of retailer purchasing
patterns

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<PAGE>

described above. International net sales decreased $33.9 million to $105.2
million in the third quarter of 2000 as compared to the same period in the prior
year. Excluding the International net sales of Eastpak and the Retail Clippers
business for the 1999 period, net sales decreased $13.3 million or 11.2% as
compared to the third quarter of 1999. The variance in International net sales
in the 2000 period is primarily attributable to decreases in net sales in Europe
and Canada. The net sales decrease in Europe was driven by lower levels of sales
of outdoor recreation products and unfavorable foreign currency exchange rates.
The decrease in net sales in Canada resulted from lower levels of sales of
Powermate generators. These decreases are partially offset by increases in net
sales in Latin America resulting from higher levels of sales of appliances.

Gross margin for the third quarter in 2000 was $105.1 million, or $57.7 million
lower than the comparable period in 1999. Excluding the effects of divestitures,
adjusted gross margin was $105.5 million in the third quarter of 2000, or $43.0
million lower than the comparable period in 1999. As a percentage of adjusted
net sales, adjusted gross margin was 22.8% in the third quarter of 2000 as
compared to the third quarter 1999 adjusted gross margin of 26.4%. The decrease
in the gross margin percentage, adjusted for divestitures, is largely
attributable to the Outdoor Leisure and International groups. These decreases
were primarily driven by unfavorable manufacturing fixed cost absorption
resulting from the lower production levels in the 2000 period and the effect of
the shift in product mix, primarily related to Year 2000 Products in the 1999
period, as gross margins on these products are higher than the overall average
gross margin on the products the Company sells. These decreases are partially
offset by decreases in customer allowances, which are deductions from gross
sales to arrive at net sales. The gross margin percentage for the Household
group, excluding the Retail Clippers business, improved approximately 2% in the
third quarter of 2000 as compared to the same period in 1999. This improvement
in gross margin results from a number of actions by the Company, including
sourcing certain products outside the U.S., reductions in costs resulting from
the Glenwillow plant closure and decreases in customer returns and allowances.

SG&A expense in the third quarter of 2000 was $137.4 million, representing a
13.3% decrease compared to the same period in the prior year. Excluding the
effects of divestitures and significant and unusual items, as summarized above
under "Significant and Unusual Charges", SG&A expense for 2000 was consistent
with the same period in 1999. As a percentage of adjusted net sales, adjusted
SG&A increased to 28.8% in the third quarter of 2000 from 23.8% in the same
period in the prior year. This percentage increase is primarily attributable to
the effect of the reduced sales volumes combined with increases in certain fixed
administrative expenses, including insurance, as compared to the same period in
the prior year. In addition, research and development ("R&D") spending increased
by $1.5 million in the 2000 period. The higher levels of R&D costs relate to new
product development, including "Smart Products" and Powermate generators.

Consolidated operating results for the third quarters of 2000 and 1999, were a
loss of $32.3 million in 2000 and profit of $4.3 million in 1999. Operating
results, as adjusted, were a loss of $27.7 million and a profit of $14.3 million
in the third quarter of 2000 and 1999, respectively. This change resulted from
the factors discussed above.

Interest expense, net in the third quarter of 2000 was $54.8 million as compared
to $48.3 million in the same period in the prior year. Approximately half of
this increase is attributable to higher levels of borrowings during the third
quarter of 2000. The increased level of borrowings was primarily attributable to
borrowings to fund the completion of the Coleman merger in January 2000 and for
working capital purposes. The balance of the increase was driven by the impact
of higher interest rates during the 2000 period and the amortization of the loan
amendment fee (approximately $1 million) the Company is obligated to pay under
the terms of the Credit Facility. These increases are partially offset by the
decrease in interest expense related to liquidated damages payable to debenture
holders (approximately $1 million) included in 1999. See Note 3 to the Condensed
Consolidated Financial Statements for a discussion of the loan amendment fee.

Other income, net was $2.0 million for the third quarter of 2000. This amount
primarily relates to gains from miscellaneous asset sales. Other income, net of
$5.2 million for the third quarter of 1999 included a gain of approximately $4
million relating to the sale of the Mexico City facility. This gain was
partially offset by losses from other miscellaneous asset sales of approximately
$1.5 million. The balance of other income, net in 1999 resulted from favorable
foreign exchange rates, primarily from the Company's operations in Japan.

The minority interest reported for the third quarter of 1999 primarily relates
to the minority interest held in Coleman by minority shareholders.

The Company recorded a deferred tax benefit in the third quarter of 2000
primarily due to losses in foreign jurisdictions. Approximately $1.6 million of
the $3.7 million income tax expense recorded in the third quarter of 1999
related to a U.S. tax liability generated by Coleman as a separate U.S. tax
filing entity. In July 1999, the Company acquired a sufficient ownership

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<PAGE>

interest in Coleman to permit it and Coleman to file consolidated U.S. tax
returns with Coleman for all future periods. The remaining tax expense recorded
in the third quarter of 1999 related to taxes on foreign income. No net tax
benefit was recorded on the Company's domestic losses in either year as it is
management's assessment that the Company cannot demonstrate that it is more
likely than not that deferred tax assets resulting from these losses would be
realized through future taxable income.

Nine Months Ended September 30, 2000 Compared to Nine Months Ended September 30,
1999

Net sales for the nine months ended September 30, 2000 and 1999 were $1,614.9
million and $1,786.4 million, respectively, representing a decrease of $171.5
million or approximately 10%. Excluding the impact of divested businesses,
adjusted net sales for the nine months ended September 30, 2000 decreased $128.1
million, or 7.5%, as compared to the same period in the prior year. This
variance was primarily due to decreases in revenue from Year 2000 Products in
the Outdoor Leisure business. Additionally, a lower level of severe storm
activity in 2000 impacted sales of Year 2000 Products. The Company also believes
that sales of its products across all businesses were adversely affected by
retailer purchasing patterns during the first nine months of 2000. Consumer take
away during this time period out-paced retailer replenishment, resulting in part
from uncertain and potentially weakening domestic retail conditions. The Company
expects that during the fourth quarter of 2000 this purchasing trend by
retailers will continue, as well as lower overall consumer purchases. These
decreases in revenues were partially offset by increases in sales of outdoor
cooking products and appliances. Net sales for the Outdoor Leisure group
decreased $114.2 million to $666.0 million in the nine months ended September
30, 2000. Excluding the domestic net sales of Eastpak for both the 2000 and 1999
periods, net sales decreased $97.0 million or 12.8% as compared to the 1999
period. This decrease is largely attributable to the reduction in sales of Year
2000 Products, as discussed above. Excluding the sales of Year 2000 Products,
revenue from Coleman products increased over the prior year, largely driven by
sales of inflatable furniture and coolers. Outdoor cooking product net sales
increased approximately $24 million in the 2000 period as compared to the same
period in 1999 largely due to the introduction of Coleman(R) branded gas grills
and grill accessories. Household net sales decreased $36.0 million, or 6.5%, to
$519.3 million in the nine-month period ended September 30, 2000 as compared to
the same period in the prior year. Excluding the net sales of the domestic
Retail Clippers business for both the 2000 and 1999 periods, net sales decreased
$30.4 million or 5.7% as compared to the nine-month period ended September 30,
1999. This decrease in revenue in the 2000 period as compared to the same period
in the prior year is primarily attributable to decreases in sales of health
products (principally heating pads and vaporizers), retail scales and First
Alert products. Partially offsetting these decreases is increases in sales of
appliances, primarily driven by increased sales of blenders and Mr. Coffee
products. International net sales decreased $19.2 million to $425.1 million in
the nine months ended September 30, 2000. Excluding the International net sales
of Eastpak and the Retail Clippers business for both the 2000 and 1999 periods,
net sales were consistent with the 1999 period. Within the International group,
net sales in Latin America and Japan increased in the 2000 period as compared to
the same period in the prior year resulting from higher levels of sales of
appliances and outdoor recreation products, respectively. These increases were
largely offset by decreases in net sales in the 2000 period in Canada as a
result of lower levels of sales of Powermate generators and decreased net sales
in Europe in the 2000 period driven by lower levels of sales of outdoor
recreation products and unfavorable foreign currency exchange rates.

Gross margin for the first nine months of 2000 was $390.5 million, or $72.4
million lower than the comparable period in 1999. Excluding the effects of
divested businesses and significant and unusual items, as summarized above under
"Significant and Unusual Charges", adjusted gross margin was $387.1 million in
the first nine months or $43.4 million lower than the comparable period in 1999.
As a percentage of adjusted net sales, adjusted gross margin was 24.7% in the
2000 period as compared to 25.4% in the same period in 1999. The variance in the
gross margin percentage in the 2000 period as compared to the same period in
1999 is attributable to the factors described above. Excluding the gross margins
on the Year 2000 Products, which are higher than the overall average gross
margin on the products the Company sells, adjusted gross margin as a percent of
sales in the nine month period ended September 30, 2000 improved over the same
period in the prior year.

SG&A expense for the first nine months of 2000 was $443.6 million, a decrease of
$16.4 million or 3.6% compared to the same period in the prior year. Excluding
the effects of divested businesses and significant and unusual items, as
summarized above under "Significant and Unusual Charges", SG&A expense for 2000
was $11.4 million, or 2.9% higher than the same period in 1999. As a percentage
of adjusted net sales, adjusted SG&A increased to 26.1% in the first nine months
of 2000 from 23.5% in the same period in the prior year. The variance is largely
attributable to the previously discussed increased spending related to R&D costs
and advertising and marketing, which increased $7.6 million and $10.7 million,
respectively, in the first nine months of 2000 as compared to the same period in
the prior year, combined with the effect of lower net sales. The increases in
advertising and marketing relate to new product introductions, including Coleman
branded grills and grill accessories and outdoor recreation products. The
variance in advertising and marketing expenses on a

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<PAGE>

year-over-year basis are also impacted by the timing of 1999 programs for the
Outdoor Leisure group, which largely occurred in the second half of 1999. These
increases in SG&A expenses are partially offset by the reduction of volume
driven selling and administrative costs as a result of the lower level of net
sales for the first nine months of 2000 compared to the same period in the prior
year. Additionally, the 1999 period included higher costs associated with
Sunbeam retail stores, and higher bad debt expense (approximately $5 million).

Operating results for the first nine months of 2000 and 1999, were a loss of
$53.2 million in 2000 and a profit of $3.0 million in 1999. Operating results,
as adjusted, were a loss of $23.1 million and a profit of $31.7 million in the
nine months ended September 30, 2000 and 1999, respectively. This change
resulted from the factors discussed above.

Interest expense increased from $136.6 million in 1999 to $160.7 million in
2000. Approximately half of this increase is attributable to higher levels of
borrowings during the 2000 period. The increased level of borrowings was
primarily due to borrowings to fund the completion of the Coleman merger in
January 2000 and for working capital purposes. The balance of the increase was
driven by the impact of higher interest rates during the 2000 period and the
amortization of the loan amendment fee ($6.9 million) the Company is obligated
to pay under the terms of the Credit Facility. These increases are partially
offset by the decrease in interest expense related to liquidated damages payable
to debenture holders (approximately $3 million) included in 1999. See Note 3 to
the Condensed Consolidated Financial Statements for a discussion of the loan
amendment fee.

Other expense, net of $2.7 million for the nine month period ending September
30, 2000 includes $4.6 million in losses on foreign exchange rates, primarily
driven by the Company's operations in Europe. These losses were partially offset
by the previously discussed gains resulting from miscellaneous asset sales.
Other income, net of $4.6 million in 1999 included a gain of approximately $4
million relating to the sale of the Mexico City facility. This gain was
partially offset by losses from other miscellaneous asset sales of approximately
$0.3 million. The remaining other income, net in 1999 resulted from favorable
foreign exchange rates, primarily from the Company's operations in Japan.

The minority interest reported in 2000 and 1999 relates to the minority interest
held in Coleman by minority shareholders.

Tax expense recorded through September 30, 2000 totaled $6.9 million, of which
$2.1 million related to Eastpak and the remainder related primarily to taxes on
foreign income. Approximately $1.6 million of the $12.7 million income tax
expense recorded in 1999 related to a U.S. tax liability generated by Coleman as
a separate U.S. tax filing entity. In July 1999, the Company acquired a
sufficient ownership interest in Coleman to permit it to file consolidated U.S.
tax returns with Coleman for all future periods. The remaining tax expense
recorded in 1999 related to taxes on foreign income. No net tax benefit was
recorded on the Company's domestic losses in either year as it is management's
assessment that the Company cannot demonstrate that it is more likely than not
that deferred tax assets resulting from these losses would be realized through
future taxable income.

Foreign Operations

After adjusting for the divestiture of Retail Clippers and Eastpak,
approximately 80% of the Company's business is conducted in U.S. dollars,
including domestic sales, U.S. dollar denominated export sales, primarily to
Latin American markets and Asian sales. The Company's non-U.S. dollar
denominated sales are made principally by subsidiaries in Europe, Canada, Japan,
Latin America and Mexico. 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.

On a limited basis, the Company selectively uses derivatives, primarily 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 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.

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<PAGE>

Liquidity and Capital Resources

Debt Instruments
----------------

In order to finance the 1998 acquisitions of Coleman, First Alert, Inc. ("First
Alert") and Signature Brands USA, Inc. ("Signature Brands") and to refinance
substantially all of the indebtedness of the Company and the three acquired
companies, the Company consummated an offering in March 1998 of Debentures due
2018 having a yield to maturity of 5% (approximately $2,014 million principle
amount at maturity), which resulted in approximately $730 million of net
proceeds to the Company, and borrowed about $1,325 million under its Credit
Facility.

The Debentures are exchangeable for shares of the Company's common stock at an
initial conversion rate of 6.575 shares for each $1,000 principal amount at
maturity of the Debentures, subject to adjustments upon occurrence of certain
events. The Debentures are subordinated in right of payment to all existing and
future senior indebtedness of the Company. The Debentures are not redeemable by
the Company prior to March 25, 2003. On or after such date, the Debentures are
redeemable for cash with at least 30 days notice, at the option of the Company.
The Company is required to purchase Debentures at the option of the holder as of
March 25, 2003, March 25, 2008 and March 25, 2013, at purchase prices equal to
the issue price plus accrued original discount to such dates. The Company may,
at its option, elect to pay any such purchase price in cash or common stock or
any combination thereof. However, the Credit Facility prohibits the Company from
redeeming or repurchasing debentures for cash.

In July 2000, the Company announced an Exchange Offer to acquire all of the
currently outstanding Debentures in exchange for secured notes and shares of
Sunbeam common stock. On September 12, 2000, the Company withdrew its offer to
exchange all of the outstanding Debentures without accepting and paying for any
tendered Debentures. The holders of the Debentures were unwilling to participate
in the Exchange Offer under the terms proposed. See additional discussion at
"Exchange Offer" within Item 2.

Concurrent with the 1998 acquisitions, the Company replaced its $250 million
syndicated unsecured five-year revolving credit facility with the Credit
Facility. The Credit Facility provided for aggregate borrowings of up to $1.7
billion and in addition to other customary covenants, required the Company to
maintain specified consolidated leverage, interest coverage and fixed charge
coverage ratios as of the end of each fiscal quarter occurring after March 31,
1998 and on or prior to the latest stated maturity date for any of the
borrowings under the Credit Facility.

As a result of, among other things, its operating losses incurred during the
first half of 1998, the Company did not achieve the specified financial ratios
for June 30, 1998 and it appeared unlikely that the Company would achieve the
specified financial ratios for September 30, 1998. Consequently, the Company and
its lenders entered into an agreement dated as of June 30, 1998 that waived
through December 31, 1998 all defaults arising from the failure of the Company
to satisfy the specified financial ratios for June 30, 1998 and September 30,
1998. Pursuant to an agreement with the Company dated as of October 19, 1998,
the Company's lenders extended all of the waivers through April 10, 1999 and
also waived through such date all defaults arising from any failure by the
Company to satisfy the specified financial ratios for December 31, 1998. In
April 1999, such waivers were extended through April 10, 2000 and on April 10,
2000 such waivers were extended through April 14, 2000.

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<PAGE>

inventory of the Company's Powermate subsidiary and outdoor cooking strategic
business unit. The Company paid a facility fee to its lenders of $62,500 for the
Supplemental Revolver.

The following description of the Credit Facility reflects the significant terms
of the Credit Facility as amended to date.

In addition to the Supplemental Revolver, the 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 was used to complete the Coleman merger which
occurred on January 6, 2000); (ii) up to $800.0 million in term loans maturing
on March 30, 2005 (all of which has been borrowed, and of which $35.0 million
was used to complete the Coleman merger which occurred on January 6, 2000 and of
which $78.0 million has been repaid) and (iii) a $500.0 million term loan
maturing September 30, 2006 (all of which has been borrowed and of which $7.9
million has been repaid). As of September 30, 2000, after giving effect to the
November 10, 2000 amendment which increased the amounts available under the
Supplemental Revolver described below, of the remaining $1.664 billion Credit
Facility, $1.538 billion was outstanding under the Credit Facility and
approximately $68 million would have been available for borrowing. The remaining
$58.1 million of the $1.664 billion Credit Facility was committed for
outstanding letters of credit.

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<PAGE>

previously agreed to for the April 15, 1999 amendment equal to 0.50% of the
commitments under the Credit Facility as of April 15, 1999, totaling $8.5
million. An additional amendment fee relating to the April 15, 1999 amendment
equal to $8.5 million will be payable to the bank lenders if the aggregate loan
and commitment exposure under the Credit Facility is equal to or more than $1.2
billion on November 30, 2000, with such fee being payable on June 30, 2001. The
$17 million amendment fee associated with the April 15, 1999 amendment was
amortized to interest expense using the straight-line method over the one-year
term of the amendment. The $8.5 million amendment fee associated with the April
14, 2000 amendment is being amortized to interest expense using the
straight-line method over the one year term of that amendment.

In addition to the above described EBITDA and other tests and ratios, the Credit
Facility contains covenants customary for credit facilities of a similar nature,
including limitations on the ability of the Company 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 expenditures, (vii) fail to maintain
its trade receivable securitization programs (or, in the case of the Sunbeam
Receivables Program (as defined below), obtain an alternative receivables
program within 60 days of termination of the Sunbeam Receivables Program),
(viii) engage in mergers, acquisitions and asset sales, (ix) engage in certain
transactions with affiliates, (x) settle certain litigation, (xi) alter its cash
management system and (xii) alter the businesses they conduct. The 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.
Furthermore, the Credit Facility requires the Company to prepay loans under the
Credit Facility on December 31, 2000 to the extent that the cash on hand in the
Company's concentration accounts plus the aggregate amount of unused revolving
loan commitments on that date exceed $185.0 million.

Pursuant to the April 14, 2000 amendment, term loan payments originally
scheduled for September 30, 1999 and March 31, 2000 in the amount of $69.3
million on each date are to be made as follows: (i) $69.3 million on the sale of
Eastpak, which occurred on May 26, 2000, (ii) $30.8 million on November 30, 2000
($11.7 million of which has already been paid with the proceeds of the sale of
Eastpak and certain other asset sales) and (iii) $38.5 million on April 10,
2001. The April 14, 2000 amendment provided that the payment dates for the $69.3
million term loan payments originally scheduled for each of September 30, 2000
and March 31, 2001 are deferred until April 10, 2001. In addition, the November
10, 2000 amendment provides that the November 30, 2000 term loan payment ($19.1
million) and the amendment fee payment ($8.5 million) be deferred until April
10, 2001. (See Note 3 to the Condensed Consolidated Financial Statements.)

Cash Flows
----------

As of September 30, 2000, the Company had cash and cash equivalents of $23.4
million and total debt of $2.4 billion. Cash used in operating activities during
the nine months ending September 30, 2000 was $97.9 million, compared to the
$73.2 million used during the nine months ending September 30, 1999. This change
is primarily attributable to a decrease in operating results after giving effect
to non-cash items, partially offset by decreased working capital needs during
the 2000 period. The decrease in cash used for working capital during the 2000
period was primarily driven by accounts receivable, which decreased
approximately $99 million from December 31, 1999 largely as a result of the
impact of the lower level of net sales in 2000 as compared to the same period in
1999. In addition, the decrease in accounts receivable during the nine months
ending September 30, 2000 reflects the impact of the increase in the existing
accounts receivable securitization program ( the "Sunbeam Receivables Program")
from $70 million to $100 million, effective March 31, 2000 and the new program
entered into in April 2000 for the sale of Coleman's and Powermate's trade
account receivables. (See Note 4 to the Condensed Consolidated Financial
Statements.) During the same period in 1999, accounts receivable increased by
approximately $78 million largely due to the Company's Outdoor Leisure division,
which experienced strong levels of second and third quarter sales in 1999.
During the first nine months of 2000, inventory levels increased approximately
$60 million due to the seasonal inventory build in the Company's Household
groups (primarily appliances and bedding products) and as a result of the
decrease in sales of Year 2000 Products and reduced sales resulting from
weakening retail conditions during the 2000 period as compared to the same
period in 1999. In the first nine months of 1999, inventory

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<PAGE>

levels decreased by $7.2 million primarily due to the fact that 1998 year-end
inventory levels were high and the Company was actively working to reduce
inventory to the appropriate level. Accounts payable decreased during the nine
month period ending September 30, 2000 by approximately $35 million primarily
due to a decrease in purchasing as a result of the lower sales volume and higher
levels of inventory at September 30, 2000. During the first nine months of 1999,
accounts payable increased approximately $30 million. The increase in payables
in the 1999 period resulted from accounts payable balances being at a low level
at year-end 1998 due to a decrease in purchasing as a result of the excess
levels of inventory in December 1998. Decreases in other liabilities, primarily
accrued interest, account for the majority of the balance of the cash used for
working capital in 1999.

Cash used in investing activities in the nine month period ending September 30,
2000 reflects $80.9 million for the purchase of the remaining approximate 20%
interest in Coleman and proceeds of $102.6 million relating to the sale of
Eastpak. Capital spending for the nine months ending September 30, 2000 totaled
$43.1 million, primarily for equipment and tooling for new products and the
expansion of the Company's Neosho, Missouri warehouse. Investing activities for
the 2000 period also includes approximately $10 million from the sale of assets,
including the sale of the former Coleman headquarters building (approximately $5
million). Capital spending in the comparable 1999 period was $63.2 million and
was primarily for information systems, including expenditures relating to Year
2000 readiness and equipment and tooling for new products. The Company
anticipates 2000 capital spending to be less than 5% of net sales.

Cash provided by financing activities totaled $93.1 million in the nine month
period ending September 30, 2000 and reflected net borrowings under the
Company's Credit Facility. Approximately $81 million of the borrowings under the
Credit Facility resulted from the Company's purchase of the remaining 20%
interest in Coleman. These borrowings were partially offset by repayments of
approximately $79 million made with proceeds from the sale of Eastpak. The
balance of the increased borrowings under the Credit Facility was used to fund
the Company's working capital requirements. Cash provided by financing
activities totaled $99.2 million in the nine months ending September 30, 1999
and reflects net borrowings under the Company's Credit Facility. (See Note 3 to
the Condensed Consolidated Financial Statements.)

At September 30, 2000, standby and commercial letters of credit aggregated $58.1
million and were predominately for insurance policies, workers' compensation,
and international trade activities. In addition, as of September 30, 2000,
surety bonds with a contract value of $72.2 million were outstanding largely for
the Company's pension plans and as a result of environmental issues and
litigation judgments that are currently under appeal.

As discussed in Note 2 to the Condensed Consolidated Financial Statements, the
Company announced it intends to sell its Professional Clippers business.
However, there can be no assurance as to whether or when such sale will be
consummated. Moreover, the terms, timing and use of the net proceeds from such
sale is subject to the approval of the lenders under the Credit Facility, and
there can be no assurance that the lenders will consent to any sale or as to the
terms of any consent provided.

As described in Note 4 to the Condensed Consolidated Financial Statements, the
purchaser under the Sunbeam Receivables Program has determined to cease
operations and consequently will cease purchasing receivables from the Company
on January 15, 2001. The Company intends to seek a replacement receivables
program, although there can be no assurance that the Company will be able to
obtain a replacement program or that the terms of any such replacement program
will be favorable to the Company. In addition, the Coleman Receivable Program
contains cross-default provisions that provide the purchasers of the receivables
an option to cease purchasing receivables if the Company is in default under the
Credit Facility. In addition, these agreements contain various other covenants
customary for these types of programs, including financial covenants. While the
Company was in compliance with such covenants through September 30, 2000, the
Company anticipates that it will be required to obtain a waiver or an amendment
for certain covenants contained in the Coleman Receivable Program early in 2001
due primarily to the anticipated financial performance of Coleman and Powermate
during 2000. The Company believes that such waiver or modification can be
obtained, although there can be no assurance that any such waiver or amendment
would be obtained or if obtained, would be on terms favorable to the Company.

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and timing of the sale of the Professional Clipper business, the Company's
ability to obtain lender consent to allow the Company access to all or most of
the proceeds thereof (after payment of the $27.6 million in principal and fees
due April 10, 2001) and the Company's ability to obtain a replacement
receivables program for the Sunbeam Receivables Program. Given these and other
uncertainties there can be no assurance that the aforementioned sources of funds
will be sufficient to meet the Company's cash requirements on a consolidated
basis. If the Company is unable to satisfy such cash requirements, the Company
could be required to adopt one or more alternatives, such as reducing or
delaying capital expenditures, borrowing additional funds, restructuring
indebtedness, selling other assets or operations and/or reducing expenditures
for new product development, cutting other costs, and some of such actions would
require the consent of the lenders under the Credit Facility. There can be no
assurance that any of such actions could be effected, or if so, on terms
favorable to the Company, that such actions would enable the Company to continue
to satisfy its cash requirements and/or that such actions would be permitted
under the terms of the Credit Facility. See "Cautionary Statements".

The Company is involved in significant litigation, including class and
derivative actions, relating to events which led to the restatement of its
consolidated financial statements, the issuance of the warrant to a subsidiary
of M&F, the sale of the debentures and the employment agreements of Messrs.
Dunlap and Kersh. The Company intends to vigorously defend each of the actions,
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 Company were to lose these suits, the resulting judgments would
likely have a material adverse effect on the Company's financial position,
results of operations or cash flows. Additionally, the Company's insurance
carriers, on the one hand, and the Company on the other, have filed various
suits against each other requesting a declaratory judgment on the validity of
the directors' and officers' liability insurance policies or have advised the
Company of their intent to deny coverage under such policies. The Company is
defending these claims and pursuing recovery from its insurers. See Part II-
"Other Information". The Company's failure to obtain such insurance recoveries
following an adverse judgment against the Company on any of the foregoing
actions could have a material adverse effect on the Company's financial
position, results of operations or cash flows.

Amounts accrued for litigation matters represent the anticipated costs (damages
and/or settlement amounts) in connection with pending litigation and claims and
related anticipated legal fees for defending such actions. The costs are accrued
when it is both probable that an asset has been impaired or a liability has been
incurred and the amount can be reasonably estimated. The accruals are based upon
the Company's assessment, after consultation with counsel, of probable loss
based on the facts and circumstances of each case, the legal issues involved,
the nature of the claim made, the nature of the damages sought and any relevant
information about the plaintiff, and other significant factors which vary by
case. When it is not possible to estimate a specific expected cost to be
incurred, the Company evaluates the range of probable loss and records the
minimum end of the range. As of September 30, 2000 the Company had established
accruals for litigation matters of $32.4 million (representing $6.5 million and
$25.9 million for estimated damages or settlement amounts and legal fees,
respectively) and $24.3 million as of December 31, 1999 (representing $9.6
million and $14.7 million for estimated damages or settlements and legal fees,
respectively.) It is anticipated that the $32.4 million accrual at September 30,
2000 will be paid as follows: $7.5 million in 2000, and $24.4 million in 2001
and $0.5 million in 2002. The Company believes, based on information available
to the Company on September 30, 2000, that anticipated probable costs of
litigation matters existing as of September 30, 2000 have been adequately
reserved to the extent determinable.

As a consumer goods manufacturer and distributor, the Company faces the constant
risks of product liability and related lawsuits involving claims for substantial
money damages, product recall actions and higher than anticipated rates of
warranty returns or other returns of goods. These claims could result in
liabilities that could have a material adverse effect on the Company's financial
position, results of operations or cash flows. Some of the product lines the
Company acquired in the 1998 acquisitions have increased its exposure to product
liability and related claims.

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The Company and its subsidiaries are also involved in various lawsuits from time
to time that the Company considers to be ordinary routine litigation incidental
to its business. In the opinion of the Company, the resolution of these routine
matters, and of certain matters relating to prior operations, individually or in
the aggregate, will not have a material adverse effect on the financial
position, results of operations or cash flows of the Company.

See Note 9 to the Condensed Consolidated Financial Statements.

New Accounting Standards

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 (the
"Act") and in releases made by the SEC. These 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,"

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<PAGE>

"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:

o high leverage;

o the Company's ability to continue to have access to its revolving credit
facility and its supplemental revolver including the Company's ability to
(i) comply with the terms of its Credit Facility, including the cumulative
EBITDA and other financial covenants, or (ii) enter into an amendment to
its credit agreement containing financial covenants which it and its bank
lenders find mutually acceptable or obtain waivers of compliance from such
covenants;

o the prices at which the Company is able to sell receivables under its trade
accounts receivables securitization programs and/or the Company's ability
to continue to sell receivables under either of such programs including the
Company's ability to comply with the terms of such programs; or obtain
replacement programs on acceptable terms in the event one or both of such
programs are terminated;

o the Company's ability to continue to have access to foreign working capital
lines or the amount of credit available to the Company under such lines;

o the Company's ability to refinance its indebtedness, including the Credit
Facility and/or the Debentures, at acceptable rates with acceptable other
terms;

o the Company's ability to consummate the sale of its Professional Clippers
business and certain other non-core assets and if consummated, the terms of
such sales and the Company's ability to obtain consent from its lenders for
such sale or the terms of such consent, including the portion of net
proceeds to be retained by the Company;

o weather conditions, including the absence of severe storms such as
hurricanes, which can have an unfavorable impact upon sales of Powermate
generators and certain of the Company's other products;

o economic uncertainty in Japan, Korea and other Asian countries, as well as
in Mexico, Venezuela, and other Latin American countries;

o the possibility of a slowdown in economic growth or retail sales of the
United States and/or other countries or a recession in the United States or
other countries resulting in a decrease in consumer demands for the
Company's products;

o the trend by retailers of increasing the scope of private label or
retailer-specific brands, particulary in appliances;

o the Company's ability to fully integrate the Coleman, and Signature Brands
businesses and expenses associated with such integration;

o the Company's sourcing of products from international vendors, including
the ability to select reliable vendors and obtain on-time delivery and
quality products from such vendors;

o the Company's ability to maintain and increase market share for its
products at acceptable margins;

o the Company's ability to successfully introduce new products and to provide
on-time delivery and a satisfactory level of customer service;

o changes in domestic and/or foreign laws and regulations, including changes
in tax laws, accounting standards, environmental laws, occupational, health
and safety laws;

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<PAGE>

o access to foreign markets together with foreign economic conditions,
including currency fluctuations and trade, monetary and/or tax policies;

o fluctuations in the cost and availability of raw materials and/or products;

o changes in the availability and costs of labor;

o effectiveness of advertising and marketing programs;

o product quality, including excess warranty costs;

o product liability expenses consisting of insurance, litigation fees and
damages and/or settlement costs, as well as other costs including Sunbeam's
First Alert subsidiary and costs including legal fees and penalties (if
any) and lost business and/or goodwill of product recalls;

o 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 under its directors' and officers'
liability insurance; and

o actions by competitors in existing and/or future lines of businesses
including business combinations, new product offerings and promotional
activities.

Other factors and assumptions not included in the list above may also cause the
Company's actual results to materially differ from those projected.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

On June 16, 1998, the court entered an order consolidating all these suits and
all similar class actions subsequently filed (collectively, the "Consolidated
Federal Actions"). On January 6, 1999, plaintiffs filed a consolidated amended
class action complaint against the Company, some of its present and former
directors and former officers, and Arthur Andersen. The consolidated amended
class action complaint alleges, among other things, that defendants made
material misrepresentations and omissions regarding the Company's business
operations and future prospects in an effort to artificially inflate the price
of the Company's common stock and call options, and that, in violation of
section 20(a) of the Exchange Act, the individual defendants exercised influence
and control over the Company, causing the Company to make material
misrepresentations and omissions. The consolidated amended complaint seeks an
unspecified award of money damages. In February 1999, plaintiffs moved for an
order certifying a class consisting of all persons and entities who purchased
the Company's common stock or who purchased call options or sold put options
with respect to the Company's common stock during the period April 23, 1997
through June 30, 1998, excluding the defendants, their affiliates, and employees
of the Company. Defendants have opposed that motion. In March 1999, all
defendants who had been served with the consolidated amended class action
complaint moved to dismiss it and the court granted the motion only as to
certain non-employee current and former directors and a former officer, and
denied it as to the other defendants. Arthur Andersen has filed counterclaims
against the Company, and a third-party complaint against a former director of
the Company and against unnamed third party corporations. On July 31, 2000, the
court dismissed the former director from Arthur Anderson's counterclaims. On
June 30, 2000, the plaintiffs filed a second amended complaint against most of
the same defendants (although two of the Company's former outside directors were
not included as defendants in the second amended complaint) alleging the same
principal claims as the prior amended complaint described above.

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& Forbes alleging, among other things, that certain of the defendants breached
their fiduciary duty when the Company entered into a settlement agreement with
MacAndrews & Forbes, and certain of the defendants breached their fiduciary duty
and wasted corporate assets by, among other things, issuing materially false and
misleading statements regarding the Company's financial condition. The plaintiff
in this action seeks, among other things, recission of the warrants issued to
MacAndrews & Forbes and an injunction preventing the issuance of warrants and
damages. Each of the defendants has filed a motion to dismiss this complaint.

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<PAGE>

Alabama Securities Laws. The plaintiffs seek compensatory and punitive damages
in an unspecified amount. Arthur Andersen has filed a cross claim against the
Company for contribution and indemnity. The Company has filed a motion to
dismiss. In May 2000, the plaintiffs in this action filed an amended complaint,
which added allegations of violations of the federal securities laws. This
action was transferred to and consolidated with the Consolidated Federal
Actions.

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Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

Exhibit No. Description
---------- --------------------------------------------

10.1 Eleventh Amendment dated as of July 6, 2000 to
Credit Agreement dated as of March 30, 1998 among
Sunbeam Corporation, the subsidiary borrowers
referred to therein, the Lenders party thereto,
Morgan Stanley Senior Funding, Inc., Bank of America
National Trust and Savings Association and First
Union National Bank (as amended, the "Credit
Agreement")

10.2 Twelfth Amendment to the Credit Agreement dated as
of August 10, 2000

10.3 Thirteenth Amendment to the Credit Agreement dated
as of September 29, 2000

10.4 Fourteenth Amendment to the Credit Agreement dated
as of November 10, 2000

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

(b) Report on Form 8-K

No reports on Form 8-K were filed through September 30, 2000.

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SIGNATURE

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: November 17, 2000

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EXHIBIT INDEX

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

10.2 Twelfth Amendment to the Credit Agreement dated as
of August 10, 2000

10.3 Thirteenth Amendment to the Credit Agreement dated
as of September 29, 2000

10.4 Fourteenth Amendment to the Credit Agreement dated
as of November 10, 2000

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