<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended MARCH 31, 1996
-----------------------
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from ___________ to ___________
Commission File Number: 1-11962
------------
COLEMAN WORLDWIDE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 13-3704484
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1526 COLE BLVD., SUITE 300, GOLDEN, COLORADO 80401
(Address of principal executive offices) (Zip Code)
303-202-2400
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to
such filing requirement for the past 90 days. /X/ Yes No
----- -----
The number of shares outstanding of the registrant's par value $1.00 common
stock was 1,000 shares as of April 30, 1996, all of which were held by an
indirect wholly-owned subsidiary of Mafco Holdings Inc.
Exhibit Index on Page 13.
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION Page
----
Item 1. Condensed Consolidated Financial Statements:
Condensed Consolidated Statements of Earnings
Three months ended March 31, 1996 and 1995 3
Condensed Consolidated Balance Sheets
March 31, 1996 and December 31, 1995 4
Condensed Consolidated Statements of Cash Flows
Three months ended March 31, 1996 and 1995 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
2
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands)
(Unaudited)
THREE MONTHS
ENDED MARCH 31,
------------------
1996 1995
-------- --------
Net revenues . . . . . . . . . . . . . . . . . . . . $273,560 $224,024
Cost of sales. . . . . . . . . . . . . . . . . . . . 192,594 155,528
-------- -------
Gross profit . . . . . . . . . . . . . . . . . . . . 80,966 68,496
Selling, general and administrative expenses . . . . 46,776 39,638
Interest expense . . . . . . . . . . . . . . . . . . 11,056 8,399
Amortization of goodwill and deferred charges. . . . 2,392 2,017
Other (income), net. . . . . . . . . . . . . . . . . (2,721) (150)
-------- -------
Earnings before income taxes, minority interest
and extraordinary item. . . . . . . . . . . . . . . 23,463 18,592
Provision for income taxes . . . . . . . . . . . . . 8,692 7,037
Minority interest. . . . . . . . . . . . . . . . . . 2,535 2,270
-------- -------
Earnings before extraordinary item . . . . . . . . . 12,236 9,285
Extraordinary loss on early extinguishment of
debt, net of income tax benefit . . . . . . . . . . (582) --
-------- -------
Net earnings . . . . . . . . . . . . . . . . . . . . $ 11,654 $ 9,285
-------- -------
-------- -------
See Notes to Condensed Consolidated Financial Statements
3
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
MARCH 31, DECEMBER 31,
1996 1995
--------- ------------
ASSETS
Current assets:
Cash and cash equivalents. . . . . . . . . . . . . . $ 6,816 $ 12,065
Accounts receivable, net . . . . . . . . . . . . . . 262,656 165,309
Inventories . . . . . . . . . . . . . . . . . . . . 257,886 216,236
Deferred tax assets. . . . . . . . . . . . . . . . . 21,485 20,481
Prepaid assets and other . . . . . . . . . . . . . . 25,641 22,420
---------- --------
Total current assets . . . . . . . . . . . . . . . 574,484 436,511
Property, plant and equipment, net . . . . . . . . . . 169,677 162,691
Intangible assets related to businesses
acquired, net . . . . . . . . . . . . . . . . . . . . 264,158 225,247
Note receivable - affiliate. . . . . . . . . . . . . . 50,685 50,685
Deferred tax assets and other. . . . . . . . . . . . . 25,558 31,255
---------- --------
$1,084,562 $906,389
---------- --------
---------- --------
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts and notes payable . . . . . . . . . . . . . . $ 133,274 $ 90,679
Other current liabilities. . . . . . . . . . . . . . . 48,778 59,213
---------- --------
Total current liabilities. . . . . . . . . . . . . 182,052 149,892
Long-term debt . . . . . . . . . . . . . . . . . . . . 645,025 519,640
Income taxes payable - affiliate . . . . . . . . . . . 43,528 37,846
Other liabilities. . . . . . . . . . . . . . . . . . . 47,856 48,072
Minority interest. . . . . . . . . . . . . . . . . . . 52,390 49,266
Contingencies. . . . . . . . . . . . . . . . . . . . .
Stockholder's equity:
Common stock . . . . . . . . . . . . . . . . . . . . 1 1
Additional paid-in capital . . . . . . . . . . . . . 23,486 23,496
Retained earnings. . . . . . . . . . . . . . . . . . 89,477 77,823
Currency translation adjustment. . . . . . . . . . . 747 353
---------- --------
Total stockholder's equity . . . . . . . . . . . . 113,711 101,673
---------- --------
$1,084,562 $906,389
---------- --------
---------- --------
See Notes to Condensed Consolidated Financial Statements
4
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
THREE MONTHS
ENDED MARCH 31,
--------------------
1996 1995
--------- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings. . . . . . . . . . . . . . . . . . . . $ 11,654 $ 9,285
--------- --------
Adjustments to reconcile net earnings to net cash
flows from operating activities:
Depreciation and amortization. . . . . . . . . . . 7,733 6,348
Non-cash tax sharing agreement provision . . . . . 5,682 4,234
Minority interest. . . . . . . . . . . . . . . . . 2,535 2,270
Interest accretion . . . . . . . . . . . . . . . . 2,976 2,789
Non-cash gain on LYONs conversion. . . . . . . . . (2,751) --
Extraordinary loss on early extinguishment
of debt . . . . . . . . . . . . . . . . . . . . . 986 --
Change in assets and liabilities:
Increase in receivables. . . . . . . . . . . . . (84,659) (67,109)
Increase in inventories. . . . . . . . . . . . . (28,420) (28,165)
Increase in accounts payable . . . . . . . . . . 8,741 10,582
Other, net . . . . . . . . . . . . . . . . . . . (17,323) (409)
--------- --------
(104,500) (69,460)
--------- --------
Net cash used by operating activities. . . . . . . . (92,846) (60,175)
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures . . . . . . . . . . . . . . . . (6,866) (5,619)
Purchases of businesses, net of cash acquired. . . . (60,132) --
Increase in note receivable - affiliate. . . . . . . -- (10,734)
Proceeds from sale of fixed assets . . . . . . . . . 186 273
--------- --------
Net cash used by investing activities. . . . . . . . (66,812) (16,080)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from revolving credit agreement
borrowings. . . . . . . . . . . . . . . . . . . . . 125,713 54,900
Net change in short-term borrowings. . . . . . . . . 29,611 17,775
Repayment of long-term debt. . . . . . . . . . . . . (172) (2,270)
Purchases of Company common stock. . . . . . . . . . (2,329) --
Proceeds from stock options exercised. . . . . . . . 967 3,410
Other, net . . . . . . . . . . . . . . . . . . . . . (10) 17
--------- --------
Net cash provided by financing activities. . . . . . 153,780 73,832
--------- --------
Effect of exchange rate changes on cash. . . . . . . 629 (2,471)
--------- --------
Net decrease in cash and cash equivalents. . . . . . (5,249) (4,894)
Cash and cash equivalents at beginning of the
period. . . . . . . . . . . . . . . . . . . . . . . 12,065 8,319
--------- --------
Cash and cash equivalents at end of the period . . . $ 6,816 $ 3,425
--------- --------
--------- --------
See Notes to Condensed Consolidated Financial Statements
5
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share data)
(Unaudited)
1. BASIS OF FINANCIAL STATEMENT PRESENTATION
Coleman Worldwide Corporation ("Coleman Worldwide") is a holding company
formed in March 1993 in connection with the offering of Liquid Yield OptionTM
Notes due 2013 (the "LYONs"TM). Coleman Worldwide also holds 22,033,760
shares of the common stock of The Coleman Company, Inc. (the "Company" or
"Coleman") which represents approximately 83% of the outstanding Coleman
common stock as of March 31, 1996.
The accompanying unaudited condensed consolidated financial statements
of Coleman Worldwide have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three months ended March 31, 1996 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1996. The balance sheet at December 31, 1995 has been derived
from the audited financial statements for that date but does not include all
of the information and footnotes required by generally accepted accounting
principles for complete financial statements. For further information, refer
to the consolidated financial statements and footnotes thereto included in
the Coleman Worldwide's annual report on Form 10-K for the year ended
December 31, 1995.
2. INVENTORIES
The components of inventories consist of the following:
MARCH 31, DECEMBER 31,
1996 1995
--------- ------------
Raw material and supplies . . . $ 72,450 $ 57,653
Work-in-process . . . . . . . . 7,118 5,389
Finished goods. . . . . . . . . 178,318 153,194
-------- --------
$257,886 $216,236
-------- --------
-------- --------
3. ACQUISITIONS
On January 2, 1996, the Company purchased substantially all the assets
and assumed certain liabilities of Seatt Corporation ("Seatt"), a leading
designer, manufacturer and distributor of a broad range of safety related
electronic products for residential and commercial applications. The Seatt
acquisition, which was accounted for under the purchase method, was completed
for approximately $64,982 including fees and expenses and was financed
through borrowings under the Company Credit Agreement, and assumption of
certain liabilities in the amount of $7,157 by the Company. The results of
operations of Seatt have been included in the consolidated financial
statements from the date of acquisition. In connection with the preliminary
purchase price allocation of the Seatt acquisition, the Company recorded
goodwill of approximately $37,821. The Company is amortizing this amount
over 40 years.
6
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share data)
(Unaudited)
The following summarized, unaudited pro forma results of operations for
the three months ended March 31,1995 assumes the acquisition of Seatt
occurred as of the beginning of 1995. The pro forma results do not purport
to be indicative of what would have occurred had the Seatt acquisition been
consummated at the beginning of 1995. Moreover, the pro forma information is
not intended to be indicative of future results of operations.
THREE MONTHS ENDED
MARCH 31,
1995
------------------
Net revenues. . . . . . . . . . . . . $238,185
Net earnings. . . . . . . . . . . . . 9,374
On February 28, 1996, the Company and Butagaz S.N.C. ("Butagaz"), a
subsidiary of Societe de Petroles Shell S.A., jointly announced they had
entered into an agreement in connection with the sale to Coleman of 60
percent of the outstanding shares of Application des Gaz, S.A. ("ADG" or
"Camping Gaz") at a price of French Franc 404 per share (approximately $81
per share at the then current exchange rate) or approximately $58,000 in the
aggregate. Coleman has the right to purchase the balance of Butagaz' 10
percent economic interest at a later date at the same price per share of
French Franc 404, with Butagaz retaining a seat on the board of ADG. The
transaction is subject to several conditions and once these have been
satisfied, the purchase of the remaining 30 percent of the outstanding shares
of Camping Gaz held by ADG public shareholders shall be proposed through a
tender offer at the same price of French Franc 404 per share. The Company
expects the conditions to the acquisition will be satisfied and expects to
complete the acquisition of Camping Gaz late in the second quarter of 1996.
Camping Gaz has a significant presence in the market for camping equipment in
Europe and has recently pursued its development internationally. The
Company's current intention is to finance the Camping Gaz acquisition through
a private placement issuance of approximately $160,000 aggregate principal
amount senior notes due in 2008. The Company is currently in the process of
reviewing its integration alternatives with respect to the combination of the
business operations of Coleman and Camping Gaz. The conclusions of the
review could result in a charge against earnings in 1996.
4. SUBSEQUENT EVENTS
On April 30, 1996, the Company amended the Company Credit Agreement to
revise several of the terms and provisions of the Company Credit Agreement
and to allow for the issuance of additional long-term notes. The Company
Credit Agreement, as amended, provides for (a) an unsecured French Franc term
loan in the amount of French Franc 385,125 ($75,000 at the then current
exchange rates) and (b) an unsecured revolving credit facility of $275,000.
The Company Credit Agreement, as amended, is available to the Company until
April 30, 2001.
The outstanding loans under the Company Credit Agreement bear interest
at either of the following rates, as selected by the Company from time to
time: (i) the higher of the agent's base lending rate or the federal funds
rate plus .50% or (ii) the London Inter-Bank Offered Rate ("LIBOR") plus a
margin ranging from .25% to 1.1% based on the Company's financial
performance. If there is a default, the interest rate otherwise in effect
will be increased by 2% per annum and the margin will be 1.0% in the case of
U.S. Dollar denominated LIBOR loans and 1.1% for foreign currency denominated
LIBOR loans. The Company Credit Agreement also bears an overall facility fee
ranging from .15% to .375% based on the Company's financial performance.
7
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share data)
(Unaudited)
The amended Company Credit Agreement contains various restrictive
covenants, including without limitation, requirements for the maintenance of
specified financial ratios and levels of consolidated net worth and certain
other provisions limiting the incurrence of additional debt, purchase or
redemption of Coleman Common Stock, issuance of Coleman Preferred Stock, and
the payment of dividends. Under the most restrictive of these covenants of
the amended Company Credit Agreement, approximately $69,860 would have been
available for payment by the Company of cash dividends at March 31, 1996.
In connection with the amending and restating of the Company's previous
credit agreement, the Company will recognize an extraordinary loss of
approximately $1,078 ($652 after taxes, or $0.03 per share) in the quarter
ended June 30, 1996, which represents a write-off of the related unamortized
financing costs associated with the Company's previous credit agreement.
5. CONTINGENCIES
On July 22, 1993, Coleman Worldwide's parent, Coleman Holdings Inc.,
("Coleman Holdings") issued and sold $281,281 principal amount at maturity of
Senior Secured Discount Notes due 1998 (the "Old Notes") in a private
placement offering. Subsequent to the private placement offering, a
registration statement on Form S-1 was filed to exchange the Old Notes for
Series B Senior Secured Discount Notes (the "Notes").
The Notes will mature on May 27, 1998 and are secured by all the shares
of Coleman Worldwide. In connection with Coleman Holdings' Notes issuance,
Coleman Worldwide has provided a non-recourse guaranty, which is secured by
its pledge of 13,000,000 shares of Coleman Common Stock. There will be no
periodic payment of interest on the Notes. The aggregate principal amount of
the Notes represents a yield to maturity of 10.875% per annum (computed on a
semi-annual bond equivalent basis) calculated from July 22, 1993.
8
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Coleman Worldwide is a holding company with no business operations or
source of income of its own. Accordingly, except as otherwise indicated, the
following discussion relates to the results of operations of the Company.
RESULTS OF OPERATIONS
Net revenues in the 1996 and 1995 periods were $273.6 million and $224.0
million, respectively, an increase of $49.6 million, or 22.1%. All classes
of the Company's products contributed to this increase with recreation
products increasing by $15.2 million, hardware/home center products
contributing $16.5 million, and the Company's new class of home safety and
security products recording revenues of $17.9 million. Net revenues in the
United States and Canada increased 24.7%, and net revenues from international
markets increased 14.3%.
Recreation products revenues reflect strong growth in sleeping bags,
tents and camping accessories and along with sales of Sierra camp furniture
products, a business acquired in July 1995, helped offset a decline in
revenues from cooler and jugs which is primarily attributable to a large
thermo-electric cooler premium promotion in the 1995 period which was not
repeated in 1996. The increase in sales of the Company's hardware/home
center products include strong sales of generators as a result of the winter
weather and continued growth in pressure washer revenues as the overall
pressure washer market continues to grow and become more competitive. Total
revenues in the 1996 period also include revenues from home safety and
security products associated with the Seatt business, which was acquired in
January 1996. Seatt revenues exceeded expectations and were up when compared
to Seatt's respective period in 1995. International revenues were adversely
affected by the unfavorable translation of foreign revenues, primarily in
Japan, due to the strengthening of the U.S. dollar in the 1996 period as
compared to the 1995 period.
Cost of sales was $192.6 million in 1996 compared with $155.5 million in
1995, an increase of 23.8%. Cost of sales as a percent of net revenues
increased to 70.4% in 1996 from 69.4% in 1995. The increase in cost of sales
as a percent of net revenues is primarily because of the effects of the mix
of products sold, as revenues from lower margin products, primarily electric
pressure washers, grew faster than other categories of products which carry
higher margins.
Selling, general and administrative ("SG&A") expenses were $46.7 million
in 1996 compared to $39.6 million in 1995, an increase of 18.0%. SG&A
expenses as a percent of net revenues improved to 17.1% in 1996 from 17.7% in
1995 as revenues grew faster than the growth in SG&A expenses. The increase
in SG&A expenses primarily reflects SG&A expenses associated with recent
business acquisitions and to a lesser extent increased advertising, marketing
and administrative expenses.
The Company's interest expense was $8.1 million in 1996 compared with
$5.6 million in 1995, an increase of $2.5 million. This increase was
primarily the result of higher borrowings to fund business acquisitions and
support the increase in working capital. On an unconsolidated basis, Coleman
Worldwide had an additional $3.0 million of interest expense in 1996 compared
with $2.8 million in 1995, an increase of $0.2 million. This increase is a
result of the effects of compounding interest related to the LYONs.
During the three months ended March 31, 1996, holders of LYONs with a
principal amount at maturity of $9.4 million elected to exchange such LYONs
pursuant to the terms of the LYONs indenture. In connection with these
exchanges, Coleman Worldwide delivered 74,107 shares of Coleman Common Stock
that Coleman Worldwide owned to the holders of the LYONs which were
exchanged. Coleman Worldwide recognized a gain of $2.7 million in connection
with these exchanges and which is reflected in other income. Coleman Worldwide
9
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
also recognized an extraordinary loss on early extinguishment of debt as a
result of the LYONs exchange in an amount of $1.0 million ($0.6 million after
tax). This extraordinary loss represents i) the excess fair value of the
property delivered by Coleman Worldwide to the holders of the LYONs which
were exchanged over the accreted value of the LYONs obligations at the time
of the exchange, along with ii) a pro-rata portion of the related unamortized
financing costs associated with the LYONs issuance.
Minority interest represents the minority stockholders' proportionate
share of the results of operations of the Company, which is reflected on
Coleman Worldwide's consolidated financial statements because of Coleman
Worldwide's approximate 83% ownership of Coleman's common stock. Minority
interest increased in 1996 due to an increase in the Company's income in 1996.
The Company's effective income tax rate was 37.0% in 1996 compared with
38.4% in 1995. Coleman Worldwide's consolidated effective income tax rate was
37.0% in 1996 compared with 37.8% in 1995. In each case, the decrease in the
effective tax rate in 1996 as compared to 1995 is primarily due to tax
benefits associated with the Company's manufacturing operations in Puerto
Rico.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows used in Coleman Worldwide's consolidated operations were
$92.8 million and $60.2 million for the three months ended March 31, 1996 and
1995, respectively. Cash used during these periods reflects the Company's
seasonal working capital requirements associated with generally higher sales
in the first quarter of the year as compared to the fourth quarter of the
year. Receivables increased by $84.7 million and $67.1 million for the three
months ended March 31, 1996 and 1995, respectively, as a result of the
seasonality of the Company's sales and an increase in the overall level of
the Company's sales. Inventories increased by $28.4 million in the three
months ended March 31, 1996 to support the growth of the Company, especially
in the camping accessory and lighting products. Coleman Worldwide's net
cash used for investing activities was $66.8 million and $16.1 million for
the three months ended March 31, 1996 and 1995, respectively. The Company's
capital expenditures were $6.9 million and $5.6 million in the three months
ended March 31, 1996 and 1995, respectively. The Company used $60.1 million
of cash for a business acquisition during the three months ended March 31,
1996. The increase in capital expenditures reflects the addition of
equipment to expand the Company's capacity to manufacture certain of its
products lines. Net advances to Mafco Holdings Inc. under the Coleman
Worldwide tax sharing agreement and the terms of the LYONs trust indenture
were $10.7 million during the three months ended March 31, 1995. Net cash
provided by financing activities for the three months ended March 31, 1996
consisted primarily of increases in long-term and short-term borrowings to
finance the seasonal increase in working capital and the Company's investing
activities.
The Company's working capital requirements are currently funded by cash
flow from operations and domestic and foreign bank lines of credit. In April
1996, the Company amended its previous credit agreement to allow for the
Camping Gaz acquisition as well as to extend the maturity of the credit
agreement (the "Company Credit Agreement"). The Company Credit Agreement
provides a term loan of French Franc 385,125 ($75.0 million at the then
current exchange rates) and a revolving credit facility in an amount of
$275.0 million. Availability under the Company Credit Agreement is reduced by
any commercial paper borrowings outstanding. The Company Credit Agreement is
available to the Company until April 30, 2001. At March 31, 1996, $70.7
million would have been available for borrowings under the Company Credit
Agreement.
The outstanding loans under the Company Credit Agreement bear interest
at either of the following rates, as selected by the Company from time to
time: (i) the higher of the agent's base lending rate or the federal funds
rate plus .50% or (ii) the London Inter-Bank Offered Rate ("LIBOR") plus a
margin ranging from .25% to 1.1% based on the Company's financial
performance. If there is a default, the interest rate otherwise in effect
will be increased by 2% per annum and the margin will be 1.0% for in the case
of U.S. Dollar denominated LIBOR loans
10
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
and 1.1% for foreign currency denominated LIBOR loans. The Company Credit
Agreement also bears an overall facility fee ranging from .15% to .375% based
on the Company's financial performance.
The Company Credit Agreement contains various restrictive covenants,
including without limitation, requirements for the maintenance of specified
financial ratios and levels of consolidated net worth and certain other
provisions limiting the incurrence of additional debt, purchase or redemption
of Coleman Common Stock, issuance of Coleman Preferred Stock, and the payment
of dividends. Under the most restrictive of these covenants of the Company
Credit Agreement, approximately $69.9 million would have been available for
payment by the Company of cash dividends at March 31, 1996.
In connection with the amending of the Company's credit agreement, the
Company will recognize an extraordinary loss of approximately $1.1 million
($0.7 million after taxes, or $0.03 per share) in the quarter ended June 30,
1996, which represents a write-off of the related unamortized financing costs
associated with the Company's credit agreement.
Coleman Worldwide and its parent, Coleman Holdings Inc., have entered
into borrowing agreements which are collateralized by the Company's common
stock.
The Company expects that the combination of the cash flow generated by
its operations and borrowings under the Company Credit Agreement will be
sufficient to enable it to meet its current operating requirements, including
projected capital expenditures, tax sharing payments and other obligations.
On February 28, 1996, the Company and Butagaz S.N.C. ("Butagaz"), a
subsidiary of Societe de Petroles Shell S.A., jointly announced they had
entered into an agreement in connection with the sale to Coleman of 60
percent of the outstanding shares of Application des Gaz, S.A. ("ADG" or
"Camping Gaz") at a price of French Franc 404 per share (approximately $81
per share at the then current exchange rate) or approximately $58.0 million
in the aggregate. Coleman has the right to purchase the balance of Butagaz'
10 percent economic interest at a later date at the same price per share of
French Franc 404, with Butagaz retaining a seat on the board of ADG. The
transaction is subject to several conditions and once these have been
satisfied, the purchase of the remaining 30 percent of the outstanding shares
of Camping Gaz held by ADG public shareholders shall be proposed through a
tender offer at the same price of French Franc 404 per share. The Company
expects the conditions to the acquisition will be satisfied and expects to
complete the acquisition of Camping Gaz late in the second quarter of 1996.
Camping Gaz has a significant presence in the market for camping equipment in
Europe and has recently pursued its development internationally. The
Company's current intention is to finance the Camping Gaz acquisition through
a private placement issuance of approximately $160.0 million aggregate
principal amount senior notes due in 2008. The Company is currently in the
process of reviewing its integration alternatives with respect to the
combination of the business operations of Coleman and Camping Gaz. The
conclusions of the review could result in a charge against earnings in 1996.
The Company uses a variety of derivative financial instruments to manage
its foreign currency and interest rate exposures. The Company does not
speculate on interest rates or foreign currency rates. Instead it uses
derivatives when implementing its risk management strategies to reduce the
possible effects of these exposures.
With respect to foreign currency exposures the Company principally uses
forward and option contracts to reduce risks arising from firm commitments,
anticipated intercompany sales transactions and intercompany receivable and
payable balances. The Company generally uses interest rate swaps and
interest rate caps to fix certain of its variable rate debt. The Company
manages credit risk related to these derivative contracts through credit
approvals, exposure limits and other monitoring procedures.
Coleman Worldwide is a holding company with no business operations or
source of income of its own,
11
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
and its ability to meet its obligations with respect to the LYONs and any
other obligations is contingent upon distributions from the Company,
including payments under the Company tax sharing agreement, capital
contributions or loans from its direct and indirect parent companies, other
borrowings and proceeds from the disposition of Coleman Common Stock owned by
Coleman Worldwide. As the holder of approximately 83% of the capital stock
of the Company, Coleman Worldwide has the ability to cause the Company to
make distributions up to the maximum amount permitted by law, subject to
limitations in the debt instruments of the Company. However, Coleman
Worldwide currently expects that, for the foreseeable future, the net
earnings and cash flows of the Company will be retained and used in the
business of the Company and that Coleman Worldwide will not receive any
distributions from the Company other than payments under the Company's tax
sharing agreement. Furthermore, the terms of the Company Credit Agreement
may limit its ability to pay dividends or make other payments to Coleman
Worldwide. The receipt by Coleman Worldwide of tax sharing payments from the
Company will cease upon Coleman Worldwide's ownership interest in Coleman
falling below 80%, and the Indenture does not require Coleman Worldwide to
own more than a majority of the Coleman Common Stock. Pursuant to the LYONs
indenture agreement, at any time that the LYONs are outstanding, the amounts
that Coleman Worldwide would be required to pay to Mafco under the Worldwide
Tax Sharing Agreement, together with any remaining funds paid to Coleman
Worldwide by the Company under the tax sharing agreement between Coleman
Worldwide and the Company, may not be paid as tax sharing payments, but
Coleman Worldwide may advance such funds to Mafco as long as the aggregate
amount of such advances at any time does not exceed the issue price plus
accrued OID of the LYONs. Such advances are evidenced by noninterest bearing
unsecured demand promissory notes from Mafco in the amount of $50.7 million
at March 31, 1996.
Coleman Worldwide currently anticipates that in order to pay the
principal amount at maturity of the LYONs, to redeem the LYONs or to
repurchase the LYONs for cash, including upon a Purchase Date (as defined) or
upon the occurrence of any Additional Purchase Right Event (as defined),
Coleman Worldwide will be required to adopt one or more alternatives, such as
seeking capital contributions or loans from its direct and indirect parent
companies, refinancing its indebtedness or disposing of Coleman Common Stock
owned by Coleman Worldwide (which disposition could result in tax sharing
payments ceasing to be available to Coleman Worldwide). None of the
affiliates of Coleman Worldwide will be required to make any capital
contributions or other payments to Coleman Worldwide with respect to Coleman
Worldwide's obligations on the LYONs, nor has any affiliate of Coleman
Worldwide or any other person guaranteed the obligations of Coleman Worldwide
with respect to the LYONs. There can be no assurance that any of the
foregoing actions could be effected on satisfactory terms, that they would be
sufficient to enable Coleman Worldwide to make any payments in respect of the
LYONs when required or that any of such actions would be permitted by the
terms of the Indenture or, with respect to sales of Coleman Common Stock, the
debt instruments of the Company then in effect.
SEASONALITY
The Company's sales generally are highest in the second quarter of the
year and lowest in the fourth quarter. As a result of this seasonality, the
Company has generally incurred a loss in the fourth quarter. The Company's
sales may be affected by weather conditions, especially during the second and
third quarters of the year.
12
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit Index Description
------------- -----------
4.1 Amendment No. 1 dated as of April 30, 1996 to
the Amended and Restated Credit Agreement dated as
of August 3, 1996 among the Company, the Lenders
party thereto, the Issuing Bank, the Agent, and the
Co-Agents (the "Company Credit Agreement");
(incorporated by reference to Exhibit 4.1 to The
Coleman Company Inc.'s Form 10-Q for the period
ended March 31, 1996 (the "Company's March 31, 1996
Form 10-Q")).
4.2 Amendment No. 2 dated as of April 30, 1996 to the
Company Credit Agreement; (incorporated by reference
to Exhibit 4.2 to the Company's March 31, 1996 Form
10-Q).
MANAGEMENT CONTRACTS AND COMPENSATORY PLANS
10.1 Employment Agreement dated as of January 1, 1996
between the Company and Patrick McEvoy;
(incorporated by reference to Exhibit 10.1 to
the Company's March 31, 1996 Form 10-Q).
10.2 Corrected and Restated Employment Agreement
dated as of January 1, 1996 between the Company
and Michael N. Hammes; (incorporated by
reference to Exhibit 10.2 to the Company's March
31, 1996 Form 10-Q).
10.3 The Coleman Retirement Salaried Incentive
Savings Plan; (incorporated by reference to
Exhibit 10.3 to the Company's March 31, 1996
Form 10-Q).
27.1 Financial Data Schedule.
(b) Reports on Form 8-K
A report on Form 8-K was filed on January 12, 1996 to
disclose the purchase of assets andassumption of certain
liabilities of Seatt Corporation ("Seatt") and to provide the
financial statements and information required by Item 7(a) in
connection with the Company's acquisition of Seatt.
A report on Form 8-K/A was filed on March 17, 1996 to provide
the information required by Item 7(b) in connection with the
Company's acquisition of Seatt.
13
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
COLEMAN WORLDWIDE CORPORATION
(Registrant)
Date: May 13, 1996 By: /s/ George Mileusnic
------------------------- ---------------------------------
George Mileusnic
Executive Vice President and
Chief Financial Officer
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AND CONDENSED CONSOLIDATED BALANCE
SHEETS FOUND ON PAGES THREE AND FOUR OF THE COMPANY'S FORM 10-Q FOR THE
YEAR-TO-DATE, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 6,816
<SECURITIES> 0
<RECEIVABLES> 266,203
<ALLOWANCES> 3,863
<INVENTORY> 257,886
<CURRENT-ASSETS> 574,484
<PP&E> 242,468
<DEPRECIATION> 72,791
<TOTAL-ASSETS> 1,084,562
<CURRENT-LIABILITIES> 182,052
<BONDS> 645,025
0
0
<COMMON> 1
<OTHER-SE> 113,710
<TOTAL-LIABILITY-AND-EQUITY> 1,084,562
<SALES> 272,745
<TOTAL-REVENUES> 273,560
<CGS> 192,594
<TOTAL-COSTS> 192,594
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 840
<INTEREST-EXPENSE> 11,056
<INCOME-PRETAX> 23,463
<INCOME-TAX> 8,692
<INCOME-CONTINUING> 12,236
<DISCONTINUED> 0
<EXTRAORDINARY> (582)
<CHANGES> 0
<NET-INCOME> 11,654
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
