<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 13, 1997
REGISTRATION STATEMENT NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
<TABLE>
<S> <C>
COLEMAN ESCROW CORP. COLEMAN WORLDWIDE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) (EXACT NAME OF CO-REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 3089 65-0752460 DELAWARE 3089 13-3704484
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER (STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION JURISDICTION OF INDUSTRIAL IDENTIFICATION
INCORPORATION OR CLASSIFICATION CODE NUMBER) INCORPORATION OR CLASSIFICATION CODE NUMBER)
ORGANIZATION) NUMBER) ORGANIZATION) NUMBER)
</TABLE>
------------------------
<TABLE>
<S> <C>
COLEMAN ESCROW CORP. COLEMAN WORLDWIDE CORPORATION
5900 NORTH ANDREWS AVENUE 1767 DENVER WEST BOULEVARD
SUITE 700 GOLDEN, COLORADO 80401
FORT LAUDERDALE, FLORIDA 33309 (303) 202-2400
(954) 772-9000
</TABLE>
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES)
------------------------
BARRY F. SCHWARTZ, ESQ.
COLEMAN ESCROW CORP.
COLEMAN WORLDWIDE CORPORATION
5900 NORTH ANDREWS AVENUE
SUITE 700
FORT LAUDERDALE, FLORIDA 33309
(954) 772-9000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPY TO:
STACY J. KANTER, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
919 THIRD AVENUE
NEW YORK, NEW YORK 10022
(212) 735-3000
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. /x/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM AGGREGATE
TITLE OF EACH CLASS AMOUNT TO BE MAXIMUM OFFERING OFFERING AMOUNT OF
OF SECURITIES TO BE REGISTERED REGISTERED PRICE PER UNIT PRICE(1)(2) REGISTRATION FEE
<S> <C> <C> <C> <C>
Senior Secured First Priority
Discount Exchange Notes due 2001...... $600,475,000 64.949% $390,002,508 $118,183
Senior Secured Second Priority
Discount Exchange Notes due 2001...... $131,560,000 60.812% $80,004,267 $24,244
Non-Recourse Guaranty of Coleman
Worldwide Corporation(3).............. -- -- -- (4)
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Exclusive of any accrued original issue discount.
(3) The Non-Recourse Guaranty of Coleman Worldwide Corporation being registered
is the non-recourse guaranty by Coleman Worldwide Corporation of the
obligations of Coleman Escrow Corp. under the Senior Secured First Priority
Discount Exchange Notes due 2001 and the Senior Secured Second Priority
Discount Exchange Notes due 2001.
(4) Pursuant to Rule 457(n) under the Securities Act of 1933, no separate fee
for the Non-Recourse Guaranty of Coleman Worldwide Corporation is payable.
------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSON. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JUNE 13, 1997
PROSPECTUS
OFFER FOR ALL OUTSTANDING SENIOR SECURED FIRST PRIORITY DISCOUNT NOTES DUE 2001
IN EXCHANGE FOR SENIOR SECURED FIRST PRIORITY DISCOUNT EXCHANGE NOTES DUE 2001
AND
OFFER FOR ALL OUTSTANDING SENIOR SECURED SECOND PRIORITY DISCOUNT NOTES DUE 2001
IN EXCHANGE FOR SENIOR SECURED SECOND PRIORITY DISCOUNT EXCHANGE NOTES DUE 2001
OF
[LOGO] COLEMAN ESCROW CORP.
The Exchange Offer will expire at 5:00 P.M.,
New York City time, on , 1997, unless extended
------------------------------
Coleman Escrow Corp., a Delaware corporation (the 'Issuer'), hereby offers,
upon the terms and subject to the conditions set forth in this Prospectus and
the accompanying Letter of Transmittal (which together constitute the 'Exchange
Offer'), to exchange an aggregate principal amount at maturity of up to
$600,475,000 of its Senior Secured First Priority Discount Exchange Notes due
2001 (the 'New First Priority Notes') and up to $131,560,000 of its Senior
Secured Second Priority Discount Exchange Notes due 2001 (the 'New Second
Priority Notes' and, together with the New First Priority Notes, the 'New
Notes'), which have been registered under the Securities Act of 1933, as amended
(the 'Securities Act'), for a like principal amount at maturity of its issued
and outstanding Senior Secured First Priority Discount Notes due 2001 (the 'Old
First Priority Notes' and, together with the New First Priority Notes, the
'First Priority Notes') and Senior Secured Second Priority Discount Notes due
2001 (the 'Old Second Priority Notes' and, together with the Old First Priority
Notes, the 'Old Notes' and, together with the New Second Priority Notes, the
'Second Priority Notes'), respectively, from the holders thereof. The terms of
the New First Priority Notes and the New Second Priority Notes are identical in
all material respects to the Old First Priority Notes and the Old Second
Priority Notes, respectively, except for certain transfer restrictions and
registration rights relating to the Old Notes and except that, if the Exchange
Offer is not consummated by November 17, 1997, interest will accrue on the Old
Notes (in addition to the accretion of Original Issue Discount (as defined
herein)) from and including November 17, 1997 until but excluding the date of
consummation of the Exchange Offer payable in cash semiannually in arrears on
May 15 and November 15, commencing May 15, 1998, at a rate per annum equal to
.50% of the Accreted Value (as defined herein) of the Old Notes as of the
November 15 or May 15 immediately preceding such interest payment date. The Old
Notes were issued pursuant to an offering (the 'Offering'), which was exempt
from registration under the Securities Act, on May 20, 1997.
The Issue Price of each of the Old First Priority Notes was $649.49 per
$1,000 principal amount at maturity (64.949% of principal amount at maturity),
and the Issue Price of each of the Old Second Priority Notes was $608.12 per
$1,000 principal amount at maturity (60.812% of principal amount at maturity).
Except as set forth above, there will be no periodic payments of interest on the
Old Notes. The Notes will mature on May 15, 2001. The Issue Price of (i) each
Old First Priority Note represents a yield to maturity of 11 1/8% per annum and
(ii) each Old Second Priority Note represents a yield to maturity of 12 7/8% per
annum, in each case, computed on a semiannual bond equivalent basis, calculated
from May 20, 1997. The New Notes and the Old Notes are collectively referred to
herein as the "Notes."
The Old Notes were offered by the Issuer to fund (i) the redemption of
$281,281,000 aggregate principal amount at maturity of Senior Secured Discount
Notes due 1998 (the 'Coleman Holdings Notes') of Coleman Holdings Inc., a wholly
owned subsidiary of the Issuer ('Coleman Holdings'), and (ii) the retirement,
including through redemption or any earlier exchanges, of $561,553,000
outstanding aggregate principal amount at maturity of Liquid Yield
Option(Trademark) Notes due 2013 (the 'LYONs' (Trademark)) of Coleman Worldwide
Corporation, a wholly owned subsidiary of Coleman Holdings ('Coleman
Worldwide'), which LYONs are exchangeable for shares of common stock, par value
$.01 per share (the 'Coleman Common Stock'), of The Coleman Company, Inc.
('Coleman' or the 'Company'). The redemption of the Coleman Holdings Notes (the
'Coleman Holdings Notes Redemption') is expected to occur on July 15, 1997.
Following the Coleman Holdings Notes Redemption, Coleman Holdings expects to be
merged with and into the Issuer (the 'Coleman Holdings Merger'), and the Issuer
will directly own all of the shares of capital stock of Coleman Worldwide and
indirectly own through Coleman Worldwide the 26,000,000 shares (representing
approximately 48.7% of shares outstanding) of Coleman Common Stock that are
currently pledged to secure the Coleman Holdings Notes. The retirement of the
LYONs is expected to occur in a series of transactions, including an exchange
offer by Coleman Worldwide commenced on May 23, 1997 and the subsequent
redemption by Coleman Worldwide on May 27, 1998 of all LYONs then outstanding
(such transactions collectively referred to herein as the 'LYONs Retirement').
Following the LYONs Retirement, the Issuer expects to be merged with and
into Coleman Worldwide (the 'Coleman Worldwide Merger'), and Coleman Worldwide,
as successor to the Issuer, will continue to own the 16,394,810 shares
(representing approximately 30.7% of shares outstanding) of Coleman Common Stock
currently pledged to secure the LYONs, the 26,000,000 shares of Coleman Common
Stock currently pledged to secure the Coleman Holdings Notes and the 1,672,710
shares (representing approximately 3.2% of shares outstanding) of Coleman Common
Stock not currently pledged, of which 522,710 shares are currently pledged to
secure the Old Notes, less any shares of Coleman Common Stock delivered upon
exchange of the LYONs (the 'Delivered Shares').
Concurrently with the closing of the Offering, the Issuer deposited the net
proceeds of the Offering, which were approximately $455.3 million (the 'Escrowed
Funds'), with an escrow agent (the 'Escrow Agent'), and the Escrowed Funds have
been temporarily invested in Treasury Securities and other Permitted Investments
(as such terms are defined herein). The Escrowed Funds will be used by the
Issuer to make capital contributions from time to time to Coleman Holdings and
Coleman Worldwide (the 'Capital Contributions'), which Capital Contributions
will be used to fund the Coleman Holdings Notes Redemption and the LYONs
Retirement.
The Notes will be redeemable at the option of the Issuer, in whole or in
part, at any time on and after May 15, 2000 at the redemption prices set forth
herein on the date of redemption. Notwithstanding the foregoing, the Issuer will
have the option to redeem the Notes at any time in whole at a redemption price
equal to the Accreted Value (as defined herein) on the date of redemption plus
the
(Continued on following page)
------------------------------
SEE 'RISK FACTORS' COMMENCING ON PAGE 19 OF THIS PROSPECTUS FOR A DESCRIPTION OF
CERTAIN RISKS TO BE CONSIDERED BY HOLDERS WHO TENDER THEIR OLD NOTES
IN THE EXCHANGE OFFER.
------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------------------
The date of this Prospectus is , 1997.
<PAGE>
(Continued from previous page)
Applicable Premium (as defined herein). Upon a Change of Control (as defined
herein), subject to certain conditions, each holder of the Notes will have the
right to require the Issuer to repurchase all or a portion of such holder's
Notes at a price equal to the Put Amount (as defined herein) on the date of
repurchase.
The Old Notes are, and the New Notes will be, senior secured obligations of
the Issuer and will rank pari passu in right of payment with all future senior
indebtedness of the Issuer, if any, and senior to all future subordinated
indebtedness of the Issuer, if any. The Old Notes are, and the New Notes will
be, (i) prior to the Coleman Holdings Merger, secured by a pledge of all of the
shares of capital stock of Coleman Holdings and (ii) guaranteed on a
non-recourse basis by Coleman Worldwide (the 'Coleman Worldwide Non-Recourse
Guaranty'), which Coleman Worldwide Non-Recourse Guaranty is currently secured
by a pledge of 522,710 shares of Coleman Common Stock and, simultaneously with
the Coleman Holdings Notes Redemption, also will be secured by a pledge of the
26,000,000 shares of Coleman Common Stock currently pledged to secure the
Coleman Holdings Notes. Simultaneously with the Coleman Holdings Notes
Redemption, the Notes will be secured by a pledge of all of the shares of
capital stock of Coleman Worldwide. In addition, simultaneously with any release
of Escrowed Funds from time to time in connection with the LYONs Retirement, the
Coleman Worldwide Non-Recourse Guaranty will also be secured by the shares of
Coleman Common Stock for which such exchanged LYONs are exchangeable that are
released from the pledge to secure any exchanged LYONs. Upon consummation of the
Coleman Holdings Notes Redemption and the LYONs Retirement, the Notes will be
secured by a pledge of 44,067,520 shares of Coleman Common Stock, less any
Delivered Shares. The First Priority Notes will rank senior in right of payment
to the Second Priority Notes with respect to any collateral securing the Notes
and the Coleman Worldwide Non-Recourse Guaranty. See 'Risk Factors--Control by
Holders of First Priority Notes.' On June 12, 1997, the last reported sale price
of the Coleman Common Stock on the New York Stock Exchange (the 'NYSE') was
$17 1/2 per share.
The only outstanding indebtedness of the Issuer is the Notes, and all of the
Issuer's consolidated liabilities (other than the Notes and certain liabilities
incurred in connection with the Offering) are liabilities of its subsidiaries.
The Issuer is a holding company and therefore the Old Notes are, and the New
Notes will be, effectively subordinated to all existing and future indebtedness
and other liabilities of the Issuer's subsidiaries. The Indenture generally
prohibits the incurrence of additional debt by the Issuer and limits the
incurrence of additional debt and the issuance of preferred stock by the
Issuer's subsidiaries. As of March 31, 1997, after giving pro forma effect to
the Offering, the Capital Contributions, the Coleman Holdings Notes Redemption
and the LYONs Retirement, the outstanding indebtedness and other liabilities of
such subsidiaries would have been approximately $970.9 million. Prior to the
Coleman Holdings Notes Redemption and the LYONs Retirement, the Notes will be
effectively subordinated to the Coleman Holdings Notes and the LYONs,
respectively. See 'Description of the Notes.'
For each Old First Priority Note and Old Second Priority Note accepted for
exchange, the holder of such Old Note will receive a New First Priority Note and
New Second Priority Note, respectively, having a principal amount at maturity
equal to that of the surrendered Old Note. Original Issue Discount on the New
Notes will accrue from May 20, 1997, the date of original issuance of the Old
Notes. Holders whose Old Notes are accepted for exchange may, in the limited
circumstances described above, have the right to receive, in cash, accrued
interest (if any) thereon to, but not including, the date of consummation of the
Exchange Offer, such interest to be payable on the November 15 or May 15 next
following such date of consummation. Holders of Old Notes accepted for exchange
will be deemed to have waived the right to receive any other payments or accrued
interest on the Old Notes.
The New Notes are being offered hereunder in order to satisfy certain
obligations of the Issuer contained in the Registration Agreement dated May 20,
1997 (the 'Registration Agreement') among the Issuer and the Initial Purchasers
(as defined below). Based on interpretations by the staff of the Securities and
Exchange Commission (the 'SEC') as set forth in no action letters issued to
third parties, the Issuer believes that New Notes issued pursuant to the
Exchange Offer in exchange for Old Notes may be offered for resale, resold and
otherwise transferred by holders thereof (other than any such holder which is an
'affiliate' of the Issuer within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery provisions
of the Securities Act, provided that such New Notes are acquired in the ordinary
course of such holder's business and such holder has no arrangement with any
person to participate in the distribution of such New Notes. However, the Issuer
does not intend to request the SEC to consider, and the SEC has not considered,
the Exchange Offer in the context of a no-action letter and there can be no
assurance that the staff of the SEC would make a similar determination with
respect to the Exchange Offer as in such other circumstances. Each holder, other
than a broker-dealer, must acknowledge that it is not engaged in, and does not
intend to engage in, a distribution of such New Notes and has no arrangement or
understanding to participate in a distribution of New Notes. Each broker-dealer
that receives New Notes for its own account pursuant to the Exchange Offer must
acknowledge that it will deliver a prospectus in connection with any resale of
such New Notes. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an 'underwriter' within the meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of New Notes received in exchange for
Old Notes where such Old Notes were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Issuer has agreed
that, for a period of 180 days after the Expiration Date (as defined herein), it
will make this Prospectus available to any broker-dealer for use in connection
with any such resale. See 'Plan of Distribution.'
The Issuer will not receive any proceeds from the Exchange Offer and will
pay all the expenses incident to the Exchange Offer. Tenders of Old Notes
pursuant to the Exchange Offer may be withdrawn at any time prior to the
Expiration Date. In the event the Issuer terminates the Exchange Offer and does
not accept for exchange any Old Notes, the Issuer will promptly return the Old
Notes to the holders thereof. See 'The Exchange Offer.'
There is no existing trading market for the New Notes, and there can be no
assurance regarding the future development of a market for the New Notes, or the
ability of holders of the New Notes to sell their New Notes or the price at
which such holders may be able to sell their New Notes. Bear, Stearns & Co.
Inc., Chase Securities Inc. and Credit Suisse First Boston Corporation (the
'Initial Purchasers') have advised the Issuer that they currently intend to make
a market in the New Notes. The Initial Purchasers are not obligated to do so,
however, and any market-making with respect to the New Notes may be discontinued
at any time without notice. The Issuer does not intend to apply for listing or
quotation of the New Notes on any securities exchange or stock market.
- ------------------
(Trademark) Trademark of Merrill Lynch & Co., Inc.
2
<PAGE>
AVAILABLE INFORMATION
The Issuer and Coleman Worldwide have filed with the SEC a Registration
Statement on Form S-1 (the 'Registration Statement') under the Securities Act,
with respect to the New Notes and the Coleman Worldwide Non-Recourse Guaranty of
the New Notes being offered by this Prospectus. This Prospectus does not contain
all the information set forth in the Registration Statement and the exhibits
thereto, to which reference is hereby made. Any statements made in this
Prospectus concerning the provisions of certain documents are not necessarily
complete and, in each instance, reference is made to the copy of such document
filed as an exhibit to the Registration Statement.
The Registration Statement and the exhibits thereto may be inspected and
copied at the public reference facilities maintained by the SEC at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and will also be
available for inspection and copying at the regional offices of the SEC located
at 7 World Trade Center, New York, New York 10048 and at Citicorp Center, 500
West Madison Street (Suite 1400), Chicago, Illinois 60661. Copies of such
material may also be obtained from the Public Reference Section of the SEC at
450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. The Issuer
is not currently subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the 'Exchange Act'). Coleman Worldwide is, and
as a result of the Exchange Offer, the Issuer will become, subject to such
requirements, and in accordance therewith Coleman Worldwide files, and the
Issuer will file, periodic reports and other information with the SEC. The SEC
maintains a Web site that contains reports, proxy and information statements and
other information regarding registrants, such as the Issuer and Coleman
Worldwide, that file electronically with the SEC and the address of such site is
http://www.sec.gov. The LYONs are listed on the NYSE and, accordingly, the
reports, proxy and information statements and other information of Coleman
Worldwide can also be inspected at the offices of the New York Stock Exchange
Inc., 20 Broad Street, New York, New York 10005. In the event the Issuer is not
required to be subject to the reporting requirements of the Exchange Act in the
future, the Issuer will be required under the Indenture, dated as of May 20,
1997 (the 'Indenture'), between the Issuer and First Trust National Association,
as trustee (the 'Trustee'), pursuant to which the Old Notes have been, and the
New Notes will be, issued, to continue to file with the SEC and to furnish to
holders of the Notes the information, documents and other reports specified in
Sections 13 and 15(d) of the Exchange Act, including reports on Forms 10-K, 10-Q
and 8-K, for so long as any Notes are outstanding.
3
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and the Consolidated
Financial Statements and notes thereto contained elsewhere in this Prospectus.
Unless the context otherwise requires, all references in this Prospectus to (i)
the 'Issuer' mean Coleman Escrow Corp., (ii) the 'Company' or 'Coleman' mean The
Coleman Company, Inc. and its subsidiaries, (iii) 'Coleman Holdings' mean
Coleman Holdings Inc. and (iv) 'Coleman Worldwide' mean Coleman Worldwide
Corporation. All share information and percentages with respect to Coleman
Common Stock are based on the number of shares outstanding as of May 5, 1997.
THE ISSUER
The Issuer is a holding company whose only significant asset is all of the
common stock, par value $1.00 per share, of Coleman Holdings. Coleman Holdings
is a holding company formed in July 1993 in connection with the offering of the
Coleman Holdings Notes and holds all of the outstanding shares of capital stock
of Coleman Worldwide. Coleman Worldwide was formed in March 1993 in connection
with the offering of $575 million aggregate principal amount at maturity of
LYONs. Coleman Worldwide also holds 44,067,520 shares of the Coleman Common
Stock, which represent approximately 82.6% of the outstanding Coleman Common
Stock. As such, the Issuer's principal business operations are conducted by
Coleman and its subsidiaries, and the Issuer has no operations of its own. The
Issuer is an indirect wholly owned subsidiary of MacAndrews & Forbes Holdings
Inc. ('MacAndrews Holdings'), a corporation wholly owned through Mafco Holdings
Inc. ('Mafco' and, together with MacAndrews Holdings, 'MacAndrews & Forbes') by
Ronald O. Perelman. See 'Relationship with MacAndrews & Forbes' and 'Ownership
of Common Stock.' Following the Coleman Holdings Notes Redemption, Coleman
Holdings expects to be merged with and into the Issuer in the Coleman Holdings
Merger. Following the LYONs Retirement, the Issuer expects to be merged with and
into Coleman Worldwide in the Coleman Worldwide Merger, with Coleman Worldwide
as the surviving corporation.
THE COMPANY
Coleman is a leading manufacturer and marketer of consumer products for the
outdoor recreation and hardware markets on a global basis. The Company's
products have been sold domestically and internationally under the Coleman brand
name since the 1920s. The Company believes its strong market position is
attributable primarily to its well-recognized trademarks, particularly the
Coleman brand name, broad product line, product quality and innovation, and
marketing, distribution and manufacturing expertise.
The Company participates in two primary markets, outdoor recreation and
hardware. The Company's principal outdoor recreation products include a
comprehensive line of lanterns and stoves for outdoor recreational use,
fuel-related products such as disposable fuel cartridges, a broad range of
coolers and jugs, sleeping bags, backpacks, tents, outdoor folding furniture,
portable electric lights, spas, camping accessories and other products for
recreational use. These outdoor recreation products are distributed
predominantly through mass merchandisers, sporting goods chains and outdoor
specialty stores. The Company's principal hardware products include portable
generators, portable and stationary air compressors, and safety and security
products such as smoke alarms, carbon monoxide detectors and thermostats.
The Company has made several acquisitions in recent years designed to
expand its product lines in the outdoor recreation market. In 1996, the Company
acquired the French company Application des Gaz ('Camping Gaz'), which is a
leader in the European camping equipment market. In 1995, the Company acquired
Sierra Corporation of Fort Smith, Inc. ('Sierra'), a manufacturer of portable
outdoor and recreational folding furniture and accessories. In 1994, the Company
acquired substantially all of the assets of Eastpak, Inc. and all of the capital
stock of M.G. Industries, Inc. (together, 'Eastpak'), a leading designer,
manufacturer and distributor of branded daypacks, sports bags and related
products.
The Company also restructured certain operations in the outdoor recreation
market. In 1994, the Company restructured its German manufacturing operations
(the 'German Restructuring'), including selling its plastic cooler business
located in Inheiden, Germany and Loucka, Czech Republic. In 1996, the Company
closed the Brazilian manufacturing operations it had acquired from Metal Yanes,
Ltda. in 1994.
4
<PAGE>
The Company has also expanded its presence in the hardware market through
its acquisition in 1996 of the assets of Seatt Corporation ('Seatt'), a leading
designer, manufacturer and distributor of smoke alarms, thermostats and carbon
monoxide detectors, its acquisition in 1995 of substantially all of the assets
of Active Technologies, Inc. ('ATI'), a manufacturer of technologically advanced
lightweight generators and battery charging equipment, and its acquisition in
1994 of substantially all of the assets of Sanborn Manufacturing Company
('Sanborn'), a manufacturer of a broad line of portable and stationary air
compressors.
BUSINESS STRATEGY AND RESTRUCTURING
The Company's business strategy is to build upon its reputation as a
leading manufacturer and marketer of high quality brand name consumer products
for the outdoor recreation and hardware markets by (i) focusing on quality and
service, (ii) continuing to introduce new products, (iii) developing the
Company's existing brands, (iv) expanding the Company's international presence,
(v) continuing to develop its human resources, including developing and building
its team of experienced managers and increasing management's focus on
profitability and cash flows and (vi) further improving the quality and
efficiency of its business processes to reduce administrative costs and improve
profitability and competitiveness.
As part of its strategy to improve its business processes, the Company has
announced several restructuring initiatives designed to reduce costs and improve
profitability and competitiveness. In March 1997, the Company announced that it
would close its executive offices in Golden, Colorado, with most of its
administrative functions expected to return to its Wichita, Kansas facility. In
April 1997, the Company announced its intention to (i) eliminate 700 employees,
which represent approximately 10% of its current work force, (ii) close or
relocate three domestic factories and close one international factory, (iii)
close its Geneva, Switzerland international headquarters, (iv) rationalize its
product lines, including a significant reduction in SKUs, and (v) sell its
pressure washer business. In addition, the Company may sell other non-strategic
businesses if suitable opportunities arise. Coleman has already begun to
implement its new restructuring plan. Coleman has announced plans to close its
Hastings, Nebraska factory which was used in the manufacturing of portable power
generators and pressure washers. The Company expects to incur certain
restructuring and other charges in connection with these initiatives during
1997. The Company recorded other charges of approximately $2.4 million, net of
taxes, for the first quarter of 1997 and expects to record a significantly
greater amount of restructuring and other charges for the second quarter of
1997. There can be no assurance as to the amount of the restructuring and other
charges to be recorded in the second quarter of 1997 or that restructuring and
other charges will not be recorded in subsequent periods. See 'Management's
Discussion of Financial Condition and Results of Operations--Liquidity and
Capital Resources.'
BACKGROUND
Coleman was formed in December 1991 to succeed to the assets and
liabilities of the outdoor products business of New Coleman Holdings Inc.
('Holdings'), an indirect parent of the Issuer. Holdings (then named The Coleman
Company, Inc.) was acquired in 1989 by MacAndrews & Forbes (the 'Acquisition').
In March 1992, the Company completed an initial public offering of the Coleman
Common Stock (the 'IPO'). Coleman Worldwide's ownership interest in the Company
was approximately 82.6% at May 5, 1997.
In 1993, Coleman Worldwide issued $575.0 million principal amount at
maturity of LYONs in an underwritten public offering. The net proceeds from the
issuance of the LYONs of approximately $133.1 million were distributed by
Coleman Worldwide to its then direct and indirect parent companies, of which
$110.0 million was used to repay indebtedness incurred in connection with the
Acquisition. See 'Description of Other Indebtedness--Coleman Worldwide--The
LYONs.' In connection with the offering of the LYONs, the ownership interest of
MacAndrews & Forbes in the Company was transferred to Coleman Worldwide. Each
LYON ($1,000 principal amount at maturity) is exchangeable at the option of the
holder at any time for 15.706 shares of Coleman Common Stock, subject to Coleman
Worldwide's right to elect to pay cash equal to the then market value of such
shares in lieu, in whole or in part, of delivering such shares of Coleman Common
Stock. The LYONS are secured by a pledge of 16,394,810 shares (representing
approximately 30.7% of shares outstanding) of Coleman Common Stock.
5
<PAGE>
Also in 1993, Coleman Holdings issued approximately $281.3 million
principal amount at maturity of Coleman Holdings Notes pursuant to exemptions
from, or in transactions not subject to, the registration requirements of the
Securities Act and applicable state securities laws. The net proceeds from the
issuance of the Coleman Holdings Notes of approximately $162.3 million were
distributed to MacAndrews & Forbes and were not available to Coleman Holdings or
its subsidiaries. In connection with the offering of the Coleman Holdings Notes,
all of the outstanding capital stock of Coleman Worldwide was transferred by
Holdings to Coleman Holdings. The Coleman Holdings Notes are secured by a pledge
of all of the common stock of Coleman Worldwide and guaranteed on a non-recourse
basis by Coleman Worldwide (the 'Old Coleman Worldwide Non-Recourse Guaranty').
The Old Coleman Worldwide Non-Recourse Guaranty is secured by a pledge of
26,000,000 shares (representing approximately 48.7% of shares outstanding) of
Coleman Common Stock. In addition, Coleman Worldwide currently owns 1,672,710
shares (representing approximately 3.2% of shares outstanding) of Coleman Common
Stock, of which 522,710 shares are currently available to be pledged to secure
the Notes.
The Issuer was incorporated in Delaware in May 1997. The Issuer's principal
executive offices are located at 5900 North Andrews Avenue, Suite 700, Fort
Lauderdale, Florida 33309 and its telephone number is (954) 772-9000.
6
<PAGE>
OWNERSHIP OF THE ISSUER AND THE COMPANY
The following chart illustrates a simplified ownership structure of the
Issuer and the Company:
Mafco Holdings Inc.
('Mafco')
100%
MacAndrews & Forbes Holdings Inc.
('MacAndrews Holdings')
100%
New Coleman Holdings Inc.
('Holdings')
100%
COLEMAN ESCROW CORP.
(THE 'ISSUER')
100%
Coleman Holdings Inc.
('Coleman Holdings')
100%
Coleman Worldwide Corporation
('Coleman Worldwide')
82.6%
The Coleman Company, Inc.
('Coleman' or the 'Company')
7
<PAGE>
THE TRANSACTIONS
The Old Notes are, and the New Notes will be, secured by a pledge of all of
the shares of common stock of Coleman Holdings and guaranteed pursuant to the
Coleman Worldwide Non-Recourse Guaranty, which Coleman Worldwide Non-Recourse
Guaranty is currently secured by a pledge of 522,710 shares of Coleman Common
Stock. Concurrently with the closing of the Offering, the Issuer deposited the
Escrowed Funds, consisting of the net proceeds of the Offering of approximately
$455.3 million, with the Escrow Agent. The Escrow Agent will release the
Escrowed Funds to the Issuer from time to time upon the satisfaction of certain
conditions, including presentation of an Officer's Certificate certifying that,
among other things (a) (i) the conditions to the optional redemption by Coleman
Holdings contained in the indenture governing the Coleman Holdings Notes (the
'Coleman Holdings Notes Indenture') to be complied with on the date of the
Coleman Holdings Notes Redemption (other than payment) have been satisfied or
waived, (ii) the conditions to any delivery of cash upon exchange from time to
time of LYONs through an exchange offer to be complied with by Coleman Worldwide
(other than payment) have been satisfied or waived, (iii) the conditions to the
optional redemption by Coleman Worldwide contained in the indenture governing
the LYONs (the 'LYONs Indenture') to be complied with on May 27, 1998 (other
than payment) have been satisfied or waived, (iv) the conditions to any exchange
of LYONs from time to time by the holders thereof and the election by Coleman
Worldwide to deliver cash in lieu of shares of Coleman Common Stock that are
contained in the LYONs Indenture (other than payment) have been satisfied or
waived or (v) the conditions to certain other payments that may be required to
be made by Coleman Worldwide pursuant to the terms of the LYONs Indenture have
been satisfied or waived and (b) following the release, such Escrowed Funds,
subject to certain limited exceptions, will be contributed to Coleman Holdings
or Coleman Worldwide and used to fund the Coleman Holdings Notes Redemption, the
LYONs Retirement or such other payments, as the case may be. See 'Description of
the Notes--Escrow of Proceeds.' Notwithstanding the foregoing, there will be no
release of Escrowed Funds to the Issuer after the occurrence of certain events
of bankruptcy, insolvency or reorganization of Coleman Holdings, Coleman
Worldwide or Coleman (the 'Triggering Events'). If a Triggering Event occurs,
the Issuer will be required to use any remaining Escrowed Funds to redeem the
Notes, on a pro rata basis, at a redemption price equal to the Accreted Value
plus accrued interest (if any) on the Mandatory Redemption Date (as defined
herein). See 'Description of the Notes--Mandatory Redemption.'
The Issuer will contribute from time to time the Escrowed Funds to Coleman
Holdings and Coleman Worldwide (the 'Capital Contributions') to finance the
Coleman Holdings Notes Redemption and the LYONs Retirement. On May 22, 1997,
Coleman Holdings gave irrevocable notice that the Coleman Holdings Notes will be
redeemed on July 15, 1997. The LYONs Retirement is expected to be completed on
or prior to May 27, 1998. In connection with the LYONs Retirement, on May 23,
1997, Coleman Worldwide commenced an offer to pay cash in the amount of $343.61
per $1,000 principal amount at maturity upon exchange of any and all outstanding
LYONs. To the extent that any LYONs are not exchanged, the Issuer intends to
cause Coleman Worldwide to redeem any outstanding LYONs on May 27, 1998, which
is the first time that Coleman Worldwide has the right to do so under the LYONs
Indenture. There can be no assurance that an exchange offer for the LYONs will
be consummated or, if consummated, as to the final terms thereof or that the
LYONs Retirement will be consummated on or before May 27, 1998. In addition,
there can be no assurance that the Escrowed Funds will be sufficient to
consummate the LYONs Retirement. See 'Risk Factors--Subordination to Subsidiary
Liabilities.'
Following the Coleman Holdings Notes Redemption, Coleman Holdings expects
to be merged with and into the Issuer in the Coleman Holdings Merger, and the
Issuer will directly own all of the shares of capital stock of Coleman
Worldwide. The pledge of the Coleman Holdings capital stock will terminate upon
the Coleman Holdings Merger. Following the LYONs Retirement, the Issuer expects
to be merged with and into Coleman Worldwide in the Coleman Worldwide Merger,
with Coleman Worldwide, as the surviving corporation, assuming all of the
Issuer's obligations under the Indenture and the Notes. The Coleman Worldwide
Non-Recourse Guaranty and the pledge of the Coleman Worldwide capital stock will
terminate upon the Coleman Worldwide Merger. Following each of the Coleman
Holdings Notes Redemption and the LYONs Retirement, all obligations of Coleman
Holdings under the Coleman Holdings Notes Indenture and all obligations of
Coleman Worldwide under the LYONs Indenture, respectively, will be satisfied and
discharged.
Simultaneously with the Coleman Holdings Notes Redemption, the Notes will
be secured by a pledge of all of the shares of capital stock of Coleman
Worldwide and the Coleman Worldwide Non-Recourse Guaranty will
8
<PAGE>
be secured by an additional pledge of the 26,000,000 shares of Coleman Common
Stock that are currently pledged to secure the Old Coleman Worldwide
Non-Recourse Guaranty of the Coleman Holdings Notes. In addition to such shares,
simultaneously with the release of Escrowed Funds from time to time in
connection with the LYONs Retirement, the Coleman Worldwide Non-Recourse
Guaranty will be secured by the shares of Coleman Common Stock for which such
exchanged LYONs are exchangeable that are released from the pledge to secure any
exchanged LYONs. Upon consummation of the Coleman Holdings Notes Redemption and
the LYONs Retirement, the Notes will be secured by a pledge of 44,067,520 shares
of Coleman Common Stock (consisting of the 26,000,000 shares currently pledged
to secure the Old Coleman Worldwide Non-Recourse Guaranty of the Coleman
Holdings Notes, the 16,394,810 shares of Coleman Common Stock currently pledged
to secure the LYONs and the 1,672,710 shares of Coleman Common Stock not
currently pledged, of which 522,710 shares are currently pledged to secure the
Old Notes), less any Delivered Shares.
THE EXCHANGE OFFER
<TABLE>
<S> <C>
Securities Offered.................... Up to $600,475,000 aggregate principal
amount at maturity of Senior Secured
First Priority Discount Exchange Notes
due 2001 and $131,560,000 aggregate
principal amount at maturity of Senior
Secured Second Priority Discount
Exchange Notes due 2001, in each case,
which have been registered under the
Securities Act. The terms of the New
First Priority Notes and the New Second
Priority Notes are identical in all
material respects to the Old First
Priority Notes and the Old Second
Priority Notes, respectively, except for
certain transfer restrictions and
registration rights relating to the Old
Notes and except that, if the Exchange
Offer is not consummated by November 17,
1997, interest will accrue on the Old
Notes (in addition to the accretion of
Original Issue Discount) from and
including such date until but excluding
the date of consummation of the Exchange
Offer payable in cash semiannually in
arrears on May 15 and November 15,
commencing May 15, 1998, at a rate per
annum equal to .50% of the Accreted
Value of the Old Notes as of the
November 15 or May 15 immediately
preceding such interest payment date.
The Exchange Offer.................... The New First Priority Notes and the New
Second Priority Notes are being offered
in exchange for a like principal amount
at maturity of Old First Priority Notes
and Old Second Priority Notes,
respectively. The issuance of the New
Notes is intended to satisfy obligations
of the Issuer contained in the
Registration Agreement. For procedures
for tendering, see 'The Exchange
Offer--Procedures for Tendering Old
Notes.'
Tenders; Expiration Date;
Withdrawal.......................... The Exchange Offer will expire at 5:00
p.m., New York City time, on
, 1997, or such later
date and time to which it is extended.
The tender of Old Notes pursuant to the
Exchange Offer may be withdrawn at any
time prior to the Expiration Date. Any
Old Note not accepted for exchange for
any reason will be returned without
expense to the tendering holder thereof
as promptly as practicable after the
expiration or termination of the
Exchange Offer. See 'The Exchange
Offer--Terms of the Exchange Offer;
Period for Tendering Old Notes' and 'The
Exchange Offer--Withdrawal.'
Certain Conditions to Exchange Offer.. The Issuer shall not be required to
accept for exchange, or to issue New
Notes in exchange for, any Old Notes and
may terminate or amend the Exchange
Offer if at any time before the
acceptance of
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
the Old Notes for exchange or the
exchange of the New Notes for such Old
Notes certain events have occurred,
which in the reasonable judgment of the
Issuer, make it inadvisable to proceed
with the Exchange Offer and/or with such
acceptance for exchange or with such
exchange. Such events include (i) any
threatened, instituted or pending action
seeking to restrain or prohibit the
Exchange Offer, (ii) a general
suspension of trading in securities on
any national securities exchange or in
the over-the-counter market, (iii) a
general banking moratorium, (iv) the
commencement of a war or armed
hostilities involving the United States
and (v) a material adverse change or
development involving a prospective
material adverse change in the Issuer's
business, properties, assets,
liabilities, financial condition,
operations, results of operations or
prospects that may affect the value of
the Old Notes or the New Notes. In
addition, the Issuer will not accept for
exchange any Old Notes tendered, and no
New Notes will be issued in exchange for
any such Old Notes, at any such time any
stop order shall be threatened or in
effect with respect to the Registration
Statement of which the Prospectus
constitutes a part or the qualification
of the Indenture under the Trust
Indenture Act of 1939. See 'The Exchange
Offer--Certain Conditions to the
Exchange Offer.'
Federal Income Tax
Consequences........................ The exchange pursuant to the Exchange
Offer should not result in gain or loss
to the holders or the Issuer for federal
income tax purposes. See 'Certain U.S.
Federal Income Tax Considerations.'
Use of Proceeds....................... There will be no proceeds to the Issuer
from the exchange pursuant to the
Exchange Offer. See 'Use of Proceeds.'
Exchange Agent........................ First Trust National Association is
serving as exchange agent (the 'Exchange
Agent') in connection with the Exchange
Offer.
</TABLE>
CONSEQUENCES OF EXCHANGING OLD NOTES
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the provisions in
the Indenture regarding transfer and exchange of the Old Notes and the
restrictions on transfer of such Old Notes as set forth in the legend thereon as
a consequence of the issuance of the Old Notes pursuant to exemptions from, or
in transactions not subject to, the registration requirements of the Securities
Act and applicable state securities laws. In general, the Old Notes may not be
offered or sold, unless registered under the Securities Act, except pursuant to
an exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. The Issuer does not currently anticipate that
it will register Old Notes under the Securities Act. See 'Description of the
Notes--Registration Rights.' Based on interpretations by the staff of the SEC,
as set forth in no-action letters issued to third parties, the Issuer believes
that New Notes issued pursuant to the Exchange Offer in exchange for Old Notes
may be offered for resale, resold or otherwise transferred by holders thereof
(other than any holder which is an 'affiliate' of the Issuer within the meaning
of Rule 405 under the Securities Act) without compliance with the registration
and prospectus delivery provisions of the Securities Act, provided that such New
Notes are acquired in the ordinary course of such holders' business and such
holders have no arrangement with any person to participate in the distribution
of such New Notes. However, the Issuer does not intend to request the SEC to
consider, and the SEC has not considered, the Exchange Offer in the context of a
no-action letter and there can be no assurance that the staff of the SEC would
make a similar determination with respect to the Exchange Offer as in such other
circumstances. Each holder, other than a broker-dealer, must acknowledge that it
is not engaged in, and does not intend to engage in, a distribution of New Notes
and has no arrangement or understanding to participate in a distribution of New
Notes. If any holder is an affiliate of the Issuer, is engaged or intends to
engage in or has any arrangement or understanding with respect to the
distribution of the New Notes to be
10
<PAGE>
acquired pursuant to the Exchange Offer, such holder (i) could not rely on the
applicable interpretations of the staff of the SEC and (ii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction.
Each broker-dealer that receives New Notes for its own account in exchange
for Old Notes must acknowledge that such Old Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities and that it will deliver a prospectus in connection with any resale
of such New Notes. The Letter of Transmittal states that by so acknowledging and
by delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an 'underwriter' within the meaning of the Securities Act. This Prospectus,
as it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of New Notes received in exchange for
Old Notes where such Old Notes were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Issuer has agreed
that, for a period of 180 days after the Expiration Date, it will make this
Prospectus available to any broker-dealer for use in connection with any such
resale. See 'Plan of Distribution.' In addition, to comply with the state
securities laws, the New Notes may not be offered or sold in any state unless
they have been registered or qualified for sale in such state or an exemption
from registration or qualification is available and is complied with. The offer
and sale of the New Notes to 'qualified institutional buyers' (as such term is
defined under Rule 144A of the Securities Act) is generally exempt from
registration or qualification under the state securities laws. The Issuer
currently does not intend to register or qualify the sale of the New Notes in
any state where an exemption from registration or qualification is required and
not available. See 'The Exchange Offer--Consequences of Exchanging Old Notes'
and 'Description of the Notes--Registration Rights.'
SUMMARY DESCRIPTION OF THE NEW NOTES
The terms of the New First Priority Notes and the New Second Priority Notes
are identical in all material respects to the Old First Priority Notes and the
Old Second Priority Notes, respectively, except for certain transfer
restrictions and registration rights relating to the Old Notes and except that,
if the Exchange Offer is not consummated by November 17, 1997, interest will
accrue on the Old Notes (in addition to the accretion of Original Issue
Discount) from and including such date until but excluding the date of
consummation of the Exchange Offer payable in cash semiannually in arrears on
May 15 and November 15, commencing May 15, 1998, at a rate per annum equal to
.50% of the Accreted Value of the Old Notes as of the November 15 or May 15
immediately preceding such interest payment date.
<TABLE>
<S> <C>
Securities Offered.................... Up to $600,475,000 principal amount at
maturity of Senior Secured First
Priority Discount Exchange Notes due
2001 (the 'New First Priority Notes')
and up to $131,560,000 principal amount
at maturity of Senior Secured Second
Priority Discount Exchange Notes due
2001 (the 'New Second Priority Notes').
Maturity Date......................... May 15, 2001.
Yield to Maturity..................... 11 1/8% and 12 7/8% per annum with
respect to the New First Priority Notes
and the New Second Priority Notes,
respectively (computed on a semiannual
bond equivalent basis), calculated from
May 20, 1997.
Original Issue Discount............... The Old First Priority Notes were issued
at an issue price of $649.49 per $1,000
aggregate principal amount at maturity,
and the Old Second Priority Notes were
issued at an issue price of $608.12 per
$1,000 aggregate principal amount at
maturity. Because the New Notes will be
treated as a continuation of the Old
Notes, which were issued at an original
issue discount ('Original Issue
Discount') for federal income tax
purposes, the New Notes will have
Original Issue Discount. Prospective
holders of the New Notes should be aware
that although there will be no periodic
payments of interest on the New Notes,
accrued Original Issue Discount will be
includable, periodically, in a holder's
gross income for United States federal
</TABLE>
11
<PAGE>
<TABLE>
<S> <C>
income tax purposes prior to redemption
or other disposition of such holder's
New Notes, whether or not such New Notes
are ultimately redeemed, sold (to the
Issuer or otherwise) or paid at
maturity. See 'Certain Tax Aspects.'
Optional Redemption................... The Notes may be redeemed at the option
of the Issuer in whole or from time to
time in part at any time on and after
May 15, 2000 at the redemption prices
set forth herein on the date of
redemption. Notwithstanding the
foregoing, the Issuer will have the
option to redeem the Notes at any time
in whole at a redemption price equal to
the Accreted Value on the date of
redemption plus the Applicable Premium.
See 'Description of the Notes--Optional
Redemption.'
Change of Control..................... Upon a Change of Control, each holder of
the Notes will have the right to require
the Issuer to repurchase all or a
portion of such holder's Notes at a
price equal to the Put Amount on the
date of repurchase.
Escrow of Proceeds of Offering........ Concurrently with the closing of the
Offering, the net proceeds of the
Offering were deposited with the Escrow
Agent and held in escrow. Such Escrowed
Funds have been temporarily invested in
Treasury Securities and other Permitted
Investments. The Escrow Agent will
release the Escrowed Funds to the Issuer
from time to time as necessary to
finance the Coleman Holdings Notes
Redemption and the LYONs Retirement,
subject to satisfaction of certain
conditions and subject to certain
limited exceptions. Notwithstanding the
foregoing, there will be no release of
Escrowed Funds to the Issuer upon the
occurrence of a Triggering Event. See
'Description of the Notes--Escrow of
Proceeds.'
Mandatory Redemption.................. The Notes are subject to mandatory
redemption upon the occurrence of a
Triggering Event at a time when any
Escrowed Funds are remaining. If a
Triggering Event occurs, the Issuer will
be required to use any such remaining
Escrowed Funds to redeem the Notes, on a
pro rata basis, at a redemption price
equal to the Accreted Value plus accrued
interest (if any) on the Mandatory
Redemption Date. See 'Description of the
Notes--Mandatory Redemption.'
Collateral............................ Prior to the Coleman Holdings Merger,
the Old Notes are, and the New Notes
will be, secured by a pledge of all of
the shares of capital stock of Coleman
Holdings. In addition, the Old Notes
are, and the New Notes will be,
guaranteed pursuant to the Coleman
Worldwide Non-Recourse Guaranty, which
Coleman Worldwide Non-Recourse Guaranty
is currently secured by a pledge of the
522,710 shares of Coleman Common Stock
owned by Coleman Worldwide.
Simultaneously with the Coleman Holdings
Notes Redemption, the Notes will be
secured by a pledge of all of the shares
of capital stock of Coleman Worldwide
and the Coleman Worldwide Non-Recourse
Guaranty will be secured by an
additional pledge of the 26,000,000
shares of Coleman Common Stock that are
currently pledged to secure the Old
Coleman Worldwide Non-Recourse Guaranty
of the Coleman Holdings Notes. In
addition to such shares, simultaneously
with the release of Escrowed Funds from
time to time in connection with the
LYONs Retirement, the Coleman Worldwide
Non-Recourse Guaranty will be secured by
the shares of Coleman Common Stock for
which such exchanged LYONs are
exchangeable that are released from the
pledge to secure any exchanged LYONs.
</TABLE>
12
<PAGE>
<TABLE>
<S> <C>
Upon consummation of the Coleman
Holdings Notes Redemption and the LYONs
Retirement, the Notes will be secured by
a pledge of 44,067,520 shares of Coleman
Common Stock (consisting of the
26,000,000 shares currently pledged to
secure the Old Coleman Worldwide
Non-Recourse Guaranty of the Coleman
Holdings Notes, the 16,394,810 shares of
Coleman Common Stock currently pledged
to secure the LYONs and the 1,672,710
shares of Coleman Common Stock not
currently pledged, of which 522,710
shares are currently pledged to secure
the Old Notes), less any Delivered
Shares. The First Priority Notes will
rank senior in right of payment to the
Second Priority Notes with respect to
any collateral securing the Notes and
the Coleman Worldwide Non- Recourse
Guaranty. See 'Risk Factors--Control by
Holders of First Priority Notes.' No
additional shares of Coleman Common
Stock will be pledged by the Issuer as
security for the Notes irrespective of
the value of Coleman Common Stock at any
time. See 'Risk Factors--Security for
the Notes; Potential for Diminution' and
'Description of the Notes--Security.'
After the consummation of the Coleman
Holdings Notes Redemption and the LYONs
Retirement, the Issuer or Coleman
Worldwide, as applicable, may withdraw
the collateral consisting of shares of
Coleman Common Stock, in whole or in
part, by substituting therefor with the
Trustee cash or U.S. Government
Obligations (as defined herein) that
will be sufficient for the payment at
maturity of principal and interest (if
any) on the Notes, or the pro rata
portion thereof, respectively. In
addition, the pro rata portion of
collateral consisting of Coleman Common
Stock may be released following a
redemption, in part, of the Notes or a
repurchase, in part, of the Notes after
a Change of Control or the delivery of
less than all the Notes for
cancellation. See 'Description of the
Notes--Security.'
Ranking and Holding Company
Structure........................... The Old Notes are, and the New Notes
will be, senior secured obligations of
the Issuer and will rank pari passu in
right of payment with all future senior
indebtedness of the Issuer, if any, and
senior to all future subordinated
indebtedness of the Issuer, if any. The
only outstanding indebtedness of the
Issuer is the Notes, and all the
Issuer's consolidated liabilities (other
than the Notes and certain liabilities
incurred in connection with the
Offering) are liabilities of its
subsidiaries. The Issuer is a holding
company and therefore the Old Notes are,
and the New Notes will be, effectively
subordinated to all existing and future
indebtedness and other liabilities of
the Issuer's subsidiaries, including
trade payables. As of March 31, 1997,
after giving pro forma effect to the
Offering, the Capital Contributions, the
Coleman Holdings Notes Redemption and
the LYONs Retirement, the outstanding
indebtedness and other liabilities of
such subsidiaries would have been
approximately $970.9 million. Prior to
the Coleman Holdings Notes Redemption
and the LYONs Retirement, the Notes will
also be effectively subordinated to the
Coleman Holdings Notes and the LYONs,
respectively. See 'Risk Factors--Holding
Company Structure,' '--Indebtedness and
Ability to Repay the Notes,'
</TABLE>
13
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<TABLE>
<S> <C>
'--Subordination to Subsidiary
Liabilities' and 'Description of the
Notes.'
Certain Covenants..................... The indenture governing the Notes (the
'Indenture') requires the Coleman
Holdings Notes Redemption to be
consummated no later than July 31, 1997
and the LYONs Retirement to be
consummated no later than June 10, 1998,
provided that, in each case, no
Triggering Event shall have occurred.
The Indenture also requires the Issuer,
prior to the Coleman Holdings Merger, to
hold directly all of the capital stock
of Coleman Holdings and, prior to the
Coleman Worldwide Merger, to hold,
directly or indirectly, all of the
capital stock of Coleman Worldwide. The
Issuer is also required to hold,
directly or indirectly, a majority of
the voting power of the voting stock of
Coleman at all times, unless and until
the Issuer exercises its right to
substitute U.S. Government Obligations
for all of the pledged collateral. The
Indenture also contains certain
covenants that, among other things,
generally prohibit the incurrence of
additional debt by the Issuer and the
issuance of additional debt or preferred
stock by Coleman Holdings and Coleman
Worldwide, and limit (i) the incurrence
of additional debt and the issuance of
preferred stock by Coleman, (ii) the
payment of dividends on the capital
stock of the Issuer and its subsidiaries
and the redemption or repurchase of the
capital stock of the Issuer, (iii) the
sale of assets and subsidiary stock,
(iv) transactions with affiliates, (v)
the creation of liens on the assets of
the Issuer, Coleman Holdings and Coleman
Worldwide and (vi) consolidations,
mergers and transfers of all or
sustantially all of the Issuer's assets.
The foregoing limitations and
prohibitions, however, are subject to a
number of qualifications. See
'Description of the Notes--Certain
Covenants.'
Use of Proceeds....................... The Issuer will not receive any proceeds
from the Exchange Offer. The Issuer will
use the net proceeds of the Offering,
which were approximately $455.3 million,
to make the Capital Contributions to
finance the Coleman Holdings Notes
Redemption and the LYONs Retirement.
Pending such uses, the net proceeds of
the Offering are being held in escrow
and invested in Treasury Securities and
other Permitted Investments. See 'Use of
Proceeds.'
</TABLE>
RISK FACTORS
Prospective holders of the New Notes should consider carefully all of the
information set forth in this Prospectus and, in particular, should evaluate the
specific factors set forth under 'Risk Factors' on page 19 before making a
decision to tender their Old Notes in the Exchange Offer.
14
<PAGE>
SUMMARY HISTORICAL FINANCIAL DATA
The Issuer is a holding company formed in May 1997 to hold all of the
common stock of Coleman Holdings. Coleman Holdings is a holding company formed
in July 1993 in connection with the offering of the Coleman Holdings Notes and
holds all of the outstanding shares of capital stock of Coleman Worldwide.
Coleman Worldwide was formed in March 1993 in connection with the offering of
$575 million aggregate principal amount at maturity of LYONs and holds
44,067,520 shares of Coleman Common Stock, which represent approximately 82.6%
of the outstanding Coleman Common Stock. Coleman was formed in December 1991 to
succeed to the assets and liabilities of the outdoor products business of
Holdings. Due to the Issuer's 100% direct ownership of Coleman Holdings, 100%
indirect ownership of Coleman Worldwide and approximately 82.6% indirect
ownership of Coleman, the Consolidated Financial Statements of the Issuer
include the accounts of Coleman Holdings and its subsidiaries after elimination
of all material intercompany accounts and transactions. Minority interest
primarily represents the minority stockholders' proportionate share of the
results of operations and equity of Coleman.
The summary historical financial data for, and as of the end of, each of
the years in the five year period ended December 31, 1996 have been derived from
the audited Consolidated Financial Statements of the Issuer and its
subsidiaries. The summary historical financial data for the three months ended
March 31, 1997 and 1996 and as of March 31, 1997 have been derived from the
unaudited Consolidated Financial Statements of the Issuer which reflect, in the
opinion of management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial data for such periods and
at such date. Results for the interim periods are not necessarily indicative of
results for the full year.
The following summary historical financial data should be read in
conjunction with 'Capitalization,' 'Selected Historical Financial Data,'
'Management's Discussion and Analysis of Financial Condition and Results of
Operations' and the Consolidated Financial Statements of the Issuer and the
notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------------- ------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
-------- -------- ---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS DATA:
Net revenues............................ $295,464 $273,560 $1,220,216 $933,574 $751,580 $575,415 $505,815
Cost of sales (a)....................... 214,422 192,594 928,497 649,427 535,710 400,052 350,141
-------- -------- ---------- -------- -------- -------- --------
Gross profit............................ 81,042 80,966 291,719 284,147 215,870 175,363 155,674
Selling, general and administrative
expenses (a).......................... 65,952 46,800 292,012 175,036 128,664 102,214 92,711
Asset impairment charge (b)............. -- -- -- 12,289 -- -- --
Restructuring expense (c)............... -- -- -- -- 18,456 -- --
Interest expense, net................... 20,414 16,960 75,120 57,830 43,736 23,760 14,465
Amortization of goodwill and deferred
charges............................... 3,322 2,704 12,304 9,558 7,864 6,322 6,002
Gain on IPO (d)......................... -- -- -- -- -- -- (54,515)
Other (income) expense, net............. 271 (2,721) (1,604) 283 1,138 766 1,343
-------- -------- ---------- -------- -------- -------- --------
(Loss) earnings before income taxes,
minority interest and extraordinary
item.................................. (8,917) 17,223 (86,113) 29,151 16,012 42,301 95,668
Income tax (benefit) expense (a)........ (3,190) 6,508 (23,766) 11,701 3,091 18,210 40,713
Minority interest....................... 232 2,535 (5,390) 6,696 5,734 6,401 4,428
-------- -------- ---------- -------- -------- -------- --------
(Loss) earnings before extraordinary
item.................................. (5,959) 8,180 (56,957) 10,754 7,187 17,690 50,527
Extraordinary loss on early
extinguishment of debt, net of income
taxes................................. -- (582) (1,244) (787) (677) -- --
-------- -------- ---------- -------- -------- -------- --------
Net (loss) earnings..................... $ (5,959) $ 7,598 $ (58,201) $ 9,967 $ 6,510 $ 17,690 $ 50,527
-------- -------- ---------- -------- -------- -------- --------
-------- -------- ---------- -------- -------- -------- --------
OTHER DATA:
Ratio of earnings to fixed charges
(e)................................... -- 1.93x -- 1.45x 1.33x 2.51x 6.35x
</TABLE>
(continued on following page)
15
<PAGE>
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AS OF
MARCH 31,
1997
----------
<S> <C>
BALANCE SHEET DATA:
Total assets...................................... $1,254,931
Long-term debt
(including current portions).................... 995,394
Minority interest................................. 44,598
Total stockholder's deficit....................... (187,156)
</TABLE>
- ------------------
(a) During 1996, the Company recorded restructuring and certain other charges
totaling $52,516, net of tax. Cost of sales includes a pre-tax charge of
$44,005, selling, general and administrative expenses include a pre-tax
charge of $30,195, and the provision for income tax benefit includes $21,684
of net tax benefits resulting from these charges.
(b) Asset impairment charge reflects primarily the non-recurring charge taken in
connection with the adoption of Statement of Financial Accounting Standards
No. 121.
(c) Restructuring expense reflects primarily the non-recurring charge taken in
connection with the German Restructuring which includes severance costs,
commitments to third parties and write-downs of leasehold improvements and
other assets to estimated realizable values.
(d) Gain on IPO represents the gain to Coleman Worldwide on the sale of
approximately 18% of the Coleman Common Stock in the IPO.
(e) Earnings used in computing the ratio of earnings to fixed charges consist of
(loss) earnings before income taxes plus fixed charges. Fixed charges
consist of interest expense (including amortization of debt issuance costs,
but not the loss relating to the early extinguishment of debt) and 33% of
rental expense (considered to be representative of the interest factors).
The deficiency of earnings to fixed charges was $8,917 and $86,113 for the
three months ended March 31, 1997 and the year ended December 31, 1996,
respectively.
16
<PAGE>
SUMMARY PRO FORMA FINANCIAL DATA
The following unaudited summary pro forma consolidated condensed statements
of operations and other data for the three months ended March 31, 1997 and the
year ended December 31, 1996 give pro forma effect to the Offering, the Capital
Contributions, the Coleman Holdings Notes Redemption and the LYONs Retirement,
in each case, as if such transactions had been consummated on January 1, 1996,
and the pro forma consolidated condensed balance sheet as of March 31, 1997
gives pro forma effect to the Offering, the Capital Contributions, the Coleman
Holdings Notes Redemption and the LYONs Retirement as if such transactions had
been consummated on March 31, 1997. The pro forma information assumes that all
outstanding LYONs are redeemed on May 27, 1998, which is the first time that
Coleman Worldwide has the right to do so under the LYONs Indenture. The pro
forma adjustments are based upon available information and certain assumptions
that management of the Issuer believes are reasonable under the circumstances.
The summary pro forma financial data do not purport to represent the results of
operations or the financial position of the Issuer and its subsidiaries that
actually would have occurred had the foregoing transactions been consummated on
the aforesaid dates.
The summary pro forma financial data should be read in conjunction with the
Pro Forma Financial Data, Consolidated Financial Statements of the Issuer and
the notes thereto included elsewhere in this Prospectus.
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
AS OF MARCH 31, 1997
--------------------------------------------
ACTUAL ADJUSTMENTS PRO FORMA
------------- ----------- ----------
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents............. $ 12,866 $ 455,257(1) $ 11,971
(193,955)(2)
(262,197)(3)
Accounts and notes receivable......... 271,617 271,617
Inventories........................... 288,166 288,166
Deferred tax assets................... 39,895 39,895
Prepaid assets and other.............. 16,654 16,654
------------- ----------- ----------
Total current assets............... 629,198 (895) 628,303
Property, plant and equipment, net...... 194,739 194,739
Intangible assets related to businesses 341,907 341,907
acquired, net.........................
Note receivable--affiliate.............. 47,739 47,739
Deferred tax assets and other........... 41,348 14,750(1) 49,599
(5,043)(2)
(1,456)(3)
------------- ----------- ----------
1,254,931 7,356 1,262,287
------------- ----------- ----------
------------- ----------- ----------
Current Liabilities:
Accounts and notes payable............ 194,462 194,462
Other current liabilities............. 115,971 115,971
------------- ----------
Total current liabilities.......... 310,433 310,433
Long-term debt.......................... 994,664 470,007(1) 1,038,041
(177,736)(2)
(248,894)(3)
Income taxes payable--affiliate......... 16,681 16,681
Other liabilities....................... 75,711 75,711
Minority interest....................... 44,598 44,598
Stockholder's deficit................... (187,156) (21,262)(2) (223,177)
(14,759)(3)
------------- ----------- ----------
$ 1,254,931 $ 7,356 $1,262,287
------------- ----------- ----------
------------- ----------- ----------
</TABLE>
(continued on following page)
17
<PAGE>
PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, 1997 YEAR ENDED DECEMBER 31, 1996
------------------------------------- -------------------------------------
ACTUAL ADJUSTMENTS PRO FORMA ACTUAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net revenues.............................. $ 295,464 $ 295,464 $1,220,216 $1,220,216
Cost of sales............................. 214,422 214,422 928,497 928,497
---------- ---------- ---------- ----------
Gross profit.............................. 81,042 81,042 291,719 291,719
Selling, general and administrative
expenses................................ 65,952 65,952 292,012 292,012
Interest expense, net..................... 20,414 $ 15,005 (4) 25,717 75,120 $ 55,227 (4) 93,943
(9,702)(5) (36,404)(5)
Amortization of goodwill and deferred
charges................................. 3,322 922 (4) 3,854 12,304 3,688 (4) 14,431
(390)(5) (1,561)(5)
Other expense (income), net............... 271 -- 271 (1,604) -- (1,604)
---------- -------- ---------- ---------- ----------- ----------
Loss before income taxes, minority
interest and extraordinary item......... (8,917) (5,835) (14,752) (86,113) (20,950) (107,063)
Income tax benefit........................ (3,190) (1,945)(6) (5,135) (23,766) (6,961)(6) (30,727)
Minority interest in earnings of Camping
Gaz..................................... 112 112 1,872 1,872
Minority interest in earnings (loss) of
Coleman................................. 120 120 (7,262) (7,262)
---------- ----------- ---------- ---------- ----------- ----------
Loss before extraordinary item............ $ (5,959) $ (3,890) $ (9,849) $ (56,957) $ (13,989) $ (70,946)
---------- ----------- ---------- ---------- ----------- ----------
---------- ----------- ---------- ---------- ----------- ----------
OTHER DATA:
Ratio of earnings to fixed charges (7).... -- -- -- --
</TABLE>
- ------------------
(1) Reflects the issuance of the Notes, net of underwriting discounts and
related fees and expenses.
(2) Reflects the LYONs Retirement at May 27, 1998 for aggregate consideration of
$193,955, the accreted value on such date ($343.61 per $1,000 principal
amount at maturity) plus related fees and expenses. Stockholder's deficit
reflects a charge representing interest accretion on the LYONs from April
1, 1997 through May 27, 1998 of $9,436 net of taxes, an extraordinary loss
of $3,747, net of taxes, representing the write-off of deferred charges
related to the LYONs and fees and expenses related to the LYONs Retirement
and a distribution of the tax benefit of $8,079 associated with such
charges since the Issuer is not a party to a tax sharing agreement.
(3) Reflects the redemption of the Coleman Holdings Notes for aggregate
consideration of $262,197 based on the redemption price of 102.175% of the
accreted value at July 15, 1997. Stockholder's deficit reflects a charge
representing interest accretion on the Coleman Holdings Notes from April 1,
1997 through July 15, 1997 of $5,018 net of taxes, an extraordinary loss of
$4,575, net of taxes, representing the redemption premium paid to redeem the
Coleman Holdings Notes and the write-off of deferred charges related to the
Coleman Holdings Notes, and a distribution of the tax benefit of $5,166
associated with such charges since the Issuer is not a party to a tax
sharing agreement.
(4) Reflects interest expense on the New Notes based on a yield to maturity of
11 1/8% on the New First Priority Notes and 12 7/8% on the New Second
Priority Notes compounded semiannually on a bond equivalent basis, and the
related amortization of deferred financing costs over four years.
(5) Reflects the elimination of interest expense and amortization of deferred
financing costs related to the LYONs and Coleman Holdings Notes. Since the
LYONs Retirement may not be completed until May 27, 1998, the Issuer and its
subsidiaries will continue to incur interest expense on the outstanding
principal amount of the LYONs not retired at a rate of 7.25% and will earn
interest income on the Escrowed Funds for such period. Since the Coleman
Holdings Notes Redemption will not be completed until approximately two
months after the Offering, the Issuer and its subsidiaries will continue to
incur interest expense on the Coleman Holdings Notes at a rate of 10.875%
and will earn interest income on the Escrowed Funds for such period.
Escrowed Funds are currently earning interest income at an annual rate of
approximately 5.5%.
(6) Reflects the tax effect of the pro forma adjustments.
(7) The actual and pro forma deficiency of earnings to fixed charges was $86,113
and $107,063, respectively, for the year ended December 31, 1996 and $8,917
and $14,752, respectively, for the three months ended March 31, 1997.
18
<PAGE>
RISK FACTORS
Prospective holders of the New Notes should consider carefully the
following factors, as well as the other information set forth in this Prospectus
before tendering their Old Notes in the Exchange Offer, although the risk
factors set forth below (other then '--Consequences of Failure to Exchange and
Requirements for Transfer of New Notes') are generally applicable to the Old
Notes as well as the New Notes.
CONSEQUENCES OF FAILURE TO EXCHANGE AND REQUIREMENTS FOR TRANSFER OF NEW NOTES
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the provisions in
the Indenture regarding transfer and exchange of the Old Notes and the
restrictions on transfer of such Old Notes as set forth in the legend thereon as
a consequence of the issuance of the Old Notes pursuant to exemptions from, or
in transactions not subject to, the registration requirements of the Securities
Act and applicable state securities laws. In general, the Old Notes may not be
offered or sold, unless registered under the Securities Act, except pursuant to
an exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. The Issuer does not currently anticipate that
it will register Old Notes under the Securities Act. The Issuer currently does
not intend to register or qualify the sale of the New Notes in any state where
an exemption from registration or qualification is required and not available.
See 'The Exchange Offer--Consequences of Exchanging Old Notes.'
HOLDING COMPANY STRUCTURE
The Issuer is a holding company with no business operations or source of
income of its own. The Issuer's only significant asset is all of the common
stock of Coleman Holdings, a holding company that through Coleman Worldwide owns
approximately 82.6% of the outstanding shares of Coleman Common Stock. The
Issuer's principal business operations are conducted by Coleman and its
subsidiaries, and the Issuer has no operations of its own. Accordingly, the
Issuer's only source of cash to pay its obligations with respect to the Notes
and any other obligations is expected to be distributions with respect to its
ownership interest in Coleman from the net earnings and cash flow generated by
Coleman, after payment by Coleman Worldwide and Coleman Holdings of amounts due
on the LYONs and the Coleman Holdings Notes, as the case may be, for so long as
they remain outstanding and certain other expenses. As the indirect holder
through Coleman Worldwide of approximately 82.6% of the Coleman Common Stock,
the Issuer has the ability to cause the Company, Coleman Worldwide and Coleman
Holdings, to make distributions up to the maximum amount permitted by law,
subject to limitations in the debt instruments of the Company, Coleman Worldwide
and Coleman Holdings. However, the Issuer currently expects that, for the
foreseeable future, the net earnings and cash flow of the Company will be
retained and used in the business of the Company and that the Issuer will not
receive any distributions from the Company, Coleman Worldwide or Coleman
Holdings. The terms of the Company's credit agreement as amended and restated as
of August 3, 1995 and as further amended (the 'Company Credit Agreement'),
prohibits the Company from paying dividends prior to January 1, 1999 and
thereafter restricts the Company's ability to pay dividends or make other
payments to Coleman Worldwide, Coleman Holdings and the Issuer. In addition, the
LYONs Indenture restricts Coleman Worldwide's ability to pay dividends and make
other payments to Coleman Holdings or the Issuer and the Coleman Holdings Notes
Indenture restricts Coleman Holdings' ability to pay dividends and make other
payments to the Issuer. Although Coleman Worldwide may receive payments from the
Company pursuant to a tax sharing agreement (the 'Company Tax Sharing
Agreement'), Coleman Worldwide will not distribute such payments to Coleman
Holdings or the Issuer. In addition, the LYONs Indenture requires that any such
payments received from the Company be paid to Mafco or retained by Coleman
Worldwide (except under certain limited circumstances which are unlikely to
occur prior to the LYONs Retirement). See 'Description of Other
Indebtedness--Coleman Worldwide--The LYONs' and 'Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and Capital
Resources.'
INDEBTEDNESS AND ABILITY TO REPAY THE NOTES
The only outstanding indebtedness of the Issuer on an unconsolidated basis
is the Notes. The Indenture generally prohibits the incurrence of additional
debt by the Issuer and limits the incurrence of additional debt and the issuance
of preferred stock by the Issuer's subsidiaries. See 'Description of the
Notes--Certain Covenants.'
19
<PAGE>
The Issuer currently anticipates that in order to pay the principal amount
at maturity of the Notes or upon the occurrence of an Event of Default, to
redeem the Notes or to repurchase the Notes upon the occurrence of a Change of
Control, the Issuer will be required to adopt one or more alternatives, such as
seeking capital contributions or loans from its affiliates, refinancing its
indebtedness or selling its equity securities or the equity securities or assets
of Coleman. None of the affiliates of the Issuer is required to make any capital
contributions or other payments to the Issuer with respect to the Issuer's
obligations on the Notes, and, except for the Coleman Worldwide Non-Recourse
Guaranty, which will terminate upon the Coleman Worldwide Merger, the
obligations of the Issuer with respect to the Notes are not guaranteed by any
affiliate of the Issuer or any other person. There can be no assurance that any
of the foregoing actions could be effected on satisfactory terms, that they
would be sufficient to enable the Issuer to make any payments in respect of the
Notes when required or that any of such actions would be permitted by the terms
of the Indenture, the Coleman Holdings Notes Indenture (prior to the Coleman
Holdings Notes Redemption), the LYONs Indenture (prior to the LYONs Retirement)
or the debt instruments of the Company or Coleman Worldwide then in effect.
Moreover, the events that constitute a Change of Control under the Indenture may
also constitute events of default or repurchase right events under certain debt
instruments of the Issuer's subsidiaries. Such events may permit the lenders
under such debt instruments to accelerate the debt (or, in the case of the
Coleman Holdings Notes and the LYONs, to require the issuers thereof to
repurchase such securities) and, if the debt is not paid or repurchased, to
enforce their security interests, if any, in substantially all of the assets of
the Issuer's subsidiaries and the shares of Coleman Common Stock securing the
Coleman Holdings Notes and the LYONs. Any such enforcement may limit the
Issuer's ability to raise cash to purchase the Notes and may have a material
adverse effect on the market price of Coleman Common Stock and on the price that
could be obtained for the Coleman Worldwide capital stock and thus on the
ability of the Trustee to realize value through sales of the collateral. See
'--Security for the Notes; Potential for Diminution,' 'Management's Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources,' 'Description of Other Indebtedness' and 'Description of the
Notes.'
RECENT OPERATING LOSSES AND STOCKHOLDER'S DEFICIT
The Issuer recorded a loss before extraordinary item of $57.0 million for
the year ended December 31, 1996 and a net loss of $6.0 million for the three
months ended March 31, 1997. On a historical basis, the Issuer's earnings before
fixed charges were insufficient to cover fixed charges by approximately $86.1
million and $8.9 million for the year ended December 31, 1996 and the three
months ended March 31, 1997, respectively. On a pro forma basis, assuming that
the Offering, the Capital Contributions, the Coleman Holdings Notes Redemption
and the LYONs Retirement had each occurred on January 1, 1996, the Issuer would
have experienced a loss before extraordinary item of $70.9 million and $9.8
million for the year ended December 31, 1996 and the three months ended March
31, 1997, respectively. On a pro forma basis, assuming that the Offering, the
Capital Contributions, the Coleman Holdings Notes Redemption and the LYONs
Retirement had each occurred on January 1, 1996, the Issuer's net earnings for
the year ended December 31, 1996 and the three months ended March 31, 1997 would
have been insufficient to cover fixed charges by approximately $107.1 million
and $14.8 million, respectively. As a result, on a historical and a pro forma
basis, the Issuer would have had to achieve growth in its earnings before fixed
charges at least equal to the amounts of such insufficiencies in order to cover
its fixed charges. Fixed charges consist of interest expense (including
amortization of debt issuance costs, but not the loss relating to the early
extinguishment of debt) and 33% of rental expense (considered by the Issuer to
be representative of the interest factor). The Issuer had a stockholder's
deficit of approximately $187.2 million as of March 31, 1997 and, on a pro forma
basis, assuming that the Offering, the Capital Contributions, the Coleman
Holdings Notes Redemption and the LYONs Retirement had each occurred on March
31, 1997, the Issuer's stockholder's deficit would have been approximately
$222.3 million.
SUBORDINATION TO SUBSIDIARY LIABILITIES
Any right of the Issuer and its creditors, including holders of the Notes,
to participate in the assets of any of the Issuer's subsidiaries upon any
liquidation or reorganization of any such subsidiary will be subject to the
prior claims of the subsidiary's creditors, including trade creditors (except to
the extent the Issuer may itself be a creditor of such subsidiary). Accordingly,
the Old Notes are, and the New Notes will be, effectively subordinated to
liabilities, including trade payables, of the subsidiaries of the Issuer. The
ability of the Issuer's creditors, including the holders of the Notes, to
participate in such assets will also be limited to the extent that the
20
<PAGE>
outstanding shares of Coleman Common Stock are not beneficially owned by the
Issuer. The Issuer is a holding company and currently does not have any
indebtedness that ranks pari passu with, or senior to, the Notes. As of March
31, 1997, after giving effect to the Offering, the Capital Contributions, the
Coleman Holdings Notes Redemption and the LYONs Retirement, subsidiaries of the
Issuer would have had approximately $970.9 million of total liabilities,
including approximately $648.3 million of indebtedness. The Indenture generally
prohibits the incurrence of additional debt by the Issuer and limits the
incurrence of additional debt and the issuance of preferred stock by the
Issuer's subsidiaries, including Coleman. Prior to the Coleman Holdings Notes
Redemption and the LYONs Retirement, the Notes will also be effectively
subordinated to the Coleman Holdings Notes and the LYONs, respectively.
There can be no assurance that an exchange offer for the LYONs will be
consummated or that the LYONs Retirement will be consummated on or before May
27, 1998. See 'Description of the Notes.' To the extent that the LYONs
Retirement may not be completed until May 27, 1998, the Issuer and its
subsidiaries will continue to incur interest expense on the outstanding
principal amount of the LYONs not retired at the rate of 7.25%. In addition,
there can be no assurance that the Escrowed Funds will be sufficient to
consummate the LYONs Retirement at any time, particularly if the market value of
the Coleman Common Stock increases such that the market value of the shares for
which the outstanding LYONs may be exchanged exceeds the remaining Escrowed
Funds. If the Escrowed Funds are insufficient, the Issuer will be required to
adopt one or more alternatives, such as seeking capital contributions or loans
from its affiliates, or if LYONs are exchanged, delivering Coleman Common Stock
upon exchange, thereby reducing the Issuer's indirect ownership of Coleman. None
of the affiliates of the Issuer is required to make any capital contributions or
other payments to the Issuer with respect to the Issuer's obligation to
consummate the LYONs Retirement. There can be no assurance that any of the
foregoing actions could be effected on satisfactory terms, that they would be
sufficient to enable the Issuer to consummate the LYONs Retirement on May 27,
1998 without delivering Coleman Common Stock upon exchange or that any of such
actions would be permitted by the terms of the Indenture, the LYONs Indenture or
the debt instruments of the Company then in effect.
SECURITY FOR THE NOTES; POTENTIAL FOR DIMINUTION
Prior to the Coleman Holdings Merger, all of the Issuer's obligations under
the Indenture and the Notes will be secured by a pledge of all of the shares of
capital stock of Coleman Holdings. In addition, the Old Notes are, and the New
Notes will be, guaranteed pursuant to the Coleman Worldwide Non-Recourse
Guaranty, which Coleman Worldwide Non-Recourse Guaranty is currently secured by
522,710 shares of Coleman Common Stock. Simultaneously with the Coleman Holdings
Notes Redemption, the Notes will be secured by all of the capital stock of
Coleman Worldwide and the Coleman Worldwide Non-Recourse Guaranty will be
secured by an additional pledge of the 26,000,000 shares of Coleman Common Stock
that are currently pledged to secure the Old Coleman Worldwide Non-Recourse
Guaranty of the Coleman Holdings Notes. The Coleman Worldwide Non-Recourse
Guaranty and the pledge of the Coleman Worldwide capital stock will terminate
upon the Coleman Worldwide Merger. The Trustee's claim under the Coleman
Worldwide Non-Recourse Guaranty will be limited to the shares pledged as
security therefor and will not entitle the Trustee or the holders of the Notes
to the status of a general creditor of Coleman Worldwide. In addition to such
shares, simultaneously with the release of Escrowed Funds from time to time to
redeem the LYONs or upon exchange of LYONs in connection with the LYONs
Retirement, the Coleman Worldwide Non-Recourse Guaranty will become secured by
the shares of Coleman Common Stock into which such exchanged or redeemed LYONs
are exchangeable that are released from the pledge to secure any exchanged or
redeemed LYONs, until consummation of the LYONs Retirement, at which time the
Notes will also be secured by the 16,394,810 shares of Coleman Common Stock
currently pledged to secure the LYONs and the 1,672,710 shares of Coleman Common
Stock not currently pledged to secure the LYONs, of which 522,710 shares are
currently pledged to secure the Notes, less any Delivered Shares. Upon
consummation of the Coleman Holdings Notes Redemption and the LYONs Retirement,
the Notes will be secured by the shares of Coleman Common Stock that are
currently pledged to secure the LYONs and the Old Coleman Worldwide Non-Recourse
Guaranty of the Coleman Holdings Notes plus the 1,672,710 shares of Coleman
Common Stock not currently pledged, less any Delivered Shares.
No additional shares of Coleman Common Stock will be pledged irrespective
of the market value of the stock at any time. The Coleman Common Stock is
currently listed on the NYSE. Since January 1, 1996, the high
21
<PAGE>
and low sales prices of the Coleman Common Stock were $26 and $11 1/2 per share,
respectively. There currently is no public market for the Coleman Worldwide or
Coleman Holdings capital stock. The value of the collateral will be subject to
fluctuation and there can be no assurance that the proceeds from the sale or
sales of all of such collateral would be sufficient to satisfy the amounts due
on the Notes in the event of a default. In addition, the ability of the holders
of the Notes to realize upon the collateral may be subject to certain
limitations and there can be no assurance that the Trustee or the holders of the
Notes would be able to sell the shares pledged as collateral to secure the Notes
and the Coleman Worldwide Non-Recourse Guaranty at the then current market
value. Sales of substantial amounts of the Coleman Common Stock (whether by the
Trustee or other secured lenders, if any, or otherwise) could adversely affect
market prices.
The Notes are not guaranteed by the Company, and except for the Coleman
Worldwide Non-Recourse Guaranty of Coleman Worldwide, which will terminate upon
the Coleman Worldwide Merger, the Notes are not guaranteed by any other
affiliate of the Issuer. If there were an Event of Default under the Indenture
and the Trustee under the Indenture or the holders of the Notes were to
foreclose upon the collateral, such foreclosure could constitute a change of
control of the Company which would result in an event of default permitting
acceleration under the Company Credit Agreement. There can be no assurance that
the assets of the Company and its subsidiaries would be sufficient to repay in
full borrowings under the Company Credit Agreement if they became due. In such
event no assets of the subsidiaries of the Company would be available to the
holders of the Notes and the value of the shares of Coleman Common Stock (and
Coleman Holdings and Coleman Worldwide capital stock) securing the Notes would
be substantially diminished or eliminated. Although currently unsecured, the
Company Credit Agreement provides that it will become secured by the Company's
assets at December 31, 1997 if a specified financial leverage requirement is not
met. If the Company Credit Agreement became secured, any enforcement of the
security interests securing the Company Credit Agreement, or enforcement of the
security interests securing any other indebtedness of the Issuer or its
subsidiaries, could have a material adverse effect on the market price of
Coleman Common Stock and on the ability of the Trustee to realize value through
sales of the collateral pledged to secure the Notes and the Coleman Worldwide
Non-Recourse Guaranty. The Indenture permits the Issuer, under certain
circumstances, to grant liens on its assets, if any, other than the shares of
Coleman Holdings, Coleman Worldwide or Coleman, as the case may be, pledged to
secure the Notes.
Because the additional 26,000,000 shares of Coleman Common Stock to be
pledged to secure the Coleman Worldwide Non-Recourse Guaranty following the
Coleman Holdings Merger and the shares, if any, to be pledged upon the
completion of the LYONs Retirement, will not be pledged simultaneously with
Coleman Worldwide incurring its obligation to issue the Coleman Worldwide
Non-Recourse Guaranty, but rather will be pledged later, in certain
circumstances such pledge could constitute a preference if Coleman Worldwide
were to become a debtor in a bankruptcy case. Under applicable provisions of the
United States Bankruptcy Code (the 'Bankruptcy Code'), if Coleman Worldwide were
to become the subject of a bankruptcy case within the 90-day period following
the issuance of the Coleman Worldwide Non-Recourse Guaranty or following any
pledges of additional shares of Coleman Common Stock (or within one year of such
events if the entity for whom the transfer is made is an 'insider' within the
meaning of the Bankruptcy Code), a bankruptcy court could avoid the pledge of
Coleman Common Stock as a preference if Coleman Worldwide was insolvent at the
time thereof and the pledge enabled holders of the Notes to receive more than
they would if Coleman Worldwide were liquidated under the Bankruptcy Code. Such
pledges by Coleman Worldwide may also be voidable as preferences under similar
state laws, which in many cases have a 120-day preference period. The Notes are
not secured by a pledge of the Escrowed Funds. The Escrowed Funds could be
subject to the claims of creditors of the Issuer, if any, other than the holders
of the Notes.
CONTROL BY HOLDERS OF FIRST PRIORITY NOTES
The First Priority Notes constitute approximately 82.0% of the aggregate
principal amount at maturity of the Notes sold in the Offering and the Second
Priority Notes constitute the balance. Under the terms of the Indenture, the
First Priority Notes and the Second Priority Notes will be treated as separate
series of securities for purposes of their respective rights to payment upon a
realization of the collateral securing the Notes and the Coleman Worldwide
Non-Recourse Guaranty. Accordingly, any proceeds received by the Trustee from a
realization on the collateral will be applied first to pay the expenses of the
Trustee under the Indenture, second to pay the Default Amount (as defined
herein) on the First Priority Notes and, thereafter, to pay the Default Amount
on the Second
22
<PAGE>
Priority Notes. For all other purposes the First Priority Notes and the Second
Priority Notes will be treated as a single class of securities issued under the
Indenture. Any actions that may be taken by the holders of less than all of
Notes outstanding under the Indenture, including the approval of any supplements
or amendments thereto, waivers of any past defaults, giving notice to the Issuer
and the Trustee of an Event of Default, rescinding an acceleration of the Notes,
exercising remedies with respect to the collateral securing the Notes and
controlling proceedings following an Event of Default, may be taken by the
holders of specified percentages of the aggregate principal amount at maturity
of Notes outstanding. There will be no separate class voting for holders of the
Second Priority Notes under any circumstances, even if the proposed action would
more adversely affect the holders of the Second Priority Notes. Accordingly, it
is expected that the holders of the First Priority Notes will be able to control
the vote on all actions requiring approval of the holders of a majority of the
aggregate principal amount at maturity of Notes outstanding without obtaining
the approval of any holders of the Second Priority Notes. With respect to
actions that may be taken by holders of at least 25% of the aggregate principal
amount at maturity of Notes outstanding, the approval of at least some of the
holders of the First Priority Notes will be required in order to take such
actions. In addition, if a default occurs under the Indenture, the Trustee may
be deemed to have a 'conflicting interest' within the meaning of the Trust
Indenture Act of 1939, as amended (the 'TIA'). In such case, the Trustee would
be required to eliminate the conflicting interest, by appointing another trustee
or otherwise.
RESTRICTIONS IMPOSED BY TERMS OF INDEBTEDNESS; CONSEQUENCES OF FAILURE TO COMPLY
The terms and conditions of the Indenture, the Coleman Holdings Notes
Indenture, the LYONs Indenture, the Company Credit Agreement and the Company
Senior Notes (as defined herein) impose restrictions that affect, among other
things, the ability of the Issuer and its subsidiaries to incur debt, pay
dividends, make acquisitions, create liens, sell assets and make certain
investments.
The terms of the Company Credit Agreement also require the Company to
maintain specified financial ratios and tests, including a specified ratio of
consolidated current assets to consolidated current liabilities, a specified
ratio of consolidated debt to consolidated net worth, a minimum interest
coverage ratio, a minimum fixed charge coverage ratio, and a minimum
consolidated net worth. The terms of the Company Senior Notes also require the
Company to maintain specified financial ratios and tests, including a specified
level of consolidated net worth. The Company's ability to comply with the
foregoing provisions can be affected by events beyond the Company's control, and
there can be no assurance that the Company will achieve operating results that
maintain compliance with such provisions. The breach of any of such covenants
would result in a default under the Company Credit Agreement or the Company
Senior Notes permitting the holders thereof to declare all amounts outstanding
thereunder to be due and payable. In addition, the terms of the LYONs Indenture
provide that if the Company fails to maintain a specified ratio of consolidated
debt to the sum of consolidated debt and consolidated net worth or Coleman
Worldwide fails to maintain a minimum consolidated net worth, an Additional
Purchase Right Event under the LYONs Indenture would occur, which would require
Coleman Worldwide to repurchase the LYONs. If an Additional Purchase Right Event
under the LYONs Indenture did so occur, however, the Issuer would be permitted
under the Indenture and the Escrow Agreement to use the Escrowed Funds to
finance such LYONs repurchase. If indebtedness of the Issuer or its subsidiaries
were to be accelerated or required to be repurchased, there could be no
assurance that the assets of the Issuer and its subsidiaries would be sufficient
to repay in full borrowings under the outstanding debt instruments of the Issuer
and its subsidiaries, including the Notes. See 'Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and Capital
Resources,' 'Description of the Notes' and 'Description of Other Indebtedness.'
The events that constitute a Change of Control under the Indenture may also
constitute events of default or repurchase right events under certain
indebtedness of the Issuer's subsidiaries which indebtedness is effectively
senior to the Notes. See '--Subordination to Subsidiary Liabilities.' Such
events may permit the lenders under such debt instruments to accelerate the debt
(or, in the case of the Coleman Holdings Notes and the LYONs, to require the
issuers thereof to repurchase such securities) and, if the debt is not paid or
repurchased, to enforce their security interests, if any, thereby limiting the
Issuer's ability to raise cash to repurchase the Notes and reducing the
practical benefit of this provision to the holders of the Notes. As of March 31,
1997 after giving pro forma effect to the Offering, the Capital Contributions,
the Coleman Holdings Notes Redemption and the LYONs Retirement, the amount of
outstanding indebtedness that could be accelerated or result in a mandatory
repurchase
23
<PAGE>
under these circumstances would have been $205.1 million (excluding the Coleman
Holdings Notes and the LYONs). See '--Indebtedness and Ability to Repay the
Notes,' '--Subordination to Subsidiary Liabilities' and 'Description of the
Notes--Change of Control.'
COMPETITION
The markets in which the Company operates are highly competitive. The
Company competes in selected product categories against a number of
multinational manufacturers, some of which are larger and have substantially
greater resources than the Company. See 'Business--Competition.'
SOCIAL, POLITICAL AND ECONOMIC RISKS AFFECTING FOREIGN OPERATIONS AND EFFECTS OF
FOREIGN CURRENCY FLUCTUATIONS
The Company sells its products in more than 100 countries. As a result, the
Company is exposed to the risk of changes in social, political and economic
conditions inherent in foreign operations, including changes in the laws and
policies that govern foreign investment in countries where it has operations as
well as, to a lesser extent, changes in United States laws and regulations
relating to foreign trade and investment. In addition, the Company's results of
operations and the value of its foreign assets are affected by fluctuations in
foreign currency exchange rates, which may favorably or adversely affect
reported earnings and, accordingly, the comparability of period-to-period
results of operations. Changes in currency exchange rates may affect the
relative prices at which the Company and foreign competitors sell their products
in the same market. For 1996 and 1995, 32% and 24%, respectively, of the
Company's net sales were outside North America. The Company enters into forward
and option contracts to hedge certain cash flows denominated in foreign
currency. See 'Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources.'
FRAUDULENT CONVEYANCE CONSIDERATIONS
None of the proceeds from the Offering were made available to Coleman
Worldwide, which following the Coleman Holdings Notes Redemption will issue the
Coleman Worldwide Non-Recourse Guaranty to secure the Notes issued by its
parent, the Issuer, and pledge Coleman Common Stock as security therefor. Under
applicable provisions of federal bankruptcy law or comparable provisions of
state fraudulent transfer law, if a court were to find that at the time it
issued the Coleman Worldwide Non-Recourse Guaranty or pledged the Coleman Common
Stock in connection with the Offering (a) Coleman Worldwide issued the Coleman
Worldwide Non-Recourse Guaranty or pledged the Coleman Common Stock with the
intent of hindering, delaying or defrauding creditors, or (b) Coleman Worldwide
received less than reasonably equivalent value or fair consideration in exchange
for the obligations that it incurred under the Coleman Worldwide Non-Recourse
Guaranty, or for the pledge of Coleman Common Stock, and Coleman Worldwide (i)
was insolvent or was rendered insolvent by reason of such incurrence or pledge,
(ii) was engaged in business or a transaction, or was about to engage in
business or a transaction, for which its remaining assets constituted
unreasonably small capital or (iii) intended to incur, or believed that it would
incur, debts beyond its ability to pay such debts as they matured, the Coleman
Worldwide Non-Recourse Guaranty and the pledge of the Coleman Common Stock
securing the Coleman Worldwide Non-Recourse Guaranty could be voided, or claims
in respect of the Coleman Worldwide Non-Recourse Guaranty and the pledge could
be subordinated to all other debts of Coleman Worldwide. In addition, any
payments by Coleman Worldwide pursuant to the Coleman Worldwide Non-Recourse
Guaranty could be avoided and be required to be returned to Coleman Worldwide,
particular creditors of Coleman Worldwide or to a fund for the benefit of its
creditors.
The measures of insolvency for purposes of the foregoing considerations
will vary depending upon the law applied in any proceeding with respect to the
foregoing. Generally, however, Coleman Worldwide would be considered insolvent
if the sum of its debts, including contingent liabilities, were greater than the
value of all of its assets at a fair valuation or if the present fair saleable
value of its assets were less than the amount that would be required to pay its
probable liability on its existing debts, including contingent liabilities, as
they become absolute and mature. There can be no assurance, however, as to what
standard a court would apply in making such determination.
24
<PAGE>
ORIGINAL ISSUE DISCOUNT; LIMITATIONS ON HOLDERS' CLAIMS
The Old Notes were, and the New Notes will be, issued at a substantial
original issue discount from their principal amount at maturity. Consequently,
purchasers of Notes will be required to include amounts in gross income for
federal income tax purposes in advance of receipt of the cash payments to which
the income is attributable. See 'Certain U.S. Federal Income Tax Considerations'
for a more detailed discussion of the federal income tax consequences to the
purchasers of the Notes resulting from the purchase, ownership or disposition
thereof.
Under the Indenture, in the event of an acceleration of the maturity of the
Notes upon the occurrence of an Event of Default, the holders of the Notes may
be entitled to recover only the amount which may be declared due and payable
pursuant to the Indenture, which will be less than the principal amount at
maturity of such Notes. See 'Description of the Notes--Defaults.'
If a bankruptcy case is commenced by or against the Issuer under the
Bankruptcy Code, the claim of a holder of Notes with respect to the principal
amount thereof may be limited to an amount equal to the sum of (i) the Issue
Price of the Notes and (ii) that portion of the Original Issue Discount which is
not deemed to constitute 'unmatured interest' for purposes of the Bankruptcy
Code. Accordingly, holders of the Notes under such circumstances may, even if
sufficient funds are available, receive a lesser amount than they would be
entitled to under the express terms of the Indenture. In addition, there can be
no assurance that a bankruptcy court would compute the accrual of interest by
the same method as that used for the calculation of Original Issue Discount
under federal income tax law and, accordingly, a holder might be required to
recognize gain or loss in the event of a distribution related to such a
bankruptcy case.
LACK OF PUBLIC MARKET FOR THE NOTES
The New Notes are being offered to the holders of the Old Notes. The Old
Notes were issued on May 20, 1997 to a small number of institutional investors
and institutional accredited investors and are eligible for trading in the
Private Offerings, Resales and Trading through Automated Linkages (PORTAL)
Market, the National Association of Securities Dealers' screen-based, automated
market for trading of securities eligible for resale under Rule 144A. To the
extent that Old Notes are tendered and accepted in the Exchange Offer, the
trading market for the remaining untendered Old Notes could be adversely
affected. There is no existing trading market for the New Notes, and there can
be no assurance regarding the future development of a market for the New Notes,
or the ability of holders of the New Notes to sell their New Notes or the price
at which such holders may be able to sell their New Notes. Although the Initial
Purchasers have informed the Issuer that they currently intend to make a market
in the New Notes, they are not obligated to do so and any such market making may
be discontinued at any time without notice. As a result, the market price of the
New Notes could be adversely affected. The Issuer does not intend to apply for
listing or quotation of the New Notes on any securities exchange or stock
market.
CONTROL BY MACANDREWS & FORBES
MacAndrews & Forbes' indirect ownership of all of the capital stock of each
of the Issuer, Coleman Holdings and Coleman Worldwide and approximately 82.6% of
the Coleman Common Stock permits MacAndrews & Forbes to elect the entire Board
of Directors of each of the Issuer, Coleman Holdings, Coleman Worldwide and the
Company and to control the Issuer, Coleman Holdings, Coleman Worldwide and the
Company, including the vote on matters submitted to a vote of the Company's
stockholders. Although the Company has five directors who are neither officers
nor employees of MacAndrews & Forbes or any of its affiliates, the Board of
Directors of each of the Issuer, Coleman Holdings, Coleman Worldwide and the
Company has been, and is expected to continue to be, comprised entirely of
designees of MacAndrews & Forbes, which is wholly owned by Ronald O. Perelman.
The shares of common stock of the Issuer and shares of common stock of
intermediate holding companies are or may from time to time be pledged to secure
obligations of MacAndrews & Forbes or its affiliates. A foreclosure upon any
such shares of common stock could constitute a change of control under the
Indenture and certain debt instruments of the Issuer's subsidiaries, including
the Company Credit Agreement, the Coleman Holdings Notes and the LYONs. See
'--Security for the Notes; Potential for Diminution.'
25
<PAGE>
FORWARD-LOOKING STATEMENTS
This Prospectus contains certain forward-looking statements and information
relating to the Company that are based on the beliefs of management as well as
assumptions made by and information currently available to management. Such
forward-looking statements are principally contained in the sections 'Prospectus
Summary,' 'Business--Business Strategy' and 'Management's Discussion and
Analysis of Financial Condition and Results of Operations.' In addition, in
those and other portions of this Prospectus. the words 'anticipate,' 'believe,'
'estimate,' 'expect,' 'plans,' 'intends' and similar expressions, as they relate
to the Issuer, Coleman Holdings, Coleman Worldwide, the Company or management,
are intended to identify forward-looking statements. Such statements reflect the
current views of the Issuer and its subsidiaries with respect to future events
and are subject to certain risks, uncertainties and assumptions, including the
risk factors described in this Prospectus. In addition to factors that may be
described in this Prospectus, the following factors, among others, could cause
the actual results of the Issuer and its subsidiaries, including the Company, to
differ materially from those expressed in any forward-looking statements made:
(i) the success of the Company's restructuring programs, (ii) negative external
factors like adverse weather in North America or other regions, (iii) possible
continued consumer spending decline in Japan, (iv) the possibility the Company
may be required to renegotiate its credit agreements and (v) any difficulties or
delays in effecting the Coleman Holdings Notes Redemption and the LYONs
Retirement. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results may vary
materially from those described herein as anticipated, believed, estimated or
expected. The Issuer does not intend to update these forward-looking statements.
USE OF PROCEEDS
The Issuer will not receive any proceeds from the Exchange Offer. The
Issuer will use the net proceeds of the Offering, approximately $455.3 million,
to make the Capital Contributions to finance the Coleman Holdings Notes
Redemption and the LYONs Retirement. The Coleman Holdings Notes mature on May
27, 1998 and original issue discount thereon accretes at the rate of 10 7/8% per
annum, compounded on a semiannual bond equivalent basis. The LYONs mature on May
27, 2013 and original issue discount accretes at the rate of 7.25% per annum,
compounded on a semiannual bond equivalent basis. As of March 31, 1997, the
accreted value of the Coleman Holdings Notes and the LYONs was approximately
$248.9 million and $177.7 million, respectively. If there are any proceeds of
the Offering remaining after consummation of the Coleman Holdings Notes
Redemption and the LYONs Retirement, the Issuer intends to dividend or
distribute such funds to MacAndrews & Forbes. See 'Description of Other
Indebtedness.' Pending such uses, the net proceeds of the Offering are being
held in escrow and invested in Treasury Securities and other Permitted
Investments.
26
<PAGE>
CAPITALIZATION
The following table sets forth the actual consolidated capitalization of
the Issuer and its subsidiaries as of March 31, 1997 and the consolidated
capitalization of the Issuer and its subsidiaries at such date as adjusted to
give effect to the Offering, the Capital Contributions, the Coleman Holdings
Notes Redemption and the LYONs Retirement, as if such transactions had been
consummated on March 31, 1997. The as adjusted information assumes that all
outstanding LYONs are redeemed on May 27, 1998. Due to its direct 100% ownership
of Coleman Holdings, indirect 100% ownership of Coleman Worldwide and indirect
82.6% ownership of Coleman, the Consolidated Financial Statements of the Issuer
and its subsidiaries include the accounts of Coleman Holdings and its
subsidiaries after elimination of all material intercompany accounts and
transactions. Minority interest primarily represents the minority stockholders'
proportionate share of the equity of Coleman. This table should be read in
conjunction with the Consolidated Financial Statements of the Issuer and the
notes thereto and the Pro Forma Financial Data included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
AS OF MARCH 31, 1997
-------------------------
ACTUAL AS ADJUSTED
---------- -----------
(DOLLARS IN THOUSANDS,
EXCEPT SHARE DATA)
<S> <C> <C>
Short-term borrowings................... $ 79,562 $ 79,562
Current portion of long-term debt....... 730 730
Long-term debt:
The Issuer:
First Priority Notes................ $ -- $ 390,003 (a)
Second Priority Notes............... -- 80,004 (a)
Coleman Holdings:
Coleman Holdings Notes.............. 248,894 -- (b)
Coleman Worldwide:
LYONs............................... 177,736 -- (c)
Coleman:
7.26% Senior Notes due 2007......... 200,000 200,000
7.10% Senior Notes due 2006......... 85,000 85,000
7.25% Senior Notes due 2008......... 75,000 75,000
Company Credit Agreement (d):
Revolving credit facility......... 136,901 136,901
Term loan......................... 68,167 68,167
Other............................... 3,696 3,696
---------- -----------
Total long-term debt, including
current portion.................. 995,394 1,038,771
Less: current portion............. (730) (730)
---------- -----------
Total long-term debt........... 994,664 1,038,041
---------- -----------
Minority interest....................... 44,598 44,598
Stockholder's deficit
Common stock, $1.00 par value; 1,000
shares authorized, issued and
outstanding......................... 1 1
Capital deficiency.................... (130,576) (143,821)(e)
Accumulated deficit................... (53,842) (76,618)(f)
Currency translation adjustment....... (2,364) (2,364)
Minimum pension liability
adjustment.......................... (375) (375)
---------- -----------
Total stockholder's deficit........... (187,156) (223,177)
---------- -----------
Total capitalization.................... $ 932,398 $ 939,754
---------- -----------
---------- -----------
</TABLE>
- ------------------
(a) Reflects the issuance of the Notes, net of the Original Issue Discount of
$210.5 million and $51.6 million for the First Priority Notes and Second
Priority Notes, respectively.
(b) Reflects the Coleman Holdings Notes Redemption.
(c) Reflects the LYONs Retirement.
(d) The Company Credit Agreement consists of a $275.0 million revolving credit
facility and a 385.1 million French Franc (approximately $68.2 million at
March 31, 1997 exchange rates) term loan that matures on April 30, 2001. At
March 31, 1997, $135.1 million was available for borrowings under the
Company Credit Agreement.
(e) Reflects the distribution of the tax benefit relating to the interest
accretion and extraordinary loss associated with the Coleman Holdings Notes
Redemption and the LYONs Retirement since the Issuer is not a party to a tax
sharing agreement.
(f) Reflects the interest accretion on the LYONs from April 1, 1997 through May
27, 1998 and an extraordinary loss, net of taxes, related to the LYONs
Retirement and reflects the interest accretion on the Coleman Holdings Notes
from April 1, 1997 through July 15, 1997 and an extraordinary loss, net of
taxes, related to the Coleman Holdings Notes Redemption.
27
<PAGE>
PRICE RANGE OF COLEMAN COMMON STOCK
The Coleman Common Stock is listed and traded on the NYSE under the symbol
'CLN' and has unlisted trading privileges on the Midwest Stock Exchange and the
Pacific Stock Exchange. The following table sets forth the high and low sales
prices as reported on the NYSE Composite Tape for the Coleman Common Stock for
the first quarter in 1997, the second quarter in 1997 (through June 12, 1997)
and for each quarter in 1996 and 1995.
<TABLE>
<CAPTION>
1997 HIGH LOW
- -------------------------------------------------- ---- ---
<S> <C> <C>
First Quarter................................... $16 1/8 $11 1/2
Second Quarter (through June 12, 1997).......... 19 1/8 12 7/8
1996
- --------------------------------------------------
First Quarter................................... $26 $16 5/16
Second Quarter.................................. 23 1/4 19 13/16
Third Quarter................................... 21 5/8 13 3/4
Fourth Quarter.................................. 15 1/4 11 3/4
1995
- --------------------------------------------------
First Quarter................................... $19 15/16 $16 1/4
Second Quarter.................................. 19 1/8 15 1/2
Third Quarter................................... 19 9/16 17 11/16
Fourth Quarter.................................. 18 3/4 16 3/8
</TABLE>
On June 12, 1997, the last reported sales price of the Coleman Common Stock
on the NYSE was $17 1/2 per share.
28
<PAGE>
PRO FORMA FINANCIAL DATA
The following unaudited pro forma consolidated condensed statements of
operations and other data for the year ended December 31, 1996 and the three
months ended March 31, 1997 give pro forma effect to the Offering, the Capital
Contributions, the Coleman Holdings Notes Redemption and the LYONs Retirement,
in each case, as if such transactions had been consummated on January 1, 1996,
and the pro forma consolidated condensed balance sheet as of March 31, 1997
gives pro forma effect to the Offering, the Capital Contributions, the Coleman
Holdings Notes Redemption and the LYONs Retirement as if such transactions had
been consummated on March 31, 1997. The pro forma information assumes that all
outstanding LYONs are redeemed on May 27, 1998, which is the first time that
Coleman Worldwide has the right to do so under the LYONs Indenture. The pro
forma adjustments are based upon available information and certain assumptions
that management of the Issuer believes are reasonable under the circumstances.
The pro forma financial data do not purport to represent the results of
operations or the financial position of the Issuer and its
subsidiaries that actually would have occurred had the foregoing transactions
been consummated on the aforesaid dates.
The pro forma financial data should be read in conjunction with the
Consolidated Financial Statements of the Issuer and the notes thereto included
elsewhere in this Prospectus.
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
AS OF MARCH 31, 1997
-----------------------------------------
ACTUAL ADJUSTMENTS PRO FORMA
---------- ----------- ----------
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents............. $ 12,866 $ 455,257 (1) $ 11,971
(193,955)(2)
(262,197)(3)
Accounts and notes receivable......... 271,617 271,617
Inventories........................... 288,166 288,166
Deferred tax assets................... 39,895 39,895
Prepaid assets and other.............. 16,654 16,654
---------- ----------- ----------
Total current assets............... 629,198 (895) 628,303
Property, plant and equipment, net...... 194,739 194,739
Intangible assets related to businesses 341,907 341,907
acquired, net.........................
Note receivable-affiliate............... 47,739 47,739
Deferred tax assets and other........... 41,348 14,750(1) 49,599
(5,043)(2)
(1,456)(3)
---------- ----------- ----------
1,254,931 7,356 1,262,287
---------- ----------- ----------
---------- ----------- ----------
Current Liabilities:
Accounts and notes payable............ 194,462 194,462
Other current liabilites................ 115,971 115,971
---------- ----------
Total current liabilities.......... 310,433 310,433
Long-term debt.......................... 994,664 470,007(1) 1,038,041
(177,736)(2)
(248,894)(3)
Income taxes payable--affiliate......... 16,681 16,681
Other liabilities....................... 75,711 75,711
Minority interest....................... 44,598 44,598
Stockholder's deficit................... (187,156) (21,262)(2) (223,177)
(14,759)(3)
---------- ----------- ----------
$1,254,931 $ 7,356 $1,262,287
---------- ----------- ----------
---------- ----------- ----------
</TABLE>
(continued on following page)
29
<PAGE>
PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, 1997 YEAR ENDED DECEMBER 31, 1996
------------------------------------- -------------------------------------
ACTUAL ADJUSTMENTS PRO FORMA ACTUAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net revenues.............................. $ 295,464 $ 295,464 $1,220,216 $1,220,216
Cost of sales............................. 214,422 214,422 928,497 928,497
---------- ---------- ---------- ----------
Gross profit.............................. 81,042 81,042 291,719 291,719
Selling, general and administrative
expenses................................ 65,952 65,952 292,012 292,012
Interest expense, net..................... 20,414 $ 15,005 (4) 25,717 75,120 $ 55,227 (4) 93,943
(9,702)(5) (36,404)(5)
Amortization of goodwill and deferred
charges................................. 3,322 922 (4) 3,854 12,304 3,688 (4) 14,431
(390)(5) (1,561)(5)
Other expense (income), net............... 271 -- 271 (1,604) -- (1,604)
---------- ----------- ---------- ---------- --------- ----------
Loss before income taxes, minority
interest and extraordinary item......... (8,917) (5,835) (14,752) (86,113) (20,950) (107,063)
Income tax benefit........................ (3,190) (1,945)(6) (5,135) (23,766) (6,961)(6) (30,727)
Minority interest in earnings of Camping
Gaz..................................... 112 112 1,872 1,872
Minority interest in earnings (loss) of
Coleman................................. 120 120 (7,262) (7,262)
---------- ----------- ---------- ---------- --------- ----------
Loss before extraordinary item............ $ (5,959) $ (3,890) $ (9,849) $ (56,957) $ (13,989) $ (70,946)
---------- ----------- ---------- ---------- --------- ----------
---------- ----------- ---------- ---------- --------- ----------
OTHER DATA:
Ratio of earnings to fixed charges (7).... -- -- -- --
</TABLE>
- ------------------
(1) Reflects the issuance of the Notes, net of underwriting discounts and
related fees and expenses.
(2) Reflects the LYONs Retirement at May 27, 1998 for aggregate consideration of
$193,955, the accreted value on such date ($343.61 per $1,000 principal
amount at maturity) plus related fees and expenses. Stockholder's deficit
reflects a charge representing interest accretion on the LYONs from April 1,
1997 through May 27, 1998 of $9,436 net of taxes, an extraordinary loss of
$3,747, net of taxes, representing the write-off of deferred charges related
to the LYONs and fees and expenses related to the LYONs Retirement and a
distribution of the tax benefit of $8,079 associated with such charges since
the Issuer is not a party to a tax sharing agreement.
(3) Reflects the redemption of the Coleman Holdings Notes for aggregate
consideration of $262,197 based on the redemption price of 102.175% of the
accreted value at July 15, 1997. Stockholder's deficit reflects a charge
representing interest accretion on the Coleman Holdings Notes from April 1,
1997 through July 15, 1997 of $5,018 net of taxes, an extraordinary loss of
$4,575 net of taxes, representing the redemption premium paid to redeem the
Coleman Holdings Notes and the write-off of deferred charges related to the
Coleman Holdings Notes, and a distribution of the tax benefit of $5,166
associated with such charges since the Issuer is not a party to a tax
sharing agreement.
(4) Reflects interest expense on the New Notes based on a yield to maturity of
11 1/8% on the New First Priority Notes and 12 7/8% on the New Second
Priority Notes compounded semiannually on a bond equivalent basis, and the
related amortization of deferred financing costs over four years.
(5) Reflects the elimination of interest expense and amortization of deferred
financing costs related to the LYONs and Coleman Holdings Notes. Since the
LYONs Retirement may not be completed until May 27, 1998, the Issuer and its
subsidiaries will continue to incur interest expense on the outstanding
principal amount of the LYONs not retired at a rate of 7.25% and will earn
interest income on the Escrowed Funds for such period. Since the Coleman
Holdings Notes Redemption will not be completed until approximately two
months after the Offering, the Issuer and its subsidiaries will continue to
incur interest expense on the Coleman Holdings Notes at a rate of 10.875%
and will earn interest income on the Escrowed Funds for such period.
Escrowed Funds are currently earning interest income at an annual rate of
approximately 5.5%.
(6) Reflects the tax effect of the pro forma adjustments.
(7) The actual and pro forma deficiency of earnings to fixed charges was $86,113
and $107,063, respectively, for the year ended December 31, 1996 and $8,917
and $14,752, respectively, for the three months ended March 31, 1997.
30
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA
The Issuer is a holding company formed in May 1997 to hold all of the
common stock of Coleman Holdings. Coleman Holdings is a holding company formed
in July 1993 in connection with the offering of the Coleman Holdings Notes and
holds all of the outstanding shares of capital stock of Coleman Worldwide.
Coleman Worldwide was formed in March 1993 in connection with the offering of
$575 million aggregate principal amount at maturity of LYONs and holds
44,067,520 shares of Coleman Common Stock, which represent approximately 82.6%
of the outstanding Coleman Common Stock. Coleman was formed in December 1991 to
succeed to the assets and liabilities of the outdoor products business of
Holdings. Due to the Issuer's 100% direct ownership of Coleman Holdings, 100%
indirect ownership of Coleman Worldwide and approximately 82.6% indirect
ownership of Coleman, the Consolidated Financial Statements of the Issuer
include the accounts of Coleman Holdings and its subsidiaries after elimination
of all material intercompany accounts and transactions. Minority interest
primarily represents the minority stockholders' proportionate share of the
results of operations and equity of Coleman.
The selected historical financial data for, and as of the end of, each of
the years in the five year period ended December 31, 1996 have been derived from
the audited Consolidated Financial Statements of the Issuer and its
subsidiaries. The selected historical financial data for the three months ended
March 31, 1997 and 1996 and as of March 31, 1997 have been derived from the
unaudited Consolidated Financial Statements of the Issuer which reflect, in the
opinion of management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial data for such periods and
at such date. Results for the interim periods are not necessarily indicative of
results for the full year.
The following selected historical financial data should be read in
conjunction with 'Capitalization,' 'Management's Discussion and Analysis of
Financial Condition and Results of Operations' and the Consolidated Financial
Statements of the Issuer and the notes thereto included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------------- ------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
-------- -------- ---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS DATA:
Net revenues.......................... $295,464 $273,560 $1,220,216 $933,574 $751,580 $575,415 $505,815
Cost of sales (a)..................... 214,422 192,594 928,497 649,427 535,710 400,052 350,141
-------- -------- ---------- -------- -------- -------- --------
Gross profit.......................... 81,042 80,966 291,719 284,147 215,870 175,363 155,674
Selling, general and administrative
expenses (a)........................ 65,952 46,800 292,012 175,036 128,664 102,214 92,711
Asset impairment charge (b)........... -- -- -- 12,289 -- -- --
Restructuring expense (c)............. -- -- -- -- 18,456 -- --
Interest expense, net................. 20,414 16,960 75,120 57,830 43,736 23,760 14,465
Amortization of goodwill and deferred
charges............................. 3,322 2,704 12,304 9,558 7,864 6,322 6,002
Gain on IPO (d)....................... -- -- -- -- -- -- (54,515)
Other (income) expense, net........... 271 (2,721) (1,604) 283 1,138 766 1,343
-------- -------- ---------- -------- -------- -------- --------
(Loss) earnings before income taxes,
minority interest and extraordinary
item................................ (8,917) 17,223 (86,113) 29,151 16,012 42,301 95,668
Income tax (benefit) expense (a)...... (3,190) 6,508 (23,766) 11,701 3,091 18,210 40,713
Minority interest..................... 232 2,535 (5,390) 6,696 5,734 6,401 4,428
-------- -------- ---------- -------- -------- -------- --------
(Loss) earnings before extraordinary
item................................ (5,959) 8,180 (56,957) 10,754 7,187 17,690 50,527
Extraordinary loss on early
extinguishment of debt, net of
income taxes........................ -- (582) (1,244) (787) (677) -- --
-------- -------- ---------- -------- -------- -------- --------
Net (loss) earnings................... $ (5,959) $ 7,598 $ (58,201) $ 9,967 $ 6,510 $ 17,690 $ 50,527
-------- -------- ---------- -------- -------- -------- --------
-------- -------- ---------- -------- -------- -------- --------
OTHER DATA:
Ratio of earnings to fixed charges
(e)................................. -- 1.93x -- 1.45x 1.33x 2.51x 6.35x
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
AS OF AS OF DECEMBER 31,
MARCH 31, ----------------------------------------------------------
1997 1996 1995 1994 1993 1992
---------- ---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets........................ $1,254,931 $1,208,275 $909,460 $759,417 $558,243 $443,781
Long-term debt (including current
portions)......................... 995,394 1,000,541 738,672 642,297 489,618 237,098
Minority interest................... 44,598 45,088 49,266 42,233 39,952 36,372
Total stockholder's (deficit)
equity............................ (187,156) (177,936) (113,320) (114,998) (115,692) 54,778
</TABLE>
- ------------------------
(a) During 1996, the Company recorded restructuring and certain other charges
totaling $52,516, net of tax. Cost of sales includes a pre-tax charge of
$44,005, selling, general and administrative expenses include a pre-tax
charge of $30,195, and the provision for income tax benefit includes $21,684
of net tax benefits resulting from these charges.
(b) Asset impairment charge reflects primarily the non-recurring charge taken in
connection with the adoption of Statement of Financial Accounting Standards
No. 121.
(c) Restructuring expense reflects primarily the non-recurring charge taken in
connection with the German Restructuring which includes severance costs,
commitments to third parties and write-downs of leasehold improvements and
other assets to estimated realizable values.
(d) Gain on IPO represents the gain to Coleman Worldwide on the sale of
approximately 18% of the Coleman Common Stock in the IPO.
(e) Earnings used in computing the ratio of earnings to fixed charges consist of
loss (earnings) before income taxes plus fixed charges. Fixed charges
consist of interest expense (including amortization of debt issuance costs,
but not the loss relating to the early extinguishment of debt) and 33% of
rental expense (considered to be representative of the interest factors).
The deficiency of earnings to fixed charges was $8,917 and $86,113 for the
three months ended March 31, 1997 and the year ended December 31, 1996,
respectively.
32
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Issuer 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. The following
discussion should be read in conjunction with the Consolidated Financial
Statements of the Issuer and the notes thereto included elsewhere in this
Prospectus. See 'Index to Consolidated Financial Statements.'
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 COMPARED WITH THE THREE MONTHS ENDED MARCH 31,
1996
Net revenues of $295.5 million in 1997 were $21.9 million or 8.0% greater
than in 1996 with outdoor recreation products increasing $29.2 million or 15.5%
and hardware products decreasing $7.3 million or 8.6%. Geographically, United
States and Canadian revenues decreased 7.9% while international revenues
increased 60.6%.
Outdoor recreation products revenues increased $29.2 million or 15.5%. The
sales increase includes the effects of Camping Gaz, a business acquired in March
1996. Excluding the estimated effects of the Camping Gaz acquisition and the
strengthening of the US dollar, sales decreased approximately 3.9% reflecting
the Company's initiatives to reduce its dependence on promotional programs.
Hardware products revenues decreased $7.3 million or 8.6% due to the decline in
pressure washer sales, a result of the Company's decision to exit the electric
pressure washer business.
Gross margins decreased as a percent of sales by 2.2 percentage points from
29.6% in 1996. The decrease is driven by the effect of lower production levels
and to a lesser extent increased resin costs associated with the Company's
plastics business. The closing or relocating of three domestic factories and the
closing of one international factory as part of the Company's restructuring
initiatives is intended to reduce manufacturing costs in the latter part of
1997.
Selling, general and administrative ('SG&A') expenses were $65.9 million in
1997 compared to $46.7 million in 1996, an increase of 40.9%. The increase in
SG&A expenses reflects SG&A expenses associated with the Camping Gaz acquisition
and severance costs associated with recent executive changes.
Interest expense was $10.7 million in 1997 compared with $8.1 million in
1996, an increase of $2.6 million. This increase was primarily the result of
higher borrowings to fund the Camping Gaz acquisition and to a lesser extent
higher interest rates. Coleman Worldwide, on a stand-alone basis, had $3.2
million of interest expense in 1997 compared with $3.0 million in 1996, an
increase of $0.2 million. This increase is a result of the effects of
compounding interest related to the LYONs. In addition, Coleman Holdings, on a
stand-alone basis, had $6.5 million of interest expense in 1997 compared with
$5.9 million in 1996, an increase of $0.6 million. This increase is a result of
the effects of compounding interest related to the Coleman Holdings Notes.
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 such LYONs. Coleman Worldwide
recognized a gain of $2.7 million in connection with these exchanges which is
reflected in other income. Coleman Worldwide 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 in earnings of Camping Gaz represents the interest of
minority shareholders in certain subsidiary operations of Camping Gaz. Minority
interest in the earnings of Coleman represents the minority stockholders'
proportionate share of the results of operations of Coleman, which is reflected
on the Issuer's consolidated financial statements because of the Issuer's
approximate 82.6% ownership of Coleman Common Stock.
33
<PAGE>
The Company recorded a provision for income tax expense of $0.5 million or
38.6% of pre-tax earnings in 1997 compared to a provision for income tax expense
of $8.8 million or 37.0% of pre-tax earnings in 1996. On an unconsolidated
basis, Coleman Worldwide recorded an income tax benefit of $1.3 million in 1997
and $0.1 million in 1996, or approximately 38% of Coleman Worldwide's
unconsolidated pre-tax loss in each period. In addition, Coleman Holdings on an
unconsolidated basis, recorded a provision for income tax benefit of $2.4
million in 1997 and $2.2 million in 1996, or approximately 35.0% of Coleman
Holdings' unconsolidated pre-tax loss in each period.
The Company recorded other charges of approximately $2.4 million, net of
taxes, for the first quarter of 1997 and expects to record a significantly
greater amount of restructuring and other charges for the second quarter of
1997. See 'Business--Business Strategy and Restructuring--Restructuring.' There
can be no assurance as to the amount of the restructuring and other charges to
be recorded in the second quarter of 1997 or that restructuring and other
charges will not be recorded in subsequent periods. See '--Liquidity and Capital
Resources.'
YEAR ENDED DECEMBER 31, 1996 COMPARED WITH THE YEAR ENDED DECEMBER 31, 1995
Net revenues in 1996 and 1995 were $1,220.2 million and $933.6 million,
respectively, an increase of $286.6 million or 30.7% with outdoor recreation
products increasing by $170.7 million or 24.8% and hardware products increasing
$115.9 million or 47.4%. Geographically, United States and Canada revenues
increased 15.6%, while international revenues increased 79.5%.
Outdoor recreation products revenues increased $170.7 million or 24.8%.
Excluding the impact of the Camping Gaz and Sierra acquisitions, the effect of a
weaker yen in 1996 as compared to 1995 and the one-time 1995 thermo-electric
cooler premium promotion, comparable outdoor recreation product revenues
increased approximately 6.4%. Significant revenue gains were experienced in the
backpack, tent and sleeping bag businesses, primarily in international markets.
In addition, the Company successfully introduced a new line of camping
accessories and expanded its heater and light businesses. These gains were
substantially offset by poor weather conditions during the camping season in
North America and the economic downturn experienced in Japan, both of which
adversely affected the demand for the Company's camping products. Hardware
products revenues increased 47.4% or $115.9 million. Excluding the impact of the
Seatt acquisition, comparable hardware products revenues increased approximately
13.8%, driven by strong generator and pressure washer sales.
Gross margins, excluding the impact of restructuring and other charges
totaling $44.0 million which are more fully discussed below, decreased as a
percent of sales by 2.9 percentage points from 30.4% in 1995 to 27.5% in 1996.
This decrease is primarily the result of lower margins associated with the
Company's backpack business and the unfavorable effects of product mix including
significantly higher sales of pressure washers at lower gross margin percentages
and lower sales of camping products which tend to have higher gross margin
percentages than the Company's average.
SG&A expenses, excluding $30.2 million of restructuring and other charges
as discussed more fully below, were $261.5 million in 1996 compared to $174.7
million in 1995, an increase of 49.7%. The increase in SG&A expenses primarily
reflects SG&A expenses associated with the Camping Gaz and Seatt business
acquisitions and to a lesser extent increased advertising and marketing
expenses.
During 1996, the Company recorded restructuring and certain other charges
totaling $52.5 million net of tax. The restructuring charges total $45.1
million, net of tax, and consist of charges to (a) integrate the Camping Gaz and
Coleman operations into a single global recreation products business, (b) exit
the low-end electric pressure washer business, (c) exit a portion of the
Company's battery powered light business and settle certain litigation with
respect to this business, and (d) increase the valuation reserve for certain
foreign deferred income tax assets. Other charges of $7.4 million, net of tax,
relate to certain asset write-offs and other tax matters. These other charges
were incurred in the Company's normal course of business, although the amounts
involved are higher than similar charges that the Company has recorded in prior
periods. Cost of sales includes a pre-tax charge of $44.0 million, SG&A expenses
includes a pre-tax charge of $30.2 million, and the provision for income tax
expense includes $21.7 million of tax benefits resulting from these charges, net
of the effect of an increase in the valuation reserve related to certain foreign
deferred tax assets and other foreign tax charges.
34
<PAGE>
The Company's interest expense was $38.7 million in 1996 compared with
$24.5 million in 1995, an increase of $14.2 million. This increase was primarily
the result of higher borrowings to fund business acquisitions and support the
increased working capital. On an unconsolidated basis, Coleman Worldwide had an
additional $12.1 million of interest expense in 1996 compared with $11.4 million
in 1995, an increase of $0.7 million. This increase is a result of the effects
of compounding interest related to the LYONs. In addition, Coleman Holdings, on
an unconsolidated basis, had $24.3 million of interest expense in 1996 compared
with $21.9 million in 1995, an increase of $2.4 million. This increase is a
result of the effects of compounding interest related to the Coleman Holdings
Notes.
The Company recorded an income tax benefit in 1996 of $10.9 million, which
includes the net tax benefits of $21.7 million associated with restructuring and
other charges discussed above. Excluding the net tax benefit from restructuring
and other charges, the provision for income taxes would have been $10.8 million
or 45.0% of pre-tax earnings, excluding restructuring and other charges, as
compared to a provision for income tax expense of $24.5 million or 37.9% of
pre-tax earnings in 1995. The increase is primarily due to losses of certain
foreign subsidiaries for which the Company has not recognized a tax benefit and
the impact of non-deductible goodwill amortization. On an unconsolidated basis,
Coleman Worldwide recorded an income tax benefit of $3.9 million in 1996 and
$4.6 million in 1995 or approximately 38% of Coleman Worldwide's unconsolidated
pre-tax loss in each period. In addition, Coleman Holdings on an unconsolidated
basis, recorded a provision for income tax benefit of $9.0 million in 1996 and
$8.2 million in 1995 or approximately 35.0% of Coleman Holdings' unconsolidated
pre-tax loss in each period.
The Company obtained control of approximately 70% of Camping Gaz in March
1996 and obtained control of the remaining 30% in July 1996. Accordingly, the
minority interest in Camping Gaz for 1996 primarily represents the minority
shareholders' approximate 30% proportionate share of the results of operations
of Camping Gaz for the period March through June of 1996. Minority interest in
Camping Gaz also includes the interests of minority shareholders in certain
subsidiary operations of Camping Gaz.
Minority interest in the loss of the Company represents the minority
stockholders' proportionate share of the results of operations of the Company,
which is reflected on the Issuer's Consolidated Financial Statements because of
the Issuer's ownership through Coleman Holdings and Coleman Worldwide of
approximately 83% of the Coleman Common Stock.
During the second quarter of 1996, in connection with the renegotiation of
its then existing credit agreement, the Company recorded an extraordinary loss
of $1.1 million ($0.6 million after taxes) which represents a write-off of the
related unamortized financing costs associated with its then existing credit
agreement. During the third quarter of 1995, the Company completed a $200.0
million private placement debt issue. In connection with the private placement,
the Company renegotiated its previous credit agreement and recorded an
extraordinary loss of $1.3 million ($0.8 million after taxes) which represents a
write-off of the related unamortized financing costs associated with its
previous credit agreement.
YEAR ENDED DECEMBER 31, 1995 COMPARED WITH THE YEAR ENDED DECEMBER 31, 1994
Net revenues in 1995 and 1994 were $933.6 million and $751.6 million,
respectively, an increase of $182.0 million, or 24.2% with outdoor recreation
products increasing by $125.2 million or 22.2% and hardware products increasing
$56.8 million or 30.2%. Geographically, United States and Canada revenues
increased 24.0%, while international revenues increased 25.1%.
Outdoor recreation products revenues increased $125.2 million or 22.2%. The
sales increase includes the effects of a full twelve months of the Eastpak
business, a business acquired in November 1994. The sales increase also reflects
strong performance in the sleeping bag, tent, and the core camping businesses,
particularly in Japan. Sales of coolers and jugs increased overall in part due
to a thermo-electric cooler premium promotion that began in early 1995. In
addition, price increases in selected areas also helped to compensate for the
loss of revenues attributable to the German operations which were sold in the
third quarter of 1994. Hardware products revenues increased 30.2% or $56.8
million. The sales increase includes the effects of a full twelve months of the
compressor business, a business acquired in April of 1994. Pressure washer unit
sales continued to increase although per unit sales prices declined somewhat in
the latter half of 1995 in response to a more competitive market. In addition,
generator sales were up primarily as a result of storm activity in the latter
half of 1995.
35
<PAGE>
Gross margins increased as a percent of sales by 1.7 percentage points from
28.7% in 1994 to 30.4% in 1995. The margin improvement is due to the favorable
effects of the mix of products sold including higher margin new products. Gross
margins were negatively impacted in 1995 due to manufacturing inefficiencies,
integration costs and pricing issues at the Company's Brazilian operations. Cost
of sales in 1995 also includes a $6.3 million benefit resulting from the effects
of marking to market the Company's forward exchange contracts pursuant to the
guidance of the Emerging Issues Task Force (the 'EITF') in its consensus opinion
of EITF 95-2 'Determination of What Constitutes a Firm Commitment for Foreign
Currency Transactions Not Involving a Third Party', which was adopted in the
fourth quarter of 1995. Prior to the adoption of EITF 95-2, the Company
routinely used forward exchange contracts to hedge certain intercompany
commitments and deferred recognition of forward exchange contract gains and
losses until the component of the related hedge transaction was completed and
recognized in income. Cost of sales in 1994 also includes a $2.2 million charge
resulting from an increase in the Company's reserves for estimated costs of
environmental remediation efforts.
SG&A expenses were $174.7 million in 1995, compared to $128.5 million in
1994, an increase of 36.0%. The increase in SG&A expenses is primarily related
to the Company's selling and marketing organization, SG&A expenses associated
with the businesses acquired in 1994, and expenses associated with the
relocation of corporate, certain international and hardware offices. Reduced
annual expenses associated with certain insurance programs helped reduce the
overall increase in SG&A.
During the fourth quarter of 1995, the Company adopted Financial Accounting
Standards No. 121, 'Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of' ('FAS 121'). In connection with the
adoption of FAS 121 the Company recognized an asset impairment charge of $12.3
million ($9.9 million after tax) related to its Brazilian operations. The
Brazilian operations had not performed to the Company's expectations since the
acquisition of this business in April of 1994, and, in the fourth quarter of
1995, the Company initiated actions to reduce the operating losses in Brazil.
These actions included replacing management, increasing prices, dramatically
downsizing the manufacturing operations and reducing SG&A and other overhead.
Because of these actions, the Company performed an impairment review pursuant to
the guidelines set forth in FAS 121 and concluded that a recognition of an asset
impairment charge was appropriate.
During September 1994, the Company restructured its German manufacturing
operations in a move to strengthen its European business and eliminate
unprofitable operations. The German Restructuring resulted in a one-time charge
of approximately $18.0 million before tax and included severance costs of $1.5
million, commitments to third parties of approximately $5.5 million, and
write-downs of leasehold improvements and other assets to estimated realizable
values aggregating $11.0 million. In connection with the restructuring, the
Company recognized tax benefits of approximately $10.9 million relating to the
write-off of the Company's investment in its German operations. The Company also
announced a plan to change from manufacturing to sourcing for certain textile
product lines and to exit the market for personal flotation devices. This plan
resulted in a $0.5 million pretax charge.
The Company's interest expense was $24.5 million in 1995 and $13.4 million
in 1994, an increase of $11.1 million. This increase was primarily the result of
higher borrowings in 1995 necessary to support the Company's acquisitions and
increased working capital needs related to the growth of the Company and, to a
lesser extent, higher interest rates in 1995. On an unconsolidated basis,
Coleman Worldwide had an additional $11.4 million of interest expense in 1995
compared with $10.6 million in 1994, an increase of $0.8 million, or 6.9%. This
increase is a result of the effects of compounding interest related to the
LYONs. In addition, Coleman Holdings, on an unconsolidated basis, had $21.9
million of interest expense in 1995 compared with $19.7 million in 1994, an
increase of $2.2 million, or 11.1%. This increase is a result of the effects of
compounding interest related to the Coleman Holdings Notes.
Minority interest represents the minority stockholders' proportionate share
of the results of operations of the Company, which is reflected on the Issuer's
Consolidated Financial Statements because of the sale of approximately 18% of
the Coleman Common Stock in the IPO in 1992. Minority interest increased in 1995
due to an increase in the Company's income in 1995.
The Company's effective income tax rate was 37.9% in 1995 compared with
30.6% in 1994. The increase in the effective tax rate in 1995 as compared to
1994 is primarily due to higher taxes on foreign earnings in the 1995
36
<PAGE>
period as compared to the 1994 period which was favorably impacted by the tax
benefits arising from permanent basis differences associated with the
restructuring of the German operations. The effective income tax rate in 1995
also reflects the favorable impact of tax benefits associated with the Company's
manufacturing operations in Puerto Rico, which were acquired in late 1994. The
Issuer's consolidated effective income tax rate was 40.1% in 1995 compared with
19.3% in 1994. The increase in the Issuer's consolidated effective income tax
rate reflects the proportionately greater impact of the items discussed above
when compared to the Issuer's consolidated earnings before income taxes,
minority interest and extraordinary item, partially offset by the
proportionately higher impact of nondeductible goodwill amortization when
compared with 1994.
During the third quarter of 1995, the Company completed a $200.0 million
private placement debt issue. In connection with the private placement, the
Company renegotiated its previous credit agreement and recorded an extraordinary
loss of $1.3 million ($0.8 million after taxes), which represents a write-off of
the related unamortized financing costs associated with its previous credit
agreement. During the second quarter of 1994, in connection with the
renegotiation of its then existing credit agreement, the Company recorded an
extraordinary loss of $1.1 million ($0.7 million after taxes) which represents a
write-off of the related unamortized financing costs associated with its then
existing credit agreement.
LIQUIDITY AND CAPITAL RESOURCES
Operating activities of the Issuer and its subsidiaries used $5.5 million
of cash during the year ended December 31, 1996 and provided $9.3 million and
$46.6 million for the years ended December 31, 1995 and 1994, respectively, and
used $48.1 million and $92.8 million during the three months ended March 31,
1997 and 1996, respectively. At December 31, 1996, receivables were
approximately equal to 1995 year-end levels, excluding the amount acquired in
connection with the Camping Gaz and Seatt acquisitions and the effect of the
restructuring and other charges described above. Inventories, excluding the
amount acquired in connection with the Camping Gaz and Seatt acquisitions and
the effect of the restructuring and other charges described above, increased by
$42.4 million during the year ended December 31, 1996 period primarily because
of lower than expected sales as described above. During the three months ended
March 31, 1997, receivables increased $67.5 million as a result of the
seasonality of the Company's sales and an increase in the overall level of such
sales. Despite the seasonality of the Company's business, inventories at March
31, 1997 were approximately equal to the levels at December 31, 1996 as a result
of the Company's initiative to reduce inventory.
Net cash used for (provided by) investing activities by the Issuer and its
subsidiaries was $204.3 million, $68.3 million, and $157.1 million for the years
ended December 31, 1996, 1995 and 1994, respectively, and ($2.8) million and
$66.8 million for the three months ended March 31, 1997 and 1996, respectively.
Net cash used for investing activities was composed primarily of the Company's
capital expenditures, purchases of businesses, and also advances to Mafco under
the Coleman Worldwide Tax Sharing Agreement (as defined herein) and the terms of
the LYONs Indenture of $4.1 million, $6.7 million and $27.1 million for the
years ended December 31, 1996, 1995 and 1994, respectively. The Company's
capital expenditures were $41.3 million in the year ended December 31, 1996, and
the Company used $161.9 million of cash for business acquisitions during the
year ended December 31, 1996. During the three months ended March 31, 1997, the
Company's capital expenditures were $6.3 million, and Coleman Worldwide had a
reduction in the net advances to Mafco under the Coleman Worldwide Tax Sharing
Agreement and the terms of the LYONs Indenture in the amount of $7.0 million.
For 1997, the Company expects capital expenditures to be within the range of
$30.0 million to $40.0 million.
Net cash provided by financing activities by the Issuer and its
subsidiaries was $210.7 million, $64.4 million, and $114.7 million for the years
ended December 31, 1996, 1995, and 1994, respectively, and consisted primarily
of increases in long-term borrowings and in 1994 from revolving credit agreement
borrowings. The Company paid $2.3 million to acquire 100,000 shares of Coleman
Common Stock in the open market during 1996. Coleman Holdings' net cash provided
by financing activities for the three months ended March 31, 1997 consisted
primarily of an increase in short-term borrowings to finance the seasonal
increase in working capital.
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 then existing credit agreement to: (a) provide a
term loan of French Franc 385.1 million ($75.0 million at the then current
exchange rates and
37
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approximately $68.2 million at March 31, 1997), (b) provide an unsecured
revolving credit facility in an amount of $275.0 million, (c) allow for the
Camping Gaz acquisition and (d) extend the maturity of the Company Credit
Agreement. Due to the restructuring and other charges as discussed previously
and lower than expected operating results, the Company further amended the
Company Credit Agreement in October 1996 and again in March 1997.
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 December 31, 1996, $128.1
million was available for borrowings under the Company Credit Agreement. At
March 31, 1997, $135.1 million was available for borrowings under the Company
Credit Agreement. However, the Indenture, the Coleman Holdings Indenture and the
LYONs Indenture contain certain provisions that by their terms restrict the
Company's ability to, among other things, incur debt. Accordingly, to the extent
that borrowings by the Company of amounts otherwise available under the Company
Credit Agreement exceed the level of borrowings permitted by such holding
company debt instruments, a default will result under such debt instruments.
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 2.125% 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. 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, levels of consolidated net worth and profits, and certain
other provisions limiting the incurrence of additional debt, purchase or
redemption of the Company's common stock, issuance of preferred stock of the
Company, and also prohibits the Company from paying any dividends until on or
after January 1, 1999 and limits the amount of dividends the Company may pay
thereafter. The Company Credit Agreement also provides for a specific
requirement relating to the Company's financial leverage at December 31, 1997
which, if not achieved, will result in the Company Credit Agreement becoming
secured by the Company's assets. For purposes of determining the Company's
compliance with certain of such financial covenants, the Company Credit
Agreement excludes up to $30 million of charges in connection with the Company's
restructuring initiatives. See 'Description of Other Indebtedness--Company
Credit Agreement.' In addition, substantially all of the Coleman Common Stock
owned by Coleman Worldwide are pledged to secure indebtedness of Coleman
Worldwide and of its parent, Coleman Holdings.
The Company's ability to meet its current cash operating requirements,
including projected capital expenditures, tax sharing payments and other
obligations is dependent upon a combination of cash flows from operations and
borrowings under the Company Credit Agreement. The Company's ability to borrow
under the terms of the Company Credit Agreement is subject to the Company's
continuing requirement to meet the various restrictive covenants, including
without limitation, those described above. If the Company fails to meet the
various restrictive covenants of the Company Credit Agreement, the Company will
need to renegotiate its current Company Credit Agreement, and/or enter into
alternative financing arrangements. There is no assurance that the terms and
conditions of such agreements would be as favorable as those now contained in
the Company Credit Agreement.
The Company financed the acquisition of the shares of Camping Gaz with the
net proceeds from (i) a private placement issuance and sale of $85.0 million
aggregate principal amount of 7.10% Senior Notes, Series A, due 2006 (the 'Notes
due 2006') and (ii) a private placement issuance and sale of $75.0 million
aggregate principal amount of 7.25% Senior Notes, Series B, due 2008 (the 'Notes
due 2008'). The Notes due 2006 bear interest at the rate of 7.10% per annum
payable semiannually, and the principal amount is payable in annual installments
of $12.1 million commencing June 13, 2000 with a final payment due on June 13,
2006. If there is a default, the interest rate will be the greater of (i) 9.10 %
or (ii) 2% above the prime interest rate. The Notes due 2008 bear interest at
the rate of 7.25% per annum payable semiannually, and the principal amount is
payable in annual installments of $15.0 million commencing June 13, 2004 with a
final payment due on June 13, 2008. If there is a default, the interest rate
will be the greater of (i) 9.25 % or (ii) 2% above the prime interest rate. The
Notes due 2006 and the Notes due 2008 are unsecured and are subject to various
restrictive covenants, including without
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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 and sale and leaseback transactions under the
terms of the Note Purchase Agreement. The Notes due 2006 and the Notes due 2008
and the Company's Notes due 2007 (as defined herein) shall become secured if the
Company Credit Agreement becomes secured as discussed above. See 'Description of
Other Indebtedness.'
The Company's international operations are located primarily in Japan,
Europe, and Canada, which are not considered to be highly inflationary
environments. 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, 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 the Coleman Common Stock
owned by Coleman Worldwide. As the holder of approximately 83% of the Coleman
Common Stock, 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 flow 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 prohibits the Company from paying any dividends
until on or after January 1, 1999 and limits the amount of dividends the Company
may pay thereafter. 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 LYONs Indenture does not require Coleman
Worldwide to own more than a majority of the Coleman Common Stock. Pursuant to
the LYONs Indenture, at any time that the LYONs are outstanding, the amounts
that Coleman Worldwide would be required to pay to Mafco Holdings under the
Worldwide Tax Sharing Agreement, together with any remaining funds paid to
Coleman Worldwide by the Company under the Company Tax Sharing Agreement may not
be paid as tax sharing payments, but Coleman Worldwide may advance such funds to
Mafco Holdings 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
Holdings in the amount of $47.7 million at March 31, 1997. See 'Relationship
with MacAndrews & Forbes--Tax Sharing Agreements.'
The Issuer expects to use the Escrowed Funds to redeem the LYONs or to
repurchase the LYONs for cash, including upon the optional redemption on May 27,
1998 or upon the occurrence of any Additional Purchase Right Event (as defined),
or to repay the LYONs upon an acceleration after an Event of Default (as defined
in the LYONs Indenture) has occurred. There can be no assurance, however, that
the Escrowed Funds will be sufficient to consummate the LYONs Retirement. If the
Escrowed Funds are insufficient, the Issuer will be required to adopt one or
more alternatives, such as seeking capital contributions or loans from its
affiliates. None of the affiliates of the Issuer will be required to make any
capital contributions or other payments to the Issuer with respect to the
Issuer's obligations to consummate the LYONs Retirement. There can be no
assurance that any of the foregoing actions could be effected on satisfactory
terms, that they would be sufficient to enable the Issuer to consummate the
LYONs Retirement when required or that any of such actions would be permitted by
the terms of the Indenture, the LYONs Indenture or the debt instruments of the
Company then in effect.
The LYONs Indenture provides the holders of LYONs with the option to
require Coleman Worldwide to purchase the LYONs after the occurrence of certain
events ('Additional Purchase Right Events'). Additional
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Purchase Right Events occur, among other things, upon the Company's Consolidated
Debt Ratio (as defined) exceeding 0.75 to 1.0 or the Consolidated Net Worth (as
defined) of Coleman Worldwide as of the end of any fiscal quarter being less
than a specified amount which is $60.0 million at March 31, 1997, which
specified amount increases to $70.0 million at June 30, 1997. The Indenture and
the Escrow Agreement will permit the use of Escrowed Funds to finance any
required purchase of LYONs by Coleman Worldwide following an Additional Purchase
Right Event.
On March 31, 1997, MacAndrews Holdings assumed a liability of Coleman
Worldwide in the amount of approximately $2.3 million. The assumption was
accounted for as a capital contribution.
Coleman Holdings is a holding company with no business operations or source
of income of its own, Coleman Holdings' only significant asset is all of the
common stock of Coleman Worldwide, which owns approximately 82.6% of the
outstanding shares of Coleman Common Stock. Coleman Holdings' principal business
operations are conducted by Coleman and its subsidiaries, and Coleman Holdings
has no operations of its own. Accordingly, Coleman Holdings' only source of cash
to pay its obligations with respect to the Coleman Holdings Notes and any other
obligations is distributions with respect to ownership interest in Coleman from
the net earnings and cash flow generated by Coleman, after payment by Coleman
Worldwide of amounts due on the LYONs for so long as they remain outstanding and
certain other expenses. However, Coleman Holdings currently expects that the
proceeds of the Offering will be contributed by the Issuer to Coleman Holdings
and used to fund the Coleman Holdings Notes Redemption.
The Coleman Holdings Notes Indenture contains certain covenants that, among
other things, state that Coleman Holdings shall not permit the Company to issue
debt if after giving effect to such issuance the Company's Consolidated Debt
Ratio (as defined) exceeds 0.75 to 1.0. See 'Risk Factors--Indebtedness and
Ability to Repay the Notes,' 'Description of Other Indebtedness' and
'Description of the Notes.'
The Issuer is a holding company with no business operations or source of
income of its own. The Issuer's only significant asset is all of the common
stock of Coleman Holdings, a holding company that through Coleman Worldwide owns
approximately 82.6% of the outstanding shares of Coleman Common Stock. The
Issuer's principal business operations are conducted by Coleman and its
subsidiaries, and the Issuer has no operations of its own. Accordingly, the
Issuer's only source of cash to pay its obligations with respect to the Notes
and any other obligations is expected to be distributions with respect to
ownership interest in Coleman from the net earnings and cash flow generated by
Coleman, after payment by Coleman Worldwide and Coleman Holdings of amounts due
on the LYONs and the Coleman Holdings Notes, as the case may be, for so long as
they remain outstanding and certain other expenses. As the indirect holder
through Coleman Worldwide of approximately 82.6% of the Coleman Common Stock,
the Issuer has the ability to cause the Company, Coleman Worldwide and Coleman
Holdings, to make distributions up to the maximum amount permitted by law,
subject to limitations in the debt instruments of the Company, Coleman Worldwide
and Coleman Holdings. However, the Issuer currently expects that, for the
foreseeable future, the net earnings and cash flow of the Company will be
retained and used in the business of the Company and that the Issuer will not
receive any distributions from the Company, Coleman Worldwide or Coleman
Holdings. The terms of the Company Credit Agreement prohibit the Company from
paying dividends until on or after January 1, 1999 and thereafter restrict the
Company's ability to pay dividends or make other payments to Coleman Worldwide,
Coleman Holdings and the Issuer. In addition, the LYONs Indenture restricts
Coleman Worldwide's ability to pay dividends and make other payments to Coleman
Holdings or the Issuer and the Coleman Holdings Notes Indenture restricts
Coleman Holdings' ability to pay dividends and make other payments to the
Issuer. Although Coleman Worldwide may receive payments from the Company
pursuant to the Company Tax Sharing Agreement, Coleman Worldwide will not
distribute such payments to Coleman Holdings or the Issuer. In addition, the
LYONs Indenture requires that any such payments received from the Company be
paid to Mafco or retained by Coleman Worldwide (except under certain limited
circumstances which are unlikely to occur prior to the LYONs Retirement). See
'Description of Other Indebtedness--Coleman Worldwide--The LYONs' and 'Risk
Factors--Holding Company Structure.'
The Issuer currently anticipates that in order to pay the principal amount
at maturity of the Notes or upon the occurrence of an Event of Default, to
redeem the Notes or to repurchase the Notes upon the occurrence of a Change of
Control, the Issuer will be required to adopt one or more alternatives, such as
seeking capital contributions or loans from its affiliates, refinancing its
indebtedness or selling its equity securities or the equity
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securities or assets of Coleman. None of the affiliates of the Issuer is
required to make any capital contributions or other payments to the Issuer with
respect to the Issuer's obligations on the Notes, and, except for the Coleman
Worldwide Non-Recourse Guaranty to be issued following the Coleman Holdings
Notes Redemption, the obligations of the Issuer with respect to the Notes are
not guaranteed by any affiliate of the Issuer or any other person. There can be
no assurance that any of the foregoing actions could be effected on satisfactory
terms, that they would be sufficient to enable the Issuer to make any payments
in respect of the Notes when required or that any of such actions would be
permitted by the terms of the Indenture, the Coleman Holdings Notes Indenture,
the LYONs Indenture or the debt instruments of the Company or Coleman Worldwide
then in effect. Moreover, the events that constitute a Change of Control under
the Indenture may also constitute events of default or repurchase right events
under certain debt instruments of the Issuer's subsidiaries. Such events may
permit the lenders under such debt instruments to accelerate the debt (or, in
the case of LYONs, to require Coleman Worldwide to repurchase the LYONs) and, if
the debt is not paid or repurchased, to enforce their security interests in
substantially all of the assets of the Issuer's subsidiaries. Any such
enforcement may limit the Issuer's ability to raise cash to purchase the Notes
and may have a material adverse effect on the market price of Coleman Common
Stock and on the price that could be obtained for the Coleman Worldwide capital
stock and thus on the ability of the Trustee to realize value through sales of
the collateral. See 'Risk Factors--Indebtedness and Ability to Repay the Notes,'
'--Security for the Notes; Potential for Diminution,' 'Description of Other
Indebtedness' and 'Description of the Notes.'
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. For the years ended December 31, 1994, 1995 and 1996, second
quarter sales comprised approximately 34%, 33% and 37% of annual sales,
respectively. Consequently, the Company's annual results are generally dependent
on its results during the second quarter. Furthermore, the Company has announced
and is in the process of implementing certain restructuring initiatives, which
the Company expects to have an impact on its results during the remainder of
1997. There can be no assurance as to the Company's success in implementing such
initiatives or the results therefrom or as to any adverse impact of the
Company's restructuring initiatives. See '--Liquidity and Capital Resources.'
INFLATION
In general, manufacturing costs are affected by inflation and the effects
of inflation may be experienced by the Company in future periods. Management
believes, however, that such effect has not been material to the Company during
the past three years.
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THE EXCHANGE OFFER
TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING OLD NOTES
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal (which together constitute the
Exchange Offer), the Issuer will accept for exchange Old Notes which are
properly tendered on or prior to the Expiration Date and not withdrawn as
permitted below. As used herein, the term 'Expiration Date' means 5:00 p.m., New
York City time, on , 1997; provided, however, that if the Issuer, in its
sole discretion, has extended the period of time for which the Exchange Offer is
open, the term 'Expiration Date' means the latest time and date to which the
Exchange Offer is extended.
As of the date of this Prospectus, $600,475,000 aggregate principal amount
at maturity of the Old First Priority Notes and $131,560,000 aggregate principal
amount of the Old Second Priority Notes were outstanding. This Prospectus,
together with the Letter of Transmittal, is first being sent on or about
, 1997, to all holders of Old Notes known to the Issuer. The Issuer's
obligation to accept Old Notes for exchange pursuant to the Exchange Offer is
subject to certain conditions as set forth below under '--Certain Conditions to
the Exchange Offer.'
The Issuer expressly reserves the right, at any time or from time to time,
to extend the period of time during which the Exchange Offer is open, and
thereby delay acceptance for exchange of any Old Notes, by giving oral or
written notice of such extension to the holders thereof as described below.
During any such extension, all Old Notes previously tendered will remain subject
to the Exchange Offer and may be accepted for exchange by the Issuer. Any Old
Notes not accepted for exchange for any reason will be returned without expense
to the tendering holder thereof as promptly as practicable after the expiration
or termination of the Exchange Offer.
Old Notes tendered in the Exchange Offer must be in denominations of
principal amount of $1,000 and any integral multiple thereof.
The Issuer expressly reserves the right to amend or terminate the Exchange
Offer, and not to accept for exchange any Old Notes not therefore accepted for
exchange, upon the occurrence of any of the events specified below under
'--Certain Conditions to the Exchange Offer.' The Issuer will give oral or
written notice of any extension, amendment, non-acceptance or termination to the
holders of the Old Notes as promptly as practicable, such notice in the case of
any extension to be issued by means of a press release or other public
announcement no later than 9:00 a.m., New York City time, on the next business
day after the previously scheduled Expiration Date.
PROCEDURES TOR TENDERLNG OLD NOTES
The tender to the Issuer of Old Notes by a holder thereof as set forth
below and the acceptance thereof by the Issuer will constitute a binding
agreement between the tendering holder and the Issuer upon the terms and subject
to the conditions set forth in this Prospectus and in the accompanying Letter of
Transmittal. Except as set forth below, a holder who wishes to tender Old Notes
for exchange pursuant to the Exchange Offer must transmit a properly completed
and duly executed Letter of Transmittal, including all other documents required
by such Letter of Transmittal, to First Trust National Association, as Exchange
Agent, at the address set forth below under '--Exchange Agent' on or prior to
the Expiration Date. In addition, either (i) certificates for such Old Notes
must be received by the Exchange Agent along with the Letter of Transmittal, or
(ii) a timely confirmation of a book-entry transfer (a 'Book-Entry
Confirmation') of such Old Notes, if such procedure is available, into the
Exchange Agent's account at The Depository Trust Company (the 'Book-Entry
Transfer Facility') pursuant to the procedure for book-entry transfer described
below, must be received by the Exchange Agent prior to the Expiration Date, or
(iii) the holder must comply with the guaranteed delivery procedures described
below. THE METHOD OF DELIVERY OF OLD NOTES, LETTERS OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDERS. IF SUCH DELIVERY
IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED, WITH
RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR OLD NOTES SHOULD
BE SENT TO THE ISSUER.
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Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the Old Notes surrendered for exchange
pursuant thereto are tendered (i) by a registered holder of the Old Notes who
has not completed the box entitled 'Special Issuance Instructions' or 'Special
Delivery Instructions' on the Letter of Transmittal or (ii) for the account of
an Eligible Institution (as defined herein). In the event that signatures on a
Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantees must be by a firm which is a member
of a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc. or by a commercial bank or trust company
having an office or correspondent in the United States (collectively, 'Eligible
Institutions'). If Old Notes are registered in the name of a person other than a
signer of the Letter of Transmittal, the Old Notes surrendered for exchange must
be endorsed by, or be accompanied by a written instrument or instruments of
transfer or exchange, in satisfactory form as determined by the Issuer in its
sole discretion, duly executed by, the registered Holder with the signature
thereon guaranteed by an Eligible Institution.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Old Notes tendered for exchange will be determined by
the Issuer in its sole discretion, which determination shall be final and
binding. The Issuer reserves the absolute right to reject any and all tenders of
any particular Old Notes not properly tendered or to not accept any particular
Old Notes which acceptance might, in the judgment of the Issuer or its counsel,
be unlawful. The Issuer also reserves the absolute right to waive any defects or
irregularities or conditions of the Exchange Offer as to any particular Old
Notes either before or after the Expiration Date (including the right to waive
the ineligibility of any holder who seeks to tender Old Notes in the Exchange
Offer). The interpretation of the terms and conditions of the Exchange Offer as
to any particular Old Notes either before or after the Expiration Date
(including the Letter of Transmittal and the instructions thereto) by the Issuer
shall be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Old Notes for exchange must be
cured within such reasonable period of time as the Issuer shall determine.
Neither the Issuer, the Exchange Agent nor any other person shall be under any
duty to give notification of any defect or irregularity with respect to any
tender of Old Notes for exchange, nor shall any of them incur any liability for
failure to give such notification.
If the Letter of Transmittal is signed by a person or persons other than
the registered holder or holders of Old Notes, such Old Notes must be endorsed
or accompanied by appropriate powers of attorney, in either case signed exactly
as the name or names of the registered holder or holders that appear on the Old
Notes.
If the Letter of Transmittal or any Old Notes or powers of attomey are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and, unless waived by
the Issuer, proper evidence satisfactory to the Issuer of their authority to so
act must be submitted.
By tendering, each holder will represent to the Issuer that, among other
things, the New Notes acquired pursuant to the Exchange Offer are being obtained
in the ordinary course of business of the person receiving such New Notes,
whether or not such person is the holder, and that neither the holder nor such
other person has any arrangement or understanding with any person to participate
in the distribution of the New Notes. In the case of a holder that is not a
broker-dealer, each such holder, by tendering, will also represent to the Issuer
that such holder is not engaged in, or does not intend to engage in, a
distribution of the New Notes. If any holder or any such other person is an
'affiliate,' as defined under Rule 405 of the Securities Act, of the Issuer, or
is engaged in or intends to engage in or has an arrangement or understanding
with any person to participate in a distribution of such New Notes to be
acquired pursuant to the Exchange Offer, such holder or any such other person
(i) could not rely on the applicable interpretations of the staff of the SEC and
(ii) must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any resale transaction. Each broker-dealer
that receives New Notes for its own account in exchange for Old Notes, where
such Old Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes. See 'Plan of
Distribution.' The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an 'underwriter' within the meaning of the Securities Act.
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ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Upon satisfaction or waiver of all of the conditions to the Exchange Offer,
the Issuer will accept, promptly after the Expiration Date, all Old Notes
properly tendered and will issue the New Notes promptly after acceptance of the
Old Notes. See '--Certain Conditions to the Exchange Offer.' For purposes of the
Exchange Offer, the Issuer shall be deemed to have accepted properly tendered
Old Notes for exchange when, as and if the Issuer has given oral or written
notice thereof to the Exchange Agent, with written confirmation of any oral
notice to be given promptly thereafter.
For each Old Note accepted for exchange, the holder of such Old Note will
receive a New Note having a principal amount at maturity equal to that of the
surrendered Old Note. Original Issue Discount on the New Notes will accrue from
May 20, 1997, the date of original issuance of the Old Notes. If the Exchange
Offer is not consummated by November 17, 1997, interest will accrue on the Old
Notes (in addition to the accrual of Original Issue Discount) from and including
such date until but excluding the date of consummation of the Exchange Offer
payable in cash semiannually in arrears on May 15 and November 15 commencing May
15, 1998, at a rate per annum equal to .50% of the Accreted Value of the Old
Notes as of the November 15 or May 15 immediately preceding such interest
payment date. Payments of such interest, if any, on Old Notes in exchange for
which the New Notes were issued will be made to the persons who, at the close of
business on May 1 or November 1 next preceding the interest payment date, are
registered holders of such Old Notes if such record date occurs prior to such
exchange, or are registered holders of the New Notes if such record date occurs
on or after the date of such exchange, even if Notes are cancelled after the
record date and on or before the interest payment date.
In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of certificates for such Old Notes or a timely Book-Entry
Confirmation of such Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility, a properly completed and duly executed Letter of
Transmittal and all other required documents. If any tendered Old Notes are not
accepted for any reason set forth in the terms and conditions of the Exchange
Offer or if Old Notes are submitted for a greater principal amount at maturity
than the holder desired to exchange, such unaccepted or non-exchanged Old Notes
will be resumed without expense to the tendering holder thereof (or, in the case
of Old Notes tendered by book-entry transfer into the Exchange Agent's account
at the Book-Entry Transfer Facility pursuant to the book-entry procedures
described below, such non-exchanged Old Notes will be credited to an account
maintained with such Book-Entry Transfer Facility) as promptly as practicable
after the expiration or termination of the Exchange Offer.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Old Notes at the Book-Entry Transfer Facility for purposes of the
Exchange Offer within two business days after the date of this Prospectus, and
any financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Old Notes by causing the
Book-Entry Transfer Facility to transfer such Old Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility in accordance with such
Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of Old Notes may be effected through book-entry transfer at the
Book-Entry Transfer Facility, the Letter of Transmittal or facsimile thereof,
with any required signature guarantees and any other required documents, must,
in any case, be transmitted to and received by the Exchange Agent at one of the
addresses set forth below under '--Exchange Agent' on or prior to the Expiration
Date or the guaranteed delivery procedures described below must be complied
with.
GUARANTEED DELIVERY PROCEDURES
If a registered holder of the Old Notes desires to tender Old Notes held by
such holder and such Old Notes are not immediately available, or time will not
permit such holder's Old Notes or other required documents to reach the Exchange
Agent before the Expiration Date, or the procedure for book-entry transfer
cannot be completed on a timely basis, a tender may be effected if (i) the
tender is made through an Eligible Institution, (ii) prior to the Expiration
Date, the Exchange Agent received from such Eligible Institution a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof) and
Notice of Guaranteed Delivery, substantially in the form provided by the Issuer
(by telegram, telex, facsimile transmission, mail or hand delivery), setting
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forth the name and address of the holder of Old Notes and the amount of Old
Notes tendered, stating that the tender is being made thereby and guaranteeing
that within three New York Stock Exchange ('NYSE') trading days after the date
of execution of the Notice of Guaranteed Delivery, the certificates for all
physically tendered Old Notes, in proper form for transfer, or a Book-Entry
Confirmation, as the case may be, and any other documents required by the Letter
of Transmittal will be deposited by the Eligible Institution with the Exchange
Agent, and (iii) the certificates for all physically tendered Old Notes, in
proper form for transfer, or a Book-Entry Confirmation, as the case may be, and
all other documents required by the Letter of Transmittal, are received by the
Exchange Agent within three NYSE trading days after the date of execution of the
Notice of Guaranteed Delivery.
WITHDRAWAL RIGHTS
Tenders of Old Notes may be withdrawn at any time prior to the Expiration
Date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent at one of the addresses set forth below under
'--Exchange Agent.' Any such notice of withdrawal must specify the name of the
person having tendered the Old Notes to be withdrawn, identify the Old Notes to
be withdrawn (including the principal amount of such Old Notes), and (where
certificates for Old Notes have been transmitted) specify the name in which such
Old Notes are registered, if different from that of the withdrawing holder. If
certificates for Old Notes have been delivered or otherwise identified to the
Exchange Agent, then, prior to the release of such certificates the withdrawing
holder must also submit the serial numbers of the particular certificates to be
withdrawn and signed notice of withdrawal with signatures guaranteed by an
Eligible Institution unless such holder is an Eligible Institution. If Old Notes
have been tendered pursuant to the procedure for book-entry transfer described
above, any notice of withdrawal must specify the name and number of the account
at the Book-Entry Transfer Facility to be credited with the withdrawn Old Notes
and otherwise comply with the procedures of such facility. All questions as to
the validity, form and eligibility (including time of receipt) of such notices
will be determined by the Issuer, whose determination shall be final and binding
on all parties. Any Old Notes so withdrawn will be deemed not to have been
validly tendered for exchange for purposes of the Exchange Offer. Any Old Notes
which have been tendered for exchange but which are not exchanged for any reason
will be returned to the holder thereof without cost to such holder (or, in the
case of Old Notes tendered by book-entry transfer into the Exchange Agent's
account at the Book-Entry Transfer Facility pursuant to the book-entry transfer
procedures described above, such Old Notes will be credited to an account
maintained with such Book-Entry Transfer Facility for the Old Notes) as soon as
practicable after withdrawal, rejection of tender or termination of the Exchange
Offer. Properly withdrawn Old Notes may be retendered by following one of the
procedures described under '--Procedures for Tendering Old Notes' above at any
time on or prior to the Expiration Date.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, the Issuer shall
not be required to accept for exchange, or to issue New Notes in exchange for,
any Old Notes and may terminate or amend the Exchange Offer, if at any time
before the acceptance of such Old Notes for exchange or the exchange of the New
Notes for such Old Notes, any of the following events shall occur:
(a) there shall be threatened, instituted or pending any action or
proceeding before, or any injunction, order of decree shall have been
issued by, any court or governmental agency or other governmental
regulatory or administrative agency or commission, (i) seeking to restrain
or prohibit the making or consummation of the Exchange Offer or any other
transaction contemplated by the Exchange Offer, or assessing or seeking any
damages as a result thereof, or (ii) resulting in a material delay in the
ability of the Issuer to accept for exchange or exchange some or all of the
Old Notes pursuant to the Exchange Offer; or any statute, rule, regulation,
order or injunction shall be sought, proposed, introduced, enacted,
promulgated or deemed applicable to the Exchange Offer or any of the
transactions contemplated by the Exchange Offer by any government or
governmental authority, domestic or foreign, or any action shall have been
taken, proposed or threatened, by any government, governmental authority,
agency or court, domestic or foreign, that in the reasonable judgment of
the Issuer might directly or indirectly result in any of the consequences
referred to in clauses (i) or (ii) above or, in the reasonable judgment of
the Issuer, might result in the holders
45
<PAGE>
of New Notes having obligations with respect to resales and transfers of
New Notes which are greater than those described in the interpretation of
the SEC referred to on the cover page of this Prospectus, or would
otherwise make it inadvisable to proceed with the Exchange Offer; or
(b) there shall have occurred (i) any general suspension of or general
limitation on prices for, or trading in, securities on any national
securities exchange or in the over-the-counter market, (ii) any limitation
by any governmental agency or authority which may adversely affect the
ability of the Issuer to complete the transactions contemplated by the
Exchange Offer, (iii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States or any
limitation by any governmental agency or authority which adversely affects
the extension of credit or (iv) a commencement of a war, armed hostilities
or other similar international calamity directly or indirectly involving
the United States, or, in the case of any of the foregoing existing at the
time of the commencement of the Exchange Offer, a material acceleration or
worsening thereof; or
(c) any change (or any development involving a prospective change)
shall have occurred or be threatened in the business, properties, assets,
liabilities, financial condition, operations, results of operations or
prospects of the Issuer and its subsidiaries taken as a whole that, in the
reasonable judgment of the Issuer, is or may be adverse to the Issuer, or
the Issuer shall have become aware of facts that, in the reasonable
judgment of the Issuer, have or may have adverse significance with respect
to the value of the Old Notes or the New Notes;
which in the reasonable judgment of the Issuer in any case, and regardless of
the circumstances (including any action by the Issuer) giving rise to any event
described above, makes it inadvisable to proceed with the Exchange Offer and/or
with such acceptance for exchange or with such exchange.
The foregoing conditions are for the sole benefit of the Issuer and may be
asserted by the Issuer regardless of the circumstances giving rise to any such
condition or may be waived by the Issuer in whole or in part at any time and
from time to time in its sole discretion. The failure by the Issuer at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.
In addition, the Issuer will not accept for exchange any Old Notes
tendered, and no New Notes will be issued in exchange for any such Old Notes, if
at such time any stop order shall be threatened or in effect with respect to the
Registration Statement of which this Prospectus constitutes a part or the
qualification of the Indenture under the Trust Indenture Act of 1939 (the
'TIA').
EXCHANGE AGENT
First Trust National Association has been appointed as the Exchange Agent
for the Exchange Offer. All executed Letters of Transmittal should be directed
to the Exchange Agent at one of the addresses set forth below. Questions and
requests for assistance, requests for additional copies of this Prospectus or of
the Letter of Transmittal and requests for Notices of Guaranteed Delivery should
be directed to the Exchange Agent addressed as follows:
Delivery To: First Trust National Association, Exchange Agent
<TABLE>
<S> <C>
By Mail: By Overnight Courier or Hand:
First Trust National Association First Trust National Association
Corporate Trust Depositary 180 East 5th Street
P.O. Box 64485 4th Floor Window
St. Paul, MN 59164-9549 St. Paul, MN 55101
Attn: Corporate Trust Attn: Corporate Trust
By Facsimile:
(612) 244-1537
Confirm by Telephone:
(612) 973-5800
</TABLE>
46
<PAGE>
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY OF SUCH LETTER OF TRANSMITTAL.
FEES AND EXPENSES
The Issuer will not make any payment to brokers, dealers, or others
soliciting acceptances of the Exchange Offer.
The estimated cash expenses to be incurred in connection with the Exchange
Offer will be paid by the Issuer and are estimated in the aggregate to be
$ .
TRANSFER TAXES
Holders who tender their Old Notes for exchange will not be obligated to
pay any transfer taxes in connection therewith, except that holders who instruct
the Issuer to register New Notes in the name of, or request that Old Notes not
tendered or not accepted in the Exchange Offer be returned to, a person other
than the registered tendering holder will be responsible for the payment of any
applicable transfer tax thereon.
CONSEQUENCES OF EXCHANGING OLD NOTES
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the provisions in
the Indenture regarding transfer and exchange of the Old Notes and the
restrictions on transfer of such Old Notes as set forth in the legend thereon as
a consequence of the issuance of the Old Notes pursuant to exemptions from, or
in transactions not subject to, the registration requirements of the Securities
Act and applicable state securities laws. In general, the Old Notes may not be
offered or sold, unless registered under the Securities Act, except pursuant to
an exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. The Issuer does not currently anticipate that
it will register Old Notes under the Securities Act. See 'Description of the
Notes--Registration Rights.' Based on interpretations by the staff of the SEC,
as set forth in no-action letters issued to third parties, the Issuer believes
that New Notes issued pursuant to the Exchange Offer in exchange for Old Notes
may be offered for resale, resold or otherwise transferred by holders thereof
(other than any such holder which is an 'affiliate' of the Issuer within the
meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that such New Notes are acquired in the ordinary course of such holders'
business and such holders have no arrangement or understanding with any person
to participate in the distribution of such New Notes. However, the Issuer does
not intend to request the SEC to consider, and the SEC has not considered, the
Exchange Offer in the context of a no-action letter and there can be no
assurance that the staff of the SEC would make a similar determination with
respect to the Exchange Offer as in such other circumstances. Each holder, other
than a broker-dealer, must acknowledge that it is not engaged in, and does not
intend to engage in, a distribution of New Notes and has no arrangement or
understanding to participate in a distribution of New Notes. If any holder is an
affiliate of the Issuer, is engaged in or intends to engage in or has any
arrangement or understanding with respect to the distribution of the New Notes
to be acquired pursuant to the Exchange Offer, such holder (i) could not rely on
the applicable interpretations of the staff of the SEC and (ii) must comply with
the registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. Each broker-dealer that receives New
Notes for its own account in exchange for Old Notes, where such Old Notes were
acquired by such broker-dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. See 'Plan of Distribution.' In
addition, to comply with state securities laws, the New Notes may not be offered
or sold in any state unless they have been registered or qualified for sale in
such state or an exemption from registration or qualification is available and
is complied with. The offer and sale of the New Notes to 'qualified
institutional buyers' (as such term is defined under Rule 144A of the Securities
Act) is generally exempt from registration or qualifcation under the state
securities laws. The Issuer currently does not intend to register or qualify the
sale of the New Notes in any state where an exemption from registration or
qualification is required and not available.
47
<PAGE>
BUSINESS
THE ISSUER
The Issuer is a holding company whose only significant asset is all of the
common stock, par value $1.00 per share, of Coleman Holdings. Coleman Holdings
is a holding company formed in July 1993 in connection with the offering of the
Coleman Holdings Notes and holds all of the outstanding shares of capital stock
of Coleman Worldwide. Coleman Worldwide was formed in March 1993 in connection
with the offering of $575 million aggregate principal amount at maturity of
LYONs. Coleman Worldwide also holds 44,067,520 shares of the Coleman Common
Stock, which represent approximately 82.6% of the outstanding Coleman Common
Stock. As such, the Issuer's principal business operations are conducted by
Coleman and its subsidiaries, and the Issuer has no operations of its own. The
Issuer is an indirect wholly owned subsidiary of MacAndrews Holdings, a
corporation wholly owned by Ronald O. Perelman. See 'Relationship with
MacAndrews & Forbes' and 'Ownership of Common Stock.' Following the Coleman
Holdings Notes Redemption, Coleman Holdings expects to be merged with and into
the Issuer in the Coleman Holdings Merger. Following the LYONs Retirement, the
Issuer expects to be merged with and into Coleman Worldwide in the Coleman
Worldwide Merger, with Coleman Worldwide as the surviving corporation.
THE COMPANY
Coleman is a leading manufacturer and marketer of consumer products for the
outdoor recreation and hardware markets on a global basis. The Company's
products have been sold domestically and internationally under the Coleman brand
name since the 1920s. The Company believes its strong market position is
attributable primarily to its well-recognized trademarks, particularly the
Coleman brand name, broad product line, product quality and innovation, and
marketing, distribution and manufacturing expertise.
The Company participates in two primary markets, outdoor recreation and
hardware. The Company's principal outdoor recreation products include a
comprehensive line of lanterns and stoves for outdoor recreational use,
fuel-related products such as disposable fuel cartridges, a broad range of
coolers and jugs, sleeping bags, backpacks, tents, outdoor folding furniture,
portable electric lights, spas, camping accessories and other products for
recreational use. These outdoor recreation products are distributed
predominantly through mass merchandisers, sporting goods chains and outdoor
specialty stores. The Company's principal hardware products include portable
generators, portable and stationary air compressors, and safety and security
products such as smoke alarms, carbon monoxide detectors and thermostats.
The Company has made several acquisitions in recent years designed to
expand its product lines in the outdoor recreation market. In 1996, the Company
acquired the French company, Camping Gaz, which is a leader in the European
camping equipment market. In 1995, the Company acquired Sierra, a manufacturer
of portable outdoor and recreational folding furniture and accessories. In 1994,
the Company acquired substantially all of the assets of Eastpak. In 1993, the
Company acquired substantially all of the assets associated with the butane
business of Taymar in the United Kingdom and substantially all of the assets of
S.V.B. in Italy. Taymar manufactures and distributes lightweight butane camping
lanterns and stoves, as well as butane gas torches and other accessories. S.V.B.
manufactures and distributes a wide range of products for the camping and
hardware markets under the S.V.B. brand name.
The Company also restructured certain operations in the outdoor recreation
market. In 1994, the Company completed the German Restructuring of its German
manufacturing operations, including selling its plastic cooler business located
in Inheiden, Germany and Loucka, Czech Republic. In 1996, the Company closed the
Brazilian manufacturing operations it had acquired from Metal Yanes, Ltda. in
1994.
The Company has also expanded its presence in the hardware market through
its acquisition in 1996 of the assets of Seatt, a leading designer, manufacturer
and distributor of smoke alarms, thermostats and carbon monoxide detectors, its
acquisition in 1995 of substantially all of the assets of ATI, a manufacturer of
technologically advanced lightweight generators and battery charging equipment,
and its acquisition in 1994 of substantially all of the assets of Sanborn, a
manufacturer of a broad line of portable and stationary air compressors.
PRODUCTS
The Company participates in two primary markets, outdoor recreation and
hardware.
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Outdoor Recreation
The Company's principal products include a comprehensive line of lanterns
and stoves for outdoor recreational use, fuel-related products such as
disposable fuel cartridges, a broad range of coolers and jugs, sleeping bags,
backpacks, tents, outdoor folding furniture, portable electric lights, spas,
camping accessories and other products for recreational use. These products are
distributed predominantly through mass merchandisers, sporting goods chains and
outdoor specialty stores.
Lanterns and Stoves. Coleman believes it is the leading manufacturer of
lanterns and stoves for outdoor recreational use in the world. Coleman's liquid
fuel appliances include single and dual fuel-powered lanterns and stoves.
Coleman also manufactures a broad range of propane- and butane-fueled lanterns
and stoves, which allow the user to regulate the intensity of light or heat.
These products are manufactured at the Company's facilities located in the
United States and Europe and are marketed under the Coleman, Camping Gaz and
Peak 1 brand names.
Fuel. The Company is a leading supplier to the worldwide camping and
outdoor recreation market of propane and butane cartridges and camping fuel. In
addition to manufacturing and filling disposable propane cartridges and
refillable LPG cylinders, Coleman sells camping fuel that is refined and canned
to its specifications by various suppliers, fills butane gas cartridges and
purchases butane-filled gas cartridges from third-party vendors for sale to
customers throughout the world. These products are marketed under the Coleman,
Camping Gaz and Peak 1 brand names.
Coolers and Jugs. The Company manufactures and sells a wide variety of
insulated coolers and jugs and reusable ice substitutes. The Company's cooler
line includes personal coolers for camping, picnics or lunch box use; large
coolers; beverage coolers for use at work sites and recreational and social
events; and soft-sided coolers. Coleman's cooler products are manufactured
predominantly at the Company's facilities located in the United States and are
marketed under the Coleman brand name worldwide and under the Camping Gaz brand
name in Europe. In addition, the Company also manufactures coolers and jugs for
third parties to be given away as promotions or sold with the customer's own
products as a premium.
Recreational Soft Goods. The Company designs, manufactures or sources, and
markets textile products, including tents, sleeping bags, backpacks, daysacks,
sports bags, duffle bags and rucksacks. These products are manufactured at the
Company's facilities located in the United States and Puerto Rico or sourced
from third-party vendors who manufacture them to the Company's specifications.
The Company's tents and sleeping bags are marketed under the Coleman and Peak 1
brand names, while its daysacks, sport bags and related products are marketed
under the Coleman, Eastpak and newly licensed Timberland brand names. In
addition to mass merchandisers, sporting goods chains and outdoor specialty
stores, the Company distributes daysacks, sports bags and duffle bags through
college bookstores and luggage shops.
Outdoor Furniture. The Company manufactures and markets aluminum-and
steel-framed, portable, out-door, folding furniture under the Coleman and Sierra
Trails brand names. These products are manufactured predominantly at the
Company's facilities located in the United States.
Electric Lights. The Company designs and markets electric lighting
products that are manufactured by others and sold under the Coleman, Powermate,
Job-Pro and Camping Gaz brand names. These products include portable electric
lights such as hand held spotlights, flashlights and fluorescent lanterns and a
line of rechargeable lanterns and flashlights.
Spas. The Company manufactures and markets a wide range of spas, which are
made primarily from acrylic, for residential applications. These products are
manufactured at the Company's facility located in the United States and are
distributed through a nationwide dealer network.
Camping Accessories. The Company designs, sources and markets a variety of
small accessories for camping and outdoor use, such as cookware and utensils.
These products are manufactured by third-party vendors to Coleman's
specifications and are marketed under the Coleman brand name.
Hardware
The Company's principal products include portable generators, portable and
stationary air compressors and safety and security products such as smoke
alarms, carbon monoxide detectors and thermostats.
Generators. The Company is a leading manufacturer and distributor of
portable generators in the United States and worldwide. These products are
manufactured by the Company, using engines manufactured by
49
<PAGE>
Tecumseh, Briggs & Stratton, Vanguard, Honda and Kawasaki, at its facilities
located in the United States, are marketed under the Coleman Powermate brand
name and are distributed predominantly through mass merchandisers and home
center chains. With its acquisition of ATI, the Company now produces advanced,
light-weight generators.
Air Compressors. The Company's air compressors are manufactured at its
facilities located in the United States, are marketed under the Coleman
Powermate brand name and are distributed predominantly through mass
merchandisers and home center chains.
Safety and Security Products. The Company manufactures a range of safety
and security products for resi-dential use, primarily smoke alarms, carbon
monoxide detectors and thermostats. The Company manufactures these products at
its facilities located in Mexico and markets them under the Firex, Code 1 and
Coleman Sheltra brand names. These products are distributed predominantly
through electrical wholesalers, mass merchandisers, and home center chains in
North America and selected foreign countries, primarily Australia and the United
Kingdom.
In addition, the Company offers a line of pressure washers manufactured at
its facilities located in the United States and distributed predominantly
through mass merchandisers and home center chains under the Coleman Powermate
brand name. As part of its restructuring initiatives, the Company expects to
sell its pressure washer business. See '--Business Strategy and Restructuring.'
BUSINESS STRATEGY AND RESTRUCTURING
Business Strategy
The Company's business strategy is to build upon its reputation as a
leading manufacturer and marketer of high quality brand name consumer products
for the outdoor recreation and hardware markets. The specific operating
strategies include:
Focus on Quality and Service. Since the business of the Company was
founded in the early 1900s, Coleman has built a reputation for its quality
products and superior customer service. The Company is committed to
continuing, and building upon, this reputation.
Introducing New Products. The Company plans to continue introducing
new products. Management intends to focus on leveraging the Company's
existing technologies, processes and expertise to maximize the speed and
efficiency of new product development and introductions.
Developing Existing Brands. The Company believes it has some of the
more prominent brand names in the outdoor recreation and hardware markets
and plans to strengthen these brands through superior product design,
advertising and promotion.
Expanding International Markets. Coleman is currently a market leader
in several product categories in Europe and Japan. The Company plans to
utilize its well-established infrastructures in Europe and Japan to expand
in other core product categories and to invest appropriately to develop and
build businesses in new geographic markets.
Developing Human Resources. The Company plans to continue developing,
training, and motivating its personnel at all levels to achieve excellence,
including developing and building its team of experienced managers and
revising its management incentive programs to increase management's focus
on profitability and cash flows.
Operating Efficiency. The Company plans to continue seeking ways to
further improve the quality and efficiency of its business processes in
order to ensure quality and realize cost savings, including, among other
things, exiting low margin product lines and businesses and consolidating
manufacturing, distribution and administrative facilities.
Restructuring
As part of its strategy to improve its business processes, the Company has
announced several restructuring initiatives designed to reduce costs and improve
profitability and competitiveness. In March 1997, the Company announced that it
would close its executive offices in Golden, Colorado, with most of its
administrative functions expected to return to its Wichita, Kansas facility. In
April 1997, the Company announced its intention to (i) eliminate 700 employees,
which represent approximately 10% of its current work force, (ii) close or
relocate three domestic factories and close one international factory, (iii)
close its Geneva, Switzerland international
50
<PAGE>
headquarters, (iv) rationalize its product lines, including a significant
reduction in SKUs, and (v) sell its pressure washer business. In addition, the
Company may sell other non-strategic businesses if suitable opportunities arise.
Coleman has already begun to implement its new restructuring plan. Coleman has
announced plans to close its Hastings, Nebraska factory which was used in the
manufacturing of portable power generators and pressure washers, and to
eliminate the jobs of its 135 factory employees. The Company expects to incur
certain restructuring and other charges in connection with these initiatives
during 1997. The Company recorded other charges of approximately $2.4 million,
net of taxes, for the first quarter of 1997 and expects to record a
significantly greater amount of restructuring and other charges for the second
quarter of 1997. There can be no assurance as to the amount of the restructuring
and other charges to be recorded in the second quarter of 1997 or that
restructuring and other charges will not be recorded in subsequent periods. See
'Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources.'
SALES AND MARKETING
The following table sets forth the net revenues by class of products for
the three months ended March 31, 1997 and 1996 and the years ended December 31,
1996, 1995 and 1994.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, YEAR ENDED DECEMBER 31,
---------------- ----------------------------
1997 1996 1996 1995 1994
------ ------ -------- ------ ------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Outdoor Recreation......................... $217.8 $188.6 $ 859.6 $688.9 $563.7
Hardware................................... 77.7 85.0 360.6 244.7 187.9
------ ------ -------- ------ ------
Total................................. $295.5 $273.6 $1,220.2 $933.6 $751.6
------ ------ -------- ------ ------
------ ------ -------- ------ ------
</TABLE>
In the United States and Canada, the Company's outdoor recreation products
are sold by the Company's own sales force and, to a lesser extent, by sales
representatives that serve specialty markets and related distribution channels.
Spa products, however, are sold by independent sales representatives to a
nationwide dealer network and, to a lesser extent, by regional sales managers
employed by the Company. The Company's hardware products are sold by Company and
independent sales representatives.
The Company promotes its products through national and local advertising
campaigns, frequently coordinating with retailers' promotions to maximize the
benefits of its advertising efforts.
Coleman's major customers include Canadian Tire, Home Depot, Kmart,
Price/Costco, Target, and Wal-Mart. Wal-Mart and its affiliates accounted for
approximately 15% of the Company's 1996 consolidated net revenues. Although the
loss of Wal-Mart as a customer could have an adverse effect on the Company, the
Company believes its relationship with Wal-Mart is satisfactory and the Company
has no reason to believe Wal-Mart will not continue as a customer.
International sales represented 32%, 24% and 23% of net revenues for the
years ended December 31, 1996, 1995 and 1994, respectively. For 1996,
approximately 79% of the Company's international sales were in Japan and Europe,
with the balance in Latin America, Asia-Pacific, Africa and the Middle East. The
Company has sales administration offices and warehouse and distribution
facilities in Australia, Austria, Belgium, Brazil, the Czech Republic, France,
Germany, Hungary, Italy, Japan, The Netherlands, Portugal, Spain, Switzerland,
the United Arab Emirates and the United Kingdom. Each office is responsible for
sales and distribution of the Company's products in the territories assigned to
that office. The Company's direct export operations market its products directly
to international customers in certain other markets through Company sales
managers, independent distributors, and commissioned sales representatives. In
total, the Company sells its products in more than 100 countries.
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. See 'Management's Discussion and Analysis of Financial Condition
and Results of Operations--Seasonality.'
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COMPETITION
The markets in which the Company operates are highly competitive, based
primarily on product quality, product innovation, price and customer service and
support. The Company's competitors vary according to product line. The Company
believes that no other company produces and markets the breadth of camping and
outdoor recreation products marketed by the Company. Lanterns and stoves compete
with, among others, products offered by Century Primus (a unit of Century Tool &
Manufacturing Inc.), American Camper (a unit of Brunswick Corporation) and
Dayton Hudson Corporation. The Company's insulated cooler and jug products
compete with products offered by Rubbermaid Incorporated, Igloo Products Corp.
(a unit of Brunswick Corporation) and The Thermos Company (a unit of Nippon
Sanso KK). The Company's sleeping bags compete with, among others, American
Recreation and Slumberjack (units of Kellwood Company), Academy Broadway Corp.
and MZH Inc. (a unit of Brunswick Corporation), as well as certain private label
manufacturers. In the tent market, the Company competes with, among others,
Sears, Wenzel (a unit of Kellwood Company), Eureka (a unit of Johnson Worldwide
Associates, Inc.) and Mountain Safety Research (a unit of Thaw Corporation), as
well as certain private label manufacturers. The Company's backpack products
compete with, among others, American Camper (a unit of Brunswick Corporation),
JanSport (a unit of VF Corporation), Nike, Outdoor Products and Kelty (a unit of
Kellwood Company), as well as certain private label manufacturers. The Company's
competition in the electric light business includes, among others, Eveready (a
unit of Ralston Purina Company) and Rayovac Corporation. The Company's spas
compete with, among others, Watkins Manufacturing Corporation (d.b.a. Hot
Springs, a unit of Masco Corporation) and Clark Manufacturing Company, Inc.
(d.b.a. Sundance Spas). The Company's camping accessories compete primarily with
Coughlan's. The Company's primary competitors in the generator business are
Generac Corporation, Honda Motor Co., Ltd., Kawasaki and Yamaha. Primary
competitors in the air compressor business include DeVilbiss and Campbell
Hausfield. Alfred Karcher, Inc. and Sears are the Company's primary competitors
in pressure washers. The Company's safety and security products compete
primarily with First Alert, American Sensor and Nighthawk (a unit of Williams
Holding PLC). In addition, the Company competes with various other entities in
international markets.
PATENTS, TRADEMARKS, AND LICENSES
The Company's operations are not significantly dependent upon any single or
related group of patents. While the Company does not believe any single
trademark is material to its business other than the 'Coleman' word mark and the
'Coleman in parallelogram with lantern symbol' logo mark, it believes its
trademarks taken as a whole are material to its business. Accordingly, the
Company has taken, and will continue to take, actions to protect its interests
in all such trademarks.
The Company licenses the Coleman name and logo under two types of licensing
arrangements: general merchandise licenses and licenses to purchasers of
businesses divested by Holdings. The Company's general merchandise licensing
activities involve licensing the Coleman name and logo, for a royalty fee, to
certain companies that manufacture and sell products that complement the
Company's product lines. In connection with the divestitures of certain
businesses after the Acquisition, Holdings entered into trademark license
agreements with the purchasers of these businesses. The Company and Holdings
receive no direct financial remuneration from the use of the Coleman name by the
purchasers of the divested businesses. The Company's licensing activities are
not material to the results of operations of the Company.
RESEARCH AND DEVELOPMENT
The Company's research and development efforts are linked to the process of
marketing its products. New products and improvements to existing products are
developed based upon the perceived needs and demands of consumers. The Company's
research and development is performed primarily by an in-house team of marketing
managers, engineers, draftsmen and product testers using tools such as
computer-assisted design and a variety of consumer research techniques.
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INDUSTRY SEGMENTS, FOREIGN AND DOMESTIC OPERATIONS
The Company operates in a single business segment. Certain information
concerning geographic segments of the Company is set forth in Note 16 to the
Notes to Consolidated Financial Statements of the Issuer contained elsewhere in
this Prospectus.
EMPLOYEES
As of December 31, 1996, the Company employed approximately 4,200 persons
full time in the United States and 2,800 persons internationally. None of the
Company's United States employees are represented by unions. The Company's
Canadian warehouse employees are represented by a union. All of the
approximately 350 production employees at the Company's operations in France and
Italy and the approximately 1,100 production employees at the Company's
operations in Mexico are represented by unions. The Company believes that its
relations with its employees are satisfactory and that its employees, many of
whom have long-term experience with the Company, represent a valuable resource.
PROPERTIES
The Company's principal properties as of December 31, 1996 are as follows:
<TABLE>
<CAPTION>
BUILDING
SQUARE
LOCATION PRINCIPAL USE FOOTAGE
- -------- ------------- --------
<S> <C> <C>
St Genis Laval, France........ Manufacture of lanterns and 2,070,000
stoves, filling of gas
cylinders, and assembly of
barbecues; office and
warehouse
Wichita, KS................... Manufacture of lanterns and 1,162,000
stoves and insulated coolers
and jugs; research and
development and design
operations; office and
warehouse
New Braunfels, TX............. Manufacture of insulated 338,000
coolers and other plastic
products
Lake City, SC................. Manufacture of sleeping bags 168,000
Springfield, MN............... Manufacture of air compressors 166,000
Cedar City, UT................ Manufacture of sleeping bags 160,000
Kearney, NE................... Manufacture/assembly of 155,000
portable generators and
pressure washers; office and
warehouse
Pacola, OK.................... Manufacture of outdoor folding 123,000
furniture
Maize, KS..................... Manufacture of propane 116,000
cylinders and machined parts
Chihuahua, Mexico............. Manufacture of smoke alarms 110,000
and carbon monoxide detectors
Hastings, NE.................. Manufacture of pressure 103,000
washers and generators
New Ulm, MN................... Manufacture of air compressors 90,000
Morovis and Orocovis, Puerto Manufacture of daypacks, 80,000
Rico........................ sports bags, and related
products
</TABLE>
53
<PAGE>
<TABLE>
<CAPTION>
BUILDING
SQUARE
LOCATION PRINCIPAL USE FOOTAGE
- -------- ------------- --------
<S> <C> <C>
Chandler, AZ.................. Manufacture of acrylic spas; 78,000
office and warehouse
Centenaro di Lonato, Italy.... Manufacture of butane 77,000
lanterns, stoves and heaters;
office and warehouse
Stockport, England............ Manufacture of butane 60,000
cylinders, torches, lanterns
and stoves; office and
warehouse
</TABLE>
The Wichita, Kansas; New Braunfels, Texas; Lake City, South Carolina; Cedar
City, Utah; Pacola, Oklahoma; Chandler, Arizona; New Ulm and Springfield,
Minnesota; Centenaro di Lonato, Italy; and Stockport, England facilities are
owned by the Company. The owned facilities at Kearney, Nebraska reside on land
leased under three leases that expire in 2007 with options to extend for three
additional ten-year periods. The Maize, Kansas facility is leased by the Company
under leases that terminate in 2005. The Company has an option to purchase this
facility at the end of the lease period. The Hastings, Nebraska facility is
leased by the Company for a term that expires in 1999 with options to extend the
lease for three additional one-year periods and an option to purchase the
facility during the lease term including renewal periods. The Puerto Rico
facilities in Morovis and Orocovis are leased for terms that expire in 1999 and
2007, respectively. The warehouse portion of St. Genis Laval, France is leased
for terms that expire in 1998, the remaining facility is owned. Approximately
48,000 square feet of the Chihuahua, Mexico property are leased for terms that
expire in 1998, and the remaining facility is owned.
LEGAL PROCEEDINGS
Environmental Matters
Gilbert and Mosley Site. As a result of investigations undertaken in 1986,
the Kansas Department of Health and Environment ('KDHE') discovered that
groundwater in the downtown Wichita area (the 'Gilbert and Mosley Site') was
contaminated with volatile organic chemicals ('VOCs'). Coleman occupied a
facility within the boundaries of the Gilbert and Mosley Site. Subsequent
investigations in the area, including investigations in November 1988 by
Coleman, indicated that the groundwater beneath the Coleman property is
contaminated with VOCs. Coleman is in the process of remediating the
contamination on its property.
The City of Wichita has entered into a voluntary agreement with KDHE in
which the City agreed to investigate and then remediate contamination in the
Gilbert and Mosley Site. Coleman has entered into an agreement with KDHE in
which Coleman agreed to perform a similar study for the Coleman property and to
implement remedial activities at its property. In addition, Coleman entered into
an agreement with the City of Wichita in which Coleman agreed to fund its
proportionate share of the City's study and remediation of the Gilbert and
Mosley site.
All previously filed lawsuits alleging that properties in the downtown
Wichita area were diminished in value as a result of discharges of volatile
organic chemicals from Coleman's downtown Wichita facility have been settled and
dismissed.
Maize Site. Coleman has undertaken a soil and groundwater investigation at
its facility in Maize, Kansas (the 'Maize Site'). Results indicate that limited
VOC contamination is present in the groundwater under and to the southeast of
the facility. The data has been reported to the KDHE, and Coleman has entered
into an agreement with KDHE to implement appropriate remedial actions. The
remediation system has been installed, and Coleman is in the process of
remediating the contaminated groundwater.
Northeast Site. In 1990 Coleman undertook a soil and groundwater
investigation of its facility in northeast Wichita (the 'Northeast Site').
Results indicated the presence of VOCs in the groundwater and soils. Although
some of the contamination may be a result of Coleman's operations at the
facility, the data also indicated that
54
<PAGE>
contamination was migrating onto the Coleman property from up gradient sources.
Coleman reported the initial results of its study to KDHE. Coleman has also
provided copies of all data to the United States Environmental Protection Agency
(the 'EPA'), at its request. The EPA has not initiated any actions against the
Company with respect to the Northeast Site. An agreement has been entered into
with KDHE to undertake additional investigatory activities, and an interim
remediation system has been installed. Additions to the interim remediation
system are planned for installation during 1997.
Lake City Site. In 1992 Coleman undertook a soil and groundwater
investigation of its facility in Lake City, South Carolina (the 'Lake City
Site'). Results indicated limited VOC and fuel oil contamination in the soil and
groundwater. In both instances the contamination appears to relate to the
activities of a previous occupant of the Lake City Site. The results of the
investigation have been reported to the appropriate South Carolina environmental
agency. Coleman has demanded that the prior owner and occupant undertake
appropriate action. At the state's request, Coleman has undertaken additional
investigations. Coleman has also commenced legal proceedings against the prior
owner.
The Company has adopted an environmental policy designed to ensure that the
Company operates in full compliance with applicable environmental regulations
and, where appropriate, the Company's own internal standards. Coleman has also
undertaken an environmental compliance audit program. The Company makes
expenditures that it believes are necessary to comply with environmental
management practices. Environmental expenditures that relate to current
operations are expensed or capitalized as appropriate and were not significant
in 1996 and are not expected to be significant in the foreseeable future.
Coleman has established reserves for environmental matters, including the
investigations, remedial activities and litigation described above.
OTHER
General. The Company and Holdings are involved in various claims and legal
actions arising in the ordinary course of business, including environmental
matters and product liability lawsuits that are incidental to its business. The
Issuer believes the ultimate disposition of these matters is not expected to
have a material adverse effect on the Issuer's consolidated financial condition
or results of operations. Coleman Holdings and the Company have entered into a
cross-indemnification agreement with Holdings pursuant to which Coleman will
indemnify Holdings against all liabilities related to businesses transferred to
the Company, and Holdings will indemnify the Company against all liabilities of
Holdings other than liabilities related to the businesses transferred to the
Company.
55
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information as of June , 1997,
concerning the directors and executive officers of the Issuer. Each director
holds office until his successor is duly elected and qualified or until his
resignation or removal, if earlier.
DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Ronald O. Perelman............ 54 Chairman of the Board, Chief
Executive Officer and Director
Howard Gittis................. 63 Vice Chairman of the Board and
Director
Irwin Engelman................ 63 Executive Vice President and
Chief Financial Officer
Barry F. Schwartz............. 48 Executive Vice President and
General Counsel
</TABLE>
The following table sets forth certain information as of June , 1997,
concerning the directors and executive officers of the Company. Each director
holds office until his successor is duly elected and qualified or until his
resignation or removal, if earlier.
DIRECTORS
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Ronald O. Perelman............ 54 Director
Donald G. Drapkin............. 49 Director
Lawrence M. Jones............. 65 Director
Robert J. Lanigan............. 69 Director
Jerry W. Levin................ 53 Chairman of the Board,
Director and
Chief Executive Officer
Robert S. Miller.............. 55 Director
John A. Moran................. 65 Director
Bruce Slovin.................. 61 Director
William H. Spoor.............. 74 Director
</TABLE>
EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Jerry W. Levin................ 53 Chairman of the Board,
Director and Chief Executive
Officer
Gerald E. Brown............... 50 Executive Vice President
(President--Coleman
Powermate)
Mark Goldman.................. 42 Executive Vice President
(President--Eastpak)
Steven F. Kaplan.............. 41 Executive Vice President and
Chief Financial Officer
Patrick McEvoy................ 46 Executive Vice President
(President--Coleman Safety &
Security)
Terry C. Bridges.............. 53 Executive Vice President and
General Counsel
David K. Stearns.............. 50 Executive Vice President
Frederik B. van den Bergh..... 51 Executive Vice President
(President--Coleman
International)
H. MacGregor Clarke........... 36 Vice President and Treasurer
Michael A. Zawalski........... 37 Vice President--Finance
Lynn E. Feldkamp.............. 41 Controller
</TABLE>
Mr. Perelman has been Chairman of the Board and a Director of the Issuer,
Coleman Worldwide and of Coleman Holdings since their formations in May 1997,
March 1993 and July 1993, respectively, and a Director and Chairman of the
Executive Committee of the Company since 1989. Mr. Perelman has been Chairman of
the
56
<PAGE>
Board and Chief Executive Officer of MacAndrews Holdings and various of its
affiliates since 1980. Mr. Perelman also is Chairman of the Board of Andrews
Group Incorporated ('Andrews Group'), Consolidated Cigar Holdings Inc. ('Cigar
Holdings'), Mafco Consolidated Group Inc. ('Mafco Consolidated'), Meridian
Sports Incorporated ('Meridian'), and M&F Worldwide Corp. ('MFW') and is the
Chairman of the Executive Committees of the Boards of Directors of Revlon, Inc.
('Revlon'), Revlon Consumer Products Corporation ('Products Corporation'), and
Marvel Entertainment Group, Inc. ('Marvel'). Mr. Perelman is a Director of the
following corporations which file reports pursuant to the Exchange Act: Andrews
Group, California Federal Bank, A Federal Savings Bank ('California Federal'),
Cigar Holdings, Consolidated Cigar Corporation ('Consolidated Cigar'), The
Cosmetic Center, Inc. ('Cosmetic Center'), First Nationwide Holdings Inc. ('FN
Holdings'), First Nationwide (Parent) Holdings Inc. ('FN Parent'), Mafco
Consolidated, Marvel, Marvel (Parent) Holdings Inc. ('Marvel Parent'), Marvel
III Holdings Inc. ('Marvel III'), Meridian, MFW, Pneumo Abex Corporation
('Pneumo Abex'), Products Corporation, Revlon, Revlon Worldwide Corporation
('Revlon Worldwide') and Toy Biz, Inc. ('Toy Biz'). (On December 27, 1996,
Marvel Holdings Inc. ('Marvel Holdings'), of which Mr. Perelman was a director,
Marvel Parent, Marvel III and Marvel and several of its subsidiaries filed
voluntary petitions for reorganization under Chapter 11 of the United States
Bankruptcy Code.)
Mr. Gittis has been Vice Chairman of the Board of the Issuer since its
formation in May 1997. He has been Vice Chairman of MacAndrews Holdings and
various of its affiliates since 1985. Mr. Gittis is a Director of the following
corporations which file reports pursuant to the Exchange Act: Andrews Group,
California Federal, Cigar Holdings, Consolidated Cigar, Cosmetic Center, FN
Holdings, FN Parent, Mafco Consolidated, MFW, Pneumo Abex, Products Corporation,
Revlon, Revlon Worldwide, Jones Apparel Group, Inc., Loral Space &
Communications Ltd. and Rutherford-Moran Oil Corporation.
Mr. Engelman has been Executive Vice President and Chief Financial Officer
of the Issuer since its formation in May 1997. He has been Executive Vice
President and Chief Financial Officer of MacAndrews Holdings and various of its
affiliates since 1992. He was Executive Vice President and Chief Financial
Officer of GAF Corporation from 1990 to 1991; Director, President and Chief
Operating Officer of Citytrust Bancorp Inc. from 1988 to 1990; Executive Vice
President of the Blackstone Group LP from 1987 to 1988; and Director and
Executive Vice President of General Foods Corporation for more than five years
prior to 1987. (On December 27, 1996, Marvel Parent, Marvel III, of which Mr.
Engelman is an executive officer, and Marvel Holdings, of which Mr. Engelman was
an executive officer, filed voluntary petitions for reorganization under Chapter
11 of the United States Bankruptcy Code.)
Mr. Schwartz has been Executive Vice President and General Counsel of the
Issuer since its formation in May 1997. He has been Executive Vice President and
General Counsel of MacAndrews Holdings and various of its affiliates since 1993.
Mr. Schwartz was Senior Vice President of MacAndrews Holdings from 1989 to 1993.
(On December 27, 1996, Marvel Parent and Marvel III, of which Mr. Schwartz is an
executive officer, and Marvel Holdings, of which Mr. Schwartz was an executive
officer, filed voluntary petitions for reorganization under Chapter 11 of the
United States Bankruptcy Code.)
Mr. Drapkin has been a Director of the Issuer, Coleman Worldwide and
Coleman Holdings since their formations in May 1997, March 1993 and July 1993,
respectively, and a Director of the Company since 1989. He has been a Director
and Vice Chairman of MacAndrews Holdings and various of its affiliates since
1987. Mr. Drapkin was a partner in the law firm of Skadden, Arps, Slate, Meagher
& Flom in New York for more than five years prior to 1987. Mr. Drapkin also is a
Director of the following corporations which file reports pursuant to the
Securities Exchange Act of 1934: Andrews Group, Consolidated Cigar, Cigar
Holdings, Marvel, Marvel Parent, Marvel III, Products Corporation, Revlon,
Revlon Worldwide, Toy Biz, Algos Pharmaceutical Corporation and VIMRx
Pharmaceuticals Inc. (On December 27, 1996, Marvel Holdings, of which Mr.
Drapkin was a director, Marvel Parent, Marvel III, Marvel and several
subsidiaries of Marvel Holdings filed voluntary petitions for reorganization
under Chapter 11 of the United States Bankruptcy Code.)
Mr. Jones has been a Director of the Company since 1989. Mr. Jones was
Chairman and Chief Executive Officer of the Company from October 1990 to
December 1993 and has been associated with the Company for more than 35 years,
including serving as President and Chief Executive Officer from July 1989 to
September 1990. Prior to rejoining the Company in 1989, Mr. Jones was Vice
Chairman and Chief Financial Officer of Fleming Companies, Inc. (distributor of
food products, health and beauty items) from December 1987 to June 1989. Mr.
Jones is presently a Director of Union Pacific Resources. He was also a Director
of Fourth Financial
57
<PAGE>
Corporation until January 1996, of Fleming Companies, Inc. until December 1996,
and Chairman of Prince Sports Group, Inc. until March 1997.
Mr. Lanigan has been a Director of the Company since February 1995. Mr.
Lanigan is also a Director of The Dunn & Bradstreet Corporation, Sonat, Inc.,
Transocean Offshore, Inc., Chrysler Corporation, Cognizant Corporation, and
Owens-Illinois, Inc. From 1984 to 1990, Mr. Lanigan was Chairman and Chief
Executive Officer of Owens-Illinois, Inc., and served as Chairman from 1990 to
1991.
Mr. Levin has been Chairman and Chief Executive Officer of the Company
since February 1997, a Director since 1989 and was previously Chairman of the
Company from 1989 to 1991. Mr. Levin has been a Director of Coleman Holdings and
Coleman Worldwide since March 14, 1994. Mr. Levin has been Chairman of the Board
of Revlon and of Products Corporation since their respective formations in 1992
and Chairman of the Board of Cosmetic Center since April 1997. Mr. Levin served
as Chief Executive Officer of Revlon and of Products Corporation from 1992 until
January 1997, and President of Revlon and of Products Corporation from their
respective formations in 1992 to November 1995. Mr. Levin has been Executive
Vice President of MacAndrews Holdings since 1989. For 15 years prior to joining
MacAndrews Holdings he held various senior positions with The Pillsbury Company.
Mr. Levin is a Director of the following corporations which file reports
pursuant to the Securities Exchange Act of 1934: Ecolab Inc., Cosmetic Center,
First Bank System, Inc., Meridian, Products Corporation, and Revlon Worldwide.
Mr. Miller has been a Director of the Company since July 1994. Mr. Miller
has been Vice President, Treasurer and a Director of Moore Mill & Lumber Co. (a
closely-held family timber business) since January 1993. He was a senior partner
at James D. Wolfensohn Inc. during 1992. From 1979 to 1992, Mr. Miller held
various executive positions at Chrysler Corporation, including Vice Chairman of
the Board of Directors and Chief Financial Officer. Mr. Miller is a Director of
Federal Mogul Corp. (an auto parts manufacturer), Fluke Corp. (an electronic
test and measurement equipment manufacturer), Pope & Talbot Inc. (a forest
products company), and Symantec (a personal computer software company). Mr.
Miller is also Vice Chairman of the Board of Morrison Knudsen, Inc. (an
engineering and construction company).
Mr. Moran has been a Director of the Company since July 1996. Mr. Moran
currently serves as Chairman of Rutherford-Moran Oil Corporation. From 1967, Mr.
Moran was affiliated with Dyson-Kissner-Moran Corporation, a private holding
company, serving in various executive positions including Chairman of the Board,
President and Chief Executive Officer, and Executive Vice President. He is a
Director of Bessemer Securities Corporation. He is a member and former Chairman
of the National Advisory Council of the University of Utah, as well as a member
of World Presidents Organization, the Chief Executives Organization and The
Foreign Policy Association. He is a former Director of the United Nations
Association and trustee of the Brooklyn Museum.
Mr. Slovin has been a Director of Coleman Worldwide and Coleman Holdings
since their respective formations in March 1993 and July 1993 and of the Company
since February 1993 and President of Coleman Holdings and Coleman Worldwide
since 1995. He has been President of MacAndrews Holdings and various of its
affiliates since 1982. Mr. Slovin is also a Director of the following
corporations which file reports pursuant to the Exchange Act: Andrews Group,
Cantel Industries, Inc., Continental Health Affiliates, Inc., Infu-Tech, Inc.,
Meridian, and PCT.
Mr. Spoor has been a Director of the Company since May 1992. Mr. Spoor
retired in September 1985 as Chairman and Chief Executive Officer of The
Pillsbury Company ('Pillsbury') after 14 years in that position and 36 years
with Pillsbury. He returned to Pillsbury as Chairman of the Executive Committee
in September 1987, and resumed as Chairman, Chief Executive Officer and
President of Pillsbury in March 1988, from which he retired in August 1988. Mr.
Spoor now serves as Chairman Emeritus of Pillsbury, and is in the business of
personal investments. He is a Director of L & L Holdings and Inner City Tennis.
Mr. Brown has been Executive Vice President of the Company since July 1994,
and a Vice President of the Company from 1993 to July 1994. He has been Chairman
of the Board and President of Coleman Powermate, Inc. since November 1990. He
joined Coleman Powermate, Inc. in 1974, became Vice President of Sales and
Marketing in 1987, and President in 1989.
Mr. Goldman has been Executive Vice President since April 1995 and
President of Eastpak since November 1994. He joined Eastpak in 1976.
58
<PAGE>
Mr. Kaplan joined the Company in August 1996 as Executive Vice President
and Chief Financial Officer. From 1993 to 1996, Mr. Kaplan was an independent
management consultant and financial advisor. During 1994, Mr. Kaplan served as
Chief Financial Officer of Marcam Corporation. From 1987 to 1992, Mr. Kaplan
held various positions with AM International, Inc., including Executive Vice
President, Chief Financial Officer and Chief Strategic Officer; Senior Vice
President, Chief Strategic Officer; and President of Harris Graphics (a division
of AM International, Inc.), and served as a member of the Board of Directors of
AM International, Inc. from 1991 to 1992. Prior to joining AM International,
Inc., Mr. Kaplan was Vice President and Partner of the Boston Consulting Group,
Inc. Mr. Kaplan is currently a member of the Board of Directors of Kurzweil
Applied Intelligence, Inc.
Mr. McEvoy has been Executive Vice President since March 1996 and President
of Coleman Safety & Security Products, Inc. since January 1996. Mr. McEvoy has
also been President of Seatt since December 1995. He joined Coleman in April
1994 as the Senior Vice President of Production, Development and Operations for
the Company's North American Recreation business unit. Prior to joining Coleman,
he served as Vice President of Black & Decker Corporation from 1990 to 1994, and
Vice President for the Chrysler Corporation from 1988 to 1990.
Mr. Bridges has been Executive Vice President and General Counsel of the
Company since April 1997. From 1993 to March 1997, Mr. Bridges served as the
Executive Vice President and Chief Administrative Officer of Andrews Group, and
from 1993 to January 1997 served in the same position at New World
Communications Group Incorporated. Prior to 1993, Mr. Bridges was a partner in
the law firm of Troutman Sanders in Atlanta, Georgia for more than five years.
Mr. Stearns has been Executive Vice President since January 1995, and
Senior Vice President--Marketing from October 1991 to January 1995. He joined
the Company in 1976 and has served in various positions, including Vice
President/General Manager--Import Division from 1985 to 1990.
Mr. van den Bergh has been an Executive Vice President of the Company since
May 1996. From 1986 to 1992, he was the Regional Director/Southern Europe and
Vice President and a member of the European Board of Black & Decker--Europe.
From 1992 to 1996, Mr. van den Bergh worked for Braun A.G. (a Gillette company)
as a member of the management board in charge of Sales and Marketing.
Mr. Clarke joined Coleman as Vice President and Treasurer in March 1996. He
held various financial positions with PepsiCo., Inc. from 1989 to 1996.
Mr. Zawalski joined Coleman in February 1996 as Vice President--Finance.
From 1987 through 1996, he held various positions with The Quaker Oats Co.,
including Vice President, General Manager, and Director of Finance-Breakfast
Division.
Mr. Feldkamp has been Controller since May 1987. He joined the Company in
1980 and has served as Tax Manager and Assistant Controller.
All of the executive officers serve at the pleasure of the Board.
COMPENSATION OF DIRECTORS
Directors, if any, who are not currently receiving compensation as
employees of the Issuer or the Company or any of their affiliates are paid an
annual $25,000 retainer fee payable in monthly installments, plus reasonable
out-of-pocket expenses. In addition, such directors receive a fee of $1,000 for
each meeting of the Board of Directors or any committee meeting that they
attend.
EXECUTIVE COMPENSATION
The Issuer is a holding company with no business operations of its own. The
officers of the Issuer receive no compensation for their services to the Issuer.
The information regarding certain compensation awarded to the Chief Executive
Officer and the next four most highly-compensated executive officers of Coleman,
who served as executive officers of Coleman at December 31, 1996, is set forth
below.
59
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning annual, long term and
other compensation of the Company's former Chief Executive Officer and the next
four most highly-compensated executive officers.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
------------------------------------------------
AWARDS
ANNUAL COMPENSATION --------------- PAYOUTS
-------------------------------------------------- SECURITIES -----------------------------
NAME AND PRINCIPAL OTHER ANNUAL UNDERLYING LTIP ALL OTHER
POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS/SARS(#) PAYOUTS($) COMPENSATION($)
- ------------------------- ---- --------- ---------- --------------- --------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael N. Hammes ....... 1996 625,000 0 0 80,000(3) 0 3,270(4)
Former Chairman and 1995 600,000 891,103(1) 163,590(2) 100,000(3) 0 3,117
Former Chief Executive 1994 600,000 900,000(1) 94,238(2) 200,000(3) 0 304
Officer
Frederik B. van den 1996 333,333 233,333(1) 204,266(2) 130,000(3) 0 2,124(4)
Bergh .................
Executive Vice
President
Frederick J. Fritz ...... 1996 255,208 0 0 10,000(3) 0 248(4)
Former Executive Vice 1995 236,859 278,005 61,082(2) 120,000(3) 0 985
President
Mark Goldman ............ 1996 250,000 0 0 0 0 4,270(4)
Executive Vice 1995 250,000 0 0 20,000(3) 0 4,492
President 1994 43,346 0 7,885(2) 0 0 0
Gerald E. Brown ......... 1996 225,000 0 45,877(2) 0 0 4,834(4)
Executive Vice 1995 225,000 100,000 96,568(2) 20,000(3) 0 4,704
President 1994 218,750 262,500 0 88,000(3) 0 3,188
</TABLE>
- ------------------
(1) Bonus earned in 1995 includes $591,103 from a performance incentive plan and
a $300,000 special bonus payment pursuant to Mr. Hammes' employment
agreement. For 1994, bonus earned includes a $600,000 performance incentive
plan payment and a $300,000 special bonus payment pursuant to Mr. Hammes'
employment agreement. Mr. van den Bergh's bonus for 1996 was paid pursuant
to a guaranteed incentive payment provision in his employment agreement.
(2) Other Annual Compensation earned by Mr. van den Bergh during 1996 includes a
$153,100 payment made to him to compensate him for the loss of stock option
price appreciation upon leaving his former employer. Other Annual
Compensation for 1995 includes relocation costs as follows: Mr. Hammes,
$137,703; and Mr. Fritz, $52,127. For 1994, Other Annual Compensation
includes $29,908 reimbursed to Mr. Hammes for the payment of taxes due on
relocation and travel expenses, and $44,091 for costs related to travel
between Wichita, Kansas and his residence; and $7,885 for Mr. Goldman's
personal use of a Company vehicle. Other Annual Compensation for 1996
includes $27,996 reimbursed to Mr. Brown for the payment of taxes due on
relocation, personal use of Company vehicle, and other expenses; for 1995,
Other Annual Compensation includes $54,264 in relocation costs and $27,021
for country club memberships.
(3) Share numbers have been adjusted for a two-for-one stock split on July 15,
1996.
(4) All Other Compensation for 1996 represents the Company's matching 401(k)
contributions and premiums paid for term life insurance, respectively, as
follows: Mr. Hammes, $3,230 and $40; Mr. van den Bergh, $0 and $2,124; Mr.
Fritz, $208 and $40; Mr. Goldman, $3,230 and $1,040; and Mr. Brown, $4,750
and $84.
60
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning individual grants of
stock options during 1996 to the Company's former Chief Executive Officer and
the next four most highly-compensated executive officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------
% OF
TOTAL
OPTIONS
NUMBER OF GRANTED
SECURITIES TO EXERCISE
UNDERLYING EMPLOYEES OR BASE GRANT DATE
OPTIONS IN FISCAL PRICE EXPIRATION PRESENT
NAME GRANTED(#) YEAR ($/SH) DATE VALUE(4)
---- ------------ --------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Michael N. Hammes ................................ 80,000(1) 11.9% $ 15.00 12/27/06 $256,520
Frederik B. van den Bergh ........................ 100,000(2) 14.8 23.125 05/01/06 775,326
30,000(2) 4.4 15.00 12/27/06 96,195
Frederick J. Fritz ............................... 10,000(3) 1.5 15.00 12/27/06 32,065
Mark Goldman ..................................... 0 0 0 0 0
Gerald E. Brown .................................. 0 0 0 0 0
</TABLE>
- ------------------
(1) Mr. Hammes' options were granted on December 27, 1996 pursuant to the 1996
Stock Option Plan. Pursuant to an agreement entered into with Mr. Hammes in
February 1997, discussed later in this Prospectus, Mr. Hammes' options were
canceled.
(2) Mr. van den Bergh's options were granted on May 1, 1996 and December 27,
1996, respectively. The May 1, 1996 and December 27, 1996 options were
granted pursuant to the 1996 Stock Option Plan. The options are exercisable
in installments of 33%, 33%, and 34%, respectively. The earlier option vests
on May 1, 1999, May 1, 2000, and May 1, 2001. The later option vests on
December 27, 1999, December 27, 2000, and December 27, 2001, respectively.
(3) Mr. Fritz' options were granted on December 27, 1996 pursuant to the 1996
Stock Option Plan. Pursuant to an agreement entered into with Mr. Fritz on
March 15, 1997, all of Mr. Fritz' options became immediately exercisable and
expire on June 15, 1997 if not exercised.
(4) The grant date present value was estimated using the Black-Scholes option
pricing model and the following weighted-average assumptions: risk-free
interest rate of 6.11%, dividend yield of 0.0%, volatility of the expected
market price of the Company's common stock of 20.22%, and a weighted-average
expected life of the option of 5.5 years.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth aggregated option exercises in the last
fiscal year and fiscal year-end option values for the Company's former Chief
Executive Officer and the next four most highly-compensated executive officers.
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES FISCAL YEAR-END(#) FISCAL YEAR-END($)(1)
ACQUIRED
ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
---- ----------- ----------- ------------------ ---------------------
<S> <C> <C> <C> <C>
Michael N. Hammes(2) .......................... 0 0 120,000/460,000 0/0
Frederik van den Bergh ........................ 0 0 0/130,000 0/0
Frederick J. Fritz(3) ......................... 0 0 0/130,000 0/0
Mark Goldman .................................. 0 0 0/20,000 0/0
Gerry E. Brown ................................ 0 0 15,200/104,800 0/0
</TABLE>
(Footnotes on next page)
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(Footnotes from previous page)
- ------------------
(1) Market closing price of $13.75 per share on December 31, 1996, was used in
computing year-end values.
(2) In connection with an agreement entered into with Mr. Hammes on February 28,
1997, the Company agreed to accelerate the vesting of 280,000 stock options.
(3) In connection with an agreement entered into with Mr. Fritz on March 15,
1997, the Company agreed to accelerate the vesting of 130,000 stock options.
EMPLOYMENT AGREEMENTS AND TERMINATION OF
EMPLOYMENT ARRANGEMENTS
Mr. Hammes had an employment agreement with the Company which became
effective January 1, 1996. The term of the agreement was for two years with
automatic extensions of one year unless notice of nonrenewal was given. In
February 1997, the Company and Mr. Hammes agreed to terminate the employment
agreement. Pursuant to the agreement to terminate, Mr. Hammes will continue to
receive his base salary and benefits for two years. The Company also has agreed
to pay Mr. Hammes $450,000 in connection with the agreement to terminate and to
pay an equal amount at the end of two years.
Mr. van den Bergh has an employment agreement with the Company which became
effective May 1, 1996. Under the agreement, his base salary is $500,000. He is
eligible for an annual target incentive of 70% of base salary. The agreement
provides for a guaranteed incentive payment of $233,333 for 1996, and $116,666
for 1997, and is for a term expiring April 30, 1998 with automatic extensions of
one year provided no notice of non-renewal is given. The agreement provides for
severance payments for two years based on base salary and annual target
incentive, with a provision for offsets in the second year based on any earnings
from any other employer. He will also be eligible to participate in the
Company's welfare benefits for two years provided he is otherwise qualified.
Mr. Fritz had an employment agreement with the Company which became
effective January 20, 1995. The agreement was for a term expiring January 31,
1997 with automatic extensions of six months unless notice of non-renewal was
given. In March 1997, the Company and Mr. Fritz agreed to terminate the
employment agreement. Pursuant to the agreement to terminate, Mr. Fritz will
continue to receive his base salary and benefits for one year.
Mr. Goldman has two employment agreements with the Company which became
effective November 1, 1994. Under the agreements, which have identical material
terms, Mr. Goldman's base salary is $250,000 per year. He is eligible for a
discretionary incentive payment each year. The agreements are for terms expiring
December 31, 1997.
Mr. Brown has an employment agreement with the Company which became
effective January 1, 1996. Under the agreement, his base salary is $225,000. He
is eligible for an annual target incentive of 70% of his base salary. The
agreement is for a term expiring December 31, 1997 with automatic extensions of
one year unless notice of non-renewal is given. The agreement provides for
severance benefits for a period of two years, based on base salary and annual
target incentive, with a provision for offsets in the second year based on any
earnings from any other employer. He is also eligible for continuing employee
welfare benefits for a period of two years following termination, provided he is
otherwise qualified.
PENSION PLANS
RETIREMENT PLAN. The Company participates in the New Coleman Company, Inc.
Retirement Plan for Salaried Employees (the 'Salaried Pension Plan') which
replaced a prior plan that was terminated on June 30, 1989. Participants in the
Salaried Pension Plan include participants under the prior plan and certain
salaried exempt employees who are at least 21 years old and have completed at
least one year of service with the Company.
Benefits to participants vest fully after five years of Vesting Service (as
defined in the Salaried Pension Plan) and such benefits are determined primarily
by a formula based on the average of the five consecutive years of greatest
compensation earned during the last ten years of the participant's service to
the Company, and the number of years of service attained by the individual
participant. Such compensation is composed primarily of
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regular base salary and contributions to qualified deferred compensation plans
and does not include amounts paid pursuant to the Company's annual cash
incentive compensation plans. Participants make no contributions to the Salaried
Pension Plan.
EXCESS BENEFIT PLAN. The Company participates in the New Coleman Holdings
Inc. Excess Benefit Plan (the 'Excess Benefit Plan') for designated employees
who are participants in the Salaried Pension Plan and whose retirement income
from the Salaried Pension Plan in the form of payment to be made under the
Salaried Pension Plan exceeds the maximum permissible under the Employee
Retirement Income Security Act, as amended, and certain Internal Revenue Code
provisions. The Excess Benefit Plan supplements the Salaried Pension Plan by
providing additional retirement benefits to its participants in excess of the
maximum amount permitted under the Salaried Pension Plan, which benefits
generally are payable in conjunction with payments made under the Salaried
Pension Plan. Benefits payable under the Excess Benefit Plan have been included
in the estimated annual benefits payable listed on the table following
discussion of the Consolidated Supplemental Retirement Plan. The Excess Benefit
Plan was amended and restated effective January 1, 1995 to add a provision
allowing annual cash incentive compensation plan payments to designated
participants to be included as compensation in the formula used to determine
benefits under the Excess Benefit Plan. Thirteen executives participated in this
feature of the Excess Benefit Plan during 1996.
CONSOLIDATED SUPPLEMENTAL RETIREMENT PLAN. In addition to the obligation of
the Company under the Salaried Pension Plan and the Excess Benefit Plan, the
Company had committed to provide other supplemental retirement benefits for Mr.
Hammes, including credit for additional years of service and certain other
formula changes. Pursuant to an agreement entered into with Mr. Hammes in
February 1997, discussed above, Mr. Hammes is no longer a participant in the
Consolidated Supplemental Retirement Plan.
The following table shows estimated annual benefits payable under the
Salaried Pension Plan, Excess Benefit Plan and the Consolidated Supplemental
Retirement Plan and reflects the straight life benefit form of payment for
employees, assumes normal retirement at age 65, and reflects deductions for
Social Security and other offset amounts:
<TABLE>
<CAPTION>
ESTIMATED ANNUAL PENSION
FINAL -------------------------------------------------------
AVERAGE 10 YEARS 20 YEARS 30 YEARS 35 YEARS
EARNINGS OF SERVICE OF SERVICE OF SERVICE OF SERVICE
- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
$ 100,000 $ 36,076 $ 42,152 $ 48,228 $ 56,266
200,000 76,076 92,152 108,228 126,266
300,000 116,076 142,152 168,228 196,266
400,000 156,076 192,152 228,228 266,266
500,000 196,076 242,152 288,228 336,266
600,000 236,076 292,152 348,228 406,266
700,000 276,076 342,152 408,228 476,266
800,000 316,076 392,152 468,228 546,266
900,000 356,076 442,152 528,228 616,266
1,000,000 396,076 492,152 588,228 686,266
1,100,000 436,076 542,152 648,228 756,266
1,200,000 476,076 592,152 708,228 826,266
1,300,000 516,076 642,152 768,228 896,266
1,400,000 556,076 692,152 828,228 966,266
1,500,000 596,076 742,152 888,228 1,036,266
1,600,000 636,076 792,152 948,228 1,106,266
1,700,000 676,076 842,152 1,008,228 1,176,266
1,800,000 716,076 892,152 1,068,228 1,246,266
</TABLE>
Benefits under the Salaried Pension Plan are payable upon normal retirement
at age 65, and at age 55 following vested termination, disability, and death. A
participant may elect to commence early benefit payments at any time after the
participant's 55th birthday or may retire with 30 years of Vesting Service at
amounts reduced from those payable upon normal retirement age. As of December
31, 1996, credited years of service for each of the individuals listed on the
Summary Compensation Table are as follows: Mr. Hammes, 3.3 years (plus
additional years of service provided under the Consolidated Supplemental
Retirement Plan, for a total of 11.3 years); Mr. van den Bergh, 8 months; Mr.
Fritz, 2 years; Mr. Goldman, 3 years; and Mr. Brown, 7 years. In
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accordance with Mr. Hammes' agreement discussed above, Mr. Hammes will be
entitled to receive a pension of $15,110 per month commencing March 1, 1999.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Company (made up of Messrs. Miller
(Chairman), Drapkin, Lanigan and Slovin) determined compensation of executive
officers of the Company during 1996.
OWNERSHIP OF COMMON STOCK
The Issuer has 1,000 shares of common stock, par value $1.00 per share,
issued and outstanding. Ronald O. Perelman, 35 East 62nd Street, New York, New
York 10021, through MacAndrews & Forbes, beneficially owns 100% of the
outstanding shares of common stock of the Issuer and Coleman Worldwide. No other
director, executive officer or person beneficially owns any shares of common
stock of the Issuer or Coleman Worldwide. The shares of common stock of the
Issuer and Coleman Worldwide and shares of common stock of intermediate holding
companies are or may from time to time be pledged to secure obligations of
MacAndrews & Forbes or its affiliates.
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RELATIONSHIP WITH MACANDREWS & FORBES
MacAndrews & Forbes beneficially owns 100% of the common stock of the
Issuer and owns indirectly approximately 82.6% of the Coleman Common Stock. Due
to its stock ownership, MacAndrews & Forbes controls the Issuer and the Company
and is able to elect the entire Board of Directors of each of the Issuer and the
Company.
MacAndrews & Forbes is a diversified holding company with interests in
several industries. Through its 83% ownership of Revlon, MacAndrews & Forbes is
engaged in the cosmetics and skin care, fragrance and personal care products
business. MacAndrews & Forbes owns 65% of Meridian, a manufacturer and marketer
of specialized boats and water sports equipment. Through its 85% ownership of
Mafco Consolidated, MacAndrews & Forbes is engaged in the manufacture and
distribution of cigars and pipe tobacco, and through Mafco Consolidated's 36%
ownership of MFW, MacAndrews & Forbes is in the business of processing licorice
and other flavors. MacAndrews & Forbes is also in the financial services
business through its 80% ownership of California Federal. In addition,
MacAndrews & Forbes has an investment in Marvel, a youth entertainment company,
which is currently the subject of a Chapter 11 bankruptcy case. The principal
executive offices of MacAndrews & Forbes are located at 35 East 62nd Street, New
York, New York 10021.
The Company is insured under policies maintained by MacAndrews & Forbes,
and the Company reimburses MacAndrews & Forbes for the portion of the cost of
such policies attributable to the Company. Management believes that such cost is
lower than would be incurred were such entities to be separately insured. In
addition, the Company reimburses MacAndrews & Forbes for the Issuer's allocable
portion of certain costs such as legal, accounting and other professional fees
and other services and related expenses.
TAX SHARING AGREEMENTS
The Issuer, Coleman Holdings, Coleman Worldwide and the Company are, for
federal income tax purposes, included in the affiliated group of which Mafco is
the common parent, and the federal taxable income and loss of the Issuer,
Coleman Holdings, Coleman Worldwide and the Company will be included in the
consolidated federal income tax return filed by Mafco. The Issuer, Coleman
Holdings, Coleman Worldwide and the Company also may be included in certain
state and local tax returns of Mafco or its subsidiaries. Coleman Holdings and
Mafco entered into a tax sharing agreement (the 'Holdings Tax Sharing
Agreement'), pursuant to which Coleman Holdings will pay to Mafco amounts equal
to the taxes that Coleman Holdings would otherwise have to pay if it were to
file separate returns including only itself (including any amounts determined to
be due as a result of a redetermination of the tax liability of the Mafco
consolidated group arising from an audit or otherwise). In connection with the
offering of the LYONs, Coleman Worldwide and Mafco entered into a tax sharing
agreement (the 'Worldwide Tax Sharing Agreement' and together with the Holdings
Tax Sharing Agreement, the 'Tax Sharing Agreements'), pursuant to which Coleman
Worldwide is required to pay to Mafco amounts equal to the taxes that Coleman
Worldwide would otherwise have to pay if it were to file separate consolidated
federal, state or local income tax returns including only itself and its
domestic subsidiaries (including any amounts determined to be due as a result of
a redetermination of the tax liability of the Mafco consolidated group ensuing
from an audit or otherwise). 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 Company Tax Sharing Agreement, will
instead be advanced by Coleman Worldwide to Mafco as long as the aggregate
amount of such advances at any time does not exceed the Issue Price plus accrued
Original Issue Discount on the LYONs. Such advances will be evidenced by
noninterest bearing unsecured demand promissory notes from Mafco. In addition,
the Company, Coleman Worldwide and Mafco entered into a Tax Sharing Agreement
with the Company (the 'Company Tax Sharing Agreement') pursuant to which the
Company is required to pay to Coleman Worldwide amounts equal to the taxes that
the Company would otherwise have to pay if it were to file separate consolidated
federal, state or local income tax returns including only itself and its
domestic subsidiaries (including any amounts determined to be due as a result of
a redetermination of the tax liability of the Mafco consolidated group ensuing
from an audit or otherwise). Under federal tax law, the Issuer, Coleman
Holdings, Coleman Worldwide and the Company will be subject to several liability
with respect to the consolidated federal income tax liabilities of the
affiliated group of which Mafco is the common parent for any taxable period
during which the Issuer, Coleman Holdings, Coleman Worldwide or the Company or a
subsidiary of any of them is a member of such group. Mafco has agreed, however,
to indemnify the Issuer, Coleman Holdings, Coleman Worldwide and the Company for
any such federal income tax liability (and certain state and local tax
liabilities) of Mafco or any of its subsidiaries that the Issuer, Coleman
Holdings, Coleman Worldwide or the Company or any of their subsidiaries are
actually required to pay. Because the tax sharing payments to be made under the
respective Tax Sharing Agreements will be determined by the amount of taxes that
the Company, Coleman Worldwide or Coleman Holdings, as the case
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may be, would otherwise have to pay if it were to file federal, state or local
income tax returns, including only itself and, in the case of Coleman Holdings,
Coleman Worldwide and the Company, its domestic subsidiaries, the Tax Sharing
Agreements will not increase the taxes payable by the Issuer if the Issuer were
to file separate returns for itself, or by the Company, Coleman Holdings or
Coleman Worldwide. Mafco may benefit, however, to the extent that Mafco can
offset the taxable income generated by the Issuer's domestic subsidiaries
(including Coleman Holdings, Coleman Worldwide and the Company) against losses
and tax credits generated by Mafco and its other subsidiaries. On January 5,
1995, the Company paid to Coleman Worldwide, an amount equal to its estimated
Federal tax liability for the first, second and third quarters of 1995, net of
the amount of the then estimated refund due to the Company with respect to its
1994 tax liability, and also net of an early payment discount.
Following the Coleman Holdings Merger, the Holdings Tax Sharing Agreement
will be terminated. Following the Coleman Worldwide Merger, the Worldwide Tax
Sharing Agreement will also be terminated and the Company Tax Sharing Agreement
will be amended so that payments thereunder from the Company will be made to
Mafco directly. The Issuer will not be a party to any tax sharing agreement and
will neither receive, nor make, any tax sharing payments. If the value of the
Coleman Common Stock into which the LYONs are exchangeable exceeds the accreted
value of the LYONs on May 27, 1998 holders of the LYONs may elect to exchange
their LYONs for Coleman Common Stock rather than have their LYONs redeemed on
such date. Although the Issuer intends to cause Coleman Worldwide to deliver
cash from the Escrowed Funds to holders equal to the then market value of the
Coleman Common Stock for which the LYONs may be exchanged, the Escrowed Funds
may be insufficient to enable Coleman Worldwide to satisfy exchanges of LYONs
with cash on May 27, 1998. As a result, Coleman Worldwide would be required to
deliver shares of Coleman Common Stock upon exchange of LYONs as part of the
LYONs Retirement. If delivery of such Delivered Shares to the holders of LYONs
causes the Issuer to own indirectly less than 80% of the Coleman Common Stock,
then Coleman would no longer be included in the consolidated tax group of which
Mafco is the common parent.
CROSS-INDEMNIFICATION AGREEMENT
The Company and Holdings are parties to a cross-indemnification agreement
(the 'Cross-Indemnification Agreement'), pursuant to which the Company has
agreed to indemnify Holdings against all liabilities related to the outdoor
products business transferred to the Company, and Holdings has agreed to
indemnify the Company and its immediate corporate parent against all liabilities
of Holdings other than liabilities related to the outdoor products business
transferred to the Company. The liabilities that the Company will indemnify
Holdings against include (i) asserted and potential product liability claims
arising out of products manufactured or sold by the outdoor products business,
and (ii) asserted and potential environmental claims and liabilities related to
facilities currently or formerly owned or used by the outdoor products business.
MANAGEMENT AGREEMENT
Pursuant to a management services agreement with Holdings (the 'Management
Agreement'), the Company provided management services to certain affiliates.
During 1993, the Management Agreement was amended and stipulated that the
Company would provide management services to such other affiliates through June
30, 1995, instead of through the original expiration date of March 31, 1997.
Prior to the termination of the Management Agreement, the services provided by
the Company included general executive services, accounting services, legal and
tax services, employee personnel services and systems services. The Management
Agreement also provided for the indemnification of the Company by such
affiliates against liabilities which could arise in connection with the
Company's management services. For the period ended December 31, 1994,
management fees earned by the Company were $4.8 million. For the period ended
June 30, 1995, management fees earned by the Company were $2.4 million. The
Company believes that the terms of the Management Agreement were at least as
favorable to the Company as those it could have negotiated with nonaffiliated
parties.
INTERNATIONAL SALES ARRANGEMENTS
The Company purchases products from certain affiliates which it resells in
international markets. These products are purchased at negotiated prices that
reflect what the Company believes is a reasonable allocation between the Company
and the affiliates of the gross margins on these products.
SALE AND PURCHASE OF INACTIVE SUBSIDIARIES
During the fourth quarter of 1996, the Company and a subsidiary sold an
inactive subsidiary to an affiliate for approximately $3.0 million. The
affiliate expects to realize certain tax benefits in future years. During the
first quarter of 1997, the Company purchased an inactive subsidiary from an
affiliate for approximately $1.0 million. The Company expects to realize certain
tax benefits in future years.
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PENSION PLANS
Holdings maintains pension and other retirement plans in various forms
covering employees of the Company who meet eligibility requirements. Holdings
also has an unfunded excess benefit plan covering certain of the Company's U.S.
employees whose benefits under the plans described above are limited by
provisions of the Internal Revenue Code. The Company pays to Holdings its
allocable costs of maintaining such plans for the Company's employees.
OTHER ARRANGEMENTS
At the beginning of 1995, Mr. McEvoy, an Executive Vice President of the
Company, had a noninterest-bearing loan from the Company in the amount of
$63,333. At the end of 1995, the principal balance of the loan was $42,222 and
at the end of 1996, the principal balance of the loan was $21,111.
During 1996, a subsidiary of the Company paid approximately $250,000 for
office and warehouse space leased from a real estate partnership in which Mr.
Goldman, an Executive Vice President of the Company, and three other immediate
family members of Mr. Goldman's are partners. A manufacturing business owned by
Mr. Goldman's father contracted with the Company's subsidiary for the
manufacture of goods sold to the subsidiary, for which the subsidiary paid
approximately $1.7 million during 1996. Approximately 6% of the subsidiary's
product units sold during 1996 were produced by Mr. Goldman's father's company.
Pursuant to the agreement by which the Company acquired the Eastpak business,
Mr. Goldman is entitled to certain additional payments from the Company upon
Eastpak achieving certain operating targets. In accordance with such agreement,
Mr. Goldman was paid $5.5 million in 1996.
DESCRIPTION OF OTHER INDEBTEDNESS
Each of the following summaries of certain indebtedness of the Coleman
Holdings, Coleman Worldwide and the Company is subject to and qualified in its
entirety by reference to the detailed provisions of the respective agreements
and instruments to which each summary relates. Copies of such agreements and
instruments are filed as exhibits to the Registration Statement of which this
Prospectus constitutes a part. Capitalized terms used below and not defined have
the meanings set forth in the respective agreements.
COLEMAN HOLDINGS
Coleman Holdings Notes
On July 22, 1993, Coleman Holdings issued and sold $281,281,000 principal
amount at maturity of senior secured discount notes (the 'Original Coleman
Holdings Notes') having terms substantially identical in all material respects
to the Coleman Holdings Notes in a private placement offering. Subsequent to the
private placement offering, a registration statement relating to the exchange of
the Original Coleman Holdings Notes for the Coleman Holdings Notes became
effective.
The Coleman Holdings Notes mature on May 27, 1998 and are secured by all
the shares of Coleman Worldwide. In addition, Coleman Worldwide guaranteed the
Coleman Holdings Notes pursuant to the Old Coleman Worldwide Non-Recourse
Guaranty, which is secured by its pledge of 26,000,000 shares of Coleman Common
Stock. There are no periodic payments of interest on the Coleman Holdings Notes.
The aggregate principal amount of the Coleman Holdings Notes represents a yield
to maturity of 10.875% per annum (computed on a semiannual bond equivalent
basis) calculated from July 22, 1993.
The Coleman Holdings Notes are redeemable by Coleman Holdings on or after
July 15, 1996, at the option of Coleman Holdings, in whole or in part, from July
15, 1996 through July 14, 1997 at the redemption price of 104.350% and from July
15, 1997 through January 14, 1998 at the redemption price of 102.175% (expressed
as percentages of Accreted Value as of the redemption date) plus accrued and
unpaid interest, if any, to the redemption date (subject to the right of holders
of record on the relevant record date to receive interest due, if any, on the
relevant interest payment date). Thereafter, Coleman Holdings may redeem the
Coleman Holdings Notes in whole at any time or in part from time to time at a
redemption price of 100% of the aggregate principal amount at maturity of the
Coleman Holdings Notes to be redeemed plus accrued and unpaid interest, if any,
to the redemption date.
The Coleman Holdings Indenture contains various restrictive covenants
which, among other things, limit (i) the incurrence of additional debt by
Coleman Holdings or Coleman Worldwide, (ii) the issuance of preferred
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stock by Coleman Worldwide, (iii) the incurrence of additional debt by Coleman
or any of its subsidiaries and the issuance of preferred stock by Coleman, (iv)
the payment of dividends on the capital stock of Coleman Holdings and its
subsidiaries and the redemption or repurchase of the capital stock of Coleman
Holdings, (v) the creation of restrictions on the ability of Coleman Worldwide
to pay dividends or make other distributions on its capital stock, (vi)
transactions with affiliates, (vii) the creation of liens on certain assets of
Coleman Holdings and Coleman Worldwide and (viii) consolidations, mergers and
transfers of all or substantially all of Coleman Holdings' assets. All of these
limitations and prohibitions, however, are subject to a number of
qualifications.
Events of Default under the Coleman Holdings Indenture include, among other
things, (i) a default in the payment of interest, if any, when due which
continues for more than thirty days, (ii) a default in the payment of principal
of any Coleman Holdings Note when due at its Stated Maturity, upon redemption,
upon required purchase, upon declaration or otherwise, (iii) the failure by the
Trustee to have a perfected security interest in the collateral, (iv) the
failure to comply with any other agreements in the Coleman Holdings Indenture or
the Coleman Holdings Notes upon receipt by Coleman Holdings of notice of such
default by the Trustee or by the holders of not less than 25% in aggregate
principal amount at maturity of the Coleman Holdings Notes then outstanding and
the failure to cure (or obtain a waiver of) such default within the time
specified after receipt of such notice, (v) the failure by Coleman Worldwide to
pay when due the purchase price of LYONs tendered to it by and at the option of
holders thereof pursuant to the terms of the LYONs Indenture and the total
purchase price of such LYONs that is unpaid exceeds $25.0 million, (vi) the
failure to pay other indebtedness of Coleman Holdings or a Significant
Subsidiary within any applicable grace period after final maturity or as a
result of acceleration of such indebtedness and the total principal amount of
the portion of such indebtedness that is unpaid or accelerated exceeds $25.0
million and such default continues for a period of five days after notice, (vii)
failure by Coleman Holdings or a Significant Subsidiary to pay any undischarged
judgment in excess of $25.0 million after an enforcement proceeding is commenced
or within the time specified after receipt of notice of such default by the
Trustee or by the holders of not less than 25% in aggregate principal amount at
maturity of the Coleman Holdings Notes then outstanding and (viii) certain
events of bankruptcy, insolvency or reorganization of Coleman Holdings or a
Significant Subsidiary.
COLEMAN WORLDWIDE
The LYONs
On May 27, 1993, Coleman Worldwide issued and sold $500.0 million principal
amount at maturity of LYONs in an underwritten public offering. On June 7, 1993,
an additional $75.0 million principal amount at maturity of LYONs was sold upon
exercise of the underwriter's over-allotment option.
The LYONs mature on May 27, 2013 and are secured by 16,394,810 shares of
Coleman Common Stock. There are no periodic payments of interest on the LYONs.
Each LYON was sold for an issue price of $240.67 and has a principal amount at
maturity of $1,000. The aggregate principal amount of the LYONs represents a
yield to maturity of 7.25% per annum (computed on a semiannual bond equivalent
basis) calculated from May 27, 1993.
Each LYON is exchangeable, at the option of the holder, at any time on or
prior to maturity (unless previously redeemed or otherwise purchased) for shares
of Coleman Common Stock securing the LYONs at an exchange rate of 15.706 shares
of Coleman Common Stock per LYON, subject to Coleman Worldwide's right to pay
cash equal to the then market value (as defined in the LYONs Indenture) of such
shares in lieu, in whole or in part, of delivering such shares. The exchange
rate will not be adjusted for accrued OID, but will be subject to adjustment
upon the occurrence of certain events affecting the Coleman Common Stock.
The LYONs are redeemable by Coleman Worldwide on or after May 27, 1998, at
the option of Coleman Worldwide, in whole or in part, at redemption prices equal
to the issue price plus accrued OID through but excluding the date of
redemption, payable solely in cash. Coleman Worldwide will be obligated to
purchase any LYON, at the option of the holder, on May 27, 1998, May 27, 2003
and May 27, 2008 (each, a 'Purchase Date') for a purchase price per LYON of
$343.61, $490.58 and $700.42 (representing the issue price plus accrued OID
through but excluding each such Purchase Date), respectively, representing a
yield per annum to the holder on each such date of 7.25%, computed on a
semiannual bond equivalent basis. Coleman Worldwide may, at its option, elect to
pay the purchase price on any Purchase Date either in cash or shares of Coleman
Common Stock or any combination thereof.
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In addition, 35 business days after the occurrence of an Additional
Purchase Right Event, the LYONs must be purchased solely for cash by Coleman
Worldwide, at the option of the holder, for a purchase price equal to the issue
price plus accrued OID of the LYONs through but excluding the applicable
purchase date. An Additional Purchase Right Event will occur, among other
things, if (i) Permitted Holders (defined to include Ronald O. Perelman, his
heirs and their affiliates) cease to beneficially own a majority of the voting
power and outstanding common stock of Coleman Worldwide, (ii) Coleman Worldwide
ceases to be the holder of record of a majority of the voting power and
outstanding Coleman Common Stock, (iii) any debt of Coleman Worldwide (including
the Old Coleman Worldwide Non-Recourse Guaranty) or any debt of its wholly-owned
subsidiaries is not paid within any applicable grace period after maturity or is
accelerated because of a default, (iv) the number of shares of Coleman Common
Stock the beneficial owners of which are not affiliates of the Company falls
below 3,000,000 (subject to adjustment under certain circumstances) as a result
of purchases of Coleman Common Stock by Coleman Worldwide or any of its
affiliates, (v) the Company or any of its subsidiaries incurs any indebtedness
if, after giving effect to such incurrence, the Company's consolidated ratio of
debt to total capitalization (as defined in the LYONs Indenture) would exceed
75%, (vi) Coleman Worldwide's consolidated net worth as of the end of any fiscal
quarter falls below specified levels ($60 million at March 31, 1997 and $70
million at June 30, 1997), (vii) Permitted Holders (as defined in the LYONs
Indenture) beneficially own any Coleman Common Stock other than through Coleman
Worldwide or (viii) the Company transfers all or substantially all of its assets
to any person.
The LYONs Indenture contains various restrictive covenants which, among
other things, limit (i) the issuance of additional debt and preferred stock or
the creation of liens by Coleman Worldwide, (ii) the payment of dividends on and
redemption or repurchase of capital stock of Coleman Worldwide, (iii) the use by
Coleman Worldwide of dividends or distributions received in respect of Coleman
Common Stock and tax sharing payments received from Coleman, (iv) the making of
any payments or the transfer of any assets, (v) the business activities of
Coleman Worldwide and (vi) consolidations, mergers and transfers of all or
substantially all of Coleman Worldwide's assets. All of these limitations,
however, are subject to a number of important qualifications.
Events of default under the LYONs Indenture include, among other things,
(i) a default in the payment of any principal or interest, if any, when due,
(ii) a default in the delivery of exchange property upon the exchange of the
LYONs as provided in the LYONs Indenture, (iii) the failure by the Trustee to
have a perfected security interest in the collateral, (iv) the failure to comply
with any other agreements in the LYONs or in the LYONs Indenture upon receipt by
Coleman Worldwide of notice of such default by the Trustee or by the holders of
not less than 25% in aggregate principal amount at maturity of the LYONs then
outstanding and the failure to cure (or obtain a waiver of) such default within
60 days after the receipt of such notice and (v) certain events of bankruptcy,
insolvency or reorganization of Coleman Worldwide or the Company.
THE COMPANY
Company Credit Agreement
The Company Credit Agreement consists of a $275.0 million unsecured
revolving credit facility (the 'Revolving Credit Facility'), and a term loan
facility for approximately 385.1 million French Francs (approximately $68.2
million at March 31, 1997 exchange rates). The Revolving Credit Facility
includes as subfacilities a $75.0 million multi-currency facility, a $15.0
million swing line facility and a $75.0 million letter of credit facility. The
multi-currency facility is available to the Company and certain of its
international subsidiaries designated from time to time in certain foreign
currencies. Proceeds of the loans under the Company Credit Agreement may be used
for general corporate purposes, including to finance working capital needs and
to provide liquidity support for any commercial paper issued by the Company.
As of December 31, 1996, approximately $128.1 million was available for
borrowings under the Company Credit Agreement. At March 31, 1997, approximately
$135.1 million was available for borrowings under the Company Credit Agreement.
The Company Credit Agreement 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) LIBOR plus, in the case of all LIBOR loans other than loans denominated
in certain specified currencies, a margin ranging from .25% to 2.125% based on
the Company's financial performance and, in the case of loans
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denominated in certain specified currencies, a margin ranging from .35% to
2.225% 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. The Company
Credit Agreement also bears an overall facility fee ranging from .15% to .375%
based on the Company's financial performance.
The loans and other extensions of credit under the Company Credit Agreement
are guaranteed by the domestic subsidiaries of the Company.
The Company is required to prepay borrowings under the Company Credit
Agreement with (i) all of the net cash proceeds of any sales or other
dispositions of assets of the Company or its subsidiaries outside of the
ordinary course of business, subject to certain exceptions, or (ii) all of the
net cash proceeds of any sale or other disposition of the capital stock or other
equity securities or incurrence of indebtedness of the Company or any of its
subsidiaries, subject to certain exceptions, and, in each case, such proceeds
will first be applied to prepayment of the term loans and, after the term loans
have been repaid in full and subject to certain exceptions, any remaining
proceeds will be applied to prepayment of any loans under the Revolving Credit
Facility, the effect of which will be to permanently reduce the Revolving Credit
Facility by such amount. The Company is also required to prepay borrowings under
the Company Credit Agreement equal to the amount by which the aggregate
outstanding loans under the Revolving Credit Facility exceed the available
Revolving Credit Facility then in effect.
The Company Credit Agreement restricts the Company and its subsidiaries
from, among other things (subject to certain exceptions), (i) creating any
liens, (ii) incurring any indebtedness, (iii) merging with or into or
consolidating with or into, or conveying, transferring, leasing or disposing of
all or substantially all of its assets to, or acquiring all or substantially all
of the assets of, any other person, (iv) selling, transferring or otherwise
disposing of any of its assets outside of the ordinary course of its business,
(v) making any loan, advance or investment in any person, (vi) purchasing,
redeeming or otherwise acquiring for value any of its capital stock, paying
dividends on its capital stock or making certain other restricted payments,
(vii) making any material change in its business, (viii) issuing any preferred
stock, (ix) amending, supplementing or waiving any provisions of the the
Management Agreement, the Cross-Indemnification Agreement, the Reimbursement
Agreement or the Tax Sharing Agreements (collectively, the 'Intercompany
Agreements'), (x) making any capital expenditures or (xi) engaging in
transactions with affiliates.
The Company Credit Agreement requires the Company to satisfy the financial
covenants described below. The Company is required to: (i) maintain a specified
minimum consolidated net worth, (ii) not exceed a specified ratio of (a) total
debt of the Company and its subsidiaries to (b) consolidated EBITDA of the
Company, (iii) maintain a specified interest coverage ratio, (iv) maintain a
specified ratio of (a) consolidated EBITDA available for fixed charges to (b)
consolidated fixed charges, (v) maintain a specified minimum cumulative EBITDA
and (vi) not exceed a specified maximum amount of debt. The Company Credit
Agreement also provides for a specific requirement relating to the Company's
financial leverage as of the end of the fiscal quarter ending on December 31,
1997 which, if not achieved, will result in the Company's Credit Agreement
becoming secured by the assets of the Company and its domestic subsidiaries. For
purposes of determining the Company's compliance with certain of such financial
covenants, the Company Credit Agreement excludes from the definition of EBITDA
up to $30 million of charges in connection with the Company's restructuring
initiatives. These financial covenants may limit the Company's ability to pay
cash dividends to Coleman Worldwide.
The events of default under the Company Credit Agreement include, among
other things, the following: (i) the failure to make payments of principal or
interest or fees when due or other amounts payable under the Company Credit
Agreement within five business days after their due date, (ii) any material
inaccuracy in the representations and warranties made in the Company Credit
Agreement, (iii) a breach of certain covenants in the Company Credit Agreement
and related documents, subject in certain instances to the expiration of
applicable grace periods, (iv) the failure to pay any principal, premium or
interest on or any other amount payable in respect of indebtedness in an
aggregate principal amount of $5.0 million when the same becomes due and payable
or a default under the agreements related to such indebtedness (if the effect of
such default is to cause or permit the acceleration thereof), (v) certain events
of bankruptcy, insolvency or reorganization, (vi) the Company or any subsidiary
being the subject of certain unstayed judgments in excess of $5.0 million that
are not insured or certain materially adverse nonmonetary judgments, (vii) the
failure of any loan document to be valid and binding on or enforceable against
the Company or any subsidiary party thereto in all material respects, (viii) any
person (other than Ronald O. Perelman (and heirs and affiliates)) shall own an
amount of the capital stock of the Company
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having greater than or equal to 30% of the voting power under ordinary
circumstances to elect the Board of Directors of the Company and the failure of
Ronald O. Perelman (and heirs and affiliates) to beneficially own a majority of
the outstanding voting stock of the Company or to have the power to direct the
management of the Company, (ix) certain ERISA events or (x) the amendment of any
Intercompany Agreements without the consent of the required banks (as specified
in the Company Credit Agreement) or the failure of any such Intercompany
Agreement to be in full force and effect.
The Company Credit Agreement requires the Company to give the Agent
thereunder notice of (i) any claim by MacAndrews & Forbes under the
Reimbursement Agreement during the continuance of a default under the Company
Credit Agreement or (ii) any claim by Holdings or the Company under the
Cross-Indemnification Agreement, in either case not later than three business
days after the claim is made or five business days before the Company makes any
payment in respect thereof.
Company Senior Notes
7.26% Senior Notes due 2007
On August 8, 1995, the Company completed a private placement issuance and
sale of $200 million aggregate principal amount of 7.26% Senior Notes due 2007
(the 'Notes due 2007'). Interest on the Notes due 2007 is payable semiannually,
and the principal is payable in annual installments of $40 million each
commencing August 8, 2003, with a final installment payment of $40 million due
on August 8, 2007. If there is a default, the interest rate will be the greater
of (i) 9.26% or (ii) 2.0% above the prime interest rate.
The Notes due 2007 are unsecured, are guaranteed by the Company's domestic
subsidiaries and are subject to various restrictive covenants, including without
limitation, requirements for the maintenance of specified levels of consolidated
net worth and certain other provisions limiting the incurrence of additional
debt and sale and leaseback transactions under the terms of the applicable note
purchase agreement. The Notes due 2007 shall become secured if the Company
Credit Agreement becomes secured as discussed under '--Company Credit
Agreement.'
7.10% Senior Notes due 2006
On June 13, 1996, the Company completed a private placement issuance and
sale of $85 million aggregate principal amount of 7.10% Senior Notes due 2006
(the 'Notes due 2006'). Interest on the Notes due 2006 is payable semiannually,
and the principal is payable in annual installments of $12.1 million each
commencing June 13, 2000, with a final installment payment of $12.1 million due
on June 13, 2006. If there is a default, the interest rate will be the greater
of (i) 9.10% or (ii) 2.0% above the prime interest rate.
The Notes due 2006 are unsecured, are guaranteed by the Company's domestic
subsidiaries and are subject to various restrictive covenants, including without
limitation, requirements for the maintenance of specified levels of consolidated
net worth and certain other provisions limiting the incurrence of additional
debt and sale and leaseback transactions under the terms of the applicable note
purchase agreement. The Notes due 2006 shall become secured if the Company
Credit Agreement becomes secured as discussed under '--Company Credit
Agreement.'
7.25% Senior Notes due 2008
On June 13, 1996, the Company completed a private placement issuance and
sale of $75 million aggregate principal amount of 7.25% Senior Notes due 2008
(the 'Notes due 2008' and, together with the Notes due 2007 and the Notes due
2006, the 'Company Senior Notes'). Interest on the Notes due 2008 is payable
semiannually, and the principal is payable in annual installments of $15 million
each commencing June 13, 2004, with a final installment payment of $15 million
due on June 13, 2008. If there is a default, the interest rate will be the
greater of (i) 9.25% or 2.0% above the prime interest rate.
The Notes due 2008 are unsecured, are guaranteed by the Company's domestic
subsidiaries and are subject to various restrictive covenants, including without
limitation, requirements for the maintenance of specified levels of consolidated
net worth and certain other provisions limiting the incurrence of additional
debt and sale and leaseback transactions under the terms of the applicable note
purchase agreement. The Notes due 2008 shall become secured if the Company
Credit Agreement becomes secured as discussed under '--Company Credit
Agreement.'
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DESCRIPTION OF THE NOTES
The New Notes will be issued under the Indenture dated as of May 20, 1997
between the Issuer and First Trust National Association, as trustee (the
'Trustee'), a copy of which is filed as an exhibit to the Registration Statement
of which this Prospectus constitutes a part. The following summary, which
describes material provisions of the Indenture and the Notes, does not purport
to be complete and is subject to, and is qualified in its entirety by reference
to, the Trust Indenture Act of 1939, as in effect on the date of the original
issue of the Notes (the 'TIA'), and all the provisions of the Indenture and the
Notes, including the definitions therein of terms not defined in this
Prospectus. Certain terms used herein are defined below under '--Certain
Definitions.' The terms of the New First Priority Notes and the New Second
Priority Notes are identical in all material respects to the terms of the Old
First Priority Notes and the Old Second Priority Notes, respectively, except for
certain transfer restrictions and registration rights relating to the Old Notes
and except that, if the Exchange Offer is not consummated by November 17, 1997,
interest will accrue on the Old Notes (in addition to the accretion of Original
Issue Discount) from and including such date, until but excluding the date if
consummation of the Exchange Offer payable in cash semiannually in arrears on
May 15 and November 15, commencing May 15, 1998, at a rate per annum equal to
.50% of the Accreted Value as of the November 15 and May 15 immediately
preceding such interest payment date.
GENERAL
The Notes will mature on May 15, 2001. The Trustee authenticated and
delivered the Old First Priority Notes for original issue in an aggregate
principal amount at maturity of $600,475,000 and the Old Second Priority Notes
for original issue in an aggregate principal amount at maturity of $131,560,000.
The Old Notes were offered at a substantial discount from their principal
amount at maturity. See 'Certain U.S. Federal Income Tax Considerations.' There
will be no periodic cash payments of interest, except as described below. The
New Notes will be treated as a continuation of the Old Notes, which were issued
at an Original Issue Discount (the difference between the original issue price
of the Notes and their principal amount at maturity). The calculation of the
accretion of Original Issue Discount in the period during which a New Note
remains outstanding will be on a semiannual bond equivalent basis using a
360-day year composed of twelve 30-day months; such accretion will commence from
the date of original issue of the Notes. The aggregate principal amount at
maturity of the Notes represents a yield to maturity of 11 1/8% and 12 7/8% per
annum with respect to the First Priority Notes and the Second Priority Notes,
respectively, without giving effect to any periodic payments of interest
described below. Redemption or purchase by the Issuer of a Note will cause the
Original Issue Discount and interest, if any, to cease to accrue on such Note,
under the terms and subject to the conditions of the Indenture.
If by November 17, 1997 neither (i) the Exchange Offer is consummated nor
(ii) a Shelf Registration Statement with respect to the resale of the Old Notes
is declared effective, interest will accrue (in addition to the accretion of
Original Issue Discount) on the Old Notes from and including November 17, 1997
until but excluding the earlier of (i) the consummation of the Exchange Offer
and (ii) the effective date of such Shelf Registration Statement. In each case
such interest will be payable in cash semiannually in arrears on May 15 and
November 15, commencing May 15, 1998 at a rate per annum equal to .50% of the
Accreted Value of the Notes as of the Semi-Annual Accrual Date (as defined)
immediately preceding the interest payment date. Payments of such interest, if
any, on Old Notes in exchange for which the New Notes were issued will be made
to the persons who at the close of business on the May 1 or November 1 preceding
such interest payment date are registered holders of such Old Notes if such
record date occurs prior to such exchange, or are registered holders of the New
Notes if such record date occurs on or after the date of such exchange, even if
Notes are cancelled after the record date and on or before the interest payment
date. Interest will be computed on the basis of a 360-day year of twelve 30-day
months. Holders of Old Notes accepted for exchange will be deemed to have waived
the right to receive any other payments or accrued interest on the Old Notes.
Principal and interest, if any, will be payable at the office of the
Trustee, but, at the option of the Issuer interest may be paid by check mailed
to the registered holders of the Notes at their registered addresses; provided
that all payments with respect to Global Notes (as defined herein), and
Certificated Securities (as defined herein) the holders of which have given wire
transfer instructions to the Issuer, will be required to be made by wire
transfer of immediately available funds to the accounts specified by the holders
thereof. The Notes will be transferable and exchangeable at the office of the
Trustee and will be issued only in fully registered form, without coupons, in
denominations of principal amount at maturity of $1,000 and any integral
multiple thereof. Wherever
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it is provided that the Accreted Value, the Put Amount, the Due Amount or the
principal amount at maturity with respect to a Note will be paid, such provision
will be deemed to require the simultaneous payment of accrued and unpaid
interest (if any) on such Note.
Any Old First Priority Notes or Old Second Priority Notes that remain
outstanding after the consummation of the Exchange Offer, together with the New
Notes issued in connection with the Exchange Offer, will be treated as a single
class of securities under the Indenture except as expressly provided therein.
ESCROW OF PROCEEDS
On May 15, 1997, the Issuer entered into an escrow agreement (the 'Escrow
Agreement') with First Trust National Association, as escrow agent (the 'Escrow
Agent'), pursuant to which the Issuer deposited with the Escrow Agent the
Escrowed Funds, which consisted of the net proceeds of the Offering. The
Escrowed Funds are being temporarily invested in Treasury Securities and other
Permitted Investments (as defined in the Escrow Agreement). 'Treasury
Securities' mean any investment in obligations issued or guaranteed by the
United States government or any agency thereof, in each case, maturing within
360 days of the date of acquisition thereof. In addition to Treasury Securities,
the Escrowed Funds may be invested pursuant to the Escrow Agreement in certain
other Permitted Investments, including repurchase obligations with a term of not
more than 30 days entered into with a nationally recognized broker dealer, with
respect to which the purchased securities are obligations issued or guaranteed
by the United States government or any agency thereof.
The Issuer is only entitled to release the Escrowed Funds in accordance
with the provisions of the Escrow Agreement. Pursuant to the Escrow Agreement,
the Escrow Agent will release the Escrowed Funds to the Issuer from time to time
upon the satisfaction of certain conditions, including presentation of an
Officer's Certificate certifying that, among other things (a) (i) the conditions
to the optional redemption by Coleman Holdings contained in the indenture
governing the Coleman Holdings Notes Indenture to be complied with on the date
of the Coleman Holdings Notes Redemption (other than payment) have been
satisfied or waived, (ii) the conditions to any delivery of cash upon exchange
from time to time of LYONs through an exchange offer to be complied with by
Coleman Worldwide (other than payment) have been satisfied or waived, (iii) the
conditions to the optional redemption by Coleman Worldwide contained in the
LYONs Indenture to be complied with on May 27, 1998 (other than payment) have
been satisfied or waived, (iv) the conditions to any exchange of LYONs from time
to time by the holders thereof and the election by Coleman Worldwide to deliver
cash in lieu of shares of Coleman Common Stock that are contained in the LYONs
Indenture (other than payment) have been satisfied or waived, (v) the Coleman
Holding Notes have been accelerated for payment upon the occurrence of an event
of default pursuant to the Coleman Holdings Notes Indenture, (vi) the conditions
to any purchase of LYONs at the option of the holder thereof upon the occurrence
of a Purchase Right Event or an Additional Purchase Right Event and the election
by Coleman Worldwide to deliver cash in lieu of shares of Coleman Common Stock
that are contained in the LYONs Indenture (other than payment) have been
satisfied or waived or (vii) the LYONs have been accelerated for payment upon
the occurrence of an event of default pursuant to the terms of the LYONs
Indenture and (b) following the release, such Escrowed Funds will, subject to
certain limited exceptions, be contributed to Coleman Holdings or Coleman
Worldwide and used to fund the Coleman Holdings Notes Redemption or the LYONs
Retirement (whether through an exchange offer, redemption, repurchases upon the
occurrence of an Additional Purchase Right Event, the exchange of LYONs by the
holders thereof or payment of the LYONs upon acceleration), as the case may be.
Notwithstanding the foregoing, there will be no release of Escrowed Funds to the
Issuer after the occurrence of a Triggering Event. If a Triggering Event occurs,
the Issuer will be required to use any remaining Escrowed Funds to redeem the
Notes, on a pro rata basis, at a redemption price equal to the Accreted Value
plus accrued interest (if any) on the Mandatory Redemption Date. See
'--Mandatory Redemption.'
Pursuant to the Escrow Agreement, the amount of Escrowed Funds that may be
released to the Issuer (i) in connection with the Coleman Holdings Notes
Redemption will be equal to the aggregate redemption price under the Coleman
Holdings Notes Indenture on July 15, 1997 (approximately $262.2 million) (the
'Coleman Holdings Redemption Amount') and (ii) at any one time in connection
with the LYONs Retirement prior to the optional redemption by Coleman Worldwide
on May 27, 1998 will be equal to the lesser of (a) the amount of cash required
by Coleman Worldwide pursuant to the LYONs Indenture to satisfy its obligations
in connection with the exchange of LYONs by the holders thereof for Coleman
Common Stock and Coleman Worldwide's election to pay cash in lieu thereof or the
repurchase of LYONs at the holders' option upon the occurrence of an Additional
Purchase Right Event or the amount of cash required to purchase or exchange
LYONs in an exchange offer and (b) the pro rata portion of
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the Escrowed Funds based upon the LYONs to be exchanged or repurchased by the
Issuer under the circumstances described in clause (a) above; provided, however,
that if the Coleman Holdings Notes Redemption has not been consummated, then the
pro rata portion in clause (b) shall be determined based on the difference
between the Escrowed Funds and the Coleman Holdings Redemption Amount. The
Escrow Agreement provides that all Escrowed Funds (less the Coleman Holdings
Redemption Amount, if prior to the Coleman Holdings Notes Redemption) shall be
released to the Issuer to fund the optional redemption by Coleman Worldwide of
the LYONs on May 27, 1998 or to repay the LYONs after the occurrence of an event
of default and the acceleration thereof. Notwithstanding the foregoing, the
Escrow Agreement provides that upon any release of Escrowed Funds to the Issuer,
if Coleman Worldwide has cash available (the 'Available Coleman Worldwide Cash')
to finance a portion of the purchase, redemption, exchange or payment upon
acceleration of the LYONs other than as a result of Coleman Worldwide's receipt
of a Capital Contribution from the Escrowed Funds released to the Issuer, then
the Issuer may reduce the amount of the Capital Contribution to be made to
Coleman Worldwide by the amount of the Available Coleman Worldwide Cash. The
Escrow Agreement permits the portion of Escrowed Funds released to the Issuer in
the amount of the Available Coleman Worldwide Cash to be retained by the Issuer,
which in turn will be able to use such funds in its discretion for any purpose,
including to dividend or distribute such funds to MacAndrews & Forbes.
Upon consummation of both the Coleman Holdings Note Redemption and the
LYONs Retirement, the Escrow Agent will release any remaining Escrowed Funds to
the Issuer upon the Issuer's delivery to the Trustee of an Officer's Certificate
stating that each of the Coleman Holdings Notes Redemption and the LYONs
Retirement have been consummated. Upon receipt, the Issuer will be permitted to
use such funds in its discretion for any purpose, including to dividend or
distribute such excess to MacAndrews & Forbes.
OPTIONAL REDEMPTION
Except as set forth below, the Notes may not be redeemed by the Issuer
prior to May 15, 2000. On and after such date, the Issuer may redeem the Notes
in whole at any time or in part from time to time at the redemption prices
listed below (expressed as percentages of Accreted Value as of the redemption
date) for the periods indicated plus accrued and unpaid interest, if any, to the
redemption date (subject to the right of holders of record on the relevant
record date to receive interest due, if any, on the relevant interest payment
date):
<TABLE>
<CAPTION>
PERIOD REDEMPTION PRICE
- ------ ---------------------------------------------
FIRST PRIORITY NOTES SECOND PRIORITY NOTES
-------------------- ---------------------
<S> <C> <C>
From May 15, 2000 through May 14,
2001.................................... 102.781% 103.219%
</TABLE>
Thereafter, the Issuer may redeem the Notes in whole at any time or in part from
time to time at a redemption price of 100% of the aggregate principal amount at
maturity of the Notes to be redeemed plus accrued and unpaid interest, if any,
to the redemption date.
The Notes may be redeemed at the option of the Issuer at any time as a
whole at a redemption price equal to the sum of (i) the Accreted Value thereof
at the date of redemption, plus (ii) the Applicable Premium at the date of
redemption.
'Accreted Value' as of any date (the 'Specified Date') means, with respect
to each $1,000 principal amount at maturity of Notes:
(i) if the Specified Date is one of the following dates (each a
'Semi-Annual Accrual Date'), the amount set forth opposite such date below
under Column 1, in the case of First Priority Notes, or under Column 2, in
the case of Second Priority Notes:
<TABLE>
<CAPTION>
SEMI-ANNUAL ACCRUAL DATE ACCRETED VALUE
- ------------------------ -------------------------------------------------
COLUMN 1 COLUMN 2
----------------------- -----------------------
(FIRST PRIORITY NOTES) (SECOND PRIORITY NOTES)
----------------------- ------------------------
<S> <C> <C>
May 20, 1997.......................... $ 649.49 $ 608.12
November 15, 1997..................... $ 684.59 $ 646.15
May 15, 1998.......................... $ 722.67 $ 687.75
November 15, 1998..................... $ 762.87 $ 732.02
May 15, 1999.......................... $ 805.30 $ 779.15
November 15, 1999..................... $ 850.10 $ 829.30
May 15, 2000.......................... $ 897.38 $ 882.69
November 15, 2000..................... $ 947.30 $ 939.51
May 15, 2001.......................... $1,000.00 $ 1,000.00
</TABLE>
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(ii) if the Specified Date occurs between two Semi-Annual Accrual
Dates, the sum of (A) the Accreted Value for the Semi-Annual Accrual Date
immediately preceding the Specified Date and (B) an amount equal to the product
of (i) the Accreted Value for the immediately following Semi-Annual Accrual Date
less the Accreted Value for the immediately preceding Semi-Annual Accrual Date
and (ii) a fraction, the numerator of which is the number of days from the
immediately preceding Semi-Annual Accrual Date to the Specified Date, using a
360-day year of twelve 30-day months, and the denominator of which is 180 (or,
if the Semi-Annual Accrual Date immediately preceding the Specified Date is May
20, 1997, the denominator of which is 175).
Notice of redemption will be mailed at least 30 days but not more than 60
days before any redemption date to each holder of Notes to be redeemed at its
registered address. Notes in denominations larger than $1,000 principal amount
at maturity may be redeemed in part but only in integral multiples thereof. If
money sufficient to pay the redemption price of and accrued interest (if any) on
all Notes (or portions thereof) to be redeemed on the redemption date is
deposited with the Paying Agent on or before the redemption date, on and after
such date Accreted Value ceases to increase and interest (if any) ceases to
accrue on such Notes (or such portions thereof) called for redemption.
MANDATORY REDEMPTION
The Notes are subject to mandatory redemption upon the occurrence of a
Triggering Event at a time when any Escrowed Funds are remaining. If a
Triggering Event occurs, the Issuer will be required to use any such remaining
Escrowed Funds to redeem the Notes, on a pro rata basis, at a redemption price
equal to the Accreted Value plus accrued interest (if any) on the Mandatory
Redemption Date (the 'Mandatory Redemption Price'). The 'Mandatory Redemption
Date' means the 45th day (or if such day is not a business day, the next
following business day) following the occurrence of a Triggering Event. Notice
of redemption will be mailed at least 30 days before the Mandatory Redemption
Date to each holder of Notes to be redeemed at its registered address.
If the Escrow Agent receives a notice of mandatory redemption pursuant to
the terms of the Indenture and the Notes, the Escrow Agent will liquidate all
Escrowed Funds then held by it by not later than the third Business Day prior to
the Mandatory Redemption Date and release to the Paying Agent for the Notes an
amount of Escrowed Funds equal to the aggregate Mandatory Redemption Price of
the Notes for payment to holders of the Notes on the Mandatory Redemption Date.
Concurrently with such release to the Paying Agent, the Escrow Agent will
release any excess of Escrowed Funds over the Mandatory Redemption Price to the
Issuer which, in turn, will be permitted to use such funds in its discretion for
any purpose, including to dividend or distribute such excess funds to MacAndrews
& Forbes.
SINKING FUND
There will be no mandatory sinking fund payments for the Notes.
GUARANTY
Coleman Worldwide has irrevocably and unconditionally guaranteed the
punctual payment when due, whether at Stated Maturity, by acceleration or
otherwise, of all Obligations of the Issuer under the Indenture whether for
principal of or interest (if any) on the Notes, expenses, indemnification or
otherwise (all such Obligations guaranteed by Coleman Worldwide being the
'Guaranteed Obligations').
Coleman Worldwide's liability under the Indenture is limited to the Coleman
Collateral provided by it and any Substitute Collateral (as defined) provided by
it and the proceeds realized by the Trustee upon the sale or other realization
of such Coleman Collateral and Substitute Collateral, it being understood that
the Coleman Worldwide Non-Recourse Guaranty otherwise is a nonrecourse
obligation of Coleman Worldwide and that the Trustee's and the Holders' rights
to recover against Coleman Worldwide under the Indenture shall be limited solely
to the Coleman Collateral provided by it and any Substitute Collateral provided
by it and the proceeds realized by the Trustee upon the sale or other
realization of such Coleman Collateral and Substitute Collateral.
Subject to the limited recourse set forth in the immediately preceding
paragraph, Coleman Worldwide agrees to pay, in addition to the amount stated
above, any and all expenses (including reasonable counsel fees and
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expenses) incurred by the Trustee or the Holders in enforcing any rights under
the Coleman Worldwide Non-Recourse Guaranty with respect to Coleman Worldwide.
The Coleman Worldwide Non-Recourse Guaranty is a continuing guarantee and
shall (a) remain in full force and effect until the earliest of (i) the release
of all the Coleman Collateral provided by Coleman Worldwide and all the
Substitute Collateral, if any, provided by Coleman Worldwide, in each case
pursuant to the terms of the Indenture, (ii) the sale or other disposition of
all Coleman Collateral provided by Coleman Worldwide and all Substitute
Collateral, if any, provided by Coleman Worldwide and the application of the
proceeds thereof in accordance with the Indenture and (iii) the Coleman
Worldwide Merger, (b) be binding upon Coleman Worldwide and (c) inure to the
benefit of and be enforceable by the Trustee, the Holders and their successors,
transferees and assigns.
SECURITY
Pursuant to the Indenture, the Notes will be secured by (i) until the
Coleman Holdings Merger, a security interest in and pledge by the Issuer of all
its right, title and interest in and to all of the Capital Stock of Coleman
Holdings (the 'Holdings Pledged Shares'), (ii) upon consummation of the Coleman
Holdings Notes Redemption and until the Coleman Worldwide Merger, and
simultaneously with their release from the Lien of the Coleman Holdings
Indenture, a security interest in and pledge by the Issuer of all its right,
title and interest in and to all of the Capital Stock of Coleman Worldwide (the
'Worldwide Pledged Shares'), and (iii) all dividends, cash, instruments and
other property and proceeds from time to time received, receivable or otherwise
distributed in respect of or in an exchange for any of the foregoing, other than
in each case, such of the foregoing that may be released from the Lien of the
Indenture under certain circumstances (collectively, the 'Holding Company
Collateral'). The pledge of the Holdings Pledged Shares will terminate upon the
Coleman Holdings Merger, and the pledge of the Worldwide Pledged Shares will
terminate upon the Coleman Worldwide Merger. The Coleman Worldwide Non-Recourse
Guaranty will be secured by (i) a security interest in and pledge by Coleman
Worldwide of all its right, title and interest in and to 522,710 shares of
Coleman Common Stock owned by Coleman Worldwide, (ii) upon the consummation of
the Coleman Holdings Notes Redemption and simultaneously with their release from
the Lien of the Coleman Holdings Indenture, a security interest in and pledge by
Coleman Worldwide of all its right, title and interest in and to an additional
26,000,000 shares of Coleman Common Stock owned by Coleman Worldwide that were
pledged to secure the guaranty of the Coleman Holdings Notes, (iii) from time to
time in connection with the LYONs Retirement, a security interest in and pledge
by Coleman Worldwide of all its right, title and interest in and to all shares
of Coleman Common Stock owned by Coleman Worldwide which are released in
connection with the LYONs Retirement simultaneously with such release, less any
Delivered Shares, (iv) from time to time as they become available to be pledged,
any other shares of Coleman Common Stock owned by Coleman Worldwide (all of the
foregoing, collectively, the 'Coleman Pledged Shares,' which term shall exclude
Withdrawn Shares), and (v) all dividends, cash, instruments and other property
and proceeds from time to time received, receivable or otherwise distributed in
respect of or in an exchange for any of the foregoing other than in each case
for such of the foregoing that may be released from the Lien of the Indenture
under certain circumstances (collectively, the 'Coleman Collateral'). In
addition, each of the Issuer and Coleman Worldwide will assign and pledge to the
Trustee, for its benefit and the benefit of the holders of the Notes, a security
interest in all cash and U.S. Government Obligations deposited by it with the
Trustee in substitution for Coleman Collateral, and all dividends, cash,
instruments and other property and proceeds from time to time received,
receivable or otherwise distributed in respect of or in an exchange for the
foregoing other than such of the foregoing that are released from the Lien of
the Indenture under certain circumstances (the 'Substitute Collateral', and
together with the Holding Company Collateral and the Coleman Collateral, the
'Collateral'). Other than the right to enforce their security interest in the
Coleman Collateral and in the Substitute Collateral, if any, provided by Coleman
Worldwide, the holders of the Notes will have no recourse to any assets of
Coleman Worldwide.
The security interest in the Collateral will be a first priority security
interest. The First Priority Notes will rank senior in right of payment to the
Second Priority Notes with respect to the Collateral. However, absent any
Default, the Issuer and Coleman Worldwide will be able to vote, as each sees fit
in its sole discretion, the Capital Stock of Coleman Holdings, Coleman Worldwide
and Coleman, respectively, provided that no vote may be cast, and no consent,
waiver or ratification given or action taken, which would be inconsistent with
or violate any provision of the Indenture or the Notes.
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After the Coleman Holdings Notes Redemption and the LYONs Retirement, the
Indenture will permit the Issuer to withdraw the Coleman Collateral in whole or,
on a pro rata basis, in part by substituting therefor or causing Coleman
Worldwide to substitute therefor with the Trustee cash or U.S. Government
Obligations for the payment of principal and interest (if any) on the Notes and
satisfying certain other conditions. If a pro rata portion of Coleman Collateral
is to be released, the Issuer will be required to certify to the Trustee that
the ratio of the Market Value of the Coleman Collateral that will remain after
giving effect to such release to the aggregate Accreted Value of that portion of
the outstanding Notes not covered by cash or U.S. Government Obligations is at
least the same as such ratio immediately prior to the withdrawal, but in no
event less than 1.5 to 1.00, and that the Market Value of the Coleman Collateral
that will remain after giving effect to such release would be at least equal to
the aggregate principal amount at maturity of the outstanding Notes not covered
by cash or U.S. Government Obligations.
In connection with or after a redemption of Notes in part, or a purchase of
Notes in part pursuant to the provisions described under 'Change of Control' or
any delivery by the Issuer of less than all the Notes for cancellation, the
Indenture permits the Issuer to request a pro rata release of the Coleman
Collateral based on the percentage of the Notes redeemed or purchased, or
delivered for cancellation so long as the ratio of the Market Value of the
remaining Coleman Collateral to the aggregate Accreted Value of the Notes not so
redeemed or repaid and not covered by cash or U.S. Government Obligations is at
least the same as such ratio immediately prior to such release, but in no event
less than 1.5 to 1.00, and that the Market Value of the Coleman Collateral that
will remain after giving effect to such release would be at least equal to the
aggregate principal amount at maturity of the outstanding Notes not covered by
cash or U.S. Government Obligations. In addition, in connection with a
redemption of Notes, or with a purchase of Notes pursuant to the provisions
described under 'Change of Control' or with the payment at maturity of the
principal amount of the Securities the Indenture permits the Issuer or Coleman
Worldwide to request a release of Substitute Collateral to the extent necessary
to pay the redemption price, purchase price, or principal amount at maturity as
the case may be.
Upon satisfaction by the Issuer of the conditions to its legal defeasance
option or its covenant defeasance option or the discharge of the Indenture, the
Lien of the Indenture on all the Collateral will terminate and all the
Collateral will be released without any further action by the Trustee or any
other person.
There can be no assurance that the proceeds of any sale of the Collateral
pursuant to the Indenture following an Event of Default would be sufficient to
satisfy payments due on the Notes. In addition, the ability of the holders of
Notes to realize upon the Collateral may be subject to certain bankruptcy law
limitations in the event of a bankruptcy.
If an Event of Default occurs under the Indenture, the Trustee, on behalf
of the holders of the Notes, in addition to any rights or remedies available to
it under the Indenture, may take such action as it deems advisable to protect
and enforce its rights in the Collateral, including the institution of
foreclosure proceedings. The proceeds received by the Trustee from any
foreclosure will be applied by the Trustee first to pay the expenses of such
foreclosure and fees and other amounts then payable to the Trustee under the
Indenture, second to pay the Default Amount (as defined) on the First Priority
Notes and, thereafter, to pay the Default Amount on the Second Priority Notes.
CHANGE OF CONTROL
Upon the occurrence of any of the following events (each a 'Change of
Control'), each holder of Notes will have the right to require the Issuer to
repurchase all or any part of such holder's Notes at a repurchase price in cash
equal to their Put Amount as of the date of repurchase, plus accrued and unpaid
interest, if any, to the date of repurchase:
(i) prior to the earlier to occur of the first public offering of
Voting Stock of Parent or the first public offering of Voting Stock of the
Issuer, the Permitted Holders cease to be the 'beneficial owner' (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, of a majority in the aggregate of the total voting power of the
Voting Stock of the Issuer, whether as a result of issuance of securities
of the Issuer, any merger, consolidation, liquidation or dissolution of the
Issuer, any direct or indirect transfer of securities by Parent or
otherwise (for purposes of this clause (i) and clause (ii) below, the
Permitted Holders will be deemed to beneficially own any Voting Stock of a
corporation (the 'specified corporation') held by any other corporation
(the 'parent corporation') so long as the Permitted Holders beneficially
own (as so
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defined), directly or indirectly, in the aggregate a majority of the voting
power of the Voting Stock of the parent corporation);
(ii) any 'person' (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act), other than one or more Permitted Holders, is or becomes
the beneficial owner (as defined in clause (i) above, except that a person
will be deemed to have 'beneficial ownership' of all shares that any such
person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of
more than 35% of the total voting power of the Voting Stock of the Issuer;
provided, however, that the Permitted Holders beneficially own (as defined
in clause (i) above), directly or indirectly, in the aggregate a lesser
percentage of the total voting power of the Voting Stock of the Issuer than
such other person and do not have the right or ability by voting power,
contract or otherwise to elect or designate for election a majority of the
Board of Directors of the Issuer (for the purposes of this clause (ii),
such other person will be deemed to 'beneficially own' any Voting Stock of
a specified corporation held by a parent corporation, if such other person
beneficially owns (as defined in this clause (ii)), directly or indirectly,
more than 35% of the voting power of the Voting Stock of such parent
corporation and the Permitted Holders beneficially own (as defined in
clause (i) above), directly or indirectly, in the aggregate a lesser
percentage of the voting power of the Voting Stock of such parent
corporation and do not have the right or ability by voting power, contract
or otherwise to elect or designate for election a majority of the Board of
Directors of such parent corporation); or
(iii) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors of the
Issuer (together with any new directors whose election by such Board of
Directors or whose nomination for election by the shareholders of the
Issuer was approved by a vote of 66 2/3% of the directors of the Issuer
then still in office who were either directors at the beginning of such
period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors of the Issuer then in office.
Within 45 days following any Change of Control, the Issuer will mail a
notice to each holder stating (i) that a Change of Control has occurred and that
such holder has the right to require the Issuer to repurchase all or any part of
such holder's Notes at a repurchase price in cash equal to their Put Amount as
of the date of repurchase plus accrued and unpaid interest, if any, to the date
of repurchase; (ii) the circumstances and relevant facts regarding such Change
of Control; (iii) the repurchase date (which will be no earlier than 30 days nor
later than 60 days from the date such notice is mailed); and (iv) the
instructions determined by the Issuer consistent with the Indenture, that a
holder must follow in order to have its Notes repurchased.
The Issuer's ability to pay cash to holders of Notes upon a repurchase may
be limited by the Issuer's then existing financial resources. The Issuer will
comply with any tender offer rules under the Exchange Act which may then be
applicable, including Rule 14e-1, in connection with any offer required to be
made by the Issuer to repurchase the Notes as a result of a Change of Control.
Certain provisions relating to the Issuer's obligation to make an offer to
repurchase the Notes as a result of a Change of Control may not be waived or
modified without the written consent of the holders of all the Notes.
CERTAIN COVENANTS
Set forth below are certain covenants contained in the Indenture:
Limitation on Debt of the Issuer, Coleman Holdings and Coleman
Worldwide. The Issuer will not issue any Debt and the Issuer shall not
permit Coleman Holdings or Coleman Worldwide to issue any Debt or Preferred
Stock; provided, however, that the foregoing will not prohibit the issuance
of the following Debt:
(1) The Old Notes, the New Notes and Debt issued in exchange for,
or the proceeds of which are used to Refinance, any Debt permitted by
this clause (1); provided, however, that in the case of any Debt (other
than the New Notes) issued in connection with a Refinancing, (x) the
principal amount or, in the case of Debt issued at a discount, the
accreted value of the Debt so issued shall, as of the date of the Stated
Maturity of the Debt being Refinanced, not exceed the sum of (i) the
principal amount or, if the Debt being Refinanced was issued at a
discount, the accreted value of the Debt being Refinanced as of the date
of the Stated Maturity of the Debt being Refinanced and (ii) any
Refinancing Costs associated with such Refinancing, and (y) the Debt so
issued shall not provide for the payment of
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principal or interest in cash prior to the Stated Maturity of the Notes
and shall not have a Stated Maturity prior to the Stated Maturity of the
Notes;
(2) The Coleman Holdings Notes and the LYONs; and
(3) Debt consisting solely of a guarantee by the Issuer or Coleman
Worldwide of obligations of another person of the type referred to in
clauses (i) through (vi) of the definition of 'Debt', in respect of
which guarantee the holder thereof shall have no recourse to the Issuer
or Coleman Worldwide other than Unrestricted Assets pledged by the
Issuer or Coleman Worldwide to secure such guarantee; provided, however,
that this clause (3) shall not permit the Issuer or Coleman Worldwide to
assume the obligation of such other person.
Limitation on Debt of Coleman and Its Subsidiaries and Limitation on
Preferred Stock of Coleman. (a) The Issuer will not permit Coleman or any
Subsidiary of Coleman to issue, directly or indirectly, any Debt; provided,
however, that Coleman and its Subsidiaries will be permitted to issue Debt
if, at the time of such issuance, the Consolidated EBITDA Coverage Ratio
for the period of the most recently completed four consecutive fiscal
quarters ending at least 45 days prior to the date such Debt is issued
exceeds the ratio of 2.5 to 1.0.
(b) Notwithstanding the foregoing, Coleman and its Subsidiaries may
issue the following Debt:
(1) Debt issued pursuant to the Credit Agreement, any Refinancing
thereof or any other credit agreement, indenture or other agreement, in
an aggregate principal amount not to exceed $350 million outstanding at
any one time;
(2) Debt issued pursuant to the Note Purchase Agreements, any
Refinancing thereof or any other credit agreement, indenture or other
agreement, in an aggregate principal amount not to exceed at any one
time outstanding $360 million plus any Refinancing Costs associated with
any such Refinancing; provided, however, that the Debt so issued shall
not have an Average Life shorter than the Average Life of the Debt
outstanding under the Note Purchase Agreements on the Issue Date or
Stated Maturity prior to the earliest Stated Maturity of the Debt
outstanding under the Note Purchase Agreements on the Issue Date;
(3) Debt (in addition to Debt described in clauses (1) and (2)
above) issued for working capital and general corporate purposes in an
aggregate principal amount at the time of such issue which, when taken
together with the aggregate principal amount then outstanding of all
other Debt issued pursuant to this clause (3), shall not exceed the sum
of (i) 50% of the book value of the inventory of Coleman and its
consolidated Subsidiaries and (ii) 80% of the book value of the accounts
receivable of Coleman and its consolidated Subsidiaries, in each case as
determined in accordance with GAAP;
(4) Debt of Coleman issued to and held by a Wholly Owned Recourse
Subsidiary and Debt of a Subsidiary of Coleman issued to and held by
Coleman or a Wholly Owned Recourse Subsidiary; provided, however, that
any subsequent issuance or transfer of any Capital Stock that results in
any such Wholly Owned Recourse Subsidiary ceasing to be a Wholly Owned
Recourse Subsidiary or any subsequent transfer of such Debt (other than
to Coleman or a Wholly Owned Recourse Subsidiary) shall be deemed, in
each case, to constitute the issuance of such Debt by Coleman or of such
Debt by such Subsidiary;
(5) Debt (other than Debt described in clause (1), (2), (3) or (4)
above) outstanding on the Issue Date and Debt issued to Refinance any
Debt permitted by this clause (5), by clause (7) below or by paragraph
(a) above; provided, however, that in the case of a Refinancing, (x) the
principal amount of the Debt so issued shall not exceed the principal
amount of the Debt being Refinanced plus any Refinancing Costs
associated with such Refinancing and (y) the Debt so issued shall not
have an Average Life shorter than the Average Life of the Debt being
Refinanced or Stated Maturity prior to the Stated Maturity of the Debt
being Refinanced;
(6) Debt issued and arising out of purchase money obligations for
property acquired in an amount not to exceed, for the period through
December 31, 1997, $15 million, plus for each fiscal year thereafter,
$15 million; provided, however, that any such amounts which are
available to be utilized during any period and are not so utilized may
be utilized during any succeeding period;
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(7) Debt of a Subsidiary of Coleman issued and outstanding on or
prior to the date on which such Subsidiary was acquired by Coleman
(other than Debt issued as consideration in, or to provide all or any
portion of the funds or credit support utilized to consummate, the
transaction or series of related transactions pursuant to which such
Subsidiary became a Subsidiary of Coleman or was acquired by Coleman);
(8) Non-Recourse Debt of a Non-Recourse Subsidiary; provided,
however, that if any such Debt thereafter ceases to be Non-Recourse Debt
of a Non-Recourse Subsidiary, then such event shall be deemed for the
purposes of this covenant to constitute the issuance of such Debt by the
Issuer thereof; and
(9) Debt (in addition to Debt described in clauses (1) through (8)
above and in paragraph (a) above) in an aggregate principal amount
outstanding at any time not to exceed $75 million.
(c) The Issuer will not permit Coleman to issue any Preferred Stock;
provided, however, that Coleman may issue the following Preferred Stock:
(1) Preferred Stock of Coleman issued to and held by the Issuer,
Coleman Holdings or Coleman Worldwide or a Wholly Owned Recourse
Subsidiary of Coleman; provided, however, that any subsequent issuance
or transfer of any Capital Stock that results in any such Wholly Owned
Recourse Subsidiary ceasing to be a Wholly Owned Recourse Subsidiary of
Coleman or any subsequent transfer of such Preferred Stock (other than
to the Issuer or a Wholly Owned Recourse Subsidiary of the Issuer,
Coleman Holdings or Coleman Worldwide), will be deemed, in each case, to
constitute the issuance of such Preferred Stock by Coleman; and
(2) Preferred Stock (other than Preferred Stock described in clause
(1) but including Preferred Stock described in the proviso to clause
(1)) issued by Coleman; provided, however, that the liquidation value of
any Preferred Stock issued pursuant to this clause (2) will constitute
Debt of Coleman for purposes of this covenant.
(d) To the extent Coleman or any Subsidiary of Coleman guarantees any
Debt of Coleman or of a Subsidiary of Coleman, such guarantee and such Debt
will be deemed to be the same indebtedness and only the amount of the Debt
will be deemed to be outstanding. If Coleman or a Subsidiary of Coleman
guarantees any Debt of a person that, subsequent to the issuance of such
guarantee, becomes a Subsidiary, such guarantee and the Debt so guaranteed
shall be deemed to be the same indebtedness which shall be deemed to have
been issued when the guarantee was issued and shall be deemed to be
permitted to the extent the guarantee was permitted when issued.
Limitation on Restricted Payments. (a) The Issuer will not, and will not
permit any of its Subsidiaries, directly or indirectly, to make any
Restricted Payment if, at the time of the making of such Restricted
Payment:
(1) a Default has occurred or is continuing (or would result
therefrom); or
(2) the aggregate amount of such Restricted Payment and all other
Restricted Payments since the Issue Date would exceed the sum of:
(i) 50% of Consolidated Net Income (or, if such aggregate
Consolidated Net Income is a deficit, minus 100% of such deficit) of
the Issuer accrued during the period (treated as one accounting
period) from January 1, 1997, to the end of the most recent fiscal
quarter ending at least 45 days prior to the date of such Restricted
Payment;
(ii) the aggregate Net Cash Proceeds from sales of Capital Stock
of the Issuer or cash capital contributions made to the Issuer and,
without duplication, any earnings thereon or proceeds thereof to the
extent invested in any Temporary Cash Investments on or after the
Issue Date; and
(iii) the amount by which Debt of the Issuer is reduced on or
after the Issue Date upon any conversion or exchange of Debt of the
Issuer into Capital Stock of the Issuer which is not Redeemable Stock
or Exchangeable Stock.
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(b) The preceding paragraph will not prohibit the following (none of
which will be included in the calculation of the amount of Restricted
Payments, except to the extent expressly provided in clause (viii) below):
(i) so long as no Default has occurred and is continuing or would
result from such transaction, any Restricted Payment to the extent it
consists of Unrestricted Assets;
(ii) any purchase or redemption of Capital Stock or Subordinated
Obligations out of the proceeds from the substantially concurrent sale
of Capital Stock;
(iii) any purchase or redemption of Subordinated Obligations out of
the proceeds from the substantially concurrent sale of Subordinated
Obligations;
(iv) dividends or distributions made by Coleman to the Issuer,
Coleman Holdings or Coleman Worldwide and to its other stockholders on a
pro rata basis;
(v) dividends or distributions made by Coleman Worldwide to the
Issuer or Coleman Holdings;
(vi) dividends or distributions made by Coleman Holdings to the
Issuer;
(vii) dividends or distributions made by a Subsidiary of Coleman or
by an Unrestricted Subsidiary to the Issuer, Coleman Holdings, Coleman
Worldwide, Coleman or a Subsidiary of Coleman or to an Unrestricted
Subsidiary and, if a Subsidiary of Coleman or such Unrestricted
Subsidiary is not wholly owned, to its other stockholders pro rata to
the extent they are not Affiliates of the Issuer (other than (w)
Coleman, (x) a Subsidiary of Coleman, (y) an Unrestricted Affiliate and
(z) a Permitted Affiliate);
(viii) dividends paid within 60 days after the date of declaration
thereof, or Restricted Payments made within 60 days after the making of
a binding commitment in respect thereof, if at such date of declaration
or commitment such dividend or other Restricted Payment would have
complied with this covenant; provided, however, that at the time of
payment of such dividend, or the making of such Restricted Payment, no
other Default has occurred or is continuing (or results therefrom);
provided further, however, that such dividend or other Restricted
Payment shall be included in the calculation of the amount of Restricted
Payments;
(ix) purchases, redemptions, defeasances or acquisitions of
Non-Recourse Debt by a Non-Recourse Subsidiary;
(x) dividends and distributions made by Coleman or its Subsidiaries
in respect of Preferred Stock of Coleman permitted by paragraph (b)
under 'Limitation of Debt of Coleman and Its Subsidiaries and Limitation
on Preferred Stock of Coleman' above or in respect of Preferred Stock of
such Subsidiaries permitted by paragraph (a) of such section;
(xi) Investments in Affiliates of the Issuer consisting of Debt
permitted by clause (3) of 'Limitation on Debt of the Issuer, Coleman
Holdings and Coleman Worldwide' or Investments consisting of Debt of
Unrestricted Subsidiaries;
(xii) so long as no Default or (so long as the LYONs Indenture is
in effect) no LYONs Default has occurred and is continuing or would
result from such transaction, dividends or distributions made by the
Issuer to the extent attributable to (A) the net proceeds of the
issuance of Debt by Non-Recourse Subsidiaries or (B) cash dividends or
distributions received from Unrestricted Subsidiaries of the Issuer or
Coleman Worldwide (other than dividends or distributions paid to Coleman
Worldwide or the Issuer out of dividends or distributions received by
Unrestricted Subsidiaries in respect of the shares of Coleman Common
Stock);
(xiii) so long as no Default or (so long as the LYONs Indenture is
in effect) no LYONs Default has occurred and is continuing or would
result from such transaction, the contribution by the Issuer or Coleman
Worldwide to an Unrestricted Subsidiary of Withdrawn Shares;
(xiv) so long as no Default or (so long as the LYONs Indenture is
in effect) no LYONs Default has occurred and is continuing or would
result from such transaction, Restricted Payments to the extent
attributable to Restricted Cash;
(xv) dividends or other Restricted Payments consisting solely of
funds released from time to time pursuant to Section 2(k) of the Escrow
Agreement to the extent such funds are not needed for the Capital
Contributions (as defined in the Escrow Agreement) to be made to Coleman
Worldwide;
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(xvi) dividends or other Restricted Payments consisting solely of
funds released from the Escrow Agreement after all Coleman Holdings
Notes have been redeemed and all LYONs have been retired; and
(xvii) any Restricted Payment to the extent it consists of the
disposition of any Mafco Demand Notes (as defined in the LYONs
Indenture) after all LYONs have been retired.
(c) The Issuer or any Subsidiary of the Issuer may take actions to
make a Restricted Payment in anticipation of the occurrence of any of the
events described in clause (b) of this covenant; provided, however, that
the making of such Restricted Payment will be conditioned upon the
occurrence of such event.
Limitation on Sales of Assets and Subsidiary Stock. (a) The Issuer
shall not, and shall not permit Coleman Holdings or Coleman Worldwide to,
make any Asset Disposition.
(b) The Issuer shall not permit Coleman or any Subsidiary of Coleman
(other than a Non-Recourse Subsidiary) to make any Asset Disposition
unless:
(i) Coleman or such Subsidiary receives consideration at the time
of such Asset Disposition at least equal to the fair market value, as
determined in good faith by the Board of Directors of Coleman, the
determination of which shall be conclusive and evidenced by a resolution
of the Board of Directors of Coleman (including as to the value of all
non-cash consideration), of the Capital Stock and assets subject to such
Asset Disposition;
(ii) at least 75% of the consideration consists of cash, cash
equivalents, readily marketable securities which Coleman intends, in
good faith, to liquidate promptly after such Asset Disposition or the
assumption of liabilities (including, in the case of the sale of the
Capital Stock of a Subsidiary of Coleman, liabilities of such
Subsidiary) (provided, however, that in respect of an Asset Disposition,
more than 25% of the consideration may consist of consideration other
than cash, cash equivalents, such readily marketable securities or such
assumed liabilities if (x) such Asset Disposition is approved by a
majority of those members of the Board of Directors of Coleman having no
personal stake in such Asset Disposition and (y) if such Asset
Disposition involves aggregate consideration in excess of $10 million
(with the value of any non-cash consideration being determined by a
majority of those members of the Board of Directors of Coleman having no
personal stake in such Asset Disposition), such Asset Disposition has
been determined, in the written opinion of a nationally recognized
investment banking firm, to be fair from a financial point of view to
Coleman or such Subsidiary, as the case may be); and
(iii) an amount equal to 100% of the Net Available Cash from such
Asset Disposition is applied by Coleman (or such Subsidiary, as the case
may be) at Coleman's election (1) to the prepayment, repayment or
repurchase of Debt of Coleman or Debt of a Wholly Owned Recourse
Subsidiary or, additionally in the case of an Asset Disposition by a
Subsidiary that is not a Wholly Owned Recourse Subsidiary, Debt of such
Subsidiary (in each case other than Debt owed to (x) an Unrestricted
Subsidiary, (y) a Non-Recourse Subsidiary or (z) an Affiliate of the
Issuer which is not a Subsidiary of the Issuer) (whether or not the
related loan commitment is permanently reduced in connection therewith),
(2) to the investment by Coleman or such Wholly Owned Recourse
Subsidiary (or, additionally in the case of an Asset Disposition by a
Subsidiary that is not a Wholly Owned Recourse Subsidiary, the
investment by such Subsidiary) in (x) assets to replace the assets that
were the subject of such Asset Disposition, (y) assets that (as
determined by the Board of Directors of Coleman, the determination of
which shall be conclusive and evidenced by a resolution of such Board of
Directors) will be used in the businesses of Coleman and its Wholly
Owned Recourse Subsidiaries (or, additionally in the case of an Asset
Disposition by a Subsidiary that is not a Wholly Owned Recourse
Subsidiary, the businesses of such Subsidiary) existing on the Issue
Date or in businesses reasonably related thereto or (z) Temporary Cash
Investments or (3) to make a Restricted Payment to Coleman Worldwide,
Coleman Holdings or the Issuer.
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Notwithstanding the foregoing, Coleman and its Subsidiaries shall not
be required to apply any Net Available Cash in accordance with this paragraph
(b) except to the extent that the aggregate Net Available Cash from all Asset
Dispositions made by Coleman and its Subsidiaries which are not applied in
accordance with this paragraph (b) exceed $10 million.
Limitation on Transactions with Affiliates. (a) None of the Issuer,
Coleman Holdings or Coleman Worldwide will conduct any business or enter
into any transaction or series of similar transactions (including the
purchase, sale, lease or exchange of any property or the rendering of any
service) with any Affiliate of the Issuer or any legal or beneficial owner
of 10% or more of the voting power of the Voting Stock of the Issuer or
with an Affiliate of such owner.
(b) The Issuer will not permit Coleman or any of its Subsidiaries
(other than a Non-Recourse Subsidiary) to conduct any business or enter
into any transaction or series of similar transactions (including the
purchase, sale, lease or exchange of any property or the rendering of any
service) with any Affiliate of the Issuer or any legal or beneficial owner
of 10% or more of the voting power of the Voting Stock of the Issuer or
with an Affiliate of any such owner unless
(i) the terms of such business, transaction or series of
transactions are (A) set forth in writing and (B) at least as favorable
to Coleman or such Subsidiary as terms that would be obtainable at the
time for a comparable transaction or series of similar transactions in
arm's-length dealings with an unrelated third Person and
(ii) to the extent that such business, transaction or series of
transactions is known by the Board of Directors of Coleman or of such
Subsidiary to involve an Affiliate of the Issuer or a legal or
beneficial owner of 10% or more of the voting power of the Voting Stock
of the Issuer or an Affiliate of such owner, then
(A) with respect to a transaction or series of related
transactions, other than any purchase or sale of inventory in the
ordinary course of business, involving aggregate payments or other
consideration in excess of $5,000,000, such transactions or series of
related transactions has been approved (and the value of any noncash
consideration has been determined) by a majority of those members of
the Board of Directors of Coleman having no personal stake in such
business, transaction or series of transactions and
(B) with respect to a transaction or series of related
transactions, other than any distribution arrangement or any purchase
or sale of inventory, in each case in the ordinary course of business
(an 'Exempt Transaction'), involving aggregate payments or other
consideration in excess of $25,000,000 (with the value of any noncash
consideration being determined by a majority of those members of the
Board of Directors of Coleman having no personal stake in such
business, transaction or series of transactions), such transaction or
series of related transactions has been determined, in the written
opinion of a nationally recognized investment banking firm to be
fair, from a financial point of view, to Coleman or such Subsidiary.
The provisions of the preceding paragraphs (a) and (b) above will
not prohibit (i) any Restricted Payment permitted to be paid as
described under 'Limitation on Restricted Payments' above, (ii) any
transaction between Coleman and any of its Subsidiaries; provided,
however, that no portion of any minority interest in any such Subsidiary
is owned by (x) any Affiliate (other than the Issuer, Coleman Holdings,
Coleman Worldwide, Coleman, a Wholly Owned Recourse Subsidiary of
Coleman, a Permitted Affiliate or an Unrestricted Affiliate) of the
Issuer or (y) any legal or beneficial owner of 10% or more of the voting
power of the Voting Stock of the Issuer or any Affiliate of such owner
(other than the Issuer, Coleman Holdings, Coleman Worldwide, Coleman,
any Wholly Owned Recourse Subsidiary of Coleman or an Unrestricted
Affiliate), (iii) any transaction between Subsidiaries of Coleman;
provided, however, that no portion of any minority interest in any such
Subsidiary is owned by (x) any Affiliate (other than the Issuer, Coleman
Holdings, Coleman Worldwide, Coleman, a Wholly Owned Recourse Subsidiary
of Coleman, a Permitted Affiliate or an Unrestricted Affiliate) of the
Issuer or (y) any legal or beneficial owner of 10% or more of the voting
power of the Voting Stock of the Issuer or any Affiliate of such owner
(other than the Issuer, Coleman Holdings, Coleman Worldwide, Coleman,
any Wholly Owned Recourse Subsidiary of Coleman or an Unrestricted
Affiliate), (iv) any transaction between Coleman or a Subsidiary of
Coleman and its own
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employee stock ownership plan, (v) any transaction with an officer or
director of any Subsidiary of the Issuer entered into in the ordinary
course of business (including compensation or employee benefit
arrangements with any such officer or director); provided, however, such
officer holds, directly or indirectly, no more than 10% of the
outstanding Capital Stock of the Issuer, (vi) any business or
transaction with an Unrestricted Affiliate, (vii) any transaction
pursuant to which Mafco Holdings will provide the Issuer and its
Subsidiaries at their request and at the cost to Mafco Holdings with
certain allocated services to be purchased from third party providers,
such as legal and accounting services, insurance coverage and other
services; (viii) any transaction contemplated by the Escrow Agreement,
the Securities Loan Agreement or the Tax Sharing Agreements; (ix) any
Guarantee issued by the Issuer or Coleman Worldwide permitted under
'Limitation on the Debt of the Issuer, Coleman Holdings and Coleman
Worldwide' and (x) the Mergers.
Limitation on Other Business Activities. (a) The Issuer will not
engage in any trade or business other than the ownership of the Capital
Stock of Coleman, Coleman Worldwide and Coleman Holdings and one or more
Unrestricted Subsidiaries.
(b) The Issuer shall not permit Coleman Holdings to engage in any
trade or business other than the ownership of the Capital Stock of Coleman
and Coleman Worldwide.
(c) The Issuer shall not permit Coleman Worldwide to engage in a trade
or business other than the ownership of the Capital Stock of Coleman and
one or more Unrestricted Subsidiaries.
Required Stock Ownership; Limitation on Liens. (a) The Issuer shall
at all times be, or cause Coleman Worldwide to be, the legal and beneficial
owner of the Coleman Pledged Shares. The Issuer shall at all times be, or
cause Coleman Worldwide together with the Issuer to be, the legal and
beneficial owner of at least a majority of the voting power of the Voting
Stock of Coleman (including the Coleman Pledged Shares) (treating any
Coleman Pledged Shares, any Coleman Common Stock pledged for the benefit of
the holders of LYONs or Coleman Holdings Notes or subject to any other Lien
permitted by this covenant and any Coleman Common Stock subject to or lent
pursuant to the Securities Loan Agreement as held legally and beneficially
by the Issuer or Coleman Worldwide); provided, however, that the Issuer and
Coleman Worldwide will be deemed to be the legal and beneficial owner of
any Coleman Common Stock held of record by a nominee for the Depositary
Trust Company ('DTC') or any other public clearing corporation (a 'public
clearing corporation' is any member of the Federal Reserve System
registered as a clearing agency pursuant to the provisions of Section 17A
of the Exchange Act), if the books of DTC or such other public clearing
corporation, as the case may be, show that such Coleman Common Stock is
held solely for the account of the Issuer or Coleman Worldwide, subject to
any Lien permitted under this covenant. The Issuer shall at all times prior
to the Coleman Holdings Merger be the legal and beneficial owner of 100% of
the Capital Stock of Coleman Holdings. The Issuer shall at all times prior
to the Coleman Worldwide Merger be, or cause Coleman Holdings to be, the
legal and beneficial owner of 100% of the Capital Stock of Coleman
Worldwide.
(b) The Issuer shall not create or permit to exist any Lien on the
Collateral directly owned by it, other than the Lien of this Indenture. The
Issuer shall not permit Coleman Worldwide to create or permit to exist any
Lien on the Collateral directly owned by Coleman Worldwide, other than the
Lien of (or with respect to) the Coleman Holdings Notes Indenture, LYONs
Indenture and the Indenture.
(c) The Issuer shall not create or permit to exist any Lien to secure
Debt of the Issuer on terms more favorable to the holders of such Debt than
the terms of the collateral for the Notes in the Indenture, including the
initial loan to value ratio in respect of such Debt compared to the initial
loan to value ratio of the Collateral in respect of the Notes, unless
contemporaneously therewith effective provision is made to secure the Notes
equally and ratably with such Debt with a Lien on the same assets securing
such Debt for so long as such Debt is secured by such Lien; provided,
however, that if such Debt is a Subordinated Obligation, the Lien securing
such Debt will be subordinate and junior to the Lien securing the Notes
with the same or lesser relative priority as such Subordinated Obligation
will have with respect to the Notes; provided further, however, that this
paragraph (c) shall not apply to Liens created as permitted by clause (3)
of 'Limitation on Debt of the Issuer, Coleman Holdings and Coleman
Worldwide' above.
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(d) The limitations set forth in this covenant shall not be applicable
from and after the time that all the Collateral shall have been released
from the Lien of the Indenture pursuant to the provisions of the Indenture
relating to substitution or release of Collateral.
Coleman Holdings Notes Redemption; LYONs Retirement. The Issuer shall
cause (i) Coleman Holdings to redeem all of the Coleman Holdings Notes by no
later than July 31, 1997, and (ii) Coleman Worldwide to redeem or otherwise
retire all of the LYONs by no later than June 10, 1998, provided that, in each
case, no Triggering Event shall have occurred.
SEC Reports. Notwithstanding that the Issuer may not be required to be
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, from and after the date (the 'reporting date') of effectiveness of a
Registration Statement, the Issuer will file or cause to be filed with the SEC
and provide the Trustee and holders of the Notes with the information, documents
and other reports (or copies of such portions of any of the foregoing as the SEC
may by rules and regulations prescribe) specified in Sections 13 and 15(d) of
the Exchange Act. Prior to the reporting date, the Issuer shall provide the
Trustee and the holders of the Notes with information that is substantially
similar to that required to be provided to such Persons after the reporting
date. The Issuer also will comply with the other provisions of TIA Section
314(a).
SUCCESSOR COMPANY
(a) The Issuer may not consolidate with or merge with or into, or convey,
transfer or lease all or substantially all its assets to, any person, unless:
(i) the resulting, surviving or transferee person (if not the Issuer) is
organized and existing under the laws of the United States of America, any State
thereof or the District of Columbia and such person expressly assumes by a
supplemental indenture, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of the Issuer under the
Indenture and the Notes; (ii) except in the case of either Merger, immediately
after giving effect to such transaction (and treating any Debt which becomes an
obligation of the resulting, surviving or transferee person or any of its
Subsidiaries as a result of such transaction as having been issued by such
person or such Subsidiary at the time of such transaction), no Default has
occurred and is continuing; (iii) except in the case of either Merger,
immediately after giving effect to such transaction, the resulting, surviving or
transferee person has a Consolidated Net Worth in an amount which is not less
than the Consolidated Net Worth of the Issuer immediately prior to such
transaction; and (iv) the Issuer delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger or transfer and such supplemental indenture (if any) comply with the
Indenture.
(b) The resulting, surviving or transferee person will be the successor
company under the Indenture and thereafter, except in the case of a lease, the
Issuer will be discharged from all obligations and covenants under the Indenture
and the Notes.
(c) Following consummation of the Coleman Holdings Merger, the provisions
of 'Certain Covenants' restricting the activities of Coleman Holdings shall not
be applicable to the surviving corporation. Following consummation of the
Coleman Worldwide Merger, the provisions of 'Certain Covenants' restricting the
activities of Coleman Worldwide shall not be applicable to the surviving
corporation.
DEFAULTS
An Event of Default is defined in the Indenture as (i) a default in the
payment of interest (if any) on the Notes when due, continued for 30 days, (ii)
a default in the payment of principal of any Note when due at its Stated
Maturity, upon redemption, upon required purchase, upon declaration or
otherwise, (iii) (1) the failure by the Issuer to comply with its obligations
described under 'Successor Company' above, (2) the failure by the Issuer to
comply with its obligations described under paragraph (a) under 'Required Stock
Ownership; Limitation on Liens' above (the 'stock ownership provision'), (3) the
failure by the Issuer to comply with its obligations described under 'Coleman
Holdings Notes Redemption; LYONs Retirement' above (the 'retirement provision')
and 'Mandatory Redemption' above or (4) the Trustee fails to have a perfected
security interest in the Collateral (the 'continued perfection provision'), (iv)
the failure by the Issuer to comply for 30 days after notice with any of its
obligations under the covenants described under 'Limitation on Debt of the
Issuer, Coleman Holdings and Coleman Worldwide,' 'Limitation on Debt of Coleman
and its Subsidiaries and Limitation on Preferred Stock of Coleman,' 'Limitation
on Restricted Payments', 'Limitations on Sales of
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Assets and Subsidiary Stock,' 'Limitation on Transactions with Affiliates,'
'Change of Control' (other than a failure to purchase Notes), 'Limitation on
Other Business Activities,' 'Required Stock Ownership; Limitation on Liens'
(other than paragraph (a) thereof) or 'SEC Reports' above, (v) the failure by
the Issuer to comply for 60 days after notice with its other agreements
contained in the Indenture or the Notes or the Escrow Agreement (other than
those referred to in clauses (i), (ii), (iii) and (iv) of this paragraph) or
with certain representations and warranties given in relation to the grant of
the security interest described under 'Security' above, (vi) Debt of the Issuer
or any Significant Subsidiary is not paid within any applicable grace period
after final maturity or is accelerated by the holders thereof because of a
default and the total principal amount of the portion of such Debt that is
unpaid or accelerated exceeds $25 million or its foreign currency equivalent and
such default continues for 5 days after notice (the 'cross acceleration
provision'), (vii) certain events of bankruptcy, insolvency or reorganization of
the Issuer or a Significant Subsidiary (the 'bankruptcy provisions'), (viii) any
judgment or decree for the payment of money in excess of $25 million is entered
against the Issuer or a Significant Subsidiary and is not discharged and either
(A) an enforcement proceeding has been commenced by any creditor upon such
judgment or decree or (B) there is a period of 60 days following the entry of
such judgment or decree during which such judgment or decree is not discharged,
waived or the execution thereof stayed and, in the case of (B), such default
continues for 10 days after the notice specified in the next sentence (the
'judgment default provision') or (ix) Coleman Worldwide fails to pay when due
the purchase price of LYONs tendered to it by and at the option of the holders
thereof pursuant to the terms of the LYONs Indenture and the total purchase
price of such LYONs that is unpaid exceeds $25 million. However, a default under
clauses (iv), (v), (vi) and (viii) (B) will not constitute an Event of Default
until the Trustee or the holders of 25% in principal amount at maturity of the
outstanding Notes notify the Issuer of the default and the Issuer does not cure
such default within the time specified after receipt of such notice.
If an Event of Default (other than an Event of Default specified in clause
(vii) in the above paragraph with respect to the Issuer) occurs and is
continuing, the Trustee or the holders of at least 25% in principal amount at
maturity of the outstanding Notes may declare the Accreted Value of and accrued
interest (if any) on all the Notes as of the date of such declaration to be due
and payable (collectively, the 'Default Amount'). Upon such a declaration, such
Default Amount will be due and payable immediately. If an Event of Default
relating to certain events of bankruptcy, insolvency or reorganization of the
Issuer occurs, the Default Amount on all the Notes as of the date of such Event
of Default will ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any holders of the Notes.
Under certain circumstances, the holders of a majority in principal amount at
maturity of the outstanding Notes may rescind any such acceleration with respect
to the Notes and its consequences.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default occurs and is continuing, the Trustee will
be under no obligation to exercise any of the rights or powers under the
Indenture at the request or direction of any of the holders of the Notes unless
such holders have offered to the Trustee reasonable indemnity or security
against any loss, liability or expense. Except to enforce the right to receive
payment of principal, premium (if any) or interest (if any) when due, no holder
of a Note may pursue any remedy with respect to the Indenture or the Notes
unless (i) such holder has previously given the Trustee notice that an Event of
Default is continuing, (ii) holders of at least 25% in principal amount at
maturity of the outstanding Notes have requested the Trustee to pursue the
remedy, (iii) such holders have offered the Trustee reasonable security or
indemnity against any loss, liability or expense, (iv) the Trustee has not
complied with such request within 60 days after the receipt thereof and the
offer of security or indemnity and (v) the holders of a majority in principal
amount at maturity of the outstanding Notes have not given the Trustee a
direction inconsistent with such request within such 60-day period. Subject to
certain restrictions, the holders of a majority in principal amount at maturity
of the outstanding Notes are given the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. The Trustee, however,
may refuse to follow any direction that conflicts with law or the Indenture or
that the Trustee determines is unduly prejudicial to the rights of any other
holder of a Note or that would involve the Trustee in personal liability.
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The Indenture provides that if a Default occurs and is continuing and is
known to the Trustee, the Trustee must mail to each holder of the Notes notice
of the Default within 90 days after it occurs. Except in the case of a Default
in the payment of principal of or interest on any Note, the Trustee may withhold
notice if and so long as a committee of its Trust Officers in good faith
determines that withholding notice is in the interests of the holders of the
Notes. In addition, the Issuer is required to deliver to the Trustee, within 120
days after the end of each fiscal year, a certificate indicating whether the
signers thereof know of any Default that occurred during the previous year. The
Issuer also is required to deliver to the Trustee, within 30 days after the
occurrence thereof, written notice of any event which would constitute certain
Defaults, their status and what action the Issuer is taking or proposes to take
in respect thereof.
AMENDMENT
Subject to certain exceptions, the Indenture may be amended with the
consent of the holders of a majority in principal amount at maturity of the
Notes then outstanding and any past default or noncompliance with any provisions
may be waived with the consent of the holders of a majority in principal amount
at maturity of the Notes then outstanding. However, without the consent of each
holder of an outstanding Note affected, no amendment may (i) reduce the
principal amount at maturity of Notes whose holders must consent to an
amendment, (ii) reduce the rate of or extend the time for payment of interest
(if any) on any Note, (iii) reduce the principal of or extend the Stated
Maturity of any Note or reduce the Accreted Value, Put Amount, Due Amount,
Mandatory Redemption Price or Default Amount of any Note, (iv) reduce the
premium or amount payable upon the redemption of any Note or change the time at
which any Note may be redeemed as described under 'Optional Redemption' or
'Mandatory Redemption' above, (v) make any Note payable in money other than that
stated in the Note, (vi) impair the right of any holder of the Notes to receive
payment of principal of and interest (if any) on such holder's Notes on or after
the due dates therefor or to institute suit for the enforcement of any payment
on or with respect to such holder's Notes, (vii) make any change in the
provisions relating to Collateral that adversely affects such holder, (viii)
make any change in the definition of Change of Control or Triggering Event or in
the dates by which the Issuer must purchase, or in the obligation of the Issuer
to purchase, tendered Notes upon a Change of Control or a Mandatory Redemption,
respectively, or (ix) make any change in the amendment provisions which require
each holder's consent or in the waiver provisions.
Without the consent of or notice to any holder of the Notes, the Issuer and
the Trustee may amend the Indenture to cure any ambiguity, omission, defect or
inconsistency, to provide for the assumption by a successor corporation of the
obligations of the Issuer under the Indenture if in compliance with the
provisions described under 'Successor Company' above, to provide for
uncertificated Notes in addition to or in place of certificated Notes (provided
that the uncertificated Notes are issued in registered form for purposes of
Section 163(f) of the Code, or in a manner such that the uncertificated Notes
are described in Section 163(f)(2)(B) of the Code), to add guarantees with
respect to the Notes or to secure (or provide additional security for) the
Notes, to add to the covenants of the Issuer for the benefit of the holders of
the Notes or to surrender any right or power conferred upon the Issuer, to
provide for issuance of the New Notes under the Indenture (including to provide
for treatment of the New Notes and the Old Notes as a single class of
securities) in connection with the Exchange Offer, to make any change that does
not adversely affect the rights of any holder of the Notes or to comply with any
requirement of the SEC in connection with the qualification of the Indenture
under the TIA or otherwise to comply with the TIA.
The consent of the holders of the Notes is not necessary under the
Indenture to approve the particular form of any proposed amendment. It is
sufficient if such consent approves the substance of the proposed amendment.
After an amendment under the Indenture becomes effective, the Issuer is
required to mail to holders of the Notes a notice briefly describing such
amendment. However, the failure to give such notice to all holders of the Notes,
or any defect therein, will not impair or affect the validity of the amendment.
A consent to any amendment or waiver under the Indenture by any holder of
Notes given in connection with a tender of such holder's Notes will not be
rendered invalid by such tender.
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TRANSFER
The Notes will be issued in registered form and will be transferable only
upon the surrender of the Notes being transferred for registration of transfer.
The Issuer may require payment of a sum sufficient to cover any tax, assessment
or other governmental charge payable in connection with certain transfers and
exchanges. See 'Book Entry; Delivery and Form.'
DEFEASANCE
The Issuer at any time may terminate all its obligations under the Notes
and the Indenture ('legal defeasance'), except for certain obligations,
including those respecting the defeasance trust and obligations to register the
transfer or exchange of the Notes, to replace mutilated, destroyed, lost or
stolen Notes and to maintain a registrar and paying agent in respect of the
Notes. The Issuer at any time may terminate its obligations under the covenants
described under 'Certain Covenants,' 'Change of Control,' and 'Security' above,
Coleman Worldwide's obligations under 'Guaranty' and 'Security' above, and the
operation of the stock ownership provision, the retirement provision, the
continued perfection provision, the cross acceleration provision, the bankruptcy
provisions with respect to Significant Subsidiaries, the judgment default
provision and the LYONs cross default provision described under 'Defaults' above
and the limitations contained in clause (iii) described under 'Successor
Company' above ('covenant defeasance').
The Issuer may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. If the Issuer exercises its
legal defeasance option, payment of the Notes may not be accelerated because of
an Event of Default with respect thereto. If the Issuer exercises its covenant
defeasance option, payment of the Notes may not be accelerated because of an
Event of Default specified in clause (iii)(2), (3) and (4), (iv), (vi), (vii)
(with respect only to Significant Subsidiaries), (viii) or (ix) under 'Defaults'
above, or because of the failure of the Issuer to comply with clause (iii)
described under 'Successor Company' above or with its obligations under
'Security' above or because of Coleman Worldwide's failure to comply with its
obligations under 'Guaranty' and 'Security' above.
In order to exercise either defeasance option, the Issuer must irrevocably
deposit in trust (the 'defeasance trust') with the Trustee money or U.S.
Government Obligations for the payment of principal and interest (if any) on the
Notes to redemption or maturity, as the case may be (it being understood that
any cash or U.S. Government Obligations previously deposited with the Trustee as
Substitute Collateral pursuant to the Indenture may be designated for this
purpose), and must comply with certain other conditions, including (unless the
Notes will mature or be redeemed within 40 days) delivering to the Trustee an
Opinion of Counsel to the effect that holders of the Notes will not recognize
income, gain or loss for federal income tax purposes as a result of such deposit
and defeasance and will be subject to federal income tax on the same amount and
in the same manner and at the same times as would have been in the case if such
deposit and defeasance had not occurred (and, in the case of legal defeasance
only, such Opinion of Counsel must be based on a ruling of the Internal Revenue
Service or other change in applicable federal income tax law).
CONCERNING THE TRUSTEE
First Trust National Association, is the Trustee under the Indenture
and has been appointed by the Issuer as Registrar and Paying Agent with regard
to the Notes.
GOVERNING LAW
The Indenture provides that it and the Notes will be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to applicable principles of conflicts of law to the extent that the
application of the law of another jurisdiction would be required thereby.
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CERTAIN DEFINITIONS
The following are certain definitions used in the Indenture and applicable
to the description of the Indenture and the Notes set forth herein.
'Affiliate' of any specified person means (i) any other person which,
directly or indirectly, is in control of, is controlled by or is under common
control with such specified person or (ii) any other person who is a director or
officer (A) of such specified person, (B) of any subsidiary of such specified
person or (C) of any person described in clause (i) above. For purposes of this
definition, control of a person means the power, direct or indirect, to direct
or cause the direction of the management and policies of such person whether by
contract or otherwise; and the terms 'controlling' and 'controlled' have
meanings correlative to the foregoing.
'Applicable Premium' means, with respect to a Note at any time, the greater
of (i) 1.0% of the Accreted Value of such Note at such time and (ii) the excess
of (A) the present value at such time of the principal amount at maturity plus
any required interest payments due on such Note, computed using a discount rate
equal to the Treasury Rate plus 100 basis points, over (B) the Accreted Value of
such Note at such time.
'Asset Disposition' means any sale, lease, transfer or other disposition
(or series of related sales, leases, transfers or dispositions) of shares of
Capital Stock of a Subsidiary of the Issuer (other than directors' qualifying
shares and other than Capital Stock of an Unrestricted Subsidiary or a
Non-Recourse Subsidiary), property or other assets (each referred to for the
purposes of this definition as a 'disposition') by the Issuer or any of its
Subsidiaries (other than an Unrestricted Subsidiary or a Non-Recourse
Subsidiary) (including any disposition by means of a merger, consolidation or
similar transaction) other than (i) a disposition by a Subsidiary of Coleman to
Coleman or by Coleman or a Subsidiary of Coleman to a Wholly Owned Recourse
Subsidiary, (ii) a disposition of property or assets by Coleman or its
Subsidiaries at fair market value in the ordinary course of business, (iii) a
disposition by Coleman or its Subsidiaries of obsolete assets or inventory in
the ordinary course of business, (iv) a disposition subject to or permitted by
the provisions described under 'Limitation on Restricted Payments' above, (v) a
disposition by the Issuer, Coleman Holdings or Coleman Worldwide of any
Unrestricted Assets, (vi) a disposition of (A) Capital Stock of Coleman Holdings
to the Issuer, (B) Capital Stock of Coleman Worldwide to Coleman Holdings or the
Issuer or (C) Capital Stock of Coleman to Coleman Worldwide, Coleman Holdings or
the Issuer, (vii) an issuance of employee stock options, (viii) the Mergers and
(ix) a disposition by Coleman or any of its Subsidiaries in which Coleman or its
Subsidiaries receive as consideration Capital Stock of (or similar interests in)
a Person engaged in, or assets that will be used in, the businesses of Coleman
and its Wholly Owned Recourse Subsidiaries, or additionally, in the case of a
disposition by a Subsidiary that is not a Wholly Owned Recourse Subsidiary, the
business of such Subsidiary, existing on the Issue Date or in businesses
reasonably related thereto, as determined by the Board of Directors of Coleman,
the determination of which shall be conclusive and evidenced by a resolution of
the Board of Directors of Coleman.
'Average Life' means, with respect to any Debt, the quotient obtained by
dividing (i) the sum of the products of (a) the number of years from the date of
the transaction or event giving rise to the need to calculate the Average Life
of such Debt to the date, or dates, of each successive scheduled principal
payment of such Debt multiplied by (b) the amount of each such principal payment
by (ii) the sum of all such principal payments.
'Board of Directors' means, with respect to any person, the Board of
Directors of such person or any committee thereof duly authorized to act on
behalf of such Board.
'Business Day' means each day that is not a Saturday, a Sunday or a day on
which banking institutions are not required to be open in the State of New York
or in the state where the principal office of the Trustee is located.
'Capital Lease Obligations' of a person means any obligation which is
required to be classified and accounted for as a capital lease on the face of a
balance sheet of such person prepared in accordance with GAAP; the amount of
such obligation shall be the capitalized amount thereof, determined in
accordance with GAAP; and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment of a
penalty.
'Capital Stock' of any person means any and all shares, interests
(including partnership interests), rights to purchase, warrants, options,
participations or other equivalents of or interests in (however designated)
equity of
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such person, including any Preferred Stock, but excluding any debt securities
convertible into or exchangeable for such equity.
'Closing Price' on any Trading Day with respect to the per share price of
any Capital Stock means the last reported sales price regular way or, in case no
such reported sale takes place on such Trading Day, the average of the reported
closing bid and asked prices regular way, on the principal national securities
exchange on which such Capital Stock is listed or admitted to trading or, if not
listed or admitted to trading on any national securities exchange, on the
National Association of Securities Dealers Automated Quotations National Market
System or, if such Capital Stock is not listed or admitted to trading on any
national securities exchange or quoted on such National Market System, the
average of the closing bid and asked prices in the over-the-counter market as
furnished by any New York Stock Exchange member firm that is selected from time
to time by the Issuer for that purpose and is reasonably acceptable to the
Trustee.
'Code' means the Internal Revenue Code of 1986, as amended.
'Coleman' means The Coleman Company, Inc., a Delaware corporation, and its
successors.
'Coleman Common Stock' means the common stock, par value $.01 per share, of
Coleman, as such common stock may from time to time be reclassified or otherwise
changed.
'Coleman Holdings Indenture' means the Indenture dated as of July 15, 1993,
between Coleman Holdings and the trustee thereunder, pursuant to which the
Coleman Holdings Notes were issued, as such agreement may be amended from time
to time.
'Coleman Holdings Merger' means the merger of Coleman Holdings with and
into the Issuer.
'Coleman Holdings Notes' means the Senior Secured Discount Notes Due 1998
of Coleman Holdings and the Series B Senior Secured Discount Notes Due 1998 of
Coleman Holdings.
'Coleman Worldwide Merger' means the merger of the Issuer with and into
Coleman Worldwide.
'Consolidated EBITDA Coverage Ratio' means, for any period, the ratio of
(i) the aggregate amount of EBITDA for such period to (ii) Consolidated Interest
Expense for such period; provided, however, that (1) if Coleman or any
Subsidiary of Coleman has issued any Debt since the beginning of such period
that remains outstanding or if the transaction giving rise to the need to
calculate the Consolidated EBITDA Coverage Ratio is an issuance of Debt, or
both, EBITDA and Consolidated Interest Expense for such period shall be
calculated after giving effect on a pro forma basis to such Debt as if such Debt
had been issued on the first day of such period and the discharge of any other
Debt Refinanced or otherwise discharged with the proceeds of such new Debt as if
such discharge had occurred on the first day of such period, (2) if since the
beginning of such period Coleman or any Subsidiary of Coleman shall have made
any Asset Disposition, EBITDA for such period shall be reduced by an amount
equal to the EBITDA (if positive) directly attributable to the assets which are
the subject of such Asset Disposition for such period, or increased by an amount
equal to the EBITDA (if negative), directly attributable thereto for such period
and Consolidated Interest Expense for such period shall be reduced by an amount
equal to the Consolidated Interest Expense directly attributable to any Debt of
Coleman or any Subsidiary of Coleman Refinanced or otherwise discharged with
respect to Coleman and its continuing Subsidiaries in connection with such Asset
Dispositions for such period (or if the Capital Stock of any Subsidiary of
Coleman is sold, the Consolidated Interest Expense for such period directly
attributable to the Debt of such Subsidiary to the extent Coleman and its
continuing Subsidiaries are no longer liable for such Debt after such sale) and
(3) if since the beginning of such period Coleman or any Subsidiary of Coleman
(by merger or otherwise) shall have made an Investment in any Subsidiary of
Coleman (or any Person which becomes a Subsidiary of Coleman) or an acquisition
of assets which constitutes all or substantially all of an operating unit of a
business, including any Investment or acquisition of assets occurring in
connection with a transaction causing a calculation to be made hereunder, EBITDA
and Consolidated Interest Expense for such period shall be calculated after
giving pro forma effect thereto, as if such Investment or acquisition occurred
on the first day of such period. For purposes of this definition, whenever pro
forma effect is to be given to an acquisition of assets, an Investment in any
Person, an Asset Disposition, or the amount of income or earnings relating
thereto, or the amount of Consolidated Interest Expense associated with any
Debt, the pro forma calculations shall be determined in good faith by a
responsible financial or accounting Officer of Coleman. If any Debt bears a
floating rate of interest and is being given pro
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forma effect, the interest on such Debt shall be calculated as if the rate in
effect on the date of determination had been the applicable rate for the entire
period.
'Consolidated Interest Expense' means, for any period, the sum of (a) the
interest expense, net of any interest income, of Coleman and its consolidated
Subsidiaries (other than Non-Recourse Subsidiaries) for such period as
determined in accordance with GAAP consistently applied, plus (b) Preferred
Stock dividends in respect of Preferred Stock of Coleman or any Subsidiary of
Coleman (other than a Non-Recourse Subsidiary) held by Persons other than
Coleman or a Wholly Owned Recourse Subsidiary, plus (c) the cash contributions
to an employee stock ownership plan of Coleman and its Subsidiaries (other than
Non-Recourse Subsidiaries) to the extent such contributions are used by an
employee stock ownership plan to pay interest.
'Consolidated Net Income' means with respect to any person, for any period,
the consolidated net income (or loss) of such person and its consolidated
Subsidiaries for such period as determined in accordance with GAAP, adjusted to
the extent included in calculating such net income (or loss), by excluding (i)
all extraordinary gains or losses; (ii) the portion of net income (or loss) of
such person and its consolidated Subsidiaries attributable to minority interests
in unconsolidated persons except to the extent that, in the case of net income,
cash dividends or distributions have actually been received by such person or
one of its consolidated Subsidiaries (subject, in the case of a dividend or
distribution received by a Subsidiary of such person, to the limitations
contained in clause (v) below) and, in the case of net loss, such person or any
Subsidiary of such person has actually contributed, lent or transferred cash to
such unconsolidated person; (iii) net income (or loss) of any other person
attributable to any period prior to the date of combination of such other person
with such person or any of its Subsidiaries on a 'pooling of interests' basis;
(iv) net gains or losses in respect of dispositions of assets by such person or
any of its Subsidiaries (including pursuant to a sale-and-leaseback arrangement)
other than in the ordinary course of business; (v) the net income of any
Subsidiary of such person to the extent that the declaration of dividends or
distributions by that Subsidiary of that income is not at the time permitted,
directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulations applicable to that Subsidiary or its shareholders; (vi) any net
income or loss of any Non-Recourse Subsidiary, except that such person's equity
in the net income of any such Non-Recourse Subsidiary for such period shall be
included in such Consolidated Net Income up to the aggregate amount of cash
actually distributed by such Non-Recourse Subsidiary during such period to such
person as a dividend or other distribution; and (vii) the cumulative effect of a
change in accounting principles; provided, however, that in calculating
Consolidated Net Income of Coleman, net income of a Subsidiary of the type
described in clause (v) of this definition shall not be excluded.
'Consolidated Net Worth' of any person means, at any date, all amounts
which would, in conformity with GAAP, be included under shareholders' equity on
a consolidated balance sheet of such person at such date, less any amounts
attributable to Redeemable Stock or Exchangeable Stock.
'Credit Agreement' means the Amended and Restated Credit Agreement dated as
of August 3, 1995 by and among Coleman, Credit Suisse and the Banks named
therein, as the same may be amended or restated from time to time.
'Debt' of any person means, without duplication, (i) the principal of and
premium (if any) in respect of (A) indebtedness of such person for money
borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other
similar instruments for the payment of which such person is responsible or
liable; (ii) all Capital Lease Obligations of such person; (iii) all obligations
of such person issued or assumed as the deferred purchase price of property, all
conditional sale obligations of such person and all obligations of such person
under any title retention agreement (but excluding trade accounts payable and
other accrued current liabilities arising in the ordinary course of business);
(iv) all obligations of such person for the reimbursement of any obligor on any
letter of credit, banker's acceptance or similar credit transaction (other than
obligations with respect to letters of credit securing obligations (other than
obligations described in (i) through (iii) above) entered into in the ordinary
course of business of such person to the extent such letters of credit are not
drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no
later than the third Business Day following receipt by such person of a demand
for reimbursement following payment on the letter of credit); (v) the amount of
all obligations of such person with respect to the redemption, repayment or
other repurchase of, in the case of a Subsidiary of Coleman, any Preferred Stock
and, in the case of any other person, any Redeemable Stock (but excluding in
each case any
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accrued dividends); (vi) all obligations of the type referred to in clauses (i)
through (v) of other persons and all dividends of other persons for the payment
of which, in either case, such person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise, including guarantees of such
obligations and dividends; and (vii) all obligations of the type referred to in
clauses (i) through (vi) of other persons secured by any Lien on any property or
asset of such person (whether or not such obligation is assumed by such person),
the amount of such obligation being deemed to be the lesser of the value of such
property or assets or the amount of the obligation so secured.
'Default' means any event which is, or after notice or passage of time or
both would be, an Event of Default.
'Delivered Shares' means any shares of Coleman Common Stock delivered by
Coleman Worldwide upon an exchange of the LYONs to the holders thereof pursuant
to the LYONs Indenture.
'Due Amount' as of any date means with respect to each $1,000 principal
amount at maturity of Notes, the Accreted Value thereof on such date plus any
premium due and payable thereon.
'EBITDA' means, for any period, the Consolidated Net Income of Coleman for
such period, plus the following to the extent included in calculating such
Consolidated Net Income: (i) income tax expense, (ii) Consolidated Interest
Expense, (iii) depreciation expense, (iv) amortization expense, (v) all other
noncash charges (excluding any noncash charge to the extent that it requires an
accrual of or a reserve for cash disbursements for any future period) and (vi)
foreign currency gains or losses.
'Escrow Agent' means the Escrow Agent from time to time under the Escrow
Agreement.
'Escrow Agreement' means the Escrow Agreement dated as of May 15, 1997
between the Issuer and First Trust National Association, as escrow agent
thereunder, as amended from time to time.
'Exchange Act' means the Securities Exchange Act of 1934, as amended.
'Exchangeable Stock' means any Capital Stock of a person which by its terms
or otherwise is required to be exchanged or converted or is exchangeable or
convertible at the option of the holder into another security (other than
Capital Stock of such person which is neither Exchangeable Stock nor Redeemable
Stock).
'Generally Accepted Accounting Principles' or 'GAAP' means generally
accepted accounting principles in the United States, as in effect from time to
time, except that for purposes of calculating the Consolidated EBITDA Coverage
Ratio, it shall mean generally accepted accounting principles in the United
States as in effect on the Issue Date.
'guarantee' means any obligation, contingent or otherwise, of any person
directly or indirectly guaranteeing any Debt or other obligation of any other
person and any obligation, direct or indirect, contingent or otherwise, of such
person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation of such other person (whether arising
by virtue of partnership arrangements, or by agreement to keep-well, to purchase
assets, goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Debt or other obligation of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided, however, that the term 'guarantee' will not include
endorsements for collection or deposit in the ordinary course of business. The
term 'guarantee' used as a verb has a corresponding meaning.
'Holder' or 'Securityholder' means the person in whose name a Note is
registered on the Registrar's books.
'Investment' in any person means any loan or advance to, any net payment on
a guarantee of, any acquisition of Capital Stock, equity interest, obligation or
other security of, or capital contribution or other investment in, such person.
Investment shall exclude advances to customers and suppliers in the ordinary
course of business. The term 'Invest' has a corresponding meaning. For purposes
of the definitions of 'Non-Recourse Subsidiary,' 'Unrestricted Subsidiary' and
'Restricted Payment' and for purposes of the 'Limitation on Restricted Payments'
covenant, (i) 'Investment' shall include a designation after the Issue Date of a
Subsidiary as a Non-Recourse Subsidiary, and such Investment shall be valued at
an amount equal to the portion (proportionate to the Issuer's equity interest in
such Subsidiary) of the fair market value of the net assets of such
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Subsidiary at the time that such Subsidiary is designated a Non-Recourse
Subsidiary; and (ii) any property transferred to or from a Non-Recourse
Subsidiary or an Unrestricted Subsidiary shall be valued at its fair market
value at the time of such transfer, in each case as determined in good faith by
the Board of Directors of the Issuer (or of Coleman in the case of a
Non-Recourse Subsidiary), and if such property so transferred (including in a
series of related transactions) has a fair market value, as so determined by the
Board of Directors, in excess of $10 million, such determination shall be
confirmed by an independent appraiser.
'issue' means issue, assume, guarantee, incur or otherwise become liable
for; provided, however, that any Debt or Capital Stock of a person existing at
the time such person becomes a Subsidiary of another person (whether by merger,
consolidation, acquisition or otherwise) will be deemed to be issued by such
Subsidiary at the time it becomes a Subsidiary of such other person.
'Issue Date' means the date of original issue of the Notes.
'Lien' means any mortgage, pledge, security interest, conditional sale or
other title retention agreement or other similar lien.
'LYONs' means the Liquid Yield OptionTM(1) Notes due 2013 of Coleman
Worldwide.
'LYONs Default' means any event which is, or after notice or passage of
time or both would be, an event of default under the LYONs Indenture.
'LYONs Escrow Agreement' means the Escrow and Pledge Agreement dated as of
May 27, 1993, between Coleman Worldwide and First Trust National Association, as
escrow agent thereunder, as amended from time to time.
'LYONs Indenture' means the Indenture, dated as of May 27, 1993, between
Coleman Worldwide and First Trust National Association, as successor trustee,
pursuant to which the LYONs were issued, as it may be amended from time to time.
'MacAndrews Holdings' means MacAndrews & Forbes Holdings Inc., a Delaware
corporation, and its successors.
'Mafco Consolidated Group' means the 'Affiliated Group' (within the meaning
of Section 1504(a)(1) of the Code) of which Mafco Holdings is the common parent.
'Mafco Holdings' means Mafco Holdings Inc., a Delaware corporation, and its
successors.
'Market Value' means as of any date the sum of (i) in respect of Coleman
Pledged Shares, an amount equal to the product of (x) the average of the Closing
Prices per share of Coleman Common Stock during the five Trading Days ending
immediately preceding such date and (y) the number of Coleman Pledged Shares,
(ii) as to Collateral consisting of cash, the amount of such cash, (iii) as to
any other Collateral having a purported value equal to or less than $5 million,
the fair market value thereof as of such date as determined by the Board of
Directors of the Issuer (the determination of which shall be conclusive and
shall be evidenced by a resolution of such Board of Directors of the Issuer),
and (iv) as to any other Collateral having a purported value of more than $5
million, the fair market value thereof as of such date as determined by an
independent appraiser.
'Merger' means the Coleman Holdings Merger or the Coleman Worldwide Merger,
as the case may be.
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(1) Trademark of Merrill Lynch & Co., Inc.
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'Net Available Cash' from an Asset Disposition means cash payments received
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise, but only as and when
received, but excluding any other consideration received in the form of
assumption by the acquiring person of Debt or other obligations relating to such
properties or assets or received in any other noncash form) therefrom, in each
case net of (i) all legal, title and recording tax expenses, commissions and
other fees and expenses incurred, and all Federal, state, provincial, foreign
and local taxes required or estimated in good faith to be required to be accrued
as a liability under Generally Accepted Accounting Principles, as a consequence
of such Asset Disposition, (ii) all payments made on any Debt which is secured
by any assets subject to such Asset Disposition, in accordance with the terms of
any Lien upon or other security agreement of any kind with respect to such
assets, or which must by its terms, or in order to obtain a necessary consent to
such Asset Disposition, or by applicable law be repaid out of the proceeds from
or in connection with such Asset Disposition and (iii) all distributions and
other payments required to be made to minority interest holders in Subsidiaries
or joint ventures as a result of such Asset Disposition; provided, however, that
in connection with an Asset Disposition to a Subsidiary of Coleman (other than a
Wholly Owned Recourse Subsidiary), Net Available Cash will be deemed to be a
percentage of Net Available Cash (as calculated above) equal to (A) 100% minus
(B) Coleman's percentage ownership in such Subsidiary.
'Net Cash Proceeds,' with respect to any issuance or sale of Capital Stock,
means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or estimated in good
faith to be payable as a result thereof.
'Non-Convertible Capital Stock' means, with respect to any corporation, any
non-convertible Capital Stock of such corporation and any Capital Stock of such
corporation convertible solely into non-convertible common stock of such
corporation; provided, however, that Non-Convertible Capital Stock will not
include any Redeemable Stock or Exchangeable Stock.
'Non-Recourse Debt' means Debt or that portion of Debt (i) as to which
neither the Issuer nor its Subsidiaries (other than a Non-Recourse Subsidiary or
an Unrestricted Subsidiary) (A) provide credit support (including any
undertaking, agreement or instrument which would constitute Debt), (B) is
directly or indirectly liable or (C) constitute the lender and (ii) no default
with respect to which (including any rights which the holders thereof may have
to take enforcement action against the assets of a Non-Recourse Subsidiary or an
Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any
holder of any other Debt of the Issuer or its Subsidiaries (other than
Non-Recourse Subsidiaries or Unrestricted Subsidiaries) to declare a default on
such other Debt or cause the payment thereof to be accelerated or payable prior
to its Stated Maturity.
'Non-Recourse Subsidiary' means a Subsidiary of Coleman (i) which has been
designated as such by Coleman, (ii) which has no Debt other than Non-Recourse
Debt and (iii) which is in the same line of business as Coleman and its Wholly
Owned Subsidiaries existing on the Issue Date or in businesses reasonably
related thereto.
'Note Purchase Agreements' means (i) the Note Purchase Agreements, each
dated as of August 3, 1995, between Coleman and the Purchasers named therein, as
amended from time to time, relating to Coleman's 7.26% Senior Notes due 2007,
and (ii) the Note Purchase Agreements, each dated as of May 1, 1996, between
Coleman and the Purchasers named therein, as amended from time to time relating
to Coleman's 7.10% Senior Notes, Series A, due 2006, and 7.25% Senior Notes,
Series B, due 2008.
'Obligations' means (a) the full and punctual payment of principal of and
interest, if any, on the Notes when due, whether at maturity, by acceleration,
by redemption or otherwise, and all other monetary obligations of the Issuer
under the Indenture and the Notes and (b) the full and punctual performance of
all other obligations of the Issuer under the Indenture and the Notes.
'Officer' means the Chairman of the Board, the President, any Vice
President, the Treasurer, an Assistant Treasurer or the Secretary or an
Assistant Secretary of the Issuer.
'Officers' Certificate' means a certificate signed by the Chairman of the
Board, Vice Chairman, the President or a Vice President (regardless of Vice
Presidential designation), and by the Treasurer, an Assistant Treasurer,
Secretary or an Assistant Secretary, of the Issuer, and delivered to the
Trustee. One of the Officers
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signing an Officers' Certificate given pursuant to the requirement for a
Compliance Certificate, as described in the last paragraph under 'Defaults'
above, will be the principal executive, financial or accounting officer of the
Issuer.
'Opinion of Counsel' means a written opinion from legal counsel who is
reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Issuer (or its Parent or one of its Subsidiaries) or the Trustee.
'Parent' means Coleman (Parent) Holdings Inc., a Delaware corporation, and
any other Person which acquires or owns directly or indirectly 80% or more of
the Voting Stock of the Issuer.
'Permitted Affiliate' means any individual that is a director or officer of
the Issuer, of a Subsidiary of the Issuer or of an Unrestricted Affiliate;
provided, however, that such individual is not also a director or officer of
MacAndrews Holdings or any person that controls MacAndrews Holdings.
'Permitted Holders' means Ronald O. Perelman (or in the event of his
incompetence or death, his estate, heirs, executor, administrator, committee or
other personal representative (collectively, 'heirs')) or any person controlled,
directly or indirectly, by Ronald O. Perelman or his heirs.
'person' means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity.
'Pledged Shares' means any Collateral consisting of Coleman Pledged Shares,
Worldwide Pledged Shares and Holdings Pledged Shares.
'Preferred Stock,' as applied to the Capital Stock of any corporation,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
'principal' of a Note as of any date means the Accreted Value of the Note
as of such date plus the premium, if any, payable on the Note which is due or
overdue or is to become due on such date.
'principal amount at maturity' of a Note means the amount specified as such
on the face of such Note.
'Put Amount' as of any date means, with respect to each $1,000 principal
amount at maturity of Notes, the sum of (a) the Accreted Value thereof on such
date and (b) 1% of the Accreted Value thereof on such date (if such date is a
Semi-Annual Accrual Date) or (if such date is not a Semi-Annual Accrual Date)
the preceding Semi-Annual Accrual Date.
'Redeemable Stock' means, with respect to any person, any Capital Stock of
such person that by its terms or otherwise is required to be redeemed on or
prior to the first anniversary of the Stated Maturity of the Notes or is
redeemable at the option of the holder thereof at any time on or prior to the
first anniversary of the Stated Maturity of the Notes.
'Refinance' means, in respect of any Debt, to refinance, extend, renew,
refund, repay, prepay, redeem, defease or retire, or to issue Debt in exchange
or replacement for, such Debt. 'Refinanced' and 'Refinancing' shall have
correlative meanings.
'Refinancing Costs' means, with respect to any Debt or Preferred Stock
being Refinanced, any premium actually paid thereon and reasonable costs and
expenses, including underwriting discounts, in connection with such Refinancing;
provided, that if any Debt issued in connection with such a Refinancing is
issued at a discount, Refinancing Costs shall be an amount equal to the accreted
value (as of the Stated Maturity of the Debt being Refinanced) of the portion of
such Debt used to pay such premium, costs and expenses.
'Registration Agreement' means the Registration Agreement, dated May 20,
1997, among the Issuer and Bear, Stearns & Co. Inc., Chase Securities Inc. and
Credit Suisse First Boston Corporation.
'Restricted Cash' means any cash received by Coleman Worldwide pursuant to
a Tax Sharing Agreement, the LYONs Escrow Agreement or the Securities Loan
Agreement.
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'Restricted Payment' means, as to any person making a Restricted Payment,
(i) any dividend or any distribution on or in respect of the Capital Stock of
such person (including any payment in connection with any merger or
consolidation involving such person) or to the holders of the Capital Stock of
such person (except dividends or distributions payable solely in the
Non-Convertible Capital Stock of such person or in options, warrants or other
rights to purchase the Non-Convertible Capital Stock of such person), (ii) any
purchase, redemption or other acquisition or retirement for value of any Capital
Stock of the Issuer or of any direct or indirect parent of the Issuer, (iii) any
purchase, repurchase, redemption, defeasance or other acquisition or retirement
for value, prior to scheduled maturity, scheduled repayment or scheduled sinking
fund payment, of any Subordinated Obligation (other than the purchase,
repurchase or other acquisition of Subordinated Obligations purchased in
anticipation of satisfying a sinking fund obligation, principal installment or
final maturity, in each case due within one year of the date of acquisition),
(iv) any Investment in any Affiliate of the Issuer other than (a) a Subsidiary
of the Issuer, (b) an Affiliate of the Issuer which will become a Subsidiary of
the Issuer as a result of any such Investment and (c) an Unrestricted Affiliate
or (v) any Investment in a Non-Recourse Subsidiary or an Unrestricted
Subsidiary.
'Securities Loan Agreement' means the Securities Loan Agreement dated as of
May 27, 1993, among Merrill Lynch, Pierce, Fenner & Smith Incorporated, Coleman
Worldwide and the securities loan custodian thereunder, as amended from time to
time.
'Shelf Registration Statement' has the meaning ascribed thereto in the
Registration Agreement.
'Significant Subsidiary' means (i) any Subsidiary (other than a
Non-Recourse Subsidiary and other than any Unrestricted Subsidiary) of the
Issuer which at the time of determination either (A) had assets which, as of the
date of the Issuer's most recent quarterly consolidated balance sheet,
constituted at least 5% of the Issuer's total assets on a consolidated basis as
of such date, in each case determined in accordance with Generally Accepted
Accounting Principles, or (B) had revenues for the 12-month period ending on the
date of the Issuer's most recent quarterly consolidated statement of income
which constituted at least 5% of the Issuer's total revenues on a consolidated
basis for such period, or (ii) any subsidiary of the Issuer (other than a
Non-Recourse Subsidiary and other than an Unrestricted Subsidiary) which, if
merged with all Defaulting Subsidiaries (as defined below) of the Issuer, would
at the time of determination either (A) have had assets which, as of the date of
the Issuer's most recent quarterly consolidated balance sheet, would have
constituted at least 10% of the Issuer's total assets on a consolidated basis as
of such date or (B) have had revenues for the 12-month period ending on the date
of the Issuer's most recent quarterly consolidated statement of income which
would have constituted at least 10% of the Issuer's total revenues on a
consolidated basis for such period (each such determination being made in
accordance with Generally Accepted Accounting Principles). 'Defaulting
Subsidiary' means any Subsidiary of the Issuer (other than a Non-Recourse
Subsidiary and other than an Unrestricted Subsidiary) with respect to which an
event described under clause (vi), (vii), (viii) or (ix) of 'Defaults' above has
occurred and is continuing.
'Stated Maturity' means, with respect to any security, the date specified
in such security as the fixed date on which the principal of such security is
due and payable, including pursuant to any mandatory redemption provision (but
excluding any provision providing for the repurchase of such security at the
option of the holder thereof upon the happening of any contingency).
'Subordinated Obligation' means any Debt of the Issuer (whether outstanding
on the Issue Date or thereafter issued) which is subordinate or junior in right
of payment to the Notes.
'Subsidiary' means, with respect to any person, any corporation,
association, partnership or other business entity of which more than 50% of the
total voting power of shares of Capital Stock or other interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned, directly or indirectly, by (i) such person, (ii) such
person and one or more Subsidiaries of such person or (iii) one or more
Subsidiaries of such person.
'Tax Sharing Agreements' means (i) the Tax Sharing Agreement dated as of
May 27, 1993 by and among Mafco Holdings, Coleman Worldwide, Coleman and its
Subsidiaries and any entities which become parties thereto, (ii) the Tax Sharing
Agreement dated as of May 27, 1993 by and among Mafco Holdings, Coleman
Worldwide and any entities which become parties thereto, (iii) the Tax Sharing
Agreement dated as of July 22,
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1993 between Mafco Holdings and Coleman Holdings and (iv) any amendments to any
of the foregoing and any other tax allocation agreement between the Issuer or
any of its Subsidiaries with the Issuer or any direct or indirect shareholder of
the Issuer with respect to consolidated or combined tax returns including the
Issuer or any of its Subsidiaries but only to the extent that amounts payable
from time to time by the Issuer or any such Subsidiary under any such agreement
do not exceed the corresponding tax payments that the Issuer or such Subsidiary
would have been required to make to any relevant taxing authority had the Issuer
or such Subsidiary not joined in such consolidated or combined returns, but
instead had filed returns including only the Issuer or its Subsidiaries
(provided that any such agreement may provide that, if the Issuer or any such
Subsidiary ceases to be a member of the affiliated group of corporations of
which Mafco Holdings is the common parent for purposes of filing a consolidated
federal income tax return (such cessation, a 'Deconsolidation Event'), then the
Issuer or such Subsidiary will indemnify such direct or indirect shareholder
with respect to any federal, state or local income, franchise or other tax
liability (including any related interest, additions or penalties) imposed on
such shareholder as the result of an audit or other adjustment with respect to
any period prior to such Deconsolidation Event that is attributable to the
Issuer, such Subsidiary or any predecessor business thereof (computed as if the
Issuer, such Subsidiary or such predecessor business, as the case may be, were a
stand-alone entity that filed separate tax returns as an independent
corporation), but only to the extent that any such tax liability exceeds any
liability for taxes recorded on the books of the Issuer or such Subsidiary with
respect to any such period).
'Temporary Cash Investments' means any of the following: (i) any investment
in direct obligations of the United States of America or any agency thereof or
obligations guaranteed by the United States of America or any agency thereof, in
each case, maturing within 360 days of the date of acquisition thereof, (ii)
investments in time deposit accounts, certificates of deposit and money market
deposits maturing within 180 days of the date of acquisition thereof issued by a
bank or trust company (including the Trustee) which is organized under the laws
of the United States of America, any state thereof or any foreign country
recognized by the United States of America having capital, surplus and undivided
profits aggregating in excess of $250,000,000 and whose debt is rated 'A' (or
such similar equivalent rating) or higher by at least one nationally recognized
statistical rating organization (as defined in Rule 436 under the Securities
Act) or any money-market fund sponsored by any registered broker dealer or
mutual fund distributor, (iii) repurchase obligations with a term of not more
than 30 days for underlying securities of the types described in clause (i)
above entered into with a bank meeting the qualifications described in clause
(ii) above, (iv) investments in commercial paper, maturing not more than 90 days
after the date of acquisition, issued by a corporation (other than an Affiliate
or Subsidiary of the Issuer) organized and in existence under the laws of the
United States of America or any foreign country recognized by the United States
of America with a rating at the time as of which any investment therein is made
of 'P-2' (or higher) according to Moody's Investors Service, Inc. or 'A-2' (or
higher) according to Standard and Poor's Corporation and (v) securities with
maturities of six months or less from the date of acquisition backed by standby
or direct pay letters of credit issued by any bank satisfying the requirements
of clause (ii) above.
'Trading Day' means each Monday, Tuesday, Wednesday, Thursday and Friday,
other than any such day on which securities are not traded on the applicable
securities exchange or in the applicable securities market.
'Treasury Rate' means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15(519) which
has become publicly available at least two business days prior to the date fixed
for repayment or, in the case of defeasance, prior to the date of deposit (or,
if such Statistical Release is no longer published, any publicly available
source of similar market data)) most nearly equal to the then remaining average
life to Stated Maturity of the Notes; provided, however, that if the average
life to Stated Maturity of the Notes is not equal to the constant maturity of a
United States Treasury security for which a weekly average yield is given, the
Treasury Rate shall be obtained by linear interpolation (calculated to the
nearest one-twelfth of a year) from the weekly average yields of United States
Treasury securities of which such yields are given, except that if the average
life to Stated Maturity of the Notes is less than one year, the weekly average
yield on actually traded United States Treasury securities adjusted to a
constant maturity of one year shall be used.
'Trust Officer' means any officer or assistant officer of the Trustee
assigned by the Trustee to administer its corporate trust matters.
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'Unrestricted Affiliate' means a person (other than a Subsidiary of
Coleman) controlled (as defined in the definition of an 'Affiliate') by Coleman,
in which no Affiliate of the Issuer (other than (w) Coleman, Coleman Holdings or
Coleman Worldwide, (x) a Wholly Owned Recourse Subsidiary of Coleman, (y) a
Permitted Affiliate and (z) another Unrestricted Affiliate) has an Investment.
'Unrestricted Assets' means (i) Withdrawn Shares, (ii) Capital Stock of
Unrestricted Subsidiaries and (iii) all dividends, cash and other property and
proceeds (including proceeds of sale) from time to time received, receivable or
otherwise distributed in respect of or in exchange for any of the foregoing.
'Unrestricted Subsidiary' means a Subsidiary of the Issuer which (i) is
acquired or organized by the Issuer or Coleman Worldwide or any other
Unrestricted Subsidiary (or any combination of the foregoing), (ii) is
capitalized only with Unrestricted Assets, cash or Temporary Cash Investments,
(iii) does not have any Debt (A) which is held by the Issuer, (B) as to which
the Issuer or any of its Subsidiaries (other than an Unrestricted Subsidiary)
has provided credit support (other than as permitted by paragraph (3) of
'Limitations on Debt of the Issuer, Coleman Holdings and Coleman Worldwide'
above) or (C) any default as to which would permit any holder (whether upon
notice, after lapse of time or both) of any Debt of the Issuer or any of its
Subsidiaries (other than an Unrestricted Subsidiary) to declare a default on
such Debt or (except, in the case of the LYONs, upon the occurrence of an event
that gives the holders of the LYONs an option to require Coleman Worldwide to
purchase such holders' LYONs) to cause the payment thereof to be accelerated
prior to its Stated Maturity and (iv) conducts no trade or business other than
ownership of Coleman Common Stock.
'U.S. Government Obligations' means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable at the issuer's option.
'Voting Stock' of a corporation means all classes of Capital Stock of such
corporation then outstanding and normally entitled to vote in the election of
directors.
'Wholly Owned Recourse Subsidiary' means a Subsidiary of a person (other
than a Non-Recourse Subsidiary and other than an Unrestricted Subsidiary) all
the Capital Stock of which (other than directors' qualifying shares) is owned by
such person or another Wholly Owned Recourse Subsidiary of such person.
'Withdrawn Collateral' means any Coleman Pledged Shares which are released
from the Lien of the Indenture ('Withdrawn Shares') together with any cash or
instruments or other Collateral which are released from the Lien of the
Indenture.
REGISTRATION RIGHTS
Holders of the New Notes are not entitled to any registration rights with
respect to the New Notes. The Issuer has entered into a registration agreement
(the 'Registration Agreement') with the Initial Purchasers, for the benefit of
the holders of the Old Notes, pursuant to which the Issuer has agreed that it
will, at its cost, by October 17, 1997, use its best efforts to cause a
registration statement (the 'Registration Statement') to be declared effective
under the Securities Act. The Registration Statement of which this Prospectus
forms a part constitutes the registration statement for the Exchange Offer. Upon
the Registration Statement being declared effective, the Issuer will offer the
New First Priority Notes and the New Second Priority Exchange Notes in exchange
for surrender of the Old First Priority Notes and the Old Second Priority Notes,
respectively. The Issuer will keep the Exchange Offer open for not less than 30
days (or longer if required by applicable law) after the date notice of the
Exchange Offer is mailed to the holders of the Old Notes. For each Old Note
surrendered to the Issuer pursuant to the Exchange Offer, the holder of such Old
Note will receive a New Note having a principal amount at maturity equal to that
of the surrendered Old Note. Because the New Notes will be treated as a
continuation of the Old Notes, Original Issue Discount on each New Note will
accrete from May 20, 1997, the date of original issuance of the Old Notes. Under
existing SEC interpretations, the New Notes would in general be freely
transferable after the Exchange Offer without further registration under the
Securities Act; provided, however, that in the case of broker-dealers, a
prospectus meeting the requirements of the Securities Act be delivered as
required. The Issuer has agreed for a period of 180 days after the date of
consummation of the Exchange Offer to make available a prospectus meeting the
requirements of the Securities Act to any broker-
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dealer for use in connection with any resale of any such New Notes acquired as
described below. A broker-dealer which delivers such a prospectus to purchasers
in connection with such resales will be subject to certain of the civil
liability provisions under the Securities Act and will be bound by the
provisions of the Registration Agreement (including certain indemnification
rights and obligations).
In the event that applicable interpretations of the staff of the SEC do not
permit the Issuer to effect the Exchange Offer, or if for any other reason the
Exchange Offer is not consummated by November 17, 1997, the Issuer will, at its
cost, (a) as promptly as practicable, file the Shelf Registration Statement
covering resales of the Old Notes, (b) use its best efforts to cause the Shelf
Registration Statement to be declared effective under the Securities Act and (c)
use its best efforts to keep effective the Shelf Registration Statement until
two years after its effective date. The Issuer will, in the event of the Shelf
Registration Statement, provide to each holder of the Old Notes copies of the
prospectus, which is a part of the Shelf Registration Statement, notify each
such holder when the Shelf Registration Statement for the Notes has become
effective and take certain other actions as are required to permit unrestricted
resales of the Old Notes. A holder of Old Notes who sells such Old Notes
pursuant to the Shelf Registration Statement generally would be required to be
named as a selling securityholder in the related prospectus and to deliver a
prospectus to purchasers, will be subject to certain of the civil liability
provisions under the Securities Act in connection with such sales and will be
bound by the provisions of the Registration Agreement which are applicable to
such a holder (including certain indemnification obligations).
If by November 17, 1997, neither (i) the Exchange Offer is consummated nor
(ii) the Shelf Registration Statement is declared effective, interest will
accrue (in addition to the accretion of Original Issue Discount) on the Notes
from and including such date, until but excluding the earlier of (i) the
consummation of the Exchange Offer and (ii) the effective date of a Shelf
Registration Statement. In each case, such interest will be payable in cash
semiannually in arrears on May 15 and November 15, commencing May 15, 1998, at a
rate per annum equal to .50% of the Accreted Value as of the November 15 and May
15 immediately preceding such interest payment date.
The summary herein of certain provisions of the Registration Agreement does
not purport to be complete and is subject to, and is qualified in its entirety
by reference to, all the provisions of the Registration Agreement, a copy of
which is filed as an exhibit to the Registration Statement of which this
Prospectus constitutes a part.
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CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to the Issuer,
has advised the Issuer that the following discussion, except as otherwise
indicated, expresses their opinion as to the material federal income tax
considerations applicable to the exchange of Old Notes for New Notes and the
ownership and disposition of the New Notes by holders who acquire the New Notes
pursuant to the Exchange Offer. This discussion is based on laws, regulations,
rulings and decisions now in effect, all of which are subject to change. The
discussion does not cover all aspects of federal taxation that may be relevant
to, or the actual tax effect that any of the matters described herein will have
on, particular holders, and does not address state, local, foreign or other tax
laws. Certain holders (including insurance companies, tax-exempt organizations,
financial institutions, broker-dealers, taxpayers subject to the alternative
minimum tax and foreign partners) may be subject to special rules not discussed
below. The description assumes that holders of the New Notes will hold the New
Notes as 'capital assets' (generally, property held for investment purposes)
within the meaning of Section 1221 of the Internal Revenue Code of 1986, as
amended (the 'Code'). EACH HOLDER SHOULD CONSULT ITS OWN TAX ADVISOR IN
DETERMINING THE FEDERAL, STATE, LOCAL AND ANY OTHER TAX CONSEQUENCES TO THE
PARTICULAR HOLDER OF THE EXCHANGE OF OLD NOTES FOR NEW NOTES AND THE OWNERSHIP
AND DISPOSITION OF THE NEW NOTES.
EXCHANGE OF NOTES
The exchange of the Old Notes for the New Notes pursuant to the Exchange
Offer will not be treated as an 'exchange' for federal income tax purposes
because the New Notes do not differ materially in kind or extent from the Old
Notes, and because the exchange will occur by operation of the terms of the Old
Notes. Rather the New Notes received by a holder will be treated as a
continuation of the Old Notes in the hands of such holder. As a result, no gain
or loss will be recognized on the exchange of Old Notes for New Notes pursuant
to the Exchange Offer.
ORIGINAL ISSUE DISCOUNT
The Old Notes were issued on May 20, 1997 and have Original Issue Discount
for federal income tax purposes. Because the New Notes will be treated as a
continuation of the Old Notes, which were issued with Original Issue Discount,
the New Notes will have Original Issue Discount for federal income tax purposes,
and holders of the New Notes will be required to recognize such Original Issue
Discount as ordinary income in advance of the receipt of the cash payments to
which such income is attributable (regardless of the holder's regular method of
accounting).
The total amount of Original Issue Discount with respect to a New Note will
be equal to the excess of the 'stated redemption price at maturity' of such New
Note over its 'issue price.' The 'stated redemption price at maturity' of a New
Note will be equal to the stated principal amount due at maturity. The 'issue
price' of all the New Notes will be equal to the issue price of the Old Notes.
Holders of New Notes are required to include Original Issue Discount in income
as it accrues in accordance with a constant yield method based on compounding at
the end of each accrual period (regardless of a holder's regular method of
accounting). In general, the amount of Original Issue Discount that is
includable in income is determined by allocating to each day in an accrual
period the ratable portion of Original Issue Discount allocable to the accrual
period. The amount of Original Issue Discount that is allocable to an accrual
period is generally an amount equal to the product of the adjusted issue price
of a Note at the beginning of such accrual period (the issue price of the Notes
determined as described above, generally increased by all prior accruals of
Original Issue Discount with respect to the Notes) and the yield to maturity
(the discount rate, which when applied to all payments under the Notes results
in a present value equal to the issue price) less any qualified stated interest
(interest that is unconditionally payable in cash or property at least annually
at a single fixed rate) allocable to the accrual period.
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DISPOSITION OF NEW NOTES
A holder's tax basis in a New Note will be increased by the amount of
Original Issue Discount that is includable in such holder's income. If a New
Note is redeemed, sold or otherwise disposed of, the holder thereof will
generally recognize gain or loss equal to the difference between the amount
realized on the redemption, sale or other disposition of such New Note and the
holder's adjusted basis in the New Note. Subject to the market discount rules
discussed below, such gain or loss will be capital gain or loss and will be
long-term capital gain or loss if, on the date of the sale, a holder has a
holding period for the New Notes (which would include the holding period of the
Old Notes) of more than one year.
Under the market discount rules of the Code, an exchanging holder (other
than a holder who made the election described below) who purchased an Old Note
with 'market discount' (generally defined as the amount by which the adjusted
issue price of the Old Note on the holder's date of purchase exceeds the
holder's purchase price) will be required to treat any gain recognized on the
redemption, sale or other disposition of the New Note received in the exchange
as ordinary income to the extent of the market discount that accrued during the
holding period of such New Note (which would include the holding period of the
Old Note). A holder who has elected under applicable Code provisions to include
market discount in income annually as such discount accrues will not, however,
be required to treat any gain recognized as ordinary income under these rules.
Holders should consult their tax advisors as to the portion of any gain that
would be taxable as ordinary income under these provisions.
INFORMATION REPORTING
Each New Note will contain a legend stating that it has Original Issue
Discount and setting forth the issue date, the issue price, the amount of
Original Issue Discount and the yield to maturity. The Issuer will report
annually to the IRS and to each holder (other than holders not subject to the
information reporting requirements) the amount of Original Issue Discount
accrued with respect to such New Note and any interest paid with respect to the
Old Notes as described above under 'Description of the Notes--Registration
Rights.'
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BOOK-ENTRY; DELIVERY AND FORM
GENERAL
Except as set forth below, the Notes will initially be issued in the form
of one or more registered Notes in global form without coupons (each a 'Global
Note'). Each Global Note was or will be deposited with, or on behalf of, DTC and
registered in the name of Cede & Co., as nominee of DTC, or will remain in the
custody of the Trustee pursuant to the FAST Balance Certificate Agreement
between DTC and the Trustee.
Subject to the terms of the Indenture and the limitations applicable to the
Global Notes, Notes may be presented for exchange as provided below or for
registration of transfer (duly endorsed or with the form of transfer endorsed
thereon duly executed) at the office of the Registrar or at the office of any
transfer agent designated by the Issuer for such purpose. Such transfer or
exchange will be effected upon the Registrar's or such transfer agent's, as the
case may be, being satisfied with the documents of title and identity of the
Person making the request. The Issuer has appointed the Trustee as Registrar.
The Issuer may at any time designate additional transfer agents or rescind the
designation of any transfer agent or approve a change in the office through
which any transfer agent acts; provided, however, that there shall at all times
be a transfer agent in the Borough of Manhattan, The City of New York.
GLOBAL NOTES
DTC has advised the Issuer that it is (i) a limited purpose trust company
organized under the laws of the State of New York, (ii) a member of the Federal
Reserve System, (iii) a 'clearing corporation' within the meaning of the Uniform
Commercial Code, as amended, and (iv) a 'Clearing Agency' registered pursuant to
Section 17A of the Exchange Act. DTC was created to hold securities for its
participants (collectively, the 'Participants') and facilitate the clearance and
settlement of securities transactions between Participants through electronic
book-entry changes to the accounts of its Participants, thereby eliminating the
need for physical transfer and delivery of certificates. Participants include
securities brokers and dealers (including the Initial Purchasers), banks and
trust companies, clearing corporations and certain other organizations. Access
to DTC's system is also available to other entities such as banks, brokers,
dealers and trust companies (collectively, the 'Indirect Participants') that
clear through or maintain a custodial relationship with a Participant, either
directly or indirectly. Holders who are not Participants may beneficially own
securities held by or on behalf of the Depository only through Participants or
Indirect Participants.
The Issuer expects that pursuant to procedures established by DTC (i) upon
deposit of the Global Notes, DTC will credit the accounts of Participants
designated by the Initial Purchasers with an interest in the Global Note and
(ii) ownership of the Notes will be shown on, and the transfer of ownership
thereof will be effected only through, records maintained by DTC (with respect
to the interest of Participants), the Participants and the Indirect
Participants. The laws of some states require that certain persons take physical
delivery in definitive form of securities that they own and that security
interest in negotiable instruments can only be perfected by delivery of
certificates representing the instruments. Consequently, the ability to transfer
Notes or to pledge the Notes as collateral will be limited to such extent.
So long as DTC or its nominee is the registered owner of a Global Note, DTC
or such nominee, as the case may be, will be considered the sole owner or holder
of the Notes represented by the Global Note for all purposes under the
Indenture. Except as provided below, owners of beneficial interests in a Global
Note will not be entitled to have Notes represented by such Global Note
registered in their names, will not receive or be entitled to receive physical
delivery of certificated securities (the 'Certificated Securities'), and will
not be considered the owners or Holders thereof under the Indenture for any
purpose, including with respect to giving of any directions, instruction or
approval to the Trustee thereunder. As a result, the ability of a person having
a beneficial interest in Notes represented by a Global Note to pledge or
transfer such interest to persons or entities that do not participate
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in DTC's system or to otherwise take action with respect to such interest, may
be affected by the lack of a physical certificate evidencing such interest.
Accordingly, each holder owning a beneficial interest in a Global Note must
rely on the procedures of DTC and, if such holder is not a Participant or an
Indirect Participant, on the procedures of the Participant through which such
holder owns its interest, to exercise any rights of a holder of Notes under the
Indenture or such Global Note. The Issuer understands that under existing
industry practice, in the event the Issuer requests any action of holders of
Notes or a holder that is an owner of a beneficial interest in a Global Note
desires to take any action that DTC, as the holder of such Global Note, is
entitled to take, DTC would authorize the Participants to take such action and
the Participant would authorize holders owning through such Participants to take
such action or would otherwise act upon the instruction of such holders. Neither
the Issuer nor the Trustee will have any responsibility or liability for any
aspect of the records relating to or payments made on account of Notes by DTC,
or for maintaining, supervising or reviewing any records of DTC relating to such
Notes.
Payments with respect to the principal of, premium, if any, and interest
on, any Notes represented by a Global Note registered in the name of DTC or its
nominee on the applicable record date will be payable by the Trustee to or at
the direction of DTC or its nominee in its capacity as the registered holder of
the Global Note representing such Notes under the Indenture. Under the terms of
the Indenture, the Issuer and the Trustee may treat the persons in whose names
the Notes, including the Global Notes, are registered as the owners thereof for
the purpose of receiving such payment and for any and all other purposes
whatsoever. Consequently, neither the Issuer nor the Trustee has or will have
any responsibility or liability for the payment of such amounts to beneficial
owners of interest in the Global Note (including principal, premium, if any, and
interest), or to immediately credit the accounts of the relevant Participants
with such payment, in amounts proportionate to their respective holdings in
principal amount of beneficial interest in the Global Note as shown on the
records of DTC. Payments by the Participants and the Indirect Participants to
the beneficial owners of interests in the Global Note will be governed by
standing instructions and customary practice and will be the responsibility of
the Participants or the Indirect Participants and DTC.
CERTIFICATED SECURITIES
If (i) the Issuer notifies the Trustee in writing that DTC is no longer
willing or able to act as a depository or DTC ceases to be registered as a
clearing agency under the Exchange Act and the Issuer is unable to locate a
qualified successor within 90 days, (ii) the Issuer, at its option, notifies the
Trustee in writing that it elects to cause the issuance of Notes in definitive
form under the Indenture or (iii) upon the occurrence of certain other events,
then, upon surrender by DTC of its Global Notes, Certificated Securities will be
issued to each person that DTC identifies as the beneficial owner of the Notes
represented by the Global Notes. Upon any such issuance, the Trustee is required
to register such Certificated Securities in the name of such person or persons
(or the nominee of any thereof), and cause the same to be delivered thereto.
Neither the Issuer nor the Trustee shall be liable for any delay by DTC or
any Participant or Indirect Participant in identifying the beneficial owners of
the related Notes and each such person may conclusively rely on, and shall be
protected in relying on, instructions from DTC for all purposes (including with
respect to the registration and delivery, and the respective principal amounts,
of the Notes to be issued).
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired as a result of market-making activities or other
trading activities. The Issuer has agreed that for a period of 180 days after
the Expiration Date, it will make this Prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale. In
addition, until , 1997, all dealers effecting transactions in the New
Notes may be required to deliver a prospectus.
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The Issuer will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Notes. Any broker-dealer
that resells New Notes that were received by it for its own account pursuant to
the Exchange Offer and any broker or dealer that participates in a distribution
of such New Notes may be deemed to be an 'underwriter' within the meaning of the
Securities Act and any profit on any such resale of New Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
'underwriter' within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date, the Issuer will
promptly send additional copies of the Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such document
in the Letter of Transmittal. The Issuer has agreed to pay all expenses incident
to the Exchange Offer other than commissions or concessions of any brokers or
dealers and will indemnify the holders of the Notes (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
LEGAL MATTERS
Certain legal matters with respect to the validity of the issuance of the
New Notes will be passed upon for the Issuer by Paul, Weiss, Rifkind, Wharton &
Garrison, New York, New York and, with respect to certain federal income tax
considerations, by Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York.
Skadden, Arps, Slate, Meagher & Flom LLP has acted as counsel for the Issuer and
Coleman Worldwide in connection with the Exchange Offer. Skadden, Arps, Slate,
Meagher & Flom LLP and Paul, Weiss, Rifkind, Wharton & Garrison and Latham &
Watkins, New York, New York, have from time to time represented, and may
continue to represent, MacAndrews & Forbes and certain of its affiliates
(including the Issuer, Coleman Holdings, Coleman Worldwide and Coleman) in
connection with certain legal matters. Joseph H. Flom, a partner in the firm of
Skadden, Arps, Slate, Meagher & Flom LLP, is a director of Revlon Group
Incorporated, a wholly owned subsidiary of MacAndrews & Forbes.
EXPERTS
The consolidated financial statements and schedules of Coleman Escrow
Corp., Coleman Worldwide Corporation and The Coleman Company, Inc. at December
31, 1996 and 1995, and for each of the three years in the period ended December
31, 1996, appearing in this Prospectus and Registration Statement have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
reports thereon appearing elsewhere herein and in the Registration Statement,
and are included in reliance upon such reports given upon the authority of such
firm as experts in accounting and auditing.
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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
COLEMAN ESCROW CORP.:
As of December 31, 1996 and 1995 and for the years ended
December 31, 1996, 1995 and 1994:
Report of Independent Auditors............................ F-2
Consolidated Balance Sheets as of December 31, 1996 and
1995................................................... F-3
Consolidated Statements of Operations for the years
ended December 31, 1996, 1995 and 1994................... F-4
Consolidated Statements of Stockholder's Deficit for the
years ended December 31, 1996, 1995 and 1994........... F-5
Consolidated Statements of Cash Flows for the years ended
December 31, 1996, 1995 and 1994....................... F-6
Notes to Consolidated Financial Statements................ F-7
As of March 31, 1997 and for the three months ended March
31, 1997 and 1996 (Unaudited):
Condensed Consolidated Balance Sheet as of March 31, 1997
(Unaudited)............................................ F-28
Condensed Consolidated Statements of Operations for the
three months ended March 31, 1997 and 1996
(Unaudited)............................................ F-29
Condensed Consolidated Statements of Cash Flows for the
three months ended March 31, 1997 and 1996
(Unaudited)............................................ F-30
Notes to Condensed Consolidated Financial Statements
(Unaudited)............................................ F-31
COLEMAN WORLDWIDE CORPORATION:
As of December 31, 1996 and 1995 and for the years ended
December 31, 1996, 1995 and 1994:
Report of Independent Auditors............................ F-33
Consolidated Balance Sheets as of December 31, 1996 and
1995................................................... F-34
Consolidated Statements of Operations for the years
ended December 31, 1996, 1995 and 1994................. F-35
Consolidated Statements of Stockholder's Equity for the
years ended December 31, 1996, 1995 and 1994........... F-36
Consolidated Statements of Cash Flows for the years
ended December 31, 1996, 1995 and 1994................. F-37
Notes to Consolidated Financial Statements................ F-38
As of March 31, 1997 and for the three months ended March
31, 1997 and 1996 (Unaudited):
Condensed Consolidated Balance Sheet as of March 31, 1997
(Unaudited)............................................ F-59
Condensed Consolidated Statements of Operations for the
three months ended March 31, 1997 and 1996
(Unaudited)............................................ F-60
Condensed Consolidated Statements of Cash Flows for the
three months ended March 31, 1997 and 1996
(Unaudited)............................................ F-61
Notes to Condensed Consolidated Financial Statements
(Unaudited)............................................ F-62
THE COLEMAN COMPANY, INC.:
As of December 31, 1996 and 1995 and for the years ended
December 31, 1996, 1995 and 1994:
Report of Independent Auditors............................ F-64
Consolidated Balance Sheets as of December 31, 1996 and
1995................................................... F-65
Consolidated Statements of Operations for the years
ended December 31, 1996, 1995 and 1994................. F-66
Consolidated Statements of Stockholders' Equity for the
years ended December 31, 1996, 1995 and 1994........... F-67
Consolidated Statements of Cash Flows for the years
ended December 31, 1996, 1995 and 1994................. F-68
Notes to Consolidated Financial Statements................ F-69
As of March 31, 1997 and for the three months ended March
31, 1997 and 1996 (Unaudited):
Condensed Consolidated Balance Sheet as of March 31, 1997
(Unaudited)............................................ F-88
Condensed Consolidated Statements of Operations for the
three months ended March 31, 1997 and 1996
(Unaudited)............................................ F-89
Condensed Consolidated Statements of Cash Flows for the
three months ended March 31, 1997 and 1996
(Unaudited)............................................ F-90
Notes to Condensed Consolidated Financial Statements
(Unaudited)............................................ F-91
</TABLE>
Separate financial statements of Coleman Holdings have not been included
herein because the consolidated net (loss) earnings, total assets, stockholder's
deficit and cash flows of the Issuer and Coleman Holdings are equivalent for all
periods for which historical financial statements are presented.
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholder
Coleman Escrow Corp.
We have audited the accompanying consolidated balance sheets of Coleman Escrow
Corp. and subsidiaries as of December 31, 1996 and 1995, and the related
consolidated statements of operations, stockholder's deficit, and cash flows for
each of the three years in the period ended December 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Coleman
Escrow Corp. and subsidiaries at December 31, 1996 and 1995, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
Denver, Colorado
March 10, 1997,
except for the first sentence
of Note 1 as to which the date
is May 7, 1997
F-2
<PAGE>
COLEMAN ESCROW CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1996 1995
---------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents....................... $ 17,299 $ 12,065
Accounts receivable, less allowance of $11,512
in 1996 and $3,115 in 1995................... 182,418 148,765
Notes receivable................................ 27,524 16,544
Inventories..................................... 287,502 216,236
Deferred tax assets............................. 40,466 20,481
Prepaid assets and other........................ 14,943 22,475
---------- --------
Total current assets......................... 570,152 436,566
Property, plant and equipment, net................ 199,182 162,691
Intangible assets related to businesses acquired,
net............................................. 349,761 225,247
Note receivable--affiliate........................ 54,739 50,685
Deferred tax assets and other..................... 34,441 34,271
---------- --------
$1,208,275 $909,460
---------- --------
---------- --------
LIABILITIES AND STOCKHOLDER'S DEFICIT
Current liabilities:
Current portion of long-term debt............... $ 747 $ 1,051
Short-term borrowings........................... 33,935 19,302
Accounts payable................................ 98,906 71,377
Accrued expenses................................ 113,040 58,245
---------- --------
Total current liabilities.................... 246,628 149,975
Long-term debt.................................... 999,794 737,621
Income taxes payable--affiliate................... 18,528 37,846
Other liabilities................................. 76,173 48,072
Minority interest................................. 45,088 49,266
Commitments and contingencies
Stockholder's deficit:
Common stock, par value $1.00 per share;
1,000 shares issued and outstanding.......... 1 1
Capital deficiency.............................. (132,674) (123,992)
(Accumulated deficit) retained earnings......... (47,883) 10,318
Currency translation adjustment................. 2,856 353
Minimum pension liability adjustment............ (236) --
---------- --------
Total stockholder's deficit.................. (177,936) (113,320)
---------- --------
$1,208,275 $909,460
---------- --------
---------- --------
</TABLE>
See Notes to Consolidated Financial Statements
F-3
<PAGE>
COLEMAN ESCROW CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1996 1995 1994
---------- -------- --------
<S> <C> <C> <C>
Net revenues...................................... $1,220,216 $933,574 $751,580
Cost of sales..................................... 928,497 649,427 535,710
---------- -------- --------
Gross profit...................................... 291,719 284,147 215,870
Selling, general and administrative expenses...... 292,012 175,036 128,664
Asset impairment charge........................... -- 12,289 --
Restructuring expense............................. -- -- 18,456
Interest expense, net............................. 75,120 57,830 43,736
Amortization of goodwill and deferred charges..... 12,304 9,558 7,864
Other (income) expense, net....................... (1,604) 283 1,138
---------- -------- --------
(Loss) earnings before income taxes, minority
interest and extraordinary item................. (86,113) 29,151 16,012
Income tax (benefit) expense...................... (23,766) 11,701 3,091
Minority interest in earnings of Camping Gaz...... 1,872 -- --
Minority interest in (loss) earnings of Coleman... (7,262) 6,696 5,734
---------- -------- --------
(Loss) earnings before extraordinary item......... (56,957) 10,754 7,187
Extraordinary loss on early extinguishment of
debt, net of income tax benefit of $846 in 1996,
$503 in 1995, and $435 in 1994.................. (1,244) (787) (677)
---------- -------- --------
Net (loss) earnings............................... $ (58,201) $ 9,967 $ 6,510
---------- -------- --------
---------- -------- --------
</TABLE>
See Notes to Consolidated Financial Statements
F-4
<PAGE>
COLEMAN ESCROW CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S DEFICIT
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
COMMON STOCK (ACCUMULATED
------------------- DEFICIT) CURRENCY MINIMUM
NUMBER CAPITAL RETAINED TRANSLATION PENSION
OF SHARES AMOUNT DEFICIENCY EARNINGS ADJUSTMENT LIABILITY
--------- ------ ---------- ------------ ------------ -------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993............ 1,000 $ 1 $ (109,319) $ (6,159) $ (215) $ --
Net earnings.......................... -- -- -- 6,510 -- --
Currency translation adjustment....... -- -- -- -- 1,185
Net distributions..................... -- -- (7,001) -- -- --
--------- --- ---------- ------------ ------------ -------
Balance at December 31, 1994............ 1,000 1 (116,320) 351 970 --
Net earnings.......................... -- -- -- 9,967 -- --
Currency translation adjustment....... -- -- -- -- (617)
Net distributions..................... -- -- (7,672) -- --
--------- --- ---------- ------------ ------------ -------
Balance at December 31, 1995............ 1,000 1 (123,992) 10,318 353 --
Net loss.............................. -- -- -- (58,201) -- --
Currency translation adjustment....... -- -- -- -- 2,503 --
Minimum pension liability adjustment,
net of tax......................... -- -- -- -- -- (236)
Net distributions..................... -- -- (8,682) -- -- --
--------- --- ---------- ------------ ------------ -------
Balance at December 31, 1996............ 1,000 $ 1 $ (132,674) $(47,883) $2,856 $(236)
--------- --- ---------- ------------ ------------ -------
--------- --- ---------- ------------ ------------ -------
</TABLE>
See Notes to Consolidated Financial Statements
F-5
<PAGE>
COLEMAN ESCROW CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1996 1995 1994
--------- -------- ---------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net (loss) earnings............................. $ (58,201) $ 9,967 $ 6,510
--------- -------- ---------
Adjustments to reconcile net (loss) earnings to
net cash flows from operating activities:
Depreciation and amortization.............. 38,189 28,335 24,410
Non-cash tax sharing agreement provision... (4,376) 7,562 (3,678)
Minority interest in (loss) earnings of
Coleman................................. (7,262) 6,696 5,734
Minority interest in earnings of Camping
Gaz..................................... 1,872 -- --
Interest accretion......................... 36,404 33,288 30,362
Non-cash gain on LYONs conversion.......... (2,755) -- --
Non-cash restructuring and other charges... 48,269 12,289 10,950
Extraordinary loss on early extinguishment
of debt................................. 2,090 1,290 1,112
Change in assets and liabilities:
Decrease (increase) in receivables...... 976 (37,833) (22,001)
Increase in inventories................. (42,402) (49,396) (10,852)
(Decrease) increase in accounts
payable............................... (12,308) 13,825 (1,403)
Other, net.............................. (5,972) (16,682) 5,504
--------- -------- ---------
52,725 (626) 40,138
--------- -------- ---------
Net cash (used) provided by operating
activities...................................... (5,476) 9,341 46,648
--------- -------- ---------
Cash Flows from Investing Activities:
Capital expenditures............................ (41,334) (29,053) (34,915)
Purchases of businesses, net of cash acquired... (161,875) (33,385) (99,587)
Increase in note receivable--affiliate.......... (4,054) (6,742) (27,052)
Proceeds from sale of fixed assets.............. 2,924 928 4,471
--------- -------- ---------
Net cash used by investing activities............. (204,339) (68,252) (157,083)
--------- -------- ---------
Cash Flows from Financing Activities:
Net change in short-term borrowings............. (11,043) 3,106 6,867
Net (payments of) proceeds from revolving
credit agreement borrowings.................. (2,779) (61,289) 129,274
Proceeds from issuance of long-term debt........ 235,000 200,000 --
Repayment of long-term debt..................... (6,778) (74,782) (10,796)
Debt issuance and refinancing costs............. (3,902) (3,569) (1,955)
Purchases of Company common stock............... (2,329) (4,086) (9,571)
Proceeds from stock options exercised including
tax benefits................................. 2,192 4,520 584
Contributions from parent....................... 331 488 345
--------- -------- ---------
Net cash provided by financing activities......... 210,692 64,388 114,748
--------- -------- ---------
Effect of exchange rate changes on cash........... 4,357 (1,731) (1,587)
--------- -------- ---------
Net increase in cash and cash equivalents......... 5,234 3,746 2,726
Cash and cash equivalents at beginning of the
year............................................ 12,065 8,319 5,593
--------- -------- ---------
Cash and cash equivalents at end of the year...... $ 17,299 $ 12,065 $ 8,319
--------- -------- ---------
--------- -------- ---------
</TABLE>
See Notes to Consolidated Financial Statements
F-6
<PAGE>
COLEMAN ESCROW CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE DATA)
1. SIGNIFICANT ACCOUNTING POLICIES
Background:
Coleman Escrow Corp. ('Coleman Escrow') is a holding company formed in May
1997 in connection with the offering of Senior Secured First Priority Discount
Notes due 2001 and Senior Secured Second Priority Discount Notes due 2001 (the
'Old Notes') to hold all of the outstanding shares of capital stock of Coleman
Holdings Inc. ('Coleman Holdings'). Coleman Holdings is a holding company formed
in July 1993 in connection with the offering of Senior Secured Discount Notes
Due 1998 (the "Old Discount Notes") to hold all of the outstanding shares of
capital stock of Coleman Worldwide Corporation ('Coleman Worldwide'). Coleman
Worldwide is a holding company formed in March 1993 in connection with the
offering of Liquid Yield Option(Trademark) Notes due 2013 (the
'LYONs'(Trademark)) to hold the common stock of The Coleman Company, Inc.
('Coleman' or the 'Company'). Coleman Worldwide owns approximately 44,067,520
shares of the common stock of the Company which represents approximately 83% of
the outstanding common stock of the Company as of December 31, 1996. Coleman
Escrow, Coleman Holdings and Coleman Worldwide have no operations of their own.
In connection with an initial public offering ('IPO'), the Company was formed in
December 1991 to succeed to the assets and liabilities of the outdoor products
business of New Coleman Holdings Inc. ('Holdings'), an indirect wholly-owned
subsidiary of Mafco Holdings Inc. ('Mafco'). Holdings (then named The Coleman
Company, Inc.) was acquired in 1989 by MacAndrews & Forbes Holdings Inc.
('MacAndrews Holdings' and, together with Mafco, 'MacAndrews & Forbes'), a
corporation wholly-owned through Mafco by Ronald O. Perelman. Coleman is a
subsidiary of Coleman Worldwide, which is an indirect wholly-owned subsidiary of
Holdings. In March 1992, the Company completed the IPO of its common stock.
Principles of Consolidation:
The consolidated financial statements include the accounts of Coleman
Holdings and its subsidiaries after elimination of all material intercompany
accounts and transactions.
Cash Equivalents:
Cash equivalents (primarily investments in money market funds and
commercial paper which are purchased with original maturities of three months or
less) are carried at cost, which approximates fair value.
Inventories:
Inventories are valued at the lower of cost or market. Cost is principally
determined by the first-in, first-out ('FIFO') method.
Property, Plant and Equipment:
Property, plant and equipment is recorded at cost and depreciated on a
straight-line basis over the estimated useful lives of such assets as follows:
land improvements, 5 to 25 years; buildings and building improvements, 7 to 45
years; and machinery and equipment, 3 to 15 years. Leasehold improvements are
amortized over their estimated useful lives or the terms of the leases,
whichever is shorter. Repairs and maintenance are charged to operations as
incurred, and significant expenditures for additions and improvements are
capitalized.
Intangible Assets:
Intangible assets represent goodwill which is being amortized on a
straight-line basis over periods not in excess of 40 years. Accumulated
amortization aggregated $39,520 and $29,664 at December 31, 1996 and 1995,
respectively. The carrying amount of goodwill is reviewed if facts and
circumstances suggest it may be impaired.
If this review indicates goodwill will not be recoverable over the
remaining amortization period, as determined based on the estimated undiscounted
cash flows of the entity acquired, the carrying amount of the goodwill is
reduced to estimated fair value based on market value or discounted cash flows,
as appropriate.
F-7
<PAGE>
COLEMAN ESCROW CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
1. SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Deferred Charges:
Expenses associated with borrowings, such as for underwriting, legal fees
and printing costs, are amortized over the term of the related debt.
Revenue Recognition:
The Company recognizes net revenues upon shipment of merchandise. Net
revenues comprise gross revenues less customer returns and allowances.
Advertising and Promotion Expense:
Production costs of future media advertising are deferred until the
advertising occurs. All other advertising and promotion costs are expensed when
incurred. The amounts charged against operations for the years ended December
31, 1996, 1995 and 1994 were $58,823, $37,544 and $30,831, respectively.
Research and Development:
Research and development expenditures are expensed as incurred. The amounts
charged against operations for the years ended December 31, 1996, 1995 and 1994
were $11,082, $6,548, and $5,230, respectively.
Self Insurance:
Coleman Escrow participates in insurance programs maintained by Holdings.
Coleman Escrow estimates its liability for the self-insured portions of the
risks covered by such programs and accrues appropriate reserves. (See Note 11.)
Foreign Currency Translation:
The Company's international operations, other than its Brazilian and
Mexican operations, are conducted in economic environments which the Company
does not consider to be highly inflationary. Assets and liabilities of
international operations generally are translated into U.S. dollars at the rates
of exchange in effect at the balance sheet date, and income and expense items
generally are translated at the average exchange rates prevailing during the
period presented. Gains and losses resulting from the translation of these
financial statements are recorded as a component of stockholder's equity. Gains
and losses resulting from foreign currency transactions and translation of the
financial statements of the Company's Brazilian and Mexican operations are
included in the results of operations and have not been significant for the
years ended December 31, 1996, 1995 and 1994.
Financial Instruments with Off-Balance-Sheet Risk:
The Company periodically enters into a variety of foreign currency exchange
agreements in the management of foreign currency exposure related primarily to
firm commitments, intercompany foreign sales transactions expected to occur
within the next twelve months and intercompany accounts receivables and
payables.
At December 31, 1996, the Company did not have any outstanding foreign
currency exchange agreements related to firm commitments. At December 31, 1995,
the Company had a forward exchange contract to buy $15,000 of Italian lira
maturing on May 31, 1996 and had an unrecognized gain of $93. The gains and
losses from this contract are accounted for under the deferral method and are
recognized and included in income in the same period as a component of the
related hedged transactions. In the event it is no longer probable the
transactions will be consummated, the gains and losses are recognized
immediately in income under the fair value method. At December 31, 1995, the
Company had outstanding option contracts for the purchase or sale of Italian
lira totaling $10,500, which contracts expired during 1996.
During the fourth quarter of 1995, the Company elected to adopt the
provisions of the Emerging Issues Task Force Issue No. 95-2, 'Determination of
What Constitutes a Firm Commitment for Foreign Currency
F-8
<PAGE>
COLEMAN ESCROW CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
1. SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Transactions Not Involving a Third Party' ('EITF 95-2') which narrowed the scope
of intercompany foreign currency commitments eligible to be hedged for financial
reporting purposes. Under EITF 95-2, the Company reflects the carrying value of
its forward currency contract positions relating to intercompany foreign sales
transactions on a mark-to-market basis and accounts for the resulting
unrecognized gains or losses in income as a component of cost of sales. As a
result of this change, the Company increased net income by $3,796 in the fourth
quarter of 1995. Prior to the adoption of EITF 95-2, the gains and losses
associated with these contracts were accounted for under the deferral method. At
December 31, 1996, the Company had forward exchange contracts to sell $8,500 in
Canadian dollars maturing on February 28, 1997, for which the Company has
recognized a net gain of $40 as a component of cost of sales. At December 31,
1995, the Company had forward exchange contracts to sell $22,969 in foreign
currencies, which contracts matured at various dates in 1996 and for which the
Company has recognized a net gain of $7,599 as a component of cost of sales.
The Company also enters into option contracts to hedge intercompany foreign
sales transactions. Gains and losses on these contracts are deferred and
recognized as an adjustment to cost of sales upon the sale of the related
inventory. At December 31, 1996 and 1995, the Company had outstanding option
contracts for the sale of Japanese yen at fixed exchange rates totaling $20,038
and $24,926 for specified periods of time which expire during 1997 and 1996,
respectively. Net unrealized gains deferred at December 31, 1996 and 1995 were
$653 and $125, respectively.
With respect to intercompany accounts receivable and payables, at December
31, 1996, the Company had forward exchange contracts to sell $26,623 and to buy
$3,898 in foreign currencies, which contracts matured at various dates in 1997,
and had deferred a net gain of $185. At December 31, 1995, the Company had
forward exchange contracts to sell $31,152 and to buy $1,712 in foreign
currencies, which contracts matured at various dates in 1996 and had deferred a
net gain of $56. The gains and losses from these contracts are accounted for
under the deferral method and are recognized and included in income in the same
period as a component of the related hedged transactions.
The Company periodically enters into interest rate swap and cap agreements
as a hedge against interest rate exposure of variable rate debt. At December 31,
1996, $25,000 of the Company's outstanding long-term debt was subject to an
interest rate swap agreement and $25,000 of the Company's outstanding long-term
debt was subject to an interest rate cap. Under the interest rate swap
agreement, the Company pays the counterparty interest at a fixed rate of 6.115%,
and the counterparty pays the Company interest at a variable rate equal to the
three month LIBOR for a seven year period commencing January 2, 1996. The
agreement is with a major financial institution which is expected to fully
perform under the terms of the agreement, thereby mitigating the credit risk
from the transaction. The differences to be paid or received on interest rate
swap agreements designated as hedges are included in interest expense as
payments are made or received. The interest rate cap agreement entitles the
Company to receive from a major financial institution the amount, if any, by
which the Company's interest payments on $25,000 of its variable rate debt
exceed 7.35%. The $509 premium paid for this interest rate cap agreement is
included in other assets and is amortized to interest expense over the
three-year term of the cap, which commenced January 3, 1995. Payments received
as a result of the cap are accrued as a reduction of interest expense on the
variable rate debt. In the event the interest rate swap or cap agreements are
terminated early and the related debt remains outstanding, the amounts paid or
received upon the early termination, along with any unamortized premium, will
continue to be amortized over the terms of the original interest rate swap and
cap agreements.
Credit Risk:
Financial instruments which potentially subject the Company to
concentrations of credit risk consist primarily of trade receivables and
derivative financial instruments. Credit risk on trade receivables is minimized
as a result of the large and diversified nature of the Company's worldwide
customer base. Although the Company
F-9
<PAGE>
COLEMAN ESCROW CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
1. SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
has one significant customer (See Note 14), there have been no credit losses
related to this customer. With respect to its derivative contracts, the Company
is also subject to credit risk of non performance by counterparties and its
maximum potential loss may exceed the amount recognized in the financial
statements. The Company controls its exposure to credit risk through credit
approvals, credit limits and monitoring procedures. Collateral is generally not
required for the Company's financial instruments.
Fair Value of Financial Instruments:
The following methods and assumptions were used by Coleman Escrow in
estimating its fair value disclosures for financial instruments:
Cash and cash equivalents: The carrying amount reported in the
balance sheet for cash and cash equivalents approximates its fair value.
Long- and short-term debt: The carrying amounts of Coleman Escrow's
borrowings under its foreign bank lines of credit, revolving credit
agreement and other variable rate debt approximate their fair value. The
fair value of the Company's senior notes issues (see Note 9) are estimated
using discounted cash flow analysis based on the Company's estimated
current borrowing rate for similar types of borrowing arrangements. The
fair value of the publicly traded LYONs debt and Discount Notes is based on
quoted market prices.
Foreign currency exchange agreements: The fair values of Coleman
Escrow's foreign currency agreements are estimated based on quoted market
prices of comparable agreements, adjusted through interpolation where
necessary for maturity differences.
Interest rate swap and cap agreements: The fair values of interest
rate swap and cap agreements are the amounts at which they could be
terminated, based on estimates obtained from dealers.
The carrying amounts and fair values of Coleman Escrow's financial
instruments at December 31, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1996 DECEMBER 31, 1995
-------------------------- --------------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
OF ASSET/ OF ASSET/ OF ASSET/ OF ASSET/
(LIABILITY) (LIABILITY) (LIABILITY) (LIABILITY)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Cash and cash equivalents............... $ 17,299 $ 17,299 $ 12,065 $ 12,065
Short-term debt......................... (33,935) (33,935) (19,302) (19,302)
Long-term debt excluding capital
leases................................ (999,947) (972,821) (737,895) (770,667)
Foreign currency exchange agreements.... 940 1,629 8,026 8,287
Interest rate swap agreements........... -- 296 -- (635)
Interest rate cap agreement............. 170 1 340 18
</TABLE>
USE OF ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
F-10
<PAGE>
COLEMAN ESCROW CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
1. SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Reclassifications:
Certain amounts in the prior years' financial statements have been
reclassified to conform to the current year presentation.
Accounting for Stock-Based Compensation:
The Company accounts for its stock compensation arrangements under the
provisions of Accounting Principles Board Opinion No. 25, 'Accounting for Stock
Issued to Employees' ('APB 25') and related pronouncements. Under the provisions
of APB 25, no compensation expense is recognized when stock options are granted
with exercise prices equal to or greater than market value on the date of grant.
Impairment of Long-Lived Assets:
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, 'Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of' ('FAS 121'),
which requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amount. FAS 121 also addresses the accounting for long-lived assets
expected to be disposed of. The Company adopted FAS 121 in the fourth quarter of
1995. The effect of the adoption of FAS 121 is described in Note 3.
2. ACQUISITIONS
During April 1994, the Company purchased substantially all the assets of
Sanborn Manufacturing Company ('Sanborn') in Eden Prairie, Minnesota, a
manufacturer of a broad line of portable and stationary air compressors for
consumer and commercial markets distributed primarily through warehouse clubs,
home centers and mass merchants in North America, and substantially all the
assets and business of Metal Yanes, Ltda. ('Yanes') in Sao Paulo, Brazil, a
manufacturer of camping products, including propane and butane fueled lanterns,
camp stoves, tents, lantern mantles and fuel. The Sanborn and Yanes
acquisitions, which were accounted for under the purchase method of accounting,
were completed for the following consideration: (a) approximately $41,066 in
cash financed through borrowings under the Company Credit Agreement (as defined
in Note 9), (b) assumption of liabilities in the amount of $22,193, and (c) a
note payable of $2,999. During 1995, in connection with the Sanborn acquisition,
the Company entered into a settlement agreement with the predecessor owners
which resolved certain disputes between the parties as well as fulfilled certain
obligations owed and anticipated to be owed by the Company to the predecessor
owners. These anticipated obligations related to a requirement to make
additional payments of up to $4,000 based upon the achievement of certain annual
sales levels during the five year period ending December 31, 1998 by Coleman
Powermate Compressors, Inc. ('Compressors'), the Company's subsidiary that
acquired the Sanborn assets (the 'Sales Agreement'). As a result of the
settlement, goodwill was increased by $3,282. For 1994, approximately $671 was
earned under the terms of the Sales Agreement based on the 1994 sales levels of
Compressors, and this amount was recorded as additional goodwill in 1994. The
results of operations of these businesses have been included in the consolidated
financial statements from the dates of acquisitions.
On November 2, 1994, the Company purchased substantially all the assets of
Eastpak, Inc. and all of the capital stock of M.G. Industries, Inc.
(collectively, 'Eastpak'), a leading designer, manufacturer and distributor of
branded daypacks, sports bags and related products. The Eastpak acquisition,
which was accounted for under the purchase method, was completed for
approximately $57,850 in cash financed through borrowings under the Company
Credit Agreement, and assumption of certain liabilities in the amount of $4,130.
The Company also entered into an agreement with the predecessor owner of Eastpak
to make additional payments based upon the
F-11
<PAGE>
COLEMAN ESCROW CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
2. ACQUISITIONS--(CONTINUED)
achievement of certain annual sales levels of Eastpak products and other
products substantially similar to the Eastpak products during the years ended
December 31, 1995, 1996, and 1997. For 1995 and 1996, a total of approximately
$11,000 was recorded under the terms of this agreement. An additional amount of
up to $12,000 may be earned during the year ended December 31, 1997. These
amounts are recorded as additional goodwill. The results of operations of
Eastpak have been included in the consolidated financial statements from the
date of acquisition.
In connection with the final purchase price allocations of the Sanborn and
Eastpak acquisitions, the Company recorded goodwill of approximately $53,000.
The Company is amortizing these amounts over 40 years. The goodwill of
approximately $7,700 associated with the Yanes acquisition was included in the
1995 asset impairment charge of $12,289 related to the Company's operations in
Brazil, which is further discussed in Note 3.
During 1995, the Company purchased all of the outstanding shares of capital
stock of Sierra Corporation of Fort Smith, Inc. ('Sierra'), a manufacturer of
portable outdoor and recreational folding furniture and accessories, and
substantially all of the assets of Active Technologies, Inc. ('ATI'), a
manufacturer of technologically advanced lightweight generators and battery
charging equipment. The aggregate purchase price for these acquisitions was
$19,516 including fees and expenses. These acquisitions were accounted for using
the purchase method of accounting. The purchase price and expenses associated
with these acquisitions exceeded the fair value of net assets acquired by
$11,186 and the excess has been assigned to goodwill and is being amortized over
20 to 30 years on the straight-line basis. In connection with the ATI purchase,
the Company may also be required to record an additional amount of up to $18,750
based on the Company's sales of ATI related products and royalties received by
the Company for licensing arrangements related to ATI patents. For 1995 and
1996, the amounts earned under the terms of this agreement were immaterial.
Amounts earned under the terms of the agreement are recorded as additional
goodwill. The results of operations of these companies on a pro forma basis as
if their acquisitions had occurred at the beginning of 1995 and 1994,
respectively, individually and in the aggregate were not significant to Coleman
Holdings.
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 safety and security related electronic products
for residential and commercial applications. The Seatt acquisition, which was
accounted for under the purchase method, was completed for approximately $65,300
including fees and expenses. The results of operations of Seatt have been
included in the consolidated financial statements from the date of acquisition.
In connection with the purchase price allocation of the Seatt acquisition, the
Company recorded goodwill of approximately $38,800. The Company is amortizing
this amount over 40 years on the straight-line method.
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 (the 'Share Purchase Agreement') in connection with the sale
to Coleman of approximately 70% of the outstanding shares of Application des
Gaz, S.A. 'ADG' or 'Camping Gaz'). Camping Gaz is a leading manufacturer and
distributor of camping appliances in Europe. On June 24, 1996, Coleman commenced
a public tender offer for the purchase of all the publicly traded outstanding
shares of ADG, or approximately 30% of the outstanding shares. The tender offer
period expired in July 1996 with approximately 94% of the outstanding publicly
traded shares of ADG tendered for purchase. The Company completed the necessary
steps to acquire the remaining publicly held stock during the third quarter of
1996. The cost of acquiring all the shares of ADG was approximately $100,000
including fees and expenses.
The acquisition of Camping Gaz is being accounted for under the purchase
method. In connection with the allocation of purchase price to the fair values
of assets acquired and liabilities assumed, the Company recorded goodwill of
approximately $84,200, which is being amortized over 40 years on the
straight-line method. The
F-12
<PAGE>
COLEMAN ESCROW CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
2. ACQUISITIONS--(CONTINUED)
Company also recognized liabilities in the amount of $21,898 representing
severance and other termination benefits for production and administrative
employees of Camping Gaz who will be terminated. The Company paid termination
costs of approximately $4,385 during 1996 and anticipates all remaining
termination costs will be paid during 1997.
The Company has included the results of operations of Camping Gaz in the
consolidated financial statements from March 1, 1996, the date on which the
Company obtained control of Camping Gaz, and has recognized minority interest
related to the publicly traded shares for the period March 1, 1996 through June
30, 1996.
The following summarized, unaudited pro forma results of operations of
Coleman Escrow for the years ended December 31, 1996 and 1995 assume the
acquisition of Seatt and the acquisition of all the outstanding shares of
Camping Gaz occurred as of the beginning of the respective periods. The pro
forma results include certain adjustments, primarily reflecting increased
amortization and interest expense and a lower income tax provision, and are not
necessarily indicative of what the results of operations would have been had the
Seatt and Camping Gaz acquisitions occurred at the beginning of the respective
periods. Moreover, the pro forma information is not intended to be indicative of
future results of operations.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------------------
1996 1995
---------- ----------
<S> <C> <C>
Net revenues...................................... $1,246,370 $1,193,295
(Loss) earnings before extraordinary item......... (57,091) 9,996
Net (loss) earnings............................... (58,335) 9,209
</TABLE>
3. RESTRUCTURING, ASSET IMPAIRMENT AND OTHER CHARGES
During 1996, the Company recorded restructuring and certain other charges
totaling $52,516, net of tax. The restructuring charges total $45,086, net of
tax, and consist of charges to a) integrate the Camping Gaz and Coleman
operations into a single global recreation products business, b) exit the low
end electric pressure washer business, c) exit a portion of the Company's
battery powered light business and settle certain litigation with respect to
this business, and d) increase the valuation reserve for certain foreign
deferred income tax assets. Other charges of $7,430, net of tax, relate to
certain asset write-offs and other tax matters. These other charges were
incurred in the Company's normal course of business, although the amounts
involved are higher than similar charges the Company has recorded in prior
periods. Cost of sales includes a pre-tax charge of $44,005, selling, general
and administrative expenses includes a pre-tax charge of $30,195, and the
provision for income tax expense includes $21,684 of tax benefits resulting from
these charges, net of the effect of an increase in the valuation reserve related
to certain foreign deferred tax assets and other foreign tax charges.
During 1995, in connection with the adoption of FAS 121, the Company
recognized an asset impairment charge of $12,289 related to its Brazilian
operations. The Brazilian operations had not performed to the Company's
expectations since acquisition of this business in April of 1994, and in the
fourth quarter of 1995, the Company initiated actions to reduce the operating
losses in Brazil. These actions included replacing management, increasing
prices, downsizing the manufacturing operations and reducing SG&A and other
expenses. Because of these actions, the Company performed an impairment review
pursuant to the guidelines set forth in FAS 121 and concluded recognition of an
asset impairment charge was appropriate. The basis of the fair values used in
the computation of the charge were appraisals for property and equipment and
estimated discounted cash flows for goodwill. The charge has been included in
the statement of operations under the caption 'Asset Impairment Charge'.
F-13
<PAGE>
COLEMAN ESCROW CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
3. RESTRUCTURING, ASSET IMPAIRMENT AND OTHER CHARGES--(CONTINUED)
During September 1994, the Company restructured its German manufacturing
operations. The German Restructuring included the sale of the low margin plastic
cooler business located in Inheiden, Germany and Loucka, Czech Republic,
including inventory, to a management group. The German Restructuring resulted in
a one-time charge of approximately $17,956 before tax and included severance
costs of $1,541, commitments to third parties of approximately $5,465 and
write-downs of leasehold improvements and other assets to estimated realizable
values aggregating $10,950. As a result of the restructuring, the German work
force was reduced by about 150 employees from a pre-restructuring level of
approximately 250 employees. The restructuring was substantially completed in
1994. In connection with the restructuring, the Company recognized tax benefits
of approximately $10,900 relating to the write-off of the Company's investment
in its German operations. The Company also announced a plan to change from
manufacturing to sourcing for certain textile product lines and to exit the
market for personal flotation devices. This plan resulted in a $500 pre-tax
charge.
4. INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
Raw material and supplies......................... $ 82,399 $ 57,653
Work-in-process................................... 12,878 5,389
Finished goods.................................... 192,225 153,194
-------- --------
$287,502 $216,236
-------- --------
-------- --------
</TABLE>
Generally, inventory costs are determined by the FIFO method; however,
approximately 13% and 10% of total inventories at December 31, 1996 and 1995,
respectively, are determined using the last-in, first-out ('LIFO') method. If
such inventories were stated using the FIFO method, such amounts would
approximate the LIFO carrying values.
5. PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment, net consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
Land and land improvements........................ $ 8,772 $ 6,318
Buildings and building improvements............... 78,760 67,989
Machinery and equipment........................... 194,714 142,941
Construction-in-progress.......................... 15,519 13,105
-------- --------
297,765 230,353
Accumulated depreciation.......................... (98,583) (67,662)
-------- --------
$199,182 $162,691
-------- --------
-------- --------
</TABLE>
Depreciation expense was $25,770, $19,142, and $16,793 for the years ended
December 31, 1996, 1995 and 1994, respectively.
F-14
<PAGE>
COLEMAN ESCROW CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
6. ACCRUED EXPENSES
Accrued expenses consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
Compensation and related benefits................. $ 29,331 $ 14,201
Other............................................. 83,709 44,044
-------- --------
$113,040 $ 58,245
-------- --------
-------- --------
</TABLE>
7. OTHER LIABILITIES
Other liabilities consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
Pensions and other postretirement benefits........ $ 52,229 $ 40,240
Other............................................. 23,944 7,832
-------- --------
$ 76,173 $ 48,072
-------- --------
-------- --------
</TABLE>
8. SHORT-TERM BORROWINGS
The Company maintained foreign bank lines of credit aggregating $119,101,
and $64,375, of which $33,935 and $19,302 were outstanding at December 31, 1996
and 1995, respectively. The weighted average interest rate on amounts borrowed
was approximately 2.4% and 7.1% at December 31, 1996 and 1995, respectively.
Outstanding letters of credit aggregated approximately $32,897 and $40,036
at December 31, 1996 and 1995, respectively.
9. LONG-TERM DEBT
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1996 1995
---------- --------
<S> <C> <C>
7.26% Senior Notes due 2007(a).................... $ 200,000 $200,000
7.10% Senior Notes due 2006(b).................... 85,000 --
7.25% Senior Notes due 2008(c).................... 75,000 --
Revolving credit facility(d)...................... 146,350 150,150
Term loan(d)...................................... 73,478 --
Liquid Yield Option -TM- Notes due 2013(e)........ 174,594 165,434
Series B Senior Secured Discount Notes due in
1998(f)......................................... 242,334 217,981
Other............................................. 3,785 5,107
---------- --------
1,000,541 738,672
Less current portion.............................. 747 1,051
---------- --------
$ 999,794 $737,621
---------- --------
---------- --------
</TABLE>
F-15
<PAGE>
COLEMAN ESCROW CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
9. LONG-TERM DEBT--(CONTINUED)
- ------------------------
<TABLE>
<S> <C>
(a) On August 8, 1995, the Company completed a private placement issuance
and sale of $200,000 aggregate principal amount of 7.26% Senior Notes
due 2007 (the '2007 Notes'). Interest on the 2007 Notes is payable
semiannually, and the principal is payable in annual installments of
$40,000 each commencing August 8, 2003, with a final installment
payment of $40,000 due on August 8, 2007. If there is a default, the
interest rate will be the greater of (i) 9.26% or (ii) 2.0% above the
prime interest rate.
The 2007 Notes are unsecured and are subject to 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 and sale and leaseback transactions under the terms of
the note purchase agreement. The 2007 Notes shall become secured if
the Company Credit Agreement becomes secured as discussed in (d)
below.
(b) On June 13, 1996, the Company completed a private placement issuance
and sale of $85,000 aggregate principal amount of 7.10% Senior Notes
due 2006 (the '2006 Notes'). Interest on the 2006 Notes is payable
semiannually, and the principal is payable in annual installments of
$12,143 each commencing June 13, 2000, with a final installment
payment of $12,143 due on June 13, 2006. If there is a default, the
interest rate will be the greater of (i) 9.10% or (ii) 2.0% above the
prime interest rate.
The 2006 Notes are unsecured and are subject to 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 and sale and leaseback transactions under the terms of
the note purchase agreement. The 2006 Notes shall become secured if
the Company Credit Agreement becomes secured as discussed in (d)
below.
(c) On June 13, 1996, the Company completed a private placement issuance
and sale of $75,000 aggregate principal amount of 7.25% Senior Notes
due 2008 (the '2008 Notes'). Interest on the 2008 Notes is payable
semiannually, and the principal is payable in annual installments of
$15,000 each commencing June 13, 2004, with a final installment
payment of $15,000 due on June 13, 2008. If there is a default, the
interest rate will be the greater of (i) 9.25% or (ii) 2.0% above the
prime interest rate.
The 2008 Notes are unsecured and are subject to 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 and sale and leaseback transactions under the terms of
the note purchase agreement. The 2008 Notes shall become secured if
the Company Credit Agreement becomes secured as discussed in (d)
below.
(d) In April 1996, the Company amended its credit agreement to: a) provide
a term loan of French Franc 385,125 ($73,478 at current exchange
rates), b) provide an unsecured revolving credit facility in an amount
of $275,000, c) allow for the Camping Gaz acquisition and d) extend
the maturity of the credit agreement (as amended, the 'Company Credit
Agreement'). In connection with the Company recording the
restructuring and other charges as discussed in Note 3 and lower than
expected operating results, the Company further amended the Company
Credit Agreement in October 1996 and again in March 1997.
The Company Credit Agreement 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 2.125% 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.
The Company Credit Agreement also bears an overall facility fee
ranging from .15% to .375% based on the Company's financial
performance.
</TABLE>
F-16
<PAGE>
COLEMAN ESCROW CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
9. LONG-TERM DEBT--(CONTINUED)
<TABLE>
<S> <C>
The Company Credit Agreement contains various restrictive covenants
including, without limitation, requirements for the maintenance of
specified financial ratios, levels of consolidated net worth and
profits, and certain other provisions limiting the incurrence of
additional debt, purchase or redemption of the Company's common stock,
issuance of preferred stock of the Company, and also prohibits the
Company from paying any dividends until on or after January 1, 1999
and limits the amount of dividends the Company may pay thereafter. The
Company Credit Agreement also provides for a specific requirement
relating to the Company's financial leverage at December 31, 1997
which, if not achieved, will result in the Company Credit Agreement
becoming secured by the Company's assets. In addition, substantially
all of the shares of the Company's common stock owned by Coleman
Worldwide are pledged to secure indebtedness of Coleman Worldwide and
of its parent, Coleman Holdings Inc. The indentures governing this
indebtedness contain various covenants including a covenant placing
certain limitations on the Company's indebtedness.
(e) On May 27, 1993, Coleman Worldwide issued and sold $500,000 principal
amount at maturity of LYONs in an underwritten public offering. On
June 7, 1993, an additional $75,000 principal amount at maturity of
LYONs was sold upon exercise of the underwriter's overallotment
option.
The LYONs mature on May 27, 2013 and are secured by 16,394,810 shares
of common stock of Coleman. There are no periodic payments of interest
on the LYONs. The aggregate principal amount of the LYONs represents a
yield to maturity of 7.25% per annum (computed on a semiannual bond
equivalent basis) calculated from May 27, 1993.
Each LYON has a principal amount at maturity of $1 and is
exchangeable, at the option of the holder, at any time on or prior to
maturity (unless previously redeemed or otherwise purchased) for
shares of common stock of Coleman securing the LYONs at an exchange
rate of 15.706 shares of common stock of Coleman per LYON, subject to
Coleman Worldwide's right to pay cash equal to the then market value
(as defined) of such shares in lieu, in whole or in part, of
delivering such shares. The exchange rate will not be adjusted for
original issue discount ('OID') but will be subject to adjustment upon
the occurrence of certain events affecting the common stock of
Coleman.
The LYONs are redeemable by Coleman Worldwide on or after May 27,
1998, at the option of Coleman Worldwide, in whole or in part, at
redemption prices equal to the issue price plus accrued OID through
but excluding the date of redemption, payable solely in cash. Coleman
Worldwide will purchase any LYON, at the option of the holder, on May
27, 1998, May 27, 2003 and May 27, 2008 (each, a 'Purchase Date') for
a purchase price per LYON equal to the issue price plus accrued OID
through but excluding each such Purchase Date, representing a yield
per annum to the holder on each such date of 7.25% computed on a
semiannual bond equivalent basis. Coleman Worldwide may, at its
option, elect to pay the purchase price on any Purchase Date either in
cash or shares of common stock of Coleman or any combination thereof.
The Indenture governing the LYONs provides the holders of LYONs with
the option to require Coleman Worldwide to purchase the LYONs after
the occurrence of certain events ('Additional Purchase Right Events').
Additional Purchase Right Events occur, among other things, upon the
Company's Consolidated Debt Ratio (as defined) exceeding 0.75 to 1.0
or the Consolidated Net Worth (as defined) of Coleman Worldwide as of
the end of any fiscal quarter being less than a specified amount which
is $60,000 at March 31, 1997 and increases to $70,000 at June 30,
1997.
(f) On July 22, 1993, Coleman Holdings issued and sold $281,281 principal
amount at maturity of Old Discount 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 Discount Notes for
Series B Senior Secured Discount Notes (the 'Discount Notes').
</TABLE>
F-17
<PAGE>
COLEMAN ESCROW CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
9. LONG-TERM DEBT--(CONTINUED)
<TABLE>
<S> <C>
The Discount Notes mature on May 27, 1998 and are secured by all the
shares of Coleman Worldwide. In addition, Coleman Worldwide has
provided a non-recourse guaranty, which is secured by its pledge of
26,000,000 shares of Coleman Common Stock. There are no periodic
payments of interest on the Discount Notes. The aggregate principal
amount of the Discount Notes represents a yield to maturity of 10.875%
per annum (computed on a semiannual bond equivalent basis) calculated
from July 22, 1993.
The Indenture governing the Discount Notes contains certain covenants
that, among other things, states that Coleman Holdings shall not
permit the Company to issue debt if after giving effect to such
issuance the Company's Consolidated Debt Ratio (as defined) exceeds
0.75 to 1.0.
The Discount Notes are redeemable by Coleman Holdings on or after July
15, 1996, at the option of Coleman Holdings, in whole or in part, at
redemption prices listed below (expressed as percentages of Accreted
Value as of the redemption date) for the periods indicated plus
accrued and unpaid interest, if any, to the redemption date (subject
to the right of holders of record on the relevant record date to
receive interest due, if any, on the relevant interest payment date):
</TABLE>
<TABLE>
<CAPTION>
REDEMPTION
PERIOD PRICE
- ------------------------------------------------------------- ----------
<S> <C>
From July 15, 1996 through July 14, 1997..................... 104.350%
From July 15, 1997 through January 14, 1998.................. 102.175%
</TABLE>
Thereafter, Coleman Holdings may redeem the Discount Notes in whole at
any time or in part from time to time at a redemption price of 100% of
the aggregate principal amount at maturity of the Discount Notes to be
redeemed plus accrued and unpaid interest, if any, to the redemption
date.
The aggregate scheduled amounts of long-term debt maturities in the years
1997 through 2001 are $747, $281,781, $2,357, $12,207, and $232,005,
respectively.
10. INCOME TAXES
Coleman Escrow is included in the consolidated federal and certain
consolidated state income tax returns of Mafco and/or its affiliates. Coleman
Holdings and Mafco have entered into a tax sharing agreement (the 'Holdings Tax
Sharing Agreement') pursuant to which Coleman Holdings will pay to Mafco amounts
equal to the taxes that Coleman Holdings would otherwise have to pay if it were
to file separate tax returns for itself. To the extent that Coleman Holdings is
entitled to a tax benefit from Mafco as a result of its tax losses, such amounts
are recorded as a reduction in the provision for income taxes and a distribution
to its parent. During 1996 and 1995, Coleman Escrow recorded a $9,013 and
$8,160, respectively, benefit for income taxes and similar amounts were recorded
as distributions to its parent. Coleman Worldwide and Mafco are parties to a tax
sharing agreement (the 'Tax Sharing Agreement'), pursuant to which Coleman
Worldwide is required to pay to Mafco amounts equal to the taxes that Coleman
Worldwide would otherwise have to pay if it were to file separate consolidated
federal, state or local income tax returns including only itself and its
domestic subsidiaries. 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 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 $54,739 at
December 31, 1996. As a result of the restriction on the payment of the tax
sharing amounts, income taxes provided pursuant to the Tax Sharing Agreement are
reflected as a non-cash charge. For all periods presented, federal and state
income taxes are provided as if Coleman Worldwide filed its
F-18
<PAGE>
COLEMAN ESCROW CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
10. INCOME TAXES--(CONTINUED)
own income tax returns. The accompanying consolidated balance sheet includes
approximately $18,528 and $37,846 of federal and state income taxes payable to
Mafco pursuant to the Tax Sharing Agreement at December 31, 1996 and 1995,
respectively.
For financial reporting purposes, (loss) earnings before income taxes,
minority interest and extraordinary item include the following components:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1996 1995 1994
-------- ------- -------
<S> <C> <C> <C>
Earnings (loss) earnings before income
taxes, minority interest and
extraordinary item:
Domestic.............................. $(65,344) $43,585 $38,387
Foreign............................... (20,769) (14,434) (22,375)
-------- ------- -------
$(86,113) $29,151 $16,012
-------- ------- -------
-------- ------- -------
</TABLE>
Significant components of the provision for income tax (benefit) expense
were as follow:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1996 1995 1994
-------- ------- -------
<S> <C> <C> <C>
Current:
Federal............................... $(12,945) $ 6,360 $(4,199)
State................................. (937) 3,102 899
Foreign............................... 3,454 3,853 2,248
-------- ------- -------
Total current...................... (10,428) 13,315 (1,052)
-------- ------- -------
Deferred:
Federal............................... (10,686) (3,104) 6,069
State................................. (2,178) (725) 1,114
Foreign............................... (474) 2,215 (3,040)
-------- ------- -------
Total deferred..................... (13,338) (1,614) 4,143
-------- ------- -------
$(23,766) $11,701 $ 3,091
-------- ------- -------
-------- ------- -------
</TABLE>
The effective tax rate on (loss) earnings before income taxes, minority
interest and extraordinary item varies from the current statutory federal income
tax rate as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1996 1995 1994
----- ---- -----
<S> <C> <C> <C>
(Benefit) provision at statutory rate... (35.0)% 35.0% 35.0%
State taxes, net........................ (3.2) 4.0 8.0
Recognition of permanent basis
differences related to loss on
restructuring of foreign investment... -- -- (30.9)
Nondeductible amortization.............. 3.0 6.8 10.4
Foreign operations...................... 2.6 (0.4) (7.6)
Valuation allowance..................... 4.1 -- --
Puerto Rico operations.................. 0.2 (5.7) --
Other, net.............................. 0.7 0.4 4.4
----- ---- -----
Effective tax rate (benefit)
provision............................. (27.6)% 40.1% 19.3%
----- ---- -----
----- ---- -----
</TABLE>
F-19
<PAGE>
COLEMAN ESCROW CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
10. INCOME TAXES--(CONTINUED)
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
Coleman Escrow's deferred tax liabilities and assets are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1996 1995
------- -------
<S> <C> <C>
Deferred tax assets:
Postretirement benefits other than pensions..... $12,370 $11,986
Reserves for self-insurance and warranty
costs........................................ 6,678 4,777
Pension liabilities............................. 8,828 4,942
Inventory....................................... 8,245 5,579
Net operating loss carryforwards................ 14,875 3,103
Impaired assets................................. -- 10,068
Other, net...................................... 24,026 5,555
------- -------
Total deferred tax assets.................... 75,022 46,010
Valuation allowance............................. (7,501) --
------- -------
Net deferred tax assets......................... 67,521 46,010
------- -------
Deferred tax liabilities:
Depreciation.................................... 18,248 17,611
Other, net...................................... 7,675 5,125
------- -------
Total deferred tax liabilities............... 25,923 22,736
------- -------
Net deferred tax assets......................... $41,598 $23,274
------- -------
------- -------
</TABLE>
During 1996, Coleman Escrow increased the valuation allowance related to
certain foreign deferred tax assets due to uncertainties over realization. At
December 31, 1996, Coleman Escrow had net operating loss carryforwards ('NOL's')
of approximately $42,677 for certain foreign income tax purposes. These NOL's
expire beginning in 1999.
Coleman Escrow has not provided for taxes on undistributed foreign earnings
of approximately $16,904 at December 31, 1996 as Coleman Escrow intends to
permanently reinvest these earnings in the future growth of the business.
Determination of the amount of unrecognized deferred U.S. income tax liability
is not practicable because of the complexities associated with its hypothetical
calculation.
11. RELATED PARTY TRANSACTIONS
In 1996, the Company entered into an agreement with an affiliate in which
the Company realized approximately $1,800 of net tax benefits associated with
certain foreign tax net operating loss carry forwards that had not previously
been recognized.
The Company provided management services to certain affiliates pursuant to
a management agreement through June 30, 1995. The consolidated financial
statements reflect the management fees as a reduction in selling, general and
administration expenses. For the years ended December 31, 1995 and 1994,
management fees earned by the Company were $2,400 and $4,800, respectively.
MacAndrews & Forbes provides Coleman Escrow, at Coleman Escrow's request,
with certain allocated services, pursuant to a services agreement. These
allocated services are purchased by MacAndrews & Forbes from third party
providers on behalf of Coleman Escrow. Such services include professional
services, such as legal and accounting, insurance coverage and other services.
Coleman Escrow reimburses MacAndrews & Forbes for that portion of amounts due to
third party providers as is allocable to the services purchased for and provided
to Coleman Escrow and reimburses MacAndrews & Forbes for their other
out-of-pocket expenses incurred in
F-20
<PAGE>
COLEMAN ESCROW CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
11. RELATED PARTY TRANSACTIONS--(CONTINUED)
connection with providing such services. Coleman Escrow participates in certain
of Holdings' insurance programs, including health and life insurance, workers
compensation, and liability insurance. Coleman Escrow's expense represents its
expected costs for self-insured retentions and premiums for excess coverage
insurance. The expense was $13,923, $9,874, and $10,586 for the years ended
December 31, 1996, 1995 and 1994, respectively.
The Company purchases and sells products from and to certain affiliates.
These amounts are not, in the aggregate, material.
12. EMPLOYEE BENEFIT PLANS
Pension Plans:
Holdings maintains pension and other retirement plans in various forms
covering employees of the Company who meet eligibility requirements. The U.S.
salaried retirement plan is a non-contributory defined benefit plan and provides
benefits based on a formula of each participant's final average pay and years of
service. The U.S. hourly pension plan is a non-contributory defined benefit plan
and contains a flat benefit formula. The salaried and hourly plans provide
reduced benefits for early retirement and the salaried plan takes into account
offsets for Social Security benefits. The Company's policy is to contribute
annually the minimum amount required pursuant to the Employee Retirement Income
Security Act, as amended.
Holdings also has an unfunded excess benefit plan covering certain of the
Company's U.S. employees whose benefits under the plans described above are
limited by provisions of the Internal Revenue Code. The following table
reconciles the funded status of the pension plans with the amount recognized in
Coleman Holdings' consolidated balance sheets as of the dates indicated:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1996 1995
-------- --------
<S> <C> <C>
Actuarial present value of benefit obligation:
Accumulated benefit obligation, including vested
benefits of $18,686 and $15,282.............. $(21,933) $(17,588)
-------- --------
-------- --------
Projected benefit obligation for service rendered
to date......................................... $(37,092) $(32,284)
Plan assets at fair value......................... 16,197 9,696
-------- --------
Projected benefit obligation in excess of plan
assets.......................................... (20,895) (22,588)
Unrecognized prior service cost................... 50 57
Unrecognized net loss............................. 7,999 8,869
-------- --------
Accrued pension cost.............................. (12,846) (13,662)
Amount reflected as an intangible asset........... (288) --
Amount reflected as minimum pension liability
adjustment...................................... (470) --
-------- --------
Amount reflected as pension liability............. $(13,604) $(13,662)
-------- --------
-------- --------
</TABLE>
The weighted-average discount rate used in determining the actuarial
present value of the projected benefit obligation was 7.5% and 7.25% as of
December 31, 1996 and 1995, respectively. The rate of increase in future
compensation levels reflected in such determination was 5% as of December 31,
1996 and 1995. The expected long-term rate of return on assets was 9% as of
December 31, 1996, 1995 and 1994. Plan assets consist primarily of common stock,
mutual funds and fixed income securities stated at fair market value, and cash
equivalents stated at cost, which approximates fair market value. Unrecognized
items are being recognized over the estimated remaining service lives of active
employees.
F-21
<PAGE>
COLEMAN ESCROW CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
12. EMPLOYEE BENEFIT PLANS--(CONTINUED)
Net pension expense includes the following components:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1996 1995 1994
------- -------- -------
<S> <C> <C> <C>
Service cost-benefits attributed to service during
the year........................................ $ 3,098 $ 2,125 $ 2,051
Interest cost on projected benefit obligation..... 2,442 2,004 1,554
Actual return on plan assets...................... (1,490) (1,347) 391
Net amortization and deferrals.................... 844 834 (750)
------- -------- -------
Net pension expense............................... $ 4,894 $ 3,616 $ 3,246
------- -------- -------
------- -------- -------
</TABLE>
Savings Plan:
In January 1990, Holdings initiated an employee savings plan under Section
401(k) of the Internal Revenue Code. This plan covers substantially all of the
Company's full-time U.S. employees and allows employees to contribute up to 10%
of their salary to the plan. The Company matches, at a 33 1/3% rate, employee
contributions of up to 6% of their salary. Amounts charged to expense for
matching contributions were $1,314, $1,165, and $927 for the years ended
December 31, 1996, 1995 and 1994, respectively.
Retiree Health Care and Life Insurance:
The Company, through Holdings, provides certain unfunded health and life
insurance benefits for certain retired employees. Approximately 53 percent of
the Company's U.S. employees may become eligible for these benefits if they
reach retirement age while working for the Company.
The following table reconciles the funded status of the Company's allocable
portion of Holdings' postretirement benefit plans with the amount recognized in
Coleman Escrow's consolidated balance sheets as of the dates indicated:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees........................................ $ (6,682) $ (6,660)
Fully eligible active plan participants......... (3,015) (2,991)
Other active plan participants.................. (10,664) (10,904)
-------- --------
Total accumulated postretirement benefit
obligation...................................... (20,361) (20,555)
Unrecognized transition benefit................... (3,973) (4,239)
Unrecognized prior service cost................... (492) (580)
Unrecognized net (gain) loss...................... (976) 936
-------- --------
Net postretirement benefit liability.............. $(25,802) $(24,438)
-------- --------
-------- --------
</TABLE>
Net periodic postretirement benefit expense includes the following
components:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Service cost-benefits attributed to
service during the year......................... $1,044 $ 756 $ 901
Interest cost on accumulated postretirement
benefit obligation.............................. 1,454 1,352 1,268
Amortization of transition benefit and other net
gains........................................... (354) (455) (354)
------ ------ ------
Net periodic postretirement benefit expense....... $2,144 $1,653 $1,815
------ ------ ------
------ ------ ------
</TABLE>
The discount rate used in determining the accumulated postretirement
benefit obligation ('APBO') was 7.5% and 7.25% as of December 31, 1996 and 1995,
respectively. The assumed health care cost trend rate used in measuring the APBO
at December 31, 1996 was 8% starting in 1997, then gradually decreasing to 5% by
the
F-22
<PAGE>
COLEMAN ESCROW CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
12. EMPLOYEE BENEFIT PLANS--(CONTINUED)
year 2003 and remaining at that level thereafter. The health care cost trend
rate assumption has a significant effect on the amount of the obligation and
periodic benefit expense reported. An increase in the assumed health care cost
trend rates by 1% in each year would increase the APBO as of December 31, 1996
by approximately 18% and the service and interest cost components of net
periodic postretirement benefit expense by approximately 23%.
Stock Option Plan:
The Company adopted The Coleman Company, Inc. 1992 Stock Option Plan (the
'1992 Stock Option Plan') prior to the effective date of the IPO. During 1993,
the shareholders approved the 1993 Stock Option Plan (the '1993 Stock Option
Plan') and during 1996, the shareholders approved The Coleman Company, Inc. 1996
Stock Option Plan (the '1996 Stock Option Plan'). Under the terms of the 1992
Stock Option Plan, the 1993 Stock Option Plan and the 1996 Stock Option Plan
(collectively the 'Stock Option Plans'), incentive stock options ('ISOs'),
non-qualified stock options ('NQSOs') and stock appreciation rights ('SARs') may
be granted to key employees of the Company and any of its affiliates from time
to time. Stock options have been granted under the Stock Option Plans with
vesting terms and maximum terms of approximately five years and ten years,
respectively. The aggregate number of shares of common stock as to which options
and rights may be granted under the Stock Option Plans may not exceed 4,700,000.
The following table summarizes the stock option transactions under the
Stock Option Plans:
<TABLE>
<CAPTION>
1996 1995 1994
--------------------------- --------------------------- ---------------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
OPTIONS EXERCISE PRICE OPTIONS EXERCISE PRICE OPTIONS EXERCISE PRICE
---------- -------------- ---------- -------------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding--January 1,.......... 2,572,930 $15.25 2,310,888 $14.03 1,256,540 $12.61
Granted:
at market price.............. 294,000 19.73 637,000 17.89 1,272,450 15.13
above market price........... 381,000 15.00 -- -- -- --
Exercised...................... (154,890) 12.17 (325,748) 12.09 (53,362) 10.12
Forfeited...................... (75,410) 14.19 (49,210) 13.14 (164,740) 12.98
---------- ---------- ----------
Outstanding--December 31,........ 3,017,630 15.84 2,572,930 15.25 2,310,888 14.03
---------- ---------- ----------
---------- ---------- ----------
Exercisable--December 31,........ 513,440 13.25 413,526 12.84 488,488 12.15
---------- ---------- ----------
---------- ---------- ----------
Weighted-average fair value of
options granted during the
year:
at market price................ $ 6.62 $ 7.13
---------- ----------
---------- ----------
above market price............. $ 3.21 --
---------- ----------
---------- ----------
</TABLE>
The following table summarizes information concerning currently outstanding
and exercisable options at December 31, 1996:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
- ------------------------------------------------------------------------- OPTIONS EXERCISABLE
RANGE WEIGHTED-AVERAGE -------------------------------
OF EXERCISE NUMBER REMAINING WEIGHTED-AVERAGE NUMBER WEIGHTED-AVERAGE
PRICES OUTSTANDING CONTRACTUAL LIFE EXERCISE PRICE EXERCISABLE EXERCISE PRICE
- ------------------ ----------- ----------------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
$ 9.75-$14.32 770,630 1.59 years $13.05 393,440 $12.71
$14.33-$15.13 606,000 7.32 14.98 120,000 15.06
$15.14-$16.30 755,000 7.92 16.06 -- --
$16.31-$23.13 886,000 8.86 18.65 -- --
----------- -----------
$ 9.75-$23.13 3,017,630 6.46 513,440
----------- -----------
----------- -----------
</TABLE>
F-23
<PAGE>
COLEMAN ESCROW CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
12. EMPLOYEE BENEFIT PLANS--(CONTINUED)
As described in Note 1, the Company follows APB 25 in accounting for its
stock compensation arrangements. Pro forma financial information regarding net
income is required by FASB Statement No. 123, 'Accounting for Stock-Based
Compensation' ('FAS 123'), and has been determined as if the Company had
accounted for its employee stock options under the fair value method of FAS 123.
The fair value of ISOs and NQSOs granted during 1996 and 1995 were estimated at
the date of grant using the Black-Scholes option pricing model with the
following weighted-average assumptions: risk-free interest rates of 6.11% and
5.91 % for 1996 and 1995, respectively, dividend yield of 0.0%, volatility of
the expected market price of the Company's common stock of 20.2% and 30.8% for
1996 and 1995, respectively, and a weighted-average expected life of the option
of 5.5 years.
FAS 123 requires the use of option valuation models, one of which is the
Black-Scholes model, that were not developed for use valuing ISOs or NQSOs.
Further, these option valuation models require the input of highly subjective
assumptions, including the expected stock price volatility. In management's
opinion, based on the above, the existing models do not necessarily provide a
reliable single measure of the fair value of its ISOs or NQSOs.
The following summarized, unaudited pro forma results of operations assume
the estimated fair value of the ISOs and NQSOs granted in 1996 and 1995 is
amortized to expense over the ISOs' and NQSOs' vesting period. FAS 123 does not
require disclosure of the effect of any grants of stock based compensation prior
to 1995 and, therefore, the pro forma effect on net earnings of FAS 123 is not
representative of the pro forma effect on net earnings in future years.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------------
1996 1995
-------- ------
<S> <C> <C>
Pro forma net (loss) earnings..................... $(58,918) $9,742
</TABLE>
13. COMMITMENTS AND CONTINGENCIES
Leases:
The Company leases manufacturing, administrative and sales facilities and
various types of equipment under operating lease agreements expiring through
2007. Rental expense was $14,164, $11,526, and $9,520 for the years ended
December 31, 1996, 1995 and 1994, respectively. Minimum rental commitments under
all noncancellable operating leases with remaining lease terms in excess of one
year from December 31, 1996, aggregated $43,573; such commitments for each of
the five years subsequent to December 31, 1996 are $12,379, $11,135, $6,189,
$4,296, and $2,619, respectively, and $6,955 thereafter.
The Company leases its Hastings, Nebraska facility and the corporate office
building in Denver, Colorado under agreements which give the Company the right,
subject to certain qualifications, to renew, terminate, or purchase the
properties. Upon termination, the Company has guaranteed the lessor certain
residual values.
F-24
<PAGE>
COLEMAN ESCROW CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
13. COMMITMENTS AND CONTINGENCIES--(CONTINUED)
Environmental Matters:
The Company is subject to various environmental regulations and has adopted
an environmental policy designed to ensure the Company operates in full
compliance with applicable environmental regulations and, where appropriate, the
Company's own internal standards. Coleman has also undertaken an environmental
compliance audit program. The Company makes expenditures it believes are
necessary to comply with environmental management practices. Environmental
expenditures that relate to current operations are expensed or capitalized as
appropriate, were not significant in 1996, and are not expected to be
significant in the foreseeable future. Coleman has established reserves for
various environmental matters to cover the estimated costs of the
investigations, remedial activities and litigation.
Other:
The Company and Holdings are involved in various claims and legal actions
arising in the ordinary course of business. The Company believes the ultimate
disposition of these matters is not expected to have a material adverse effect
on Coleman Escrow's consolidated financial condition or results of operations.
Coleman Holdings and the Company have entered into a cross-indemnification
agreement with Holdings pursuant to which Coleman will indemnify Holdings
against all liabilities related to businesses transferred to the Company, and
Holdings will indemnify the Company against all liabilities of Holdings other
than liabilities related to the businesses transferred to the Company.
The Company is also party to a license agreement which requires payments of
minimum guaranteed royalties aggregating to $8,225 at December 31, 1996; such
commitments for each of the four years remaining under the agreement subsequent
to December 31, 1996 are $933, $1,768, $2,454, and $3,070, respectively.
14. SIGNIFICANT CUSTOMERS
The Company's U.S. and Canadian operations have one significant customer
which accounted for approximately 15%, 19%, and 21% of net revenues in the years
ended December 31, 1996, 1995 and 1994, respectively.
15. CASH FLOW REPORTING
Coleman Escrow uses the indirect method to report cash flows from operating
activities. Interest paid was $37,608, $23,976, and $11,933 and income taxes
paid were $2,857, $4,606, and $359 for the years ended December 31, 1996, 1995
and 1994, respectively. Certain non-cash transactions relating to acquisitions
and the issuance of long-term debt have been reported in Notes 2 and 9.
16. GEOGRAPHIC SEGMENTS
Coleman Escrow designs, manufactures and markets a wide variety of multiuse
products and accessories, which are primarily marketed through independent
retail markets, for the outdoor recreation and hardware consumers. Coleman
Holdings is a leading manufacturer and marketer of brand name consumer products
for the camping and related outdoor recreation markets in the United States,
Canada, Europe, and Japan.
Operating profit, as indicated below, represents net revenues less
operating expenses and amortization of goodwill. Generally, sales between
geographic areas are made at cost plus a share of operating profit. Identifiable
assets are those used by each geographic segment. Corporate assets are
principally cash, certain property and equipment, income tax refunds
receivable--affiliate, and deferred charges. The geographic segment presentation
F-25
<PAGE>
COLEMAN ESCROW CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
16. GEOGRAPHIC SEGMENTS--(CONTINUED)
has been restated for the years ended December 31, 1995 and 1994 to reflect the
European segment which became a significant segment for the year ended December
31, 1996, primarily due to the impact of the Camping Gaz operations.
Information related to Coleman Escrow's geographic segments is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1996 1995 1994
---------- -------- --------
<S> <C> <C> <C>
Net revenues:
Domestic--U.S................................... $ 916,260 $716,018 $566,098
--Export............................... 91,125 90,434 93,917
Europe.......................................... 168,780 52,233 52,461
Other foreign................................... 219,350 169,836 121,545
Eliminations.................................... (175,299) (94,947) (82,441)
---------- -------- --------
$1,220,216 $933,574 $751,580
---------- -------- --------
---------- -------- --------
Operating profit:
Domestic(a)..................................... $ 19,915 $120,915 $ 94,773
Europe(b)....................................... (17,505) (3,241) (23,203)
Other foreign(c)................................ 4,027 (10,540) 2,222
---------- -------- --------
6,437 107,134 73,792
Corporate expenses................................ (17,430) (20,153) (14,044)
Interest expense.................................. (75,120) (57,830) (43,736)
(Loss) earnings before income taxes, minority
interest and extraordinary item.................
---------- -------- --------
$ (86,113) $ 29,151 $ 16,012
---------- -------- --------
---------- -------- --------
Identifiable assets:
Domestic........................................ $ 782,373 $696,681 $559,599
Europe.......................................... 247,412 70,478 72,908
Other foreign................................... 83,033 59,107 54,573
Corporate....................................... 95,457 83,194 72,337
---------- -------- --------
$1,208,275 $909,460 $759,417
---------- -------- --------
---------- -------- --------
</TABLE>
- ------------------
(a) Includes $49,257 of restructuring and other charges in 1996.
(b) Includes $20,002 of restructuring and other charges in 1996 and $17,956
related to German Restructuring in 1994.
(c) Includes $4,941 of restructuring and other charges in 1996 and $12,289 of
asset impairment charges in 1995.
F-26
<PAGE>
COLEMAN ESCROW CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
17. QUARTERLY FINANCIAL SUMMARIES (UNAUDITED)
Summarized quarterly financial data for 1996 and 1995 are as follow:
<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30,(A) DECEMBER 31,(B)(C)
--------- -------- ---------------- ------------------
<S> <C> <C> <C> <C>
1996
Net revenues...................................... $ 273,560 $452,654 $269,607 $224,395
Gross profit...................................... 80,966 137,538 39,894 33,321
Earnings (loss) before extraordinary item......... 8,180 17,337 (46,325) (36,149)
Net earnings (loss)............................... 7,598 16,680 (46,330) (36,149)
1995
Net revenues...................................... $ 224,024 $311,281 $211,817 $186,452
Gross profit...................................... 68,496 99,575 65,932 50,144
Earnings (loss) before extraordinary item......... 5,586 17,399 1,960 (14,191)
Net earnings (loss)............................... 5,586 17,399 1,173 (14,191)
</TABLE>
- ------------------
(a) For the third quarter of 1996, the gross profit amount includes $33,567 of
restructuring and other charges. The loss before extraordinary item and net
loss amounts include an after tax charge of $44,495 related to restructuring
and other charges.
(b) For the fourth quarter of 1996, the gross profit amount includes $10,438 of
restructuring and other charges. The loss before extraordinary item and net
loss amounts include an after tax charge of $8,021 related to restructuring
and other charges.
(c) For the fourth quarter of 1995, the gross profit amount includes $7,599 of
income as a result of adopting the provisions of EITF 95-2. The loss before
extraordinary item and net loss amounts include an after tax asset
impairment charge of $9,856 as a result of adopting FAS 121 and an after tax
credit of $3,796 as a result of adopting the provisions of EITF 95-2.
F-27
<PAGE>
COLEMAN ESCROW CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31,
1997
----------
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 12,866
Accounts and notes receivable, less allowance of $9,934... 271,617
Inventories............................................... 288,166
Deferred tax assets....................................... 39,895
Prepaid assets and other.................................. 16,654
----------
Total current assets................................... 629,198
Property, plant and equipment, net.......................... 194,739
Intangible assets related to businesses acquired, net....... 341,907
Note receivable--affiliate.................................. 47,739
Deferred tax assets and other............................... 41,348
----------
$1,254,931
----------
----------
LIABILITIES AND STOCKHOLDER'S DEFICIT
Current liabilities:
Accounts and notes payable................................ $ 194,462
Other current liabilites.................................. 115,971
----------
Total current liabilites............................... 310,433
Long-term debt.............................................. 994,664
Income taxes payable--affiliate............................. 16,681
Other liabilities........................................... 75,711
Minority interest........................................... 44,598
Commitments and contingencies...............................
Stockholder's deficit:
Common stock.............................................. 1
Capital deficiency........................................ (130,576)
Accumulated deficit....................................... (53,842)
Currency translation adjustment........................... (2,364)
Minimum pension liability adjustment...................... (375)
----------
Total stockholder's deficit............................ (187,156)
----------
$1,254,931
----------
----------
</TABLE>
See Notes to Condensed Consolidated Financial Statements
F-28
<PAGE>
COLEMAN ESCROW CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------
1997 1996
-------- --------
<S> <C> <C>
Net revenues...................................... $295,464 $273,560
Cost of sales..................................... 214,422 192,594
-------- --------
Gross profit...................................... 81,042 80,966
Selling, general and administrative expenses...... 65,952 46,800
Interest expense, net............................. 20,414 16,960
Amortization of goodwill and deferred charges..... 3,322 2,704
Other expense (income), net....................... 271 (2,721)
-------- --------
(Loss) earnings before income taxes, minority
interest and extraordinary item................. (8,917) 17,223
Income tax (benefit) expense...................... (3,190) 6,508
Minority interest in earnings of Camping Gaz...... 112 --
Minority interest in earnings of Coleman.......... 120 2,535
-------- --------
(Loss) earnings before extraordinary item......... (5,959) 8,180
Extraordinary loss on early extinguishment of
debt, net of income tax benefit................. -- (582)
-------- --------
Net (loss) earnings............................... $ (5,959) $ 7,598
-------- --------
-------- --------
</TABLE>
See Notes to Condensed Consolidated Financial Statements
F-29
<PAGE>
COLEMAN ESCROW CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
---------------------
1997 1996
-------- ---------
<S> <C> <C>
Cash Flows from Operating Activities:
Net (loss) earnings............................. $ (5,959) $ 7,598
-------- ---------
Adjustments to reconcile net (loss) earnings to
net cash
used by operating activities:
Depreciation and amortization.............. 10,047 8,045
Non-cash tax sharing agreement (benefit)
provision................................. (4,262) 3,498
Minority interest in earnings of Coleman... 120 2,535
Minority interest in earnings of Camping
Gaz....................................... 112 --
Interest accretion......................... 9,702 8,880
Non-cash gain on LYONs conversion.......... -- (2,751)
Extraordinary loss on early extinguishment
of debt................................... -- 986
Change in assets and liabilities:
Increase in receivables................. (67,454) (84,659)
Increase in inventories................. (5,258) (28,420)
Increase in accounts payable............ 18,655 8,741
Other, net.............................. (3,824) (17,297)
-------- ---------
(42,162) (100,442)
-------- ---------
Net cash used by operating activities............. (48,121) (92,844)
-------- ---------
Cash Flows from Investing Activities:
Capital expenditures............................ (6,313) (6,866)
Purchases of businesses, net of cash acquired... -- (60,132)
Decrease in note receivable--affiliate.......... 7,000 --
Proceeds from sale of fixed assets.............. 2,126 186
-------- ---------
Net cash provided by (used by) investing
activities...................................... 2,813 (66,812)
-------- ---------
Cash Flows from Financing Activities:
Net (payments of) proceeds from revolving
credit agreement borrowings.................. (8,959) 125,713
Net change in short-term borrowings............. 48,996 29,611
Repayment of long-term debt..................... (64) (172)
Debt issuance and refinancing costs............. (718) --
Purchases of Company common stock............... -- (2,329)
Proceeds from stock options exercised........... 197 967
Contributions from (distributions to) parent.... 82 (12)
-------- ---------
Net cash provided by financing activities......... 39,534 153,778
-------- ---------
Effect of exchange rate changes on cash........... 1,341 629
-------- ---------
Net decrease in cash and cash equivalents......... (4,433) (5,249)
Cash and cash equivalents at beginning of the
period.......................................... 17,299 12,065
-------- ---------
Cash and cash equivalents at end of the period.... $ 12,866 $ 6,816
-------- ---------
-------- ---------
</TABLE>
See Notes to Consolidated Financial Statements
F-30
<PAGE>
COLEMAN ESCROW CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
1. BASIS OF FINANCIAL STATEMENT PRESENTATION
Coleman Escrow Corp. ('Coleman Escrow') is a holding company formed in May
1997 in connection with the offering of Senior Secured First Priority Discount
Notes due 2001 and Senior Secured Second Priority Discount Notes due 2001 (the
'Old Notes') to hold all of the outstanding shares of capital stock of Coleman
Holdings Inc. ('Coleman Holdings'). Coleman Holdings is a holding company formed
in July 1993 in connection with the offering of Senior Secured Discount Notes
due 1998 (the 'Holding Notes') to hold all of the outstanding shares of capital
stock of Coleman Worldwide Corporation ('Coleman Worldwide'). Coleman Worldwide
is a holding company formed in March 1993 in connection with the offering of
Liquid Yield Option(Trademark) Notes due 2013 (the 'LYONS'(Trademark)). Coleman
Worldwide also holds 44,067,520 shares of the common stock of The Coleman
Company, Inc. ('Coleman' or the 'Company') which represents approximately 83% of
the outstanding Coleman common stock as of March 31, 1997. Coleman Escrow,
Coleman Holdings and Coleman Worldwide are holding companies with no business
operations of their own.
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information. 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, 1997 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1997.
2. INVENTORIES
The components of inventories consist of the following:
<TABLE>
<CAPTION>
MARCH 31,
1997
---------
<S> <C>
Raw material and supplies..................................... $ 83,710
Work-in-process............................................... 16,036
Finished goods................................................ 188,420
---------
$ 288,166
---------
---------
</TABLE>
3. OTHER CHARGES
During the three months ended March 31, 1997, the Company recorded certain
other charges totaling $2,435, net of tax, primarily related to severance costs
associated with recent executive changes.
4. RELATED PARTY TRANSACTIONS
During the three months ended March 31, 1997, the Company agreed to
purchase an inactive subsidiary from an affiliate for $1,000. The Company
expects to realize certain foreign tax benefits from this transaction in future
years. The Company has accounted for this transaction in a manner similar to a
pooling-of-interests due to the Mafco Holdings Inc. common control over each of
the parties involved in the transaction. The $2,608 excess value of tax benefits
acquired over the purchase price has been accounted for as a capital
contribution.
On March 31, 1997, MacAndrews & Forbes Holdings Inc., an indirect parent,
assumed a liability of Coleman Worldwide in the amount of $2,271. The assumption
was accounted for as a capital contribution.
5. SUBSEQUENT EVENTS
In April 1997, the Company announced its intentions to (i) close its
corporate headquarters in Golden, Colorado, (ii) close its Geneva, Switzerland
international headquarters, (iii) reduce the Company's workforce by
approximately 10% and (iv) close or relocate three domestic factories and close
one international factory. Most of the costs associated with these actions will
be reflected in the results of operations for the quarter ended June 30, 1997.
F-31
<PAGE>
COLEMAN ESCROW CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
5. SUBSEQUENT EVENTS--(CONTINUED)
On May 6, 1997, Coleman Worldwide and Coleman Holdings jointly announced
that Coleman Holdings intends to redeem the Holdings Notes on or about July 15,
1997, and that Coleman Worldwide intends to retire the LYONs. Coleman Worldwide
will make an offer to pay cash for the LYONs in excess of the market value of
the shares of the Company's common stock for which the LYONs may be exchanged.
Coleman Worldwide expects to commence the offer as soon as reasonably
practicable and to redeem any remaining LYONs on May 27, 1998. Redemption of the
Holdings Notes and retirement of the LYONs will be made with the proceeds from
the issuance of debt securities (the 'Notes') by a newly formed holding company.
Upon the redemption of the Holdings Notes and retirement of the LYONs, the Notes
are expected to be secured by the shares of the Company's common stock owned by
Coleman Worldwide.
F-32
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholder
Coleman Worldwide Corporation
We have audited the accompanying consolidated balance sheets of Coleman
Worldwide Corporation and subsidiaries as of December 31, 1996 and 1995, and the
related consolidated statements of operations, stockholder's equity, and cash
flows for each of the three years in the period ended December 31, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
The Coleman Company, Inc. and subsidiaries at December 31, 1996 and 1995, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended December 31, 1996, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
Denver, Colorado
March 10, 1997
F-33
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1996 1995
---------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents....................... $ 17,299 $ 12,065
Accounts receivable, less allowance of $11,512
in 1996 and $3,115 in 1995................... 182,418 148,765
Notes receivable................................ 27,524 16,544
Inventories..................................... 287,502 216,236
Deferred tax assets............................. 40,466 20,481
Prepaid assets and other........................ 14,885 22,420
---------- --------
Total current assets......................... 570,094 436,511
Property, plant and equipment, net................ 199,182 162,691
Intangible assets related to businesses acquired,
net............................................. 349,761 225,247
Note receivable--affiliate........................ 54,739 50,685
Deferred tax assets and other..................... 32,673 31,255
---------- --------
$1,206,449 $906,389
---------- --------
---------- --------
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current portion of long-term debt............... $ 747 $ 1,051
Short-term borrowings........................... 33,935 19,302
Accounts payable................................ 98,906 71,377
Accrued expenses................................ 112,944 58,162
---------- --------
Total current liabilities.................... 246,532 149,892
Long-term debt.................................... 757,460 519,640
Income taxes payable--affiliate................... 18,528 37,846
Other liabilities................................. 76,173 48,072
Minority interest................................. 45,088 49,266
Commitments and contingencies.....................
Stockholder's equity:
Common stock, par value $1.00 per share;
1,000 shares issued and outstanding.......... 1 1
Additional paid-in capital...................... 23,687 23,496
Retained earnings............................... 36,360 77,823
Currency translation adjustment................. 2,856 353
Minimum pension liability adjustment............ (236) --
---------- --------
Total stockholder's equity................... 62,668 101,673
---------- --------
$1,206,449 $906,389
---------- --------
---------- --------
</TABLE>
See Notes to Consolidated Financial Statements
F-34
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1996 1995 1994
---------- -------- --------
<S> <C> <C> <C>
Net revenues............................ $1,220,216 $933,574 $751,580
Cost of sales........................... 928,497 649,427 535,710
---------- -------- --------
Gross profit............................ 291,719 284,147 215,870
Selling, general and administrative
expenses.............................. 291,862 174,870 128,561
Asset impairment charge................. -- 12,289 --
Restructuring expense................... -- -- 18,456
Interest expense, net................... 50,767 35,930 24,031
Amortization of goodwill and deferred
charges............................... 11,056 8,309 6,667
Other (income) expense, net............. (1,604) 283 1,138
---------- -------- --------
(Loss) earnings before income taxes,
minority interest and extraordinary
item............................... (60,362) 52,466 37,017
Income tax (benefit) expense............ (14,753) 19,861 10,437
Minority interest in earnings of Camping
Gaz................................... 1,872 -- --
Minority interest in (loss) earnings of
Coleman............................... (7,262) 6,696 5,734
---------- -------- --------
(Loss) earnings before extraordinary
item............................... (40,219) 25,909 20,846
Extraordinary loss on early
extinguishment of debt, net of income
tax benefit of $846 in 1996, $503 in
1995, and $435 in 1994................ (1,244) (787) (677)
---------- -------- --------
Net (loss) earnings................... $ (41,463) $ 25,122 $ 20,169
---------- -------- --------
---------- -------- --------
</TABLE>
See Notes to Consolidated Financial Statements
F-35
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
COMMON STOCK
------------------- ADDITIONAL CURRENCY MINIMUM
NUMBER PAID-IN RETAINED TRANSLATION PENSION
OF SHARES AMOUNT CAPITAL EARNINGS ADJUSTMENT LIABILITY
--------- ------ ---------- -------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993................. 1,000 $ 1 $ 22,902 $ 32,532 $ (215) $ --
Net earnings............................... -- -- -- 20,169 -- --
Currency translation adjustment............ -- -- -- -- 1,185 --
Contributions.............................. -- -- 208 -- -- --
--------- ------ ---------- -------- ----------- -------
Balance at December 31, 1994................. 1,000 1 23,110 52,701 970 --
Net earnings............................... -- -- -- 25,122 -- --
Currency translation adjustment............ -- -- -- -- (617) --
Contributions.............................. -- -- 386 -- --
--------- ------ ---------- -------- ----------- -------
Balance at December 31, 1995................. 1,000 1 23,496 77,823 353 --
Net loss................................... -- -- -- (41,463) -- --
Currency translation adjustment............ -- -- -- -- 2,503 --
Minimum pension liability adjustment, net
of tax.................................. -- -- -- -- -- (236)
Contributions.............................. -- -- 191 -- -- --
--------- ------ ---------- -------- ----------- -------
Balance at December 31, 1996................. 1,000 $ 1 $ 23,687 $ 36,360 $ 2,856 $(236)
--------- ------ ---------- -------- ----------- -------
--------- ------ ---------- -------- ----------- -------
</TABLE>
See Notes to Consolidated Financial Statements
F-36
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1996 1995 1994
--------- -------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) earnings................... $ (41,463) $ 25,122 $ 20,169
Adjustments to reconcile net (loss)
earnings to net cash flows from
operating activities:
Depreciation and amortization.... 36,941 27,087 23,213
Non-cash tax sharing agreement
provision..................... 4,637 15,722 3,668
Minority interest in (loss)
earnings of Coleman........... (7,262) 6,696 5,734
Minority interest in earnings of
Camping Gaz................... 1,872 -- --
Interest accretion............... 12,051 11,388 10,657
Non-cash gain on LYONs
conversion.................... (2,755) -- --
Non-cash restructuring and other
charges....................... 48,269 12,289 10,950
Extraordinary loss on early
extinguishment of debt........ 2,090 1,290 1,112
Change in assets and liabilities:
Decrease (increase) in
receivables................... 976 (37,833) (22,122)
Increase in inventories.......... (42,402) (49,396) (10,852)
(Decrease) increase in accounts
payable....................... (12,308) 13,825 (1,403)
Other, net....................... (5,982) (16,747) 5,659
--------- -------- ---------
36,127 (15,679) 26,616
--------- -------- ---------
Net cash (used) provided by operating
activities............................ (5,336) 9,443 46,785
--------- -------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures.................. (41,334) (29,053) (34,915)
Purchases of businesses, net of cash
acquired........................... (161,875) (33,385) (99,587)
Increase in note
receivable--affiliate.............. (4,054) (6,742) (27,052)
Proceeds from sale of fixed assets.... 2,924 928 4,471
--------- -------- ---------
Net cash used by investing activities... (204,339) (68,252) (157,083)
--------- -------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in short-term borrowings... (11,043) 3,106 6,867
Net (payments of) proceeds from
revolving credit agreement
borrowings......................... (2,779) (61,289) 129,274
Proceeds from issuance of long-term
debt............................... 235,000 200,000 --
Repayment of long-term debt........... (6,778) (74,782) (10,796)
Debt issuance and refinancing costs... (3,902) (3,569) (1,955)
Purchases of Company common stock..... (2,329) (4,086) (9,571)
Proceeds from stock options exercised
including tax benefits............. 2,192 4,520 584
Contributions from parent............. 191 386 208
--------- -------- ---------
Net cash provided by financing
activities............................ 210,552 64,286 114,611
--------- -------- ---------
Effect of exchange rate changes on
cash.................................. 4,357 (1,731) (1,587)
--------- -------- ---------
Net increase in cash and cash
equivalents........................... 5,234 3,746 2,726
Cash and cash equivalents at beginning
of the year........................... 12,065 8,319 5,593
--------- -------- ---------
Cash and cash equivalents at end of the
year.................................. $ 17,299 $ 12,065 $ 8,319
--------- -------- ---------
--------- -------- ---------
</TABLE>
See Notes to Consolidated Financial Statements
F-37
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE DATA)
1. SIGNIFICANT ACCOUNTING POLICIES
Background:
Coleman Worldwide Corporation ('Coleman Worldwide') was formed in March
1993 in connection with the offering of Liquid Yield Option(TM) Notes due 2013
(the 'LYONs'TM). Coleman Worldwide also holds 44,067,520 shares of the common
stock of The Coleman Company, Inc. ('Coleman' or the 'Company') which represents
approximately 83% of the outstanding Coleman common stock as of December 31,
1996. Coleman was formed in December 1991 to succeed to the assets and
liabilities of the outdoor products business of New Coleman Holdings Inc.
('Holdings') an indirect wholly-owned subsidiary of Mafco Holdings Inc.
('Mafco'). Holdings (then named The Coleman Company, Inc.) was acquired in 1989
by MacAndrews & Forbes Holdings Inc. ('MacAndrews Holdings', and, together with
Mafco, 'MacAndrews & Forbes'), a corporation wholly owned through Mafco by
Ronald O. Perelman. Coleman is a subsidiary of Coleman Worldwide Corporation
('Coleman Worldwide'), which is an indirect wholly-owned subsidiary of Holdings.
In March 1992, the Company completed an initial public offering of its common
stock.
Principles of Consolidation:
The consolidated financial statements include the accounts of Coleman
Worldwide and its subsidiaries after elimination of all material intercompany
accounts and transactions.
Cash Equivalents:
Cash equivalents (primarily investments in money market funds and
commercial paper which are purchased with original maturities of three months or
less) are carried at cost, which approximates fair value.
Inventories:
Inventories are valued at the lower of cost or market. Cost is principally
determined by the first-in, first-out ('FIFO') method.
Property, Plant and Equipment:
Property, plant and equipment is recorded at cost and depreciated on a
straight-line basis over the estimated useful lives of such assets as follows:
land improvements, 5 to 25 years; buildings and building improvements, 7 to 45
years; and machinery and equipment, 3 to 15 years. Leasehold improvements are
amortized over their estimated useful lives or the terms of the leases,
whichever is shorter. Repairs and maintenance are charged to operations as
incurred, and significant expenditures for additions and improvements are
capitalized.
Intangible Assets:
Intangible assets represent goodwill which is being amortized on a
straight-line basis over periods not in excess of 40 years. Accumulated
amortization aggregated $39,520 and $29,664 at December 31, 1996 and 1995,
respectively. The carrying amount of goodwill is reviewed if facts and
circumstances suggest it may be impaired. If this review indicates goodwill will
not be recoverable over the remaining amortization period, as determined based
on the estimated undiscounted cash flows of the entity acquired, the carrying
amount of the goodwill is reduced to estimated fair value based on market value
or discounted cash flows, as appropriate.
F-38
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
1. SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Deferred Charges:
Expenses associated with borrowings, such as for underwriting, legal fees
and printing costs, are amortized over the term of the related debt.
Revenue Recognition:
The Company recognizes net revenues upon shipment of merchandise. Net
revenues comprise gross revenues less customer returns and allowances.
Advertising and Promotion Expense:
Production costs of future media advertising are deferred until the
advertising occurs. All other advertising and promotion costs are expensed when
incurred. The amounts charged against operations for the years ended December
31, 1996, 1995 and 1994 were $58,823, $37,544 and $30,831, respectively.
Research and Development:
Research and development expenditures are expensed as incurred. The amounts
charged against operations for the years ended December 31, 1996, 1995 and 1994
were $11,082, $6,548, and $5,230, respectively.
Self Insurance:
Coleman Worldwide participates in insurance programs maintained by
Holdings. Coleman Worldwide estimates its liability for the self-insured
portions of the risks covered by such programs and accrues appropriate reserves.
(See Note 11.)
Foreign Currency Translation:
The Company's international operations, other than its Brazilian and
Mexican operations, are conducted in economic environments which the Company
does not consider to be highly inflationary. Assets and liabilities of
international operations generally are translated into U.S. dollars at the rates
of exchange in effect at the balance sheet date, and income and expense items
generally are translated at the average exchange rates prevailing during the
period presented. Gains and losses resulting from the translation of these
financial statements are recorded as a component of stockholder's equity. Gains
and losses resulting from foreign currency transactions and translation of the
financial statements of the Company's Brazilian and Mexican operations are
included in the results of operations and have not been significant for the
years ended December 31, 1996, 1995 and 1994.
Financial Instruments with Off-Balance-Sheet Risk:
The Company periodically enters into a variety of foreign currency exchange
agreements in the management of foreign currency exposure related primarily to
firm commitments, intercompany foreign sales transactions expected to occur
within the next twelve months and intercompany accounts receivables and
payables.
At December 31, 1996, the Company did not have any outstanding foreign
currency exchange agreements related to firm commitments. At December 31, 1995,
the Company had a forward exchange contract to buy $15,000 of Italian lira
maturing on May 31, 1996 and had an unrecognized gain of $93. The gains and
losses from this contract are accounted for under the deferral method and are
recognized and included in income in the same period as a component of the
related hedged transactions. In the event it is no longer probable the
transactions will be consummated, the gains and losses are recognized
immediately in income under the fair value method. At December 31, 1995, the
Company had outstanding option contracts for the purchase or sale of Italian
lira totaling $10,500, which contracts expired during 1996.
During the fourth quarter of 1995, the Company elected to adopt the
provisions of the Emerging Issues Task Force Issue No. 95-2, 'Determination of
What Constitutes a Firm Commitment for Foreign Currency
F-39
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
1. SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Transactions Not Involving a Third Party' ('EITF 95-2') which narrowed the scope
of intercompany foreign currency commitments eligible to be hedged for financial
reporting purposes. Under EITF 95-2, the Company reflects the carrying value of
its forward currency contract positions relating to intercompany foreign sales
transactions on a mark-to-market basis and accounts for the resulting
unrecognized gains or losses in income as a component of cost of sales. As a
result of this change, the Company increased net income by $3,796 in the fourth
quarter of 1995. Prior to the adoption of EITF 95-2, the gains and losses
associated with these contracts were accounted for under the deferral method. At
December 31,1996, the Company had forward exchange contracts to sell $8,500 in
Canadian dollars maturing on February 28, 1997, for which the Company has
recognized a net gain of $40 as a component of cost of sales. At December
31,1995, the Company had forward exchange contracts to sell $22,969 in foreign
currencies, which contracts matured at various dates in 1996 and for which the
Company has recognized a net gain of $7,599 as a component of cost of sales.
The Company also enters into option contracts to hedge intercompany foreign
sales transactions. Gains and losses on these contracts are deferred and
recognized as an adjustment to cost of sales upon the sale of the related
inventory. At December 31, 1996 and 1995, the Company had outstanding option
contracts for the sale of Japanese yen at fixed exchange rates totaling $20,038
and $24,926 for specified periods of time which expire during 1997 and 1996,
respectively. Net unrealized gains deferred at December 31, 1996 and 1995 were
$653 and $125, respectively.
With respect to intercompany accounts receivable and payables, at December
31, 1996, the Company had forward exchange contracts to sell $26,623 and to buy
$3,898 in foreign currencies, which contracts matured at various dates in 1997,
and had deferred a net gain of $185. At December 31, 1995, the Company had
forward exchange contracts to sell $31,152 and to buy $1,712 in foreign
currencies, which contracts matured at various dates in 1996 and had deferred a
net gain of $56. The gains and losses from these contracts are accounted for
under the deferral method and are recognized and included in income in the same
period as a component of the related hedged transactions.
The Company periodically enters into interest rate swap and cap agreements
as a hedge against interest rate exposure of variable rate debt. At December 31,
1996, $25,000 of the Company's outstanding long-term debt was subject to an
interest rate swap agreement and $25,000 of the Company's outstanding long-term
debt was subject to an interest rate cap. Under the interest rate swap
agreement, the Company pays the counterparty interest at a fixed rate of 6.115%,
and the counterparty pays the Company interest at a variable rate equal to the
three month LIBOR for a seven year period commencing January 2, 1996. The
agreement is with a major financial institution which is expected to fully
perform under the terms of the agreement, thereby mitigating the credit risk
from the transaction. The differences to be paid or received on interest rate
swap agreements designated as hedges are included in interest expense as
payments are made or received. The interest rate cap agreement entitles the
Company to receive from a major financial institution the amount, if any, by
which the Company's interest payments on $25,000 of its variable rate debt
exceed 7.35%. The $509 premium paid for this interest rate cap agreement is
included in other assets and is amortized to interest expense over the
three-year term of the cap, which commenced January 3, 1995. Payments received
as a result of the cap are accrued as a reduction of interest expense on the
variable rate debt. In the event the interest rate swap or cap agreements are
terminated early and the related debt remains outstanding, the amounts paid or
received upon the early termination, along with any unamortized premium, will
continue to be amortized over the terms of the original interest rate swap and
cap agreements.
Credit Risk:
Financial instruments which potentially subject Coleman Worldwide to
concentrations of credit risk consist primarily of trade receivables and
derivative financial instruments. Credit risk on trade receivables is minimized
as a result of the large and diversified nature of the Company's worldwide
customer base. Although the Company
F-40
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
1. SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
has one significant customer (see Note 14), there have been no credit losses
related to this customer. With respect to its derivative contracts, the Company
is also subject to credit risk of non performance by counterparties and its
maximum potential loss may exceed the amount recognized in the financial
statements. The Company controls its exposure to credit risk through credit
approvals, credit limits and monitoring procedures. Collateral is generally not
required for the Company's financial instruments.
Fair Value of Financial Instruments:
The following methods and assumptions were used by Coleman Worldwide in
estimating its fair value disclosures for financial instruments:
Cash and cash equivalents: The carrying amount reported in the balance
sheet for cash and cash equivalents approximates its fair value.
Long- and short-term debt: The carrying amounts of Coleman Worldwide's
borrowings under its foreign bank lines of credit, revolving credit
agreement and other variable rate debt approximate their fair value. The
fair value of the Company's senior notes issues (see Note 9) are estimated
using discounted cash flow analysis based on the Company's estimated
current borrowing rate for similar types of borrowing arrangements. The
fair value of the publicly traded LYONs debt is based on quoted market
prices.
Foreign currency exchange agreements: The fair values of Coleman
Worldwide's foreign currency agreements are estimated based on quoted
market prices of comparable agreements, adjusted through interpolation
where necessary for maturity differences.
Interest rate swap and cap agreements: The fair values of interest
rate swap and cap agreements are the amounts at which they could be
terminated, based on estimates obtained from dealers.
The carrying amounts and fair values of Coleman Worldwide's financial
instruments at December 31, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1996 DECEMBER 31, 1995
-------------------------- --------------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
OF ASSET/ OF ASSET/ OF ASSET/ OF ASSET/
(LIABILITY) (LIABILITY) (LIABILITY) (LIABILITY)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Cash and cash equivalents..................................... $ 17,299 $ 17,299 $ 12,065 $ 12,065
Short-term debt............................................... (33,935) (33,935) (19,302) (19,302)
Long-term debt excluding capital leases....................... (757,613) (738,964) (519,914) (541,732)
Foreign currency exchange agreements.......................... 940 1,629 8,026 8,287
Interest rate swap agreements................................. -- 296 -- (635)
Interest rate cap agreement................................... 170 1 340 18
</TABLE>
Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Reclassifications:
Certain amounts in the prior years' financial statements have been
reclassified to conform to the current year presentation.
F-41
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
1. SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Accounting for Stock-Based Compensation:
The Company accounts for its stock compensation arrangements under the
provisions of Accounting Principles Board Opinion No. 25, 'Accounting for Stock
Issued to Employees' ('APB 25') and related pronouncements. Under the provisions
of APB 25, no compensation expense is recognized when stock options are granted
with exercise prices equal to or greater than market value on the date of grant.
Impairment of Long-Lived Assets:
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, 'Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of' ('FAS 121'),
which requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amount. FAS 121 also addresses the accounting for long-lived assets
expected to be disposed of. The Company adopted FAS 121 in the fourth quarter of
1995. The effect of the adoption of FAS 121 is described in Note 3.
2. ACQUISITIONS
During April 1994, the Company purchased substantially all the assets of
Sanborn Manufacturing Company ('Sanborn') in Eden Prairie, Minnesota, a
manufacturer of a broad line of portable and stationary air compressors for
consumer and commercial markets distributed primarily through warehouse clubs,
home centers and mass merchants in North America, and substantially all the
assets and business of Metal Yanes, Ltda. ('Yanes') in Sao Paulo, Brazil, a
manufacturer of camping products, including propane and butane fueled lanterns,
camp stoves, tents, lantern mantles and fuel. The Sanborn and Yanes
acquisitions, which were accounted for under the purchase method of accounting,
were completed for the following consideration: (a) approximately $41,066 in
cash financed through borrowings under the Company Credit Agreement (as defined
in Note 9), (b) assumption of liabilities in the amount of $22,193, and (c) a
note payable of $2,999. During 1995, in connection with the Sanborn acquisition,
the Company entered into a settlement agreement with the predecessor owners
which resolved certain disputes between the parties as well as fulfilled certain
obligations owed and anticipated to be owed by the Company to the predecessor
owners. These anticipated obligations related to a requirement to make
additional payments of up to $4,000 based upon the achievement of certain annual
sales levels during the five year period ending December 31, 1998 by Coleman
Powermate Compressors, Inc. ('Compressors'), the Company's subsidiary that
acquired the Sanborn assets (the 'Sales Agreement'). As a result of the
settlement, goodwill was increased by $3,282. For 1994, approximately $671 was
earned under the terms of the Sales Agreement based on the 1994 sales levels of
Compressors, and this amount was recorded as additional goodwill in 1994. The
results of operations of these businesses have been included in the consolidated
financial statements from the dates of acquisitions.
On November 2, 1994, the Company purchased substantially all the assets of
Eastpak, Inc. and all of the capital stock of M.G. Industries, Inc.
(collectively, 'Eastpak'), a leading designer, manufacturer and distributor of
branded daypacks, sports bags and related products. The Eastpak acquisition,
which was accounted for under the purchase method, was completed for
approximately $57,850 in cash financed through borrowings under the Company
Credit Agreement, and assumption of certain liabilities in the amount of $4,130.
The Company also entered into an agreement with the predecessor owner of Eastpak
to make additional payments based upon the achievement of certain annual sales
levels of Eastpak products and other products substantially similar to the
Eastpak products during the years ended December 31, 1995, 1996, and 1997. For
1995 and 1996, a total of approximately $11,000 was recorded under the terms of
this agreement. An additional amount of up to $12,000 may be earned during the
year ended December 31, 1997. These amounts are recorded as additional goodwill.
F-42
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
2. ACQUISITIONS--(CONTINUED)
The results of operations of Eastpak have been included in the consolidated
financial statements from the date of acquisition.
In connection with the final purchase price allocations of the Sanborn and
Eastpak acquisitions, the Company recorded goodwill of approximately $53,000.
The Company is amortizing these amounts over 40 years. The goodwill of
approximately $7,700 associated with the Yanes acquisition was included in the
1995 asset impairment charge of $12,289 related to the Company's operations in
Brazil, which is further discussed in Note 3.
During 1995, the Company purchased all of the outstanding shares of capital
stock of Sierra Corporation of Fort Smith, Inc. ('Sierra'), a manufacturer of
portable outdoor and recreational folding furniture and accessories, and
substantially all of the assets of Active Technologies, Inc. ('ATI'), a
manufacturer of technologically advanced lightweight generators and battery
charging equipment. The aggregate purchase price for these acquisitions was
$19,516 including fees and expenses. These acquisitions were accounted for using
the purchase method of accounting. The purchase price and expenses associated
with these acquisitions exceeded the fair value of net assets acquired by
$11,186 and the excess has been assigned to goodwill and is being amortized over
20 to 30 years on the straight-line basis. In connection with the ATI purchase,
the Company may also be required to record an additional amount of up to $18,750
based on the Company's sales of ATI related products and royalties received by
the Company for licensing arrangements related to ATI patents. For 1995 and
1996, the amounts earned under the terms of this agreement were immaterial.
Amounts earned under the terms of the agreement are recorded as additional
goodwill. The results of operations of these companies on a pro forma basis as
if their acquisitions had occurred at the beginning of 1995 and 1994,
respectively, individually and in the aggregate were not significant to Coleman
Worldwide.
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 safety and security related electronic products
for residential and commercial applications. The Seatt acquisition, which was
accounted for under the purchase method, was completed for approximately $65,300
including fees and expenses. The results of operations of Seatt have been
included in the consolidated financial statements from the date of acquisition.
In connection with the purchase price allocation of the Seatt acquisition, the
Company recorded goodwill of approximately $38,800. The Company is amortizing
this amount over 40 years on the straight-line method.
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 (the 'Share Purchase Agreement') in connection with the sale
to Coleman of approximately 70% of the outstanding shares of Application des
Gaz, S.A. ('ADG' or 'Camping Gaz'). Camping Gaz is a leading manufacturer and
distributor of camping appliances in Europe. On June 24, 1996, Coleman commenced
a public tender offer for the purchase of all the publicly traded outstanding
shares of ADG, or approximately 30% of the outstanding shares. The tender offer
period expired in July 1996 with approximately 94% of the outstanding publicly
traded shares of ADG tendered for purchase. The Company completed the necessary
steps to acquire the remaining publicly held stock during the third quarter of
1996. The cost of acquiring all the shares of ADG was approximately $100,000
including fees and expenses.
The acquisition of Camping Gaz is being accounted for under the purchase
method. In connection with the allocation of purchase price to the fair values
of assets acquired and liabilities assumed, the Company recorded goodwill of
approximately $84,200, which is being amortized over 40 years on the
straight-line method. The Company also recognized liabilities in the amount of
$21,898 representing severance and other termination benefits for production and
administrative employees of Camping Gaz who will be terminated. The Company paid
termination costs of approximately $4,385 during 1996 and anticipates all
remaining termination costs will be paid during 1997.
F-43
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
2. ACQUISITIONS--(CONTINUED)
The Company has included the results of operations of Camping Gaz in the
consolidated financial statements from March 1, 1996, the date on which the
Company obtained control of Camping Gaz, and has recognized minority interest
related to the publicly traded shares for the period March 1, 1996 through June
30, 1996.
The following summarized, unaudited pro forma results of operations of
Coleman Worldwide for the years ended December 31, 1996 and 1995 assume the
acquisition of Seatt and the acquisition of all the outstanding shares of
Camping Gaz occurred as of the beginning of the respective periods. The pro
forma results include certain adjustments, primarily reflecting increased
amortization and interest expense and a lower income tax provision, and are not
necessarily indicative of what the results of operations would have been had the
Seatt and Camping Gaz acquisitions occurred at the beginning of the respective
periods. Moreover, the pro forma information is not intended to be indicative of
future results of operations.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------------------
1996 1995
---------- ----------
<S> <C> <C>
Net revenues...................................... $1,246,370 $1,193,295
(Loss) earnings before extraordinary item......... (40,353) 25,151
Net (loss) earnings............................... (41,597) 24,364
</TABLE>
3. RESTRUCTURING, ASSET IMPAIRMENT AND OTHER CHARGES
During 1996, the Company recorded restructuring and certain other charges
totaling $52,516, net of tax. The restructuring charges total $45,086, net of
tax, and consist of charges to a) integrate the Camping Gaz and Coleman
operations into a single global recreation products business, b) exit the low
end electric pressure washer business, c) exit a portion of the Company's
battery powered light business and settle certain litigation with respect to
this business, and d) increase the valuation reserve for certain foreign
deferred income tax assets. Other charges of $7,430, net of tax, relate to
certain asset write-offs and other tax matters. These other charges were
incurred in the Company's normal course of business, although the amounts
involved are higher than similar charges the Company has recorded in prior
periods. Cost of sales includes a pre-tax charge of $44,005, selling, general
and administrative expenses includes a pre-tax charge of $30,195, and the
provision for income tax expense includes $21,684 of tax benefits resulting from
these charges, net of the effect of an increase in the valuation reserve related
to certain foreign deferred tax assets and other foreign tax charges.
During 1995, in connection with the adoption of FAS 121, the Company
recognized an asset impairment charge of $12,289 related to its Brazilian
operations. The Brazilian operations had not performed to the Company's
expectations since acquisition of this business in April of 1994, and in the
fourth quarter of 1995, the Company initiated actions to reduce the operating
losses in Brazil. These actions included replacing management, increasing
prices, downsizing the manufacturing operations and reducing SG&A and other
expenses. Because of these actions, the Company performed an impairment review
pursuant to the guidelines set forth in FAS 121 and concluded recognition of an
asset impairment charge was appropriate. The basis of the fair values used in
the computation of the charge were appraisals for property and equipment and
estimated discounted cash flows for goodwill. The charge has been included in
the statement of operations under the caption 'Asset Impairment Charge'.
F-44
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
3. RESTRUCTURING, ASSET IMPAIRMENT AND OTHER CHARGES--(CONTINUED)
During September 1994, the Company restructured its German manufacturing
operations. The German Restructuring included the sale of the low margin plastic
cooler business located in Inheiden, Germany and Loucka, Czech Republic,
including inventory, to a management group. The German Restructuring resulted in
a one-time charge of approximately $17,956 before tax and included severance
costs of $1,541, commitments to third parties of approximately $5,465 and
write-downs of leasehold improvements and other assets to estimated realizable
values aggregating $10,950. As a result of the restructuring, the German work
force was reduced by about 150 employees from a pre-restructuring level of
approximately 250 employees. The restructuring was substantially completed in
1994. In connection with the restructuring, the Company recognized tax benefits
of approximately $10,900 relating to the write-off of the Company's investment
in its German operations. The Company also announced a plan to change from
manufacturing to sourcing for certain textile product lines and to exit the
market for personal flotation devices. This plan resulted in a $500 pre-tax
charge.
4. INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
Raw material and supplies......................... $ 82,399 $ 57,653
Work-in-process................................... 12,878 5,389
Finished goods.................................... 192,225 153,194
-------- --------
$287,502 $216,236
-------- --------
-------- --------
</TABLE>
Generally, inventory costs are determined by the FIFO method; however,
approximately 13% and 10% of total inventories at December 31, 1996 and 1995,
respectively, are determined using the last-in, first-out ('LIFO') method. If
such inventories were stated using the FIFO method, such amounts would
approximate the LIFO carrying values.
5. PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment, net consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
Land and land improvements........................ $ 8,772 $ 6,318
Buildings and building improvements............... 78,760 67,989
Machinery and equipment........................... 194,714 142,941
Construction-in-progress.......................... 15,519 13,105
-------- --------
297,765 230,353
Accumulated depreciation.......................... (98,583) (67,662)
-------- --------
$199,182 $162,691
-------- --------
-------- --------
</TABLE>
Depreciation expense was $25,770, $19,142, and $16,793 for the years ended
December 31, 1996, 1995 and 1994, respectively.
F-45
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
6. ACCRUED EXPENSES
Accrued expenses consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1996 1995
-------- -------
<S> <C> <C>
Compensation and related benefits................. $ 29,331 $14,201
Other............................................. 83,613 43,961
-------- -------
$112,944 $58,162
-------- -------
-------- -------
</TABLE>
7. OTHER LIABILITIES
Other liabilities consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1996 1995
------- -------
<S> <C> <C>
Pensions and other postretirement benefits........ $52,229 $40,240
Other............................................. 23,944 7,832
------- -------
$76,173 $48,072
------- -------
------- -------
</TABLE>
8. SHORT-TERM BORROWINGS
The Company maintained foreign bank lines of credit aggregating $119,101,
and $64,375, of which $33,935 and $19,302 were outstanding at December 31, 1996
and 1995, respectively. The weighted average interest rate on amounts borrowed
was approximately 2.4% and 7.1% at December 31, 1996 and 1995, respectively.
Outstanding letters of credit aggregated approximately $32,897 and $40,036
at December 31, 1996 and 1995, respectively.
9. LONG-TERM DEBT
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
7.26% Senior Notes due 2007 (a)................... $200,000 $200,000
7.10% Senior Notes due 2006 (b)................... 85,000 --
7.25% Senior Notes due 2008 (c)................... 75,000 --
Revolving credit facility (d)..................... 146,350 150,150
Term loan (d)..................................... 73,478 --
Liquid Yield Option(TM) Notes due 2013 (e)........ 174,594 165,434
Other............................................. 3,785 5,107
-------- --------
758,207 520,691
Less current portion.............................. 747 1,051
-------- --------
$757,460 $519,640
-------- --------
-------- --------
</TABLE>
- ------------------
(a) On August 8, 1995, the Company completed a private placement issuance and
sale of $200,000 aggregate principal amount of 7.26% Senior Notes due 2007
(the '2007 Notes'). Interest on the 2007 Notes is payable semiannually, and
the principal is payable in annual installments of $40,000 each commencing
August 8, 2003, with a final installment payment of $40,000 due on August
8, 2007. If there is a default, the interest rate will be the greater of
(i) 9.26% or (ii) 2.0% above the prime interest rate.
F-46
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
9. LONG-TERM DEBT--(CONTINUED)
The 2007 Notes are unsecured and are subject to 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 and
sale and leaseback transactions under the terms of the note purchase
agreement. The 2007 Notes shall become secured if the Company Credit
Agreement becomes secured as discussed in (d) below.
(b) On June 13, 1996, the Company completed a private placement issuance and
sale of $85,000 aggregate principal amount of 7.10% Senior Notes due 2006
(the '2006 Notes'). Interest on the 2006 Notes is payable semiannually, and
the principal is payable in annual installments of $12,143 each commencing
June 13, 2000, with a final installment payment of $12,143 due on June 13,
2006. If there is a default, the interest rate will be the greater of (i)
9.10% or (ii) 2.0% above the prime interest rate.
The 2006 Notes are unsecured and are subject to 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 and
sale and leaseback transactions under the terms of the note purchase
agreement. The 2006 Notes shall become secured if the Company Credit
Agreement becomes secured as discussed in (d) below.
(c) On June 13, 1996, the Company completed a private placement issuance and
sale of $75,000 aggregate principal amount of 7.25% Senior Notes due 2008
(the '2008 Notes'). Interest on the 2008 Notes is payable semiannually, and
the principal is payable in annual installments of $15,000 each commencing
June 13, 2004, with a final installment payment of $15,000 due on June 13,
2008. If there is a default, the interest rate will be the greater of (i)
9.25% or (ii) 2.0% above the prime interest rate.
The 2008 Notes are unsecured and are subject to 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 and
sale and leaseback transactions under the terms of the note purchase
agreement. The 2008 Notes shall become secured if the Company Credit
Agreement becomes secured as discussed in (d) below.
(d) In April 1996, the Company amended its credit agreement to: a) provide a
term loan of French Franc 385,125 ($73,478 at current exchange rates), b)
provide an unsecured revolving credit facility in an amount of $275,000, c)
allow for the Camping Gaz acquisition and d) extend the maturity of the
credit agreement (as amended, the 'Company Credit Agreement'). In
connection with the Company recording the restructuring and other charges
as discussed in Note 3 and lower than expected operating results, the
Company further amended the Company Credit Agreement in October 1996 and
again in March 1997.
The Company Credit Agreement 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 2.125% 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. 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, levels of consolidated net worth and profits,
and certain other provisions limiting the incurrence of additional debt,
purchase or redemption of the Company's common stock, issuance of preferred
stock of the Company, and also prohibits the Company from paying any
dividends until on or after January 1, 1999 and limits the amount of
dividends the Company may pay thereafter. The Company Credit Agreement also
provides for a specific requirement relating to the
F-47
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
9. LONG-TERM DEBT--(CONTINUED)
Company's financial leverage at December 31, 1997 which, if not achieved,
will result in the Company Credit Agreement becoming secured by the
Company's assets. In addition, substantially all of the shares of the
Company's common stock owned by Coleman Worldwide are pledged to secure
indebtedness of Coleman Worldwide and of its parent, Coleman Holdings Inc.
The indentures governing this indebtedness contain various covenants
including a covenant placing certain limitations on the Company's
indebtedness.
(e) On May 27, 1993, Coleman Worldwide issued and sold $500,000 principal
amount at maturity of LYONs in an underwritten public offering. On June 7,
1993, an additional $75,000 principal amount at maturity of LYONs was sold
upon exercise of the underwriter's overallotment option.
The LYONs mature on May 27, 2013 and are secured by 16,394,810 shares of
common stock of Coleman. There are no periodic payments of interest on the
LYONs. The aggregate principal amount of the LYONs represents a yield to
maturity of 7.25% per annum (computed on a semiannual bond equivalent
basis) calculated from May 27, 1993.
Each LYON has a principal amount at maturity of $1 and is exchangeable, at
the option of the holder, at any time on or prior to maturity (unless
previously redeemed or otherwise purchased) for shares of common stock of
Coleman securing the LYONs at an exchange rate of 15.706 shares of common
stock of Coleman per LYON, subject to Coleman Worldwide's right to pay cash
equal to the then market value (as defined) of such shares in lieu, in
whole or in part, of delivering such shares. The exchange rate will not be
adjusted for original issue discount ('OID') but will be subject to
adjustment upon the occurrence of certain events affecting the common stock
of Coleman.
The LYONs are redeemable by Coleman Worldwide on or after May 27, 1998, at
the option of Coleman Worldwide, in whole or in part, at redemption prices
equal to the issue price plus accrued OID through but excluding the date of
redemption, payable solely in cash. Coleman Worldwide will purchase any
LYON, at the option of the holder, on May 27, 1998, May 27, 2003 and May
27, 2008 (each, a 'Purchase Date') for a purchase price per LYON equal to
the issue price plus accrued OID through but excluding each such Purchase
Date, representing a yield per annum to the holder on each such date of
7.25% computed on a semiannual bond equivalent basis. Coleman Worldwide
may, at its option, elect to pay the purchase price on any Purchase Date
either in cash or shares of common stock of Coleman or any combination
thereof.
The Indenture governing the LYONs provides the holders of LYONs with the
option to require Coleman Worldwide to purchase the LYONs after the
occurrence of certain events ('Additional Purchase Right Events').
Additional Purchase Right Events occur, among other things, upon the
Company's Consolidated Debt Ratio (as defined) exceeding 0.75 to 1.0 or the
Consolidated Net Worth (as defined) of Coleman Worldwide as of the end of
any fiscal quarter being less than a specified amount which is $60,000 at
March 31, 1997 and increases to $70,000 at June 30, 1997.
The aggregate scheduled amounts of long-term debt maturities in the years
1997 through 2001 are $747, $500, $2,357, $12,207, and $232,005,
respectively.
10. INCOME TAXES
Coleman Worldwide is included in the consolidated federal income tax return
of Mafco Holdings Inc. ('Mafco') and certain state tax returns of Mafco or its
affiliates. Coleman Worldwide and Mafco are parties to a tax sharing agreement
(the 'Tax Sharing Agreement'), pursuant to which Coleman Worldwide is required
to pay to Mafco amounts equal to the taxes that Coleman Worldwide would
otherwise have to pay if it were to file separate consolidated federal, state or
local income tax returns including only itself and its domestic subsidiaries.
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 Tax Sharing Agreement, together with any
F-48
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
10. INCOME TAXES--(CONTINUED)
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 $54,739 at
December 31, 1996. As a result of the restriction on the payment of the tax
sharing amounts, income taxes provided pursuant to the Tax Sharing Agreement are
reflected as a non-cash charge. For all periods presented, federal and state
income taxes are provided as if Coleman Worldwide filed its own income tax
returns. The accompanying consolidated balance sheet includes approximately
$18,528 and $37,846 of federal and state income taxes payable to Mafco pursuant
to the Tax Sharing Agreement at December 31, 1996 and 1995, respectively.
For financial reporting purposes, (loss) earnings before income taxes,
minority interest and extraordinary item include the following components:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Earnings (loss) earnings before income
taxes, minority interest and
extraordinary item:
Domestic.............................. $(39,593) $ 66,900 $ 59,392
Foreign............................... (20,769) (14,434) (22,375)
-------- -------- --------
$(60,362) $ 52,466 $ 37,017
-------- -------- --------
-------- -------- --------
</TABLE>
Significant components of the provision for income tax (benefit) expense
were as follow:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1996 1995 1994
-------- ------- -------
<S> <C> <C> <C>
Current:
Federal............................... $ (3,932) $14,520 $ 3,147
State................................. (937) 3,102 899
Foreign............................... 3,454 3,853 2,248
-------- ------- -------
Total current.................... (1,415) 21,475 6,294
-------- ------- -------
Deferred:
Federal............................... (10,686) (3,104) 6,069
State................................. (2,178) (725) 1,114
Foreign............................... (474) 2,215 (3,040)
-------- ------- -------
Total deferred................... (13,338) (1,614) 4,143
-------- ------- -------
$(14,753) $19,861 $10,437
-------- ------- -------
-------- ------- -------
</TABLE>
F-49
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
10. INCOME TAXES--(CONTINUED)
The effective tax rate on (loss) earnings before income taxes, minority
interest and extraordinary item varies from the current statutory federal income
tax rate as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1996 1995 1994
----------------------- ----------------------- -----------------------
<S> <C> <C> <C>
(Benefit) provision at statutory rate... (35.0)% 35.0% 35.0%
State taxes, net........................ (4.5) 2.2 3.5
Recognition of permanent basis
differences related to loss on
restructuring of foreign investment... -- -- (13.4)
Nondeductible amortization.............. 4.3 3.8 4.4
Foreign operations...................... 3.6 (0.2) (3.4)
Valuation allowance..................... 5.8 -- --
Puerto Rico operations.................. 0.3 (3.1) --
Other, net.............................. 1.1 0.2 2.1
------ ----- ------
Effective tax rate (benefit)
provision............................. (24.4)% 37.9% 28.2%
------ ----- ------
------ ----- ------
</TABLE>
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
Coleman Worldwide's deferred tax liabilities and assets are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1996 1995
------- -------
<S> <C> <C>
Deferred tax assets:
Postretirement benefits other than pensions..... $12,370 $11,986
Reserves for self-insurance and warranty
costs........................................ 6,678 4,777
Pension liabilities............................. 8,828 4,942
Inventory....................................... 8,245 5,579
Net operating loss carryforwards................ 14,875 3,103
Impaired assets................................. -- 10,068
Other, net...................................... 24,026 5,555
------- -------
Total deferred tax assets.................. 75,022 46,010
Valuation allowance............................... (7,501) --
------- -------
Net deferred tax assets.................... 67,521 46,010
------- -------
Deferred tax liabilities:
Depreciation.................................... 18,248 17,611
Other, net...................................... 7,675 5,125
------- -------
Total deferred tax liabilities............. 25,923 22,736
------- -------
Net deferred tax assets................. $41,598 $23,274
------- -------
------- -------
</TABLE>
During 1996, Coleman Worldwide increased the valuation allowance related to
certain foreign deferred tax assets due to uncertainties over realization. At
December 31, 1996, Coleman Worldwide had net operating loss carryforwards
('NOL's') of approximately $42,677 for certain foreign income tax purposes.
These NOL's expire beginning in 1999.
Coleman Worldwide has not provided for taxes on undistributed foreign
earnings of approximately $16,904 at December 31, 1996 as Coleman Worldwide
intends to permanently reinvest these earnings in the future growth of the
business. Determination of the amount of unrecognized deferred U.S. income tax
liability is not practicable because of the complexities associated with its
hypothetical calculation.
F-50
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
11. RELATED PARTY TRANSACTIONS
In 1996, the Company entered into an agreement with an affiliate in which
the Company realized approximately $1,800 of net tax benefits associated with
certain foreign tax net operating loss carry forwards that had not previously
been recognized.
The Company provided management services to certain affiliates pursuant to
a management agreement through June 30, 1995. The consolidated financial
statements reflect the management fees as a reduction in selling, general and
administration expenses. For the years ended December 31, 1995 and 1994,
management fees earned by the Company were $2,400 and $4,800, respectively.
MacAndrews & Forbes provides Coleman Worldwide, at Coleman Worldwide's
request, with certain allocated services, pursuant to a services agreement.
These allocated services are purchased by MacAndrews & Forbes from third party
providers on behalf of Coleman Worldwide. Such services include professional
services, such as legal and accounting, insurance coverage and other services.
Coleman Worldwide reimburses MacAndrews & Forbes for that portion of amounts due
to third party providers as is allocable to the services purchased for and
provided to Coleman Worldwide and reimburses MacAndrews & Forbes for their other
out-of-pocket expenses incurred in connection with providing such services.
Coleman Worldwide participates in certain of Holdings' insurance programs,
including health and life insurance, workers' compensation, and liability
insurance. Coleman Worldwide's expense represents its expected costs for
self-insured retentions and premiums for excess coverage insurance. The expense
was $13,923, $9,874, and $10,586 for the years ended December 31, 1996, 1995 and
1994, respectively.
The Company purchases and sells products from and to certain affiliates.
These amounts are not, in the aggregate, material.
12. EMPLOYEE BENEFIT PLANS
Pension Plans:
Holdings maintains pension and other retirement plans in various forms
covering employees of the Company who meet eligibility requirements. The U.S.
salaried retirement plan is a non-contributory defined benefit plan and provides
benefits based on a formula of each participant's final average pay and years of
service. The U.S. hourly pension plan is a non-contributory defined benefit plan
and contains a flat benefit formula. The salaried and hourly plans provide
reduced benefits for early retirement and the salaried plan takes into account
offsets for Social Security benefits. The Company's policy is to contribute
annually the minimum amount required pursuant to the Employee Retirement Income
Security Act, as amended.
Holdings also has an unfunded excess benefit plan covering certain of the
Company's U.S. employees whose benefits under the plans described above are
limited by provisions of the Internal Revenue Code. The
F-51
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
12. EMPLOYEE BENEFIT PLANS--(CONTINUED)
following table reconciles the funded status of the pension plans with the
amount recognized in Coleman Worldwide's consolidated balance sheets as of the
dates indicated:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
Actuarial present value of benefit
obligation:
Accumulated benefit obligation,
including vested benefits of
$18,686 and $15,282................ $(21,933) $(17,588)
-------- --------
-------- --------
Projected benefit obligation for service
rendered to date...................... $(37,092) $(32,284)
Plan assets at fair value............... 16,197 9,696
-------- --------
Projected benefit obligation in excess
of plan assets........................ (20,895) (22,588)
Unrecognized prior service cost......... 50 57
Unrecognized net loss................... 7,999 8,869
-------- --------
Accrued pension cost.................... (12,846) (13,662)
Amount reflected as an intangible
asset................................. (288) --
Amount reflected as minimum pension
liability adjustment.................. (470) --
-------- --------
Amount reflected as pension liability... $(13,604) $(13,662)
-------- --------
-------- --------
</TABLE>
The weighted-average discount rate used in determining the actuarial
present value of the projected benefit obligation was 7.5% and 7.25% as of
December 31, 1996 and 1995, respectively. The rate of increase in future
compensation levels reflected in such determination was 5% as of December 31,
1996 and 1995. The expected long-term rate of return on assets was 9% as of
December 31, 1996, 1995 and 1994. Plan assets consist primarily of common stock,
mutual funds and fixed income securities stated at fair market value, and cash
equivalents stated at cost, which approximates fair market value. Unrecognized
items are being recognized over the estimated remaining service lives of active
employees.
Net pension expense includes the following components:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Service cost-benefits attributed to
service during the year............... $3,098 $2,125 $2,051
Interest cost on projected benefit
obligation............................ 2,442 2,004 1,554
Actual return on plan assets............ (1,490) (1,347) 391
Net amortization and deferrals.......... 844 834 (750)
------ ------ ------
Net pension expense..................... $4,894 $3,616 $3,246
------ ------ ------
------ ------ ------
</TABLE>
Savings Plan:
In January 1990, Holdings initiated an employee savings plan under Section
401(k) of the Internal Revenue Code. This plan covers substantially all of the
Company's full-time U.S. employees and allows employees to contribute up to 10%
of their salary to the plan. The Company matches, at a 33 1/3% rate, employee
contributions of up to 6% of their salary. Amounts charged to expense for
matching contributions were $1,314, $1,165, and $927 for the years ended
December 31, 1996, 1995 and 1994, respectively.
Retiree Health Care and Life Insurance:
The Company, through Holdings, provides certain unfunded health and life
insurance benefits for certain retired employees. Approximately 53 percent of
the Company's U.S. employees may become eligible for these benefits if they
reach retirement age while working for the Company.
F-52
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
12. EMPLOYEE BENEFIT PLANS--(CONTINUED)
The following table reconciles the funded status of the Company's allocable
portion of Holdings' postretirement benefit plans with the amount recognized in
Coleman Worldwide's consolidated balance sheets as of the dates indicated:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
Accumulated postretirement benefit
obligation:
Retirees.............................. $ (6,682) $ (6,660)
Fully eligible active plan
participants....................... (3,015) (2,991)
Other active plan participants........ (10,664) (10,904)
-------- --------
Total accumulated postretirement benefit
obligation............................ (20,361) (20,555)
Unrecognized transition benefit......... (3,973) (4,239)
Unrecognized prior service cost......... (492) (580)
Unrecognized net (gain) loss............ (976) 936
-------- --------
Net postretirement benefit liability.... $(25,802) $(24,438)
-------- --------
-------- --------
</TABLE>
Net periodic postretirement benefit expense includes the following
components:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Service cost-benefits attributed to service during the year................ $1,044 $ 756 $ 901
Interest cost on accumulated postretirement benefit obligation............. 1,454 1,352 1,268
Amortization of transition benefit and other net gains..................... (354) (455) (354)
------ ------ ------
Net periodic postretirement benefit expense................................ $2,144 $1,653 $1,815
------ ------ ------
------ ------ ------
</TABLE>
The discount rate used in determining the accumulated postretirement
benefit obligation ('APBO') was 7.5% and 7.25% as of December 31, 1996 and 1995,
respectively. The assumed health care cost trend rate used in measuring the APBO
at December 31, 1996 was 8% starting in 1997, then gradually decreasing to 5% by
the year 2003 and remaining at that level thereafter. The health care cost trend
rate assumption has a significant effect on the amount of the obligation and
periodic benefit expense reported. An increase in the assumed health care cost
trend rates by 1% in each year would increase the APBO as of December 31, 1996
by approximately 18% and the service and interest cost components of net
periodic postretirement benefit expense by approximately 23%.
Stock Option Plan:
The Company adopted The Coleman Company, Inc. 1992 Stock Option Plan (the
'1992 Stock Option Plan') prior to the effective date of the IPO. During 1993,
the shareholders approved the 1993 Stock Option Plan (the '1993 Stock Option
Plan') and during 1996, the shareholders approved The Coleman Company, Inc. 1996
Stock Option Plan (the '1996 Stock Option Plan'). Under the terms of the 1992
Stock Option Plan, the 1993 Stock Option Plan and the 1996 Stock Option Plan
(collectively the 'Stock Option Plans'), incentive stock options ('ISOs'),
non-qualified stock options ('NQSOs') and stock appreciation rights ('SARs') may
be granted to key employees of the Company and any of its affiliates from time
to time. Stock options have been granted under the Stock Option Plans with
vesting terms and maximum terms of approximately five years and ten years,
respectively. The aggregate number of shares of common stock as to which options
and rights may be granted under the Stock Option Plans may not exceed 4,700,000.
F-53
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
12. EMPLOYEE BENEFIT PLANS--(CONTINUED)
The following table summarizes the stock option transactions under the
Stock Option Plans:
<TABLE>
<CAPTION>
1996 1995 1994
---------------------- ---------------------- ----------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Outstanding--January 1,................. 2,572,930 $ 15.25 2,310,888 $ 14.03 1,256,540 $ 12.61
Granted:
at market price.................... 294,000 19.73 637,000 17.89 1,272,450 15.13
above market price................. 381,000 15.00 -- -- -- --
Exercised............................. (154,890) 12.17 (325,748) 12.09 (53,362) 10.12
Forfeited............................. (75,410) 14.19 (49,210) 13.14 (164,740) 12.98
--------- --------- ---------
Outstanding--December 31,............... 3,017,630 15.84 2,572,930 15.25 2,310,888 14.03
--------- --------- ---------
--------- --------- ---------
Exercisable--December 31,............... 513,440 13.25 413,526 12.84 488,488 12.15
--------- --------- ---------
--------- --------- ---------
Weighted-average fair value of options
granted during the year:
at market price.................... $6.62 $7.13
---------
---------
above market price................. $3.21 --
---------
---------
</TABLE>
The following table summarizes information concerning currently outstanding
and exercisable options at December 31, 1996:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
- ---------------------------------------------------------------------------- -----------------------------
WEIGHTED-AVERAGE WEIGHTED- WEIGHTED-
RANGE OF NUMBER REMAINING AVERAGE NUMBER AVERAGE
EXERCISE PRICES OUTSTANDING CONTRACTUAL LIFE EXERCISE PRICE EXERCISABLE EXERCISE PRICE
- ------------------------ ----------- ---------------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
$ 9.75-$14.32 770,630 1.59 years $13.05 393,440 $12.71
$14.33-$15.13 606,000 7.32 14.98 120,000 15.06
$15.14-$16.30 755,000 7.92 16.06 -- --
$16.31-$23.13 886,000 8.86 18.65 -- --
----------- -----------
$ 9.75-$23.13 3,017,630 6.46 513,440
----------- -----------
----------- -----------
</TABLE>
As described in Note 1, the Company follows APB 25 in accounting for its
stock compensation arrangements. Pro forma financial information regarding net
income is required by FASB Statement No. 123, 'Accounting for Stock-Based
Compensation' ('FAS 123'), and has been determined as if the Company had
accounted for its employee stock options under the fair value method of FAS 123.
The fair value of ISOs and NQSOs granted during 1996 and 1995 were estimated at
the date of grant using the Black-Scholes option pricing model with the
following weighted-average assumptions: risk-free interest rates of 6.11% and
5.91% for 1996 and 1995, respectively, dividend yield of 0.0%, volatility of the
expected market price of the Company's common stock of 20.2% and 30.8% for 1996
and 1995, respectively, and a weighted-average expected life of the option of
5.5 years.
F-54
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
12. EMPLOYEE BENEFIT PLANS--(CONTINUED)
FAS 123 requires the use of option valuation models, one of which is the
Black-Scholes model, that were not developed for use valuing ISOs or NQSOs.
Further, these option valuation models require the input of highly subjective
assumptions, including the expected stock price volatility. In management's
opinion, based on the above, the existing models do not necessarily provide a
reliable single measure of the fair value of its ISOs or NQSOs.
The following summarized, unaudited pro forma results of operations assume
the estimated fair value of the ISOs and NQSOs granted in 1996 and 1995 is
amortized to expense over the ISOs' and NQSOs' vesting period. FAS 123 does not
require disclosure of the effect of any grants of stock based compensation prior
to 1995 and, therefore, the pro forma effect on net earnings of FAS 123 is not
representative of the pro forma effect on net earnings in future years.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
---------------------
1996 1995
-------- -------
<S> <C> <C>
Pro forma net (loss) earnings..................... $(42,180) $24,897
</TABLE>
13. COMMITMENTS AND CONTINGENCIES
Leases:
The Company leases manufacturing, administrative and sales facilities and
various types of equipment under operating lease agreements expiring through
2007. Rental expense was $14,164, $11,526, and $9,520 for the years ended
December 31, 1996, 1995 and 1994, respectively. Minimum rental commitments under
all noncancellable operating leases with remaining lease terms in excess of one
year from December 31, 1996, aggregated $43,573; such commitments for each of
the five years subsequent to December 31, 1996 are $12,379, $11,135, $6,189,
$4,296, and $2,619, respectively, and $6,955 thereafter.
The Company leases its Hastings, Nebraska facility and the corporate office
building in Denver, Colorado under agreements which give the Company the right,
subject to certain qualifications, to renew, terminate, or purchase the
properties. Upon termination, the Company has guaranteed the lessor certain
residual values.
Environmental Matters:
The Company is subject to various environmental regulations and has adopted
an environmental policy designed to ensure the Company operates in full
compliance with applicable environmental regulations and, where appropriate, the
Company's own internal standards. Coleman has also undertaken an environmental
compliance audit program. The Company makes expenditures it believes are
necessary to comply with environmental management practices. Environmental
expenditures that relate to current operations are expensed or capitalized as
appropriate, were not significant in 1996, and are not expected to be
significant in the foreseeable future. Coleman has established reserves for
various environmental matters to cover the estimated costs of the
investigations, remedial activities and litigation.
Non-Recourse Guaranty:
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 net proceeds of approximately $162,299 were
distributed to Coleman Holdings' parent.
F-55
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
13. COMMITMENTS AND CONTINGENCIES--(CONTINUED)
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 26,000,000 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 semiannual bond
equivalent basis) calculated from July 22, 1993.
Other:
The Company and Holdings are involved in various claims and legal actions
arising in the ordinary course of business. The Company believes the ultimate
disposition of these matters is not expected to have a material adverse effect
on Coleman Worldwide's consolidated financial condition or results of
operations. Coleman Worldwide and the Company have entered into a
cross-indemnification agreement with Holdings pursuant to which Coleman will
indemnify Holdings against all liabilities related to businesses transferred to
the Company, and Holdings will indemnify the Company against all liabilities of
Holdings other than liabilities related to the businesses transferred to the
Company.
The Company is also party to a license agreement which requires payments of
minimum guaranteed royalties aggregating to $8,225 at December 31, 1996; such
commitments for each of the four years remaining under the agreement subsequent
to December 31, 1996 are $933, $1,768, $2,454, and $3,070, respectively.
14. SIGNIFICANT CUSTOMERS
The Company's U.S. and Canadian operations have one significant customer
which accounted for approximately 15%, 19%, and 21% of net revenues in the years
ended December 31, 1996, 1995 and 1994, respectively.
15. CASH FLOW REPORTING
Coleman Worldwide uses the indirect method to report cash flows from
operating activities. Interest paid was $37,608, $23,976, and $11,933 and income
taxes paid were $2,857, $4,606, and $359 for the years ended December 31, 1996,
1995 and 1994, respectively. Certain non-cash transactions relating to
acquisitions and the issuance of long-term debt have been reported in Notes 2
and 9.
16. GEOGRAPHIC SEGMENTS
Coleman Worldwide designs, manufactures and markets a wide variety of
multiuse products and accessories, which are primarily marketed through
independent retail markets, for the outdoor recreation and hardware consumers.
Coleman Worldwide is a leading manufacturer and marketer of brand name consumer
products for the camping and related outdoor recreation markets in the United
States, Canada, Europe, and Japan.
Operating profit, as indicated below, represents net revenues less
operating expenses and amortization of goodwill. Generally, sales between
geographic areas are made at cost plus a share of operating profit. Identifiable
assets are those used by each geographic segment. Corporate assets are
principally cash, certain property and equipment, income tax refunds
receivable--affiliate, and deferred charges. The geographic segment presentation
has been restated for the years ended December 31, 1995 and 1994 to reflect the
European segment which became a significant segment for the year ended December
31, 1996, primarily due to the impact of the Camping Gaz operations.
F-56
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
16. GEOGRAPHIC SEGMENTS--(CONTINUED)
Information related to Coleman Worldwide's geographic segments is as
follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1996 1995 1994
---------- -------- --------
<S> <C> <C> <C>
Net revenues:
Domestic--U.S......................... $ 916,260 $716,018 $566,098
--Export..................... 91,125 90,434 93,917
Europe................................ 168,780 52,233 52,461
Other foreign......................... 219,350 169,836 121,545
Eliminations.......................... (175,299) (94,947) (82,441)
---------- -------- --------
$1,220,216 $933,574 $751,580
---------- -------- --------
---------- -------- --------
Operating profit:
Domestic (a).......................... $ 19,915 $120,915 $ 94,773
Europe (b)............................ (17,505) (3,241) (23,203)
Other foreign (c)..................... 4,027 (10,540) 2,222
---------- -------- --------
6,437 107,134 73,792
Corporate expenses...................... (16,032) (18,738) (12,744)
Interest expense........................ (50,767) (35,930) (24,031)
---------- -------- --------
(Loss) earnings before income taxes,
minority interest and extraordinary
item.................................. $ (60,362) $ 52,466 $ 37,017
---------- -------- --------
---------- -------- --------
Identifiable assets:
Domestic.............................. $ 782,373 $696,681 $559,599
Europe................................ 247,412 70,478 72,908
Other foreign......................... 83,033 59,107 54,573
Corporate............................. 93,631 80,123 67,946
---------- -------- --------
$1,206,449 $906,389 $755,026
---------- -------- --------
---------- -------- --------
</TABLE>
- ------------------
(a) Includes $49,257 of restructuring and other charges in 1996.
(b) Includes $20,002 of restructuring and other charges in 1996 and $17,956
related to the German Restructuring in 1994.
(c) Includes $4,941 of restructuring and other charges in 1996 and $12,289 of
asset impairment charges in 1995.
F-57
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)
(IN THOUSANDS, EXCEPT SHARE DATA)
17. QUARTERLY FINANCIAL SUMMARIES (UNAUDITED)
Summarized quarterly financial data for 1996 and 1995 are as follow:
<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30,(A) DECEMBER 31,(B)(C)
--------- -------- ---------------- ------------------
<S> <C> <C> <C> <C>
1996
Net revenues...................................... $ 273,560 $452,654 $269,607 $224,395
Gross profit...................................... 80,966 137,538 39,894 33,321
Earnings (loss) before extraordinary item......... 12,236 21,437 (42,047) (31,845)
Net earnings (loss)............................... 11,654 20,780 (42,052) (31,845)
1995
Net revenues...................................... $ 224,024 $311,281 $211,817 $186,452
Gross profit...................................... 68,496 99,575 65,932 50,144
Earnings (loss) before extraordinary item......... 9,285 21,085 5,831 (10,292)
Net earnings (loss)............................... 9,285 21,085 5,044 (10,292)
</TABLE>
- ------------------
(a) For the third quarter of 1996, the gross profit amount includes $33,567 of
restructuring and other charges. The loss before extraordinary item and net
loss amounts include an after tax charge of $44,495 related to restructuring
and other charges.
(b) For the fourth quarter of 1996, the gross profit amount includes $10,438 of
restructuring and other charges. The loss before extraordinary item and net
loss amounts include an after tax charge of $8,021 related to restructuring
and other charges.
(c) For the fourth quarter of 1995, the gross profit amount includes $7,599 of
income as a result of adopting the provisions of EITF 95-2. The loss before
extraordinary item and net loss amounts include an after tax asset
impairment charge of $9,856 as a result of adopting FAS 121 and an after tax
credit of $3,796 as a result of adopting the provisions of EITF 95-2.
F-58
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31,
1997
------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents....................... $ 12,866
Accounts and notes receivable, less allowance of
$9,934....................................... 271,617
Inventories..................................... 288,166
Deferred tax assets............................. 39,895
Prepaid assets and other........................ 16,611
------------
Total current assets......................... 629,155
Property, plant and equipment, net................ 194,739
Intangible assets related to businesses acquired,
net............................................. 341,907
Note receivable--affiliate........................ 47,739
Deferred tax assets and other..................... 39,892
------------
$ 1,253,432
------------
------------
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts and notes payable...................... $ 194,462
Other current liabilites........................ 115,902
------------
Total current liabilites..................... 310,364
Long-term debt.................................. 745,770
Income taxes payable--affiliate................... 16,681
Other liabilities................................. 75,711
Minority interest................................. 44,598
Commitments and contingencies.....................
Stockholder's equity:
Common stock.................................... 1
Additional paid-in capital...................... 28,159
Retained earnings............................... 34,887
Currency translation adjustment................. (2,364)
Minimum pension liability adjustment............ (375)
------------
Total stockholder's equity................... 60,308
------------
$ 1,253,432
------------
------------
</TABLE>
See Notes to Condensed Consolidated Financial Statements
F-59
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------
1997 1996
-------- --------
<S> <C> <C>
Net revenues...................................... $295,464 $273,560
Cost of sales..................................... 214,422 192,594
-------- --------
Gross profit...................................... 81,042 80,966
Selling, general and administrative expenses...... 65,923 46,776
Interest expense, net............................. 13,854 11,056
Amortization of goodwill and deferred charges..... 3,010 2,392
Other expense (income), net....................... 271 (2,721)
-------- --------
(Loss) earnings before income taxes, minority
interest and extraordinary item................. (2,016) 23,463
Income tax (benefit) expense...................... (775) 8,692
Minority interest in earnings of Camping Gaz...... 112 --
Minority interest in earnings of Coleman.......... 120 2,535
-------- --------
(Loss) earnings before extraordinary item......... (1,473) 12,236
Extraordinary loss on early extinguishment of
debt, net of income tax benefit................. -- (582)
-------- --------
Net (loss) earnings............................... $ (1,473) $ 11,654
-------- --------
-------- --------
</TABLE>
See Notes to Condensed Consolidated Financial Statements
F-60
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
---------------------
1997 1996
-------- ---------
<S> <C> <C>
Cash Flows from Operating Activities:
Net (loss) earnings............................. $ (1,473) $ 11,654
-------- ---------
Adjustments to reconcile net (loss) earnings to
net cash
used by operating activities:
Depreciation and amortization.............. 9,735 7,733
Non-cash tax sharing agreement (benefit)
provision................................. (1,847) 5,682
Minority interest in earnings of Coleman... 120 2,535
Minority interest in earnings of Camping
Gaz....................................... 112 --
Interest accretion......................... 3,142 2,976
Non-cash gain on LYONs conversion.......... -- (2,751)
Extraordinary loss on early extinguishment
of debt................................... -- 986
Change in assets and liabilities:
Increase in receivables................. (67,454) (84,659)
Increase in inventories................. (5,258) (28,420)
Increase in accounts payable............ 18,655 8,741
Other, net.............................. (3,812) (17,323)
-------- ---------
(46,607) (104,500)
-------- ---------
Net cash used by operating activities............. (48,080) (92,846)
-------- ---------
Cash Flows from Investing Activities:
Capital expenditures............................ (6,313) (6,866)
Purchases of businesses, net of cash acquired... -- (60,132)
Decrease in note receivable--affiliate.......... 7,000 --
Proceeds from sale of fixed assets.............. 2,126 186
-------- ---------
Net cash provided by (used by) investing
activities...................................... 2,813 (66,812)
-------- ---------
Cash Flows from Financing Activities:
Net (payments of) proceeds from revolving credit
agreement borrowings......................... (8,959) 125,713
Net change in short-term borrowings............. 48,996 29,611
Repayment of long-term debt..................... (64) (172)
Debt issuance and refinancing costs............. (718) --
Purchases of Company common stock............... -- (2,329)
Proceeds from stock options exercised........... 197 967
Contributions from (distributions to) parents... 41 (10)
-------- ---------
Net cash provided by financing activities......... 39,493 153,780
-------- ---------
Effect of exchange rate changes on cash........... 1,341 629
-------- ---------
Net decrease in cash and cash equivalents......... (4,433) (5,249)
Cash and cash equivalents at beginning of the
period.......................................... 17,299 12,065
-------- ---------
Cash and cash equivalents at end of the period.... $ 12,866 $ 6,816
-------- ---------
-------- ---------
</TABLE>
See Notes to Condensed Consolidated Financial Statements
F-61
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
1. BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
Coleman Worldwide Corporation ('Coleman Worldwide') have been prepared in
accordance with generally accepted accounting principles for interim financial
information. 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, 1997 are
not necessarily indicative of the results that may be expected for the year
ended December 31, 1997. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Coleman Worldwide
annual report on Form 10-K for the year ended December 31, 1996.
2. INVENTORIES
The components of inventories consist of the following:
<TABLE>
<CAPTION>
MARCH 31,
1997
---------
<S> <C>
Raw material and supplies ............................................ $ 83,710
Work-in-process ...................................................... 16,036
Finished goods ....................................................... 188,420
---------
$ 288,166
---------
---------
</TABLE>
3. OTHER CHARGES
During the three months ended March 31, 1997, the Company recorded certain
other charges totaling $2,435, net of tax, primarily related to severance costs
associated with recent executive changes.
4. RELATED PARTY TRANSACTIONS
During the three months ended March 31, 1997, the Company agreed to
purchase an inactive subsidiary from an affiliate for $1,000. The Company
expects to realize certain foreign tax benefits from this transaction in future
years. The Company has accounted for this transaction in a manner similar to a
pooling-of-interests due to the Mafco Holdings Inc. common control over each of
the parties involved in the transaction. The $2,608 excess value of tax benefits
acquired over the purchase price has been accounted for as a capital
contribution.
On March 31, 1997, MacAndrews & Forbes Holdings Inc., an indirect parent,
assumed a liability of Coleman Worldwide in the amount of $2,271. The assumption
was accounted for as a capital contribution.
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 'Holdings Notes'). The net proceeds of approximately
$162,299 were distributed to Coleman Holdings' parent.
The Holdings Notes will mature on May 27, 1998, and are secured by all the
shares of Coleman Worldwide. In connection with the Holdings Notes issuance,
Coleman Worldwide has provided a non-recourse guaranty, which is secured by its
pledge of 26,000,000 shares of Coleman Common Stock. There will be no periodic
payment of interest on the Holdings Notes. The aggregate principal amount of the
Holdings Notes represents a yield to maturity of 10.875% per annum (computed on
a semi-annual bond equivalent basis) calculated from July 22, 1993.
F-62
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
6. SUBSEQUENT EVENTS
In April 1997, the Company announced its intentions to (i) close its
corporate headquarters in Golden, Colorado, (ii) close its Geneva, Switzerland
international headquarters, (iii) reduce the Company's workforce by
approximately 10% and (iv) close or relocate three domestic factories and close
one international factory. Most of the costs associated with these actions will
be reflected in the results of operations for the quarter ended June 30, 1997.
On May 6, 1997, Coleman Worldwide and Coleman Holdings jointly announced
that Coleman Holdings intends to redeem the Holdings Notes on or about July 15,
1997, and that Coleman Worldwide intends to retire its Liquid Yield
Option(Trademark) Notes due 2013 (the 'LYONs'(Trademark)). Coleman Worldwide
will make an offer to pay cash for the LYONs in excess of the market value of
the shares of the Company's common stock for which the LYONs may be exchanged.
Coleman Worldwide expects to commence the offer as soon as reasonably
practicable and to redeem any remaining LYONs on May 27, 1998. Redemption of the
Holdings Notes and retirement of the LYONs will be made with the proceeds from
the issuance of debt securities (the 'Notes') by a newly formed holding company.
Upon the redemption of the Holdings Notes and retirement of the LYONs, the Notes
are expected to be secured by the shares of the Company's common stock owned by
Coleman Worldwide.
F-63
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Stockholders and Board of Directors
The Coleman Company, Inc.
We have audited the accompanying consolidated balance sheets of The Coleman
Company, Inc. and subsidiaries as of December 31, 1996 and 1995, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the three years in the period ended December 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
The Coleman Company, Inc. and subsidiaries at December 31, 1996 and 1995, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended December 31, 1996, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
Denver, Colorado
March 10, 1997
F-64
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1996 1995
---------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents....................... $ 17,299 $ 12,065
Accounts receivable, less allowance of $11,512
in 1996 and $3,115 in 1995................... 182,418 148,765
Notes receivable................................ 27,524 16,544
Inventories..................................... 287,502 216,236
Income tax refunds receivable--affiliate........ 21,661 2,400
Deferred tax assets............................. 40,466 20,481
Prepaid assets and other........................ 14,767 22,308
---------- --------
Total current assets.............................. 591,637 438,799
Property, plant and equipment, net................ 199,182 162,691
Intangible assets related to businesses acquired,
net............................................. 341,715 217,289
Deferred tax assets and other..................... 27,552 25,708
---------- --------
$1,160,086 $844,487
---------- --------
---------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt............... $ 747 $ 1,051
Short-term borrowings........................... 33,935 19,302
Accounts payable................................ 98,906 71,377
Accrued expenses................................ 112,906 58,137
---------- --------
Total current liabilities.................... 246,494 149,867
Long-term debt.................................... 582,866 354,206
Other liabilities................................. 76,173 48,072
Minority interest................................. 1,608 --
Commitments and contingencies.....................
Stockholders' equity:
Preferred stock, par value $.01 per share;
20,000,000 shares authorized, no shares
issued or outstanding........................ -- --
Common stock, par value $.01 per share;
80,000,000 shares authorized; 53,222,420
shares issued and outstanding in 1996; and
53,177,280 shares issued and outstanding in
1995......................................... 532 532
Additional paid-in capital...................... 166,690 165,466
Retained earnings............................... 82,832 126,179
Currency translation adjustment................. 3,176 165
Minimum pension liability adjustment............ (285) --
---------- --------
Total stockholders' equity................... 252,945 292,342
---------- --------
$1,160,086 $844,487
---------- --------
---------- --------
</TABLE>
See Notes to Consolidated Financial Statements.
F-65
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1996 1995 1994
---------- -------- --------
<S> <C> <C> <C>
Net revenues............................ $1,220,216 $933,574 $751,580
Cost of sales........................... 928,497 649,427 535,710
---------- -------- --------
Gross profit............................ 291,719 284,147 215,870
Selling, general and administrative
expenses.............................. 291,669 174,688 128,466
Asset impairment charge................. -- 12,289 --
Restructuring expense................... -- -- 18,456
Interest expense, net................... 38,727 24,545 13,374
Amortization of goodwill and deferred
charges............................... 10,473 7,745 6,209
Other expense, net...................... 1,151 334 1,138
---------- -------- --------
(Loss) earnings before income taxes,
minority interest and extraordinary
item............................... (50,301) 64,546 48,227
Income tax (benefit) expense............ (10,927) 24,479 14,747
Minority interest in earnings of Camping
Gaz................................... 1,872 -- --
---------- -------- --------
(Loss) earnings before extraordinary
item............................... (41,246) 40,067 33,480
Extraordinary loss on early
extinguishment of debt, net of income
tax benefit of $431 in 1996, $503 in
1995, and $435 in 1994................ (647) (787) (677)
---------- -------- --------
Net (loss) earnings..................... $ (41,893) $ 39,280 $ 32,803
---------- -------- --------
---------- -------- --------
(Loss) earnings per share:
(Loss) earnings before extraordinary
item............................... $ (0.78) $ 0.75 $ 0.62
Extraordinary item...................... (0.01) (0.01) (0.01)
---------- -------- --------
---------- -------- --------
Net (loss) earnings................... $ (0.79) $ 0.74 $ 0.61
---------- -------- --------
---------- -------- --------
Weighted average common shares
outstanding........................... 53,197 53,226 53,436
---------- -------- --------
---------- -------- --------
</TABLE>
See Notes to Consolidated Financial Statements
F-66
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
COMMON STOCK
-------------------- ADDITIONAL CURRENCY MINIMUM
NUMBER PAID-IN RETAINED TRANSLATION PENSION
OF SHARES AMOUNT CAPITAL EARNINGS ADJUSTMENT LIABILITY
---------- ------ ---------- -------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993.............. 53,615,770 $536 $ 167,514 $ 60,597 $ (543) $ --
Purchases of common stock............... (597,600) (6) (5,224) (4,341) -- --
Stock issued under stock option plan.... 53,362 1 538 -- -- --
Stock option tax benefits............... -- -- 45 -- -- --
Net earnings............................ -- -- -- 32,803 -- --
Currency translation adjustment......... -- -- -- -- 1,443 --
---------- ------ ---------- -------- -----------
Balance at December 31, 1994.............. 53,071,532 531 162,873 89,059 900 --
Purchases of common stock............... (220,000) (2) (1,924) (2,160) -- --
Stock issued under stock option plan.... 325,748 3 3,935 -- -- --
Stock option tax benefits............... -- -- 582 -- -- --
Net earnings............................ -- -- -- 39,280 -- --
Currency translation adjustment......... -- -- -- -- (735) --
---------- ------ ---------- -------- ----------- -------
Balance at December 31, 1995.............. 53,177,280 532 165,466 126,179 165 --
Purchases of common stock............... (100,000) (1) (874) (1,454) -- --
Stock split issuance costs.............. -- -- (93) -- -- --
Stock issued under stock option plan.... 145,140 1 1,737 -- -- --
Stock option tax benefits............... -- -- 454 -- -- --
Net loss................................ -- -- -- (41,893) -- --
Currency translation adjustment......... -- -- -- -- 3,011 --
Minimum pension liability adjustment,
net of tax........................... -- -- -- -- -- (285)
---------- ------ ---------- -------- ----------- -------
Balance at December 31, 1996.............. 53,222,420 $532 $ 166,690 $ 82,832 $ 3,176 $(285)
---------- ------ ---------- -------- ----------- -------
---------- ------ ---------- -------- ----------- -------
</TABLE>
See Notes to Consolidated Financial Statements
F-67
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1996 1995 1994
--------- -------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net (loss) earnings................... $ (41,893) $ 39,280 $ 32,803
--------- -------- ---------
Adjustments to reconcile net (loss)
earnings to net cash flows from
operating activities:
Depreciation and amortization.... 36,358 26,523 22,755
Non-cash restructuring and other
charges....................... 48,269 12,289 10,950
Extraordinary loss on early
extinguishment of debt........ 1,078 1,290 1,112
Minority interest in earnings of
Camping Gaz................... 1,872 -- --
Change in assets and liabilities:
Decrease (increase) in
receivables................... 976 (37,833) (22,122)
Increase in inventories.......... (42,402) (49,396) (10,852)
(Decrease) increase in accounts
payable....................... (12,308) 13,825 (1,403)
Other, net....................... (1,279) (3,789) (13,302)
--------- -------- ---------
32,564 (37,091) (12,862)
--------- -------- ---------
Net cash (used) provided by operating
activities............................ (9,329) 2,189 19,941
--------- -------- ---------
Cash flows from investing activities:
Capital expenditures.................. (41,334) (29,053) (34,915)
Purchases of businesses, net of cash
acquired........................... (161,875) (33,385) (99,587)
Proceeds from sale of fixed assets.... 2,924 928 4,471
--------- -------- ---------
Net cash used by investing activities... (200,285) (61,510) (130,031)
Cash flows from financing activities:
Net change in short-term borrowings... (11,043) 3,106 6,867
Net (payments of) proceeds from
revolving credit agreement
borrowings......................... (2,779) (61,289) 129,274
Proceeds from issuance of long-term
debt............................... 235,000 200,000 --
Repayment of long-term debt........... (6,648) (73,884) (10,796)
Debt issuance and refinancing costs... (3,902) (3,569) (1,955)
Purchases of Company common stock..... (2,329) (4,086) (9,571)
Proceeds from stock options exercised
including tax benefits............. 2,192 4,520 584
--------- -------- ---------
Net cash provided by financing
activities............................ 210,491 64,798 114,403
--------- -------- ---------
Effect of exchange rate changes on
cash.................................. 4,357 (1,731) (1,587)
--------- -------- ---------
Net increase in cash and cash
equivalents........................... 5,234 3,746 2,726
Cash and cash equivalents at beginning
of the year........................... 12,065 8,319 5,593
--------- -------- ---------
Cash and cash equivalents at end of the
year.................................. $ 17,299 $ 12,065 $ 8,319
--------- -------- ---------
--------- -------- ---------
</TABLE>
See Notes to Consolidated Financial Statements
F-68
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE DATA)
1. SIGNIFICANT ACCOUNTING POLICIES
Background:
The Coleman Company, Inc. ('Coleman' or the 'Company') was formed in
December 1991 to succeed to the assets and liabilities of the outdoor products
business of New Coleman Holdings Inc. ('Holdings') an indirect wholly-owned
subsidiary of Mafco Holdings Inc. ('Mafco'). Holdings (then named The Coleman
Company, Inc.) was acquired in 1989 by MacAndrews & Forbes Holdings Inc.
('MacAndrews Holdings', and, together with Mafco, 'MacAndrews & Forbes'), a
corporation wholly owned through Mafco by Ronald O. Perelman. Coleman is a
subsidiary of Coleman Worldwide Corporation ('Coleman Worldwide'), which is an
indirect wholly-owned subsidiary of Holdings. In March 1992, the Company
completed an initial public offering of its common stock. MacAndrews & Forbes
indirectly holds 44,067,520 shares of the common stock of Coleman, which
represents approximately 83% of the outstanding Coleman common stock as of
December 31, 1996.
Principles of Consolidation:
The consolidated financial statements include the accounts of the Company
and its subsidiaries after elimination of all material intercompany accounts and
transactions.
Cash Equivalents:
Cash equivalents (primarily investments in money market funds and
commercial paper which are purchased with original maturities of three months or
less) are carried at cost, which approximates fair value.
Inventories:
Inventories are valued at the lower of cost or market. Cost is principally
determined by the first-in, first-out ('FIFO') method.
Property, Plant and Equipment:
Property, plant and equipment is recorded at cost and depreciated on a
straight-line basis over the estimated useful lives of such assets as follows:
land improvements, 5 to 25 years; buildings and building improvements, 7 to 45
years; and machinery and equipment, 3 to 15 years. Leasehold improvements are
amortized over their estimated useful lives or the terms of the leases,
whichever is shorter. Repairs and maintenance are charged to operations as
incurred, and significant expenditures for additions and improvements are
capitalized.
Intangible Assets:
Intangible assets represent goodwill which is being amortized on a
straight-line basis over periods not in excess of 40 years. Accumulated
amortization aggregated $38,851 and $29,261 at December 31, 1996 and 1995,
respectively. The carrying amount of goodwill is reviewed if facts and
circumstances suggest it may be impaired. If this review indicates goodwill will
not be recoverable over the remaining amortization period, as determined based
on the estimated undiscounted cash flows of the entity acquired, the carrying
amount of the goodwill is reduced to estimated fair value based on market value
or discounted cash flows, as appropriate.
F-69
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
1. SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Revenue Recognition:
The Company recognizes net revenues upon shipment of merchandise. Net
revenues comprise gross revenues less customer returns and allowances.
Advertising and Promotion Expense:
Production costs of future media advertising are deferred until the
advertising occurs. All other advertising and promotion costs are expensed when
incurred. The amounts charged against operations for the years ended December
31, 1996, 1995 and 1994 were $58,823, $37,544 and $30,831, respectively.
Research and Development:
Research and development expenditures are expensed as incurred. The amounts
charged against operations for the years ended December 31, 1996, 1995 and 1994
were $11,082, $6,548, and $5,230, respectively.
Self Insurance:
The Company participates in insurance programs maintained by Holdings. The
Company estimates its liability for the self-insured portions of the risks
covered by such programs and accrues appropriate reserves. (See Note 11.)
Foreign Currency Translation:
The Company's international operations, other than its Brazilian and
Mexican operations, are conducted in economic environments which the Company
does not consider to be highly inflationary. Assets and liabilities of
international operations generally are translated into U.S. dollars at the rates
of exchange in effect at the balance sheet date, and income and expense items
generally are translated at the average exchange rates prevailing during the
period presented. Gains and losses resulting from the translation of these
financial statements are recorded as a component of stockholders' equity. Gains
and losses resulting from foreign currency transactions and translation of the
financial statements of the Company's Brazilian and Mexican operations are
included in the results of operations and have not been significant for the
years ended December 31, 1996, 1995 and 1994.
Financial Instruments with Off-Balance-Sheet Risk:
The Company periodically enters into a variety of foreign currency exchange
agreements in the management of foreign currency exposure related primarily to
firm commitments, intercompany foreign sales transactions expected to occur
within the next twelve months and intercompany accounts receivables and
payables.
At December 31, 1996, the Company did not have any outstanding foreign
currency exchange agreements related to firm commitments. At December 31, 1995,
the Company had a forward exchange contract to buy $15,000 of Italian lira
maturing on May 31, 1996 and had an unrecognized gain of $93. The gains and
losses from this contract are accounted for under the deferral method and are
recognized and included in income in the same period as a component of the
related hedged transactions. In the event it is no longer probable the
transactions will be consummated, the gains and losses are recognized
immediately in income under the fair value method. At December 31, 1995, the
Company had outstanding option contracts for the purchase or sale of Italian
lira totaling $10,500, which contracts expired during 1996.
During the fourth quarter of 1995, the Company elected to adopt the
provisions of the Emerging Issues Task Force Issue No. 95-2, 'Determination of
What Constitutes a Firm Commitment for Foreign Currency Transactions Not
Involving a Third Party' ('EITF 95-2') which narrowed the scope of intercompany
foreign currency commitments eligible to be hedged for financial reporting
purposes. Under EITF 95-2, the Company
F-70
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
1. SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
reflects the carrying value of its forward currency contract positions relating
to intercompany foreign sales transactions on a mark-to-market basis and
accounts for the resulting unrecognized gains or losses in income as a component
of cost of sales. As a result of this change, the Company increased net income
by $3,796 in the fourth quarter of 1995. Prior to the adoption of EITF 95-2, the
gains and losses associated with these contracts were accounted for under the
deferral method. At December 31, 1996, the Company had forward exchange
contracts to sell $8,500 in Canadian dollars maturing on February 28, 1997, for
which the Company has recognized a net gain of $40 as a component of cost of
sales. At December 31, 1995, the Company had forward exchange contracts to sell
$22,969 in foreign currencies, which contracts matured at various dates in 1996
and for which the Company has recognized a net gain of $7,599 as a component of
cost of sales.
The Company also enters into option contracts to hedge intercompany foreign
sales transactions. Gains and losses on these contracts are deferred and
recognized as an adjustment to cost of sales upon the sale of the related
inventory. At December 31, 1996 and 1995, the Company had outstanding option
contracts for the sale of Japanese yen at fixed exchange rates totaling $20,038
and $24,926 for specified periods of time which expire during 1997 and 1996,
respectively. Net unrealized gains deferred at December 31, 1996 and 1995 were
$653 and $125, respectively.
With respect to intercompany accounts receivable and payables, at December
31, 1996, the Company had forward exchange contracts to sell $26,623 and to buy
$3,898 in foreign currencies, which contracts matured at various dates in 1997,
and had deferred a net gain of $185. At December 31, 1995, the Company had
forward exchange contracts to sell $31,152 and to buy $1,712 in foreign
currencies, which contracts matured at various dates in 1996 and had deferred a
net gain of $56. The gains and losses from these contracts are accounted for
under the deferral method and are recognized and included in income in the same
period as a component of the related hedged transactions.
The Company periodically enters into interest rate swap and cap agreements
as a hedge against interest rate exposure of variable rate debt. At December 31,
1996, $25,000 of the Company's outstanding long-term debt was subject to an
interest rate swap agreement and $25,000 of the Company's outstanding long-term
debt was subject to an interest rate cap. Under the interest rate swap
agreement, the Company pays the counterparty interest at a fixed rate of 6.115%,
and the counterparty pays the Company interest at a variable rate equal to the
three month LIBOR for a seven year period commencing January 2, 1996. The
agreement is with a major financial institution which is expected to fully
perform under the terms of the agreement, thereby mitigating the credit risk
from the transaction. The differences to be paid or received on interest rate
swap agreements designated as hedges are included in interest expense as
payments are made or received. The interest rate cap agreement entitles the
Company to receive from a major financial institution the amount, if any, by
which the Company's interest payments on $25,000 of its variable rate debt
exceed 7.35%. The $509 premium paid for this interest rate cap agreement is
included in other assets and is amortized to interest expense over the
three-year term of the cap, which commenced January 3, 1995. Payments received
as a result of the cap are accrued as a reduction of interest expense on the
variable rate debt. In the event the interest rate swap or cap agreements are
terminated early and the related debt remains outstanding, the amounts paid or
received upon the early termination, along with any unamortized premium, will
continue to be amortized over the terms of the original interest rate swap and
cap agreements.
Credit Risk:
Financial instruments which potentially subject the Company to
concentrations of credit risk consist primarily of trade receivables and
derivative financial instruments. Credit risk on trade receivables is minimized
as a result of the large and diversified nature of the Company's worldwide
customer base. Although the Company has one significant customer (See Note 14),
there have been no credit losses related to this customer. With respect to its
derivative contracts, the Company is also subject to credit risk of non
performance by counterparties
F-71
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
1. SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
and its maximum potential loss may exceed the amount recognized in the financial
statements. The Company controls its exposure to credit risk through credit
approvals, credit limits and monitoring procedures. Collateral is generally not
required for the Company's financial instruments.
Fair Value of Financial Instruments:
The following methods and assumptions were used by the Company in
estimating its fair value disclosures for financial instruments:
Cash and cash equivalents: The carrying amount reported in the
balance sheet for cash and cash equivalents approximates its fair value.
Long- and short-term debt: The carrying amounts of the Company's
borrowings under its foreign bank lines of credit, revolving credit
agreement and other variable rate debt approximate their fair value. The
fair value of the Company's senior notes issues (see Note 9) are estimated
using discounted cash flow analysis based on the Company's estimated
current borrowing rate for similar types of borrowing arrangements.
Foreign currency exchange agreements: The fair values of the
Company's foreign currency agreements are estimated based on quoted market
prices of comparable agreements, adjusted through interpolation where
necessary for maturity differences.
Interest rate swap and cap agreements: The fair values of interest
rate swap and cap agreements are the amounts at which they could be
terminated, based on estimates obtained from dealers.
The carrying amounts and fair values of the Company's financial instruments
at December 31, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1996 DECEMBER 31, 1995
-------------------------- --------------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
OF ASSET/ OF ASSET/ OF ASSET/ OF ASSET/
(LIABILITY) (LIABILITY) (LIABILITY) (LIABILITY)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Cash and cash equivalents......................... $ 17,299 $ 17,299 $ 12,065 $ 12,065
Short-term debt................................... (33,935) (33,935) (19,302) (19,302)
Long-term debt excluding capital leases........... (583,019) (578,921) (354,480) (370,322)
Foreign currency exchange agreements.............. 940 1,629 8,026 8,287
Interest rate swap agreements..................... -- 296 -- (635)
Interest rate cap agreement....................... 170 1 340 18
</TABLE>
Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Reclassifications:
Certain amounts in the prior years' financial statements have been
reclassified to conform to the current year presentation.
F-72
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
1. SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Accounting for Stock-Based Compensation:
The Company accounts for its stock compensation arrangements under the
provisions of Accounting Principles Board Opinion No. 25, 'Accounting for Stock
Issued to Employees' ('APB 25') and related pronouncements. Under the provisions
of APB 25, no compensation expense is recognized when stock options are granted
with exercise prices equal to or greater than market value on the date of grant.
Impairment of Long-Lived Assets:
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, 'Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of' ('FAS 121'),
which requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amount. FAS 121 also addresses the accounting for long-lived assets
expected to be disposed of. The Company adopted FAS 121 in the fourth quarter of
1995. The effect of the adoption of FAS 121 is described in Note 3.
2. ACQUISITIONS
During April 1994, the Company purchased substantially all the assets of
Sanborn Manufacturing Company ('Sanborn') in Eden Prairie, Minnesota, a
manufacturer of a broad line of portable and stationary air compressors for
consumer and commercial markets distributed primarily through warehouse clubs,
home centers and mass merchants in North America, and substantially all the
assets and business of Metal Yanes, Ltda. ('Yanes') in Sao Paulo, Brazil, a
manufacturer of camping products, including propane and butane fueled lanterns,
camp stoves, tents, lantern mantles and fuel. The Sanborn and Yanes
acquisitions, which were accounted for under the purchase method of accounting,
were completed for the following consideration: (a) approximately $41,066 in
cash financed through borrowings under the Company Credit Agreement (as defined
in Note 9), (b) assumption of liabilities in the amount of $22,193, and (c) a
note payable of $2,999. During 1995, in connection with the Sanborn acquisition,
the Company entered into a settlement agreement with the predecessor owners
which resolved certain disputes between the parties as well as fulfilled certain
obligations owed and anticipated to be owed by the Company to the predecessor
owners. These anticipated obligations related to a requirement to make
additional payments of up to $4,000 based upon the achievement of certain annual
sales levels during the five year period ending December 31, 1998 by Coleman
Powermate Compressors, Inc. ('Compressors'), the Company's subsidiary that
acquired the Sanborn assets (the 'Sales Agreement'). As a result of the
settlement, goodwill was increased by $3,282. For 1994, approximately $671 was
earned under the terms of the Sales Agreement based on the 1994 sales levels of
Compressors, and this amount was recorded as additional goodwill in 1994. The
results of operations of these businesses have been included in the consolidated
financial statements from the dates of acquisitions.
On November 2, 1994, the Company purchased substantially all the assets of
Eastpak, Inc. and all of the capital stock of M.G. Industries, Inc.
(collectively, 'Eastpak'), a leading designer, manufacturer and distributor of
branded daypacks, sports bags and related products. The Eastpak acquisition,
which was accounted for under the purchase method, was completed for
approximately $57,850 in cash financed through borrowings under the Company
Credit Agreement, and assumption of certain liabilities in the amount of $4,130.
The Company also entered into an agreement with the predecessor owner of Eastpak
to make additional payments based upon the achievement of certain annual sales
levels of Eastpak products and other products substantially similar to the
Eastpak products during the years ended December 31, 1995, 1996, and 1997. For
1995 and 1996, a total of approximately $11,000 was recorded under the terms of
this agreement. An additional amount of up to $12,000 may be earned during the
year ended December 31, 1997. These amounts are recorded as additional goodwill.
F-73
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
2. ACQUISITIONS--(CONTINUED)
The results of operations of Eastpak have been included in the consolidated
financial statements from the date of acquisition.
In connection with the final purchase price allocations of the Sanborn and
Eastpak acquisitions, the Company recorded goodwill of approximately $53,000.
The Company is amortizing these amounts over 40 years. The goodwill of
approximately $7,700 associated with the Yanes acquisition was included in the
1995 asset impairment charge of $12,289 related to the Company's operations in
Brazil, which is further discussed in Note 3.
During 1995, the Company purchased all of the outstanding shares of capital
stock of Sierra Corporation of Fort Smith, Inc. ('Sierra'), a manufacturer of
portable outdoor and recreational folding furniture and accessories, and
substantially all of the assets of Active Technologies, Inc. ('ATI'), a
manufacturer of technologically advanced lightweight generators and battery
charging equipment. The aggregate purchase price for these acquisitions was
$19,516 including fees and expenses. These acquisitions were accounted for using
the purchase method of accounting. The purchase price and expenses associated
with these acquisitions exceeded the fair value of net assets acquired by
$11,186 and the excess has been assigned to goodwill and is being amortized over
20 to 30 years on the straight-line basis. In connection with the ATI purchase,
the Company may also be required to record an additional amount of up to $18,750
based on the Company's sales of ATI related products and royalties received by
the Company for licensing arrangements related to ATI patents. For 1995 and
1996, the amounts earned under the terms of this agreement were immaterial.
Amounts earned under the terms of the agreement are recorded as additional
goodwill. The results of operations of these companies on a pro forma basis as
if their acquisitions had occurred at the beginning of 1995 and 1994,
respectively, individually and in the aggregate were not significant to the
Company.
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 safety and security related electronic products
for residential and commercial applications. The Seatt acquisition, which was
accounted for under the purchase method, was completed for approximately $65,300
including fees and expenses. The results of operations of Seatt have been
included in the consolidated financial statements from the date of acquisition.
In connection with the purchase price allocation of the Seatt acquisition, the
Company recorded goodwill of approximately $38,800. The Company is amortizing
this amount over 40 years on the straight-line method.
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 (the 'Share Purchase Agreement') in connection with the sale
to Coleman of approximately 70% of the outstanding shares of Application des
Gaz, S.A. ('ADG' or 'Camping Gaz'). Camping Gaz is a leading manufacturer and
distributor of camping appliances in Europe. On June 24, 1996, Coleman commenced
a public tender offer for the purchase of all the publicly traded outstanding
shares of ADG, or approximately 30% of the outstanding shares. The tender offer
period expired in July 1996 with approximately 94% of the outstanding publicly
traded shares of ADG tendered for purchase. The Company completed the necessary
steps to acquire the remaining publicly held stock during the third quarter of
1996. The cost of acquiring all the shares of ADG was approximately $100,000
including fees and expenses.
The acquisition of Camping Gaz is being accounted for under the purchase
method. In connection with the allocation of purchase price to the fair values
of assets acquired and liabilities assumed, the Company recorded goodwill of
approximately $84,200, which is being amortized over 40 years on the
straight-line method. The Company also recognized liabilities in the amount of
$21,898 representing severance and other termination benefits for production and
administrative employees of Camping Gaz who will be terminated. The Company paid
termination costs of approximately $4,385 during 1996 and anticipates all
remaining termination costs will be paid during 1997.
F-74
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
2. ACQUISITIONS--(CONTINUED)
The Company has included the results of operations of Camping Gaz in the
consolidated financial statements from March 1, 1996, the date on which the
Company obtained control of Camping Gaz, and has recognized minority interest
related to the publicly traded shares for the period March 1, 1996 through June
30, 1996.
The following summarized, unaudited pro forma results of operations for the
years ended December 31, 1996 and 1995 assume the acquisition of Seatt and the
acquisition of all the outstanding shares of Camping Gaz occurred as of the
beginning of the respective periods. The pro forma results include certain
adjustments, primarily reflecting increased amortization and interest expense
and a lower income tax provision, and are not necessarily indicative of what the
results of operations would have been had the Seatt and Camping Gaz acquisitions
occurred at the beginning of the respective periods. Moreover, the pro forma
information is not intended to be indicative of future results of operations.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------------------
1996 1995
---------- ----------
<S> <C> <C>
Net revenues...................................... $1,246,370 $1,193,295
(Loss) earnings before extraordinary item......... (41,407) 39,153
Net (loss) earnings............................... (42,054) 38,366
(Loss) earnings per common share:
(Loss) earnings before extraordinary item....... $ (0.78) $ 0.73
Net (loss) earnings............................... (0.79) 0.72
</TABLE>
3. RESTRUCTURING, ASSET IMPAIRMENT AND OTHER CHARGES
During 1996, the Company recorded restructuring and certain other charges
totaling $52,516, net of tax. The restructuring charges total $45,086, net of
tax, and consist of charges to a) integrate the Camping Gaz and Coleman
operations into a single global recreation products business, b) exit the low
end electric pressure washer business, c) exit a portion of the Company's
battery powered light business and settle certain litigation with respect to
this business, and d) increase the valuation reserve for certain foreign
deferred income tax assets. Other charges of $7,430, net of tax, relate to
certain asset write-offs and other tax matters. These other charges were
incurred in the Company's normal course of business, although the amounts
involved are higher than similar charges the Company has recorded in prior
periods. Cost of sales includes a pre-tax charge of $44,005, selling, general
and administrative expenses includes a pre-tax charge of $30,195, and the
provision for income tax expense includes $21,684 of tax benefits resulting from
these charges, net of the effect of an increase in the valuation reserve related
to certain foreign deferred tax assets and other foreign tax charges.
During 1995, in connection with the adoption of FAS 121, the Company
recognized an asset impairment charge of $12,289 related to its Brazilian
operations. The Brazilian operations had not performed to the Company's
expectations since acquisition of this business in April of 1994, and in the
fourth quarter of 1995, the Company initiated actions to reduce the operating
losses in Brazil. These actions included replacing management, increasing
prices, downsizing the manufacturing operations and reducing SG&A and other
expenses. Because of these actions, the Company performed an impairment review
pursuant to the guidelines set forth in FAS 121 and concluded recognition of an
asset impairment charge was appropriate. The basis of the fair values used in
the computation of the charge were appraisals for property and equipment and
estimated discounted cash flows for goodwill. The charge has been included in
the statement of operations under the caption 'Asset Impairment Charge'.
F-75
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
3. RESTRUCTURING, ASSET IMPAIRMENT AND OTHER CHARGES--(CONTINUED)
During September 1994, the Company restructured its German manufacturing
operations. The German Restructuring included the sale of the low margin plastic
cooler business located in Inheiden, Germany and Loucka, Czech Republic,
including inventory, to a management group. The German Restructuring resulted in
a one-time charge of approximately $17,956 before tax and included severance
costs of $1,541, commitments to third parties of approximately $5,465 and
write-downs of leasehold improvements and other assets to estimated realizable
values aggregating $10,950. As a result of the restructuring, the German work
force was reduced by about 150 employees from a pre-restructuring level of
approximately 250 employees. The restructuring was substantially completed in
1994. In connection with the restructuring, the Company recognized tax benefits
of approximately $10,900 relating to the write-off of the Company's investment
in its German operations. The Company also announced a plan to change from
manufacturing to sourcing for certain textile product lines and to exit the
market for personal flotation devices. This plan resulted in a $500 pre-tax
charge.
4. INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
Raw material and supplies......................... $ 82,399 $ 57,653
Work-in-process................................... 12,878 5,389
Finished goods.................................... 192,225 153,194
-------- --------
$287,502 $216,236
-------- --------
-------- --------
</TABLE>
Generally, inventory costs are determined by the FIFO method; however,
approximately 13% and 10% of total inventories at December 31, 1996 and 1995,
respectively, are determined using the last-in, first-out ('LIFO') method. If
such inventories were stated using the FIFO method, such amounts would
approximate the LIFO carrying values.
5. PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment, net consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
Land and land improvements...................................................... $ 8,772 $ 6,318
Buildings and building improvements............................................. 78,760 67,989
Machinery and equipment......................................................... 194,714 142,941
Construction-in-progress........................................................ 15,519 13,105
-------- --------
297,765 230,353
Accumulated depreciation........................................................ (98,583) (67,662)
-------- --------
$199,182 $162,691
-------- --------
-------- --------
</TABLE>
Depreciation expense was $25,770, $19,142, and $16,793 for the years ended
December 31, 1996, 1995 and 1994, respectively.
F-76
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
6. ACCRUED EXPENSES
Accrued expenses consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
Compensation and related benefits................. $ 29,331 $ 14,201
Other............................................. 83,575 43,936
-------- --------
$112,906 $ 58,137
-------- --------
-------- --------
</TABLE>
7. OTHER LIABILITIES
Other liabilities consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1996 1995
------- -------
<S> <C> <C>
Pensions and other postretirement benefits........ $52,229 $40,240
Other............................................. 23,944 7,832
------- -------
$76,173 $48,072
------- -------
------- -------
</TABLE>
8. SHORT-TERM BORROWINGS
The Company maintained foreign bank lines of credit aggregating $119,101,
and $64,375, of which $33,935 and $19,302 were outstanding at December 31, 1996
and 1995, respectively. The weighted average interest rate on amounts borrowed
was approximately 2.4% and 7.1% at December 31, 1996 and 1995, respectively.
Outstanding letters of credit aggregated approximately $32,897 and $40,036
at December 31, 1996 and 1995, respectively.
9. LONG-TERM DEBT
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
7.26% Senior Notes due 2007 (a)................... $200,000 $200,000
7.10% Senior Notes due 2006 (b)................... 85,000 --
7.25% Senior Notes due 2008 (c)................... 75,000 --
Revolving credit facility (d)..................... 146,350 150,150
Term loan (d)..................................... 73,478 --
Other............................................. 3,785 5,107
-------- --------
583,613 355,257
Less current portion.............................. 747 1,051
-------- --------
$582,866 $354,206
-------- --------
-------- --------
</TABLE>
- ------------------
(a) On August 8, 1995, the Company completed a private placement issuance and
sale of $200,000 aggregate principal amount of 7.26% Senior Notes due 2007
(the '2007 Notes'). Interest on the 2007 Notes is payable semiannually, and
the principal is payable in annual installments of $40,000 each commencing
August 8, 2003, with a final installment payment of $40,000 due on August
8, 2007. If there is a default, the interest rate will be the greater of
(i) 9.26% or (ii) 2.0% above the prime interest rate.
F-77
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
9. LONG-TERM DEBT--(CONTINUED)
The 2007 Notes are unsecured and are subject to 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 and
sale and leaseback transactions under the terms of the note purchase
agreement. The 2007 Notes shall become secured if the Company Credit
Agreement becomes secured as discussed in (d) below.
(b) On June 13, 1996, the Company completed a private placement issuance and
sale of $85,000 aggregate principal amount of 7.10% Senior Notes due 2006
(the '2006 Notes'). Interest on the 2006 Notes is payable semiannually, and
the principal is payable in annual installments of $12,143 each commencing
June 13, 2000, with a final installment payment of $12,143 due on June 13,
2006. If there is a default, the interest rate will be the greater of (i)
9.10% or (ii) 2.0% above the prime interest rate.
The 2006 Notes are unsecured and are subject to 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 and
sale and leaseback transactions under the terms of the note purchase
agreement. The 2006 Notes shall become secured if the Company Credit
Agreement becomes secured as discussed in (d) below.
(c) On June 13, 1996, the Company completed a private placement issuance and
sale of $75,000 aggregate principal amount of 7.25% Senior Notes due 2008
(the '2008 Notes'). Interest on the 2008 Notes is payable semiannually, and
the principal is payable in annual installments of $15,000 each commencing
June 13, 2004, with a final installment payment of $15,000 due on June 13,
2008. If there is a default, the interest rate will be the greater of (i)
9.25% or (ii) 2.0% above the prime interest rate.
The 2008 Notes are unsecured and are subject to 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 and
sale and leaseback transactions under the terms of the note purchase
agreement. The 2008 Notes shall become secured if the Company Credit
Agreement becomes secured as discussed in (d) below.
(d) In April 1996, the Company amended its credit agreement to: a) provide a
term loan of French Franc 385,125 ($73,478 at current exchange rates), b)
provide an unsecured revolving credit facility in an amount of $275,000, c)
allow for the Camping Gaz acquisition and d) extend the maturity of the
credit agreement (as amended, the 'Company Credit Agreement'). In
connection with the Company recording the restructuring and other charges
as discussed in Note 3 and lower than expected operating results, the
Company further amended the Company Credit Agreement in October 1996 and
again in March 1997.
The Company Credit Agreement 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 2.125% 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. 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, levels of consolidated net worth and profits,
and certain other provisions limiting the incurrence of additional debt,
purchase or redemption of the Company's common stock, issuance of preferred
stock of the Company, and also prohibits the Company from paying any
dividends until on or after January 1, 1999 and limits the amount of
dividends the Company
F-78
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
9. LONG-TERM DEBT--(CONTINUED)
may pay thereafter. The Company Credit Agreement also provides for a
specific requirement relating to the Company's financial leverage at
December 31, 1997 which, if not achieved, will result in the Company Credit
Agreement becoming secured by the Company's assets. In addition,
substantially all of the shares of the Company's common stock owned by
Coleman Worldwide are pledged to secure indebtedness of Coleman Worldwide
and of its parent, Coleman Holdings Inc. The indentures governing this
indebtedness contain various covenants including a covenant placing certain
limitations on the Company's indebtedness.
The aggregate scheduled amounts of long-term debt maturities in the years
1997 through 2001 are $747, $500, $2,357, $12,207, and $232,005, respectively.
10. INCOME TAXES
The Company is included in the consolidated federal income tax return of
Mafco and certain state tax returns of Mafco or its affiliates. For all periods
presented, federal and state income taxes are provided as if the Company filed
its own income tax returns. The accompanying consolidated balance sheet includes
approximately $21,661 and $2,400 of federal and state income taxes receivable
from affiliate at December 31, 1996 and 1995, respectively.
For financial reporting purposes, (loss) earnings before income taxes,
minority interest and extraordinary item include the following components:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
(Loss) earnings before income taxes,
minority interest and extraordinary
item:
Domestic.............................. $(29,532) $ 78,980 $ 70,602
Foreign............................... (20,769) (14,434) (22,375)
-------- -------- --------
$(50,301) $ 64,546 $ 48,227
-------- -------- --------
-------- -------- --------
</TABLE>
Significant components of the provision for income tax (benefit) expense
were as follow:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Current:
Federal............................... $ (709) $ 18,415 $ 6,782
State................................. (334) 3,825 1,574
Foreign............................... 3,454 3,853 2,248
-------- -------- --------
Total current.................... 2,411 26,093 10,604
-------- -------- --------
Deferred:
Federal............................... (10,686) (3,104) 6,069
State................................. (2,178) (725) 1,114
Foreign............................... (474) 2,215 (3,040)
-------- -------- --------
Total deferred................... (13,338) (1,614) 4,143
-------- -------- --------
$(10,927) $ 24,479 $ 14,747
-------- -------- --------
-------- -------- --------
</TABLE>
F-79
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
10. INCOME TAXES--(CONTINUED)
The effective tax rate on (loss) earnings before income taxes, minority
interest and extraordinary item varies from the current statutory federal income
tax rate as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1996 1995 1994
----------------------- ----------------------- -----------------------
<S> <C> <C> <C>
(Benefit) provision at statutory rate... (35.0)% 35.0% 35.0%
State taxes, net........................ (4.6) 2.5 3.6
Recognition of permanent basis
differences related to loss on
restructuring of foreign investment... -- -- (10.3)
Nondeductible amortization.............. 5.0 2.9 3.4
Foreign operations...................... 4.3 (0.1) (2.5)
Valuation allowance..................... 7.0 -- --
Puerto Rico operations.................. 0.4 (2.6) --
Other, net.............................. 1.2 0.2 1.4
------ ----- ------
Effective tax rate (benefit)
provision............................. (21.7)% 37.9% 30.6%
------ ----- ------
------ ----- ------
</TABLE>
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax liabilities and assets are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1996 1995
------- -------
<S> <C> <C>
Deferred tax assets:
Postretirement benefits other than pensions..................................... $12,370 $11,986
Reserves for self-insurance and warranty costs.................................. 6,678 4,777
Pension liabilities............................................................. 8,828 4,942
Inventory....................................................................... 8,245 5,579
Net operating loss carryforwards................................................ 14,875 3,103
Impaired assets................................................................. -- 10,068
Other, net...................................................................... 24,026 5,555
------- -------
Total deferred tax assets.................................................. 75,022 46,010
Valuation allowance............................................................... (7,501) --
------- -------
Net deferred tax assets.................................................... 67,521 46,010
------- -------
Deferred tax liabilities:
Depreciation.................................................................... 18,248 17,611
Other, net...................................................................... 7,675 5,125
------- -------
Total deferred tax liabilities............................................. 25,923 22,736
------- -------
Net deferred tax assets................................................. $41,598 $23,274
------- -------
------- -------
</TABLE>
During 1996, the Company increased the valuation allowance related to
certain foreign deferred tax assets due to uncertainties over realization. At
December 31, 1996, the Company had net operating loss carryforwards ('NOL's') of
approximately $42,677 for certain foreign income tax purposes. These NOL's
expire beginning in 1999.
The Company has not provided for taxes on undistributed foreign earnings of
approximately $16,904 at December 31, 1996 as the Company intends to permanently
reinvest these earnings in the future growth of the business. Determination of
the amount of unrecognized deferred U.S. income tax liability is not practicable
because of the complexities associated with its hypothetical calculation.
F-80
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
11. RELATED PARTY TRANSACTIONS
In 1996, the Company entered into an agreement with an affiliate in which
the Company realized approximately $1,800 of net tax benefits associated with
certain foreign tax net operating loss carry forwards that had not previously
been recognized.
The Company provided management services to certain affiliates pursuant to
a management agreement through June 30, 1995. The consolidated financial
statements reflect the management fees as a reduction in selling, general and
administration expenses. For the years ended December 31, 1995 and 1994,
management fees earned by the Company were $2,400 and $4,800, respectively.
MacAndrews & Forbes provides the Company, at the Company's request, with
certain allocated services, pursuant to a services agreement. These allocated
services are purchased by MacAndrews & Forbes from third party providers on
behalf of the Company. Such services include professional services, such as
legal and accounting, insurance coverage and other services. The Company
reimburses MacAndrews & Forbes for that portion of amounts due to third party
providers as is allocable to the services purchased for and provided to the
Company and reimburses MacAndrews & Forbes for their other out-of-pocket
expenses incurred in connection with providing such services. The Company
participates in certain of Holdings' insurance programs, including health and
life insurance, workers' compensation, and liability insurance. The Company's
expense represents its expected costs for self-insured retentions and premiums
for excess coverage insurance. The expense was $13,923, $9,874, and $10,586 for
the years ended December 31, 1996, 1995 and 1994, respectively.
The Company purchases and sells products from and to certain affiliates.
These amounts are not, in the aggregate, material.
12. EMPLOYEE BENEFIT PLANS
Pension Plans:
Holdings maintains pension and other retirement plans in various forms
covering employees of the Company who meet eligibility requirements. The U.S.
salaried retirement plan is a non-contributory defined benefit plan and provides
benefits based on a formula of each participant's final average pay and years of
service. The U.S. hourly pension plan is a non-contributory defined benefit plan
and contains a flat benefit formula. The salaried and hourly plans provide
reduced benefits for early retirement and the salaried plan takes into account
offsets for Social Security benefits. The Company's policy is to contribute
annually the minimum amount required pursuant to the Employee Retirement Income
Security Act, as amended.
Holdings also has an unfunded excess benefit plan covering certain of the
Company's U.S. employees whose benefits under the plans described above are
limited by provisions of the Internal Revenue Code. The following table
reconciles the funded status of the pension plans with the amount recognized in
the Company's consolidated balance sheets as of the dates indicated:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
Actuarial present value of benefit obligation:
Accumulated benefit obligation, including vested
benefits of $18,686 and $15,282.............. $(21,933) $(17,588)
-------- --------
-------- --------
Projected benefit obligation for service rendered
to date......................................... $(37,092) $(32,284)
Plan assets at fair value......................... 16,197 9,696
-------- --------
Projected benefit obligation in excess of plan
assets.......................................... (20,895) (22,588)
Unrecognized prior service cost................... 50 57
Unrecognized net loss............................. 7,999 8,869
-------- --------
Accrued pension cost.............................. (12,846) (13,662)
-------- --------
Amount reflected as an intangible asset........... (288) --
Amount reflected as minimum pension liability
adjustment...................................... (470) --
-------- --------
Amount reflected as pension liability............. $(13,604) $(13,662)
-------- --------
-------- --------
</TABLE>
F-81
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
12. EMPLOYEE BENEFIT PLANS--(CONTINUED)
The weighted-average discount rate used in determining the actuarial
present value of the projected benefit obligation was 7.5% and 7.25% as of
December 31, 1996 and 1995, respectively. The rate of increase in future
compensation levels reflected in such determination was 5% as of December 31,
1996 and 1995. The expected long-term rate of return on assets was 9% as of
December 31, 1996, 1995 and 1994. Plan assets consist primarily of common stock,
mutual funds and fixed income securities stated at fair market value, and cash
equivalents stated at cost, which approximates fair market value. Unrecognized
items are being recognized over the estimated remaining service lives of active
employees.
Net pension expense includes the following components:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Service cost-benefits attributed to
service during the year............... $3,098 $2,125 $2,051
Interest cost on projected benefit
obligation............................ 2,442 2,004 1,554
Actual return on plan assets............ (1,490) (1,347) 391
Net amortization and deferrals.......... 844 834 (750)
------ ------ ------
Net pension expense..................... $4,894 $3,616 $3,246
------ ------ ------
------ ------ ------
</TABLE>
Savings Plan:
In January 1990, Holdings initiated an employee savings plan under Section
401(k) of the Internal Revenue Code. This plan covers substantially all of the
Company's full-time U.S. employees and allows employees to contribute up to 10%
of their salary to the plan. The Company matches, at a 33 1/3% rate, employee
contributions of up to 6% of their salary. Amounts charged to expense for
matching contributions were $1,314, $1,165, and $927 for the years ended
December 31, 1996, 1995 and 1994, respectively.
Retiree Health Care and Life Insurance:
The Company, through Holdings, provides certain unfunded health and life
insurance benefits for certain retired employees. Approximately 53 percent of
the Company's U.S. employees may become eligible for these benefits if they
reach retirement age while working for the Company.
The following table reconciles the funded status of the Company's allocable
portion of Holdings' postretirement benefit plans with the amount recognized in
the Company's consolidated balance sheets as of the dates indicated:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
Accumulated postretirement benefit
obligation:
Retirees.............................. $ (6,682) $ (6,660)
Fully eligible active plan
participants....................... (3,015) (2,991)
Other active plan participants........ (10,664) (10,904)
-------- --------
Total accumulated postretirement benefit
obligation............................ (20,361) (20,555)
Unrecognized transition benefit......... (3,973) (4,239)
Unrecognized prior service cost......... (492) (580)
Unrecognized net (gain) loss............ (976) 936
-------- --------
Net postretirement benefit liability.... $(25,802) $(24,438)
-------- --------
-------- --------
</TABLE>
F-82
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
12. EMPLOYEE BENEFIT PLANS--(CONTINUED)
Net periodic postretirement benefit expense includes the following
components:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Service cost-benefits attributed to
service during the year............... $1,044 $ 756 $ 901
Interest cost on accumulated
postretirement benefit obligation..... 1,454 1,352 1,268
Amortization of transition benefit and
other net gains....................... (354) (455) (354)
------ ------ ------
Net periodic postretirement benefit
expense............................... $2,144 $1,653 $1,815
------ ------ ------
------ ------ ------
</TABLE>
The discount rate used in determining the accumulated postretirement
benefit obligation ('APBO') was 7.5% and 7.25% as of December 31, 1996 and 1995,
respectively. The assumed health care cost trend rate used in measuring the APBO
at December 31, 1996 was 8% starting in 1997, then gradually decreasing to 5% by
the year 2003 and remaining at that level thereafter. The health care cost trend
rate assumption has a significant effect on the amount of the obligation and
periodic benefit expense reported. An increase in the assumed health care cost
trend rates by 1% in each year would increase the APBO as of December 31, 1996
by approximately 18% and the service and interest cost components of net
periodic postretirement benefit expense by approximately 23%.
Stock Option Plan:
The Company adopted The Coleman Company, Inc. 1992 Stock Option Plan (the
'1992 Stock Option Plan') prior to the effective date of the IPO. During 1993,
the shareholders approved the 1993 Stock Option Plan (the '1993 Stock Option
Plan') and during 1996, the shareholders approved The Coleman Company, Inc. 1996
Stock Option Plan (the '1996 Stock Option Plan'). Under the terms of the 1992
Stock Option Plan, the 1993 Stock Option Plan and the 1996 Stock Option Plan
(collectively the 'Stock Option Plans'), incentive stock options ('ISOs'),
non-qualified stock options ('NQSOs') and stock appreciation rights ('SARs') may
be granted to key employees of the Company and any of its affiliates from time
to time. Stock options have been granted under the Stock Option Plans with
vesting terms and maximum terms of approximately five years and ten years,
respectively. The aggregate number of shares of common stock as to which options
and rights may be granted under the Stock Option Plans may not exceed 4,700,000.
The following table summarizes the stock option transactions under the
Stock Option Plans:
<TABLE>
<CAPTION>
1996 1995 1994
---------------------- ---------------------- ----------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Outstanding--January 1,................. 2,572,930 $ 15.25 2,310,888 $ 14.03 1,256,540 $ 12.61
Granted:
at market price.................... 294,000 19.73 637,000 17.89 1,272,450 15.13
above market price................. 381,000 15.00 -- -- -- --
Exercised............................. (154,890) 12.17 (325,748) 12.09 (53,362) 10.12
Forfeited............................. (75,410) 14.19 (49,210) 13.14 (164,740) 12.98
--------- --------- ---------
Outstanding--December 31,............... 3,017,630 15.84 2,572,930 15.25 2,310,888 14.03
--------- --------- ---------
--------- --------- ---------
Exercisable--December 31,............... 513,440 13.25 413,526 12.84 488,488 12.15
--------- --------- ---------
--------- --------- ---------
Weighted-average fair value of options
granted during the year:
at market price.................... $ 6.62 $ 7.13
--------- ---------
--------- ---------
above market price................. $ 3.21 --
--------- ---------
--------- ---------
</TABLE>
F-83
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
12. EMPLOYEE BENEFIT PLANS--(CONTINUED)
The following table summarizes information concerning currently outstanding
and exercisable options at December 31, 1996:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
- ------------------------------------------------------------ -------------------------
WEIGHTED-
AVERAGE WEIGHTED- WEIGHTED-
REMAINING AVERAGE AVERAGE
RANGE OF NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE
EXERCISE PRICES OUTSTANDING LIFE PRICE EXERCISABLE PRICE
- --------------- ----------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
$9.75-$14.32 770,630 1.59 years $ 13.05 393,440 $ 12.71
$14.33-$15.13 606,000 7.32 14.98 120,000 15.06
$15.14-$16.30 755,000 7.92 16.06 -- --
$16.31-$23.13 886,000 8.86 18.65 -- --
----------- -----------
$9.75-$23.13 3,017,630 6.46 513,440
----------- -----------
----------- -----------
</TABLE>
As described in Note 1, the Company follows APB 25 in accounting for its
stock compensation arrangements. Pro forma financial information regarding net
income and earnings per share is required by FASB Statement No. 123, 'Accounting
for Stock-Based Compensation' ('FAS 123'), and has been determined as if the
Company had accounted for its employee stock options under the fair value method
of FAS 123. The fair value of ISOs and NQSOs granted during 1996 and 1995 were
estimated at the date of grant using the Black-Scholes option pricing model with
the following weighted-average assumptions: risk-free interest rates of 6.11%
and 5.91 % for 1996 and 1995, respectively, dividend yield of 0.0%, volatility
of the expected market price of the Company's common stock of 20.2% and 30.8%
for 1996 and 1995, respectively, and a weighted-average expected life of the
option of 5.5 years.
FAS 123 requires the use of option valuation models, one of which is the
Black-Scholes model, that were not developed for use valuing ISOs or NQSOs.
Further, these option valuation models require the input of highly subjective
assumptions, including the expected stock price volatility. In management's
opinion, based on the above, the existing models do not necessarily provide a
reliable single measure of the fair value of its ISOs or NQSOs.
The following summarized, unaudited pro forma results of operations assume
the estimated fair value of the ISOs and NQSOs granted in 1996 and 1995 is
amortized to expense over the ISOs' and NQSOs' vesting period. FAS 123 does not
require disclosure of the effect of any grants of stock based compensation prior
to 1995 and, therefore, the pro forma effect on net earnings of FAS 123 is not
representative of the pro forma effect on net earnings in future years.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1996 1995
-------- --------
<S> <C> <C>
Pro forma net (loss) earnings..................... $(42,760) $ 39,009
Pro forma net (loss) earnings per common share.... $ (0.80) $ 0.73
</TABLE>
13. COMMITMENTS AND CONTINGENCIES
Leases:
The Company leases manufacturing, administrative and sales facilities and
various types of equipment under operating lease agreements expiring through
2007. Rental expense was $14,164, $11,526, and $9,520 for the years ended
December 31, 1996, 1995 and 1994, respectively. Minimum rental commitments under
all noncancellable operating leases with remaining lease terms in excess of one
year from December 31, 1996, aggregated $43,573; such commitments for each of
the five years subsequent to December 31, 1996 are $12,379, $11,135, $6,189,
$4,296, and $2,619, respectively, and $6,955 thereafter.
F-84
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
13. COMMITMENTS AND CONTINGENCIES--(CONTINUED)
The Company leases its Hastings, Nebraska facility and the corporate office
building in Denver, Colorado under agreements which give the Company the right,
subject to certain qualifications, to renew, terminate, or purchase the
properties. Upon termination, the Company has guaranteed the lessor certain
residual values.
Environmental Matters:
The Company is subject to various environmental regulations and has adopted
an environmental policy designed to ensure the Company operates in full
compliance with applicable environmental regulations and, where appropriate, the
Company's own internal standards. Coleman has also undertaken an environmental
compliance audit program. The Company makes expenditures it believes are
necessary to comply with environmental management practices. Environmental
expenditures that relate to current operations are expensed or capitalized as
appropriate, were not significant in 1996, and are not expected to be
significant in the foreseeable future. Coleman has established reserves for
various environmental matters to cover the estimated costs of the
investigations, remedial activities and litigation.
Other:
The Company and Holdings are involved in various claims and legal actions
arising in the ordinary course of business. The Company believes the ultimate
disposition of these matters is not expected to have a material adverse effect
on the Company's consolidated financial condition or results of operations. The
Company has entered into a cross-indemnification agreement with Holdings
pursuant to which it will indemnify Holdings against all liabilities related to
businesses transferred to the Company, and Holdings will indemnify the Company
against all liabilities of Holdings other than liabilities related to the
businesses transferred to the Company.
The Company is also party to a license agreement which requires payments of
minimum guaranteed royalties aggregating to $8,225 at December 31, 1996; such
commitments for each of the four years remaining under the agreement subsequent
to December 31, 1996 are $933, $1,768, $2,454, and $3,070, respectively.
14. SIGNIFICANT CUSTOMERS
The Company's U.S. and Canadian operations have one significant customer
which accounted for approximately 15%, 19%, and 21% of net revenues in the years
ended December 31, 1996, 1995 and 1994, respectively.
15. CASH FLOW REPORTING
The Company uses the indirect method to report cash flows from operating
activities. Interest paid was $37,608, $23,976, and $11,933 and income taxes
paid were $7,041, $12,246, and $27,411 for the years ended December 31, 1996,
1995 and 1994, respectively. Certain non-cash transactions relating to
acquisitions and the issuance of long-term debt have been reported in Notes 2
and 9.
16. PREFERRED STOCK
The Company has authorized 20,000,000 shares of preferred stock, par value
$0.01 per share. The Company's Certificate of Incorporation authorizes the Board
of Directors to provide for the issuance of a series of preferred stock, to
establish the number of shares of each such series and to fix the designation,
powers, preferences and rights of the shares of each such series and any
qualifications, limitations or restrictions thereof.
F-85
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
17. GEOGRAPHIC SEGMENTS
The Company designs, manufactures and markets a wide variety of multiuse
products and accessories, which are primarily marketed through independent
retail markets, for the outdoor recreation and hardware consumers. The Company
is a leading manufacturer and marketer of brand name consumer products for the
camping and related outdoor recreation markets in the United States, Canada,
Europe, and Japan.
Operating profit, as indicated below, represents net revenues less
operating expenses and amortization of goodwill. Generally, sales between
geographic areas are made at cost plus a share of operating profit. Identifiable
assets are those used by each geographic segment. Corporate assets are
principally cash, certain property and equipment, income tax refunds
receivable--affiliate, and deferred charges. The geographic segment presentation
has been restated for the years ended December 31, 1995 and 1994 to reflect the
European segment which became a significant segment for the year ended December
31, 1996, primarily due to the impact of the Camping Gaz operations.
Information related to the Company's geographic segments is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1996 1995 1994
---------- -------- --------
<S> <C> <C> <C>
Net revenues:
Domestic--U.S......................... $ 916,260 $716,018 $566,098
--Export..................... 91,125 90,434 93,917
Europe................................ 168,780 52,233 52,461
Other foreign......................... 219,350 169,836 121,545
Eliminations.......................... (175,299) (94,947) (82,441)
---------- -------- --------
$1,220,216 $933,574 $751,580
---------- -------- --------
---------- -------- --------
Operating profit:
Domestic (a).......................... $ 19,915 $120,915 $ 94,773
Europe (b)............................ (17,505) (3,241) (23,203)
Other foreign (c)..................... 4,027 (10,540) 2,222
---------- -------- --------
6,437 107,134 73,792
Corporate expenses...................... (18,011) (18,043) (12,191)
Interest expense........................ (38,727) (24,545) (13,374)
---------- -------- --------
(Loss) earnings before income taxes,
minority interest and extraordinary
item.................................. $ (50,301) $ 64,546 $ 48,227
---------- -------- --------
---------- -------- --------
Identifiable assets:
Domestic.............................. $ 782,373 $696,681 $559,599
Europe................................ 247,412 70,478 72,908
Other foreign......................... 83,033 59,107 54,573
Corporate............................... 47,268 18,221 25,185
---------- -------- --------
$1,160,086 $844,487 $712,265
---------- -------- --------
---------- -------- --------
</TABLE>
- ------------------
(a) Includes $49,257 of restructuring and other charges in 1996.
(b) Includes $20,002 of restructuring and other charges in 1996 and $17,956
related to the German Restructuring in 1994.
(c) Includes $4,941 of restructuring and other charges in 1996 and $12,289 of
asset impairment charges in 1995.
F-86
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)
(IN THOUSANDS, EXCEPT SHARE DATA)
18. QUARTERLY FINANCIAL SUMMARIES (UNAUDITED)
Summarized quarterly financial data for 1996 and 1995 are as follow:
<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30,(A) DECEMBER 31,(B)(C)
--------- -------- ---------------- ------------------
<S> <C> <C> <C> <C>
1996
Net revenues.......................... $ 273,560 $452,654 $269,607 $224,395
Gross profit.......................... 80,966 137,538 39,894 33,321
Earnings (loss) before extraordinary
item............................... 15,039 28,046 (48,458) (35,873)
Net earnings (loss)................... 15,039 27,399 (48,458) (35,873)
Earnings (loss) per share:
Earnings (loss) before
extraordinary item............... $ 0.28 $ 0.53 $ (0.91) $ (0.67)
Net earnings (loss)................... 0.28 0.52 (0.91) (0.67)
1995
Net revenues.......................... $ 224,024 $311,281 $211,817 $186,452
Gross profit.......................... 68,496 99,575 65,932 50,144
Earnings (loss) before extraordinary
item............................... 13,247 27,594 9,056 (9,830)
Net earnings (loss)................... 13,247 27,594 8,269 (9,830)
Earnings (loss) per share:
Earnings (loss) before
extraordinary item............... $ 0.25 $ 0.52 $ 0.17 $ (0.18)
Net earnings (loss)................... 0.25 0.52 0.16 (0.18)
</TABLE>
- ------------------
(a) For the third quarter of 1996, the gross profit amount includes $33,567 of
restructuring and other charges. The loss before extraordinary item and net
loss amounts include an after tax charge of $44,495 related to restructuring
and other charges.
(b) For the fourth quarter of 1996, the gross profit amount includes $10,438 of
restructuring and other charges. The loss before extraordinary item and net
loss amounts include an after tax charge of $8,021 related to restructuring
and other charges.
(c) For the fourth quarter of 1995, the gross profit amount includes $7,599 of
income as a result of adopting the provisions of EITF 95-2. The loss before
extraordinary item and net loss amounts include an after tax asset
impairment charge of $9,856 as a result of adopting FAS 121 and an after tax
credit of $3,796 as a result of adopting the provisions of EITF 95-2.
F-87
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31,
1997
----------
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 12,866
Accounts and notes receivable, less allowance of $9,934... 286,278
Inventories............................................... 288,166
Deferred tax assets....................................... 39,895
Prepaid assets and other.................................. 16,529
----------
Total current assets................................... 643,734
Property, plant and equipment, net.......................... 194,739
Intangible assets related to businesses acquired, net....... 334,012
Deferred tax assets and other............................... 32,577
----------
$1,205,062
----------
----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts and notes payable................................ $ 194,462
Other current liabilities................................. 115,329
----------
Total current liabilities.............................. 309,791
Long-term debt.............................................. 568,034
Other liabilities........................................... 75,711
Minority interest........................................... 1,549
Commitments and Contingencies...............................
Stockholders' equity:
Common stock.............................................. 532
Additional paid-in capital................................ 169,495
Retained earnings......................................... 83,531
Currency translation adjustment........................... (3,128)
Minimum pension liability adjustment...................... (453)
----------
Total stockholders' equity............................. 249,977
----------
$1,205,062
----------
----------
</TABLE>
See Notes to Condensed Consolidated Financial Statements
F-88
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
----------------------
1997 1996
---------- --------
<S> <C> <C>
Net revenues...................................... $ 295,464 $273,560
Cost of sales..................................... 214,422 192,594
---------- --------
Gross profit...................................... 81,042 80,966
Selling, general and administrative expenses...... 65,873 46,737
Interest expense, net............................. 10,712 8,081
Amortization of goodwill and deferred charges..... 2,865 2,247
Other expense, net................................ 271 30
---------- --------
Earnings before income taxes and minority
interest........................................ 1,321 23,871
Income tax expense................................ 510 8,832
Minority interest in earnings of Camping Gaz...... 112 --
---------- --------
Net earnings...................................... $ 699 $ 15,039
---------- --------
---------- --------
Earnings per common share......................... $ .01 $ .28
---------- --------
---------- --------
Weighted average common shares outstanding........ 53,231 53,165
---------- --------
---------- --------
</TABLE>
See Notes to Condensed Consolidated Financial Statements
F-89
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
---------------------
1997 1996
-------- ---------
<S> <C> <C>
Cash Flows from Operating Activities:
Net earnings...................................... $ 699 $ 15,039
-------- ---------
Adjustments to reconcile net earnings to net cash
used by operating activities:
Depreciation and amortization................ 9,590 7,588
Minority interest in earnings of Camping
Gaz......................................... 112 --
Change in assets and liabilities:
Increase in receivables.................... (60,454) (84,659)
Increase in inventories.................... (5,258) (28,420)
Increase in accounts payable............... 18,655 8,741
Other, net................................. (4,383) (11,145)
-------- ---------
(41,738) (107,895)
-------- ---------
Net cash used by operating activities............. (41,039) (92,856)
-------- ---------
Cash Flows from Investing Activities:
Capital expenditures............................ (6,313) (6,866)
Purchases of businesses, net of cash acquired... -- (60,132)
Proceeds from sale of fixed assets.............. 2,126 186
-------- ---------
Net cash used by investing activities............. (4,187) (66,812)
-------- ---------
Cash Flows from Financing Activities:
Net (payments of) proceeds from revolving
credit agreement borrowings.................. (8,959) 125,713
Net change in short-term borrowings............. 48,996 29,611
Repayment of long-term debt..................... (64) (172)
Debt issuance and refinancing costs............. (718) --
Purchases of Company common stock............... -- (2,329)
Proceeds from stock options exercised........... 197 967
-------- ---------
Net cash provided by financing activities......... 39,452 153,790
-------- ---------
Effect of exchange rate changes on cash........... 1,341 629
-------- ---------
Net decrease in cash and cash equivalents......... (4,433) (5,249)
Cash and cash equivalents at beginning of the
period.......................................... 17,299 12,065
-------- ---------
Cash and cash equivalents at end of the period.... $ 12,866 $ 6,816
-------- ---------
-------- ---------
</TABLE>
See Notes to Condensed Consolidated Financial Statements
F-90
<PAGE>
THE COLEMAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
1. BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information. 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, 1997 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1997. For further information, refer to
the consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended December 31, 1996.
2. INVENTORIES
The components of inventories consist of the following:
<TABLE>
<CAPTION>
MARCH 31,
1997
---------
<S> <C>
Raw material and supplies............................................. $ 83,710
Work-in-process....................................................... 16,036
Finished goods........................................................ 188,420
---------
$ 288,166
---------
---------
</TABLE>
3. OTHER CHARGES
During the three months ended March 31, 1997, the Company recorded certain
other charges totaling $2,435, net of tax, primarily related to severance costs
associated with recent executive changes.
4. RELATED PARTY TRANSACTION
During the three months ended March 31, 1997, the Company agreed to
purchase an inactive subsidiary from an affiliate for $1,000. The Company
expects to realize certain foreign tax benefits from this transaction in future
years. The Company has accounted for this transaction in a manner similar to a
pooling-of-interests due to the Mafco Holdings Inc. common control over each of
the parties involved in the transaction. The $2,608 excess value of tax benefits
acquired over the purchase price has been accounted for as a capital
contribution.
5. SUBSEQUENT EVENTS
In April 1997, the Company announced its intentions to (i) close its
corporate headquarters in Golden, Colorado, (ii) close its Geneva, Switzerland
international headquarters, (iii) reduce the Company's workforce by
approximately 10% and (iv) close or relocate three domestic factories and close
one international factory. Most of the costs associated with these actions will
be reflected in the results of operations for the quarter ended June 30, 1997.
6. RECENTLY ISSUED ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, 'Earnings per Share' ('FAS 128'),
which specifies the computation, presentation, and disclosure requirements for
earnings per share with the objective to simplify the computation of earnings
per share. FAS 128 is effective for financial statements for periods ending
after December 15, 1997 and earlier application is not permitted. After the
effective date, all prior period earnings per share data shall be restated to
conform with the provisions of FAS 128. The adoption of FAS 128 is not expected
to have a material impact on the Company's earnings per share data.
F-91
<PAGE>
------------------------------------------------------
------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, ANY SECURITY OTHER THAN THE SECURITIES TO WHICH
IT RELATES, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY SUCH SECURITIES TO ANYONE OR BY ANYONE IN ANY JURISDICTION WHERE,
OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE ISSUER SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------------
TABLE OF CONTENTS
------------------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.......................... 3
Prospectus Summary............................. 4
Risk Factors................................... 19
Use of Proceeds................................ 26
Capitalization................................. 27
Price Range of Coleman Common Stock............ 28
Pro Forma Financial Data....................... 29
Selected Historical Financial Data............. 31
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... 33
The Exchange Offer............................. 42
Business....................................... 48
Management..................................... 56
Ownership of Common Stock...................... 64
Relationship with MacAndrews & Forbes.......... 65
Description of Other Indebtedness.............. 67
Description of the Notes....................... 72
Certain U.S. Federal Income Tax
Considerations............................... 100
Book-Entry; Delivery and Form.................. 102
Plan of Distribution........................... 103
Legal Matters.................................. 104
Experts........................................ 104
Index to Consolidated Financial Statements..... F-1
</TABLE>
UNTIL , 1997 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE NEW NOTES, WHETHER OR NOT PARTICIPATING IN
THE EXCHANGE OFFER, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
$732,035,000
COLEMAN ESCROW CORP.
$600,475,000 SENIOR SECURED FIRST
PRIORITY DISCOUNT EXCHANGE NOTES
DUE 2001
$131,560,000 SENIOR SECURED SECOND
PRIORITY DISCOUNT EXCHANGE NOTES
DUE 2001
----------------------------------------
PROSPECTUS
----------------------------------------
, 1997
------------------------------------------------------
------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Set forth below is a table of the SEC registration fee and estimates of all
other expenses to be incurred in connection with the issuance and distribution
of the securities described in this Registration Statement:
<TABLE>
<S> <C>
SEC registration fee.................................................. $142,427
Printing and engraving expenses....................................... *
Legal fees and expenses............................................... *
Accounting fees and expenses.......................................... *
Miscellaneous......................................................... *
--------
Total................................................................. $ *
--------
--------
*To be completed by amendment.
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
In accordance with Section 145 of the General Corporation Law of the State
of Delaware (the 'Delaware Corporation Law'), Article VIII of each undersigned
Registrant's bylaws, copies of which are filed as Exhibits 3.3 and 3.4,
respectively, to this Registration Statement, provides that such Registrant will
indemnify any persion who is or was a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of such Registrant) by reason of the fact that he is or was a director
or officer of such Registrant, or is or was a director or officer of such
Registrant serving at the request of such Registrant as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of such Registrant, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction or upon a plea of nolo contendere or its
equivalent, will not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of such Registrant, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
Article VIII of each undersigned Registrant's bylaws also provides that
such Registrant will indemnify any person who is or was a party or is threatened
to be made a party to any threatened, pending or completed action or suit by or
in the right of such Registrant to procure a judgment in its favor by reason of
the fact that he is or was a director or officer of such Registrant, or is or
was a director or officer of such Registrant serving at the request of such
Registrant as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise,
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of such Registrant; except that no indemnification
will be made in respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to such Registrant unless and only to the
extent that the Court of Chancery or the court in which such action or suit was
brought determines upon application that, despite the adjudication of liability,
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court deems proper.
In accordance with Section 102(b)(7) of the Delaware Corporation Law,
Article Sixth of the Certificate of Incorporation of each Registrant, copies of
which are filed as Exhibits 3.1 and 3.2, respectively, to this Registration
Statement, provides that no director of such Registrant shall be personally
liable to such Registrant or its shareholders for monetary damages for any
breach of his fiduciary duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to such Registrant or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the
Delaware Corporation Law or (iv) for any transaction from which the director
derived an improper personal benefit.
II-1
<PAGE>
ITEM 15 RECENT SALES OF UNREGISTERED SECURITIES
In connection with the organization of Coleman Escrow Corp. (the 'Issuer'),
which is one of the undersigned Registrants, on May 8, 1997, Coleman (Parent)
Holdings Inc. contributed 1,000 shares of common stock, par value $1.00 per
share, of Coleman Holdings Inc. to the Issuer in exchange for 1,000 shares of
common stock of the Issuer. On May 20, 1997, the Issuer sold $600,475,000
aggregate principal amount at maturity of Old First Priority Notes and
$131,560,000 aggregate principal amount at maturity of Old Second Priority Notes
to Bear, Stearns & Co. Inc., Chase Securities Inc. and Credit Suisse First
Boston Corporation (collectively, the 'Initial Purchasers') for $390,002,508 and
$80,004,267, less a discount to the Initial Purchasers of $9,750,063 and
$2,000,107, respectively. The Old First Priority Notes and the Old Second
Priority Notes were guaranteed on a non-recourse basis by Coleman Worldwide
Corporation ('Coleman Worldwide'), one of the undersigned Registrants. Such
transactions were exempt from the registration requirements of the Securities
Act of 1933, as amended (the 'Securities Act'), in reliance on Section 4(2) of
such Act on the basis that such transactions did not involve a public offering.
In accordance with the aggreement pursuant to which the Initial Purchasers
purchased the Old Notes, the Initial Purchasers agreed to offer and sell such
notes only to 'qualified institutional buyers' (as defined in Rule 144A under
the Securities Act) and to a limited number of institutional 'accredited
investors' (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act). Except for the transactions described above, there have not been any
recent sales of unregistered securities by the Registrants.
ITEM 16 EXHIBIT AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- ---------------------------------------------------------------------------------------------------------
<S> <C>
3.1 -- Certificate of Incorporation of the Issuer, filed with the Secretary of State of the State of
Delaware on May 7, 1997.
3.2 -- Certificate of Incorporation of Coleman Worldwide, filed with the Secretary of State of the State
of Delaware on March 12, 1993 (incorporated by reference to Exhibit 3.1 to the Coleman Worldwide
Corporation 1993 Annual Report on Form 10-K (the '1993 Worldwide 10-K')).
3.3 -- By-Laws of the Issuer, as adopted on May 7, 1997.
3.4 -- By-Laws of Coleman Worldwide, as adopted on March 12, 1993 (incorporated by reference to Exhibit
3.2 to the 1993 Worldwide 10-K).
4.1 -- Indenture, dated as of May 20, 1997, by and among the Issuer, Coleman Worldwide (only with respect
to the non-recourse guaranty and certain collateral security agreements contained in Articles X and
XI thereof) and First Trust National Association, as Trustee, relating to the Senior Secured First
Priority Discount Notes due 2001, the Senior Secured Second Priority Discount Notes due 2001, the
Senior Secured First Priority Discount Exchange Notes due 2001 and the Senior Secured Second
Priority Discount Exchange Notes due 2001 (incorporated by reference to Exhibit (a) to the
Transaction Statement on Schedule 13E-3 of Coleman Worldwide).
4.2 -- Registration Agreement, dated as of May 20, 1997, among Coleman Escrow Corp. and Bear, Stearns &
Co. Inc., Chase Securities Inc. and Credit Suisse First Boston Corporation.
4.3 -- Amended and Restated Credit Agreement, dated as of August 3, 1995 among The Coleman Company, Inc.,
the Lenders party thereto, the Issuing Bank, the Agent, and the Co-Agents (the 'Company Credit
Agreement') (incorporated by reference to Exhibit 4.2 to The Coleman Company, Inc. Form 10-Q for
the period ended June 30, 1995 (the 'Company's June 30, 1995 Form 10-Q')).
4.4 -- Amendment No. 1 dated as of April 30, 1996 to the Company Credit Agreement (incorporated by
reference to Exhibit 4.1 to The Coleman Company, Inc. Form 10-Q for the period ended March 31, 1996
(the 'Company's March 31, 1996 Form 10-Q')).
4.5 -- Amendment No. 2 dated as of April 30, 1996 to the Company's Credit Agreement (incorporated by
reference to Exhibit 4.2 to the Company's March 31, 1996 Form 10-Q).
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- ---------------------------------------------------------------------------------------------------------
<S> <C>
4.6 -- Amendment No. 3 dated as of May 29, 1996 to the Company Credit Agreement (incorporated by reference
to Exhibit 4.1 to The Coleman Company, Inc. Form 10-Q for the period ended September 30, 1996 (the
'Company's September 30, 1996 Form 10-Q')).
4.7 -- Amendment No. 4 dated as of October 25, 1996 to the Company Credit Agreement (incorporated by
reference to Exhibit 4.2 to the Company's September 30, 1996 Form 10-Q).
4.8 -- Amendment No. 5 dated as of March 7, 1996 to the Company Credit Agreement (incorporated by
reference to Exhibit 4.6 to The Coleman Company, Inc. 1996 Annual Report on Form 10-K (the '1996
Coleman 10-K')).
4.9 -- Purchase Agreement dated as of August 3, 1995 among the Company and purchasers party thereto (the
'Notes Agreement') (incorporated by reference to Exhibit 4.3 to the Company's June 30, 1995 Form
10-Q)
4.10 -- Note Purchase Agreement dated as of May 1, 1996 among the Company and the Purchasers party thereto
(incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K dated June
28, 1996).
4.11 -- Specimen copy of definitive certificate of Common Stock of The Coleman Company, Inc., par value
$.01 per share (incorporated by reference to Exhibit 4.4 to The Coleman Company, Inc. 1992 Annual
Report on Form 10-K (the '1992 Coleman 10-K')).
4.12 -- Indenture dated as of May 27, 1993 between Coleman Worldwide and Continental Bank National
Association, as Trustee (incorporated by reference to Exhibit 4.10 to the Coleman Holdings Inc.
Registration Statement Form S-1 (File No. 33-67058), filed on August 6, 1993 (the 'Holdings S-1')).
4.13 -- Escrow and Pledge Agreement dated as of May 27, 1993 among Coleman Worldwide and the Trustee, as
Escrow Agent (incorporated by reference to Exhibit 4.2 to the Holdings S-1).
4.14 -- Worldwide Non-Recourse Guaranty dated as of May 27, 1993 (incorporated by reference to Exhibit 4.6
to the Holdings S-1).
4.15 -- Worldwide Pledge Agreement dated as of May 27, 1993 between Coleman Worldwide and the Agent
(incorporated by reference to Exhibit 4.7 to the Holdings S-1).
4.16 -- Indenture dated as of July 15, 1993 between Coleman Holdings Inc., Coleman Worldwide, as guarantor,
and the Trustee (incorporated by reference to Exhibit 4.1 to the Holdings S-1).
*5.1 -- Opinion of Paul, Weiss, Rifkind, Wharton & Garrison, special counsel to the Registrants.
*8.1 -- Opinion of Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to the Registrants.
10.1 -- Escrow Agreement, dated as of May 15, 1997, between Coleman Escrow Corp. and First Trust National
Association, as Escrow Agent.
10.2 -- Indemnity Agreement, dated as of May 20, 1997, between Bear, Stearns & Co. Inc. and the Issuer.
10.3 -- Cross-Indemnification Agreement dated as of February 26, 1992 among New Coleman Holdings Inc.,
Coleman Finance Holdings Inc., the Company and certain subsidiaries of New Coleman Holdings Inc.
and the Company (the 'Cross Indemnification Agreement') (incorporated by reference to Exhibit 10.1
to the 1992 Coleman 10-K).
10.4 -- Amendment No. 1 dated as of December 30, 1992 to the Cross-Indemnification Agreement (incorporated
by reference to Exhibit 10.2 to the 1992 Coleman 10-K).
10.5 -- Reimbursement Agreement dated as of February 26, 1992 between the Company and MacAndrews Holdings
(incorporated by reference to Exhibit 10.4 to the 1992 Coleman 10-K).
10.6 -- Subordination Agreement dated as of March 4, 1992 among New Coleman Holdings Inc., Coleman
Powermate, Inc., Coleman Spas, Inc., the Company, the Lenders party to the Company Credit Agreement
and Credit Suisse, as agent (the 'Subordination Agreement') (incorporated by reference to Exhibit
10.17 to the 1992 Coleman 10-K).
10.7 -- Amendment No. 1 dated as of December 30, 1992, to the Subordination Agreement (incorporated by
reference to Exhibit 10.18 to the 1992 Coleman 10-K).
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- ---------------------------------------------------------------------------------------------------------
<S> <C>
10.8 -- Tax Allocation Agreement dated as of August 24, 1990 among MacAndrews Holdings, New Coleman
Holdings Inc. and subsidiaries of New Coleman Holdings Inc. (incorporated by reference to Exhibit
10.29 to the 1992 Coleman 10-K).
10.9 -- Amendment No. 1 dated as of February 26, 1992 to the Tax Allocation Agreement (incorporated by
reference to Exhibit 10.30 to the 1992 Coleman 10-K).
10.10 -- Amendment No. 2 dated as of December 30, 1992 to the Tax Allocation Agreement (incorporated by
reference to Exhibit 10.31 to the 1992 Coleman 10-K).
10.11 -- Amendment No. 3 dated as of May 27, 1993 to the Tax Allocation Agreement (incorporated by reference
to Exhibit 10.45 to the Holdings S-1).
10.12 -- Tax Sharing Agreement II dated as of February 26, 1992, among Mafco, Coleman Finance Holdings Inc.,
the Company and certain subsidiaries of the Company (incorporated by reference to Exhibit 10.25 to
the 1992 Coleman 10-K).
10.13 -- Amendment No. 1 dated as of December 30, 1992 to the Tax Sharing Agreement II (incorporated by
reference to Exhibit 10.26 to the 1992 Coleman 10-K).
10.14 -- Supplemental Tax Sharing Agreement dated as of February 26, 1992, between the Company and
MacAndrews Holdings (incorporated by reference to Exhibit 10.32 to the 1992 Coleman 10-K).
10.15 -- Tax Sharing Agreement III dated as of February 26, 1992 among Mafco, New Coleman Holdings Inc.,
Coleman Finance Holdings Inc. and subsidiaries of Coleman Finance Holdings Inc. (incorporated by
reference to Exhibit 10.27 to the 1992 Coleman 10-K).
10.16 -- Amendment No. 1 dated as of December 30, 1992 to the Tax Sharing Agreement III (incorporated by
reference to Exhibit 10.28 to the 1992 Coleman 10-K).
10.17 -- Tax Sharing Agreement V dated as of May 27, 1993 among Mafco, Coleman Worldwide, the Company and
certain subsidiaries of the Company (incorporated by reference to Exhibit 10.38 to the Holdings
S-1).
10.18 -- Tax Sharing Agreement VI dated as of May 27, 1993 between Mafco and Coleman Worldwide (incorporated
by reference to Exhibit 10.39 to the Holdings S-1).
10.19 -- Tax Sharing Termination Agreement dated as of May 27, 1993 among Mafco, New Coleman Holdings Inc.,
Coleman Finance Holdings Inc., the Company and subsidiaries of the Company and Coleman Finance
Holdings Inc. (incorporated by reference to Exhibit 10.40 to the Holdings S-1).
10.20 -- Registration Rights Agreement dated as of March 4, 1992 among the Company, Coleman Finance Holdings
Inc. and Credit Suisse, as agent (incorporated by reference to Exhibit 10.33 to the 1992 Coleman
10-K).
10.21 -- Worldwide Registration Rights Agreement dated as of May 27, 1993 among Coleman Worldwide, the
Company, the Lenders Party thereto and the Agent (incorporated by reference to Exhibit 10.47 to the
Holdings S-1).
10.22 -- Asset Purchase Agreement dated as of October 10, 1994, by and among E. Acquisition Corporation, the
Company, Eastpak, Inc. and Mark Goldman (incorporated by reference to Exhibit 10.1 to the Company's
Current Report on Form 8-K dated November 2, 1994 (the 'Coleman 8-K')).
10.23 -- Stock Purchase Agreement dated as of October 10, 1994, by and among M. Acquisition Corporation, the
Company and Mark Goldman (incorporated by reference to Exhibit 10.2 to the Coleman 8-K).
10.24 -- Contingent Payment Agreement dated as of October 10, 1994, by and among E. Acquisition Corporation,
M. Acquisition Corporation, the Company and Mark Goldman (incorporated by reference to Exhibit 10.3
to the Coleman 8-K).
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- ---------------------------------------------------------------------------------------------------------
<S> <C>
10.25 -- Agreement for Purchase and Sale of Assets of Seatt Corporation dated October 26, 1995 by and among
James McCrink, Seatt Corporation, Seller, and the Company, Purchaser (incorporated by reference to
Exhibit 10.1 to the Company's Current Report on Form 8-K dated January 26, 1996).
10.26 -- Share Purchase Agreement dated as of February 27, 1996 by and among Butagaz S.N.C. and Bafiges S.A.
(incorporated by reference to Exhibit 10.26 to the Company's 1995 Annual Report on Form 10-K (the
'1995 Coleman 10-K')).
10.27 -- Amendment to the Share Purchase Agreement dated as of February 27, 1996 by and among Bafiges S.A.
and Butagaz S.N.C. (incorporated by reference to Exhibit 10.27 to the 1995 Coleman 10-K).
10.28 -- Shareholders Agreement dated as of February 27, 1996 by and among Butagaz S.N.C., the Company and
Bafiges S.A. (incorporated by reference to Exhibit 10.28 to the 1995 Coleman 10-K).
10.29 -- Agreement dated as of February 27, 1996 by and between Shell International Petroleum Company
Limited, Butagaz S.N.C. on the first part, and Bafiges S.A. and the Company on the second part
(incorporated by reference to Exhibit 10.29 to the 1995 Coleman 10-K).
10.30 -- Non-Competition, Confidentiality and Release Agreement between the Company and Robert L. Ring,
dated as of February 11, 1994 (incorporated by reference to Exhibit 10.46 to the 1993 Coleman
10-K).
10.31 -- Employment Agreement dated as of January 1, 1996 between the Company and George Mileusnic
(incorporated by reference to Exhibit 10.44 to the 1995 Coleman 10-K).
10.32 -- First Amendment dated August 1, 1996 to Employment Agreement effective as of January 1, 1996, by
and between the Company and George Mileusnic (incorporated by reference to Exhibit 10.5 to the
Company's September 30, 1996 Form 10-Q).
10.33 -- Employment Agreement dated as of January 1, 1996 between the Company and Larry E. Sanford
(incorporated by reference to Exhibit 10.46 to the 1995 Coleman 10-K).
10.34 -- First Amendment dated August 1, 1996 to Employment Agreement effective as of January 1, 1996, by
and between the Company and Larry E. Sanford (incorporated by reference to Exhibit 10.7 to the
Company's September 30, 1996 Form 10-Q).
10.35 -- Employment Agreement dated as of January 1, 1996 between the Company and Michael N. Hammes
(incorporated by reference to Exhibit 10.47 to the 1995 Coleman 10-K).
10.36 -- 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).
10.37 -- First Amendment dated July 1, 1996 to Employment Agreement effective January 1, 1996 between the
Company and Michael N. Hammes (incorporated by reference to Exhibit 10.4 to the Company's June 30,
1996 Form 10-Q).
10.38 -- Second Amendment dated August 1, 1996 to Employment Agreement effective as of January 1, 1996, by
and between the Company and Michael N. Hammes (incorporated by reference to Exhibit 10.3 to the
Company's September 30, 1996 Form 10-Q).
10.39 -- Letter Agreement between the Company and Lawrence M. Jones dated as of January 14, 1994
(incorporated by reference to Exhibit 10.57 to the 1993 Coleman 10-K).
10.40 -- Employment Agreement dated as of January 20, 1995 between the Company and Frederick J. Fritz
(incorporated by reference to Exhibit 10.41 to the 1994 Coleman 10-K).
10.41 -- Employment Agreement dated as of January 1, 1996 between the Company and Gerald E. Brown
(incorporated by reference to Exhibit 10.48 to the 1995 Coleman 10-K).
10.42 -- First Amendment dated August 1, 1996 to Employment Agreement effective as of January 1, 1996, by
and between the Company and Gerry E. Brown (incorporated by reference to Exhibit 10.8 to the
Company's September 30, 1996 Form 10-Q).
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- ---------------------------------------------------------------------------------------------------------
<S> <C>
10.43 -- 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).
10.44 -- First Amendment dated August 1, 1996 to Employment Agreement effective as of January 1, 1996, by
and between the Company and Patrick McEvoy (incorporated by reference to Exhibit 10.6 to the
Company's September 30, 1996 Form 10-Q).
10.45 -- Employment Agreement dated as of January 1, 1996 between the Company and David Stearns
(incorporated by reference to Exhibit 10.50 to the 1995 Coleman 10-K).
10.46 -- First Amendment dated August 1, 1996 to Employment Agreement effective as of January 1, 1996, by
and between the Company and David Stearns (incorporated by reference to Exhibit 10.4 to the
Company's September 30, 1996 Form 10-Q).
10.47 -- Employment Agreement dated as of May 1, 1996 between the Company and Frederik van den Bergh
(incorporated by reference to Exhibit 10.1 to the Company's June 30, 1996 Form 10-Q).
10.48 -- First Amendment dated August 1, 1996 to Employment Agreement effective as of May 1, 1996, by and
between the Company and Frederik van den Bergh (incorporated by reference to Exhibit 10.2 to the
Company's September 30, 1996 Form 10-Q).
10.49 -- Second Amendment dated August 1, 1996 to Employment Agreement effective as of May 1, 1996, by and
between the Company and Frederik van den Bergh (incorporated by reference to Exhibit 10.47 to the
1996 Coleman 10-K).
10.50 -- Employment Agreement dated as of August 1, 1996 between the Company and Steven F. Kaplan
(incorporated by reference to Exhibit 10.2 to the Company's June 30, 1996 Form 10-Q).
10.51 -- Addendum dated August 3, 1996 and effective August 1, 1996 to Employment Agreement dated as of
August 1, 1996 between the Company and Steven F. Kaplan (incorporated by reference to Exhibit 10.3
to the Company's June 30, 1996 Form 10-Q).
10.52 -- First Amendment dated August 1, 1996 to Employment Agreement effective as of August 1, 1996, by and
between the Company and Steven F. Kaplan (incorporated by reference to Exhibit 10.1 to the
Company's September 30, 1996 Form 10-Q).
10.53 -- The Coleman Company, Inc. Performance Incentive Plan for 1996 (incorporated by reference to Exhibit
10.53 to the 1995 Coleman 10-K).
10.54 -- The Coleman Company, Inc. Executive Annual Incentive Plan for 1995 (incorporated by reference to
Exhibit 10.49 to the 1994 Coleman 10-K).
10.55 -- The Coleman Company, Inc. 1996 Stock Option Plan, as amended (incorporated by reference to Exhibit
10.53 to the 1996 Coleman 10-K).
10.56 -- The Coleman Retirement Salaried Incentive Savings Plan (incorporated by reference to Exhibit 10.3
to the Company's March 31, 1996 Form 10-Q).
10.57 -- The Coleman Retirement Incentive Savings Plan (the 'Savings Plan') (incorporated by reference to
Exhibit 10.54 to the 1995 Coleman 10-K).
10.58 -- First Amendment dated as of October 11, 1994 to the Savings Plan (incorporated by reference to
Exhibit 10.55 to the 1995 Coleman 10-K).
10.59 -- Second Amendment dated as of January 1, 1995 to the Savings Plan (incorporated by reference to
Exhibit 10.56 to the 1995 Coleman 10-K).
10.60 -- Third Amendment dated as of December 14, 1995 to the Savings Plan (incorporated by reference to
Exhibit 10.57 to the 1995 Coleman 10-K).
10.61 -- Fourth Amendment dated as of December 14, 1995 to the Savings Plan (incorporated by reference to
Exhibit 10.58 to the 1995 Coleman 10-K).
10.62 -- Fifth Amendment dated as of January 1, 1996 to the Savings Plan (incorporated by reference to
Exhibit 10.59 to the 1995 Coleman 10-K).
10.63 -- Amendment dated as of December 14, 1995 to the Savings Plan (incorporated by reference to Exhibit
10.60 to the 1995 Coleman 10-K).
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- ---------------------------------------------------------------------------------------------------------
<S> <C>
10.64 -- Amendment dated as of December 14, 1995 to the Savings Plan (incorporated by reference to Exhibit
10.61 to the 1995 Coleman 10-K).
10.65 -- Amendment dated as of January 1, 1996 to the Savings Plan (incorporated by reference to Exhibit
10.62 to the 1995 Coleman 10-K).
10.66 -- New Coleman Holdings Inc. Excess Benefit Plan dated as of January 1, 1995 (incorporated by
reference to Exhibit 10.1 to the Company's June 30, 1995 Form 10-Q).
10.67 -- The New Coleman Company, Inc. Retirement Plan for Salaried Employees (the 'Retirement Plan')
(incorporated by reference to Exhibit 10.63 to the 1995 Coleman 10-K).
10.68 -- Amendment dated as of October 17, 1994 to the Retirement Plan (incorporated by reference to Exhibit
10.64 to the 1995 Coleman 10-K).
10.69 -- Amendment dated as of December 14, 1995 to the Retirement Plan (incorporated by reference to
Exhibit 10.65 to the 1995 Coleman 10-K).
10.70 -- Amendment dated as of December 14, 1995 to the Retirement Plan (incorporated by reference to
Exhibit 10.66 to the 1995 Coleman 10-K).
10.71 -- Amendment dated as of October 12, 1995 to the Retirement Plan (incorporated by reference to Exhibit
10.67 to the 1995 Coleman 10-K).
10.72 -- Amendment dated as of January 1, 1996 to the Retirement Plan (incorporated by reference to Exhibit
10.68 to the 1995 Coleman 10-K).
10.73 -- Amendment dated as of December 31, 1995 to the Retirement Plan (incorporated by reference to
Exhibit 10.69 to the 1995 Coleman 10-K).
10.74 -- The Coleman Company, Inc. Special Executive Retirement Plan for the benefit of Robert L. Ring,
dated as of April 11, 1994 (incorporated by reference to Exhibit 10.2 to the Company's March 31,
1994 Form 10-Q).
10.75 -- The Coleman Company, Inc. Consolidated Supplemental Retirement Plan, dated as of January 1, 1996
(incorporated by reference to Exhibit 10.73 to the 1995 Coleman 10-K).
10.76 -- First Amendment dated July 1, 1996 to the Consolidated Supplemental Retirement Plan adopted January
1, 1996 (incorporated by reference to Exhibit 10.5 to the Company's June 30, 1996 Form 10-Q).
10.77 -- The Coleman Company, Inc. Executive Employees Deferred Compensation Plan, as amended by the First
Amendment thereto (incorporated by reference to Exhibit 10.11 to the Coleman Registration Statement
on Form S-1 (File No. 33-44728), filed on December 23, 1991 (the 'Coleman S-1')).
10.78 -- The Coleman Company, Inc. 1992 Stock Option Plan (incorporated by reference to Exhibit 10.13 to
Amendment No. 2 to the Coleman S-1).
10.79 -- The Coleman Company, Inc. 1993 Stock Option Plan (incorporated by reference to Exhibit 10.18 to The
Coleman Company, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 1993, filed
on November 15, 1993).
10.80 -- The Coleman Company, Inc. 1996 Stock Option Plan (incorporated by reference to Exhibit 10.78 to the
1995 Coleman 10-K).
10.81 -- Employment Agreement dated as of November 1, 1994 between E. Acquisition Corporation and Mark
Goldman (incorporated by reference to Exhibit 10.79 to the 1996 Coleman 10-K).
10.82 -- Employment Agreement dated as of November 1, 1994 between M. Acquisition Corporation and Mark
Goldman (incorporated by reference to Exhibit 10.80 to the 1996 Coleman 10-K).
10.83 -- Letter Agreement dated as of February 28, 1997 between the Company and Michael N. Hammes
(incorporated by reference to Exhibit 10.81 to the 1996 Coleman 10-K).
10.85 -- Indemnity Agreement dated as of May 27, 1993 among Coleman Worldwide, New Coleman Holdings Inc. and
certain subsidiaries of New Coleman Holdings Inc. (incorporated by reference to Exhibit 10.3 to the
Holdings S-1).
</TABLE>
II-7
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- ---------------------------------------------------------------------------------------------------------
<S> <C>
10.86 -- Reimbursement Agreement dated as of May 27, 1993 between Coleman Worldwide and MacAndrews Holdings
(incorporated by reference to Exhibit 10.8 to the Holdings S-1).
10.87 -- Indemnity Agreement dated as of July 22, 1993 between Coleman Holdings Inc., New Coleman Holdings
Inc. and certain of New Coleman Holdings Inc.'s subsidiaries (incorporated by reference to Exhibit
10.4 to the Holdings S-1).
10.88 -- Reimbursement Agreement dated as of July 22, 1993 between Coleman Holdings Inc. and MacAndrews
Holdings (incorporated by reference to Exhibit 10.7 to the Holdings S-1).
10.89 -- Tax Sharing Agreement VII dated as of July 22, 1993 between Coleman Holdings Inc. and Mafco
(incorporated by reference to Exhibit 10.41 to the Holdings S-1).
10.90 -- Letter Agreement dated as of March 15, 1997 between the Company and Frederick W. Fritz
(incorporated by reference to Exhibit 10.1 to the Company's March 31, 1997 Form 10-Q).
12.1 -- Statement regarding the computation of ratio of earnings to fixed charges for the Issuer.
21.1 -- Subsidiaries of the Issuer.
21.2 -- Subsidiaries of Coleman Worldwide (incorporated by reference to Exhibit 21.1 to the Coleman
Worldwide Corporation 1996 Annual Report on Form 10-K).
23.1 -- Consent of Ernst & Young LLP.
*23.2 -- Consent of Paul, Weiss, Rifkind, Wharton & Garrison, special counsel to the Registrants (included
in Exhibit 5.1).
*23.3 -- Consent of Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to the Registrants (included
in Exhibit 8.1).
24.1 -- Power of Attorney executed by Ronald O. Perelman.
24.2 -- Power of Attorney executed by Howard Gittis.
24.3 -- Power of Attorney executed by Irwin Engelman.
24.4 -- Power of Attorney executed by Donald G. Drapkin.
24.5 -- Power of Attorney executed by Jerry W. Levin.
24.6 -- Power of Attorney executed by Bruce Slovin.
24.7 -- Power of Attorney executed by Laurence Winoker.
25.1 -- Statement of Eligibility and Qualification on Form T-1 of First Trust National Association, as
Trustee under the Indenture relating to the Issuer's Senior Secured First Priority Discount
Exchange Notes due 2001 and Senior Secured Second Priority Discount Exchange Notes due 2001.
27.1 -- Financial Data Schedule of the Issuer for the year ended December 31, 1996.
27.2 -- Financial Data Schedule of the Issuer for the three months ended March 31, 1997.
*99.1 -- Form of Letter of Transmittal.
*99.2 -- Form of Notice of Guaranteed Delivery.
*99.3 -- Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
*99.4 -- Form of Letter to Clients.
</TABLE>
- ------------------
<TABLE>
<C> <S>
* To be filed by amendment.
(b) Financial Statement Schedules;
Schedule I(a)-Condensed Financial Information of the Issuer.
Schedule I(b)-Condensed Financial Information of Coleman Worldwide.
</TABLE>
II-8
<PAGE>
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the 'Calculation of
Registration Fee' table in the effective registration statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrants hereby undertake:
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Registrants pursuant to the foregoing provisions, or
otherwise, the Registrants have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrants of expenses incurred or paid by
a director, officer or controlling person of such Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Registrants will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Securities Act and will
be governed by the final adjudication of such issue.
II-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on June 12, 1997.
COLEMAN ESCROW CORP.
By /s/ Glenn P. Dickes
-------------------------------
Glenn P. Dickes
Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ----------------------------------------- ----------------------------------------- ---------------------
<S> <C> <C>
* Chairman of the Board, June 12, 1997
- ----------------------------------------- President and Director
Ronald O. Perelman (Principal Executive Officer)
* Vice Chairman of the Board and June 12, 1997
- ----------------------------------------- Director
Howard Gittis
* Executive Vice President and June 12, 1997
- ----------------------------------------- Chief Financial Officer
Irwin Engelman (Principal Financial Officer)
* Vice President and Controller June 12, 1997
- ----------------------------------------- (Principal Accounting Officer)
Laurence Winoker
</TABLE>
*Joram C. Salig, by signing his name hereto, does hereby execute this
Registration Statement on behalf of the directors and officers of the Registrant
indicated above by asterisks, pursuant to powers of attorney duly executed by
such directors and officers and filed as exhibits to the Registration Statement.
By /s/ Joram C. Salig
------------------------------
Joram C. Salig
Attorney-in-Fact
II-10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on June 12, 1997.
COLEMAN WORLDWIDE CORPORATION
By /s/ Glenn P. Dickes
--------------------------------
Glenn P. Dickes
Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ----------------------------------------- ----------------------------------------- ---------------------
<S> <C> <C>
* Chairman of the Board and June 12, 1997
- ----------------------------------------- Director (Principal Executive
Ronald O. Perelman Officer)
* Director June 12, 1997
- -----------------------------------------
Donald G. Drapkin
* Director June 12, 1997
- -----------------------------------------
Jerry W. Levin
* President and Director June 12, 1997
- -----------------------------------------
Bruce Slovin
* Executive Vice President, June 12, 1997
- ----------------------------------------- Chief Financial Officer and
Irwin Engelman Treasurer
(Principal Financial Officer)
* Chief Accounting Officer June 12, 1997
- ----------------------------------------- (Principal Accounting Officer)
Laurence Winoker
</TABLE>
*Joram C. Salig, by signing his name hereto, does hereby execute this
Registration Statement on behalf of the directors and officers of the Registrant
indicated above by asterisks, pursuant to powers of attorney duly executed by
such directors and officers and filed as exhibits to the Registration Statement.
By /s/ Joram C. Salig
-------------------------------
Joram C. Salig
Attorney-in-Fact
II-11
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholder
Coleman Escrow Corp.
We have audited the consolidated financial statements of Coleman Escrow Corp.
and subsidiaries as of December 31, 1996 and 1995 and for each of the three
years in the period ended December 31, 1996 and have issued our report thereon
dated March 10, 1997, except for the first sentence of Note 1 as to which the
date is May 7, 1997 (included elsewhere in this Registration Statement). Our
audits also included the financial statement schedule listed in Item 16(b) of
this Registration Statement. This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth herein.
ERNST & YOUNG LLP
Denver, Colorado
March 10, 1997
except for the first sentence of Note 1
as to which the date is May 7, 1997
S-1
<PAGE>
SCHEDULE I(a)
COLEMAN ESCROW CORP. AND SUBSIDIARIES
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
COLEMAN ESCROW CORP.
CONDENSED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1996 1995
--------- ---------
<S> <C> <C>
ASSETS
Investment in Coleman Holdings Inc................ ($177,936) ($113,320)
--------- ---------
--------- ---------
STOCKHOLDER'S DEFICIT
Stockholder's deficit
Common stock.................................... 1 1
Capital deficiency.............................. (132,674) (123,992)
(Accumulated deficit) retained earnings......... (47,883) 10,318
Minimum pension liability adjustment............ (236) --
Currency translation adjustment................. 2,856 353
--------- ---------
Total stockholder's deficit.................. $(177,936) $(113,320)
--------- ---------
--------- ---------
</TABLE>
S-2
<PAGE>
SCHEDULE I(a)
COLEMAN ESCROW CORP. AND SUBSIDIARIES
CONDENSED FINANCIAL INFORMATION OF REGISTRANT--(CONTINUED)
COLEMAN ESCROW CORP.
CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Equity in net (loss) earnings of
subsidiaries.......................... $(58,201) $ 9,967 $ 6,510
-------- -------- --------
Net (loss) earnings..................... $(58,201) $ 9,967 $ 6,510
-------- -------- --------
-------- -------- --------
</TABLE>
S-3
<PAGE>
SCHEDULE I(a)
COLEMAN ESCROW CORP. AND SUBSIDIARIES
CONDENSED FINANCIAL INFORMATION OF REGISTRANT--(CONTINUED)
COLEMAN ESCROW CORP.
CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1996 1995 1994
-------- ------- ------
<S> <C> <C> <C>
Net (loss) earnings..................... $(58,201) $(9,967) $6,510
Equity in net (loss) earnings of
subsidiaries.......................... 58,201 9,967 (6,510)
-------- ------- ------
Increase in cash........................ $ -- $ -- $ --
-------- ------- ------
-------- ------- ------
</TABLE>
S-4
<PAGE>
SCHEDULE I(a)
COLEMAN ESCROW CORP. AND SUBSIDIARIES
CONDENSED FINANCIAL INFORMATION OF REGISTRANT--(CONTINUED)
COLEMAN ESCROW CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE DATA)
1. BACKGROUND AND BASIS OF FINANCIAL STATEMENT PRESENTATION
Coleman Escrow Corp. ('Coleman Escrow') is a holding company formed in May
1997 in connection with the offering of Senior Secured Discount Notes due 2001
(the 'Old Notes'), to hold all of the outstanding shares of capital stock of
Coleman Holdings Inc. ('Coleman Holdings').
In the Coleman Escrow parent company-only financial statements, Coleman
Escrow's investment in Coleman Holdings is stated at cost plus equity in
undistributed earnings of Coleman Holdings since date of acquisition. Coleman
Escrow's share of net income of its unconsolidated subsidiary is included in
consolidated income using the equity method. The Coleman Escrow parent
company-only financial statements should be read in conjunction with Coleman
Escrow's consolidated financial statements.
2. SUBSEQUENT EVENT (UNAUDITED)
On May 20, 1997, Coleman Escrow issued and sold $600,475 aggregate
principal amount at maturity of its Senior Secured First Priority Discount Notes
due 2001 (the 'Old First Priority Notes') and $131,560 aggregate principal
amount of maturity of its Senior Secured Second Priority Discount Notes (the
'Old Second Priority Notes' and, together with the Old First Priority Notes, the
'Old Notes') in a private placement offering. The net proceeds of approximately
$455,300 were deposited in escrow.
There are no periodic payments of interest on the Old Notes. The issue
price of (i) the Old First Priority Notes represents a yield to maturity of
11 1/8% per annum and (ii) the Old Second Priority Notes represents a yield to
maturity of 12 7/8% per annum, in each case, computed on a semi-annual bond
equivalent basis calculated from May 20, 1997.
The Indenture governing the Old Notes contain certain covenants that, among
other things, states that Coleman Escrow shall not permit the Company to issue
debt if after giving effect to such issuance the Company's Consolidated EBITDA
Coverage Ratio (as defined) is less than 2.5 to 1.0.
The Old Notes are redeemable by Coleman Escrow from May 15, 2000 through
May 14, 2001, at the option of Coleman Escrow, in whole or in part, at
redemption prices listed below (expressed as percentages of Accreted Value as of
the redemption date) for the periods indicated plus accrued and unpaid interest,
if any, to the redemption date (subject to the right of holders of record on the
relevant record date to receive interest due, if any, on the relevant interest
payment date):
<TABLE>
<CAPTION>
REDEMPTION
PRICE
----------
<S> <C>
Old First Priority Notes..................................... 102.781%
Old Second Priority Notes.................................... 103.219%
</TABLE>
Thereafter, Coleman Escrow may redeem the Old Notes in whole at any time or
in part from time to time at a redemption price of 100% of the aggregate
principal amount at maturity of the Old Notes to be redeemed plus accrued and
unpaid interest, if any, to the redemption date.
S-5
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholder
Coleman Worldwide Corporation
We have audited the consolidated financial statements of Coleman Worldwide
Corporation and subsidiaries as of December 31, 1996 and 1995 and for each of
the three years in the period ended December 31, 1996, and have issued our
report thereon dated March 10, 1997 (included elsewhere in this Registration
Statement). Our audits also included the financial statement schedule listed in
Item 16(b) of this Registration Statement. This schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion based on our audits.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
ERNST & YOUNG LLP
Denver, Colorado
March 10, 1997
S-6
<PAGE>
SCHEDULE I(b)
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
COLEMAN WORLDWIDE CORPORATION
CONDENSED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
ASSETS
Investment in The Coleman Company, Inc............ $209,465 $243,076
Note receivable--affiliate........................ 54,739 50,685
Other assets...................................... 13,285 13,617
-------- --------
$277,489 $307,378
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDER'S EQUITY
Accrued expenses.................................. $ 38 $ 25
Income taxes payable--subsidiary.................. 21,661 2,400
Income taxes payable--affiliate--long term........ 18,528 37,846
Long-term debt.................................... 174,594 165,434
Stockholder's equity
Common stock.................................... 1 1
Additional paid-in capital...................... 23,687 23,496
Retained earnings............................... 36,360 77,823
Minimum pension liability adjustment............ (236) --
Currency translation adjustment................. 2,856 353
-------- --------
Total stockholder's equity................... 62,668 101,673
-------- --------
$277,489 $307,378
-------- --------
-------- --------
</TABLE>
S-7
<PAGE>
SCHEDULE I(b)
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
CONDENSED FINANCIAL INFORMATION OF REGISTRANT--(CONTINUED)
COLEMAN WORLDWIDE CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Administrative expenses................. $ 193 $ 182 $ 95
Interest expense, net................... 12,040 11,385 10,657
Amortization of deferred charges........ 583 564 458
Other income, net....................... (2,755) (51) --
-------- -------- --------
Loss before income taxes, equity in net
earnings of subsidiaries and
extraordinary item.................... (10,061) (12,080) (11,210)
Income tax benefit...................... (3,826) (4,618) (4,310)
-------- -------- --------
Loss before equity in net earnings of
subsidiary and extraordinary item..... (6,235) (7,462) (6,900)
Equity in net (loss) earnings of
subsidiaries.......................... (34,631) 32,584 27,069
-------- -------- --------
(Loss) earnings before extraordinary
item.................................. (40,866) 25,122 20,169
Extraordinary loss on early
extinguishment of debt, net of income
tax benefit of $415................... (597) -- --
-------- -------- --------
Net (loss) earnings..................... $(41,463) $ 25,122 $ 20,169
-------- -------- --------
-------- -------- --------
</TABLE>
S-8
<PAGE>
SCHEDULE I(b)
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
CONDENSED FINANCIAL INFORMATION OF REGISTRANT--(CONTINUED)
COLEMAN WORLDWIDE CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Net cash flows provided by operating
activities............................ $ 3,993 $ 7,254 $26,844
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in note
receivable--affiliate.............. (4,054) (6,742) (27,052)
------- ------- -------
Net cash used by investing
activities......................... (4,054) (6,742) (27,052)
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt........... (130) (898) --
Contributions from parent............. 191 386 208
------- ------- -------
Net cash (used) provided by financing
activities............................ 61 (512) 208
------- ------- -------
Increase in cash........................ $ -- $ -- $ --
------- ------- -------
------- ------- -------
</TABLE>
S-9
<PAGE>
SCHEDULE I(b)
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
CONDENSED FINANCIAL INFORMATION OF REGISTRANT--(CONTINUED)
COLEMAN WORLDWIDE CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE DATA)
1. BACKGROUND AND BASIS OF FINANCIAL STATEMENT PRESENTATION
Coleman Worldwide Corporation ('Coleman Worldwide') was formed in March
1993 in connection with the offering of Liquid Yield Option(Trademark) Notes due
2013 (the 'LYONs'(Trademark)). Coleman Worldwide holds 44,067,520 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
December 31, 1996.
In the Coleman Worldwide parent company-only financial statements, Coleman
Worldwide's investment in Coleman is stated at cost plus equity in undistributed
earnings of Coleman since date of acquisition. Coleman Worldwide's share of net
income of its unconsolidated subsidiary is included in consolidated income using
the equity method. The Coleman Worldwide parent company-only financial
statements should be read in conjunction with Coleman Worldwide's consolidated
financial statements.
2. LONG-TERM DEBT
On May 27, 1993, Coleman Worldwide issued and sold $500,000 principal
amount at maturity of LYONs in an underwritten public offering. On June 7, 1993,
an additional $75,000 principal amount at maturity of LYONs was sold upon
exercise of the underwriter's overallotment option. The net proceeds of
approximately $133,100 were used to repay the Allocated Indebtedness and the
balance of the net proceeds was used to pay a dividend to MacAndrews & Forbes.
The LYONs mature on May 27, 2013 and are secured by 16,394,810 shares of
common stock of Coleman. There are no periodic payments of interest on the
LYONs. The aggregate principal amount of the LYONs represents a yield to
maturity of 7.25% per annum (computed on a semi-annual bond equivalent basis)
calculated from May 27, 1993.
Each LYON has a principal amount at maturity of $1 and is exchangeable, at
the option of the holder, at any time on or prior to maturity (unless previously
redeemed or otherwise purchased) for shares of common stock of Coleman securing
the LYONs at an exchange rate of 15.706 shares of common stock of Coleman per
LYON, subject to the Coleman Worldwide's right to pay cash equal to the then
market value (as defined) of such shares in lieu, in whole or in part, of
delivering such shares. The exchange rate will not be adjusted for original
issue discount ('OID') but will be subject to adjustment upon the occurrence of
certain events affecting the Coleman Common Stock. As of December 31, 1996,
LYONs with a principal amount at maturity of $13,447 have been exchanged at the
request of the LYONs holder.
The LYONs are redeemable by Coleman Worldwide on or after May 27, 1998, at
the option of Coleman Worldwide, in whole or in part, at redemption prices equal
to the issue price plus accrued OID through but excluding the date of
redemption, payable solely in cash. Coleman Worldwide will purchase any LYON, at
the option of the holder, on May 27, 1998, May 27, 2003 and May 27, 2008 (each,
a 'Purchase Date') for a purchase price per LYON equal to the issue price plus
accrued OID through but excluding each such Purchase Date, representing a yield
per annum to the holder on each such date of 7.25% computed on a semi-annual
bond equivalent basis. Coleman Worldwide may, at its option, elect to pay the
purchase price on any Purchase Date either in cash or shares of common stock of
Coleman or any combination thereof.
The Indenture governing the LYONs provides the holders of LYONs with the
option to require Coleman Worldwide to purchase the LYONs after the occurrence
of certain events ('Additional Purchase Right Events'). Additional Purchase
Right Events occur, among other things, upon the Company's Consolidated Debt
Ratio (as defined) exceeding 0.75 to 1.0 or the Consolidated Net Worth (as
defined) of Coleman Worldwide as of the end
S-10
<PAGE>
COLEMAN WORLDWIDE CORPORATION AND SUBSIDIARIES
CONDENSED FINANCIAL INFORMATION OF REGISTRANT--(CONTINUED)
COLEMAN WORLDWIDE CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE DATA)
2. LONG-TERM DEBT--(CONTINUED)
of any fiscal quarter being less than a specified amount which is $60,000 at
March 31, 1997 and increases to $70,000 at June 30, 1997.
3. COMMITMENTS AND 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 26,000,000 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.
4. INCOME TAXES PAYABLE-SUBSIDIARY, INCOME TAXES PAYABLE-AFFILIATE AND NOTE
RECEIVABLE-AFFILIATE
Coleman and Coleman Worldwide are included in the consolidated federal and
certain consolidated state income tax returns of Mafco Holdings Inc. ('Mafco')
and/or it affiliates. Coleman and Coleman Worldwide have entered into a tax
sharing agreement (the 'Company Tax Sharing Agreement') pursuant to which
Coleman is required to pay to Coleman Worldwide amounts equal to the taxes that
Coleman would otherwise have to pay if it were to file separate consolidated
federal, state or local income tax returns including only itself and its
domestic subsidiaries. The accompanying condensed balance sheet includes
approximately $21,666 and $2,400 of federal and state income taxes payable to
Coleman pursuant to the Company Tax Sharing Agreement at December 31, 1996 and
1995, respectively. Coleman Worldwide and Mafco are parties to a tax sharing
agreement (the 'Worldwide Tax Sharing Agreement'), pursuant to which Coleman
Worldwide is required to pay to Mafco amounts equal to the taxes that Coleman
Worldwide would otherwise have to pay if it were to file separate consolidated
federal, state or local income tax returns including only itself and its
domestic subsidiaries. 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
Company Tax Sharing Agreement 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 $54,739 and $50,685 at
December 31, 1996 and 1995, respectively. As a result of the restriction on the
payment of the tax sharing amounts, the accompanying condensed balance sheet
includes approximately $18,528 and $37,846 of federal and state income taxes
payable to Mafco pursuant to the Worldwide Tax Sharing Agreement at December 31,
1996 and 1995, respectively.
S-11
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3.1 -- Certificate of Incorporation of the Issuer, filed with the Secretary of State of the
State of Delaware on May 7, 1997.
3.2 -- Certificate of Incorporation of Coleman Worldwide, filed with the Secretary of State
of the State of Delaware on March 12, 1993 (incorporated by reference to Exhibit 3.1
to the Coleman Worldwide Corporation 1993 Annual Report on Form 10-K (the '1993
Worldwide 10-K')).
3.3 -- By-Laws of the Issuer, as adopted on May 7, 1997.
3.4 -- By-Laws of Coleman Worldwide, as adopted on March 12, 1993 (incorporated by reference
to Exhibit 3.2 to the 1993 Worldwide 10-K).
4.1 -- Indenture, dated as of May 20, 1997, by and among the Issuer, Coleman Worldwide (only
with respect to the non-recourse guaranty and certain collateral security agreements
contained in Articles X and XI thereof) and First Trust National Association, as
Trustee, relating to the Senior Secured First Priority Discount Notes due 2001, the
Senior Secured Second Priority Discount Notes due 2001, the Senior Secured First
Priority Discount Exchange Notes due 2001 and the Senior Secured Second Priority
Discount Exchange Notes due 2001 (incorporated by reference to Exhibit (a) to the
Transaction Statement on Schedule 13E-3 of Coleman Worldwide).
4.2 -- Registration Agreement, dated as of May 20, 1997, among Coleman Escrow Corp. and Bear,
Stearns & Co. Inc., Chase Securities Inc. and Credit Suisse First Boston Corporation.
4.3 -- Amended and Restated Credit Agreement, dated as of August 3, 1995 among The Coleman
Company, Inc., the Lenders party thereto, the Issuing Bank, the Agent, and the
Co-Agents (the 'Company Credit Agreement') (incorporated by reference to Exhibit 4.2
to The Coleman Company, Inc. Form 10-Q for the period ended June 30, 1995 (the
'Company's June 30, 1995 Form 10-Q')).
4.4 -- Amendment No. 1 dated as of April 30, 1996 to the Company Credit Agreement
(incorporated by reference to Exhibit 4.1 to The Coleman Company, Inc. Form 10-Q for
the period ended March 31, 1996 (the 'Company's March 31, 1996 Form 10-Q')).
4.5 -- Amendment No. 2 dated as of April 30, 1996 to the Company's Credit Agreement
(incorporated by reference to Exhibit 4.2 to the Company's March 31, 1996 Form 10-Q).
4.6 -- Amendment No. 3 dated as of May 29, 1996 to the Company Credit Agreement (incorporated
by reference to Exhibit 4.1 to The Coleman Company, Inc. Form 10-Q for the period
ended September 30, 1996 (the 'Company's September 30, 1996 Form 10-Q')).
4.7 -- Amendment No. 4 dated as of October 25, 1996 to the Company Credit Agreement
(incorporated by reference to Exhibit 4.2 to the Company's September 30, 1996 Form
10-Q).
4.8 -- Amendment No. 5 dated as of March 7, 1996 to the Company Credit Agreement
(incorporated by reference to Exhibit 4.6 to The Coleman Company, Inc. 1996 Annual
Report on Form 10-K (the '1996 Coleman 10-K')).
4.9 -- Purchase Agreement dated as of August 3, 1995 among the Company and purchasers party
thereto (the 'Notes Agreement') (incorporated by reference to Exhibit 4.3 to the
Company's June 30, 1995 Form 10-Q)
4.10 -- Note Purchase Agreement dated as of May 1, 1996 among the Company and the Purchasers
party thereto (incorporated by reference to Exhibit 4.1 to the Company's Current
Report on Form 8-K dated June 28, 1996).
</TABLE>
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4.11 -- Specimen copy of definitive certificate of Common Stock of The Coleman Company, Inc.,
par value $.01 per share (incorporated by reference to Exhibit 4.4 to The Coleman
Company, Inc. 1992 Annual Report on Form 10-K (the '1992 Coleman 10-K')).
4.12 -- Indenture dated as of May 27, 1993 between Coleman Worldwide and Continental Bank
National Association, as Trustee (incorporated by reference to Exhibit 4.10 to the
Coleman Holdings Inc. Registration Statement Form S-1 (File No. 33-67058), filed on
August 6, 1993 (the 'Holdings S-1')).
4.13 -- Escrow and Pledge Agreement dated as of May 27, 1993 among Coleman Worldwide and the
Trustee, as Escrow Agent (incorporated by reference to Exhibit 4.2 to the Holdings
S-1).
4.14 -- Worldwide Non-Recourse Guaranty dated as of May 27, 1993 (incorporated by reference to
Exhibit 4.6 to the Holdings S-1).
4.15 -- Worldwide Pledge Agreement dated as of May 27, 1993 between Coleman Worldwide and the
Agent (incorporated by reference to Exhibit 4.7 to the Holdings S-1).
4.16 -- Indenture dated as of July 15, 1993 between Coleman Holdings Inc., Coleman Worldwide,
as guarantor, and the Trustee (incorporated by reference to Exhibit 4.1 to the
Holdings S-1).
*5.1 -- Opinion of Paul, Weiss, Rifkind, Wharton & Garrison, special counsel to the
Registrants.
*8.1 -- Opinion of Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to the
Registrants.
10.1 -- Escrow Agreement, dated as of May 15, 1997, between Coleman Escrow Corp. and First
Trust National Association, as Escrow Agent.
10.2 -- Indemnity Agreement, dated as of May 20, 1997, between Bear, Stearns & Co. Inc. and
the Issuer.
10.3 -- Cross-Indemnification Agreement dated as of February 26, 1992 among New Coleman
Holdings Inc., Coleman Finance Holdings Inc., the Company and certain subsidiaries of
New Coleman Holdings Inc. and the Company (the 'Cross Indemnification Agreement')
(incorporated by reference to Exhibit 10.1 to the 1992 Coleman 10-K).
10.4 -- Amendment No. 1 dated as of December 30, 1992 to the Cross-Indemnification Agreement
(incorporated by reference to Exhibit 10.2 to the 1992 Coleman 10-K).
10.5 -- Reimbursement Agreement dated as of February 26, 1992 between the Company and
MacAndrews Holdings (incorporated by reference to Exhibit 10.4 to the 1992 Coleman
10-K).
10.6 -- Subordination Agreement dated as of March 4, 1992 among New Coleman Holdings Inc.,
Coleman Powermate, Inc., Coleman Spas, Inc., the Company, the Lenders party to the
Company Credit Agreement and Credit Suisse, as agent (the 'Subordination Agreement')
(incorporated by reference to Exhibit 10.17 to the 1992 Coleman 10-K).
10.7 -- Amendment No. 1 dated as of December 30, 1992, to the Subordination Agreement
(incorporated by reference to Exhibit 10.18 to the 1992 Coleman 10-K).
10.8 -- Tax Allocation Agreement dated as of August 24, 1990 among MacAndrews Holdings, New
Coleman Holdings Inc. and subsidiaries of New Coleman Holdings Inc. (incorporated by
reference to Exhibit 10.29 to the 1992 Coleman 10-K).
</TABLE>
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10.9 -- Amendment No. 1 dated as of February 26, 1992 to the Tax Allocation Agreement
(incorporated by reference to Exhibit 10.30 to the 1992 Coleman 10-K).
10.10 -- Amendment No. 2 dated as of December 30, 1992 to the Tax Allocation Agreement
(incorporated by reference to Exhibit 10.31 to the 1992 Coleman 10-K).
10.11 -- Amendment No. 3 dated as of May 27, 1993 to the Tax Allocation Agreement (incorporated
by reference to Exhibit 10.45 to the Holdings S-1).
10.12 -- Tax Sharing Agreement II dated as of February 26, 1992, among Mafco, Coleman Finance
Holdings Inc., the Company and certain subsidiaries of the Company (incorporated by
reference to Exhibit 10.25 to the 1992 Coleman 10-K).
10.13 -- Amendment No. 1 dated as of December 30, 1992 to the Tax Sharing Agreement II
(incorporated by reference to Exhibit 10.26 to the 1992 Coleman 10-K).
10.14 -- Supplemental Tax Sharing Agreement dated as of February 26, 1992, between the Company
and MacAndrews Holdings (incorporated by reference to Exhibit 10.32 to the 1992
Coleman 10-K).
10.15 -- Tax Sharing Agreement III dated as of February 26, 1992 among Mafco, New Coleman
Holdings Inc., Coleman Finance Holdings Inc. and subsidiaries of Coleman Finance
Holdings Inc. (incorporated by reference to Exhibit 10.27 to the 1992 Coleman 10-K).
10.16 -- Amendment No. 1 dated as of December 30, 1992 to the Tax Sharing Agreement III
(incorporated by reference to Exhibit 10.28 to the 1992 Coleman 10-K).
10.17 -- Tax Sharing Agreement V dated as of May 27, 1993 among Mafco, Coleman Worldwide, the
Company and certain subsidiaries of the Company (incorporated by reference to Exhibit
10.38 to the Holdings S-1).
10.18 -- Tax Sharing Agreement VI dated as of May 27, 1993 between Mafco and Coleman Worldwide
(incorporated by reference to Exhibit 10.39 to the Holdings S-1).
10.19 -- Tax Sharing Termination Agreement dated as of May 27, 1993 among Mafco, New Coleman
Holdings Inc., Coleman Finance Holdings Inc., the Company and subsidiaries of the
Company and Coleman Finance Holdings Inc. (incorporated by reference to Exhibit 10.40
to the Holdings S-1).
10.20 -- Registration Rights Agreement dated as of March 4, 1992 among the Company, Coleman
Finance Holdings Inc. and Credit Suisse, as agent (incorporated by reference to
Exhibit 10.33 to the 1992 Coleman 10-K).
10.21 -- Worldwide Registration Rights Agreement dated as of May 27, 1993 among Coleman
Worldwide, the Company, the Lenders Party thereto and the Agent (incorporated by
reference to Exhibit 10.47 to the Holdings S-1).
10.22 -- Asset Purchase Agreement dated as of October 10, 1994, by and among E. Acquisition
Corporation, the Company, Eastpak, Inc. and Mark Goldman (incorporated by reference to
Exhibit 10.1 to the Company's Current Report on Form 8-K dated November 2, 1994 (the
'Coleman 8-K')).
10.23 -- Stock Purchase Agreement dated as of October 10, 1994, by and among M. Acquisition
Corporation, the Company and Mark Goldman (incorporated by reference to Exhibit 10.2
to the Coleman 8-K).
10.24 -- Contingent Payment Agreement dated as of October 10, 1994, by and among E. Acquisition
Corporation, M. Acquisition Corporation, the Company and Mark Goldman (incorporated by
reference to Exhibit 10.3 to the Coleman 8-K).
</TABLE>
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10.25 -- Agreement for Purchase and Sale of Assets of Seatt Corporation dated October 26, 1995
by and among James McCrink, Seatt Corporation, Seller, and the Company, Purchaser
(incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K
dated January 26, 1996).
10.26 -- Share Purchase Agreement dated as of February 27, 1996 by and among Butagaz S.N.C. and
Bafiges S.A. (incorporated by reference to Exhibit 10.26 to the Company's 1995 Annual
Report on Form 10-K (the '1995 Coleman 10-K')).
10.27 -- Amendment to the Share Purchase Agreement dated as of February 27, 1996 by and among
Bafiges S.A. and Butagaz S.N.C. (incorporated by reference to Exhibit 10.27 to the
1995 Coleman 10-K).
10.28 -- Shareholders Agreement dated as of February 27, 1996 by and among Butagaz S.N.C., the
Company and Bafiges S.A. (incorporated by reference to Exhibit 10.28 to the 1995
Coleman 10-K).
10.29 -- Agreement dated as of February 27, 1996 by and between Shell International Petroleum
Company Limited, Butagaz S.N.C. on the first part, and Bafiges S.A. and the Company on
the second part (incorporated by reference to Exhibit 10.29 to the 1995 Coleman 10-K).
10.30 -- Non-Competition, Confidentiality and Release Agreement between the Company and Robert
L. Ring, dated as of February 11, 1994 (incorporated by reference to Exhibit 10.46 to
the 1993 Coleman 10-K).
10.31 -- Employment Agreement dated as of January 1, 1996 between the Company and George
Mileusnic (incorporated by reference to Exhibit 10.44 to the 1995 Coleman 10-K).
10.32 -- First Amendment dated August 1, 1996 to Employment Agreement effective as of January
1, 1996, by and between the Company and George Mileusnic (incorporated by reference to
Exhibit 10.5 to the Company's September 30, 1996 Form 10-Q).
10.33 -- Employment Agreement dated as of January 1, 1996 between the Company and Larry E.
Sanford (incorporated by reference to Exhibit 10.46 to the 1995 Coleman 10-K).
10.34 -- First Amendment dated August 1, 1996 to Employment Agreement effective as of January
1, 1996, by and between the Company and Larry E. Sanford (incorporated by reference to
Exhibit 10.7 to the Company's September 30, 1996 Form 10-Q).
10.35 -- Employment Agreement dated as of January 1, 1996 between the Company and Michael N.
Hammes (incorporated by reference to Exhibit 10.47 to the 1995 Coleman 10-K).
10.36 -- 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).
10.37 -- First Amendment dated July 1, 1996 to Employment Agreement effective January 1, 1996
between the Company and Michael N. Hammes (incorporated by reference to Exhibit 10.4
to the Company's June 30, 1996 Form 10-Q).
10.38 -- Second Amendment dated August 1, 1996 to Employment Agreement effective as of January
1, 1996, by and between the Company and Michael N. Hammes (incorporated by reference
to Exhibit 10.3 to the Company's September 30, 1996 Form 10-Q).
10.39 -- Letter Agreement between the Company and Lawrence M. Jones dated as of January 14,
1994 (incorporated by reference to Exhibit 10.57 to the 1993 Coleman 10-K).
</TABLE>
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10.40 -- Employment Agreement dated as of January 20, 1995 between the Company and Frederick J.
Fritz (incorporated by reference to Exhibit 10.41 to the 1994 Coleman 10-K).
10.41 -- Employment Agreement dated as of January 1, 1996 between the Company and Gerald E.
Brown (incorporated by reference to Exhibit 10.48 to the 1995 Coleman 10-K).
10.42 -- First Amendment dated August 1, 1996 to Employment Agreement effective as of January
1, 1996, by and between the Company and Gerry E. Brown (incorporated by reference to
Exhibit 10.8 to the Company's September 30, 1996 Form 10-Q).
10.43 -- 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).
10.44 -- First Amendment dated August 1, 1996 to Employment Agreement effective as of January
1, 1996, by and between the Company and Patrick McEvoy (incorporated by reference to
Exhibit 10.6 to the Company's September 30, 1996 Form 10-Q).
10.45 -- Employment Agreement dated as of January 1, 1996 between the Company and David Stearns
(incorporated by reference to Exhibit 10.50 to the 1995 Coleman 10-K).
10.46 -- First Amendment dated August 1, 1996 to Employment Agreement effective as of January
1, 1996, by and between the Company and David Stearns (incorporated by reference to
Exhibit 10.4 to the Company's September 30, 1996 Form 10-Q).
10.47 -- Employment Agreement dated as of May 1, 1996 between the Company and Frederik van den
Bergh (incorporated by reference to Exhibit 10.1 to the Company's June 30, 1996 Form
10-Q).
10.48 -- First Amendment dated August 1, 1996 to Employment Agreement effective as of May 1,
1996, by and between the Company and Frederik van den Bergh (incorporated by reference
to Exhibit 10.2 to the Company's September 30, 1996 Form 10-Q).
10.49 -- Second Amendment dated August 1, 1996 to Employment Agreement effective as of May 1,
1996, by and between the Company and Frederik van den Bergh (incorporated by reference
to Exhibit 10.47 to the 1996 Coleman 10-K).
10.50 -- Employment Agreement dated as of August 1, 1996 between the Company and Steven F.
Kaplan (incorporated by reference to Exhibit 10.2 to the Company's June 30, 1996 Form
10-Q).
10.51 -- Addendum dated August 3, 1996 and effective August 1, 1996 to Employment Agreement
dated as of August 1, 1996 between the Company and Steven F. Kaplan (incorporated by
reference to Exhibit 10.3 to the Company's June 30, 1996 Form 10-Q).
10.52 -- First Amendment dated August 1, 1996 to Employment Agreement effective as of August 1,
1996, by and between the Company and Steven F. Kaplan (incorporated by reference to
Exhibit 10.1 to the Company's September 30, 1996 Form 10-Q).
10.53 -- The Coleman Company, Inc. Performance Incentive Plan for 1996 (incorporated by
reference to Exhibit 10.53 to the 1995 Coleman 10-K).
10.54 -- The Coleman Company, Inc. Executive Annual Incentive Plan for 1995 (incorporated by
reference to Exhibit 10.49 to the 1994 Coleman 10-K).
10.55 -- The Coleman Company, Inc. 1996 Stock Option Plan, as amended (incorporated by
reference to Exhibit 10.53 to the 1996 Coleman 10-K).
10.56 -- The Coleman Retirement Salaried Incentive Savings Plan (incorporated by reference to
Exhibit 10.3 to the Company's March 31, 1996 Form 10-Q).
</TABLE>
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10.57 -- The Coleman Retirement Incentive Savings Plan (the 'Savings Plan') (incorporated by
reference to Exhibit 10.54 to the 1995 Coleman 10-K).
10.58 -- First Amendment dated as of October 11, 1994 to the Savings Plan (incorporated by
reference to Exhibit 10.55 to the 1995 Coleman 10-K).
10.59 -- Second Amendment dated as of January 1, 1995 to the Savings Plan (incorporated by
reference to Exhibit 10.56 to the 1995 Coleman 10-K).
10.60 -- Third Amendment dated as of December 14, 1995 to the Savings Plan (incorporated by
reference to Exhibit 10.57 to the 1995 Coleman 10-K).
10.61 -- Fourth Amendment dated as of December 14, 1995 to the Savings Plan (incorporated by
reference to Exhibit 10.58 to the 1995 Coleman 10-K).
10.62 -- Fifth Amendment dated as of January 1, 1996 to the Savings Plan (incorporated by
reference to Exhibit 10.59 to the 1995 Coleman 10-K).
10.63 -- Amendment dated as of December 14, 1995 to the Savings Plan (incorporated by reference
to Exhibit 10.60 to the 1995 Coleman 10-K).
10.64 -- Amendment dated as of December 14, 1995 to the Savings Plan (incorporated by reference
to Exhibit 10.61 to the 1995 Coleman 10-K).
10.65 -- Amendment dated as of January 1, 1996 to the Savings Plan (incorporated by reference
to Exhibit 10.62 to the 1995 Coleman 10-K).
10.66 -- New Coleman Holdings Inc. Excess Benefit Plan dated as of January 1, 1995
(incorporated by reference to Exhibit 10.1 to the Company's June 30, 1995 Form 10-Q).
10.67 -- The New Coleman Company, Inc. Retirement Plan for Salaried Employees (the 'Retirement
Plan') (incorporated by reference to Exhibit 10.63 to the 1995 Coleman 10-K).
10.68 -- Amendment dated as of October 17, 1994 to the Retirement Plan (incorporated by
reference to Exhibit 10.64 to the 1995 Coleman 10-K).
10.69 -- Amendment dated as of December 14, 1995 to the Retirement Plan (incorporated by
reference to Exhibit 10.65 to the 1995 Coleman 10-K).
10.70 -- Amendment dated as of December 14, 1995 to the Retirement Plan (incorporated by
reference to Exhibit 10.66 to the 1995 Coleman 10-K).
10.71 -- Amendment dated as of October 12, 1995 to the Retirement Plan (incorporated by
reference to Exhibit 10.67 to the 1995 Coleman 10-K).
10.72 -- Amendment dated as of January 1, 1996 to the Retirement Plan (incorporated by
reference to Exhibit 10.68 to the 1995 Coleman 10-K).
10.73 -- Amendment dated as of December 31, 1995 to the Retirement Plan (incorporated by
reference to Exhibit 10.69 to the 1995 Coleman 10-K).
10.74 -- The Coleman Company, Inc. Special Executive Retirement Plan for the benefit of Robert
L. Ring, dated as of April 11, 1994 (incorporated by reference to Exhibit 10.2 to the
Company's March 31, 1994 Form 10-Q).
10.75 -- The Coleman Company, Inc. Consolidated Supplemental Retirement Plan, dated as of
January 1, 1996 (incorporated by reference to Exhibit 10.73 to the 1995 Coleman 10-K).
10.76 -- First Amendment dated July 1, 1996 to the Consolidated Supplemental Retirement Plan
adopted January 1, 1996 (incorporated by reference to Exhibit 10.5 to the Company's
June 30, 1996 Form 10-Q).
10.77 -- The Coleman Company, Inc. Executive Employees Deferred Compensation Plan, as amended
by the First Amendment thereto (incorporated by reference to Exhibit 10.11 to the
Coleman Registration Statement on Form S-1 (File No. 33-44728), filed on December 23,
1991 (the 'Coleman S-1')).
</TABLE>
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10.78 -- The Coleman Company, Inc. 1992 Stock Option Plan (incorporated by reference to Exhibit
10.13 to Amendment No. 2 to the Coleman S-1).
10.79 -- The Coleman Company, Inc. 1993 Stock Option Plan (incorporated by reference to Exhibit
10.18 to The Coleman Company, Inc. Quarterly Report on Form 10-Q for the quarter ended
September 30, 1993, filed on November 15, 1993).
10.80 -- The Coleman Company, Inc. 1996 Stock Option Plan (incorporated by reference to Exhibit
10.78 to the 1995 Coleman 10-K).
10.81 -- Employment Agreement dated as of November 1, 1994 between E. Acquisition Corporation
and Mark Goldman (incorporated by reference to Exhibit 10.79 to the 1996 Coleman
10-K).
10.82 -- Employment Agreement dated as of November 1, 1994 between M. Acquisition Corporation
and Mark Goldman (incorporated by reference to Exhibit 10.80 to the 1996 Coleman
10-K).
10.83 -- Letter Agreement dated as of February 28, 1997 between the Company and Michael N.
Hammes (incorporated by reference to Exhibit 10.81 to the 1996 Coleman 10-K).
10.85 -- Indemnity Agreement dated as of May 27, 1993 among Coleman Worldwide, New Coleman
Holdings Inc. and certain subsidiaries of New Coleman Holdings Inc. (incorporated by
reference to Exhibit 10.3 to the Holdings S-1).
10.86 -- Reimbursement Agreement dated as of May 27, 1993 between Coleman Worldwide and
MacAndrews Holdings (incorporated by reference to Exhibit 10.8 to the Holdings S-1).
10.87 -- Indemnity Agreement dated as of July 22, 1993 between Coleman Holdings Inc., New
Coleman Holdings Inc. and certain of New Coleman Holdings Inc.'s subsidiaries
(incorporated by reference to Exhibit 10.4 to the Holdings S-1).
10.88 -- Reimbursement Agreement dated as of July 22, 1993 between Coleman Holdings Inc. and
MacAndrews Holdings (incorporated by reference to Exhibit 10.7 to the Holdings S-1).
10.89 -- Tax Sharing Agreement VII dated as of July 22, 1993 between Coleman Holdings Inc. and
Mafco (incorporated by reference to Exhibit 10.41 to the Holdings S-1).
10.90 -- Letter Agreement dated as of March 15, 1997 between the Company and Frederick W. Fritz
(incorporated by reference to Exhibit 10.1 to the Company's March 31, 1997 Form 10-Q).
12.1 -- Statement regarding the computation of ratio of earnings to fixed charges for the
Issuer.
21.1 -- Subsidiaries of the Issuer.
21.2 -- Subsidiaries of Coleman Worldwide (incorporated by reference to Exhibit 21.1 to the
Coleman Worldwide Corporation 1996 Annual Report on Form 10-K).
23.1 -- Consent of Ernst & Young LLP and Report on Schedule.
*23.2 -- Consent of Paul, Weiss, Rifkind, Wharton & Garrison, special counsel to the
Registrants (included in Exhibit 5.1).
*23.3 -- Consent of Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to the
Registrants (included in Exhibit 8.1).
24.1 -- Power of Attorney executed by Ronald O. Perelman.
24.2 -- Power of Attorney executed by Howard Gittis.
24.3 -- Power of Attorney executed by Irwin Engelman.
24.4 -- Power of Attorney executed by Donald G. Drapkin.
24.5 -- Power of Attorney executed by Jerry W. Levin.
24.6 -- Power of Attorney executed by Bruce Slovin.
24.7 -- Power of Attorney executed by Laurence Winoker.
</TABLE>
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25.1 -- Statement of Eligibility and Qualification on Form T-1 of First Trust National
Association, as Trustee under the Indenture relating to the Issuer's Senior Secured
First Priority Discount Exchange Notes due 2001 and Senior Secured Second Priority
Discount Exchange Notes due 2001.
27.1 -- Financial Data Schedule of the Issuer for the year ended December 31, 1996.
27.2 -- Financial Data Schedule of the Issuer for the three months ended March 31, 1997.
*99.1 -- Form of Letter of Transmittal.
*99.2 -- Form of Notice of Guaranteed Delivery.
*99.3 -- Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees.
*99.4 -- Form of Letter to Clients.
</TABLE>
- ------------------
* To be filed by amendment.
<PAGE>
CERTIFICATE OF INCORPORATION
OF
COLEMAN ESCROW CORP.
FIRST: The name of the Corporation is Coleman
Escrow Corp. (hereinafter the "Corporation").
SECOND: The address of the registered office of the
Corporation in the State of Delaware is 1013 Centre Road, in the City of
Wilmington, County of New Castle. The name of its registered agent at that
address is The Prentice-Hall Corporation System, Inc.
THIRD: The purpose of the Corporation is to engage in any
lawful act or activity for which a corporation may be organized under the
General Corporation Law of the State of Delaware as set forth in Title 8 of the
Delaware Code (the "GCL").
FOURTH: The total number of shares of stock which the
Corporation shall have authority to issue is 1,000 shares of Common Stock, each
having a par value of one dollar ($1.00).
FIFTH: The name and mailing address of the
Sole Incorporator is as follows:
Name Address
---- -------
Lynn Buckley P.O. Box 636
Wilmington, DE 19899
SIXTH: The following provisions are inserted for the
management of the business and the conduct of the affairs of the Corporation,
and for further definition, limitation and regulation of the powers of the
Corporation and of its directors and stockholders:
(1) The business and affairs of the Corporation shall be
managed by or under the direction of the Board of Directors.
<PAGE>
(2) The directors shall have concurrent power with the
stockholders to make, alter, amend, change, add to or repeal the
By-Laws of the Corporation.
(3) The number of directors of the Corporation shall be as
from time to time fixed by, or in the manner provided in, the By-Laws
of the Corporation. Election of directors need not be by written ballot
unless the By-Laws so provide.
(4) No director shall be personally liable to the Corporation
or any of its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) pursuant to Section 174
of the GCL or (iv) for any transaction from which the director derived
an improper personal benefit. If the GCL is amended hereafter to
authorize the further elimination or limitation of liability of
directors, then the liability of a director of the Corporation shall be
eliminated or limited to the fullest extent authorized by the GCL, as
so amended. Any repeal or modification of this Article SIXTH by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of
such repeal or modification with respect to acts or omissions occurring
prior to such repeal or modification.
(5) In addition to the powers and authority hereinbefore or by
statute expressly conferred upon them, the directors are hereby
empowered to exercise all such powers and do all such acts and things
as may be exercised or done by the Corporation, subject, nevertheless,
to the provisions of the GCL, this Certificate of Incorporation, and
any By-Laws adopted by the stockholders; provided, however, that no
By-Laws hereafter adopted by the stockholders
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shall invalidate any prior act of the directors which would have been
valid if such By-Laws had not been adopted.
SEVENTH: Meetings of stockholders may be held within or
without the State of Delaware, as the By-Laws may provide. The books of the
Corporation may be kept (subject to any provision contained in the GCL) outside
the State of Delaware at such place or places as may be designated from time to
time by the Board of Directors or in the By-Laws of the Corporation.
EIGHTH: The Corporation reserves the right to amend, alter,
change or repeal any provision contained in this Certificate of Incorporation,
in the manner now or hereafter prescribed by statute, and all rights conferred
upon stockholders herein are granted subject to this reservation.
I, THE UNDERSIGNED, being the Sole Incorporator hereinbefore
named, for the purpose of forming a corporation pursuant to the GCL, do make
this Certificate, hereby declaring and certifying that this is my act and deed
and the facts herein stated are true, and accordingly have hereunto set my hand
this 7th day of May, 1997.
/s/ Lynn Buckley
-----------------------
Lynn Buckley
Sole Incorporator
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BY-LAWS
OF
COLEMAN ESCROW CORP.
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the
Corporation shall be in the City of Wilmington, County of New Castle, State of
Delaware.
Section 2. Other Offices. The Corporation may also have
offices at such other places both within and without the State of Delaware as
the Board of Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. Meetings of the stockholders for
the election of directors or for any other purpose shall be held at such time
and place, either within or without the State of Delaware as shall be designated
from time to time by the Board of Directors and stated in the notice of the
meeting or in a duly executed waiver of notice thereof.
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Section 2. Annual Meetings. The Annual Meetings of
Stockholders shall be held on such date and at such time as shall be designated
from time to time by the Board of Directors and stated in the notice of the
meeting, at which meetings the stockholders shall elect by a plurality vote a
Board of Directors, and transact such other business as may properly be brought
before the meeting. Written notice of the Annual Meeting stating the place, date
and hour of the meeting shall be given to each stockholder entitled to vote at
such meeting not less than ten nor more than sixty days before the date of the
meeting.
Section 3. Special Meetings. Unless otherwise prescribed by
law or by the Certificate of Incorporation, Special Meetings of Stockholders,
for any purpose or purposes, may be called by either (i) the Chairman or any
Vice Chairman, if there be one, or (ii) the President, (iii) any Vice President,
if there be one, (iv) the Secretary or (v) any Assistant Secretary, if there be
one, and shall be called by any such officer at the request in writing of a
majority of the Board of Directors or at the request in writing of stockholders
owning a majority of the capital stock of the Corporation issued and outstanding
and entitled to vote. Such request shall
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state the purpose or purposes of the proposed meeting. Written notice of a
Special Meeting stating the place, date and hour of the meeting and the purpose
or purposes for which the meeting is called shall be given not less than ten nor
more than sixty days before the date of the meeting to each stockholder entitled
to vote at such meeting.
Section 4. Quorum. Except as otherwise provided by law or by
the Certificate of Incorporation, the holders of a majority of the capital stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business. If, however, such quorum shall not
be present or represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by proxy, shall have
power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally noticed. If the adjournment is for more than thirty days, or if after
the
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adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder entitled to vote at the
meeting.
Section 5. Voting. Unless otherwise required by law, the
Certificate of Incorporation or these ByLaws, any question brought before any
meeting of stockholders shall be decided by the vote of the holders of a
majority of the stock represented and entitled to vote thereat. Each stockholder
represented at a meeting of stockholders shall be entitled to cast one vote for
each share of the capital stock entitled to vote thereat held by such
stockholder. Such votes may be cast in person or by proxy but no proxy shall be
voted on or after three years from its date, unless such proxy provides for a
longer period. The Board of Directors, in its discretion, or the officer of the
Corporation presiding at a meeting of stockholders, in his discretion, may
require that any votes cast at such meeting shall be cast by written ballot.
Section 6. Consent of Stockholders in Lieu of Meeting.
Unless otherwise provided in the Certificate of Incorporation, any action
required or permitted to be taken at any Annual or Special Meeting of
Stockholders of
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the Corporation, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
Section 7. List of Stockholders Entitled to Vote. The officer
of the Corporation who has charge of the stock ledger of the Corporation shall
prepare and make, at least ten days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified
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in the notice of the meeting, or, if not so specified, at the place where the
meeting is to be held. The list shall also be produced and kept at the time and
place of the meeting during the whole time thereof, and may be inspected by any
stockholder of the Corporation who is present.
Section 8. Stock Ledger. The stock ledger of the Corporation
shall be the only evidence as to who are the stockholders entitled to examine
the stock ledger, the list required by Section 7 of this Article II or the books
of the Corporation, or to vote in person or by proxy at any meeting of
stockholders.
ARTICLE III
DIRECTORS
Section 1. Number and Election of Directors. The Board of
Directors shall consist of not less than one nor more than fifteen members, the
exact number of which shall initially be fixed by the Incorporator and
thereafter from time to time by the Board of Directors. Except as provided in
Section 2 of this Article, directors shall be elected by a plurality of the
votes cast at Annual Meetings of Stockholders, and each director so elected
shall hold office until the next Annual Meeting and until
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his successor is duly elected and qualified, or until his earlier resignation or
removal. Any director may resign at any time upon notice to the Corporation.
Directors need not be stockholders.
Section 2. Vacancies. Vacancies and newly created
directorships resulting from any increase in the authorized number of directors
may be filled by a majority of the directors then in office, though less than a
quorum, or by a sole remaining director, and the directors so chosen shall hold
office until the next annual election and until their successors are duly
elected and qualified, or until their earlier resignation or removal.
Section 3. Duties and Powers. The business of the Corporation
shall be managed by or under the direction of the Board of Directors which may
exercise all such powers of the Corporation and do all such lawful acts and
things as are not by statute or by the Certificate of Incorporation or by these
By-Laws directed or required to be exercised or done by the stockholders.
Section 4. Meetings. The Board of Directors of the
Corporation may hold meetings, both regular and special, either within or
without the State of Delaware. Regular meetings of the Board of Directors may be
held without notice at such time and at such place as may from
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time to time be determined by the Board of Directors. Special meetings of the
Board of Directors may be called by the Chairman, if there be one, the
President, or any director. Notice thereof stating the place, date and hour of
the meeting shall be given to each director either by mail not less than
forty-eight (48) hours before the date of the meeting, by telephone or telegram
on twenty-four (24) hours' notice, or on such shorter notice as the person or
persons calling such meeting may deem necessary or appropriate in the
circumstances.
Section 5. Quorum. Except as may be otherwise specifically
provided by law, the Certificate of Incorporation or these By-Laws, at all
meetings of the Board of Directors, a majority of the entire Board of Directors
shall constitute a quorum for the transaction of business and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors. If a quorum shall not be present at
any meeting of the Board of Directors, the directors present thereat may adjourn
the meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
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Section 6. Actions of Board. Unless otherwise provided by the
Certificate of Incorporation or these ByLaws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all the members of the Board of Directors or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee.
Section 7. Meetings by Means of Conference Telephone. Unless
otherwise provided by the Certificate of Incorporation or these By-Laws, members
of the Board of Directors of the Corporation, or any committee designated by the
Board of Directors, may participate in a meeting of the Board of Directors or
such committee by means of a conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting pursuant to this Section 7 shall
constitute presence in person at such meeting.
Section 8. Committees. The Board of Directors may designate
one or more committees, each committee to consist of one or more of the
directors of the Corporation. The Board of Directors may designate one or
more
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directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of any such committee. In the absence or
disqualification of a member of a committee, and in the absence of a designation
by the Board of Directors of an alternate member to replace the absent or
disqualified member, the member or members thereof present at any meeting and
not disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any absent or disqualified member. Any committee, to the
extent allowed by law and provided in the resolution establishing such
committee, shall have and may exercise all the powers and authority of the Board
of Directors in the management of the business and affairs of the Corporation.
Each committee shall keep regular minutes and report to the Board of Directors
when required.
Section 9. Compensation. The directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors and
may be paid a fixed sum for attendance at each meeting of the Board of Directors
or a stated salary as director. No such payment shall preclude any director
from serving the Corporation in any
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other capacity and receiving compensation therefor. Members of special or
standing committees may be allowed like compensation for attending committee
meetings.
Section 10. Interested Directors. No contract or transaction
between the Corporation and one or more of its directors or officers, or between
the Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction, or solely because his or their votes are
counted for such purpose if (i) the material facts as to his or their
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board of Directors or the committee, and the Board of Directors
or committee in good faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested directors, even though the
disinterested directors be less than a quorum; or (ii) the material facts as to
his or their relationship or interest and as to the contract or transaction are
dis-
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closed or are known to the stockholders entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by vote of the
stockholders; or (iii) the contract or transaction is fair as to the Corporation
as of the time it is authorized, approved or ratified by the Board of Directors,
a committee thereof or the stockholders. Common or interested directors may be
counted in determining the presence of a quorum at a meeting of the Board of
Directors or of a committee which authorizes the contract or transaction.
ARTICLE IV
OFFICERS
Section 1. General. The officers of the Corporation shall be
chosen by the Board of Directors and shall be a President, a Secretary and a
Treasurer. The Board of Directors, in its discretion, may also choose a Chairman
of the Board of Directors (who must be a director), one or more Vice Chairmen of
the Board of Directors (who must be a director) and one or more Vice Presidents,
Assistant Secretaries, Assistant Treasurers and other officers. Any number of
offices may be held by the same person, unless otherwise prohibited by law, the
Certificate of Incorporation or these By-Laws. The officers of
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the Corporation need not be stockholders of the Corporation nor, except in the
case of the Chairman of the Board of Directors, need such officers be directors
of the Corporation.
Section 2. Election. The Board of Directors at its first
meeting held after each Annual Meeting of Stockholders shall elect the officers
of the Corporation who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined from time to
time by the Board of Directors; and all officers of the Corporation shall hold
office until their successors are chosen and qualified, or until their earlier
resignation or removal. Any officer elected by the Board of Directors may be
removed at any time by the affirmative vote of a majority of the Board of
Directors. Any vacancy occurring in any office of the Corporation shall be
filled by the Board of Directors. The salaries of all officers of the
Corporation shall be fixed by the Board of Directors.
Section 3. Voting Securities Owned by the Corporation.
Powers of attorney, proxies, waivers of notice of meeting, consents and other
instruments relating to securities owned by the Corporation may be executed
in the name of and on behalf of the Corporation by the
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President or any Vice President and any such officer may, in the name of and on
behalf of the Corporation, take all such action as any such officer may deem
advisable to vote in person or by proxy at any meeting of security holders of
any corporation in which the Corporation may own securities and at any such
meeting shall possess and may exercise any and all rights and power incident to
the ownership of such securities and which, as the owner thereof, the
Corporation might have exercised and possessed if present. The Board of
Directors may, by resolution, from time to time confer like powers upon any
other person or persons.
Section 4. Chairman of the Board of Directors. The Chairman of
the Board of Directors, if there be one, shall preside at all meetings of the
stockholders and of the Board of Directors. He shall be the Chief Executive
Officer of the Corporation, and except where by law the signature of the
President is required, the Chairman of the Board of Directors shall possess the
same power as the President to sign all contracts, certificates and other
instruments of the Corporation which may be authorized by the Board of
Directors. During the absence or disability of the President, the Chairman of
the Board of Directors shall exercise all the powers and discharge all
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the duties of the President. The Chairman of the Board of Directors shall also
perform such other duties and may exercise such other powers as from time to
time may be assigned to him by these By-Laws or by the Board of Directors.
Section 5. Vice Chairmen. At the request of the Chairman or in
his inability or refusal to act, the Vice Chairman or the Vice Chairmen if there
is more than one (in the order designated by the Board of Directors) shall
perform the duties of the Chairman, and when so acting, shall have all of the
powers of and be subject to all the restrictions upon the Chairman. Each Vice
Chairman shall also perform such other duties and may exercise such other powers
as from time to time may be assigned to him by these By-Laws or by the Board of
Directors.
Section 6. President. The President shall, subject to the
control of the Board of Directors and, if there be one, the Chairman of the
Board of Directors, have general supervision of the business of the Corporation
and shall see that all orders and resolutions of the Board of Directors are
carried into effect. He shall execute all bonds, mortgages, contracts and other
instruments of the Corporation requiring a seal, under the seal of the
Corporation, except where required or permitted by
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law to be otherwise signed and executed and except that the other officers of
the Corporation may sign and execute documents when so authorized by these
By-Laws, the Board of Directors or the President. In the absence or disability
of the Chairman of the Board of Directors, or if there be none, the President
shall preside at all meetings of the stockholders and the Board of Directors. If
there be no Chairman of the Board of Directors, the President shall be the Chief
Executive Officer of the Corporation. The President shall also perform such
other duties and may exercise such other powers as from time to time may be
assigned to him by these By-Laws or by the Board of Directors.
Section 7. Vice Presidents. At the request of the President or
in his absence or in the event of his inability or refusal to act (and if there
be no Chairman of the Board of Directors or any Vice Chairmen of the Board of
Directors), the Vice President or the Vice Presidents if there is more than one
(in the order designated by the Board of Directors) shall perform the duties of
the President, and when so acting, shall have all the powers of and be subject
to all the restrictions upon the President. Each Vice President shall perform
such other duties and have such other powers as the Board of Direc-
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tors from time to time may prescribe. If there be no Chairman of the Board of
Directors or any Vice Chairmen of the Board of Directors and no Vice President,
the Board of Directors shall designate the officer of the Corporation who, in
the absence of the President or in the event of the inability or refusal of the
President to act, shall perform the duties of the President, and when so acting,
shall have all the powers of and be subject to all the restrictions upon the
President.
Section 8. Secretary. The Secretary shall attend all meetings
of the Board of Directors and all meetings of stockholders and record all the
proceedings thereat in a book or books to be kept for that purpose; the
Secretary shall also perform like duties for the standing committees when
required. The Secretary shall give, or cause to be given, notice of all meetings
of the stockholders and special meetings of the Board of Directors, and shall
perform such other duties as may be prescribed by the Board of Directors or
President, under whose supervision he shall be. If the Secretary shall be unable
or shall refuse to cause to be given notice of all meetings of the stockholders
and special meetings of the Board of Directors, and if there be no Assistant
Secretary, then either the Board of Directors or the President
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may choose another officer to cause such notice to be given. The Secretary shall
have custody of the seal of the Corporation and the Secretary or any Assistant
Secretary, if there be one, shall have authority to affix the same to any
instrument requiring it and when so affixed, it may be attested by the signature
of the Secretary or by the signature of any such Assistant Secretary. The Board
of Directors may give general authority to any other officer to affix the seal
of the Corporation and to attest the affixing by his signature. The Secretary
shall see that all books, reports, statements, certificates and other documents
and records required by law to be kept or filed are properly kept or filed, as
the case may be.
Section 9. Treasurer. The Treasurer shall have the custody of
the corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall
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render to the President and the Board of Directors, at its regular meetings, or
when the Board of Directors so requires, an account of all his transactions as
Treasurer and of the financial condition of the Corporation. If required by the
Board of Directors, the Treasurer shall give the Corporation a bond in such sum
and with such surety or sureties as shall be satisfactory to the Board of
Directors for the faithful performance of the duties of his office and for the
restoration to the Corporation, in case of his death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other property of
whatever kind in his possession or under his control belonging to the
Corporation.
Section 10. Assistant Secretaries. Except as may be otherwise
provided in these By-Laws, Assistant Secretaries, if there be any, shall perform
such duties and have such powers as from time to time may be assigned to them by
the Board of Directors, the President, any Vice President, if there be one, or
the Secretary, and in the absence of the Secretary or in the event of his
disability or refusal to act, shall perform the duties of the Secretary, and
when so acting, shall have all the powers of and be subject to all the
restrictions upon the Secretary.
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Section 11. Assistant Treasurers. Assistant Treasurers, if
there be any, shall perform such duties and have such powers as from time to
time may be assigned to them by the Board of Directors, the President, any Vice
President, if there be one, or the Treasurer, and in the absence of the
Treasurer or in the event of his disability or refusal to act, shall perform the
duties of the Treasurer, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the Treasurer. If required by the Board of
Directors, an Assistant Treasurer shall give the Corporation a bond in such sum
and with such surety or sureties as shall be satisfactory to the Board of
Directors for the faithful performance of the duties of his office and for the
restoration to the Corporation, in case of his death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other property of
whatever kind in his possession or under his control belonging to the
Corporation.
Section 11. Other Officers. Such other offi- cers as the
Board of Directors may choose shall perform such duties and have such powers as
from time to time may be assigned to them by the Board of Directors. The Board
of Directors may delegate to any other officer of the
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Corporation the power to choose such other officers and to prescribe their
respective duties and powers.
ARTICLE V
STOCK
Section 1. Form of Certificates. Every holder of stock in the
Corporation shall be entitled to have a certificate signed, in the name of the
Corporation (i) by the Chairman of the Board of Directors, the President or a
Vice President and (ii) by the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant Secretary of the Corporation, certifying the number of
shares owned by him in the Corporation.
Section 2. Signatures. Any or all of the signatures on a
certificate may be a facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.
Section 3. Lost Certificates. The Board of Directors may
direct a new certificate to be issued in
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place of any certificate theretofore issued by the Corporation alleged to have
been lost, stolen or destroyed, upon the making of an affidavit of that fact by
the person claiming the certificate of stock to be lost, stolen or destroyed.
When authorizing such issue of a new certificate, the Board of Directors may, in
its discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate, or his legal
representative, to advertise the same in such manner as the Board of Directors
shall require and/or to give the Corporation a bond in such sum as it may direct
as indemnity against any claim that may be made against the Corporation with
respect to the certificate alleged to have been lost, stolen or destroyed.
Section 4. Transfers. Stock of the Corporation shall be
transferable in the manner prescribed by law and in these By-Laws. Transfers of
stock shall be made on the books of the Corporation only by the person named in
the certificate or by his attorney lawfully constituted in writing and upon the
surrender of the certificate therefor, which shall be cancelled before a new
certificate shall be issued.
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Section 5. Record Date. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or entitled to express consent to
corporate action in writing without a meeting, or entitled to receive payment of
any dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock,
or for the purpose of any other lawful action, the Board of Directors may fix,
in advance, a record date, which shall not be more than sixty days nor less than
ten days before the date of such meeting, nor more than sixty days prior to any
other action. A determination of stockholders of record entitled to notice of or
to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
Section 6. Beneficial Owners. The Corporation shall be
entitled to recognize the exclusive right of a person registered on its books as
the owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the owner
of shares, and shall not be bound
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to recognize any equitable or other claim to or interest in such share or shares
on the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by law.
ARTICLE VI
NOTICES
Section 1. Notices. Whenever written notice is required by
law, the Certificate of Incorporation or these By-Laws, to be given to any
director, member of a committee or stockholder, such notice may be given by
mail, addressed to such director, member of a committee or stockholder, at his
address as it appears on the records of the Corporation, with postage thereon
prepaid, and such notice shall be deemed to be given at the time when the same
shall be deposited in the United States mail. Written notice may also be given
personally or by telegram, telex or cable.
Section 2. Waivers of Notice. Whenever any notice is
required by law, the Certificate of Incorporation or these By-Laws, to be given
to any director, member of a committee or stockholder, a waiver thereof in
writing, signed, by the person or persons entitled to
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said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, and may be paid in cash, in property, or in shares of the Corporation's
capital stock. Before payment of any dividend, there may be set aside out of any
funds of the Corporation available for dividends such sum or sums as the Board
of Directors from time to time, in its absolute discretion, deems proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for any proper
purpose, and the Board of Directors may modify or abolish any such reserve.
Section 2. Disbursements. All checks or demands for money and
notes of the Corporation shall be signed by such officer or officers or such
other person or persons as the Board of Directors may from time to time
designate.
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Section 3. Fiscal Year. The fiscal year of the Corporation
shall be fixed by resolution of the Board of Directors.
Section 4. Corporate Seal. The corporate seal shall have
inscribed thereon the name of the Corporation, the year of its organization and
the words "Corporate Seal, Delaware". The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or otherwise.
ARTICLE VIII
INDEMNIFICATION
Section 1. Power to Indemnify in Actions, Suits or Proceedings
other Than Those by or in the Right of the Corporation. Subject to Section 3 of
this Article VIII, the Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he is or was a director or officer of the Corporation,
or is or was a director or officer of the Corporation serving at the request of
the Corporation as a director or officer,
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employee or agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
Section 2. Power to Indemnify in Actions, Suits or Proceedings
by or in the Right of the Corporation. Subject to Section 3 of this Article
VIII, the Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threat-
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ened, pending or completed action or suit by or in the right of the Corporation
to procure a judgment in its favor by reason of the fact that he is or was a
director or officer of the Corporation, or is or was a director or officer of
the Corporation serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Corporation; except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
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Section 3. Authorization of Indemnification. Any
indemnification under this Article VIII (unless ordered by a court) shall be
made by the Corporation only as authorized in the specific case upon a
determination that indemnification of the director or officer is proper in the
circumstances because he has met the applicable standard of conduct set forth in
Section 1 or Section 2 of this Article VIII, as the case may be. Such
determination shall be made (i) by a majority vote of the directors who are not
parties to such action, suit or proceeding, even though less than a quorum, or
(ii) if there are no such directors, or if such directors so direct, by
independent legal counsel in a written opinion, or (iii) by the stockholders. To
the extent, however, that a director or officer of the Corporation has been
successful on the merits or otherwise in defense of any action, suit or
proceeding described above, or in defense of any claim, issue or matter therein,
he shall be indemnified against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection therewith, without the necessity of
authorization in the specific case.
Section 4. Good Faith Defined. For purposes of any
determination under Section 3 of this Article
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VIII, a person shall be deemed to have acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, or, with respect to any criminal action or proceeding, to have had
no reasonable cause to believe his conduct was unlawful, if his action is based
on the records or books of account of the Corporation or another enterprise, or
on information supplied to him by the officers of the Corporation or another
enterprise in the course of their duties, or on the advice of legal counsel for
the Corporation or another enterprise or on information or records given or
reports made to the Corporation or another enterprise by an independent
certified public accountant or by an appraiser or other expert selected with
reasonable care by the Corporation or another enterprise. The term "another
enterprise" as used in this Section 4 shall mean any other corporation or any
partnership, joint venture, trust, employee benefit plan or other enterprise of
which such person is or was serving at the request of the Corporation as a
director, officer, employee or agent. The provisions of this Section 4 shall not
be deemed to be exclusive or to limit in any way the circumstances in which a
person may be deemed to have met the
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applicable standard of conduct set forth in Section 1 or 2 of this Article VIII,
as the case may be.
Section 5. Indemnification by a Court. Notwithstanding any
contrary determination in the specific case under Section 3 of this Article
VIII, and notwithstanding the absence of any determination thereunder, any
director or officer may apply to any court of competent jurisdiction in the
State of Delaware for indemnification to the extent otherwise permissible under
Sections 1 and 2 of this Article VIII. The basis of such indemnification by a
court shall be a determination by such court that indemnification of the
director or officer is proper in the circumstances because he has met the
applicable standards of conduct set forth in Sections 1 or 2 of this Article
VIII, as the case may be. Neither a contrary determination in the specific case
under Section 3 of this Article VIII nor the absence of any determination
thereunder shall be a defense to such application or create a presumption that
the director or officer seeking indemnification has not met any applicable
standard of conduct. Notice of any application for indemnification pursuant to
this Section 5 shall be given to the Corporation promptly upon the filing of
such application. If successful, in whole or in part, the director or officer
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seeking indemnification shall also be entitled to be paid the expense of
prosecuting such application.
Section 6. Expenses Payable in Advance. Expenses incurred by a
director or officer in defending or investigating a threatened or pending
action, suit or proceeding shall be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the Corporation as authorized in this Article VIII.
Section 7. Nonexclusivity of Indemnification and Advancement
of Expenses. The indemnification and advancement of expenses provided by or
granted pursuant to this Article VIII shall not be deemed exclusive of any other
rights to which those seeking indemnification or advancement of expenses may be
entitled under any By-Law, agreement, contract, vote of stockholders or
disinterested directors or pursuant to the direction (howsoever embodied) of any
court of competent jurisdiction or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office, it
being the policy of the Corporation that
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indemnification of the persons specified in Sections 1 and 2 of this Article
VIII shall be made to the fullest extent permitted by law. The provisions of
this Article VIII shall not be deemed to preclude the indemnification of any
person who is not specified in Section 1 or 2 of this Article VIII but whom the
Corporation has the power or obligation to indemnify under the provisions of the
General Corporation Law of the State of Delaware, or otherwise.
Section 8. Insurance. The Corporation may purchase and
maintain insurance on behalf of any person who is or was a director or officer
of the Corporation, or is or was a director or officer of the Corporation
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power or the obligation to
indemnify him against such liability under the provisions of this Article VIII.
Section 9. Certain Definitions. For purposes of this
Article VIII, references to "the Corporation"
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shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors or officers, so that any
person who is or was a director or officer of such constituent corporation, or
is or was a director or officer of such constituent corporation serving at the
request of such constituent corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, shall stand in the same position under the
provisions of this Article VIII with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued. For purposes of this Article VIII, references
to "fines" shall include any excise taxes assessed on a person with respect to
an employee benefit plan; and references to "serving at the request of the
Corporation" shall include any service as a director, officer, employee or agent
of the Corporation which imposes duties on, or involves services by, such
director or officer with respect to an employee benefit plan, its participants
or beneficiaries; and a person who
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acted in good faith and in a manner he reasonably believed to be in the interest
of the participants and beneficiaries of an employee benefit plan shall be
deemed to have acted in a manner "not opposed to the best interests of the
Corporation" as referred to in this Article VIII.
Section 10. Survival of Indemnification and Advancement of
Expenses. The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article VIII shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director
or officer and shall inure to the benefit of the heirs, executors and
administrators of such a person.
Section 11. Limitation on Indemnification. Notwithstanding
anything contained in this Article VIII to the contrary, except for proceedings
to enforce rights to indemnification (which shall be governed by Section 5
hereof), the Corporation shall not be obligated to indemnify any director or
officer in connection with a proceeding (or part thereof) initiated by such
person unless such proceeding (or part thereof) was authorized or consented to
by the Board of Directors of the Corporation.
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Section 12. Indemnification of Employees and Agents. The
Corporation may, to the extent authorized from time to time by the Board of
Directors, provide rights to indemnification and to the advancement of expenses
to employees and agents of the Corporation similar to those conferred in this
Article VIII to directors and officers of the Corporation.
ARTICLE IX
AMENDMENTS
Section 1. Amendments. These By-Laws may be altered, amended
or repealed, in whole or in part, or new By-Laws may be adopted by the
stockholders or by the Board of Directors, provided, however, that notice of
such alteration, amendment, repeal or adoption of new ByLaws be contained in the
notice of such meeting of stockholders or Board of Directors as the case may be.
All such amendments must be approved by either the holders of a majority of the
outstanding capital stock entitled to vote thereon or by a majority of the
entire Board of Directors then in office.
Section 2. Entire Board of Directors. As used in this
Article IX and in these By-Laws generally, the term "entire Board of Directors"
means the total number
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of directors which the Corporation would have if there were no vacancies.
37
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COLEMAN ESCROW CORP.
$600,475,000 Senior Secured First Priority Discount Notes due 2001
$131,560,000 Senior Secured Second Priority Discount Notes due 2001
REGISTRATION AGREEMENT
May 20, 1997
BEAR, STEARNS & CO. INC.
CHASE SECURITIES INC.
CREDIT SUISSE FIRST BOSTON CORPORATION
c/o BEAR, STEARNS & CO. INC.
245 Park Avenue
New York, NY 10167
Dear Sirs:
Coleman Escrow Corp., a Delaware corporation (the "Company"), proposes
to issue and sell to Bear, Stearns & Co. Inc., Chase Securities Inc. and Credit
Suisse First Boston Corporation (the "Initial Purchasers"), upon the terms set
forth in a purchase agreement dated May 15, 1997, among the Company and the
Initial Purchasers (the "Purchase Agreement"), $600,475,000 aggregate principal
amount at maturity of its Senior Secured First Priority Discount Notes due 2001
(the "First Priority Notes") and $131,560,000 aggregate principal amount at
maturity of its Senior Secured Second Priority Discount Notes due 2001 (the
"Second Priority Notes" and, together with the First Priority Notes, the
"Securities"). Capitalized terms used but not specifically defined herein are
defined in the Purchase Agreement. As an inducement to the Initial Purchasers to
enter into the Purchase Agreement and in satisfaction of a condition to your
obligations thereunder, the Company agrees with you, for the benefit of the
holders of the Securities (including the Initial Purchasers, the "Holders"), as
follows:
1. Registered Exchange Offer. The Company shall prepare and, not later
than July 7, 1997, shall file with the Securities and Exchange Commission (the
"Commission") a registration statement (the "Exchange Offer Registration
Statement") on an appropriate form under the Securities Act of 1933, as amended
(the "1933 Act"), with respect to a proposed offer (the "Registered Exchange
Offer") to the Holders to issue and deliver to such Holders, in exchange for the
First Priority Notes and Second Priority Notes, a like principal amount of
Senior Secured First Priority Discount Exchange Notes due 2001 and Senior
Secured Second Priority Discount Exchange Notes due 2001 of the Company
(collectively the "Exchange Notes"), identical in all material respects to the
respective Securities (except that the interest rate increase provisions and the
transfer restrictions will be modified or eliminated, as appropriate), shall use
its best efforts to cause the Exchange Offer Registration Statement to become
effective under the 1933 Act not later than October 17, 1997 and shall use its
best efforts to keep the Exchange Offer Registration Statement effective under
the 1933 Act until the close of business on the 180th day following the
expiration of the Registered Exchange Offer (such period being called the
"Exchange Offer Registration Period") for use by Exchanging Dealers (as defined
below) as contemplated in Section 4(g) below. The Company shall be deemed not to
have used its best efforts to keep the Exchange Offer Registration Statement
effective during the Exchange Offer Registration Period if it voluntarily takes
any action that would result in Exchanging Dealers not being able to use such
Registration Statement as contemplated in such Section 4(g), unless (i) such
action is required by applicable law, or (ii) such action is taken by the
Company in good faith and for valid business reasons (not including avoidance of
the Company's obligations hereunder), including the acquisition or divestiture
of assets, so long as the Company promptly thereafter complies with the
requirements of Section 4(j) hereof, if applicable. The Exchange Notes will be
issued under the Indenture dated as of May 20, 1997 (the "Indenture"), between
the Company and First Trust National Association, as trustee (the "Trustee"), or
an indenture (the "Exchange Notes Indenture") between the
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Company and the Trustee or such other bank or trust company reasonably
satisfactory to you, as trustee (the "Exchange Notes Trustee"), such indenture
to be identical in all material respects with the Indenture except for the
interest rate increase provisions and the transfer restrictions relating to the
Securities (as described above).
Upon the effectiveness of the Exchange Offer Registration Statement,
the Company shall promptly commence the Registered Exchange Offer, it being the
objective of such Registered Exchange Offer to enable each Holder electing to
exchange Securities for Exchange Notes (assuming that such Holder is not an
affiliate of the Company within the meaning of the 1933 Act, acquires the
Exchange Notes in the ordinary course of such Holder's business and has no
arrangements with any person to participate in the distribution of the Exchange
Notes) to trade such Exchange Notes from and after their receipt without any
limitations or restrictions under the 1933 Act and without material restrictions
under the securities laws of a substantial proportion of the several states of
the United States. Notwithstanding the foregoing, the Initial Purchasers and the
Company acknowledge that, pursuant to current interpretations by the
Commission's staff of Section 5 of the 1933 Act, and in the absence of an
applicable exemption therefrom, (i) each Holder (including any Initial
Purchaser) which is a broker-dealer electing to exchange Securities, acquired
for its own account as a result of market-making activities or other trading
activities, for Exchange Notes (an "Exchanging Dealer"), is required to deliver
a prospectus containing the information set forth in Annex A hereto on the
cover, in Annex B hereto in "The Exchange Offer" section, and in Annex C hereto
in the "Plan of Distribution" section of such prospectus in connection with a
sale of any such Exchange Notes received by such Exchanging Dealer pursuant to
the Registered Exchange Offer and (ii) each Initial Purchaser which elects to
sell Exchange Notes acquired in exchange for Securities constituting any portion
of an unsold allotment is required to deliver a prospectus, containing the
information required by Items 507 and/or 508 of Regulation S-K under the 1933
Act, as applicable, in connection with such a sale.
In connection with the Registered Exchange Offer, the Company shall:
(a) mail to each Holder a copy of the prospectus forming part
of the Exchange Offer Registration Statement, together with an
appropriate letter of transmittal and related documents;
(b) keep the Registered Exchange Offer open for not less than
30 days after the date notice thereof is mailed to the Holders (or
longer if required by applicable law);
(c) utilize the services of a depositary for the Registered
Exchange Offer with an address in the Borough of Manhattan, The City of
New York;
(d) permit Holders to withdraw tendered Securities at any time
prior to the close of business, New York time, on the last business day
on which the Registered Exchange Offer shall remain open; and
(e) otherwise comply in all respects with all applicable laws.
As soon as practicable after the close of the Registered Exchange
Offer, the Company shall:
(a) accept for exchange all Securities tendered and not
validly withdrawn pursuant to the Registered Exchange Offer;
(b) deliver to the Trustee for cancellation all Securities so
accepted for exchange; and
(c) cause the Trustee or the Exchange Notes Trustee, as the
case may be, promptly to authenticate and deliver to each Holder of
Securities Exchange Notes equal in principal amount to the Securities
of such Holder so accepted for exchange.
Original issue discount on each Exchange Note will accrue from the last
Semi-Annual Accrual Date (as such term is defined in the Indenture) of the
Securities surrendered in exchange therefor or, if prior to November 15, 1997,
from the date original issue discount began to accrue on the Securities.
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<PAGE>
Notwithstanding any other provisions hereof, the Company will ensure
that (i) any Exchange Offer Registration Statement and any amendment thereto and
any prospectus forming part thereof and any supplement thereto complies in all
material respects with the 1933 Act and the rules and regulations thereunder,
(ii) any Exchange Offer Registration Statement and any amendment thereto does
not, when it becomes effective, contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading and (iii) any prospectus forming part
of any Exchange Offer Registration Statement, and any supplement to such
prospectus, does not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements, in the light of
the circumstances under which they were made, not misleading.
Each Holder participating in the Registered Exchange Offer shall be
required to represent to the Company that at the time of the consummation of the
Registered Exchange Offer (i) any Exchange Notes received by such Holder will be
acquired in the ordinary course of business, (ii) such Holder will have no
arrangements or understanding with any person to participate in the distribution
of the Securities or the Exchange Notes within the meaning of the 1933 Act,
(iii) such Holder is not an "affiliate," as defined in Rule 405 under the 1933
Act, of the Company or if it is an affiliate, such Holder acknowledges that it
must comply with the registration and prospectus delivery requirements of the
1933 Act to the extent applicable, (iv) if such Holder is not a broker-dealer,
that it is not engaged in, and does not intend to engage in, a distribution of
the Exchange Notes and (v) if such Holder is a broker-dealer, that it will
receive Exchange Notes in exchange for Securities that were acquired as a result
of market-making activities or other trading activities and that it will be
required to acknowledge that it will deliver a prospectus in connection with any
resale of such Exchange Notes.
In the event that any Initial Purchaser determines upon advice of its
outside counsel that it is not eligible to participate in the Registered
Exchange Offer with respect to the exchange of Securities constituting any
portion of an unsold allotment, as soon as practicable upon receipt by the
Company of an opinion of outside counsel for such Initial Purchaser, reasonably
satisfactory in form and substance to outside counsel of the Company, to the
effect that such exchange does not require compliance with the registration
requirements under the 1933 Act, the Company shall issue and deliver to such
Initial Purchaser, in exchange for such Securities, a like principal amount of
Exchange Notes.
2. Shelf Registration. If (i) because of any change in law or
applicable interpretations thereof by the Commission's staff, the Company
determines that it is not permitted to effect the Registered Exchange Offer as
contemplated by Section 1 hereof, (ii) for any other reason the Registered
Exchange Offer is not consummated by November 17, 1997, (iii) any Initial
Purchaser so requests with respect to Securities held by it following
consummation of the Registered Exchange Offer, (iv) any Holder (other than an
Initial Purchaser) is not eligible to participate in the Registered Exchange
Offer or, in the case of any Initial Purchaser that participates in the
Registered Exchange Offer or acquires Exchange Notes pursuant to the last
paragraph of Section 1 hereof, such Initial Purchaser does not receive freely
tradeable Exchange Notes in exchange for exchanged Securities constituting any
portion of an unsold allotment (it being understood that the requirement that an
Initial Purchaser deliver a prospectus in connection with sales of Exchange
Notes acquired in the Registered Exchange Offer in exchange for Securities
acquired as a result of market-making activities or other trading activities,
shall not result in such Exchange Notes not being "freely tradeable" for
purposes of this Section 2) or (v) the Company so elects, the following
provisions shall apply:
(a) The Company shall as promptly as practicable file with the
Commission and thereafter shall use its best efforts to cause to be
declared effective a registration statement on an appropriate form
under the 1933 Act relating to the offer and sale of the Securities by
the Holders or the Exchange Notes by the Initial Purchasers, as
applicable, from time to time in accordance with the methods of
distribution elected by such Holders or the Initial Purchasers, as
applicable, and set forth in such registration statement (hereafter, a
"Shelf Registration Statement" and, together with any Exchange Offer
Registration Statement, a "Registration Statement").
(b) The Company shall use its best efforts to keep the Shelf
Registration Statement continuously effective in order to permit the
prospectus forming part thereof to be usable by Holders or the
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<PAGE>
Initial Purchasers, as applicable, for a period of two years from
the date the Shelf Registration Statement is declared effective by the
Commission or such shorter period that will terminate when all the
Securities or Exchange Notes, as applicable, covered by the Shelf
Registration Statement have been sold pursuant to the Registration
Statement or when, in the opinion of outside counsel to the Company,
which is reasonably satisfactory in form and substance to counsel for
the Initial Purchasers, all such Securities may be sold without
registration under the 1933 Act and unlegended certificates
representing the Securities may be given to the holders thereof (in any
such case, such period being called the "Shelf Registration Period").
The Company shall be deemed not to have used its best efforts to keep
the Shelf Registration Statement effective during the requisite period
if it voluntarily takes any action that would result in Holders of
Securities covered thereby not being able to offer and sell such
securities during that period, unless (i) such action is required by
applicable law, or (ii) such action is taken by the Company in good
faith and for valid business reasons (not including avoidance of the
Company's obligations hereunder), including the acquisition or
divestiture of assets, so long as the Company promptly thereafter
complies with the requirements of Section 4(j) hereof, if applicable.
(c) Notwithstanding any other provisions hereof, the Company
will ensure that (i) any Shelf Registration Statement and any amendment
thereto and any prospectus forming part thereof and any supplement
thereto complies in all material respects with the 1933 Act and the
rules and regulations thereunder, (ii) any Shelf Registration Statement
and any amendment thereto does not, when it becomes effective, contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading and (iii) any prospectus forming part of any
Shelf Registration Statement, and any supplement to such prospectus,
does not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading.
3. Additional Interest. If (a) by July 7, 1997, a Registration
Statement has not been filed with the SEC with respect to the Registered
Exchange Offer or the resale of the Securities, interest will accrue (in
addition to the accretion of original issue discount) on the Securities from and
including such date, until but excluding the earlier of (i) the date such
Registration Statement is filed and (ii) November 17, 1997 and (b) by November
17, 1997, neither (i) the Registered Exchange Offer is consummated nor (ii) a
Shelf Registration Statement is declared effective, interest will accrue (in
addition to the accrual of original issue discount) on the Securities from and
including such date, until but excluding the earlier of (i) the consummation of
the Registered Exchange Offer and (ii) the effective date of a Shelf
Registration Statement. In each case, such interest will be payable in cash
semiannually in arrears on May 15 and November 15 commencing November 15, 1997,
at a rate per annum equal to .50% of the Accreted Value (as such term is defined
in the Indenture) as of the November 15 and May 15 (or May 20, in the case of
the first interest payment date) immediately preceding such interest payment
date.
4. Registration Procedures. In connection with any Shelf Registration
Statement and, to the extent applicable, any Exchange Offer Registration
Statement, the following provisions shall apply:
(a) The Company shall (i) furnish to the Initial Purchasers,
prior to the filing thereof with the Commission, a copy of the
Registration Statement and each amendment thereof and each supplement,
if any, to the prospectus included therein and shall use its best
efforts to reflect in each such document, when so filed with the
Commission, such comments as the Initial Purchasers reasonably may
propose, (ii) include the information set forth in Annex A hereto on
the cover, in Annex B hereto in "The Exchange Offer" section, and in
Annex C hereto in the "Plan of Distribution" section of the prospectus
forming a part of the Exchange Offer Registration Statement, and
include the information set forth in Annex D hereto in the Letter of
Transmittal delivered pursuant to the Registered Exchange Offer, and
(iii) if requested by the Initial Purchasers, include the information
required by Items 507 and/or 508 of Regulation S-K under the 1933 Act,
as applicable, in the prospectus forming a part of the Registration
Statement; and (iv) in the case of a Shelf Registration Statement,
include the names of the Holders who propose to sell Securities
pursuant to the Shelf Registration Statement, as selling security
holders.
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(b) (1) the Company shall advise you and, in the case of a
Shelf Registration Statement, the Holders of Securities included
therein, and, if requested by you or any such Holder, confirm such
advice in writing:
(i) when the Registration Statement and any amendment
thereto has been filed with the Commission and when the
Registration Statement or any post-effective amendment thereto
has become effective; and
(ii) of any request by the Commission for amendments
or supplements to the Registration Statement or the prospectus
included therein or for additional information.
(2) The Company shall advise you (which notice pursuant to
clause (iii) below shall be accompanied by an instruction to suspend
the use of the prospectus until the requisite changes have been made)
and, in the case of a Shelf Registration Statement, the Holders of
Securities included therein, and, in the case of an Exchange Offer
Registration Statement, any Exchanging Dealer which has provided in
writing to the Company a telephone or facsimile number or address for
notices, and, if requested by you or any such Holder or Exchanging
Dealer, confirm such advice in writing;
(i) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that
purpose;
(ii) of the receipt by the Company of any
notification with respect to the suspension of the
qualification of the securities included therein for sale in
any jurisdiction or the initiation or threatening of any
proceeding for such purpose; and
(iii) of the happening of any event that requires the
making of any changes in the Registration Statement or the
prospectus so that, as of such date, the statements therein
are not misleading and do not omit to state a material fact
required to be stated therein or necessary to make the
statements therein (in the case of the prospectus, in light of
the circumstances under which they were made) not misleading
(which advice shall be accompanied by an instruction to
suspend the use of the prospectus until the requisite changes
have been made).
(c) The Company will make every reasonable effort to obtain
the withdrawal of any order suspending the effectiveness of any
Registration Statement at the earliest possible time.
(d) The Company will furnish to each Holder of Securities
included within the coverage of any Shelf Registration Statement,
without charge, at least one copy of such Shelf Registration Statement
and any post-effective amendment thereto, including financial
statements and schedules, and, if the Holder so requests in writing,
all exhibits (including those incorporated by reference).
(e) The Company will, during the Shelf Registration Period,
deliver to each Holder of Securities included within the coverage of
any Shelf Registration Statement, without charge, as many copies of the
prospectus (including each preliminary prospectus) included in such
Shelf Registration Statement and any amendment or supplement thereto as
such Holder may reasonably request; and the Company consents to the use
of the prospectus or any amendment or supplement thereto by each of the
selling Holders of Securities in connection with the offering and sale
of the Securities covered by the prospectus or any amendment or
supplement thereto.
(f) The Company will furnish to each Exchanging Dealer or
Initial Purchaser, as applicable, which so requests, without charge, at
least one copy of the Exchange Offer Registration Statement and any
post-effective amendment thereto, including financial statements and
schedules, and, if the Exchanging Dealer or Initial Purchaser, as
applicable, so requests in writing, all exhibits (including those
incorporated by reference).
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(g) The Company will, during the Exchange Offer Registration
Period, promptly deliver to each Exchanging Dealer, without charge, as
many copies of the prospectus included in such Exchange Offer
Registration Statement and any amendment or supplement thereto as such
Exchanging Dealer may reasonably request for delivery by such
Exchanging Dealer in connection with a sale of Exchange Notes received
by it pursuant to the Registered Exchange Offer; and the Company
consents to the use of the prospectus or any amendment or supplement
thereto by any such Exchanging Dealer, as aforesaid.
(h) Prior to any public offering of securities pursuant to any
Shelf Registration Statement, the Company will register or qualify or
cooperate with the Holders of Securities included therein and their
respective counsel in connection with the registration or qualification
of such securities for offer and sale under the securities or blue sky
laws of such jurisdictions as any such Holder reasonably requests in
writing and do any and all other acts or things necessary or advisable
to enable the offer and sale in such jurisdictions of the Securities
covered by such Shelf Registration Statement; provided, however, that
the Company will not be required to qualify generally to do business in
any jurisdiction where it is not then so qualified or to take any
action which would subject it to general service of process or to
taxation in any such jurisdiction where it is not then so subject.
(i) The Company will cooperate with the Holders of Securities
to facilitate the timely preparation and delivery of certificates
representing Securities to be sold pursuant to any Shelf Registration
Statement free of any restrictive legends and in such denominations and
registered in such names as Holders may request prior to sales of
Securities pursuant to such Shelf Registration Statement.
(j) Upon the occurrence of any event contemplated by paragraph
(b)(2)(iii) above, the Company will promptly prepare a post-effective
amendment to the Registration Statement or a supplement to the related
prospectus or file any other required document so that, as thereafter
delivered to purchasers of the Securities included therein, the
prospectus will not include an untrue statement of a material fact or
omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading.
(k) Not later than the effective date of the applicable
Registration Statement, the Company will provide a CUSIP number for the
Securities or Exchange Notes, as the case may be, and provide the
applicable trustee with printed certificates for the Securities or
Exchange Notes, as the case may be, in a form eligible for deposit with
The Depository Trust Company.
(l) The Company will comply with all applicable rules and
regulations of the Commission and will make generally available to its
security holders as soon as practicable after the effective date of the
applicable Registration Statement an earnings statement satisfying the
provisions of Section 11(a) of the 1933 Act.
(m) The Company will cause the Indenture or the Exchange Notes
Indenture, as the case may be, to be qualified under the Trust
Indenture Act of 1939, as amended, in a timely manner.
(n) The Company may require each Holder of the Securities to
be sold pursuant to any Shelf Registration Statement to furnish to the
Company such information regarding the holder and the distribution of
such Securities as the Company may from time to time reasonably require
for inclusion in such Registration Statement, and the Company may
exclude from such Registration Statement the Securities of any Holder
that fails to furnish such information within a reasonable time after
receiving such request.
(o) The Company shall enter into such customary agreements
(including if requested an underwriting agreement in customary form)
and take all such other action, if any, as any Holder shall reasonably
request in order to facilitate the disposition of the Securities
pursuant to any Shelf Registration Statement.
6
<PAGE>
(p) In the case of any Shelf Registration Statement, the
Company shall (i) make reasonably available for inspection by the
Holders, and any underwriter participating in any disposition pursuant
to a Registration Statement, and any attorney, accountant or other
agent retained by the Holders or any such underwriter all relevant
financial and other records, pertinent corporate documents and
properties of the Company and (ii) cause the Company's officers,
directors and employees to supply all relevant information reasonably
requested by the Holders or any such underwriter, attorney, accountant
or agent in connection with any such Registration Statement.
(q) In the case of any Exchange Offer Registration Statement,
the Company shall (i) make reasonably available for inspection by the
Initial Purchasers, but in each case only in such firm's capacity as an
Exchanging Dealer and with the express understanding that each such
firm shall be acting solely for itself and not on behalf of any other
party, including, without limitation, any other Exchanging Dealer, all
relevant financial and other records, pertinent corporate documents and
properties of the Company and (ii) cause the Company's officers,
directors and employees to supply all information reasonably requested
by any of them.
(r) In the case of any Shelf Registration Statement, the
Company, if requested by any Holders, shall cause (x) its counsel to
deliver an opinion relating to the Securities included within the
coverage of such Shelf Registration Statement in customary form, (y)
its officers to execute and deliver all customary documents and
certificates requested by any underwriters of the Securities and (z)
its independent public accountants to provide to the selling Holders
and any underwriter therefor a comfort letter in customary form.
(s) In the case of any Exchange Offer Registration Statement,
the Company, if requested by the Initial Purchasers, but in each case
only in such firm's capacity as an Exchanging Dealer and with the
express understanding that each such firm shall be acting solely for
itself and not on behalf of any other party, including, without
limitation, any other Exchanging Dealer, in connection with any
prospectus delivery as contemplated in paragraph (g) above, shall use
its best efforts to cause, on and as of the effective date of the
Exchange Offer Registration Statement, (x) its counsel to deliver an
opinion relating to the Exchange Offer Registration Statement and the
Exchange Notes in customary form, (y) its officers to execute and
deliver all customary documents and certificates requested and (z) its
independent public accountants to provide a comfort letter in customary
form, subject to receipt of appropriate documentation (including the
delivery of a customary representation letter), as contemplated by
Statement on Auditing Standards No. 72.
5. Registration Expenses. The Company will bear all expenses incurred
in connection with the performance of its obligations under Sections 1, 2, 3 and
4 hereof and, in the event of any Shelf Registration Statement, will reimburse
the Holders for the reasonable fees and disbursements of one firm or counsel
designated by the Holders of a majority in principal amount of the Securities to
be registered thereunder to act as counsel for the Holders in connection
therewith, and, in the case of any Exchange Offer Registration Statement, will
reimburse the Initial Purchasers, as applicable, for the reasonable fees and
disbursements of counsel in connection therewith.
6. Indemnification.
(a) In the event of a Shelf Registration or in connection with
any prospectus delivery pursuant to a Registered Exchange Offer by an
Exchanging Dealer as contemplated in Section 4(g) above, the Company
shall indemnify and hold harmless each Holder and each person, if any,
who controls such Holder within the meaning of Section 15 of the 1933
Act or Section 20 of the Securities Exchange Act of 1934, as amended
(the "1934 Act") as follows:
(i) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, arising out of any
untrue statement or alleged untrue statement of a material
fact contained in any such Registration Statement or any
prospectus forming part thereof or the omission or alleged
omission therefrom of a material fact required to be stated
therein or necessary
7
<PAGE>
to make the statements therein (in the case of any
prospectus, in the light of the circumstances under which they
were made) not misleading;
(ii) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, to the extent of
the aggregate amount paid in settlement of any litigation, or
any investigation or proceeding by any governmental or
regulatory agency or body, commenced or threatened, or of any
claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission;
and
(iii) against any and all expense whatsoever, as
incurred (including, subject to Section 6(c) hereof, the fees
and disbursements of counsel chosen by the indemnified party)
reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by
any governmental or regulatory agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission;
provided, however, that (i) this indemnity shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission
made in reliance upon and in conformity with written information
furnished to the Company by the indemnified party expressly for use in
such Registration Statement and (ii) such indemnity with respect to any
preliminary prospectus shall not inure to the benefit of any Holder (or
any person controlling such Holder) from whom the person asserting any
such loss, claim, damage or liability purchased the Securities which
are the subject thereof if such person did not receive a copy of the
final prospectus (or the final prospectus as supplemented) at or prior
to the confirmation of the sale of such Securities to such person and
(A) the untrue statement or omission of a material fact contained in
such preliminary prospectus was corrected in the final prospectus (or
the final prospectus as supplemented) and (B) such Holder had
previously been furnished by or on behalf of the Company (prior to the
date of mailing by such Holder of the applicable confirmation) with a
sufficient number of copies of the final prospectus as so amended or
supplemented.
(b) In the event of a Shelf Registration Statement, each
Holder shall indemnify and hold harmless the Company, its directors and
officers and each person, if any, who controls the Company within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
against any and all loss, liability, claim, damage and expense
described in the indemnity contained in Section 6(a) hereof, as
incurred, but only with respect to untrue statements or omissions, or
alleged untrue statements or omissions, made in the Registration
Statement (or any amendment or supplement thereto) in reliance on and
in conformity with written information furnished to the Company by such
Holder expressly for use in the Registration Statement (or in such
amendment or supplement); provided, however, that no such Holder shall
be liable for any indemnity claims hereunder in excess of the amount of
net proceeds received by such Holder from the sale of securities
pursuant to the Registration Statement.
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action
commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not
relieve such indemnifying party from any liability which it may have
otherwise than on account of this indemnity agreement, except to the
extent actually prejudiced thereby. If any such claim or action shall
be brought against an indemnified party, the indemnified party shall
notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes,
jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the
indemnified party. After notice from the indemnifying party to the
indemnified party of its election to assume the defense of such claim
or action, the indemnifying party shall not be liable to the
indemnified party under this Section 6 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the
defense thereof (other than reasonable costs of investigation);
provided, however, if the defendants in any such action include both an
indemnified party and an indemnifying party and the indemnified party
shall have reasonably concluded that there may be legal defenses
available to it and/or other indemnified parties that
8
<PAGE>
are different from or additional to those available to the indemnifying
party, the indemnified party or parties under this Section 6 shall have
the right to employ not more than one counsel to represent them and, in
that event, the fees and expenses of not more than one such separate
counsel shall be paid by the indemnifying party, as such expenses are
incurred. No indemnifying party shall be liable for any settlement
effected without its written consent of any claim or action. An
indemnifying party will not, without the prior written consent of the
indemnified party, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit
or proceeding in respect of which indemnification or contribution may
be sought hereunder (whether or not the indemnified parties are actual
or potential parties to such claim or action) unless such settlement,
compromise or consent includes an unconditional release of each
indemnified party from all liability arising out of such claim, action,
suit or proceeding.
(d) To provide for just and equitable contribution in
circumstances in which the indemnity provided for in Section 6(a)-6(c)
hereof is for any reason held to be unenforceable by the indemnified
parties although applicable in accordance with its terms, the Company
and the applicable Holder or Holders shall contribute to the aggregate
losses, liabilities, claims, damages and expenses of the nature
contemplated by said indemnity incurred by the Company and such Holder
or Holders, as incurred, in such proportions that the Company is
responsible for that portion represented by the percentage that the
aggregate consideration received by the Company from the sale by it of
the Securities sold by such Holder bears to the aggregate principal
amount of Securities sold by such Holder and such Holder is responsible
for the balance; provided, however, that no person found guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the 1933 Act) by a court of competent jurisdiction shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 6, each person, if any,
who controls a Holder within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act shall have the same rights to
contribution as such Holder and each director and officer of the
Company and each person, if any, who controls the Company within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
shall have the same rights to contribution as the Company.
(e) The agreements contained in this Section 6 shall survive
the sale of the Securities pursuant to a Registration Statement and
shall remain in full force and effect, regardless of any termination of
cancellation of this Agreement or any investigation made by or on
behalf of any indemnified party.
7. Miscellaneous.
(a) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, unless the Company has obtained the
written consent of Holders of a majority in aggregate principal amount of the
Securities.
(b) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telex, telecopier, or air courier guaranteeing overnight delivery:
(1) if to a Holder, at the most current address given by such
Holder to the Company in accordance with the provisions of this Section
7(b), which address initially is, with respect to each Holder, the
address of such Holder maintained by the Registrar under the Indenture
(or the Exchange Notes Indenture), with a copy in like manner to the
Initial Purchasers;
(2) if to the Initial Purchasers, initially at the
respective addresses set forth in the Purchase Agreement, with copies
to the parties specified therein; and
(3) if to the Company, initially at the address set forth
in the Purchase Agreement, with copies to the parties specified
therein.
All such notices and communications shall be deemed to have been duly
given when received.
9
<PAGE>
The Initial Purchasers or the Company by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
(c) Successors and Assigns. This Agreement shall be binding upon
the Company and its successors and assigns.
(d) Counterparts. This agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(e) Headings. The headings in this agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
(f) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
Specified times of day refer to New York City time.
10
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
among the Company and you.
Very truly yours,
COLEMAN ESCROW CORP.
By: /s/ Glenn P. Dickes
---------------------------------
Name: Glenn P. Dickes
Title: Vice President
CONFIRMED AND ACCEPTED
as of the date first above written:
BEAR, STEARNS & CO. INC.
By: /s/ Paul Abecassis
--------------------------------------
Name: Paul Abecassis
Title: Senior Managing Director
CHASE SECURITIES INC.
By: /s/ James P. Casey
--------------------------------------
Name: James P. Casey
Title: Managing Director
CREDIT SUISSE FIRST BOSTON CORPORATION
By: /s/ Carolynn Rockafellow
--------------------------------------
Name: Carolynn Rockafellow
Title: Managing Director
<PAGE>
ANNEX A TO REGISTRATION AGREEMENT
Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Registered Exchange Offer (as defined herein) must acknowledge
that it will deliver a prospectus in connection with any resale of such Exchange
Notes. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the 1933 Act. This Prospectus, as it may
be amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of Exchange Notes received in exchange for Securities
where such Securities were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the expiration of the Registered Exchange
Offer, it will make this Prospectus available to any broker-dealer for use in
connection with any such resale. See "Plan of Distribution."
A-1
<PAGE>
ANNEX B TO REGISTRATION AGREEMENT
Each broker-dealer that receives Exchange Notes for its own account in
exchange for Securities, where such Securities were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes. See "Plan of Distribution."
B-1
<PAGE>
ANNEX C TO REGISTRATION AGREEMENT
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Registered Exchange Offer must acknowledge that it will deliver
a prospectus in connection with any resale of such Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Notes received in
exchange for Securities where such Securities were acquired as a result of
market-making activities or other trading activities. The Company has agreed
that for a period of 180 days after the expiration of the Registered Exchange
Offer, it will make this Prospectus, as amended or supplemented, available to
any broker-dealer for use in connection with any such resale. In addition, until
____________, 199_, all dealers effecting transactions in the Exchange Notes may
be required to deliver a prospectus.(1)
The Company will not receive any proceeds from any sale of Exchange
Notes by broker-dealers. Exchange Notes received by broker-dealers for their own
account pursuant to the Registered Exchange Offer may be sold from time to time
in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Exchange Notes or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer and/or the purchasers of any such
Exchange Notes. Any broker-dealer that resells Exchange Notes that were received
by it for its own account pursuant to the Registered Exchange Offer and any
broker or dealer that participates in a distribution of such Exchange Notes may
be deemed to be an "underwriter" within the meaning of the 1933 Act and any
profit on any such resale of Exchange Notes and any commissions or concessions
received by any such persons may be deemed to be underwriting compensation under
the 1933 Act. The Letter of Transmittal states that, by acknowledging that it
will deliver and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the 1933 Act.
For a period of 180 days after the expiration of the Registered
Exchange Offer, the Company will promptly send additional copies of this
Prospectus and any amendment or supplement to this Prospectus to any
broker-dealer that requests such documents in the Letter of Transmittal. The
Company has agreed to pay all expenses incident to the Registered Exchange Offer
other than commissions or concessions of any brokers or dealers and will
indemnify the holders of the Securities (including any broker-dealers) against
certain liabilities, including liabilities under the 1933 Act.
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(1.) The legend required by Item 502(e) of Regulation S-K must appear
on the back page of the Exchange Offer Prospectus.
C-1
<PAGE>
ANNEX D TO REGISTRATION AGREEMENT
Rider A
|_| CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name:
Address:
Rider B
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Notes. If the undersigned is a broker-dealer that will receive Exchange Notes
for its own account in exchange for Securities, it represents that the
Securities to be exchanged for Exchange Notes were acquired by it as a result of
market-making or other trading activities and acknowledges that it will deliver
a prospectus in connection with any resale of such Exchange Notes; however, by
so acknowledging and by delivering a prospectus, the undersigned will not be
deemed to admit that it is an "underwriter" within the meaning of the 1933 Act.
D-1
<PAGE>
ESCROW AGREEMENT, dated as of May 15, 1997 (the "Agreement"),
between COLEMAN ESCROW CORP. (the "Issuer") and FIRST TRUST
NATIONAL ASSOCIATION, as Escrow Agent (the "Escrow Agent").
This Agreement is being entered into in connection with the
Purchase Agreement (the "Purchase Agreement"), dated May 15, 1997, among the
Issuer, Bear, Stearns & Co. Inc., Chase Securities Inc. and Credit Suisse First
Boston Corporation (the "Initial Purchasers"), and the Indenture (the
"Indenture"), dated as of May 20, 1997, between the Issuer and First Trust
National Association, as trustee (the "Trustee"). Capitalized terms which are
used but not defined herein have the respective meanings specified in the
Indenture.
Pursuant to the Purchase Agreement, the Issuer is selling
$600,475,000 aggregate principal amount at maturity of its Senior Secured First
Priority Discount Notes due 2001 (the "First Priority Notes") and $131,560,000
aggregate principal amount at maturity of its Senior Secured Second Priority
Discount Notes due 2001 (the "Second Priority Notes" and, together with the
First Priority Notes, the "Notes", which term shall include any notes issued in
exchange for Notes pursuant to the Registration Agreement). Concurrently with
the closing of the sale of the Notes, the Issuer will deposit with the Escrow
Agent, as hereinafter provided, the net proceeds from the sale of the Notes of
$455,256,605.58 (the "Initial Deposit"). The Initial Deposit will be used to
finance (a) the redemption (the "Coleman Holdings Notes Redemption") of
$281,281,000 aggregate principal amount at maturity of Senior Secured Discount
Notes due 1998 (the "Coleman Holdings Notes") of Coleman Holdings Inc., a wholly
owned subsidiary of the Issuer ("Coleman Holdings"), and (b) the retirement (the
"LYONs Retirement") of $561,553,000 aggregate principal amount at maturity of
Liquid Yield Option(TM) Notes due 2013 (the
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(TM) Trademark of Merrill Lynch & Co., Inc.
<PAGE>
"LYONs"(TM)) of Coleman Worldwide Corporation, a wholly owned subsidiary of
Coleman Holdings ("Coleman Worldwide"). The LYONs Retirement is expected to
occur through one or more transactions or series of transactions, including (i)
one or more offers to pay cash upon exchange of LYONs in excess of the then
market value of the shares of Coleman Common Stock (as defined herein) for which
the LYONs may be exchanged and (ii) redemption of the LYONs at the option of
Coleman Worldwide.
The Coleman Holdings Notes were originally issued pursuant to
the Indenture, dated as of July 15, 1993, between Coleman Holdings and First
Trust National Association, as trustee (the "Coleman Holdings Indenture"). The
LYONs were originally issued pursuant to the Indenture, dated as of May 27,
1993, between Coleman Worldwide and First Trust National Association, as trustee
(the "LYONs Indenture"). Each LYON ($1,000 principal amount at maturity) is
exchangeable at the option of the holder thereof at any time prior to May 27,
2013 into 15.706 shares of common stock, par value $.01 per share (the "Coleman
Common Stock"), of The Coleman Company, Inc., an 83% owned subsidiary of Coleman
Worldwide ("Coleman"). The LYONs are secured by a pledge of 16,394,810 shares of
Coleman Common Stock, which pledge is governed by the terms of the Indenture and
the Escrow and Pledge Agreement, dated as of May 27, 1993, between Coleman
Worldwide and First Trust National Association, as trustee (the "Coleman
Worldwide Pledge Agreement").
In the event that none of the Notes remains outstanding, this
Agreement shall automatically terminate and any and all excess Escrowed Funds
shall immediately be released to the Issuer, as hereinafter provided.
Accordingly, the Issuer and the Escrow Agent agree as follows:
- -----------
(TM) Trademark of Merrill Lynch & Co., Inc.
2
<PAGE>
1. Delivery, Acceptance and Investment of
Escrowed Funds.
(a) Concurrently with the closing of the sale of the Notes,
which is expected to occur on May 20, 1997, the Issuer will deposit the Initial
Deposit with the Escrow Agent. The Initial Deposit shall be made in the form of
cash, Treasury Securities or any combination thereof.
"Treasury Securities" means any investment in obligations
issued or guaranteed by the United States government or any agency thereof, in
each case maturing within 360 days of the date of acquisition thereof.
(b) The Escrow Agent hereby agrees to accept the Initial
Deposit and to hold such funds and the proceeds thereof in one or more separate
identifiable accounts for disbursement in accordance with the provisions hereof.
The Initial Deposit and the proceeds of any such deposit, less any amounts
released pursuant to the terms of this Agreement, shall constitute the "Escrowed
Funds." The Escrow Agent further agrees to invest any portion of the Escrowed
Funds in Permitted Investments as directed in writing from time to time by the
Issuer.
"Permitted Investments" means (i) Treasury Securities, (ii)
investments in time deposit accounts, certificates of deposit and money market
deposits maturing within 180 days of the date of acquisition thereof, entitled
to U.S. federal deposit insurance for the full amount thereof or issued by a
bank or trust company (including the Escrow Agent or an affiliate of the Escrow
Agent) which is organized under the laws of the United States of America or any
state thereof having capital, surplus and undivided profits aggregating in
excess of $500,000,000 and (iii) repurchase obligations with a term of not more
than 30 days entered into with a nationally recognized broker dealer, with
respect to which the purchased securities are obligations issued or guaranteed
by the United States government or any agency thereof, which repurchase
obligations shall be entered into pursuant to agreements substantially in the
form of one or more of the agreements attached as Exhibit D.
(c) The obligation and liability of the Escrow
Agent to make the payments and transfers required by this
3
<PAGE>
Escrow Agreement shall be limited to the Escrowed Funds. The Escrow Agent shall
not be liable for any loss resulting from any investment made pursuant to this
Escrow Agreement in compliance with the provisions hereof.
2. Release of Escrowed Funds.
(a) The Escrow Agent shall only release the Escrowed Funds
from the escrow created hereby in accordance with this Section 2 and upon
termination of this Agreement in accordance with Section 5.
(b) Subject to Section 2(l) hereof, if the Escrow Agent
receives a notice from the Issuer that the Coleman Holdings Notes Redemption
pursuant to paragraph 5 of the Coleman Holdings Notes and Article III of the
Coleman Holdings Indenture is to occur on or after July 15, 1997, the Escrow
Agent shall, on the Business Day prior to the date fixed for the Coleman
Holdings Notes Redemption, release to the Issuer the amount of Escrowed Funds
equal to the redemption price payable under the Coleman Holdings Indenture
sufficient to redeem all of the Coleman Holdings Notes outstanding on the date
thereof (the "Coleman Holdings Redemption Amount"), as specified in such notice
from the Issuer.
(c) Subject to Section 2(l) hereof, if the Escrow Agent
receives a notice from the Issuer that the maturity of the Coleman Holdings
Notes has been accelerated pursuant to Section 6.02 of the Coleman Holdings
Indenture and such acceleration has not been rescinded (the "Coleman Holdings
Notes Acceleration"), the Escrow Agent shall, on the date specified in such
notice, release to the Issuer the amount of Escrowed Funds equal to the accreted
value of the Coleman Holdings Notes and accrued interest thereon as of the date
of such acceleration, as specified in such notice from the Issuer.
(d) Subject to Sections 2(j)and 2(l) hereof, if the Escrow
Agent receives a notice from the Issuer that holders of LYONs have surrendered
such LYONs for exchange (a "LYONs Exchange") for Exchange Property (as defined
in the LYONs Indenture) and that Coleman Worldwide has exercised its right
pursuant to the LYONs Indenture to pay cash (the "LYONs Cash Payment Option") in
lieu of Exchange Property, in whole or in part, the Escrow Agent shall, on the
date specified in such notice
4
<PAGE>
from the Issuer, release to the Issuer the amount of Escrowed Funds necessary to
satisfy the LYONs Cash Payment Option, as specified in such notice from the
Issuer.
(e) Subject to Sections 2(j) and 2(l) hereof, if the Escrow
Agent receives a notice from the Issuer that the Issuer, Coleman Worldwide or
any other affiliate of the Issuer has offered to pay cash upon exchange of LYONs
in excess of the amount required to satisfy the LYONs Cash Payment Option in a
LYONs Exchange (an "Optional LYONs Exchange Offer"), the Escrow Agent shall, on
the first Business Day following the expiration date for such Optional LYONs
Exchange Offer, release to the Issuer the amount of Escrowed Funds equal to the
amount required to pay the exchange consideration for all LYONs delivered for
exchange in such Optional LYONs Exchange Offer, as specified in such notice from
the Issuer.
(f) Subject to Sections 2(j) and 2(l) hereof, if the Escrow
Agent receives a notice from the Issuer that Coleman Worldwide has agreed to
purchase any LYONs pursuant to paragraph 6 of the LYONs and Section 3.08 of the
LYONs Indenture (a "LYONs Purchase") and that Coleman Worldwide has exercised
the LYONs Cash Payment Option, the Escrow Agent shall on the first Business Day
following the Purchase Date (as defined in the LYONs Indenture) for the LYONs
Purchase, release to the Issuer the amount of Escrowed Funds equal to the
Purchase Price (as defined in the LYONs Indenture), as specified in such notice
from the Issuer.
(g) Subject to Sections 2(j) and 2(l) hereof, if the Escrow
Agent receives a notice from the Issuer that Coleman Worldwide has agreed to
purchase any LYONs pursuant to paragraph 6 of the LYONs and Section 3.09 of the
LYONs Indenture (an "Additional LYONs Purchase"), the Escrow Agent shall, on the
first Business Day following the Additional Purchase Right Purchase Date (as
defined in the LYONs Indenture) for the Additional LYONs Purchase, release to
the Issuer the amount of Escrowed Funds equal to the Additional Purchase Right
Purchase Price (as defined in the LYONs Indenture), as specified in such notice
from the Issuer.
(h) Subject to Section 2(l) hereof, if the Escrow Agent
receives a notice from the Issuer that an optional redemption of the LYONs
pursuant to paragraph 5
5
<PAGE>
of the LYONs and Section 3.01 of the LYONs Indenture (the "LYONs Optional
Redemption") is to occur, the Escrow Agent shall, on the Business Day prior to
the date fixed for the LYONs Optional Redemption, release to the Issuer the
amount of Escrowed Funds equal to the redemption price under the LYONs Indenture
sufficient to redeem all of the LYONs outstanding on the date thereof, as
specified in such notice from the Issuer.
(i) Subject to Section 2(l) hereof, if the Escrow Agent
receives a notice from the Issuer that the maturity of the LYONs has been
accelerated pursuant to Section 6.02 of the LYONs Indenture and such
acceleration has not been rescinded (the "LYONs Acceleration"), the Escrow Agent
shall, on the date specified in such notice, release to Issuer the amount of
Escrowed Funds equal to the Issue Price plus accrued Original Issue Discount (as
such terms are defined in the LYONs Indenture) of the LYONs then outstanding
through the date of such acceleration, as specified in such notice from the
Issuer.
(j) In the case of any release of Escrowed Funds pursuant to
Section 2(d), 2(e), 2(f) or 2(g) of this Agreement (a "LYONs Release Event"),
the amount of Escrowed Funds to be released to the Issuer will be equal to the
lesser of (i) the amount specified by the Issuer in such notice and (ii) the
product of (A) the total amount of Escrowed Funds immediately prior to such
LYONs Release Event (less the Coleman Holdings Redemption Amount, if prior to a
release of Escrowed Funds pursuant to Section 2(b)), and (B) the quotient
obtained when (x) the aggregate principal amount at maturity of the LYONs to be
so exchanged, purchased or redeemed in connection with such LYONs Release Event
is divided by (y) the aggregate principal amount at maturity of all LYONs
outstanding immediately prior to such LYONs Release Event. The product
calculated by the Issuer pursuant to clause (ii) of the preceding sentence is
referred to herein as the "Pro Rata Release Amount."
(k) The notice to be provided by the Issuer to the Escrow
Agent upon the occurrence of the events specified in Sections 2(b) through 2(i)
hereof shall be contained in an officer's certificate (an "Officer's
Certificate"), substantially in the form of Exhibit A hereto, signed by the
Issuer through any one of the Chief Executive Officer, President, Chief
Financial Officer, Con-
6
<PAGE>
troller or Vice President of the Issuer (each an "Authorized Officer"), pursuant
to which the Issuer certifies to the Escrow Agent the matters specified in
Exhibit A hereto, including a statement that the amount of Escrowed Funds to be
released will be contributed to Coleman Holdings or Coleman Worldwide, as the
case may be (each, a "Capital Contribution"), and disbursed to pay for one of
the events described in Sections 2(b) through 2(i) of this Agreement.
Notwithstanding the foregoing or any other provision in this Agreement to the
contrary, upon any release of Escrowed Funds to the Issuer, if Coleman Worldwide
has cash available (the "Available Coleman Worldwide Cash") to pay for a portion
of the LYONs Exchange, Optional LYONs Exchange Offer, LYONs Purchase, Additional
LYONs Purchase, LYONs Optional Redemption or the LYONs Acceleration, other than
as a result of Coleman Worldwide's receipt of a Capital Contribution from the
Escrowed Funds released to the Issuer, then the Issuer may reduce the amount of
the Capital Contribution to be made to Coleman Worldwide by the amount of such
Available Coleman Worldwide Cash. The Issuer shall be entitled to retain and use
for any purpose that portion of Escrowed Funds released to the Issuer equal to
the amount of Available Coleman Worldwide Cash. No representation or reference
as to whether Available Coleman Worldwide Cash exists shall be required to be
made by the Issuer in the Officer's Certificate or otherwise under this
Agreement.
(l) If the Escrow Agent receives a notice from the Trustee or
otherwise becomes aware that a Triggering Event has occurred and as a result,
that a Mandatory Redemption pursuant to paragraph 6 of each of the Notes and
Article III of the Indenture is to occur, the Escrow Agent shall in no event
release any of the Escrowed Funds to the Issuer pursuant to Sections 2(b)-2(j)
hereof. The Escrow Agent will liquidate all Escrowed Funds then held by it not
later than the third Business Day prior to the date fixed for such Mandatory
Redemption specified in the notice from the Trustee (the "Mandatory Redemption
Date"). The Escrow Agent will on the Business Day prior to the Mandatory
Redemption Date release to the Paying Agent an amount of Escrowed Funds in cash
equal to the redemption price set forth in paragraph 6 of the Notes (the
"Mandatory Redemption Price") payable to the holders of the Notes, as specified
in such notice from the Trustee. Concurrently with such release to the Paying
Agent,
7
<PAGE>
the Escrow Agent shall release any excess of Escrowed Funds over the Mandatory
Redemption Price to the Issuer.
"Triggering Event" means the occurrence of any
of the following:
(i) any of Coleman Holdings, Coleman
Worldwide or Coleman pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for
relief against it in an involuntary case;
(C) consents to the appointment of a
Custodian of it or for any substantial part of its property; or
(D) makes a general assignment for the
benefit of its creditors;
or takes any comparable action under any foreign laws relating to insolvency; or
(ii) a court of competent jurisdiction enters an
order or decree under any Bankruptcy Law that:
(A) is for relief against any of Coleman
Holdings, Coleman Worldwide or Coleman;
(B) appoints a Custodian of any of Coleman
Holdings, Coleman Worldwide or Coleman or for any substantial part of
its property; or
(C) orders the winding up or liquidation of
any of Coleman Holdings, Coleman Worldwide or Coleman;
or any similar relief is granted under any foreign laws and the order or decree
remains unstayed and in effect for 60 days.
(m) Upon the termination of this Agreement in accordance with
Section 5 hereof, the Escrow Agent shall release all Escrowed Funds to the
Issuer.
8
<PAGE>
3. Exercise of LYONs Cash Payment Option.
(a) In connection with any LYONs Exchange or LYONs Purchase
(except if there has been a release of Escrowed Funds pursuant to Section 2(i)
hereof, in which case Section 3(b) shall govern), the Issuer shall cause Coleman
Worldwide to (i) exercise the LYONs Cash Payment Option in an amount up to the
Pro Rata Release Amount and (ii) except as provided in Section 2(k), apply such
amount to such exchange or purchase to the maximum extent possible.
(b) Except as provided in Section 2(k), to the extent that any
holder of LYONs seeks to exchange LYONs within the 30 days following a LYONs
Acceleration, the Issuer shall cause Coleman Worldwide to (i) exercise the LYONs
Cash Payment Option in an amount equal to the product of (A) the total amount of
Escrowed Funds released pursuant to Section 2(i) hereof in connection with such
LYONs Acceleration and (B) the quotient obtained when (x) the aggregate
principal amount at maturity of the LYONs to be so exchanged, is divided by (y)
the aggregate principal amount at maturity of the LYONs outstanding as of the
date of such LYONs Acceleration, and (ii) apply such amount to such exchange to
the maximum extent possible.
4. Reliance on Information Supplied.
The Escrow Agent may rely on the contents of any Officer's
Certificate furnished hereunder without making any independent verification.
5. Termination of Agreement.
This Agreement shall terminate upon the earliest to occur of
(i) delivery to the Escrow Agent of an Officer's Certificate substantially in
the form of Exhibit B hereto signed by the Issuer through an Authorized Officer
pursuant to which the Issuer certifies that the Coleman Holdings Notes
Redemption and the LYONs Retirement have been consummated or (ii) delivery to
the Escrow Agent of an Officer's Certificate substantially in the form of
Exhibit C hereto signed by the Issuer through an Authorized Officer pursuant to
which the Issuer certifies that none of the Notes remains outstanding. Upon
termination of this Agreement, any Escrowed Funds remaining in
9
<PAGE>
the custody of the Escrow Agent shall be delivered to the Issuer in accordance
with Section 2(m) hereof, free and clear of any and all interests of the Escrow
Agent or any other party.
6. Indemnity.
The Issuer agrees to indemnify the Escrow Agent, and its
officers, directors, employees and agents, for and to hold it and each of them
harmless against any loss, liability or expense arising out of or in connection
with this Agreement and carrying out its duties hereunder, including the cost
and expenses of defending itself against any claim of liability; provided,
however, that the Issuer will not be liable for indemnification or otherwise for
any loss, liability or expense to the extent arising out of the gross
negligence, willful misconduct or bad faith of the Escrow Agent.
7. Modifications, Waivers and Amendments.
The Escrow Agent shall not be bound by any modification,
amendment, termination (except as provided in Section 6 hereof), cancellation,
rescission or super-session of this Agreement unless the same shall be in
writing and signed by the parties hereto, and, if its rights, duties, immunities
or indemnities as Escrow Agent are affected thereby, unless it shall have given
its prior written consent thereto.
8. Concerning the Escrow Agent.
(a) The Escrow Agent and the Issuer acknowledge and agree that
the Escrowed Funds shall be held by the Escrow Agent for and on behalf of the
Issuer, and that the Escrow Agent is acting exclusively as the agent, custodian
and bailee of the Issuer, and not of any other party.
(b) The fee of the Escrow Agent hereunder is $3,000 per annum,
which fee shall be nonrefundable and paid in advance by the Issuer. The Issuer
also agrees to pay on demand the costs and expenses of the Escrow Agent,
including the fees and expenses of counsel selected by the Escrow Agent, other
than the costs and expenses reimbursed pursuant to Section 6 hereof, incurred in
connection with its duties hereunder.
10
<PAGE>
(c) The Escrow Agent shall exercise the same degree of care
toward the Escrowed Funds as it exercises toward its own similar property and
shall not be held to any higher standard of care under this Agreement, nor be
deemed to owe any fiduciary duty to the Issuer.
(d) The Escrow Agent may act upon any instrument or other
writing believed by it in good faith to be genuine and to have been signed or
presented by the proper person, and shall not be liable to any party hereto in
connection with the performance of its duties hereunder, except for its own
negligence, willful misconduct or bad faith. The duties of the Escrow Agent
shall be determined only with reference to this Escrow Agreement and applicable
laws and Escrow Agent is not charged with any knowledge of or any duties or
responsibilities in connection with any other document or agreement. If in doubt
as to its duties and responsibilities hereunder, the Escrow Agent may consult
with counsel of its choice and shall be protected in any action taken or omitted
in good faith in connection with the advice or opinion of such counsel.
(e) The Escrow Agent may execute any of its powers or
responsibilities hereunder and exercise any rights hereunder either directly or
by or through its agents or attorneys.
(f) Nothing in this Escrow Agreement shall be deemed to impose
upon the Escrow Agent any duty to qualify to do business or to act as agent or
otherwise in any jurisdiction other than the State of New York.
(g) The Escrow Agent shall not be responsible for and shall
not be under a duty to examine into or pass upon the validity, binding effect,
execution or sufficiency of this Escrow Agreement, any agreement amendatory or
supplemental hereto or of any certificates delivered to it hereunder.
(h) The Escrow Agent makes no representation as to the
validity, value, genuineness or collectibility of any security or other document
or instrument held by or delivered to it.
(i) The Escrow Agent shall not be called upon to advise any
party as to selling or retaining, or taking
11
<PAGE>
or refraining from taking any action with respect to, any securities or other
property deposited hereunder.
(j) The Escrow Agent shall have the right at any time to
resign hereunder by giving written notice of its resignation to the Issuer at
the address set forth herein or at such other address as the Issuer shall
provide, at least 30 days prior to the date specified for such resignation to
take effect. Upon the effective date of such resignation, all cash and other
payments and all other property then held by the Escrow Agent hereunder shall be
delivered by it to a successor escrow agent. If no successor escrow agent is
appointed, Escrow Agent may apply to a court of competent jurisdiction for such
appointment. The Escrow Agent or any successor is not required to be the same
entity as the Trustee under the Indenture.
(k) In the event that Escrow Agent should at any time be
confronted with inconsistent claims or demands to the Escrowed Funds, the Escrow
Agent shall have the right, but not the duty, to interplead the parties in any
court of competent jurisdiction and request that such court determine the
respective rights of the parties with respect to the Escrowed Funds. In the
event the Escrow Agent no longer holds any Escrowed Funds, it shall be released
from any obligation or liability as a consequence of any such claims or demands.
9. Benefits of Agreement.
Nothing in this Agreement, expressed or implied, shall give or
be construed to give any person, other than the parties hereto, any legal or
equitable right, remedy or claim under any covenant, condition or provision
herein contained, all the covenants, conditions and provisions contained in this
Agreement being for the sole benefit of the parties hereto.
10. Notices.
All notices required to be given hereunder shall be in writing
and shall be deemed given when received at the following addresses until such
time as the parties hereto designate a different or additional address or
addresses:
12
<PAGE>
To the Issuer:
Coleman Escrow Corp.
5900 North Andrews Avenue, Suite 700
Fort Lauderdale, Florida 33309-7098
Attn: Secretary
Telephone: (954) 772-9000
Facsimile: (954) 938-7811
To the Escrow Agent:
First Trust National Association
One Illinois Center
111 East Wacker Drive
Suite 3000
Chicago, Illinois 60601
Attn: Corporate Trust Department
Telephone: (312) 228-9400
Facsimile: (312) 228-9459
13
<PAGE>
11. Miscellaneous.
(a) This Agreement sets forth exclusively the duties of the
Escrow Agent with respect to any and all matters pertinent hereto and no implied
duties or obligations shall be read into this Agreement against the Escrow
Agent.
(b) This Agreement may be executed in any number of
counterparts, each of which shall be an original and all of which when taken
together shall constitute one agreement.
(c) This Agreement shall be governed by the laws of the State
of New York but without giving effect to applicable principles of conflicts of
law to the extent that the application of the laws of another jurisdiction would
be required thereby.
14
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of this 15th day of May, 1997.
FIRST TRUST NATIONAL
ASSOCIATION,
as Escrow Agent,
by
/s/ Martha Sanders
-----------------------------
Name: Martha Sanders
Title: Vice President
COLEMAN ESCROW CORP.
by
/s/ Glenn P. Dickes
-----------------------------
Name: Glenn P. Dickes
Title: Vice President and
Secretary
<PAGE>
EXHIBIT A
Form of Officer's Certificate
of
Coleman Escrow Corp.
This Certificate is being delivered pursuant to Section 2 of
the Escrow Agreement, dated as of May 15, 1997 (the "Escrow Agreement"), between
Coleman Escrow Corp. (the "Issuer") and First Trust National Association, as
Escrow Agent (the "Escrow Agent"). Capitalized terms which are used but not
defined herein shall have the respective meanings specified in the Escrow
Agreement.
The Issuer hereby certifies through the undersigned officer
that:
1. Promptly following the delivery of this Certificate, the
Issuer proposes to cause to be consummated the [Coleman Holdings Notes
Redemption] [LYONs Exchange] [Optional LYONs Exchange Offer] [LYONs Purchase]
[Additional LYONs Purchase] [LYONs Optional Redemption]. OR A [Coleman Holdings
Notes Acceleration] [LYONs Acceleration] has occurred pursuant to the [Coleman
Holdings Indenture] [LYONs Indenture], and such acceleration has not been
rescinded.
2. Promptly following the delivery of this Certificate and the
release of $______ to the Issuer from the Escrowed Funds (such amount being
referred to herein as the "Released Funds") pursuant to the provisions of the
Escrow Agreement, the Issuer expects (subject to Section 2(k) of the Escrow
Agreement) to use the Released Funds to make a Capital Contribution to [Coleman
Holdings] [Coleman Worldwide] to enable it to satisfy its payment obligations
with respect to the [Coleman Holdings Notes Redemption] [Coleman Holdings Notes
Acceleration] [LYONs Exchange] [Optional LYONs Exchange Offer] [LYONs Purchase]
[Additional LYONs Purchase] [LYONs Optional Redemption] [LYONs Acceleration].
3. All conditions (other than payment) to the [Coleman
Holdings Notes Redemption] [Coleman Holdings
A-1
<PAGE>
Notes Acceleration] [LYONs Exchange] [Optional LYONs Exchange Offer] [LYONs
Purchase] [Additional LYONs Purchase] [LYONs Optional Redemption] [LYONs
Acceleration] contained in the Indenture, [the Coleman Holdings Indenture] [the
LYONs Indenture] [the Optional LYONs Exchange Offer] have been satisfied or
waived.
4. The amount of the Released Funds to be delivered to the
Issuer pursuant to a LYONs Release Event does not exceed the Pro Rata Release
Amount.
5. No Triggering Event has occurred.
IN WITNESS WHEREOF, Coleman Escrow Corp., through the
undersigned officer, has signed this Certificate this day of , 199_.
COLEMAN ESCROW CORP.
By:
------------------------
Name:
Title:
A-2
<PAGE>
EXHIBIT B
Form of Officer's Certificate
of
Coleman Escrow Corp.
This Certificate is being delivered pursuant to Section 2 of
the Escrow Agreement, dated as of May 15, 1997 (the "Escrow Agreement"), between
Coleman Escrow Corp. (the "Issuer") and First Trust National Association, as
Escrow Agent (the "Escrow Agent"). Capitalized terms which are used but not
defined herein shall have the respective meanings specified in the Escrow
Agreement.
The Issuer hereby certifies through the undersigned officer
that:
1. The Coleman Holdings Notes Redemption was
consummated on ____, 1997.
2. The LYONs Retirement was consummated on
__________, 199_.
3. No Triggering Event has occurred.
IN WITNESS WHEREOF, Coleman Escrow Corp., through the
undersigned officer, has signed this Certificate this day of , 199_.
COLEMAN ESCROW CORP.
By:
--------------------------
Name:
Title:
B-1
<PAGE>
EXHIBIT C
Form of Officer's Certificate
of
Coleman Escrow Corp.
This Certificate is being delivered pursuant to Section 4 of
the Escrow Agreement, dated as of May 15, 1997 (the "Escrow Agreement"), between
Coleman Escrow Corp. (the "Issuer") and First Trust National Association, as
Escrow Agent (the "Escrow Agent"). Capitalized terms which are used but not
defined herein shall have the respective meanings specified in the Escrow
Agreement.
The Issuer hereby certifies through the undersigned officer
that none of the Notes remains outstanding.
IN WITNESS WHEREOF, Coleman Escrow Corp., through the
undersigned officer, has signed this Certificate this day of , 199_.
COLEMAN ESCROW CORP.
By:
--------------------------
Name:
Title:
C-1
<PAGE>
EXHIBIT D
D-1
<PAGE>
INDEMNITY AGREEMENT, dated as of May 20,
1997, between COLEMAN ESCROW CORP. (the "Company")
and BEAR, STEARNS & CO. INC. ("Bear Stearns").
WHEREAS, Bear Stearns has been requested by the Company to
provide a certificate dated the date hereof (the "Certificate") to First Trust
National Association, as trustee (the "Trustee"), under the Indenture dated as
of May 20, 1997, between the Company and the Trustee relating to the Company's
Senior Secured First Priority Discount Notes due 2001 and Senior Secured Second
Priority Notes due 2001 (collectively, the "Notes");
WHEREAS, the Certificate, which is being supplied to the
Trustee in compliance with Section 314(d) of the Trust Indenture Act of 1939, as
amended, sets forth a fair value of shares of capital stock of Coleman Holdings
Inc. and The Coleman Company, Inc. being pledged on the date hereof to the
Trustee as security for the Notes;
WHEREAS, in order to induce Bear Stearns to provide the
Certificate, the Company has agreed to grant the indemnities herein provided.
NOW, THEREFORE, in consideration of the premises and for good
and valuable consideration, the receipt of which is hereby acknowledged, the
parties hereto agree as follows:
1. Indemnification. The Company agrees to indemnify Bear
Stearns and its affiliates and their respective directors, officers, employees,
agents and controlling persons (Bear Stearns and each such person being an
"Indemnified Party") from and against any and all loses, claims, damages and
liabilities, joint or several, to which such Indemnified Party may become
subject under any applicable federal or state law, or otherwise, arising out of
the delivery of the Certificate by Bear Stearns to the Trustee and will
reimburse any Indemnified Party for all expenses (including reasonable counsel
fees and expenses) reasonably incurred in connection with the investigation of,
preparation for or defense of any pending or threatened claim or any action or
proceeding arising therefrom, whether or not such Indemnified Party is a party
and whether or not such claim, action or proceeding is initiated by or on behalf
of the
<PAGE>
Company. The Company will not be liable under the foregoing indemnification
provision to the extent that any loss, claim, damage, liability or expense is
found in a final judgment by a court to have resulted from Bear Stearns' bad
faith or gross negligence. The Company also agrees that no Indemnified Party
shall have any liability (whether direct or indirect, in contract or tort or
otherwise) to the Company or its security holders or creditors related to or
arising out of the delivery of the Certificate, except to the extent that any
loss, claim, damage or liability is found in a final judgment by a court to have
resulted from Bear Stearns' bad faith or gross negligence.
If the Indemnification of an Indemnified Party provided for in
this letter agreement is for any reason held unenforceable, the Company agrees
to contribute to the losses, claims, damages and liabilities for which such
indemnification is held unenforceable in such proportion as is appropriate to
reflect the relative fault of the Company, on the one hand, and Bear Stearns, on
the other hand, as well as any other relevant equitable considerations. In no
event, shall an Indemnified Party be obligated to contribute any amount
hereunder that exceeds the amount of fees previously received by Bear Stearns
pursuant to the Purchase Agreement.
Each Indemnified Party shall give notice as promptly as
reasonably practical to the Company of any suit commenced against it in respect
of which indemnity may be sought hereunder, but failure to so notify the Company
shall not relieve the Company from any liability which it may have otherwise
than on account of this indemnity agreement. The Company may participate at its
own expense in the defense of any such action. In no event shall the Company be
liable for fees and expenses of more than one counsel (in addition to any local
counsel) separate from their own counsel for all Indemnified Parties in
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances.
The Company agrees that, without Bear Stearns' prior written
consent, it will not settle, compromise or consent to the entry of any judgment
in any pending or threatened claim, action or proceeding in respect of
2
<PAGE>
which indemnification could be sought under this Indemnity Agreement (whether or
not Bear Stearns or any other Indemnified Party is an actual or potential party
to such claim, action or proceeding), unless such settlement, compromise or
consent includes an unconditional release of each Indemnified Party from all
liability arising out of such claim, action or proceeding. The Company shall not
be liable for any settlement effected without its written consent of any claim
or action.
In the event that an Indemnified Party is requested or
required to appear as a witness in any action brought by or on behalf of or
against the Company in which such Indemnified Party is not named as a defendant,
the Company agrees to reimburse Bear Stearns for all out-of-pocket expenses
incurred by it in connection with such Indemnified Party's appearing and
preparing to appear as such a witness, including, without limitation, the
reasonable fees and disbursements of its legal counsel, and to compensate Bear
Stearns in an amount to be mutually agreed upon.
2. Governing Law. This agreement shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
contracts executed in and to be performed in that State.
3. Waivers, Amendment, etc. No waiver, amendment or other
modification of this letter agreement shall be effective unless in writing and
signed by each party to be bound thereby.
3
<PAGE>
IN WITNESS WHEREOF, each of the Company and Bear Stearns, by
their respective officers thereunto duly authorized, has executed and delivered
this Agreement as of the date first written above.
COLEMAN ESCROW CORP.,
by
/s/ Glenn P. Dickes
---------------------------
Name: Glenn P. Dickes
Title: Vice President and Secretary
BEAR, STEARNS & CO. INC.,
by
/s/ Robert Bicknese
---------------------------
Name: Robert Bicknese
Title: Senior Managing Director
<PAGE>
EXHIBIT 12.1
COLEMAN ESCROW CORP. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1992 1993 1994 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Earnings before income taxes........................... $ 95,668 $ 42,301 $ 16,012 $ 29,151
Plus: Fixed charges.................................... 17,889 27,934 49,090 65,220
------------ ------------ ------------ ------------
Earnings available to cover fixed charges.............. 113,557 70,235 65,102 94,371
------------ ------------ ------------ ------------
Fixed charges:
Interest expense, gross.............................. 14,807 23,915 44,122 59,366
Amortization of deferred charges..................... 954 1,177 1,795 2,012
Portion of rents representative of an interest
factor............................................ 2,128 2,842 3,173 3,842
------------ ------------ ------------ ------------
Fixed charges.......................................... $ 17,889 $ 27,934 $ 49,090 $ 65,220
------------ ------------ ------------ ------------
Ratio of earnings to fixed charges..................... 6.35x 2.51x 1.33x 1.45x
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Deficiency of earnings to fixed charges................
<CAPTION>
PRO FORMA
THREE MONTHS ENDED PRO FORMA THREE MONTHS
YEAR ENDED ---------------------- YEAR ENDED ENDED
DECEMBER 31, MARCH 31, MARCH 31, DECEMBER 31, MARCH 31,
1996 1996 1997 1996 1997
------------ --------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Earnings before income taxes........................... $(86,113) $17,223 $(8,917) $ (107,063) $(14,752)
Plus: Fixed charges.................................... 83,086 18,597 23,077 101,036 28,182
------------ --------- --------- ------------ ------------
Earnings available to cover fixed charges.............. (3,027) 35,820 14,160 (6,027) 13,430
------------ --------- --------- ------------ ------------
Fixed charges:
Interest expense, gross.............................. 76,078 17,039 21,144 91,901 25,717
Amortization of deferred charges..................... 2,287 554 618 4,414 1,150
Portion of rents representative of an interest
factor............................................ 4,721 1,004 1,315 4,721 1,315
------------ --------- --------- ------------ ------------
Fixed charges.......................................... $ 83,086 $18,597 $23,077 $ 101,036 $ 28,182
------------ --------- --------- ------------ ------------
Ratio of earnings to fixed charges..................... 1.93x
---------
---------
Deficiency of earnings to fixed charges................ $(86,113) $(8,917) $ (107,063) $(14,752)
------------ --------- ------------ ------------
------------ --------- ------------ ------------
</TABLE>
<PAGE>
EXHIBIT 21.1
SUBSIDIARIES
The following is a list of all the subsidiaries of Coleman Escrow Corp.
<TABLE>
<CAPTION>
JURISDICTION OF ASSUMED
NAME INCORPORATION NAME
- ---- --------------- -------
<S> <C> <C>
Application des Gaz, S.A. France
Australian Coleman, Inc. Kansas
Befiges S.A. France
Beacon Exports, Inc. Kansas
Camping Gaz (Brazil) Brasil
Camping Gaz (Gb) Limited United Kingdom
Camping Gaz (Hong Kong) Hong Kong
Camping Gaz (India) Pvt. Ltd. India
Camping Gaz (Poland) Poland
Camping Gaz AG Switzerland
Camping Gaz Cs, Spol. S.r.l. Czech Republic
Camping Gaz GmbH Austria
Camping Gaz International Germany
Camping Gaz International Hellas Sarl Greece
Camping Gaz International (Portugal) Ltda Portugal
Camping Gaz K.K. Japan
Camping Gaz Kit Hungary
Camping Gaz Philippines, Inc. Philippines
Camping Gaz Senegal Senegal
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
JURISDICTION OF ASSUMED
NAME INCORPORATION NAME
- ---- --------------- -------
<S> <C> <C>
Camping Gaz Srl Italy
Campiran SA Iran
The Canadian Coleman Company, Limited Ontario (Canada) La Compagnie Canadien Coleman
Coleman Argentina, Inc. Delaware
Coleman Belgium N.V. Belgium
Coleman do Brasil Ltda. Brazil
The Coleman Company, Inc. Delaware Lantern and Stove Co. Inc.
Coleman Country, Ltd. Kansas Coleman Dubai
Coleman (Deutschland) GmbH Germany
Coleman Holdings Inc. Delaware
Coleman Holland B.V. The Netherlands
Coleman Japan Co., Ltd. Japan
Coleman Mexico S.A. de C.V. Mexico
Coleman Powermate Compressors, Inc. Delaware
Coleman Powermate, Inc. Nebraska
Coleman Powermate, Ltd. Manitoba (Canada)
Coleman Safety & Security Products, Inc. Delaware
Coleman SARL France
Coleman SARL Switzerland
Coleman Spas, Inc. California
Coleman SVB S.r.l. Italy
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
JURISDICTION OF ASSUMED
NAME INCORPORATION NAME
- ---- --------------- -------
<S> <C> <C>
Coleman Taymar Limited United Kingdom
Coleman U.K. Holdings Limited United Kingdom
Coleman U.K. PLC United Kingdom
Coleman Venture Capital, Inc. Kansas
Coleman Worldwide Corporation Delaware
Crosman Arms Canada, Ltd. Canada
Eastpak Corporation Delaware American Lifestyles Group
Eastpak Manufacturing Corporation Delaware
Epigas International Limited United Kingdom
General Archery Industries, Inc. Arkansas
Jasan Products Ltd. Bermuda
Kansas Acquisition Corp. Delaware
Neves Carin & Ca Ltda Portugal
Nippon Coleman, Inc. Kansas
Pearson Holdings, Inc. Arkansas
Productos Coleman, S.A. Spain
PT Camping Gaz Indonesia
River View Corporation of Barling, Inc. Arkansas
Seatt de Mexico, S.A. de C.V. Mexico
Sierra Canada, Ltd. Ontario (Canada) Thomas L. Clark Manufacturing Company
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
JURISDICTION OF ASSUMED
NAME INCORPORATION NAME
- ---- --------------- -------
<S> <C> <C>
Sierra Corporation of Fort Smith, Inc. Arkansas
Taymar Gas Limited United Kingdom
Tsana Internacional, S.A. Costa Rica
Woodcraft Equipment Company Missouri
</TABLE>
<PAGE>
Exhibit 23.1
CONSENT OF INDPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
use of our reports (i) dated March 10, 1997, except for the first sentence of
Note 1 as to which the date is May 7, 1997, with respect to the consolidated
financial statements and schedule of Coleman Escrow Corp., (ii) dated March 10,
1997, with respect to the consolidated financial statements and schedule of
Coleman Worldwide Corporation and (iii) dated March 10, 1997, with respect to
the consolidated financial statements of The Coleman Company, Inc., in the
Registration Statement (Form S-1 No. 333- ) and related Prospectus of Coleman
Escrow Corp. for the registration of Senior Secured First Priority Discount
Exchange Notes due 2001 and Senior Secured Second Priority Discount Exchange
Notes due 2001.
Ernst & Young LLP
Denver, Colorado
June 12, 1997
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Glenn P. Dickes, Terry C. Bridges and Joram C.
Salig or any of them, each acting alone, his true and lawful attorney-in-fact
and agent, with full power of substitution, for him and in his name, place and
stead, in any and all capacities, in connection with the Registration Statement
on Form S-1 (the "Registration Statement") of Coleman Escrow Corp. and Coleman
Worldwide Corporation (together, the "Registrants") under the Securities Act of
1933, as amended (the "Securities Act"), including, without limiting the
generality of the foregoing, to sign the Registration Statement in the name and
on behalf of the Registrants or on behalf of the undersigned as a director or
officer of either or both of the Registrants, to sign any amendments and
supplements relating thereto (including post-effective amendments) under the
Securities Act and to sign any instrument, contract, document or other writing
of or in connection with the Registration Statement and any amendments and
supplements thereto (including post-effective amendments) and to file the same,
with all exhibits thereto, and other documents in connection therewith,
including this power of attorney, with the Securities and Exchange Commission
and any applicable securities exchange or securities self-regulatory body,
granting unto said attorneys-in-fact and agents, each acting alone, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS HEREOF, the undersigned has signed these presents
this 12th day of June, 1997.
/s/ Ronald O. Perelman
----------------------------
Ronald O. Perelman
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Glenn P. Dickes, Terry C. Bridges and Joram C.
Salig or any of them, each acting alone, his true and lawful attorney-in-fact
and agent, with full power of substitution, for him and in his name, place and
stead, in any and all capacities, in connection with the Registration Statement
on Form S-1 (the "Registration Statement") of Coleman Escrow Corp. and Coleman
Worldwide Corporation (together, the "Registrants") under the Securities Act of
1933, as amended (the "Securities Act"), including, without limiting the
generality of the foregoing, to sign the Registration Statement in the name and
on behalf of the Registrants or on behalf of the undersigned as a director or
officer of either or both of the Registrants, to sign any amendments and
supplements relating thereto (including post-effective amendments) under the
Securities Act and to sign any instrument, contract, document or other writing
of or in connection with the Registration Statement and any amendments and
supplements thereto (including post-effective amendments) and to file the same,
with all exhibits thereto, and other documents in connection therewith,
including this power of attorney, with the Securities and Exchange Commission
and any applicable securities exchange or securities self-regulatory body,
granting unto said attorneys-in-fact and agents, each acting alone, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS HEREOF, the undersigned has signed these presents
this 12th day of June, 1997.
/s/ Howard Gittis
-----------------------
Howard Gittis
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Glenn P. Dickes, Terry C. Bridges and Joram C.
Salig or any of them, each acting alone, his true and lawful attorney-in-fact
and agent, with full power of substitution, for him and in his name, place and
stead, in any and all capacities, in connection with the Registration Statement
on Form S-1 (the "Registration Statement") of Coleman Escrow Corp. and Coleman
Worldwide Corporation (together, the "Registrants") under the Securities Act of
1933, as amended (the "Securities Act"), including, without limiting the
generality of the foregoing, to sign the Registration Statement in the name and
on behalf of the Registrants or on behalf of the undersigned as a director or
officer of either or both of the Registrants, to sign any amendments and
supplements relating thereto (including post-effective amendments) under the
Securities Act and to sign any instrument, contract, document or other writing
of or in connection with the Registration Statement and any amendments and
supplements thereto (including post-effective amendments) and to file the same,
with all exhibits thereto, and other documents in connection therewith,
including this power of attorney, with the Securities and Exchange Commission
and any applicable securities exchange or securities self-regulatory body,
granting unto said attorneys-in-fact and agents, each acting alone, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS HEREOF, the undersigned has signed these presents
this 12th day of June, 1997.
/s/ Irwin Engelman
--------------------------
Irwin Engelman
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Glenn P. Dickes, Terry C. Bridges and Joram C.
Salig or any of them, each acting alone, his true and lawful attorney-in-fact
and agent, with full power of substitution, for him and in his name, place and
stead, in any and all capacities, in connection with the Registration Statement
on Form S-1 (the "Registration Statement") of Coleman Escrow Corp. and Coleman
Worldwide Corporation (together, the "Registrants") under the Securities Act of
1933, as amended (the "Securities Act"), including, without limiting the
generality of the foregoing, to sign the Registration Statement in the name and
on behalf of the Registrants or on behalf of the undersigned as a director or
officer of either or both of the Registrants, to sign any amendments and
supplements relating thereto (including post-effective amendments) under the
Securities Act and to sign any instrument, contract, document or other writing
of or in connection with the Registration Statement and any amendments and
supplements thereto (including post-effective amendments) and to file the same,
with all exhibits thereto, and other documents in connection therewith,
including this power of attorney, with the Securities and Exchange Commission
and any applicable securities exchange or securities self-regulatory body,
granting unto said attorneys-in-fact and agents, each acting alone, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS HEREOF, the undersigned has signed these presents
this 12th day of June, 1997.
/s/ Donald G. Drapkin
-------------------------
Donald G. Drapkin
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Glenn P. Dickes, Terry C. Bridges and Joram C.
Salig or any of them, each acting alone, his true and lawful attorney-in-fact
and agent, with full power of substitution, for him and in his name, place and
stead, in any and all capacities, in connection with the Registration Statement
on Form S-1 (the "Registration Statement") of Coleman Escrow Corp. and Coleman
Worldwide Corporation (together, the "Registrants") under the Securities Act of
1933, as amended (the "Securities Act"), including, without limiting the
generality of the foregoing, to sign the Registration Statement in the name and
on behalf of the Registrants or on behalf of the undersigned as a director or
officer of either or both of the Registrants, to sign any amendments and
supplements relating thereto (including post-effective amendments) under the
Securities Act and to sign any instrument, contract, document or other writing
of or in connection with the Registration Statement and any amendments and
supplements thereto (including post-effective amendments) and to file the same,
with all exhibits thereto, and other documents in connection therewith,
including this power of attorney, with the Securities and Exchange Commission
and any applicable securities exchange or securities self-regulatory body,
granting unto said attorneys-in-fact and agents, each acting alone, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS HEREOF, the undersigned has signed these presents
this 12th day of June, 1997.
/s/ Jerry W. Levin
---------------------------
Jerry W. Levin
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Glenn P. Dickes, Terry C. Bridges and Joram C.
Salig or any of them, each acting alone, his true and lawful attorney-in-fact
and agent, with full power of substitution, for him and in his name, place and
stead, in any and all capacities, in connection with the Registration Statement
on Form S-1 (the "Registration Statement") of Coleman Escrow Corp. and Coleman
Worldwide Corporation (together, the "Registrants") under the Securities Act of
1933, as amended (the "Securities Act"), including, without limiting the
generality of the foregoing, to sign the Registration Statement in the name and
on behalf of the Registrants or on behalf of the undersigned as a director or
officer of either or both of the Registrants, to sign any amendments and
supplements relating thereto (including post-effective amendments) under the
Securities Act and to sign any instrument, contract, document or other writing
of or in connection with the Registration Statement and any amendments and
supplements thereto (including post-effective amendments) and to file the same,
with all exhibits thereto, and other documents in connection therewith,
including this power of attorney, with the Securities and Exchange Commission
and any applicable securities exchange or securities self-regulatory body,
granting unto said attorneys-in-fact and agents, each acting alone, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS HEREOF, the undersigned has signed these presents
this 12th day of June, 1997.
/s/ Bruce Slovin
--------------------------
Bruce Slovin
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Glenn P. Dickes, Terry C. Bridges and Joram C.
Salig or any of them, each acting alone, his true and lawful attorney-in-fact
and agent, with full power of substitution, for him and in his name, place and
stead, in any and all capacities, in connection with the Registration Statement
on Form S-1 (the "Registration Statement") of Coleman Escrow Corp. and Coleman
Worldwide Corporation (together, the "Registrants") under the Securities Act of
1933, as amended (the "Securities Act"), including, without limiting the
generality of the foregoing, to sign the Registration Statement in the name and
on behalf of the Registrants or on behalf of the undersigned as a director or
officer of either or both of the Registrants, to sign any amendments and
supplements relating thereto (including post-effective amendments) under the
Securities Act and to sign any instrument, contract, document or other writing
of or in connection with the Registration Statement and any amendments and
supplements thereto (including post-effective amendments) and to file the same,
with all exhibits thereto, and other documents in connection therewith,
including this power of attorney, with the Securities and Exchange Commission
and any applicable securities exchange or securities self-regulatory body,
granting unto said attorneys-in-fact and agents, each acting alone, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS HEREOF, the undersigned has signed these presents
this 12th day of June, 1997.
/s/ Laurence Winoker
-------------------------
Laurence Winoker
<PAGE>
EXHIBIT 25.1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(B)(2)
------------------------
FIRST TRUST NATIONAL ASSOCIATION
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)
36-4046888
(I.R.S. EMPLOYER IDENTIFICATION NO.)
111 E. WACKER DRIVE, SUITE 3000 60601
CHICAGO, ILLINOIS (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICER)
------------------------
G.M. CARROLL
FIRST TRUST NATIONAL ASSOCIATION
111 E. WACKER DRIVE, SUITE 3000
CHICAGO, ILLINOIS 60601
TELEPHONE: (312) 228-9451
(NAME, ADDRESS, AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
------------------------
COLEMAN ESCROW CORP.
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)
DELAWARE 65-0752460
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
5900 N. ANDREWS AVENUE
SUITE 700
FT. LAUDERDALE, FLORIDA 33309
(ADDRESS OF PRINCIPAL EXECUTIVE (ZIP CODE)
OFFICES)
SENIOR SECURED FIRST PRIORITY DISCOUNT EXCHANGE NOTES DUE 2001
SENIOR SECURED SECOND PRIORITY DISCOUNT EXCHANGE NOTES DUE 2001
(TITLE OF INDENTURE SECURITIES)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
ITEM 1. GENERAL INFORMATION.
FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE.
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT
IS SUBJECT.
Comptroller of the Currency, Washington, D.C.
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
ITEM 2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
The obligor is not an affiliate of the trustee.
ITEM 3. VOTING SECURITIES OF THE TRUSTEE.
FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF VOTING SECURITIES OF
THE TRUSTEE.
AS OF JUNE 12, 1997
<TABLE>
<CAPTION>
COL.A COL. B
- -------------------------------------------------- -----------
AMOUNT
TITLE OF CLASS OUTSTANDING
- -------------------------------------------------- -----------
<S> <C>
</TABLE>
Not applicable by virtue of response to Item 13.
ITEM 4. TRUSTEESHIPS UNDER OTHER INDENTURES.
IF THE TRUSTEE IS A TRUSTEE UNDER ANOTHER INDENTURE UNDER WHICH ANY OTHER
SECURITIES, OR CERTIFICATES OF INTEREST OR PARTICIPATION IN ANY OTHER
SECURITIES, OF THE OBLIGOR ARE OUTSTANDING, FURNISH THE FOLLOWING INFORMATION:
(A) TITLE OF THE SECURITIES OUTSTANDING UNDER EACH SUCH OTHER INDENTURE.
Not applicable by virtue of response to Item 13.
(B) A BRIEF STATEMENT OF THE FACTS RELIED UPON AS A BASIS FOR THE CLAIM
THAT NO CONFLICTING INTEREST WITHIN THE MEANING OF SECTION 310(B)(1) OF THE ACT
ARISES AS A RESULT OF THE TRUSTEESHIP UNDER ANY SUCH OTHER INDENTURE, INCLUDING
A STATEMENT AS TO HOW THE INDENTURE SECURITIES WILL RANK AS COMPARED WITH THE
SECURITIES ISSUED UNDER SUCH OTHER INDENTURE.
Not applicable by virtue of response to Item 13.
1
<PAGE>
ITEM 5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH THE OBLIGOR OR
UNDERWRITERS.
IF THE TRUSTEE OR ANY OF THE DIRECTORS OR EXECUTIVE OFFICERS OF THE TRUSTEE
IS A DIRECTOR, OFFICER, PARTNER, EMPLOYEE, APPOINTEE, OR REPRESENTATIVE OF THE
OBLIGOR OR OF ANY UNDERWRITER FOR THE OBLIGOR, IDENTIFY EACH SUCH PERSON HAVING
ANY SUCH CONNECTION AND STATE THE NATURE OF EACH SUCH CONNECTION.
Not applicable by virtue of response to Item 13.
ITEM 6. VOTING SECURITIES OF THE TRUSTEE OWNED BY THE OBLIGOR OR ITS OFFICIALS.
FURNISH THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES OF THE TRUSTEE
OWNED BENEFICIALLY BY THE OBLIGOR AND EACH DIRECTOR, PARTNER AND EXECUTIVE
OFFICER OF THE OBLIGOR.
AS OF JUNE 12, 1997
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D
- ---------------------------------------- ------ ------------ ----------------------
PERCENTAGE OF VOTING
TITLE AMOUNT SECURITIES REPRESENTED
OF OWNED BY AMOUNT GIVEN IN
NAME OF OWNER CLASS BENEFICIALLY COL. C
- ---------------------------------------- ------ ------------ ----------------------
<S> <C> <C> <C>
</TABLE>
Not applicable by virtue of response to Item 13.
ITEM 7. VOTING SECURITIES OF THE TRUSTEE OWNED BY UNDERWRITERS OR THEIR
OFFICIALS.
FURNISH THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES OF THE
TRUSTEE OWNED BENEFICIALLY BY EACH UNDERWRITER FOR THE OBLIGOR AND EACH
DIRECTOR, PARTNER, AND EXECUTIVE OFFICER OF EACH SUCH UNDERWRITER.
AS OF JUNE 12, 1997
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D
- --------------------------------------------------------------- ------ ------------ ----------------------
PERCENTAGE OF VOTING
TITLE AMOUNT SECURITIES REPRESENTED
OF OWNED BY AMOUNT GIVEN IN
NAME OF OWNER CLASS BENEFICIALLY COL. C
- --------------------------------------------------------------- ------ ------------ ----------------------
<S> <C> <C> <C>
</TABLE>
Not applicable by virture of response to Item 13.
2
<PAGE>
ITEM 8. SECURITIES OF THE OBLIGOR OWNED OR HELD BY THE TRUSTEE.
FURNISH THE FOLLOWING INFORMATION AS TO SECURITIES OF THE OBLIGOR OWNED
BENEFICIALLY OR HELD AS COLLATERAL SECURITY FOR OBLIGATIONS IN DEFAULT BY THE
TRUSTEE:
AS OF JUNE 12, 1997
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D
- ----------------------------------------- --------- ------------------------- ---------------------
WHETHER
THE
SECURITIES AMOUNT OWNED BENEFICIALLY
ARE OR HELD AS COLLATERAL
VOTING OR SECURITY FOR OBLIGATIONS PERCENT OF CLASS
NONVOTING IN REPRESENTED BY AMOUNT
TITLE OF CLASS SECURITIES DEFAULT GIVEN IN COL. C
- ----------------------------------------- --------- ------------------------- ---------------------
<S> <C> <C> <C>
</TABLE>
Not applicable by virtue of response to Item 13.
ITEM 9. SECURITIES OF UNDERWRITERS OWNED OR HELD BY THE TRUSTEE.
IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL SECURITY FOR
OBLIGATIONS IN DEFAULT ANY SECURITIES OF AN UNDERWRITER FOR THE OBLIGOR. FURNISH
THE FOLLOWING INFORMATION AS TO EACH CLASS OF SECURITIES OF SUCH UNDERWRITER ANY
OF WHICH ARE SO OWNED OR HELD BY THE TRUSTEE.
AS OF JUNE 12, 1997
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D
- ---------------------------------------------------- ----------- ---------------------- ----------------
AMOUNT OWNED
BENEFICIALLY OR HELD PERCENT OF CLASS
AS COLLATERAL SECURITY REPRESENTED BY
AMOUNT FOR OBLIGATIONS IN AMOUNT GIVEN
NAME OF ISSUER AND TITLE OF CLASS OUTSTANDING DEFAULT BY TRUSTEE IN COL. C
- ---------------------------------------------------- ----------- ---------------------- ----------------
<S> <C> <C> <C>
</TABLE>
Not applicable by virtue of response to Item 13.
ITEM 10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES OF CERTAIN
AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR.
IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL SECURITY FOR
OBLIGATIONS IN DEFAULT VOTING SECURITIES OF A PERSON WHO, TO THE KNOWLEDGE OF
THE TRUSTEE (1) OWNS 10 PERCENT OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR
OR (2) IS AN AFFILIATE, OTHER THAN A SUBSIDIARY, OF THE OBLIGOR, FURNISH THE
FOLLOWING INFORMATION AS TO THE VOTING SECURITIES OF SUCH PERSON.
AS OF JUNE 12, 1997
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D
- ---------------------------------------------------- ----------- ---------------------- ----------------
AMOUNT OWNED
BENEFICIALLY OR HELD PERCENT OF CLASS
AS COLLATERAL SECURITY REPRESENTED BY
AMOUNT FOR OBLIGATIONS IN AMOUNT GIVEN
NAME OF ISSUER AND TITLE OF CLASS OUTSTANDING DEFAULT BY TRUSTEE IN COL. C
- ---------------------------------------------------- ----------- ---------------------- ----------------
<S> <C> <C> <C>
</TABLE>
Not applicable by virtue of response to Item 13.
3
<PAGE>
ITEM 11. OWNERSHIP OF HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF A PERSON
OWNING 50 PERCENT OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR.
IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL SECURITY FOR
OBLIGATIONS IN DEFAULT ANY SECURITIES OF A PERSON WHO, TO THE KNOWLEDGE OF THE
TRUSTEE, OWNS 50 PERCENT OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR,
FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF SECURITIES OF SUCH PERSON
ANY OF WHICH ARE SO OWNED OR HELD BY THE TRUSTEE.
<TABLE>
<CAPTION>
AS OF JUNE 12, 1997
COL. C
---------------------- COL. D
AMOUNT OWNED ----------------
COL. B BENEFICIALLY OR HELD PERCENT OF CLASS
COL. A ----------- AS COLLATERAL SECURITY REPRESENTED BY
- ----------------------------------------------- AMOUNT FOR OBLIGATIONS IN AMOUNT GIVEN
NAME OF ISSUER AND TITLE OF CLASS OUTSTANDING DEFAULT BY TRUSTEE IN COL. C
- ----------------------------------------------- ----------- ---------------------- ----------------
<S> <C> <C> <C>
</TABLE>
Not applicable by virtue of response to Item 13.
ITEM 12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE.
EXCEPT AS NOTED IN THE INSTRUCTIONS, IF THE OBLIGOR IS INDEBTED TO THE
TRUSTEE, FURNISH THE FOLLOWING INFORMATION:
<TABLE>
<CAPTION>
AS OF JUNE 12, 1997
COL. A COL. B COL. C
NATURE OF INDEBTEDNESS AMOUNT OUTSTANDING DATE DUE
- ------------------------------------------------------------------- ------------------ --------
<S> <C> <C>
</TABLE>
Not applicable by virtue of response to Item 13.
ITEM 13. DEFAULTS BY THE OBLIGOR.
(A) STATE WHETHER THERE IS OR HAS BEEN A DEFAULT WITH RESPECT TO THE
SECURITIES UNDER THIS INDENTURE. EXPLAIN THE NATURE OF SUCH DEFAULT.
There is not nor has there been a default with respect to the securities
under this indenture.
(B) IF THE TRUSTEE IS A TRUSTEE UNDER ANOTHER INDENTURE UNDER WHICH ANY
OTHER SECURITIES, OR CERTIFICATES OF INTEREST OR PARTICIPATION IN ANY OTHER
SECURITIES, OF THE OBLIGOR ARE OUTSTANDING, OR IS TRUSTEE FOR MORE THAN ONE
OUTSTANDING SERIES OF SECURITIES UNDER THE INDENTURE, STATE WHETHER THERE HAS
BEEN A DEFAULT UNDER ANY SUCH INDENTURE OR SERIES, IDENTIFY THE INDENTURE OR
SERIES AFFECTED, AND EXPLAIN THE NATURE OR ANY SUCH DEFAULT.
There is not nor has there been a default with respect to the securities
under this indenture. The trustee is not a trustee under other indentures under
which any other securities or certificates of interest or participation in any
other securities of the obligor are outstanding.
ITEM 14. AFFILIATIONS WITH THE UNDERWRITERS.
IF ANY UNDERWRITER IS AN AFFILIATE OF THE TRUSTEE OF THE TRUSTEES, DESCRIBE
EACH SUCH AFFILIATION.
Not applicable by virtue of response to Item 13.
ITEM 15. FOREIGN TRUSTEE.
IDENTIFY THE ORDER OR RULE PURSUANT TO WHICH THE FOREIGN TRUSTEE IS
AUTHORIZED TO ACT AS SOLE TRUSTEE UNDER INDENTURES QUALIFIED OR TO BE QUALIFIED
UNDER THE ACT.
Not applicable.
4
<PAGE>
ITEM 16. LIST OF EXHIBITS.
LIST BELOW ALL EXHIBITS FILED AS A PART OF THIS STATEMENT OF ELIGIBILITY.
1. A copy of the Articles of Association of First Trust National
Association as now in effect, incorporated herein by reference to Exhibit 1 to
T-1; Registration No. 333-19025.
2. A copy of the certificate of authority to commence business,
incorporated herein by reference to Exhibit 2 to T-1; Registration No. 33-64175.
3. A copy of the certificate of authority to exercise corporate trust
powers, incorporated herein by reference to Exhibit 3 to T-1; Registration No.
33-64175.
4. A copy of the existing By-Laws of First Trust National Association as
now in effect, filed herewith.
5. Not applicable by virtue of response to Item 13.
6. The consent of the trustee required by Section 321(b) of the Trust
Indenture Act of 1939, incorporated herein by reference to Exhibit 6 to T-1;
Registration No. 33-64175.
7. A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining authority,
filed herewith.
8. Not applicable.
9. Not applicable.
5
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, First Trust National Association, a National Banking Association
organized and existing under the laws of the United States of America, has duly
caused this Statement of Eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the city of Chicago, and state of
Illinois, as of 12th day of June, 1997.
FIRST TRUST NATIONAL ASSOCIATION
By: /s/ G.M. CARROLL
---------------------------------
G.M. Carroll
Vice President and Assistant
Secretary
6
<PAGE>
EXHIBIT 4
FIRST TRUST
NATIONAL ASSOCIATION
BYLAWS
AS LAST AMENDED ON JULY 16, 1996
ARTICLE I
MEETINGS OF SHAREHOLDERS
Section 1.1. Annual Meeting. The annual meeting of the shareholders, for
the election of directors and the transaction of other business, shall be held
at a time and place as the Chairman or President may designate. Notice of such
meeting shall be given at least ten days prior to the date thereof, to each
shareholder of the Association. If, for any reason, an election of directors is
not made on the designated day, the election shall be held on some subsequent
day, as soon thereafter as practicable, with prior notice thereof.
Section 1.2. Special Meetings. Except as otherwise specially provided by
law, special meetings of the shareholders may be called for any purpose, at any
time by a majority of the board of directors, or by any shareholder or group of
shareholders owning at least ten percent of the outstanding stock. Every such
special meeting, unless otherwise provided by law, shall be called upon not less
than ten days prior notice stating the purpose of the meeting.
Section 1.3. Nominations for Directors. Nominations for election to the
board of directors may be made by the board of directors or by any shareholder.
Section 1.4. Proxies. Shareholders may vote at any meeting of the
shareholders by proxies duly authorized in writing. Proxies shall be valid only
for one meeting and any adjournments of such meeting and shall be filed with the
records of the meeting.
Section 1.5. Quorum. A majority of the outstanding capital stock,
represented in person or by proxy, shall constitute a quorum at any meeting of
shareholders, unless otherwise provided by law. A majority of the votes cast
shall decide every question or matter submitted to the shareholders at any
meeting, unless otherwise provided by law or by the Articles of Association.
ARTICLE II
DIRECTORS
Section 2.1. Board of Directors. The board of directors (hereinafter
referred to as the 'board'), shall have power to manage and administer the
business and affairs of the Association. All authorized corporate powers of the
Association shall be vested in and may be exercised by the board.
Section 2.2. Powers. In addition to the foregoing, the board of directors
shall have and may exercise all of the powers granted to or conferred upon it by
the Articles of Association, the Bylaws and by law.
Section 2.3. Number. The board shall consist of a number of members to be
fixed and determined from time to time by resolution of the board or the
shareholders at any meeting thereof, in accordance with the Articles of
Association.
Section 2.4. Organization Meeting. The newly elected board shall meet for
the purpose of organizing the new board and electing and appointing such
officers of the Association as may be appropriate. Such meeting shall be held on
the day of the election or as soon thereafter as practicable, and, in any event,
within thirty days thereafter. If, at the time fixed for such meeting, there
shall not be a quorum present, the directors present may adjourn the meeting
until a quorum is obtained.
Section 2.5. Regular Meetings. The regular meetings of the board shall be
held, without notice, as the Chairman or President may designate and deem
suitable.
7
<PAGE>
Section 2.6. Special Meetings. Special meetings of the board may be called
by the Chairman or the President of the Association, or at the request of two or
more directors. Each member of the board shall be given notice stating the time
and place of each such meeting.
Section 2.7. Quorum. A majority of the directors shall constitute a quorum
at any meeting, except when otherwise provided by law; but fewer may adjourn any
meeting. Unless otherwise provided, once a quorum is established, any act by a
majority of those constituting the quorum shall be the act of the board.
Section 2.8. Vacancies. When any vacancy occurs among the directors, the
remaining members of the board may appoint a director to fill such vacancy at
any regular meeting of the board, or at a special meeting called for that
purpose.
ARTICLE III
COMMITTEES
Section 3.1. Advisory Board of Directors. The board may appoint persons,
who need not be directors, to serve as advisory directors on an advisory board
of directors established with respect to the business affairs of either this
Association alone or the business affairs of a group of affiliated organizations
of which this Association is one. Advisory directors shall have the powers and
duties as may be determined by the board, provided, that the board's
responsibility for the business and affairs of this Association shall in no
respect be delegated or diminished.
Section 3.2. Audit Committee. The board shall appoint an Audit Committee
which shall consist of at least two Directors. If legally permissible, the board
may determine to name itself as the Audit Committee. The Audit Committee shall
direct and review audits of the Association's fiduciary activities.
The members of the Audit Committee shall be appointed each year and shall
continue to act until their successors are named. The Audit Committee shall have
power to adopt its own rules and procedures and to do those things which in the
judgment of such Committee are necessary or helpful with respect to the exercise
of its functions or the satisfaction of its responsibilities.
Section 3.3. Executive Committees. The board may appoint an Executive
Committee which shall consist of at least three directors and which shall have,
and may exercise, all the powers of the board between meetings of the board or
otherwise when the board is not meeting.
Section 3.4. Other Committees. The board may appoint, from time to time,
committees of one or more persons who need not be directors, for such purposes
and with such powers as the board may determine. In addition, either the
Chairman or the President may appoint, from time to time, committees of one or
more officers, employees, agents or other persons, for such purposes and with
such powers as either the Chairman or the President deems appropriate and
proper.
Whether appointed by the board, the Chairman, or the President, any such
Committee shall at all times be subject to the direction and control of the
board.
Section 3.5. Meeting Minutes and Rules. An advisory board of directors
and/or committee shall meet as necessary in consideration of the purpose of the
advisory board of directors or committee, and shall maintain minutes in
sufficient detail to indicate actions taken or recommendations made; unless
required by the members, discussions, votes or other specific details need not
be reported. An advisory board of directors or a committee may, in consideration
of its purpose, adopt its own rules for the exercise of any of its functions or
authority.
ARTICLE IV
OFFICERS AND EMPLOYEES
Section 4.1. Chairman of the Board. The board may appoint one of its
members to be Chairman of the board to serve at the pleasure of the board. The
Chairman shall supervise the carrying out of the policies adopted or approved by
the board; shall have general executive powers, as well as the specific powers
conferred by these Bylaws; shall also have and may exercise such powers and
duties as from time to time may be conferred upon or assigned by the board.
8
<PAGE>
Section 4.2. President. The board may appoint one of its members to be
President of the Association. In the absence of the Chairman, the President
shall preside at any meeting of the board. The President shall have general
executive powers, and shall have and may exercise any and all other powers and
duties pertaining by law, regulation or practice, to the Office of President, or
imposed by these Bylaws. The President shall also have and may exercise such
powers and duties as from time to time may be conferred or assigned by the
board.
Section 4.3. Vice President. The board may appoint one or more Vice
Presidents who shall have such powers and duties as may be assigned by the board
and to perform the duties of the President on those occasions when the President
is absent, including presiding at any meeting of the board in the absence of the
Chairman and President.
Section 4.4. Secretary. The board shall appoint a Secretary, or other
designated officer who shall be Secretary of the board and of the Association,
and shall keep accurate minutes of all meetings. The Secretary shall attend to
the giving of all notices required by these Bylaws to be given; shall be
custodian of the corporate seal, records, document and papers of the
Association; shall provide for the keeping of proper records of all transactions
of the Association; shall have and may exercise any and all other powers and
duties pertaining by law, regulation or practice, to the Secretary, or imposed
by these Bylaws; and shall also perform such other duties as may be assigned
from time to time by the board.
Section 4.5. Other Officers. The board may appoint, and may authorize the
Chairman or the President to appoint, any officer as from time to time may
appear to the board, the Chairman or the President to be required or desirable
to transact the business of the Association. Such officers shall exercise such
powers and perform such duties as pertain to their several offices, or as may be
conferred upon or assigned to them by these Bylaws, the board, the Chairman or
the President.
Section 4.6. Tenure of Office. The Chairman or the President and all other
officers shall hold office for the current year for which the board was elected,
unless they shall resign, become disqualified, or be removed. Any vacancy
occurring in the Office of Chairman or President shall be filled promptly by the
board.
Any officer elected by the board or appointed by the Chairman or the
President may be removed at any time, with or without cause, by the affirmative
vote of a majority of the board or, if such officer was appointed by the
Chairman or the President, by the Chairman or the President, respectively.
ARTICLE V
STOCK
Section 5.1. Shares of stock shall be transferable on the books of the
Association, and a transfer book shall be kept in which all transfers of stock
shall be recorded. Every person becoming a shareholder by such transfer shall,
in proportion to such person's shares, succeed to all rights of the prior holder
of such shares. Each certificate of stock shall recite on its face that the
stock represented thereby is transferable only upon the board of the Association
properly endorsed.
9
<PAGE>
ARTICLE VI
CORPORATE SEAL
Section 6.1. The Chairman, the President, the Secretary, any Assistant
Secretary or other officer designated by the board, the Chairman, or the
President, shall have authority to affix the corporate seal to any document
requiring such seal, and to attest the same. Such seal shall be substantially in
the following form:
[SEAL]
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.1. Execution of Instruments. All agreements, checks, drafts,
orders, indentures, notes, mortgages, deeds, conveyances, transfers,
endorsements, assignments, certificates, declarations, receipts, discharges,
releases, satisfactions, settlements, petitions, schedules, accounts,
affidavits, bonds, undertakings, guarantees, proxies and other instruments or
documents may be signed, countersigned, executed, acknowledged, endorsed,
verified, delivered or accepted on behalf of the Association, whether in a
fiduciary capacity or otherwise, by any officer of the Association, or such
employee or agent as may be designated from time to time by the board by
resolution, or by the Chairman or the President by written instrument, which
resolution or instrument shall be certified as in effect by the Secretary or an
Assistant Secretary of the Association. The provisions of this section are
supplementary to any other provision of the Articles of Association or Bylaws.
Section 7.2. Records. The Articles of Association, the Bylaws and the
proceedings of all meetings of the shareholders, the board, and standing
committees of the board, shall be recorded in appropriate minute books provided
for that purpose. The minutes or each meeting shall be signed by the Secretary,
or other officer appointed to act as Secretary of the meeting.
Section 7.3. Trust Files. There shall be maintained in the Association
files all fiduciary records necessary to assure that its fiduciary
responsibilities have been property undertaken and discharged.
Section 7.4. Trust Investments. Funds held in a fiduciary capacity shall be
invested according to the instrument establishing the fiduciary relationship and
according to law. Where such instrument does not specify the character and class
of investments to be made and does not vest in the Association a discretion in
the matter, funds held pursuant to such instrument shall be invested in
investments in which corporate fiduciaries may invest under law.
Section 7.5. Notice. Whenever notice is required by the Articles of
Association, the Bylaws or law, such notice shall be by mail, postage prepaid,
telegram, in person, or by any other means by which such notice can reasonably
be expected to be received, using the address of the person to receive such
notice, or such other personal data, as may appear on the records of the
Association. Prior notice shall be proper if given not more than 30 days nor
less than 10 days prior to the event for which notice is given.
10
<PAGE>
ARTICLE VIII
INDEMNIFICATION
Section 8.1. The Association shall indemnify to the full extent permitted
by, and in the manner permissible under, the Articles of Association and the
laws of the United States of America, as applicable and as amended from time to
time, any person made, or threatened to be made, a party to any action, suit or
`proceeding, whether criminal, civil, administrative or investigative, by reason
of the fact that such person is or was a director, advisory director, officer or
employee of the Association, or any predecessor of the Association, or served
any other enterprise as a director or officer at the request of the Association
or any predecessor of the Association.
Section 8.2. The board in its discretion may, on behalf of the Association,
indemnify any person, other than a director, advisory director, officer or
employee, made a party to any action, suit or proceeding by reason of the fact
that such person is or was an agent of the Association or any predecessor of the
Association serving in such capacity at the request of the Association or any
predecessor of the Association.
ARTICLE IX
INTERPRETATION AND AMENDMENT
Section 9.1. The Bylaws shall be interpreted in accordance with and subject
to appropriate provisions of law, and may be amended, altered or repealed, at
any regular or special meeting of the board.
Section 9.2. A copy of the Bylaws, with all amendments, shall at all times
be kept in a convenient place at the main office of the Association, and shall
be open for inspection to all shareholders during Association hours.
11
<PAGE>
EXHIBIT 7
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR MARCH 31, 1997
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC -- BALANCE SHEET
<TABLE>
<CAPTION>
C200
DOLLAR AMOUNTS IN THOUSANDS
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule RC-A): RCON
--------
a. Noninterest-bearing balances and currency and coin (1) 0081 .... 54,767 1.a
b. Interest-bearing balances (2) 0071 .... 0 1.b
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column A) 1754 .... 0 2.a
b. Available-for-sale securities (from Schedule RC-B, column D) 1773 .... 3,205 2.b
3. Federal funds sold and securities purchased under agreements to resell 1350 .... 0 3.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income RCON
--------
(from Schedule RC-C) 2122 .... 0 ........... 4.a
b. LESS: Allowance for loan and lease losses 3123 .... 0 ........... 4.b
c. LESS: Allocated transfer risk reserve 3128 .... 0 ........... 4.c
d. Loans and leases, net of unearned income,
allowance, and reserve (item 4.a minus 4.b and 4.c) 2125 .... 0 4.d
5. Trading assets 3545 .... 0 5.
6. Premises and fixed assets (including capitalized leases) 2145 .... 126 6.
7. Other real estate owned (from
Schedule RC-M) 2150 .... 0 7.
8. Investments in unconsolidated subsidiaries and associated companies (from
Schedule RC-M) 2130 .... 0 8.
9. Customers' liability to this bank on acceptances outstanding 2155 .... 0 9.
10. Intangible assets (from Schedule RC-M) 2143 .... 48,568 10.
11. Other assets (from Schedule RC-F) 2160 .... 2,720 11.
12. Total assets (sum of items 1 through 11) 2170 .... 109,386 12.
</TABLE>
- ------------------
1) Includes cash items in process of collection and unposted debits.
2) Includes time certificates of deposit not held for trading.
12
<PAGE>
SCHEDULE RC -- CONTINUED
<TABLE>
<CAPTION>
DOLLAR AMOUNTS IN THOUSANDS
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of RCON
--------
columns A and C from Schedule RC-E) 2200 .... 0 13.a
RCON
--------
(1) Noninterest-bearing (1) 6631 .... 0 ........... 13.a.1
(2) Interest-bearing 6636 .... 0 ........... 13.a.2
b. in foreign offices, Edge and Agreement subsidiaries, and IBFs ...........
(1) Noninterest-bearing ...........
(2) Interest-bearing ...........
14. Federal funds purchased and securities sold under agreements to repurchase 2500 .... 0 14.
15. a. Demand notes issued to the U.S. Treasury 2540 .... 0 15.a
b. Trading liabilities 3548 .... 0 15.b
16. Other borrowed money (includes mortgage indebtedness and obligations under
capitalized leases):
a. With a remaining maturity of one year or less 2332 .... 0 16.a
b. With a remaining maturity of more than one year 2333 .... 0 16.b
17. Not applicable
18. Bank's liability on acceptances executed and outstanding 2920 .... 0 18.
19. Subordinated notes and debentures (2) 3200 .... 0 19.
20. Other liabilities (from Schedule RC-G) 2930 .... 2,216 20.
21. Total liabilities (sum of items 13 through 20) 2948 .... 2,216 21.
22. Not applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus 3838 .... 0 23.
24. Common stock 3230 .... 1,000 24.
25. Surplus (exclude all surplus related to preferred stock) 3839 .... 106,712 25.
26. a. Undivided profits and capital reserves 3632 .... (542) 26.a
b. Net unrealized holding gains (losses) on available-for-sale securities 8434 .... 0 26.b
27. Cumulative foreign currency translation adjustments ...........
28. Total equity capital (sum of items 23 through 27) 3210 .... 107,170 28.
29. Total liabilites, limited-life preferred stock, and equity capital
(sum of items 21 and 28) 3300 .... 109,386 29.
</TABLE>
MEMORANDUM
To be reported only with the March Report of Condition.
<TABLE>
<S> <C> <C>
1. Indicate in the box at the right the number of the statement below that best
describes the most comprehensive level of auditing work performed for the bank
by independent external auditors as of any date during 1996 6724 .... 2 M.1
</TABLE>
<TABLE>
<S> <C>
1 = Independent audit of the bank conducted in accordance with
generally accepted auditing standards by a certified public
accounting firm which submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted
in accordance with generally accepted auditing standards by a
certified public accounting firm which submits a report on the
consolidated holding company (but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with
generally accepted auditing standards by a certified public
accounting firm (may be required by state chartering authority)
4 = Directors' examination of the bank performed by other external
auditors (may be required by state chartering authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external
auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
</TABLE>
- ------------------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
(2) Includes limited life preferred stock and related surplus.
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF THE ISSUER FOR THE YEAR ENDED DECEMBER 31,
1996 AS FILED IN THE ISSUER'S REGISTRATION STATEMENT ON FORM S-1 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 1040968
<NAME> COLEMAN ESCROW CORP.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 17,299
<SECURITIES> 0
<RECEIVABLES> 221,454
<ALLOWANCES> 11,512
<INVENTORY> 287,502
<CURRENT-ASSETS> 570,152
<PP&E> 297,765
<DEPRECIATION> 98,583
<TOTAL-ASSETS> 1,208,275
<CURRENT-LIABILITIES> 246,628
<BONDS> 999,794
0
0
<COMMON> 1
<OTHER-SE> (177,937)
<TOTAL-LIABILITY-AND-EQUITY> 1,208,275
<SALES> 1,215,865
<TOTAL-REVENUES> 1,220,216
<CGS> 928,497
<TOTAL-COSTS> 928,497
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 5,225
<INTEREST-EXPENSE> 75,120
<INCOME-PRETAX> (86,113)
<INCOME-TAX> (23,766)
<INCOME-CONTINUING> (56,957)
<DISCONTINUED> 0
<EXTRAORDINARY> (1,244)
<CHANGES> 0
<NET-INCOME> (58,201)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF THE ISSUER FOR THE QUARTER ENDED
MARCH 31, 1997 AS FILED IN THE ISSUER'S REGISTRATION STATEMENT ON FORM S-1 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 1040968
<NAME> COLEMAN ESCROW CORP.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 12,866
<SECURITIES> 0
<RECEIVABLES> 281,551
<ALLOWANCES> 9,934
<INVENTORY> 288,166
<CURRENT-ASSETS> 629,198
<PP&E> 294,734
<DEPRECIATION> 99,995
<TOTAL-ASSETS> 1,254,931
<CURRENT-LIABILITIES> 310,433
<BONDS> 994,664
0
0
<COMMON> 1
<OTHER-SE> (187,157)
<TOTAL-LIABILITY-AND-EQUITY> 1,254,931
<SALES> 294,023
<TOTAL-REVENUES> 295,464
<CGS> 214,422
<TOTAL-COSTS> 214,422
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 455
<INTEREST-EXPENSE> 20,414
<INCOME-PRETAX> (8,917)
<INCOME-TAX> (3,190)
<INCOME-CONTINUING> (5,959)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,959)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
