-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Rwlz/cl9d5Afcj6OFObwLiWLjF0xOCMd/NohpPLphGv6KplA4TzpS0efqcmylP42 q54SgwEqFa/EfLHU/C5zkw== 0000912057-97-017231.txt : 19970514 0000912057-97-017231.hdr.sgml : 19970514 ACCESSION NUMBER: 0000912057-97-017231 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970513 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COLEMAN CO INC CENTRAL INDEX KEY: 0000021627 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC LIGHTING & WIRING EQUIPMENT [3640] IRS NUMBER: 133639257 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-00988 FILM NUMBER: 97602462 BUSINESS ADDRESS: STREET 1: 1526 COLE BLVD STREET 2: SUITE 300 CITY: GOLDEN STATE: CO ZIP: 80401 BUSINESS PHONE: 3032022400 MAIL ADDRESS: STREET 1: 1526 COLE BLVD STREET 2: SUITE 300 CITY: GOLDEN STATE: CO ZIP: 80401 10-Q 1 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 For the quarterly period ended MARCH 31, 1997 -------------- or [ ] Transition Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 For the transition period from to Commission File Number: 1-988 ----- THE COLEMAN COMPANY, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) DELAWARE 13-3639257 ------------------------------- ------------------ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1767 DENVER WEST BLVD., GOLDEN, COLORADO 80401 ---------------------------------------- ----- (Address of principal executive offices) (Zip Code) 303-202-2400 ---------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirement for the past 90 days. X Yes No --- --- The number of shares outstanding of the registrant's par value $.01 common stock was 53,357,256 shares as of May 5, 1997, of which 44,067,520 shares were held by an indirect wholly-owned subsidiary of Mafco Holdings Inc. Exhibit Index on Page 11. THE COLEMAN COMPANY, INC. AND SUBSIDIARIES INDEX PART I. FINANCIAL INFORMATION Page ---- Item 1. Condensed Consolidated Financial Statements: Condensed Consolidated Statements of Operations Three months ended March 31, 1997 and 1996 3 Condensed Consolidated Balance Sheets March 31, 1997 and December 31, 1996 4 Condensed Consolidated Statements of Cash Flows Three months ended March 31, 1997 and 1996 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 PART II. OTHER INFORMATION Item 1. Legal Proceedings 11 Item 6. Exhibits and Reports on Form 8-K 11 Signatures 12 2 THE COLEMAN COMPANY, INC. AND SUBSIDIARIES ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) Three Months Ended March 31, ----------------------- 1997 1996 -------- -------- 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 -------- -------- -------- -------- See Notes to Condensed Consolidated Financial Statements 3 THE COLEMAN COMPANY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) March 31, December 31, 1997 1996 ---------- ---------- ASSETS Current assets: Cash and cash equivalents $ 12,866 $ 17,299 Accounts and notes receivable, less allowance of $9,934 in 1997 and $11,512 in 1996 286,278 231,603 Inventories 288,166 287,502 Deferred tax assets 39,895 40,466 Prepaid assets and other 16,529 14,767 ---------- ---------- Total current assets 643,734 591,637 Property, plant and equipment, net 194,739 199,182 Intangible assets related to businesses acquired, net 334,012 341,715 Deferred tax assets and other 32,577 27,552 ---------- ---------- $1,205,062 $1,160,086 ---------- ---------- ---------- ---------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts and notes payable $ 194,462 $ 132,841 Other current liabilities 115,329 113,653 ---------- ---------- Total current liabilities 309,791 246,494 Long-term debt 568,034 582,866 Other liabilities 75,711 76,173 Minority interest 1,549 1,608 Contingencies Stockholders' equity: Common stock 532 532 Additional paid-in capital 169,495 166,690 Retained earnings 83,531 82,832 Currency translation adjustment (3,128) 3,176 Minimum pension liability adjustment (453) (285) ---------- ---------- Total stockholders' equity 249,977 252,945 ---------- ---------- $1,205,062 $1,160,086 ---------- ---------- ---------- ---------- See Notes to Condensed Consolidated Financial Statements 4 THE COLEMAN COMPANY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Three Months Ended March 31, --------------------- 1997 1996 -------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 699 $ 15,039 -------- --------- Adjustments to reconcile net earnings to net cash flows from 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 -------- --------- -------- --------- See Notes to Condensed Consolidated Financial Statements 5 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 of The Coleman Company, Inc. ("Coleman" or "Company") include the accounts of the Company and its subsidiaries after elimination of all material intercompany accounts and transactions, and have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 1997 are not necessarily indicative of the results that may be expected for the year ended December 31, 1997. The balance sheet at December 31, 1996 has been derived from the audited financial statements for that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the 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: March 31, December 31, 1997 1996 -------- -------- Raw material and supplies $ 83,710 $ 82,399 Work-in-process 16,036 12,878 Finished goods 188,420 192,225 -------- -------- $288,166 $287,502 -------- -------- -------- -------- 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 EVENT 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 6 THE COLEMAN COMPANY, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except share data) (Unaudited) 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. 7 THE COLEMAN COMPANY, INC. AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS 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. The Company has already begun to implement its new restructuring plan. The Company 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. 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. 8 COLEMAN COMPANY, INC. AND SUBSIDIARIES Minority interest represents the interest of minority shareholders in certain subsidiary operations of Camping Gaz. 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. LIQUIDITY AND CAPITAL RESOURCES The Company's operating activities used $41.0 million and $92.9 million of cash during the three months ended March 31, 1997 and 1996. During the 1997 period, receivables increased $60.5 million as a result of the seasonality of the Company's sales and an increase in the overall level of the Company's sales. Despite the seasonality of the business, inventories were approximately equal to the levels at December 31, 1996 as a result of the Company's initiatives to reduce inventory. The Company's net cash used for investing activities was $4.2 million and $66.8 million for the three months ended March 31, 1997 and 1996, respectively. The Company's capital expenditures were $6.3 million in the three months ended March 31, 1997. 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. Availability under the Company's domestic revolving credit agreement, as amended (the "Company Credit Agreement"), is reduced by any commercial paper borrowings outstanding. The Company Credit Agreement is available to the Company until April 30, 2001. At March 31, 1997, $135.1 million was available for borrowings under the Company Credit Agreement. However, debt instruments of Coleman Worldwide Corporation ("Coleman Worldwide") and Coleman Holdings Inc. ("Coleman Holdings") 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 covenants, the Company Credit Agreement excludes up to $30.0 million of charges in connection with the Company's restructuring initiatives. 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. On May 6, 1997, Coleman Worldwide and Coleman Holdings jointly announced that Coleman Holdings intends to redeem its Senior Secured 9 COLEMAN COMPANY, INC. AND SUBSIDIARIES Discount Notes due 1998 (the "Holdings Notes") on or about July 15, 1997, and that Coleman Worldwide intends to retire its Liquid Yield Option-TM- Notes due 2013 (the "LYONs-TM-"). 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. 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 periodically 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. 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. 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. FORWARD-LOOKING STATEMENTS The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for certain forward-looking statements. The forward-looking statements contained in this Form 10-Q are subject to certain risks and uncertainties. Actual results could differ materially from current expectations. Among the factors which could affect the Company's actual results and could cause results to differ from those contained in the forward-looking statements contained herein are (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 10 COLEMAN COMPANY, INC. AND SUBSIDIARIES in Japan, (iv) the possibility the Company may be required to renegotiate its credit agreements, and (v) difficulties or delays in executing the sale of the Notes, the proceeds from which will be used to redeem the Holdings Notes and retire the LYONs, as well as other difficulties in effecting such redemption and retirement. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits EXHIBIT INDEX DESCRIPTION ------------- ----------- 10.1*+ Letter Agreement dated as of March 15, 1997 between the Company and Frederick J. Fritz. 27+ Financial Data Schedule ------------- * Management Contracts and Compensatory Plans + Filed herewith (b) Reports on Form 8-K No reports on Form 8-K were filed during the quarter ended March 31, 1997. 11 COLEMAN COMPANY, INC. AND SUBSIDIARIES SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. THE COLEMAN COMPANY, INC. (Registrant) Date: May 12, 1997 By: /s/ Steven F. Kaplan ---------------------------------- Steven F. Kaplan Executive Vice President and Chief Financial Officer 12 EX-10.1 2 EXHIBIT 10.1 EXECUTION COPY March 15, 1997 Frederick J. Fritz The Coleman Company, Inc. 250 North St. Francis Street Wichita, KS 67201 Dear Mr. Fritz: This letter will set forth our agreement regarding termination of your employment with The Coleman Company, Inc. ("Coleman"): 1. TERMINATION. Your employment with Coleman and its affiliates (the "Company") will terminate as of March 15, 1997. The employment agreement dated January 20, 1995 between you and Coleman is terminated as of that date and is of no further effect, with the exception of Section 8(a), (b) and (d) thereof, which shall continue in full force. 2. PAYMENTS. Coleman shall pay to you $262,500 per year, payable monthly in arrears, for the period beginning on the date hereof and ending on March 15, 1998. In addition, you shall be entitled to receive an amount equal to the amount of target incentive bonus (based on a rate of $183,759 per year) you would have earned (based on actual 1997 results), if any, for the period up to and including March 15, 1997, payable under Coleman's regular incentive bonus plan terms and at the normal time for payment of such bonus. The amounts payable hereunder are not subject to any mitigation or offset on account of any other earnings or compensation you may have. In the event of your death, any amounts due hereunder shall be paid to your estate. Coleman will pay you $2,000 eight days after the execution of this Agreement, subject to applicable withholding, provided that you have not exercised your right to revoke the ADEA release provided in Section 6(b). 3. STOCK OPTIONS. The Company shall cause you to become fully vested as of March 15, 1997, in all of the 130,000 options which have been granted to you pursuant to Coleman's stock option plans and currently remain outstanding. You may exercise such options at any time within three months following March 15, 1997, (i.e., through June 15, 1997), in accordance with the terms of such options. After June 15, 1997, your unexercised options shall automatically expire and shall no longer be exercisable. 2 Notwithstanding anything to the contrary in the agreements governing the stock options, you agree that: if you wish to exercise a stock option, you will provide Coleman with written advance notice stating your intention and identifying an option exercise date at least seven days after the date that such advance notice is received by Coleman; within three days after the receipt by Coleman of any such advance notice, Coleman may in its sole discretion determine to pay you cash in lieu of allowing you to exercise some or all of the stock options with respect to which you have provided such advance notice of intention to exercise; if Coleman determines to exercise its rights under this Section, Coleman shall provide to you, within such three day period, a written notice identifying the stock options as to which Coleman has determined to so exercise its rights and the number of shares under each such stock option as to which Coleman has so determined to exercise its rights; any such cash payment shall be paid to you within five days after the option exercise date set forth in your advance notice; and the amount of such cash payment shall (on an option-by-option basis) equal (i) the number of shares to which you would otherwise would have become entitled (the "Shares") on exercise of the stock option in respect of which Coleman has determined to exercise its rights under this Section, multiplied by (ii) the closing price of a Share on the New York Stock Exchange on the date on which you would (pursuant to your notice) have exercised your stock option (but for Coleman's exercise of its rights under this Section) minus the per share exercise price of such Stock Option. 4. VACATION. As soon as practicable after March 15, 1997, you will be paid for four weeks of accrued vacation in accordance with the Company's regular policies. 5. FRINGE BENEFITS. You shall continue to receive all employee benefits currently provided to you by Coleman hereof through March 15, 1997, including participation in all life insurance programs provided to you by Coleman. You will not be required to reimburse Coleman for any premiums heretofore paid by Coleman with respect to the so-called GRIP life insurance policy provided to you. If you elect COBRA continuation coverage effective March 15, 1997 with respect to Cole- man's group medical plan, Coleman will, through March 15, 1998, pay a portion of your premiums on account of such COBRA coverage so that the amount payable by you during such period does not exceed the amount payable under such plan by similarly situated active employees. Coleman shall also continue to allow you to use the Company-paid automobile currently provided to you through March 15, 1998. As soon as practicable after the execution of this Agreement, Coleman will sell to you, for the amount of $10, the laptop computer and cellular telephone which were provided for your use by Coleman and which are currently in your possession. You acknowledge that you understand that you may be taxable on the value you receive on account of this sale. 3 Coleman shall continue to allow you to use the Company-paid membership at Crestview Country Club in Wichita, Kansas which was provided for your use until the earlier of March 15, 1998 and the date on which your principal residence is no longer in Wichita, Kansas. Coleman agrees to pay any dues and membership fees (but not other fees, such as food and beverage charges) with respect to such club membership during the period you are entitled to use such club membership. You agree to cooperate with Coleman (including signing such documents as Coleman may request) to transfer such club membership as of and after the date the Company is no longer required to provide such club membership for your use. 6. EXECUTIVE RELEASES. (a) GENERAL. You release and discharge the Company from any and all charges, claims and causes of action of any kind, whether known or unknown and whenever arising, including, but not limited to, all claims arising at any time, directly or indirectly, out of your employment or the termination of your employment with the Company, PROVIDED, HOWEVER, that you do not waive, and such released claims shall not include, any of your rights to receive payments and benefits under this Agreement or otherwise enforce this Agreement. (b) AGE AND SEX DISCRIMINATION, ETC. You realize there are many laws and regulations prohibiting employment discrimination pursuant to which you may have rights or claims. These include, without limitation, the Age Discrimination in Employment Act of 1967, as amended ("ADEA"); the National Labor Relations Act, as amended; the Civil Rights Act of 1991; 42 U.S.C. 1981, as amended; the Americans With Disabilities Act of 1990; Title VII of the Civil Rights Act of 1964, as amended; the Employee Retirement Income Security Act of 1974, as amended; and various other federal, state and local human rights laws. You also understand there may be other statutes and laws of contract and tort, otherwise relating to your employment. By signing this Agreement you acknowledge that you intend to waive and release any rights known or unknown you may have under these laws, as provided in paragraph 6(a) (subject to your limited rights of revocation under Section 6(b)). You understand that the Company has offered to give you 21 days to consider the ADEA release given under this Agreement and the consideration offered on account thereof. You acknowledge that you are voluntarily waiving this 21-day period. You acknowledge that you have read this Agreement carefully, have been advised to consult an attorney and any other advisors of your choice, and fully understand that by signing below you are giving up certain rights which you may have to sue or assert a claim against the Company. You acknowledge that you 4 have not been forced or pressured in any manner whatsoever to sign this Agreement and you agree to all of its terms voluntarily. You shall have seven days from the date of this Agreement to revoke the release you are giving in this Section, but only to the extent it relates to any claim you may have arising under the ADEA. If you revoke such release, you will be deemed not to have released any claim arising under ADEA, you shall not be entitled to the Company's payment of $2,000 under Section 2. 7. COMPANY RELEASE. The Company forever releases you, your family, your estate, your agents, successors and assigns from any and all claims, demands, causes of action, controversies, agreements, promises and remedies, in connection with or in relationship to your capacity as an employee or officer or director of the Company, whenever arising, whether known or unknown, PROVIDED, HOWEVER, that the Company does not release any of its rights arising under this Agreement. 8. CONFIDENTIALITY. As a senior executive of the Company, you acknowledge that you have had access to proprietary information of the Company and confidential information regarding the Company, its personnel policies and its personnel. You agree that you and your spouse will hold, and that you will use your best efforts to cause your family and counsel to hold, all such information in a fiduciary capacity for the benefit of the Company and you will not disclose to any third party or use for your or their benefit or that of any third party, any such information except to the extent required by law or agreed to by the Company. 9. SCOPE. The release herein covers both claims that you and Coleman know about and those that are unknown. Both parties expressly waive all rights and protection afforded by any statute which limits the effect of a release with respect to unknown claims. 10. MISCELLANEOUS. This letter constitutes the entire Agreement and under-standing of the parties hereto relating to the subject matter hereof, and supersedes all prior agreements and understandings, written or oral, except as specifically written herein. This letter may not be amended or modified except by written instrument executed by the parties hereto. The failure of either party at any time to require performance of any provision hereof shall in no manner affect the right at a later time to enforce that provision. No waiver by either party of the breach of any term in this letter, whether by conduct or otherwise, shall be deemed to be a further or continuing waiver of any such breach hereof. 5 11. TAXES. You shall be responsible for the payment of any and all required federal, state, local and foreign taxes incurred, or to be incurred, in connection with any amounts payable to you under this Agreement. Notwithstanding any other provision of this Agreement, the Company may withhold from amounts payable under this Agreement all federal, state, local and foreign taxes that are required to withheld by applicable laws and regulations. 12. GOVERNING LAW. This Agreement will be construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflict of laws. AGREED: THE COLEMAN COMPANY, INC. /s/ Frederick J. Fritz By: /s/ Jerry W. Levin - -------------------------- --------------------------------------- Frederick J. Fritz Jerry W. Levin EX-27 3 EXHIBIT 27 - FDS
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS FILED IN THE COMPANY'S FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 12,866 0 281,551 9,934 288,166 643,734 294,734 99,995 1,205,062 309,791 568,034 0 0 532 249,445 1,205,062 294,023 295,464 214,422 214,422 0 455 10,712 1,321 510 699 0 0 0 699 .01 .01
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