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

                                   FORM 10-K

(Mark One)

          [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                  FOR THE FISCAL YEAR ENDED DECEMBER 29, 1996

                                      OR

         [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
               SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

             FOR THE TRANSITION PERIOD FROM _________ TO _________.

                          COMMISSION FILE NUMBER 1-52

                                 [SUNBEAM LOGO]

                              SUNBEAM CORPORATION
            (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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

   1615 S. CONGRESS AVENUE, SUITE 200
         DELRAY BEACH, FLORIDA                           33445
 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)             (ZIP CODE)

                                (561) 243-2100
             (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

          SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

     TITLE OF EACH CLASS:           NAME OF EACH EXCHANGE ON WHICH REGISTERED:
 COMMON STOCK, $0.01 PAR VALUE              NEW YORK STOCK EXCHANGE

       SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes [X]  No [ ]

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (section 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]

     The aggregate market value of all classes of the registrant's voting stock
held by non-affiliates as of March 21, 1997 was approximately $2,151,896,208.

     On March 21, 1997, there were 84,497,304 shares of the registrant's Common
Stock outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the Proxy Statement for the 1997 Annual Meeting of Shareholders
are incorporated by reference in Part III hereof.

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<PAGE>

                     SUNBEAM CORPORATION AND SUBSIDIARIES
                                 ANNUAL REPORT
                                 ON FORM 10-K

                               TABLE OF CONTENTS

                                                                          PAGE
                                                                         ------
PART I
 ITEM 1.    BUSINESS
            General. ...................................................    1
            Restructuring and Growth Plan ..............................    1
            Products    ................................................    2
            Competitive Strengths   ....................................    3
            Customers   ................................................    4
            Patents and Trademarks  ....................................    5
            Employees   ................................................    5
            Seasonality    .............................................    5
            Raw Materials  .............................................    5
            Environmental Matters   ....................................    5
 ITEM 2.    PROPERTIES  ................................................    9
 ITEM 3.    LEGAL PROCEEDINGS    .......................................    9
 ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS   ......   10
            EXECUTIVE OFFICERS OF THE REGISTRANT   .....................   10

PART II
 ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
            STOCKHOLDER MATTERS  .......................................   12
 ITEM 6.    SELECTED FINANCIAL DATA    .................................   13
 ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
            CONDITION AND RESULTS OF OPERATIONS    .....................   14
 ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA  ...............   18
 ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
            ACCOUNTING AND FINANCIAL DISCLOSURE    .....................   18

PART III
 ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT    ......   18
 ITEM 11.   EXECUTIVE COMPENSATION  ....................................   18
 ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
            MANAGEMENT  ................................................   19
 ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS  ............   19

PART IV
 ITEM 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
            ON FORM 8-K    .............................................   19
SIGNATURES   ............................................................  22


<PAGE>

                                    PART I

ITEM 1. BUSINESS

GENERAL

     Sunbeam Corporation (collectively with its subsidiaries, the
"Company" or "Sunbeam") is a leading designer, manufacturer and
marketer of branded consumer products. The Company's primary business is the
manufacture, marketing and distribution of durable household consumer goods
through mass market and other distributors in the United States and
internationally. The Company also sells its products to commercial end users
such as hotels and other institutions (the "Away From Home" category of the
business).

     The Company's product categories are: (1) Appliances (mixers,
blenders, food steamers, bread makers, rice cookers, coffee makers, toasters,
irons and garment steamers) (2) Health Care (vaporizers, humidifiers, air
cleaners, massagers, hot and cold packs, blood pressure monitors and scales) (3)
Personal Care and Comfort (shower massagers, hair clipper and trimmers, electric
warming blankets and throws) (4) Outdoor Cooking (electric, gas and charcoal
grills and grill accessories) and (5) Away From Home (clippers and related
products for the professional and veterinarian trade and sales of products to
commercial and institutional channels). The International Group is responsible
for sales (primarily of small appliances, personal care and comfort products,
professional clippers and related products and grills) in all countries other
than the United States.

     Sunbeam products enjoy a long-standing reputation for quality, and a
majority of the Company's sales are from products which hold the number one or
two market share in their respective product categories.

     The Company was organized in 1989 (as Sunbeam-Oster Company, Inc.) and in
September 1990, Sunbeam acquired the assets and assumed certain liabilities,
through a reorganization, of Allegheny International, Inc. (the "Predecessor"),
an entity operating as a debtor-in-possession under Chapter 11 of the United
States Bankruptcy Code since 1988. In August 1992, the Company completed a
public offering of 20,000,000 shares of its common stock. In May 1995, the
Company changed its name from Sunbeam-Oster Company, Inc. to Sunbeam
Corporation.

RESTRUCTURING AND GROWTH PLAN

     In the Fall of 1996, under newly elected Chairman, Albert J. Dunlap, the
Company announced a major restructuring and growth plan. The restructuring
portion of the plan has been substantially completed, resulting in a significant
reduction in employees, facilities and costs, all of which is anticipated to
generate approximately $225 million in annual savings for the Company. As a part
of the restructuring plan, the Company also announced that it would divest
certain lines of business. The Company has completed the sales of its furniture,
time and temperature and decorative bedding businesses and anticipates the
completion of the divestiture of its textile mill in Biddeford, Maine and its
Counselor/Registered trademark/ and Borg/Registered trademark/ scale business in
the first half of 1997.

     The Company's restructuring plan includes the closure of 18 factories and
6 office facilities, resulting in the consolidation of all corporate offices
into a single headquarters office located in Delray Beach, Florida and an
administrative facility at its Hattiesburg manufacturing and distribution
facility. The number of manufacturing facilities will be reduced from twenty-six
to eight (four in the US and four international). See "Properties" below.

     The Company has also consolidated all purchasing functions, substantially
reduced the number of stock keeping units maintained by the Company and
outsourced certain back-office administrative activities.

                                       1

<PAGE>


     The Company has also developed a comprehensive three year growth plan for
its core businesses. Sunbeam's goal is for revenues to double, reaching $2
billion, by 1999, with operating margins improving to 20% of sales. This revenue
growth is anticipated to be derived, in large part, by the development of new
innovative products and the globalization of the Company. Domestically, the goal
is to introduce at least 30 new products each year. On the international side,
the Company has a goal to triple international sales to $600 million by 1999.
The Company expects to sign fifteen new international distributor and licensing
agreements by April 1997 and many more throughout the remainder of the year. The
Company has already launched 42 new 220 volt products for international markets.
The Company has also identified new channels of distribution as sales growth
opportunities, including commercial organizations and "direct to the
consumer" channels such as catalogs, the Internet and Sunbeam/Registered
trademark/ factory outlet stores.

     Both international expansion and new product introductions will be
supported by a significant investment in a major new advertising program that is
geared to rebuilding SUNBEAM/Registered trademark/ and OSTER/Registered
trademark/ brand awareness in the marketplace. The Company is well on its way to
accomplishing its brand repositioning strategy, in large part due to a $12.0
million advertising campaign in the fourth quarter of 1996 which has already
increased Sunbeam's brand relevance with consumers by 25%, as tabulated by a
leading independent market research organization.

PRODUCTS

     In connection with the Company's 1996 restructuring, the Company redefined
its core product categories as specified below:

APPLIANCES

     Small kitchen appliances including Mixmaster/Registered trademark/ stand
mixers, hand mixers, Osterizer/Registered trademark/ blenders, food processors,
toasters, can openers, coffee makers, breadmakers, waffle makers, and culinary
accessories, are sold primarily under the Sunbeam/Registered trademark/,
Oster/Registered trademark/ and Oster Designer/Registered trademark/ brand
names. The Company holds the number one or two market positions in blenders,
mixers, and breadmakers. This product category also encompasses garment care
appliances consisting of irons and steamers. Sales of appliances accounted for
approximately 29% of the Company's domestic net sales in 1996.

HEALTH CARE

     The Company markets its home health products under the trademark Health at
Home/Registered trademark/. These products include heating pads, bath scales,
blood pressure and other health-monitoring instruments, massagers, vaporizers,
humidifiers and dental care products. Sales of health care products accounted
for approximately 11% of the Company's domestic net sales in 1996.

PERSONAL CARE AND COMFORT

     The Company's personal care products include shower massagers, consumer
hair clippers and trimmers and a broad line of electric blankets, comforters and
Cuddle-Up/Registered trademark/ heated throws. The Company holds the number one
market position in electric blankets and heated throws. Sales of personal care
and comfort products accounted for approximately 21% of the Company's domestic
net sales in 1996.

OUTDOOR COOKING

     Sunbeam is a leading supplier of outdoor barbecue grills. Sunbeam has the
leading market share position in the gas grill industry. Barbecue grills consist
of propane, natural gas, electric and charcoal models sold primarily under the
Sunbeam/Registered trademark/ and Grillmaster/Registered trademark/ brand names.
Sales of outdoor cooking products accounted for approximately 29% of the
Company's domestic net sales in 1996.

AWAY FROM HOME

     The Company markets a line of professional barber and beauty equipment,
including electric and battery clippers, replacement blades and other grooming
accessories sold to both conventional retailers and through professional
distributors. In addition, the Company is expanding the marketing of its
appliances and personal care and comfort products to institutional and
commercial channels. Sales of away from home products described above accounted
for approximately 5% of the Company's domestic net sales in 1996.

                                       2

<PAGE>

INTERNATIONAL

     The Company markets a variety of products (primarily small kitchen
appliances, personal care and comfort products, professional clippers and
related products and grills) outside the U.S. While the Company sells many of
the same products domestically and internationally, it also sells products
designed specifically to appeal to foreign markets. The Company, through its
foreign subsidiaries, has a manufacturing facility in Venezuela, and sales
offices in the United Kingdom and Hong Kong. The Company's international
products are sourced from the Company's United States, Mexican or Venezuelan
manufacturing operations or from vendors primarily located in Asia.
International sales accounted for approximately 19% of the Company's total net
sales in 1996.


     To date, the Company's activities outside the United States have been
primarily focused in Mexico, South and Central America and Canada. The Company
enjoys a strong market position in a number of product categories in Latin
America. The Oster- brand has the leading market share in small appliances in a
number of Latin American countries.The Company intends to focus on expanding its
business in South and Central America by introducing broader product offerings,
achieving increased market penetration and expanding geographically into South
American countries where the Company has historically not been represented by
introducing new 220 volt products. The Company has introduced 42 such products
in the last year and continues to develop such products at an increasing rate.
The Company also intends to expand its product offerings in the Far East and
Europe. The Company may choose to approach these markets directly through its
own operations, by acquisition, or through international joint ventures or other
types of strategic alliances. The Company has recently entered into new
distribution or licensing arrangements providing for the distribution of Sunbeam
and/or Oster goods into additional countries in South America, Africa and the
Far East.

COMPETITIVE STRENGTHS

     Worldwide, Sunbeam competes in markets with a number of well-established
United States and foreign companies on the basis of various strengths, depending
on the country, product category and distribution channels. The Company believes
that it is well-positioned to pursue continued growth as a result of several
competitive strengths, which include the following.

     DISTRIBUTION NETWORK.  The Company has one of the premier mass merchant
distribution networks serving large national retailers in the United States. The
Company also has a strong network of well-established distributors and service
organizations in Latin America. The Company supports its customers needs with
strong warehousing and distribution capabilities, a broad, high-quality product
portfolio and electronic data interchange ("EDI") and just in time product
delivery capabilities. The Company markets its products through virtually every
category of retailer including mass merchandisers, catalog showrooms, warehouse
clubs, department stores, catalogues, Company-owned outlet stores, television
shopping channels, hardware stores, home centers, drug and grocery stores, and
pet supply retailers, as well as independent distributors and military post
exchange outlets.

                                       3

<PAGE>


     STRONG POSITION IN CONSOLIDATING RETAIL ENVIRONMENT.  The consolidation
trend in the retail industry has resulted in the emergence and global expansion
of large mass merchandisers that demand financially strong, efficient suppliers
which offer a broad range of innovative, quality products with the ability to
make timely shipments in large volumes and provide strong promotional and
merchandising support. The Company has benefited from this trend and believes it
has the opportunity to further expand distribution with a number of retailers
and increase its penetration of existing accounts. In 1996, the Company sold
products to virtually all of the top 100 U.S. retailers, including Wal-Mart,
Target Stores, Kmart, Sears, Roebuck & Co., Service Merchandise, Home Depot,
Lowes, Costco, Sam's Club, Walgreens, Eckerd and Bed Bath & Beyond.

     BRAND NAME RECOGNITION.  The Sunbeam/Registered trademark/ and
Oster/Registered trademark/ brands have been household names for generations.
The Company believes that these brands, along with its other well-known
secondary names such as Mixmaster/Registered trademark/ and Osterizer/Registered
trademark/ draw customers into retail stores specifically to purchase products
bearing these brand names. During the past year, the Company has spent over $75
million for advertising and sales promotion to support brand recognition.

     MARKET LEADERSHIP.  The majority of Sunbeam sales are from products in
which the Company holds the number one or two market share position. The Company
believes that this combination of leading brand-name products and breadth of
product offerings makes Sunbeam an attractive vendor to retailers who are
consolidating their suppliers.


CUSTOMERS

     The rapid growth of large mass merchandisers and warehouse clubs and
changes in consumer shopping patterns have contributed to a significant
consolidation of the U.S. retail industry and the formation of dominant
multi-category retailers. Sunbeam has positioned itself to respond to the
challenges of this changing retail environment by pursuing strategic
relationships with large, high-volume merchandisers. The Company markets its
products through virtually every category of retailer including mass
merchandisers, catalog showrooms, warehouse clubs, department stores, hardware
stores, catalogues, television shopping channels, home centers, drug and grocery
stores, and pet supply retailers, as well as independent distributors and the
military post exchange services. The Company's largest customer, Wal-Mart
Stores, Inc., accounted for approximately 19% of sales in 1996.

     Retailers are pursuing a number of strategies in their competition to
deliver the highest-quality, lowest-cost brand name products. A growing trend
among retailers is to purchase on a "just-in-time" basis in order to
reduce inventory costs and increase returns on investment. This trend has
required increased working capital investments for manufacturers and requires
manufacturers to more closely

                                       4

<PAGE>

monitor consumer buying patterns as retailers shorten their lead times for
orders. Currently, most Sunbeam products sold to U.S. retailers are manufactured
at the Company's own facilities in North America. This enables the Company to
provide rapid, reliable delivery in order to maximize customers' inventory
turns. The Company intends to support its retail partners' "just-in-time"
inventory strategies through investments in, among other things, improved
forecasting systems, more responsive manufacturing and distribution capabilities
and electronic communications. Currently, Sunbeam has approximately 75% of its
U.S. customer sales on electronic data interchange (EDI) systems.

     The amount of backlog orders at any point in time is not a significant
factor in the Company's business.

PATENTS AND TRADEMARKS

     Sunbeam believes that an integral part of its strength is its ability to
capitalize on the Sunbeam/Registered trademark/ and Oster/Registered trademark/
trademarks which are registered in the United States and in numerous foreign
countries. Widely recognized throughout North America, South and Central America
and Europe, these registered trademarks, along with Osterizer/Registered
trademark/, Mixmaster/Registered trademark/, Toast Logic/ Trademark/,
Steammaster/Registered trademark/, Oskar/Registered trademark/,
Grillmaster/Registered trademark/ and "Blanket with a Brain/ Trademark/" brands
are important to the success of the Company's products. Other important
trademarks within Sunbeam include Oster Designer /Registered trademark/ line and
Cuddle-Up/Registered trademark/.

     Sunbeam holds several patents covering a wide variety of products, the loss
of any one of which would not have a material adverse effect on the Company's
business taken as a whole.

EMPLOYEES

     The Company currently has approximately 6,000 employees; as of December 29,
1996, the Company had approximately 9,000 employees. As a result of the
Company's restructuring plan, employment was reduced from approximately 12,000
people to approximately 6,000 people. Other than at two facilities (both of
which are expected to be sold or closed by fall of 1997), none of the Company's
full-time workforce has domestic union representation. Sunbeam has had no
labor-related work stoppages and, in the opinion of management, relations with
its employees are generally good.

SEASONALITY

     On a consolidated basis, Sunbeam sales do not exhibit substantial
seasonality. However, sales of outdoor cooking products are strongest in the
first half of the year, while sales of appliances and personal care and comfort
products are strongest in the second half of the year. In addition, sales of a
number of the Company's products, including warming blankets, vaporizers,
humidifiers and grills may be impacted by weather conditions.

RAW MATERIALS

     The raw materials used in the manufacture of the Company's products are
available from numerous suppliers in quantities sufficient to meet normal
requirements. The Company's primary raw materials include aluminum, steel,
resin, copper, and corrugated cardboard for cartons.

ENVIRONMENTAL MATTERS

     The Company's operations, like those of comparable businesses, are subject
to certain federal, state, local and foreign environmental laws and regulations
in addition to laws and regulations regarding labeling and packaging of products
and the sale of products containing certain environmentally sensitive materials
("Environmental Laws"). The Company believes it is in substantial
compliance with all

                                       5

<PAGE>

Environmental Laws which are applicable to its operations. Compliance with
Environmental Laws involves certain continuing costs; however, such costs of
ongoing compliance have not resulted, and are not anticipated to result, in a
material increase in the Company's capital expenditures or to have a material
adverse effect on the Company's results of operations, financial condition or
competitive position.

     In addition to ongoing environmental compliance at its operations, the
Company also is actively engaged in certain environmental remediation activities
relating primarily to divested operations. As of December 31, 1996, the Company
had been identified by the United States Environmental Protection Agency
("EPA") as a potentially responsible party ("PRP") in connection
with seven (7) sites subject to the federal Superfund law and two (2) sites
subject to state Superfund laws comparable to the federal law (collectively the
"Environmental Sites"), exclusive of sites at which the Company has been
designated (or expects to be designated) as a de minimis (less than 1%)
participant .

     The Superfund Act, and related state environmental remediation laws,
generally authorize governmental authorities to remediate a Superfund site and
to assess the costs against the PRPs or to order the PRPs to remediate the site
at their expense. Liability under the Superfund Law is joint and several and is
imposed on a strict basis, without regard to degree of negligence or
culpability. As a result, the Company recognizes its responsibility to determine
whether other PRPs at a Superfund site are financially capable of paying their
respective shares of the ultimate cost of remediation of the site. Whenever the
Company has determined that a particular PRP is not financially responsible, it
has assumed for purposes of establishing reserve amounts that such PRP will not
pay its respective share of the costs of remediation. To minimize the Company's
potential liability with respect to the Environmental Sites, the Company has
actively participated in steering committees and other groups of PRPs
established with respect to such sites. The Company currently is engaged in
active remediation activities at seven (7) sites, four (4) of which are among
the Environmental Sites referred to above, and three (3) of which have not been
designated as Superfund sites under federal or state law.

     In addition, the Company is engaged in environmental remediation activities
at 2 sites in Newburgh Heights, Ohio, where a subsidiary formerly conducted
operations. The Company has been actively cooperating with the United States
Nuclear Regulatory Commission and state regulatory authorities in developing a
plan for remediation of those sites. Remediation of one of the sites, the
Harvard Avenue Site, is nearly complete. Active remediation is underway at the
other site-the Bert Avenue Site and is anticipated to be completed in 1997.

     The Company's costs for environmental remediation activities have not had
a material adverse effect on the Company's results of operations, financial
condition or competitive position. The Company has established reserves to cover
the anticipated probable costs of remediation, based upon periodic reviews of
all sites for which the Company has, or may have, remediation responsibility. As
of December 29, 1996, the amount of such reserves was approximately five percent
of the Company's total liabilities as set forth in the consolidated financial
statements. Such environmental reserves do not consider offsets for potential
insurance recoveries from certain of the Company's liability insurance carriers
which the Company continues to pursue.

     Due to uncertainty over the remedial measures to be adopted at some sites,
the possibility of changes in the Environmental Laws, and the fact that joint
and several liability with the right of contribution is possible at federal and
state Superfund sites, the Company's ultimate future liability with respect to
sites at which remediation has not been completed may vary from the amounts
reserved as of December 31, 1996. However, the Company believes, based on
existing information, that the costs of completing the environmental remediation
of all sites for which the Company has a remediation responsibility have been
adequately reserved and that the ultimate resolution of these matters will not
have a material adverse effect upon the Company's financial condition.

     In December 1996, the Company reached a negotiated settlement with the EPA
with regard to a notice of violation concerning the construction and operation
of two paint lines at the Company's

                                       6

<PAGE>

Neosho, MO facility prior to obtaining the necessary permits for construction
and operation. The original penalty proposed by the EPA was in the amount of
approximately $2 million, but the Company and the EPA have negotiated a
settlement of the EPA's lawsuit against the Company for a lesser amount. The
settlement amount of $829,825 recognizes the benefits of a "supplemental
environmental project" which consisted of the Company's installation of
nominal emission powder coating lines to replace solvent paint lines. The
Company is awaiting proposed settlement documentation from the EPA and
anticipates formal resolution of this matter by the second quarter of 1997.

     In December 1996, the Company paid a negotiated penalty to the EPA in the
amount of $110,138 to settle violations arising from the Company's failure to
file certain mandatory Form R reports for 1990 through 1994. The originally
proposed penalties had been in the amount of $946,596, and the Company was able
to negotiate a reduced penalty amount due to the fact that the EPA agreed to
apply its self-policing/self-disclosure policy. The Company voluntarily notified
the EPA of its deficiencies in filing the Form R reports promptly upon learning
of the reporting deficiencies.

     The Company is not a party to any other administrative or judicial
proceeding to which a governmental authority is a party and which involves
potential monetary sanctions, exclusive of interest and costs, of $100,000 or
more.

CAUTIONARY STATEMENTS

     Certain of the information contained herein (including Management's
Discussion and Analysis of Financial Condition and Results of Operations)
contains "forward-looking" information, as that term is defined in the
Private Securities Litigation Reform Act of 1995, as the same may be amended
(herein the "Act") and in releases made by the Securities and Exchange
Commission ("SEC") from time to time.

     These Cautionary Statements are being made pursuant to the Act, with the
intention of obtaining the benefits of the "Safe Harbor" provisions of the
Act. The Company cautions investors that any forward-looking statements made by
the Company are not guarantees of future performance and that actual results may
differ materially from those in the forward-looking statements as a result of
various factors.

     /bullet/ The Company's performance should be expected to be affected by the
strength of the retail economy, primarily in the United States, but also in
Canada and Latin America. Weakness in consumer confidence and retail outlets
(including the financial weakness or bankruptcy of retail outlets, especially
mass merchants) should be expected to adversely impact the Company's future
financial results.

     /bullet/ The Company operates in a highly competitive environment with
numerous competitors which are financially strong and capable of competing
effectively with the Company in the marketplace. Such competitors may take
actions to meet the Company's new product introductions and other initiatives.
Some competitors may be willing to accept lower margins and to reduce prices to
compete with the Company. As a result, the Company could fail to achieve
anticipated sales increases, to realize anticipated price increases, or
otherwise fail to meet its anticipated results. Any of such circumstances would
likely have an adverse effect on future financial performance, which effect
could be material.

     /bullet/ The Company manufactures most of its products, although it also
sources some products from third parties. The Company's ability to realize
operating profits is dependent upon its ability to timely manufacture, source
and deliver products which may be sold for a profit. Labor difficulties, delays
in delivery or pricing of raw materials and/or sourced products, scheduling and
transportation difficulties, management dislocations and delays in development
and manufacture of new products can negatively affect operating profits.

     /bullet/ As a consumer goods distributor, the Company's results of
operations can be negatively impacted by product liability lawsuits and/or by
higher than anticipated rates of warranty returns or other returns of goods.

                                       7

<PAGE>


     /bullet/ The Company expects to substantially increase the amount of
business conducted by it outside North America. If the Company fails to achieve
anticipated market penetration in areas of the world into which the Company
currently expects to expand its sales, such event is likely to have an adverse
effect on the Company's future financial performance, which effect could be
material. Expansion of the Company's sales in foreign markets depends upon many
factors, including the states of economies in foreign countries, the strength of
consumer demand in those countries for products which the Company sells (or
expects to sell in those markets), the strength of competition from other global
consumer products companies and other factors which may negatively affect the
Company's anticipated performance in those markets.

     /bullet/ The Company currently manufactures some products and has sales in
such economies as those of Mexico and Venezuela, both of which economies have
been unstable or hyperinflationary in recent years. The economies of other
foreign countries important to the Company's expansion plans, including other
countries in Latin America and developing countries throughout the world, could
suffer similar instability in the future. Such factors as currency devaluations,
new tariffs, changes in monetary policies, inflation, governmental instability
and similar matters could negatively affect the Company's anticipated
performance in foreign markets. The occurrence of any of these circumstances
could have an adverse effect on future financial performance, which effect could
be material.

     /bullet/ A significant portion of the cost of goods manufactured by the
Company in North America is raw material cost. The Company has implemented
changes in its purchasing function which the Company anticipates will enable it
to purchase raw materials more efficiently and economically than it has in the
past. The success of the Company's purchasing initiatives may be affected by
many factors beyond the Company's control, such as commodity pricing generally
and higher prices for the specific raw materials required by the Company. In
addition, the Company's initiatives to reduce the cost of raw materials simply
may not achieve savings in amounts which the Company anticipates. A material
failure by the Company to achieve the anticipated reductions in raw material
costs would likely have an adverse effect on anticipated future financial
performance, which effect could be material.

     /bullet/ The Company anticipates realizing price increases for certain of
its products. The Company operates in a highly competitive industry, and its
ability to realize price increases may be limited due to competitive pressures.
If there is a material failure to realize anticipated price increases, margins
likely will be lower than anticipated by the Company, and this will likely have
an adverse effect on future financial performance, which effect could be
material.

     /bullet/ The Company anticipates that it will be able to more rapidly
develop and introduce a substantial number of new and innovative products in the
future. However, the Company may prove unable to meet its more aggressive
schedules for future product development. Failure to develop and manufacture new
products in the amounts and with the quality anticipated or a failure to reduce
the cycle time for new product introductions would likely have an adverse effect
on future financial performance, which effect could be material.

     /bullet/ Sales of certain of the Company's products can be negatively
impacted by abnormal weather conditions during different seasons and quarters of
the year.

     /bullet/ The Company has entered into various arrangements with third
parties for the provision of back-office administrative services previously
provided with internal resources, including provision of all necessary computer
systems. Failure of any of these third party service providers to perform in
accordance with their respective agreements with the Company could result in
disruptions of the Company's normal business operations with a consequent impact
on sales, collections, cash flow and/or profitability.

     /bullet/ The Company's profitability may be negatively impacted by
underabsorption of manufacturing costs resulting from underutilization of
manufacturing capacity if the Company's sales growth is less than anticipated.

                                       8

<PAGE>


     /bullet/ The Company's ability to realize the cost savings anticipated from
the restructuring plan will be affected by, among other items, the Company's
ability to complete facility rationalization initiatives in a timely manner
without negatively impacting production during such transition.

ITEM 2. PROPERTIES

     In conjunction with the Company's formal restructuring plan and
divestiture activities, Sunbeam has reduced the total square footage of active
manufacturing, administrative, distribution and warehouse floorspace to 3.6
million square feet from 7.2 million square feet at the same time last year.

     Active United States manufacturing, warehouse, and office locations (upon
completion of the restructuring plan) are set forth below. In addition to the
facilities set forth below, the Company leases warehouse space on a short-term
basis when needed and leases space in various malls for its Sunbeam outlet
stores. Except as otherwise noted, each location is used for manufacturing,
warehousing and related administrative office space.

UNITED STATES                       SQUARE FEET         TITLE
-------------                       -----------         -----
Brownsville, Texas   ............        48,000       Leased(1)
Delray Beach, Florida   .........        51,073       Leased(2)
Del Rio, Texas    ...............        10,560       Leased(1)
Hattiesburg, Mississippi   ......       725,000       Owned
Hattiesburg, Mississippi   ......       300,000       Leased(1)
McMinnville, Tennessee  .........       169,400       Leased
Neosho, Missouri  ...............       853,714       Owned/Leased
Waynesboro, Mississippi    ......       887,200       Leased
                                      ----------
  Total  ........................     3,044,947
                                      ==========

     Active properties outside the United States are as follows:

INTERNATIONAL                      SQUARE FEET        TITLE
-------------                      -----------        -----
Acuna, Mexico    ...............       110,000       Owned
Barquisimeto, Venezuela   ......        75,686       Owned
Caracas, Venezuela  ............         9,867       Leased(3)
Kowloon, Hong Kong  ............        10,076       Leased(3)
Matamoros, Mexico   ............        91,542       Owned
Milton Kaynes, England  ........         5,928       Leased(3)
Tlalnepantla, Mexico   .........       297,927       Owned
                                      ---------
  Total    .....................       601,026
                                      =========

----------------

(1) Warehouse only
(2) Corporate headquarters
(3) Administration
(4) Warehouse and administration

     The Company believes that its existing facilities will adequately provide
sufficient suitable capacity to implement its operating plans.

ITEM 3. LEGAL PROCEEDINGS

     The Company and its subsidiaries are involved in various lawsuits arising
from time to time which the Company considers to be ordinary routine litigation
incidental to its business. In the opinion of the Company, the resolution of
these matters, and of certain matters relating to prior operations of the
Predecessor, individually or in the aggregate, will not have a material adverse
effect upon the financial position or results of operations of the Company. The
Company has established reserves for pending litigation which the Company
considers to be adequate to cover loss contingencies determined by the Company
associated with such proceedings.

                                       9

<PAGE>

     See "Environmental Matters" under Item 1 for a description of certain
legal proceedings related to environmental matters, which provision is
incorporated herein by reference.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     During the quarter ended December 29, 1996, there were no matters submitted
to a vote of the Company's security holders.

EXECUTIVE OFFICERS OF THE REGISTRANT

     The executive officers of the Company are as follows:

<TABLE>
<CAPTION>
NAME                         AGE                              TITLE
----                         ---                              -----
<S>                         <C>      <C>
Albert J. Dunlap   ......    59       Chairman, Chief Executive Officer and Director
Russell A. Kersh   ......    43       Executive Vice President, Finance and Administration
David C. Fannin    ......    51       Executive Vice President, General Counsel and Secretary
Donald R. Uzzi  .........    44       Executive Vice President, Consumer Products Worldwide
Jack Dailey  ............    57       Vice President, Corporate Purchasing and Logistics
Edwin T. Derecho   ......    39       Vice President, Treasurer
Robert J. Gluck    ......    39       Vice President, Controller
Lee Griffith    .........    56       Vice President, Sales
Janet G. Kelley    ......    43       Vice President, Associate General Counsel
Gary Mask    ............    48       Vice President, Human Resources
Kevin McBride   .........    42       Vice President, Marketing and Product Development
Ronald L. Newcomb  ......    53       Vice President, Manufacturing
R. Dixon Thayer    ......    45       Vice President, International
Robert P. Totte    ......    43       Vice President, Taxes
</TABLE>

     ALBERT J. DUNLAP has been Chairman and Chief Executive Officer of Sunbeam
Corporation since July 18, 1996. From April 1994 to December 1995 he was
Chairman and Chief Executive Officer of Scott Paper Company. From 1991 to 1993,
Mr. Dunlap was the Managing Director and Chief Executive Officer of Consolidated
Press Holdings Limited (an Australian media, chemicals and agricultural
operation). Mr. Dunlap is a Director of General Oriental Investments Limited.

     DAVID C. FANNIN has been Executive Vice President, General Counsel and
Secretary since January 1994. From 1979 until 1993, he was a partner in the law
firm of Wyatt, Tarrant and Combs.

     RUSSELL A. KERSH has been Executive Vice President, Finance and
Administration of Sunbeam Corporation since July 22, 1996. From June 1994 to
December 1995 he was Executive Vice President, Finance and Administration of
Scott Paper Company. Mr. Kersh served as the Chief Operating Officer of Addidas
America from January 1993 to May 1994. He is a Director of Basic Petroleum
International, Ltd. (a Guatemalan petroleum company).

     DONALD R. UZZI has been Executive Vice President, Consumer Products
Worldwide since January, 1997. From November 1996 to January 1997, he held the
position of Senior Vice President, Global Marketing. Mr. Uzzi joined the Company
in September 1996 as Vice President, Marketing and Product Development. From
January 1993 to July 1996, Mr. Uzzi served as President of the Beverage Division
of Quaker Oats. During 1990 to 1992, Mr. Uzzi was employed by Pepsi Cola as
Senior Vice President for North America (1992) and Vice President and General
Manager of the Mid-Atlantic Division (1990-1991).

     JACK DAILEY has been Vice President, Corporate Purchasing and Logistics
since July 1996. He was Vice President, Purchasing at Scott Paper Company from
April 1994 to December 1995. Prior to that time, he was Vice President and
General Manager of North American Operation for Inmac (a business computer
products direct response company) from August 1988 to February 1994.

                                       10

<PAGE>

     EDWIN T. DERECHO joined the Company as Vice President and Treasurer in
October 1994. Prior to joining the Company, Mr. Derecho held the position of
Director of Capital Markets at PepsiCo, Inc. from March 1992. From 1986 to 1992
he was employed at Citibank, N.A., most recently as a Vice President.

     ROBERT J. GLUCK has been a Vice President of the Company since December
1992 and was named Vice President, Controller in February 1995. Mr. Gluck was
employed by the public accounting firm of Ernst & Young from 1981 until 1992.

     LEE GRIFFITH has been Vice President, Sales since September 1996. He was
previously with Scott Paper Company where he served as President and Chief
Executive Officer of Scott Paper Limited of Canada since January 1995. Prior to
that date, Mr. Griffith was employed by Scott Paper Company as Vice President,
Consumer Sales for North America (from 1994 to 1995) and Vice President, U.S.
Consumer Business (from 1988 to 1994).

     JANET G. KELLEY has been Vice President since February 1996 and Associate
General Counsel since July 1995. She was Group Counsel from March 1994. From
1984 to 1994, Ms. Kelley was a partner in the law firm of Wyatt, Tarrant &
Combs.

     GARY MASK joined the Company in March 1997 as Vice President, Human
Resources. He was employed as Vice President, Human Resources of Cavenham Forest
Industries (the successor to Crown Zellerbach Corporation) from 1984 through
February 1997.

     KEVIN MCBRIDE has been Vice President, Marketing and Product Development
since January 1997. From January 1994 to June 1996, he was Vice President,
Marketing of Circle K Stores, Inc. From September 1991 to December 1993, he was
a Managing Director of Cambridge Group East, a management consulting company.

     RONALD L. NEWCOMB has been Vice President, Manufacturing since September
1996. Prior to his employment with Sunbeam, Mr. Newcomb was Vice President,
Operations, Worldwide Household Products Group for Black & Decker from August
1994 to August 1996. From August 1989 to August 1994, he was Vice President of
Operations and Manufacturing for Textron Lycoming.

     R. DIXON THAYER has been Vice President, International since September
1996. Prior to joining Sunbeam, Mr. Thayer was Vice President, Global Research,
Development Engineering and Global Growth for Kimberly Clark from December 1995.
Prior to that date, Mr. Thayer held various positions with Scott Paper Company,
including Vice President, New Product Development (from April to December 1995),
Vice President and General Manager of Europe ASH from January 1991 to April
1995.

     ROBERT P. TOTTE has been Vice President, Taxes since May 1993. He was
National Tax Director for Domino's Pizza, Inc. from 1985 until 1993.

                                       11

<PAGE>

                                    PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     The Common Stock is listed and traded on the New York Stock Exchange under
the symbol "SOC". The Company has paid quarterly cash dividends of $.01
per share since December 15, 1992. The Company presently intends to continue to
pay cash dividends at a quarterly rate of $.01 per share; however, future
payments of cash dividends will be at the discretion of the Company's Board of
Directors and dependent upon the Company's results of operations, financial
condition and other relevant factors.

     The following table sets forth the high and low sale prices for the Common
Stock for the calendar quarters indicated as reported by the New York Stock
Exchange Composite Tape:

                               MARKET PRICE
                           --------------------
                            HIGH        LOW
                           ---------   --------
 1996:
 Fourth Quarter   ......    $29 1/2     $22 3/4
 Third Quarter    ......    $24 3/4     $12 1/4
 Second Quarter   ......    $17 1/8     $13 1/2
 First Quarter    ......    $19 3/4     $15 1/8

 1995:
 Fourth Quarter   ......    $16 3/8     $13 1/2
 Third Quarter .........    $17 1/8     $14
 Second Quarter   ......    $23 5/8     $12 1/2
 First Quarter .........    $25 1/2     $22 3/8

     On March 21, 1997 there were approximately 1,509 record holders of the
Company's Common Stock.

     During the fourth quarter of 1996, the Company sold 2,000 shares of Common
Stock (from the Treasury account) to Director Faith Whittlesey for $27.63 per
share (the market value at the date of sale on December 5, 1996) in connection
with her appointment to the Board of Directors. This transaction was made
pursuant to the exemption from registration provided by Section 4(2) of the
Securities Act of 1933.

                                       12


<PAGE>


ITEM 6. SELECTED FINANCIAL DATA

     The following is a summary of certain financial information relating to the
Company. The summary should be read in conjunction with the Consolidated
Financial Statements of the Company included in this report. All amounts in the
table are expressed in millions, except per share data.

<TABLE>
<CAPTION>
                                                                               FISCAL YEARS ENDED
                                                    ------------------------------------------------------------------------
                                                     JANUARY 3,    JANUARY 2,    JANUARY 1,    DECEMBER 31,   DECEMBER 29,
                                                      1993(1)         1994          1995           1995          1996(2)
                                                    ------------- ------------- ------------- --------------- --------------
<S>                                                 <C>           <C>           <C>           <C>             <C>
STATEMENT OF OPERATIONS DATA:
 Net sales  .......................................    $ 839.8       $927.5       $1,044.3       $1,016.9         $ 984.2
 Cost of goods sold  ..............................      615.5        674.2          764.4          809.1           900.6
 Selling, general and administrative
  expense .........................................      121.5        119.3          128.9          137.5           216.1
 Restructuring, impairment and other costs   ......          -            -              -              -           154.8
                                                       --------      -------      ---------      ---------        -------
 Operating earnings (loss) ........................    $ 102.8       $134.0       $  151.0       $   70.3         $(287.3)
                                                       ========      =======      =========      =========        =======
 Earnings (loss) from continuing operations
  before cumulative effect of accounting
  change  .........................................    $  53.5       $ 76.9       $   85.3       $   37.6         $(196.7)
 Earnings from discontinued operations,
  net of taxes(3)  ................................       12.1         11.9           21.7           12.9             0.8
 Estimated loss on sale of discontinued
  operations, net of taxes(3)  ....................          -            -              -              -           (32.4)
 Earnings (loss) before cumulative effect of
  accounting change   .............................    $  65.6       $ 88.8       $  107.0       $   50.5         $(228.3)
 Net earnings(loss)  ..............................    $  48.3       $ 88.8       $  107.0       $   50.5         $(228.3)

FULLY DILUTED EARNINGS PER SHARE
 Average common and equivalent shares
  outstanding   ...................................       84.8         88.2           82.6           82.8            82.9
 Earnings (loss) per share from continuing
  operations before cumulative effect of
  accounting change  ..............................    $  0.63       $ 0.87       $   1.03       $   0.45         $ (2.37)
 Earnings (loss) per share before cumulative
  effect of accounting change .....................    $  0.77       $ 1.01       $   1.30       $   0.61         $ (2.75)
 Earnings (loss) per share of Common Stock   ......    $  0.57       $ 1.01       $   1.30       $   0.61         $ (2.75)
 Cash dividends declared per share   ..............    $  0.01       $ 0.04       $   0.04       $   0.04         $  0.04

BALANCE SHEET DATA
 (AT PERIOD END):
  Working capital .................................    $ 400.2       $261.4       $  294.8       $  411.7         $ 352.6
  Total assets    .................................    1,043.8        928.8        1,008.9        1,158.7         1,072.7
  Long-term debt  .................................      133.5        133.4          124.0          161.6           201.1
  Shareholder's equity ............................      477.2        370.0          454.7          601.0           395.3

<FN>
----------------

(1) Net earnings for the fiscal year ended January 3, 1993 included a $17.3
    million after-tax charge attributable to the adoption of Statement of
    Financial Accounting Standards No. 106, EMPLOYERS ACCOUNTING FOR
    POSTRETIREMENT BENEFITS OTHER THAN PENSIONS.
(2) Includes special charges of $337.6 million before taxes. See Notes 2 and 3
    to Notes to Consolidated Financial Statements.
(3) Represents earnings from the Company's furniture business, net of income
    taxes and the estimated loss on disposal. See Note 3 to Notes to
    Consolidated Financial Statements.
</FN>
</TABLE>

                                       13

<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATION

YEAR ENDED DECEMBER 29, 1996 COMPARED TO THE YEAR ENDED DECEMBER 31, 1995

     On November 12, 1996 the Company announced a major restructuring and growth
plan designed to massively reduce its cost structure and grow the business in
order to restore higher levels of profitability for the Company. The cost
reduction portion of the restructuring and growth plan is expected to result in
anticipated annual savings estimated to be $225.0 million with 75% realization
of these savings in 1997 and the remaining 25% in 1998. These cost savings will
result primarily from the consolidation of administrative functions within the
Company, the rationalization of manufacturing and warehouse facilities
(including the reduction in the number of production facilities from 26 to 8 and
warehouses utilized from 61 to 18), the elimination of over 6,000 positions
(including 3,300 from the divestiture of non-core businesses described below and
the elimination of approximately 2,800 other positions), the centralization of
the Company's procurement function and the reduction of the Company's product
offerings and stock keeping units ("SKU's"). The restructuring and growth
plan also included a redefinition of the Company's core product categories and
the elimination of those businesses and product lines that do not fit the core
categories. Sunbeam's new core product categories are Appliances, Health Care,
Personal Care and Comfort, Outdoor Cooking and Away From Home. Product
categories and businesses which were determined to be non-core and have already
been divested include the Company's furniture business and time and the
temperature product line, both of which were sold in March 1997, and its
decorative bedding product line, sold in December 1996. The remaining non-core
product categories, which are planned for divestiture in the first half of 1997,
are Counselor/Registered trademark/ and Borg/Registered trademark/ scales and
the Company's textile mill in Biddeford, Maine.

     The Company's operating results for 1996 include the effects of a pre-tax
special charge of $337.6 million recorded in conjunction with the implementation
of the restructuring and growth plan. Approximately 20% of the charge is for
cash items of which $63.8 million is accrued at December 29, 1996, primarily for
severance costs and lease and other facility exit costs that will be
substantially expended during 1997. The special charge to earnings is included
in the following categories on the consolidated statement of operations (in
millions):

<TABLE>
<CAPTION>
                                                       PRE-TAX DOLLAR         AFTER-TAX
                                                           AMOUNT          PER SHARE AMOUNT
                                                       -----------------   ------------------
<S>                                                    <C>                 <C>
Restructuring, impairment and other costs  .........        $154.9              $ (1.21)
Cost of sales   ....................................          92.3                (0.72)
Selling, general and administrative  ...............          42.5                (0.33)
Estimated loss from discontinued operations   ......          47.9                (0.39)
                                                            -------             --------
Total  .............................................        $337.6              $ (2.65)
                                                            =======             ========
</TABLE>

     As further described in Note 3, the sale of the Company's furniture
business assets (primarily inventory, property, plant and equipment) was
completed on March 17, 1997. The Company received $62.1 million in cash at
closing and expects to receive approximately $10.0 million by June 30, 1997. The
Company retained accounts receivable related to the furniture business of
approximately $50.0 million as of the closing date. The final purchase price for
the furniture business is subject to post-closing adjustment based on the terms
of the Asset Purchase Agreement. The Company will finalize its accounting for
the loss on disposal of the furniture business in the first quarter of 1997 and
could record an additional after-tax loss from discontinued operations. See
discussion of Restructuring, Impairment and Other Costs in Note 2 and
Discontinued Operations and Assets Held For Sale in Note 3 to the Company's
consolidated financial statements for further information regarding the
individual components of the special charge.

     Net sales from continuing operations of $984.2 million for 1996 represents
a decrease of $32.7 million, or 3.2%, from 1995. The Company experienced a loss
from continuing operations of $196.7 million or $2.37 per share for 1996 versus
earnings from continuing operations of $37.6 million or $.45

                                       14

<PAGE>

per share in 1995 primarily as a result of the restructuring activities
discussed above. The net loss for 1996 was $228.3 million, or $2.75 per share,
compared to net earnings of $50.5 million, or $0.61 per share, for 1995.
Excluding the impact of special charge items for 1996, earnings from continuing
operations before income taxes decreased from $60.6 million in 1995 to a loss of
$12.9 million in 1996.

     Domestic sales represented approximately 80% of total sales of the Company
in 1996 and decreased $28.5 million or 3.4% from 1995. This sales decline was
driven by lower sales of outdoor cooking products, which declined 7.3% and lower
sales of bedding products which declined 9.0% from 1995, primarily as result of
lower decorative bedding sales (divested in December 1996). Domestic sales of
appliance products were flat with sales increases from new products such as
vegetable steamers and toaster ovens being offset by reduced pricing on
breadmakers. Sales of other product categories such as health and personal care
products and time and temperature products (divested in March 1997) were either
flat or declined slightly from 1995 levels.

     International sales decreased $4.2 million or 2.2% from 1995 primarily as
a result of lower sales in Latin America due to political and/or economic
instability in several countries such as Ecuador, Peru, Columbia and Venezuela
(which suffered a bolivar devaluation in April 1996), a sales decline of 11.2%
in Canada as a result of the bankruptcy filing of the Company's then largest
Canadian customer offset by a 55.0% increase in sales in Mexico as a result of a
more stable economic environment in 1996.

     The Company's gross margin percentage, excluding the impact of special
charges, was 17.9% of sales in 1996, down from 20.4% in 1995, primarily from the
underabsorption of higher manufacturing costs and excess manufacturing capacity
that has now been realigned for 1997 and beyond by the Company's restructuring
and growth plan cost reduction initiatives.

     Selling, general and administrative ("SG&A") expenses, excluding the
impact of special charges described above, were 17.6% of sales in 1996 primarily
as a result of an inflated cost structure that has now been realigned for 1997
and beyond. In addition, a $12.0 million fourth quarter 1997 media advertising
campaign and one-time expenditures for market research, new packaging, and other
growth plan initiatives resulted in higher than normal SG&A spending in 1996.
Also included in 1996 SG&A costs were $7.7 million of compensation expense
resulting from restricted stock awards made in connection with the employment of
a new senior management team.

     Interest expense for 1996 increased from $9.4 million in 1995 to $13.6
million as a result of increased indebtedness of the Company for working capital
requirements and non-recurring capitalized interest in 1995 related to the
construction of the Hattiesburg manufacturing and distribution center.

     The effective income tax rate for 1996 decreased 3 percentage points from
1995 to 35.0% as a result of certain foreign and state operating losses for
which no tax benefits were recorded and the non-deductibility of compensation
expense related to restricted stock awards.

     The Company's discontinued furniture operations had revenues of $227.5
million in 1996, up 22.6% from $185.6 million in 1995. This revenue growth was
the result of the acquisition of the Samsonite/Registered trademark/ furniture
business in November 1995. Excluding the impact of this acquisition, furniture
business sales declined 2.1%. Earnings from the discontinued furniture
operations, net of taxes, declined from $12.9 million in 1995 to $.8 million in
1996 primarily as a result of lower gross margins from reduced pricing,
underabsorption of higher manufacturing costs and higher raw material costs. In
addition, SG&A costs increased due to the inclusion of the Samsonite- furniture
business, higher distribution and warehousing costs, particularly with resin
furniture products, and higher bad debt expenses.

YEAR ENDED DECEMBER 31, 1995 COMPARED TO THE YEAR ENDED JANUARY 1, 1995

     Net sales from continuing operations of $1,016.9 million for 1995 decreased
$27.4 million, or 2.6%, from 1994. Earnings from continuing operations were
$37.6 million or $.45 per share in 1995 compared to $85.3 million in 1994 or
$1.03 per share.

                                       15

<PAGE>

     Domestic sales represented approximately 82% of total Company sales for
1995 and decreased $23.4 million or 2.7% below 1994 levels due to an 8.6%
decline in sales of outdoor cooking products offset by a 5.4% increase in
appliance sales from new product introductions in late 1994 and 1995 and an
11.5% increase in sales of warming blankets and heated throws. Sales of other
product categories, including health and personal care products, and time and
temperature products (divested in March 1997), declined 6.1% in 1995.

     International sales decreased by $4.0 million or 2.1% below 1994 levels
primarily as a result of a 53.8% decrease in sales in Mexico as a result of the
peso devaluation in late 1994 and the 1995 recession offset by increased sales
from expanded distribution in South and Central America, higher sales in
Venezuela resulting from consumer anticipation of the devaluation of the bolivar
and higher gas grill sales in Europe.

     For 1995, the gross margin percentage decreased from 26.8% to 20.4%. The
decline in margin was due primarily to (1) manufacturing inefficiencies arising
from lower than planned production rates, (2) increased promotional expenses,
(3) certain inventory writedowns, primarily related to outdoor products unsold
from the 1995 season, (4) increased appliance warranty expenses, (5) increases
in raw material prices not fully recovered by selling price increases and (6) a
higher level of close-out sales of household products in connection with the
transition to the Hattiesburg facility and in anticipation of new product
launches planned for 1996.

     Operating earnings for 1995 were $70.2 million, a decrease of $80.8 million
from 1994. As a percentage of sales, operating earnings decreased 7.6 percentage
points to 6.9% which is primarily attributable to the gross margin percentage
decline. SG&A increased from 12.3% to 13.5% of net sales in 1995. SG&A in dollar
terms increased $8.7 million in 1995 to $137.5 million primarily from (1)
increased provisions for bad debts and customer deductions associated with the
bankruptcy filings of certain of the Company's retail customers, (2)
non-recurring costs associated with the start-up of the Hattiesburg distribution
center (which caused the Company to incur additional costs for temporary
distribution labor, overtime costs and costs of outside distribution services as
well as delaying closure of a former warehouse), (3) costs associated with
International expansion activities in the Far East and Europe, (4) increased
depreciation expense related to investments in information systems and the
Hattiesburg distribution center and (5) increased investments in product design
engineering resources.

     Interest expense for the year ended December 31, 1995 increased $2.5
million, or 35.3%, over 1994 due primarily to increased indebtedness of the
Company in support of working capital and capital spending requirements.

     The effective income tax rate decreased from 41.1% to 38.0%, or 3.1
percentage points, from 1994. The reduced effective tax rate was a result of (1)
increased earnings of certain foreign operations and dividend payments from the
Company's Venezuelan subsidiary, which allowed for the utilization of net
operating loss carryforwards and foreign tax credits for which no tax benefits
were recorded, and (2) state income tax benefits associated with the Hattiesburg
facility.

     The Company's discontinued furniture operations had revenues of $186.5
million in 1995, up 20.9% from $154.2 million in 1994. This revenue growth was
the result of the acquisition of the Rubbermaid- resin furniture business in
September 1994. Excluding the impact of this acquisition, furniture business
sales increased 3.9% primarily from additional sales of wrought iron furniture.
Earnings from the discontinued furniture operations, net of taxes, declined from
$21.7 million in 1994 to $12.9 million in 1995 primarily as a result of lower
gross margins from higher raw material costs, particularly resin. In addition,
SG&A costs increased due to the inclusion of the resin furniture business and
from higher distribution and warehousing costs associated with the resin
facility. In addition, the bankruptcy filing of one large customer adversely
impacted the discontinued furniture business operating results in 1995.

FOREIGN OPERATIONS

     During 1996 almost 90% of the Company's business was conducted in U.S.
dollars (including both domestic sales and U.S. dollar denominated export sales
primarily to certain Latin American markets).

                                       16

<PAGE>

The Company's non-U.S. dollar denominated sales are made principally by
subsidiaries in Mexico, Venezuela, Canada and Europe. Venezuela is considered a
hyperinflationary economy for accounting purposes; therefore, translation
adjustments related to Venezuelan net monetary assets are included as a
component of net earnings. Such translation adjustments were not material to
1995 and 1996 operating results. As a result of continued inflation, Mexico will
be considered a hyperinflationary economy for accounting purposes beginning in
1997.

LIQUIDITY AND CAPITAL RESOURCES

     As of December 29, 1996, the Company had cash and cash equivalents of $11.5
million and total debt of $202.0 million. Cash provided by operating activities
during 1996 was $14.2 million compared to $81.5 million in 1995. This decrease
is primarily attributable to the reduction in earnings (loss) before non-cash
charges (depreciation, restructuring and other non-cash special charges, loss on
discontinued operations and deferred taxes).

     Capital spending, inclusive of a $5.0 million warehouse expansion financed
with a capital lease, totaled $75.3 million in 1996 (including $14.5 million
related to the discontinued furniture operations) and was primarily attributable
to new product development, cost reduction initiatives and warehouse expansions.
Capital spending in 1995 reflected approximately $59.4 million associated with
the Hattiesburg facility, $27.4 million related to new product development and
$10.8 million attributable to the discontinued furniture business. The remaining
1995 spending was primarily attributable to cost reduction projects,
productivity initiatives and environmental compliance including $14.4 million
for a powder coat paint system for outdoor cooking products. The Company
anticipates 1997 capital spending to be approximately 75% of 1996 levels and
primarily related to new product introductions and certain facility
rationalization initiatives.

     Cash used in investing activities for 1995 and 1994 also includes the
purchase of certain furniture businesses, both of which were included in the
divestiture of the Company's furniture business completed in March 1997. Cash
used in investing activities in 1994 is net of $23.5 million received from the
surrender of certain life insurance policies on former employees of the Company.


     Cash provided by financing activities in 1996 includes $30.0 million in net
borrowings under the Company's $500.0 million revolving credit facility, $11.5
million in new issuances of long-term debt and $4.6 million in proceeds from the
sale of treasury shares to certain executives of the Company. Cash used in
financing activities in 1995 reflects $13.1 million used for the purchase of
treasury stock in connection with a stock repurchase program the Company had
authorized in 1995 and which it discontinued in late 1996.

     The Company is a party to various environmental matters, substantially all
related to previously divested operations. In connection with the Company's
restructuring plan a comprehensive review of environmental exposures was
undertaken and the Company accelerated its strategy for the resolution and
settlement of certain environmental claims. This review and change in strategy
resulted in additional environmental reserves being recorded in 1996 as more
fully described in Note 12 to the consolidated financial statements. In
management's opinion, the ultimate resolution of these environmental matters
will not have a material adverse effect upon the Company's financial condition.


     On a limited basis, the Company selectively uses derivatives (interest rate
swaps and foreign exchange option and forward contracts) to manage interest rate
and foreign exchange exposures that arise in the normal course of business. No
derivative contracts are entered into for trading or speculative purposes. The
use of derivatives did not have a material impact on the Company's financial
results in 1996 and 1995. See Note 6 to the Company's consolidated financial
statements.

     The Company believes its cash flow from operations, existing cash and cash
equivalent balances as well as its revolving credit facility will be sufficient
to finance its requirements to support working capital needs, remaining cash
expenditures required to implement its restructuring and growth plan,

                                       17

<PAGE>

capital expenditures and debt service in the foreseeable future.

NEW ACCOUNTING STANDARDS

     In December 1995, Statement of Financial Accounting Standard ("SFAS")
No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION, was issued. SFAS No. 123
allows either adoption of a fair value method for accounting for stock-based
compensation plans or continuation of accounting under APB No. 25, ACCOUNTING
FOR STOCK ISSUED TO EMPLOYEES, and related interpretations with supplemental
disclosures.

     The Company has chosen to account for its stock options and employee stock
purchase plans using the intrinsic value based method prescribed in APB Opinion
No. 25 and, accordingly, does not recognize compensation expense for stock
option grants made at an exercise price equal to or in excess of the fair market
value of the stock at the date of grant. Pro forma net income and earnings per
share amounts as if the fair value method had been adopted are presented in Note
7 to the consolidated financial statements. The adoption of SFAS No. 123 will
not impact the Company's results of operations, financial position or cash
flows.

CAUTIONARY STATEMENTS

     The Company's Cautionary Statements set forth in Part I, Item 1 of this
report, under the heading "Cautionary Statements," are incorporated herein by
reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The response to this item appears in Item 14(a) of this report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

     None.

                                   PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     Information regarding the Company's directors is incorporated by reference
to the information set forth under the caption "Election of Directors" in
the Company's Proxy Statement for the 1997 Annual Meeting of Shareholders (the
"Proxy Statement"), which Proxy Statement will be filed with the
Securities and Exchange Commission (the "SEC") not later than 120 days
after the end of the Company's fiscal year pursuant to Regulation 14A.
Information regarding executive officers of the Registrant is included under a
separate caption in Part I hereof. Information regarding compliance with Section
16(a) of the Exchange Act is incorporated by references to the information
included under the caption "Section 16(a) Beneficial Ownership Reporting
Compliance" in the Company's Proxy Statement.

ITEM 11. EXECUTIVE COMPENSATION

     Information regarding this item is incorporated by reference to the
information included under the captions "Executive Compensation",
"Compensation Committee Interlocks and Insider Participation" and
"Directors' Compensation" in the Company's Proxy Statement, which will
be filed with the SEC not later than 120 days after the end of the Company's
fiscal year pursuant to Regulation 14A.

                                       18

<PAGE>


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     Information regarding this item is incorporated by reference to the
information included under the captions "Security Ownership of Certain
Shareholders" and "Security Ownership by Management" in the Company's
Proxy Statement, which will be filed with the SEC not later than 120 days after
the end of the Company's fiscal year pursuant to Regulation 14A.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Information regarding this item is incorporated by reference to the
information included under the caption "Certain Relationships and Related
Transactions" in the Company's Proxy Statement, which will be filed with the
SEC not later than 120 days after the end of the Company's fiscal year pursuant
to Regulation 14A.

                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

     (a) (1)   The consolidated financial statements, related notes thereto and
the report of independent certified public accountants required by Item 8 are
listed on page F-1 herein.

         (2)   The listing of financial statement schedules appears on page F-1
herein.

         (3)(a) Exhibits required by Item 601 are set forth below, including the
management contracts or compensatory plans or arrangements required pursuant to
Item 601 which are designated as Exhibits 10a to 10i and 10s to 10cc.

<TABLE>
<CAPTION>
EXHIBIT
 NO.                                              DESCRIPTION
---------                                         -----------
<S>         <C>
 2a.         Asset Purchase Agreement dated February 10, 1997, among Sunbeam Products, Inc., Sunbeam
             Furniture Company, OP II, Inc., Jacuzzi Outdoor Products, Inc., Sunbeam Corporation and
             U.S. Industries, Inc.

 2b.         Amendment to Asset Purchase Agreement dated as of March 17, 1997, among Sunbeam
             Products, Inc., Sunbeam Furniture Company, OP II, Inc., Sunlite Casual Furniture, Inc.,
             Sunbeam Corporation and U.S. Industries, Inc.

 3a.         Amended and Restated Certificate of Incorporation of Sunbeam.(10)

 3b.         By-laws of Sunbeam, as amended(11)

10a.         Employment Agreement dated as of July 18, 1996, by and between Sunbeam and Albert
             J.Dunlap.(10)

10b.         Employment Agreement dated as of July 22, 1996, by and between Sunbeam and Russell A.
             Kersh.(11)

10c.         Employment Agreement dated as of July 29, 1996, by and between Sunbeam and David C.
             Fannin.(11)

10d.         Employment Agreement dated as of January 1, 1997, by and between Sunbeam and Donald
             Uzzi.

10e.         Sunbeam Executive Benefit Replacement Plan.(7)

10f.         Amended and Restated Sunbeam Equity Team Plan.

10g.         Performance Based Compensation Plan.

10h.         Sunbeam Deferred Compensation Plan for Outside Directors dated as of December 15,
             1993.(2)
</TABLE>

                                       19

<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO.                                                 DESCRIPTION
---------                                           -----------
<S>         <C>
10i.         Employment Agreement dated as of June 24, 1996, by and between the Company and Charles
             J. Thayer.(10)

10j.         Tax Sharing Agreement dated as of October 31, 1990 by and among Sunbeam, SAIL, SOHO,
             Montey and the subsidiaries of Sunbeam listed therein.(1)

10k.         Guarantee Agreement, dated as of June 1, 1994, between Sunbeam and Continental Bank,
             N.A., as Trustee.(4)

10l.         Trust Indenture, dated as of June 1, 1994, between Mississippi Business Finance Corporation
             ("MBFC"), and Continental Bank, N.A., as Trustee.(4)

10m.         Loan Agreement, dated as of June 1, 1994, between MBFC and Sunbeam.(4)

10n.         $75 million Sunbeam promissory note, dated as of June 21,1994, payable to MBFC.(4)

10o.         Leasehold Deed of Trust and Security Agreement, dated as of June 1, 1994, among Sunbeam,
             Jim B. Tohill, as Trustee, and MBFC.(4)

10p.         Credit Agreement dated as of September 16, 1996, among the Company, The Chase
             Manhattan Bank and the Lenders named therein.(11)

10q.         First Amendment dated as of November 21, 1996 to the Credit Agreement dated as of
             September 16, 1996, among the Company, The Chase Manhattan Bank and the Lenders
             named therein.

10r.         Second Amendment dated as of January 31, 1997 to the Credit Agreement dated as of
             September 16, 1996, among the Company, The Chase Manhattan Bank and the Lenders
             named therein.

10s.         Employment Agreement dated as of August 1, 1993, by and between Sunbeam and Roger W.
             Schipke.(3)

10t.         First Amendment to Employment Agreement between the Company and Roger W. Schipke
             dated as of June 1, 1994.(5)

10u.         Equity Award Agreement dated as of August 1, 1993, by and between Sunbeam and Roger W.
             Schipke.(3)

10v.         Amendment to Equity Award Agreement and Stock Pledge Agreement dated September 1,
             1994, by and between the Company and Roger W. Schipke.(5)

10w.         Employment Agreement made and effective as of January 1, 1994, by and between the
             Company and James J. Clegg.(6)

10x.         Employment Agreement made and effective as of January 1, 1994, by and between the
             Company and Paul M. O'Hara.(7)

10y.         Agreement between the Company and Roger W. Schipke dated as of December 12, 1995.(9)

10z.         Agreement and Release between Roger W. Schipke and the Company dated May 22, 1996.(10)

10aa.        Agreement and Release between James J. Clegg and the Company dated July 23, 1996(10).

10bb.        Agreement and Release between Paul M. O'Hara and the Company dated August 7, 1996.(11)

10cc.        Agreement, Release, Covenant Not to Sue and Confidentiality Agreement between James D.
             Wilson and the Company dated March 15, 1997.

11.          Calculations of Earnings Per Share of Common Stock.

21.          Subsidiaries of the Registrant.

23.          Consent of Arthur Andersen LLP.

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

<FN>
----------------

 (1) Incorporated by reference to the Company's Annual Report on Form 10-K for
     the fiscal year ended September 30, 1990.

 (2) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the quarter ended July 4, 1993.

                                       20

<PAGE>

 (3) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the quarter ended October 3, 1993.

 (4) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the quarter ended July 3, 1994.

 (5) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the quarter ended October 2, 1994.

 (6) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the quarter ended April 3, 1994.

 (7) Incorporated by reference to the Company's Annual Report on Form 10-K for
     the fiscal year ended January 1, 1995.

 (8) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the quarter ended July 2, 1995.

 (9) Incorporated by reference to the Company's Annual Report on Form 10-K for
     the fiscal year ended December 21, 1995.

(10) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the quarter ended June 30, 1996.

(11) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the quarter ended September 29, 1996.
</FN>
</TABLE>

     (b) Reports on Form 8-K.
         The registrant filed a report on Form 8-K on November 12, 1996.

     (c) Exhibits
         The exhibits required by Item 601 are filed herewith.

     (d) Financial Statement Schedules
         The Financial Statement Schedules required by Regulation S-X are filed
         herewith.

                                       21

<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                 SUNBEAM CORPORATION

                                 BY: /s/ RUSSELL A. KERSH
                                     --------------------------------
                                     RUSSELL A. KERSH
                                     Executive Vice President,
                                     Finance and Administration
                                     (Principal Financial Officer)

                                     Dated: March 31, 1997

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.

<TABLE>
<CAPTION>
     NAME AND SIGNATURE                      TITLE                       DATE
     ------------------                      -----                       ----
<S>                              <C>                                <C>
/s/    ALBERT J. DUNLAP           Chairman, Chief Executive          March 31, 1997
------------------------------     Officer and Director
      Albert J. Dunlap             (Principal Executive Officer)

/s/    CHARLES M. ELSON           Director                           March 31, 1997
------------------------------
      Charles M. Elson

/s/    RUSSELL A. KERSH           Executive Vice President,          March 31, 1997
------------------------------     Finance and Administration
      Russell A. Kersh             and Director

/s/    HOWARD G. KRISTOL          Director                           March 31, 1997
------------------------------
     Howard G. Kristol

/s/   PETER A. LANGERMAN          Director                           March 31, 1997
------------------------------
     Peter A. Langerman

/s/    CHARLES J. THAYER          Director                           March 31, 1997
------------------------------
     Charles J. Thayer

/s/    FAITH WHITTLESEY           Director                           March 31, 1997
------------------------------
      Faith Whittlesey

/s/    ROBERT J. GLUCK            Vice President, Controller         March 31, 1997
------------------------------     (Principal Accounting Officer)
      Robert J. Gluck
</TABLE>

                                       22

<PAGE>

                     SUNBEAM CORPORATION AND SUBSIDIARIES
         INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE

<TABLE>
<CAPTION>
                                                                                          PAGE
                                                                                         ------
<S>                                                                                      <C>
FINANCIAL STATEMENTS:

Report of Independent Certified Public Accountants   .................................    F-2

Consolidated Statements of Operations
 for the Fiscal Years Ended January 1, 1995, December 31, 1995 and December 29, 1996      F-3

Consolidated Balance Sheets as of December 31, 1995 and December 29, 1996 ............    F-4

Consolidated Statements of Shareholders' Equity
 for the Fiscal Years Ended January 1, 1995, December 31, 1995 and December 29, 1996      F-5

Consolidated Statements of Cash Flows
 for the Fiscal Years Ended January 1, 1995, December 31, 1995 and December 29, 1996      F-6

Notes to Consolidated Financial Statements  ..........................................    F-7

FINANCIAL STATEMENT SCHEDULE:*

II. Valuation and Qualifying Accounts ................................................    F-27

<FN>
----------------

* All other schedules for which provision is made in the applicable accounting
  regulations of the Securities and Exchange Commission are not required under
  the related instructions or are inapplicable, and therefore not included
  herein.
</FN>
</TABLE>

                                      F-1

<PAGE>


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Shareholders of
Sunbeam Corporation:

     We have audited the accompanying consolidated balance sheets of Sunbeam
Corporation (a Delaware corporation) and subsidiaries as of December 31, 1995
and December 29, 1996 and the related consolidated statements of operations,
shareholders' equity and cash flows for each of the three fiscal years in the
period ended December 29, 1996. These consolidated financial statements and the
schedule referred to below are the responsibility of the Company's management.
Our responsibility is to express an opinion on these consolidated financial
statements and schedule 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 financial statements referred to above present fairly,
in all material respects, the financial position of Sunbeam Corporation and
subsidiaries as of December 31, 1995 and December 29, 1996, and the results of
their operations and their cash flows for each of the three fiscal years in the
period ended December 29, 1996 in conformity with generally accepted accounting
principles.

     Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the accompanying
index to the financial statements and financial statement schedule is presented
for purposes of complying with the Securities and Exchange Commission's rules
and is not a required part of the basic financial statements. This schedule has
been subjected to the auditing procedures applied in our audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.

ARTHUR ANDERSEN LLP

Fort Lauderdale, Florida,
 January 29, 1997, except with respect to the matters
 discussed in Note 3, as to which the date is March 17, 1997.

                                      F-2

<PAGE>


                     SUNBEAM CORPORATION AND SUBSIDIARIES

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

<TABLE>
<CAPTION>
                                                                              FISCAL YEARS ENDED
                                                               ------------------------------------------------
                                                               JANUARY 1,      DECEMBER 31,      DECEMBER 29,
                                                                  1995             1995             1996
                                                               -------------   ---------------   --------------
<S>                                                            <C>             <C>               <C>
Net sales   ................................................   $1,044,247         $1,016,883        $ 984,236
Cost of goods sold   .......................................      764,355            809,130          900,573
Selling, general and administrative expense  ...............      128,836            137,508          216,129
Restructuring, impairment and other costs    ...............            -                  -          154,869
                                                               ----------         ----------        ---------
Operating earnings (loss)  .................................      151,056             70,245         (287,335)
Interest expense  ..........................................        6,974              9,437           13,588
Other (income) expense, net   ..............................         (712)               173            1,638
                                                               ----------         ----------        ---------
Earnings (loss) from continuing operations before
 income taxes  .............................................      144,794             60,635         (302,561)
Income taxes (benefit):
 Current    ................................................       33,227             (2,105)         (28,062)
 Deferred   ................................................       26,283             25,146          (77,828)
                                                               ----------         ----------        ---------
                                                                   59,510             23,041         (105,890)
                                                               ----------         ----------        ---------
Earnings (loss) from continuing operations   ...............       85,284             37,594         (196,671)
Earnings from discontinued operations, net of taxes   ......       21,727             12,917              839
Estimated loss on sale of discontinued operations,
 net of taxes  .............................................            -                  -          (32,430)
                                                               ----------         ----------        ---------
Net earnings (loss)  .......................................   $  107,011         $   50,511        $(228,262)
                                                               ==========         ==========        =========
Earnings (loss) per share of common stock from
 continuing operations  ....................................   $     1.03         $     0.45        $   (2.37)
                                                               ==========         ==========        =========
Net earnings (loss) per share of common stock   ............   $     1.30         $     0.61        $   (2.75)
                                                               ==========         ==========        =========
Weighted average common shares outstanding   ...............       82,553             82,819           82,925
                                                               ==========         ==========        =========
</TABLE>

                          See Notes to Consolidated Financial Statements.

                                      F-3

<PAGE>

                     SUNBEAM CORPORATION AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS
                            (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                           DECEMBER 31,      DECEMBER 29,
                                                                               1995             1996
                                                                           ---------------   --------------
<S>                                                                        <C>               <C>
ASSETS
Current assets:
 Cash and cash equivalents    ..........................................      $  28,273         $  11,526
 Receivables, net    ...................................................        216,195           213,438
 Inventories   .........................................................        209,106           162,252
 Net assets of discontinued operations and other assets
 held for sale    ......................................................        101,632           102,847
 Deferred income taxes  ................................................         26,333            93,689
 Prepaid expenses and other current assets   ...........................         19,543            40,411
                                                                              ---------         ---------
    Total current assets   .............................................        601,082           624,163
Property, plant and equipment, net  ....................................        287,080           220,088
Trademarks and trade names, net  .......................................        214,006           200,262
Other assets   .........................................................         56,516            28,196
                                                                              ---------         ---------
                                                                             $1,158,684        $1,072,709
                                                                              =========         =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
 Short-term debt and current portion of long-term debt   ...............      $   1,166         $     921
 Accounts payable    ...................................................         94,191           107,319
 Restructuring accrual  ................................................         13,770            63,834
 Other current liabilities    ..........................................         80,204            99,509
                                                                              ---------         ---------
    Total current liabilities    .......................................        189,331           271,583
Long-term debt    ......................................................        161,133           201,115
Other long-term liabilities   ..........................................         50,088            64,376
Non-operating liabilities  .............................................         80,167            88,075
Deferred income taxes   ................................................         76,932            52,308
Commitments and contingencies (Notes 12 and 13)
Shareholders' equity:
 Preferred stock (2,000,000 shares authorized, none outstanding)  ......              -                 -
 Common stock (issued 87,802,667 and 88,441,479 shares)  ...............            878               884
 Paid-in capital  ......................................................        441,786           447,948
 Retained earnings   ...................................................        266,698            35,118
 Other   ...............................................................        (24,880)          (25,310)
                                                                              ---------         ---------
                                                                                684,482           458,640
 Treasury stock, at cost (5,905,600 and 4,478,814 shares)   ............        (83,449)          (63,388)
                                                                              ---------         ---------
    Total shareholders' equity  ........................................        601,033           395,252
                                                                              ---------         ---------
                                                                             $1,158,684        $1,072,709
                                                                              =========         =========
</TABLE>

                          See Notes to Consolidated Financial Statements.

                                      F-4

<PAGE>


                     SUNBEAM CORPORATION AND SUBSIDIARIES

               CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                         COMMON      PAID-IN                     RETAINED         OTHER        TREASURY
                                         STOCK       CAPITAL       WARRANTS      EARNINGS       (NOTE 4)         STOCK
                                         ---------   -----------   -----------   ------------   ------------   ------------
<S>                                      <C>         <C>           <C>           <C>            <C>            <C>
Balance at January 1, 1994   .........      $876       $440,012      $ 2,368       $ 182,148      $ (14,043)     $ (174,070)
 Net earnings    .....................         -              -            -         107,011              -               -
 Common dividends
  ($.04 per share)  ..................         -              -            -          (3,169)             -               -
 Exercise of stock options
  and warrants .......................        56         21,864       (2,368)              -              -               -
 Issuance of restricted stock   ......         -              -            -               -           (108)              -
 Amortization of unearned
  compensation   .....................         -              -            -               -          1,269               -
 Minimum pension liability   .........         -              -            -               -           (561)              -
 Translation adjustments  ............         -              -            -               -         (6,675)              -
                                            ----       --------      -------       ---------      ---------      ----------
Balance at January 1, 1995   .........       932        461,876            -         285,990        (20,118)       (174,070)
                                            ----       --------      -------       ---------      ---------      ----------
 Net earnings    .....................         -              -            -          50,511              -               -
 Common dividends
  ($.04 per share)  ..................         -              -            -          (3,268)             -               -
 Exercise of stock options   .........        20         17,013            -               -              -               -
 Amortization of unearned
  compensation   .....................         -              -            -               -            582               -
 Retirement of treasury shares  ......       (74)       (37,103)           -         (66,535)             -         103,712
 Purchase of common stock
  for treasury   .....................         -              -            -               -              -         (13,091)
 Minimum pension liability   .........         -              -            -               -           (199)              -
 Translation adjustments  ............         -              -            -               -         (5,145)              -
                                            ----       --------      -------       ---------      ---------      ----------
Balance at December 31, 1995    ......       878        441,786            -         266,698        (24,880)        (83,449)
                                            ----       --------      -------       ---------      ---------      ----------
 Net loss  ...........................         -              -            -        (228,262)             -               -
 Common dividends
  ($.04 per share)  ..................         -              -            -          (3,318)             -               -
 Exercise of stock options   .........         6          7,313            -               -              -               -
 Grant of restricted stock   .........         -         (1,120)           -               -        (14,346)         15,466
 Amortization of unearned
  compensation   .....................         -              -            -               -          7,707               -
 Minimum pension liability   .........         -              -            -               -          4,963               -
 Retirement and sale of
  treasury shares   ..................         -            (31)           -               -              -           4,595
 Translation adjustments  ............         -              -            -               -          1,246               -
                                            ----       --------      -------       ---------      ---------      ----------
Balance at December 29, 1996    ......      $884       $447,948      $     -       $  35,118      $ (25,310)     $  (63,388)
                                            ====       ========      =======       =========      =========      ==========
</TABLE>

                          See Notes to Consolidated Financial Statements.

                                      F-5

<PAGE>


                     SUNBEAM CORPORATION AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                    FISCAL YEARS ENDED
                                                                     ------------------------------------------------
                                                                     JANUARY 1,      DECEMBER 31,      DECEMBER 29,
                                                                        1995             1995             1996
                                                                     -------------   ---------------   --------------
<S>                                                                  <C>             <C>               <C>
OPERATING ACTIVITIES:
 Net earnings (loss)    ..........................................     $ 107,011        $  50,511        $ (228,262)
 Adjustments to reconcile net earnings to net cash provided
  by operating activities:  ......................................
   Depreciation and amortization    ..............................        35,766           44,174            47,429
   Restructuring, impairment and other costs    ..................             -                -           154,869
   Other non-cash special charges   ..............................             -                -           128,800
   Estimated loss on sale of discontinued operations,
    net of taxes  ................................................             -                -            32,430
   Deferred income taxes   .......................................        26,283           25,146           (77,828)
 Increase (decrease) in cash from changes in working capital:
   Receivables, net  .............................................       (48,228)          (4,499)          (13,829)
   Inventories    ................................................       (36,760)          (4,874)          (11,651)
   Prepaid expenses and other current assets    ..................           792           (2,498)            4,288
   Accounts payable  .............................................         5,567            9,245            14,735
   Income taxes payable    .......................................        16,818          (18,452)          (21,942)
 Payment of other long-term and non-operating liabilities   ......       (17,310)         (21,719)          (27,089)
 Other, net    ...................................................        (9,104)           4,482            12,213
                                                                       ---------        ---------        ----------
     Net cash provided by operating activities  ..................        80,835           81,516            14,163
                                                                       ---------        ---------        ----------
INVESTING ACTIVITIES:
 Capital expenditures   ..........................................       (90,929)        (140,053)          (75,336)
 Decrease (increase) in investments restricted for
  plant construction .............................................       (46,362)          45,755                 -
 Purchase of businesses    .......................................       (19,284)         (13,053)                -
 Cash surrender value of life insurance policies   ...............        23,549                -                 -
 Sale of marketable securities, net    ...........................        14,708                -                 -
 Other, net    ...................................................           200                -              (860)
                                                                       ---------        ---------        ----------
     Net cash used in investing activities   .....................      (118,118)        (107,351)          (76,196)
                                                                       ---------        ---------        ----------
FINANCING ACTIVITIES:
 Net borrowings under revolving credit facility    ...............        35,000           40,000            30,000
 Issuance of long-term debt   ....................................        78,013                -            11,500
 Payments of debt obligations    .................................      (127,446)          (5,417)           (1,794)
 Proceeds from exercise of stock options and warrants    .........        19,151            9,818             4,684
 Purchase of common stock for treasury    ........................             -          (13,091)                -
 Sale of treasury stock    .......................................             -                -             4,578
 Payments of dividends on common stock    ........................        (3,169)          (3,268)           (3,318)
 Other financing activities   ....................................         2,606             (264)             (364)
                                                                       ---------        ---------        ----------
     Net cash provided by financing activities  ..................         4,155           27,778            45,286
                                                                       ---------        ---------        ----------
     Net increase (decrease) in cash and
      cash equivalents    ........................................       (33,128)           1,943           (16,747)
Cash and cash equivalents at beginning of year  ..................        59,458           26,330            28,273
                                                                       ---------        ---------        ----------
Cash and cash equivalents at end of year  ........................     $  26,330        $  28,273        $   11,526
                                                                       =========        =========        ==========
</TABLE>

                See Notes to Consolidated Financial Statements.

                                      F-6

<PAGE>

                     SUNBEAM CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

     Sunbeam Corporation ("Sunbeam" or the "Company") is a leading
designer, manufacturer and marketer of branded consumer products. The
Sunbeam/Registered trademark/ and Oster/Registered trademark/ brands have been
household names for generations, and the Company is a market share leader in
many of its product categories.

     The Company markets its products through virtually every category of
retailer including mass merchandisers, catalog showrooms, warehouse clubs,
department stores, catalogues, Company-owned outlet stores, television shopping
channels, hardware stores, home centers, drug and grocery stores, pet supply
retailers, as well as independent distributors and the military. The Company
also sells its products to commercial end users such as hotels and other
institutions.

     Approximately 80% of total Company sales are generated in the United
States. The remaining sales are generated primarily in Latin America, Mexico,
Canada and Europe.

PRINCIPLES OF CONSOLIDATION

     The consolidated financial statements include the accounts of the Company
and all majority-owned subsidiaries that it controls. All material intercompany
balances and transactions have been eliminated.

PRESENTATION OF FISCAL PERIODS

     The Company's fiscal year ends on the Sunday nearest December 31. Fiscal
years 1994, 1995 and 1996 ended on January 1, 1995, December 31, 1995 and
December 29, 1996, respectively, which encompassed a 52-week period.

USE OF ESTIMATES

     The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those
estimates. Significant accounting estimates include the establishment of the
allowance for doubtful accounts, reserves for product warranty, product
liability, excess and obsolete inventory, litigation and environmental exposures
and the estimated loss on the sale of discontinued operations.

CONCENTRATIONS OF CREDIT RISK

     Substantially all of the Company's trade receivables are due from
retailers and distributors located throughout the United States, Latin America
and Canada. Approximately 35% of the Company's sales in 1996 were to its five
largest customers. The Company establishes its credit policies based on an
ongoing evaluation of its customers creditworthiness and competitive market
conditions and establishes its allowance for doubtful accounts based on an
assessment of exposures to credit losses at each balance sheet date. The Company
believes its allowance for doubtful accounts is sufficient based on the credit
exposures outstanding at December 29, 1996. However, several retailers filed for
bankruptcy protection and/or reported lower sales and earnings in 1996 and if
retail softness occurs in 1997, it is possible that additional credit losses
could be incurred.

                                      F-7

<PAGE>

                     SUNBEAM CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)

1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES-(CONTINUED)

INVENTORIES

     Inventories are stated at the lower of cost or market with cost being
determined principally by the first-in, first-out method.

PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment is stated at cost. The Company provides for
depreciation using primarily the straight-line method in amounts that allocate
the cost of property, plant and equipment over the following useful lives:

 Buildings and improvements   ............    20 to 40 years
 Machinery, equipment and tooling   ......     3 to 15 years
 Furniture and fixtures    ...............     3 to 10 years

     Leasehold improvements are amortized on a straight-line basis over the
shorter of the useful life of the improvement or the term of the lease.

LONG-LIVED ASSETS

     During 1996, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED
ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF. See Notes 2 and 3 for a
discussion of asset impairment charges as a result of the implementation of the
Company's restructuring and growth plan.

CAPITALIZED INTEREST

     Interest costs for the construction of certain long-term assets are
capitalized and amortized over the related assets' estimated useful lives.
Total interest costs during 1995 and 1996 amounted to $12.7 million and $14.0
million, respectively, of which $3.3 million and $.4 million, respectively, was
capitalized into the construction cost of the long-term assets.

AMORTIZATION PERIODS

     Trademarks and trade names are being amortized on a straight-line basis
over 40 years.

REVENUE RECOGNITION

     The Company recognizes revenue from product sales at the time of shipment.
Net sales is comprised of gross sales less provisions for expected customer
returns, discounts, promotional allowances and co-operative advertising.

WARRANTY COSTS

     The Company provides for warranty costs in amounts it estimates will be
needed to cover future warranty obligations for products sold during the year.
Estimates of warranty costs are periodically reviewed and adjusted, when
necessary, to consider actual experience.

                                      F-8

<PAGE>

                     SUNBEAM CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)

1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES-(CONTINUED)

ADVERTISING COSTS

     Advertising costs, included in "Selling, General and Administrative
Expense," are expensed as incurred. Co-operative advertising costs are
expensed ratably over the year in relation to revenues.

FOREIGN CURRENCY TRANSLATION

     The assets and liabilities of subsidiaries, other than those operating in
highly inflationary environments, are translated into U.S. dollars at year-end
exchange rates, with resulting translation gains and losses accumulated in a
separate component of shareholders' equity. Income and expense items are
converted into U.S. dollars at average rates of exchange prevailing during the
year.

     For subsidiaries operating in highly inflationary environments,
specifically Venezuela, inventories and property, plant and equipment are
translated at the rate of exchange on the date the assets were acquired, while
other assets and liabilities are translated at year-end exchange rates.
Translation adjustments for those operations are included in results of
operations.

STOCK-BASED COMPENSATION PLANS

     In 1995, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION. SFAS No. 123 allows
either adoption of a fair value method for accounting for stock-based
compensation plans or continuation of accounting under Accounting Principles
Board ("APB") Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES,
and related interpretations with supplemental disclosures.

     The Company has chosen to account for its stock options using the intrinsic
value based method prescribed in APB Opinion No. 25 and, accordingly, does not
recognize compensation expense for stock option grants made at an exercise price
equal to or in excess of the fair market value of the stock at the date of
grant. Pro-forma net income and earnings per share amounts as if the fair value
method had been adopted are presented in Note 7 herein. The adoption of SFAS No.
123 will not impact the Company's results of operations, financial position or
cash flows.

EARNINGS PER SHARE OF COMMON STOCK

     Earnings per common share calculations are determined by dividing earnings
(loss) available to common shareholders by the weighted average number of shares
of common stock and dilutive common stock equivalents outstanding. Primary and
fully diluted earnings per share are equivalent for each of the fiscal years
presented.

RECLASSIFICATIONS

     Certain prior year amounts have been reclassified to reflect discontinued
operations as described in Note 3.

2. RESTRUCTURING, IMPAIRMENT AND OTHER COSTS

     On November 12, 1996, the Company announced the details of its
restructuring and growth plan for the future. The cost reduction phase of the
plan includes the consolidation of administrative

                                      F-9

<PAGE>

                     SUNBEAM CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)

2. RESTRUCTURING, IMPAIRMENT AND OTHER COSTS-(CONTINUED)

functions within the Company, the rationalization of manufacturing and warehouse
facilities, the centralization of the Company's procurement function, and
reduction of the Company's product offerings and stock keeping units
("SKU's"). The Company also announced plans to divest several lines of
business which it determined are not core for Sunbeam (see Note 3).

     Since the restructuring plan was announced, the Company has consolidated
six divisional and regional headquarters functions into a single worldwide
corporate headquarters in Delray Beach, Florida and outsourced certain back
office activities resulting in a 50% reduction in total back-office/
administrative headcount. Overall, the restructuring plan calls for a reduction
in the number of production facilities from 26 to 8 and warehouses from 61 to
18. The restructuring plan will result in the elimination of over 6,000
positions from the Company's workforce, including 3,300 from the disposition of
non-core business operations and the elimination of approximately 2,800 other
positions. The Company completed the major phases of the restructuring plan by
January 1997.

     In conjunction with the implementation of the restructuring and growth
plan, the Company recorded a pre-tax special charge to earnings of approximately
$337.6 million in the fourth quarter of 1996. This amount is allocated as
follows in the accompanying Consolidated Statement of Operations: $154.9 million
to Restructuring, Impairment and Other Costs as further described below; $92.3
million to Cost of Goods Sold related principally to inventory write-downs from
the reduction in SKU's and costs of inventory liquidation programs; $42.5
million to Selling, General and Administrative expenses principally for
increases in environmental and litigation reserves (see Notes 12 and 13) and
other reserve categories; and the estimated pre-tax loss on the divestiture of
the Company's furniture business of approximately $47.9 million.

     Amounts included in Restructuring, Impairment and Other Costs in the
accompanying Consolidated Statement of Operations include cash items such as
severance and other employee costs of $43.0 million, lease obligations and other
exit costs associated with facility closures of $12.6 million, $7.5 million of
start-up costs on back office outsourcing initiatives and other costs related to
the implementation of the restructuring and growth plan. Expenditures for the
cash restructuring items will be substantially completed in 1997. Non-cash
Restructuring, Impairment and Other Costs include $91.8 million related to asset
write-downs to net realizable value for disposals of excess facilities and
equipment and non-core product lines, write-offs of redundant computer systems
from the administrative back-office consolidations and outsourcing initiatives
and intangible, packaging and other asset write-downs related to exited product
lines and SKU reductions.

3. DISCONTINUED OPERATIONS AND OTHER ASSETS HELD FOR SALE

     As part of the restructuring plan and redefinition of its core businesses,
the Company also announced the divestiture of the furniture business, by a sale
of assets. On February 10, 1997, the Company entered into an agreement to sell
the business to U.S. Industries, Inc. which was completed on March 17, 1997. In
connection with the sale of these assets (primarily inventory, property, plant
and equipment), the Company received approximately $62.1 million in cash at
closing and, in addition, expects to receive approximately $10.0 million by June
30, 1997. The Company retained accounts receivable related to the furniture
business of approximately $50.0 million as of the closing date. The final
purchase price is subject to post-closing adjustments based on the terms of the
Asset Purchase Agreement.

     In connection with the furniture divestiture, the Company recorded a
provision for estimated losses to be incurred on the sale of $32.4 million, net
of applicable income tax benefits. The Company will

                                      F-10

<PAGE>

                     SUNBEAM CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)

3. DISCONTINUED OPERATIONS AND OTHER ASSETS HELD FOR SALE-(CONTINUED)

finalize its accounting for the loss on disposal of the furniture business in
the first quarter of 1997 and could record an additional after-tax loss from
discontinued operations. Earnings from the discontinued furniture business were
$21.7 million in 1994, $12.9 million in 1995 and $.8 million in 1996, net of
applicable income taxes of $15.2 million, $7.9 million and $.5 million,
respectively. Revenues for the discontinued furniture business were $154.2
million in 1994, $185.6 million in 1995 and $227.5 million in 1996. These
revenues are not included in sales as reported in the accompanying Consolidated
Statement of Operations.

     In addition to the furniture business divestiture, the Company also
announced its intent to sell other non-core product lines and assets as part of
its restructuring plan, including time and temperature products,
Counselor/Registered trademark/ and Borg/Registered trademark/ scales,
decorative bedding products and a textile facility. Anticipated losses to be
incurred on the disposal of these assets, which consist primarily of write-downs
of assets to net realizable value, are included in Restructuring, Impairment and
Other Costs in the Consolidated Statement of Operations as described in Note 2.
The Company completed the sale of its decorative bedding product line in
December 1996 and its time and temperature product line in March 1997. The
remaining asset divestitures are expected to be completed in the first half of
1997.

4. SHAREHOLDERS' EQUITY

     The Company has 200,000,000 shares of $.01 par value common stock
authorized. At December 29, 1996 there were 9,021,837 shares of common stock
reserved for issuance upon the exercise of outstanding stock options.

     In June 1995, the Company retired 7,376,395 shares of common stock held in
treasury, and such shares were returned to the status of authorized but unissued
shares. As a result, $103.7 million assigned to treasury stock has been
eliminated with a corresponding decrease to common stock, paid-in capital and
retained earnings. In 1995, the Company repurchased 905,600 shares of its common
stock at a total cost of $13.1 million.

     In July 1996, the Company sold 321,786 shares of common stock for total
proceeds of approximately $4.4 million, and granted 1,100,000 shares of
restricted stock in connection with the employment of a new Chairman and Chief
Executive Officer and certain other officers of the Company. Compensation
expense attributable to the restricted stock awards is being amortized to
expense beginning in 1996 over the periods in which the restrictions lapse
(which in the case of 333,333 shares, was immediately upon the date of grant, in
the case of 666,667 shares, is equally over two years from the date of grant and
in the case of the remaining restricted shares, is equally over three years from
the dates of grant). Total compensation expense recognized for restricted stock
grants in 1996 was $7.7 million.

                                      F-11

<PAGE>

                     SUNBEAM CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)

4. SHAREHOLDERS' EQUITY-(CONTINUED)

     Information regarding other changes in shareholders' equity is summarized
below (in thousands):

<TABLE>
<CAPTION>
                                                  CURRENCY         MINIMUM
                                                 TRANSLATION       PENSION         UNEARNED
                                                 ADJUSTMENTS      LIABILITY      COMPENSATION           TOTAL
                                                 --------------   ------------   ---------------   ------------------
<S>                                              <C>              <C>            <C>               <C>
 Balance at January 2, 1994   ..................    $ (1,537)       $ (10,366)       $ (2,140)            $ (14,043)
  Issuance of restricted stock   ...............           -                -            (108)                 (108)
  Amortization of unearned compensation   ......           -                -           1,269                 1,269
  Increase in minimum pension liability
   (net of tax of $357) ........................           -             (561)              -                  (561)
  Translation adjustments  .....................      (6,675)               -               -                (6,675)
                                                    --------        ---------        --------             ----------
 Balance at January 1, 1995   ..................      (8,212)         (10,927)           (979)              (20,118)
  Amortization of unearned compensation   ......           -                -             582                   582
  Increase in minimum pension liability
   (net of tax of $127) ........................           -             (199)              -                  (199)
  Translation adjustments  .....................      (5,145)               -               -                (5,145)
                                                    --------        ---------        --------             ----------
 Balance at December 31, 1995    ...............     (13,357)         (11,126)           (397)              (24,880)
  Grant of restricted stock   ..................           -                -         (14,346)              (14,346)
  Amortization of unearned compensation   ......           -                -           7,707                 7,707
  Decrease in minimum pension liability
   (net of tax of $2,672) ......................           -            4,963               -                 4,963
  Translation adjustments  .....................       1,246                -               -                 1,246
                                                    --------        ---------        --------             ----------
 Balance at December 29, 1996    ...............    $(12,111)       $  (6,163)       $ (7,036)            $ (25,310)
                                                    ========        =========        ========             ==========
</TABLE>

5. CREDIT FACILITIES AND LONG-TERM DEBT

     In June 1994, the Mississippi Business Finance Corporation ("MBFC")
issued $75 million of 7.85% Industrial Development Revenue Notes (the
"Notes") maturing serially in eleven equal annual installments beginning
June 1999 to certain institutional investors through a private placement. The
MBFC loaned the proceeds of the Notes to a subsidiary of the Company under a
non-recourse loan agreement (the "Hattiesburg Loan") restricting the use
of such funds to the acquisition, design, construction and equipping of the
Hattiesburg, Mississippi manufacturing and distribution center. The Notes are
guaranteed by the Company and the Hattiesburg Loan is secured by the Hattiesburg
facility.

     In September 1996, the Company entered into a $500 million syndicated
unsecured five year revolving credit facility (the "Credit Agreement")
which replaced a previous credit facility of $500 million. The Credit Agreement
was amended in November 1996 and January 1997. Under the Credit Agreement, the
Company can borrow under a competitive bid option, or at a spread above LIBOR
(currently .50%) or at a bank base rate. In addition, the Company pays an annual
facility fee (currently .25%). The Credit Agreement contains certain financial
covenants.

     The aggregate annual principal payments on long-term debt, excluding
amounts outstanding under the Credit Agreement, due in each of the years
1997-2001, are $.9 million, $.7 million, $7.7 million, $7.9 million and $7.9
million, respectively.

                                      F-12

<PAGE>

                     SUNBEAM CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)

5. CREDIT FACILITIES AND LONG-TERM DEBT-(CONTINUED)

     Long-term debt at the end of each fiscal year consists of the following (in
thousands):

<TABLE>
<CAPTION>
                                                                             1995         1996
                                                                           -----------   ----------
<S>                                                                        <C>           <C>
 Revolving credit facility, weighted average interest rate of 5.99% and
  5.68% at December 31, 1995, and December 29, 1996, respectively ......     $75,000     $105,000
 Hattiesburg industrial revenue bond due 2009, fixed interest rate
  of 7.85%  ............................................................      75,000       75,000
 Other long-term borrowings, due through 2012, weighted average
  interest rate of 6.84% and 4.95%, at December 31, 1995 and
  December 29, 1996, respectively   ....................................      11,609       22,036
                                                                             --------    ---------
                                                                             $161,609    $202,036
                                                                             ========    =========
</TABLE>

6. FINANCIAL INSTRUMENTS

FAIR VALUE OF FINANCIAL INSTRUMENTS

     The carrying amounts of the Company's financial instruments as of December
29, 1996 approximate market based upon the following methods and assumptions:

     CASH AND CASH EQUIVALENTS-The carrying amount of cash and cash equivalents
is assumed to approximate fair value as cash equivalents include all highly
liquid, short-term investments with original maturities of three months or less.

     SHORT AND LONG-TERM DEBT-The carrying value of the Company's various debt
outstanding as of December 29, 1996 approximates market. The fair value of the
Company's fixed rate debt is estimated using discounted cash flow analysis,
based upon the market yield of public debt securities of comparable credit
quality and maturity. The carrying value of the Company's variable rate debt is
assumed to approximate market based upon periodic adjustments of the interest
rate to the current market rate in accordance with the terms of the debt
agreements.

     LETTERS OF CREDIT-The Company utilizes stand-by letters of credit to back
certain financing instruments and insurance policies and commercial letters of
credit guaranteeing various international trade activities. The contract amounts
of the letters of credit approximate their fair value.

DERIVATIVE FINANCIAL INSTRUMENTS

     The Company selectively uses derivatives to manage interest rate and
foreign exchange exposures that arise in the normal course of business. The use
of derivatives did not have a material impact on the Company's results of
operations in either 1995 and 1996. No derivatives are entered into for trading
or speculative purposes. Interest rate swaps are used to achieve or maintain a
desired mix of fixed and floating rate debt in the Company's debt portfolio.
Foreign exchange option and forward contracts are used to hedge a portion of the
Company's underlying exposures denominated in foreign currency. Although the
market value of derivative contracts at any single point in time will vary with
changes in interest and/or foreign exchange rates, the difference between the
carrying value and fair value of such contracts at December 31, 1995 and
December 29, 1996 is not considered to be material, either individually or in
the aggregate. The Company enters into derivative contracts with counterparties
that it believes to be creditworthy. The Company does not enter into any
leveraged derivative transactions.

                                      F-13

<PAGE>

                     SUNBEAM CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)

6. FINANCIAL INSTRUMENTS-(CONTINUED)

     As of December 29, 1996, $10.0 million of the Company's outstanding
floating rate debt was subject to interest rate swap agreements. Under the terms
of the contract, the Company receives a floating interest rate and pays a fixed
interest rate. The differential to be paid or received is accrued as interest
rates change and recognized as an adjustment to interest expense.

     In order to mitigate the transaction exposures that may arise from changes
in foreign exchange rates, the Company purchases foreign currency option
contracts to hedge anticipated transactions. The option contracts typically
expire within one year. Any realized gains on options are not deferred but are
recognized in income in the period when the hedged exposure is recognized. The
Company purchased options with a notional value of $11.7 million in 1995 and
$18.2 million in 1996. Options with notional value of $3.2 million and $25.4
million expired in 1995 and 1996, respectively. The Company held purchased
option contracts with a notional value of $8.6 million and $1.4 million at
December 31, 1995 and December 29, 1996, respectively.

     The Company has intercompany balances that are denominated in foreign
currency. A portion of these balances are hedged using forward exchange
contracts, and gains and losses on these contracts are included in the
accompanying Consolidated Statement of Operations. The Company had forward
exchange contracts with a notional value of $2.2 million December 31, 1995 and
none outstanding at December 29, 1996.

7. EMPLOYEE STOCK OPTIONS AND AWARDS

     At December 29, 1996, the Company had one stock-based compensation plan,
the Amended and Restated Sunbeam Corporation Equity Team Plan (the
"Plan"). Under the Plan, all domestic employees are eligible for grants of
options to purchase up to an aggregate of 11,300,000 shares of the Company's
common stock at an exercise price equal to or in excess of the fair market value
of the stock on the date of grant. The term of each option generally commences
on the date of grant and expires on the tenth anniversary of the date of grant.
Options generally become exercisable over a three to five year period.

     The Plan also provides for the grant of restricted stock awards of up to
200,000 shares, in the aggregate, to selected executives, employees and
non-employee directors. Restrictions lapse ratably over a three to seven year
period from the date of grant. In 1994, 5,000 shares of restricted stock were
granted under the Plan and in 1996, 25,574 shares were granted under the Plan.

     In July 1996, options to purchase an aggregate of 3,000,000 shares were
granted outside of the Plan (of which 2,750,000 options are outstanding at
December 29, 1996) at exercise prices equal to the fair market value of the
Company's common stock on the dates of grant in connection with the employment
of a new Chairman and Chief Executive Officer and certain other executive
officers of the Company. These outstanding options have terms of ten years and,
with respect to options for 2,500,000 shares, are excercisable in three annual
installments beginning July 17, 1996. Options for the remaining 250,000 shares
still outstanding are excercisable in three annual installments beginning on the
first anniversary of the July 22, 1996 grant date. See Note 4 for a discussion
of restricted stock awards made outside of the Plan.

     The Company applies APB Opinion No. 25 and related Interpretations in
accounting for its stock options. Accordingly, no compensation cost has been
recognized for outstanding stock options. Had

                                      F-14

<PAGE>

                     SUNBEAM CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)

7. EMPLOYEE STOCK OPTIONS AND AWARDS-(CONTINUED)

compensation cost for the Company's outstanding stock options been determined
based on the fair value at the grant dates for those options consistent with
SFAS No. 123, the Company's net earnings (loss) and earnings (loss) per share
would have been reduced to the pro forma amounts indicated below (in thousands
except per share amounts):

                               1995          1996
                              ----------   ------------
 Net earnings (loss)
  As reported  ............    $50,511       $ (228,262)
  Pro forma    ............    $47,377       $ (248,890)
 Earnings (loss) per share
  As reported  ............    $  0.61       $    (2.75)
  Pro forma    ............    $  0.57       $    (3.00)

     The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants in 1995 and 1996: expected volatility of 36.78%, a
risk-free interest rate of 6.34 %, a dividend yield of .1%; and an expected life
of 5 years.

     A summary of the status of the Company's outstanding stock options as of
December 31, 1995 and December 29, 1996, and changes during the years ending on
those dates is presented below:

<TABLE>
<CAPTION>
                                                           1995                                 1996
                                            ------------------------------------- --------------------------------
                                                                 WEIGHTED                           WEIGHTED
                                                                 AVERAGE                             AVERAGE
                                               SHARES         EXERCISE PRICE        SHARES        EXERCISE PRICE
                                            ---------------   -----------------   -------------   ----------------
<S>                                         <C>               <C>                 <C>             <C>
 PLAN OPTIONS
  Outstanding at beginning of year   ......     5,230,221          $14.85           4,610,387         $ 16.67
  Granted    ..............................     1,928,500           18.61           4,061,450           20.39
  Exercised  ..............................    (1,142,348)           6.32            (622,994)           7.51
  Canceled   ..............................    (1,405,986)          21.06          (1,777,006)          18.64
                                              -----------                         -----------
  Outstanding at end of year   ............     4,610,387           16.67           6,271,837           19.43
                                              ===========                         ===========
  Options exercisable at year-end    ......     1,539,836          $11.47           1,655,450         $ 16.13
  Weighted-average fair value of
   options granted during the year  .......   $      8.28                         $     14.76

 OPTIONS OUTSIDE PLAN
  Outstanding at beginning of year   ......       750,000          $16.70             692,500         $ 16.70
  Granted    ..............................             -               -           3,000,000           12.65
  Exercised  ..............................       (57,500)          16.70                   -               -
  Canceled   ..............................             -               -            (942,500)          16.27
                                              -----------                         -----------
  Outstanding at end of year   ............       692,500           16.70           2,750,000           12.43
                                              ===========                         ===========
  Options exercisable at year-end    ......       505,000          $16.70             833,333         $ 12.25
  Weighted-average fair value of
   options granted during the year  .......             -                         $      5.99
</TABLE>

                                      F-15

<PAGE>

                     SUNBEAM CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)

7. EMPLOYEE STOCK OPTIONS AND AWARDS-(CONTINUED)

     The following table summarizes information about stock options outstanding
at December 29, 1996:

<TABLE>
<CAPTION>
                                              OPTIONS OUTSTANDING                               OPTIONS EXERCISABLE
                           ------------------------------------------------------------ -----------------------------------
                             NUMBER          WEIGHTED-AVERAGE                             NUMBER
RANGE OF                   OUTSTANDING          REMAINING         WEIGHTED-AVERAGE      EXERCISABLE      WEIGHTED-AVERAGE
EXERCISE PRICES            AT 12/29/96       CONTRACTUAL LIFE      EXERCISE PRICE       AT 12/29/96      EXERCISE PRICE
---------------            --------------   -------------------   -------------------   --------------   ------------------
<S>                        <C>              <C>                   <C>                   <C>              <C>
 $5.00 to $14.99  ......      1,378,417         7.6 years               $11.61              596,316            $7.80
$15.00 to $19.99  ......        824,037         8.1 years                16.50              245,240            17.31
$20.00 to $24.99  ......      3,657,583         8.9 years                22.24              811,894            21.86
   Over $25.00 .........        411,800        10.0 years                26.49                2,000            25.16
                             -----------                                                  ----------
 $5.00 to $27.38  ......      6,271,837         8.6 years               $19.43            1,655,450           $16.13
                             ===========                                                  ==========
</TABLE>

8. EMPLOYEE BENEFIT PLANS

RETIREMENT PLANS

     The Company sponsors several defined benefit pension plans covering
eligible U.S. salaried and hourly employees. Benefit accruals under such plans
covering all U.S. salaried employees were frozen, effective December 31, 1990.
Therefore no credit in the pension formula is given for service or compensation
after that date. However, employees continue to earn service toward vesting in
their interest in the frozen plans as of December 31, 1990. Employees of
non-U.S. subsidiaries generally receive retirement benefits from Company
sponsored plans or from statutory plans administered by governmental agencies in
their countries.

     The funded status of the Company's U.S. defined benefit pension plans at
the end of each fiscal year follows (in thousands):

<TABLE>
<CAPTION>
                                                                          1995         1996
                                                                        -----------   ----------
<S>                                                                     <C>           <C>
 Actuarial present value of benefit obligations:
  Vested    .........................................................     $132,765    $122,379
  Non-vested   ......................................................          558         375
                                                                          --------    --------
 Accumulated benefit obligations    .................................      133,323     122,754
 Plan assets at fair value    .......................................      122,162     116,522
                                                                          --------    --------
 Accumulated benefit obligations in excess of plan assets   .........       11,161       6,232
 Unrecognized net loss  .............................................      (17,891)    (19,537)
 Additional minimum liability    ....................................       17,891      10,255
                                                                          --------    --------
 Pension liability (prepaid) recognized on the balance sheet   ......     $ 11,161    $ (3,050)
                                                                          ========    ========
</TABLE>

                                      F-16

<PAGE>

                     SUNBEAM CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)

8. EMPLOYEE BENEFIT PLANS-(CONTINUED)

     Net periodic pension cost for the Company's U.S. defined benefit pension
plans for each fiscal year includes the following components (in thousands):

<TABLE>
<CAPTION>
                                                             1994           1995          1996
                                                           ------------   ------------   ---------
<S>                                                        <C>            <C>            <C>
 Service cost-benefits earned during the period   ......     $    396       $    331     $   411
 Interest cost-accumulated benefit obligations    ......       10,325         10,620       9,071
 Actual return on plan assets   ........................        3,581        (20,985)       (816)
 Net amortization and deferral  ........................      (13,416)        11,332      (7,518)
                                                             --------       --------     -------
 Net periodic pension cost   ...........................     $    886       $  1,298     $ 1,148
                                                             ========       ========     =======
 Assumptions:
  Discount rate  .......................................         8.75%          7.25%       7.75%
  Long-term rate of return on assets  ..................         9.00%          9.50%       7.75%
</TABLE>

     The Company funds its pension plans in amounts consistent with applicable
laws and regulations. Pension plan assets include corporate and U.S. government
bonds and cash equivalents.

     The assets, liabilities and pension costs of the Company's non-U.S.
defined benefit retirement plans are not material to the consolidated financial
statements.

OTHER POSTRETIREMENT BENEFITS

     The Company provides health care and life insurance benefits to certain
former employees who retired from the Company prior to March 31, 1991. The
Company has consistently followed a policy of funding the cost of postretirement
health care and life insurance benefits on a pay-as-you-go basis.

     Effective July 1, 1993, various amendments to the Company's postretirement
benefits program were adopted. The amendments included increases in retiree
contribution levels for certain retiree groups and the discontinuation of
medical and/or life insurance coverage for certain retirees who qualify for
Medicare. These amendments resulted in an unrecognized reduction in prior
service cost which is being amortized over future years.

     The following table presents the funded status reconciled with the amounts
recognized in the Company's Consolidated Balance Sheet at the end of each
fiscal year (in thousands):

<TABLE>
<CAPTION>
                                                             1995         1996
                                                            ----------   ---------
<S>                                                         <C>          <C>
 Accumulated postretirement benefit obligation  .........    $15,127     $14,555
 Plan assets   ..........................................          -           -
                                                             --------    --------
 Accumulated postretirement benefit obligation in excess
  of plan assets  .......................................     15,127      14,555
 Unrecognized reduction in prior service cost   .........     21,820      18,877
 Unrecognized net gain  .................................         95          95
                                                             --------    --------
 Accrued postretirement benefit obligation recognized
  on the balance sheet  .................................    $37,042     $33,527
                                                             ========    ========
</TABLE>

                                      F-17

<PAGE>

                     SUNBEAM CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)

8. EMPLOYEE BENEFIT PLANS-(CONTINUED)

     Net periodic postretirement benefit cost for each fiscal year includes the
following components (in thousands):

<TABLE>
<CAPTION>
                                                             1995          1996
                                                            ----------   -----------
<S>                                                         <C>          <C>
 Interest cost    .......................................     $ 1,353      $ 1,042
 Amortization of reduction in prior service cost   ......      (2,943)      (2,943)
                                                              -------      -------
 Net periodic postretirement benefit credit  ............     $(1,590)     $(1,901)
                                                              =======      =======
</TABLE>

     The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation is 9.5% for 1997 and is assumed to decrease
gradually to 6% by 2003 and remain at that level thereafter. A one percentage
point increase in the assumed health care cost trend rate for each year would
increase the accumulated postretirement benefit obligation as of December 29,
1996 and the net periodic postretirement benefit cost for 1996 by approximately
8%. The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 7.25% at December 31, 1995 and December
29, 1996.

DEFINED CONTRIBUTION PLANS

     The Company sponsors defined contribution profit sharing plans covering
eligible employees. Company contributions to these plans include employer
matching contributions as well as discretionary profit sharing contributions
depending on both the performance of the Company, in an amount up to 10% of
eligible compensation. The Company provided $5.8 million in 1994, $4.1 million
in 1995 and $1.7 million in 1996 for its defined contribution plans.

                                      F-18

<PAGE>

                     SUNBEAM CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)

9. SUPPLEMENTARY FINANCIAL STATEMENT DATA

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

<TABLE>
<CAPTION>
                                                         1995           1996
                                                       ------------   -----------
<S>                                                    <C>            <C>
 Receivables:
  Trade   ..........................................     $ 224,201    $ 227,043
  Sundry  ..........................................         4,320        2,412
                                                         ---------    ---------
                                                           228,521      229,455
  Valuations allowances  ...........................       (12,326)     (16,017)
                                                         ---------    ---------
                                                         $ 216,195    $ 213,438
                                                         =========    =========
 Inventories:
  Finished goods   .................................     $ 120,018    $  85,213
  Work in process  .................................        25,609       25,167
  Raw materials and supplies   .....................        63,479       52,272
                                                         ---------    ---------
                                                         $ 209,106    $ 162,252
                                                         =========    =========
 Property, plant and equipment:
  Land    ..........................................     $   2,783    $   2,524
  Buildings and improvements   .....................        90,898       95,619
  Machinery and equipment   ........................       293,985      258,199
                                                         ---------    ---------
                                                           387,666      356,342
  Accumulated depreciation and amortization   ......      (100,586)    (136,254)
                                                         ---------    ---------
                                                         $ 287,080    $ 220,088
                                                         =========    =========
 Trademarks and trade names:
  Gross   ..........................................     $ 245,307    $ 245,307
  Accumulated amortization  ........................       (31,301)     (45,045)
                                                         ---------    ---------
                                                         $ 214,006    $ 200,262
                                                         =========    =========
</TABLE>

     Inventory and property, plant and equipment exclude assets of discontinued
operations and other assets held for sale.

<TABLE>
<CAPTION>
                                                           1995         1996
                                                         -----------   ----------
<S>                                                      <C>           <C>
 Other current liabilities:
  Payrolls, commissions and employee benefits   ......    $ 23,550       $18,536
  Advertising and sales promotion   ..................      16,543        21,794
  Product warranty   .................................      15,592        23,883
  Other  .............................................      24,519        35,296
                                                          ---------     ---------
                                                          $ 80,204      $ 99,509
                                                          =========     =========
 Non-operating liabilities:
  Accrued postretirement benefit obligation  .........    $ 37,042      $ 33,527
  Accrued pension    .................................      11,161             -
  Other  .............................................      31,964        54,548
                                                          ---------     ---------
                                                          $ 80,167      $ 88,075
                                                          =========     =========
</TABLE>

                                      F-19

<PAGE>

                     SUNBEAM CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)

9. SUPPLEMENTARY FINANCIAL STATEMENT DATA-(CONTINUED)

     Supplementary Statements of Operations and Cash Flows data for each fiscal
year are summarized as follows (in thousands):

<TABLE>
<CAPTION>
                                                  1994           1995           1996
                                                ------------   ------------   ------------
<S>                                             <C>            <C>            <C>
 Other (income) expense, net:
  Interest income    ........................     $ (3,911)      $ (3,657)      $ (1,255)
  Other  ....................................        3,199          3,830          2,893
                                                  --------       --------       --------
                                                  $   (712)      $    173       $  1,638
                                                  ========       ========       ========
 Advertising and sales promotion    .........     $ 56,104       $ 62,299       $ 78,733
                                                  ========       ========       ========
 Cash paid (received) during the period for:
  Interest (net of capitalization)  .........     $  7,461       $ 12,555       $ 13,397
                                                  ========       ========       ========
  Income taxes (net of refunds)  ............     $ 23,595       $ 13,936       $   (540)
                                                  ========       ========       ========
</TABLE>

   Non-Cash Transactions:
     In connection with the acquisition of the outdoor resin furniture business
     from Rubbermaid Incorporated in 1994, the Company assumed certain long-term
     debt in the amount of $5 million.

     In connection with a warehouse expansion related to the electric blanket
     business, the Company entered into a $5 million capital lease obligation in
     1996.

10. INCOME TAXES

     Earnings (loss) from continuing operations before income taxes for each
fiscal year is summarized as follows (in thousands):

                       1994          1995             1996
                     -----------   ----------      ----------
 Domestic   ......    $134,720      $54,646        $(285,011)
 Foreign    ......      10,074        5,989          (17,550)
                      ---------     --------       ----------
                      $144,794      $60,635        $(302,561)
                      =========     ========       ==========

                                      F-20

<PAGE>

                     SUNBEAM CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)

10. INCOME TAXES-(CONTINUED)

     Income tax provisions include current and deferred taxes (tax benefits) for
each fiscal year as follows (in thousands):

                      1994          1995            1996
                     ----------   ------------   -------------
 Current:
  Federal   ......    $28,769       $ (1,329)      $ (28,567)
  State  .........      3,289         (1,402)           (202)
  Foreign   ......      1,169            626             707
                      --------      --------       ---------
                       33,227         (2,105)        (28,062)
                      --------      --------       ---------
 Deferred:
  Federal   ......     21,850         23,127         (65,833)
  State  .........      1,901          1,962         (11,050)
  Foreign   ......      2,532             57            (945)
                      --------      --------       ---------
                       26,283         25,146         (77,828)
                      --------      --------       ---------
                      $59,510       $ 23,041       $(105,890)
                      ========      ========       =========

     A reconciliation of income tax expense with the expected income tax
computed by applying the federal statutory income tax rate to earnings (loss)
from continuing operations before income taxes for each fiscal year is as
follows (in thousands):

<TABLE>
<CAPTION>
                                                                 1994         1995              1996
                                                                ----------   ----------      ----------
<S>                                                             <C>          <C>          <C>
 Income tax computed at the federal statutory
  tax rate   ................................................    $50,678      $21,222       $ (105,896)
 State and local taxes (net of federal benefit)  ............      3,373          364           (7,313)
 Foreign earnings and dividends taxed at other rates   ......      2,011          419            5,967
 Non-deductible expenses    .................................      2,062          872            3,373
 Other, net  ................................................      1,386          164           (2,021)
                                                                 --------     --------      -----------
                                                                 $59,510      $23,041       $ (105,890)
                                                                 ========     ========      ===========
</TABLE>

                                      F-21

<PAGE>

                     SUNBEAM CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)

10. INCOME TAXES-(CONTINUED)

     The major components of the Company's net current deferred tax asset and
net long-term deferred tax liability at the end of each fiscal year are as
follows (in thousands):

<TABLE>
<CAPTION>
                                                         1995                                1996
                                           ----------------------------------- --------------------------------
                                             CURRENT          LONG-TERM          CURRENT          LONG-TERM
                                           DEFERRED TAX      DEFERRED TAX      DEFERRED TAX      DEFERRED TAX
                                              ASSET           LIABILITY           ASSET           LIABILITY
                                           ---------------   ---------------   ---------------   --------------
<S>                                        <C>               <C>               <C>               <C>
 Operating reserves and accruals  ......       $16,389           $ 23,562          $60,307          $ 28,447
 Book/tax basis difference in
  trademarks and trade names   .........             -            (73,172)               -           (72,587)
 Book/tax basis difference in
  other assets  ........................         2,036            (27,957)          19,276           (13,406)
 Reserves for non-operating assets
  and non-operating liabilities   ......         3,616             25,484            8,905            24,043
 Other    ..............................         4,292            (24,849)           5,201           (18,805)
                                               --------          --------          --------         --------
                                               $26,333           $(76,932)         $93,689          $(52,308)
                                               ========          ========          ========         ========
</TABLE>

     As of December 29, 1996, the Company is in a net deferred tax asset
position of approximately $41.4 million. Management believes that it is more
likely than not that the net deferred tax asset will be realized based on a
combination of refund of taxes paid in prior years and available in the
carryback period, reversals of existing taxable temporary differences and the
generation of future taxable income. Deferred U.S. income taxes are not provided
on the undistributed earnings of foreign subsidiaries, since such earnings are
considered to be permanently reinvested. At December 29, 1996, the cumulative
amount of undistributed earnings of foreign subsidiaries on which U.S. federal
income taxes have not been provided was approximately $25.7 million. It is not
practicable to calculate the amount of unrecognized deferred U.S. income tax
liability on such undistributed foreign earnings because of the complexities
associated with its hypothetical calculation.

11. CUSTOMER AND GEOGRAPHIC DATA

     Classes of products which contributed more than 10% to consolidated sales
were outdoor home use durable products and indoor home use durable products.
Sales of outdoor home use durable products amounted to $294.2 million in 1994,
$269.0 million in 1995 and $256.9 million in 1996. Sales of indoor home use
durable products were $698.8 million in 1994, $688.3 million in 1995 and $680.7
million in 1996.

     The Company's largest customer accounted for approximately 17% of
consolidated sales in 1994, 19% in 1995 and 19% in 1996.

                                      F-22

<PAGE>

                     SUNBEAM CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)

11. CUSTOMER AND GEOGRAPHIC DATA-(CONTINUED)

     The Company's operations are conducted in the United States and
international markets, principally in Latin America, Canada and Mexico.
Information about the Company's domestic and international operations for each
fiscal year is as follows (in thousands):

<TABLE>
<CAPTION>
                                                           1994            1995            1996
                                                        -------------   -------------   -------------
<S>                                                     <C>             <C>             <C>
 Net sales:
  Domestic    .......................................     $ 852,796       $ 829,423       $ 800,969
  International (includes U.S. export sales)   ......       191,451         187,460         183,267
                                                          ---------       ---------       ---------
                                                         $1,044,247      $1,016,883       $ 984,236
                                                          =========       =========       =========
 Operating earnings (loss):
  Domestic ..........................................     $ 148,254       $  70,423       $(246,577)
  International (includes U.S. export sales)   ......        29,336          24,301          (5,022)
                                                          ---------       ---------       ---------
                                                            177,590          94,724        (251,599)
  Unallocated expenses and eliminations  ............       (26,534)        (24,479)        (35,736)
                                                          ---------       ---------       ---------
                                                          $ 151,056       $  70,245       $(287,335)
                                                          =========       =========       =========
 Identifiable assets:
  Domestic ..........................................     $ 969,964      $1,040,591       $ 781,788
  International  ....................................        68,301          67,563          73,430
                                                          ---------       ---------       ---------
                                                          1,038,265       1,108,154         855,218
  Corporate assets  .................................        74,664          50,530         217,491
                                                          ---------       ---------       ---------
                                                         $1,112,929      $1,158,684      $1,072,709
                                                          =========       =========       =========
</TABLE>

     Unallocated expenses and eliminations include corporate administrative
expenses, intangible amortization, certain pension and postretirement benefit
costs or credits, and eliminations of intercompany income and expense.
Identifiable assets are those used directly in the operations, and exclude
non-operating, corporate and deferred tax assets. Sales between geographic areas
are not material and are made primarily at cost plus a markup.

12. ENVIRONMENTAL MATTERS

     The Company's operations, like those of comparable businesses, are subject
to certain federal, state, local and foreign environmental laws and regulations.
As of December 29, 1996, the Company had been identified as a potentially
responsible party ("PRP") in connection with seven sites subject to the
federal Superfund law and two sites subject to state Superfund laws comparable
to the federal law (collectively the "Environmental Sites"), exclusive of
sites at which the Company has been designated (or expects to be designated) as
a DE MINIMIS (less than 1%) participant. Substantially all of these sites relate
to divested operations of the Company.

     The Company currently is engaged in active remediation activities at seven
sites, four of which are among the Environmental Sites referred to above, and
three of which have not been designated as Superfund sites under federal or
state law. In addition, the Company is engaged in environmental remediation
activities at two sites in Newburgh Heights, Ohio, where a subsidiary formerly
conducted operations. The Company has been actively cooperating with the United
States Nuclear Regulatory Commission and state regulatory authorities in
developing a plan for remediation of those sites.

                                      F-23

<PAGE>

                     SUNBEAM CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)

12. ENVIRONMENTAL MATTERS-(CONTINUED)

Remediation at one of the two sites is essentially complete and remediation of
the other site is expected to be substantially complete during 1997.

     The Company has established reserves, in accordance with SFAS No. 5,
ACCOUNTING FOR CONTINGENCIES, to cover the anticipated probable costs of
remediation, based upon periodic reviews of all sites for which the Company has,
or may have remediation responsibility. As of December 29, 1996, the amount of
such reserves was approximately 5% of the Company's total liabilities as set
forth in the consolidated financial statements. Liability under the Superfund
law is joint and several and is imposed on a strict basis, without regard to
degree of negligence or culpability. As a result, the Company recognizes its
responsibility to determine whether other PRP's at a Superfund site are
financially capable of paying their respective shares of the ultimate cost of
remediation of the site. Whenever the Company has determined that a particular
PRP is not financially responsible, it has assumed for purposes of establishing
reserve amounts that such PRP will not pay its respective share of the costs of
remediation. To minimize the Company's potential liability with respect to the
Environmental Sites, the Company has actively participated in steering
committees and other groups of PRP's established with respect to such sites. The
Company continues to pursue the recovery of some environmental remediation costs
from certain of its liability insurance carriers; however, such potential
recoveries have not been offset against potential liabilities and have not been
considered in determining the Company's environmental reserves.

     Due to uncertainty over remedial measures to be adopted at some sites, the
possibility of changes in environmental laws and regulations and the fact that
joint and several liability with the right of contribution is possible at
federal and state Superfund sites, the Company's ultimate future liability with
respect to sites at which remediation has not been completed may vary from the
amounts reserved as of December 29, 1996. In connection with the Company's
restructuring plan, in the fourth quarter of 1996 a comprehensive review of all
environmental exposures was performed and the Company accelerated its strategy
for the resolution and settlement of certain environmental claims. As a result,
the Company recorded additional environmental reserves of approximately $9.0
million. The Company believes, based on existing information, that the costs of
completing environmental remediation of all sites for which the Company has a
remediation responsibility have been adequately reserved, and that the ultimate
resolution of these matters will not have a material adverse effect upon the
Company's financial condition.

13. OTHER COMMITMENTS AND CONTINGENCIES

LEASES

     The Company rents certain facilities and equipment under operating leases.
Rental expense for operating leases amounted to $8.8 million for 1994, $8.6
million for 1995 and $8.0 million for 1996. The minimum future rentals due under
noncancelable operating leases as of December 29, 1996 aggregated $11.9 million.
The amounts payable in each of the years 1997-2001 and thereafter are $1.4
million, $1.4 million, $1.3 million, $1.3 million, $1.3 million and $5.2
million, respectively.

CERTAIN DEBT OBLIGATIONS

     Responsibility for servicing certain debt obligations of the Company's
predecessor were assumed by third parties in connection with the acquisition of
former businesses, although the Company's

                                      F-24

<PAGE>

                     SUNBEAM CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)

13. OTHER COMMITMENTS AND CONTINGENCIES-(CONTINUED)

predecessor remained the primary obligor in accordance with the respective loan
documents. Such obligations, which amounted to approximately $20.6 million at
December 29, 1996, and the corresponding receivables from the third parties, are
not included in the consolidated balance sheets since these transactions
occurred prior to the issuance of SFAS No. 76, EXTINGUISHMENT OF DEBT.
Management believes that the third parties will continue to meet their
obligations pursuant to the assumption agreements.

     Letters of credit aggregating $29.2 million were outstanding as of December
29, 1996.

LITIGATION

     The Company is involved in various lawsuits arising from time to time in
the ordinary course of business and related to divested operations of the
Company. The Company has established reserves, in accordance with SFAS No. 5,
ACCOUNTING FOR CONTINGENCIES, to cover the anticipated probable costs of
litigation matters, based upon periodic reviews of all cases. In the fourth
quarter of 1996, the Company increased litigation reserves by approximately
$17.7 million based on adverse developments in the status of certain claims,
primarily related to divested operations of the Company. The Company believes,
based on existing information, that anticipated probable costs of litigation
matters have been adequately reserved, and that the ultimate resolution of these
matters will not have a material adverse effect upon the Company's financial
condition.

PRODUCT LIABILITY MATTERS

     The Company is party to various personal injury and property damage
lawsuits relating to its products and incidental to its business. Annually, the
Company sets its product liability insurance program based on the Company's
current and historical claims experience and the availability and cost of
insurance. The Company's program for 1996 was comprised of a self-insurance
retention of $1 million per occurrence.

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

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

                                      F-25

<PAGE>

                     SUNBEAM CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)

14. UNAUDITED QUARTERLY FINANCIAL DATA

                                FISCAL 1996(a)

<TABLE>
<CAPTION>
                                                       FIRST       SECOND        THIRD           FOURTH
                                                      QUARTER      QUARTER      QUARTER         QUARTER
                                                      ----------   ----------   ----------   ------------
                                                            (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S>                                                   <C>          <C>          <C>          <C>
Net sales   .......................................     $229.7       $253.9       $231.8         $ 268.8
Gross profit (loss)  ..............................       48.1         47.2         28.8           (40.4)
Operating earnings (loss)  ........................       15.5          9.2        (20.7)         (291.3)(c)
Earnings (loss) from continuing operations   ......        6.7          2.8        (15.8)         (190.4)
Earnings (loss) per share from continuing
 operations    ....................................        .08          .03         (.19)          (2.29)
Earnings (loss) from discontinued operations,
 net of taxes  ....................................       10.7          4.4         (2.3)          (11.9)
Estimated loss on sale of discontinued operations,
 net of taxes  ....................................          -            -            -           (32.4)
Net earnings (loss)  ..............................       17.4          7.2        (18.1)         (234.8)
Net earnings (loss) per share(b)    ...............        .21          .09         (.22)          (2.83)
</TABLE>

<TABLE>
<CAPTION>
                                FISCAL 1995(a)

                                                       FIRST       SECOND        THIRD           FOURTH
                                                      QUARTER      QUARTER      QUARTER         QUARTER
                                                      ----------   ----------   ----------   ------------
                                                             (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S>                                                      <C>          <C>          <C>          <C>
Net sales   .......................................     $244.6       $241.9       $246.3          $284.1
Gross profit   ....................................       58.9         49.3         53.6            46.0
Operating earnings   ..............................       32.3         15.1         19.1             3.7 (d)
Earnings from continuing operations    ............       17.9          8.1          9.9             1.7
Earnings per share from continuing operations   ...        .22          .10          .12             .01
Earnings (loss) from discontinued operations,
 net of taxes  ....................................       12.1          3.3         (0.9)           (1.6)
Net earnings   ....................................       30.0         11.4          9.0             0.1
Net earnings per share(b)  ........................        .36          .14          .11              --

<FN>
----------------

(a) Each quarter consists of a 13-week period.
(b) Primary and fully diluted earnings per share amounts are equivalent.
(c) Refer to Note 2 and 3 regarding the Company's 1996 restructuring and growth
    plan.
(d) Operating earnings for the Fourth Quarter of 1995 include charges related to
    the Company's inventory reduction initiatives which resulted in approximately
    $12.0 million of excess capacity costs attibutable to lower production levels.
</FN>
</TABLE>

                                      F-26

<PAGE>

                     SUNBEAM CORPORATION AND SUBSIDIARIES
                                  SCHEDULE II

                       VALUATION AND QUALIFYING ACCOUNTS

                        FISCAL YEARS 1996, 1995 AND 1994
                            (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                      BALANCE AT      CHARGED TO                         BALANCE AT
                                                      BEGINNING       COSTS AND                           END OF
DESCRIPTION                                           OF PERIOD        EXPENSES        DEDUCTIONS         PERIOD
-----------                                           ----------      ----------      ----------------   ------------
<S>                                                   <C>             <C>             <C>                <C>
Allowance for doubtful accounts and cash discounts:
                                                                                           $     (233)(a)
  Fiscal year ended                                                                            19,911 (b)
   December 29, 1996   ..............................    $12,326         $23,369                    - (c)  $16,017
                                                         ========        ========     ===============      ========

                                                                                           $      715 (a)
  Fiscal year ended                                                                             6,988 (b)
   December 31, 1995   ..............................    $ 9,416         $10,651                   38 (c)  $12,326
                                                         ========        ========     ===============      ========

                                                                                           $      700 (a)
  Fiscal year ended                                                                             3,487 (b)
   January 1, 1995  .................................    $10,795         $ 2,996                  188 (c)  $ 9,416
                                                         ========        ========     ===============      ========

<FN>
----------------

Notes: (a) Reclassified to accrued liabilities for customer deductions.
       (b) Accounts written off as uncollectible.
       (c) Foreign currency translation adjustment.
</FN>
</TABLE>

                                      F-27