Dunlap Responds to Sunbeam Restatement.

BOCA RATON, Fla.--(BUSINESS WIRE)--Oct. 20, 1998--Albert J. Dunlap issued the following statement in response to SunbeamAEs restatement announced today (NYSE: SOC):

"I am heartened by the results of SunbeamAEs long-awaited restatement, for it confirms what I have been saying for the past four months: there were no improprieties or illegalities in the manner in which either I u or my management team u conducted SunbeamAEs business.

"The items at issue in SunbeamAEs restatement are items that were fully disclosed to and examined by SunbeamAEs outside auditors, Arthur Andersen, before they certified SunbeamAEs 1996 and 1997 financial statements, and the conclusions certified by Arthur Andersen were fully reviewed by SunbeamAEs Audit Committee prior to their release.

"Most, if not all, of SunbeamAEs restatement "corrections" appear to be after-the-fact alterations to management estimates rather than errors or misstatements. However these technical accounting issues are ultimately resolved -- and my consultants from PricewaterhouseCoopers will closely scrutinize and test each of the restated items once we obtain the underlying documents to which we have thus far been denied access u there has been no allegation of any management wrongdoing.

"As I previously explained, while I had no involvement whatsoever with any accounting or audit matters, I explicitly directed all of SunbeamAEs personnel to perform their jobs in a legally, morally and fiduciarily correct manner, and if there were questions regarding accounting, to work them out with the auditors. SunbeamAEs restatement today appears to reflect a disagreement as to the accounting treatment of a limited number of items. It remains to be seen whether the original treatment was correct, whether the revised treatment is correct or, possibly, whether both may be correct.

"With respect to the 1996 restructuring charges, which were reviewed extensively by both Arthur Andersen, which was the outside audit firm prior to my joining Sunbeam, and by SunbeamAEs Audit Committee, which was comprised solely of outside directors of the Board, Arthur Andersen signed off that: (i) the charges were actually and properly classified as restructuring charges; (2) that the numbers were reasonable; and (3) that a plan really existed and had been implemented. It is clear that no items in the restructuring charges were concealed from Arthur Andersen or the Audit Committee, both of which signed off on the restructuring plan after an extensive review. Management succeeded in cutting excess costs and restructuring Sunbeam's operations.

"In connection with the bill and hold practice, now questioned by the restatement, this practice was established by Sunbeam, in part, to accommodate customer requests and to solve SunbeamAEs historical inability to supply seasonal products on a timely basis to customers. Arthur Andersen and the Audit Committee extensively reviewed the bill and hold practice and my understanding is that Arthur Andersen contacted SunbeamAEs customers to confirm compliance with GAAP. Consequently, Arthur Andersen advised SunbeamAEs management and the Board that SunbeamAEs bill and hold complied with GAAP. I understand that the products sold pursuant to the bill and hold practice were ultimately paid for by the customers, consistent with what we believed were completed sales. Once again, there was full disclosure and an extensive outside review of this program. Arthur Andersen signed off on it, and then reaffirmed that it was consistent with GAAP.

"In connection with the question of guaranteed sales, Sunbeam has always maintained an allowance for doubtful accounts. SunbeamAEs management embarked on a policy of requiring that all sales be final and that returns would not be accepted. In addition, based upon a focus on improved manufacturing, reduction in our product lines and sales to certain foreign territories, Sunbeam reduced its reserves. I believe that all of these issues were fully examined by Arthur Andersen and SunbeamAEs Audit Committee, which signed off on the same.

"Consistent with my practices throughout my career, full disclosure was made by Sunbeam to its outside auditors of all of SunbeamAEs accounting practices now is question. These practices were reviewed with SunbeamAEs Audit Committee, and the outside auditors affirmed to Sunbeam that the accounting treatment with respect to each of these items was appropriate and in accordance with GAAP."