FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest
event reported): February 8, 1994
Zenith Electronics Corporation
(Exact name of registrant as specified in its charter)
Delaware 1-4115 36-1996520
(State or jurisdiction (Commission File (IRS Employer
of incorporation) Number) identification No.)
1000 Milwaukee Avenue
Glenview, Illinois 60025
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code (708) 391-7000
Not applicable
(Former name or former address, if changed since last report)
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Item 5. Other Events.
The following statement was included in the Company's recently filed
Form S-3 Registration Statement under the Securities Act of 1933:
"INVESTMENT CONSIDERATIONS
"The following factors should be carefully considered in evaluating
an investment in any shares of Common Stock offered hereby:
"Losses From Continuing Operations. The Company has reported substantial
losses from its continuing operations for the last eight years. The color
television market in the United States has been under intense pricing
pressure for many years and color television prices have dropped sharply,
resulting in substantially reduced profit margins. Although the Company has
benefitted from major cost-reduction programs, lower sales and inflationary
cost increases have more than offset such cost reduction benefits. In
recent years, operating results have also been adversely affected by
significant restructuring charges, start-up costs for new programs and
costs related to downsizing certain non-consumer businesses. The Company
expects a loss in the fourth quarter and the full year 1993 despite record
industry unit volume. The Company also plans to take a special charge
of about $30 million in the fourth quarter of 1993. See "Recent
Developments." There can be no assurance that the Company's net operating
losses will not continue for the foreseeable future.
"Liquidity. Cash decreased from $176 million at December 31, 1989 to
zero at October 2, 1993. (Due to the seasonal nature of the Company's
business, cash available peaks after year ends). Of the total cash
decrease, $67 million was related to the disposition of the discontinued
computer products business and took place in 1990, while the remaining
$109 million related to ongoing operations, including cash used for
operating activities, investing activities and financing activities. The
Company's borrowings during this period have increased, and the Company
entered into the Credit Agreement in May, 1993. The maximum commitment
of funds available for borrowing under the Credit Agreement is $90 million,
based upon a borrowing base formula related to eligible accounts and
eligible inventory (each as defined in the Credit Agreement). As of
February 3, 1994, the Company had outstanding borrowings under the
Credit Agreement of $25 million. The Credit Agreement is scheduled to
expire in December 1994. See "Credit Agreement." Although the Company
believes that its Credit Agreement, together with extended-term payables
available from a foreign supplier and its continuing efforts to obtain
other financing sources, will be adequate to meet its seasonal working
capital needs, there can be no assurance that the Company may not
experience liquidity problems in the future because of adverse market
conditions or other unfavorable events.
"Business Strategy. The Company's business strategy involves improving the
profitability of core businesses and the introduction of new products, such
as high-definition television, home theater TVs and new digital cable
products, as well as the restructuring of certain business operations.
These efforts to improve profitability, develop and introduce new products
and restructure operations are expected to continue to involve significant
expenditures by the Company in 1994 and beyond. There can be no assurance
that the Company will achieve the improvement in financial results
expected from this business strategy.
<PAGE>
"Competition. The Company's major product areas, including the color
television market, are highly competitive. The Company's major competitors
are foreign-owned global giants, generally with greater financial, marketing,
manufacturing and technical resources. In efforts to increase market share
or achieve higher production volumes, the Company's competitors have
aggressively lowered their selling prices. Some of the Company's foreign
competitors have been capable of offsetting the effects of U.S. price
reductions through sales at higher margins in their home markets and
through direct governmental supports. There can be no assurance that
such competition will not continue to adversely affect the Company's
performance or that the Company will be able to maintain its market share
in the face of such competition."
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ZENITH ELECTRONICS CORPORATION
By:/s/ David S. Levin
--------------------
David S. Levin, Secretary
Date: February 8, 1994
