<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
(Mark One)
(X) Quarterly report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 1994.
or
( ) Transition report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission file number 1-2883
OUTBOARD MARINE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 36-1589715
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
100 Sea-Horse Drive
Waukegan, Illinois 60085
(Address or principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 708-689-6200
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
Number of shares of Common Stock of $0.15 par value outstanding
at April 29, 1994 were 19,867,300 shares (not including 239,700
treasury shares).
Exhibit Index Page 11.
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OUTBOARD MARINE CORPORATION
FORM 10-Q
PART I, ITEM 1
FINANCIAL INFORMATION
FINANCIAL STATEMENTS
March 31, 1994
Financial statements required by this form:
Page
----
Statement of Consolidated Earnings 3
Condensed Statement of Consolidated Financial Position 4
Statement of Consolidated Cash Flows 5
In the opinion of management, the information furnished reflects
all adjustments necessary for a fair statement of the results of
the interim periods and all such adjustments are of a normal
recurring nature. These financial statements should be read in
conjunction with the financial statements and notes thereto
included in the Company's Annual Report on Form 10-K for the year
ended September 30, 1993.
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<PAGE> 3
<TABLE>
OUTBOARD MARINE CORPORATION
STATEMENT OF CONSOLIDATED EARNINGS
(UNAUDITED)
<CAPTION>
Three Months Ended Six Months Ended
March 31 March 31
-------------------- --------------------
(In millions except amounts per share) 1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
NET SALES $ 263.5 $ 274.5 $ 454.3 $ 452.8
COST OF GOODS SOLD 198.9 214.0 353.3 372.5
-------- -------- -------- --------
Gross earnings 64.6 60.5 101.0 80.3
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 51.3 53.4 93.1 101.5
-------- -------- -------- --------
Earnings (loss) from operations 13.3 7.1 7.9 (21.2)
NON-OPERATING EXPENSE (INCOME):
Interest expense 5.1 5.0 10.1 11.2
Other, net (11.7) .4 (13.6) (1.5)
-------- -------- -------- --------
(6.6) 5.4 (3.5) 9.7
-------- -------- -------- --------
Earnings (loss) before provision for income
taxes and cumulative effect of changes in
accounting principles 19.9 1.7 11.4 (30.9)
PROVISION (CREDIT) FOR INCOME TAXES .8 .7 1.6 (13.0)
-------- -------- -------- --------
Net earnings (loss) before cumulative effect
of changes in accounting principles 19.1 1.0 9.8 (17.9)
CUMULATIVE EFFECT ON PRIOR YEARS
OF CHANGES IN ACCOUNTING PRINCIPLES
Income taxes - - - (10.0)
Postretirement benefits other than pensions - - - (107.5)
-------- -------- -------- --------
Net earnings (loss) $ 19.1 $ 1.0 $ 9.8 $(135.4)
======== ======== ======== ========
NET EARNINGS (LOSS) PER SHARE OF COMMON STOCK
based on weighted average common shares and
common stock equivalents outstanding:
Primary
Before cumulative effect of changes in
accounting principles $ .95 $ .05 $ .49 $ ( .92)
Cumulative effect of changes in
accounting principles - - - (6.01)
-------- -------- -------- --------
Net primary $ .95 $ .05 $ .49 $ (6.93)
======== ======== ======== ========
Fully diluted $ .85 $ .05 $ .49 $ (6.93)
======== ======== ======== ========
DIVIDENDS PAID PER SHARE $ .10 $ .10 $ .20 $ .20
======== ======== ======== ========
AVERAGE SHARES OF COMMON STOCK AND COMMON
STOCK EQUIVALENTS OUTSTANDING (if applicable) 20.0 19.8 20.0 19.5
<FN>
The financial statements for the three and six months ended March 31, 1993 have been restated to
reflect the adoption of Accounting Standards No. 106 "Accounting for Postretirement Benefits
Other Than Pension" and No. 109 "Accounting for Income Taxes" which were adopted effective
October 1, 1992.
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</TABLE>
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<TABLE>
OUTBOARD MARINE CORPORATION
CONDENSED STATEMENT OF CONSOLIDATED FINANCIAL POSITION
(UNAUDITED)
<CAPTION>
(In millions) March 31 September 30
1994 1993 1993
-------- -------- --------
<S> <C> <C> <C>
ASSETS
- - ------
CURRENT ASSETS:
Cash and cash equivalents $ 33.1 $ 34.6 $ 104.4
Receivables 193.5 194.7 136.3
Inventories-
Finished products 77.7 92.1 64.1
Raw material, work in process
and service parts 102.4 116.4 90.0
-------- -------- --------
Total inventory 180.1 208.5 154.1
Other current assets 31.4 69.5 30.5
-------- -------- --------
Total current assets 438.1 507.3 425.3
PRODUCT TOOLING, net 45.4 33.1 36.2
GOODWILL AND INTANGIBLES, net 32.5 111.6 33.3
OTHER ASSETS 85.7 54.4 86.7
PLANT AND EQUIPMENT, at cost 543.3 583.7 542.9
Less-Accumulated depreciation 333.0 349.0 332.6
-------- -------- --------
210.3 234.7 210.3
-------- -------- --------
$ 812.0 $ 941.1 $ 791.8
======== ======== ========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
- - ----------------------------------------
CURRENT LIABILITIES:
Notes payable $ 28.0 $ 37.7 $ -
Accounts payable 76.8 78.5 76.6
Accrued and other 167.8 121.0 174.8
-------- -------- --------
Total current liabilities 272.6 237.2 251.4
LONG-TERM DEBT 178.1 196.4 183.0
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS 103.5 102.7 106.1
OTHER NON-CURRENT LIABILITIES 88.2 91.2 90.4
STOCKHOLDERS' INVESTMENT:
Common stock and capital surplus 108.3 105.4 106.0
Retained earnings 71.5 216.8 65.7
Cumulative translation adjustments (10.2) (8.6) (10.8)
-------- -------- --------
Total stockholders' investment 169.6 313.6 160.9
-------- -------- --------
$ 812.0 $ 941.1 $ 791.8
======== ======== ========
SHARES OF COMMON STOCK OUTSTANDING 19.9 19.6 19.8
<FN>
The financial statements for March 31, 1993 have been restated to reflect the adoption
of Accounting Standards No. 106 "Accounting for Postretirement Benefits Other Than
Pensions" and No. 109 "Accounting for Income Taxes" which were adopted effective
October 1, 1992.
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</TABLE>
<PAGE> 5
<TABLE>
OUTBOARD MARINE CORPORATION
STATEMENT OF CONSOLIDATED CASH FLOWS
(UNAUDITED)
<CAPTION>
(In millions) Six Months Ended
March 31
-----------------------
1994 1993
------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ 9.8 $ (135.4)
Adjustments to reconcile net earnings (loss) to net cash
provided by operations:
Cumulative effect of changes in accounting principles - 117.5
Depreciation and amortization 18.3 28.2
Gain on transfer of land rights (10.5) -
Changes in current accounts excluding the effects
of noncash transactions:
(Increase) in accounts receivable (56.5) (44.5)
(Increase) in inventory (25.6) (32.7)
(Increase) in other current assets ( .4) (7.8)
(Decrease) in accounts payable and accrued liabilities (12.6) (25.8)
Other, net (10.5) (15.5)
------- --------
Net cash used for operating activities (88.0) (116.0)
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for plant and equipment, and tooling (29.5) (20.7)
Net proceeds on transfer of land rights 10.5 -
Other, net 7.5 2.2
------- --------
Net cash used for investing activities (11.5) (18.5)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in short-term debt 28.0 37.7
Payments of long-term debt, including current maturities - (9.8)
Cash dividends paid (4.0) (3.9)
Other, net 1.9 .9
------- --------
Net cash provided by financing activities 25.9 24.9
EXCHANGE RATE EFFECT ON CASH 2.3 1.6
------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS (71.3) (108.0)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 104.4 142.6
------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 33.1 $ 34.6
======= ========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid $ 7.7 $ 9.6
Income taxes paid 4.8 12.9
<FN>
The financial statements for March 31, 1993 have been restated to reflect the adoption of
Accounting Standards No. 106 "Accounting for Postretirement Benefits Other Than Pensions"
and No.109 "Accounting for Income Taxes" which were adopted effective October 1, 1992.
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</TABLE>
<PAGE> 6
OUTBOARD MARINE CORPORATION
FORM 10-Q
PART I, ITEM 2
FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
March 31, 1994
RESULTS OF OPERATIONS
The company achieved net earnings of $19.1 million, or
95 cents per share (85 cents per share, fully diluted), on sales
of $263.5 million for this year's second quarter, compared with
net earnings of $1 million, or five cents per share, on sales of
$274.5 million for the same quarter last year. U.S. sales were
down 1 percent in the quarter, while sales outside the U.S. were
down 12 percent. The sales decline in the quarter was due to
component supply problems that kept the company from meeting
market demand in some areas, as well as the termination last year
of a significant outboard engine supply agreement with a major
boat manufacturer.
Non-operating income and net earnings were increased by
$10.5 million from a real estate transaction involving the
transfer of land rights the company held in Hong Kong.
Much of the second quarter performance success was due to
the restructuring program, which produced $7 million in cost
reduction in the quarter. That, in turn, helped increase
operating earnings to $13.3 million from $7.1 million last year,
an 87 percent improvement. The company also achieved improved
profitability from a richer sales mix of higher horsepower
outboards in the quarter. The company attributes that sales mix
improvement, in large part, to the enthusiastic market response
to the Johnson and Evinrude V-6 outboards and to the success of
the outboard pre-rigging program.
For the first six months of 1994, the company achieved net
earnings of $9.8 million or 49 cents per share, on sales of
$454.3 million, compared with a net loss of $135.4 million, or
$6.93 per share, on sales of $452.8 million for the first six
months of 1993. The loss in the first half of 1993 included
charges totalling $117.5 million, or $6.01 per share, to
implement Accounting Standards No. 106, "Accounting for
Postretirement Benefits Other Than Pensions" (SFAS 106) and
Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS
109). U.S. sales in the first half of this year increased 2
percent, while our sales outside the U.S. decreased 5 percent.
The company achieved operating earnings of $7.9 million in
the first half of this year, compared with an operating loss of
$21.2 million in the first half of 1993.
The provision for income taxes of $0.8 million and $1.6
million for the three and six months ended March 31, 1994,
respectively, resulted from expected taxes payable relating to
certain international subsidiaries. The company's return to
profitability places it in a favorable tax position. In the
second quarter, certain deferred tax benefits from the adoption
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<PAGE> 7
last year of accounting standards SFAS 106 and 109, and from
restructuring expenses, were recognized because of the profits.
To the extent there are additional profits for the year,
additional deferred tax benefits will be recognized to reduce the
income tax provision.
It is not appropriate to compare the results of operations
for the current quarter with those of the preceding quarter
because of the seasonal nature of the company's business.
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<PAGE> 8
OUTBOARD MARINE CORPORATION
FORM 10-Q
PART I, ITEM 2
FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
March 31, 1994
FINANCIAL CONDITION
Due to the seasonal nature of the company's business,
receivables, inventories and accompanying short-term borrowings
are usually at their highest levels in the second and third
fiscal quarters and decline thereafter as the company's products
enter their peak selling seasons. The company's ratio of current
assets to current liabilities at March 31, 1994 was 1.6 as
compared with 2.1 at March 31, 1993. Current assets of $438.1
million at March 31, 1994 decreased $69.2 million as compared to
current assets of $507.3 million at March 31, 1993. Inventories
decreased $28.4 million due largely to efficiencies gained in
Europe, Canada and the United States including those gained from
the establishment of the stern drive manufacturing joint venture
with Volvo Penta. Other current assets decreased $38.1 million
due primarily to lower deferred tax benefits resulting from the
adoption of SFAS 109.
Goodwill and intangibles decreased $79.1 million due
primarily to a fiscal year 1993 write-down of $75.8 million
included in restructuring charges. Other assets increased $31.3
million due primarily to investments in the joint venture with
Volvo Penta and in IJ Holdings, Inc. and also to increased
pension assets. Product tooling increased $12.3 million due
primarily to new outboard motor models. Plant and equipment
decreased due primarily to a contribution to the joint venture
with Volvo Penta and to lower capital expenditures in
relationship to depreciation.
Current liabilities increased by $35.4 million to $272.6
million as of March 31, 1994 compared to $237.2 million at March
31, 1993 due primarily to reserves for restructuring established
in the last two quarters of fiscal year 1993 and also due to a
$13.1 million increase in current maturity of long-term debt.
While the company's total debt to total capitalization at
March 31, 1994 was 56.6 percent compared to 43.0 percent at March
31, 1993, long-term debt decreased $18.3 million from the
previous year. The principle reason for the change in the
company's total debt to total capitalization was the
restructuring charges recorded in the last two quarters of fiscal
year 1993.
The company believes that with the current capital structure
plus funds to be generated by operating activities, existing cash
and marketable securities, additional funds available from
existing worldwide credit lines, and long-term debt and equity
sources, it has sufficient resources to meet future capital
requirements.
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<PAGE> 9
OUTBOARD MARINE CORPORATION
FORM 10-Q
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits reference is made to the Exhibit Index on
Page 11.
(b) Reports on Form 8-K. The Registrant did not file any
reports on Form 8-K for the fiscal quarter ended
March 31, 1994.
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<PAGE> 10
S I G N A T U R E
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
OUTBOARD MARINE CORPORATION
Signature Title Date
________________________ _________________ __________________
Vice President &
By /s/ James R. Maurice Controller May 11, 1994
________________________ _________________ __________________
JAMES R. MAURICE
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<PAGE> 11
OUTBOARD MARINE CORPORATION
EXHIBIT INDEX
Exhibit 4: Instruments defining the rights of security
holders including indentures:
(A) With respect to the Agreement of Outboard Marine
Corporation, reference is made to Exhibit 4(A) to
the Registrant's Annual Report on Form 10-K for
the fiscal year ended September 30, 1993, which is
incorporated herein by reference.
(B) With respect to rights of Series A, Junior
Participating Preferred Stock, reference is made
to the Registrant's report on Form 8-K filed on
October 17, 1990, which is incorporated herein by
reference.
(C) With respect to rights of holders of the
Registrant's 9-1/8% sinking fund debentures due
2017, reference is made to Exhibit 4(A) in the
Registrant's Registration Statement Number 33
-12759 filed on March 20, 1987, which is
incorporated herein by reference.
(D) With respect to rights of holders of Registrant's
7% convertible subordinated debentures due 2002,
reference is made to Registrant's Registration
Statement Number 33-47354 filed on April 28, 1992,
which is incorporated herein by reference.
Exhibit 10: Material contracts:
(A) With respect to the Registrant's 1987 Stock Option
and Performance Unit Plan, reference is made to
Exhibit 10(D) to the Registrant's Annual Report on
Form 10-K for the fiscal year ended September 30,
1987, which is incorporated herein by reference.
(B) With respect to the OMC Executive Bonus Plan,
reference is made to Exhibit 10(C) to the
Registrant's Annual Report on Form 10-K for the
fiscal year ended September 30, 1990, which is
incorporated herein by reference.
(C) With respect to the OMC Executive Equity Incentive
Plan, reference is made to Exhibit 10(D) to the
Registrant's Annual Report on Form 10-K for the
fiscal year ended September 30, 1990, which is
incorporated herein by reference.
(D) With respect to Severance Agreements for all
elected officers of the Registrant (except Mr.
Chapman), reference is made to Exhibit 10(E) of
the Registrant's Annual Report on Form 10-K for
the fiscal year ended September 30, 1988, which is
incorporated herein by reference.
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<PAGE> 12
(E) With respect to the Severance Agreement for Mr.
Chapman, reference is made to Exhibit 10(F) of the
Registrant's Annual Report on Form 10-K for the
fiscal year ended September 30, 1988, which is
incorporated herein by reference.
(F) With respect to the Registrant's Revolving Credit
Agreement, reference is made to Exhibit 10 (H) to
the Registrant's Annual Report on Form 10-K for
the fiscal year ended September 30, 1992, which is
incorporated herein by reference. With respect to
Amendment No. 1 and No. 3 to such Credit Agreement
reference is made to Exhibit 10 to the
Registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1993, which is incorporated
herein by reference. With respect to Amendment No.
2 to such Credit Agreement, reference is made to
Exhibit 10 (F) to the Registrant's Annual Report
on Form 10-K for the fiscal year ended September
30, 1993, which is incorporated herein by
reference. With respect to Amendment No. 4 to such
Credit Agreement, a copy is attached hereto.
Exhibit 11: Statements regarding computation of per share
earnings:
A statement regarding the computation of per share
earnings is attached hereto as Exhibit 11.
Exhibit 12: Statements regarding computation of ratios:
A statement regarding the computation of the ratio
of earnings to fixed charges is attached hereto as
Exhibit 12.
Exhibit 19: Report furnished to security holders:
A copy of the Registrant's Shareholders Report
for the fiscal quarter ended March 31, 1994, is
attached hereto as Exhibit 19.
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<PAGE> 13
EXHIBIT 10 (F)
February 25, 1994
Outboard Marine Corporation
100 Sea-Horse Drive
Waukegan, Illinois 60085
Attention: Robert J. Moerchen
Re: Amendment No. 4 to Revolving Credit Agreement dated as of
August 27, 1992 among Outboard Marine Corporation, the
Banks named therein, The First National Bank of Chicago,
As Agent, and Bank of America National Trust and Savings
Association, as Co-Agent
Ladies and Gentlemen:
We refer to that certain Revolving Credit Agreement dated as
of August 27, 1992, as heretofore amended (herein called the
"Agreement"), among Outboard Marine Corporation (the "Company"),
the Banks named on the signature pages thereof, Bank of America
National Trust and Savings Association as Co-Agent and the First
National Bank of Chicago as Agent. Capitalized terms used herein
and not otherwise defined shall have their meanings as attributed
to such terms in the Agreement.
The Company has advised the banks that it wishes to add The
Bank of New York as a party to the Agreement and to reduce the
Commitments of certain Banks, as hereinafter set forth. In
addition, the Company has requested certain waivers to the
Agreement.
This is to advise you that the Company and the Banks hereby
agree as follows:
1) To amend the signature pages to the Agreement by
deleting the amount of each Bank's Commitment set forth therein
and by substituting therefor the amount set forth opposite each
Bank's name on the signature pages hereto. From and after the
Effective Date of this Amendment No. 4, each Bank's Commitment
shall be the amount set forth on the signature pages to this
Amendment No. 4.
2) To amend the Agreement by adding as a Bank party to the
Agreement, The Bank of New York, whose commitment shall be
$15,000,000. From and after the Effective Date of this Amendment
No. 4, The Bank of New York hereby agrees to be and shall be
deemed a Bank, with all the rights and obligations of a Bank
originally a party to the Agreement.
3) To waive the provisions of Section 6.07 to permit the
Company to prepay at par its 10.2% $5,000,000 medium term note
issued January 30, 1989 and maturing February 15, 1999.
4) To waive the provisions of Section 6.04 (c) to permit
the Company to assign to New World Development Company Limited or
its Designee, during fiscal year 1994, its land rights in Hong
Kong for approximately $10.2 million in Net Proceeds, which
amount shall not reduce the amount of Fixed Asset sales permitted
under said Section 6.04 (c).
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<PAGE> 14
5) To amend the Agreement by adding the following Section
9.04 (f):
"FEDERAL RESERVE BANKS. Notwithstanding anything herein
to the contrary, any Bank may at any time without the consent of
the Company or the Agent and without restrictions as to amount or
otherwise, pledge and assign as collateral all or any portion of
its rights under this Agreement, any Note or any Loan to a Federal
Reserve Bank, provided that no such pledge or assignment shall
release the transferor Bank from its obligations hereunder."
It is understood and agreed that all of the terms,
conditions and covenants of the Agreement, except as specifically
amended and waived herein shall remain unaltered and in full
force and effect and shall continue to be binding upon the
Company, the Banks, the Co-Agent and the Agent. The Agreement is
hereby ratified, confirmed and approved.
In order to induce the Banks to enter this Amendment, the
Company, by its signature below, represents that (i) no Default
or Event of Default has occurred and is continuing and (ii) the
representations and warranties contained in Article IV are true
and correct as if made on the Effective Date.
The Bank of New York, by its signature below, agrees to
become a party to the Agreement and to be bound by, and act in
accordance with, the terms and provisions of the Agreement as of
the Effective Date of this Amendment No. 4.
This Amendment No. 4 shall become effective as of February
25, 1994 ("Effective Date") upon receipt by the Agent of:
1) A copy of the Amendment No. 4 executed by the Banks and
Company.
2) Executed Committed Note and Competitive Bid Note in
favor of The Bank of New York.
3) New Committed Notes, payable to the order of each Bank
whose Commitment is amended hereby in the amount of its
Commitment after giving effect to this amendment.
Each such Bank shall return its old Committed Note to the
Company after the effective Date.
4) An amended Schedule 1 and address for notices for The
Bank of New York.
This amendment may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of
which counterparts, when so executed shall be deemed to be an
original and all of which when taken together shall constitute
one and the same amendment.
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<PAGE> 15
Commitment
- - ----------
THE FIRST NATIONAL BANK OF CHICAGO,
$36,248,225 individually and as Agent
By: Deborah Stevens
____________________________________
Title: Vice President/Senior Corporate
Banker
____________________________________
$30,451,775 BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By: Patricia Del Grande
____________________________________
Title: Vice President
____________________________________
$30,000,000 ROYAL BANK OF CANADA
By: Patricia A. Herbig
____________________________________
Title: Manager, Corporate Banking
____________________________________
$25,000,000 CONTINENTAL BANK N.A.
By: Mary T. Carlson
____________________________________
Title: Vice President
____________________________________
$13,300,000 FIRSTAR BANK MILWAUKEE, N.A.
By: F. R. Dengel
____________________________________
Title: Vice President
____________________________________
$10,000,000 THE BANK OF NOVA SCOTIA
By: A.S. Norsworthy
____________________________________
Title: Assistant Agent
____________________________________
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<PAGE> 16
$15,000,000 NBD BANK, N.A.
By: Jenny Gilpin
____________________________________
Title: Second Vice President
____________________________________
$15,000,000 THE BANK OF NEW YORK
By: Sarah Powell-Goldman
____________________________________
Title: Assistant Vice President
____________________________________
Accepted and Agreed to:
OUTBOARD MARINE CORPORATION
By: James R. Maurice
____________________________
Title: Vice President & Controller
____________________________
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<PAGE> 17
EXHIBIT 11
OUTBOARD MARINE CORPORATION AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
(In millions except amounts per share)
Three Months Ended Six Months Ended
March 31 March 31
----------------- -------------------
1994 1993 1994 1993
-------- -------- -------- ---------
Primary Earnings Per Share:
Net earnings (loss) $ 19.1 $ 1.0 $ 9.8 $ (135.4)
======== ======== ======== =========
Weighted average number of shares 19.8 19.6 19.8 19.5
Common stock equivalents (stock
options) .2 .2 .2 *
-------- -------- -------- ---------
Average shares outstanding 20.0 19.8 20.0 19.5
======== ======== ======== =========
Primary earnings (loss) per share $ .95 $ .05 $ .49 $ (6.93)
======== ======== ======== =========
Fully Diluted Earnings per Share:
Net earnings (loss) $ 19.1 $ 1.0 $ 9.8 $ (135.4)
Add: After-tax interest and
related expense amortization
on 7% convertible subordinated
debentures .9 .9 1.7 1.7
-------- -------- -------- ---------
Net earnings (loss) adjusted $ 20.0 $ 1.9 $ 11.5 $ (133.7)
======== ======== ======== =========
Weighted average number of shares 19.8 19.6 19.8 19.5
Common stock equivalents (stock
options) .2 .2 .2 .2
Weighted average common
shares assuming
conversion of 7% convertible
subordinated debentures 3.4 3.4 3.4 3.4
-------- -------- -------- ---------
Average shares outstanding 23.4 23.2 23.4 23.1
======== ======== ======== =========
Fully diluted earnings (loss) per
share $ .85 $ ** $ ** $ **
======== ======== ======== =========
* The computation of primary earnings per share of common stock
is computed without common stock equivalents because inclusion
of common stock equivalents is antidilutive.
** The computation of fully diluted earnings per share of
common stock is antidilutive; therefore, the amount reported
for primary and fully diluted earnings per share is the same.
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<PAGE> 18
EXHIBIT 12
OUTBOARD MARINE CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(In millions except ratios)
Twelve
Six Months Ended Months
March 31 Ended
-------------------- March 31,
1994 1993 1994
-------- -------- --------
Earnings (loss):
Earnings (loss) before provision for
income taxes and cumulative
effect of changes in accounting
principles $ 11.4 $ (30.9) $(117.6)
Interest expense 10.1 11.2 18.7
Interest portion of rent expense .5 .4 1.0
-------- -------- --------
Earnings (loss) $ 22.0 $ (19.3) $ (97.9)
======== ======== ========
Fixed Charges:
Interest expense $ 10.1 $ 11.2 $ 18.7
Interest portion of rent expense .5 .4 1.0
-------- -------- --------
Fixed Charges $ 10.6 $ 11.6 $ 19.7
======== ======== ========
Ratio of earnings to fixed charges 2.1
========
Excess of fixed charges over earnings $ 30.9 $ 117.6
======== ========
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<PAGE> 19
EXHIBIT 19
April 20, 1994
To Our Shareholders:
I am pleased to tell you that our company has had a highly
successful second quarter this year. We have returned OMC to
profitability for the first half of the year, and we are well on
our way to a profitable 1994.
We achieved net earnings of $19.1 million, or 95 cents per share
(85 cents per share, fully diluted), on sales of $263.5 million for
this year's second quarter, compared with net earnings of $1
million, or five cents per share, on sales of $274.5 million for
the same quarter last year. Our U.S. sales were down 1 percent in
the quarter, while our sales outside the U.S. were down 12 percent.
Our net earnings were increased by $10.5 million from a real estate
transaction involving the transfer of land rights we held in Hong
Kong. Of course, we also are in a favorable tax position, since
our return to profitability is allowing us to realize deferred tax
benefits resulting from our adoption last year of accounting
standards SFAS 106 and 109, and from our restructuring expenses,
none of which were tax-benefitted last year.
But even if we adjusted our results to remove the real estate gain
and assume a normal 40 percent tax rate, we still would have
delivered primary net earnings of 28 cents per share in the past
quarter. Compared with 5 cents per share in the same quarter last
year, that is a very solid improvement.
We owe much of our second quarter performance to the success of our
restructuring program, which produced $7 million in cost reduction
in the quarter. That, in turn, helped increase our operating
earnings to $13.3 million from $7.1 million last year, an 87
percent improvement.
For the first six months of 1994, we achieved net earnings of $9.8
million, or 49 cents per share, on sales of $454.3 million,
compared with a net loss of $135.4 million, or $6.93 per share, on
sales of $452.8 million for the first six months of 1993. Our loss
in the first half of 1993 included charges totalling $117.5
million, or $6.01 per share, to implement accounting rules SFAS 106
and 109. Our U.S. sales in the first half of this year increased
2 percent, while our sales outside the U.S. decreased 5 percent.
We achieved operating earnings of $7.9 million in the first half of
this year, compared with an operating loss of $21.2 million in the
first half of 1993.
Let me give you a brief review of our operations in the past
quarter to help you better understand the progress we are making,
beginning with our Marine Power Products Group, which markets our
engine and accessory products in the United States.
MPPG's sales declined somewhat in the past quarter, and we have
lost some market share, primarily in smaller, lower horsepower
units. That share loss is a product of two factors. First, it's
the product of supply problems we experienced in the quarter with
outboard motor components, primarily for 3 through 8-horsepower
outboards. Those problems are behind us now. Second, it's the
product of our loss of the Tracker Marine OEM outboard sales we had
last year in the second quarter.
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On the other side of the coin, we sold a richer mix of higher
horsepower, more profitable outboards in the quarter. On a
percentage basis, the average horsepower of the outboards we sold
jumped by double digits compared with the same quarter last year.
This increase is the result of a number of factors. But important
among them are the success of our boat builder pre-rigging program
and the excellent reception our larger horsepower outboards are
receiving in the marketplace.
We are managing OMC for profitability, not just market share, and
we are achieving the results we're after.
Our Fishing Boat Group, which builds fiberglass fishing boats for
both freshwater and saltwater use, had an excellent second quarter.
The group turned in a strong sales increase, in spite of the fact
that weather-related problems kept them from producing and shipping
boats for several days during the quarter.
Our Aluminum Boat Group also turned in a solid sales increase, and
our Recreational Boat Group, which markets runabouts and cruisers,
showed an overall sales increase for the quarter. We're very
pleased about that performance because this category of boats was
hardest hit during the downturn.
In our International Group, which markets the bulk of our products
outside the United States, we're still experiencing tough going.
Sales are down in Europe due to a continuing, severe downturn in
the market there. But our year-to-date operating results in
Western Europe were substantially improved over their level last
year, illustrating the success of our European restructuring
program.
Partially offsetting our sales decline in Europe was a strong sales
increase in Latin America and a solid sales gain in Australia. On
its bottom line, our International Group's performance
significantly improved over the same quarter last year.
In summary, we're very pleased with our second quarter and first
half results. We know we still have a demanding task ahead of us.
But we're quite confident of our ability to deliver significant
improvement in our operating results for the year. And we're well
positioned to begin delivering improved shareholder value.
At its April meeting, our board of directors demonstrated its
continuing confidence in our company's performance by declaring a
cash dividend of 10 cents per share, payable May 27, 1994, to
shareholders of record May 13, 1994.
JAMES C. CHAPMAN
James C. Chapman
Chairman, President and
Chief Executive Officer
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NEWS RELEASE: OMC REPORTS STRONG SECOND QUARTER EARNINGS GROWTH
WAUKEGAN, Ill., April 20--Outboard Marine Corporation said today
that cost reduction measures produced stronger operating earnings
in its second quarter. The company said its improved operating
earnings, along with a one-time benefit from a Hong Kong real
estate transaction, produced strong net earnings growth in the
quarter, which ended March 31.
OMC reported net earnings of $19.1 million, or 95 cents per
share (85 cents per share, fully diluted), on sales of $263.5
million for its second quarter, compared with net earnings of $1
million, or five cents per share, on sales of $274.5 million for
the same quarter last year. Net earnings were increased by $10.5
million from the transfer of land rights held by the company in
Hong Kong.
Operating earnings increased to $13.3 million in the 1994 second
quarter from $7.1 million in the same quarter last year.
U.S. sales in the quarter were down 1 percent, while sales outside
the U.S. were down 12 percent. OMC said its sales decline in the
quarter was due to component supply problems that kept the company
from meeting market demand in some areas, as well as the
termination last year of a significant outboard engine supply
agreement with a major boat manufacturer.
"Our ability to deliver improved earnings on reduced sales shows
the effectiveness of the cost reduction measures associated with
our restructuring," said OMC Chairman, President and Chief
Executive Officer James C. Chapman. "We also achieved improved
profitability from a richer sales mix of higher horsepower
outboards in the quarter. We attribute that sales mix improvement,
in large part, to the enthusiastic market response to our Johnson
and Evinrude V-6 outboards and to the success of our outboard pre-
rigging program."
For the first six months of 1994, OMC reported net earnings of $9.8
million, or 49 cents per share, on sales of $454.3 million,
compared with a net loss of $135.4 million, or $6.93 per share, on
sales of $452.8 million for the first six months of 1993. The net
loss in the first half of 1993 included charges totalling $117.5
million, or $6.01 per share, to implement accounting rules SFAS No.
106 for retiree health care and life insurance benefits, and SFAS
No. 109 to eliminate deferred tax assets from the company's balance
sheet.
The company reported operating earnings of $7.9 million in the
first half of 1994, compared with an operating loss of $21.2
million in the first half of 1993. U.S. sales in the first half of
this year increased 2 percent, while sales outside the U.S.
decreased 5 percent.
OMC also declared a cash dividend of 10 cents per share, payable
May 27, 1994, to shareholders of record May 13, 1994.
Outboard Marine Corporation (OM-NYSE) is a leading international
marketer of marine engines, boats, accessories and services.
# # #
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<TABLE>
OUTBOARD MARINE CORPORATION
STATEMENT OF CONSOLIDATED EARNINGS
(UNAUDITED)
<CAPTION>
Three Months Ended Six Months Ended
March 31 March 31
-------------------- --------------------
(In millions except amounts per share) 1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
NET SALES $ 263.5 $ 274.5 $ 454.3 $ 452.8
COST OF GOODS SOLD 198.9 214.0 353.3 372.5
-------- -------- -------- --------
Gross earnings 64.6 60.5 101.0 80.3
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 51.3 53.4 93.1 101.5
-------- -------- -------- --------
Earnings (loss) from operations 13.3 7.1 7.9 (21.2)
NON-OPERATING EXPENSE (INCOME):
Interest expense 5.1 5.0 10.1 11.2
Other, net (11.7) .4 (13.6) (1.5)
-------- -------- -------- --------
(6.6) 5.4 (3.5) 9.7
-------- -------- -------- --------
Earnings (loss) before provision for income
taxes and cumulative effect of changes in
accounting principles 19.9 1.7 11.4 (30.9)
PROVISION (CREDIT) FOR INCOME TAXES .8 .7 1.6 (13.0)
-------- -------- -------- --------
Net earnings (loss) before cumulative effect
of changes in accounting principles 19.1 1.0 9.8 (17.9)
CUMULATIVE EFFECT ON PRIOR YEARS
OF CHANGES IN ACCOUNTING PRINCIPLES
Income taxes - - - (10.0)
Postretirement benefits other than pensions - - - (107.5)
-------- -------- -------- --------
Net earnings (loss) $ 19.1 $ 1.0 $ 9.8 $(135.4)
======== ======== ======== ========
NET EARNINGS (LOSS) PER SHARE OF COMMON STOCK
based on weighted average common shares and
common stock equivalents outstanding:
Primary
Before cumulative effect of changes in
accounting principles $ .95 $ .05 $ .49 $ ( .92)
Cumulative effect of changes in
accounting principles - - - (6.01)
-------- -------- -------- --------
Net primary $ .95 $ .05 $ .49 $ (6.93)
======== ======== ======== ========
Fully diluted $ .85 $ .05 $ .49 $ (6.93)
======== ======== ======== ========
DIVIDENDS PAID PER SHARE $ .10 $ .10 $ .20 $ .20
======== ======== ======== ========
AVERAGE SHARES OF COMMON STOCK AND COMMON
STOCK EQUIVALENTS OUTSTANDING (if applicable) 20.0 19.8 20.0 19.5
<FN>
The financial statements for the three and six months ended March 31, 1993 have been restated to
reflect the adoption of Accounting Standards No. 106 "Accounting for Postretirement Benefits
Other Than Pension" and No. 109 "Accounting for Income Taxes" which were adopted effective
October 1, 1992.
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</TABLE>
<PAGE> 23
<TABLE>
OUTBOARD MARINE CORPORATION
CONDENSED STATEMENT OF CONSOLIDATED FINANCIAL POSITION
(UNAUDITED)
<CAPTION>
(In millions) March 31 September 30
1994 1993 1993
-------- -------- --------
<S> <C> <C> <C>
ASSETS
- - ------
CURRENT ASSETS:
Cash and cash equivalents $ 33.1 $ 34.6 $ 104.4
Receivables 193.5 194.7 136.3
Inventories-
Finished products 77.7 92.1 64.1
Raw material, work in process
and service parts 102.4 116.4 90.0
-------- -------- --------
Total inventory 180.1 208.5 154.1
Other current assets 31.4 69.5 30.5
-------- -------- --------
Total current assets 438.1 507.3 425.3
PRODUCT TOOLING, net 45.4 33.1 36.2
GOODWILL AND INTANGIBLES, net 32.5 111.6 33.3
OTHER ASSETS 85.7 54.4 86.7
PLANT AND EQUIPMENT, at cost 543.3 583.7 542.9
Less-Accumulated depreciation 333.0 349.0 332.6
-------- -------- --------
210.3 234.7 210.3
-------- -------- --------
$ 812.0 $ 941.1 $ 791.8
======== ======== ========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
- - ----------------------------------------
CURRENT LIABILITIES:
Notes payable $ 28.0 $ 37.7 $ -
Accounts payable 76.8 78.5 76.6
Accrued and other 167.8 121.0 174.8
-------- -------- --------
Total current liabilities 272.6 237.2 251.4
LONG-TERM DEBT 178.1 196.4 183.0
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS 103.5 102.7 106.1
OTHER NON-CURRENT LIABILITIES 88.2 91.2 90.4
STOCKHOLDERS' INVESTMENT:
Common stock and capital surplus 108.3 105.4 106.0
Retained earnings 71.5 216.8 65.7
Cumulative translation adjustments (10.2) (8.6) (10.8)
-------- -------- --------
Total stockholders' investment 169.6 313.6 160.9
-------- -------- --------
$ 812.0 $ 941.1 $ 791.8
======== ======== ========
SHARES OF COMMON STOCK OUTSTANDING 19.9 19.6 19.8
<FN>
The financial statements for March 31, 1993 have been restated to reflect the adoption
of Accounting Standards No. 106 "Accounting for Postretirement Benefits Other Than
Pensions" and No. 109 Accounting for Income Taxes" which were adopted effective
October 1, 1992.
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</TABLE>
