<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 December 31, 1993.
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 January 31, 1994 were 20,047,300 shares (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
December 31, 1993
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
Note to Consolidated Financial Statements 6
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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OUTBOARD MARINE CORPORATION
STATEMENT OF CONSOLIDATED EARNINGS
(UNAUDITED)
(In millions except amounts per share) Three Months Ended
December 31
---------------------
1993 1992
------- --------
NET SALES $190.8 $ 178.3
COST OF GOODS SOLD 154.4 158.5
------- --------
Gross earnings 36.4 19.8
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 41.8 48.1
------- --------
Earnings (loss) from operations (5.4) (28.3)
NON-OPERATING EXPENSE (INCOME):
Interest expense 5.0 6.2
Other, net (1.9) (1.9)
------- --------
3.1 4.3
------- --------
Earnings (loss) before provision for income
taxes and cumulative effect of changes in
accounting principles (8.5) (32.6)
PROVISION (CREDIT) FOR INCOME TAXES 0.8 (13.7)
------- --------
Net earnings (loss) before cumulative effect
of changes in accounting principles (9.3) (18.9)
CUMULATIVE EFFECT ON PRIOR YEARS
OF CHANGES IN ACCOUNTING PRINCIPLES
Income taxes - (10.0)
Postretirement benefits other than pensions - (107.5)
------- --------
Net earnings (loss) $ (9.3) $(136.4)
======= ========
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 $(0.47) $(0.97)
Cumulative effect of changes in
accounting principles - (6.02)
------- -------
Net primary $(0.47) $(6.99)
======= =======
Fully diluted $(0.47) $(6.99)
======= =======
DIVIDENDS PAID PER SHARE $ 0.10 $ 0.10
======= =======
AVERAGE SHARES OF COMMON STOCK AND COMMON
STOCK EQUIVALENTS OUTSTANDING (if applicable) 19.8 19.5
The accompanying note is an integral part of these statements.
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OUTBOARD MARINE CORPORATION
CONDENSED STATEMENT OF CONSOLIDATED FINANCIAL POSITION
(UNAUDITED)
(In millions)
December 31 September 30
1993 1992 1993
ASSETS ------- ------- -------
- ------
CURRENT ASSETS:
Cash and cash equivalents $ 44.5 $ 57.0 $104.4
Receivables 126.9 129.6 136.3
Inventories-
Finished products 72.7 92.1 64.1
Raw material, work in process
and service parts 87.6 113.9 90.0
------- ------- -------
Total inventory 160.3 206.0 154.1
Other current assets 32.1 73.1 30.5
------- ------- -------
Total current assets 363.8 465.7 425.3
PRODUCT TOOLING, net 39.2 31.8 36.2
GOODWILL AND INTANGIBLES, net 32.8 113.2 33.3
OTHER ASSETS 86.5 53.1 86.7
PLANT AND EQUIPMENT, at cost 547.5 579.7 542.9
Less-Accumulated depreciation 336.5 343.0 332.6
------- ------- -------
211.0 236.7 210.3
------- ------- -------
$733.3 $900.5 $791.8
======= ======= =======
LIABILITIES AND STOCKHOLDERS' INVESTMENT
- ----------------------------------------
CURRENT LIABILITIES:
Notes payable $ - $ 0.6 $ -
Accounts payable 49.1 55.1 76.6
Accrued and other 155.5 122.2 174.8
------- ------- -------
Total current liabilities 204.6 177.9 251.4
LONG-TERM DEBT 183.1 198.1 183.0
POSTRETIREMENT BENEFITS OTHER
THAN PENSIONS 105.9 102.7 106.1
OTHER NON-CURRENT LIABILITIES 88.9 108.1 90.4
STOCKHOLDERS' INVESTMENT:
Common stock and capital surplus 107.1 105.0 106.0
Retained earnings 54.4 217.7 65.7
Cumulative translation adjustments (10.7) (9.0) (10.8)
------- ------- -------
Total stockholders' investment 150.8 313.7 160.9
------- ------- -------
$733.3 $900.5 $791.8
======= ======= =======
SHARES OF COMMON STOCK OUTSTANDING 19.8 19.5 19.8
The accompanying note is an integral part of these statements.
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OUTBOARD MARINE CORPORATION
STATEMENT OF CONSOLIDATED CASH FLOWS
(UNAUDITED)
(In millions) Three Months Ended
December 31
----------------------
1993 1992
------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (9.3) $(136.4)
Adjustments to reconcile net loss to net cash
provided by operations:
Cumulative effect of changes in accounting
principle - 117.5
Depreciation and amortization 10.7 13.8
Changes in current accounts excluding the effects
of noncash transactions:
Decrease in accounts receivable 9.4 19.9
(Increase) in inventory (7.2) (30.2)
(Increase) in other current assets (1.2) (11.3)
(Decrease) in accounts payable and accrued
liabilities (45.8) (55.8)
Other, net (0.8) 3.6
------- --------
Net cash used for operating activities (44.2) (78.9)
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for plant and equipment, and tooling (14.0) (8.7)
Other, net 1.4 1.9
------- --------
Net cash used for investing activities (12.6) (6.8)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in short-term debt - 0.6
Cash dividends paid (2.0) (2.0)
Other, net 0.6 -
------- --------
Net cash used for financing activities (1.4) (1.4)
EXCHANGE RATE EFFECT ON CASH (1.7) 1.5
------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (59.9) (85.6)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 104.4 142.6
------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 44.5 $ 57.0
======= ========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid $ 3.2 $ 3.7
Income taxes paid 4.0 1.9
The accompanying note is an integral part of these statements.
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<PAGE> 6
OUTBOARD MARINE CORPORATION
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The financial statements for the quarter ended December 31, 1992 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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OUTBOARD MARINE CORPORATION
FORM 10-Q
PART I, ITEM 2
FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
December 31, 1993
RESULTS OF OPERATIONS
The company had both improved sales and earnings for its
fiscal 1994 first quarter, which ended December 31, 1993. The
company reported a net loss of $9.3 million, or 47 cents per
share, for the recently completed quarter, compared with a net
loss of $136.4 million, or $6.99 per share, for the same quarter
last year. Excluding the cumulative effect of charges to
implement two mandated accounting standards, SFAS No. 106 and
SFAS No. 109, OMC's net loss in the last year's first quarter
would have been $18.9 million, or 97 cents per share. A loss in
the December quarter is not unusual for OMC due to the seasonal
nature of its recreational marine products business.
Sales in the company's 1994 first quarter increased 7
percent to $190.8 million from $178.3 million in the first
quarter of 1993. The company's U.S. sales increased 7.2 percent
while its sales outside the U.S. increased 6.6 percent. The
favorable first quarter sales comparison was the product of price
increases; a richer sales mix of higher-priced engine and boat
models; stronger outboard sales in markets outside the U.S.; and
1992 fourth quarter sales programs that reduced sales in the
fiscal year 1993 first quarter.
The company had a pre-tax loss of $8.5 million in its 1994
first quarter compared with a pre-tax loss of $32.6 million in
the first quarter of 1993. The company's pre-tax performance in
the first quarter of this year benefitted from the increased
sales and also from $5 million in reduced costs which stemmed
from restructuring and other efficiency programs implemented in
1993. Interest expense also declined by $1.2 million in this
year's first quarter, due primarily to lower interest rates and
debt.
The provision for income taxes of $0.8 million for the three
months ended December 31, 1993, resulted from expected taxes
payable relating to certain international subsidiaries. In the
quarter ended December 31, 1993, tax benefits from the net loss were
not recognized, as they were in quarter ended December 31, 1992.
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
December 31, 1993
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 December 31, 1993 was 1.8 as
compared with 2.6 at December 31, 1992. Current assets of $363.8
million at December 31, 1993 decreased $101.9 million as compared
to current assets of $465.7 million at December 31, 1992. Cash
and cash equivalents decreased $12.5 million due primarily to
lower marketable securities. Inventories decreased $45.7 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 $41.0 million due primarily to
lower deferred tax benefits resulting from the adoption of
Accounting Standards No. 109 "Accounting for Income Taxes" (SFAS
No. 109) and also due to a tax refund and tax benefits recorded
at December 31, 1992.
Goodwill and intangibles decreased $80.4 million due
primarily to a fiscal year 1993 write-down of $75.8 million
included in restructuring charges. Other assets increased $33.4
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 $7.4 million due
primarily to new models. Plant and equipment decreased due to a
contribution to the joint venture with Volvo Penta and to lower
capital expenditures in relationship to depreciation.
Current liabilities increased by $26.7 million to $204.6
million as of December 31, 1993 compared to $177.9 million at
December 31, 1992 due primarily to reserves for restructuring
established in the last two quarters of fiscal year 1993. Other
non-current liabilities decreased $19.2 million due primarily to
lower deferred taxes.
While company's total debt to total capitalization at
December 31, 1993 was 56.2 percent compared to 40.0 percent at
December 31, 1992, long-term debt decreased $15.0 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 with the current capital structure and
the use of 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 4. Submission of Matters to a Vote of Security Holders
At the Registrant's Annual Meeting of Shareholders held on
January 20, 1994, there were 20,015,340 shares outstanding and
entitled to notice and to vote at the meeting. The following
matters were voted on, with the results indicated:
Frank Borman, James C. Chapman, J. W. Marriott, Jr. and
Robert D. Randolph were each elected a director with a minimum of
15,930,186 shares voting for the election of each Director. The
term of office as director continued after the Annual Meeting of
Shareholders for William C. France, Urban T. Kuechle, Richard T.
Lindgren, Harry A. Shaw III, Richard J. Stegemeier, Charles D.
Strang and Richard F. Teerlink.
The amendment to the 1987 Stock Option and Performance Unit
Plan was approved with 12,594,100 shares voting "FOR" the
amendment, 3,477,326 shares voting "AGAINST" the amendment and
198,511 shares abstaining from voting.
The amendment to the OMC Executive Equity Incentive Plan was
approved with 12,756,708 shares voting "FOR" the amendment,
3,304,016 shares voting "AGAINST" the amendment and 209,213
shares abstaining from voting.
The 1994 OMC Long-Term Incentive Plan was approved with
10,607,701 shares voting "FOR" the amendment, 3,338,415 shares
voting "AGAINST" the amendment, 190,732 shares abstaining from
voting and 2,133,089 shares of broker nonvotes.
The OMC Employee Stock Purchase Plan was approved with
13,477,092 shares voting "FOR" the amendment, 407,338 shares
voting "AGAINST" the amendment, 252,418 shares abstaining from
voting and 2,133,089 shares of broker nonvotes.
The Stock Purchase Plan for Non-Employee Directors was
approved with 12,781,523 shares voting "FOR" the amendment,
1,172,918 shares voting "AGAINST" the amendment and 182,407
shares abstaining from voting and 2,133,089 shares of broker
nonvotes.
The appointment of Arthur Andersen & Co. as the Registrant's
independent accountants was confirmed with 16,141,340 shares
voting "FOR" the confirmation, 47,753 shares voting "AGAINST" the
confirmation and 80,843 shares abstaining from voting.
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
December 31, 1993.
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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 February 8, 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.
(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.
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<PAGE> 12
(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.
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 December 31, 1993, is attached
hereto as Exhibit 19.
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EXHIBIT 11
OUTBOARD MARINE CORPORATION AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
(In millions except amounts per share)
Three Months Three Months
Ended Ended
December 31, December 31,
1993 1992
----------- -----------
Primary Earnings Per Share:
Net earnings (loss) $ (9.3) $(136.4)
======== ========
Weighted average number of shares 19.8 19.5
Common stock equivalents (stock options) * *
-------- --------
Average shares outstanding 19.8 19.5
======== ========
Primary earnings (loss) per share $ (0.47) $ (6.99)
======== ========
Fully Diluted Earnings per Share:
Net earnings (loss) $ (9.3) $(136.4)
Add: After-tax interest and
related expense amortiza-
tion on 7% convertible
subordinated debentures 0.8 0.8
-------- --------
Net earnings (loss) adjusted $ (8.5) $(135.6)
======== ========
Weighted average number of shares 19.8 19.5
Common stock equivalents (stock options) 0.1 0.3
Weighted average common
shares assuming
conversion of 7% convertible
subordinated debentures 3.4 3.4
-------- --------
Average shares outstanding 23.3 23.2
======== ========
Fully diluted earnings (loss) per share $ ** $ **
======== ========
* 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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EXHIBIT 12
OUTBOARD MARINE CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(In millions except ratios)
Twelve
Three Months Ended Months
December 31 Ended
------------------ December 31,
1993 1992 1993
------- ------- --------
Earnings (loss):
Earnings (loss) before provision for
income taxes and cumulative effect
of changes in accounting principles $ (8.5) $(32.6) $(135.8)
Interest expense 5.0 6.2 18.6
Interest portion of rent expense 0.2 0.2 0.9
------- ------- --------
Earnings (loss) $ (3.3) $(26.2) $(116.3)
======= ======= ========
Fixed Charges:
Interest expense $ 5.0 $ 6.2 $ 18.6
Interest portion of rent expense 0.2 0.2 0.9
------- ------- --------
Fixed Charges $ 5.2 $ 6.4 $ 19.5
======= ======= ========
Excess of fixed charges over earnings $ 8.5 $ 32.6 $ 135.8
======= ======= ========
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EXHIBIT 19
January 20, 1994
Dear Shareholder:
This year, we are replacing our brochure-format quarterly
reports with quarterly mailings to you that will include the news
release we issue on the day we make our financial results public.
We have adopted this format as part of our comprehensive cost
reduction plan for 1994. But it offers the additional benefit of
allowing us to reach you faster with each quarter's financial
results.
The news we're bringing you this quarter is good. Even
excluding from our results approximately $6 million in benefits
from timing items that aren't likely to benefit the full fiscal
year, we improved our pre-tax earnings performance by $18 million
in the first quarter of this year over the same quarter last year.
That achievement stems, in part, from dollar sales increases in
both engines and boats in the United States, as well as sales
increases in some of our international operations, with Australia
and Latin America leading the way. The price increases we
implemented last year contributed importantly to the first
quarter's revenue growth.
Part of the increase in U.S. outboard sales also resulted from
delays in bringing some higher horsepower 1994 model year outboards
to market early last fall. We filled those orders and booked those
sales in the first quarter. But still another reason for the sales
boost in engines was our success in establishing outboard pre-
rigging agreements with major independent boat builders.
Our bottom line in the past quarter benefitted directly from $5
million in cost reduction that we achieved through restructuring
and other efficiency measures we implemented last year. In
addition to seeing the results of these measures on our income
statement, you can see them on our balance sheet. Our inventories
were down $46 million in the quarter, due largely to efficiencies
we've gained in Europe, Canada and the United States, including
those we've gained from the establishment of our stern drive
manufacturing joint venture with Volvo Penta.
We believe our first quarter's financial performance shows we
are well on our way to achieving the goal we stated in our 1993
annual report of both winning in the marketplace and winning on the
bottom line by translating our marketplace success into greater
profitability.
I also am pleased to tell you that OMC Executive Vice President
and Chief Operating Officer Robert D. Randolph has been elected to
our board of directors. Bob has made important contributions to
OMC over the past 10 years, first as head of our U.S. engine
manufacturing operations; later as president of the Marine Power
Products Group; and, for the past year-and-a-half, as chief
operating officer. He will be a valuable addition to our board.
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<PAGE> 16
Finally, at its Jan. 20 meeting, our board declared a cash
dividend of 10 cents per share for the 1994 first quarter, payable
Feb. 25, 1994, to shareholders of record Feb. 11, 1994.
We recognize that we have a tough road ahead of us in 1994. We
expect to have to continue to deal with a slow pace of recovery in
the U.S. marine products market and economic recession in Europe.
Still, because of the plans we have put in place, we are confident
of our ability to return our company to profitability in 1994. Our
first quarter results support that sense of confidence.
Sincerely,
JAMES C. CHAPMAN
James C. Chapman
Chairman, President and
Chief Executive Officer
JCC/ljp
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<PAGE> 17
NEWS RELEASE: OMC REPORTS IMPROVED FIRST QUARTER PERFORMANCE
WAUKEGAN, Ill., Jan. 20--Outboard Marine Corporation (OMC) today
reported both improved sales and bottom line results for its fiscal
1994 first quarter, which ended last Dec. 31.
The company reported a net loss of $9.3 million, or 47 cents per
share, for the recently completed quarter, compared with a net loss
of $136.4 million, or $6.99 per share, for the same quarter last
year. Excluding the cumulative effect of charges to implement two
mandated accounting standards, SFAS No. 106 and SFAS No. 109, OMC's
net loss in the 1993 first quarter last year would have been $18.9
million, or 97 cents per share. A loss in the December quarter is
not unusual for OMC due to the seasonal nature of its recreational
marine products business.
Sales in OMC's 1994 first quarter increased 7 percent to $190.8
million from $178.3 million in the first quarter of 1993. The
company's U.S. sales increased 7.2 percent while its sales outside
the U.S. increased 6.6 percent.
OMC said its favorable first quarter sales comparison was the
product of price increases; a richer sales mix of higher-priced
engine and boat models; stronger outboard sales in markets outside
the U.S.; and 1992 fourth quarter sales programs that reduced sales
in the 1993 first quarter.
OMC reported a pre-tax loss of $8.5 million in its 1994 first
quarter compared with a pre-tax loss of $32.6 million in the first
quarter of 1993. The company's 1994 pre-tax results benefitted
from approximately $6 million in lower costs due primarily to
timing items that are not likely to benefit the full year.
However, OMC's pre-tax performance in the first quarter of this
year also benefitted from $5 million in reduced costs which stemmed
from restructuring and other efficiency programs implemented in
1993. Interest expense also declined by $1.2 million in this
year's first quarter, due primarily to lower interest rates and
debt.
"We are encouraged by our 1994 first-quarter performance," said OMC
Chairman, President and Chief Executive Officer James C. Chapman.
"We recognize that we still have a difficult road ahead of us. We
don't expect this recovery to show the same strength as prior ones.
"But our company now is properly structured for today's markets,"
Chapman said. "We're realizing the cost savings we planned to
achieve from last year's restructuring. Our new products also are
being well accepted, and the price increases we implemented at the
beginning of this model year are sticking. These factors make us
confident in our ability to deliver profitable performance in
1994."
At its Jan. 20 meeting, OMC's board of directors declared a cash
dividend of 10 cents per share for the 1994 first quarter, payable
Feb. 25, 1994, to shareholders of record Feb. 11, 1994.
Outboard Marine Corporation (OM-NYSE) is a leading international
marketer of marine engines, boats, accessories and services.
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<PAGE> 18
OUTBOARD MARINE CORPORATION
STATEMENT OF CONSOLIDATED EARNINGS
(UNAUDITED)
Three Months End
December 31
---------------------
1993 1992
(In millions except amounts per share) ------- --------
NET SALES $190.8 $ 178.3
COST OF GOODS SOLD 154.4 158.5
------- --------
Gross earnings 36.4 19.8
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 41.8 48.1
------- --------
Earnings (loss) from operations (5.4) (28.3)
NON-OPERATING EXPENSE (INCOME):
Interest expense 5.0 6.2
Other, net (1.9) (1.9)
------- --------
3.1 4.3
------- --------
Earnings (loss) before provision for income
taxes and cumulative effect of changes in
accounting principles (8.5) (32.6)
PROVISION (CREDIT) FOR INCOME TAXES 0.8 (13.7)
------- --------
Net earnings (loss) before cumulative effect
of changes in accounting principles (9.3) (18.9)
CUMULATIVE EFFECT ON PRIOR YEARS
OF CHANGES IN ACCOUNTING PRINCIPLES
Income taxes - (10.0)
Postretirement benefits other than pensions - (107.5)
------- --------
Net earnings (loss) $ (9.3) $(136.4)
======= ========
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 $(0.47) $(0.97)
Cumulative effect of changes in
accounting principles - (6.02)
------- -------
Net primary $(0.47) $(6.99)
======= =======
Fully diluted $(0.47) $(6.99)
======= =======
DIVIDENDS PAID PER SHARE $ 0.10 $ 0.10
======= =======
AVERAGE SHARES OF COMMON STOCK AND COMMON
STOCK EQUIVALENTS OUTSTANDING (if applicable) 19.8 19.5
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<PAGE> 19
The financial statements for the quarter ended December 31, 1992 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.
-19-
<PAGE> 20
OUTBOARD MARINE CORPORATION
CONDENSED STATEMENT OF CONSOLIDATED FINANCIAL POSITION
(UNAUDITED)
(In millions)
December 31 September 30
1993 1992 1993
ASSETS ------- ------- -------
- ------
CURRENT ASSETS:
Cash and cash equivalents $ 44.5 $ 57.0 $104.4
Receivables 126.9 129.6 136.3
Inventories-
Finished products 72.7 92.1 64.1
Raw material, work in process
and service parts 87.6 113.9 90.0
------- ------- -------
Total inventory 160.3 206.0 154.1
Other current assets 32.1 73.1 30.5
------- ------- -------
Total current assets 363.8 465.7 425.3
PRODUCT TOOLING, net 39.2 31.8 36.2
GOODWILL AND INTANGIBLES, net 32.8 113.2 33.3
OTHER ASSETS 86.5 53.1 86.7
PLANT AND EQUIPMENT, at cost 547.5 579.7 542.9
Less-Accumulated depreciation 336.5 343.0 332.6
------- ------- -------
211.0 236.7 210.3
------- ------- -------
$733.3 $900.5 $791.8
======= ======= =======
LIABILITIES AND STOCKHOLDERS' INVESTMENT
- ----------------------------------------
CURRENT LIABILITIES:
Notes payable $ - $ 0.6 $ -
Accounts payable 49.1 55.1 76.6
Accrued and other 155.5 122.2 174.8
------- ------- -------
Total current liabilities 204.6 177.9 251.4
LONG-TERM DEBT 183.1 198.1 183.0
POSTRETIREMENT BENEFITS OTHER
THAN PENSIONS 105.9 102.7 106.1
OTHER NON-CURRENT LIABILITIES 88.9 108.1 90.4
STOCKHOLDERS' INVESTMENT:
Common stock and capital surplus 107.1 105.0 106.0
Retained earnings 54.4 217.7 65.7
Cumulative translation adjustments (10.7) (9.0) (10.8)
------- ------- -------
Total stockholders' investment 150.8 313.7 160.9
------- ------- -------
$733.3 $900.5 $791.8
======= ======= =======
SHARES OF COMMON STOCK OUTSTANDING 19.8 19.5 19.8
-20-
<PAGE> 21
The financial statements for the quarter ended December 31, 1992 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.
-21-
<PAGE> 22
NEWS RELEASE: RANDOLPH ELECTED DIRECTOR OF OMC
WAUKEGAN, Ill., Jan. 20--Outboard Marine Corporation (OMC)
announced that Robert D. Randolph has been elected to the
corporation's board of directors. Randolph is executive vice
president and chief operating officer of OMC.
Randolph joined OMC in 1984 as director of manufacturing for the
company's marine engine operations. He was elected a vice
president of the corporation in 1986. In 1990, he was elected to
the office of executive vice president and also named president of
the OMC Marine Power Products Group. He became chief operating
officer in 1992. Prior to joining OMC, Randolph's background
included 25 years of manufacturing experience in the automotive
industry.
He and his wife live in Barrington Hills, Ill.
Outboard Marine Corporation (OM-NYSE) is a leading international
marketer of marine engines, boats, accessories and services.
# # #
-22-
<PAGE> 23
NEWS RELEASE: BADDELEY ELECTED OMC VICE PRESIDENT
WAUKEGAN, Ill., Jan. 20--Outboard Marine Corporation (OMC) today
announced that D. Jeffrey Baddeley was elected a vice president of
the corporation. He will continue in his position as general
counsel for the worldwide manufacturer of marine engines and boats.
He also will continue to direct the activities of OMC's corporate
secretary's office, its law department and its environmental
affairs and product safety departments.
Baddeley joined OMC in 1989 to become corporate secretary and
associate general counsel. He was elected general counsel in 1993.
Prior to joining OMC, Baddeley spent nearly 20 years at Sargent-
Welch Scientific Company, a publicly held manufacturer of
analytical and scientific equipment. There, he rose to executive
vice president, secretary, general counsel and chief administrative
officer. He also managed the company's distribution division and
served on its board of directors.
Earlier, Baddeley was senior attorney at Armour and Company and
associate attorney at the Cleveland law firm of Squire, Sanders &
Dempsey.
Baddeley is a resident of Lake Bluff, Ill.
Outboard Marine Corporation (OM-NYSE) is a leading international
marketer of marine engines, boats, accessories and services.
# # #
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