<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> MAR-31-1995
<CASH> 37,100
<SECURITIES> 0
<RECEIVABLES> 226,600
<ALLOWANCES> 15,600
<INVENTORY> 234,400
<CURRENT-ASSETS> 519,700
<PP&E> 548,000
<DEPRECIATION> 326,500
<TOTAL-ASSETS> 920,500
<CURRENT-LIABILITIES> 324,000
<BONDS> 177,300
<COMMON> 3,000
0
0
<OTHER-SE> 219,300
<TOTAL-LIABILITY-AND-EQUITY> 920,500
<SALES> 318,800
<TOTAL-REVENUES> 318,800
<CGS> 233,000
<TOTAL-COSTS> 233,000
<OTHER-EXPENSES> 60,100
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,400
<INCOME-PRETAX> 20,300
<INCOME-TAX> 2,300
<INCOME-CONTINUING> 18,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,000
<EPS-PRIMARY> .90
<EPS-DILUTED> .81
</TABLE>
<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, 1995.
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 of (IRS Employer Identification No.)
incorporation or organization)
100 Sea Horse Drive
Waukegan, Illinois 60085
(Address of 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 28, 1995 were 20,003,740 shares (not including 195,214
treasury shares).
Exhibit Index Page 11.
-1-
<PAGE> 2
OUTBOARD MARINE CORPORATION
FORM 10-Q
PART I, ITEM 1
FINANCIAL INFORMATION
FINANCIAL STATEMENTS
March 31, 1995
Financial statements required by this form:
Page
----
Statement of Consolidated Earnings 3
Condensed Statement of Consolidated Financial Position 4
Statement of Consolidated Cash Flows 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, 1994.
-2-
<PAGE> 3
OUTBOARD MARINE CORPORATION
STATEMENT OF CONSOLIDATED EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31 March 31
------------------- -------------------
(In millions except amounts per share) 1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
NET SALES $ 318.8 $ 263.5 $ 561.4 $ 454.3
COST OF GOODS SOLD 233.0 198.9 424.4 353.3
-------- -------- -------- --------
Gross earnings 85.8 64.6 137.0 101.0
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 60.9 51.3 111.0 93.1
-------- -------- -------- --------
Earnings from operations 24.9 13.3 26.0 7.9
NON-OPERATING EXPENSE (INCOME):
Interest expense 5.4 5.1 10.4 10.1
Other, net ( .8) (11.7) (2.4) (13.6)
-------- -------- -------- --------
4.6 (6.6) 8.0 (3.5)
-------- -------- -------- --------
Earnings before provision
for income taxes 20.3 19.9 18.0 11.4
PROVISION FOR INCOME TAXES 2.3 .8 3.1 1.6
-------- -------- -------- --------
Net earnings $ 18.0 $ 19.1 $ 14.9 $ 9.8
======== ======== ======== ========
NET EARNINGS PER SHARE OF COMMON
STOCK BASED on weighted average
common shares and common stock
equivalents outstanding:
Primary $ .90 $ .95 $ .74 $ .49
======== ======== ======== ========
Fully diluted $ .81 $ .85 $ .71 $ .49
======== ======== ======== ========
DIVIDENDS PAID PER SHARE $ .10 $ .10 $ .20 $ .20
======== ======== ======== ========
AVERAGE SHARES OF COMMON STOCK AND
COMMON STOCK EQUIVALENTS OUTSTANDING
(if applicable) 20.1 20.0 20.1 20.0
-3-
</TABLE>
<PAGE> 4
OUTBOARD MARINE CORPORATION
CONDENSED STATEMENT OF CONSOLIDATED FINANCIAL POSITION
(UNAUDITED)
<TABLE>
<CAPTION>
March 31 September 30
(In millions) 1995 1994 1994
-------- -------- --------
<S> <C> <C> <C>
ASSETS
- ------
CURRENT ASSETS:
Cash and cash equivalents $ 37.1 $ 33.1 $ 80.3
Receivables 211.0 193.5 150.5
Inventories-
Finished products 90.5 77.7 58.7
Raw material, work in process
and service parts 143.9 102.4 105.0
-------- -------- --------
Total inventory 234.4 180.1 163.7
Other current assets 37.2 31.4 35.3
-------- -------- --------
Total current assets 519.7 438.1 429.8
PRODUCT TOOLING, net 52.4 45.4 48.3
INTANGIBLES 31.5 32.5 32.1
OTHER ASSETS 95.4 85.7 89.8
PLANT AND EQUIPMENT, at cost 548.0 543.3 535.6
Less-Accumulated depreciation 326.5 333.0 318.5
-------- -------- --------
221.5 210.3 217.1
-------- -------- --------
Total assets $ 920.5 $ 812.0 $ 817.1
======== ======== ========
-4-
<PAGE> 5
LIABILITIES AND SHAREHOLDERS' INVESTMENT
- ----------------------------------------
CURRENT LIABILITIES:
Notes payable $ 90.0 $ 28.0 $ -
Accounts payable 101.7 76.8 102.9
Accrued and other 132.3 167.8 130.7
-------- -------- --------
Total current liabilities 324.0 272.6 233.6
LONG-TERM DEBT 177.3 178.1 178.2
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS 100.8 103.5 102.3
OTHER NON-CURRENT LIABILITIES 96.1 88.2 94.0
SHAREHOLDERS' INVESTMENT:
Common stock and capital surplus 110.9 108.3 109.3
Retained earnings 117.2 71.5 106.3
Cumulative translation adjustments (5.8) (10.2) (6.6)
-------- -------- --------
Total shareholders' investment 222.3 169.6 209.0
-------- -------- --------
Total liabilities and
shareholders' investment $ 920.5 $ 812.0 $ 817.1
======== ======== ========
SHARES OF COMMON STOCK OUTSTANDING 20.0 19.9 20.0
</TABLE>
-5-
<PAGE> 6
OUTBOARD MARINE CORPORATION
STATEMENT OF CONSOLIDATED CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
March 31
---------------------
(In millions) 1995 1994
------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 14.9 $ 9.8
Adjustments to reconcile net earnings to net cash
provided by operations:
Depreciation and amortization 21.8 18.3
Gain on transfer of land rights - (10.5)
Changes in current accounts excluding the effects
of noncash transactions
(Increase) in accounts receivable (58.0) (56.5)
(Increase) in inventory (68.8) (25.6)
(Increase) in other current assets (1.4) (.4)
(Decrease) in accounts payable and accrued
liabilities (1.6) (12.6)
Other, net (3.0) (10.5)
------- -------
Net cash used for operating activities (96.1) (88.0)
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for plant and equipment, and tooling (31.9) (29.5)
Net proceeds on transfer of land rights - 10.5
Other, net (1.5) 7.5
------- -------
Net cash used for investing activities (33.4) (11.5)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in short-term debt 90.0 28.0
Cash dividends paid (4.0) (4.0)
Other, net .7 1.9
------- -------
Net cash provided by financing
activities 86.7 25.9
EXCHANGE RATE EFFECT ON CASH (.4) 2.3
------- -------
NET DECREASE IN CASH AND CASH EQUIVALENTS (43.2) (71.3)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 80.3 104.4
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 37.1 $ 33.1
======= =======
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid $ 9.4 $ 7.7
Income taxes paid 1.4 4.8
</TABLE>
-6-
<PAGE> 7
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, 1995
RESULTS OF OPERATIONS
The company achieved strong sales and earnings improvement in
the second quarter and first half of fiscal 1995.
Sales increased by 21 percent to $318.8 million in the second
quarter of 1995, up from $263.5 million in the second quarter of
1994. Some of that sales increase came from a larger than usual
number of orders that carried over from the first quarter and
prior fiscal year. The bulk came from growing demand for the
company's products in the United States and in markets around
the world.
U.S. sales grew by 19 percent. U.S. power products sales
increased by 21 percent, fueled by increased loose outboard
sales and strong demand for the new V-4 outboards and the
popular V-6 models. U.S. boat sales increased nearly 17 percent
in the quarter.
Outside the United States, sales increased 28 percent. All
international operations reported sales gains, with OMC Europe
leading the way with a 51 percent sales increase. Outboards
drove sales gains in all of OMC's international markets.
Sales improvement translated into strong earnings growth for
the quarter. Net earnings were $18 million, or 90 cents per
share (81 cents, fully diluted), for this year's second quarter.
Net earnings were $19.1 million, or 95 cents per share (85
cents, fully diluted), for last year's second quarter. Last
year's second quarter earnings, however, benefited from $10.5
million in non-operating income from a real estate transaction
in Hong Kong. Removing that gain from last year's results would
leave adjusted net earnings of $8.6 million, or 43 cents per
share (40 cents, fully diluted), for the 1994 second quarter, a
positive earnings swing of $9.4 million, or 47 cents per share,
for the second quarter of this year.
For the first six months of 1995, the company achieved net
earnings of $14.9 million, or 74 cents per share (71 cents,
fully diluted), on sales of $561.4 million. Net earnings were
$9.8 million, or 49 cents per share, on sales of $454.3 million
for the same period in 1994. Removing the gain from the Hong
Kong land transaction would leave an adjusted net loss of $0.7
million, or 4 cents per share for last year's first half.
The company is fully participating in the growth of the
industry during this cyclical upturn. Full participation in the
market's growth, though, is requiring increased spending in the
manufacturing and marketing operations, as well as to pay for
new product development for a new generation of low-emission
outboards that will win sales in the future. That increased
spending, along with additional tooling amortization and
depreciation expense, will offset the additional cost savings
that had been slated for fiscal 1995 as part of our 1993
-7-
<PAGE> 8
restructuring program.
Profit margins, however, will continue to benefit from the
streamlining measures we implemented in 1993 and 1994. Benefits
can be seen on our second quarter income statement.
Gross margin for this year's second quarter increased to 26.9
percent from 24.5 percent last year. Selling, general and
administrative expense increased by $9.6 million, slightly down
as a percentage of sales. Operating earnings increased more
than 87 percent to $24.9 million from $13.3 million in the
second quarter last year. And operating margin increased to 7.8
percent from 5 percent in the second quarter last year.
Margin improvement also was significant for the first six
months of the year. Gross margin for the first half of this
year increased to 24.4 percent from 22.2 percent for the first
six months of 1994. Selling, general and administrative expense
in this year's first half increased by $17.9 million, but
decreased as a percentage of sales. Operating earnings more than
tripled to $26 million from $7.9 million in the first half of
last year. And operating margin increased to 4.6 percent from
1.7 percent.
The company is addressing the engine manufacturing complexities
that limited growth last year, and the company is now satisfying
market demand with current levels of production. The company is
seeing continuing strength in its markets, and the company is
working hard to maximize earnings in this cyclical upturn while
it, simultaneously, begins the process of developing a new
strategic direction that will produce a steady growth in
shareholder value.
The provision for income taxes of $2.3 million and $3.1 million
for the three and six months ended March 31, 1995, respectively,
resulted from expected taxes payable relating to certain
international subsidiaries.
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.
-8-
<PAGE> 9
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, 1995
FINANCIAL CONDITION
Due to the seasonal nature of the company's business, it is
more appropriate to compare the March 31, 1995 Condensed
Statement of Financial Position with March 31, 1994. The
company's ratio of current assets to current liabilities was 1.6
at both March 31, 1995 and March 31, 1994. Current assets of
$519.7 million at March 31, 1995 increased $81.6 million as
compared to current assets of $438.1 million at March 31, 1994.
Receivables increased $17.5 million due primarily to higher
sales in the current quarter and to a miscellaneous receivable
in 1995 on a tax interest adjustment. Inventories increased
$54.3 million due primarily to higher manufacturing activity.
Other current assets increased $5.8 million due primarily to
deferred income tax benefits.
Product tooling increased $7.0 million due primarily to the
introduction of new outboard models. Other assets increased
$9.7 million due primarily to reclassifications of joint venture
investment and increased pension assets.
Current liabilities increased by $51.4 million to $324.0
million as of March 31, 1995 compared to $272.6 million at March
31, 1994. Notes payable increased $62.0 million at March 31,
1995. The $24.9 million increase in accounts payable resulted
primarily from increased manufacturing activity. The decrease
in accrued and other resulted from higher restructuring accruals
and decreased current maturities of long-term debt at March 31,
1995.
Other non-current liabilities increased $7.9 million due
primarily to higher accruals for contingencies.
The company's total debt to total capitalization at March 31,
1995 was 54.6 percent compared to 56.6 percent at March 31,
1994. Notes payable increased $62.0 million at March 31, 1995
while long-term debt decreased $.8 million and current
maturities of long-term debt decreased $15.0 million from the
previous year.
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.
-9-
<PAGE> 10
OUTBOARD MARINE CORPORATION
FORM 10-Q
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The USEPA issued a Unilateral Administrative Order directing the
company to undertake groundwater remediations at the Cadillac
Industrial Park in Cadillac, Michigan. The company responded
with a conditional offer to proceed in conjunction with other
potentially responsible parties. The USEPA accepted the
company's offer and issued a notice to proceed. This
development will not require the company to expend any
additional funds.
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, 1995.
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
________________________ ___________________________ __________________
By /s/ James R. Maurice Vice President & Controller May 1, 1995
________________________ ___________________________ __________________
JAMES R. MAURICE
-10-
<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, 1994, 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 the OMC 1994 Long-Term Incentive
Plan, reference is made to Exhibit C, to Outboard
Marine Corporation's Notice of Annual Meeting and
Proxy Statement prepared in connection with the
January 20, 1994 Annual Meeting of Shareholders,
which is incorporated herein by reference.
-11-
<PAGE> 12
(E) With respect to Severance Agreements for all elected
officers of the Registrant (except Mr. Bowman),
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.
(F) With respect to the Registrant's Revolving Credit
Agreement dated as of December 30, 1994, reference is
made to Exhibit 10(G) to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended December 31,
1994, 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 19: Report furnished to security holders:
A copy of the Registrant's Shareholders Report for
the fiscal quarter ended March 31, 1995, is
attached hereto as Exhibit 19.
Exhibit 27: Financial data schedules:
This information is filed only in the electronic filing.
-12-
<PAGE> 13
EXHIBIT 11
OUTBOARD MARINE CORPORATION AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
(In millions except amounts per share)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31 March 31
-------------------- --------------------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Primary Earnings Per Share:
Net earnings $ 18.0 $ 19.1 $ 14.9 $ 9.8
======== ======== ======== ========
Weighted average number of shares 20.0 19.8 20.0 19.8
Common stock equivalents (stock options) .1 .2 .1 .2
-------- -------- -------- --------
Average shares outstanding 20.1 20.0 20.1 20.0
======== ======== ======== ========
Primary earnings per share $ .90 $ .95 $ .74 $ .49
======== ======== ======== ========
Fully Diluted Earnings per Share:
Net earnings $ 18.0 $ 19.1 $ 14.9 $ 9.8
Add: After-tax interest and related
expense amortization on 7% convertible
subordinated debentures .9 .9 1.7 1.7
-------- -------- -------- --------
Net earnings adjusted $ 18.9 $ 20.0 $ 16.6 $ 11.5
======== ======== ======== ========
Weighted average number of shares 20.0 19.8 20.0 19.8
Common stock equivalents (stock options) .1 .2 .1 .2
Weighted average common shares assuming
conversion of 7% convertible
subordinated debentures 3.4 3.4 3.4 3.4
-------- -------- -------- --------
Average shares outstanding 23.5 23.4 23.5 23.4
======== ======== ======== ========
Fully diluted earnings per share $ .81 $ .85 $ .71 $ *
======== ======== ======== ========
* The computation of fully dilutive earnings per share of common stock is antidilutive;
therefore, the amount reported for primary and fully diluted earnings per share is the
same.
-13-
</TABLE>
<PAGE> 14
EXHIBIT 19
April 19, 1995
To Our Shareholders:
I'm very pleased to tell you that our company achieved strong sales
and earnings improvement in the second quarter and first half of
fiscal 1995.
We increased our sales by 21 percent to $318.8 million in the second
quarter of 1995, up from $263.5 million in the second quarter of 1994.
Some of that sales increase came from a larger than usual number of
orders that we carried over from the first quarter and prior fiscal
year. But the bulk of it came from growing demand for our products in
the United States and in markets around the world.
Our U.S. sales grew by 19 percent. U.S. power products sales
increased by 21 percent, fueled by increased loose outboard sales and
strong demand for our new V-4 outboards and our popular V-6 models.
Our U.S. boat sales increased nearly 17 percent in the quarter.
Outside the United States, our sales increased 28 percent. All of our
international operations reported sales gains, with OMC Europe leading
the way with a 51 percent sales increase. Outboards drove our sales
gains in all of our international markets.
Our sales improvement translated into strong earnings growth for the
quarter. We achieved net earnings of $18 million, or 90 cents per
share (81 cents, fully diluted), for this year's second quarter. We
reported net earnings of $19.1 million, or 95 cents per share (85
cents, fully diluted), for last year's second quarter. Last year's
second quarter earnings, however, benefitted from $10.5 million in
non-operating income from a real estate transaction in Hong Kong.
Removing that gain from last year's results would leave adjusted net
earnings of $ 8.6 million, or 43 cents per share (40 cents, fully
diluted), for the 1994 second quarter. That is a positive earnings
swing of $ 9.4 million, or 47 cents per share, for the second quarter
of this year.
For the first six months of 1995, we achieved net earnings of $14.9
million, or 74 cents per share (71 cents fully diluted), on sales of
$561.4 million. We reported net earnings of $9.8 million, or 49 cents
per share, on sales of $454.3 million for the same period in 1994.
Removing the gain from our Hong Kong land transaction would leave an
adjusted net loss of $ 0.7 million, or 4 cents per share for last
year's first half.
We are fully participating in the growth of our industry during this
cyclical upturn. Full participation in the market's growth, though,
is requiring increased spending in our manufacturing and marketing
operations, as well as to pay for new product development for a new
generation of low-emission outboards that will win sales for OMC in
the future. That increased spending, along with additional tooling
amortization and depreciation expense, will offset the additional cost
savings that had been slated for fiscal 1995 as part of our 1993
restructuring program.
Our profit margins, however, will continue to benefit from the
streamlining measures we implemented in 1993 and 1994. You can see
some of those benefits on our second quarter income statement.
-14-
<PAGE> 15
Our gross margin for this year's second quarter increased to 26.9
percent from 24.5 percent last year. Our SG and A expense increased
by $9.6 million, but it was flat as a percentage of sales. Our
operating earnings increased more than 87 percent to $24.9 million
from $13.3 million in the second quarter last year. And our operating
margin increased to 7.8 percent from 5 percent in the second quarter
last year.
Our margin improvement also was significant for the first six months
of the year. Our gross margin for the first half of this year
increased to 24.4 percent from 22.2 percent for the first six months
of 1994. Our SG and A expense in this year's first half increased by
$17.9 million, but decreased as a percentage of sales. Operating
earnings more than tripled to $26 million from $7.9 million in the
first half of last year. And our operating margin increased to 4.6
percent from 1.7 percent.
I certainly can't tell you that our business is performing at the
level at which we want it to perform. But we are addressing the
engine manufacturing complexities that limited our growth last year,
and we are now satisfying market demand with our current levels of
production.
We're seeing continuing strength in our markets, and we're working
hard to maximize our earnings in this cyclical upturn while we,
simultaneously, begin the process of developing a new strategic
direction for our company that will produce steady growth in
shareholder value.
I'm looking forward to working to increase the value of your
investment, and I am pleased to advise you that our board of directors
has declared a cash dividend of 10 cents per share payable May 26,
1995, to shareholders of record May 12, 1995.
HARRY W. BOWMAN
- ----------------
Harry W. Bowman
Chairman, President and
Chief Executive Officer
-15-
<PAGE> 16
OUTBOARD MARINE CORPORATION
STATEMENT OF CONSOLIDATED EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31 March 31
------------------- -------------------
(In millions except amounts per share) 1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
NET SALES $ 318.8 $ 263.5 $ 561.4 $ 454.3
COST OF GOODS SOLD 233.0 198.9 424.4 353.3
-------- -------- -------- --------
Gross earnings 85.8 64.6 137.0 101.0
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 60.9 51.3 111.0 93.1
-------- -------- -------- --------
Earnings from operations 24.9 13.3 26.0 7.9
NON-OPERATING EXPENSE (INCOME):
Interest expense 5.4 5.1 10.4 10.1
Other, net ( .8) (11.7) (2.4) (13.6)
-------- -------- -------- --------
4.6 (6.6) 8.0 (3.5)
-------- -------- -------- --------
Earnings before provision
for income taxes 20.3 19.9 18.0 11.4
PROVISION FOR INCOME TAXES 2.3 .8 3.1 1.6
-------- -------- -------- --------
Net earnings $ 18.0 $ 19.1 $ 14.9 $ 9.8
======== ======== ======== ========
NET EARNINGS PER SHARE OF COMMON
STOCK BASED on weighted average
common shares and common stock
equivalents outstanding:
Primary $ .90 $ .95 $ .74 $ .49
======== ======== ======== ========
Fully diluted $ .81 $ .85 $ .71 $ .49
======== ======== ======== ========
DIVIDENDS PAID PER SHARE $ .10 $ .10 $ .20 $ .20
======== ======== ======== ========
AVERAGE SHARES OF COMMON STOCK AND
COMMON STOCK EQUIVALENTS OUTSTANDING
(if applicable) 20.1 20.0 20.1 20.0
-16-
</TABLE>
<PAGE> 17
OUTBOARD MARINE CORPORATION
CONDENSED STATEMENT OF CONSOLIDATED FINANCIAL POSITION
(UNAUDITED)
<TABLE>
<CAPTION>
March 31 September 30
(In millions) 1995 1994 1994
-------- -------- --------
<S> <C> <C> <C>
ASSETS
- ------
CURRENT ASSETS:
Cash and cash equivalents $ 37.1 $ 33.1 $ 80.3
Receivables 211.0 193.5 150.5
Inventories-
Finished products 90.5 77.7 58.7
Raw material, work in process
and service parts 143.9 102.4 105.0
-------- -------- --------
Total inventory 234.4 180.1 163.7
Other current assets 37.2 31.4 35.3
-------- -------- --------
Total current assets 519.7 438.1 429.8
PRODUCT TOOLING, net 52.4 45.4 48.3
INTANGIBLES 31.5 32.5 32.1
OTHER ASSETS 95.4 85.7 89.8
PLANT AND EQUIPMENT, at cost 548.0 543.3 535.6
Less-Accumulated depreciation 326.5 333.0 318.5
-------- -------- --------
221.5 210.3 217.1
-------- -------- --------
Total assets $ 920.5 $ 812.0 $ 817.1
======== ======== ========
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<PAGE> 18
LIABILITIES AND SHAREHOLDERS' INVESTMENT
- ----------------------------------------
CURRENT LIABILITIES:
Notes payable $ 90.0 $ 28.0 $ -
Accounts payable 101.7 76.8 102.9
Accrued and other 132.3 167.8 130.7
-------- -------- --------
Total current liabilities 324.0 272.6 233.6
LONG-TERM DEBT 177.3 178.1 178.2
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS 100.8 103.5 102.3
OTHER NON-CURRENT LIABILITIES 96.1 88.2 94.0
SHAREHOLDERS' INVESTMENT:
Common stock and capital surplus 110.9 108.3 109.3
Retained earnings 117.2 71.5 106.3
Cumulative translation adjustments (5.8) (10.2) (6.6)
-------- -------- --------
Total shareholders' investment 222.3 169.6 209.0
-------- -------- --------
Total liabilities and
shareholders' investment $ 920.5 $ 812.0 $ 817.1
======== ======== ========
SHARES OF COMMON STOCK OUTSTANDING 20.0 19.9 20.0
</TABLE>
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