<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> JUN-30-1995
<CASH> 48,900
<SECURITIES> 0
<RECEIVABLES> 198,000
<ALLOWANCES> 16,100
<INVENTORY> 235,400
<CURRENT-ASSETS> 504,400
<PP&E> 558,700
<DEPRECIATION> 332,700
<TOTAL-ASSETS> 911,900
<CURRENT-LIABILITIES> 287,400
<BONDS> 177,300
<COMMON> 3,000
0
0
<OTHER-SE> 246,000
<TOTAL-LIABILITY-AND-EQUITY> 911,900
<SALES> 329,600
<TOTAL-REVENUES> 329,600
<CGS> 246,500
<TOTAL-COSTS> 246,500
<OTHER-EXPENSES> 44,500
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,800
<INCOME-PRETAX> 31,800
<INCOME-TAX> 3,800
<INCOME-CONTINUING> 28,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 28,000
<EPS-PRIMARY> 1.39
<EPS-DILUTED> 1.22
</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 June 30, 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 July 31, 1995 were 20,014,548 shares (not including 195,214
treasury shares).
Exhibit Index Page 14.
-1-
<PAGE> 2
OUTBOARD MARINE CORPORATION
FORM 10-Q
PART I, ITEM 1
FINANCIAL INFORMATION
FINANCIAL STATEMENTS
June 30, 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
Notes to Consolidated Financial Statements 7
-2-
<PAGE> 3
OUTBOARD MARINE CORPORATION
STATEMENT OF CONSOLIDATED EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30 June 30
------------------- -------------------
(In millions except amounts per share) 1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
NET SALES $ 329.6 $ 318.8 $ 891.0 $ 773.1
COST OF GOODS SOLD 246.5 233.8 670.9 587.1
-------- -------- -------- --------
Gross earnings 83.1 85.0 220.1 186.0
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 51.8 53.5 162.8 146.6
-------- -------- -------- --------
Earnings from operations 31.3 31.5 57.3 39.4
NON-OPERATING EXPENSE (INCOME):
Interest expense 6.8 5.1 17.2 15.2
Other, net (7.3) (3.8) (9.7) (17.4)
-------- -------- -------- --------
( .5) 1.3 7.5 (2.2)
-------- -------- -------- --------
Earnings before provision
for income taxes 31.8 30.2 49.8 41.6
PROVISION FOR INCOME TAXES 3.8 2.2 6.9 3.8
-------- -------- -------- --------
Net earnings $ 28.0 $ 28.0 $ 42.9 $ 37.8
======== ======== ======== ========
NET EARNINGS PER SHARE OF COMMON
STOCK based on weighted average
common shares and common stock
equivalents outstanding:
Primary $ 1.39 $ 1.40 $ 2.13 $ 1.89
======== ======== ======== ========
Fully diluted $ 1.22 $ 1.23 $ 1.93 $ 1.73
======== ======== ======== ========
DIVIDENDS PAID PER SHARE $ .10 $ .10 $ .30 $ .30
======== ======== ======== ========
AVERAGE SHARES USED IN COMPUTING
EARNINGS PER SHARE OF COMMON STOCK
AND COMMON STOCK EQUIVALENTS:
Primary 20.1 20.0 20.1 20.0
Fully diluted 23.5 23.4 23.5 23.4
</TABLE>
The accompanying notes are an integral part of these statements.
-3-
<PAGE> 4
OUTBOARD MARINE CORPORATION
CONDENSED STATEMENT OF CONSOLIDATED FINANCIAL POSITION
(UNAUDITED)
<TABLE>
<CAPTION>
June 30 September 30
(In millions) 1995 1994 1994
-------- -------- --------
<S> <C> <C> <C>
ASSETS
- ------
CURRENT ASSETS:
Cash and cash equivalents $ 48.9 $ 63.1 $ 80.3
Receivables 181.9 169.8 150.5
Inventories-
Finished products 98.7 62.3 58.7
Raw material, work in process
and service parts 136.7 112.4 105.0
-------- -------- --------
Total inventory 235.4 174.7 163.7
Other current assets 38.2 29.0 35.3
-------- -------- --------
Total current assets 504.4 436.6 429.8
PRODUCT TOOLING, net 53.2 48.2 48.3
INTANGIBLES 31.3 32.3 32.1
OTHER ASSETS 97.0 86.8 89.8
PLANT AND EQUIPMENT, at cost 558.7 549.5 535.6
Less-Accumulated depreciation 332.7 336.0 318.5
-------- -------- --------
226.0 213.5 217.1
-------- -------- --------
Total assets $ 911.9 $ 817.4 $ 817.1
======== ======== ========
-4-
<PAGE> 5
LIABILITIES AND SHAREHOLDERS' INVESTMENT
- ----------------------------------------
CURRENT LIABILITIES:
Notes payable $ 75.0 $ - $ -
Accounts payable 77.5 82.2 102.9
Accrued and other 134.9 164.0 130.7
-------- -------- --------
Total current liabilities 287.4 246.2 233.6
LONG-TERM DEBT 177.3 178.1 178.2
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS 100.8 102.9 102.3
OTHER NON-CURRENT LIABILITIES 97.4 92.2 94.0
SHAREHOLDERS' INVESTMENT:
Common stock and capital surplus 111.3 108.6 109.3
Retained earnings 143.2 97.6 106.3
Cumulative translation adjustments (5.5) (8.2) (6.6)
-------- -------- --------
Total shareholders' investment 249.0 198.0 209.0
-------- -------- --------
Total liabilities and
shareholders' investment $ 911.9 $ 817.4 $ 817.1
======== ======== ========
SHARES OF COMMON STOCK OUTSTANDING 20.0 19.9 20.0
</TABLE>
The accompanying notes are an integral part of these statements.
-5-
<PAGE> 6
OUTBOARD MARINE CORPORATION
STATEMENT OF CONSOLIDATED CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
June 30
---------------------
(In millions) 1995 1994
------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 42.9 $ 37.8
Adjustments to reconcile net earnings to net cash
provided by operations:
Depreciation and amortization 33.4 29.0
Gain on transfer of land rights - (10.5)
Changes in current accounts excluding the effects
of noncash transactions
(Increase) in accounts receivable (32.4) (30.9)
(Increase) in inventory (66.4) (21.4)
(Increase) decrease in other current assets (2.4) 2.7
(Decrease) in accounts payable and accrued
liabilities (23.1) (8.5)
Other, net (6.6) (6.4)
------- -------
Net cash used for operating activities (54.6) (8.2)
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for plant and equipment, and tooling (48.5) (45.9)
Net proceeds on transfer of land rights - 10.5
Proceeds from sale of plant and equipment 4.5 5.7
Other, net (3.0) 3.9
------- -------
Net cash used for investing activities (47.0) (25.8)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in short-term debt 75.0 -
Payments of long-term debt, including current maturities (1.1) (5.1)
Cash dividends paid (6.0) (5.9)
Other, net 2.1 2.7
------- -------
Net cash provided by (used for)
financing activities 70.0 (8.3)
EXCHANGE RATE EFFECT ON CASH .2 1.0
------- -------
NET DECREASE IN CASH AND CASH EQUIVALENTS (31.4) (41.3)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 80.3 104.4
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 48.9 $ 63.1
======= =======
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid $ 14.8 $ 11.8
Income taxes paid 1.6 5.7
</TABLE>
The accompanying notes are an integral part of these statements.
-6-
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial
statements present information in accordance with generally
accepted accounting principles for interim financial information
and have been prepared pursuant to the rules and regulations of
the Securities and Exchange Commission. Accordingly, they do
not include all information or footnotes required by generally
accepted accounting principles for complete financial
statements. 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. The
1995 interim results are not necessarily indicative of the
results which may be expected for the remainder of the year.
2. CONTINGENT LIABILITIES
As a normal business practice, certain subsidiaries have made
arrangements by which qualified retail dealers may obtain
inventory financing. Under these arrangements, the company will
repurchase its products in the event of repossession upon a
retail dealer's default. These arrangements contain provisions
which limit the company's annual repurchase obligation. The
maximum potential repurchase commitment on June 30, 1995, was
approximately $53 million. The company resells any repurchased
products. Losses incurred under this program have not been
material. The company accrues for losses that are anticipated
in connection with expected repurchases.
The company is engaged in a substantial number of legal
proceedings arising in the ordinary course of business. While
the result of these proceedings cannot be predicted with any
certainty, based upon the information presently available,
management is of the opinion that the final outcome of all such
proceedings should not have a material effect upon the company's
financial position or the results of operations of the company.
Under the requirements of Superfund and certain other laws, the
company is potentially liable for the cost of clean-up at
various contaminated sites identified by the United States
Environmental Protection Agency (USEPA) and other agencies. The
company has been notified that it is named a PRP for study and
clean-up costs at various sites which the company does not
believe to be material, as well as the sites discussed in more
detail below. In some cases there are several named PRPs and in
others there are hundreds. The company generally participates
in the investigation or clean-up of these sites through cost
sharing agreements with terms that vary from site to site.
Costs are typically allocated based upon the volume and nature
of the materials sent to the site and/or the amount of time the
site was owned or operated. However, under Superfund, and
certain other laws, as a PRP the company can be held jointly and
severally liable for all environmental costs associated with the
site. Except as described below, the company is currently not
in possession of sufficient information to confirm the existence
of liability or make any judgment as to the amount thereof
regarding these sites.
-7-
<PAGE> 8
The company is engaged in the following material legal
proceedings:
A. The company has substantially completed PCB remediation of
the biota and sediment of certain waterways adjacent to the
company's Waukegan, Illinois lakefront facility and in the
groundwater underlying and adjacent to and on certain land of
that facility as agreed to with the USEPA and the Illinois
Environmental Protection Agency under a 1989 consent decree.
The company is currently in negotiations with USEPA, U.S. Army
Core of Engineers and their hired consultants regarding
oversight costs which are being claimed by the agencies. To
date the company has recovered approximately $14 million through
settlements with insurance companies as partial reimbursement
for costs and defense in remediation. The company is currently
pursuing litigation against several additional insurance
companies.
B. In 1988 and 1989 the company received from the USEPA notices
of potential liability and information requests regarding
alleged releases of hazardous substances at the Cadillac
Industrial Park in Cadillac, Michigan. The company settled with
the Michigan Department of Natural Resources for past costs
incurred and the national resources damages resulting from the
alleged release of hazardous substances at the Cadillac
Industrial Park. The settlement was within the amount
previously accrued by the company for this site. The USEPA has
accepted the company's conditional offer to proceed in
conjunction with the other potentially responsible parties which
will result in no additional funds being expended by the
company. The company is currently in the process of finalizing
the remediation plan with the other potentially responsible
parties.
C. In 1989 thirty-nine PRPs, including the company, were served
with a notice pursuant to section 4(q) of the Illinois
Environmental Protection Act with respect to alleged
contamination of Brush Creek and Lake Bracken located in
Galesburg, Illinois. The company has cooperated with the State
of Illinois in response to the notice. In 1994 the company
received a request to contribute to the stream-bed
investigation. The company has complied with that request.
D. In 1989 and 1990 the company received notices of potential
liability and information requests from the USEPA regarding
alleged hazardous waste contamination of the Yeoman Creek
Landfill/Edwards Field site in Waukegan, Illinois. In 1991 the
company and four other parties agreed to an administrative order
issued by the USEPA to perform a remedial investigation and
feasibility study at the site and a work plan was subsequently
approved by the USEPA and the Illinois EPA. The parties are
implementing the approved work plan. The company and other
participating PRPs have filed a cost recovery action against
non-participating PRPs. That suit is pending.
E. In 1990 the company received from the USEPA a notice of
potential liability and information request regarding a possible
contamination of certain land located in Waukegan, Illinois
currently owned by the company on which two former owners
conducted coking operations. The company complied with the
investigation and feasibility study at this site.
-8-
<PAGE> 9
The company has substantial experience in the remediation of
contaminated sites. Once the company becomes aware of its
potential liability at a particular site, it uses this
experience to determine if it is probable that a liability has
been incurred and whether or not the amount of the loss can be
reasonably estimated. Once the company has sufficient
information necessary to support a reasonable estimate or range
of loss for a particular site, an amount is added to the
company's aggregate environmental contingent liability accrual.
The amount added to the accrual for the particular site is
arrived at by analyzing the site as a whole and reviewing the
probable outcome for the remediation of the site. This is not
necessarily the minimum or maximum liability at the site but,
based on the company's experience, most accurately reflects the
company's liability based on the information currently
available. The company takes into account the number of other
participants involved in the site, their experience in the
remediation of sites as well as our knowledge of their ability
to pay.
As a general rule, the company accrues remediation costs for
continuing operations on an undiscounted basis and does not
accrue for normal operating and maintenance costs for site
monitoring and compliance requirements. However, the company
does accrue for environmental close down costs associated with
discontinued operations or facilities, including the
environmental costs of operation and maintenance until
disposition. The company has accrued approximately $12 million
for costs related to remediation at continuing and closed down
operations as well as the proceedings discussed above. The
possible recovery of additional insurance proceeds has not been
considered in estimating contingent environmental liabilities.
Each site is reviewed on a quarterly basis and the environmental
contingent liability accrual is adjusted accordingly. Because
the sites are reviewed and the accrual adjusted quarterly the
company is confident that the accrual accurately reflects the
company's liability based on the information available at the
time.
While the results of the proceedings discussed above cannot be
predicted with any certainty, based upon the information
presently available, management is of the opinion that the final
outcome of such proceedings, after giving consideration to the
amounts accrued, should not have a material effect on the
company's financial position or the results of operations of the
company.
-9-
<PAGE> 10
OUTBOARD MARINE CORPORATION
FORM 10-Q
PART I, ITEM 2
FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
June 30, 1995
RESULTS OF OPERATIONS
The past quarter was a challenging one for the company and for
the entire marine industry. After two quarters of strong growth this
fiscal year, demand for U.S. marine products unexpectedly slowed in the
company's third quarter. The quarter had flat earnings on a modest 3.4
percent sales improvement.
For the first nine months, the company achieved substantial
improvement in sales and earnings. Pre-tax earnings, adjusted to remove
the one-time gain from the sale of Hong Kong land rights in the 1994
results, were up 60 percent in the first nine months of this year. The
company believes the U.S. marine products market will continue to grow
in 1996, although at a slower rate than the full-year 1995 rate.
The company achieved net earnings of $28 million, or $1.39 per
share ($1.22 fully diluted), for this year's third quarter on sales of
$329.6 million. By comparison, the company reported net earnings of $28
million, or $1.40 per share ($1.23 fully diluted), on sales of $318.8
million for the same quarter last year.
Sales for the quarter outside the U.S. increased 10 percent,
led by OMC Europe's 23 percent sales gain. Exchange rates benefitted
the company in Europe, but the company also achieved real sales and
market share growth -- an affirmation that the actions taken to streamline
European operations in 1993 and 1994 did improve the company's
competitiveness.
In the U.S. market, sales for the quarter were up one percent.
Although the company's dealers continued to buy outboards, which drove
the Marine Power Products Group's sales up 17 percent, there was a
significant slowdown on the boat side of the business. The Fishing Boat
Group's sales increased 5 percent, while the Aluminum and Recreational
Boat Groups' sales were down 18 and 16 percent, respectively.
The company believes the softness in the U.S. marine products
market is the product of the slowdown in the broader U.S. economy and
declining consumer confidence. In this environment consumers typically
defer discretionary, big-ticket purchases. That fact affected most
producers of large durable goods last spring.
The U.S. marine market softened following several quarters of
growth in which the company's manufacturing operations and dealers' sales
were strong. As a result, the company and its dealers now have excess
inventory. The company has adjusted production schedules and staffing
accordingly to work these inventory levels down.
The unabsorbed overhead from reduced production schedules, higher
material costs and increased product development spending for advanced
outboards combined to reduce gross earnings to $83.1 million in the past
quarter, down from $85 million in the same quarter last year. Pre-tax
earnings of $31.8 million for this year's third quarter compared with
$30.2 million for last year's third quarter.
-10-
<PAGE> 11
For the first nine months of 1995, the company achieved net
earnings of $42.9 million, or $2.13 per share ($1.93 fully diluted), on
sales of $891 million, a 15 percent sales increase. By comparison, the
company reported net earnings of $37.8 million, or $1.89 per share
($1.73 fully diluted), on sales of $773.1 million for the first nine
months of 1994. Last year's net earnings were increased by a $10.5
million gain from the sale of Hong Kong land rights.
Gross earnings increased more that 18 percent to $220.1 million
in the first nine months of 1995, up from $186 million in the same period
last year. Pre-tax earnings were $49.8 million in this year's first nine
months, compared with $41.6 million for the same period in 1994. However,
excluding the gain from the sale of Hong Kong land rights from the 1994
results, adjusted pre-tax earnings were up 60 percent for the first nine
months of this year compared to the same period last year.
The provision for income taxes of $3.8 million and $6.9 million
for the three and nine months ended June 30, 1995, respectively,
resulted from expected taxes payable relating to certain international
subsidiaries.
Due to the seasonal nature of the company's business, it is
more appropriate to compare the results of operations for the current
quarter with those of the same quarter of the preceding year rather
than the immediately preceding quarter.
-11-
<PAGE> 12
OUTBOARD MARINE CORPORATION
FORM 10-Q
PART I, ITEM 2
FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
June 30, 1995
FINANCIAL CONDITION
Due to the seasonal nature of the company's business, it is
more appropriate to compare the June 30, 1995 Condensed Statement of
Financial Position with June 30, 1994 rather than with the fiscal
year end at September 30, 1994. The company's ratio of current assets
to current liabilities was 1.8 at both June 30, 1995 and June 30, 1994.
Current assets of $504.4 million at June 30, 1995 increased $67.8
million as compared to current assets of $436.6 million at June 30,
1994. Receivables increased $12.1 million due primarily to higher
sales in the current quarter and to a miscellaneous receivable in
1995 on a tax interest adjustment. Inventories increased $60.7 million
due primarily to higher manufacturing activity to meet anticipated
increased demand. As a result of the slowdown in the broader U.S.
economy and declining consumer confidence, the actual increased demand
was less than anticipated. Other current assets increased $9.2 million
due primarily to deferred income tax benefits.
Product tooling increased $5.0 million due primarily to the
introduction of new outboard models. Other assets increased $10.2
million due primarily to reclassifications of joint venture investment
and increased pension assets.
Current liabilities increased by $41.2 million to $287.4
million as of June 30, 1995 compared to $246.2 million at June 30, 1994.
Notes payable increased $75.0 million at June 30, 1995. The decrease in
accrued and other resulted from lower restructuring accruals as
previously accrued restructuring charges were spent and also decreased
current maturities of long-term debt at June 30, 1995.
The company's total debt to total capitalization at June 30,
1995 was 50.4 percent compared to 48.7 percent at June 30, 1994. Notes
payable increased $75.0 million at June 30, 1995 while long-term debt
decreased $.8 million and current maturities of long-term debt decreased
$10.0 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 cash equivalents, additional funds available from existing
worldwide credit lines, and long-term debt and equity sources, it has
sufficient resources to meet future capital requirements through all
phases of the marine industry cycle for the foreseeable future.
-12-
<PAGE> 13
OUTBOARD MARINE CORPORATION
FORM 10-Q
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
See Note 2 to Consolidated Financial Statements.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits reference is made to the Exhibit Index on Page 14.
(b) Reports on Form 8-K. The Registrant did not file any
reports on Form 8-K for the fiscal quarter ended June 30, 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 August 11, 1995
________________________ ___________________________ __________________
JAMES R. MAURICE
-13-
<PAGE> 14
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.
-14-
<PAGE> 15
(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 June 30, 1995, is
attached hereto as Exhibit 19.
Exhibit 27: Financial data schedules:
This information is filed only in the electronic filing.
-15-
<PAGE> 16
EXHIBIT 11
OUTBOARD MARINE CORPORATION AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
(In millions except amounts per share)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30 June 30
-------------------- --------------------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Primary Earnings Per Share:
Net earnings $ 28.0 $ 28.0 $ 42.9 $ 37.8
======== ======== ======== ========
Weighted average number of shares 20.0 19.9 20.0 19.8
Common stock equivalents (stock options) .1 .1 .1 .2
-------- -------- -------- --------
Average shares outstanding 20.1 20.0 20.1 20.0
======== ======== ======== ========
Primary earnings per share $ 1.39 $ 1.40 $ 2.13 $ 1.89
======== ======== ======== ========
Fully Diluted Earnings per Share:
Net earnings $ 28.0 $ 28.0 $ 42.9 $ 37.8
Add: After-tax interest and related
expense amortization on 7% convertible
subordinated debentures .8 .8 2.5 2.5
-------- -------- -------- --------
Net earnings adjusted $ 28.8 $ 28.8 $ 45.4 $ 40.3
======== ======== ======== ========
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 $ 1.22 $ 1.23 $ 1.93 $ 1.73
======== ======== ======== ========
-16-
</TABLE>
<PAGE> 17
EXHIBIT 19
July 20, 1995
Dear Shareholder:
The past quarter was a challenging one for OMC and for the entire marine
industry. After two quarters of strong growth this fiscal year, U.S. marine
products demand suddenly and dramatically slowed in our third quarter. The
bottom line for the quarter was flat earnings on a modest 3.4 percent sales
improvement.
But for the first nine months, we achieved very substantial improvement. Our
pre-tax earnings, adjusted to remove a one-time gain from our 1994 results,
were up 60 percent in the first nine months of this year. We also believe the
U.S. marine products market will continue to grow in 1996, although at a
slower rate than the full-year 1995 rate.
That's a snapshot of our performance for the quarter, put into the context of
a larger picture. Here are the specifics.
We achieved net earnings of $28 million, or $1.39 per share ($1.22 fully
diluted), for this year's third quarter on sales of $329.6 million. By
comparison, we reported net earnings of $28 million, or $1.40 per share ($1.23
fully diluted), on sales of $318.8 million for the same quarter last year.
Our sales outside the U.S. increased 10 percent, led by OMC Europe's 23 percent
sales gain. Exchange rates benefitted us in Europe, but we also achieved real
sales and market share growth -- an affirmation that the actions we took to
streamline our European operations in 1993 and 1994 did improve our
competitiveness.
In the U.S. market, our sales were up one percent. Although our dealers
continued to buy outboards, which drove the Marine Power Products Group's sales
up 17 percent, we saw a significant slowdown on the boat side of our business.
The Fishing Boat Group's sales increased 5 percent, while the Aluminum and
Recreational Boat Groups' sales were down 18 and 16 percent, respectively.
We believe the softness in the U.S. marine products market is the product of
the slowdown in the broader U.S. economy and declining consumer confidence.
This is an environment in which consumers defer discretionary, big-ticket
purchases. That fact affected most producers of large durable goods last
spring.
The U.S. marine market turned soft following several quarters of strong growth
in which our manufacturing operations and our dealers' sales were running in
high gear. As a result, we and our dealers now have excess inventory. We're
going to work these inventory levels down, and we've adjusted our production
schedules and staffing accordingly.
The unabsorbed overhead from our reduced production schedules, higher material
costs and increased product development spending for our advanced LEAP
outboards combined to reduce our gross earnings to $83.1 million in the past
quarter, down from $85 million in the same quarter last year. We reported
pre-tax earnings of $31.8 million for this year's third quarter, compared with
$30.2 million for last year's third quarter.
For the first nine months of 1995, we achieved net earnings of $42.9 million,
or $2.13 per share ($1.93 fully diluted), on sales of $891 million, a 15
percent sales increase. By comparison, we reported net earnings of $37.8
million, or $1.89 per share ($1.73 fully diluted), on sales of $773.1 million
for the first nine months of 1994. Last year's net earnings were increased
by a $10.5 million gain from a real estate transaction.
-17-
<PAGE> 18
Our gross earnings increased more than 18 percent to $220.1 million in the
first nine months of 1995, up from $186 million in the same period last year.
Our pre-tax earnings were $49.8 million in this year's first nine months,
compared with $41.6 million for the same period in 1994. However, excluding
the real estate gain from our 1994 results, we achieved adjusted pre-tax
earnings of $49.8 million for the first nine months of this year, up 60 percent
from $31.1 million for the same period last year.
It has been, overall, a very positive nine months. We have some issues to
deal with, as we've described above. But the issues affecting OMC aren't
limited to our company or our industry. We also believe they are temporary.
We've taken steps to address these immediate challenges, and, in the somewhat
longer term, we look forward to a higher level of sales growth.
For our third quarter, our board of directors declared a cash dividend of
10 cents per share payable Aug. 25, 1995, to shareholders of record Aug.
11, 1995.
HARRY W. BOWMAN
- ----------------
Harry W. Bowman
Chairman, President and
Chief Executive Officer
-18-
<PAGE> 19
OUTBOARD MARINE CORPORATION
STATEMENT OF CONSOLIDATED EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30 June 30
------------------- -------------------
(In millions except amounts per share) 1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
NET SALES $ 329.6 $ 318.8 $ 891.0 $ 773.1
COST OF GOODS SOLD 246.5 233.8 670.9 587.1
-------- -------- -------- --------
Gross earnings 83.1 85.0 220.1 186.0
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 51.8 53.5 162.8 146.6
-------- -------- -------- --------
Earnings from operations 31.3 31.5 57.3 39.4
NON-OPERATING EXPENSE (INCOME):
Interest expense 6.8 5.1 17.2 15.2
Other, net (7.3) (3.8) (9.7) (17.4)
-------- -------- -------- --------
( .5) 1.3 7.5 (2.2)
-------- -------- -------- --------
Earnings before provision
for income taxes 31.8 30.2 49.8 41.6
PROVISION FOR INCOME TAXES 3.8 2.2 6.9 3.8
-------- -------- -------- --------
Net earnings $ 28.0 $ 28.0 $ 42.9 $ 37.8
======== ======== ======== ========
NET EARNINGS PER SHARE OF COMMON
STOCK based on weighted average
common shares and common stock
equivalents outstanding:
Primary $ 1.39 $ 1.40 $ 2.13 $ 1.89
======== ======== ======== ========
Fully diluted $ 1.22 $ 1.23 $ 1.93 $ 1.73
======== ======== ======== ========
DIVIDENDS PAID PER SHARE $ .10 $ .10 $ .30 $ .30
======== ======== ======== ========
AVERAGE SHARES USED IN COMPUTING
EARNINGS PER SHARE OF COMMON STOCK
AND COMMON STOCK EQUIVALENTS:
Primary 20.1 20.0 20.1 20.0
Fully diluted 23.5 23.4 23.5 23.4
-19-
</TABLE>
<PAGE> 20
OUTBOARD MARINE CORPORATION
CONDENSED STATEMENT OF CONSOLIDATED FINANCIAL POSITION
(UNAUDITED)
<TABLE>
<CAPTION>
June 30 September 30
(In millions) 1995 1994 1994
-------- -------- --------
<S> <C> <C> <C>
ASSETS
- ------
CURRENT ASSETS:
Cash and cash equivalents $ 48.9 $ 63.1 $ 80.3
Receivables 181.9 169.8 150.5
Inventories-
Finished products 98.7 62.3 58.7
Raw material, work in process
and service parts 136.7 112.4 105.0
-------- -------- --------
Total inventory 235.4 174.7 163.7
Other current assets 38.2 29.0 35.3
-------- -------- --------
Total current assets 504.4 436.6 429.8
PRODUCT TOOLING, net 53.2 48.2 48.3
INTANGIBLES 31.3 32.3 32.1
OTHER ASSETS 97.0 86.8 89.8
PLANT AND EQUIPMENT, at cost 558.7 549.5 535.6
Less-Accumulated depreciation 332.7 336.0 318.5
-------- -------- --------
226.0 213.5 217.1
-------- -------- --------
Total assets $ 911.9 $ 817.4 $ 817.1
======== ======== ========
-20-
<PAGE> 21
LIABILITIES AND SHAREHOLDERS' INVESTMENT
- ----------------------------------------
CURRENT LIABILITIES:
Notes payable $ 75.0 $ - $ -
Accounts payable 77.5 82.2 102.9
Accrued and other 134.9 164.0 130.7
-------- -------- --------
Total current liabilities 287.4 246.2 233.6
LONG-TERM DEBT 177.3 178.1 178.2
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS 100.8 102.9 102.3
OTHER NON-CURRENT LIABILITIES 97.4 92.2 94.0
SHAREHOLDERS' INVESTMENT:
Common stock and capital surplus 111.3 108.6 109.3
Retained earnings 143.2 97.6 106.3
Cumulative translation adjustments (5.5) (8.2) (6.6)
-------- -------- --------
Total shareholders' investment 249.0 198.0 209.0
-------- -------- --------
Total liabilities and
shareholders' investment $ 911.9 $ 817.4 $ 817.1
======== ======== ========
SHARES OF COMMON STOCK OUTSTANDING 20.0 19.9 20.0
</TABLE>
-22-
