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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): February 16, 1999
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OUTBOARD MARINE CORPORATION
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(Exact Name of Registrant as Specified in its Charter)
DELAWARE
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(State or Other Jurisdiction of Incorporation)
1-2883 36-1589715
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(Commission File Numbers) (I.R.S. Employer Identification No.)
100 SEA HORSE DRIVE
WAUKEGAN, ILLINOIS 60085
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(Address of Principal Executive Office) (Zip Code)
(847) 689-6200
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(Registrant's Telephone Number, Including Area Code)
N/A
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(Former Name or Former Address, if Changed Since Last Report)
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NYFS08...:\60\66560\0003\1966\FRM2169P.280
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Item 5. Other Events.
Registrant issued a press release on February 16, 1999, announcing, among
other things, results for the quarter ending December 31, 1998. A copy of the
press release is attached hereto as Exhibit 99.1.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(c) Exhibits
Exhibit No. Exhibit
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99.1 Press Release dated February 16, 1999.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
OUTBOARD MARINE CORPORATION
(Registrant)
By: /s/ Robert S. Romano
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Date: February 17, 1999 Name: Robert S. Romano
Title: Vice President, Secretary
and General Counsel
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EXHIBIT INDEX
Exhibit No. Exhibit
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99.1 Press Release dated February 16, 1999.
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EXHIBIT 99.1
Gary Beckett
Director, Corporate Communications
847-689-7019
OMC REPORTS RESULTS FOR
QUARTER ENDING DEC. 31, 1998
February 16, 1999
(Waukegan, IL) - Outboard Marine Corporation (OMC) today announced its
results for the quarter ended December 31, 1998.
Sales for the quarter were $199.4 million, a decrease of 4.8% from $209.5
million in the comparable quarter of 1997. Softness in the international
markets, lower demand for certain outboard products, and competitive promotional
pricing all contributed to the decline in sales. In addition, the comparable
quarter of 1997 included unusually strong sales in October 1997.
David Jones, OMC President and Chief Executive Officer, indicated that the
company would continue to promote its brands through marketing incentives rather
than through price reductions. "We are pleased with the brand repositioning and
marketing programs that we began in 1998," said Jones. "The marketing programs
have been well received by dealers and consumers. Our pricing programs are sound
and we are determined to maintain the integrity of our dealer programs."
"Reports coming from the early winter boat shows are positive, especially
for our boat brands," Jones added. "We expect this trend to continue into the
spring retail selling season."
The Company has developed and is implementing strategies to address
performance issues which arose in certain applications of several of the
FICHT(R) fuel-injected Evinrude(R) outboards. Steps taken include 1999 engine
modifications and changes in production processes. In addition, upgrade kits are
being provided for certain previously sold models. The actions resulted in
certain charges being taken in the quarter ended December 31, 1998 and are
expected to result in additional charges and expenses in 1999, primarily in the
first quarter, and a reduced level of engine sales in the first quarter as
compared to the same quarter in 1998, as production facilities are modified for
the changes in the production processes.
Gross earnings for the quarter ended December 31, 1998 were $18.7 million,
as compared with $35.8 million during the comparable quarter of 1997. OMC also
reported a
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loss from operations for the December 31, 1998 quarter of $43.6 million, as
compared with a loss of $11.0 million during the comparable quarter of 1997. The
net loss for the quarter was $47.1 million, as compared with a net loss of $17.1
million in the quarter ended December 31, 1997. OMC attributed these declines to
lower sales and to costs related to a number of other actions that were included
in the quarter, including charges resulting from the Company's efforts to
eliminate old and discontinued boat models in the dealer channels, reduce field
engine inventories held by dealers, and the FICHT initiatives mentioned above.
The Company entered into an amendment with the lenders under its Revolving
Credit Agreement which provides additional capacity under the borrowing base and
a waiver of non-compliance with a financial maintenance covenant as of December
31, 1998, that resulted from lower than anticipated earnings for the quarter
then ended. In addition, the Company is negotiating further amendments to the
financial maintenance covenants in view of the anticipated results of
operations, including the effect of the Ficht initiatives discussed above. The
Company believes that such negotiations will be concluded satisfactorily during
the quarter ending March 31, 1999.
The Company previously announced that it has changed its fiscal year from
a September 30 year-end to a December 31 year-end and will be filing a report on
Form 10-K for the three-month transition period ended December 31, 1998.
Some of the information contained in this release is forward looking in
nature within the meaning of the Private Securities Litigation Reform Act of
1995. All forward-looking statements are inherently uncertain as they are based
on various expectations and assumptions concerning future events and they are
subject to numerous known and unknown risks and uncertainties which could cause
actual events or results to differ materially from those projected and which
include, but are not limited to, the impact of competitive products and pricing,
product demand and market acceptance, new product development, year 2000 issues,
the ability of the company to implement its strategic initiatives, availability
of raw materials, the availability of adequate financing on terms and conditions
acceptable to the Company, adverse weather conditions and general economic
conditions, including interest rates and consumer confidence.
Outboard Marine Corporation is a leading manufacturer and marketer of
internationally-known boat brands, including Chris-Craft(R), Four Winns(R),
Seaswirl(R), Javelin(R), Stratos(R), Lowe(R), Hydra-Sports, and Princecraft(R);
marine accessories and marine engines, under the brand names of Johnson(R) and
Evinrude(R); and FICHT(R) fuel injection --the industry's premier low-emission
two-stroke engine technology.
For more information on OMC and its brands, visit us on the World Wide Web
at: www.omc-online.com.
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SUMMARY OF RESULTS
Three Months Ended
December 31
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Unaudited
(Dollars in millions) 1998 1997
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Net sales $199.4 $209.5
Cost of goods sold 180.7 173.7
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Gross earnings 18.7 35.8
Selling, general and administrative expense 62.3 46.8
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Earnings (Loss) from operations (43.6) (11.0)
Non-operating expense (income)
Interest expense 6.8 7.7
Other, net (3.3) (2.4)
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3.5 5.3
Earnings (loss) before provision
for income taxes (47.1) (16.3)
Provision for Income Taxes 0.0 0.8
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Net earnings (loss) $(47.1) $(17.1)
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