[TEXT]
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) May 17, 1994
THE QUAKER OATS COMPANY
New Jersey 1-12 36-1655315
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
Quaker Tower P.O. Box 049001, Chicago, Illinois 60604-9001
(address of principal executive offices)
Registrant's telephone number, including area code 312-222-7111
Item 5. Other Items
QUAKER OATS ANNOUNCES REENGINEERING MEASURES TO STRENGTHEN
COMPETITIVE ADVANTAGE; WILL RESULT IN FOURTH-QUARTER CHARGES
On May 16, 1994, The Quaker Oats Company announced that it is pursuing
a series of cost reduction measures, as part of a company-wide
reengineering
process. The cost reduction measures will result in charges of approxi-
mately $110 million to $130 million, or $1.00 to $1.20 per share, in the
fourth fiscal quarter ending June 30, 1994, and are expected to save $35
million to $45 million annually.
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.
THE QUAKER OATS COMPANY
By Thomas L. Gettings
Thomas L. Gettings
Vice President and
Corporate Controller
Date: May 17, 1994
EXHIBIT INDEX
Exhibit Exhibit Paper (P) or
Number Description Electronic (E)
(1) Press Release dated May 16, 1994 (E)
QUAKER ANNOUNCES REENGINEERING MEASURES
TO STRENGTHEN COMPETITIVE ADVANTAGE;
WILL RESULT IN FOURTH-QUARTER CHARGES
CHICAGO, May 16, 1994 -- The Quaker Oats Company (NYSE:OAT) today
announced that it is pursuing a series of cost reduction measures, as
part
of a company-wide reengineering process, designed to bring greater value
to
consumers and trade customers and to keep Quaker among the top-performing
companies in the food industry. The cost reduction measures will result
in a charge of approximately $110 million to $130 million, or $1.00 to
$1.20 per share, in the fourth fiscal quarter ending June 30, 1994, and
are
expected to save $35 million to $45 million annually.
The first action will be the elimination of approximately 300 positions
at
the Company's Chicago headquarters and Barrington, Illinois Research and
Development facility, representing a combined reduction of about 15
percent
at the two locations. The remaining actions will be mostly related to
consolidations at several Quaker facilities around the world, which will
be completed over the next 12 to 15 months, as well as write-offs
relating
to discontinued product lines and excess manufacturing capacity.
William D. Smithburg, Chairman and Chief Executive Officer, said,
"Today's
announcement does not constitute a single event, but more of an ongoing
process of streamlining the way in which we manufacture and market our
products. The entire grocery industry is engaged in productivity and
efficiency initiatives called Efficient Consumer Response (ECR). Quaker
has been in the forefront of this movement with programs, such as Supply
Chain Management and Total Customer Development, that bring value to our
consumers and trade customers.
"We are making these changes at a time when our financial results are
strong," Mr. Smithburg said. "Our objective is to stay ahead of our
competition by improving the speed and responsiveness of our go-to-market
processes by further reducing redundancies within our systems. If we can
do that, while providing healthful, good-tasting products that consumers
want, we will be in an excellent position to realize our stated financial
objective of achieving a real earnings growth rate of at least 7 percent
over time."
The departments and employees most affected by today's action are in
shared
service areas, such as Consumer Affairs, Package Design and Promotions,
which
are either being realigned into specific business units, outsourced or
eliminated. Employees whose jobs are being affected will in most cases
remain in active service through June 30. They will receive an enhanced
severance package and will be provided outplacement services to assist
them
in finding new positions.
Philip A. Marineau, President and Chief Operating Officer, said, "It is
hard
to make decisions that affect peoples' lives, but we believe that the
changes we are making will help us get our skills and capabilities better
aligned with our consumers and trade customers. In no way is this a
reflection on the affected employees or the quality of work they have
done."
For the nine months ended March 31, 1994, Quaker reported a 16 percent
increase in operating profits. In its most recent fiscal year ended
June 30, 1993, Quaker achieved earnings per share of $3.93 up 21 percent
from the prior year's $3.25, excluding the cumulative effect of new
accounting standards. Fiscal 1993 sales were $5.7 billion.
Quaker's worldwide employment currently stands at 20,000, of which 11,000
are located in the U.S.
