-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, GFmVjymmIblBh0/6S/UDCQHogVys4rs/SXKd/iLHS1jqIWAeS17u6/FWcvtycOvo /9FomhjZxmoEc2y1Nozccg== 0000075149-95-000010.txt : 19950814 0000075149-95-000010.hdr.sgml : 19950814 ACCESSION NUMBER: 0000075149-95-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950811 SROS: CSX SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: OUTBOARD MARINE CORP CENTRAL INDEX KEY: 0000075149 STANDARD INDUSTRIAL CLASSIFICATION: ENGINES & TURBINES [3510] IRS NUMBER: 361589715 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-02883 FILM NUMBER: 95561743 BUSINESS ADDRESS: STREET 1: 100 SEA HORSE DR CITY: WAUKEGAN STATE: IL ZIP: 60085 BUSINESS PHONE: 7086896200 MAIL ADDRESS: STREET 1: 100 SEA HORSE DRIVE CITY: WAUKEGAN STATE: IL ZIP: 60085 EX-27 1 ART. 5 FDS FOR 3RD QUARTER 10-Q
5 1,000 9-MOS SEP-30-1995 JUN-30-1995 48,900 0 198,000 16,100 235,400 504,400 558,700 332,700 911,900 287,400 177,300 3,000 0 0 246,000 911,900 329,600 329,600 246,500 246,500 44,500 0 6,800 31,800 3,800 28,000 0 0 0 28,000 1.39 1.22
10-Q 2 EDGAR OMC 10-Q FILING 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- 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- 3 OUTBOARD MARINE CORPORATION STATEMENT OF CONSOLIDATED EARNINGS (UNAUDITED)
Three Months Ended Nine Months Ended June 30 June 30 ------------------- ------------------- (In millions except amounts per share) 1995 1994 1995 1994 -------- -------- -------- -------- 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
The accompanying notes are an integral part of these statements. -3- 4 OUTBOARD MARINE CORPORATION CONDENSED STATEMENT OF CONSOLIDATED FINANCIAL POSITION (UNAUDITED)
June 30 September 30 (In millions) 1995 1994 1994 -------- -------- -------- 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- 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
The accompanying notes are an integral part of these statements. -5- 6 OUTBOARD MARINE CORPORATION STATEMENT OF CONSOLIDATED CASH FLOWS (UNAUDITED)
Nine Months Ended June 30 --------------------- (In millions) 1995 1994 ------- ------- 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
The accompanying notes are an integral part of these statements. -6- 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- 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- 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- 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- 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- 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- 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- 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- 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- 16 EXHIBIT 11 OUTBOARD MARINE CORPORATION AND SUBSIDIARIES COMPUTATION OF PER SHARE EARNINGS (In millions except amounts per share)
Three Months Ended Nine Months Ended June 30 June 30 -------------------- -------------------- 1995 1994 1995 1994 -------- -------- -------- -------- 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-
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- 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- 19 OUTBOARD MARINE CORPORATION STATEMENT OF CONSOLIDATED EARNINGS (UNAUDITED)
Three Months Ended Nine Months Ended June 30 June 30 ------------------- ------------------- (In millions except amounts per share) 1995 1994 1995 1994 -------- -------- -------- -------- 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-
20 OUTBOARD MARINE CORPORATION CONDENSED STATEMENT OF CONSOLIDATED FINANCIAL POSITION (UNAUDITED)
June 30 September 30 (In millions) 1995 1994 1994 -------- -------- -------- 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- 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
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