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 WAUKEGAN, Ill., Sept. 14 /PRNewswire/ -- Outboard Marine Corporation (OMC) said today that it expects to take a pre-tax restructuring charge of $37.5 million in its fiscal fourth quarter, which ends September 30, to implement a major reorganization of its European operations and to close four distribution centers in Canada. At the same time, OMC said that, due primarily to larger than expected losses in its European markets, the company expects to incur a loss from operations in its fourth quarter.
 The restructuring actions and charge announced today were the remaining elements of a broader profit improvement program, most of the details of which were announced last July 15 in conjunction with OMC's third quarter results. At that time, the company said it planned to take a fourth quarter charge of up to $40 million to complete the program. The full program is expected to produce pre- tax restructuring charges of $144.9 million for the 1993 fiscal year, including $75.9 million to write off goodwill and intangibles. Together with savings from manufacturing and other cost reductions, it will produce total cost savings of $32 million in fiscal 1994, $50 million in 1995 and $65 million in 1996. OMC said the program will reduce its break-even point by approximately $250 million when fully implemented in 1996.
 "Continuing economic recession and shifts in global sales patterns have burdened some of our operations with excess manufacturing capacity and high cost structures," said OMC Chairman, President and
Chief Executive Officer James C. Chapman. "This is especially true in Europe, where we are experiencing losses driven by a continuing recession that has stifled consumer demand for outboards and boats and reduced the overall sales volume of the marine products marketplace by nearly half since its peak sales years in the 1980s. Our restructuring program is designed to address these issues and to simplify and streamline our worldwide organization."
 Chapman said the company will dramatically downsize its European headquarters staff and close its headquarters facility in Brugge, Belgium. Additionally it will decentralize its planning, marketing and financial reporting functions, transferring these to a new system of three largely autonomous zone offices. Each zone office will be a profit center developing marketing and sales programs targeted at dealers and consumers in specific regions of Europe.
 "This new structure will put the decision-making authority for the marketing, sales and customer service functions closer to the marketplace and better focus our organization on the tasks that are key to increasing sales in this tough environment," Chapman said. OMC also will close its Brugge manufacturing plant, which primarily produces 3-through 8-horsepower outboards for the world market. The Brugge engine production will be absorbed by other OMC plants.
 "At the time we established this production in Brugge, Europe accounted for about two-thirds of the demand for these engines," Chapman said. "Today, the greatest demand for these models is in the Americas. We will move this production closer to our primary markets, increasing the capacity utilization of our other operations and removing costs from our European organization."
 Chapman said aluminum boat assembly, done in the Brugge facility from components pre-cut in OMC's U.S. plants, will be assigned to an outside vendor. Additionally, OMC's main European distribution center in Brugge will be relocated to a leased facility, allowing all OMC facilities in Brugge to be offered for sale in 1994. OMC will continue to produce fiberglass boats in its plants in France and Sweden.
 "We are committed to competitiveness in all of our world markets," Chapman said. "An important aim of this restructuring was to address the issue of international competitiveness on a comprehensive basis rather than seeking band-aid solutions. With this new structure, we will be better positioned to win in our world markets."
 Outboard Marine Corporation (NYSE: OM) is a leading marketer of marine engines, boats, accessories and services.
 -0- 9/13/93
 /CONTACT: Ronald C. Kuykendall, Media Relations, 708-689-5642 or Stan R. Main, Investor Relations, 708-689-5254, both of Outboard Marine/

CO: Outboard Marine Corporation ST: Illinois IN: LEI SU: ERP

LG -- NY010 -- 1597 09/14/93 08:21 EDT
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Publication:PR Newswire
Date:Sep 14, 1993

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