<PAGE>

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                               ----------------

                                   FORM 10-Q

  (Mark One)
  [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000.

                                       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          (IRS EmployerIdentification No.)
    ofincorporation or organization)

          100 Sea Horse Drive                            60085
           Waukegan, Illinois                          (Zip Code)
    (Address of principal executive
                offices)

                                  847-689-6200
              Registrant's telephone number, including area code:

                               ----------------

   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 $0.01 par value outstanding at March 31,
2000 was 20,439,531 shares.

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>

                          OUTBOARD MARINE CORPORATION
                            FORM 10-Q PART I, ITEM 1
                             FINANCIAL INFORMATION

                              FINANCIAL STATEMENTS
                                 March 31, 2000

<TABLE>
<CAPTION>
                                                                           Page
                                                                           ----
<S>                                                                        <C>
Financial statements required by this form:

  Condensed Statements of Consolidated Operations and Comprehensive
   Income.................................................................   3

  Condensed Statements of Consolidated Financial Position.................   4

  Condensed Statements of Consolidated Cash Flows.........................   5

  Notes to Condensed Consolidated Financial Statements....................   6
</TABLE>

                                       2
<PAGE>

                          OUTBOARD MARINE CORPORATION

    CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS AND COMPREHENSIVE INCOME
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                          Three Months Ended
                                                               March 31,
                                                          --------------------
                                                            2000       1999
                                                          ---------  ---------
                                                              (Dollars in
                                                            millions except
                                                          amounts per share)
<S>                                                       <C>        <C>
Net sales................................................ $   269.1  $   255.2
Costs of goods sold......................................     225.7      201.9
                                                          ---------  ---------
  Gross earnings.........................................      43.4       53.3
Selling, general, and administrative expense.............      64.4       57.1
                                                          ---------  ---------
  Loss from operations...................................     (21.0)      (3.8)
Interest expense.........................................       8.3        8.2
Other income, net........................................      (0.7)      (1.2)
                                                          ---------  ---------
  Loss before provision for income taxes.................     (28.6)     (10.8)
Provision for income taxes...............................       1.1        1.1
                                                          ---------  ---------
  Net loss before preferred dividends....................     (29.7)     (11.9)
Preferred dividends......................................       1.8        --
                                                          ---------  ---------
  Net loss of common shareholders........................ $   (31.5) $   (11.9)
                                                          =========  =========

Net loss of common shareholders.......................... $   (31.5) $   (11.9)
Other comprehensive expense
  Foreign currency translation adjustments...............      (1.5)      (1.6)
                                                          ---------  ---------
    Other comprehensive expense..........................      (1.5)      (1.6)
                                                          ---------  ---------
    Comprehensive loss................................... $   (33.0) $   (13.5)
                                                          =========  =========
Net loss of common shareholder per share of common stock
  Basic.................................................. $   (1.54) $   (0.58)
                                                          =========  =========
  Diluted................................................ $   (1.54) $   (0.58)
                                                          =========  =========
Average shares of common stock outstanding
  Basic .................................................      20.4       20.4
  Diluted................................................      20.4       20.4
</TABLE>


        The accompanying notes are an integral part of these statements.

                                       3
<PAGE>

                          OUTBOARD MARINE CORPORATION

            CONDENSED STATEMENTS OF CONSOLIDATED FINANCIAL POSITION

<TABLE>
<CAPTION>
                                                         March 31,  December 31,
                                                           2000         1999
                                                        ----------- ------------
                                                        (Unaudited)
                                                         (Dollars in millions)
<S>                                                     <C>         <C>
ASSETS
Current Assets:
  Cash and cash equivalents............................   $  39.0     $  25.0
  Receivables, net.....................................     142.7       104.9
  Inventories, net:
    Finished products..................................      77.4        66.6
    Raw material, work in process and service parts....     117.0       122.0
                                                          -------     -------
      Total inventories................................     194.4       188.6
  Other current assets.................................      20.1        17.2
                                                          -------     -------
      Total current assets.............................     396.2       335.7
Restricted cash........................................      31.0        30.6
Property, plant and equipment, net.....................     194.2       200.5
Product tooling, net...................................      27.1        29.5
Goodwill, net..........................................     106.4       107.2
Trademarks, patent and other intangibles, net..........      79.2        79.3
Other assets...........................................      67.1        65.6
                                                          -------     -------
      Total assets.....................................   $ 901.2     $ 848.4
                                                          =======     =======
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
  Loan payable.........................................   $  68.0     $  58.0
  Accounts payable.....................................     105.2        99.2
  Accrued and other....................................     190.5       183.2
  Current maturities of long-term debt.................       7.3         8.4
                                                          -------     -------
      Total current liabilities........................     371.0       348.8
Long-term debt.........................................     236.4       241.4
Postretirement benefits other than pensions............      99.1        99.1
Other non-current liabilities..........................      80.6        78.8
Preferred stock........................................      30.9         --
Shareholders' investment:
  Common stock and capital surplus.....................     313.4       277.5
  Accumulated deficit..................................    (220.7)     (189.2)
  Accumulated other comprehensive income...............      (9.5)       (8.0)
                                                          -------     -------
      Total shareholders' investment...................      83.2        80.3
                                                          -------     -------
      Total liabilities and shareholders' investment...   $ 901.2     $ 848.4
                                                          =======     =======
</TABLE>

        The accompanying notes are an integral part of these statements.

                                       4
<PAGE>

                          OUTBOARD MARINE CORPORATION

                CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                      Three Months Ended
                                                           March 31,
                                                      --------------------  ---
                                                        2000       1999
                                                      ---------  ---------
                                                          (Dollars in
                                                           millions)
<S>                                                   <C>        <C>        <C>
Cash Flows from Operating Activities:
  Net loss of common shareholders.................... $   (31.5) $   (11.9)
  Adjustments to reconcile net loss of common
   shareholders to net cash used for operations:
    Depreciation and amortization....................      13.8       12.3
    Changes in current accounts excluding the effects
     of noncash transactions:
      Increase in receivables........................     (39.0)     (20.7)
      Increase in inventories........................      (7.1)      (1.3)
      Increase in other current assets...............      (3.0)      (0.2)
      Increase in accounts payable, accrued
       liabilities and income taxes..................      14.1        1.9
      Other, net.....................................       0.8        5.2
                                                      ---------  ---------
        Net cash used for operating activities.......     (51.9)     (14.7)
Cash Flows from Investing Activities:
  Expenditures for plant and equipment, and tooling..      (6.6)     (11.1)
  Proceeds from sale of plant and equipment..........       4.6        0.2
                                                      ---------  ---------
        Net cash used for investing activities.......      (2.0)     (10.9)
Cash Flows from Financing Activities:
  Net increase in short-term debt....................      10.0       47.6
  Payments of long-term debt, including current
   maturities........................................      (6.1)     (10.1)
  Proceeds from issuance of preferred stock and
   warrants..........................................      65.0        --
  Restricted cash....................................      (0.4)      (0.3)
  Other, net.........................................       --        (0.1)
                                                      ---------  ---------
        Net cash provided by financing activities....      68.5       37.1
Exchange rate effect on cash.........................      (0.6)       0.5
                                                      ---------  ---------
Net increase in cash and cash equivalents............      14.0       12.0
Cash and cash equivalents at beginning of period.....      25.0       13.6
                                                      ---------  ---------
Cash and cash equivalents at end of period........... $    39.0  $    25.6
                                                      =========  =========
Supplemental Cash Flows Disclosures:
  Interest paid...................................... $     2.0  $     2.3
                                                      =========  =========
  Income taxes paid.................................. $     1.5  $     0.8
                                                      =========  =========
</TABLE>

        The accompanying notes are an integral part of these statements.

                                       5
<PAGE>

                          OUTBOARD MARINE CORPORATION

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

   Unless the context otherwise requires, all references herein to the
"Company" or "OMC" shall mean Outboard Marine Corporation, a Delaware
corporation, and its consolidated subsidiaries. The accompanying unaudited
condensed consolidated 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 December 31, 1999. The 2000 interim results are not
necessarily indicative of the results which may be expected for the remainder
of the year. Certain amounts in 1999 have been reclassified to conform with the
2000 presentation.

2. Short-Term Borrowings

   The Company entered into an Amended and Restated Loan and Security
Agreement, effective as of January 6, 1998 (as amended, the "Credit
Agreement"), with a syndicate of lenders for which Bank of America, N.A. is
administrative and collateral agent (the "Agent"). The Credit Agreement, which
is in effect to December 31, 2001, provides a revolving credit facility (the
"Revolving Credit Facility") of up to $150.0 million, subject to borrowing base
limitations, to finance working capital with a $50.0 million sublimit for
letters of credit. The Revolving Credit Facility is secured by a first and only
security interest in all of the Company's existing and hereafter acquired
accounts receivable, inventory, chattel paper, documents, instruments, deposit
accounts, contract rights, patents, trademarks and general intangibles and is
guaranteed by the Company's four principal domestic operating subsidiaries. On
February 1, 2000 the Company entered into an Eighth Amendment to the Amended
and Restated Loan and Security Agreement which among other things (i) increased
the borrowing capacity by increasing intellectual property availability to
$20.0 million and increasing the advance rate for finished goods inventory to
65%, (ii) eliminated tangible net worth, interest coverage, and leverage ratio
covenants, and (iii) established minimum availability requirements, maximum
capital and tooling expenditures, and a minimum earnings before interest,
taxes, depreciation and amortization ("EBITDA") covenant test to reflect
expected operating results. The Company's ability to remain in compliance with
its covenants will depend upon several factors, including its ability to
generate sales and maintain costs at acceptable levels. Factors outside the
Company's control, including but not limited to third party supplier issues,
may also affect the Company's compliance. At March 31, 2000, the Company was in
compliance with the covenants.

3. Contingent Liabilities

   The Company is engaged in a number of legal proceedings arising in the
ordinary course of business. While the result of these proceedings, as well as
those discussed below, 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 Consolidated Financial Position or the Consolidated Earnings 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 and other
agencies. The Company has been notified that it is named a potentially
responsible party ("PRP") at

                                       6
<PAGE>

                          OUTBOARD MARINE CORPORATION

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

various sites for study and clean-up costs. 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 which vary from site to site. Costs are typically allocated based
upon the volume and nature of the materials sent to the site. 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 a site.

   As a general rule, the Company accrues remediation costs for continuing
operations on an undiscounted basis and accrues for normal operating and
maintenance costs for site monitoring and compliance requirements. The Company
also accrues for environmental closedown costs associated with discontinued
operations or facilities, including the environmental costs of operation and
maintenance until disposition. At March 31, 2000 the Company has accrued
approximately $23 million for costs related to remediation at contaminated
sites including operation and maintenance for continuing and closed-down
operations. The possible recovery of insurance proceeds has not been considered
in estimating contingent environmental liabilities.

   As a normal business practice, the Company has made arrangements with
financial institutions 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 repurchase obligation to
approximately $33 million for a period not to exceed 18 months from the date of
invoice. The Company resells any repurchased products at a discount. Losses
incurred under this program have not been material. For the three month periods
ended March 31, 2000 and 1999, the Company repurchased approximately $0.3
million and $1.1 million of products, respectively. The Company accrues for
losses which are anticipated in connection with expected repurchases. The
Company does not expect these repurchases to materially affect its results of
operations, financial position, or cash flows.

4. Restructuring Charges

   During the fiscal year ended September 30, 1998, the Company finalized a
restructuring plan for the closure of its Milwaukee, WI and Waukegan, IL engine
facilities. The Company recorded a $98.5 million restructuring charge related
to these closures. The Company has outsourced substantially all of the sub-
assembly production previously performed in its Milwaukee facility and
transferred the balance of production to other facilities within the Company.
The Company is still in the process of doing the same for the Waukegan facility
and anticipates substantial completion of such plan by the end of fiscal year
2000.

   As of March 31, 2000, the Company has made payments approximating $3.7
million against the restructuring reserve established in fiscal year 1998. The
remaining $20.1 million cash component of the restructuring reserve will be
substantially spent in the remainder of fiscal year 2000 as the plants are
closed and prepared for sale.

   As part of its outsourcing efforts, the Company is negotiating with a
potential vendor for the lease of space in the Waukegan facility for the
continued supply of die cast parts. Although there can be no assurance, if the
Company is successful in its negotiations, there may be a reduction of the
employee severance and other costs previously recorded for this facility. The
Company anticipates having more information regarding the negotiations in the
second quarter of 2000.

5. Preferred Stock and Warrants Issuance

   On January 28, 2000, the Company sold an aggregate of 650,000 shares of
Series A Convertible Preferred Stock, par value $.01 per share (the "Series A
Preferred Stock"), and warrants (the "Warrants") to purchase an aggregate of
5,750,000 shares of its Common Stock, par value $.01 per share (the "Common
Stock"), for an aggregate consideration of $65.0 million in a private placement
transaction with Greenlake Holdings II, LLC and Quantum Industrial Partners,
LDC. Approximately $15.0 million of the Series A Preferred Stock was

                                       7
<PAGE>

                          OUTBOARD MARINE CORPORATION

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

issued in exchange for certain subordinated notes previously issued by the
Company to the purchasers. The Series A Preferred Stock has an initial
liquidation preference of $100 per share and an initial conversion price of $14
per share (in each case, subject to adjustment upon occurrence of certain
events). The Series A Preferred Stock is convertible into Common Stock at any
time. The Series A Preferred Stock has an annual dividend rate of 15% of the
then current liquidation preference, and is entitled to share ratably in any
dividends paid on the Common Stock. Dividends will accrue if not paid in cash,
and the liquidation preference will be increased by the amount of any accrued
but unpaid dividends. The Series A Preferred Stock may be redeemed at any time
after October 1, 2008, upon written request of the holders of at least 75% of
the then outstanding shares. The Company may redeem all outstanding shares of
the Series A Preferred Stock if, at any time, less than 10% of the total Series
A Preferred Stock originally sold on January 28, 2000 remains outstanding. The
Warrants are exercisable at any time until January 28, 2010, at an exercise
price of $.01 per share of Common Stock, payable in cash or in shares of Common
Stock. The Company intends to use the proceeds from the sale of the Series A
Preferred Stock and Warrants for general corporate purposes, including funding
its working capital and making capital expenditures.

   Upon issuance of the Series A Preferred Stock and Warrants, the Company
recorded the value of each instrument in the Statement of Consolidated
Financial Position based upon the fair market value of each instrument at the
time of issuance. The fair value per Warrant on the date of issuance using the
Black-Scholes option-pricing model was $6.25 for an aggregate fair value of
$35.9 million. The fair value of the Warrants were estimated on the date of
issuance using the following assumptions: risk-free interest rate of 6.3% and
an expected life of 8.6 years. The fair value of the Series A Preferred Stock
was determined as the difference between the aggregate amount of $65 million
and the value of the Warrants, or $29.1 million. In the three months ended
March 31, 2000, the Company has accrued $1.6 million in preferred dividend
expense and $0.2 million in amortization expense related to the discount on the
preferred stock. These amounts have been recorded in the Company's Statement of
Consolidated Operations and Comprehensive Income as Preferred dividends.

6. Segment Data

   Summarized financial information concerning the Company's reportable
segments is shown in the following table. The "Other" column includes primarily
corporate staffing expense and amortization expense on the Company's intangible
assets.

<TABLE>
<CAPTION>
                                                  Marine
                                                  Engines  Boats  Other  Total
                                                  -------  ------ -----  ------
                                                     (Dollars in millions)
   <S>                                            <C>      <C>    <C>    <C>
   Three Months Ended March 31, 2000
     Revenues.................................... $138.5   $130.6 $ --   $269.1
     Intersegment revenues.......................   15.1      --    --     15.1
     Earnings (loss) from operations.............  (14.6)     1.1  (7.5)  (21.0)
   Three Months Ended March 31, 1999
     Revenues.................................... $140.2   $115.0 $ --   $255.2
     Intersegment revenues.......................   19.9      --    --     19.9
     Earnings (loss) from operations.............    0.9      1.2  (5.9)   (3.8)
</TABLE>

                                       8
<PAGE>

                          OUTBOARD MARINE CORPORATION

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   A reconciliation of loss from operations for combined reportable segments to
consolidated loss before provision for income taxes is as follows:

<TABLE>
<CAPTION>
                                                          Three Months Ended
                                                               March 31,
                                                          --------------------
                                                            2000       1999
                                                          ---------  ---------
                                                              (Dollars in
                                                               millions)
   <S>                                                    <C>        <C>
   Loss from operations for reportable segments.......... $   (21.0) $    (3.8)
   Interest expense......................................       8.3        8.2
   Other income, net.....................................      (0.7)      (1.2)
                                                          ---------  ---------
   Loss before provision for income taxes................ $   (28.6) $   (10.8)
                                                          =========  =========
</TABLE>

7. Subsequent Events

   On May 2, 2000 the Company sold a $15.0 million Subordinated Note (the "15%
Note") and Warrants (the "New Warrants") to purchase 330,000 shares of the
Company's Common Stock, par value $0.01, to Quantum Industrial Partners LDC.
The 15% Note bears an interest rate of 15% and has a maturity date of May 31,
2000, which may be extended for four additional 30 day periods upon 5 days
written notice by the Company. The 15% Note is convertible into shares of the
Company's Series B Convertible Preferred Stock. The New Warrants are
exercisable at any time until May 2, 2010, at an exercise price of $0.01 per
share of Common Stock, payable in cash or in shares of Common Stock.

8. Subsidiary Guarantor Information

   On May 21, 1998, the Company issued $160.0 million of 10 3/4% Senior Notes
due 2008 ("Notes"). The Company's payment obligations under the Notes are
guaranteed by certain of the Company's wholly-owned subsidiaries ("Guarantor
Subsidiaries"). Such guarantees are full, unconditional, unsecured and
unsubordinated on a joint and several basis by each of the Guarantor
Subsidiaries. As of and through March 31, 2000, the Guarantor Subsidiaries were
wholly-owned, but not the only wholly-owned, subsidiaries of the Company. The
Credit Agreement and the Indenture governing the Notes contain certain
covenants which, among other things, restrict the ability of the Company and
certain of its subsidiaries to incur additional indebtedness; pay dividends or
make distributions in respect to their capital stock; enter into certain
transactions with shareholders and affiliates; make certain investments and
other restricted payments; create liens; enter into certain sale and leaseback
transactions and sell assets. These covenants are, however, subject to a number
of exceptions and qualifications. Separate financial statements of the
Guarantor Subsidiaries are not presented because management of the Company has
determined that they are not material to investors.

   The following condensed consolidating financial data illustrates the
composition of the Company ("Parent Company"), the Guarantor Subsidiaries and
the Company's non-guarantor subsidiaries ("Other Subsidiaries"). Investments in
subsidiaries are accounted for by the Company under the equity method of
accounting for purposes of the supplemental consolidating presentation.
Earnings of subsidiaries are, therefore, reflected in the Company's investment
accounts and earnings. The Company has not allocated goodwill to the Guarantor
Subsidiaries or the other subsidiaries in association with the acquisition by
and merger with Greenmarine.

                                       9
<PAGE>

                          OUTBOARD MARINE CORPORATION

            CONDENSED STATEMENTS OF CONSOLIDATED FINANCIAL POSITION
                                 MARCH 31, 2000
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                         Parent    Guarantor      Other                  Consolidated
                         Company  Subsidiaries Subsidiaries Eliminations    Total
                         -------  ------------ ------------ ------------ ------------
                                            (Dollars in Millions)
<S>                      <C>      <C>          <C>          <C>          <C>
ASSETS
------
Current Assets:
  Cash and cash
   equivalents.......... $ 16.0      $  0.1       $ 22.9      $   --        $ 39.0
  Receivables, net......   77.5        25.2         40.0          --         142.7
  Intercompany
   receivables
   (payables)...........  (11.2)       (2.4)        13.6          --           --
  Inventories, net......  107.1        49.5         40.8         (3.0)       194.4
  Other current assets..   11.8         1.4          6.9          --          20.1
                         ------      ------       ------      -------       ------
    Total current
     assets.............  201.2        73.8        124.2         (3.0)       396.2
Restricted cash.........   31.0         --           --           --          31.0
Property, plant and
 equipment, net.........  144.5        32.1         17.6          --         194.2
Product tooling, net....   21.9         5.0          0.2          --          27.1
Goodwill and other
 intangibles, net.......  180.8         --           4.8          --         185.6
Other assets............   59.4         0.4          7.3          --          67.1
Intercompany notes,
 net....................  (88.8)        --          88.8          --           --
Investment in
 subsidiaries...........  259.2         --           --        (259.2)         --
                         ------      ------       ------      -------       ------
    Total assets........ $809.2      $111.3       $242.9      $(262.2)      $901.2
                         ======      ======       ======      =======       ======
LIABILITIES AND SHAREHOLDERS' INVESTMENT
----------------------------------------
Current Liabilities:
  Loan payable.......... $ 68.0      $  --        $  --       $   --        $ 68.0
  Accounts payable......   82.9        15.1          7.2          --         105.2
  Accrued and other.....  136.0        32.6         22.7         (0.8)       190.5
  Current maturities of
   long-term debt.......    7.0         0.3          --           --           7.3
                         ------      ------       ------      -------       ------
    Total current
     liabilities........  293.9        48.0         29.9         (0.8)       371.0
Long-term debt..........  234.5         1.9          --           --         236.4
Other non-current
 liabilities............  164.4         7.7          7.6          --         179.7
Preferred stock.........   30.9         --           --           --          30.9
Shareholders'
 investment.............   85.5        53.7        205.4       (261.4)        83.2
                         ------      ------       ------      -------       ------
    Total liabilities
     and shareholders'
     investment......... $809.2      $111.3       $242.9      $(262.2)      $901.2
                         ======      ======       ======      =======       ======
</TABLE>

                                       10
<PAGE>

                          OUTBOARD MARINE CORPORATION

            CONDENSED STATEMENTS OF CONSOLIDATED FINANCIAL POSITION
                               DECEMBER 31, 1999

<TABLE>
<CAPTION>
                                                     Parent    Guarantor      Other                  Consolidated
                                                     Company  Subsidiaries Subsidiaries Eliminations    Total
                                                     -------  ------------ ------------ ------------ ------------
                                                                        (Dollars in Millions)
<S>                                                  <C>      <C>          <C>          <C>          <C>
ASSETS
------
Current Assets:
  Cash and cash equivalents......................... $  9.3      $  0.5       $ 15.2      $   --        $ 25.0
  Receivables, net..................................   58.1        16.8         30.0          --         104.9
  Intercompany receivables (payables)...............  (34.3)        1.2         33.1          --           --
  Inventories, net..................................  102.6        46.7         41.1         (1.8)       188.6
  Other current assets..............................    9.6         2.0          5.6          --          17.2
                                                     ------      ------       ------      -------       ------
    Total current assets............................  145.3        67.2        125.0         (1.8)       335.7
Restricted cash.....................................   30.6         --           --           --          30.6
Property, plant and equipment, net..................  150.1        32.4         18.1         (0.1)       200.5
Product tooling.....................................   24.3         5.0          0.2          --          29.5
Goodwill and other intangibles, net.................  181.3         --           5.2          --         186.5
Other assets........................................   56.0         2.5          7.1          --          65.6
Intercompany notes, net.............................  (88.3)        --          88.3          --           --
Investment in subsidiaries..........................  256.5         --           --        (256.5)         --
                                                     ------      ------       ------      -------       ------
    Total assets.................................... $755.8      $107.1       $243.9      $(258.4)      $848.4
                                                     ======      ======       ======      =======       ======
LIABILITIES AND SHAREHOLDERS' INVESTMENT
----------------------------------------
Current Liabilities:
  Loan payable...................................... $ 58.0      $  --        $  --       $   --        $ 58.0
  Accounts payable..................................   73.6        16.4          9.2          --          99.2
  Accrued and other.................................  133.5        29.6         21.7         (1.6)       183.2
  Current maturities of long-term debt..............    8.2         0.2          --           --           8.4
                                                     ------      ------       ------      -------       ------
    Total current liabilities.......................  273.3        46.2         30.9         (1.6)       348.8
Long-term debt......................................  239.3         2.1          --           --         241.4
Other non-current liabilities.......................  162.6         7.7          7.6          --         177.9
Shareholders' investment............................   80.6        51.1        205.4       (256.8)        80.3
                                                     ------      ------       ------      -------       ------
    Total liabilities and shareholders' investment.. $755.8      $107.1       $243.9      $(258.4)      $848.4
                                                     ======      ======       ======      =======       ======
</TABLE>


                                       11
<PAGE>

                          OUTBOARD MARINE CORPORATION

    CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS AND COMPREHENSIVE INCOME
                       THREE MONTHS ENDED MARCH 31, 2000
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                         Parent    Guarantor      Other                  Consolidated
                         Company  Subsidiaries Subsidiaries Eliminations    Total
                         -------  ------------ ------------ ------------ ------------
                                            (Dollars in Millions)
<S>                      <C>      <C>          <C>          <C>          <C>
Net sales............... $144.5      $132.0       $62.2        $(69.6)      $269.1
Cost of goods sold......  125.4       115.4        53.3         (68.4)       225.7
                         ------      ------       -----        ------       ------
  Gross earnings........   19.1        16.6         8.9          (1.2)        43.4
Selling, general and
 administrative
 expense................   42.3        14.8         7.3           --          64.4
                         ------      ------       -----        ------       ------
  Earnings (loss) from
   operations...........  (23.2)        1.8         1.6          (1.2)       (21.0)
Non-operating expense
 (income)...............    8.7        (0.1)       (1.0)          --           7.6
Equity earnings (loss)
 in subsidiaries........    3.3         --          --           (3.3)         --
                         ------      ------       -----        ------       ------
  Earnings (loss) before
   provision for income
   taxes................  (28.6)        1.9         2.6          (4.5)       (28.6)
Provision for income
 taxes..................    --          --          1.1           --           1.1
                         ------      ------       -----        ------       ------
  Net earnings (loss)
   before preferred
   dividends............  (28.6)        1.9         1.5          (4.5)       (29.7)
Preferred dividends.....    1.8         --          --            --           1.8
                         ------      ------       -----        ------       ------
  Net earnings (loss) of
   common shareholders.. $(30.4)     $  1.9       $ 1.5        $ (4.5)      $(31.5)
                         ======      ======       =====        ======       ======
Net earnings (loss) of
 common shareholders.... $(30.4)     $  1.9       $ 1.5        $ (4.5)      $(31.5)
Other comprehensive
 expense
  Foreign currency
   translation
   adjustment...........   (0.1)        --         (1.4)          --          (1.5)
                         ------      ------       -----        ------       ------
    Other comprehensive
     expense............   (0.1)        --         (1.4)          --          (1.5)
                         ------      ------       -----        ------       ------
    Comprehensive income
     (loss)............. $(30.5)     $  1.9       $ 0.1        $ (4.5)      $(33.0)
                         ======      ======       =====        ======       ======
</TABLE>

                                       12
<PAGE>

                          OUTBOARD MARINE CORPORATION

    CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS AND COMPREHENSIVE INCOME
                       THREE MONTHS ENDED MARCH 31, 1999
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                         Parent    Guarantor      Other                  Consolidated
                         Company  Subsidiaries Subsidiaries Eliminations    Total
                         -------  ------------ ------------ ------------ ------------
                                            (Dollars in Millions)
<S>                      <C>      <C>          <C>          <C>          <C>
Net sales............... $141.7      $116.2       $68.6        $(71.3)      $255.2
Cost of goods sold......  113.9       101.2        57.5         (70.7)       201.9
                         ------      ------       -----        ------       ------
  Gross earnings........   27.8        15.0        11.1          (0.6)        53.3
Selling, general and
 administrative
 expense................   36.3        13.1         7.7           --          57.1
                         ------      ------       -----        ------       ------
  Earnings (loss) from
   operations...........   (8.5)        1.9         3.4          (0.6)        (3.8)
Non-operating expense
 (income)...............    9.8         0.2        (3.0)          --           7.0
Equity earnings (loss)
 in subsidiaries........    7.0         --          --           (7.0)         --
                         ------      ------       -----        ------       ------
  Earnings (loss) before
   provision for income
   taxes................  (11.3)        1.7         6.4          (7.6)       (10.8)
Provision for income
 taxes..................    --          --          1.1           --           1.1
                         ------      ------       -----        ------       ------
  Net earnings (loss)... $(11.3)     $  1.7       $ 5.3        $ (7.6)      $(11.9)
                         ======      ======       =====        ======       ======
Net earnings (loss)..... $(11.3)     $  1.7       $ 5.3        $ (7.6)      $(11.9)
Other comprehensive
 expense
  Foreign currency
   translation
   adjustment...........   (0.2)        --         (1.4)          --          (1.6)
                         ------      ------       -----        ------       ------
    Other comprehensive
     expense............   (0.2)        --         (1.4)          --          (1.6)
                         ------      ------       -----        ------       ------
    Comprehensive income
     (loss)............. $(11.5)     $  1.7       $ 3.9        $ (7.6)      $(13.5)
                         ======      ======       =====        ======       ======
</TABLE>


                                       13
<PAGE>

                          OUTBOARD MARINE CORPORATION

                CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
                       THREE MONTHS ENDED MARCH 31, 2000
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                           Parent    Guarantor      Other                  Consolidated
                           Company  Subsidiaries Subsidiaries Eliminations    Total
                           -------  ------------ ------------ ------------ ------------
                                              (Dollars in millions)
<S>                        <C>      <C>          <C>          <C>          <C>
CASH FLOWS FROM OPERATING
 ACTIVITIES:
 Net earnings (loss) of
  common shareholders....  $(30.4)     $ 1.9        $  1.5       $(4.5)       $(31.5)
 Adjustments to reconcile
  net earnings (loss) of
  common shareholders to
  net cash provided by
  (used for) operations:
   Depreciation and
    amortization.........    11.7        1.4           0.7         --           13.8
   Changes in current
    accounts excluding
    the effects of
    noncash transactions:
   Decrease (increase) in
    receivables..........   (19.4)      (8.4)        (11.2)        --          (39.0)
   Decrease (increase) in
    intercompany
    receivables and
    payables, and
    intercompany note
    receivables and note
    payables.............   (23.6)       3.6          20.0         --            --
   Decrease (increase) in
    inventories..........    (4.4)      (2.7)         (1.2)        1.2          (7.1)
   Decrease (increase) in
    other current
    assets...............    (2.1)       0.5          (1.4)        --           (3.0)
   Increase (decrease) in
    accounts payable,
    accrued liabilities
    and income taxes.....    11.9        2.5          (0.3)        --           14.1
   Other, net............     0.5        --            0.3         --            0.8
                           ------      -----        ------       -----        ------
     Net cash provided by
      (used for)
      operating
      activities.........   (55.8)      (1.2)          8.4        (3.3)        (51.9)
CASH FLOWS FROM INVESTING
 ACTIVITIES:
 Expenditures for plant
  and equipment, and
  tooling................    (5.2)      (1.1)         (0.3)        --           (6.6)
 Proceeds from sale of
  plant and equipment....     2.6        2.0           --          --            4.6
 Equity earnings
  (loss).................    (3.3)       --            --          3.3           --
 Change in subsidiary
  investment.............     --         --            --          --            --
 Other, net..............     --         --            --          --            --
                           ------      -----        ------       -----        ------
     Net cash provided by
      (used for)
      investing
      activities.........    (5.9)       0.9          (0.3)        3.3          (2.0)
CASH FLOWS FROM FINANCING
 ACTIVITIES:
 Net increase in short-
  term debt..............    10.0        --            --          --           10.0
 Payments of long-term
  debt, including
  current maturities.....    (6.0)      (0.1)          --          --           (6.1)
 Issuance of preferred
  stock and warrants.....    65.0        --            --          --           65.0
 Change in subsidiary
  capital................     --         --            --          --            --
 Change in restricted
  cash...................    (0.4)       --            --          --           (0.4)
 Other, net..............     --         --            --          --            --
                           ------      -----        ------       -----        ------
     Net cash provided by
      (used for)
      financing
      activities.........    68.6       (0.1)          --          --           68.5
Exchange Rate Effect on
 Cash....................    (0.2)       --           (0.4)        --           (0.6)
                           ------      -----        ------       -----        ------
Net increase (decrease)
 in Cash and Cash
 Equivalents.............     6.7       (0.4)          7.7         --           14.0
Cash and Cash Equivalents
 at Beginning of Period..     9.3        0.5          15.2         --           25.0
                           ------      -----        ------       -----        ------
Cash and Cash Equivalents
 at End of Period........  $ 16.0      $ 0.1        $ 22.9       $ --         $ 39.0
                           ======      =====        ======       =====        ======
</TABLE>


                                       14
<PAGE>

                          OUTBOARD MARINE CORPORATION

                CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
                       THREE MONTHS ENDED MARCH 31, 1999
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                          Parent    Guarantor      Other                  Consolidated
                          Company  Subsidiaries Subsidiaries Eliminations    Total
                          -------  ------------ ------------ ------------ ------------
                                             (Dollars in millions)
<S>                       <C>      <C>          <C>          <C>          <C>
CASH FLOWS FROM
 OPERATING ACTIVITIES:
 Net earnings (loss) of
  common shareholders...  $(11.3)     $  1.7       $  5.3       $(7.6)       $(11.9)
 Adjustments to
  reconcile net earnings
  (loss) of common
  shareholders to net
  cash provided by (used
  for) operations:
   Depreciation and
    amortization .......     5.0         6.8          0.5         --           12.3
   Changes in current
    accounts excluding
    the effects of
    noncash
    transactions:
     Decrease (increase)
      in receivables....     5.7       (12.4)       (14.0)        --          (20.7)
     Decrease (increase)
      in intercompany
      receivables and
      payables, and
      intercompany note
      receivables and
      note payables.....   (16.5)        6.5         10.0         --            --
     Decrease (increase)
      in inventories....    (4.2)        3.5         (1.2)        0.6          (1.3)
     Decrease (increase)
      in other current
      assets............    (0.9)        0.6          0.1         --           (0.2)
     Increase (decrease)
      in accounts
      payable, accrued
      liabilities and
      income taxes......    (2.2)        2.9          1.3        (0.1)          1.9
   Other, net...........     3.0         0.1          2.0         0.1           5.2
                          ------      ------       ------       -----        ------
      Net cash provided
       by (used for)
       operating
       activities.......   (21.4)        9.7          4.0        (7.0)        (14.7)
CASH FLOWS FROM
 INVESTING ACTIVITIES:
 Expenditures for plant
  and equipment, and
  tooling...............     6.8       (16.1)        (1.8)        --          (11.1)
 Proceeds from sale of
  plant and equipment...     0.1         0.1          --          --            0.2
 Equity earnings
  (loss)................    (7.0)        --           --          7.0           --
 Change in subsidiary
  investment............    (4.5)        --           --          4.5           --
 Other, net.............     --          --           --          --            --
                          ------      ------       ------       -----        ------
      Net cash provided
       by (used for)
       investing
       activities.......    (4.6)      (16.0)        (1.8)       11.5         (10.9)
CASH FLOWS FROM
 FINANCING ACTIVITIES:
 Net increase in short-
  term debt.............    47.6         --           --          --           47.6
 Payments of long-term
  debt, including
  current maturities....   (12.5)        2.4          --          --          (10.1)
 Change in subsidiary
  capital...............     0.9         4.2         (0.6)       (4.5)          --
 Change in restricted
  cash..................    (0.3)        --           --          --           (0.3)
 Other, net.............    (0.1)        --           --          --           (0.1)
                          ------      ------       ------       -----        ------
      Net cash provided
       by (used for)
       financing
       activities.......    35.6         6.6         (0.6)       (4.5)         37.1
Exchange Rate Effect on
 Cash...................    (0.3)        --           0.8         --            0.5
                          ------      ------       ------       -----        ------
Net increase (decrease)
 in Cash and Cash
 Equivalents............     9.3         0.3          2.4         --           12.0
Cash and Cash
 Equivalents at
 Beginning of Period....     2.2         0.1         11.3         --           13.6
                          ------      ------       ------       -----        ------
Cash and Cash
 Equivalents at End of
 Period.................  $ 11.5      $  0.4       $ 13.7       $ --         $ 25.6
                          ======      ======       ======       =====        ======
</TABLE>

                                       15
<PAGE>

                          OUTBOARD MARINE CORPORATION
                                   FORM 10-Q

                                 PART 1, ITEM 2
          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS
                                 MARCH 31, 2000

   The following discussion should be read in conjunction with the Condensed
Consolidated Financial Statements of the Company, together with the notes
thereto, included elsewhere herein.

General

   Market Share. As of March 31, 2000, the Company's twelve month rolling
domestic outboard engine and boat market share have remained at their December
31, 1999 levels of 32% and 9%, respectively.

Results of Operations

Three Months Ended March 31, 2000 Compared to Three Months Ended March 31, 1999

   Net Sales. Net sales increased to $269.1 million in the three months ended
March 31, 2000 from $255.2 million in the three months ended March 31, 1999, an
increase of $13.9 million or 5.4%. The increased sales were driven by boat
segment sales, which increased $15.6 million as a result of higher unit sales
of recreational and fishing boats (primarily saltwater). Total marine engine
segment sales decreased slightly as increased parts and accessories sales were
offset by lower engine sales. Worldwide engine unit sales were negatively
affected as a result of third-party supplier quantity and quality problems.

   Cost of Goods Sold. Cost of goods sold increased to $225.7 million in the
three months ended March 31, 2000 from $201.9 million in the three months ended
March 31, 1999, an increase of $23.8 million or 11.8%. Gross earnings in the
three months ended March 31, 2000 was 16.1% of net sales as compared with 20.9%
of net sales for the comparable period in 1999. The reduction in gross earnings
percent for the quarter was attributable mainly to the marine engine segment
which had higher manufacturing costs in the three months ended March 31, 2000
than in the comparable period for the prior year. The increased manufacturing
costs were primarily driven by spending related to productivity and quality
improvement initiatives at each engine facility and costs incurred as a result
of third-party vendor issues. Additionally, cost of sales were negatively
impacted by increased warranty/rework accruals related to certain boat and
engine products.

   Selling, General and Administrative ("SG&A") Expense. SG&A expense increased
to $64.4 million in the three months ended March 31, 2000 from $57.1 million in
the three months ended March 31, 1999, an increase of $7.3 million or 12.8%.
SG&A expense as a percentage of net sales increased to 23.9% in the three
months ended March 31, 2000 from 22.4% in the three months ended March 31,
1999. The SG&A expense increase was primarily due to (i) increased marketing
expenses for promotional programs and (ii) the prior-year period including an
$0.8 million accrual reversal related to a lawsuit settlement.

   Loss from Operations. Loss from operations was $21.0 million in the three
months ended March 31, 2000 compared with a $3.8 million loss in the three
months ended March 31, 1999, an increase of $17.2 million. The increased loss
was attributable to higher cost of goods sold and SG&A expense, as discussed
above.

   Non-Operating Expense (Income). Interest expense totaled $8.3 million in the
three months ended March 31, 2000 as compared to $8.2 million in the three
months ended March 31, 1999. Other non-operating income was $0.7 million in the
three months ended March 31, 2000 compared to $1.2 million in the

                                       16
<PAGE>

comparable period in the prior year. The decrease in other non-operating income
was attributable to higher foreign exchange losses related to the Company's
European and Australian operations.

   Provision for Income Taxes. The provision for income taxes was $1.1 million
in both the three months ended March 31, 2000 and March 31, 1999. The income
tax provisions resulted from the net of expected taxes payable and benefits
relating to certain international subsidiaries. No tax benefit is allowed for
domestic losses because they are not considered realizable, at this time, under
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes."

   Preferred Dividends. Preferred dividend expense, related to the 650,000
shares of Series A Convertible Preferred Stock (see Note 5 of the Notes to the
Condensed Consolidated Financial Statements), was $1.8 million in the three
months ended March 31, 2000. This amount reflects an accrual of $1.6 million in
preferred dividend expense and $0.2 million in amortization expense related to
the discount on the preferred stock.

Financial Condition; Liquidity and Capital Resources

   The Company's business is seasonal in nature with receivables, inventory,
and short-term borrowings usually at their peak levels in the Company's fiscal
quarter ending March 31 and declining thereafter as the Company's products
enter the consumer buying season. Current assets at March 31, 2000 increased
$60.5 million from December 31, 1999 due primarily to increases in accounts
receivable and cash and cash equivalents balances. Receivables at March 31,
2000 increased $37.8 million due primarily to increases in net sales in March
2000 as compared to sales during December 1999. Cash and cash equivalents
increased by $14.0 million due primarily to the Company's issuance of preferred
stock and warrants in January 2000 (see Note 5 of the Notes to Condensed
Consolidated Financial Statements). Additionally, inventories at March 31, 2000
increased $5.8 million in anticipation of the consumer buying season. The
Company had $31.0 million in restricted cash at March 31, 2000, which cash is
held in interest reserve accounts, as required, for the benefit of the
Company's senior lenders, as discussed in more detail below.

   Cash used for operations was $51.9 million for the three months ended March
31, 2000 compared with $14.7 million for the three months ended March 31, 1999.
This increase in cash used was driven primarily by the increased net loss as
well as the increase in accounts receivable. Expenditures for plant and
equipment and tooling were $6.6 million for the three months ended March 31,
2000 compared to $11.1 million for the three months ended March 31, 1999. The
lower level of expenditures is primarily due to the timing of implementing
certain capital projects in 2000. The $6.6 million was used primarily for
production enhancements, information technology projects, and new model
development.

   Short-term debt was $68.0 million at March 31, 2000 comprising borrowings
under the Company's Revolving Credit Facility. These borrowings were used to
fund operations, pay $5.8 million of the Company's Medium-Term Notes Series A
which came due in March 2000, as well as fund capital expenditures.

   On January 28, 2000, the Company sold an aggregate of 650,000 shares of
Series A Convertible Preferred Stock, par value $.01 per share (the "Series A
Preferred Stock"), and warrants (the "Warrants") to purchase an aggregate of
5,750,000 shares of its Common Stock, par value $.01 per share (the "Common
Stock"), for an aggregate consideration of $65.0 million, in a private
placement transaction to Greenlake Holdings II, LLC and Quantum Industrial
Partners, LDC. Approximately $15.0 million of the Series A Preferred Stock was
issued in exchange for certain subordinated notes previously issued by the
Company to the purchasers. The Series A Preferred Stock has an initial
liquidation preference of $100 per share and an initial conversion price of $14
per share (in each case, subject to adjustment upon occurrence of certain
events). The Series A Preferred Stock is convertible into Common Stock at any
time. The Series A Preferred Stock has an annual dividend rate of 15% of the
then current liquidation preference, and is entitled to share ratably in any
dividends paid on the Common Stock. Dividends will accrue if not paid in cash,
and the liquidation preference will be increased by the amount of any accrued
but unpaid dividends. The Series A Preferred Stock may be redeemed at any time

                                       17
<PAGE>

after October 1, 2008, upon written request of the holders of at least 75% of
the then outstanding shares. The Company may redeem all outstanding shares of
the Series A Preferred Stock if, at any time, less than 10% of the total Series
A Preferred Stock originally sold on January 28, 2000 remains outstanding. The
Warrants are exercisable at any time until January 28, 2010, at an exercise
price of $.01 per share of Common Stock, payable in cash or in shares of Common
Stock. The Company intends to use the proceeds from the sale of the Series A
Preferred Stock and Warrants for general corporate purposes, including funding
its working capital and making capital expenditures (see Note 5 of the Notes to
Condensed Consolidated Financial Statements).

   The Company entered into an Amended and Restated Loan and Security
Agreement, effective as of January 6, 1998 (as amended, the "Credit
Agreement"), with a syndicate of lenders for which Bank of America, N.A. is
administrative and collateral agent (the "Agent"). The Credit Agreement, which
is in effect to December 31, 2001, provides a revolving credit facility (the
"Revolving Credit Facility") of up to $150.0 million, subject to borrowing base
limitations, to finance working capital with a $50.0 million sublimit for
letters of credit. As of March 31, 2000, the Company had $68.0 million of
borrowings outstanding and $37.0 million of letters of credit outstanding under
the Revolving Credit Agreement. This resulted in the Company having $26.4
million of unused borrowing capacity under the Revolving Credit Agreement after
considering borrowing base limitations and minimum availability requirements.
The Revolving Credit Facility is secured by a first and only security interest
in all of the Company's existing and hereafter acquired accounts receivable,
inventory, chattel paper, documents, instruments, deposit accounts, contract
rights, patents, trademarks and general intangibles and is guaranteed by the
Company's four principal domestic operating subsidiaries. On February 1, 2000
the Company entered into an Eighth Amendment to the Amended and Restated Loan
and Security Agreement which among other things (i) increased the borrowing
capacity by increasing intellectual property availability to $20.0 million and
increasing the advance rate for finished goods inventory to 65%, (ii)
eliminated tangible net worth, interest coverage, and leverage ratio covenants,
and (iii) established minimum availability requirements, maximum capital and
tooling expenditures, and a minimum earnings before interest, taxes,
depreciation and amortization ("EBITDA") covenant test to reflect expected
operating results. The Company's ability to remain in compliance with its
covenants will depend upon several factors, including its ability to generate
sales and maintain costs at acceptable levels. Factors outside the Company's
control, including but not limited to third party supplier issues, may also
affect the Company's compliance. At March 31, 2000, the Company was in
compliance with the covenants.

   On May 27, 1998, the Company issued $160.0 million of 10 3/4% Senior Notes
Series A ("Series A Notes") due 2008, with interest payable semiannually on
June 1 and December 1 of each year. The net proceeds from the issuance of the
Series A Notes totaled $155.2 million, of which $150.0 million was used to
repay debt assumed by the Company following the merger.

   Concurrently with the issuance of the Series A Notes, the Company entered
into a depositary agreement which provided for the establishment and
maintenance of an interest reserve account for the benefit of the holders of
the Series A Notes and an interest reserve account for the benefit of the other
senior creditors of the Company. An aggregate amount of cash equal to one
year's interest due to these lenders was deposited into these interest reserve
accounts. At March 31, 2000, the "Restricted Cash" held in these interest
reserve accounts totaled $31.0 million. The "Restricted Cash" must remain in
such accounts until at least May 27, 2001. These accounts may be accessed by
the Company for the payment of the respective interest only, provided certain
criteria are met by the Company.

   On April 14, 1999, the Company completed an exchange offer of all the Series
A Notes for Senior Notes Series B ("Series B Notes") which are registered under
the Securities Act of 1933, pursuant to a Registration Statement on Form S-4
and an accompanying Prospectus. The form and terms of the Series B Notes are
the same form and terms of the Series A Notes except (i) the Series B
designation, (ii) the Series B notes have been registered under the Securities
Act and, therefore, will not bear legends restricting the transfer thereof, and
(iii) holders of the Series B notes are not entitled to registration rights as
the exchange offer was intended to satisfy such exchange and registration
rights.


                                       18
<PAGE>

   At March 31, 2000, $62.9 million principal amount of the Company's 9 1/8%
Debentures due 2017 (the "9 1/8% Debentures") was outstanding. The 9 1/8%
Debentures mature on April 15, 2017, and interest thereon is payable semi-
annually on April 15 and October 15 of each year. The 9 1/8% Debentures are
redeemable through the operation of a sinking fund beginning on April 15, 1998,
and each year thereafter to and including April 15, 2016 at a sinking fund
redemption price equal to 100% of the principal amount thereof plus accrued
interest to the redemption date. As of March 31, 2000, the Company had
repurchased and deposited with the trustee for the 9 1/8% Debentures $34.8
million principal amount of 9 1/8% Debentures, which will be used to satisfy
its mandatory sinking fund obligations through April 15, 2004.

   At March 31, 2000, an aggregate of $5.0 million principal amount of the
Company's Medium-Term Notes Series A (the "Medium-Term Notes") was outstanding.
The Medium-Term Notes bear interest at a rate of 8.625%. The maturity dates of
the Medium-Term Notes are March 15, 2001. Interest on the outstanding Medium-
Term Notes is payable semi-annually each March 30 and September 30 and at
maturity.

   At March 31, 2000, $6.8 million principal amount of the Company's 7%
Convertible Subordinated Debentures due 2002 (the "Convertible Debentures") was
outstanding. Following the Merger, the Company purchased $67.7 million
principal amount of Convertible Debentures. Immediately prior to the merger,
the Convertible Debentures were convertible into shares of common stock of the
Company at the conversion price of $22.25 per share. As a result of the merger,
the remaining $6.8 million principal amount of outstanding Convertible
Debentures are no longer convertible into shares of common stock of the
Company. Each holder of the remaining outstanding Convertible Debentures now
has the right to convert (at $22.25 per share) such holder's Convertible
Debentures and receive cash in an amount equal to what each holder would have
received had they converted the Convertible Debentures into common stock
immediately prior to the merger ($18.00 per share). Accordingly, the remaining
outstanding Convertible Debentures are convertible into the right to receive a
cash payment equal to $809 for each $1,000 principal amount of Convertible
Debentures so converted (i.e., ($18.00/$22.25) x $1,000). The outstanding
Convertible Debentures are convertible at any time prior to their maturity on
July 1, 2002.

   The Company has various Industrial Revenue Bonds outstanding in an aggregate
principal amount of approximately $10.6 million as of March 31, 2000. The
Industrial Revenue Bonds have various maturity dates between 2002 and 2007.
Interest rates on the Industrial Revenue Bonds range from 6% to 12.037%.

   On May 2, 2000 the Company sold a $15.0 million Subordinated Note (the "15%
Note") and Warrants (the "New Warrants") to purchase 330,000 shares of the
Company's Common Stock, par value $0.01, to Quantum Industrial Partners LDC.
The 15% Note bears an interest rate of 15% and has a maturity date of May 31,
2000, which may be extended for four additional 30 day periods upon 5 days
written notice by the Company. The 15% Note is convertible into shares of the
Company's Series B Convertible Preferred Stock. The New Warrants are
exercisable at any time until May 2, 2010, at an exercise price of $0.01 per
share of Common Stock, payable in cash or in shares of Common Stock.

   As a normal business practice, the Company has made arrangements with
financial institutions 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 repurchase obligation to
approximately $33 million for a period not to exceed 18 months from the date of
invoice. The Company resells any repurchased products at a discount. Losses
incurred under this program have not been material. For the three month periods
ending March 31, 2000 and 1999, the Company repurchased approximately $0.3
million and $1.1 million of products, respectively. The Company accrues for
losses that are anticipated in connection with expected repurchases. The
Company does not expect these repurchases to materially affect its results of
operations, financial position, or cash flows.

   Based upon the current level of operations, the Company believes that its
cash flow from operations together with the sale of the Series A Preferred
Stock and Warrants, the 15% Note and Warrants on May 2, 2000, the available
borrowing capacity under the Credit Agreement, and the interest reserve
accounts and its

                                       19
<PAGE>

other sources of liquidity (including issuances of additional subordinated
notes, preferred stock, and warrants), will be adequate to meet its presently
anticipated requirements for working capital and accrued liabilities, capital
expenditures, interest payments, and scheduled principal payments for the next
two years. There can be no assurance, however, that the Company's business will
continue to generate cash flow at or above current levels. If the Company is
unable to generate sufficient cash flow from operations in the future to
service its debt and accrued liabilities and make necessary capital
expenditures, or if its future earnings growth is insufficient to meet all
required principal payments out of internally generated funds, the Company may
be required to refinance all or a portion of its existing debt, sell assets or
obtain additional financing. There can be no assurance that any such
refinancing or asset sales would be possible or that any additional financing
could be obtained on attractive terms, particularly in view of the Company's
high level of debt. The Company's ability to remain in compliance with its
covenants will depend upon several factors, including its ability to generate
sales and maintain costs at acceptable levels. Factors outside the Company's
control, including but not limited to third party supplier issues, may also
affect the Company's compliance. At March 31, 2000, the Company was in
compliance with the covenants.

Third Party Suppliers

   As part of the closure of the Company's Milwaukee, Wisconsin and Waukegan,
Illinois engine component facilities, the Company outsourced a majority of the
products manufactured at those facilities to third party suppliers. In
anticipation of the outsourcing of these components, the Company manufactured
an incremental amount of inventory that it, and the chosen supplier, believed
would be adequate to provide the Company with enough inventory to continue
manufacturing through the period necessary to relocate, validate and begin
production of the components. For the most part, the incremental inventory was
adequate to allow the Company to manufacture finished outboards until the
chosen supplier was able to supply the quantity and quality of these components
required by the Company. However, as a result of various issues, validation and
full production capabilities for some of the components has taken longer than
anticipated and production of finished outboard engines has been constrained.
These supply issues will continue to affect production into the Company's
second quarter.

Euro Currency Conversion

   On January 1, 1999, eleven of the fifteen member countries of the European
Union adopted the euro as their common legal currency. The euro trades on
currency exchanges and is available for non-cash transactions. From January 1,
1999 through January 1, 2002, each of the participating countries are scheduled
to maintain their national ("legacy") currencies as legal tender for goods and
services. Beginning January 1, 2002, new euro-denominated bills and coins will
be issued, and legacy currencies will be withdrawn from circulation no later
than July 1, 2002. The Company's foreign operating subsidiaries that will be
affected by the euro conversion have established plans to address any business
issues raised, including the competitive impact of cross-border price
transparency. It is not anticipated that there will be any near term business
ramifications; however, the long-term implications, including any changes or
modifications that will need to be made to business and financial strategies
are still being reviewed. From an accounting, treasury and computer system
standpoint, the impact from the euro currency conversion is not expected to
have a material impact on the financial position or results of operations of
the Company.

Accounting Standard

   In June 1998, the Financial Accounting Standards Board issued Statement 133
("SFAS 133"), "Accounting for Derivative Instruments and Hedging Activities."
SFAS 133 establishes accounting and reporting standards requiring that every
derivative instrument (including certain derivative instruments embedded in
other contracts) be recorded in the balance sheet as either an asset or
liability measured at its fair value. SFAS 133 requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. Special accounting for qualifying hedges
allows a derivative's gains

                                       20
<PAGE>

and losses to offset related results on the hedged item in the income
statement, and requires that a Company must formally document, designate, and
assess the effectiveness of transactions that receive hedge accounting. SFAS
133 is effective for fiscal years beginning after December 31, 2000. The
Company has not yet quantified the impacts of adopting SFAS 133 on its
financial statements and has not determined the timing of or method of its
adoption of SFAS 133.

Inflation

   Inflation may cause or may be accompanied by increases in gasoline prices
and interest rates. Such increases may adversely affect the sales of the
Company's products. Because of the low level of inflation, inflation did not
have a significant impact on operating results during the quarter ended March
31, 2000.

Market Risk

   The Company is exposed to market risk from changes in interest and foreign
exchange rates and commodity prices. From time to time, the Company enters into
financial arrangements in the ordinary course of business to hedge these
exposures. Changes in market risk did not have a significant impact on
operating results during the quarter ended March 31, 2000.

Forward-Looking Statements

   This report on Form 10-Q contains forward-looking statements, which may
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. The Company wishes to ensure that all
such forward-looking statements are accompanied by meaningful cautionary
statements pursuant to the safe harbor established in such act. All statements
other than statements of historical facts included in this Form 10-Q may
constitute forward-looking statements. Forward-looking statements include the
intent, belief or current expectations of the Company and members of its senior
management team. 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 that
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, successful implementation of turnaround strategies, product demand
and market acceptance, new product development, availability of raw materials,
the availability of adequate financing on terms and conditions acceptable to
the Company, and general economic conditions including interest rates and
consumer confidence. Investors are also directed to other risks discussed in
this report on Form 10-Q and documents filed by the Company with the Securities
and Exchange Commission.

                                       21
<PAGE>

                           Part II--OTHER INFORMATION

Item 1. Legal Proceedings

   During the three months ended March 31, 2000, no reportable events or
material developments occurred regarding the legal proceedings of the Company.

Item 6. Exhibits and Reports on Form 8-K

   a. Exhibits. Reference is made to the Exhibit Index on Page 24

  b. Reports on Form 8-K. On January 28, 2000 the Company filed a Report on
     Form 8-K announcing the issuance of 650,000 shares of Series A
     Convertible Preferred Stock, par value $.01 per share, and Warrants to
     purchase an aggregate of 5,750,000 shares of its Common Stock, par value
     $.01 per share, for an aggregate consideration of $65.0 million in a
     private placement transaction to Greenlake Holdings II, LLC and Quantum
     Industrial Partners, LDC.

                                       22
<PAGE>

                                   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 thereunto duly authorized.

                                          Outboard Marine Corporation

<TABLE>
<CAPTION>
              Signature                          Title                   Date
              ---------                          -----                   ----
<S>                                    <C>                        <C>
       /s/ Eric T. Martinez            Interim Chief Financial       May 15, 2000
______________________________________  Officer and Vice
           Eric T. Martinez             President and Treasurer
                                        (Principal Financial
                                        Officer)
</TABLE>


                                       23
<PAGE>

<TABLE>
<CAPTION>
  Exhibit
  Number                                Description
  -------                               -----------
 <C>       <S>
 3.1(a)    Restated Certificate of Incorporation of the Company (filed as
           Exhibit 3(a) to the Company's Annual Report on Form 10-K/A for the
           year ended September 30, 1997 (the "1997 10-K"))*

 3.1(a)(1) Amendement to Restated Certificate of Incorporation of the Company,
           (filed as Exhibit 3.1(a)(1) to the 1999 10K)*

           Amended and Restated bylaws of the Company (filed as Exhibit 3(B) to
 3.2(a)    the 1997 10-K)*

 (a)(1)    Amended and Restated bylaws of the Company (adopted July 23,
           1998)(filed as Exhibit 3.2(a)(1) to the Company's Registration
           Statement on Form S-4 (Registration No. 333-57949) (the "Form S-
           4"))*

 4.1       Indenture for the 10 3/4% Senior Notes due 2008, Series A (the "Old
           Notes") and 10 3/4% Senior Notes due 2008, Series B (the "Exchange
           Notes"), dated as of May 27, 1998 among the Company, the Subsidiary
           Guarantors and State Street Bank and Trust Company, as trustee
           (filed as Exhibit 4.1 to the Form S-4)*

 4.2       Form of Exchange Note (filed as Exhibit 4.2 to the Form S-4)*

 4.3       Form of Subsidiary guarantee of the Old Notes and the Exchange Notes
           (included in Exhibit 4.1) (filed as Exhibit 4.1 to the Form S-4)*

 4.4       Depositary Agreement dated as of May 27, 1998 among the Company,
           State Street Bank and Trust Company, as trustee, NationsBank, N.A.,
           as administrator agent, and State Street Bank and Trust Company, as
           depositary agent (filed as Exhibit 4.6 to the Form S-4)*

 4.5       With respect to rights of holders of the Company's 9 1/8% Sinking
           Fund Debentures due 2017, reference is made to Exhibit 4(A) to the
           Company's Registration Statement Number 33-12759 filed on March 20,
           1987*

 4.6       With respect to rights of holders of the Company's 7% Convertible
           Subordinated Debentures due 2002, reference is made to the Company's
           Registration Statement Number 33-47354 filed on April 28, 1992*

 4.7       With respect to the Supplemental Indenture dated September 30, 1997
           related to the Company's 7% Convertible Subordinated Debentures due
           2002, reference is made to Exhibit 4(c) to the 1997 10-K*

 4.8       Outboard Marine Corporation Certificate of the Powers, Designations,
           Preferences and Rights of the Series A Convertible Preferred Stock,
           Par Value $.01 Per Share (filed as Exhibit 4.8 to the 1999 10-K)*

 4.9       Series A Convertible Preferred Stock and Warrant Purchase Agreement
           (filed as Exhibit 4.9 to the 1999 10-K)*

 4.10      Stockholder Agreement between Outboard Marine Corporation, Quantum
           Industrial Partners LDC and Greenlake Holdings II LLC (filed as
           Exhibit 4.10 to the 1999 10-K)*

 4.11      Warrant to Purchase Shares of Common Stock of Outboard Marine
           Corporation by Quantum Industrial Partners LDC (filed as Exhibit
           4.11 to the 1999 10-K)*

 4.12      Warrant to Purchase Shares of Common Stock of Outboard Marine
           Corporation by Greenlake Holdings II LLC (filed as Exhibit 4.12 to
           the 1999 10-K)*

 4.13      Registration Rights Agreement between Outboard Marine Corporation,
           Quantum Industrial Partners LDC, Greenlake Holdings II LLC and
           Greenmarine Holdings LLC (filed as Exhibit 4.13 to the 1999 10-K)*

 4.14      Subordinated Note and Warrant Purchase Agreement between Outboard
           Marine Corporation, Greenlake Holdings III LLC and Quantum
           Industrial Partners LDC, attached hereto and incorporated herein as
           Exhibit 4.14.
</TABLE>

                                       24
<PAGE>

<TABLE>
<CAPTION>
 Exhibit
 Number                                Description
 -------                               -----------

 <C>     <S>
  4.15   Certificate of Amendment of Certificate of Powers, Designations,
         Preferences and Rights of the Series A Convertible Preferred Stock Par
         Value $.01 per share of Outboard Marine Corporations, attached hereto
         and incorporated herein as Exhibit 4.15.

  4.16   First Amendment to Stockholder Agreement between Outboard Marine
         Corporation, Quantum Industrial Partners LDC, Greenlake Holdings II
         LLC & Greenlake Holdings III LLC, attached hereto and incorporated
         herein as Exhibit 4.16.

  4.17   First Amendment to Registration Rights Agreement between Outboard
         Marine Corporation, Quantum Industrial Partners LDC, Greenlake
         Holdings II LLC, Greenlake Holdings III LLC and Greenmarine Holdings
         LLC, attached hereto and incorporated herein as Exhibit 4.17.

  4.18   Warrant to purchase Shares of Common Stock of Outboard Marine
         Corporation by Quantum Industrial Partners LDC, attached hereto and
         incorporate herein as Exhibit 4.18.

 10.1    Severance Agreements between the Company and certain elected and
         appointed officers and certain other executives of the Company,
         reference is made to Exhibit 99.3 and 99.4 of the Company's Schedule
         14D-9 filed with the Securities and Exchange Commission on July 15,
         1997*

 10.2    Employment Agreement of Mr. Hines dated October 6, 1997, reference is
         made to Exhibit 10(J) to the 1997 10-K*

 10.3    Amended and Restated Loan and Security Agreement between the Company
         and NationsBank of Texas, N.A. dated January 6, 1998, reference is
         made to Exhibit 10(E) to the Company's Quarterly Report on Form 10-Q
         for the fiscal quarter ended December 31, 1997*

 10.4    First Amendment to Amended and Restated Loan and Security Agreement
         between the Company and NationsBank of Texas, N.A. dated May 21, 1998
         (filed as Exhibit 10.5 to the Form S-4)*

 10.5    Employment Agreement of Mr. Jones dated March 10, 1998, reference is
         made to Exhibit 10(F) to the Company's Quarterly Report on Form 10-Q
         for the fiscal quarter ended March 31, 1998*

 10.6    With respect to the Personal Rewards and Opportunity Program,
         reference is made to Exhibit 10(G) to the Company's Quarterly Report
         on Form 10-Q for the fiscal quarter ended March 31, 1998*

 10.7    Employment Agreement of Robert Gowens dated October 1, 1998 (filed as
         Exhibit 10.8 to the Company's Annual Report on Form 10-K for the
         fiscal year ended September 30, 1998 (the "1998 10-K"))*

 10.8    Second Amendment to Amended and Restated Loan and Security Agreement
         between the Company and NationsBank of Texas, N.A. dated effective as
         of August 31, 1998 (filed as Exhibit 10.9 to the 1998 10-K)*

 10.9    Third Amendment to Amended and Restated Loan and Security Agreement
         between the Company and NationsBank of Texas, N.A. dated effective as
         of December 21, 1998 (filed as Exhibit 10.10 to the 1998 10-K)*

 10.10   Fourth Amendment to Amended and Restated Loan and Security Agreement
         between the Company and NationsBank of Texas, N.A. dated effective as
         of February 1, 1999 (filed as Exhibit 10.11 to the Transition Report
         on Form 10-K for the transition period ended December 31, 1998)*

 10.11   Fifth Amendment to Amended and Restated Loan and Security Agreement
         between the Company and NationsBank of Texas, N.A. dated effective as
         of February 25, 1999 (filed as Exhibit 10.12 to the Transition Report
         on Form 10-K for the transition period December 31, 1998)*
</TABLE>

                                       25
<PAGE>

<TABLE>
<CAPTION>
 Exhibit
 Number                                Description
 -------                               -----------

 <C>     <S>
 10.12   Promissory Note dated December 4, 1998 with Robert Gowens, Jr. and
         Donna Gowens, as Maker, and the Company, as Payee (filed as Exhibit
         10.16 to the Transition Report on Form 10-K for the transition period
         ended December 31, 1998)*

 10.13   Second Mortgage dated December 4, 1998 with Robert Gowens, Jr. and
         Donna Gowens, as Mortgagor, and the Company, as Mortgagee (filed as
         Exhibit 10.17 to the Transition Report on Form 10-K for the transition
         period ended December 31, 1998)*

 10.14   Nonqualified Stock Option Agreement dated October 1, 1998 between the
         Company and Robert B. Gowens (filed as Exhibit 10.18 to the Transition
         Report on Form 10-K for the transition period ended December 31,
         1998)*

 10.15   Secured Promissory Note dated October 6, 1997 with Andrew Hines, as
         Maker, and the Company, as Payee (filed as Exhibit 10.19 to the
         Transition Report on Form 10-K for the transition period ended
         December 31, 1998)*

 10.16   Sixth Amendment to Amended and Restated Loan and Security Agreement
         between the Company and Bank of America, N.A., dated effective as of
         July 30, 1999 (filed as Exhibit 10.16 to the Company's Quarterly
         Report on form 10-Q for the fiscal quarter ended June 30, 1999)*

 10.17   Pledge and Security Agreement dated October 6, 1997 between the
         Company and Andrew Hines (filed as Exhibit 10.20 to the Transition
         Report on Form 10-K for the transition period ended December 31,
         1998)*

 10.18   Nonqualified Stock Option Grant Agreement dated October 6, 1997
         between the Company and Andrew Hines (filed as Exhibit 10.21 to the
         Transition Report on Form 10-K for the transition period ended
         December 31, 1998)*

 10.19   Incentive Stock Option Grant Agreement dated December 30, 1997 between
         the Company and David Jones (filed as Exhibit 10.22 to the Transition
         Report on Form 10-K for the transition period ended December 31,
         1998)*

 10.20   Nonqualified Stock Option Grant Agreement dated March 10, 1998 between
         the Company and David Jones (filed as Exhibit 10.23 to the Transition
         Report on Form 10-K for the transition period ended December 31,
         1998)*

 10.21   Nonqualified Stock Option Grant Agreement dated March 10, 1998 between
         the Company and David Jones (filed as Exhibit 10.24 to the Transition
         Report on Form 10-K for the transition period ended December 31,
         1998)*

 10.22   Seventh Amendment to Amended and Restated Loan and Security Agreement
         between the Company and Bank of America, N.A., dated effective as of
         October 27, 1999 (filed as Exhibit 10.22 to the Form 10-Q for the
         period ended September 30, 1999)*

 10.23   Eighth Amendment to Amended and Restated Loan and Security Agreement
         between the Company and Bank of America, N.A., dated effective as of
         January 31, 2000 (filed as Exhibit 10.23 to the 1999 10-K)*

 10.24   Subordinated Note dated May 2, 2000 issued by Outboard Marine
         Corporation to Quantum Industrial Partners LDC as lender, attached
         hereto and incorporated herein as Exhibit 10.24.

 11.     Computation of per share earnings (loss)

 21.     Subsidiaries of Registrant (filed as Exhibit 21 to the 1999 10-K)*.

 27.     Financial Data Schedule
</TABLE>
--------
  * Incorporated herein by reference.

                                       26