LAKE FOREST, Ill., April 24 /PRNewswire-FirstCall/ -- Brunswick
Corporation (NYSE:BC) reported today net earnings from continuing
operations of $0.15 per diluted share for the first quarter of
2008, compared with $0.38 per diluted share for the year-ago
quarter. Results for the 2008 period include a $0.07 per diluted
share loss on the planned divestiture of Baja boats, $0.09 per
diluted share of restructuring and other impairment charges, and an
investment sale gain of $0.10 per diluted share. Results for the
first quarter of 2007 include $0.06 per diluted share of
restructuring charges and $0.03 per diluted share of tax-related
benefits. Brunswick Chairman and Chief Executive Officer Dustan E.
McCoy commented, "Sales for the quarter reflected lower demand for
marine products, particularly in the United States where industry
retail sales were down about 17 percent in units in the first
quarter. This weakness was partially offset by sales growth from
our bowling and fitness operations, as well as strong sales outside
the United States in all business segments. While benefiting from
favorable currency exchange rates, our success in regions outside
of the United States is also the result of our strategic focus on
better serving the unique needs of our customers in these markets.
Operationally, we continue to introduce innovative new products and
implement initiatives to improve quality and productivity, as well
as manage pipeline inventories and reduce expenses in response to
current weak market conditions for our marine products.
Financially, our balance sheet remains strong with $267 million of
cash and debt-to-total capital at 27.6 percent at the end of the
quarter. Though difficult times and more hard work are ahead, we
are pleased with our progress to date." First Quarter Results The
company said that sales in the first quarter of 2008 totaled
$1,346.8 million, down 3 percent from $1,386.1 million for the
year-ago quarter. Operating earnings in the first quarter of 2008
totaled $10.3 million, compared with $53.0 million a year ago.
Operating earnings in the first quarter of 2008 include an $8.9
million loss on the planned divestiture of Baja and $13.3 million
of restructuring and other impairment charges. In the first quarter
of 2007, operating earnings include $7.6 million of restructuring
charges. The company reported net earnings from continuing
operations of $13.3 million, or $0.15 per diluted share, in the
first quarter of 2008, versus $34.3 million, or $0.38 per diluted
share, in the year-ago quarter. Results for the first quarter of
2008 include a pretax gain on the dissolution of a bowling joint
venture in Japan of $19.7 million, or $0.10 per diluted share, as
well as the loss on the planned divestiture equivalent to $0.07 per
diluted share and other restructuring and impairment charges
equivalent to $0.09 per diluted share. Diluted earnings per share
for the first quarter of 2007 include the previously mentioned
$0.06 of restructuring charges and $0.03 of tax-related benefits.
The restructuring and other impairment charges in the first quarter
of 2008 include severance and plant closure costs, asset
write-downs and impairment charges associated with a number of
actions undertaken to shrink the company's manufacturing footprint,
exit certain market segments and reduce expenses. During the
quarter, the company completed the closure of its Aberdeen, Miss.,
boat plant and closed its bowling pin manufacturing facility in
Antigo, Wis. In addition, the company announced that it will cease
boat manufacturing at its facility in Merritt Island, Fla.,
mothball its Swansboro, N.C., boat plant and close its boat plant
in Bucyrus, Ohio, in conjunction with the proposed sale of its Baja
boat business. The effective tax rate of 48.4 percent in the first
quarter of 2008 was primarily due to a higher tax rate on the $19.7
million pretax gain on the dissolution of the bowling joint
venture. Fully diluted common shares outstanding totaled 88.3
million in the first quarter of 2008, compared with 92.0 million
shares in the same period of 2007. Boat Segment The Boat segment
consists of the Brunswick Boat Group, which produces and
distributes fiberglass and aluminum boats and marine parts and
accessories, and offers dealer management systems. The Boat segment
reported sales for the first quarter of 2008 of $637.8 million,
down 9 percent compared with $699.0 million in the first quarter of
2007. Sales in the U.S. were down double digits reflecting the
continued weak retail markets. The drop in domestic sales was
partially offset by growth in sales outside of the U.S., primarily
driven by higher sales in Europe. For the first quarter of 2008,
the Boat segment had an operating loss of $14.7 million, down from
operating earnings of $19.5 million in the year-ago quarter. The
reduction in operating earnings was primarily due to lower
fixed-cost absorption on lower sales, as well as $13.8 million of
restructuring and impairment charges related to actions described
above. The year-ago first quarter includes $4.8 million of
comparable charges. "In response to market conditions, we continued
to lower production rates to reduce pipeline inventories held by
our dealers," McCoy said. "At the end of the quarter, there were
approximately 2,800 fewer boats in our dealers' inventories than at
the same time last year. Nevertheless, we had 35 weeks of supply on
hand at quarter end, up from 34 weeks of supply a year ago, and we
will be making further production cuts in the months ahead.
Consumers remain cautious in the face of an uncertain economy, a
poor housing market and rising food and energy prices that erode
their spending power for discretionary purchases such as boats."
"Against this backdrop, we continued to make progress towards
transforming our global manufacturing profile to achieve a smaller,
more flexible manufacturing footprint as well as rationalizing our
brand portfolio," McCoy added. "We announced that we will cease
making boats at several manufacturing facilities, and we will
transfer that production to other plants that will make multiple
models and brands to lower our overall cost position and improve
capacity utilization. We will also continue to strategically refine
our product portfolio, focusing on those brands and product
segments where we see the greatest opportunity for profitable
growth." Marine Engine Segment The Marine Engine segment,
consisting of the Mercury Marine Group, reported sales of $566.0
million in the first quarter of 2008, down 1 percent from $572.6
million in the year-ago first quarter. Operating earnings in the
first quarter were $30.9 million versus $34.7 million, and
operating margins declined to 5.5 percent compared with 6.1 percent
for the same quarter in 2007. "Sales from areas outside the United
States were up double digits, which helped to mitigate the U.S.
sales decline. The U.S. sales shortfall was driven by lower engine
sales to boat builders, as well as lower parts and accessories
sales, which are tied to boat usage and engine sales," McCoy
explained. "The decline in operating earnings was primarily due to
lower sales of high-margin sterndrive engines as well as reduced
fixed-cost absorption on lower sales." Fitness Segment The Fitness
segment is comprised of the Life Fitness Division, which
manufactures and sells Life Fitness, Hammer Strength and ParaBody
fitness equipment. For the first quarter of 2008, segment sales
increased 3 percent to $149.2 million, up from $145.0 million in
the year-ago quarter. Segment operating earnings were $8.1 million
for the first quarter of 2008, flat from the first quarter a year
ago. Operating margins were 5.4 percent versus 5.6 percent in the
year-earlier quarter. "Sales growth was driven by a significant
increase in commercial equipment sales, which were up nearly double
digits," McCoy said. "This was offset by a steep decline in the
consumer segment, as individuals continue to defer purchasing
discretionary items. Operating earnings and margins were affected
by a shift in commercial product mix as the growth in strength
equipment sales, which carry lower margins relative to
cardiovascular equipment, was disproportionately higher than the
growth in cardio sales." Bowling & Billiards Segment The
Bowling & Billiards segment is comprised of the Brunswick
retail bowling centers; bowling equipment and products; and
billiards, Air Hockey and foosball tables. Segment sales in the
first quarter of 2008 totaled $113.6 million, up 7 percent from
$105.8 million in the year-ago quarter. Operating earnings were
$0.9 million in the first quarter versus $8.3 million in the
year-ago quarter. Operating margins were 0.8 percent as compared
with 7.8 percent in 2007. "Sales were up in both our bowling
products and retail segments, offsetting lower billiards sales,"
McCoy said. "Operating earnings for the segment during the quarter
were affected by a $5.6 million charge for costs associated with
the closing of the Antigo, Wis., bowling pin plant, as well as
other restructuring and impairment costs." "The retail segment, in
particular, continues to benefit as we build additional Brunswick
Zone XL bowling centers, with the most recent opening in the
Chicagoland area in the first quarter," McCoy said. "Billiards
sales, however, continued to face pressure due to the slowdown in
the housing market and the overall weak economy." About Brunswick
Headquartered in Lake Forest, Ill., Brunswick Corporation endeavors
to instill "Genuine Ingenuity"(TM) in all its leading consumer
brands, including Mercury and Mariner outboard engines; Mercury
MerCruiser sterndrives and inboard engines; MotorGuide trolling
motors; Teignbridge propellers; MotoTron electronic controls;
Albemarle, Arvor, Baja, Bayliner, Bermuda, Boston Whaler, Cabo
Yachts, Crestliner, Cypress Cay, Harris, Hatteras, Kayot, Laguna,
Lowe, Lund, Maxum, Meridian, Ornvik, Palmetto, Princecraft,
Quicksilver, Rayglass, Savage, Sea Boss, Sea Pro, Sea Ray, Sealine,
Triton, Trophy, Uttern and Valiant boats; Attwood marine parts and
accessories; Land 'N' Sea, Kellogg Marine, Diversified Marine and
Benrock parts and accessories distributors; IDS dealer management
systems; Life Fitness, Hammer Strength and ParaBody fitness
equipment; Brunswick bowling centers, equipment and consumer
products; Brunswick billiards tables; and Dynamo, Tornado and
Valley pool tables, Air Hockey and foosball tables. For more
information, visit http://www.brunswick.com/. Brunswick Corporation
Comparative Consolidated Statements of Income (in millions, except
per share data) (unaudited) Three Months Ended March 29, March 31,
2008 2007 % Change Net sales $1,346.8 $1,386.1 -3% Cost of sales
1,077.3 1,085.2 -1% Selling, general and administrative expense
203.1 206.8 -2% Research and development expense 33.9 33.5 1%
Restructuring, exit and impairment charges 22.2 7.6 NM Operating
earnings 10.3 53.0 -81% Equity earnings 4.8 6.3 -24% Investment
sale gain 19.7 - NM Other income (expense), net 1.1 (0.4) NM
Earnings before interest and income taxes 35.9 58.9 -39% Interest
expense (11.5) (13.6) -15% Interest income 1.4 1.8 -22% Earnings
before income taxes 25.8 47.1 -45% Income tax provision 12.5 12.8
Net earnings from continuing operations 13.3 34.3 -61% Discontinued
operations: Earnings from discontinued operations, net of tax - 3.4
NM Gain on disposal of discontinued operations, net of tax - 7.9 NM
Net earnings from discontinued operations - 11.3 NM Net earnings
$13.3 $45.6 -71% Earnings per common share: Basic Net earnings from
continuing operations $0.15 $0.38 -61% Earnings from discontinued
operations, net of tax - 0.03 NM Gain on disposal of discontinued
operations, net of tax - 0.09 NM Net earnings $0.15 $0.50 -70%
Diluted Net earnings from continuing operations (1) $0.15 $0.38
-61% Earnings from discontinued operations, net of tax - 0.03 NM
Gain on disposal of discontinued operations, net of tax - 0.09 NM
Net earnings $0.15 $0.50 -70% Weighted average number of shares
used for computation of: Basic earnings per share 88.2 91.4 -4%
Diluted earnings per share 88.3 92.0 -4% Effective tax rate (2)
48.4% 27.2% (1) Net earnings from continuing operations of $0.15
per diluted share for the first quarter of 2008 include a loss on
the planned divestiture of Baja boats of $0.07 per diluted share,
other restructuring, exit and impairment charges of $0.09 per
diluted share, and an investment sale gain of $0.10 per diluted
share. Net earnings from continuing operations of $0.38 per diluted
share for the first quarter of 2007 include restructuring, exit and
impairment charges of $0.06 per diluted share and special
tax-related benefits of $0.03 per diluted share. (2) The increase
in the effective tax rate for the first quarter of 2008 was
primarily due to a higher tax rate associated with the investment
sale gain. Brunswick Corporation Selected Financial Information (in
millions) (unaudited) Segment Information Three Months Ended Net
Sales Operating Earnings (1) Operating Margin March 29, March 31, %
March 29, March 31, % March 29, March 31, 2008 2007 Change 2008
2007 Change 2008 2007 Boat $637.8 $699.0 -9% $(14.7) $19.5 NM -2.3%
2.8% Marine Engine 566.0 572.6 -1% 30.9 34.7 -11% 5.5% 6.1% Marine
elimi- nations (119.8) (136.2) - - Total Marine 1,084.0 1,135.4 -5%
16.2 54.2 -70% 1.5% 4.8% Fitness 149.2 145.0 3% 8.1 8.1 0% 5.4%
5.6% Bowling & Billiards 113.6 105.8 7% 0.9 8.3 -89% 0.8% 7.8%
Eliminations - (0.1) - - Corp/Other - - (14.9) (17.6) 15% Total
$1,346.8 $1,386.1 -3% $10.3 $53.0 -81% 0.8% 3.8% (1) Operating
earnings in the first quarter of 2008 include a $22.2 million
pretax restructuring charge, consisting of $13.8 million in the
Boat segment, $1.5 million in the Marine Engine segment, $5.6
million in the Bowling & Billiards segment and $1.3 million in
Corp/Other. Operating earnings in the first quarter of 2007 include
a $7.6 million pretax restructuring charge, consisting of $4.8
million in the Boat segment and $2.8 million in the Marine Engine
segment. Brunswick Corporation Comparative Consolidated Condensed
Balance Sheets (in millions) March 29, December 31, March 31, 2008
2007 2007 (unaudited) (unaudited) Assets Current assets Cash and
cash equivalents $267.3 $331.4 $204.0 Accounts and notes
receivables, net 648.8 572.4 565.5 Inventories Finished goods 494.3
446.7 461.2 Work-in-process 346.0 323.4 338.8 Raw materials 143.9
136.6 145.2 Net inventories 984.2 906.7 945.2 Deferred income taxes
241.9 249.9 223.0 Prepaid expenses and other 57.5 53.9 80.0 Current
assets held for sale - - 30.3 Current assets 2,199.7 2,114.3
2,048.0 Net property 1,034.4 1,052.8 1,016.9 Other assets Goodwill
and other intangibles 921.0 924.5 984.0 Investments and other
long-term assets 256.3 274.0 343.1 Long-term assets held for sale -
- 22.6 Other assets 1,177.3 1,198.5 1,349.7 Total assets $4,411.4
$4,365.6 $4,414.6 Liabilities and shareholders' equity Current
liabilities Short-term debt $0.9 $0.8 $0.6 Accounts payable 488.0
437.3 435.4 Accrued expenses 832.2 858.1 788.1 Current liabilities
held for sale - - 23.3 Current liabilities 1,321.1 1,296.2 1,247.4
Long-term debt 729.1 727.4 725.8 Other long-term liabilities 444.2
449.1 534.0 Long-term liabilities held for sale - - 9.5 Common
shareholders' equity 1,917.0 1,892.9 1,897.9 Total liabilities and
shareholders' equity $4,411.4 $4,365.6 $4,414.6 Supplemental
Information Debt-to-capitalization rate 27.6% 27.8% 27.7% Brunswick
Corporation Comparative Condensed Consolidated Statements of Cash
Flows (in millions) (unaudited) Three Months Ended Revised March
29, March 31, 2008 2007 (1) Cash flows from operating activities
Net earnings $13.3 $45.6 Net earnings from discontinued operations
- 11.3 Net earnings from continuing operations 13.3 34.3
Depreciation and amortization 44.3 41.0 Changes in non-cash current
assets and current liabilities (136.6) (132.2) Impairment charges
8.4 - Income taxes and other, net (3.5) 31.1 Net cash used for
operating activities of continuing operations (74.1) (25.8) Net
cash used for operating activities of discontinued operations -
(22.6) Net cash used for operating activities (74.1) (48.4) Cash
flows from investing activities Capital expenditures (28.3) (39.8)
Acquisitions of businesses, net of cash acquired - (0.1)
Investments (4.1) (5.5) Proceeds from investment sale 40.4 -
Proceeds from sale of property, plant and equipment 1.7 0.3 Other,
net 0.2 12.8 Net cash provided by (used for) investing activities
of continuing operations 9.9 (32.3) Net cash provided by investing
activities of discontinued operations - 30.4 Net cash provided by
(used for) investing activities 9.9 (1.9) Cash flows from financing
activities Net issuances of commercial paper and other short-term
debt 0.3 - Payments of long-term debt including current maturities
(0.2) (0.2) Stock repurchases - (33.4) Stock options exercised -
4.5 Net cash provided by (used for) financing activities of
continuing operations 0.1 (29.1) Net cash used for financing
activities of discontinued operations - - Net cash provided by
(used for) financing activities 0.1 (29.1) Net decrease in cash and
cash equivalents (64.1) (79.4) Cash and cash equivalents at
beginning of period 331.4 283.4 Cash and cash equivalents at end of
period $267.3 $204.0 Free Cash Flow from Continuing Operations Net
cash used for operating activities of continuing operations $(74.1)
$(25.8) Net cash provided by (used for): Capital expenditures
(28.3) (39.8) Proceeds from sale of property, plant and equipment
1.7 0.3 Proceeds from investment sale 40.4 - Other, net 0.2 12.8
Total free cash flow from continuing operations $(60.1) $(52.5) (1)
The company expanded its presentation of the consolidated statement
of cash flows to include net earnings and net earnings from
discontinued operations. Accordingly, the company revised the
quarterly 2007 consolidated statement of cash flows. Net cash flows
from operating, investing and financing activities have not
changed. DATASOURCE: Brunswick Corporation CONTACT: Kathryn
Chieger, Vice President - Corporate and Investor Relations of
Brunswick Corporation, +1-847-735-4612 Web site:
http://www.brunswick.com/
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