LAKE FOREST, Ill.,
"Results for the quarter were driven by our Fitness equipment and Bowling
& Billiards businesses, which performed well in their seasonally strong
period," explained Brunswick Chairman and Chief Executive Officer Dustan E.
McCoy. "Earnings from these businesses, along with contributions from our
Marine Engine segment offset operating losses reported in the Boat segment.
The decline in retail demand for marine products in the
"Further, our balance sheet remained healthy with debt-to-total capital at
27.8 percent and cash of
Fourth Quarter Results
For the quarter ended
Net earnings from continuing operations were
During the quarter, Brunswick acquired 500,000 shares of its common stock
for
For the fourth quarter in 2007, Brunswick reported a net loss from
discontinued operations of
2007 Results
For the year ended
Net earnings from continuing operations for 2007 were
For 2007, largely due to a gain on the sale of its Brunswick New
Technologies unit, Brunswick reported net earnings from discontinued
operations of
Boat Segment
The Brunswick Boat Group comprises the Boat segment and includes 19 boat
brands, as well as a marine parts and accessories business. The Boat segment
reported net sales for the fourth quarter of 2007 of
For 2007, Boat segment sales were down 6 percent to
For the year, Boat segment sales benefited from double-digit increases in
both its parts and accessories business and sales outside of the
"In 2007, the U.S. boat market continued to be very soft, and preliminary numbers indicate the industry was down about 9 percent in units at retail for the year," McCoy explained. "To address weak retail demand and to maintain the health of our dealer network, we focused on reducing the pipeline, especially for fiberglass boats. We produced up to 20 percent fewer fiberglass boats in 2007 than in 2006. Reduced unit production also meant lower fixed-cost absorption, which, along with increased promotional spending to spur retail demand, had an adverse effect on fourth quarter and full-year operating earnings."
"We also continued to focus on establishing a smaller, more flexible manufacturing footprint in the U.S., closing four plants in 2007. While costs associated with realigning manufacturing adversely affect our operating earnings, we will continue to seek opportunities to better leverage our manufacturing capacity in the coming year," McCoy said.
Marine Engine Segment
The Marine Engine segment, consisting of the Mercury Marine Group,
reported net sales of
For the full year, Marine Engine segment net sales were up 4 percent to
"For the quarter and the year, double-digit sales gains from markets
outside the U.S. fueled growth in the Marine Engine segment," McCoy said.
"Mercury's international sales totaled nearly
"Mercury Marine continues to do a good job of dealing with the continuing
weak marine retail market in the
Fitness Segment
The Fitness segment is comprised of the Life Fitness Division, which
manufactures and sells Life Fitness, Hammer Strength and ParaBody fitness
equipment. Segment net sales in the fourth quarter of 2007 totaled
For 2007, the Fitness segment reported net sales of
"Life Fitness capped off a very successful year with solid growth in both sales and operating earnings during the fourth quarter of 2007, seasonally the unit's strongest quarter of the year," McCoy said. "New products in both the consumer and commercial segments helped spur sales momentum during the quarter as well as the year. For 2007, operating earnings and operating margins at Life Fitness were under pressure due to higher spending for marketing and research and development to support new product introductions, the shift in our mix to lower-margin strength equipment and competitive pricing in international markets."
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 net sales in the fourth quarter of 2007 totaled
For 2007, the segment reported net sales of
"For the quarter, the segment saw sales gains from both our retail bowling
centers and bowling products," McCoy explained. "Operating earnings were
aided by cost reductions at both bowling products and billiards, as we begin
to more fully realize savings from moving manufacturing of our bowling balls
and coin-operated tables to
"For the quarter and the year, we continued to see solid performance from both our Brunswick Zones and the Brunswick Zone XL centers," McCoy said. "We opened three new Zone XL centers during 2007, with four more locations planned for 2008. Our plans are to accelerate the growth of the Brunswick Zone XL concept going forward."
In Conclusion
"While 2007 was a difficult year, we continue to fund our operations and pursue our strategic imperatives, while improving our cash flow. Our balance sheet remains strong, and we will continue to manage our business well during these current economic conditions," McCoy concluded.
Forward-Looking Statements
Certain statements in this news release are forward looking as defined in
the Private Securities Litigation Reform Act of 1995. These statements
involve certain risks and uncertainties that may cause actual results to
differ materially from expectations as of the date of this news release.
These risks include, but are not limited to: the effect of (i) the amount of
disposable income available to consumers for discretionary purchases, and (ii)
the level of consumer confidence on the demand for marine, fitness, billiards
and bowling equipment and products; the effect of higher product prices due to
technology changes and added product features and components on consumer
demand; the effect of competition from other leisure pursuits on the level of
participation in boating, fitness, bowling and billiards activities; the
effect of interest rates and fuel prices on demand for marine products; the
ability to successfully manage pipeline inventories; the financial strength of
dealers, distributors and independent boat builders; the ability to maintain
mutually beneficial relationships with dealers, distributors and independent
boat builders; the ability to maintain effective distribution and to develop
alternative distribution channels without disrupting incumbent distribution
partners; the ability to maintain market share, particularly in high-margin
products; the success of new product introductions; the success of marketing
and cost management programs; the ability to maintain product quality and
service standards expected by customers; competitive pricing pressures; the
ability to develop cost-effective product technologies that comply with
regulatory requirements; the ability to transition and ramp up certain
manufacturing operations within time and budgets allowed; the ability to
successfully develop and distribute products differentiated for the global
marketplace; shifts in currency exchange rates; adverse foreign economic
conditions; the success of global sourcing and supply chain initiatives; the
ability to obtain components and raw materials from suppliers; increased
competition from Asian competitors; competition from new technologies; the
ability to complete environmental remediation efforts and resolve claims and
litigation at the cost estimated; the effect of weather conditions on demand
for marine products and retail bowling center revenues; and the ability to
successfully integrate acquisitions. Additional factors are included in the
company's Annual Report on Form 10-K for 2006 and Quarterly Report on Form
10-Q for the quarter ended
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,
Brunswick Corporation Comparative Consolidated Statements of Income (in millions, except per share data) Three Months Ended December 31 2007 2006 % Change (unaudited) Net sales $1,436.0 $1,370.8 5% Cost of sales 1,180.0 1,102.2 7% Selling, general and administrative expense 207.5 202.5 2% Research and development expense 34.3 35.6 -4% Impairment charges - - NM Operating earnings 14.2 30.5 -53% Equity earnings 4.9 0.2 NM Other income (expense), net 0.5 0.3 67% Earnings before interest and income taxes 19.6 31.0 -37% Interest expense (12.6) (17.0) -26% Interest income 3.1 5.6 -45% Earnings before income taxes 10.1 19.6 -48% Income tax (benefit) provision (2.0) (24.6) Net earnings from continuing operations 12.1 44.2 -73% Discontinued operations: Earnings (loss) from discontinued operations, net of tax (6.4) (97.4) 93% Gain on disposal of discontinued operations, net of tax 1.1 - NM Net earnings (loss) from discontinued operations (5.3) (97.4) 95% Net earnings (loss) $6.8 $(53.2) NM Earnings per common share: Basic Net earnings from continuing operations $0.14 $0.47 -70% Net earnings (loss) from discontinued operations (0.06) (1.05) 94% Net earnings (loss) $0.08 $(0.58) NM Diluted Net earnings from continuing operations $0.14 $0.47 -70% Net earnings (loss) from discontinued operations (0.06) (1.04) 94% Net earnings (loss) $0.08 $(0.57) NM Weighted average number of shares used for computation of: Basic earnings per share 88.5 92.3 -4% Diluted earnings per share 88.6 93.0 -5% Effective tax rate -19.8% NM Supplemental earnings per common share information Diluted net earnings from continuing operations $0.14 $0.47 -70% Special tax items (0.05) (0.25) NM Diluted net earnings from continuing operations, as adjusted $0.09 $0.22 -59% Diluted net earnings (loss) from discontinued operations $(0.06) $(1.04) 94% Gain on disposal of discontinued operations (0.01) - NM Impairment charges on assets held for sale - 0.92 NM Diluted net earnings (loss) from discontinued operations, as adjusted $(0.07) $(0.12) 42% Brunswick Corporation Comparative Consolidated Statements of Income (in millions, except per share data) Years Ended December 31 2007 2006 % Change (unaudited) Net sales $5,671.2 $5,665.0 0% Cost of sales 4,528.1 4,439.3 2% Selling, general and administrative expense 835.0 752.3 11% Research and development expense 134.5 132.2 2% Impairment charges 66.4 - NM Operating earnings 107.2 341.2 -69% Equity earnings 21.3 14.9 43% Other income (expense), net 7.8 (1.9) NM Earnings before interest and income taxes 136.3 354.2 -62% Interest expense (52.3) (60.5) -14% Interest income 8.7 16.0 -46% Earnings before income taxes 92.7 309.7 -70% Income tax provision 13.1 46.5 Net earnings from continuing operations 79.6 263.2 -70% Discontinued operations: Earnings (loss) from discontinued operations, net of tax 2.2 (129.3) NM Gain on disposal of discontinued operations, net of tax 29.8 - NM Net earnings (loss) from discontinued operations 32.0 (129.3) NM Net earnings $111.6 $133.9 -17% Earnings per common share: Basic Net earnings from continuing operations $0.88 $2.80 -69% Net earnings (loss) from discontinued operations 0.36 (1.38) NM Net earnings $1.24 $1.42 -13% Diluted Net earnings from continuing operations $0.88 $2.78 -68% Net earnings (loss) from discontinued operations 0.36 (1.37) NM Net earnings $1.24 $1.41 -12% Weighted average number of shares used for computation of: Basic earnings per share 89.8 94.0 -4% Diluted earnings per share 90.2 94.7 -5% Effective tax rate 14.1% 15.0% Supplemental earnings per common share information Diluted net earnings from continuing operations $0.88 $2.78 -68% Impairment charges, net of tax 0.46 - NM Special tax items (0.11) (0.50) NM Diluted net earnings from continuing operations, as adjusted $1.23 $2.28 -46% Diluted net earnings (loss) from discontinued operations $0.36 $(1.37) NM Gain on disposal of discontinued operations (0.34) - NM Impairment charges on assets held for sale - 0.91 NM Diluted net earnings (loss) from discontinued operations, as adjusted $0.02 $(0.46) NM Brunswick Corporation Selected Financial Information (in millions) (unaudited) Segment Information Three Months Ended December 31 Operating Net Sales Earnings (1) Operating Margin % % 2007 2006 Change 2007 2006 Change 2007 2006 Boat $645.2 $664.5 -3% $(29.9) $9.3 NM -4.6% 1.4% Marine Engine 548.6 511.3 7% 21.2 3.8 NM 3.9% 0.7% Marine eliminations (95.6) (117.8) - - Total Marine 1,098.2 1,058.0 4% (8.7) 13.1 NM -0.8% 1.2% Fitness 214.5 192.8 11% 32.4 28.9 12% 15.1% 15.0% Bowling & Billiards 123.3 120.1 3% 11.1 5.6 98% 9.0% 4.7% Eliminations - (0.1) - - Corp/Other - - (20.6) (17.1) -20% Total $1,436.0 $1,370.8 5% $14.2 $30.5 -53% 1.0% 2.2% Years Ended December 31 Operating Net Sales Earnings (2) Operating Margin % % 2007 2006 Change 2007 2006 Change 2007 2006 Boat (3) $2,690.9 $2,864.4 -6% $(81.4) $135.6 NM -3.0% 4.7% Marine Engine 2,357.5 2,271.3 4% 183.7 193.8 -5% 7.8% 8.5% Marine eliminations (477.6) (521.8) - - Total Marine 4,570.8 4,613.9 -1% 102.3 329.4 -69% 2.2% 7.1% Fitness 653.7 593.1 10% 59.7 57.8 3% 9.1% 9.7% Bowling & Billiards 446.9 458.3 -2% 16.5 22.1 -25% 3.7% 4.8% Eliminations (0.2) (0.3) - - Corp/Other - - (71.3) (68.1) -5% Total $5,671.2 $5,665.0 0% $107.2 $341.2 -69% 1.9% 6.0% (1) Operating earnings in the fourth quarter of 2007 include an $8.8 million pre-tax restructuring charge, consisting of $6.0 million in the Boat segment and $2.8 million in the Bowling & Billiards segment. Operating earnings in the fourth quarter of 2006 include a $17.1 million pre-tax restructuring charge, consisting of $4.2 million in the Boat segment, $9.5 million in the Marine Engine segment, $2.7 million in the Bowling & Billiards segment and $0.7 million in Corp/Other. (2) Operating earnings in 2007 include a $22.2 million pre-tax restructuring charge, consisting of $15.9 million in the Boat segment, $3.4 million in the Marine Engine segment, $2.8 million in the Bowling & Billiards segment and $0.1 million in Corp/Other. Operating earnings in 2006 include a $17.1 million pre-tax restructuring charge, consisting of $4.2 million in the Boat segment, $9.5 million in the Marine Engine segment, $2.7 million in the Bowling & Billiards segment and $0.7 million in Corp/Other. (3) Boat segment operating earnings for the year ended December 31, 2007, include a $66.4 million impairment charge recorded in the third quarter of 2007. Brunswick Corporation Comparative Condensed Consolidated Balance Sheets (in millions) December 31, December 31, 2007 2006 (unaudited) Assets Current assets Cash and cash equivalents $331.4 $283.4 Accounts and notes receivables, net 572.4 492.3 Inventories Finished goods 446.7 410.4 Work-in-process 323.4 308.4 Raw materials 136.6 143.1 Net inventories 906.7 861.9 Deferred income taxes 249.9 249.9 Prepaid expenses and other 53.9 85.4 Current assets held for sale - 105.5 Current assets 2,114.3 2,078.4 Net property 1,052.8 1,014.9 Other assets Goodwill 678.9 663.6 Other intangibles, net 245.6 322.6 Investments and other long-term assets 274.0 338.0 Long-term assets held for sale - 32.8 Other assets 1,198.5 1,357.0 Total assets $4,365.6 $4,450.3 Liabilities and shareholders' equity Current liabilities Short-term debt $0.8 $0.7 Accounts payable 437.3 448.6 Accrued expenses 858.1 748.9 Current liabilities held for sale - 95.0 Current liabilities 1,296.2 1,293.2 Long-term debt 727.4 725.7 Other long-term liabilities 449.1 550.9 Long-term liabilities held for sale - 8.7 Common shareholders' equity 1,892.9 1,871.8 Total liabilities and shareholders' equity $4,365.6 $4,450.3 Supplemental information Debt-to-capitalization rate 27.8% 28.0% Brunswick Corporation Comparative Condensed Consolidated Statements of Cash Flows (in millions) Years Ended December 31 Revised 2007 2006 (1) (unaudited) Cash flows from operating activities Net earnings $111.6 $133.9 Less: net earnings (loss) from discontinued operations 32.0 (129.3) Net earnings from continuing operations 79.6 263.2 Depreciation and amortization 180.1 167.3 Changes in noncash current assets and current liabilities 3.5 (92.8) Impairment charges 66.4 - Income taxes and other, net 14.5 13.3 Net cash provided by operating activities of continuing operations 344.1 351.0 Net cash used for operating activities of discontinued operations (29.8) (35.7) Net cash provided by operating activities 314.3 315.3 Cash flows from investing activities Capital expenditures (207.7) (205.1) Acquisitions of businesses, net of cash acquired (6.2) (86.2) Investments 4.1 6.1 Proceeds from the sale of property, plant and equipment 10.1 7.2 Other, net 25.6 (0.4) Net cash used for investing activities of continuing operations (174.1) (278.4) Net cash provided by (used for) investing activities of discontinued operations 75.6 (5.5) Net cash used for investing activities (98.5) (283.9) Cash flows from financing activities Net issuances (repayments) of commercial paper and other short-term debt - (0.2) Net proceeds from issuance of long-term debt 0.7 250.3 Payments of long-term debt including current maturities (0.9) (251.1) Cash dividends paid (52.6) (55.0) Stock repurchases (125.8) (195.6) Stock options exercised 10.8 15.9 Net cash used for financing activities of continuing operations (167.8) (235.7) Net cash used for financing activities of discontinued operations - - Net cash used for financing activities (167.8) (235.7) Net increase (decrease) in cash and cash equivalents 48.0 (204.3) Cash and cash equivalents at beginning of period 283.4 487.7 Cash and cash equivalents at end of period $331.4 $283.4 Free cash flow from continuing operations Net cash provided by operating activities of continuing operations $344.1 $351.0 Net cash provided by (used for): Capital expenditures (207.7) (205.1) Proceeds from the sale of property, plant and equipment 10.1 7.2 Other, net 25.6 (0.4) Free cash flow from continuing operations $172.1 $152.7 (1) For the year ended December 31, 2007, the Company expanded its presentation of the consolidated statement of cash flows to include net earnings and net earnings (loss) from continuing operations. Accordingly, the Company revised the 2006 consolidated statement of cash flows. Net cash flows from operating, investing and financing activities have not changed.
SOURCE Brunswick Corporation