EXHIBIT 99.1
[BRUNSWICK LOGO] NEWS RELEASE
Brunswick Corporation 1 N. Field Court Lake Forest, IL 60045
Telephone 847.735.4700 Facsimile 847.735.4750
www.brunswick.com
Release: IMMEDIATE
Contact: Kathryn Chieger
Vice President -- Corporate and Investor Relations
Phone: (847) 735-4612
BRUNSWICK REPORTS EPS OF $0.22 IN FIRST QUARTER
LAKE FOREST, ILL., APRIL 24, 2003 -- Brunswick Corporation (NYSE: BC)
announced today a 47 percent increase in diluted earnings per share in the first
quarter of 2003 to $0.22, in line with previously announced expectations. This
compares with $0.15 per diluted share for the first quarter of 2002, before the
cumulative effect of an accounting change.
"We are very pleased with our first quarter performance," commented
Brunswick Chairman and Chief Executive Officer George W. Buckley. "Sales
advanced in our marine engine, pleasure boat and fitness equipment businesses,
where we are seeing the results of our efforts to develop and introduce new
products and technologies take hold. Recent acquisitions also contributed to the
sales gain. The growth in marine and fitness sales more than offset a decline in
our bowling and billiards sales for the quarter."
The company reported a 50 percent improvement in net earnings on an 8
percent sales gain and a 25 percent increase in operating earnings in the first
quarter of 2003. "Our good performance was notable given the challenging
geopolitical, economic and market environment," Buckley added. "We also
continued to maintain excellent liquidity by keeping our eye on the
fundamentals, including efficient inventory management, and we are in a solid
position to act on emerging opportunities."
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APRIL 24, 2003
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FIRST-QUARTER RESULTS
For the quarter ended March 31, 2003, the company had net sales of
$934.5 million, up 8 percent from $866.7 million a year earlier. Operating
earnings rose to $38.0 million, up 25 percent from $30.3 million, and operating
margins reached 4.1 percent versus 3.5 percent a year ago.
For the first quarter of 2003, net earnings totaled $19.8 million, or
$0.22 per diluted share. In the year-ago first quarter, the company had net
earnings of $13.2 million, or $0.15 per diluted share, before the cumulative
effect of the adoption of Financial Accounting Standards Board SFAS No. 142,
"Goodwill and Other Intangible Assets." Adoption of this accounting standard
resulted in a non-cash, after-tax charge of $25.1 million, or $0.28 per diluted
share, in the first quarter of 2002. The first quarter of 2003 also benefited
from higher joint venture and interest income compared with the year-ago
quarter.
MARINE ENGINE SEGMENT
The Marine Engine segment, consisting of the Mercury Marine Group and
Brunswick New Technologies (BNT), reported net sales of $412.8 million in the
first quarter of 2003, an 11 percent increase compared with $370.4 million in
the year-ago quarter. The favorable currency effects of a weakened dollar, and
the full effect of recent acquisitions, most notably from BNT, largely drove the
sales increase for the segment. Excluding these factors, sales were up slightly
versus the year-ago quarter.
Operating earnings in the quarter declined to $19.3 million versus
$24.7 million a year ago. Operating margins were 4.7 percent compared with 6.7
percent in the first quarter of 2002.
"More than half of the margin decline was attributed to higher pension,
health care and insurance costs," Buckley explained. "Engine segment operating
margins also were adversely affected by a shift in mix from classic two-stroke
engines to lower-margin four-stroke engines, poor weather during the quarter
that led to lower sales of
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APRIL 24, 2003
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higher-margin parts and accessories, and unabsorbed costs due to production
slowdowns to keep inventories at appropriate levels."
"While our initial expectations were that marine retail would be
relatively flat for the year," Buckley said, "the retail markets have gotten off
to a slower-than-anticipated start. This was due to the timing of the war in
Iraq and the resulting low consumer confidence coming just as the boating season
was beginning. Further, competition in the marine engine segment, has also
intensified during the quarter with some manufacturers offering deep discounts,"
Buckley said.
"With the widest array of engines among all manufacturers, nearly 65
years of uninterrupted service to our dealers and customers, and continuing
investments in new products and technologies, Mercury is well poised for the
future," Buckley said. "We believe initiatives such as Project `X', our
game-changing, high-horsepower four-stroke outboard engine due to arrive in time
for next year's boating season, and new integrated marine electronics products
will further extend our leadership."
BOAT SEGMENT
The Brunswick Boat Group comprises the Boat segment and includes the
Sea Ray, Bayliner, Maxum, Sealine, Hatteras, Boston Whaler, Meridian, Trophy,
Baja and Princecraft boat brands. The Boat segment reported net sales for the
first quarter of $378.6 million, up 7 percent compared with $353.9 million in
the year-ago quarter. Operating earnings for the quarter rose to $14.1 million,
up from $3.3 million recorded during the corresponding period last year.
Operating margins in the quarter showed good progress, coming in at 3.7 percent
versus 0.9 percent for the year-ago period.
"The improvement in operating margins is a testament to our Boat Group
continuing to do a better job of leveraging top-line growth through operating
efficiencies and other improvements," Buckley said. "As for sales, we saw good
gains at Sea Ray, which experienced more normal wholesale activity this year
compared with the year-ago quarter when pipeline inventories were being
adjusted. We are particularly
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APRIL 24, 2003
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encouraged by the warm acceptance of our many new products and innovations
across all 10 of our premier boat brands."
"Sales of small boats such as runabouts, deck boats and cruisers have
improved, led by the Bayliner 175 that we introduced last year. This boat has
helped re-establish Bayliner as the leader in family boating. An entry-level
boat, the Bayliner 175 offers an engine and trailer package with a suggested
retail price of $9,995," Buckley said. "The market still remains challenging for
larger boats."
FITNESS SEGMENT
The Fitness segment is comprised of the Life Fitness Division, which
manufactures and sells Life Fitness, Hammer Strength and ParaBody fitness
equipment, and operates Omni Fitness retail stores. Segment sales in the first
quarter of 2003 totaled $119.2 million, up 14 percent from $105.0 million in the
year-ago quarter. Operating earnings rose 40 percent to $12.5 million from $8.9
million, and operating margins were 10.5 percent and 8.5 percent in the first
quarters of 2003 and 2002, respectively.
"Life Fitness' sales growth continued to outpace the industry as we
enjoyed strong results in all market segments, including commercial, consumer
and international, where we continue to gain market share," Buckley noted. "We
expect this momentum to continue, fueled by some 50 new products that Life
Fitness intends to roll out this year."
"Many of these products boast a new and exciting contemporary design
and colors along with enhanced software programming to improve user comfort and
workout effectiveness," Buckley explained. "Several products have already been
introduced and embraced by the marketplace, such as our new commercial
treadmills, our new commercial strength systems and the new gym systems for home
use."
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APRIL 24, 2003
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"Increasing market share and growth opportunities in Europe also have
led to a joint venture agreement with a leading Hungarian manufacturer to begin
making certain Life Fitness products in that country as we continue to seek
better ways to serve local markets," Buckley said.
Life Fitness also strives to be the best-cost producer of fitness
equipment. Consequently, in an effort to improve operating efficiencies and
rationalize its existing capacity, Life Fitness will close its Paso Robles,
Calif., plant by year end and consolidate its strength equipment manufacturing
into its Ramsey, Minn., facility.
"This action will better leverage existing manufacturing capacity and
the advanced technology of the Ramsey facility and make Life Fitness more
competitive in the global fitness marketplace," Buckley explained. "This move
underscores Life Fitness' focus on continued manufacturing and operating
efficiencies as the global fitness market continues to expand."
BOWLING & BILLIARDS SEGMENT
The Bowling & Billiards segment is comprised of the Brunswick retail
bowling centers, and bowling and billiards products. Segment sales in the first
quarter of 2003 totaled $85.1 million, down 6 percent compared with $90.2
million in the year-ago quarter. Operating earnings were $8.4 million in the
quarter compared with $8.5 million in the year-ago quarter. Despite the drop in
sales, segment operating margins improved to 9.9 percent in the first quarter of
2003, up from 9.4 percent in the first quarter a year ago.
"Although consumer economic weakness had an adverse effect,
particularly on our billiards sales, operating margins for the segment improved
due to continuing good work to improve efficiencies throughout those
businesses," Buckley said.
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APRIL 24, 2003
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LOOKING AHEAD
Buckley noted that the uncertain economy, the situation in the Middle
East and SARS continue to cloud the outlook for the remainder of the year.
"Though we had overall good results in the first quarter, we must nevertheless
remain guarded and vigilant as to how our markets will react to the economic and
geopolitical picture," Buckley explained. "Indeed, the war with Iraq, and its
subsequent effects on consumers and retail activity, came at a difficult time
for the marine industry, which is traditionally the most active in the second
quarter. It remains to be seen how markets will react as the war winds down.
Given that, we believe our earnings per share for the year will be in the range
of $1.40 to $1.50, compared with the $1.14 reported for 2002. This would
indicate EPS for the second quarter of 2003 of between $0.50 and $0.55, compared
with $0.51 a year ago."
"Absent any foreseeable relief from the economy and other factors, we
will continue to concentrate on the things we can control to keep our
performance on track, sticking with what we know and an approach to the market
that has proved successful in the face of adversity," Buckley added. "We will
execute our strategic plan: reduce costs to improve our competitive position,
introduce a steady stream of innovative products, enhance our marketing and
brand building efforts, improve our distribution channels, focus on our
customers' needs, and develop our people to strengthen our entire organization."
FORWARD-LOOKING STATEMENTS
Certain statements in this press 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 release. These risks
include, but are not limited to, the impact of the war in Iraq and SARS on the
global economy; the effect of a weak economy and stock market on consumer
confidence and thus on the demand for marine, fitness, billiards
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APRIL 24, 2003
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and bowling products; the impact of interest rates, fuel prices and weather
conditions on demand for marine products; the ability to maintain effective
distribution; competitive pricing pressures; the ability to maintain product
quality and service standards expected by our customers; the ability to
successfully integrate acquisitions; the financial strength of dealers and
independent boat builders; the ability to successfully manage pipeline
inventories; adverse foreign economic conditions; shifts in currency exchange
rates; the effect of weak financial markets on pension expense and funding
levels; the ability to complete environmental remediation efforts and resolve
claims and litigation at the cost estimated; the success of global sourcing and
supply chain management initiatives; the company's ability to develop and
produce new products; new and competing technologies; and imports from Asia and
increased competition from Asian competitors. Additional factors are included in
the company's Annual Report on Form 10-K for 2002.
Headquartered in Lake Forest, Ill., Brunswick Corporation is a
manufacturer and marketer of leading consumer brands including Mercury and
Mariner outboard engines; Mercury MerCruiser sterndrives and inboard engines;
Teignbridge propellers; MotoTron electronic controls; Northstar marine
electronics; IDS dealer management systems; Sea Ray, Bayliner, Maxum, Hatteras,
Meridian and Sealine pleasure boats; Baja high-performance boats; Boston Whaler
and Trophy offshore fishing boats; Princecraft fishing, deck and pontoon boats;
Life Fitness, Hammer Strength and ParaBody fitness equipment; Brunswick bowling
centers, equipment and consumer products; and Brunswick billiards tables.
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APRIL 24, 2003
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BRUNSWICK CORPORATION
COMPARATIVE CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share data)
(unaudited)
QUARTER ENDED MARCH 31
-------------------------------------
2003 2002 % Change
------ ------ --------
NET SALES $934.5 $866.7 8%
Cost of sales 725.7 675.3
Selling, general and administrative expense 170.8 161.1
------ ------
OPERATING EARNINGS 38.0 30.3 25%
Interest expense (10.7) (11.0) -3%
Other income 3.6 1.3
------ ------
EARNINGS BEFORE INCOME TAXES 30.9 20.6 50%
Income tax provision 11.1 7.4
------ ------
EARNINGS BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 19.8 13.2 50%
Cumulative effect of change in accounting principle, net of tax (1) - (25.1)
------ ------
NET EARNINGS (LOSS) $ 19.8 ($11.9) NM
====== ======
BASIC EARNINGS PER COMMON SHARE:
Earnings before cumulative effect of change in accounting principle $0.22 $0.15 47%
Cumulative effect of change in accounting principle (1) - (0.28)
------ ------
Net earnings (loss) $ 0.22 ($0.13) NM
====== ======
DILUTED EARNINGS PER COMMON SHARE:
Earnings before cumulative effect of change in accounting principle $ 0.22 $0.15 47%
Cumulative effect of change in accounting principle (1) - (0.28)
------ ------
Net earnings (loss) $ 0.22 ($0.13) NM
====== ======
AVERAGE SHARES USED FOR COMPUTATION OF:
Basic earnings per share 90.6 88.7 2%
Diluted earnings per share 90.6 89.7 1%
EFFECTIVE TAX RATE 36.0% 36.0%
(1) The Company adopted SFAS No. 142, effective Jan. 1, 2002
NM = Not Meaningful
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BRUNSWICK CORPORATION
SELECTED FINANCIAL INFORMATION
(in millions)
(unaudited)
SEGMENT INFORMATION
QUARTER ENDED MARCH 31
-----------------------------------------------------------------------------
NET SALES OPERATING EARNINGS OPERATING MARGIN
---------------------------- ------------------------ ----------------
% %
2003 2002 Change 2003 2002 Change 2003 2002
------ ------ ------ ------ ------ ------ ----- ----
MARINE ENGINE $412.8 $370.4 11% $ 19.3 $ 24.7 -22% 4.7% 6.7%
BOAT 378.6 353.9 7% 14.1 3.3 NM 3.7% 0.9%
MARINE ELIMINATIONS (61.2) (52.8) - -
------ ------ ------ ------
TOTAL MARINE 730.2 671.5 9% 33.4 28.0 19% 4.6% 4.2%
FITNESS 119.2 105.0 14% 12.5 8.9 40% 10.5% 8.5%
BOWLING & BILLIARDS 85.1 90.2 -6% 8.4 8.5 -1% 9.9% 9.4%
CORPORATE/OTHER - - (16.3) (15.1) 8%
------ ------ ------ ------
TOTAL $934.5 $866.7 8% $ 38.0 $ 30.3 25% 4.1% 3.5%
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NM = Not Meaningful
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APRIL 24, 2003
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BRUNSWICK CORPORATION
COMPARATIVE CONSOLIDATED BALANCE SHEETS
(in millions)
MARCH 31, December 31, March 31,
2003 2002 2002
----------- ----------- -----------
(unaudited) (unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 280.0 $ 351.4 $ 143.6
Accounts and notes receivables, net 441.7 401.4 432.1
Inventories
Finished goods 293.4 272.5 294.9
Work-in-process 209.8 201.6 185.2
Raw materials 64.5 72.8 59.1
-------- -------- --------
Net inventories 567.7 546.9 539.2
-------- -------- --------
Prepaid income taxes 302.6 305.1 318.2
Prepaid expenses and income tax refunds receivable 43.4 55.4 39.6
-------- -------- --------
CURRENT ASSETS 1,635.4 1,660.2 1,472.7
NET PROPERTY 777.8 792.7 787.5
OTHER ASSETS
Goodwill and other intangibles 577.9 570.3 568.9
Investments and other long-term assets 382.2 383.9 356.6
-------- -------- --------
TOTAL ASSETS $3,373.3 $3,407.1 $3,185.7
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt $ 30.7 $ 28.9 $ 40.8
Accounts payable 281.0 291.2 214.5
Accrued expenses and accrued income taxes 634.5 685.5 631.3
-------- -------- --------
CURRENT LIABILITIES 946.2 1,005.6 886.6
LONG-TERM DEBT 588.1 589.5 599.1
DEFERRED ITEMS 717.2 710.2 561.0
COMMON SHAREHOLDERS' EQUITY 1,121.8 1,101.8 1,139.0
-------- -------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $3,373.3 $3,407.1 $3,185.7
======== ======== ========
SUPPLEMENTAL INFORMATION
Debt-to-capitalization rate 35.6% 35.9% 36.0%
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BRUNSWICK CORPORATION
COMPARATIVE CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
QUARTER ENDED MARCH 31
-----------------------
2003 2002
------- ------
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss) $ 19.8 $(11.9)
Depreciation and amortization 35.6 37.5
Change in accounting principle, net of tax - 25.1
Changes in noncash current assets and current liabilities (135.3) (50.0)
Income taxes and other, net 37.7 32.0
------- ------
NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES (42.2) 32.7
------- ------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (19.9) (16.3)
Investments (11.9) -
Acquisitions of businesses, net of cash acquired - (8.8)
Other, net - 2.4
------- ------
NET CASH USED FOR INVESTING ACTIVITIES (31.8) (22.7)
------- ------
CASH FLOWS FROM FINANCING ACTIVITIES
Net issuances of commercial paper and other
short-term debt 2.2 -
Stock options exercised 0.4 25.1
------- ------
NET CASH PROVIDED BY FINANCING ACTIVITIES 2.6 25.1
------- ------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (71.4) 35.1
CASH AND CASH EQUIVALENTS AT JANUARY 1 351.4 108.5
------- ------
CASH AND CASH EQUIVALENTS AT MARCH 31 $ 280.0 $143.6
======= ======
SUPPLEMENTAL INFORMATION
FREE CASH FLOW
NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES $ (42.2) $ 32.7
NET CASH PROVIDED BY (USED FOR):
Capital expenditures (19.9) (16.3)
Investments (11.9) -
Other, net - 2.4
------- ------
TOTAL FREE CASH FLOW $ (74.0) $ 18.8
======= ======
Free cash flow is defined as cash flow from operating and investing activities,
excluding acquisition and financing activities.
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