Corporate and Financial
Brunswick Assesses Impact of Fuel Prices, Consumer Confidence and Hurricane
LAKE FOREST, Ill., Sept 20, 2005 /PRNewswire-FirstCall via COMTEX News Network/ -- Brunswick
Corporation (NYSE: BC) announced today that the combined effects of high fuel
prices, lower consumer confidence and Hurricane Katrina could contribute to a
slowing of the economy just as the marine industry moves into the off season.
"Retail demand for our marine products has remained robust relative to
last year with several of our boat brands registering double-digit retail
growth in July and August. Further, our pipeline inventories remain at
healthy levels," said Brunswick Chairman and Chief Executive Officer George W.
Buckley. "As we go into the marine off season when retail activity tapers
off, however, our financial results are driven primarily by demand at the
wholesale level, which is affected by confidence in the economy. We are
concerned that if high fuel prices, the drop in consumer confidence and
Katrina lead to slower overall economic conditions, then wholesale demand for
marine products could be affected. We believe that in this confusing economic
environment, it is prudent for us to be cautious and proactively manage
pipeline inventories down even further still. Therefore, we intend to cut
production rates to position ourselves and our marine customers in the best
possible way entering the marine off season. Should the economy not be
impacted by this confluence of events, or in fact accelerate, we will readjust
production rates to meet stronger wholesale demand. In addition, we have
several new products scheduled to launch in the coming months and healthy
pipelines permit these products to reach the marketplace in a rapid and
effective fashion."
"Given this developing view, we have tempered the assumptions behind our
previous earnings estimates," Buckley added. "We continue to see strong
performances from our fitness, electronics and bowling and billiards
businesses, which are heading into their stronger seasons. We will also
benefit from a more favorable tax structure brought on by investments in our
global manufacturing footprint. Lower sales and fixed cost absorption in our
marine businesses, however, will temporarily offset those benefits. Most
recently, we had estimated that diluted earnings per share for 2005 would fall
in the range of $3.30 to $3.40. This is compared with $2.67 per diluted share
reported a year ago, which excludes $0.10 from a nonrecurring tax benefit
recorded in the third quarter of 2004. Our current thinking is that a range
of $3.20 to $3.25 is more appropriate under the circumstances. For the
quarter ending Sept. 30, 2005, we are estimating diluted earnings per share in
the range of $0.70 to $0.74, which compares to $0.65 in the year-ago third
quarter, excluding the previously mentioned $0.10 tax benefit in 2004." The
company noted that estimates for 2005 exclude a $0.32 per diluted share gain
on the sale of securities recorded in the first quarter of the year, as well
as anticipated tax adjustments, which are estimated to be in the same order of
magnitude as the $0.10 per diluted share tax benefit recorded in the third
quarter of 2004.
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 filing. These
risks include, but are not limited to: the effect of a weak economy and stock
market on consumer confidence and thus the demand for marine, fitness,
billiards and bowling equipment and products; competitive pricing pressures;
the success of new product introductions; the ability to maintain market share
in high-margin products; competition from new technologies; imports from Asia
and increased competition from Asian competitors; the ability to obtain
component parts from suppliers; the ability to maintain effective
distribution; the financial strength of dealers, distributors and independent
boat builders; the ability to transition and ramp up certain manufacturing
operations within the time and budgets allowed; the ability to maintain
product quality and service standards expected by our customers; the ability
to successfully manage pipeline inventories; the success of global sourcing
and supply chain initiatives; the ability to successfully integrate
acquisitions; the success of marketing and cost management programs; the
ability to develop product technologies that comply with regulatory
requirements; the ability to complete environmental remediation efforts and
resolve claims and litigation at the cost estimated; the impact of weather
conditions on demand for marine products and retail bowling center revenues;
shifts in currency exchange rates; adverse foreign economic conditions; and
the impact of interest rates and fuel prices on demand for marine products.
Additional factors are included in the company's Annual Report on Form 10-K
for 2004 and Quarterly Report on Form 10-Q for the quarter ended June 30,
2005.
About Brunswick
Headquartered in Lake Forest, Ill., Brunswick Corporation endeavors to
instill "Genuine Ingenuity" 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; Northstar marine electronics; Navman marine and GPS-based
products; IDS dealer management systems; Albemarle, Arvor, Baja, Bayliner,
Bermuda, Boston Whaler, Crestliner, HarrisKayot, Hatteras, Lowe, Lund, Maxum,
Meridian, Ornvik, Palmetto, Princecraft, Quicksilver, Savage, Sea Boss, Sea
Pro, Sea Ray, Sealine, Triton, Trophy, Uttern and Valiant boats; Attwood
marine parts and accessories; Land 'N' Sea and Kellogg Marine parts and
accessories distributor; Life Fitness, Hammer Strength and ParaBody fitness
equipment; Brunswick bowling centers, equipment and consumer products;
Brunswick billiards tables; and Valley-Dynamo pool, Air Hockey and foosball
tables. For more information, visit www.brunswick.com.
SOURCE: Brunswick Corporation
Kathryn Chieger, Vice President - Corporate and Investor Relations, Brunswick
Corporation, +1-847-735-4612
