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| Exhibit 99.1 | |
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Brunswick Corporation 1 N. Field
Court Lake Forest, IL 60045
Telephone 847.735.4700 Facsimile
847.735.4750
www.brunswick.com
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| Release: | IMMEDIATE RELEASE |
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Contact:
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Bruce
Byots
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Vice
President – Corporate and Investor Relations
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Phone:
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847-735-4612
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Contact:
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Daniel
Kubera
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Director
– Media Relations and Corporate Communications
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Phone:
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847-735-4617
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Email:
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daniel.kubera@brunswick.com
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BRUNSWICK
REPORTS FOURTH QUARTER RESULTS
2010
OUTLOOK: IMPROVING REVENUE AND REDUCED LOSSES,
COMBINED
WITH CONTINUED STRONG LIQUIDITY
LAKE FOREST, Ill., Jan. 28,
2010 -- Brunswick Corporation (NYSE: BC) today reported results for the
fourth quarter of 2009:
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·
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Total
net sales of $657.3 million were down 22 percent versus
2008.
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·
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A
net loss of $124.0 million, or $1.40 per diluted share, which includes
$0.78 per diluted share of impairment and restructuring charges, and $1.20
per diluted share of benefits from special tax
items.
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·
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Cash
totaled $526.6 million, up from 2008 year-end balance of $317.5
million.
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·
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Pipeline
reduction and inventory management strategies implemented throughout the
year led to significantly lower dealer inventory levels and company cash
flow benefits, while having a negative impact on revenue and
earnings.
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“During
the fourth quarter we continued to successfully execute against our key
strategic objectives, which has allowed us not only to remain stable during the
worst marine market in decades, but also to position ourselves to take advantage
of market opportunities as they evolve,” said Brunswick’s Chairman and Chief
Executive Officer Dustan E. McCoy. “We exited 2009 with $527 million
in cash, a stronger dealer network with low inventories, and a leaner company
with a significantly reduced cost structure.
“The
factors that negatively affected our revenues and earnings in the fourth quarter
of 2009, compared to the previous year, included: lower overall unit sales
levels across the company; higher discounts to facilitate retail boat sales,
particularly of older boat models; and a reversal of variable compensation and
defined contribution retirement accruals that benefited the fourth quarter of
2008. During the quarter, we also experienced reduced fixed-cost absorption and
higher pension and interest expense, as well as higher impairment and
restructuring charges. Partially offsetting these factors were cost savings
generated from our successful and ongoing fixed-cost reduction activities, and a
special tax benefit recorded in the fourth quarter of 2009,” McCoy
said.
Fourth
Quarter Results
For the
fourth quarter of 2009, the company reported net sales of $657.3 million, down
from $837.7 million a year earlier. For the quarter, the company
reported an operating loss of $188.2 million, which included $68.6 million of
impairment and restructuring charges. In the fourth quarter of 2008,
the company had an operating loss of $38.4 million, which included an $81.2
million benefit from the reversal of variable compensation and defined
contribution retirement accruals, affecting all of the company’s segments, and
$48.9 million of impairment and restructuring charges.
For the
fourth quarter of 2009, Brunswick reported a net loss of $124.0 million, or
$1.40 per diluted share, as compared with a net loss of $66.3 million, or $0.75
per diluted share, for the fourth quarter of 2008. The diluted loss
per share for the fourth quarter of 2009 included impairment and restructuring
charges of $0.78 per diluted share, and a $1.20 per diluted share benefit from
special tax items. Diluted loss per share for the fourth quarter of
2008 included $0.34 per diluted share of impairment and restructuring charges,
and $0.59 per diluted share of non-cash charges for special tax
items.
2009
Full-Year Results
For the
year ended Dec. 31, 2009, the company reported net sales of $2,776.1 million,
down from $4,708.7 million a year earlier, and an operating loss of $570.5
million, which included $172.5 million of impairment and restructuring
charges. In 2008, the company had an operating loss of $611.6
million, which included $688.4 million of impairment and restructuring
charges.
For 2009,
the company reported a net loss of $586.2 million, or $6.63 per diluted share,
as compared with a net loss of $788.1 million, or $8.93 per diluted share, for
2008. The diluted loss per share for 2009 included impairment and
restructuring charges of $1.95 per diluted share, and a $1.09 per diluted share
benefit from special tax items. Diluted loss per share for 2008
included $5.68 per diluted share of impairment and restructuring charges, $3.90
per diluted share of non-cash charges for special tax items, and $0.11 per
diluted share gain on investment sales.
Review
of Cash Flow and Balance Sheet
During the quarter, the company
completed open market purchases of approximately $85 million of its outstanding
11.75 percent notes due 2013. Combined with previous period purchases, the
company reduced the amount of its 2013 notes outstanding to approximately $153
million, representing the only significant long-term debt maturity from 2010 to
2015.
Cash and
cash equivalents were $527 million at the end of the fourth quarter, up $209
million from year-end 2008 levels. The company’s increased cash position
resulted primarily from a change in certain current assets and current
liabilities and net tax refunds, partially offset by net losses experienced
during the year. The change in certain current assets and current liabilities
was largely the result of reductions of the company’s inventory and accounts and
notes receivable, partially offset by lower accrued expenses and decreased
accounts payable.
Net debt
(defined as total debt, less cash and cash equivalents) was $324 million, down
$90 million from year-end 2008 levels. The company’s total liquidity (defined as
cash and cash equivalents, plus amounts available under its asset-backed lending
facilities) totaled $615 million, up $96 million from year-end 2008
levels.
Marine Engine Segment
The Marine Engine segment, consisting
of the Mercury Marine Group, including the marine service, parts and accessories
businesses, reported net sales of $302.4 million in the fourth quarter of 2009,
down 11 percent from $340.2 million in the year-ago fourth
quarter. International sales, which represented 51 percent of total
segment sales in the quarter, declined by 3 percent. For the quarter, the Marine
Engine segment reported an operating loss of $59.4 million, including
restructuring charges of $8.2 million. This compares with an
operating loss of $12.9 million in the year-ago quarter, which benefited from a
$0.8 million gain related to restructuring activities.
Sales were lower across all Marine
Engine operations, with sterndrive engines experiencing a greater sales decline
than outboard engines. Sales from the segment’s domestic marine
service, parts and accessories businesses, which represented 22 percent of total
segment sales in the quarter, were down mid-single digits, as boat usage and the
purchase of parts and accessories remained relatively stable.
Mercury’s
manufacturing facilities began to ramp up production during the quarter in
response to customer inventory requirements. Lower sales, higher
pension expense and restructuring charges as well as a reversal of variable
compensation and defined contribution retirement accruals that benefited the
fourth quarter of 2008 had an adverse effect on operating earnings comparisons,
which were partially offset by Mercury Marine’s expense reductions.
Boat
Segment
The Boat segment is comprised of the
Brunswick Boat Group and includes 17 boat brands. The Boat segment
reported net sales of $153.4 million for the fourth quarter of 2009, down 38
percent compared with $248.0 million in the fourth quarter of 2008.
International sales, which represented 40 percent of total segment sales in the
quarter, decreased by 51 percent during the period. For the fourth
quarter of 2009, the Boat segment reported an operating loss of $131.6 million,
including impairment and restructuring charges of $58.3 million. This
compares with an operating loss of $59.4 million, including impairment and
restructuring charges of $39.4 million, in the fourth quarter of
2008.
Boat
manufacturing facilities also began to ramp up production during the quarter to
address inventory requirements of their dealers, although production levels
remained below the prior year quarter. Lower sales, reduced fixed-cost
absorption on lower production volumes, higher discounts to support retail sales
by dealers, higher impairment and restructuring charges, as well as a reversal
of variable compensation and defined contribution retirement accruals that
benefited the fourth quarter of 2008, had an adverse effect on operating
earnings comparisons, which were partially offset by the Boat Group’s expense
reductions.
Fitness
Segment
The Fitness segment is comprised of the
Life Fitness Division, which manufactures and sells Life Fitness and Hammer
Strength fitness equipment. Fitness segment sales in the fourth
quarter of 2009 totaled $146.4 million, down 15 percent from $171.8 million in
the year-ago quarter. International sales, which represented 52
percent of total segment sales in the quarter, declined by 10
percent. For the quarter, the Fitness segment reported
operating earnings of $20.5 million, including $0.5 million of restructuring
charges. This compares with operating earnings of $25.6 million,
including restructuring charges of $1.2 million, in the fourth quarter of
2008.
Commercial
equipment sales, which account for the largest percentage of Fitness segment
sales, declined in the quarter as gym and fitness club operators remained
cautious about ordering equipment. Sales of consumer exercise
equipment were also down during the quarter. Lower operating earnings
in the fourth quarter of 2009, when compared with 2008, reflect the unfavorable
effect of lower sales and a reversal of variable compensation and defined
contribution retirement accruals that benefited the fourth quarter of 2008,
partially offset by actions taken by Life Fitness to reduce expenses, including
improvements in material costs.
Bowling & Billiards Segment
The
Bowling & Billiards segment is comprised of Brunswick retail bowling
centers; bowling equipment and products; and billiards tables and
accessories. Segment sales in the fourth quarter of 2009 totaled
$82.2 million, down 27 percent compared with $113.2 million in the year-ago
quarter. For the quarter, the segment reported operating earnings of
$2.2 million, including restructuring charges of $0.5 million. This
compares with operating earnings of $16.6 million, including impairment and
restructuring charges of $3.8 million in the fourth quarter of
2008.
For the
quarter, retail bowling equivalent-center sales declined by a mid-single-digit
percentage. The bowling products and the billiards businesses
experienced greater sales declines, as bowling center operators and retail
billiards customers remained cautious about purchases. Lower
operating earnings in the fourth quarter of 2009, when compared with 2008,
reflect the unfavorable effect of the reduced sales, higher pension expenses and
a reversal of variable compensation and defined contribution retirement accruals
that benefited the fourth quarter of 2008, partially offset by Bowling &
Billiards’ cost reduction activities.
Outlook
See
Brunswick’s Web Site for Supplemental Chart:
http://www.brunswick.com/investors/investorinformation/events.php
“We
remain committed to the strategic focus that has ensured our financial health
and uniquely positioned us compared to most of our competitors in the marine,
fitness and bowling and billiards segments,” McCoy said. “We will continue to
focus on maintaining strong liquidity at our current net debt levels, taking all
reasonable actions to strengthen our dealer network, and doing the work
necessary to come out of this downturn stronger than when we began the
period.
“Although
our plans reflect a modest reduction in retail marine demand, our boat
facilities will gradually increase wholesale shipments throughout the year
because dealer inventories are at historically low levels. The increase in
wholesale boat shipments will require us to raise production rates throughout
the year. Additionally, although over-supply conditions still exist
in the overall marine market, we believe that based on our 2009 achievements in
lowering our dealer pipeline, the amount of discounts will be lower in 2010 as
compared to 2009.
“The
factors affecting our Boat segment should also lead to revenue growth in our
engine business, but the anticipated sales improvement will be less due to the
mix of businesses within the Marine Engine segment. Specifically, Mercury’s
parts and accessories business and its international operations, which together
currently account for roughly 72 percent of the segment’s revenues, are expected
to grow at substantially lower rates than Brunswick’s Boat segment.
“As a
result of the favorable fundamentals affecting our marine segments, our plan
reflects improved revenue and significantly reduced operating losses in
2010. Additionally, our plan reflects that our Fitness and Bowling
& Billiards segments will experience modest growth in both revenue and
operating earnings. Contributing to the decline in operating losses
for the company are lower impairment and restructuring costs and pension
expense. Partially offsetting the improvement in operating losses
will be slightly higher interest expense during 2010.
“Our
extraordinary performance against our strategic goals in this recession has
positioned Brunswick to transition from a focus on liquidity, to a focus on
continuous improvement in financial results and strength relative to the
competition in all of our business segments.
“So while
the economy and markets in which our businesses operate may remain challenging
for the foreseeable future, this transition requires that in 2010 and beyond, as
the world’s economies improve, we remain disciplined to: generate positive cash
flow, perform better than the market in each of our business segments, and grow
earnings faster than we grow sales,” McCoy concluded.
Conference
Call Scheduled
Brunswick will host a conference call
today at 10 a.m. CST, hosted by Dustan E. McCoy, chairman and chief executive
officer, Peter B. Hamilton, senior vice president and chief financial officer,
and Bruce J. Byots, vice president – corporate and investor
relations.
The call will be broadcast over the
Internet at www.brunswick.com. To
listen to the call, go to the Web site at least 15 minutes before the call to
register, download and install any needed audio software.
Security analysts
and investors wishing to participate via telephone should call (866)
831-6224 (passcode: Brunswick Q4). Callers outside North America
should call (617) 213-8853 (passcode: Brunswick Q4) to be
connected. These numbers can be accessed 15 minutes before the call
begins, as well as during the call. A replay of the conference call
will be available through midnight CST Thursday, Feb. 4, 2010, by calling (888)
286-8010 or (617) 801-6888 (passcode: 87644274). The replay will also
be available at www.brunswick.com.
Forward-Looking
Statements
Certain
statements in this news release are forward-looking as defined in the Private
Securities Litigation Reform Act of 1995. Such statements are based on current
expectations, estimates and projections about Brunswick’s
business. These statements are not guarantees of future performance
and 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
the amount of disposable income available to consumers for discretionary
purchases, and the level of consumer confidence on the demand for marine,
fitness, billiards and bowling equipment, products and services; the ability to
successfully complete restructuring efforts in the timeframe and cost
anticipated; the ability to successfully complete the disposition of non-core
assets; 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 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; and the effect of weather
conditions on demand for marine products and retail bowling center
revenues. Additional factors are included in the company’s Annual
Report on Form 10-K for 2008 and Quarterly Report on Form 10-Q for the quarter
ended Oct. 3, 2009. Such forward-looking statements speak only
as of the date on which they are made and Brunswick does not undertake any
obligation to update any forward-looking statements to reflect events or
circumstances after the date of this news release, or for changes made to this
document by wire services or Internet service providers.
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; Attwood marine parts and accessories; Land 'N' Sea, Kellogg
Marine, Diversified Marine and Benrock parts and accessories distributors;
Arvor, Bayliner, Bermuda, Boston Whaler, Cabo Yachts, Crestliner, Cypress Cay,
Harris, Hatteras, Lowe, Lund, Meridian, Ornvik, Princecraft, Quicksilver,
Rayglass, Sea Ray, Sealine, Triton, Trophy, Uttern and Valiant boats; Life
Fitness and Hammer Strength fitness equipment; Brunswick bowling centers,
equipment and consumer products; Brunswick billiards tables. For more
information, visit http://www.brunswick.com.
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Brunswick
Corporation
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Comparative
Consolidated Statements of Operations
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(in
millions, except per share data)
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(unaudited)
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Three
Months Ended
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Dec.
31,
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Dec.
31,
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2009
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2008
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%
Change
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Net
sales
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$ | 657.3 | $ | 837.7 | -22% | |||||||
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Cost
of sales
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582.5 | 719.8 | -19% | |||||||||
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Selling,
general and administrative expense
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170.6 | 82.3 |
NM
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|||||||||
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Research
and development expense
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23.8 | 25.1 | -5% | |||||||||
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Restructuring,
exit and impairment charges
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68.6 | 48.9 | 40% | |||||||||
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Operating
loss
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(188.2 | ) | (38.4 | ) |
NM
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|||||||
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Equity
loss
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(4.6 | ) | (3.6 | ) | -28% | |||||||
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Other
expense, net
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(1.2 | ) | (4.2 | ) | 71% | |||||||
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Loss
before interest, loss on early extinguishment of debt and income
taxes
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(194.0 | ) | (46.2 | ) |
NM
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|||||||
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Interest
expense
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(25.9 | ) | (18.6 | ) | -39% | |||||||
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Interest
income
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1.0 | 1.3 | -23% | |||||||||
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Loss
on early extinguishment of debt
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(13.1 | ) | - |
NM
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||||||||
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Loss
before income taxes
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(232.0 | ) | (63.5 | ) |
NM
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|||||||
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Income
tax provision (benefit)
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(108.0 | ) | 2.8 | |||||||||
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Net
loss
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$ | (124.0 | ) | $ | (66.3 | ) | -87% | |||||
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Loss
per common share:
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Basic
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$ | (1.40 | ) | $ | (0.75 | ) | ||||||
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Diluted
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$ | (1.40 | ) | $ | (0.75 | ) | ||||||
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Weighted
average shares used for computation of:
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||||||||||||
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Basic
loss per common share
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88.5 | 88.3 | ||||||||||
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Diluted
loss per common share
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88.5 | 88.3 | ||||||||||
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Effective
tax rate
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46.6% | -4.4% | ||||||||||
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Supplemental Information
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Diluted
net loss
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$ | (1.40 | ) | $ | (0.75 | ) | ||||||
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Restructuring,
exit and impairment charges (1)
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0.78 | 0.34 | ||||||||||
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Special
tax items
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(1.20 | ) | 0.59 | |||||||||
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Diluted
net loss, as adjusted
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$ | (1.82 | ) | $ | 0.18 | |||||||
| (1) The 2009 Restructuring, exit and impairment charges assume no tax benefit, while the 2008 Restructuring, exit and impairment charges include a tax benefit. |