FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
X Quarterly Report pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 1996
Commission file number 1-1043
BRUNSWICK CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 36-0848180
(State or other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1 N. Field Ct., Lake Forest, Illinois 60045-4811
(Address of principal executive offices) (Zip Code)
(847) 735-4700
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
At August 5, 1996, there were 98,307,049 shares of the Company's
Common Stock($.75 par value) outstanding.
Part I- Financial Information
Item I-Financial Statements
Brunswick Corporation
Consolidated Results Of Operations
for the periods ended June 30
(dollars in millions, except per share data)
Quarter Six Months
ended June 30 ended June 30
1996 1995 1996 1995
(unaudited)
Net sales $ 891.7 $ 839.2 $ 1,657.5 $1,613.4
Cost of sales 628.8 594.3 1,175.4 1,153.1
Selling, general and administrative 148.0 147.4 292.2 289.2
Restructuring charges and management
transition expenses - 40.0 - 40.0
Operating earnings 114.9 57.5 189.9 131.1
Interest expense (7.9) (7.9) (16.0) (15.9)
Interest income and other items, net 5.7 7.8 12.0 6.5
Earnings before income taxes 112.7 57.4 185.9 121.7
Income tax provision 41.9 20.3 69.7 44.4
Earnings from continuing operations 70.8 37.1 116.2 77.3
Loss on disposition of Technical segment - (7.0) - (7.0)
Net earnings $ 70.8 $ 30.1 $ 116.2 $ 70.3
Earnings (loss) per common share
Continuing operations $ 0.72 $ 0.38 $ 1.18 $ 0.80
Loss on disposition of Technical segment - (0.07) - (0.07)
Net earnings per common share $ 0.72 $ 0.31 $ 1.18 $ 0.73
Cash dividends declared per common share $ 0.125 $ 0.125 $ 0.25 $ 0.25
The notes are an integral part of these consolidated statements.
Brunswick Corporation
Consolidated Balance Sheets
As of June 30, 1996 and December 31, 1995
(dollars in millions)
June 30, December 31,
Assets 1996 1995
Current assets (unaudited)
Cash and cash equivalents, at cost, which
approximates market $ 137.4 $ 344.3
Marketable securities 2.0 11.2
Accounts and notes receivable, less allowances
of $21.2 and $19.0 408.1 257.7
Inventories 455.9 411.4
Prepaid income taxes 208.8 203.8
Prepaid expenses 27.9 34.2
Income tax refund receivable - 15.0
Current assets 1,240.1 1,277.6
Property
Land 64.8 62.5
Buildings 390.5 385.5
Equipment 695.8 694.8
Total land, buildings and equipment 1,151.1 1,142.8
Accumulated depreciation (607.0) (608.3)
Net land, buildings and equipment 544.1 534.5
Unamortized product tooling costs 66.8 64.4
Net property 610.9 598.9
Other assets
Dealer networks 105.7 117.5
Trademarks and other 195.0 162.2
Excess of cost over net assets of businesses acquired 213.6 119.2
Investments 93.4 85.1
Other assets 607.7 484.0
Total assets $ 2,458.7 $ 2,360.5
Liabilities and Shareholders' Equity
Current liabilities
Short-term debt, including current maturities $ 6.3 $ 6.1
Accounts payable 158.8 154.8
Accrued expenses 495.0 519.5
Income taxes payable 23.0 -
Current liabilities 683.1 680.4
Long-term debt
Notes, mortgages and debentures 309.8 312.8
Deferred items
Income taxes 156.0 157.8
Postretirement and postemployment benefits 135.0 138.3
Compensation and other 31.4 28.1
Deferred items 322.4 324.2
Common shareholders' equity
Common stock; authorized: 200,000,000 shares,
$.75 par value; issued: 102,537,692 shares 76.9 76.9
Additional paid-in capital 301.4 299.4
Retained earnings 906.4 814.8
Treasury stock, at cost: 4,242,202 shares at June 30,
1996 and 4,633,036 shares at December 31, 1995 (78.5) (85.0)
Minimum pension liability adjustment (3.4) (3.4)
Unearned portion of restricted stock
issued for future services and held in trust (7.9) (6.3)
Cumulative translation adjustments 12.5 13.7
Unamortized ESOP expense (64.0) (67.0)
Common shareholders' equity 1,143.4 1,043.1
Total liabilities and shareholders' equity $ 2,458.7 $ 2,360.5
The notes are an integral part of these consolidated statements.
Brunswick Corporation
Consolidated Statements of Cash Flows
for the six months ended June 30
(dollars in millions)
1996 1995
(unaudited)
Cash flows from operating activities
Net earnings $ 116.2 $ 70.3
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization of continuing
operations 60.4 55.1
Changes in noncash current assets and current
liabilities of continuing operations (133.5) (144.3)
(Increase) decrease in deferred items (0.7) 24.4
Stock issued for employee benefit plans 6.9 9.4
Other, net 2.7 8.3
Restructuring charge - 40.0
Estimated loss on discontinued operations - 11.5
Decrease in net assets of discontinued operations - 7.1
Net cash provided by operating activities 52.0 81.8
Cash flows from investing activities
Capital expenditures (65.3) (50.3)
Payments for businesses acquired (156.8) -
Proceeds from businesses disposed 29.4 22.0
Investment in marketable securities 9.2 13.6
Payments advanced for long-term marine engine
supply arrangements (42.8) -
Other, net (5.2) (18.8)
Net cash used for investing activities (231.5) (33.5)
Cash flows from financing activities
Cash dividends paid (24.6) (23.9)
Other, net (2.8) (5.4)
Net cash used for financing activities (27.4) (29.3)
Net (decrease) increase in cash and cash equivalents (206.9) 19.0
Cash and cash equivalents at January 1 344.3 185.2
Cash and cash equivalents at June 30 $ 137.4 $ 204.2
Supplemental cash flow disclosures:
Interest paid $ 24.1 $ 27.0
Income taxes paid, net 28.8 30.6
The notes are an integral part of these consolidated statements.
Brunswick Corporation
Notes to Consolidated Financial Statements
June 30, 1996, December 31, 1995 and June 30, 1995
(unaudited)
Note 1 - Accounting policies
This financial data has been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission.
Accordingly, certain information and disclosures, normally
included in financial statements and footnotes prepared in
accordance with generally accepted accounting principles, have
been condensed or omitted. Brunswick Corporation (the "Company")
believes that the disclosures in these statements are adequate to
make the information presented not misleading.
These financial statements should be read in conjunction with,
and have been prepared in conformity with, the accounting
principles reflected in the consolidated financial statements and
related notes included in the Company's Annual Report on Form
10-K for the year ended December 31, 1995. These interim results
include, in the opinion of the Company, all normal and recurring
adjustments necessary to present fairly the results of operations
for the quarter and six-month periods ended June 30, 1996 and
1995. The 1996 interim results are not necessarily indicative of
the results which may be expected for the remainder of the year.
Note 2 - Earnings per common share
Earnings per common share are based on the weighted average
number of common and common equivalent shares outstanding during
each period. Such average shares were 98.7 million and 96.0
million for the quarters ended June 30, 1996 and 1995,
respectively, and 98.6 and 96.0 million for the six-month period
ended June 30, 1996 and 1995, respectively.
Note 3 - Inventories
Inventories, of which approximately fifty percent were valued
using the LIFO method, consisted of the following at
June 30, 1996 and December 31, 1995 (dollars in millions):
June 30, December 31,
1996 1995
Finished goods $235.2 $206.9
Work in process 135.2 129.3
Raw materials 85.5 75.2
Inventories $455.9 $411.4
Note 4 - Acquisitions
On March 8, 1996, the Company acquired the Nelson/Weather-Rite
camping division of Roadmaster Industries, Inc. for $120.0
million in cash and the assumption of certain liabilities. The
Company acquired assets, including goodwill which will be
amortized using the straight line method over forty years. This
operation has been included with the Zebco Division in the newly
formed Brunswick Outdoor Recreation Group of the Recreation
segment. Operating results are included in the Company's results
of operations since the date of acquisition.
On May 31, 1996, the Company acquired the assets related to the
Boston Whaler line of boats from Meridian Sports for $27.4
million in cash and the assumption of certain liabilities. The
Company acquired assets, including goodwill which will be
amortized using the straight line method over forty years.
Operating results are included in the Company's results of
operations since the date of acquisition, but did not have a
significant impact on the Company's second quarter 1996 results.
These acquisitions were accounted for as purchases and are based
on the preliminary valuations of the opening balance sheets.
Note 5 - Dispositions
On April 1, 1996, the Company announced its intentions to divest
its fresh water fishing boat operations which comprise
substantially all of the assets of the Fishing Boat Division in
the Marine segment and include the Starcraft, Fisher, MonArk,
Spectrum, Astro and Procraft brands. In the second quarter, the
Company completed the disposition of these operations. This
divestiture had no impact on the Company's 1996 second quarter
consolidated results of operations. The net sales and operating
earnings(losses) of the businesses divested for the quarters and
year-to-date periods ended June 30, were as follows:
Quarter ended Year-to-date
1996 1995 1996 1995
Net sales $38.3 $51.1 $76.1 $99.2
Operating earnings(losses) $ 0.0 $ 2.1 $(1.2) $ 3.5
In the second quarter of 1995, the Company announced its
intention to divest its golf club shaft business and the Circus
World Pizza operations in the Recreation segment and recorded a
$25.8 million restructuring charge to cover estimated losses on
the dispositions. The Circus World divestiture was completed in
1995 and the sale of the golf club shaft business was completed
in the second quarter of 1996. The losses associated with these
transactions, including the estimated exposure on retained
liabilities, were adequately covered by the 1995 restructuring
charge. The net sales and operating earnings(losses) of the
businesses divested for the quarters and year-to-date periods
ended June 30, were as follows:
Quarter ended Year-to-date
1996 1995 1996 1995
Net sales $ 4.0 $ 5.3 $ 9.9 $11.8
Operating earnings(losses) $ 0.7 $(1.8) $ 1.4 $(3.9)
Note 6 - Consolidated common shareholders' equity
Minimum
Addit'l Pension Unearned Cum. Unamort.
Common stock Paid-in Retained Treasury Stock Liab. Restricted Trans. ESOP
(in millions) Shares Amount Capital Earnings Shares Amount Adjmt Stock Adjmts Expense
Balance, January 1, 1996 102.5 $76.9 $299.4 $814.8 (4.6) ($85.0) ($3.4) ($6.3) $13.7 ($67.0)
Net Earnings - - - 116.2 - - - - - -
Dividends declared ($.25 per
common share) - - - (24.6) - - - - - -
Compensation plans and other - - 2.0 - 0.4 6.5 - (1.6) - -
Deferred compensation-ESOP - - - - - - - - - 3.0
Currency translation - - - - - - - - (1.2) -
Balance, June 30, 1996 102.5 $76.9 $301.4 $906.4 (4.2) ($78.5) ($3.4) ($7.9) $12.5 ($64.0)
Note 7 - Debt
Long-term debt at June 30, 1996, and December 31, 1995, consisted
of the following (dollars in millions):
June 30, December 31,
1996 1995
Notes, 8.125%, due 1997 (net of
discount of $0.0 and $0.1) $100.0 $ 99.9
Mortgage notes and other, 3% to
10%, payable through 2001 26.8 26.8
Debentures, 7.375%, due 2023,
(net of discount of $0.8 and $0.9) 124.2 124.1
Guaranteed ESOP debt, 8.13%,
payable through 2004 64.9 67.8
315.9 318.6
Current maturities (6.1) (5.8)
Long-term debt $309.8 $312.8
As of June 30, 1996, the Company and seventeen banks had a
long-term revolving credit agreement for $400 million with a
termination date of December 31, 2000.
Under terms of the amended agreement, the Company has multiple
borrowing options, including borrowings at a corporate base rate,
as announced by The First National Bank of Chicago, or a rate
tied to the Eurodollar rate. Currently, the Company must pay a
facility fee of 0.11%.
Under the agreement, the Company is subject to interest coverage,
net worth and leverage tests as well as a restriction on secured
debt, as defined. On the interest coverage test, the Company is
required to maintain a ratio of consolidated income before
interest and taxes, as defined, to consolidated interest expense
of not less than 2.0 to 1.0 on a cumulative twelve-month basis.
The ratio, on a cumulative twelve-month basis, was 9.0 to 1.0 at
June 30, 1996. The leverage ratio of consolidated total debt to
capitalization, as defined, may not exceed 0.55 to 1.00 and at
June 30, 1996, this ratio was 0.22 to 1.00.
The Company is also required to maintain shareholders' equity of
at least $839.6 million, with the required level of shareholders'
equity at December 31 of each year being increased by 50% of net
earnings for that year. The Company has complied with this
limitation and the secured debt limitation as of June 30, 1996.
There were no borrowings under the agreement at June 30, 1996.
The Company has $100.0 million of 10 year notes that mature on
April 1, 1997, which have been classified as long-term. This
classification is based on the Company's ability to refinance
this debt with another long-term instrument and the intent is to
do so at maturity.
Note 8 - Litigation
There have been no significant changes in the status of the items
set forth in Note 13: Litigation in the 1995 Annual Report to
Shareholders and also the 1995 Annual Report on Form 10-K.
Note 9 - Segment Data
The following table sets forth net sales and operating earnings
of each of the Company's industry segments for the quarters ended
June 30, 1996 and 1995.
Quarter Ended June 30
1996 1995
Net Operating Net Operating
Sales Earnings Sales Earnings
Marine $ 672.3 $ 100.6 $ 645.3 $ 89.7
Recreation 219.4 23.8 193.9 (7.8)
Segments 891.7 124.4 839.2 81.9
Corporate - ( 9.5) - (24.4)
Consolidated $ 891.7 $ 114.9 $ 839.2 $ 57.5
Six-Months Ended June 30
1996 1995
Net Operating Net Operating
Sales Earnings Sales Earnings
Marine $1,245.7 $ 163.3 $1,221.0 $ 150.5
Recreation 411.8 45.5 392.4 16.2
Segments 1,657.5 208.8 1,613.4 166.7
Corporate - (18.9) - (35.6)
Consolidated $1,657.5 $ 189.9 $1,613.4 $ 131.1
The operating earnings (loss) of the Recreation segment for the
quarter and six-months ended June 30, 1995 include a $25.8
million restructuring charge for the losses on the divestitures
of the golf club shaft business and Circus World Pizza
operations.
The Corporate operating expenses for the quarter and six-months
ended June 30, 1995 include $14.2 million in management
transition expenses and costs associated with an early retirement
and selective separation program at the Company's corporate
office.
Note 10 - Subsequent Events
On July 19, 1996, the Company signed a definitive agreement,
subject to regulatory approval and preclosing covenants, to
acquire essentially all of the assets of the Roadmaster bicycle
business and other outdoor products, including the Flexible Flyer
line of sleds and wagons from Roadmaster Industries, Inc. for
$212.0 million in cash. This transaction is expected to close in
the third quarter of 1996.
The Company will file a universal shelf registration statement in
the third quarter with the Securities and Exchange Commission for
an aggregate offering price of up to $600 million in various
equity and/or debt securities.
Management's Discussion and Analysis
Cash Flow, Liquidity and Capital Resources
Management assesses the Company s liquidity in terms of its
overall ability to generate cash to fund its operating and
investing activities. Of particular importance in the management
of liquidity are cash flows generated from operating activities,
cash used to fund capital expenditures, acquisitions and other
strategic activities, cash needed to service existing long-term
debt, and the Company s ability to secure long-term capital at
attractive terms.
For the six months ended June 30, 1996 cash and cash equivalents
decreased $206.9 million to $137.4 million. This decrease
primarily reflects the impact of the Company s recent
acquisitions and other investing activities and seasonal
increases in noncash working capital levels, offset by the
strength of its net earnings in the first half of 1996.
Cash generated from operating activities in the first six months
of 1996 totalled $52.0 million, versus $81.8 million in 1995.
The primary components of cash generated from operating
activities include the Company s net earnings; the level of
noncash revenues and expenses included in net earnings; the
timing of cash flows relating to operating expenses, sales, and
income taxes; and the management of inventory levels. During the
first six months of 1996, the Company s net earnings increased
$45.9 million from 1995 levels to $116.2 million, but 1995
earnings include the effects of the second quarter $40.0 million
pretax charge for restructuring and management transition
expenses and the $7.0 million after-tax loss from discontinued
operations. The decrease in cash generated from operating
activities is primarily attributable to the timing of payments
made for operating expenses. The cash used to fund increases in
the Company s noncash working capital levels reflects increases
in both the 1996 and 1995 six month periods in accounts
receivable due to consistently strong June sales.
During the first six months of 1996, the Company invested $65.3
million for capital expenditures, an increase of $15.0 million
from 1995 levels. This increase reflects the Company s continued
emphasis on investing to achieve improved production efficiencies
and product quality, support new product development activities
and maintain existing production capacity. Management
anticipates that capital expenditures in 1996 may total in excess
of $160 million.
The Company also expended $156.8 million for acquisitions in the
first six months of 1996, including the purchase of the
Nelson/Weather-Rite camping division from Roadmaster Industries,
Inc. and the Boston Whaler line of boats from Meridian Sports,
which resulted in cash payments in 1996 of $120.0 million and
$27.4 million, respectively. Other investing activities include
payments advanced to boat manufacturers in connection with long-
term marine engine supply arrangements. Also, the Company has
received cash proceeds on the sale of its freshwater fishing boat
operations, which was completed in the second quarter of 1996.
Total debt at June 30, 1996, was $316.1 million versus $318.9
million at December 31, 1995, with debt-to-capitalization ratios
at those dates of 21.7% and 23.4%, respectively. The Company s
debt structure at June 30,1996, includes $100.0 million of 8.125%
notes due April 1, 1997, which Management intends to refinance at
maturity with long-term debt.
Management continues to evaluate acquisition opportunities as it
attempts to reposition the Company's sales and profit mix with a
higher contribution from consumer recreation products that offer
more stable growth opportunities. Subsequent to the close of the
second quarter, the Company announced that it had signed a
definitive agreement to acquire from Roadmaster Industries, Inc.
essentially all of the assets of its Roadmaster bicycle and
Flexible Flyer wagon and sled businesses.
The announced acquisition of the units of Roadmaster, along with
continued increased levels of capital expenditures and normal
operating requirements will be funded through existing cash
balances, cash generated from operating activities and short-term
commercial paper borrowing, if necessary. Additional significant
acquisition activity or changes in business conditions would
require the Company to increase its borrowing levels in the near-
term. The Company can provide the necessary liquidity from
various sources, including a revolving credit agreement,
commercial paper offerings, existing cash balances, and cash
generated from operating activities. The Company continues to
maintain a $400 million long-term line of credit with a group of
banks. For an explanation of the agreement and a discussion of
the specific covenant restrictions, see page 7, Note 7 - Debt.
In addition, the Company will file a universal shelf registration
in the third quarter with the Securities and Exchange Commission
for an aggregate offering price of up to $600 million in various
equity and/or debt securities.
Results of Operations - Second Quarter and the First Six Months
of 1996 versus 1995
Consolidated
In the second quarter, consolidated sales increased 6% to $891.7
million, in 1996, while year-to-date sales increased 3% to
$1,657.5 in 1996 from $1,613.4 in 1995. In both 1996 periods,
the Company benefitted from stronger sales of large boats and
sterndrive engines and the contribution of the newly acquired
Nelson/Weather-Rite Camping business. These factors were
partially offset by the negative impact of poor weather
conditions, reduced sales of the recently divested freshwater
fishing boats businesses (i.e., the Fishing Boat Division) and
reduced outboard engine sales.
International sales for the second quarter decreased 8% to $208.4
million in 1996 from $227.4 million in 1995. In the year-to-date
period, international sales declined from $430.0 million in
1995 to $403.0 million in 1996. These reductions were primarily
due to the continued decline experienced in the sales of bowling
capital equipment into Korea and Taiwan, partially offset by
increased sales volumes into China.
The Company s consolidated operating earnings in the second
quarter increased to $114.9 million in 1996 compared to $57.5
million in 1995, while six-month operating earnings levels
improved to $189.9 million in 1996 from $131.1 million in 1995.
These increases in both periods in consolidated operating
earnings were partially attributable to a $40.0 million second
quarter charge for restructuring and management transition
expenses recorded in 1995. Absent this charge, operating
earnings in the second quarter would have been 18% higher,
increasing from $97.5 million in 1995 to the aforementioned 1996
levels. In the year-to-date period, operating earnings would
have increased 11% from $171.1 million in 1995 to $189.9 million
in 1996. This gain for both periods reflects the impact of the
previously discussed changes in sales levels and improved Marine
and Recreation segment operating margins. The Company also
benefitted from effective management of selling, general and
administrative expenses as 1996 levels remained relatively
consistent with prior years while sales levels increased.
Interest expense was essentially flat with prior years levels in
the comparative quarter and year-to-date periods due to
consistent borrowing levels. Interest income and other items,
net declined in the quarter from $7.8 million in 1995 to $5.7
million in 1996, reflecting the unfavorable effects of foreign
currency transaction accounting between periods. In the six-
month period, Interest income and other items, net increased to
$12.0 million in 1996, from $6.5 million in 1995, as 1996
includes a favorable first-quarter swing in foreign currency
transaction accounting between periods and the 1996 period also
benefitted from stronger earnings from the Company's marine and
bowling joint ventures.
The effective tax rate applied to the second quarter earnings was
37.2% in 1996 and 35.4% in 1995, while the estimated year-end tax
rate stands at 37.5% at June 1996 versus 36.5% at June 1995.
In general, the higher estimated rate in 1996 resulted from the
elimination of the research and development tax credit in 1996,
which is currently under legislative review.
Marine Segment
In the second quarter, sales of the Company s Marine segment
increased to $672.3 million in 1996, representing a 4%
improvement over 1995 levels. In the six-month period ending
June 30, 1996, the sales of the Marine segment were 2% ahead of
1995 levels, increasing to $1,245.7 million in 1996 from $1,221.0
million in 1995. These increases reflect gains in the sales of
the Sea Ray and US Marine Divisions, as declines in unit sales
volumes were offset by increases in sales of larger boats. The
Mercury Marine Division reported sales which were below prior
year levels in the quarter and year-to-date periods. This
performance reflects sales gains in sterndrive engines, which are
primarily used on larger boats. These gains were fully offset by
a reduction in sales of outboard engines, as poor weather had a
negative impact on the sale of small boats at the retail level.
Also, shipments to dealers declined as retail inventories were
reduced at a higher rate in 1996 versus 1995. The performance of
the recently divested Fishing Boat Division operations was
impaired by the aforementioned impact of weather and the
disruption caused by the disposition.
Marine segment operating earnings increased 12% in the 1996
second quarter to $100.6 million versus $89.7 million in 1995.
In the six-month period, Marine segment operating earnings
increased 9% from 1995 levels to $163.3 million in 1996. This
performance reflects improved sales of the Sea Ray and US Marine
Divisions discussed above, along with the favorable shift in
sales mix to larger boats. The Mercury Marine Division posted
improvements in operating earnings despite the sales performance,
primarily due to a richer sales mix, improved pricing and
production efficiency gains. A decrease in the profitability of
the Fishing Boat Division also negatively impacted the
performance of this segment.
Recreation Segment
In the second quarter, the Recreation segment reported sales
increases of 13% to $219.4 million in 1996 compared to $193.9
million in 1995. In the year-to-date period, Recreation segment
operating earnings increased 5% to $411.8 million.
This segment consists of the Brunswick Outdoor Recreation Group,
which is comprised primarily of the Zebco, MotorGuide and
Browning fishing products units and the Nelson/Weather-Rite
camping unit which was acquired on March 8, 1996; and also
includes the Brunswick Indoor Recreation Group which is comprised
primarily of the bowling products, recreation center and
billiards businesses.
The sales increases experienced in both periods are due to the
contribution of the Brunswick Outdoor Recreation Group as the
recently acquired Nelson/Weather-Rite business added a majority
of the increase and the combined sales of the fishing products
units sustained strong revenue levels achieved in prior years.
The Brunswick Indoor Recreation Group experienced a decline in
sales due primarily to the previously mentioned reduction in
shipments of bowling capital equipment to international markets.
This reduction was caused by the transition from mature Taiwan
and Korean markets, where new center development has
substantially slowed, to the growth markets of China and other
East Asian countries, where volumes are not yet adequate to
offset the losses in the Taiwan and Korean markets. Based on
current market conditions, management expects this trend to
continue throughout the remainder of 1996.
The Recreation segment second quarter operating earnings
increased to $23.8 million in 1996 from a $7.8 million operating
loss in 1995, while the operating earnings for the six-month
period improved to $45.5 million in 1996 from $16.2 million in
1995. A portion of these fluctuations is due to a $25.8 million
restructuring charge reflected in the Recreation segment
operating earnings in the second quarter of 1995. Absent this
charge, operating earnings would have been 32% higher in the
quarter and 8% higher year-to-date than prior year levels. This
improvement in operating earnings in both periods reflects the
previously discussed fluctuations in sales levels of both groups,
along with improved profitability resulting from the divested
Circus World and golf shaft businesses.
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
none
(b) Reports on Form 8-K.
The Company filed no reports on Form 8-K during
the three months ended June 30, 1996.
Signatures
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
BRUNSWICK CORPORATION
August 7, 1996 By:/s/Peter B. Hamilton
Peter B. Hamilton, Senior
Vice President and Chief
Financial Officer*
*Mr. Hamilton is signing this report both as a duly authorized
officer and as the principal financial officer.