[BRUNSWICK LETTERHEAD] NEWS RELEASE
Release: IMMEDIATE
Contact: Kathryn Chieger
Vice President - Corporate and Investor Relations
Phone: (847) 735-4612
LIFE FITNESS IN NEGOTIATIONS TO RESOLVE PATENT SUIT
LAKE FOREST, ILL., MAY 15, 2003 -- Brunswick Corporation (NYSE: BC)
announced today that its Life Fitness Division has been in negotiations
regarding a potential settlement of a lawsuit with Precor, a manufacturer of
fitness equipment. The lawsuit involves a dispute over patent rights held by
Precor relating to the design of a cross trainer.
Although the parties have not reached a final settlement of the
lawsuit, in light of developments in connection with the negotiations, the
company decided in May 2003 to establish a $25 million reserve related to the
potential resolution of the litigation. The provision related to this reserve
will be included in the financial statements to be issued with the company's
quarterly report on Form 10-Q to be filed today. As a result of this reserve,
the company will report 2003 first quarter net earnings of $3.8 million, or
$0.04 per diluted share. Previously, the company had reported net earnings of
$19.8 million, or $0.22 per diluted share, for the first quarter.
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.
(MORE)
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
Litigation charge 25.0 -
---------- ----------
OPERATING EARNINGS (1) 13.0 30.3 -57%
Interest expense (10.7) (11.0) -3%
Other income 3.6 1.3
---------- ----------
EARNINGS BEFORE INCOME TAXES 5.9 20.6 -71%
Income tax provision 2.1 7.4
---------- ----------
EARNINGS BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 3.8 13.2 -71%
Cumulative effect of change in accounting principle, net of tax (2) - (25.1)
---------- ----------
NET EARNINGS (LOSS) $ 3.8 ($ 11.9) NM
========== ==========
BASIC EARNINGS PER COMMON SHARE:
Earnings before cumulative effect of change in accounting principle $ 0.04 $ 0.15 -73%
Cumulative effect of change in accounting principle (2) - (0.28)
---------- ----------
Net earnings (loss) $ 0.04 ($ 0.13) NM
========== ==========
DILUTED EARNINGS PER COMMON SHARE:
Earnings before cumulative effect of change in accounting principle $ 0.04 $ 0.15 -73%
Cumulative effect of change in accounting principle (2) - (0.28)
---------- ----------
Net earnings (loss) $ 0.04 ($ 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%
(1) Operating earnings in the first quarter of 2003 include a $25.0 million
litigation charge in connection with a patent infringement lawsuit relating
to the design of a cross-trainer.
(2) The Company adopted SFAS No. 142, effective Jan. 1, 2002
NM = Not Meaningful
(more)
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(1) 119.2 105.0 14% (12.5) 8.9 NM -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% $ 13.0 $ 30.3 -57% 1.4% 3.5%
=========== ========== ======== ===========
(1) Fitness segment operating earnings include a $25.0 million litigation
charge in the quarter ended March 31, 2003, in connection with a patent
infringement lawsuit relating to the design of a cross-trainer.
NM = Not Meaningful
(more)
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 650.5 685.5 631.3
---------- ---------- ----------
CURRENT LIABILITIES 962.2 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 1,105.8 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 35.9% 35.9% 36.0%
(MORE)
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) $ 3.8 $ (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 (110.3) (50.0)
Income taxes and other, net 28.7 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
======== ========
# # #