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Form 8-K BRUNSWICK CORP For: Apr 26

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April 26, 2018 6:51 AM EDT


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

________________________

FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of report (Date of earliest event reported):  April 26, 2018
smallhiresa63.jpg
BRUNSWICK CORPORATION

(Exact Name of Registrant Specified in Charter)

 
 
 
 
 
 
 
Delaware
 
001-01043
 
36-0848180
(State or Other
Jurisdiction of
Incorporation)
 
(Commission File
Number)
 
(I.R.S. Employer
Identification No.)

 
 
 
 
26125 N. Riverwoods Blvd., Suite 500 Mettawa, Illinois
 
 
60045-3420
(Address of Principal Executive Offices)
 
 
(Zip Code)

Registrant’s telephone number, including area code: (847) 735-4700
N/A
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ]           Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ]           Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ]           Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ]           Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o




Item 2.02.                      Results of Operations and Financial Condition.

On April 26, 2018, Brunswick Corporation (“Brunswick”) announced its financial results for the first quarter of 2018. The news release Brunswick issued announcing its first quarter 2018 earnings is incorporated herein by reference and is included as Exhibit 99.1 to this Current Report on Form 8-K.

In the news release, Brunswick uses non-GAAP financial measures. A “non-GAAP financial measure” is a numerical measure of a registrant’s historical or future financial performance, financial position, or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statements of operations, balance sheets, or statements of cash flows of the issuer; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. Operating and statistical measures and certain ratios and other statistical measures are not non-GAAP financial measures. GAAP refers to generally accepted accounting principles in the United States.

Brunswick has used certain of the financial measures that are included in the news release for several years, both in presenting its results to shareholders and the investment community and in its internal evaluation and management of its businesses. Brunswick’s management believes that these measures (including those that are non-GAAP financial measures) and the information they provide are useful to investors because they permit investors to view Brunswick’s performance using the same tools that Brunswick uses and to better evaluate Brunswick’s ongoing business performance. The measure diluted earnings per common share (EPS), as adjusted, is believed to be useful to investors because it represents a measure of Brunswick’s earnings, without the impact of restructuring, exit, integration, and impairment charges, charges related to the planned Fitness business separation, special tax items, and the results of discontinued operations. Brunswick defines this measure as diluted earnings (loss) per common share from continuing operations, excluding the earnings per share impact of pension settlement charges, restructuring, exit, integration, and impairment charges, charges related to the planned Fitness business separation, charges for certain product field campaigns, impairment charges for an equity method investment, loss on early extinguishment of debt, special tax items, the results of discontinued operations, or other applicable charges. Brunswick’s management also believes that the measures adjusted operating earnings and adjusted pretax earnings are useful to investors because they provide a necessary and important perspective on Brunswick's operating performance and improve comparability of performance against prior periods. Brunswick defines adjusted operating earnings as operating earnings, excluding the earnings impact of restructuring, exit, integration, and impairment charges, charges related to the planned Fitness business separation, and charges for certain product field campaigns. Brunswick defines adjusted pretax earnings as earnings (loss) before income taxes, excluding the earnings impact of pension settlement charges, restructuring, exit, integration, and impairment charges, charges related to the planned Fitness business separation, charges for certain product field campaigns, impairment charges for an equity method investment, loss on early extinguishment of debt, and other applicable charges. Brunswick’s management believes that the non-GAAP financial measure free cash flow is useful to investors because it is an indication of cash flow that may be available to fund investments in future growth initiatives. Brunswick defines free cash flow as cash flow from operating and investing activities (excluding cash provided by or used for acquisitions, investments, purchases or sales/maturities of marketable securities, and other investing activities as well as costs related to the planned Fitness business separation) and the effect of exchange rate changes on cash and cash equivalents. Brunswick does not provide forward-looking guidance for certain financial measures on a GAAP basis because it is unable to predict certain items contained in the GAAP measures without unreasonable efforts. These items may include pension settlement charges, restructuring, exit, integration, and impairment charges, special tax items, and certain other unusual adjustments.

To reflect the impact of changes in currency exchange rates on net sales, Brunswick may use constant currency reporting. To present this information, net sales transacted in currencies other than U.S. dollars are translated to U.S. dollars using prior year exchange rates for the comparative period, using the average exchange rates in effect during that period. The percentage change in net sales expressed on a constant currency basis may better reflect changes in the underlying business trends, excluding the impact of translation arising from foreign currency exchange rate fluctuations.

The information in this report and the exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.




Item 9.01.                      Financial Statements and Exhibits.
 
(d)           Exhibits:
 





SIGNATURE
 

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 hereunto duly authorized.
 
 
 
 
 
 
 
BRUNSWICK CORPORATION
 
 
 
 
 
Dated: April 26, 2018
By:
/S/ DANIEL J. TANNER
 
 
 
Daniel J. Tanner
 
 
 
Vice President and Controller
 
 
 
 
 




EXHIBIT INDEX:
 
 
 
 
Exhibit No.
 
Description of Exhibit
 
 
 
99.1
 
 
News Release, dated April 26, 2018, of Brunswick Corporation, announcing its first quarter 2018 earnings. 




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                                                   newsreleaseusea23.jpg
Brunswick Corporation 26125 N. Riverwoods Blvd., Suite 500, Mettawa, IL 60045
 
Telephone 847.735.4700 Facsimile 847.735.4750
 


Release:
IMMEDIATE
 
Contact:
Ryan Gwillim
 
 
Vice President - Investor Relations
 
Phone:
847-735-4926
 
 
 
 
Contact:
Daniel Kubera
 
 
Director - Media Relations and Corporate Communications
 
Phone:
847-735-4617
 
Email:
 

Brunswick Reports First Quarter Results

7% Growth in Revenue;

GAAP Diluted EPS of $0.91 and Diluted EPS, as adjusted, of $1.01;

2018 Guidance: Narrowed Revenue Guidance and Diluted EPS, as adjusted, Range of $4.50 to $4.65
METTAWA, Ill., April 26, 2018 -- Brunswick Corporation (NYSE: BC) today reported results for the first quarter of 2018:
•
Consolidated net sales increased 7 percent versus first quarter 2017. Net sales increased 9 percent for the Marine Engine segment and 7 percent for the Boat segment.
•
On a GAAP basis, operating earnings increased by 12 percent. Adjusted operating earnings were up 6 percent versus the prior period.
•
On a GAAP basis, diluted EPS of $0.91 increased by 12 percent compared to the prior year. Diluted EPS, as adjusted, was $1.01, up 15 percent versus first quarter 2017.

"Our first quarter performance was an excellent start to what we believe will be another year of successful execution of our strategy and creation of shareholder value," said Brunswick Chairman and Chief Executive Officer Mark Schwabero. "Our marine businesses continue to benefit from strong demand for outboard boats and engines, successful new products, and our strategy to grow the parts and accessories


businesses. As a result, our marine businesses had revenue growth of 8 percent in the quarter, with a very strong increase in operating earnings versus first quarter 2017.

"At this early point in the marine season, our current outlook on the global marine market remains in line with our initial expectations. While unfavorable weather conditions in certain markets, including the Northeast and Midwest regions of the U.S. as well as Europe, have contributed to a slightly slower start to boating activity and the marine retail selling season, we remain confident in our view of the industry for 2018," Schwabero continued.

"We continue to focus on product leadership as evidenced by Mercury’s launch of the 175-225 horsepower V6 outboard engines, the first in a series of major outboard engine launches planned for 2018. These products, which will begin shipping in the second quarter, along with other award-winning, new products within our other marine categories, respond to customers’ desire to migrate to products with enhanced features, resulting in overall business results that exceed the market," Schwabero continued.

"In our Fitness segment, we continue to execute against our digital strategy, as evidenced by our release at IHRSA of the Halo Fitness Cloud, a dynamic software platform for club operators that enhances the exerciser experience, while simplifying facility management. In the quarter, the business experienced improving demand in certain European and Asian markets which drove top-line growth, with margins remaining under pressure," Schwabero continued.

"Overall, our first quarter performance generated strong results, with the improvement in operating earnings, combined with a lower effective tax rate and fewer shares outstanding, producing a 15 percent increase in diluted earnings per common share, as adjusted, over prior year," Schwabero concluded.

Discontinued Operations

On December 5, 2017, Brunswick announced its intention to sell its Sea Ray businesses. Starting with the fourth quarter of 2017, the historical and future results


of these businesses are now reported as discontinued operations. Therefore, for all periods presented in this release, all figures and outlook statements incorporate this change and reflect continuing operations only, unless otherwise noted.

First Quarter Results

For the first quarter of 2018, Brunswick reported net sales of $1,155.4 million, up from $1,082.1 million a year earlier. For the quarter, Brunswick reported operating earnings of $115.4 million, which included $1.7 million of costs related to the planned Fitness business separation and $1.2 million of restructuring, exit, integration, and impairment charges. In the first quarter of 2017, Brunswick had operating earnings of $103.4 million, which included $8.3 million of restructuring, exit, integration, and impairment charges.

For the first quarter of 2018, Brunswick reported net earnings of $80.5 million, or $0.91 per diluted share, compared with net earnings of $74.2 million, or $0.81 per diluted share, for the first quarter of 2017. Diluted EPS for the first quarter of 2018 included an $0.08 per diluted share charge from special tax items, $0.01 per diluted share of costs related to the planned Fitness business separation, and $0.01 per diluted share of restructuring, exit, integration, and impairment charges. The diluted EPS for the first quarter of 2017 included $0.07 per diluted share of restructuring, exit, integration, and impairment charges.

Review of Cash Flow and Balance Sheet

Cash and marketable securities totaled $294.2 million at the end of the first quarter, down $164.8 million from year-end 2017 levels. The reduction includes net cash used for operating activities during the first three months of the year of $43.1 million, which improved by $23.2 million versus the prior year. This usage of cash was primarily the result of seasonal changes in working capital.

In addition, net cash used for investing and financing activities of $99.4 million during the quarter reduced cash and marketable securities balances. Investing and financing


activities during the year-to-date period included $34.5 million of capital expenditures, $35.0 million of common stock repurchases, and $16.6 million of dividend payments.

Marine Engine Segment

The Marine Engine segment, which manufactures and distributes marine propulsion systems and related parts and accessories, reported net sales of $687.1 million in the first quarter of 2018, up 9 percent from $631.8 million in the first quarter of 2017. International sales, which represented 31 percent of total segment sales in the quarter,
were up 10 percent compared to the prior year period. For the quarter, the Marine Engine segment reported operating earnings of $95.7 million. This compares with operating earnings of $87.7 million in the first quarter of 2017.

Sales increases in the quarter were driven by strong growth in propulsion, led by increases in outboard engines, and solid growth in the parts and accessories businesses. The increase in operating earnings in the first quarter was primarily due to benefits from higher net sales and favorable movements in foreign exchange rates, which were partially offset by the unfavorable impact from planned spending increases stemming from new product introductions, capacity expansion, and product development.

Boat Segment

The Boat segment, which manufactures and distributes recreational boats, reported net sales of $304.0 million for the first quarter of 2018, a solid increase from $284.9 million in the first quarter of 2017. International sales, which represented 28 percent of total segment sales in the quarter, increased by 14 percent compared to the prior year period. For the first quarter of 2018, the Boat segment reported operating earnings of $24.7 million. This compares with operating earnings of $16.2 million in the first quarter of 2017.

The Boat segment's revenue reflected strong growth in the fiberglass freshwater boat businesses, comprised of our Bayliner brand along with our European brands


Quicksilver and Uttern, and solid growth in the aluminum freshwater boat businesses. Revenue for the fiberglass saltwater boat business was comparable to a very strong first quarter of 2017. The increase in segment operating earnings was primarily the result of higher net sales and timing benefits resulting from the adoption and implementation of the new revenue recognition standard.

Fitness Segment

The Fitness segment, which manufactures and distributes strength and cardiovascular fitness equipment and active recreation products, reported net sales in the first quarter of 2018 of $244.4 million, an increase of 4 percent from $235.6 million in the first quarter of 2017. International sales, which represented 50 percent of total segment sales in the quarter, increased by 14 percent as compared to the first quarter of 2017. For the quarter, the Fitness segment reported operating earnings of $11.0 million, which included restructuring, exit, integration, and impairment charges of $1.2 million. This compares with operating earnings of $18.3 million in the first quarter of 2017, which included $2.4 million of restructuring, exit, integration, and impairment charges.

The Fitness segment's revenue reflected growth in international markets and a decline in domestic sales as increased sales to health clubs were partially offset by decreases in Cybex sales in advance of new products and sales to vertical markets. The decline in operating earnings resulted from higher freight costs, challenging pricing dynamics in certain international markets, unfavorable changes in product and customer mix, and cost inflation, which more than offset benefits from sales increases.

2018 Outlook

"Our outlook for 2018 remains generally consistent with our recently provided three-year strategic plan and reflects another year of outstanding revenue and earnings growth, with excellent cash flow generation," said Schwabero.

"We expect our marine businesses' top-line performance to benefit from the continuation of solid global market growth, along with the success of new products. In


the Fitness segment, we expect to benefit from recently introduced new products, particularly in the second half of the year. We are raising the lower end of our revenue guidance for 2018 and now expect revenue growth of 6 percent to 7 percent, absent any significant changes in global macro-economic conditions.

"For the full-year, we anticipate improvement in both gross and operating margins in our marine businesses, as we plan to continue to benefit from new products, volume leverage, cost reductions related to efficiency programs, and changes in foreign exchange rates, while continuing to invest in growth-related initiatives. In the Fitness business, we are projecting margins to decline, but year-over-year comparisons to stabilize as we move towards the end of the year as the margin pressures discussed earlier moderate, including assistance from the positive effects of recent new product launches and cost-management actions.

"Our plan assumes that inflation factors are mostly offset by price; however, the impact of trade policy changes could possibly create some additional pressure moving forward, which our businesses would address accordingly. Operating expenses are estimated to increase in 2018 as we continue to fund incremental investments to support growth; however, on a percentage of sales basis, we expect them to be consistent with 2017 levels.

"We are also narrowing the range for our full-year expectations of diluted EPS, as adjusted, to $4.50 to $4.65, which takes into account benefits from a lower federal tax rate, continued successful marine business performance, potential inflationary pressures, and additional revenue and margin risk in the Fitness business for the remainder of the year," Schwabero concluded.

Use of Non-GAAP Financial Information

A reconciliation of GAAP to non-GAAP financial measures is provided in the reconciliation sections of the consolidated financial statements accompanying this release.



Brunswick does not provide forward-looking guidance for certain financial measures on a GAAP basis because it is unable to predict certain items contained in the GAAP measures without unreasonable efforts. These items may include pension settlement charges, restructuring, exit, integration, and impairment costs, special tax items, and certain other unusual adjustments.

Conference Call Scheduled

Brunswick will host a conference call today at 10 a.m. CDT, hosted by Mark D. Schwabero, chairman and chief executive officer, William L. Metzger, senior vice president and chief financial officer, and Ryan M. Gwillim, vice president - investor relations.

The call will be broadcast over the Internet at ir.brunswick.com. To listen to the call, go to the website at least 15 minutes before the call to register, download and install any needed audio software.

See Brunswick’s website for slides used to supplement conference call remarks at ir.brunswick.com.

Security analysts and investors wishing to participate via telephone should call 888-771-4371 (passcode: Brunswick Q1). Callers outside of North America should call 847-585-4405 (passcode: Brunswick Q1) 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 EDT Thursday, May 3, 2018, by calling 888-843-7419 or international dial 630-652-3042 (passcode: 4676 2737#). 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. Forward-looking statements are based on current expectations, estimates and projections about Brunswick’s business and by their nature address matters that are, to different degrees, uncertain. Words such as


“may,” “could,” “expect,” “intend,” “target,” “plan,” “seek,” “goal,” “estimate,” “believe,” “predict,” “outlook,” “anticipates” and similar expressions are intended to identify forward-looking statements. Such 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: adverse general economic conditions, including reductions in consumer discretionary spending; negative currency trends; our ability to complete and integrate targeted acquisitions; our ability to implement our strategic plan and growth initiatives; adequate financing access for dealers and customers and our ability to access capital and credit markets; maintaining effective distribution; retaining our relationships with dealers, distributors and independent boat builders; credit and collections risks; retaining key customers; protecting our brands and intellectual property; absorbing fixed costs in production; managing expansion or consolidation of manufacturing facilities; meeting supply objectives; meeting pension funding obligations; managing our share repurchases; higher energy and fuel costs; competitive pricing pressures; developing new and innovative products at a competitive price, in legal compliance; maintaining product quality and service standards; outages or breaches of technology systems; competitor activity; product liability, warranty and other claims risks; increased costs of legal and regulatory compliance; having to record an impairment to the value of goodwill and other assets; international business risks; attracting and retaining key contributors; weather and catastrophic event risks; the possibility that the proposed Fitness spin-off will not be consummated within the anticipated time period or at all, including as the result of regulatory, market or other factors; the potential for disruption to our business in connection with the proposed spin-off; and the potential that the Fitness business and Brunswick do not realize all of the expected benefits of the separation.

Additional risk factors are included in the Company’s Annual Report on Form 10-K for 2017. Forward-looking statements speak only as of the date on which they are made and Brunswick does not undertake any obligation to update them to reflect events or circumstances after the date of this news release or for changes by wire services or Internet service providers.



About Brunswick

Headquartered in Mettawa, Ill., Brunswick Corporation’s leading consumer brands include Mercury and Mariner outboard engines; Mercury MerCruiser sterndrives and inboard engines; MotorGuide trolling motors; Mercury, Quicksilver, Attwood, Garelick and Whale marine parts and accessories; Land 'N' Sea, Kellogg Marine, Lankhorst Taselaar, Payne’s Marine and BLA parts and accessories distributors; Bayliner, Boston Whaler, Brunswick Commercial and Government Products, Crestliner, Cypress Cay, Harris, Lowe, Lund, Meridian, Princecraft, Quicksilver, Rayglass, Sea Ray, Thunder Jet and Uttern; Life Fitness, Hammer Strength, Cybex, Indoor Cycling Group and SCIFIT fitness equipment; and Brunswick billiards tables, accessories and game room furniture. For more information, visit http://www.brunswick.com.



Brunswick Corporation
Comparative Condensed Consolidated Statements of Operations
(in millions, except per share data)
(unaudited)

 
Three Months Ended
 
March 31,
2018
 
April 1,
2017
 
% Change
Net sales
$
1,155.4

 
$
1,082.1

 
7
 %
Cost of sales
847.6

 
787.8

 
8
 %
Selling, general and administrative expense
155.5

 
148.1

 
5
 %
Research and development expense
35.7

 
34.5

 
3
 %
Restructuring, exit, integration and impairment charges
1.2

 
8.3

 
-86
 %
Operating earnings
115.4

 
103.4

 
12
 %
Equity earnings
1.0

 
2.3

 
-57
 %
Other income (expense), net
0.1

 
(1.3
)
 
NM

Earnings before interest and income taxes
116.5

 
104.4

 
12
 %
Interest expense
(6.9
)
 
(6.5
)
 
6
 %
Interest income
0.7

 
0.5

 
40
 %
Earnings before income taxes
110.3

 
98.4

 
12
 %
Income tax provision
29.8

 
24.2

 
23
 %
Net earnings from continuing operations
80.5

 
74.2


8
 %
 
 
 
 
 
 
Loss from discontinued operations, net of tax
(7.6
)
 
(9.3
)
 
-18
 %
 
 
 
 
 


Net earnings
$
72.9

 
$
64.9

 
12
 %
 
 
 
 
 
 
Earnings (loss) per common share:
 
 
 
 
 
Basic
 
 
 
 
 
Earnings from continuing operations
$
0.92

 
$
0.82

 
 
Loss from discontinued operations
(0.09
)
 
(0.10
)
 
 
Net earnings
$
0.83

 
$
0.72

 
15
 %
 
 
 
 
 
 
Diluted
 
 
 
 
 
Earnings from continuing operations
$
0.91

 
$
0.81

 
 
Loss from discontinued operations
(0.09
)
 
(0.10
)
 
 
Net earnings
$
0.82

 
$
0.71

 
15
 %
 
 
 
 
 
 
Weighted average shares used for computation of:
 
 
 
 
 
Basic earnings per common share
88.1

 
90.1

 
 
Diluted earnings per common share
88.8

 
91.1

 
 
 
 
 
 
 
 
Effective tax rate from continuing operations
27.0
%
 
24.6
%
 
 
 
 
 
 
 
 
Reconciliations
 
 
 
 
 
Continuing Operations:
 
 
 
 
 
Operating earnings
$
115.4

 
$
103.4

 
12
 %
Restructuring, exit, integration and impairment charges
1.2

 
8.3

 
-86
 %
Separation costs
1.7

 
—

 
 
Adjusted operating earnings
$
118.3

 
$
111.7

 
6
 %
 
 
 
 
 
 
Earnings before income taxes
$
110.3

 
$
98.4

 
12
 %
Restructuring, exit, integration and impairment charges
1.2

 
8.3

 
NM

Separation costs
1.7

 
—

 
 
Adjusted pretax earnings
$
113.2

 
$
106.7

 
6
 %
 
 
 
 
 
 
Earnings (loss) per common share:
 
 
 
 
 
Earnings from continuing operations
$
0.91

 
$
0.81

 
 
Restructuring, exit, integration and impairment charges
0.01

 
0.07

 
 
Separation costs
0.01

 
—

 
 
Special tax items
0.08

 
(0.00
)
 
 
Diluted earnings from continuing operations, as adjusted
$
1.01

 
$
0.88

 
15
 %
 
 
 
 
 
 
NM = not meaningful
 
 
 
 
 


Brunswick Corporation
Selected Financial Information
(in millions)
(unaudited)

Segment Information - Continuing Operations

 
Three Months Ended
 
Net Sales
 
Operating Earnings (Loss) (1)
 
Operating Margin
 
Mar 31,
2018
 
Apr 1,
2017
 
% Change
 
Mar 31,
2018
 
Apr 1,
2017
 
% Change
 
Mar 31,
2018
 
Apr 1,
2017
Marine Engine
$
687.1

 
$
631.8

 
9
%
 
$
95.7

 
$
87.7

 
9
 %
 
13.9
%
 
13.9
%
Boat
304.0

 
284.9

 
7
%
 
24.7

 
16.2

 
52
 %
 
8.1
%
 
5.7
%
Marine eliminations
(80.1
)
 
(70.2
)
 
14
%
 
—

 
—

 


 
 
 
 
Total Marine
911.0

 
846.5

 
8
%
 
120.4

 
103.9

 
16
 %
 
13.2
%
 
12.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fitness
244.4

 
235.6

 
4
%
 
11.0

 
18.3

 
-40
 %
 
4.5
%
 
7.8
%
Corporate/Other
—

 
—

 
 
 
(16.0
)
 
(18.8
)
 
15
 %
 
 
 
 
Total
$
1,155.4

 
$
1,082.1

 
7
%
 
$
115.4

 
$
103.4

 
12
 %
 
10.0
%
 
9.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(1) Operating earnings (loss) for the three months ended March 31, 2018, includes $1.7 million of charges related to the planned Fitness business separation, which were recorded within Corporate/Other, as well as $1.2 million of restructuring, exit, integration and impairment charges recorded within the Fitness segment. Operating earnings (loss) for the three months ended April 1, 2017, includes $8.3 million of restructuring, exit, integration and impairment charges, consisting of $3.5 million in the Boat segment, $2.4 million in Corporate/Other and $2.4 million in the Fitness segment.






















Brunswick Corporation
Selected Financial Information
(in millions)
(unaudited)

Segment Information - Continuing Operations, As Adjusted

 
Three Months Ended
 
Net Sales
 
Operating Earnings (Loss) (1)
 
Operating Margin
 
Mar 31,
2018
 
Apr 1,
2017
 
% Change
 
Mar 31,
2018
 
Apr 1,
2017
 
% Change
 
Mar 31,
2018
 
Apr 1,
2017
Marine Engine
$
687.1

 
$
631.8

 
9
%
 
$
95.7

 
$
87.7

 
9
 %
 
13.9
%
 
13.9
%
Boat
304.0

 
284.9

 
7
%
 
24.7

 
19.7

 
25
 %
 
8.1
%
 
6.9
%
Marine eliminations
(80.1
)
 
(70.2
)
 
14
%
 
—

 
—

 


 
 
 
 
Total Marine
911.0

 
846.5

 
8
%
 
120.4

 
107.4

 
12
 %
 
13.2
%
 
12.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fitness
244.4

 
235.6

 
4
%
 
12.2

 
20.7

 
-41
 %
 
5.0
%
 
8.8
%
Corporate/Other
—

 
—

 
 
 
(14.3
)
 
(16.4
)
 
13
 %
 
 
 
 
Total
$
1,155.4

 
$
1,082.1

 
7
%
 
$
118.3

 
$
111.7

 
6
 %
 
10.2
%
 
10.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(1) Operating Earnings (Loss), As Adjusted, excludes charges related to the planned Fitness business separation and restructuring, exit, integration and impairment charges, as applicable.


Brunswick Corporation
Selected Financial Information
(in millions)
(unaudited)

Disaggregated Revenue - Continuing Operations

 
Three Months Ended
 
March 31, 2018
 
Marine Engine
 
Boat
 
Fitness
 
Total
Geographic Markets
 
 
 
 
 
 
 
United States
$
474.6

 
$
217.4

 
$
121.6

 
$
813.6

Europe
98.3

 
34.6

 
53.4

 
186.3

Asia-Pacific
51.2

 
4.8

 
42.1

 
98.1

Canada
28.9

 
44.3

 
7.1

 
80.3

Rest-of-World
34.1

 
2.9

 
20.2

 
57.2

Marine eliminations
(80.1
)
 
—


—

 
(80.1
)
Total
$
607.0

 
$
304.0

 
$
244.4

 
$
1,155.4

 
 
 
 
 
 
 
 
Major Product Lines
 
 
 
 
 
 
 
Propulsion
$
378.9

 
$
—

 
$
—

 
$
378.9

Parts & Accessories
308.2

 
—

 
—

 
308.2

Aluminum Freshwater Boats
—

 
162.5

 
—

 
162.5

Fiberglass Freshwater Boats
—

 
55.8

 
—

 
55.8

Fiberglass Saltwater Boats
—

 
85.7

 
—

 
85.7

Commercial Cardio Fitness Equipment
—

 
—

 
132.3

 
132.3

Commercial Strength Fitness Equipment
—

 
—

 
90.9

 
90.9

Consumer Fitness Equipment
—

 
—

 
21.2

 
21.2

Marine eliminations
(80.1
)
 
—

 
—

 
(80.1
)
Total
$
607.0

 
$
304.0

 
$
244.4

 
$
1,155.4



Brunswick Corporation
Selected Financial Information
(in millions)
(unaudited)

Disaggregated Revenue - Continuing Operations
 
Three Months Ended
 
April 1, 2017
 
Marine Engine
 
Boat
 
Fitness
 
Total
Geographic Markets
 
 
 
 
 
 
 
United States
$
438.5

 
$
209.0

 
$
128.2

 
$
775.7

Europe
84.4

 
28.5

 
41.0

 
153.9

Asia Pacific
49.5

 
3.1

 
36.4

 
89.0

Canada
28.6

 
37.1

 
5.7

 
71.4

Rest-of-World
30.8

 
7.2

 
24.3

 
62.3

Marine eliminations
(70.2
)
 
—

 
—

 
(70.2
)
Total
$
561.6

 
$
284.9

 
$
235.6

 
$
1,082.1

 
 
 
 
 
 
 
 
Major Product Lines
 
 
 
 
 
 
 
Propulsion
$
341.4

 
$
—

 
$
—

 
$
341.4

Parts & Accessories
290.4

 
—

 
—

 
290.4

Aluminum Freshwater Boats
—

 
152.9

 
—

 
152.9

Fiberglass Freshwater Boats
—

 
46.6

 
—

 
46.6

Fiberglass Saltwater Boats
—

 
85.4

 
—

 
85.4

Commercial Cardio Fitness Equipment
—

 
—

 
136.5

 
136.5

Commercial Strength Fitness Equipment
—

 
—

 
77.9

 
77.9

Consumer Fitness Equipment
—

 
—

 
21.2

 
21.2

Marine eliminations
(70.2
)
 
—

 
—

 
(70.2
)
Total
$
561.6

 
$
284.9

 
$
235.6

 
$
1,082.1




Brunswick Corporation
Comparative Condensed Consolidated Balance Sheets
(in millions)
(unaudited)

 
March 31,
2018
 
December 31,
2017
 
April 1,
2017
Assets
 
 
 
 
 
Current assets
 
 
 
 
 
Cash and cash equivalents, at cost, which approximates fair value
$
284.0

 
$
448.8

 
$
273.3

Restricted cash
9.4

 
9.4

 
11.2

Short-term investments in marketable securities
0.8

 
0.8

 
0.7

Total cash and short-term investments in marketable securities
294.2

 
459.0

 
285.2

Accounts and notes receivable, net
617.5

 
480.2

 
516.7

Inventories
 
 
 
 
 
Finished goods
550.8

 
506.9

 
523.0

Work-in-process
98.6

 
96.8

 
80.5

Raw materials
180.3

 
161.9

 
143.9

Net inventories
829.7

 
765.6

 
747.4

Prepaid expenses and other
40.4

 
73.1

 
36.4

Current assets held for sale
80.9

 
68.8

 
85.3

Current assets
1,862.7

 
1,846.7

 
1,671.0

 
 
 
 
 
 
Net property
673.1

 
659.5

 
583.3

 
 
 
 
 
 
Other assets
 
 
 
 
 
Goodwill
428.3

 
425.3

 
416.0

Other intangibles, net
143.3

 
144.4

 
158.6

Equity investments
29.5

 
25.0

 
26.6

Deferred income tax asset
171.0

 
165.6

 
297.6

Other long-term assets
47.0

 
45.1

 
46.1

Long-term assets held for sale
49.7

 
46.6

 
74.7

Other assets
868.8

 
852.0

 
1,019.6

 
 
 
 
 
 
Total assets
$
3,404.6

 
$
3,358.2

 
$
3,273.9

 
 
 
 
 
 
Liabilities and shareholders’ equity
 
 
 
 
 
Current liabilities
 
 
 
 
 
Current maturities of long-term debt
$
5.1

 
$
5.6

 
$
4.7

Accounts payable
419.7

 
409.7

 
390.3

Accrued expenses
583.6

 
563.6

 
498.4

Current liabilities held for sale
68.0

 
56.2

 
63.1

Current liabilities
1,076.4

 
1,035.1

 
956.5

 
 
 
 
 
 
Debt
428.9

 
431.8

 
435.4

Other long-term liabilities
415.7

 
405.7

 
404.2

Long-term liabilities held for sale
2.8

 
2.7

 
4.2

Shareholders’ equity
1,480.8

 
1,482.9

 
1,473.6

Total liabilities and shareholders’ equity
$
3,404.6

 
$
3,358.2

 
$
3,273.9

 
 
 
 
 
 
Supplemental Information
 
 
 
 
 
Debt-to-capitalization rate
22.7
%
 
22.8
%
 
23.0
%




Brunswick Corporation
Comparative Condensed Consolidated Statements of Cash Flows
(in millions)
(unaudited)

 
Three Months Ended
 
March 31,
2018
 
April 1,
2017
Cash flows from operating activities
 
 
 
Net earnings
$
72.9

 
$
64.9

Less: loss from discontinued operations, net of tax
(7.6
)
 
(9.3
)
Net earnings from continuing operations
80.5

 
74.2

Depreciation and amortization
27.8

 
23.6

Stock compensation expense
1.9

 
4.0

Pension expense, net of (funding)
0.9

 
(33.6
)
Deferred income taxes
20.5

 
13.3

Changes in certain current assets and current liabilities
(210.2
)
 
(146.6
)
Long-term extended warranty contracts and other deferred revenue
2.6

 
0.7

Income taxes
34.5

 
2.6

Other, net
(1.6
)
 
(4.5
)
Net cash used for operating activities of continuing operations
(43.1
)
 
(66.3
)
Net cash used for operating activities of discontinued operations
(24.0
)
 
(20.3
)
Net cash used for operating activities
(67.1
)
 
(86.6
)
 
 
 
 
Cash flows from investing activities
 
 
 
Capital expenditures
(34.5
)
 
(56.6
)
Sales or maturities of marketable securities
—

 
35.0

Investments
(4.8
)
 
(3.6
)
Proceeds from the sale of property, plant and equipment
0.1

 
7.6

Other, net
(0.2
)
 
(0.5
)
Net cash used for investing activities of continuing operations
(39.4
)
 
(18.1
)
Net cash used for investing activities of discontinued operations
(2.6
)
 
(4.2
)
Net cash used for investing activities
(42.0
)
 
(22.3
)
 
 
 
 
Cash flows from financing activities
 
 
 
Payments of long-term debt including current maturities
(0.1
)
 
(0.1
)
Common stock repurchases
(35.0
)
 
(20.0
)
Cash dividends paid
(16.6
)
 
(14.8
)
Proceeds from share-based compensation activity
1.0

 
3.2

Tax withholding associated with shares issued for share-based compensation
(9.3
)
 
(11.4
)
Net cash used for financing activities of continuing operations
(60.0
)
 
(43.1
)
Net cash used for financing activities of discontinued operations
—

 
(0.1
)
Net cash used for financing activities
(60.0
)
 
(43.2
)
 
 
 
 
Effect of exchange rate changes
4.3

 
3.0

Net decrease in Cash and cash equivalents and Restricted cash
(164.8
)
 
(149.1
)
Cash and cash equivalents and Restricted cash at beginning of period
458.2

 
433.6

 
 
 
 
Cash and cash equivalents and Restricted cash at end of period
293.4

 
284.5

Less: Restricted cash
9.4

 
11.2

Cash and cash equivalents at end of period
$
284.0

 
$
273.3

 
 
 
 
Reconciliation
 
 
 
Free Cash Flow
 
 
 
Net cash used for operating activities of continuing operations
$
(43.1
)
 
$
(66.3
)
 
 
 
 
Net cash provided by (used for):
 
 
 
Capital expenditures
(34.5
)
 
(56.6
)
Proceeds from the sale of property, plant and equipment
0.1

 
7.6

Effect of exchange rate changes
4.3

 
3.0

Total free cash flow
$
(73.2
)
 
$
(112.3
)



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