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Brunswick Corp. Reports Operating Results (10-Q)

May 08, 2009 | About:
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Brunswick Corp. (BC) filed Quarterly Report for the period ended 2009-05-07.

Brunswick Corporation is a manufacturer and marketer of leading consumer brands in four segments: Marine Engines Boats Fitness and Bowling & Billiards. The company also owns and operates: Brunswick bowling centers across the United States and internationally; Land 'N' Sea a distributor of marine parts and accessories; and Omni Fitness a chain of specialty fitness equipment retail stores. Brunswick Corp. has a market cap of $568.5 million; its shares were traded at around $6.45 with and P/S ratio of 0.1. The dividend yield of Brunswick Corp. stocks is 0.8%.

Highlight of Business Operations:

Quarterly operating losses were $127.5 million with negative operating margins of 17.4 percent. These results included $39.6 million of restructuring, exit and other impairment charges taken during the first quarter of 2009. In the three months ended March 29, 2008, quarterly operating earnings were $10.3 million, with operating margins of 0.8 percent, which included restructuring, exit and other impairment charges of $22.2 million. The operating losses during the first quarter of 2009 were primarily the result of lower sales from marine operations, reduced fixed-cost absorption due to reduced production rates in the Company s marine businesses in an effort to achieve appropriate levels of dealer pipeline inventories and higher restructuring, exit and other impairment charges. These factors were partially offset by successful cost-reduction initiatives, as discussed in Note 2 – Restructuring Activities in the Notes to Consolidated Financial Statements.

In March 2008, Brunswick sold its interest in its bowling joint venture in Japan for $40.4 million gross cash proceeds, $36.9 million net of cash paid for taxes and other costs. The sale resulted in a $19.7 million pretax gain, $9.1 million after-tax, and was recorded in Investment sale gain in the Consolidated Statements of Operations. This sale was subject to post-closing adjustments, which were completed during 2008. Ultimately, the Company recorded $40.4 million gross cash proceeds, $37.4 million net of cash paid for taxes and other costs, and a $20.9 million pretax gain, $9.9 million after-tax.

Total restructuring, exit and other impairment charges in the first quarter of 2009 were $39.6 million. The $39.6 million consists of $11.7 million in the Marine Engine segment, $25.0 million in the Boat segment, $1.0 million in the Fitness segment, $0.8 million in the Bowling & Billiards segment and $1.1 million at Corporate. Total restructuring, exit and other impairment charges during the first three months of 2008 were $22.2 million. The $22.2 million consists of $1.5 million in the Marine Engine segment, $13.8 million in the Boat segment, $5.6 million in the Bowling & Billiards segment and $1.3 million at Corporate. See Note 2 – Restructuring Activities in the Notes to Consolidated Financial Statements for further details.

Investment sale gains. In March 2008, Brunswick sold its interest in its bowling joint venture in Japan for $40.4 million gross cash proceeds, $36.9 million net of cash paid for taxes and other costs. The sale resulted in a $19.7 million pretax gain, $9.1 million after-tax, and was recorded in Investment sale gain in the Consolidated Statements of Operations. This sale was subject to post-closing adjustments, which were completed during 2008. Ultimately, the Company recorded $40.4 million gross cash proceeds, $37.4 million net of cash paid for taxes and other costs, and a $20.9 million pretax gain, $9.9 million after-tax.

In March 2008, Brunswick sold its interest in its bowling joint venture in Japan for $40.4 million gross cash proceeds, $36.9 million net of cash paid for taxes and other costs. The sale resulted in a $19.7 million pretax gain, $9.1 million after-tax, and was recorded in Investment sale gain in the Consolidated Statements of Operations. This sale was subject to post-closing adjustments, which were completed during 2008. Ultimately, the Company recorded $40.4 million gross cash proceeds, $37.4 million net of cash paid for taxes and other costs, and a $20.9 million pretax gain, $9.9 million after-tax.

During the first quarter of 2009, the Company recognized a tax provision of $34.4 million on a loss before income taxes of $149.8 million for an effective tax rate of (23.0) percent. Typically, the Company would recognize a tax benefit on losses before income taxes; however, due to the uncertainty of the realization of certain state and foreign net deferred tax assets, a special tax provision of $36.6 million was recognized to increase the deferred tax asset valuation allowance. See Note 12 – Income Taxes in the Notes to Consolidated Financial Statements for further details.

Read the The complete ReportBC is in the portfolios of David Tepper of APPALOOSA MANAGEMENT LP, Arnold Schneider of Schneider Capital Management, Kenneth Fisher of Fisher Asset Management, LLC, Kenneth Fisher of Fisher Asset Management, LLC, Charles Brandes of Brandes Investment.

Rating: 2.5/5 (2 votes)

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