Form 10-Q
Securities and Exchange Commission
Washington, D. C. 20549
X Quarterly Report pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 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 May 8, 1996, there were 98,283,035 shares of the Company's
Common Stock
($.75 par value) outstanding.
<PAGE>
Part I - Financial Information
Item I-Financial Statements
Brunswick Corporation
Consolidated Results Of Operations
for the three months ended March 31
(dollars in millions, except per share data)
1996 1995
(unaudited)
Net sales $ 765.8 $ 774.2
Cost of sales 546.6 558.8
Selling, general and administrative 144.2 141.8
Operating earnings 75.0 73.6
Interest expense (8.1) (8.0)
Interest income and other items, net 6.3 (1.3)
Earnings before income taxes 73.2 64.3
Income tax provision 27.8 24.1
Net earnings $ 45.4 $ 40.2
Earnings per common share $ 0.46 $ 0.42
Cash dividends declared per common share $ 0.125 $ 0.125
The notes are an integral part of these consolidated statements.
<PAGE>
Brunswick Corporation
Consolidated Balance Sheets
As of March 31, 1996 and December 31, 1995
(dollars in millions)
March 31 December 31,
Assets 1996 1995
Current assets (unaudited)
Cash and cash equivalents, at cost, which
approximates market $ 124.0 $ 344.3
Marketable securities 5.2 11.2
Accounts and notes receivable, less allowances
of $21.0 and $19.0 391.8 257.7
Inventories 488.9 411.4
Prepaid income taxes 208.4 203.8
Prepaid expenses 31.2 34.2
Income tax refunds receivable - 15.0
Current assets 1,249.5 1,277.6
Property
Land 62.7 62.5
Buildings 391.1 385.5
Equipment 703.4 694.8
Total land, buildings and equipment 1,157.2 1,142.8
Accumulated depreciation (620.6) (608.3)
Net land, buildings and equipment 536.6 534.5
Unamortized product tooling costs 65.1 64.4
Net property 601.7 598.9
Other assets
Dealer networks 111.6 117.5
Trademarks and other assets 178.7 162.2
Excess of cost over net assets of businesses acquired 204.8 119.2
Investments 87.7 85.1
Other assets 582.8 484.0
Total assets $ 2,434.0 $ 2,360.5
Liabilities And Shareholders' Equity
Current liabilities
Short-term debt, including current maturities $ 6.1 $ 6.1
Accounts payable 189.9 154.8
Accrued expenses 482.2 519.5
Income taxes payable 35.2 -
Current liabilities 713.4 680.4
Long-term debt
Notes, mortgages and debentures 312.9 312.8
Deferred items
Income taxes 157.3 157.8
Postretirement and postemployment benefits 136.8 138.3
Compensation and other 30.4 28.1
Deferred items 324.5 324.2
Common shareholders' equity
Common stock; authorized: 200,000,000 shares,
$.75 par value; issued: 102,537,692 shares
at March 31, 1996 and December 31, 1995 76.9 76.9
Additional paid-in capital 301.2 299.4
Retained earnings 847.9 814.8
Treasury stock, at cost: 4,277,956 shares at March 31,
1996 and 4,633,036 shares at December 31, 1995 (79.1) (85.0)
Minimum pension liability adjustment (3.4) (3.4)
Unearned portion of restricted stock
issued for future services and held in trust (8.0) (6.3)
Cumulative translation adjustments 13.2 13.7
Unamortized ESOP expense (65.5) (67.0)
Common shareholders' equity 1,083.2 1,043.1
Total liabilities and shareholders' equity $ 2,434.0 $ 2,360.5
The notes are an integral part of these consolidated statements.
<PAGE>
Brunswick Corporation
Consolidated Statements Of Cash Flows
for the three months ended March 31
(dollars in millions)
1996 1995
(unaudited)
Cash flows from operating activities
Net earnings $ 45.4 $ 40.2
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization of continuing
operations 29.8 28.8
Changes in noncash current assets and current
liabilities of continuing operations (124.1) (115.6)
Increase in deferred items 0.9 7.2
Stock issued for employee benefit plans 6.0 4.1
Other, net 2.1 5.2
Decrease in net assets of discontinued operations - 2.0
Net cash provided by operating activities (39.9) (28.1)
Cash flows from investing activities
Capital expenditures (24.1) (25.6)
Payments for businesses acquired (127.3) -
Investment in marketable securities 6.0 11.3
Other, net (22.7) (16.3)
Net cash used for investing activities (168.1) (30.6)
Cash flows from financing activities
Cash dividends paid (12.3) (12.0)
Other, net - (0.5)
Net cash used for financing activities (12.3) (12.5)
Net decrease in cash and cash equivalents (220.3) (71.2)
Cash and cash equivalents at January 1 344.3 185.2
Cash and cash equivalents at March 31 $ 124.0 $ 114.0
Supplemental cash flow disclosures:
Interest paid $ 7.2 $ 8.9
Income taxes paid (refunds received), net (21.2) (19.1)
The notes are an integral part of these consolidated statements.
<PAGE>
Brunswick Corporation
Notes To Consolidated Financial Statements
March 31, 1996, December 31, 1995 and March 31, 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 quarters ended March 31, 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 98.6 million and 96.0
million for the quarters ended March 31, 1996 and 1995,
respectively.
Note 3 - Inventories
Inventories, of which approximately fifty-five percent were
valued using the LIFO method, consisted of the following at March
31, 1996 and December 31, 1995 (dollars in millions):
March 31 December 31
1996 1995
Finished goods $267.2 $206.9
Work in process 133.6 129.3
Raw materials 88.1 75.2
Inventories $488.9 $411.4
<PAGE>
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, but did not have a
significant impact on the Company's first quarter 1996 results.
This acquisition was accounted for as a purchase and is based on
a preliminary valuation of the opening balance sheet.
On March 29, 1996, the Company signed a definitive agreement,
subject to regulatory approval, to acquire the assets of the
Boston Whaler line of offshore boats from Meridian Sports. This
transaction is expected to close in the second quarter of 1996.
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 Boats Division in
the Marine segment and include the Starcraft, Fisher, MonArk,
Spectrum, Astro and Procraft brands. The Company has signed a
definitive agreement, subject to regulatory approval, to dispose
of the assets associated with the Spectrum and Fisher brands, and
negotiations for the sale of the other brands are in process. The
Company expects the divestitures to be completed by the third
quarter of 1996 and that the income statement effects of the
disposition transactions will not be material to the Company's
consolidated results. The net sales and operating
earnings(losses) of the businesses to be divested for the
quarters ended March 31 were as follows:
1996 1995
Net sales $37.7 $48.1
Operating earnings(losses) $(1.2) $ 1.3
<PAGE>
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
restructuring charge to cover expected losses on the
dispositions. The Circus World divestiture was completed in 1995
and negotiations for the sale of the golf club shaft business are
in process and the sale is expected to be completed in the second
quarter of 1996. The net sales and operating earnings (losses) of
these businesses for the quarters ended March 31 were as follows:
1996 1995
Net sales $ 5.8 $ 6.5
Operating earnings(losses) $ 0.7 $(2.1)
Note 6 - Consolidated common shareholders' equity
<TABLE>
Minimum
Additional pension Unearned Cumulative Unamortized
Common stock paid-in Retained Treasury stock liability restricted translation ESOP
(in millions) Shares Amount capital earnings Shares Amount adjustment stock adjustments Expense
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1996 102.5 $76.9 $299.4 $814.8 (4.6) ($85.0) ($3.4) ($6.3) $13.7 ($67.0)
Net Earnings - - - 45.4 - - - - - -
Dividends declared ($.125 per
common share) - - - (12.3) - - - - - -
Compensation plans and other - - 1.8 - 0.3 5.9 - (1.7) - -
Deferred Compensation-ESOP - - - - - - - - - 1.5
Currency translation - - - - - - - - (0.5) -
Balance, March 31, 1996 102.5 $76.9 $301.2 $847.9 (4.3) ($79.1) ($3.4) ($8.0) $13.2 ($65.5)
</TABLE>
<PAGE>
Note 7 - Debt
Long-term debt at March 31, 1996 and December 31, 1995 consisted
of the following (dollars in millions):
March 31 December 31
1996 1995
Notes, 8.125%, due 1997 (net of
discount of $0.1.) $ 99.9 $ 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 67.8 67.8
318.7 318.6
Current maturities (5.8) (5.8)
Long-term debt $312.9 $312.8
As of March 31, 1996, the Company and seventeen banks had a
long-term 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 8.8 to 1.0 at
March 31, 1996. The leverage ratio of consolidated total debt to
capitalization, as defined, may not exceed 0.55 to 1.00 and at
March 31, 1996, this ratio was 0.23 to 1.00.
The Company is also required to maintain shareholders' equity of
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 March 31, 1996.
There were no borrowings under the agreement at March 31, 1996.
<PAGE>
Note 8 - Litigation
There has been no significant change 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
March 31, 1996 and 1995.
Quarter Ended March 31
1996 1995
Net Operating Net Operating
Sales Earnings Sales Earnings
Marine $ 573.4 $ 62.7 $ 575.7 $ 60.8
Recreation 192.4 21.7 198.5 23.9
Segments 765.8 84.4 774.2 84.7
Corporate - ( 9.4) - (11.1)
Consolidated $765.8 $ 75.0 $ 774.2 $ 73.6
<PAGE>
Management's Discussion and Analysis
Cash Flow, Liquidity and Capital Resources
For the quarter ended March 31, 1996 cash and cash equivalents
decreased $220.3 million compared to a decrease of $71.2 million
for the comparable period of 1995. Net cash used for operating
activities increased to $39.9 million from the $28.1 million for
the quarter ended March 31, 1995. The increase of $11.8 million
in cash used for operating activities was due to slightly higher
seasonal increases in non-cash working capital requirements,
primarily receivables and inventories.
Net cash used for investing activities in the first quarter of
1996 was $168.1 million compared to $30.6 million for the same
period of 1995. The increase was due primarily to a $120.0 million
cash payment made for the acquisition of the Nelson/Weather-Rite
camping division from Roadmaster Industries, Inc. and a payment
advanced to a boat manufacturer in connection with a long-term supply
relationship. Capital expenditures for the first three months
of 1996 were $24.1 million compared to $25.6 million for the
comparable period of 1995.
Net cash used for financing activities remained flat at $12.3
million in the first quarter of 1996 compared to $12.5 million in
the same period of 1995.
Working capital at March 31, 1996 was $536.1 million compared to
$597.2 million at December 31, 1995. The decrease was primarily
due to the effect of the acquisition activity discussed
previously. The Company's current ratio was 1.8 at March 31, 1996
and 1.9 at December 31, 1995.
Total debt at March 31, 1996 was $319.0 million and $318.9
million at December 31, 1995. The Company's
debt-to-capitalization ratio was 22.7% at March 31, 1996 compared
to 23.4% at December 31, 1995.
The Company maintains a $400 million long-term line of credit
agreement with a group of banks. For an explanation of the
agreement and a discussion of the specific covenant restrictions,
see page 8, Note 7 - Debt.
The Company believes that operating cash flows and existing cash
balances, supplemented when necessary with short and/or long-term
borrowings, will continue to provide the financial resources
necessary for capital expenditures and working capital
requirements.
<PAGE>
Management's Discussion and Analysis
Results of Operations
First Quarter 1996 vs. First Quarter 1995
Net Sales
Consolidated net sales for the first quarter of 1996 declined 1%
to $765.8 million from $774.2 million in the first quarter of
1995.
The Marine segment's net sales for the first quarter of 1996 were
$573.4 million versus $575.7 million in the 1995 period. This
performance reflects an increase in sales of larger boats such as
cruisers and yachts, which were offset by a decline in
sales of marine engines as domestic engine dealers and boat
manufacturers decreased purchases from prior year levels in
response to a slight reduction in retail sales activity from 1995
levels. Also, sales of the fresh water fishing boat operations (
i.e., the Fishing Boat Division), which are being divested, were
substantially below those of a year ago reflecting several
factors including the impact of the announced divestitures.
The Recreation segment's first quarter net sales decreased 3%, to
$192.4 million, from $198.5 million for the same period of 1995.
Sales of the recently formed Brunswick Outdoor Recreation Group
which consists of the businesses formerly included in the Zebco
Division and the recently-acquired Nelson/Weather-Rite camping
business were higher with the sales of the Nelson/Weather-Rite
business accounting for a portion of the increase. These
additional sales were partially offset by a decrease in fishing
tackle sales caused by poor weather and efforts by the mass
merchandisers to more aggressively manage their inventory levels.
The Brunswick Indoor Recreation Group experienced a decline in
sales as demand for bowling capital equipment decreased in Taiwan
and Korea. At the present time, it appears that reduced demand
in these markets is continuing. The sales decrease in these
markets was not fully offset by increasing sales to the expanding
market for bowling equipment in China.
Operating Earnings
Operating earnings rose to $75.0 million for the first quarter of
1996 compared to $73.6 million in the first quarter of 1995.
<PAGE>
The Marine segment reported operating earnings of $62.7 million
for the first quarter of 1996 compared to $60.8 million for the
same period of 1995. The increased operating earnings reflect
improved operating margins, as benefits from price increases and
productivity gains were partially offset by the decline in the
profitability of the fresh water fishing boat operations and
increased research and development spending. The increase in
research and development spending reflects the Company's efforts
to bring new products to market and continuing development
efforts on low emissions outboard models.
The Recreation segment operating earnings decreased 9% to $21.7
million in the first quarter of 1996, from $23.9 million in the
same period of 1995. This segment's operating earnings decreased
in line with the aforementioned reduction in sales.
The Company's selling, general and administrative expenses
increased to $144.2 million in 1996 from $141.8 million in 1995
as increased research and development expenses in the Marine
segment were offset by a decline in Corporate expenses.
Corporate expenses decreased to $9.4 million in the first quarter
of 1996, from $11.1 million in the first quarter of 1995.
Interest Expense and Other Items, Net
Interest expense for the first quarter of 1996 remained
relatively flat at $8.1 million versus $8.0 million in the same
period of 1995. Interest income and other items, net was $6.3
million in income in 1996 versus a $1.3 million expense in 1995,
primarily due to a reduction in foreign currency transaction
losses, an increase in earnings from unconsolidated affiliates,
and an increase in interest income in the first quarter of 1996
versus 1995.
Income Taxes
The effective tax rate from continuing operations for first
quarter of 1996 was 38.0% compared to 37.5% for the same period
of 1995.
<PAGE>
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders
At the April 24, 1996 Annual Meeting of
Stockholders of the Company (the "1996 Annual
Meeting"), Messrs. Peter Harf, Peter N. Larson, Jay
W. Lorsch and Kenneth Roman were elected directors
of the Company for terms expiring at the 1999
Annual Meeting. The numbers of shares voted with
respect to these directors and the number of broker
nonvotes were:
Broker
Nominees For Withheld Nonvotes
Peter Harf 74,549,532 7,994,998 300
Peter N. Larson 74,515,865 8,028,665 300
Jay W. Lorsch 74,538,023 8,006,507 300
Kenneth Roman 74,488,871 8,055,659 300
At the 1996 Annual Meeting Mr. Bernd K. Koken was
elected director of the Company for a term expiring
at the 1997 Annual Meeting. The number of shares
voted and the number of broker nonvotes with
respect to Mr. Koken were:
Broker
Nominee For Withheld Nonvotes
Bernd K. Koken 74,492,420 8,052,110 300
At the 1996 Annual Meeting the amended and restated
1991 Stock Plan (the "1991 Plan") was approved
pursuant to the following vote:
Number of Shares
For 47,067,251
Against 27,504,925
Abstain 999,292
Broker Nonvotes 6,973,362
<PAGE>
The 1991 Plan is described on pages 23-30 of the
Company's definitive proxy statement dated March
19, 1996 (the "Proxy Statement") and is Exhibit A
to the Proxy Statement, which description and
exhibit are hereby incorporated by reference.
At the 1996 Annual Meeting the 1995 Stock Plan for
Non-Employee Directors (the "1995 Plan") was
approved pursuant to the following vote:
Number of Shares
For 71,425,247
Against 3,068,781
Abstain 1,077,438
Broker Nonvotes 6,973,364
The 1995 Plan is described on pages 30-33 of the Company's
definitive Proxy Statement and is Exhibit B to the Proxy
Statement, which description and exhibit are hereby
incorporated by reference.
At the 1996 Annual Meeting the Board of Directors'
appointment of Arthur Andersen LLP as auditors for the
Company and its subsidiaries for the year 1996 was ratified
pursuant to the following vote:
Number of Shares
For 81,564,890
Against 514,074
Abstain 465,866
Broker Nonvotes 0
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
3. By-Laws of the Company.
(b) Reports on Form 8-K.
The Company filed a report on Form 8-K dated
February 5, 1996, which reports under Item 5
that the Company declared a dividend
distribution of one preferred share purchase
right for each outstanding share of common
stock of the Company.
<PAGE>
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
May 13, 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.
<PAGE>
Exhibit Index
No. Title
3. By-Laws of the Company
<PAGE>
Exhibit 3
Brunswick Corporation
By-Laws
Article I
Offices
Section 1. The registered office shall be in the City of
Wilmington, County of New Castle, State of Delaware.
Section 2. The corporation may also have offices in the City
of Lake Forest, State of Illinois, and at such other places as the
board of directors may from time to time determine or the business
of the corporation may require.
Article II
Meetings of Stockholders
Section 1. Meetings of stockholders may be held at such time
and place, within or without the State of Delaware, as shall be
stated in the notice of the meeting or in a duly executed waiver of
notice thereof.
Section 2. An annual meeting of stockholders shall be held at
such time and on such day in the month of April or in such other
month as the board of directors may specify by resolution. At the
annual meeting the stockholders shall elect by a plurality vote of
those stockholders voting at the meeting, by ballot, a board of
directors, and transact such other business as may properly be
brought before the meeting.
Section 3. Written notice of the annual meeting stating the
place, date and hour of meeting shall be given not less than ten
nor more than sixty days before the date of the meeting to each
stockholder entitled to vote at such meeting.
Section 4. At least ten days before every election of
directors, a complete list of the stockholders entitled to vote at
said election arranged in alphabetical order, shall be prepared or
caused to be prepared by the secretary. Such list shall be open at
the place where the election is to be held for said ten days, to
the examination of any stockholder, and shall be produced and kept
at the time and place of election during the whole time thereof,
and subject to the inspection of any stockholder who may be
present.
Section 5. Special meetings of the stockholders, for any
purpose or purposes, unless otherwise prescribed by statute or by
the certificate of incorporation, may be called by the chairman of
the board and shall be called by the president or secretary at the
request in writing of a majority of the board of directors. Such
request shall state the purpose or purposes of the proposed
meeting.
<PAGE>
Section 6. Written notice of a special meeting of
stockholders stating the place, date and hour of meeting, and the
purpose or purposes for which the meeting is called shall be given
not less than ten nor more than sixty days before the date of the
meeting to each stockholder entitled to vote at such meeting.
Section 7. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the shares of the
capital stock of the corporation, issued and outstanding and
entitled to vote thereat, present in person or represented by
proxy, shall be requisite and shall constitute a quorum at all
meetings of the stockholders for the transaction of business except
as otherwise provided by statute or by the certificate of
incorporation or by these by-laws. If, however, such quorum shall
not be present or represented at any meeting of the stockholders,
the stockholders entitled to vote thereat, present in person or
represented by proxy, shall have power to adjourn the meeting from
time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such
adjourned meeting at which a quorum shall be present or represented
any business may be transacted which might have been transacted at
the meeting as originally notified.
Section 9. When a quorum is present or represented at any
meeting, the vote of the holders of a majority of the stock having
voting power present in person or represented by proxy shall decide
any question brought before such meeting, unless the question is
one upon which by express provision of the statutes or of the
certificate of incorporation or of these by-laws, a different vote
is required, in which case such express provisions shall govern and
control the decision of such question.
Section 10. At any meeting of the stockholders every
stockholder having the right to vote shall be entitled to vote in
person, or by proxy appointed by an instrument in writing
subscribed by such stockholder and bearing a date not more than
three years prior to said meeting, unless said instrument provides
for a longer period. Each stockholder shall have one vote for each
share of stock having voting power, registered in his name on the
books of the corporation. Except where the transfer books of the
corporation shall have been closed or a date shall have been fixed
as a record date for the determination of its stockholders entitled
to vote, no share of stock shall be voted on at any election for
directors which shall have been transferred on the books of the
corporation within twenty days next proceeding such election of
directors.
<PAGE>
Article III
Directors
Section 1. The number of directors shall be twelve but the
number of directors may, from time to time, be altered by amendment
of these by-laws in accordance with the certificate of
incorporation.
Section 2. Subject to the rights of holders of any class or
series of stock having a preference over the Common Stock as to
dividends or upon liquidation, nominations for the election of
directors may be made by the board of directors or a committee
appointed by the board of directors or by any stockholder entitled
to vote in the election of directors generally. However, any
stockholder entitled to vote in the election of directors generally
may nominate one or more persons for election as directors at a
meeting only if written notice of such stockholder's intent to make
such nomination or nominations has been given, either by personal
delivery or by United States mail, postage prepaid, to the
secretary of the corporation not later than (a) with respect to an
election to be held at an annual meeting of stockholders, ninety
days prior to the anniversary date of the immediately preceding
annual meeting, and (b) with respect to an election to be held at a
special meeting of stockholders for the election of directors, the
close of business on the tenth day following the date on which
notice of such meeting is first given to stockholders. Each such
notice shall set forth: (i) the name and address of the stockholder
who intends to make the nomination and of the person or persons to
be nominated; (ii) a representation that the stockholder is the
holder of record of stock of the corporation entitled to vote at
such meeting and intends to appear in person or by proxy at the
meeting to nominate the person or persons specified in the notice;
(iii) a description of all arrangements or understandings between
the stockholder and each nominee and any other person or persons
(naming such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder; (iv) such other
information regarding each nominee proposed by such stockholder as
would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange
Commission; and (v) the consent of each nominee to serve as a
director of the corporation if so elected. The presiding officer
of the meeting may refuse to acknowledge the nomination of any
person not made in compliance with the foregoing procedure.
Section 3. The property and business of the corporation shall
be managed by its board of directors, which may exercise all such
powers of the corporation and do all such lawful acts and things as
are not by statute or by the certificate of incorporation or by
these by-laws directed or required to be exercised or done by the
stockholders.
<PAGE>
Meetings of the Board of Directors
Section 4. The board of directors of the corporation may hold
meetings, both regular and special, either within or without the
State of Delaware.
Section 5. The first meeting of each newly elected board
shall be held immediately after, and at the same place as, the
annual meeting of stockholders at which such board shall have been
elected, for the purpose of electing officers, and for the
consideration of any other business that may properly be brought
before the meeting. No notice of such meeting shall be necessary
to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present.
Section 6. Regular meetings of the board of directors shall
be held on such dates, not less often than once each calendar
quarter, as may be fixed from time to time by resolution of the
board of directors. No notice need be given of such meetings,
provided that notice of such resolution has been furnished to each
director. Such meetings shall be held at the Lake Forest office of
the corporation or at such other place as is stated in the notice
of the meeting. Upon the assent, given either verbally or in
writing, of a majority of the whole board, any regular meeting may
be cancelled, the time changed, or may be held at such other place
and time, as a majority of the whole board may designate, either
verbally or in writing, upon reasonable notice given to each
director, either personally or by mail or by telegram.
Section 7. Special meetings of the board of directors may be
called by the chairman of the board, or by the secretary on the
written request of two directors, to be held either at the Lake
Forest office of the corporation or at such other place as may be
convenient and may be designated by the officer calling the
meeting. Reasonable notice of such special meeting shall be given
to each director, either personally or by mail or telegram;
provided, that a majority of the whole board of directors present
at a meeting called by any of said officers, in matters requiring
prompt attention by the board, may hold a valid meeting and
transact business without the giving of notice to each director as
above provided.
Section 8. At all meetings of the board the presence of a
majority of the whole board shall be necessary and sufficient to
constitute a quorum for the transaction of business and the act of
a majority of the directors present at any meeting at which there
is a quorum shall be the act of the board of directors, except as
may be otherwise specifically provided by statute or by the
certificate of incorporation or by these by-laws. If a quorum
shall not be present at any meeting of the board of directors the
directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until
a quorum shall be present.
<PAGE>
Executive Committee
Section 9. (a) The board of directors of the corporation at
the annual or any regular or special meeting may, by resolution
adopted by a majority of the whole board, designate three or more
directors, one of whom shall be either the chairman of the board or
the president of the corporation, to constitute an executive
committee. Vacancies in the executive committee may be filled at
any meeting of the board of directors. Each member of the
executive committee shall hold office until his successor shall
have been duly elected, or until his death, or until he shall
resign or shall have been removed from office or shall cease to be
a director. Any member of the executive committee may be removed
by resolution adopted by a majority of the whole board of directors
whenever in its judgment the best interests of the corporation
would be served thereby. The compensation, if any, of members of
the executive committee shall be established by resolution of the
board of directors.
(b) The executive committee shall have and may exercise all
of the authority of the board of directors in the management of the
corporation, provided such committee shall not have the authority
of the board of directors in reference to amending the certificate
of incorporation, adopting a plan of merger or consolidation with
another corporation or corporations, recommending to the
stockholders the sale, lease, exchange, mortgage, pledge or other
disposition of all or substantially all of the property and assets
of the corporation if not made in the usual and regular course of
its business, recommending to the stockholders a voluntary
dissolution of the corporation or a revocation thereof, amending,
altering or repealing the by-laws of the corporation, electing or
removing officers of the corporation or members of the executive
committee, fixing the compensation of officers, directors, or any
member of the executive committee, declaring dividends, amending,
altering or repealing any resolution of the board of directors
which by its terms provides that it shall not be amended, altered
or repealed by the executive committee, the acquisition or sale of
companies, businesses or fixed assets where the fair market value
thereof or the consideration therefor exceeds $10,000,000,
authorizing the issuance of any shares of the corporation, or
authorizing the creation of any indebtedness for borrowed funds, in
excess of $2,000,000.
(c) The executive committee shall have power to authorize the
seal of the corporation to be affixed to all papers which may
require it. Minutes of all meetings of the executive committee
shall be submitted to the board of directors of the corporation at
each meeting following a meeting of the executive committee. The
minute books of the executive committee shall at all times be open
to the inspection of any director.
(d) The executive committee shall meet at the call of the
chairman of the executive committee, chairman of the board, the
president, or any two members of the executive committee. Three
members of the executive committee shall constitute a quorum for
the transaction of business and the act of a majority of those
present shall constitute the act of the committee.
<PAGE>
Audit Committee
Section 10. (a) The board of directors of the corporation at
the annual or any regular or special meeting shall, by resolution
adopted by a majority of the whole board, designate three or more
independent directors to constitute an audit committee and appoint
one of the directors so designated as the chairman of the audit
committee. Membership on the audit committee shall be restricted
to those directors who are independent of the management of the
corporation and are free from any relationship that, in the opinion
of the corporation's board of directors, would interfere with the
exercise of independent judgment as a member of the committee.
Vacancies in the committee may be filled at any meeting of the
board of directors. Each member of the committee shall hold office
until his successor shall have been duly elected, or until his
death, or until he shall resign or shall have been removed from the
audit committee by the board or shall cease to be a director. Any
member of the audit committee may be removed from the committee by
resolution adopted by a majority of the whole board of directors
whenever in its judgment (1) such person is no longer an
independent director or free from any relationship with the
corporation or any of its officers prohibited by this section, or
(2) the best interests of the corporation would be served thereby.
The compensation, if any, of members of the committee shall be
established by resolution of the board of directors.
(b) The audit committee shall be responsible for recommending
to the board of directors the appointment or discharge of
independent auditors, reviewing with management and the independent
auditors the terms of engagement of independent auditors, including
the fees, scope and timing of the audit and any other services
rendered by such independent auditors; reviewing with independent
auditors and management the corporation's policies and procedures
with respect to internal auditing, accounting and financial
controls, and dissemination of financial information; reviewing
with management, the independent auditors and the internal
auditors, the corporation's financial statements, audit results and
reports and the recommendations made by the auditors with respect
to changes in accounting procedures and internal controls;
reviewing the results of studies of the corporation's system of
internal accounting controls; and performing any other duties or
functions deemed appropriate by the board of directors. The
committee shall have such powers and rights as may be necessary or
desirable to fulfill these responsibilities including, the power
and right to consult with legal counsel and to rely upon the
opinion of such legal counsel. The audit committee is authorized
to communicate directly with the corporation's financial officers
and employees, internal auditors and independent auditors on such
matters as it deems desirable and to have the internal auditors and
independent auditors perform such additional procedures as it deems
appropriate. The audit committee shall periodically report to the
board of directors on its activities.
(c) Minutes of all meetings of the audit committee shall be
submitted to the board of directors of the corporation. The minute
books of the committee shall at all times be open to the inspection
of any director.
<PAGE>
(d) The audit committee shall meet at the call of its
chairman or any two members of the committee. Two members of the
audit committee shall constitute a quorum for the transaction of
business and the act of a majority of those present, but no less
than two members, shall constitute the act of the committee.
Compensation Committee
Section 11. (a) The board of directors of the corporation at
the annual or any regular or special meeting shall, by resolution
adopted by a majority of the whole board, designate three or more
directors to constitute a compensation committee and appoint one of
the directors so designated as the chairman of the compensation
committee. Membership on the compensation committee shall be
restricted to disinterested persons which for this purpose shall
mean any director, who, during the time he is a member of the
compensation committee is not eligible, and has not at any time
within one year prior thereto been eligible, for selection to
participate in any of the compensation plans administered by the
compensation committee, except for the 1988 Stock Plan for
Non-Employee Directors. Vacancies in the committee may be filled
at any meeting of the board of directors. Each member of the
committee shall hold office until his successor shall have been
duly elected, or until his death or resignation, or until he shall
have been removed from the committee by the board of directors, or
until he shall cease to be a director or a disinterested person.
Any member of the compensation committee may be removed by
resolution adopted by a majority of the whole board of directors
whenever in its judgment the best interests of the corporation
would be served thereby. A majority of the compensation committee
shall constitute a quorum and an act of the majority of the members
present at any meeting at which a quorum is present, or an act
approved in writing by each of the members of the committee without
a meeting, shall be the act of the compensation committee. The
compensation, if any, of members of the committee shall be
established by resolution of the board of directors.
(b) The compensation committee shall administer the CEO
Incentive Plan, Brunswick Performance Plan, Strategic Incentive
Plan, 1971 Stock Option Plan, 1984 Restricted Stock Plan, 1988
Stock Plan for Non-Employee Directors, 1991 Stock Plan, and
Supplemental Pension Plan. The compensation committee shall have
the power and authority vested in it by any plan of the corporation
which the committee administers. The compensation committee shall
from time to time recommend to the board of directors the
compensation of the officers of the corporation except for
assistant officers whose compensation shall be fixed by the
officers of the corporation. The compensation
committee shall also make recommendations to the board of directors
with regard to the compensation of the board of directors and its
committees except the compensation committee.
<PAGE>
Corporate Governance Committee
Section 12. (a) The board of directors of the corporation at
the annual or any regular or special meeting shall, by resolution
adopted by a majority of the whole board, designate three or more
directors to constitute a corporate governance committee of the
board of directors and appoint one of the directors so designated
as its chairman. Members on the corporate governance committee of
the board of directors shall be restricted to disinterested persons
which for this purpose shall mean any director who, during the time
the director is a member of the corporate governance committee of
the board of directors, is neither an officer or employee of the
corporation. Vacancies in the committee may be filled at any
meeting of the board of directors. Each member of the committee
shall hold office until his successor shall have been duly elected,
or until his death or resignation, or until he shall have been
removed from the committee by the board of directors, or until he
shall cease to be a director. Any member of the corporate
governance committee of the board of directors may be removed by
resolution of the whole board of directors whenever in its judgment
the best interests of the corporation would be served thereby. A
majority of the corporate governance committee of the board of
directors shall constitute a quorum and an act of the majority of
the members present at any meeting at which a quorum is present, or
an act approved in writing by each of the members of the committee
without a meeting, shall be the act of the corporate governance
committee. The compensation, if any, of members of the committee
shall be established by resolution of the board of directors.
(b) The corporate governance committee of the board of
directors shall be responsible for all matters of corporate
governance and director affairs including, but not limited to:
(i) considering and making recommendations to the
board with regard to changes in the size of
the board;
(ii) developing and maintaining appropriate
criteria for the composition of the board of
directors and its nominees;
(iii) overseeing the selection of and making
recommendations to the board regarding
nominees for election as directors to be
submitted to the stockholders and nominees to
fill vacancies on the board of directors as
they occur;
(iv) coordinating an annual evaluation by the
board, with input from senior management, of
the structure of the board and its committees
and the processes employed in their
deliberations; and
(v) periodically evaluating the performance of
members of the board.
<PAGE>
(c) Nothing in this by-law is intended to prevent any
individual director from making a recommendation of a person to be
a director of the corporation either to the corporate governance
committee or to the board.
Other Committees
Section 13. The board of directors may from time to time
create and appoint such committees in addition to the executive,
audit, compensation and nominating committees as it deems
desirable. Each additional committee shall bear such designation,
shall have such powers and shall perform such duties, not
inconsistent with these by-laws or with law, as may be assigned to
it by the board of directors; provided that no such additional
committee may exercise the powers of the board of directors in the
management of the business and affairs of the corporation except
such as shall be expressly delegated to it. The board of directors
shall have the power to change the members of any such additional
committee at any time, to fill vacancies, and to discharge any such
additional committee at any time. The compensation, if any, of
members of any such committee shall be established by resolution of
the board of directors.
Compensation of Directors
Section 14. Directors shall receive such fees and
reimbursement of reasonable expenses as may be fixed from time to
time by resolution of the board. Members of special or standing
committees shall also be allowed such fees and reimbursements for
reasonable expenses in connection with service on such committees
as may from time to time be fixed by resolution of the board. Such
fees may be fixed on the basis of meetings attended or on an annual
basis or both and may be payable currently or deferred.
Action by Written Consent
Section 15. Any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof
may be taken without a meeting if all members of the board or
committee, as the case may be, consent thereto in writing and the
writing or writings are filed with the minutes of proceedings of
the board or committee.
<PAGE>
Action by Telephone or Other Communications Equipment
Section 16. Directors may participate in a meeting of the
board or any committee by means of conference telephone or similar
communications equipment by means of which all persons
participating in the meeting can hear each other, and participation
in a meeting pursuant to this section shall constitute presence in
person at such meeting.
Alternate Committee Members
Section 17. The board of directors may designate one or more
directors as alternate members of any committee, any of whom may be
selected by the chairman of a committee to replace any absent or
disqualified member at any meeting of a committee. In the absence
or disqualification of a member of a committee and of the alternate
members of such committee, the member or members thereof present at
any meeting and not disqualified from voting, whether or not such
member or members constitutes a quorum, may unanimously appoint
another member of the board of directors to act at the meeting in
place of any such absent or disqualified member.
Article IV
Notices
Section 1. Except as may be otherwise provided for in these
by-laws, whenever under the provisions of the statutes or of the
certificate of incorporation or of these by-laws, notice is
required to be given to any director or stockholder, it shall not
be construed to mean personal notice, but such notice may be given
in writing, by mail, addressed to such director or stockholder at
such address as appears on the books of the corporation, and such
notice shall be deemed to be given at the time when the same shall
be mailed. Notice to directors may also be given by telegram or
telex.
Section 2. Whenever any notice is required to be given under
the provisions of the statutes or of the certificate of
incorporation, or of these by-laws, a waiver thereof in writing
signed by the person or persons entitled to said notice, whether
before or after the time stated therein, shall be deemed equivalent
thereto.
<PAGE>
Article V
Officers
Section 1. The Board of Directors shall elect a Chairman of
the Board from among its members. The Board of Directors shall
also elect a Chief Executive Officer and such other officers as the
Board of Directors determines, none of whom need to be members of
the Board of Directors.
Section 2. The officers of the corporation shall hold office
until their successors are chosen and qualify. Any officer of the
corporation may be removed at any time by the affirmative vote of a
majority of the whole board of directors.
Article VI
Indemnification of Directors and Officers
Section 1. The corporation may indemnify to the fullest
extent that is lawful, any person who was or is a party or is
threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (including an action by or in the
right of the corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or
was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines, taxes, penalties and
amounts paid in settlement actually and reasonably incurred by him
in connection with such action, suit or proceeding.
Section 2. The corporation may purchase and maintain
insurance on behalf of any person who is or was a director,
officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust
or other enterprise against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status
as such, whether or not he would be entitled to indemnity against
the same liability under the provisions of this article.
Section 3. The corporation may enter into an indemnity
agreement with any director, officer, employee or agent of the
corporation, upon terms and conditions that the board of directors
deems appropriate, as long as the provisions of the agreement are
not inconsistent with this article.
<PAGE>
Article VII
Certificates of Stock
Section 1. Every holder of stock in the corporation shall be
entitled to have a certificate, signed by, or in the name of the
corporation by the chairman of the board, the president or a vice
president and the treasurer or an assistant treasurer, or the
secretary or an assistant secretary of the corporation, certifying
the number of shares owned by him in the corporation. If the
corporation shall be authorized to issue more than one class of
stock or more than one series of any class, designations,
preferences and relative, participating, optional and other special
rights of each class of stock or series thereof and the
qualifications, limitations or restrictions or such preferences and
rights shall be set forth in full or summarized on the face or back
of the certificate which the corporation shall issue to represent
such class or series of stock; provided, however, that, to the full
extent allowed by law, in lieu of the foregoing requirements, there
may be set forth on the face or back of the certificate which the
corporation shall issue to represent such class or series of stock,
a statement that the corporation will furnish without charge to
each stockholder who so requests the designations, preferences and
relative, participating, optional or other special rights of each
class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and rights.
Section 2. If such certificate is countersigned (1) by a
transfer agent, or (2) by a registrar, any other signature on the
certificate may be a facsimile. In case any officer, transfer
agent, or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such
officer, transfer agent, or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as
if he were such officer, transfer agent, or registrar at the date
of issue.
Lost Certificates
Section 3. The board of directors may authorize the transfer
agents and registrars of the corporation to issue and register,
respectively, new certificates in place of any certificates alleged
to have been lost, stolen or destroyed, and in its discretion and
as a condition precedent to the issuance thereof, may prescribe
such terms and conditions as it deems expedient, and may require
such indemnities as it deems necessary to protect the corporation
and said transfer agents and registrars.
Transfers of Stock
Section 4. Upon surrender to the corporation or the transfer
agent of the corporation of a certificate for shares duly endorsed
or accompanied by proper evidence of succession, assignment or
authority to transfer, it shall be the duty of the corporation to
issue a new certificate to the person entitled thereto, cancel the
old certificate and record the transaction upon its books.
<PAGE>
Fixing Record Date
Section 5. In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to
corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a
record date, which shall not be more than sixty nor less than ten
days before the date of such meeting, nor more than sixty days
prior to any other action. A determination of stockholders of
record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record
date for the adjourned meeting.
Registered Stockholders
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of
shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books
as the owner of shares, and shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on
the party of any other person, whether or not it shall have express
or other notice thereof, except as otherwise provided by the laws
of Delaware.
Article VIII
General Provisions
Dividends
Section 1. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of
incorporation,if any, may be declared by the board of directors at
any regular or special meeting, pursuant to law. Dividends may be
paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set
aside out of any funds of the corporation available for dividends
such sum or sums as the directors from time to time, in their
absolute discretion, think proper as a reserve or reserves to meet
contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of
the corporation, and the directors may modify or abolish any such
reserve in the manner in which it was created.
Section 3. The board of directors shall present at each
annual meeting and when called for by vote of the stockholders at
any special meeting of the stockholders, a full and clear statement
of the business and condition of the corporation.
<PAGE>
Checks
Section 4. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such
other person or persons as the board of directors may from time to
time designate. The board of directors, in its discretion, may
delegate its responsibilities contained in this section to any
officer or officers of the corporation.
Fiscal Year
Section 5. The fiscal year of the corporation shall begin on
the first day of January, and terminate on the thirty-first day of
December, in each year.
Seal
Section 6. The corporate seal shall have inscribed thereon
the name of the corporation, the year of its organization and the
words "Incorporated Delaware". The seal may be used by causing it
or a facsimile thereof to be impressed or affixed or reproduced or
otherwise.
Article IX
Tennessee Authorized Corporation Protection Act
Section 1. This corporation shall be subject to Section 24(a)
of Chapter 30 of the Tennessee Business Corporation Act.
Article X
Amendments
Section 1. The holders of shares of capital stock of the
corporation entitled at the time to vote for the election of
directors shall have the power to adopt, alter, amend, or repeal
the by-laws of the corporation by vote of such percentage of such
shares as is required by the Certificate of Incorporation, or if no
percentage is specified by the Certificate of Incorporation, by
vote of not less than 66-2/3% of such shares. The board of
directors shall also have the power to adopt, alter, amend or
repeal the by-laws of the corporation by vote of such percentage of
the entire board as is required by the Certificate of
Incorporation, or if no percentage is specified by the Certificate
of Incorporation, by vote of not less than a majority of the entire
board.
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0
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