FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
X Quarterly Report pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 1997
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 12, 1997, there were 99,076,397 shares of the Company's
Common Stock($.75 par value) outstanding.
Part I- Financial Information
Item I-Financial Statements
<TABLE>
Brunswick Corporation
Consolidated Statements of Income
for the three months ended March 31
(dollars in millions, except per share data)
1997 1996
(unaudited)
<S> <C> <C>
Net sales 841.6 738.9
Cost of sales 601.0 524.0
Selling, general and administrative 147.2 138.3
Operating earnings 93.4 76.6
Interest expense (11.1) (8.1)
Other income and expense 2.8 6.3
Earnings before income taxes 85.1 74.8
Income tax provision 32.4 28.4
Earnings from continuing operations 52.7 46.4
Loss from discontinued operations 0.0 (1.0)
Net earnings 52.7 45.4
Earnings (loss) per common share
Continuing operations 0.53 0.47
Loss from discontinued operations 0.00 (0.01)
Net earnings per common share 0.53 0.46
Cash dividends declared per common share 0.125 0.125
Average shares used for computation of
earnings per share 99.7 98.6
The notes are an integral part of these
consolidated statements.
</TABLE>
<TABLE>
Brunswick Corporation
Consolidated Balance Sheets
As of March 31, 1997 and December 31, 1996
(in millions, except share data)
March 31, December 31,
1997 1996
(unaudited)
Assets
Current assets
Cash and cash equivalents, at cost,
<S> <C> <C>
which approximates market 123.9 238.5
Marketable securities 0.0 3.6
Accounts and notes receivable,
less allowances of $18.6 and $17.2 459.3 326.9
Inventories
Finished goods 286.7 225.3
Work-in-process 146.6 137.2
Raw materials 97.2 82.4
Net inventories 530.5 444.9
Prepaid income taxes 189.9 184.4
Prepaid expenses 35.9 33.6
Income tax refund receivable 0.0 9.9
Current assets 1,339.5 1,241.8
Property
Land 67.0 65.0
Buildings 409.0 404.6
Equipment 813.9 752.7
Total land, buildings and equipment 1,289.9 1,222.3
Accumulated depreciation (647.3) (620.5)
Net land, buildings and equipment 642.6 601.8
Unamortized product tooling costs 84.9 83.6
Net property 727.5 685.4
Other assets
Unrestricted cash held for
acquisition of Igloo Holdings, Inc. 0.0 143.0
Goodwill 438.8 352.4
Other intangibles 131.2 137.9
Investments 85.4 87.5
Other long-term assets 155.8 154.4
Other assets 811.2 875.2
Total Assets 2,878.2 2,802.4
Liabilities and Shareholders' Equity
Current liabilities
Short-term debt, including
current maturities of long-term debt 115.3 112.6
Accounts payable 215.2 202.4
Accrued expenses 506.3 516.1
Income taxes payable 30.5 0.0
Current liabilities 867.3 831.1
Long-term debt
Notes, mortgages and debentures 455.5 455.4
Deferred items
Income taxes 141.6 155.6
Postretirement and postemployment benefits 133.6 131.7
Compensation and other 36.0 30.9
Deferred items 311.2 318.2
Common shareholders' equity
Common stock; authorized: 200,000,000 shares,
$.75 par value; issued: 102,537,692 shares 76.9 76.9
Additional paid-in capital 303.9 302.0
Retained earnings 991.7 951.3
Treasury stock, at cost:
3,560,334 shares and 4,071,644 shares (65.6) (75.4)
Cumulative translation adjustments 5.9 11.2
Unamortized ESOP expense and other (68.6) (68.3)
Common shareholders' equity 1,244.2 1,197.7
Total liabilities and shareholders' equity 2,878.2 2,802.4
The notes are an integral part of these consolidated statements.
</TABLE>
<TABLE>
Brunswick Corporation
Consolidated Statements Of Cash Flows
for the three months ended March 31
(dollars in millions)
1997 1996
(unaudited)
Cash flows from operating activities
<S> <C> <C>
Net earnings 52.7 45.4
Depreciation and amortization 37.1 29.2
Changes in noncash current assets and current
liabilities of continuing operations (197.2) (159.5)
Income taxes 30.2 45.1
Other, net 13.5 (0.1)
Net cash used for operating activities (63.7) (39.9)
Cash flows from investing activities
Acquisitions of businesses (151.6) (127.3)
Unrestricted cash held for Igloo acquisition 143.0 0.0
Capital expenditures (32.7) (24.0)
Payments advanced for long-term
supply arrangements 0.0 (20.8)
Other, net 0.0 4.0
Net cash used for investing activities (41.3) (168.1)
Cash flows from financing activities
Cash dividends paid (12.3) (12.3)
Other, net 2.7 0.0
Net cash used for financing activities (9.6) (12.3)
Net decrease in cash and cash equivalents (114.6) (220.3)
Cash and cash equivalents at January 1 238.5 344.3
Cash and cash equivalents at March 31 123.9 124.0
Supplemental cash flow disclosures:
Interest paid 10.6 7.2
Income tax refunds received, net 2.6 21.2
The notes are an integral part of these consolidated statements.
</TABLE>
Brunswick Corporation
Notes to Consolidated Financial Statements
March 31, 1997, December 31, 1996 and March 31, 1996
(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. The results of
operations and net assets of the Company's divested freshwater
fishing boat operations that comprised substantially all of the
assets of the Fishing Boats Division have been reported as
discontinued operations. Previously reported amounts have been
restated to conform with this presentation. Additionally,
certain amounts on the December 31, 1996, balance sheet have been
reclassified to conform with the current period presentation.
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, 1996. These interim results
include, in the opinion of the Company, all normal and recurring
adjustments necessary to present fairly the results of operations
for the quarter ended March 31, 1997 and 1996. The 1997 interim
results are not necessarily indicative of the results which may
be expected for the remainder of the year.
Note 2 - Acquisitions
On January 3, 1997, the Company acquired the stock of Igloo
Holdings, Inc. for $143.0 million in cash. On March 7, 1997, the
Company acquired the assets of the Hoppe's line of hunting
accessories from Penguin Industries, Inc.
These operations have been included as part of the Brunswick
Outdoor Recreation Group of the Recreation segment. These
acquisitions were accounted for as purchases and have been
recorded using preliminary valuations of the opening balance
sheets. Goodwill arising from these acquisitions will be
amortized using the straight-line method over 40 years. The
operating results of each acquisition are included in the
Company's results of operations since the date of acquisition.
In January 1997, the Company received an $8.2 million payment
from Roadmaster Industries, Inc. in settlement of the final
purchase price adjustment on the bicycle business purchased in
September 1996, which reduces the final cash consideration paid
for the business to $190.2 million.
On April 28, 1997, the Company purchased for approximately $22.0
million the inventory and trademarks of the Mongoose bicycle and
parts business of Bell Sports Corp. and a three-year option to
acquire up to 600,000 shares of Bell common stock for $7.50 per
share.
Note 3 - Debt
On April 1, 1997, the Company retired $100.0 million of 8.125
percent notes that matured.
Note 4 - Litigation
There have been no significant changes in the status of the items
set forth in Note 4: "Commitments and Contingencies," in the 1996
Annual Report to Shareholders and also in Note 18: "Subsequent
Event," in the 1996 Annual Report on Form 10-K.
Note 5 - 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, 1997 and 1996 (in millions):
Quarter ended March 31,
1997 1996
Net Operating Net Operating
Sales Earnings Sales Earnings
Marine $ 568.6 $ 67.0 $ 546.5 $ 64.3
Recreation 273.0 36.8 192.4 21.7
Corporate - (10.4) - (9.4)
Consolidated $ 841.6 $ 93.4 $ 738.9 $ 76.6
Item 2. - Management's Discussion and Analysis
Overview
The Company's financial results in the first quarter of 1997
continue to reflect the favorable impact of strategic
initiatives, which include increasing the contribution of active
recreation businesses through acquisitions, expanding existing
brands through effective marketing programs and product
innovations, and managing costs to improve operating margins.
There were several acquisitions that affected the comparison of
the Company's first quarter 1997 results to the prior year.
These acquisitions include American Camper acquired on March 8,
1996; Boston Whaler, manufacturer of offshore fishing boats,
acquired on May 31, 1996; Roadmaster Bicycles acquired on
September 6, 1996; and Igloo Holdings, Inc., maker of coolers and
thermoelectric products, acquired on January 3, 1997.
The Company also further advanced its strategy to increase the
scope of its active recreation businesses by acquiring the
Hoppe's line of hunting accessories from Penguin Industries, Inc.
on March 7, 1997. On April 28, 1997, the Company acquired the
inventory and trademarks of the Mongoose bicycle and parts
business of Bell Sports Corp.
Other Matters - Results for the first quarter of 1996 have been
restated to account for the Company's divested freshwater fishing
boat units as discontinued operations.
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128 (SFAS No. 128), "Earnings per Share." SFAS
No. 128 replaces the presentation of primary earnings per share
with basic earnings per share, which excludes the dilutive effect
of common stock equivalents. The Company's basic earnings per
share are not expected to be materially different from primary
earnings per share.
On March 18, 1997, the Company received notification from the
Federal Trade Commission that the investigation referenced in
Note 4: "Commitments and Contingencies" of the Company's 1996
Annual Report to Shareholders and Note 18: "Subsequent Event" in
the 1996 Annual Report on Form 10-K had been concluded, with no
action warranted by the Commission.
Results of Operations
Consolidated
The following table sets forth certain ratios and relationships
calculated from the consolidated statements of income for the
quarters ended March 31:
1997 1996
Percentage increase(decrease) in (1)
Net sales 13.9% (0.5)%
Operating earnings 21.9% 4.1%
Earnings from
continuing operations 13.6% 15.4%
Earnings per share from
continuing operations 12.8% 11.9%
Expressed as a percentage
of net sales
Gross margin 28.6% 29.1%
Selling, general and
administrative expense 17.5% 18.7%
Operating margin 11.1% 10.4%
(1) as compared to the prior year
Sales increased by $102.7 million to $841.6 million in the first
quarter of 1997 compared with $738.9 million in 1996. In 1997,
the Marine segment recorded a sales increase of $22.1 million,
and the Recreation segment added $80.6 million. These increases
primarily reflect the effect of revenues from the companies
acquired in 1996 and 1997, growth in sales of higher-priced large
boats and continued strong demand for bowling capital equipment
in East Asian markets.
The Company's gross margin percentage decreased slightly from
last year, as benefits from productivity enhancements and product
innovations were offset by new product start-up costs and product
line mix. Selling, general and administrative expenses as a
percent of sales decreased to 17.5 percent in the first quarter
of 1997 from 18.7 percent in the first quarter of 1996 as a
result of effective cost management designed to keep the growth
in costs at rates below the growth in revenues. This
relationship resulted in operating margin improvement in the
first quarter of 1997 of 0.7 points to 11.1 percent compared to
1996.
In the first quarter of 1997, a 21.9 percent increase in
operating earnings was achieved, while earnings from continuing
operations increased 13.6 percent to $52.7 million. Interest
expense increased $3.0 million, or 37 percent, in the first
quarter of 1997 compared with 1996 due to increased debt levels
related to the funding of acquisitions.
The Company's effective tax rate remained consistent at 38.0
percent in the first quarter of 1997 versus 1996. Earnings per
share from continuing operations increased 12.8 percent to $0.53
in the first quarter of 1997 from $0.47 in 1996.
Marine Segment
The following table sets forth Marine segment results for the
quarters ended March 31:
(Dollars in millions) 1997 1996
Net sales $568.6 $546.5
Percentage increase (1) 4.0% 0.5%
Operating earnings $ 67.0 $ 64.3
Percentage increase (1) 4.2% 5.8%
Operating margin 11.8% 11.8%
Capital expenditures $ 19.3 $ 17.3
(1) as compared to the prior year
The Marine segment posted a sales gain of four percent as a
result of successful marketing programs and an improved product
mix.
Operating earnings for the segment were $67.0 million in the
first quarter of 1997, compared with $64.3 million in the same
period last year. Operating margins remained flat at 11.8
percent as benefits of cost management actions were offset by
costs associated with new product introductions and increased
marketing expenses.
Recreation Segment
The following table sets forth Recreation segment results for the
quarters ended March 31:
(Dollars in millions) 1997 1996
Net sales $273.0 $192.4
Percentage increase(decrease)(1) 41.9% (3.1)%
Operating earnings $ 36.8 $ 21.7
Percentage increase(decrease)(1) 69.6% (9.2)%
Operating margin 13.5% 11.3%
Capital expenditures $ 12.6 $ 7.6
(1) as compared to the prior year
In 1997, Recreation segment sales increased 41.9 percent to
$273.0 million while operating earnings increased 69.6 percent to
$36.8 million. These gains reflect the contribution of the
aforementioned businesses acquired in 1996 and 1997 and increased
shipments of bowling capital equipment into rapidly growing East
Asian markets.
Operating margins for the segment were 13.5 percent during the
first quarter of 1997, an increase of 2.2 points from 11.3
percent in 1996, reflecting the benefits of higher bowling
capital equipment sales, ongoing cost management and acquisition
integration actions.
Cash Flow, Liquidity and Capital Resources
Cash generated from operating activities, available cash balances
and selected borrowings are the Company's major sources of funds
for investments and dividend payments.
Cash and cash equivalents totalled $123.9 million at March 31,
1997, down $114.6 million from the end of 1996.
Cash used for operating activities totalled $63.7 million in
1997, up from $39.9 million in 1996. The primary components of
cash used for operating activities include the Company's net
earnings adjusted for noncash expenses; the timing of cash flows
relating to operating expenses, sales and income taxes; and the
management of inventory levels. The increase in cash used for
operating activities between 1996 and 1997 is due to the
requirements for seasonal noncash working capital by the newly
acquired businesses, partially offset by stronger operating
results.
During the first quarter of 1997, the Company invested $32.7
million in capital expenditures, compared with $24.0 million in
1996. The $8.7 million increase between 1997 and 1996 reflects
the Company's continued emphasis on investing to achieve improved
production efficiencies and product quality, growth from new
products and expansion of existing product lines. Management
anticipates that 1997 capital expenditures could approach $200.0
million, principally for new product introductions and
productivity.
Investments in acquisitions of businesses totalled $151.6 million
in the first quarter of 1997. The $143.0 million of cash paid to
acquire Igloo Holdings, Inc. was classified as unrestricted cash
held for acquisition of Igloo Holdings, Inc. and excluded from
cash and cash equivalents on the December 31, 1996 balance sheet.
Total debt at March 31, 1997 was $570.8 million versus $568.0
million at the end of 1996, with debt-to-capitalization ratios at
those dates of 31.4 percent and 32.2 percent, respectively. On
April 1, 1997, the Company used cash to retire $100.0 million of
8.125 percent notes maturing on that date. Excluding this $100.0
million of debt, the debt-to-capitalization ratio would have been
27.5 percent at March 31, 1997.
The Company has substantial financial flexibility and access to
the capital markets stemming from its strong balance sheet,
investment-grade credit ratings and ability to generate
significant cash from operating activities. The Company has
$400.0 million available under a long-term line of credit with a
group of banks and $350.0 million under a universal shelf
registration filed in 1996 with the Securities and Exchange
Commission for the issuance of equity and/or debt securities.
The Company uses its cash balances and other sources of liquidity
to invest in its current businesses to promote innovation and new
product lines, and to acquire complementary businesses. These
investments, along with other actions taken to improve the profit
margins of current businesses, are designed to continue
improvement in the Company's financial performance and enhance
shareholder value.
Forward Looking Statements
Certain statements in this Form 10-Q are forward looking as
defined in the Private Securities Litigation Reform Law. These
statements involve certain risks and uncertainties that may cause
actual results to differ materially from expectations as of the
date of this filing. These risks include, but are not limited
to, adverse weather conditions retarding sales; inventory
adjustments by major retailers; competitive pricing pressures;
success of planned acquisitions; marketing and cost-management
programs and shifts in market demand.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
At the April 23, 1997, Annual Meeting of Shareholders of
the Company (the "1997 Annual Meeting"), Messrs. Michael
J. Callahan, Manuel A. Fernandez, and Roger W. Schipke
and Ms. Rebecca P. Mark, were elected directors of the
Company for terms expiring at the 2000 Annual Meeting,
and Mr. George D. Kennedy was elected director of the
Company for a term expiring at the 1998 Annual Meeting.
The numbers of shares voted with respect to these
directors were:
Nominees For Withheld
Michael J. Callahan 89,347,165 1,229,572
Manuel A. Fernandez 89,315,751 1,260,986
George D. Kennedy 88,824,672 1,752,065
Rebecca P. Mark 89,317,852 1,258,885
Roger W. Schipke 89,346,601 1,230,136
At the 1997 Annual Meeting the Board of Directors'
appointment of Arthur Andersen LLP as auditors for the
Company and its subsidiaries for the year 1997 was
ratified pursuant to the following vote:
Number of Shares
For 90,183,981
Against 202,969
Abstain 189,787
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 no reports on Form 8-K during the
three months ended March 31, 1997.
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 14, 1997 By:/s/ Victoria J. Reich
Victoria J. Reich,
Vice President and Controller*
*Ms. Reich is signing this report both as a duly authorized
officer and as the principal accounting officer.
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.
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.
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.
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.
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.
AUDIT AND FINANCE 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 and finance committee and appoint one of
the directors so designated as the chairman of the audit and
finance committee. Membership on the audit and finance
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 and finance
committee by the board or shall cease to be a director. Any
member of the audit and finance 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 and finance 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 and finance
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 and finance committee shall
periodically report to the board of directors on its
activities.
(c) Minutes of all meetings of the audit and finance
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.
(d) The audit and finance committee shall meet at the
call of its chairman or any two members of the committee.
Two members of the audit and finance 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.
HUMAN RESOURCE AND 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
human resource and compensation committee and appoint one of
the directors so designated as the chairman of the human
resource and compensation committee. Membership on the
human resource and 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 human resource and 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 human resource
and compensation 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 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 human resource and 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
human resource and 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 human resource and
compensation committee.
(b) The human resource and compensation committee
shall administer the Brunswick Performance Plan, Strategic
Incentive Plan, 1991 Stock Plan, and Supplemental Pension
Plan. The human resource and compensation committee shall
have the power and authority vested in it by any plan of the
corporation which the committee administers. The human
resource and 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.
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.
(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 and finance, human resource and
compensation and corporate governance 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.
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.
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.
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.
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.
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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