SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) Quarterly Report pursuant to Section 13 or 15 (d) of the
Securities Exchange
Act of 1934
For the quarterly period ended September 30, 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 November 7, 1997, there were 99,706,183 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 periods ended September 30
(dollars in millions, except per share data)
Quarter Nine months
ended September 30 ended September 30
1997 1996 1997 1996
(unaudited)
<S> <C> <C> <C> <C>
Net sales 876.5 763.6 2,726.3 2,360.8
Cost of sales 627.6 556.1 1,934.6 1,682.0
Selling, general and administrative 169.0 141.5 480.4 422.9
Strategic charge 98.5 0.0 98.5 0.0
Operating earnings (loss) (18.6) 66.0 212.8 255.9
Interest expense (14.2) (8.3) (35.6) (24.3)
Other income and expense 3.2 3.2 10.1 15.2
Earnings (loss) before income taxes (29.6) 60.9 187.3 246.8
Income tax provision (benefit) (12.5) 20.4 68.8 90.1
Net earnings (loss) (17.1) 40.5 118.5 156.7
Net earnings (loss) per common share (0.17) 0.41 1.18 1.59
Cash dividends declared per common share 0.125 0.125 0.375 0.375
Average shares used for computation of
earnings per share 100.7 98.7 100.2 98.7
The notes are an integral part of these consolidated statements.
</TABLE>
<TABLE>
Brunswick Corporation
Consolidated Balance Sheets
As of September 30, 1997 and December 31, 1996
(in millions, except share data)
September 30, December 31,
1997 1996
(unaudited)
Assets
Current assets
<S> <C> <C>
Cash and cash equivalents, at cost, which approximates market 81.8 238.5
Marketable securities 0.0 3.6
Accounts and notes receivable, less allowances of $19.2 and $17.2 462.2 326.9
Inventories
Finished goods 327.8 225.3
Work-in-process 143.0 137.2
Raw materials 112.1 82.4
Net inventories 582.9 444.9
Prepaid income taxes 196.0 184.4
Prepaid expenses 51.1 33.6
Income tax refund receivable 18.9 9.9
Current assets 1,392.9 1,241.8
Property
Land 70.7 65.0
Buildings 421.6 404.6
Equipment 827.1 752.7
Total land, buildings and equipment 1,319.4 1,222.3
Accumulated depreciation (656.1) (620.5)
Net land, buildings and equipment 663.3 601.8
Unamortized product tooling costs 106.6 83.6
Net property 769.9 685.4
Other assets
Unrestricted cash held for acquisition of Igloo Holdings, Inc. 0.0 143.0
Goodwill 706.9 352.4
Other intangibles 120.3 137.9
Investments 87.4 87.5
Other long-term assets 161.0 154.4
Other assets 1,075.6 875.2
Total assets 3,238.4 2,802.4
Liabilities and Shareholders' Equity
Current liabilities
Short-term debt, including current maturities of long-term debt 108.0 112.6
Accounts payable 254.2 202.4
Accrued expenses 611.3 516.1
Current liabilities 973.5 831.1
Long-term debt
Notes, mortgages and debentures
653.6 455.4
Deferred items
Income taxes
Postretirement and postemployment benefits 126.1 155.6
Compensation and other 136.0 131.7
Deferred items 51.3 30.9
313.4 318.2
Common shareholders' equity
Common stock; authorized: 200,000,000 shares, $.75 par value;
issued: 102,537,692 shares
Additional paid-in capital 76.9 76.9
Retained earnings 306.2 302.0
Treasury stock, at cost: 2,989,807 shares and 4,071,644 shares 1,032.6 951.3
Cumulative translation adjustments (54.7) (75.4)
Unamortized ESOP expense and other 1.8 11.2
Common shareholders' equity (64.9) (68.3)
1,297.9 1,197.7
Total liabilities and shareholders' equity
3,238.4 2,802.4
The notes are an integral part of these consolidated statements.
</TABLE>
<TABLE>
Brunswick Corporation
Consolidated Statements Of Cash Flows
for the nine months ended September 30
(dollars in millions)
1997 1996
(unaudited)
Cash flows from operating activities
<S> <C> <C>
Net earnings 118.5 156.7
Depreciation and amortization 113.0 88.0
Changes in noncash current assets and current liabilities
of continuing operations (176.9) (148.2)
Income taxes (16.0) 25.9
Strategic charge 98.5 0.0
Other, net 11.0 31.0
Net cash provided by operating activities 148.1 153.4
Cash flows from investing activities
Acquisitions of businesses (486.0) (354.4)
Unrestricted cash held for acquisition of Igloo Holdings, Inc. 143.0 0.0
Capital expenditures (117.2) (106.5)
Payments advanced for long-term supply arrangements (6.3) (42.8)
Proceeds from businesses disposed 0.0 28.4
Investments in marketable securities 3.6 11.2
Other, net 1.8 (9.8)
Net cash used for investing activities (461.1) (473.9)
Cash flows from financing activities
Net proceeds from issuances of short-term commercial paper
and other short-term debt 98.2 92.0
Proceeds from issuances of long-term debt 198.6 0.0
Payments of long-term debt including current maturties (103.3) (2.9)
Cash dividends paid (37.2) (36.9)
Net cash provided by financing activities 156.3 52.2
Net decrease in cash and cash equivalents (156.7) (268.3)
Cash and cash equivalents at January 1 238.5 344.3
Cash and cash equivalents at September 30 81.8 76.0
Supplemental cash flow disclosures:
Interest paid 41.8 33.7
Income taxes paid, net 84.8 54.5
The notes are an integral part of these consolidated statements.
</TABLE>
Brunswick Corporation
Notes to Consolidated Financial Statements
September 30, 1997, December 31, 1996 and September 30, 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. 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 and nine-month periods ended September 30, 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 July 9, 1997, the Company purchased substantially all of the
facilities, equipment, inventory and other assets of Life
Fitness, a designer, manufacturer and marketer of the leading
global brand of computerized cardiovascular and strength training
fitness equipment, from a private equity fund. The purchase
price was approximately $314.0 million after post-closing
adjustments, of which $12.8 million has been deferred pursuant to
an incentive compensation plan in connection with the waiver of
employee stock options granted by Life Fitness. Life Fitness has
been included as part of the Recreation segment.
On January 3, 1997, the Company acquired the stock of Igloo
Holdings, Inc., the leading manufacturer and marketer of coolers
and ice chests, for approximately $152.0 million in cash, which
includes $9.8 million paid to certain management employees under
stock option arrangements that existed prior to acquisition. On
March 7, 1997, the Company acquired the assets of the Hoppe's
line of hunting accessories from Penguin Industries, Inc. 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. 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 October 29, 1997, the Company agreed to purchase the stock of
DBA Products Co., Inc., a global leader in the production and
distribution of high-quality bowling lane machines, cleaners,
conditioners and other lane resurfacing supplies. On November
13, 1997, the Company acquired the assets of Hammer Strength
Corporation, the global leader in plate-loaded strength training
equipment.
Note 4 - Strategic Charge
During the third quarter of 1997, the Company recorded a pretax
charge of $98.5 million ($63.0 million after tax) to cover exit
costs related to strategic activities that were committed to in
the period. The strategic actions included the termination of
development efforts on a line of personal watercraft along with
other initiatives directed at manufacturing rationalization,
product profitability improvements, and general and
administrative expense reductions. The charge consisted of $74.7
million recorded in the Marine segment and $23.8 million recorded
in the Recreation segment. Management anticipates that these
actions will be substantially completed by the end of 1998. It
is anticipated that these actions will result in exit costs
consisting primarily of asset disposition costs of $42.0 million
and severance costs of $32.6 million with the remaining
components of the charge of $23.9 million consisting of other
incremental costs anticipated in connection with the strategic
activities.
Note 5 - Debt
On July 9, 1997, the Company issued $296.0 million of commercial
paper to fund the acquisition of the Life Fitness business. On
August 4, 1997, the Company sold $200.0 million of 7-1/8 percent
notes due August 1, 2027. The proceeds from the sale of the
notes were used to retire a portion of the commercial paper
issued to finance the acquisition of Life Fitness.
During the second quarter of 1997, the Company negotiated a new
long-term credit agreement with a group of banks for $400.0
million with a termination date of May 22, 2002. Under terms of
the agreement, the Company has multiple borrowing options
including borrowing at the greater of the prime rate as announced
by The Chase Manhattan Bank, or the federal funds effective rate
plus 0.5 percent, or a rate tied to the Eurodollar rate. The
Company must pay a facility fee of 0.08 percent per annum. Under
the terms of the agreement, the Company is subject to a leverage
test, as well as a restriction on secured debt. The Company was
in compliance with these covenants at September 30, 1997.
On April 1, 1997, the Company retired $100.0 million of 8-1/8
percent notes that matured.
Note 6 - 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 except as noted in Note 18:
"Subsequent Event" in the 1996 Annual Report on Form 10-K.
Note 7 - Segment Data
The following table sets forth net sales and operating earnings (loss)
of each of the Company's industry segments for the quarter and
nine-month periods ended September 30, 1997 and 1996 (in
millions):
Quarter ended September 30
1997 1996
Net Operating Net Operating
Sales Earnings Sales Earnings
Marine $ 581.3 $ (4.9) $ 566.1 $ 65.0
Recreation 295.2 (4.5) 197.5 12.6
Corporate - (9.2) - (11.6)
Consolidated $ 876.5 $ (18.6) $ 763.6 $ 66.0
Nine months ended September 30
1997 1996
Net Operating Net Operating
Sales Earnings Sales Earnings
Marine $1,809.0 $ 167.9 $1,751.5 $ 228.3
Recreation 917.3 74.0 609.3 58.1
Corporate - (29.1) - (30.5)
Consolidated $2,726.3 $ 212.8 $2,360.8 $ 255.9
Operating earnings for the quarter and nine months ended
September 30, 1997, included a $98.5 million strategic charge
that consisted of $74.7 million in the Marine segment and $23.8
million in the Recreation segment for costs associated with
streamlining operations and improving global manufacturing costs.
Item 2. - Management's Discussion and Analysis
Overview
The Company's financial results for the third quarter and first
nine months 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.
Acquisitions - During the quarter, the Company further advanced
its strategy to increase the scope of its active recreation
businesses by acquiring substantially all of the facilities,
equipment, inventory and other assets of Life Fitness, the
designer, manufacturer and marketer of the leading global brand
of computerized cardiovascular and strength training fitness
equipment for the commercial and high-end consumer markets, from
a private equity fund on July 9, 1997.
There were several other acquisitions that affected the
comparison of the Company's results from the quarter and nine
months ending September 30, 1997, with the prior year. These
acquisitions consist of American Camper acquired on March 8,
1996; Boston Whaler, a designer and manufacturer of offshore
fishing boats, acquired on May 31, 1996; Roadmaster Bicycles
acquired on September 6, 1996; Igloo Holdings, Inc., the leading
manufacturer and marketer of coolers and thermoelectric products,
acquired on January 3, 1997; Hoppe's hunting accessories acquired
on March 7, 1997; and Mongoose bicycles acquired on April 28,
1997.
Additionally, on October 29, 1997, the Company agreed to purchase
the stock of DBA Products Co., Inc., a global leader in the
production and distribution of high-quality bowling lane
machines, cleaners, conditioners and other lane resurfacing
supplies. On November 13, 1997, the Company acquired the assets
of Hammer Strength Corporation, the global leader in plate-loaded
strength training equipment.
Strategic Charge - During the third quarter, the Company
announced initiatives to streamline its operations and improve
global manufacturing costs. The strategic activities include the
termination of development efforts on a line of personal
watercraft; closing a boat manufacturing plant in Ireland;
centralizing European marketing and customer service in the
Marine segment; outsourcing the manufacture of certain components
in the Company's bowling division; consolidating fishing reel
manufacturing into one plant; and other initiatives directed at
manufacturing rationalization, product profitability
improvements, and general and administrative expense
efficiencies.
The Company's financial results for the third quarter and first
nine months of 1997 include a $98.5 million ($63.0 million after
tax) charge to cover exit costs related to the strategic
activities summarized above. The charge consisted of $74.7
million recorded in the Marine segment and $23.8 million recorded
in the Recreation segment. Management anticipates that these
actions will be substantially completed by the end of 1998.
The Company does not expect the benefits from these actions to
have a material impact on the Company's 1997 results, but expects
aggregate pretax savings of $55.0 million to $60.0 million over
the next three years. These estimates are dependent on the
timing of the programs along with the ability to achieve the
financial performance objectives.
Other Matters - 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.
Results of Operations
Consolidated
The following table sets forth certain ratios and relationships
calculated from the consolidated statements of income before the
strategic charge for the quarter and nine-month periods ended
September 30:
Quarter ended Nine months
September 30 ended September 30
1997 1996 1997 1996
Percentage increase in (1)
Net sales 14.8% 9.9% 15.5% 5.4%
Operating earnings before
charges (2) 21.1% 23.1% 21.6% 14.8%
Earnings from continuing
operations before
charges (2) 13.3% 15.7% 15.8% 15.6%
Earnings per share from
continuing operations
before charges (2) 12.2% 13.9% 13.8% 12.8%
Expressed as a percentage
of net sales
Gross margin 28.4% 27.2% 29.0% 28.8%
Selling, general and
administrative expense 19.3% 18.5% 17.6% 17.9%
Operating margin before
charges (2) 9.1% 8.6% 11.4% 10.8%
(1) Compared with the prior year.
(2) Excludes the effects of $98.5 million ($63.0 million
after tax) strategic charge recorded in the third
quarter of 1997 and restructuring charge of $40.0
million ($24.4 million after tax) recorded in the second
quarter of 1995.
Sales increased by $112.9 million to $876.5 million in the third
quarter of 1997 compared with $763.6 million in 1996. The Marine
segment recorded a 2.7 percent sales increase of $15.2 million,
and the Recreation segment added $97.7 million for a 49.5 percent
increase in the third quarter. Sales for the nine-month period
of 1997 were $2,726.3 million, an increase of $365.5 million
versus 1996 sales. The Marine segment contributed $57.5 million
to this increase, and the Recreation segment recorded a sales
increase of $308.0 million. These increases primarily reflect
the effect of revenues from the companies acquired in 1996 and
1997 and growth in sales of larger boats.
The Company's gross margin percentage for the third quarter of
1997 improved to 28.4 percent in 1997 from 27.2 percent in 1996
reflecting productivity enhancements, product innovations and an
improved sales mix.
Selling, general and administrative expenses as a percent of
sales increased to 19.3 percent in the third quarter of 1997 from
18.5 percent in the third quarter of 1996 as a result of the
normal operating expense levels of acquired businesses and
investments in marketing activities. Operating results for the
third quarter and nine-month periods for 1997 include the impact
of the aforementioned $98.5 million ($63.0 million after tax)
strategic charge recorded in the third quarter of 1997.
Including the strategic charge, an operating loss of $18.6
million was recorded for the third quarter of 1997 versus
operating earnings of $66.0 million in 1996. For the nine-month
period, operating earnings including the strategic charge
totalled $212.8 million in 1997 down from $255.9 million in 1996.
Excluding the strategic charge, operating earnings increased 21.1
percent to $79.9 million in the third quarter of 1997 and 21.6
percent to $311.3 million in the 1997 year-to-date period.
Operating margins, excluding the impact of the strategic charge,
improved by 0.5 points to 9.1 percent in the third quarter of
1997, and in the first nine months of 1997 increased 0.6 points
to 11.4 percent, as compared with the 1996 periods. This
improvement reflects the previously mentioned movements in gross
margin percentages and in selling, general and administrative
expense levels.
Interest expense increased $5.9 million and $11.3 million, or
71.1 percent and 46.5 percent, in the third quarter and first
nine months of 1997 compared with 1996 due to increased debt
levels related to the funding of acquisitions. Other income and
expense remained unchanged in the third quarter of 1997 and
decreased $5.1 million to $10.1 million in the first nine months
of 1997 compared with 1996 due to lower joint venture earnings.
The Company's effective tax rates of 42.2 percent in the third
quarter of 1997 and 36.7 percent in the first nine months reflect
the impact of the aforementioned strategic charge. Excluding the
charge, the 1997 rates were consistent with those from the prior
year.
Including the strategic charge, earnings per share from
continuing operations decreased to a loss of $0.17 in the third
quarter of 1997 from earnings of $0.41 in 1996 and decreased 25.8
percent to $1.18 for the first nine months of 1997 compared with
1996. Earnings per share without the effect of the strategic
charge increased 12.2 percent to $0.46 for the third quarter of
1997 and increased 13.8 percent to $1.81 for the first nine
months of 1997 compared with 1996. Per share amounts reflect
higher levels of shares outstanding in 1997 versus 1996.
Marine Segment
The following table sets forth Marine segment results before the
strategic charge for the quarter and nine-month periods ended
September 30:
Quarter ended Nine-months
(Dollars in millions) September 30 ended September 30
1997 1996 1997 1996
Net sales $ 581.3 $ 566.1 $1,809.0 $1,751.5
Percentage increase 2.7% 9.4% 3.3% 4.8%
Operating earnings before
charge (1) $ 69.8 $ 65.0 $ 242.6 $ 228.3
Percentage increase (1) 7.4% 18.8% 6.3% 12.2%
Operating margin before
charge (1) 12.0% 11.5% 13.4% 13.0%
Capital expenditures $ 30.9 $ 22.2 $ 79.3 $ 65.3
(1) Excludes the effects of $74.7 million strategic charge
recorded in the third quarter of 1997 compared with the
prior year.
The Marine segment achieved sales gains versus the prior year of
2.7 percent and 3.3 percent for the 1997 third quarter and nine-
month periods, respectively, as a result of successful marketing
programs and an improved product mix.
Operating results for the third quarter of 1997 and nine-month
periods include the previously discussed strategic charge of
$74.7 million. Including the strategic charge, the Marine
segment reported an operating loss of $4.9 million in the third
quarter of 1997 compared with operating earnings of $65.0 million
in the same period last year. Operating earnings for the first
nine months of 1997 including the strategic charge decreased to
$167.9 million compared with $228.3 million in 1996.
Operating earnings, excluding the impact of the strategic charge,
increased 7.4 percent to $69.8 million for the third quarter of
1997 and increased 6.3 percent to $242.6 million for the first
nine months of 1997 compared with 1996. Operating margins
excluding the impact of the strategic charge increased for the
quarter to 12.0 percent in 1997 from 11.5 percent in 1996 and to
13.4 percent from 13.0 percent in the nine-month period of 1997
compared with 1996. These gains reflect the benefits of cost
management actions and an improved sales mix, which more than
offset costs associated with new product introductions and
increased marketing expenses.
Recreation Segment
The following table sets forth Recreation segment results before
the strategic charge for the quarter and nine-month periods ended
September 30:
Quarter ended Nine-months
(Dollars in millions) September 30 ended September 30
1997 1996 1997 1996
Net sales $295.2 $197.5 $917.3 $609.3
Percentage increase 49.5% 11.6% 50.5% 7.0%
Operating earnings before
charge (1) $ 19.3 $ 12.6 $ 97.8 $ 58.1
Percentage increase (1) 53.2% 22.3% 68.3% 11.1%
Operating margin before
charge (1) 6.5% 6.4% 10.7% 9.5%
Capital expenditures $ 7.1 $ 20.1 $ 33.4 $ 37.9
(1) Excludes the effects of a $23.8 million strategic
charge recorded in the third quarter of 1997 and a $25.8
million restructuring charge recorded in the second quarter
of 1995.
Recreation segment sales increased 49.5 percent to $295.2 million
in the third quarter of 1997 and 50.5 percent to $917.3 million
in the first nine months of 1997 compared with 1996. These gains
reflect primarily the contribution of the aforementioned
businesses acquired in 1996 and 1997, along with improved
performance in the bowling and fishing tackle businesses.
Operating results for the 1997 third quarter and nine-month
periods include a strategic charge of $23.8 million, as
previously described. Including the strategic charge, the
Recreation segment incurred an operating loss of $4.5 million in
the third quarter of 1997 compared with operating earnings of
$12.6 million in 1996. Operating earnings including the
strategic charge increased 27.4% to $74.0 million for the first
nine months of 1997 from $58.1 million in 1996.
Operating earnings for the Recreation segment, excluding the
impact of the strategic charge, increased 53.2 percent to $19.3
million in the third quarter of 1997 and increased 68.3 percent
to $97.8 million in the first nine months of 1997 compared with
1996. Operating margins excluding the strategic charge were 6.5
percent during the third quarter of 1997, an increase of 0.1
point from 6.4 percent in 1996, and 10.7 percent during the
first nine months of 1997, an increase of 1.2 points from 9.5
percent in 1996. These operating margin improvements reflect the
benefits of ongoing cost management 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 totaled $81.8 million at September 30,
1997, down $156.7 million from the end of 1996.
Cash provided by operating activities totaled $148.1 million in
1997, compared with $153.4 million in 1996. The primary
components of cash provided by 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 change
in cash provided by operating activities between 1996 and 1997
reflects stronger operating results and the investment in
noncash working capital by newly acquired businesses. There was
no significant impact on year-to-date 1997 cash flow from the
actions encompassed in the $98.5 million strategic charge.
During the first nine months of 1997, the Company invested $117.2
million in capital expenditures, compared with $106.5 million in
1996. The $10.7 million increase 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
improvements.
Investments in acquisitions of businesses totaled $486.0 million
in the first nine months of 1997. Cash of $143.0 million paid on
January 3, 1997, 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 September 30, 1997, was $761.6 million versus $568.0
million at the end of 1996, with debt-to-capitalization ratios at
those dates of 37.0 percent and 32.2 percent, respectively.
On April 1, 1997, the Company used cash to retire $100.0 million
of 8-1/8 percent notes maturing on that date. On July 9, 1997,
the Company used proceeds from commercial paper borrowings along
with cash from operations to pay for the acquisition of Life
Fitness. On August 4, 1997, the Company sold $200.0 million of
7-1/8 percent notes due August 1, 2027, and the proceeds from the
sale of the notes were used to retire a portion of the
commercial paper issued to finance the acquisition of Life
Fitness.
On October 21, 1997, the Company announced a program to
repurchase systematically up to five million shares of common
stock in open market transactions to offset shares the Company
expects to issue under its stock option and other compensation
plans. These repurchases will be funded with cash generated from
operations and short-term borrowings as required.
The Company's financial flexibility and access to capital markets
result 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 credit agreement with a group of banks and $150.0
million available 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
The estimated cost savings resulting from the strategic charge
and estimates of capital expenditures in this Form 10-Q are
forward looking statements as defined in the Private Securities
Litigation Reform Act of 1995. 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, the ability to
complete the planned initiatives in the time estimated, the
success of ongoing cost-management programs and shifts in market
demand for the Company's products.
Part II-Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
3. By-Laws of the Company.
12. Statement regarding computation of ratio of
earnings to fixed charges.
(b) Reports on Form 8-K.
The Company filed the following reports on Form
8-K during the three months ended September 30,
1997:
1. Report on Form 8-K dated July 9, 1997,
reporting in Item 2 that the Company
acquired the assets of Life Fitness.
2. Report on Form 8-K dated August 4, 1997,
reporting in Item 5 that the Company closed
an offering of $200,000,000 7-1/8% Notes due
August 1, 2027.
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
November 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 Index
No. Title
3. By-Laws of the Company
12. Statement regarding computation of ratio of earnings to
fixed charges
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 thirteen,
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.
<TABLE>
Exhibit 12
Brunswick Corporation
Computation of Ratio of Earnings to Fixed Charges
(dollars in millions) Nine Months Ended Year Ended
September 30 December 31,
1997 1996 1996
Earnings as Adjusted
<S> <C> <C> <C>
Net earnings 118.5 156.7 185.8
Income tax provision 68.8 90.1 104.5
Interest expense 35.6 24.3 33.4
Interest portion of rent expense 7.4 7.4 9.8
Equity in earnings of less-than 50% owned affiliates 0.0 0.0 0.0
Dividends received from less-than 50% owned affiliates 0.0 0.0 0.0
230.3 278.5 333.5
Fixed Charges
Interest expense 35.6 24.3 33.4
Interest portion of rent expense 7.4 7.4 9.8
Capitalized interest 0.0 0.0 0.0
43.0 31.7 43.2
Ratio of earnings to fixed charges (a) 5.4 x 8.8 x 7.7 x
(a)For computation of the ratio of earnings to fixed charges, "earnings" have been calculated
by adding fixed charges (excluding capitalized interest) to earnings from continuing
operations before income taxes and then deducting the undistributed earnings of affiliates.
Fixed charges consist of interest expense, estimated interest portion of rental expense
and capitalized interest.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 81,800
<SECURITIES> 0
<RECEIVABLES> 481,400
<ALLOWANCES> 19,200
<INVENTORY> 582,900
<CURRENT-ASSETS> 1,392,900
<PP&E> 1,426,000
<DEPRECIATION> 656,100
<TOTAL-ASSETS> 3,238,400
<CURRENT-LIABILITIES> 973,500
<BONDS> 653,600
0
0
<COMMON> 76,900
<OTHER-SE> 1,221,000
<TOTAL-LIABILITY-AND-EQUITY> 3,238,400
<SALES> 2,726,300
<TOTAL-REVENUES> 2,726,300
<CGS> 1,934,600
<TOTAL-COSTS> 1,934,600
<OTHER-EXPENSES> 578,900
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 35,600
<INCOME-PRETAX> 187,300
<INCOME-TAX> 68,800
<INCOME-CONTINUING> 118,500
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 118,500
<EPS-PRIMARY> 1.18
<EPS-DILUTED> 1.18
</TABLE>
