TulsaLarry

Marine Engine Segment
The Marine Engine segment, consisting of the Mercury Marine Group and
Brunswick New Technologies (BNT), reported net sales of $412.8 million in the
first quarter of 2003, an 11 percent increase compared with $370.4 million in
the year-ago quarter. The favorable currency effects of a weakened dollar,
and the full effect of recent acquisitions, most notably from BNT, largely
drove the sales increase for the segment. Excluding these factors, sales were
up slightly versus the year-ago quarter.
Operating earnings in the quarter declined to $19.3 million versus $24.7
million a year ago. Operating margins were 4.7 percent compared with 6.7
percent in the first quarter of 2002.
"More than half of the margin decline was attributed to higher pension,
health care and insurance costs," Buckley explained. "Engine segment
operating margins also were adversely affected by a shift in mix from classic
two-stroke engines to lower-margin four-stroke engines, poor weather during
the quarter that led to lower sales of higher-margin parts and accessories,
and unabsorbed costs due to production slowdowns to keep inventories at
appropriate levels."
"While our initial expectations were that marine retail would be relatively
flat for the year," Buckley said, "the retail markets have gotten off to a
slower-than-anticipated start. This was due to the timing of the war in Iraq
and the resulting low consumer confidence coming just as the boating season
was beginning. Further, competition in the marine engine segment, has also
intensified during the quarter with some manufacturers offering deep
discounts," Buckley said.
"With the widest array of engines among all manufacturers, nearly 65 years
of uninterrupted service to our dealers and customers, and continuing
investments in new products and technologies, Mercury is well poised for the
future," Buckley said. "We believe initiatives such as Project 'X', our game-
changing, high-horsepower four-stroke outboard engine due to arrive in time
for next year's boating season, and new integrated marine electronics products
will further extend our leadership."

Boat Segment
The Brunswick Boat Group comprises the Boat segment and includes the Sea
Ray, Bayliner, Maxum, Sealine, Hatteras, Boston Whaler, Meridian, Trophy, Baja
and Princecraft boat brands. The Boat segment reported net sales for the
first quarter of $378.6 million, up 7 percent compared with $353.9 million in
the year-ago quarter. Operating earnings for the quarter rose to $14.1
million, up from $3.3 million recorded during the corresponding period last
year. Operating margins in the quarter showed good progress, coming in at 3.7
percent versus 0.9 percent for the year-ago period.
"The improvement in operating margins is a testament to our Boat Group
continuing to do a better job of leveraging top-line growth through operating
efficiencies and other improvements," Buckley said. "As for sales, we saw
good gains at Sea Ray, which experienced more normal wholesale activity this
year compared with the year-ago quarter when pipeline inventories were being
adjusted. We are particularly encouraged by the warm acceptance of our many
new products and innovations across all 10 of our premier boat brands."
"Sales of small boats such as runabouts, deck boats and cruisers have
improved, led by the Bayliner 175 that we introduced last year. This boat has
helped re-establish Bayliner as the leader in family boating. An entry-level
boat, the Bayliner 175 offers an engine and trailer package with a suggested
retail price of $9,995," Buckley said. "The market still remains challenging
for larger boats."

Looking Ahead
Buckley noted that the uncertain economy, the situation in the Middle East
and SARS continue to cloud the outlook for the remainder of the year. "Though
we had overall good results in the first quarter, we must nevertheless remain
guarded and vigilant as to how our markets will react to the economic and
geopolitical picture," Buckley explained. "Indeed, the war with Iraq, and its
subsequent effects on consumers and retail activity, came at a difficult time
for the marine industry, which is traditionally the most active in the second
quarter. It remains to be seen how markets will react as the war winds down.
Given that, we believe our earnings per share for the year will be in the
range of $1.40 to $1.50, compared with the $1.14 reported for 2002. This
would indicate EPS for the second quarter of 2003 of between $0.50 and $0.55,
compared with $0.51 a year ago."
Headquartered in Lake Forest, Ill., Brunswick Corporation is a manufacturer
and marketer of leading consumer brands including Mercury and Mariner outboard
engines; Mercury MerCruiser sterndrives and inboard engines; Teignbridge
propellers; MotoTron electronic controls; Northstar marine electronics; IDS
dealer management systems; Sea Ray, Bayliner, Maxum, Hatteras, Meridian and
Sealine pleasure boats; Baja high-performance boats; Boston Whaler and Trophy
offshore fishing boats; Princecraft fishing, deck and pontoon boats; Life
Fitness, Hammer Strength and ParaBody fitness equipment; Brunswick bowling
centers, equipment and consumer products; and Brunswick billiards tables.

TEAMBAJA

Can somebody sum this up in about 1 or 2 lines. I dont feel like reading.

jafo

In a nutshell?

They're making money, and due to the hefty prices they charge for their products, we're the major contributors.

Peconic

Brunswick: Sales up 11% for Q1/03, but backing out acquisition and FOREX, sales flat. Margins under pressure.
Using Brunswick as indicator for industry: Overall sales flat. Most interesting segments are top end and bottom end. Margins under pressure.