posted 07-23-2003 10:50 PM ET (US)        

CEO George Buckley announced second quarter results today, including the following statements regarding Mercury and Boston Whaler sales and financial results:

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Marine Engine Segment

The Marine Engine segment, consisting of the Mercury Marine Group and Brunswick New Technologies (BNT), reported net sales of $521.9 million in the second quarter of 2003, up 3 percent from $505.8 million in the year-ago second quarter. Strong international sales and recent acquisitions offset the decline in domestic sales. Operating earnings in the second quarter were $64.2 million versus $77.8 million a year ago. Operating margins were 12.3 percent compared with 15.4 percent in the second quarter of 2002.

"Sales benefited from a strong performance in international markets, which were up 22 percent in the quarter," Buckley noted. "By contrast, the U.S. outboard market remains challenging as many of our competitors continue to offer deep discounts. We lowered production to keep inventories in balance and ended the quarter with 19 weeks of supply of engines in the pipeline, the same as last year. The lower production volumes and shifts in product mix to low-emission outboards, along with higher pension and health care costs and investments in BNT, are the primary drivers behind the margin decline. We are beginning to see the impact of cost reduction actions taken in the second quarter, which will be even more evident in the second half of the year."

"We continue to focus on new product development, and the technology transition from traditional carbureted two-stroke outboard engines to low-emission direct fuel injected (DFI) two-stroke and four-stroke products," Buckley added. "We recently introduced a new 115-horsepower OptiMax DFI two-stroke and our Project "X" high-horsepower four-stroke outboard is on track for a spring 2004 launch. These products will further enhance our position in this important segment."

Boat Segment

The Brunswick Boat Group comprises the Boat segment and includes the Sea Ray, Bayliner, Meridian, Maxum, Sealine, Hatteras, Boston Whaler, Trophy, Baja and Princecraft boat brands. The Boat segment reported sales for the second quarter of $418.9 million, up 12 percent compared with $373.3 million in the year-ago quarter. Operating earnings rose to $32.3 million, nearly triple the $11.0 million reported for the corresponding period last year. Operating margins in the second quarter improved to 7.7 percent from 2.9 percent a year ago.

"Nearly all of our boat brands posted strong sales growth in the quarter, with new products doing particularly well," Buckley commented. "Retail markets remain challenging, especially in the larger boat segments; however, we continue to see good demand for our entry-level Bayliner 175 runabout, and new models from Sea Ray, Sealine and Boston Whaler. Higher volumes and global sourcing efforts, along with significant improvements at our US Marine division, are driving improvement in operating earnings and operating margins."

"As we enter the 2004 model year, field inventories remain in excellent shape at 22 weeks of supply compared with 23 weeks a year ago. This is right where we want to be going into the seasonally-slower second half of the year," Buckley explained.

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Tommorrow there will be a live question/answer session available on an internet broadcast.