posted 09-05-2013 09:36 PM ET (US)        

First, Brunswick realized that being competitive in the marine electronics business was not in their mainstream, and they disposed of the New Zealand electronics manufacturer they had acquired, NAVMAN. This was a real shame, as the NAVMAN company was more or less ruined as a result. What was once an up and coming electronics manufacturer became just a note on a balance sheet, representing several hundred million lost.

Later, Brunswick began to shed the marginal boat brands it had acquired. Some of these had been purchased at amazingly high prices. We won't really know if Brunswick intended to actually make and sell these boat brands. The end result is those brands are not on the market. Some of these brands were so obscure I can't even remember their names.

Now the bigger limbs are falling off the tree. Brunswick has announced it has sold Cabo Yachts and Hatteras Yachts. It is believed that Brunswick had purchased these two brands for $60-million and $80-million, respectively. No figures have been announced for the selling price, but there is a lot of speculation that it was much less, reportedly only a fraction of the original investment price.

As a result, Brunswick seems to have an abundance of white space on their corporate line card these days.

posted 09-05-2013 11:34 PM ET (US)            

Also, these yachts are so expensive that they are in the price range where buyers want customization and individualization. People with $2,000,000 to spend are not keen on taking a production boat with limited options. When you are spending that kind of money, you can get things your way, usually.

Cabo, in particular, really had grown in reputation in the last decade or so. It was the sportfishing yacht to own for a while. I don't know where it ranks now. I don't follow that segment--too expensive.

posted 09-06-2013 11:56 AM ET (US)            

As a bowler I don't see any new bowling alleys going up, and very few renovations. I think the bowling business is still stagnant.

posted 09-06-2013 01:29 PM ET (US)            

http://www.bostonwhaler.com/Page.aspx/pageId/29330/pmid/308691/ 345-Conquest-Open.aspx

really hugely more seaworthy than every one of the other boats out there that look just like it, (at least to the eyes of a newbie like me)? I can see some superiority in in Unibond, in which chopper-gun layups can be made as strong as hand layups, but is there some kind of magic mojo that makes the marine architecture of the big Conquests superior to all the others in it's class?

posted 09-10-2013 01:17 PM ET (US)            

This is an interesting article

posted 09-10-2013 02:57 PM ET (US)         

At that time, the largest Whaler, if I recall correctly, was a 25' that came in the Outrage and Revenge configuration. The 18, 20, 22, and 25 hulls were basically the same as the 13-17, only larger. Boston Whaler was one of the top quality boat brands on the market without any doubt. If you pulled into a marina in a Whaler, regardless of size, you got admiring looks. Whalers were like a small batch distillery bourbon; there weren't tons of them around, but they were all well built and everything about them was quality. Even the hardware and lights looked substantially heavier and more durable than what you saw on other boats. When you looked at a Whaler, it seemed that craftsmen had put it together and really cared about the finished product. I remember people commenting that a Whaler was the only boat you could always get your money out of because the held their value so well.

posted 11-13-2013 08:56 AM ET (US)            

http://www.tradeonlytoday.com/component/content/article/4-features/ 527162-hatteras-cabo-out-of-limbo

Readers should recall that John Ward left Boston Whaler in December, 2010, when he was replaced as president of Boston Whaler and appointed to a newly created position as senior vice president of global sales and marketing for the Brunswick Hatteras and Cabo brand boat division in New Bern, [North Carolina].

http://continuouswave.com/ubb/Forum1/HTML/020382.html

In the interview, Mr. Ward speculates about the unusual approach that Brunswick took in the sale of Cabo and Hatteras, in which they announced the two brands where being sold without having any buyer for them. His speculation offered two possible reasons. Mr. Ward speculates that Brunswick decided to sell Cabo and Hatteras because they were operating units that were not contributing to Brunswick's bottom line. He also speculates that among all the boat brands owned by Brunswick, Cabo and Hatteras were the only ones that did not utilize engines made by the Mercury Marine unit, that is, no Mercury-brand outboard engines or MerCruiser-brand stern drive engines were being used for propulsion in these larger yachts. Mr. Ward said:

"When you think about vertical integration from a power standpoint, there’s no benefit for Brunswick to keep brands like Hatteras and Cabo. If the focus is going to be building your boat business and making it profitable, and growing it, and you have that vertical integration opportunity on the powertrain side of things, [selling off Cabo and Hatteras] makes sense.”

In the boating press it has been reported that the acquisition cost to Brunswick for its purchase of the Cabo and Hatteras brands was about $100,000,000. In a recent SEC filing, Brunswick reports on the financial impact of the disposition of these brands. See

LINK

I have looked over that financial document, but I cannot find any clear statement in all those tables and accountings which reveals the selling price for the Cabo and Hatteras brands to the new owner. Perhaps a forensic accountant could figure out what the real selling price was, but I certainly cannot.

posted 11-13-2013 08:39 PM ET (US)            

Back in January Reuters reported that Brunswick expects to take a charge of between $70-$80m on the transactions. Assuming that Versa bought the brands for what Brunswick hoped they would fetch back in January, I infer that the brands were sold for between $60-$70m.

posted 11-14-2013 01:30 AM ET (US)            

Cash out = $80-million + $60-million to buy the two brands

Cash in = $60 from sale of two brands

posted 11-14-2013 07:39 AM ET (US)         

By accounting rules,they cannot carry an asset like goodwill on their books for more than a current market value (calculated in some accounting rules fashion) and they would have to write goodwill down each year to that number.

Say they paid $140 million years ago, and it by 2012 had a book value of $70 million (for goodwill and depreciated fixed asset value),then in 2012, they put it for sale for $40 million. They would have to take a writedown in their financials in 2012 of $30 million, leaving a 2012 book value of $40 million (the current market value accounting rules require you to carry an asset for in a publicly traded company). Then in 2013, they sell the business for $41.6 million, they have a gain of $1.6 million.

There are way too many variables to guess or even state what the gain or loss from this sale is.

If they paid $140 million years ago and had a good solid business and were selling in a seller's market, then they would expect to sell this sort of asset for more than what they paid for it. Sort of like an old painting?

I'd say this is a buyer's market and they sold these companies at a huge loss, based on what they paid for them. But their tax loss is a whole other discussion and number.

posted 11-14-2013 08:11 AM ET (US)            

quote:

---

In connection with continued weakness in the luxury sportfishing convertible and motoryacht boat market segments, the Company recorded $14.5 million of restructuring charges during 2012 associated with its Hatteras and Cabo boat brands primarily related to the determination that the carrying value of their long-lived assets was not expected to be recovered through future cash flows. On December 31, 2012, the Board of Directors authorized the Company to exit its Hatteras and Cabo boat businesses.

Based on the performance of the Hatteras and Cabo boat businesses, the Company has concluded that proceeds from the sale will be less than its book value. These circumstances resulted in a non-cash asset impairment charge of $52.7 million, $53.2 million after-tax, in the fourth quarter of 2012.

---

So in 2012 they wrote off $14.5-million and in 2013 another 52.7-million, for a total of $67.2-million difference in the anticipated proceeds from the sale compared to the value they were carrying those assets on their books.

posted 11-14-2013 08:34 PM ET (US)         

Over the last 5 years they wrote down their assets by $695 million. There is also mention of the closing of the Cummins relationship.

They now show $77.7 million in shareholders equity and $2.3 billion in liabilities.

2012 results include $25.8 million of pretax restructuring, exit and impairment charges. 2011 results include $21.3 million of pretax restructuring, exit and impairment charges. 2010 results include $54.2 million of pretax restructuring, exit and impairment charges. 2009 results include $158.3 million of pretax restructuring, exit and impairment charges. 2008 results include $546.1 million of pretax goodwill impairment charges, trade name impairment charges and restructuring, exit and impairment charges.

The following table discloses the results of operations of the Hatteras and Cabo businesses reported as discontinued operations for years ended December 31, 2012, 2011 and 2010, respectively:
(in millions) 2012 2011 2010
Net sales $ 56.2 $ 78.0 $ 65.4
Loss from discontinued operations before income taxes (96.7) (21.4) (46.6)
Income tax provision (benefit) 0.7 (2.7) —
Net loss from discontinued operations (A) $ (97.4) $ (18.7) $ (46.6)
(A) Net loss from discontinued operations includes an asset impairment charge of $52.7 million, $53.2 million after-tax, in 2012 and other restructuring
and impairment charges, net of tax of $14.5 million, $1.4 million and $8.1 million in 2012, 2011 and 2010, respectively.

posted 11-15-2013 09:48 AM ET (US)            

"2008 results include $546.1 million of pretax goodwill impairment charges, trade name impairment charges and restructuring, exit and impairment charges."

posted 11-16-2013 08:00 AM ET (US)         

This is true only if they didn't in prior years write off some of the $100,000,000 cost on their books. Seeing that Brunswick took almost $700 million in write downs in prior years, it seems unlikely in the current market they recouped their original investment in these businesses and made a $1.6 million profit.

The current profit or loss on sale of a fixed asset is based on the current depreciated book value, not on the original cost.