Form 10-K 2004

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________

Form 10-K

	[X] Annual report pursuant to Section 13 or 15(d) of
	the Securities Exchange Act of 1934
	For the fiscal year ended December 31, 2004, or
	[ ] Transition Report Pursuant to Section 13 or 15(d)
	of the Securities Exchange Act of 1934
	Commission file number 1-1043

_______________

Brunswick Corporation

(Exact name of registrant in its charter)

	Delaware	36-0848180
	(State of incorporation)	(I.R.S. Employer 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)

Securities Registered pursuant to Section 12(b) of the Act:

	Title of each class		Name of each exchange on which registered
	Common Stock ($0.75 par value)		New York, Chicago, Pacific
	Preferred Stock Purchase Rights		and London Stock Exchanges

Securities registered Pursuant to Section 12(g) of the Act:

None

_______________

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 [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in the definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes [X] No [ ]

As of July 2, 2004, the aggregate market value of the voting stock of the registrant held by non-affiliates was $3,700,250,624. Such number excludes stock beneficially owned by officers and directors. This does not constitute an admission that they are affiliates.

The number of shares of Common Stock ($0.75 par value) of the registrant outstanding as of February 25 , 2005, was 96,891,136.

DOCUMENTS INCORPORATED BY REFERENCE

Part III of this Report on Form 10-K incorporates by reference certain information that will be set forth in the Company’s definitive Proxy Statement for the Annual Meeting of Shareholders scheduled to be held on May 4, 2005.

ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

		Page
Part I
Item 1.	Business	3
Item 2.	Properties	10
Item 3.	Legal Proceedings	11
Item 4.	Submission of Matters to a Vote of Security Holders	13
Part II
Item 5.	Market for the Registrant’s Common Equity, Related Stockholder Matters	14
Item 6.	Selected Financial Data	14
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 8.	Financial Statements and Supplementary Data	35
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	35
Item 9A.	Controls and Procedures	35
Part III
Item 10.	Directors and Executive Officers of the Registrant	37
Item 11.	Executive Compensation	38
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	38
Item 13.	Certain Relationships and Related Transactions	39
Item 14.	Principal Accounting Fees and Services	39
Part IV
Item 15.	Exhibits and Financial Statement Schedules	40

PART I

Item 1. Business

Brunswick Corporation (the Company) is a manufacturer and marketer of leading consumer brands, including: Mercury and Mariner outboard engines; MerCruiser sterndrive and inboard engines; MotorGuide trolling motors; Teignbridge propellers; Sea Ray, Bayliner, Maxum, Meridian, and Sealine pleasure boats; Hatteras luxury sportfishing convertibles and motoryachts; Baja high-performance boats; Arvor, Boston Whaler, Trophy, Sea Pro, Palmetto and Sea Boss offshore fishing boats; Crestliner, Lowe, Lund and Princecraft aluminum fishing, deck and pontoon boats; Savage and Uttern pleasure boats; Attwood marine parts and accessories; Land ‘N’ Sea, a distributor of marine parts and accessories; Seachoice marine parts and accessories; Mercury Precision Parts; Quicksilver and Swivl-Eze marine-related components and accessories; Integrated Dealer Systems dealer management systems; MotoTron engine control systems; Navman global positioning systems-based products and marine electronics; Northstar marine navigation systems; Life Fitness, Hammer Strength and ParaBody fitness equipment; Brunswick bowling products, including capital equipment, parts, supplies and consumer products; Brunswick billiards tables and accessories; and Valley-Dynamo billiards, Air Hockey and foosball tables. The Company also owns and operates Brunswick bowling centers across the United States and internationally, and a billiards retail store in the suburbs of Chicago, Illinois.

The Company’s strategy is to achieve growth by developing innovative products, identifying and deploying leading-edge technologies, pursuing aggressive marketing and brand-building activities, enhancing its distribution channels, seizing international opportunities and leveraging core competencies. In addition, growth will come from expansion of existing businesses and from acquisitions. Further, the Company focuses on enhancing its operating margins through effective cost management and investments in technology. The Company’s objective is to enhance shareholder value by achieving returns on investments that exceed its cost of capital.

Marine Engine Segment

The Marine Engine segment, which had net sales of $2,353.2 million in 2004, consists of the Mercury Marine Group and Brunswick New Technologies. The Company believes its Marine Engine segment has the largest dollar sales volume of recreational marine engines in the world.

Mercury Marine manufactures and markets a full range of sterndrive engines, inboard engines, outboard engines and water-jet propulsion systems under the Mercury, Mercury MerCruiser, Mariner, Mercury Racing, Mercury SportJet and Mercury Jet Drive brand names. Mercury Marine’s sterndrives, inboard engines, water-jet propulsion systems and a substantial number of its outboard engines are sold either to independent boatbuilders or to the Company’s Brunswick Boat Group. In addition, Mercury Marine’s outboard engines and parts and accessories, including marine electronics and control integration systems, steering systems, instruments, controls, propellers, trolling motors, service aids and marine lubricants, are sold to end-users through a global network of approximately 7,000 marine dealers and distributors, specialty marine retailers, and marine service centers. Mercury Marine, through Cummins MerCruiser Diesel Marine LLC (CMD), its joint ventures with Cummins Marine, a division of Cummins Inc., supplies integrated diesel propulsion systems to the worldwide recreational and commercial marine markets, including the Company’s Brunswick Boat Group.

Mercury Marine manufactures two-stroke OptiMax outboard engines, ranging from 75 to 250 horsepower, all of which feature Mercury’s direct fuel injection (DFI) technology. DFI is part of Mercury’s plan to comply with U.S. Environmental Protection Agency (EPA) requirements and reduce outboard engine emissions by 75 percent over a nine-year period beginning with the 1998 model year and ending with the 2006 model year. Mercury’s product line of low-emission engines includes four-stroke outboard engine models ranging from 4 to 275 horsepower. In 2004, Mercury Marine introduced Verado, a new series of high-horsepower outboard engines to complement its existing four-stroke product line. Mercury currently offers Verado engines ranging from 200 to 275-horsepower, and introduced 135, 150 and 175-horsepower models to the market in the first quarter of 2005. Mercury’s OptiMax and four-stroke outboards already achieve the EPA’s mandated 2006 emission levels.

Mercury Marine’s sterndrive and outboard engines are produced primarily in Oklahoma and Wisconsin, respectively. Certain small outboard engines are manufactured in Japan by a Mercury Marine joint venture. Mercury along with its joint venture partner, Tohatsu Corporation, expanded this manufacturing facility in Japan, in 2004. Mercury expects to begin production of 40 to 60-horsepower four-stroke outboard engines in Suzhou, China, in March 2005. In addition, Mercury Marine sources some outboard engines, powerheads and key components from Asian suppliers. Mercury Marine also manufactures engine component parts at plants in Florida and Mexico, and has a facility in Belgium that customizes engines for sale into Europe. Diesel marine propulsion systems are manufactured in South Carolina by CMD.

In addition to its marine engine operations, Mercury Marine offers to international markets a wide range of aluminum, fiberglass and inflatable boats produced either by, or for, Mercury in Australia, Poland and Sweden. These boats which are marketed under the brand names Armor, Arvor, Bermuda, Legend, Mercury, Örnvik, Protector, Quicksilver, Savage and Uttern, are typically equipped with engines manufactured by Mercury Marine, and often include other parts and accessories supplied by Mercury Marine. Mercury Marine has equity ownership interests in companies that manufacture boats under the brand names Aquador, Askeladden, Bella, Flipper, Legend, Rayglass and Valiant, which are produced in Norway, Finland, New Zealand and Portugal, respectively. Mercury Marine also manufactures custom and standard propellers and underwater stern gear for inboard-powered vessels, under the name Teignbridge, in the United Kingdom.

The Company established Brunswick New Technologies (BNT) during 2002 to expand the Company’s product offerings in marine electronics, engine controls, navigation systems, dealer management systems and related equipment for use in both marine and non-marine applications. BNT is comprised of: Navman NZ Limited, a New Zealand-based leader in global positioning systems-based products and marine electronics; MotoTron, which leverages the Company’s expertise in engine controls to non-marine markets; Northstar Technologies, a world leader in premium marine navigation electronics; and Monolith Corporation/Integrated Dealer Systems, a leading developer of dealer management systems for dealers of marine products and recreational vehicles.

Domestic retail demand for the Marine Engine segment’s products is seasonal, with sales generally highest in the second quarter. A number of factors can influence demand for the Marine Engine segment’s products, including, but not limited to:

–	Economic conditions and consumer confidence in the United States and international regions;

–	Competition from other manufacturers of marine engines and global positioning systems-based products and marine electronics;

–	Competitive pricing pressures;

–	Adverse weather in key geographic areas, including excessive rain, prolonged below-average temperatures and severe heat or drought, particularly during the key selling season;

–	The level of inventories maintained by Mercury Marine’s independent boatbuilders, dealers and the Company’s boat operations;

–	The ability to offer products of sufficient technological and quality level to meet customer needs and demands;

–	The ability to develop product technologies that comply with regulatory requirements, including emissions reductions;

–	The ability to develop and market competitive products;

–	Consumer demand for the Company’s boat offerings and those of other major boatbuilders and dealers;

–	Changes in currency exchange rates;

–	Fuel costs and fuel availability;

–	Access to water and marina facilities;

–	Prevailing interest rates and availability of financing for boatbuilders and dealers; and

–	Level of consumer participation in recreational boating.

Boat Segment

The Boat segment consists of the Brunswick Boat Group (Boat Group), which markets and manufactures fiberglass pleasure boats, high-performance boats, offshore fishing boats, and aluminum fishing, pontoon and deck boats, and manufactures and distributes marine parts and accessories. The Company believes its Boat Group, which had net sales of $2,271.1 million during 2004, has the largest dollar sales and unit volume of pleasure boats in the world.

The Boat Group manages many of the Company’s boat brands, evaluates and increases the Company’s boat portfolio by acquiring recreational boat companies that serve product segments in which the Company is not participating, expands the Company’s involvement in recreational boating services and activities to enhance the consumer experience and dealer profitability, speeds the introduction of new technologies into boat manufacturing processes and the Company’s boat products, and leverages the Company’s extensive knowledge and involvement in boat design, manufacturing and distribution.

The Boat Group is headquartered in Knoxville, Tennessee, and is comprised of the following Company boat brands: Hatteras luxury sportfishing convertibles and motoryachts; Sea Ray and Sealine yachts, sport yachts, cruisers and runabouts; Bayliner and Maxum cruisers and runabouts; Meridian motoryachts; Boston Whaler, Sea Pro, Sea Boss, Palmetto and Trophy offshore fishing boats; Baja high-performance boats; and Crestliner, Lowe, Lund and Princecraft aluminum fishing, pontoon and deck boats. The Boat Group also operates a commercial and governmental sales unit that sells products to the United States Government and state, local and foreign governments for military, law enforcement and other activities, and to commercial customers for use in a variety of applications. Sales of Boston Whaler, Baja and various inflatable boats represent the majority of the Boat Group’s governmental and commercial sales. The Boat Group procures most of its outboard motors, gasoline sterndrives and gasoline inboard engines from Mercury Marine, and diesel engines from CMD.

The Boat Group has manufacturing facilities in Florida, Maryland, Michigan, Minnesota, Missouri, North Carolina, Ohio, Oregon, South Carolina, Tennessee and Washington, as well as international manufacturing facilities in Canada, Mexico and the United Kingdom. The Boat Group also utilizes contract manufacturing facilities in Eastern Europe. Since 2002, the Company has been manufacturing entry-level runabouts at a new facility in Reynosa, Mexico. In 2004 the Company began to expand this facility to double its capacity that will allow the Company to increase production of its Bayliner runabouts. Also in 2004, the Company has committed to expand its Vonore, Tennessee, facility to have more capacity for its closed-mold operations. Closed molding is an improved manufacturing process that is environmentally friendlier than the traditional open mold process, allows for increased capacity, and produces more precise and consistent fiberglass parts, hulls and decks.

In 2004, the Company purchased the Crestliner, Lund, and Lowe aluminum boat companies. These companies allow the Company to offer consumers products in all major aluminum boat segments. Also, in 2004 the Company acquired the Sea Pro, Sea Boss and Palmetto saltwater fishing boat brands, which provide the Company with the opportunity to offer a distinctive array of offshore saltwater fishing boats.

The Company’s 2003 acquisitions of Land ‘N’ Sea Corporation (a marine parts and accessories distributor) and Attwood Corporation (a manufacturer of marine hardware and accessories) form the backbone of the Company’s initiative to develop its boat parts and accessories business to better serve marine boat dealers and consumers. Working with its boat dealer network, the Company will continue to strive to improve quality, distribution and delivery of parts and accessories to enhance the boating customers’ experience.

The Boat Group’s products are sold to end users through a global network of approximately 2,000 dealers and distributors, each of which carries one or more of the Company’s boat brands. Sales to the Boat Group’s largest dealer, MarineMax, Inc., which has multiple locations and carries a number of the Boat Group’s product lines, comprised approximately 18 percent of Boat Group sales in 2004.

Domestic retail demand for pleasure boats is seasonal, with sales generally highest in the second quarter. A number of factors can influence demand for the Boat Group’s products, including, but not limited to:

–	Economic conditions, consumer confidence and the strength of equity markets;

–	Adverse weather in key geographic areas, including excessive rain, prolonged below-average temperatures and severe heat or drought, particularly during the key selling season;

–	The Boat Group’s ability to develop and market competitive products;

–	Product quality and pricing;

–	Competition from other boatbuilders and other marine parts and accessories manufacturers and distributors;

–	Fuel costs and fuel availability;

–	Effectiveness of distribution;

–	Changes in currency exchange rates;

–	Prevailing interest rates and availability of financing for consumers and boat dealers;

–	Level of consumer participation in recreational boating; and

–	Access to water and marina facilities.

Fitness Segment

The Company’s Fitness segment is comprised of the Life Fitness division, which designs, markets and manufactures a full line of reliable, high-quality cardiovascular fitness equipment (including treadmills, total body cross trainers, stair climbers and stationary exercise bicycles) and strength-training equipment under the Life Fitness, Hammer Strength and ParaBody brands.

The Company believes that its Fitness segment, which had net sales of $558.3 million during 2004, has the largest dollar sales volume of commercial fitness equipment in the world. Life Fitness’ commercial sales are primarily to private health clubs and fitness facilities operated by professional sports teams, the military, governmental agencies, corporations, hotels, schools and universities. Commercial sales are made to customers either directly, through dealers or through distributors.

Life Fitness also sells its products into the high-end consumer markets. In 2004, the Company sold the Omni Fitness specialty fitness equipment retail stores, which had been owned and operated by the Company since 2001. Approximately 5 percent of the Fitness segment’s 2004 sales were related to Omni Fitness.

The Fitness segment’s principal manufacturing facilities are located in Illinois, Kentucky, Minnesota and Hungary. In 2004, the Company expanded it operations in Hungary, which currently produces strength equipment and will produce select lines of cardiovascular equipment, including new cross-trainers, for the European market.

During 2004, Life Fitness introduced a number of new fitness products, including new elliptical cross trainers, treadmills, stationary bikes, stairclimbers, home gym products, commercial selectorized strength training equipment and a series of cable motion machines.

The Company distributes fitness products worldwide from regional warehouses and factory stocks of merchandise. Demand for fitness products is seasonal, with sales generally highest in the first and fourth quarters, and is influenced by a number of factors, including, but not limited to:

–	Economic conditions and consumer confidence in the United States and certain international regions;

–	Product innovation;

–	Changes in consumer demand for health clubs and other exercise facilities;

–	Availability of effective product distribution;

–	Consumer participation in fitness activities;

–	Demand from owners and operators of fitness centers for new equipment;

–	Competition from other manufacturers and alternative forms of recreation;

–	Product quality, pricing, and customer service; and

–	Changes in currency exchange rates.

Bowling & Billiards Segment

The Bowling & Billiards segment is comprised of the Brunswick Bowling & Billiards division (BB&B), which had net sales of $442.4 million during 2004. BB&B is the leading full-line designer and producer of bowling products, including bowling balls and bowling pins, aftermarket products and parts, and capital equipment, which includes bowling lanes and related equipment, automatic pinsetters, ball returns, furniture units, and scoring and center management systems. Through licensing arrangements, BB&B also offers an array of bowling consumer products, including bowling shoes, bags and accessories. BB&B also designs, manufactures and markets a full line of high-quality consumer and commercial billiards tables, Air Hockey table games, foosball tables and related accessories.

BB&B operates 113 bowling centers in the United States, Canada and Europe, and with its joint venture partner operates 14 additional centers in Japan. Bowling centers offer bowling and, depending on size and location, the following activities and services: billiards, video games, pro shops, children’s playrooms, restaurants and cocktail lounges. All of the North American centers offer Cosmic Bowling, an enhanced form of bowling with integrated sound systems and glow-in-the-dark effects. To date, 46 of BB&B’s centers have been converted into Brunswick Zones, which are modernized bowling centers that offer a full array of family-oriented entertainment activities. The entertainment offerings available at Brunswick Zones are designed to appeal to a broad audience, including families and other recreational bowlers, as well as traditional league bowlers. In 2004, BB&B further enhanced the Brunswick Zone concept with the opening of the second and third showcase Brunswick Zones, in the Chicago and Denver markets, which are approximately 50 percent larger than typical Brunswick Zones and feature multiple-venue entertainment offerings such as laser tag games and expanded game rooms. BB&B intends to use this enhanced model for its three new centers that are being constructed in 2005.

BB&B’s billiards business was established in 1845, and is the oldest business operated by the Company. BB&B designs and markets billiards tables, balls and cues, as well as billiards furniture and related accessories, under the Brunswick and Contender by Brunswick brands. These products are sold worldwide into both commercial and consumer billiards markets. The Company also owns Valley-Dynamo, a leading manufacturer of commercial and consumer billiards, Air Hockey table games and foosball tables. The Company believes it has the largest dollar sales volume of billiards tables in the world. In 2003, BB&B opened Brunswick Home & Billiard, its first retail store, in a northern suburb of Chicago, Illinois. This store features billiards products and other products for the home, and utilizes marketing and merchandising concepts targeted to both women and men. Brunswick Home & Billiard provides opportunities to enhance the retail experience of billiards customers and to share those learnings with BB&B’s retail billiards dealers nationwide. Additional stores are planned for 2005.

In March of 2004, the Company exercised an option to acquire its joint venture partner’s interest in a bowling pin manufacturing operation in Antigo, Wisconsin. As a result of this transaction, the Company is the sole owner of the Brunswick Bowling Pin Company.

BB&B’s primary manufacturing and distribution locations are in Michigan, Texas, Wisconsin and Hungary.

The Company’s bowling and billiards products are sold through a variety of channels, including distributors, dealers, mass merchandisers, bowling centers and retailers, and directly to consumers. BB&B products are distributed worldwide from regional warehouses, sales offices and factory stocks of merchandise. Demand for the Bowling & Billiards segment’s products and services is influenced by a number of factors, including, but not limited to:

–	Economic conditions in the United States and key international regions;

–	The ability to develop and market competitive products;

–	Prevailing interest rates and availability of financing for purchasers of bowling capital equipment;

–	Changes in currency exchange rates;

–	Duties, tariffs and import restrictions relating to sales and shipments overseas;

–	Product innovation;

–	Availability of effective product distribution;

–	Consumer participation in bowling and billiards;

–	Demand from owners and operators of recreation centers for new equipment;

–	Competition from other manufacturers as well as alternative forms of recreation;

–	Product and facility quality, pricing, and customer service; and

–	Adverse weather in key geographical areas, including excessive snow and summers with prolonged periods of below-average rain.

Financial Services

The Company has a 49 percent ownership interest in the joint venture, Brunswick Acceptance Company, LLC (BAC) with GE Commercial Finance, which provides secured wholesale floor-plan financing to the Company’s boat and engine dealers. BAC also purchases and services a portion of Mercury Marine’s domestic accounts receivable relating to its boatbuilder and dealer customers. See Note 7, Financial Services, in the Notes to Consolidated Financial Statements for more information about BAC.

Distribution

The Company depends on distributors, dealers and retailers (Dealers) for the majority of its recreational boat sales, and significant portions of its marine engine, fitness and bowling and billiards products. The Company has approximately 7,500 Dealers serving its business segments worldwide. The Company’s marine Dealers typically carry boats, engines and related parts and accessories.

The Company’s Dealers are independent companies or proprietors that range in size from small, family-owned dealerships to large, publicly traded organizations with substantial revenues and multiple locations. Some of the Company’s Dealers sell the Company’s products exclusively, while others also carry competitors’ products. The Company owns a minority interest in certain marine Dealers.

The Company owns Land ‘N’ Sea, a parts and accessories distribution platform for the Brunswick Boat Group. Land ‘N’ Sea, with 17 distribution centers throughout North America, is the largest wholesale distributor of marine parts and accessories in the world and provides the ability to move parts quickly and accurately to dealers, repair shops and the do-it-yourself consumer.

Demand for a significant portion of the Company’s products is seasonal, and a number of the Company’s Dealers are relatively small and often highly leveraged. As a result, many of the Company’s Dealers require financial assistance to support their business and provide a stable outlet for the Company’s products. In addition to the Company’s interest in BAC, the Company provides its Dealers with assistance, including incentive programs, loans, loan guarantees and inventory repurchase commitments, under which the Company is obligated to repurchase inventory from a finance company in the event of a Dealer’s default. The Company believes that these arrangements are in the Company’s best interest, but its financial support of its Dealers does expose the Company to credit and business risk. The Company’s business units maintain active credit operations to manage this financial exposure on an ongoing basis, and the Company continues to seek opportunities to improve and sustain its various distribution channels. See Note 9, Commitments and Contingencies, in the Notes to Consolidated Financial Statements.

International Operations

The Company’s sales to customers in international markets were $1,689.2 million (32.3 percent of net sales) and $1,242.2 million (30.1 percent of net sales) in 2004 and 2003, respectively. The Company transacts most of its sales in international markets in local currencies, and its costs of products manufactured or sourced are generally denominated in U.S. dollars. In 2004, the U.S. dollar weakened approximately 10 percent against the Euro, which is the Company’s largest foreign currency exposure. The weakening of the U.S. dollar helped increase the Company’s international sales. Future strengthening or weakening of the U.S. dollar can affect the amount of sales recorded from the Company’s international operations.

The Company’s international sales are set forth in Note 4, Segment Information, in the Notes to Consolidated Financial Statements, and are also included in the table below, which details the Company’s international sales by region for 2004, 2003 and 2002:

	2004		2003		2002
(In millions)
Europe	$	945.5	$	700.4	$	552.1
Pacific Rim		313.1		220.7		174.7
Canada		273.8		200.5		166.9
Latin America		102.0		79.2		74.0
Other		54.8		41.4		37.0
	$	1,689.2	$	1,242.2	$	1,004.7

Marine Engine segment sales comprised approximately 50 percent of the Company’s total international sales in 2004. The segment’s primary international operations include the following:

–	A marine engine product customization plant and distribution center in Belgium serving Europe, Africa and the Middle East;

–	A propeller and underwater stern-gear manufacturing plant in the United Kingdom;

–	Sales offices and distribution centers in Australia, Brazil, Canada, China, Japan, Malaysia, Mexico, New Zealand and Singapore;

–	Sales offices in Belgium, Denmark, France, Germany, Italy, the Netherlands, Norway, Sweden, Switzerland and the United Kingdom;

–	Boat manufacturing plants in Australia and Sweden;

–	A research and development office in Singapore and New Zealand and a manufacturing plant in New Zealand;

–	An outboard engine assembly plant in Suzhou, China; and

–	A club and marina in Suzhou, China on Lake Tai.

Boat segment sales comprised approximately 29 percent of the Company’s total international sales in 2004. The Boat Group’s products are manufactured or assembled in the United States, Canada, Mexico, Poland and the United Kingdom, and are sold worldwide through dealers. The Boat Group also sells kits for certain runabout boat models to approved manufacturers outside the United States who then manufacture boats to specification and sell the boats under certain Boat Group brand names. The Boat Group has sales offices in England, France, the Netherlands and Spain, and a product display location in the Netherlands.

Fitness segment sales comprised approximately 15 percent of the Company’s total international sales in 2004. Life Fitness sells its products worldwide and has sales and distribution centers in Brazil, Germany, Hong Kong, Japan, the Netherlands, Spain and the United Kingdom, as well as sales offices in Austria and Italy. The Fitness segment also manufactures strength training equipment in Hungary and will begin to manufacture select lines of cardiovascular equipment in 2005 for the European market.

Bowling & Billiards segment sales comprised approximately 6 percent of the Company’s total international sales in 2004. BB&B sells its products worldwide, has sales offices in Germany, Hong Kong and the United Kingdom, and has a plant that manufactures pinsetters in Hungary. BB&B operates bowling centers in Austria, Canada and Germany, and holds a 50 percent interest in an entity that sells bowling equipment and operates bowling centers in Japan.

Raw Materials

The Company purchases raw materials from various sources. The Company is not currently experiencing any critical raw material shortages, nor does the Company anticipate any. General Motors Corporation is the sole supplier of engine blocks used in the manufacture of the Company’s gasoline sterndrive engines. The Company continues to expand its global procurement operations to leverage the Company’s purchasing power across its divisions, improve supply chain and drive cost efficiencies.

Intellectual Property

The Company has, and continues to obtain, patent rights covering certain features of the Company’s products and processes. By law, the Company’s patent rights, which consist of patents and patent licenses, have limited lives and expire periodically. The Company believes that its patent rights are important to its competitive position.

In the Marine Engine segment, patent rights principally relate to features of outboard engines and inboard-outboard drives, including: die-cast powerheads; cooling and exhaust systems; drive train, clutch and gearshift mechanisms; boat/engine mountings; shock absorbing tilt mechanisms; ignition systems; propellers; marine vessel control systems; fuel and oil injection systems; supercharged engines; outboard mid-section structures; segmented cowls; hydraulic trim, tilt, and steering; screw compressor charge air cooling systems; and airflow silencers.

In the Boat segment, patent rights principally relate to processes for manufacturing fiberglass hulls, decks and components for the Company’s boat products, as well as patent rights related to boat seats, interiors and other boat features and components.

In the Fitness segment, patent rights principally relate to fitness equipment designs and components, including patents covering internal processes, programming functions, displays, design features and styling.

In the Bowling & Billiards segment, patent rights principally relate to computerized bowling scorers and bowling center management systems, bowling lanes, lane conditioning machines, and related equipment, bowling balls, and billiards table designs and components.

The following are among the Company’s primary trademarks:

Marine Engine Segment: Integrated Dealer Systems,, Mariner, MercNet, MerCruiser, Mercury, MercuryCare, Mercury Marine, Mercury Parts Express, Mercury Precision Parts, Mercury Propellers, Mercury Racing, MotorGuide, MotoTron, Navman, Northstar, OptiMax, Pinpoint, Quicksilver, SeaPro, SmartCraft, SportJet, Teignbridge Propellers and Verado.

Boat Segment: Attwood, Baja, Bayliner, Boston Whaler, Crestliner, Hatteras, Land ‘N’ Sea, Lowe, Lund, Master Dealer, Maxum, Meridian, Palmetto, Princecraft, Sea Boss, Sea Pro, Sea Ray, Seachoice, Sealine, Swivl-Eze and Trophy.

Fitness Segment: Flex Deck, Hammer Strength, Lifecycle, Life Fitness and ParaBody.

Bowling & Billiards Segment: Air Hockey, Anvilane Pro Lane, Brunswick, Brunswick Billiards, Brunswick Pavilion, Brunswick Zone, Centennial, CenterMaster, Contender by Brunswick, Cosmic Bowling, DBA Products, Dominion, Dynamo, Fuze, Gold Crown, Inferno, IQ, Lane Shield, Lightworx, Throbot, Tornado, U.S. Play by Brunswick, Valley, Valley-Dynamo, Vector, Viz-A-Ball, Zone, and Brunswick Home and Billiard.

The Company’s trademarks have indefinite lives, and many of these trademarks are well known to the public and are considered valuable assets of the Company.

Competitive Conditions and Position

The Company believes that it has a reputation for quality in its highly competitive lines of business. The Company competes in its various markets by utilizing efficient production techniques; innovative technological advancements; effective marketing, advertising and sales efforts; providing high-quality products at competitive prices; and good after-market services.

Strong competition exists with respect to each of the Company’s product groups, but no single manufacturer competes with the Company in all product groups. In each product area, competitors range in size from large, highly diversified companies to small, single-product businesses.

The following summarizes the Company’s competitive position in each segment:

Marine Engine Segment: The Company believes it has the largest dollar sales volume of recreational marine engines in the world. The marine engine market is highly competitive among several major international companies that comprise the majority of the market, and several smaller companies. There are also many competitors in the marine accessories, electronics, engine controls, navigation systems and global positioning system-based businesses. Competitive advantage in these marine engine and accessories markets is a function of product features, technological leadership, quality, service, performance and durability, along with effective promotion, distribution, pricing and the ability to integrate these systems within a boat. See Item 3, Legal Proceedings, for discussion on pricing and the Anti-Dumping Petition.

Boat Segment: The Company believes it has the largest dollar sales and unit volume of pleasure boats in the world with the broadest array of product offerings. There are several major manufacturers of pleasure and offshore fishing boats, along with hundreds of smaller manufacturers. Consequently, this business is both highly competitive and highly fragmented. The Company believes it has the broadest range of boat product offerings in the world, with boats ranging from 10 to 100 feet, along with a parts and accessories business. In all of its boat operations, the Company competes on the basis of product features, technology, quality, dealer service, performance, value, durability and styling, along with effective promotion, distribution and pricing.

Fitness Segment: The Company believes it is the world’s largest manufacturer of commercial fitness equipment and a leading manufacturer of high-quality consumer fitness equipment. There are a few large manufacturers of fitness equipment and hundreds of small manufacturers, which creates a highly fragmented competitive landscape. Many of the Company’s fitness equipment products feature industry-leading product innovations, and the Company places significant emphasis on new product introductions. Competitive emphasis is also placed on product quality, marketing activities, pricing and service.

Bowling & Billiards Segment: The Company believes it is the world’s leading full-line designer and producer of bowling products and billiards tables. There are several large manufacturers of bowling products, whereas the bowling retail market is highly fragmented. Competitive emphasis is placed on product innovation, quality, service, marketing activities and pricing. The Company also operates 127 retail bowling centers worldwide, including those operated by the Company’s joint venture in Japan, where emphasis is placed on enhancing the bowling and entertainment experience, maintaining quality facilities and providing excellent customer service.

Research and Development

The Company strives to bolster its competitive position in all of its segments by continuously investing in research and development to drive technology innovation in our products and manufacturing technologies. The Company’s research and development investments support the introduction of new products and enhancements to existing products. The Company’s research and development investments are shown below:

	2004		2003		2002
(In millions)
Marine Engine	$	82.0	$	70.0	$	61.7
Boat		27.2		25.6		22.1
Fitness		16.0		16.9		14.4
Bowling & Billiards		5.9		5.7		4.6
Total	$	131.1	$	118.2	$	102.8

Number of Employees

The approximate number of employees as of December 31, 2004, is shown below by segment:

Marine Engine	6,450
Boat	11,700
Fitness	1,800
Bowling & Billiards	5,400
Corporate	250
Total	25,600

As of December 31, 2004, there were 2,131 employees in the Marine Engine segment, 648 employees in the Boat segment, 140 employees in the Fitness segment, and 217 employees in the Bowling & Billiards segment represented by labor unions. The Company believes that it has good relations with these labor unions. One international labor union contract for the Boat segment expires in November of 2005.

Environmental Requirements

See Item 3, Legal Proceedings, for a description of certain environmental proceedings in which the Company is involved.

Available Information

The Company maintains an Internet web site at http://www.brunswick.com that includes links to the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to those reports (SEC Reports). The SEC Reports are available without charge as soon as reasonably practicable following the time that they are filed with or furnished to the SEC. Shareholders and other interested parties may request email notification of the posting of these documents through the Investor Information section of the Company’s web site.

Item 2. Properties

The Company’s headquarters are located in Lake Forest, Illinois. The Company also maintains administrative offices in Chicago, Illinois. The Company has numerous manufacturing plants, distribution warehouses, retail stores, sales offices and test sites located throughout the world. Research and development facilities are decentralized within the Company’s operating segments, and most are located at individual manufacturing sites.

The Company believes its facilities are suitable and adequate for its current needs. The Company also believes its properties are well maintained and in good operating condition. Most plants and warehouses are of modern, single-story construction, providing efficient manufacturing and distribution operations. The Company believes its manufacturing facilities have the capacity to meet current and anticipated demand. The Company’s headquarters and most of its principal plants are owned by the Company.

The Company’s primary facilities are in the following locations:

Marine Engine Segment: Miramar and St. Cloud, Florida; Acton, Massachusetts; Stillwater and Tulsa, Oklahoma; Fond du Lac, Brookfield and Oshkosh, Wisconsin; Melbourne, Australia; Petit Rechain and Wavre Belgium; Pickering, Ontario, Canada; Juarez, Mexico; Auckland, New Zealand; and Newton Abbot, United Kingdom. The Acton, Massachusetts; Auckland, New Zealand; and Pickering, Ontario, Canada facilities are leased. The remaining facilities are owned by the Company.

Boat Segment: Edgewater, Merritt Island, Palm Coast, and Pompano Beach, Florida; Cumberland and Salisbury, Maryland; Lowell, Michigan; Little Falls, New York; Mills and Pipestone, Minnesota; Lebanon, Missouri; New Bern, North Carolina; Bucyrus, Ohio; Roseburg, Oregon; Newberry, South Carolina; Knoxville and Vonore, Tennessee; Lancaster, Texas; Arlington, Washington; Princeville, Quebec, Canada; Steinbach, Manitoba, Canada; Reynosa, Mexico; and Kidderminster, United Kingdom. All of these facilities are owned by the Company with the exception of the Pompano Beach, Florida; Lowell, Michigan; and Lancaster, Texas facilities, which are leased.

Fitness Segment: Franklin Park and Schiller Park, Illinois; Falmouth, Kentucky; Ramsey, Minnesota; and Szekesfehervar and Kiskoros, Hungary. The Schiller Park office and a portion of the Franklin Park, Illinois, facility are leased. The remaining facilities are owned by the Company.

Bowling & Billiards Segment: Lake Forest, Illinois; Muskegon, Michigan; Richland Hills, Texas; Antigo and Bristol, Wisconsin; Szekesfehervar, Hungary; 113 Company-operated bowling recreation centers in the United States, Canada and Europe, and a retail billiard store in the suburbs of Chicago, Illinois. Approximately 50 percent of BB&B’s bowling centers, the Richland Hills, Texas manufacturing facility, and the retail billiard store are leased. The remaining facilities are owned by the Company.

Item 3. Legal Proceedings

The Company accrues for litigation exposure based upon its assessment, made in consultation with counsel, of the likely range of exposure stemming from the claim. In light of existing reserves, the Company’s litigation claims, when finally resolved, will not, in the opinion of management, have a material adverse effect on the Company’s consolidated financial position. If current estimates for the cost of resolving any claims are later determined to be inadequate, results of operations could be adversely affected in the period in which additional provisions are required.

Telephone Consumer Protection Act

In the third quarter of 2004, the Company resolved a lawsuit brought against it in 2002 by plaintiffs who allegedly received unsolicited faxes in violation of the Federal Telephone Consumer Protection Act from a service provider retained by a Company subsidiary operated by the Bowling & Billiards segment. The settlement of this lawsuit did not have a material adverse effect on the Company's consolidated financial position or results of operations. The Company continues to defend itself against an additional lawsuit filed against it in April of 2004, with similar allegations. The Company does not believe the resolution of this lawsuit will have a material adverse effect on the Company's consolidated financial position or results of operations.

Tax Case

In February 2003, the United States Tax Court issued a ruling upholding the disallowance by the Internal Revenue Service (IRS) of capital losses and other expenses for 1990 and 1991 related to two partnership investments entered into by the Company. The Company has stayed its notice of appeal of the Tax Court decision to the United States Court of Appeals for the District of Columbia, pending the outcome of the Company’s settlement negotiations with the IRS. In April 2003, the Company elected to pay the IRS $62 million (approximately $50 million after-tax), and in April 2004, the Company elected to pay the IRS an additional $10 million (approximately $8 million after-tax), in connection with this matter while settlement negotiations continue. The payments were comprised of $33 million in taxes due and $39 million of pre-tax interest ($25 million after-tax). The Company elected to make the payments to avoid future interest costs. The Company believes that any penalties and accrued interest assessed against it by the IRS would not have a material adverse effect on the Company’s consolidated financial position or results of operations.

Anti-Dumping Petition

In January 2004, the Company filed a petition with the U.S. Department of Commerce (DOC) and the U.S. International Trade Commission (ITC) alleging that Japanese manufacturers of outboard engines were “dumping” by selling outboard engines in the U.S. at prices well below their sale price in Japan, and thereby causing, or threatening to cause, material injury to the U.S. outboard engine industry. The DOC determined that Japanese manufacturers were pricing outboard motors in the U.S at an average margin of 18.98 percent below fair value and imposed a corresponding provisional tariff. On February 2, 2005, the ITC ruled that there was no injury to U.S. manufacturers and declined to impose retaliatory tariffs on Japanese engines. As a result the provisional tariffs will be rescinded and no permanent tariffs will be imposed. The tariff deposits made by the Company in the amount of $4.6 million will be returned.

Yamaha Contract Dispute

In late July 2004, Yamaha announced a 91.6 percent increase in the price of 75- to 115 - horsepower powerheads sold to the Company under a long-term supply agreement. It is the Company's belief that Yamaha acted in violation of the terms of the agreement, and, in September 2004, the Company sought an injunction requiring Yamaha to comply with those terms. The court ruled in the Company's favor, ordering Yamaha to continue to supply the Company with powerheads.

While the court order was in effect, the Company had to post a bond each month in the amount of $9.8 million as security for any harm to Yamaha. In February 2005, Yamaha and the Company settled their dispute over outboard engine pricing. Yamaha agreed to continue to supply powerheads according to the terms of the original agreement. As a result of this, the Company was released from its obligation to post bond.

Environmental Matters Generally

The Company is involved in certain legal and administrative proceedings under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 and other federal and state legislation governing the generation and disposal of certain hazardous wastes. These proceedings, which involve both on- and off-site waste disposal or other contamination, in many instances seek compensation or remedial action from the Company as a waste generator under Superfund legislation, which authorizes action regardless of fault, legality of original disposition or ownership of a disposal site. The Company has established reserves based on a range of current cost estimates for all known claims.

Asbestos Class Action

The Company has been named in a number of asbestos-related lawsuits, the majority of which involve Vapor Corporation, a former subsidiary that the Company divested in 1990. Virtually all of the asbestos suits against the Company involve numerous other defendants. The claims generally allege that the Company sold products that contained components, such as gaskets, that included asbestos, and seek monetary damages from the Company. Neither the Company nor Vapor is alleged to have manufactured asbestos. The Company’s insurers have settled a number of asbestos claims for nominal amounts, while a number of other claims have been dismissed. No suit has yet gone to trial. The Company does not believe that the resolution of these lawsuits will have a material adverse effect on the Company’s consolidated financial position or results of operations.

Australia Trade Practices Investigation

In January 2005, the Company received a notice to furnish information to the Australian Competition and Consumer Commission (ACCC). The ACCC has sought information regarding a subsidiary of the Company, Navman Australia Pty Limited, with respect to sales practices from January 2001 through January 2005 and compliance with the Trade Practices Act of 1974. The Company has complied with the request of the ACCC for information and is cooperating with the investigation by the ACCC. The Company does not believe that the resolution of this matter with the ACCC will have a material adverse effect on the Company's consolidated financial position or results of operations.

Chinese Supplier Dispute

The Company's Bowling & Billiards segment is involved in an arbitration proceeding in Hong Kong arising out of a commercial dispute with a former Chinese contract manufacturer, Shanghai Zhonglu Industrial Company Limited (Zhonglu). The Company filed the arbitration seeking damages based on Zhonglu's breach of a supply and distribution agreement pursuant to which Zhonglu agreed to manufacture bowling equipment for the Company. Zhonglu has asserted counterclaims seeking damages for alleged breach of contract and other claims. The final hearing in the matter is scheduled to commence on February 28, 2005. The Company does not believe that this dispute will have a material adverse effect on the Company's financial condition or results of operations.

Patent Infringement Suit

The Company has been sued by the holder of a patent that is alleged to cover certain manufacturing processes used in the Company's smaller boats. Preliminary investigation into the claim has begun. It is too early to assess the potential validity of the claim.

See Note 9, Commitments and Contingencies, in the Notes to Consolidated Financial Statements, for disclosure of the potential cash requirements of environmental proceedings and other legal proceedings.

Item 4. Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote of security holders during the fourth quarter of fiscal year 2004.

PART II

Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters

The Company’s common stock is traded on the New York, Chicago, Pacific and London Stock Exchanges. Quarterly information with respect to the high and low prices for the common stock and the dividends declared on the common stock is set forth in Note 18, Quarterly Data, in the Notes to Consolidated Financial Statements. As of February 25, 2005, there were approximately 14,871 shareholders of record of the Company’s common stock.

In October 2004, the Company announced an increase in its annual dividend on its common stock, to $0.60 from $0.50 per share payable in December 2004. The Company intends to continue to pay annual dividends at the discretion of the Board of Directors, subject to continued capital availability and a determination that cash dividends continue to be in the best interest of the Company’s stockholders. The Company’s dividend policy may be affected by, among other things, the Company’s views on potential future capital requirements, including those relating to investments and acquisitions.

The Company did not purchase any common stock in the fourth quarter of 2004.

Item 6. Selected Financial Data

The selected historical financial data presented below as of and for the years ended December 31, 2004, 2003 and 2002, have been derived from, and should be read in conjunction with, the historical consolidated financial statements of the Company, including the notes thereto, and Item 7, Management’s Discussion and Analysis, including the Matters Affecting Comparability section. The selected historical financial data presented below as of and for the years ended December 31, 2001, 2000 and 1999, have been derived from the consolidated financial statements of the Company that are not included herein. The financial data presented below have been restated to present the discontinued operations in accordance with Accounting Principles Board (APB) Opinion No. 30, “Reporting the Results of Operations — Reporting the Effects of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions.”

2004

2003 ^(A)

2002 ^(B)

2001 ^(C)

2000

1999

(In millions, except per share data)

Results of operations data

Net sales

$

5,229.3

$

4,128.7

$

3,711.9

$

3,370.8

$

3,811.9

$

3,541.3

Unusual charges

$

-

$

-

$

-

$

-

$

55.1

$

116.0

Operating earnings

$

400.7

$

221.4

$

196.6

$

191.1

$

397.1

$

274.6

Earnings before income taxes

$

378.5

$

201.1

$

161.6

$

132.2

$

323.3

$

219.3

Earnings from continuing operations before

accounting change

$

269.8

$

135.2

$

103.5

$

84.7

$

202.2

$

143.1

Discontinued operations:

Loss from discontinued

operations, net of tax

-

-

-

-

(68.4

)

(105.2

)

Loss from disposal of discontinued

operations, net of tax

-

-

-

-

(229.6

)

-

Cumulative effect of changes in accounting

principle, net of tax

-

-

(25.1

)

(2.9

)

-

-

Net earnings (loss)

$

269.8

$

135.2

$

78.4

$

81.8

$

(95.8

)

$

37.9

Basic earnings (loss) per common share:

Earnings from continuing operations before

accounting change

$

2.82

$

1.48

$

1.15

$

0.96

$

2.28

$

1.56

Discontinued operations:

Loss from discontinued

operations, net of tax

-

-

-

-

(0.77

)

(1.14

)

Loss from disposal of discontinued

operations, net of tax

-

-

-

-

(2.59

)

-

Cumulative effect of changes in accounting

principle, net of tax

-

-

(0.28

)

(0.03

)

-

-

Net earnings (loss)

$

2.82

$

1.48

$

0.87

$

0.93

$

(1.08

)

$

0.41

Average shares used for computation of

basic earnings per share

95.6

91.2

90.0

87.8

88.7

92.0

Diluted earnings (loss) per common share:

Earnings from continuing operations before

accounting change

$

2.77

$

1.47

$

1.14

$

0.96

$

2.28

$

1.55

Discontinued operations:

Loss from discontinued

operations, net of tax

-

-

-

-

(0.77

)

(1.14

)

Loss from disposal of discontinued

operations, net of tax

-

-

-

-

(2.59

)

-

Cumulative effect of changes in accounting

principle, net of tax

-

-

(0.28

)

(0.03

)

-

-

Net earnings (loss)

$

2.77

$

1.47

$

0.86

$

0.93

$

(1.08

)

$

0.41

Average shares used for computation of

diluted earnings per share

97.3

91.9

90.7

88.1

88.7

92.6

(A)	Operating earnings include a $25.0 million litigation charge recorded in 2003 in connection with a patent infringement lawsuit relating to the design of a cross trainer. Refer to Note 9, Commitments and Contingencies, in the Notes to Consolidated Financial Statements.

(B)	Refer to Note 1, Significant Accounting Policies, in the Notes to Consolidated Financial Statements for a discussion on Goodwill and Other Intangibles.

(C)	Refer to Note 1, Significant Accounting Policies, in the Notes to Consolidated Financial Statements for a discussion on Derivatives.

	2004			2003			2002			2001			2000			1999
(In millions, except per share and other data)
Balance sheet data
Total assets	$	4,346.4		$	3,602.5		$	3,314.7		$	3,157.5		$	3,396.5		$	3,247.9
Debt Short-term	$	10.7		$	23.8		$	28.9		$	40.0		$	172.7		$	107.7
Long-term		728.4			583.8			589.5			600.2			601.8			622.5
Total debt		739.1			607.6			618.4			640.2			774.5			730.2
Common shareholders’ equity		1,712.3			1,323.0			1,101.8			1,110.9			1,067.1			1,300.2
Total capitalization	$	2,451.4		$	1,930.6		$	1,720.2		$	1,751.1		$	1,841.6		$	2,030.4
Cash flow data Net cash provided by operating activities of continuing operations	$	415.2		$	395.1		$	413.0		$	299.3		$	251.0		$	250.4
Depreciation and amortization		157.5			150.6			148.4			160.4			148.8			141.4
Capital expenditures		171.3			159.8			112.6			111.4			156.0			166.8
Acquisitions of businesses		267.8			177.3			21.2			134.4			-			4.2
Investments		16.2			39.3			8.9			-			38.1			13.6
Stock repurchases		-			-			-			-			87.1			18.3
Cash dividends paid		58.1			45.9			45.1			43.8			44.3			45.9
Other data Dividends declared per share	$	0.60		$	0.50		$	0.50		$	0.50		$	0.50		$	0.50
Book value per share		17.60			14.40			12.15			12.61			12.22			14.16
Return on beginning shareholders’ equity		20.4	%		12.3	%		7.0	%		7.7	%		(7.4	)%		2.9	%
Effective tax rate		28.7	%		32.75	%		36.0	%		36.0	%		37.5	%		34.7	%
Debt-to-capitalization rate		30.2	%		31.5	%		35.9	%		36.6	%		42.1	%		36.0	%
Number of employees		25,600			23,225			21,015			20,700			23,200			23,100
Number of shareholders of record		14,952			15,373			16,605			13,200			13,800			14,500
Common stock price (NYSE) High	$	49.85		$	32.08		$	30.01		$	25.01		$	22.13		$	30.00
Low		31.25			16.35			18.30			14.03			14.75			18.06
Close (last trading day)		49.50			31.83			19.86			21.76			16.44			22.25

The Notes to Consolidated Financial Statements should be read in conjunction with the above summary.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Certain statements in Management’s Discussion and Analysis are forward-looking as defined in the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations that are subject to risks and uncertainties. Actual results may differ materially from expectations as of the date of this filing because of factors discussed below under the Forward-Looking Statements section and elsewhere in this Annual Report.

Overview and Outlook

General

In 2004, the Company made significant progress towards achieving its strategic objective to solidify its leadership position in the marine, fitness, bowling and billiards industries by:

—	Introducing innovative and new technologies to build reliable and quality products in all of the Company’s market segments;

—
Focusing on cost reduction initiatives through global sourcing and realignment of the Company’s manufacturing footprint;

—
Acquiring and investing in businesses that will expand and enhance the Company’s product offerings particularly in boats, marine electronics and customer services;

—
Strengthening the Company’s relationships with its dealers by providing additional products and services that will make them more successful, improve the customer experience and, in turn, make Brunswick more successful; and

—
Attracting and retaining talented individuals who are responsible for executing and delivering on the Company’s commitment to enhance value for its shareholders.

While these activities are ongoing, the Company began to see results from its efforts reflected in its financial performance. Sales in 2004 increased 26.7 percent to $5,229.3 million, primarily due to growth across all market segments, and additional sales associated with acquisitions. Operating earnings for 2004 increased 81.0 percent to $400.7 million, primarily due to the same factors that drove the sales gain, as well as effective cost management efforts and global sourcing initiatives. These factors helped offset higher compensation costs, expenses associated with the acquisitions completed in 2004 and 2003, and increased research and development expenses. See the Results of Operations section below for further discussion.

Accomplishments in support of the Company’s strategic objectives in 2004 include:

•	New products:

—	The introduction of six-cylinder Verado, a family of supercharged four-stroke outboard engines;

—
New models of boats across most boat divisions;

—
Substantial roll-out of new fitness product offerings;

—
Continued expansion of Brunswick Zones and new concept, larger, showcase Brunswick Zones; and

—
New scoring systems, center management systems and bowling balls, most notably the Vector scoring system and Inferno bowling balls.

•	Manufacturing realignment:

—
Expansion of the manufacturing facility in Reynosa, Mexico, which will double capacity and allow the Company the ability to increase production of the Bayliner 175, 185 and 190 runabout models;

—
Construction of a new engine plant in China for the production of four-stroke outboard engines in the 40- to 60-horsepower range;

—
Expansion of a manufacturing facility in Japan, where the Company has a joint venture with Tohatsu Corporation to produce smaller horsepower, four-stoke outboard engines;

—
Expanded operations in Hungary to manufacture strength equipment and cardiovascular equipment, including cross-trainers for the European market;

—
Closing of the Company’s Paso Robles, California facility, and transfer of production of fitness products to an existing facility in Ramsey, Minnesota; and

—
Acquisition of the Company’s joint venture partner’s share of a bowling pin operation in Antigo, Wisconsin, allowing the Company to enhance and expand its bowling pin business.

•	Acquisitions:

—	Purchase of Crestliner, Lund, and Lowe aluminum boat companies, which provide the Company with the opportunity to offer products in all major aluminum boat segments;

—
Acquisition of the remaining 30 percent of the stock of Navman NZ Limited, which increases the existing contributions of offerings of marine electronics and global positioning systems-based products; and

—
Acquisition of the Sea Pro, Sea Boss and Palmetto saltwater fishing boat brands, which provide the Company with the opportunity to offer a distinctive array of offshore saltwater fishing boats.

•	Dealer services:

—
The purchase of Marine Innovations, a provider of extended warranties for boaters; and

—	Continued promotion of Brunswick Acceptance Company, a joint venture that provides wholesale financing to our marine dealers.

Looking ahead to 2005, the Company expects domestic retail demand for marine products to increase in the range of 5 to 7 percent. The Company estimates that industry growth, coupled with market share gains, success of new products, improved pricing and the full-year impact of acquisitions completed in 2004, will result in a 13 to 15 percent increase in our marine sales in 2005. Fitness and Bowling & Billiards segment sales are expected to increase in the mid-single digits, due primarily to new product introductions. Overall, sales are expected to increase 11 to 12 percent. Operating earnings are expected to improve in 2005, benefiting from higher volumes as well as the Company’s ongoing focus on effective cost management. The Company will incur costs for strategic initiatives, including research and development expenses to integrate engine and electronics in boat designs, costs associated with the development of new products, promotional expenses for product launches, and expense for infrastructure in the European and Asia-Pacific regions to support future growth. The Company expects 2005 non-operating income to remain relatively flat compared with 2004. The Company’s effective tax rate in 2005 is expected to be in the range of 31 to 32 percent.

Matters Affecting Comparability

Acquisitions. The Company’s operating results for 2004 include the operating results for acquisitions completed in 2004 and 2003. Approximately 40 percent of the sales increase in 2004, when compared with 2003, can be attributed to the following acquisitions:

Date	Name/Description	Segment

6/10/03	Valley-Dynamo, LP (Valley-Dynamo)	Bowling & Billiards
6/23/03	Land ‘N’ Sea Corporation (Land ‘N’ Sea)	Boat
6/23/03	Navman NZ Limited (Navman) – 70 percent	Marine Engine
9/02/03	Attwood Corporation (Attwood)	Boat
9/15/03	Protokon, LLC (Protokon) – 80 percent	Fitness
4/01/04	Lowe, Lund, Crestliner	Boat

Valley-Dynamo, a manufacturer of commercial and consumer billiards, Air Hockey and foosball tables, added new products and distribution channels to the Company’s billiards operations; Land ‘N’ Sea, a distributor of marine parts and accessories, and Attwood, a manufacturer of marine hardware and accessories, provided the Company with the distribution network, manufacturing capabilities and infrastructure to develop and expand a boat parts and accessories business; Navman, a manufacturer of marine electronics and global positioning system-based products, complemented the Company’s expansion into marine-based electronics and integration; Protokon, a Hungarian steel fabricator and electronic equipment manufacturer, allowed the Company to reduce costs and increase manufacturing capacity of fitness equipment, while better serving its fitness customers in Europe; and the Lowe, Lund, Crestliner boat brands, provided the Company with the opportunity to offer products in all major aluminum boat segments and to leverage engine synergies with the Company’s Mercury division. Refer to Note 5, Acquisitions, in the Notes to Consolidated Financial Statements, for a detailed description of these acquisitions.

The Company’s operating results for 2003 include the operating results for its acquisitions completed in 2003. Approximately 33 percent of the increase in 2003 sales, when compared with 2002, can be attributed to the acquisitions of Valley-Dynamo, Land ‘N’ Sea, Navman, Attwood and Protokon.

The Company’s operating results for 2002 include the operating results of: Teignbridge Propellers, Ltd. (Teignbridge), a manufacturer of custom and standard propellers and underwater stern gear for inboard-powered vessels; Monolith Corporation/Integrated Dealer Systems, Inc. (IDS), a developer of dealer management systems for dealers of marine products and recreational vehicles; and Northstar Technologies, Inc. (Northstar), a supplier of premium marine navigation electronics, from the acquisition dates of February 10, 2002, October 1, 2002, and December 16, 2002, respectively. The acquisition of IDS and Northstar complemented the Company’s expansion into systems integration and marine-based electronics.

Litigation charge and change in accounting principle. Comparisons of net earnings per diluted share between 2004, 2003 and 2002, are affected by a litigation charge and change in accounting principle, which are listed and described below. The effect of these items on diluted earnings per share is as follows:

	2004		2003		2002
Net earnings per diluted share — as reported	$	2.77	$	1.47	$	0.86
Litigation charge		-		0.18		-
Cumulative effect of change in accounting principle		-		-		0.28
Net earnings per diluted share — as adjusted	$	2.77	$	1.65	$	1.14

	2004		2003 ^(A)		2002 ^(B)			2001 ^(C)			2000			1999
(In millions, except per share data)
Results of operations data
Net sales	$	5,229.3	$	4,128.7	$	3,711.9		$	3,370.8		$	3,811.9		$	3,541.3
Unusual charges	$	-	$	-	$	-		$	-		$	55.1		$	116.0
Operating earnings	$	400.7	$	221.4	$	196.6		$	191.1		$	397.1		$	274.6
Earnings before income taxes	$	378.5	$	201.1	$	161.6		$	132.2		$	323.3		$	219.3
Earnings from continuing operations before accounting change	$	269.8	$	135.2	$	103.5		$	84.7		$	202.2		$	143.1
Discontinued operations:
Loss from discontinued operations, net of tax		-		-		-			-			(68.4	)		(105.2	)
Loss from disposal of discontinued operations, net of tax		-		-		-			-			(229.6	)		-
Cumulative effect of changes in accounting principle, net of tax		-		-		(25.1	)		(2.9	)		-			-
Net earnings (loss)	$	269.8	$	135.2	$	78.4		$	81.8		$	(95.8	)	$	37.9
Basic earnings (loss) per common share:
Earnings from continuing operations before accounting change	$	2.82	$	1.48	$	1.15		$	0.96		$	2.28		$	1.56
Discontinued operations:
Loss from discontinued operations, net of tax		-		-		-			-			(0.77	)		(1.14	)
Loss from disposal of discontinued operations, net of tax		-		-		-			-			(2.59	)		-
Cumulative effect of changes in accounting principle, net of tax		-		-		(0.28	)		(0.03	)		-			-
Net earnings (loss)	$	2.82	$	1.48	$	0.87		$	0.93		$	(1.08	)	$	0.41
Average shares used for computation of basic earnings per share		95.6		91.2		90.0			87.8			88.7			92.0
Diluted earnings (loss) per common share:
Earnings from continuing operations before accounting change	$	2.77	$	1.47	$	1.14		$	0.96		$	2.28		$	1.55
Discontinued operations:
Loss from discontinued operations, net of tax		-		-		-			-			(0.77	)		(1.14	)
Loss from disposal of discontinued operations, net of tax		-		-		-			-			(2.59	)		-
Cumulative effect of changes in accounting principle, net of tax		-		-		(0.28	)		(0.03	)		-			-
Net earnings (loss)	$	2.77	$	1.47	$	0.86		$	0.93		$	(1.08	)	$	0.41
Average shares used for computation of diluted earnings per share		97.3		91.9		90.7			88.1			88.7			92.6