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Brunswick 2Q adj. profit tops Street, ups outlook

LAKE FOREST, Ill. (AP) -- The boat and sporting-goods company Brunswick saw net income slip 4 percent in the second quarter on rising expenses and as it paid off debt, but that was better than Wall Street was expecting and shares rose 10 percent Thursday.

Brunswick also lifted its expectations adjusted operating income and revenue for the year, citing a lower-than-expected tax rate on top of a first-half performance this year.

The Lake Forest, Ill. company earned $80.4 million, or 86 cents per share, for the period ended June 29. A year ago it earned $83.6 million, or 90 cents per share.

Restructuring, exit and impairment charges jumped to $4 million from $800,000. Brunswick Corp. also dealt with losses on early debt extinguishment, which lowered earnings by 32 cents per share.

Operating expenses rose 2 percent on increased research and development costs.

Removing the losses on debt extinguishment, charges and other items, earnings from continuing operations were $1.23 per share.

Analysts, on average, expected earnings of $1.08 per share, according to a FactSet poll.

Shares of Brunswick surged $3.36 to $36.46 in morning trading, at one point coming within 33 cents of its 52-week peak.

Revenue increased 5 percent to $1.1 billion from $1.05 billion, driven by strong sales of outboard marine products, marine parts and accessories, fitness equipment and U.S. retail bowling center sales. Wall Street was looking for $1.11 billion in revenue.

Sales were soft for fiberglass sterndrive/inboard boats and bowling products.

Sales for the marine engine unit, which includes the Mercury Marine Group and marine parts and accessories businesses, increased 7 percent to $631.7 million. Sales overseas, which comprise 33 percent of the division's quarterly sales, rose 3 percent.

The boat segment, which includes 15 boat brands, reported a 1 percent increase in sales. International sales, which make up 37 percent of total sales of the unit, climbed 2 percent.

The fitness division, which makes and sells Life Fitness and Hammer Strength fitness equipment, posted a 5 percent sales increase. Sales overseas climbed 10 percent. This is critical, as those sales make up 51 percent of the unit's total sales.

At the bowling and billiards unit, sales slipped 2 percent. Sales abroad fell 21 percent. Those sales comprise 20 percent of total segment sales.

For the year, Brunswick now foresees adjusted earnings from continuing operations between $2.55 and $2.65 per share. It previously predicted adjusted earnings from continuing operations in a range of $2.30 to $2.50 per share. The company now anticipates a revenue increase of about 4 percent, up from its prior guidance for 3 percent to 5 percent growth.

Analysts expect 2013 earnings of $2.50 per share.