Good morning and welcome to the Brunswick Corporation 2016 Second Quarter Earnings Conference Call. All participants will be in a listen-only mode until the question-and-answer period. Today's meeting will be recorded. If you have any objections you may disconnect at this time. I now would like to introduce Bruce Byots, Vice President of Investor Relations.

Good morning and thank you for joining us. On the call this morning is Mark Schwabero, Brunswick’s Chairman and CEO; and Bill Metzger, CFO. Before we begin with our prepared remarks, I would like to remind everyone that during this call our comments will include certain forward-looking statements about future results. Please keep in mind that our actual results could differ materially from these expectations. For the details on the factors to consider, please refer to our recent SEC filings and today's press release. All of these documents are available on our Web site. During our presentation, we are using certain non-GAAP financial information. Reconciliations of GAAP to non-GAAP financial measures are provided in this presentation as well as in the reconciliation sections of the consolidated financial statements of the Company’s today’s results. I would also like to remind you that the figures in this presentation reflect continuing operations only unless otherwise noted. I would now like to turn the call over to Mark.

Thanks, Bruce, good morning everyone. Today, I will focus my opening remarks on our second quarter results, as well as provide insights into the global Marine and Fitness markets, and then Bill will comment in greater detail on our financial performance. And then I’ll come back and wrap up with comments on our current 2016 full year outlook. Our second quarter results reflect the continued successful execution of our growth strategy. About halfway through the Marine season, indications under score a healthy U.S. marketplace, which is consistent with the assumptions we’ve had made entering the year. And our 2016 outlook continues to represent another year of strong earnings growth and free cash flows as well as investments in our business. We’re making outstanding progress integrating Cybex into our Fitness segment and we remain on plan to achieve our near and long term financial objectives for this acquisition. Revenue in the second quarter increased 8.8% and on a constant current basis, the revenue increased by 9.1%, with acquisitions contribution approximately 4% of growth. The strongest growth rates reported by our Fitness segment, our fibreglass outboard and aluminium boards. Marine parts and accessories and our outboard engines also exhibited strong growth rates. Our gross margin was comparable to last year at 28.4%. Operating expenses increased by 11% and were 15.2% of sales. This compares to 14.9% of sales in 2015. Excluding the impact of acquisitions, operating expenses increased by 5%. Adjusted operating earnings increased by 7% versus the prior year, and operating margins were 13.2%, down 30 basis points compared to last year. And this is slightly better than our prior guidance to being down 50 basis points due to better than expected gross margins and lower operating expenses. Operating leverage for the quarter was approximately 10% on an as adjusted basis.…

Thanks Mark. I would like to start with an overview of our revenue performance. For the second quarter, on a constant currency basis, sales in our combined Marine segments and Fitness segment increased by 5% and 33% respectively. From a geographic perspective, consolidated U.S. sales increased by 11%, while sales outside the U.S. on a constant currency basis increased by 5%. By region, sales on a constant currency basis increased by 14% in Europe and rest of the world sales were flat to prior year. In the first half on a constant currency basis, sales in our combined Marine segments increased by 6% while out Fitness segment increased by 26%. From a geographic perspective, consolidated U.S. sales increased by 11%, sales outside the U.S. increased by 6% on a constant currency basis. This includes growth in Europe for 14% and 1% growth in other international regions. Turning to our Marine engine segment, where second quarter sales on a constant currency basis increased by 4%. From geographic perspective, sales in the U.S. were up 5% reflecting increases in outboard engines and parts and accessories. Sales to Mercury’s Europe customers excluding currency changes were up 10% led by strength in all major product categories. This performance reflect benefits from new engine products and our strategy to expand the parts and accessories business in this region. Rest of the world sales on a constant currency basis were flat to prior year. Performance in these regions was mixed with growth in Canada and slight growth in Asia Pacific which was offset by declines in the Latin America, Africa and Middle-East regions. On a product category basis, the outboard engine business reported solid sales growth in the quarter. New products introduced over the past several years that resulted in market share gains in targeted saltwater,…

Thanks Bill. Our overall operating plans and the assumptions for 2016 remain relatively consistent with those we communicated in April during our Q1 earnings call. We continue to target 2016 to be another year of outstanding earnings growth and strong free cash flow generation. Our plans reflects approximately 10% to 11% sales growth, which includes the continuation of solid market growth in the U.S. and Europe partially offset by weakness in certain international Marine markets. Our plan also reflects benefits from the success of our new products and market share gains. We also are planning for wholesale and retail unit growth rates to be in balance for the year, which will benefit Marine growth rates in the second half. We currently estimate that the acquisitions will account for about 5 percentage points of the 2016 growth rate, reflecting acquisitions that were announced in 2015 and 2016. We anticipate a slight improvement in our gross margin levels and in operating margins. Operating expenses are estimated to increase in 2016 but as a percentage of sales are expected to be slightly lower than 2015 levels. Our plan in 2016 continues to include increased investment spending to support our growth. These investments will be directed toward new products initiatives that help us advance our productivity likely in six sigma and investments to support our growth plans including information technology. Our decision to continue to proceed with these investments and based upon a favorable view of our markets, the long-term growth opportunities and our proven ability to deliver on previous investments. The cost actions taken in 2015 to respond to the foreign currency headwinds continue to yield benefits in 2016. As we assess the full year and our operating plans, we are maintaining our full year EPS guidance $3.40 to $3.50 a share. And…

Thank you. We will now begin the question-and-answer session [Operator Instructions]. And our first question is from Greg Badishkanian from Citi.

So just wondering so when you look at retail sales, the best way to do it is to look at first half because I'm guessing weather was kind of uneven throughout the first six months of the year. Is that the right way to think about it?

That’s the fair way Greg, that’s correct.

And then if you look at it, the growth rate has been pretty decent. Yet other segments, and we had the Harley report this morning, are seeing weakness within the overall leisure vehicle industry. So I'm wondering maybe some of the differences between the Marine and Boat industry versus other segments within a leisure vehicle industry.

Greg, the things that we pointed out before, but our reinforce is that obviously we’re headed different point in the recovery than some of the other industries have been in. I think the other case is that we’ve had a strong U.S. market as part of that recovery and it's balanced across essentially all of the geographic areas. And I think another thing that probably differentiates us is we’re probably a little less tied into some of the energy field or agriculture or some of the other areas as well with Marine versus some of the comparables you may be thinking of.

And then just finally, is any quantified information or numbers on, through the oil-related markets, which have been pointed out by other leisure vehicle industries in terms of maybe second quarter versus the first quarter and any impact in your business?

We’ve never seen a correlation between fuel prices, going from oil to fuel prices. We’ve never seen…

Geographic markets, the geographic markets like…

No…

Yes, and that would include maybe Canada as well, which you talked about throughout North America.

So, let me take it from a U.S. perspective. We take the top 20 saves which includes State of Texas as an example. We’re seeing extremely nice growth rates, in particular, in oil and even areas that you would relate to energy. So I think some of the more recent State of Texas was, I mean, almost 15% type growth. So, I think other factors related to droughts and things in prior years have maybe impacted us more when energy was strong and now it's helping us in the environment. But fundamentally, we’re not seeing that relationship in the U.S. market. As we look at Canada, clearly the majority of the market tends to be the Ontario and the Quebec, they represent about 60% of the market. And when we look at Ontario or even some of the maritime areas within Canada, we’re seeing a little different response than where we see in the balance of Canada which has probably a little more energy vent to it. But again the vast majority of that market is, it's sitting in the eastern provinces and maritime area.

Our next question is from James Hardiman from Wedbush Securities.

I guess first I just wanted to make sure I understand the moving parts of guidance. Obviously, the overall guidance is unchanged. But it looks like, by my math, about a nickel negative from FX maybe a penny or two positive from the tax rate. And then the remainder of that difference is made up from slightly better Boat segment guidance? Is that how I should think about it and are there any other moving parts that I missed there?

When we take a look at all of the moving parts, we’re obviously fighting maybe a little bit more of a headwind from currency I think the fact that we’ve had a good solid start to the Marine industry in U.S. And we’ve had performance quite frankly that’s outperformed that to a pretty nice degree. All said [indiscernible] as we look at what’s going to transpire over the second half of the year, we feel pretty good about where our guidance is, and we kept it consistent with where we were three months ago.

And I want to focus a little bit on your slide 18, which seems to have a lot of information in it, that talks about the Boat segment metrics, global versus U.S. and wholesale versus retail. First, the global versus U.S., 9% -- looking at retail, 9% U.S. 4% global. Does that imply, I am assuming international retail was -- would have had to be down a descent amount in the second quarter. Can you give us that number? And does that get any better?

James it is down, I am not sure I am going to give the split on that number. But it certainly down. It reflects weakness in Canada would be the primary driver. Latin America has not been a very good market for us as well. Europe has been a little bit on the positive side as Mark referenced.

And then I guess lastly, year-to-date wholesale down 1%, retail up 6%. You said a number of times that, that should even out over the course of the year. Is it as simple as saying that in the back half that wholesale should be 5% ahead of retail -- 7% ahead of retail? And regardless of what the magnitude is, how does that -- how is that dispersed between 3Q and 4Q? Do we get more of a catch-up in one of those two quarters?

I don’t think there is going to be any material difference in the catch-up Q3 to Q4. But some of that’s going to have to play its way out James. So one thing I would point out is that as we sit here today, we’ve had what we consider to be a very solid start to the year, both in U.S. and globally. And as we sit here with retail as strong as it's been and our pipelines in extremely healthy shape down two weeks, aging being favorable. We think we’re really set up for a really good opportunity in the second half of the year to restock pipelines with all of our current new products and that's one of the reasons you highlighted the fact that wholesale units should grow at a much faster rate than retail over the second half and assuming that retail continues to hang in here at strong levels that's certainly going to happen.

Okay and then just, sorry lastly for me, ASP, still solid in the second quarter, up a couple percent, was much bigger the last couple quarters. I seem to recall you made a comment about, there was a decline in larger boats in the second quarter ahead of some second half introductions. Can you just repeat what you said on that topic and if that is the case, wouldn't may be ASP benefit a little bit more of the second half?

It continues to be relatively, remember on the pipeline James that a lot of the things we're talking about are higher unit, lower dollar ASP sort of product. And as we catch up on that at the back half of the year whatever sort of benefit we might get from big boat demand later in the second half, those two things tend to be a little bit more in balance.

Got it, thanks guys. Yes, very much so, thanks, good quarter.

Our next question is from Mike Swartz from SunTrust.

Hey Mark just wanted to touch on some of the comments you know behind your four year outlook on the marine business and your understanding that we're up 6% in the US here year to date, which is similar to last year. I mean the trend in stern drives used to be materially better, seems to stabilizing a bit so. Just given that outlook and your plans to exceed retail in the back half of the year in terms of whole sale I mean how should we think about that stern drive business? Can that grow in the second half of the year and I guess both on the boats and the engine side.

Well I think there's a couple of different things that are going to go on there Michael, I mean first of all there is still a fair amount of products that we're working through transitioning from the phase out and everything that both we and our competitors have done there, so there's some dynamics working through the supply chain but from a pure retail standpoint I think there's you're still going to see a number of products coming out in the category that are going to be outboard based but clearly some of the things we're bringing out you know I would take for example the USOX product line, the things that we're doing, you know and the success we're having with urgency stern drive products and you know we're going to see, we'll see some growth in some of those areas, but you know I think it's a market that I don't think we're going to see huge increases but you know a stabilizing slight increases are all in the realm of possibilities.

And I guess just following up, remind me when was the last time you actually saw an increase in stern drive? I guess maybe even for full-year basis. Whether that's, again, boats or engines.

I think on a full year basis there'd probably be pre recessionary level.

Okay. And then just touching on the Fitness, for the acquisition of ICG, you put some slides in the presentation but maybe just getting a better sense of what was the core the main criteria for making that acquisition.

Well, as I mentioned in my comments before Michael one of the things that we're, you know clearly trying to do and it's been part of our overall strategy is try and take advantage of an area where people are looking at different ways of fulfilling their needs from an exercise and the group exercise is an area that we've been focusing a bit more on and so we've done some things product wise around what's growing and recycling and fact I think we've had a supplier relationship with them for the last five years and have gotten to know them fairly well and understand that product and the capabilities and we just see you know between our ability to get a deal with them and you know what's going on in the group exercise really put a much bigger stake and a bigger kind of foundational piece in what we're trying to do in the overall group exercise arena and I wouldn't underestimate you know there's some nice technology and IP that comes with them as well whether we're, you know they've got some really good things around their watt rate, power meter and you know they coaching by color opportunities that the intellectual property and give us some opportunity to expand that and that really falls out so. You know it's much as we did with something like Sifed and really getting a creating a bigger nucleus in the marine half space that's this particular acquisition gives us you know much more capability within the group exercise arena. And we're I mean I guess, we're really excited this has been you know we've known them for years the Burns and the scheme over there, great set of people you know we think there's a really strong cultural fit and we're really feeling good about being able to define the agreement here.

And anything you can disclose in terms of growth rate of the business?

No we haven't we really haven't talked about that growth rate but I think it's going to head, let me answer it this way Mike, it'll have minimal impact on 2016 and I think as we you know are able to bring this to a conclusion in the third quarter, as we talk about 2017 we'll probably be able to talk about this a bit more, but right now we finished the signed agreement and we're very happy with it and we can probably get a little more direction around that.

Okay, great, thanks.

Our next question's from David McGregor from Longbow Research. And our next question's from Tim Condor from Wells Fargo Security.

Thank you. Gentlemen, just a couple things here. In particular if you could drill into the European Marine trends? It appears that, that is slowing a little bit. Is that more a function of just a -- it's still growing nicely but slowing. Is that more a function of the comparisons or is there anything that you are noticing, an underlying demand and then as it relates --

I can go to the next question. Tim you're back.

And we'll go to Randy Konik from Jefferies.

Hey, great thanks a lot, I guess Bill, I wanted to ask about you know your comments around working capital improvements. Kind of where you think we are in the working capital improvement cycle? And you talked about the 29 weeks of supply on hand versus 31 weeks. Where should we be thinking about that trend over the next six months or so?

So the 29 weeks Randy is a dealer inventory metric, not necessarily a Brunswick working capital metric and as we sit here today, we're not necessarily planning for or necessarily think that we got big adjustments that need to be made, to the level of inventory being held at dealers. As we sit here today we are two weeks lower than we were a year ago which I think is a reflection of just how strong our retail performance is been and our ability to exceed what markets have done and what our market expectations were. And you know I think as we look forward, we're not anticipating there to be a continuing decline of dealer inventories on a weeks on hand basis as we go throughout the remainder of '16 and then into '17 but naturally if we get into periods of time where retail continues to outperform we may have a hard time closing that gap. Is I think the best way to look at it.

Understood. And when you talked about the ASP trends continue to move higher. But the way the boats are mixing, it seems to be on a like-for-like basis ASPs are going up but the mixed boat seems to be moving more towards a smaller, I guess, boat. How do you think about that on a long-range basis about where the trends should look out over the next few years in the industry?

So the way I would think about that is that we are seeing a nice growth across our portfolio, so we see people migrating into boats with bigger engines, more content etcetera, at the low end of our product offerings all the way to the high end. So that is part of what's driving that our view of what ASP growth is going to be on long term basis. And we feel pretty comfortable that's going to continue, mostly because it's been part of the evolution of the market over the past 15 years and people have desired to trade up buy new to achieve things that they can’t get in the used market that naturally brings with it bigger engines, more control technology, you've seen a lot of success that we've had there, introducing things like joystick and active trimming things on the engine side that all makes its way into boats and it all makes its way into a higher average selling price.

Right. So I guess my question would be, if we been talking about that theme of, don't necessarily believe that we are going to go blow past the prior peak unit volumes in the industry, it's more of an ASP kind of story that's been developing in the industry. How do you think about the discrepancy between how ASPs trend on the low end versus ASP growth potential on the high end? How should we be thinking about that?

I would think naturally on a percentage basis there's probably going to be a little bit more elasticity on the high end and the value end Randy but what could play out here is that if you end up in kind of this stable recovery mode, where we've got pretty nice balance between recovery at the high end and the low end, I think it's reasonable to assume that this ASP growth continues on at kind of its current trajectory and if you end up seeing a reemergence of value and greater growth rates on the value side we might have a little bit more upside on units which could put pressure on ASPs.

Great, and then I guess my.

Net we still get to the same dollar amount.

Perfect, and then I guess my last question would be, when you think about Canada, been a little bit of a thorn in the side as this US market continues to do very well. How do you think about your mileage posts on or at least duration of the difficulty there, when do you think we could see some sort of you know improving trend in that geography going forward thanks.

Well Randy I think the, I think one of the things that if you take it from a historical perspective, dealers and the consumer in Canada once they really start seeing stability now seeing stability in the currency they tend to adapt to it and you know we see recovery or things happening again if you do that from a historical I think one of the real questions is you know just at what point does currency have a little less volatility and with the new government Trudeau and stuff, how does that all play out to create that. You know some early indicators looking at housing prices and sales of homes and stuff in the market are giving indications that you know some of that's starting to happen from a consumer perspective but you know I think that's what really got to play out is, people just seeing less volatility and a little more stability in the currency.

Great, thanks a lot, appreciate it guys.

And we will go back to Tim Condor from Wells Fargo.

Thank you, gentlemen. A couple of things here. As it relates to the US marine market versus the international market. How would you characterize each of those over the last 90 days versus your expectations? As expected? Stronger? Weaker? And then the discussion you had about wholesale exceeding retail of the back half of the year sort of to catch up predominantly in the more entry-level part of the market. Catching up supply with demand. Does that factor in any expectations for what you are going to see at a lot of the dealer order periods here that are coming up through August or could that be further adjusted post those meetings?

Let me kind go through the questions, and the first one was you know the US is you know there's strong retail but if you look at the first six months for instance we said it would play out pretty similar to '15, it's playing out very similar to '15 so I don't know that the US is looking a lot different than we expected, you know Europe a little stronger than we expected and I think that bears out maybe not so much from the market as bears out from some of the success we're having with new products and things, on both the engine and both sides over there so I think that's maybe more us than the market, as it relates to the wholesale retail, as we go into dealer forums and dealer meetings and the launches of you know the 17 products all indications would be that we'd have pretty strong orders from dealers coming in because of where the pipeline is, because of kind of dealers confidence based upon this last year. So I think, I think as we go through the third quarter and hold those various meetings and forums, you know the order rates, orders we'll be receiving are, you know are probably going to be affirmations of what's going on just talk to you about the second half wholesale performance. That's going to play out over the next, literally the next month or two.

And then in the, if any needed to [indiscernible].

You're breaking up a little bit, I think the questions, then we would look at things obviously as we have our next call in the October timeframe relative to what that all looks like as well as continuing to get you know a little more data filling in the second quarter and how the retail is continuing into the third quarter. All of those things would give us a little more information.

Okay. And then as it relates to Europe in particular, just to get the Brexit thing on the table, anything that you've seen since then? And as you said, Mark, the trends a little bit better than you thought. So just the slowing we're seeing is the difficult comparisons but still obviously pacing along pretty nicely?

Yes, we've had a little more benefits on the north side, northern Europe but you know we're starting to see some improvement in the southern Europe and that's really where some of the regulatory markets are but as it relates to Tim the question on the Brexit side, you know it's a bit early to know where that's all going to go, but the other thing from the standpoint of dealers or distributors bringing in those four engines we're from a lot of perspective s we could say that the season's probably almost complete from the standpoint of that so, I'm not sure we'd be able to measure you know really Brexit at this point but it's way too early and number two I'm not sure how or where we really see it at this point anyway.

Okay fair. Last question relating to Fitness. If you look at share trends year-to-date, either excluding Cybex or on a pro forma basis. How are those going?

Well I'm going to -- there's not a lot of good share data out there but I'll just kind of tee it up this way. So if you see our growth now, we talked about where the industry growth was going to be and when we look at the fact we've been able to get our core business growth to be in line now as we reported the second quarter I think as other we have some of our people who are competitive that are in the public arena and I think as they report some of their results you're going to be able to see that our growth rates are exceeding their growth rates fundamentally, I believe goes well for the factor for taken share.

And our next question is from Jimmy Baker from B. Riley & Company.

Hi, good morning, guys. Just want to start with a couple of questions on Mercury. So first could you speak maybe to regional strength and weaknesses in the domestic P&A business, based on I guess weather and any other factors you think are worth calling out. And that I know you don't talk about this often but how do you feel about channel inventory levels in the P&A business? And then if I could just ask a more speculative question in the context of your exposure to Bass Pro and Cabelas, any thoughts on the implication to you if there was a potential combination there?

Away go to the first point from a regional perspective, we had as we mentioned on the call the early part of the second quarter or P&A was being impacted by weather and that I would say was if you really think about the weather patterns and I don’t like to use weather as a reason but clearly go a weather implications in the early parts of course. The month of June has been very, very strong for us, which was great and came through okay so I don’t think there is a fundamental change on the business it's really some timing and nothing that really pops out geographically when we look at the various areas as well Jimmy, so we're confident in terms of the pipeline and I think we've talked about this before in the given the fact that our P&A distribution is growing around same day next day delivery arming our whole model is basically not to rely on a dealer stocking up itself it’s a lot more around, our ability to get them what they need, when they need the product and we are very realize supplier there and so give you pipelines dealer inventories of CLA is not really something that we worry ourselves. In terms of the Bass Pro and the Cabelas, there's rumor out there. I just really they are both great customers of ours and I would rather not speculate on what on what's the results if those things happen or what might happen or what's the impacts to us, they are too really good customers for our business.

Okay. And then not to beat a dead horse but just want to come back to the Boat group for a moment. This trend of stronger increases in wholesale shipments during the back half of the year is something we've seen from you each of the last several years and it seems that at least from our work, more of a Brunswick phenomenon than an industry phenomenon. So, could you just talk about you know if there's been any kind of seasonal change in your dealer buying patterns? Are they increasingly holding off for your new model changeovers given the success that your new model shave had? I'm just wondering what's driving, not just this year, but this multiyear trend of tilting your wholesale growth to the back half?

I think there is a whole bunch of things going on that make us differ there Jimmy I had start with fact that, we've been bringing out new product that rate much greater, faster and differently then the rest of the industry so I think part of it is given that the model here changes mid year you know roughly around the 1st of July-ish timeframe, you know there's an actual tendency to once the inventory at the dealership to pull down a bit and they want to stock up with the new products that you coming out and available in the second half of the year and again just the rate at which we're bringing new products out and the types of new products we're bringing out. I think that's different than what goes to the rest of the industry. I think the other standpoint is that I think people have understood we’re a pretty reliable supplier and as a result of being a reliable supplier on our manufacturing capability, I don't think people feel they have to quite stock up to the same level that maybe they thought about having to do in the past and the other is you know our whole business model with our dealers is much more on a pull basis than a push basis, so we're not out of you know take control of relative huge discount it’s really more looking on a market by market and what the demand is, what we think they're going need to add. So it's a, I think it's more from the business perspective than a stock up perspective so I think there's a number of those factors that come into play why we're probably a little different than some of the others. Bill.

I think the only thing I can add to that Jimmy would be share performance, I think when we take a look at the last couple of years, we've had pretty good share performance in the market place and I think that's naturally going to create a situation where we may trail wholesale a little bit, trail retail a little bit with our wholesale shipments as we go through our procedures and then catch up in the back half.

That makes sense. Thanks a lot for the color.

Our next question's from Joe Spak from RBC Capital Markets.

Thanks. Good afternoon, everyone, and I know we are over the hour here so I will make it quick. I just wanted to dive in a little bit to the performance in Marine Engine in the quarter. I know you guys talked about, and I think even of the slide mentioned, increased investments way down but it still looks like the incremental margin was pretty good to so I was just wondering if there was any shift in timing of some of the investments? And maybe that bleeds over into the third quarter as to what -- why you see another down 30 basis points in the quarter?

Yes, I would say from a timing perspective we do have a little bit more investments weighted for the third quarter versus the second I think that's a good observation. I mean I don't think there's anything from a -- outside of that I'm not sure there's anything else that's worth talking about.

Okay. So the invest -- to summarize on the investment, if we go back a quarter, you are talking about higher investment even the second quarter. Seems like maybe some of that was more geared towards Fitness and then in the third quarter maybe a little bit more towards engine?

Say there was some in both, very incredible businesses.

Okay. Okay. And last one, on the decision to fund the pension a little bit more. I know you said derisking. Does that have anything at all with where you see the fund, saw something up in light of the rate movements?

No, I would say it's really as we continue to shrink the plan but buyout obligations from participants, remember those plans that are frozen and we don’t have any employees wearing or benefiting those plans today, what we are marching toward a goal of trying to get those plans fully funded but let's call it by 2020. And I think the amount of money it's going to take for us to put in every year probably as closer to $70 million a year then where we had take our initial litigations this year which would be in more of the mid-30s and when you take a look at what we've talked about in terms of cash tax rates, we got some upside there in 16 that continues on in 2017 and 2018 and it's one of the reason why we feel like we can put a little bit more in the plans get ourselves focused on getting employee funded by a date so we can proceed with an orally kind of exit from those obligations because they don’t really relate to the operations we're having and operating today.

Right and I know you mark the obligations only on December 31st, but do you have an indication as to where the fund size would move if you had to mark it at current rates?

It would be I mean there is a plenty of chance to ahead of this challenge because of discount rate movements but some of that's have been offset by contributions we've put in so.

Okay.

There maybe a little bit of decrease in funded pattern but nothing material.

Thank you.

And remember we've got a lot of our investments in the plans today in fixed income so as interest rates starts to move around we get some nice offset through investment return so to counter some of the impact on liabilities.

And we have Rommel Dionisio from Wunderlich online. Please go ahead.

Thanks. Just a quick question on the Fitness Equipment business. Given the acquisition, given the growth you are seeing in Europe and Asia, I wonder will you guys need additional infrastructure, whether it be distribution or manufacturing, in some of these overseas markets? It's not something I've heard you mention in the last few years so I just wonder if this going to be some CapEx there necessary over the next few years? Thanks.

Well if you get into a little more detail I mean part of we've made an expansion already that's all happened in our Hungry facility, we've already done physical expansions to our ramping Minnesota facility. One of the things we talked about that we were really or will assets for us in the Cybex acquisition was their Owatonna, Minnesota, facility both from standpoint it was an under assets utilization but also the opportunity to grow it and you may have seen during the quarter we've made the announcement with broken ground, we in fact our expanding that facility that's already are in our plans and guidance to grow the business grow that facility, and then when you take things like the SCIFIT acquisition, it had manufacturing capabilities when you take the ICG with our signed agreements there fundamentally it has the manufacturing capability so it's not taxing any of our existing facility so net-net is we think our capacity plans are very much aligned with the embedding and quite frankly benefitting some of the acquisitions.

Okay. Thanks very much, Mark.

And now I'll turn it back over to management for closing remarks.

Well I just close this down by really coming back to where we start. We think we've had a great quarter, I really want to thank all the employees of Brunswick for their contribution, for making all of this happen, you know we think we stand very much aligned with our overall strategy of the business and we laid out at our investor day. So the fact that the growth is coming through, we're working the strategy that we presented, you know we're growing share in the market, we're meeting the expectations of our investors, we just, it's a great quarter and we look forward to the balance of the year.

Thank you ladies and gentlemen this concludes today's conference, thank you for participating and you may now disconnect.