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I would now like to turn the call over to Dusty.Dusty McCoy Thanks Bruce and good morning, everyone. By now, I hope you’ve had the opportunity to review our second quarter earnings release. Our strong results for the past two quarters continues to reflect the hard work of our employees, dealers and suppliers, which has allowed us to take advantage of our historically low and well managed marine inventories. As well as the significant fixed cost reductions achieved during the past 2.5 years. We reported net earnings in the quarter of $0.15 per share on a sales increase of 41%. This represents our first positive quarterly net earnings since the first quarter of 2008. The quarterly EPS includes $0.26 per share restructuring charges and $0.02 per share of charges for special items, that would be tax items. Our quarterly operating earnings, excluding restructuring, exit and impairment charges were $80 million, an improvement of about $109 million compared as compared to the loss experienced in the prior year. Our operating margin, tax charges were slightly less than 8% in the quarter. This represents our highest consolidated operating margins since the second quarter of 2006. Significant increases in wholesale units in both our engine and boat segments were the primary drivers of our overall 41% topline growth, which generated a significant improvement in fixed cost absorption in our Marine businesses. Further contributing to the strong operating leverage demonstrated in these businesses were lower discounts of approximately $38 required to facilitate retail boat sales and about $20 million of reduced bad debt provisions primarily in the Engine segment. Lower pension expense of approximately $10 million also had a favorable effect on the Engine and Bowling & Billiards segments, as well as on corporate expenses. The portion of the pension expense reduction, and the lower bad debt expense were the primary factors that reduced our second quarter’s SG&A by 14%.
Our cash increased by $93 million from year end and net debt decreased by $120 million. Peter will comment in his remarks on the key factors affecting the quarter’s improved cash position, as well as provide you with an update on cash flow targets for the remainder of the year that will support our objective of generating positive cash flow in 2010. Although encouraged by our first half financial results, driven primarily by a return to a more normal relationship between wholesale and retail sales, overall Marine retail demand continue to decrease in the first six months and remained at historically low levels.Let’s review the preliminary second quarter US Marine industry data. Fiberglass sterndrive in the inboard boat unit retail demand fell by 29%. This compares to declines of 23% in the first quarter of 2010 and 33% in the second quarter of 2009. Outboard fiberglass boat retail unit demand fell 16% in the second quarter. This compares to declines of 22% in the first quarter of 2010 and 29% in the second quarter of 2009. Aluminum product demand increased by 4% in the quarter. This compares to a declines of 15% in the first quarter of 2010 and 26% in the second quarter of 2009. After taking into account the different unit volumes represented in each of these segments, preliminary total industry unit demand declined approximately 9% in the second quarter. This compares to a 20% decline in the first quarter. For the first six months of 2010, total industry demand declined by 13%. The 13% first half decline is slightly greater than our full-year 2010 timing assumption of down 10%. While the lower price aluminum boats have begun to show signs of stability which could be a leading indicator of future demand for the overall boat market, perhaps capitalize boats had yet to experience any significant improvements, as (inaudible) declines are only modestly less than the declines experienced in 2008, in 2009.
The consumer remained very reluctant to demand in this category. Retail demand has not only been mixed by category but also by geographic regions. One area of note is the multi state region that has been hit by the Gulf oil spill beginning in late April. The incident has more significantly affected our Saltwater fishing brand, prior today’s announcement regarding the sale of our Triton brand our exposure in the menus may reduce. Our recreational brands had been affected to a lesser degree. And all of the future ramifications upon our businesses remain unknown, we’re encouraged by the recent news regarding the containment of the Orley (ph) in the decline in surface oil.Read the rest of this transcript for free on seekingalpha.com