Corporate and Financial
Brunswick Announces Cost-Reduction Actions
LAKE FOREST, Ill., Nov. 9 /PRNewswire-FirstCall/ -- Brunswick Corporation
(NYSE: BC) announced today that it is taking a series of actions to cut costs,
better utilize overall capacity and improve general operating efficiencies.
"Given current market conditions, we have planned for flat to declining
production volumes in 2007. With that assumption, we must take appropriate
actions to cut costs and capitalize on the productivity improvements we are
realizing. This will create headroom in our cost structure so that we can
continue to invest in strategic initiatives critical to achieving our long-
term objectives and to help mitigate the effect of inflation on our costs,"
explained Brunswick Chairman and Chief Executive Officer Dustan E. McCoy. "We
have undertaken a review of our manufacturing footprint as well as carefully
scrutinized all processes and activities throughout our organization with an
eye toward not only how we perform our tasks, but the benefit of the tasks
performed. We are taking advantage of the more productive work processes we
have introduced and employed in the past few years, along with ongoing
integration efforts, to improve operations across the entire organization."
"Our cost-reduction efforts include consolidating certain boat
manufacturing facilities, sales offices and distribution warehouses, and
making reductions in our global work force. In recent years, a large part of
our strategic focus in marine has been to acquire a wide selection of products
and services that will enable our dealers to provide unmatched customer
service to virtually every type of boater," McCoy added. "This included
buying boat brands and establishing the industry's leading and most efficient
boat parts and accessories (P&A) business. Now with the domestic acquisition
phase largely complete and our integration efforts well under way, we are
increasingly turning our attention toward how to best manage and employ the
assets we have assembled to provide high-quality, innovative products at
competitive prices."
The consolidation of boat production will affect Lund-Canada in Steinbach,
Manitoba, and US Marine in Cumberland, Md. Lund boat manufacturing will be
transferred to its plant in New York Mills, Minn., with Lund-Canada's sales,
marketing and customer service functions remaining in Steinbach. US Marine
will transfer production of certain Bayliner runabouts from one of its two
Cumberland, Md., plants to its operations in Pipestone, Minn. Cumberland's
remaining plant will continue to produce Trophy boats. A phased shutdown of
the Steinbach and Cumberland facilities will commence in the current quarter
and be completed in 2007.
"In addition to the boat plant closures, we will be realigning
distribution for our bowling products business, streamlining some sales
operations and eliminating select positions throughout our company; cutting
across all functions and all levels. All of these actions combined will
result in a reduction of 430 hourly and salaried production employees and 215
salaried positions in various corporate and division staff functions out of
the company's worldwide work force of 28,500. The work force reductions will
take place between now and the middle of next year," McCoy added.
The company said that severance, asset write-downs and other costs
associated with the plant closures and distribution realignment will reduce
operating earnings by approximately $25 million to $28 million. Approximately
80 percent of these costs will affect the fourth quarter of 2006, with the
balance being recognized in 2007. The company's previously announced 2006
earnings estimate of $2.40 to $2.46 per share does not include any expenses
associated with these cost-reduction efforts. The company added that
anticipated savings of approximately $26 million in 2007 due to these actions
will support continued investments in strategic initiatives as well as to help
offset the effect of inflation on wages, benefits, insurance and health care
costs, and higher material, energy and other operating expenses expected next
year.
"As we look ahead, we will continue to identify additional opportunities,
and take the appropriate actions, to ensure that we operate our business as
efficiently as possible, while building long-term value in the company during
a period of weak market conditions for marine products," McCoy added.
Forward-Looking Statements
Certain statements in this press release are forward looking as defined in
the Private Securities Litigation Reform Act of 1995. These statements
involve certain risks and uncertainties that may cause actual results to
differ materially from expectations as of the date of this filing. These
risks include, but are not limited to: the effect of a weak economy and stock
market on consumer confidence and thus the demand for marine, fitness,
billiards and bowling equipment and products; competitive pricing pressures;
the success of new product introductions; the ability to maintain market share
in high-margin products; competition from new technologies; competition in the
consumer electronics markets; imports from Asia and increased competition from
Asian competitors; the ability to obtain component parts from suppliers; the
ability to maintain effective distribution; the financial strength of dealers,
distributors and independent boat builders; the ability to transition and ramp
up certain manufacturing operations within time and budgets allowed; the
ability to maintain product quality and service standards expected by our
customers; the ability to successfully manage pipeline inventories; the
success of global sourcing and supply chain initiatives; the ability to
successfully integrate acquisitions; the ability to successfully complete
announced divestitures; the success of marketing and cost management programs;
the ability to develop product technologies that comply with regulatory
requirements; the ability to complete environmental remediation efforts and
resolve claims and litigation at the cost estimated; the impact of weather
conditions on demand for marine products and retail bowling center revenues;
shifts in currency exchange rates; adverse foreign economic conditions; and
the impact of interest rates and fuel prices on demand for marine products.
Additional factors are included in the company's Annual Report on Form 10-K
for 2005 and Quarterly Report on Form 10-Q for the quarter ended September 30,
2006.
About Brunswick
Headquartered in Lake Forest, Ill., Brunswick Corporation endeavors to
instill "Genuine Ingenuity"(TM) in all its leading consumer brands, including
Mercury and Mariner outboard engines; Mercury MerCruiser sterndrives and
inboard engines; MotorGuide trolling motors; Teignbridge propellers; MotoTron
electronic controls; Albemarle, Arvor, Baja, Bayliner, Bermuda, Boston Whaler,
Cabo Yachts, Crestliner, HarrisKayot, Hatteras, Laguna, Lowe, Lund, Maxum,
Meridian, Ornvik, Palmetto, Princecraft, Quicksilver, Savage, Sea Boss, Sea
Pro, Sea Ray, Sealine, Triton, Trophy, Uttern and Valiant boats; Attwood
marine parts and accessories; Land 'N' Sea, Kellogg Marine, Diversified Marine
and Benrock parts and accessories distributors; IDS dealer management systems;
Life Fitness, Hammer Strength and ParaBody fitness equipment; Brunswick
bowling centers, equipment and consumer products; Brunswick billiards tables;
and Valley-Dynamo pool, Air Hockey and foosball tables. For more information,
visit http://www.brunswick.com .
SOURCE: Brunswick Corporation
CONTACT: Dan Kubera, Director - Media Relations and Corporate
Communications of Brunswick Corporation, +1-847-735-4617
Web site: http://www.brunswick.com
