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Exhibit
99.1
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| Brunswick
Corporation 1 N. Field
Court Lake Forest,
IL 60045 |
| Telephone
847.735.4700 Facimile 847.735.4750 |
| www.brunswick.com |
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Release:
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IMMEDIATE
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| Contact: |
Kathryn
Chieger |
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Vice
President – Corporate and Investor Relations |
| Phone: |
847-735-4612 |
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| Contact: |
Daniel
Kubera |
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Director
– Media Relations and Corporate Communications |
| Phone: |
847-735-4617 |
| Email: |
daniel.kubera@brunswick.com |
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BRUNSWICK
ANNOUNCES PLAN TO RESIZE IN LINE WITH SMALLER
U.S.
MARINE MARKET AND REDUCE FIXED COSTS BY $300 MILLION
LAKE
FOREST, Ill., June 26, 2008 -- Brunswick Corporation (NYSE: BC) announced
today a set of comprehensive actions to resize the company to improve
profitability during the current downturn in the U.S. marine market, including
actions to reduce its fixed-cost structure by $300 million versus 2007 spending
levels.
“For the
past several years, we have been implementing initiatives to fundamentally
change our cost structure by reducing our manufacturing footprint, and
leveraging purchases of common components and materials across our brands and
operations,” explained Dustan E. McCoy, Brunswick’s chairman and chief executive
officer. “In addition, we have addressed the prolonged downturn in
the U.S. marine market by continually reducing production rates throughout
our marine businesses, divesting under-utilized assets, exiting or divesting
certain businesses, eliminating discretionary spending and reducing
headcount. While these efforts have resulted in significant savings,
the realities of the current U.S. marine market have caused us to step up the
pace and magnitude of these efforts.”
“Retail
unit sales of power boats in the United States have been in decline since late
2005; however, the rate of decline has been accelerating,” McCoy
added. “Industry retail unit sales were down 13 percent in the fourth
quarter of 2007 and down 21 percent in the first quarter of 2008 compared with
the respective year-ago quarters. Further, these reductions were
recorded off of an already low base. Total unit sales of power boats in the
United States in 2007 were at their lowest in more than 40
years.”
“An
uncertain economy, high fuel and food prices, slumping home sales and values,
rising unemployment and other factors continue to erode U.S. consumers’
confidence and are reducing their ability and desire to purchase
discretionary items such as boats, and billiards tables and fitness equipment
for their homes,” McCoy explained. “For our planning purposes, we are
not assuming that these pressures will abate any time soon. As a
result, we are planning for an environment in which the U.S. marine market
will be smaller in the near term, and we will resize our company
accordingly. Our objective is to thrive and prosper while the U.S.
marine market remains under pressure and to outperform when we see a rebound in
demand.”
Cost
Savings Efforts
Brunswick stated
that its $300 million cost savings target will be achieved in part by further
shrinking its North American manufacturing footprint. The company plans to have
17 or fewer boat plants by the end of 2009, compared with the 29 it had in
2007. This will require the closure of four plants in addition to
eight plant closures already completed or announced. Brunswick will
also continue its efforts to reduce the complexity of its operations, including
reducing the number of models and option packages, focusing on those that are
popular and clearly resonate with consumers. The company’s efforts
also entail assessing the outlook for continued participation in certain market
segments across its operations that may not offer opportunities to generate
acceptable levels of profitability.
The
company said it will further reduce costs by implementing a new matrix operating
model that will more efficiently provide common support functions and
administrative services across all Brunswick business units, lowering spending
in all functional and operations activities, and reducing its work
force.
“These
obviously are hard decisions, dictated by a difficult economy that has both
constricted and altered the U.S. marine market,” McCoy said. “We have
chosen to act now to recast and resize our operations with the objective of
being profitable within a smaller marine market. We are confident
that these targeted savings and other changes are realistic and achievable, as
well as necessary, to create a leaner organization that will be able to both
prosper within these market conditions, as well as take advantage of any uptick
in demand.”
“Our
immediate focus remains on managing pipeline inventories at our marine dealers,
as well as enhancing our solid liquidity at Brunswick,” McCoy
said. “We will continue to produce at rates below retail demand to
lower pipeline inventories. A reduction in production rates also
results, unfortunately, in the need for fewer workers.” The company
said that it had notified employees today that it would be reducing its hourly
and salaried work force at certain of its marine plants by
1,000. Further work force reductions of approximately 1,000 hourly
and 700 salaried employees across the company’s marine business units and staff
functions are contemplated as additional plant closures and consolidations and
other cost-cutting measures are completed.
“Maintaining
liquidity will continue to be a key priority in these uncertain times,” McCoy
added. “We are focusing on generating cash through good working
capital management, paring inventories and discretionary
spending. Our balance sheet is solid, and we expect to generate
positive cash flow benefits in 2008 by further reducing capital spending and
from positive contributions from changes in working
capital.”
Financial
Effect
The
company said that these actions are estimated to result in restructuring charges
in the range of $200 million to $220 million pretax, which includes
approximately $75 million of previously announced restructuring charges related
to actions taken earlier this year. The charges primarily consist of
asset write-downs and asset impairments, including approximately $18 million
relating to the Valley-Dynamo commercial pool table business; severance; and
costs associated with manufacturing footprint changes. The company
estimates that 85 percent of these charges will be recorded in 2008, of which
about 50 percent will be non-cash. The company noted that $22 million
of the restructuring charges had been recorded in the first quarter of
2008.
Conference Call Today
Brunswick will
host a conference call today at 10 a.m. CDT to further discuss these actions. At
that time, McCoy will be joined by Peter G. Leempuette, senior vice president
and chief financial officer, and Kathryn J. Chieger, vice president – corporate
and investor relations.
The call will be
broadcast over the Internet at www.brunswick.com. To
listen to the call, go to the Web site at least 15 minutes before the call to
register, download and install any needed audio software.
Security analysts
and investors wishing to participate via telephone should call (888) 972-9341
(passcode: Brunswick). Callers outside of North America should call
+1 (212) 287-1618 to be connected. These numbers can be accessed 15
minutes before the call begins, as well as during the call. A replay
of the conference call will be available through midnight CDT July 3, 2008, by
calling 866-420-4829 or 203-369-0791. The replay will also be
available at www.brunswick.com.
Forward-Looking
Statements
Certain
statements in this news 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 news
release. These risks include, but are not limited to: the effect of
(i) the amount of disposable income available to consumers for discretionary
purchases, and (ii) the level of consumer confidence on the demand for marine,
fitness, billiards and bowling equipment and products; the ability to
successfully complete restructuring efforts in the timeframe and cost
anticipated; the effect of higher product prices due to technology changes and
added product features and components on consumer demand; the effect of
competition from other leisure pursuits on the level of participation in
boating, fitness, bowling and billiards activities; the effect of interest rates
and fuel prices on demand for marine products; the ability to successfully
manage pipeline inventories; the financial strength of dealers, distributors and
independent boat builders; the ability to maintain mutually beneficial
relationships with dealers, distributors and independent boat builders; the
ability to maintain effective distribution and to develop alternative
distribution channels without disrupting incumbent distribution partners; the
ability to maintain market share, particularly in high-margin products; the
success of new product introductions; the success of marketing and cost
management programs; the ability to maintain product quality and service
standards expected by customers; competitive pricing pressures; the ability to
develop cost-effective product technologies that comply with regulatory
requirements; the ability to transition and ramp up certain manufacturing
operations within time and budgets allowed; the ability to successfully develop
and distribute products differentiated for the global marketplace; shifts in
currency exchange rates; adverse foreign economic conditions; the success of
global sourcing and supply chain initiatives; the ability to obtain components
and raw materials from suppliers; increased competition from Asian competitors;
competition from new technologies; the ability to complete environmental
remediation efforts and resolve claims and litigation at the cost estimated; the
effect of weather conditions on demand for marine products and retail bowling
center revenues; and the ability to successfully integrate
aquisitions. Additional factors are included in the company’s Annual
Report on Form 10-K for 2007 and Quarterly Report on Form 10-Q for the quarter
ended March 29, 2008.
About
Brunswick
Headquartered in Lake Forest, Ill.,
Brunswick Corporation endeavors to instill “Genuine Ingenuity”Ô 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,
Bayliner, Bermuda, Boston Whaler, Cabo Yachts, Crestliner, Cypress Cay, Harris,
Hatteras, Kayot, Lowe, Lund, Maxum, Meridian, Örnvik, Princecraft, Quicksilver,
Rayglass, Savage, 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 Dynamo, Tornado and Valley pool tables, Air Hockey and foosball
tables. For more information, visit www.brunswick.com.