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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
ACCELERATES RESIZING
AND
FIXED-COST REDUCTION EFFORTS;
WILL
RECORD NON-CASH IMPAIRMENT CHARGE IN THIRD QUARTER
LAKE
FOREST, Ill., Oct. 9, 2008 – Brunswick Corporation (NYSE: BC)
today announced it will accelerate its previously announced efforts to resize
the company and to remove $300 million in fixed costs by the end of
2009. The company is taking the action in light of extraordinary
developments within the global financial markets that are affecting the
recreational marine industry.
“We
are living and working in the most turbulent economic times in recent history,”
commented Brunswick Chairman and Chief Executive Officer Dustan E.
McCoy. “From the start of the year, we’ve experienced a 3,500-point
drop in the Dow, mortgage and housing crises, record prices for oil, and, now,
shrinking credit availability for companies and individuals. The poor
economy and the accompanying weak consumer sentiment have pressured marine
markets, eroding the demand for boats and engines these past few months at a
swifter pace than originally anticipated.
“For the
past few years, Brunswick has been implementing a strategy to fundamentally
transform the way we design, engineer and manufacture our products; shrink our
manufacturing footprint so that each facility produces at higher volumes and
lower costs; and reduce our level of fixed costs in our manufacturing operations
and within operating expenses. While these times are unprecedented,
they provide an opportunity and mandate, consistent with the pursuit of our
strategy, that we step up our efforts to accomplish our restructuring goals,”
McCoy stated.
Plant
closures and furloughs
As
previously announced, Brunswick had planned to close four boat manufacturing
facilities in early 2009, but will now accelerate that process. Three
manufacturing facilities to be permanently closed are located in Pipestone,
Minn., Roseburg, Ore., and Arlington, Wash. A fourth plant, in
Navassa, N.C., will be mothballed.
Production
of the fiberglass boats manufactured in these plants will be transitioned to
other Brunswick facilities. The company said that these actions will
result in the eventual elimination of approximately 1,450 hourly and salaried
positions at these facilities, while increasing the efficiency and utilization
at the receiving plants. The Arlington, Navassa and Roseburg
shutdowns are expected to be completed by the end of 2008, with the Pipestone
shutdown expected to be completed during the first quarter of 2009.
“In
these difficult times as we move into the slowest selling season in the marine
industry, it is clear that we must aggressively support our dealer network as
they cope with the effects of the economic turbulence. Among the
significant actions we can take is to meter the production of boats consistent
with demand, which is in a pronounced downturn across all consumer durable
industries, including the recreational marine industry,” McCoy
said.
Brunswick
will temporarily suspend production at three of its boat manufacturing
facilities near Knoxville, Tenn., beginning the week of October 27 and
continuing through the remainder of 2008. During this period, the
transition of boat models from the plants that are closing into these facilities
will begin.
Financial
implications
“Our
efforts to reduce production and cut costs have helped to mitigate some of the
challenges we have faced in 2008, as well as prepare and position Brunswick to
prosper in an improved economic environment,” McCoy said. “We remain
on target to reduce fixed costs by $300 million by the end of 2009 compared with
2007 spending levels, and expect to exit 2008 with more than $125 million of
fixed-cost reductions implemented. In fact, actions completed or
currently under way will deliver about $75 million of cost savings this
year. We also continue our intense focus on liquidity and expect to
report cash at the end of the third quarter of approximately $340
million.
“As noted
above, however, we will be closing plants and temporarily suspending production
at others, which will result in significantly lower sales in the fourth
quarter. Given the effect of lower fixed-cost absorption on these
reduced sales in the remainder of 2008, we are no longer confident of achieving
our goal of posting positive earnings for the full year, excluding restructuring
and impairment charges.”
The
company said its estimate of restructuring charges to achieve its cost reduction
targets remains in the range of $200 million to $220 million pretax, of which
approximately $180 million will be recorded in 2008. These charges
include asset write-downs, severance and facility closing and other
costs. Of the total restructuring costs, approximately half will be
cash.
Further,
as prescribed by SFAS No. 142, Goodwill and Other Intangible Assets, the company
concluded that a significant portion of its goodwill and indefinite-lived
intangibles was impaired. Accordingly, the company said it will
record non-cash goodwill and trade name impairment charges, associated primarily
with certain boat brands, totaling approximately $496 million pretax in the
third quarter.
Conference
Call Today
Brunswick
will host a conference call today at 3:30 p.m. CDT to further discuss these
actions. At that time, McCoy will be joined by Peter B. Hamilton, 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) 787-0200 (passcode: Brunswick). Callers outside of
North America should call +1 (312) 470-7130 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 Oct. 16, 2008, by calling 866-358-4539 or
203-369-0140 (replay passcode: 3846). 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 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 acquisitions. 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 June 28, 2008.
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; Albemarle, Arvor, Bayliner, Bermuda,
Boston Whaler, Cabo Yachts, Crestliner, Cypress Cay, Harris, Hatteras, Kayot,
Lowe, Lund, Maxum, Meridian, Őrnvik, 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.