Annual report pursuant to Section 13 and 15(d)

Restructuring Activities

v2.4.0.6
Restructuring Activities
 12 Months Ended
Dec. 31, 2012
Restructuring and Related Activities [Abstract]  
Restructuring Activities
Note 3 – Restructuring Activities

In November 2006, Brunswick announced restructuring initiatives designed to improve the Company’s cost structure, better utilize overall capacity and improve general operating efficiencies.  These initiatives, as well as restructuring activities commenced between 2007 and 2012, reflected the Company’s response to a difficult marine market that resulted in the recognition of restructuring, exit and impairment charges in the Consolidated Statements of Operations during 2012, 2011 and 2010.

The costs incurred under these initiatives include:

Restructuring Activities – These amounts mainly relate to:
•
Employee termination and other benefits
•
Costs to retain and relocate employees
•
Consulting costs
•
Consolidation of manufacturing footprint

Exit Activities – These amounts mainly relate to:
•
Employee termination and other benefits
•
Lease exit costs
•
Inventory write-downs
•
Facility shutdown costs

Asset Disposition Actions – These amounts mainly relate to sales of assets and impairments of:
•
Fixed assets
•
Tooling
•
Patents and proprietary technology
•
Dealer networks
•
Trade names
 
Impairments of definite-lived assets are recognized when, as a result of the restructuring activities initiated, the carrying amount of the long-lived asset is not expected to be fully recoverable.  The impairments recognized were equal to the difference between the carrying amount of the asset and the estimated fair value of the asset, which was determined using observable inputs, including the use of appraisals from independent third parties when available, and, when observable inputs were not available, based on the Company’s assumptions of the data that market participants would use in pricing the asset, based on the best information available in the circumstances.  Specifically, the Company used discounted cash flows to determine the fair value of the asset when observable inputs were unavailable.

Intangible assets not subject to amortization are assessed for impairment at least annually and whenever events or changes in circumstances, such as announcements of restructuring activities, indicate that the carrying value may not be recoverable. The impairment test for indefinite-lived intangible assets consists of a comparison of the fair value of the intangible asset with its carrying amount. An impairment loss is recognized for the amount by which the carrying value exceeds the fair value of the asset. The fair value of trade names is measured using a relief-from-royalty approach, which assumes the value of the trade name is the discounted cash flows of the amount that would be paid to third parties had the Company not owned the trade name and instead licensed the trade name from another company.

The Company has reported restructuring and exit activities based on the specific driver of the cost and reflected the expense in the accounting period when the cost has been committed or incurred, as appropriate.  The Company considers actions related to the divestiture of its Sealine boat business, the divestiture of its Triton fiberglass boat business, the closure of a marine electronics business and the sale of the Valley-Dynamo business to be exit activities.  All other actions taken are considered to be restructuring activities.

The following table is a summary of the expense associated with the restructuring, exit and impairment activities for 2012, 2011 and 2010.  The 2012 charges consist of expenses related to actions initiated in 2012, 2011, 2010, 2009 and 2008.  The 2011 charges consist of expenses related to actions initiated in 2011, 2010, 2009 and 2008. The 2010 charges consist of expenses related to actions initiated in 2010, 2009 and 2008.
(in millions)
2012
 
2011
 
2010
Restructuring activities:
 
 
 
 
 
Employee termination and other benefits
$
1.6

 
$
5.7

 
$
12.3

Current asset write-downs
1.3

 
0.1

 
1.9

Transformation and other costs:
 

 
 

 
 
Consolidation of manufacturing footprint
12.1

 
13.0

 
14.9

Retention and relocation costs
0.1

 
—

 
0.5

Exit activities:
 

 
 

 
 
Employee termination and other benefits
—

 
—

 
0.8

Current asset write-downs
—

 
—

 
1.0

Transformation and other costs:
 

 
 

 
 
Consolidation of manufacturing footprint
(0.3
)
 
10.6

 
3.4

Loss on sale of non-strategic assets
—

 
—

 
3.6

Asset disposition actions:
 

 
 

 
 
Trade name impairments
1.5

 
—

 
1.1

Definite-lived asset impairments and (gains) on disposal
9.5

 
(8.1
)
 
14.7

Total restructuring, exit and impairment charges
$
25.8

 
$
21.3

 
$
54.2


 
The Company anticipates it will incur between $5 million and $6 million of additional restructuring charges in 2013 primarily related to known restructuring activities initiated during 2012 in the Boat segment.  Reductions in demand for the Company’s products, further refinement of its product portfolio or further opportunities to consolidate manufacturing facilities and reduce costs, may result in additional restructuring, exit or impairment charges in future periods.









Actions Initiated in 2012

The Company recorded restructuring charges in 2012 relating to actions initiated in connection with the continued weakness in the fiberglass sterndrive boat market segments. As a result, the Company decided to exit Bayliner cruisers in the U.S. and European markets and to further reduce the Company's manufacturing footprint by closing its Knoxville, Tennessee production facility and consolidate its fiberglass cruiser manufacturing into other boat production facilities. Long-lived asset impairment charges were also recorded for certain European and Asia-Pacific boat brands as a result of weak powerboat demand in these regions.

The restructuring, exit and impairment charges recorded in 2012, related to actions initiated in 2012, by reportable segment, are summarized below:
(in millions)
2012
Marine Engine
$
0.4

Boat
22.8

Fitness
0.1

Total
$
23.3



The following is a summary of the charges by category associated with the Company’s 2012 restructuring initiatives:
(in millions)
2012
Restructuring activities:
 
Employee termination and other benefits
$
2.0

Current asset write-downs
1.3

Transformation and other costs:
 

Consolidation of manufacturing footprint
7.1

Retention and relocation costs
0.1

Asset disposition actions:
 

Trade name impairments
1.5

Definite-lived asset impairments
11.3

Total restructuring, exit and impairment charges
$
23.3


 
The restructuring charges recorded in 2012 related to actions initiated in 2012, by reportable segment, are summarized below:
(in millions)
Marine
Engine
 
Boat
 
Fitness
 
Total
Employee termination and other benefits
$
0.4

 
$
1.5

 
$
0.1

 
$
2.0

Current asset write-downs
—

 
1.3

 
—

 
1.3

Transformation and other costs
—

 
7.2

 
—

 
7.2

Asset disposition actions
—

 
12.8

 
—

 
12.8

Total restructuring, exit and impairment charges
$
0.4

 
$
22.8

 
$
0.1

 
$
23.3













The following table summarizes the activity for restructuring, exit and impairment charges during the year ended December 31, 2012 related to actions initiated in 2012. The accrued costs as of December 31, 2012 represent cash expenditures needed to satisfy remaining obligations, the majority of which are expected to be paid by the end of 2013 and are included in Accrued expenses in the Consolidated Balance Sheets.
(in millions)
Costs Recognized in 2012
 
Non-cash Charges
 
Net Cash Payments
 
Accrued Costs as of Dec. 31, 2012
Employee termination and other benefits
$
2.0

 
$
—

 
$
(0.1
)
 
$
1.9

Current asset write-downs
1.3

 
(1.3
)
 
—

 
—

Transformation and other costs:
 

 
 

 
 

 
 

Consolidation of manufacturing footprint
7.1

 
(0.4
)
 
(1.5
)
 
5.2

Retention and relocation costs
0.1

 
—

 
(0.1
)
 
—

Asset disposition actions:
 
 
 
 
 
 
 

  Trade name impairments
1.5

 
(1.5
)
 
—

 
—

  Definite-lived asset impairments
11.3

 
(11.3
)
 
—

 
—

Total restructuring, exit and impairment charges
$
23.3

 
$
(14.5
)
 
$
(1.7
)
 
$
7.1



Actions Initiated in 2011 and 2010

During 2011 and 2010, the Company continued its restructuring activities by disposing of non-strategic assets, consolidating manufacturing operations and reducing the Company’s global workforce.  In the third quarter of 2011, the Company divested its Sealine boat brand. Results of operations of Sealine are not material for the periods presented. Additionally, the Company finalized plans to divest its Triton fiberglass boat brand and completed an asset sale transaction in the third quarter of 2010. In the fourth quarter of 2010, the Company recognized exit charges related to the closure of a marine electronics business.

The restructuring, exit and impairment charges recorded in 2012, 2011 and 2010, related to actions initiated in 2011 and 2010, by reportable segment, are summarized below:
(in millions)
2012
 
2011
 
2010
Marine Engine
$
—

 
$
0.2

 
$
2.6

Boat
(0.2
)
 
10.3

 
26.1

Fitness
—

 
0.1

 
0.1

Bowling & Billiards
0.4

 
1.6

 
1.5

Corporate
—

 
0.1

 
—

Total
$
0.2

 
$
12.3

 
$
30.3





















The following is a summary of the charges by category associated with the Company’s 2011 and 2010 restructuring initiatives:
(in millions)
2012
 
2011
 
2010
Restructuring activities:
 
 
 
 
 
Employee termination and other benefits
$
—

 
$
1.3

 
$
4.0

Current asset write-downs
—

 
0.1

 
1.0

Transformation and other costs:
 

 
 

 
 
Consolidation of manufacturing footprint
0.1

 
1.2

 
2.9

Retention and relocation costs
—

 
—

 
0.3

Exit activities:
 

 
 

 
 
Employee termination and other benefits
—

 
—

 
0.8

Current asset write-downs
—

 
—

 
1.0

Transformation and other costs:
 

 
 

 
 
Consolidation of manufacturing footprint
(0.3
)
 
10.3

 
3.5

Loss on sale of non-strategic assets
—

 
—

 
3.6

Asset disposition actions:
 

 
 

 
 
Trade name impairments
—

 
—

 
1.1

Definite-lived asset impairments and (gains) on disposal
0.4

 
(0.6
)
 
12.1

Total restructuring, exit and impairment charges
$
0.2

 
$
12.3

 
$
30.3


 
The restructuring charges recorded in 2012 related to actions initiated in 2011 and 2010, by reportable segment, are summarized below:
(in millions)
Boat
 
Bowling & Billiards
 
Total
Transformation and other costs
$
(0.2
)
 
$
—

 
$
(0.2
)
Asset disposition actions
—

 
0.4

 
0.4

Total restructuring, exit and impairment charges
$
(0.2
)
 
0.4

 
$
0.2


The restructuring charges recorded in 2011 related to actions initiated in 2011 and 2010, by reportable segment, are summarized below:
 
(in millions)
Marine Engine
 
Boat
 
Fitness
 
Bowling & Billiards
 
Corporate
 
Total
Employee termination and other benefits
$
—

 
$
1.0

 
$
—

 
$
0.2

 
$
0.1

 
$
1.3

Current asset write-downs
0.1

 
—

 
—

 
—

 
—

 
0.1

Transformation and other costs
0.1

 
10.8

 
0.1

 
0.5

 
—

 
11.5

Asset disposition actions
—

 
(1.5
)
 
—

 
0.9

 
—

 
(0.6
)
Total restructuring, exit and impairment charges
$
0.2

 
$
10.3

 
$
0.1

 
$
1.6

 
$
0.1

 
$
12.3



The restructuring charges recorded in 2010 related to actions initiated in 2010, by reportable segment, are summarized below:
 
(in millions)
Marine Engine
 
Boat
 
Fitness
 
Bowling & Billiards
 
Total
Employee termination and other benefits
$
2.0

 
$
2.3

 
$
0.1

 
$
0.4

 
$
4.8

Current asset write-downs
—

 
1.8

 
—

 
0.2

 
2.0

Transformation and other costs
0.6

 
8.8

 
—

 
0.9

 
10.3

Asset disposition actions
—

 
13.2

 
—

 
—

 
13.2

Total restructuring, exit and impairment charges
$
2.6

 
$
26.1

 
$
0.1

 
$
1.5

 
$
30.3



The following table summarizes the activity for restructuring, exit and impairment charges during the year ended December 31, 2012 related to actions initiated in 2011 and 2010.  The accrued costs as of December 31, 2012 represent cash expenditures needed to satisfy remaining obligations, the majority of which are expected to be paid by the end of 2013 and are included in Accrued expenses in the Consolidated Balance Sheets.
(in millions)
Accrued Costs as of
Jan. 1, 2012
 
Costs/(Gains)  Recognized in 2012
 
Non-cash (Charges)/Gains
 
Net Cash Payments
 
Accrued Costs as of Dec. 31, 2012
Employee termination and other benefits
$
0.8

 
$
—

 
$
—

 
$
(0.6
)
 
$
0.2

Transformation and other costs:
 

 
 

 
 

 
 

 
 

Consolidation of manufacturing footprint
0.7

 
(0.2
)
 
0.3

 
(0.1
)
 
0.7

Retention and relocation costs
0.2

 
—

 
—

 
(0.2
)
 
—

Asset disposition actions:
 

 
 

 
 

 
 

 
 

Definite-lived asset impairments on disposal
—

 
0.4

 
(0.4
)
 
—

 
—

Total restructuring, exit and impairment charges
$
1.7

 
$
0.2

 
$
(0.1
)
 
$
(0.9
)
 
$
0.9



Actions Initiated in 2009 and 2008

During the third quarter of 2009, the Company announced plans to reduce excess manufacturing capacity by relocating inboard and sterndrive production to Fond du Lac, Wisconsin and closing its Stillwater, Oklahoma plant.  This plant transition was completed in the second quarter of 2012. The Company also continued to consolidate the Boat segment’s manufacturing footprint in 2009 and began marketing for sale certain previously closed boat production facilities in the fourth quarter of 2009.  During 2008, the Company announced the closure of its boat production facilities in Cumberland, Maryland.  These actions in the Company’s marine businesses were designed to provide long-term cost savings by reducing its fixed-cost structure.

The restructuring, exit and impairment charges recorded in 2012, 2011 and 2010, related to actions initiated in 2009 and 2008, by reportable segment, are summarized below:
(in millions)
2012
 
2011
 
2010
Marine Engine
$
3.8

 
$
10.8

 
$
9.9

Boat
(1.3
)
 
(2.0
)
 
12.9

Fitness
—

 
—

 
0.1

Bowling & Billiards
—

 
0.3

 
0.3

Corporate
(0.2
)
 
(0.1
)
 
0.7

Total
$
2.3

 
$
9.0

 
$
23.9




















The following is a summary of the charges by category associated with the 2009 and 2008 restructuring activities recognized during 2012, 2011 and 2010:
(in millions)
2012
 
2011
 
2010
Restructuring activities:
 
 
 
 
 
Employee termination and other benefits
$
(0.4
)
 
$
4.4

 
$
8.3

Current asset write-downs
—

 
—

 
0.9

Transformation and other costs:
 

 
 

 
 
Consolidation of manufacturing footprint
4.9

 
11.8

 
12.0

Retention and relocation costs
—

 
—

 
0.2

Exit activities:
 

 
 

 
 
Transformation and other costs:
 

 
 

 
 
Consolidation of manufacturing footprint
—

 
0.3

 
(0.1
)
Asset disposition actions:
 

 
 

 
 
Definite-lived asset impairments and (gains) on disposal
(2.2
)
 
(7.5
)
 
2.6

Total restructuring, exit and impairment charges
$
2.3

 
$
9.0

 
$
23.9



The restructuring charges recorded in 2012 related to actions initiated in 2009 and 2008, by reportable segment, are summarized below:
(in millions)
Marine
Engine
 
Boat
 
Corporate
 
Total
Employee termination and other benefits
$
(0.4
)
 
$
—

 
$
—

 
$
(0.4
)
Transformation and other costs
5.1

 
—

 
(0.2
)
 
4.9

Asset disposition actions
(0.9
)
 
(1.3
)
 
—

 
(2.2
)
Total restructuring, exit and impairment charges
$
3.8

 
$
(1.3
)
 
$
(0.2
)
 
$
2.3


The restructuring charges recorded in 2011, related to actions initiated in 2009 and 2008, by reportable segment, are summarized below:
(in millions)
Marine
Engine
 
Boat
 
Bowling & Billiards
 
Corporate
 
Total
Employee termination and other benefits
$
3.0

 
$
1.4

 
$
—

 
$
—

 
$
4.4

Transformation and other costs
11.9

 
—

 
0.3

 
(0.1
)
 
12.1

Asset disposition actions
(4.1
)
 
(3.4
)
 
—

 
—

 
(7.5
)
Total restructuring, exit and impairment charges
$
10.8

 
$
(2.0
)
 
$
0.3

 
$
(0.1
)
 
$
9.0



The restructuring charges recorded in 2010, related to actions initiated in 2009 and 2008, by reportable segment, are summarized below:
 
(in millions)
Marine Engine
 
Boat
 
Fitness
 
Bowling & Billiards
 
Corporate
 
Total
Employee termination and other benefits
$
2.8

 
$
4.8

 
$
0.1

 
$
0.3

 
$
0.3

 
$
8.3

Current asset write-downs
—

 
0.9

 
—

 
—

 
—

 
0.9

Transformation and other costs
7.1

 
5.0

 
—

 
—

 
—

 
12.1

Asset disposition actions
—

 
2.2

 
—

 
—

 
0.4

 
2.6

Total restructuring, exit and impairment charges
$
9.9

 
$
12.9

 
$
0.1

 
$
0.3

 
$
0.7

 
$
23.9







The following table summarizes the activity for restructuring, exit and impairment charges during the year ended December 31, 2012 related to actions initiated in 2009 and 2008.  The accrued costs as of December 31, 2012 represent cash expenditures needed to satisfy remaining obligations, the majority of which are expected to be paid by the end of 2015 and are included in Accrued expenses in the Consolidated Balance Sheets.
(in millions)
Accrued Costs as of
Jan. 1, 2012
 
Costs/(Gains)  Recognized in 2012
 
Non-cash Gains
 
Net Cash Payments
 
Accrued Costs as of Dec. 31, 2012
Employee termination and other benefits
$
9.3

 
$
(0.4
)
 
$
—

 
$
(7.9
)
 
$
1.0

Transformation and other costs:
 

 
 

 
 

 
 

 
 

Consolidation of manufacturing footprint
2.4

 
4.9

 
—

 
(5.8
)
 
1.5

Asset disposition actions:
 

 
 

 
 

 
 

 
 

Definite-lived asset impairments and (gains) on disposal
—

 
(2.2
)
 
2.2

 
—

 
—

Total restructuring, exit and impairment charges
$
11.7

 
$
2.3

 
$
2.2

 
$
(13.7
)
 
$
2.5