Brunswick Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Restructuring Activities

Restructuring Activities

3 Months Ended

Mar. 30, 2013

Restructuring and Related Activities [Abstract]

Note 3 – Restructuring Activities

Since November 2006, Brunswick has announced and implemented a number of restructuring initiatives designed to improve the Company’s cost structure, better utilize overall capacity and improve general operating efficiencies. These initiatives reflected the Company’s response to a difficult marine market and resulted in the recognition of restructuring, exit and impairment charges in the Condensed Consolidated Statements of Comprehensive Income during 2013 and 2012.

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.

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 closure of a marine electronics business to be an exit activity. 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 the three months ended March 30, 2013 and March 31, 2012. The 2013 charges consist of expenses related to actions initiated in 2013 and 2012. The 2012 charges consist of expenses related to actions initiated in 2010, 2009 and 2008.



(in millions)	March 30, 2013		March 31, 2012
Restructuring activities:
Employee termination and other benefits	$	1.8	$	(0.3	)
Current asset write-downs	0.3		—
Transformation and other costs:
Consolidation of manufacturing footprint	1.1		2.1
Retention and relocation costs	0.1		—
Exit activities:
Transformation and other costs:
Consolidation of manufacturing footprint	—		(0.3		)
Asset disposition actions:
Definite-lived asset impairments and (gains) on disposal	2.3		(1.3		)
Total restructuring, exit and impairment charges	$	5.6	$	0.2

The Company anticipates it will incur between $5 million and $7 million of additional restructuring charges in 2013 primarily related to known restructuring activities initiated during 2013 and 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 2013

The Company announced in the first quarter of 2013 the consolidation of its yacht and motoryacht production at its Palm Coast, Florida manufacturing plant. As a result, the Company will suspend manufacturing at its Sykes Creek boat manufacturing facility in nearby Merritt Island, Florida at the end of June 2013. The Company recorded restructuring charges in 2013 related to these actions.

The restructuring, exit and impairment charges recorded in the three months ended March 30, 2013, related to actions initiated in 2013, by reportable segment, are summarized below:



(in millions)	March 30, 2013
Boat	$	3.1
Corporate	0.7
Total	$	3.8

The following is a summary of the charges by category associated with the Company’s 2013 restructuring initiatives:



(in millions)	March 30, 2013
Restructuring activities:
Employee termination and other benefits	$	1.7
Current asset write-downs	0.3
Transformation and other costs:
Consolidation of manufacturing footprint	0.1
Retention and relocation costs	0.1
Asset disposition actions:
Definite-lived asset impairments	1.6
Total restructuring, exit and impairment charges	$	3.8

The restructuring charges recorded in the three months ended March 30, 2013 related to actions initiated in 2013, by reportable segment, are summarized below:



(in millions)	Boat		Corporate		Total
Employee termination and other benefits	$	1.0	$	0.7	$	1.7
Current asset write-downs	0.3		—		0.3
Transformation and other costs	0.2		—		0.2
Asset disposition actions	1.6		—		1.6
Total restructuring, exit and impairment charges	$	3.1	$	0.7	$	3.8

The following table summarizes the activity for restructuring, exit and impairment charges during the three months ended March 30, 2013 related to actions initiated in 2013. The accrued costs as of March 30, 2013 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 Condensed Consolidated Balance Sheets.



(in millions)	Costs Recognized in 2013		Non-cash Charges			Net Cash Payments			Accrued Costs as of Mar. 30, 2013
Employee termination and other benefits	$	1.7	$	—		$	—		$	1.7
Current asset write-downs	0.3		(0.3		)	—			—
Transformation and other costs:
Consolidation of manufacturing footprint	0.1		—			(0.1		)	—
Retention and relocation costs	0.1		—			(0.1		)	—
Asset disposition actions:
Definite-lived asset impairments	1.6		(1.6		)	—			—
Total restructuring, exit and impairment charges	$	3.8	$	(1.9	)	$	(0.2	)	$	1.7

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 no longer sell and market 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.

The restructuring, exit and impairment charges recorded in the three months ended March 30, 2013, related to actions initiated in 2012, by reportable segment, are summarized below. There were no restructuring charges recorded during the three months ended March 31, 2012, related to actions initiated in 2012.



(in millions)	March 30, 2013
Boat	$	1.8
Total	$	1.8

The following is a summary of the charges by category associated with the Company’s 2012 restructuring initiatives:



(in millions)	March 30, 2013
Restructuring activities:
Employee termination and other benefits	$	0.1
Transformation and other costs:
Consolidation of manufacturing footprint	1.0
Asset disposition actions:
Definite-lived asset impairments	0.7
Total restructuring, exit and impairment charges	$	1.8

The restructuring charges recorded in the three months ended March 30, 2013 related to actions initiated in 2012, by reportable segment, are summarized below:



(in millions)	Boat		Total
Employee termination and other benefits	$	0.1	$	0.1
Transformation and other costs	1.0		1.0
Asset disposition actions	0.7		0.7
Total restructuring, exit and impairment charges	$	1.8	$	1.8

The following table summarizes the activity for restructuring, exit and impairment charges during the three months ended March 30, 2013 related to actions initiated in 2012. The accrued costs as of March 30, 2013 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 Condensed Consolidated Balance Sheets.



(in millions)	Accrued Costs as of Jan. 1, 2013		Costs Recognized in 2013		Non-cash Charges			Net Cash Payments			Accrued Costs as of Mar. 30, 2013
Employee termination and other benefits	$	1.9	$	0.1	$	—		$	(0.9	)	$	1.1
Transformation and other costs:
Consolidation of manufacturing footprint	5.2		1.0		—			(1.5		)	4.7
Asset disposition actions:
Definite-lived asset impairments	—		0.7		(0.7		)	—			—
Total restructuring, exit and impairment charges	$	7.1	$	1.8	$	(0.7	)	$	(2.4	)	$	5.8

Actions Initiated in 2011, 2010, 2009 and 2008

During 2011 and 2010, the Company continued its restructuring activities by consolidating manufacturing operations, reducing the Company’s global workforce and disposing of non-strategic assets including the exit of a marine electronics business in the fourth quarter of 2010.

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.

There were no restructuring charges recorded during the three months ended March 30, 2013, related to actions initiated between 2008 and 2011. The restructuring, exit and impairment charges recorded in the three months ended March 31, 2012, related to actions initiated between 2008 and 2011, by reportable segment, are summarized below:



(in millions)	March 31, 2012
Marine Engine	$	1.7
Boat	(1.5		)
Total	$	0.2

The following is a summary of the charges by category associated with the Company’s 2011, 2010, 2009 and 2008 restructuring initiatives:



(in millions)	March 31, 2012
Restructuring activities:
Employee termination and other benefits	$	(0.3	)
Transformation and other costs:
Consolidation of manufacturing footprint	2.1
Exit activities:
Transformation and other costs:
Consolidation of manufacturing footprint	(0.3		)
Asset disposition actions:
Definite-lived asset impairments and (gains) on disposal	(1.3		)
Total restructuring, exit and impairment charges	$	0.2

The restructuring charges recorded in the three months ended March 31, 2012, related to actions initiated in 2011, 2010, 2009 and 2008, by reportable segment, are summarized below:



(in millions)	Marine Engine			Boat			Total
Employee termination and other benefits	$	(0.3	)	$	—		$	(0.3	)
Transformation and other costs	2.0			(0.2		)	1.8
Asset disposition actions	—			(1.3		)	(1.3		)
Total restructuring, exit and impairment charges	$	1.7		$	(1.5	)	$	0.2

The following table summarizes the activity for restructuring, exit and impairment charges during the three months ended March 30, 2013 related to actions initiated between 2008 and 2011. The accrued costs as of March 30, 2013 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 Condensed Consolidated Balance Sheets.



(in millions)	Accrued Costs as of Jan. 1, 2013		Costs Recognized in 2013		Non-cash Charges		Net Cash Payments			Accrued Costs as of Mar. 30, 2013
Employee termination and other benefits	$	1.2	$	—	$	—	$	(0.5	)	$	0.7
Transformation and other costs:
Consolidation of manufacturing footprint	2.2		—		—		(0.2		)	2.0
Total restructuring, exit and impairment charges	$	3.4	$	—	$	—	$	(0.7	)	$	2.7

- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

+ References + Details