Edgar Filing: BRUNSWICK CORP

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company

form10_q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 2, 2011

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-1043

Brunswick Corporation

(Exact name of registrant as specified in its charter)


Delaware		36-0848180
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1 N. Field Court, Lake Forest, Illinois 60045-4811

(Address of principal executive offices, including zip code)

(847) 735-4700

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

The number of shares of Common Stock ($0.75 par value) of the registrant outstanding as of May 2, 2011, was 89,039,560.

BRUNSWICK CORPORATION

INDEX TO QUARTERLY REPORT ON FORM 10-Q

April 2, 2011

TABLE OF CONTENTS

		Page
PART I – FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements

	Consolidated Statements of Operations for the three months ended April 2, 2011 (unaudited), and April 3, 2010 (unaudited)	1

	Condensed Consolidated Balance Sheets as of April 2, 2011 (unaudited), December 31, 2010, and April 3, 2010 (unaudited)	2

	Condensed Consolidated Statements of Cash Flows for the three months ended April 2, 2011 (unaudited), and April 3, 2010 (unaudited)	4

	Notes to Condensed Consolidated Financial Statements (unaudited)	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	51

Item 4.	Controls and Procedures	51


PART II – OTHER INFORMATION

Item 1A.	Risk Factors	52

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52

Item 5.	Submission of Matters to a Vote of Security Holders	52

Item 6.	Exhibits	53

PART I – FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

BRUNSWICK CORPORATION

Consolidated Statements of Operations

(unaudited)

	Three Months Ended
(in millions, except per share data)	April 2, 2011			April 3, 2010

Net sales	$	985.9		$	844.4
Cost of sales		749.6			665.8
Selling, general and administrative expense		140.6			138.8
Research and development expense		23.4			22.3
Restructuring, exit and impairment charges		5.3			7.4
Operating earnings		67.0			10.1
Equity earnings (loss)		0.5			(0.1	)
Other income, net		—			1.0
Earnings before interest, loss on early extinguishment of debt and income taxes		67.5			11.0
Interest expense		(23.3	)		(24.3	)
Interest income		0.8			0.9
Loss on early extinguishment of debt		(4.3	)		(0.3	)
Earnings (loss) before income taxes		40.7			(12.7	)
Income tax provision		13.2			0.3
Net earnings (loss)	$	27.5		$	(13.0	)

Earnings (loss) per common share:
Basic	$	0.31		$	(0.15	)
Diluted	$	0.30		$	(0.15	)

Weighted average shares used for computation of:
Basic earnings (loss) per common share		89.1			88.6
Diluted earnings (loss) per common share		92.5			88.6

The Notes to Condensed Consolidated Financial Statements are an integral part of these consolidated statements.

BRUNSWICK CORPORATION

Condensed Consolidated Balance Sheets

(in millions)	April 2, 2011			December 31, 2010			April 3, 2010
	(unaudited)						(unaudited)
Assets
Current assets
Cash and cash equivalents, at cost, which approximates market	$	424.0		$	551.4		$	552.4
Short-term investments in marketable securities		76.8			84.7			0.8
Total cash, cash equivalents and short-term investments in marketable securities		500.8			636.1			553.2
Accounts and notes receivable, less allowances of $37.7, $38.0 and $45.1		469.2			327.3			440.1
Inventories
Finished goods		292.1			276.9			237.2
Work-in-process		169.8			164.0			178.4
Raw materials		88.9			86.6			89.0
Net inventories		550.8			527.5			504.6
Deferred income taxes		16.2			17.0			19.8
Prepaid expenses and other		28.6			27.9			30.2
Current assets		1,565.6			1,535.8			1,547.9

Property
Land		88.9			88.9			93.8
Buildings and improvements		646.0			651.3			672.0
Equipment		1,076.8			1,079.3			1,070.8
Total land, buildings and improvements and equipment		1,811.7			1,819.5			1,836.6
Accumulated depreciation		(1,254.6	)		(1,250.3	)		(1,221.3	)
Net land, buildings and improvements and equipment		557.1			569.2			615.3
Unamortized product tooling costs		58.8			61.0			80.8
Net property		615.9			630.2			696.1

Other assets
Goodwill		292.5			290.9			290.6
Other intangibles, net		54.8			56.7			72.6
Long-term investments in marketable securities		47.9			21.0			—
Equity investments		56.2			53.7			53.2
Other long-term assets		90.5			89.7			97.7
Other assets		541.9			512.0			514.1

Total assets	$	2,723.4		$	2,678.0		$	2,758.1

The Notes to Condensed Consolidated Financial Statements are an integral part of these consolidated statements.

BRUNSWICK CORPORATION

Condensed Consolidated Balance Sheets

	April 2,			December 31,			April 3,
(in millions, except share data)	2011			2010			2010
	(unaudited)						(unaudited)
Liabilities and shareholders’ equity
Current liabilities
Short-term debt, including current maturities of long-term debt	$	1.8		$	2.2		$	10.2
Accounts payable		339.3			288.2			320.6
Accrued expenses		616.5			661.2			589.3
Current liabilities		957.6			951.6			920.1

Long-term liabilities
Debt		809.9			828.4			844.2
Deferred income taxes		75.2			71.6			62.7
Postretirement benefits		550.3			548.9			537.6
Other		207.0			207.1			201.8
Long-term liabilities		1,642.4			1,656.0			1,646.3

Shareholders’ equity
Common stock; authorized: 200,000,000 shares, $0.75 par value; issued: 102,538,000 shares		76.9			76.9			76.9
Additional paid-in capital		425.8			424.6			415.7
Retained earnings		417.8			390.3			492.3
Treasury stock, at cost: 13,529,000; 13,877,000 and 14,088,000 shares		(399.3	)		(405.9	)		(410.2	)
Accumulated other comprehensive loss, net of tax		(397.8	)		(415.5	)		(383.0	)
Shareholders’ equity		123.4			70.4			191.7

Total liabilities and shareholders’ equity	$	2,723.4		$	2,678.0		$	2,758.1

The Notes to Condensed Consolidated Financial Statements are an integral part of these consolidated statements.

BRUNSWICK CORPORATION

Condensed Consolidated Statements of Cash Flows

(unaudited)

	Three Months Ended
(in millions)	April 2, 2011			April 3, 2010

Cash flows from operating activities
Net earnings (loss)	$	27.5		$	(13.0	)
Depreciation and amortization		28.4			35.1
Pension expense, net of contributions		7.2			9.0
(Gains) losses on sale of property, plant and equipment, net		(7.4	)		0.5
Deferred income taxes		3.1			0.3
Other long-lived asset impairment charges		0.3			0.5
Loss on early extinguishment of debt		4.3			0.3
Changes in certain current assets and current liabilities		(169.6	)		(111.6	)
Income taxes		5.2			107.5
Other, net		17.9			(0.5	)
Net cash provided by (used for) operating activities		(83.1	)		28.1

Cash flows from investing activities
Capital expenditures		(13.2	)		(8.6	)
Purchases of marketable securities		(39.7	)		—
Sales or maturities of marketable securities		20.0			—
Investments		(0.4	)		(0.3	)
Proceeds from the sale of property, plant and equipment		10.4			1.0
Other, net		2.8			—
Net cash used for investing activities		(20.1	)		(7.9	)

Cash flows from financing activities
Net payments of short-term debt		(0.4	)		(0.6	)
Net proceeds from issuance of long-term debt		—			10.0
Payments of long-term debt including current maturities		(19.1	)		(3.5	)
Payment of premium on early extinguishment of debt		(4.3	)		(0.3	)
Net proceeds from stock compensation activity		4.2			—
Other, net		(4.6	)		—
Net cash provided by (used for) financing activities		(24.2	)		5.6

Net increase (decrease) in cash and cash equivalents		(127.4	)		25.8
Cash and cash equivalents at beginning of period		551.4			526.6

Cash and cash equivalents at end of period	$	424.0		$	552.4

The Notes to Condensed Consolidated Financial Statements are an integral part of these consolidated statements.

BRUNSWICK CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

Note 1 – Significant Accounting Policies

Interim Financial Statements. The unaudited interim consolidated financial statements of Brunswick Corporation (Brunswick or the Company) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Therefore, certain information and disclosures normally included in financial statements and related notes prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted. Certain previously reported amounts have been reclassified to conform to the current period presentation.

These financial statements should be read in conjunction with, and have been prepared in conformity with, the accounting principles reflected in the consolidated financial statements and related notes included in Brunswick’s 2010 Annual Report on Form 10-K (the 2010 Form 10-K). These interim results include, in the opinion of management, all normal and recurring adjustments necessary to present fairly the financial position of Brunswick as of April 2, 2011, December 31, 2010, and April 3, 2010, the results of operations for the three months ended April 2, 2011, and April 3, 2010, and the cash flows for the three months ended April 2, 2011, and April 3, 2010. Due to the seasonality of Brunswick’s businesses, the interim results are not necessarily indicative of the results that may be expected for the remainder of the year.

The Company maintains its financial records on the basis of a fiscal year ending on December 31, with the fiscal quarters spanning thirteen weeks and ending on the Saturday closest to the end of that thirteen-week period. The first quarter of fiscal year 2011 ended on April 2, 2011, and the first quarter of fiscal year 2010 ended on April 3, 2010.

Recent Accounting Pronouncements. The Company evaluates the pronouncements of various authoritative accounting organizations, primarily the Financial Accounting Standards Board (FASB), the SEC, and the Emerging Issues Task Force (EITF), to determine the impact of new pronouncements on GAAP and the impact on the Company. The following are recent accounting pronouncements that have been adopted during the three months ended April 2, 2011 or have not yet been adopted.

Revenue Recognition: In October 2009, the FASB amended the Accounting Standards Codification (ASC) to address the accounting for multiple-deliverable arrangements to enable vendors to account for products or services (deliverables) separately rather than as a combined unit. The amendment is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, with early adoption permitted. The adoption of this amendment on January 1, 2011 did not have a material impact on the Company’s consolidated results of operations and financial condition.

Receivables: In July 2010, the FASB amended the ASC to include additional disclosure requirements related to the Company’s financing receivables and associated credit risk. The disclosure requirements presented as of the end of a reporting period are effective for interim and annual periods ending on or after December 15, 2010 and were first included in the Company’s 2010 Form 10-K. The disclosure requirements about activity that occurs during a reporting period are effective for interim and annual reporting periods beginning on or after December 15, 2010, and are included in expanded disclosures in Note 8 – Financing Receivables.

BRUNSWICK CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

In April 2011, the FASB amended the ASC to clarify the guidance on whether a restructuring of a receivable constitutes a troubled debt restructuring. The amendment is effective for the first interim or annual period beginning on or after June 15, 2011. The amendment must be applied retrospectively to restructurings occurring on or after the beginning of the fiscal year of adoption. The Company is currently evaluating the impact the adoption of the ASC amendment may have on the Company’s consolidated financial statements.

Note 2 – 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 reflected the Company’s response to a difficult marine market. As the marine market continued to decline, Brunswick expanded its restructuring activities during 2007, 2008, 2009, 2010 and 2011 in order to improve performance and better position the Company for current market conditions and longer-term profitable growth. These initiatives have resulted in the recognition of restructuring, exit and impairment charges in the Statement of Operations during 2010 and 2011.

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 definite-lived asset impairments of:

·	Fixed assets

Tooling

·	Patents and proprietary technology

·	Dealer networks

BRUNSWICK CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

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 divestiture of its Triton fiberglass boat business and the closure of a marine electronics 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 the three months ended April 2, 2011, and April 3, 2010. The 2011 charges consist of expenses related to actions initiated in 2011, 2010 and 2009. The 2010 charges consist of expenses related to actions initiated in 2010, 2009 and 2008:

	Three Months Ended
(in millions)	April 2, 2011			April 3, 2010

Restructuring activities:
Employee termination and other benefits	$	1.2		$	3.8
Transformation and other costs:
Consolidation of manufacturing footprint		3.9			3.2
Exit activities:
Transformation and other costs:
Consolidation of manufacturing footprint		0.6			—
Asset disposition actions:
Definite-lived asset impairments and (gain) on disposal		(0.4	)		0.4

Total restructuring, exit and impairment charges	$	5.3		$	7.4

The Company anticipates it will incur approximately $10 million of additional restructuring charges in 2011 related to restructuring activities expected to commence in 2011 or known restructuring activities initiated in 2010 and 2009. The Company expects most of these charges will be incurred in the Marine Engine and Boat segments. The Company may incur additional restructuring, exit and impairment charges if there are reductions in demand for the Company’s products, further opportunities to reduce costs or future operating losses.

Actions Initiated in 2011 and 2010

There were no significant restructuring activities initiated in 2011. During 2010, the Company continued its restructuring activities by disposing of non-strategic assets, consolidating manufacturing operations and reducing the Company’s global workforce. During the second quarter of 2010, the Company finalized plans to divest its Triton fiberglass boat brand and completed an asset sale transaction in the third quarter of 2010. The Company also reached a decision to consolidate its Cabo Yachts production into its Hatteras facility in New Bern, North Carolina. Additionally, the Company recorded impairment charges for its Ashland City, Tennessee facility in connection with the divestiture of its Triton fiberglass boat brand. In the fourth quarter of 2010, the Company recognized exit charges related to the closure of a marine electronics business.

BRUNSWICK CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

The restructuring, exit and impairment charges recorded in the first quarter of 2011 and 2010, related to actions initiated in 2011 and 2010, by reportable segment, are summarized below:


	Three Months Ended
(in millions)	April 2, 2011		April 3, 2010

Boat	$	1.4	$	—
Bowling & Billiards		—		0.1
Corporate		0.1		—

Total	$	1.5	$	0.1

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

	Three Months Ended
(in millions)	April 2, 2011		April 3, 2010

Restructuring activities:
Employee termination and other benefits	$	0.2	$	0.1
Transformation and other costs:
Consolidation of manufacturing footprint		0.7		—
Exit activities:
Transformation and other costs:
Consolidation of manufacturing footprint		0.6		—

Total restructuring, exit and impairment charges	$	1.5	$	0.1

The restructuring charges related to actions initiated in 2011 and 2010, by reportable segment, in the first quarter of 2011, are summarized below:

(in millions)	Boat		Corporate		Total

Employee termination and other benefits	$	0.1	$	0.1	$	0.2
Transformation and other costs		1.3		—		1.3

Total restructuring, exit and impairment charges	$	1.4	$	0.1	$	1.5

BRUNSWICK CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

The restructuring charges related to actions initiated in 2010, by reportable segment, in the first quarter of 2010, are summarized below:

(in millions)	Bowling & Billiards		Total

Employee termination and other benefits	$	0.1	$	0.1

Total restructuring, exit and impairment charges	$	0.1	$	0.1

The following table summarizes the 2011 charges recorded for restructuring, exit and impairment charges related to actions initiated in 2011 and 2010 and the related status as of April 2, 2011. The accrued amounts remaining as of April 2, 2011 represent cash expenditures needed to satisfy remaining obligations. The majority of the accrued costs is expected to be paid by the end of 2011 and is included in Accrued expenses in the Condensed Consolidated Balance Sheets.

(in millions)	Accrued Costs as of Jan. 1, 2011		Costs Recognized in 2011		Net Cash Payments			Accrued Costs as of Apr. 2, 2011

Employee termination and other benefits	$	0.8	$	0.2	$	(0.7	)	$	0.3
Transformation and other costs:
Consolidation of manufacturing footprint		1.4		1.3		(2.7	)		—
Retention and relocation costs		0.5		—		—			0.5

Total restructuring, exit and impairment charges	$	2.7	$	1.5	$	(3.4	)	$	0.8

Actions Initiated in 2009

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 consolidation effort is expected to continue through 2011. The Company continued to consolidate the Boat segment’s manufacturing footprint in 2009. These actions in the Company’s marine businesses are expected to provide long-term cost savings by reducing its fixed-cost structure. The Company also began marketing for sale certain previously closed boat production facilities in the fourth quarter of 2009, including the previously mothballed plants in Navassa and Swansboro, North Carolina, and its Riverview plant in Knoxville, Tennessee.

BRUNSWICK CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

The restructuring, exit and impairment charges recorded in the first quarter of 2011 and 2010, related to actions initiated in 2009, by reportable segment, are summarized below:

	Three Months Ended
(in millions)	April 2, 2011			April 3, 2010

Marine Engine	$	4.3		$	2.4
Boat		(0.4	)		2.7
Bowling & Billiards		—			0.1
Corporate		(0.1	)		0.3

Total	$	3.8		$	5.5

The following is a summary of the charges by category associated with the 2009 restructuring activities recognized during the first quarter of 2011 and 2010:

	Three Months Ended
(in millions)	April 2, 2011			April 3, 2010

Restructuring activities:
Employee termination and other benefits	$	1.0		$	3.7
Transformation and other costs:
Consolidation of manufacturing footprint		3.2			1.8
Asset disposition actions:
Definite-lived asset impairments and gain on disposal		(0.4	)		—

Total restructuring, exit and impairment charges	$	3.8		$	5.5

The restructuring charges related to actions initiated in 2009, by reportable segment, in the first quarter of 2011, are summarized below:

(in millions)	Marine Engine		Boat			Corporate			Total

Employee termination and other benefits	$	1.0	$	—		$	—		$	1.0
Transformation and other costs		3.3		—			(0.1	)		3.2
Asset disposition actions		—		(0.4	)		—			(0.4	)

Total restructuring, exit and impairment charges	$	4.3	$	(0.4	)	$	(0.1	)	$	3.8

BRUNSWICK CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

The restructuring charges related to actions initiated in 2009, by reportable segment, in the first quarter of 2010, are summarized below:

(in millions)	Marine Engine		Boat		Bowling & Billiards		Corporate		Total

Employee termination and other benefits	$	1.3	$	2.0	$	0.1	$	0.3	$	3.7
Transformation and other costs		1.1		0.7		—		—		1.8

Total restructuring, exit and impairment charges	$	2.4	$	2.7	$	0.1	$	0.3	$	5.5

The following table summarizes the 2011 charges recorded for restructuring, exit and impairment charges related to actions initiated in 2009 and the related status as of April 2, 2011. The accrued amounts remaining as of April 2, 2011 represent cash expenditures needed to satisfy remaining obligations. The majority of the accrued costs is expected to be paid by the end of 2011 and is included in Accrued expenses in the Condensed Consolidated Balance Sheets.

(in millions)	Accrued Costs as of Jan. 1, 2011		Costs (Gains) Recognized in 2011			Non-cash Gains		Net Cash Payments			Accrued Costs as of Apr. 2, 2011

Employee termination and other benefits	$	6.8	$	1.0		$	—	$	(1.3	)	$	6.5
Transformation and other costs:
Consolidation of manufacturing footprint		1.5		3.2			—		(3.4	)		1.3
Asset disposition actions:
Definite-lived asset impairments and gain on disposal		—		(0.4	)		0.4		—			—

Total restructuring, exit and impairment charges	$	8.3	$	3.8		$	0.4	$	(4.7	)	$	7.8

Actions Initiated in 2008

There were no restructuring, exit and impairment charges recorded in 2011 related to actions initiated in 2008. The restructuring, exit and impairment charges recorded in 2010 related to the following actions initiated in 2008: closing its boat plant in Bucyrus, Ohio, in anticipation of the proposed sale of certain assets relating to its Baja boat business; ceasing boat manufacturing at one of its facilities in Merritt Island, Florida; closing its Swansboro, North Carolina, boat plant; writing-down certain assets of the Valley-Dynamo coin-operated commercial billiard business; announcing the closure of its boat production facilities in Cumberland, Maryland; Pipestone, Minnesota; Roseburg, Oregon; and Arlington, Washington; and mothballing its plant in Navassa, North Carolina.

BRUNSWICK CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

The restructuring, exit and impairment charges recorded in the first quarter of 2010, related to actions initiated in 2008, by reportable segment, are summarized below:

(in millions)	Three Months Ended April 3, 2010

Boat	$	1.4
Corporate		0.4

Total	$	1.8

The following is a summary of the total expense by category associated with the 2008 restructuring initiatives recognized during the first quarter of 2010:

(in millions)	Three Months Ended April 3, 2010

Restructuring activities:
Transformation and other costs:
Consolidation of manufacturing footprint	$	1.4
Asset disposition actions:
Definite-lived asset impairments		0.4

Total restructuring, exit and impairment charges	$	1.8

The restructuring charges related to actions initiated in 2008, by reportable segment, in the first quarter of 2010, are summarized below:

(in millions)	Boat		Corporate		Total

Transformation and other costs	$	1.4	$	—	$	1.4
Asset disposition actions		—		0.4		0.4

Total restructuring, exit and impairment charges	$	1.4	$	0.4	$	1.8

The following table summarizes the related status of actions initiated in 2008 as of April 2, 2011. The accrued amounts remaining as of April 2, 2011, represent cash expenditures needed to satisfy remaining obligations. The majority of the accrued costs is expected to be paid by the end of 2011 and is included in Accrued expenses in the Consolidated Balance Sheets.

(in millions)	Accrued Costs as of Jan. 1, 2011		Net Cash Payments			Accrued Costs as of Apr. 2, 2011

Employee termination and other benefits	$	0.7	$	(0.2	)	$	0.5
Transformation and other costs:
Consolidation of manufacturing footprint		1.5		(0.2	)		1.3

Total restructuring, exit and impairment charges	$	2.2	$	(0.4	)	$	1.8

BRUNSWICK CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

Note 3 – Financial Instruments

The Company operates globally, with manufacturing and sales facilities in various locations around the world. Due to the Company’s global operations, the Company engages in activities involving both financial and market risks. The Company utilizes normal operating and financing activities, along with derivative financial instruments, to minimize these risks.

Derivative Financial Instruments. The Company uses derivative financial instruments to manage its risks associated with movements in foreign currency exchange rates, interest rates and commodity prices. Derivative instruments are not used for trading or speculative purposes. For certain derivative contracts, on the date a derivative contract is entered into, the Company designates the derivative as a hedge of a forecasted transaction (cash flow hedge). The Company formally documents its hedge relationships, including identification of the hedging instruments and the hedged items, as well as its risk management objectives and strategies for undertaking the hedge transaction. This process includes linking derivatives that are designated as hedges to specific forecasted transactions. The Company also assesses, both at the hedge’s inception and monthly thereafter, whether the derivatives used in hedging transactions are highly effective in offsetting the changes in the anticipated cash flows of the hedged item. If the hedging relationship ceases to be highly effective, or it becomes probable that a forecasted transaction is no longer expected to occur, gains and losses on the derivative are recorded in Cost of sales or Interest expense as appropriate. There were no material adjustments as a result of ineffectiveness to the results of operations for the quarters ended April 2, 2011, and April 3, 2010. The fair market value of derivative financial instruments is determined through market-based valuations and may not be representative of the actual gains or losses that will be recorded when these instruments mature due to future fluctuations in the markets in which they are traded. The effects of derivative and financial instruments are not expected to be material to the Company’s financial position or results of operations when considered together with the underlying exposure being hedged.

Fair Value Hedges. During 2011 and 2010, the Company entered into foreign currency forward contracts to manage foreign currency exposure related to changes in the value of assets or liabilities caused by changes in the exchange rates of foreign currencies. The change in the fair value of the foreign currency derivative contract and the corresponding change in the fair value of the asset or liability of the Company are both recorded through earnings (loss), each period as incurred.

Cash Flow Hedges. The Company enters into certain derivative instruments that qualify as cash flow hedges. The Company executes both forward and option contracts, based on forecasted transactions, to manage foreign exchange exposure mainly related to inventory purchase and sales transactions. The Company also enters into commodity swap agreements, based on anticipated purchases of aluminum and natural gas, to manage risk related to price changes. In prior periods, the Company entered into forward starting interest rate swaps to hedge the interest rate risk associated with the anticipated issuance of debt.

A cash flow hedge requires that as changes in the fair value of derivatives occur, the portion of the change deemed to be effective is recorded temporarily in Accumulated other comprehensive loss, an equity account, and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. As of April 2, 2011, the term of derivative instruments hedging forecasted transactions ranged from one to 12 months.

BRUNSWICK CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

Foreign Currency. The Company enters into forward and option contracts to manage foreign exchange exposure related to forecasted transactions, and assets and liabilities that are subject to risk from foreign currency rate changes. These include product costs; revenues and expenses; associated receivables and payables; intercompany obligations and receivables; and other related cash flows.

Forward exchange contracts outstanding at April 2, 2011, and December 31, 2010, had notional contract values of $193.7 million and $138.3 million, respectively. Option contracts outstanding at April 2, 2011, and December 31, 2010, had notional contract values of $141.5 million and $181.1 million, respectively. The forward and options contracts outstanding at April 2, 2011, mature during 2011 and 2012 and mainly relate to the Euro, Japanese yen, Australian dollar, Canadian dollar, Swedish krona, Mexican peso, British pound, Norwegian krone, New Zealand dollar, and Hungarian forint. As of April 2, 2011, the Company estimates that during the next 12 months, it will reclassify approximately $6.3 million in net losses (based on current rates) from Accumulated other comprehensive loss to Cost of sales.

Interest Rate. As of April 2, 2011, and December 31, 2010, the Company had $3.6 million and $3.9 million, respectively, of net deferred gains associated with all forward starting interest rate swaps, which were included in Accumulated other comprehensive loss. These amounts include gains deferred on $250.0 million of forward starting interest rate swaps terminated in July 2006 and losses deferred on $150.0 million of notional value forward starting swaps, which were terminated in August 2008. There were no forward starting interest rate swaps outstanding at April 2, 2011. For the three months ended April 2, 2011, the Company recognized $0.3 million of net amortization gains in Interest expense related to all settled forward starting interest rate swaps.

Commodity Price. The Company uses commodity swaps to hedge anticipated purchases of aluminum and natural gas. Commodity swap contracts outstanding at April 2, 2011, and December 31, 2010, had notional values of $9.3 million and $14.0 million, respectively. The contracts outstanding mature throughout 2011. The amount of gain or loss associated with these instruments is deferred in Accumulated other comprehensive loss and are recognized in Cost of sales in the same period or periods during which the hedged transaction affects earnings. As of April 2, 2011, the Company estimates that during the next 12 months, it will reclassify approximately $3.3 million in net gains (based on current prices) from Accumulated other comprehensive loss to Cost of sales.

BRUNSWICK CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

As of April 2, 2011, the fair values of the Company’s derivative instruments were:

(in millions)
	Derivative Assets			Derivative Liabilities
Instrument	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value

Foreign exchange contracts	Prepaid Expenses and other	$	0.9	Accrued expenses	$	4.7
Commodity contracts	Prepaid Expenses and other		3.1	Accrued expenses		0.1

Total		$	4.0		$	4.8

As of December 31, 2010, the fair values of the Company’s derivative instruments were:

(in millions)
	Derivative Assets			Derivative Liabilities
Instrument	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value

Foreign exchange contracts	Prepaid Expenses and other	$	1.1	Accrued expenses	$	3.4
Commodity contracts	Prepaid Expenses and other		2.4	Accrued expenses		0.2

Total		$	3.5		$	3.6

The effect of derivative instruments on the Consolidated Statement of Operations for the three months ended April 2, 2011, was:

(in millions)
Fair Value Hedging Instruments	Location of (Loss) on Derivatives Recognized in Earnings (Loss)	Amount of (Loss) on Derivatives Recognized in Earnings (Loss)

Foreign exchange contracts	Cost of sales	$	(1.3	)
Foreign exchange contracts	Other income (expense), net		(0.1	)

Total		$	(1.4	)

Cash Flow Hedge Instruments	Amount of Gain (Loss) on Derivatives Recognized in Accumulated Other Comprehensive Loss (Effective Portion)			Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Earnings (Loss) (Effective Portion)	Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Earnings (Loss) (Effective Portion)

Interest rate contracts	$	—		Interest Expense	$	0.3
Foreign exchange contracts		(4.9	)	Cost of Sales		(1.7	)
Commodity contracts		1.6		Cost of Sales		0.8

Total	$	(3.3	)		$	(0.6	)

BRUNSWICK CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

The effect of derivative instruments on the Consolidated Statement of Operations for the three months ended April 3, 2010, was:

Cash Flow Hedge Instruments	Amount of Gain/(Loss) on Derivatives Recognized in Accumulated Other Comprehensive Loss (Effective Portion)			Location of Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Earnings (Loss) (Effective Portion)	Amount of Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Earnings (Loss) (Effective Portion)

Interest rate contracts	$	—		Interest Income	$	0.2
Foreign exchange contracts		1.9		Cost of Sales		(0.4	)
Commodity contracts		(2.9	)	Cost of Sales		(0.3	)

Total	$	(1.0	)		$	(0.5	)

Concentration of Credit Risk. The Company enters into financial instruments and invests a portion of its cash reserves in marketable debt securities with banks and investment firms with which the Company has business relationships and regularly monitors the credit ratings of its counterparties. The Company sells a broad range of recreation products to a worldwide customer base and extends credit to its customers based upon an ongoing credit evaluation program. The Company’s business units maintain credit organizations to manage financial exposure. Credit risk assessments are performed on an individual account basis. Accounts are not aggregated into categories for credit risk determinations. There are no concentrations of credit risk resulting from accounts receivable that are considered material to the Company’s financial position. Refer to Note 8 – Financing Receivables for more information.

Fair Value of Other Financial Instruments. The carrying values of the Company’s short-term financial instruments, including cash and cash equivalents, accounts and notes receivable and short-term debt, including current maturities of long-term debt, approximate their fair values because of the short maturity of these instruments. At April 2, 2011, the fair value of the Company’s long-term debt was approximately $872.0 million as estimated using quoted market prices or discounted cash flows based on market rates for similar types of debt. The carrying value of long-term debt, including current maturities, was $811.6 million as of April 2, 2011.

BRUNSWICK CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

Note 4 – Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. There is a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable.

·	Level 1 - Quoted prices in active markets for identical assets or liabilities. These are typically obtained from real-time quotes for transactions in active exchange markets involving identical assets.

·	Level 2 - Inputs, other than quoted prices included within Level 1, which are observable for the asset or liability, either directly or indirectly. These are typically obtained from readily available pricing sources for comparable instruments.

Level 3 - Unobservable inputs, where there is little or no market activity for the asset or liability. These inputs reflect the reporting entity’s own assumptions of the data that market participants would use in pricing the asset or liability, based on the best information available in the circumstances.

The following table summarizes Brunswick’s financial assets and liabilities measured at fair value on a recurring basis as of April 2, 2011:

(in millions)	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents	$	222.0	$	—	$	—	$	222.0
Short-term investments in marketable securities		5.8		71.0		—		76.8
Long-term investments in marketable securities		47.9		—		—		47.9
Equity investments		2.0		—		—		2.0
Derivatives		—		4.0		—		4.0

Total assets	$	277.7	$	75.0	$	—	$	352.7

Liabilities:
Derivatives	$	—	$	4.8	$	—	$	4.8

Total liabilities	$	—	$	4.8	$	—	$	4.8

BRUNSWICK CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

The following table summarizes Brunswick’s financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2010:

(in millions)	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents	$	353.9	$	15.0	$	—	$	368.9
Short-term investments in marketable securities		10.8		73.9		—		84.7
Long-term investments in marketable securities		21.0		—		—		21.0
Equity investments		2.0		—		—		2.0
Derivatives		—		3.5		—		3.5

Total assets	$	387.7	$	92.4	$	—	$	480.1

Liabilities:
Derivatives	$	—	$	3.6	$	—	$	3.6

Total liabilities	$	—	$	3.6	$	—	$	3.6

Refer to Note 3 – Financial Instruments for additional information related to the fair value of derivative assets and liabilities by class. In addition to the items shown in the table above, refer to Note 15 in the Company’s 2010 Form 10-K for further discussion regarding the fair value measurements associated with the Company’s postretirement benefit plans.

During the first quarter of 2011 and 2010, the Company undertook various restructuring activities, as discussed in Note 2 – Restructuring Activities. The restructuring activities required the Company to perform fair value measurements, on a non-recurring basis, of certain asset groups to test for potential impairments. Certain of these fair value measurements indicated that the asset groups were impaired and, therefore, the assets were written down to fair value. Once an asset has been impaired, it is not remeasured at fair value on a recurring basis; however, it is still subject to fair value measurements to test for recoverability of the carrying amount. Other than the assets measured at fair value on a recurring basis, as shown in the table above, the asset balances shown in the Condensed Consolidated Balance Sheets that were measured at fair value on a non-recurring basis were $0.0 million, $8.5 million and $3.5 million at April 2, 2011, December 31, 2010, and April 3, 2010, respectively. Assets measured at fair value on a nonrecurring basis relate primarily to assets no longer being used. Those balances were determined with the market approach using Level 2 inputs, including third-party appraisals of comparable property.

Note 5 – Share-Based Compensation

Under the 2003 Stock Incentive Plan (Plan), the Company may grant stock options, stock appreciation rights (SARs), nonvested stock and other types of share-based awards to executives and other management employees. Under the Plan, the Company may issue up to 13.1 million shares, consisting of treasury shares and authorized, but unissued shares of common stock. As of April 2, 2011, 2.5 million shares were available for grant.

BRUNSWICK CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

Stock Options and SARs

Prior to 2005, the Company mainly issued share-based compensation in the form of stock options, and had not issued any SARs. Since the beginning of 2005, the Company has issued stock-settled SARs and has not issued any stock options. During the three months ended April 2, 2011, and April 3, 2010, the Company granted 0.9 million and 2.2 million SARs, respectively. In the three months ended April 2, 2011, and April 3, 2010, there was $2.1 million and $2.6 million, respectively, of total expense after adjusting for forfeitures, due to amortization of SARs granted.

The weighted average fair values of individual SARs granted were $11.14 and $5.63 during the first quarters of 2011 and 2010, respectively. The Company estimated the fair value of each grant on the date of grant using the Black-Scholes-Merton pricing model, utilizing the following weighted average assumptions for 2011 and 2010:

	2011	2010

Risk-free interest rate	2.8%	2.8%
Dividend yield	0.2%	0.7%
Volatility factor	52.3%	53.0%
Weighted average expected life	5.2 – 6.7 years	5.8 – 6.6 years

Non-vested Stock Awards

During the three months ended April 2, 2011, and April 3, 2010, the Company granted 0.2 million and 0.1 million stock awards, respectively. The Company recognizes the cost of non-vested stock awards on a straight-line basis over the requisite service period. During the three months ended April 2, 2011, and April 3, 2010, $0.5 million and $0.5 million, respectively, was charged to compensation expense from the amortization of previous grants.

As of April 2, 2011, the Company had $5.1 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted average period of 1.7 years.

Director Awards

The Company issues stock awards to directors in accordance with the terms and conditions determined by the Nominating and Corporate Governance Committee of the Board of Directors. One-half of each director’s annual fee is paid in Brunswick common stock, the receipt of which may be deferred until a director retires from the Board of Directors. Each director may elect to have the remaining one-half paid either in cash, in Brunswick common stock distributed at the time of the award, or in deferred Brunswick common stock units with a 20 percent premium. Prior to May 2009, each non-employee director also received an annual grant of restricted stock units, which is deferred until the director retires from the Board.

BRUNSWICK CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

Note 6 – Earnings (Loss) per Common Share

Basic earnings (loss) per common share is calculated by dividing net earnings (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per common share is calculated similarly, except that the calculation includes the dilutive effect of stock options and SARs, collectively “options,” and non-vested stock awards.

Basic and diluted earnings (loss) per common share for the three months ended April 2, 2011, and April 3, 2010, were calculated as follows:

	Three Months Ended
(in millions, except per share data)	April 2, 2011		April 3, 2010

Net earnings (loss)	$	27.5	$	(13.0	)

Weighted average outstanding shares – basic		89.1		88.6
Dilutive effect of common stock equivalents		3.4		—

Weighted average outstanding shares – diluted		92.5		88.6

Basic earnings (loss) per common share	$	0.31	$	(0.15	)

Diluted earnings (loss) per common share	$	0.30	$	(0.15	)

As of April 2, 2011, the Company had 9.5 million options outstanding, of which 4.5 million were exercisable. This compares with 10.4 million options outstanding, of which 4.3 million were exercisable, as of April 3, 2010. During the three months ended April 2, 2011, and April 3, 2010, there were 2.7 million and 5.3 million weighted average shares of options outstanding, respectively, for which the exercise price, based on the average price, was greater than the average market price of the Company’s shares for the period then ended. These options were not included in the computation of diluted earnings per common share because the effect would have been anti-dilutive. Common stock equivalents had an anti-dilutive effect on the net losses from operations during the three months ended April 3, 2010 and were not included in the diluted earnings (loss) per common share computation for the first quarter of 2010.

Note 7 – Commitments and Contingencies

Financial Commitments

The Company has entered into guarantees of indebtedness of third parties, primarily in connection with customer financing programs. Under these arrangements, the Company has guaranteed customer obligations to the financial institutions in the event of customer default, generally subject to a maximum amount that is less than total obligations outstanding. The Company has also extended guarantees to third parties that have purchased customer receivables from Brunswick and, in certain instances, has guaranteed secured term financing of its customers. Potential payments in connection with these customer financing arrangements generally extend over several years. The potential cash payments associated with these customer financing arrangements as of April 2, 2011, and April 3, 2010, were:

BRUNSWICK CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

	Single Year Obligation				Maximum Obligation
(in millions)	April 2, 2011		April 3, 2010		April 2, 2011		April 3, 2010

Marine Engine	$	5.9	$	6.2	$	5.9	$	6.2
Boat		1.9		4.6		1.9		4.6
Fitness		39.7		30.3		45.3		36.6
Bowling & Billiards		4.7		7.1		9.9		15.7

Total	$	52.2	$	48.2	$	63.0	$	63.1

In most instances, upon repurchase of the debt obligation, the Company receives rights to the collateral securing the financing. The Company’s risk under these arrangements is mitigated by the value of the collateral that secures the financing. The Company had $5.6 million and $3.9 million accrued for potential losses related to recourse exposure at April 2, 2011 and April 3, 2010, respectively.

The Company has also entered into arrangements with third-party lenders where it has agreed, in the event of a default by the customer, to repurchase from the third-party lender those Brunswick products repossessed from the customer. These arrangements are typically subject to a maximum repurchase amount. The potential amount of cash payments the Company could be required to make to purchase collateral as of April 2, 2011, and April 3, 2010, was:

	Single Year Obligation				Maximum Obligation
(in millions)	April 2, 2011		April 3, 2010		April 2, 2011		April 3, 2010

Marine Engine	$	4.3	$	2.9	$	4.3	$	2.9
Boat		87.3		79.7		107.3		99.7
Bowling & Billiards		0.2		0.5		0.2		0.5

Total	$	91.8	$	83.1	$	111.8	$	103.1

The Company’s risk under these repurchase arrangements is mitigated by the value of the products repurchased as part of the transaction. The Company had $1.8 million and $6.6 million accrued for potential losses related to repurchase exposure at April 2, 2011 and April 3, 2010, respectively. The Company’s repurchase accrual represents the expected losses resulting from obligations to repurchase products, after giving effect to proceeds anticipated to be received from the resale of those products to alternative dealers.

The Company has recorded the fair value of its estimated net liability associated with losses from these guarantee and repurchase obligations on its Condensed Consolidated Balance Sheets based on historical experience and current facts and circumstances. Historical cash requirements and losses associated with these obligations have not been significant, but could increase if dealer defaults rise beyond current expectations.

BRUNSWICK CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

Financial institutions have issued standby letters of credit and surety bonds conditionally guaranteeing obligations on behalf of the Company totaling $89.8 million as of April 2, 2011. A large portion of these standby letters of credit and surety bonds are related to the Company’s self-insured workers’ compensation program as required by its insurance companies and various state agencies. The Company has recorded reserves to cover liabilities associated with these programs. In addition, the Company has provided a letter of credit to GE Commercial Distribution Finance Corporation (GECDF) as a guarantee of the Company’s obligations to GECDF and affiliates under various agreements. Under certain circumstances, such as an event of default under the Company’s revolving credit facility, or, in the case of surety bonds, a ratings downgrade below investment grade, the Company could be required to post collateral to support the outstanding letters of credit and surety bonds. As the Company’s current long-term debt ratings are below investment grade, the Company has posted letters of credit totaling $15.1 million as collateral against $19.3 million of outstanding surety bonds as of April 2, 2011.

In addition to the guarantee arrangements discussed above, the Company has accounts receivable sale arrangements with certain third parties. The Company treats the sale of receivables in which the Company retains an interest as a secured obligation as these arrangements do not meet the requirements of a “true sale.” Accordingly, the current portion of $51.4 million and $49.6 million was recorded in Accounts and notes receivable and Accrued expenses as of April 2, 2011, and December 31, 2010, respectively, related to these arrangements. Further, the long-term portion of these arrangements of $42.8 million and $47.2 million as of April 2, 2011, and December 31, 2010, respectively, was recorded in Other long-term assets and Other long-term liabilities.

Product Warranties

The Company records a liability for product warranties at the time revenue is recognized. The liability is estimated using historical warranty experience, projected claim rates and expected costs per claim. The Company adjusts its liability for specific warranty matters when they become known and the exposure can be estimated. The Company’s warranty reserves are affected by product failure rates as well as material usage and labor costs incurred in correcting a product failure. If actual costs differ from estimated costs, the Company must make a revision to the warranty reserve.

The following activity related to product warranty liabilities was recorded in Accrued expenses during the three months ended April 2, 2011, and April 3, 2010:

	Three Months Ended
(in millions)	April 2, 2011			April 3, 2010

Balance at beginning of period	$	151.3		$	139.8
Payments made		(16.4	)		(19.5	)
Provisions/additions for contracts issued/sold		19.8			19.4
Aggregate changes for preexisting warranties		(0.1	)		(0.3	)

Balance at end of period	$	154.6		$	139.4

BRUNSWICK CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

Additionally, customers may purchase a contract from the Company that extends the product warranty beyond the standard period in the Company’s Marine Engine, Boat and Fitness segments. For certain extended warranty contracts in which the Company retains the warranty obligation, a deferred liability is recorded based on the aggregate sales price for contracts sold. The deferred liability is reduced and revenue is recognized over the contract period as costs are expected to be incurred. Deferred revenue associated with contracts sold by the Company that extend product protection beyond the standard product warranty period, not included in the table above, was $37.3 million and $37.4 million as of April 2, 2011 and December 31, 2010, respectively.

Legal and Environmental

The Company accrues for litigation exposure based upon its assessment, made in consultation with counsel, of the likely range of exposure stemming from the claim. In light of existing reserves, the Company’s litigation claims, when finally resolved, will not, in the opinion of management, have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. If current estimates for the cost of resolving any claims are later determined to be inadequate, results of operations could be adversely affected in the period in which additional provisions are required.

There were no significant changes to the legal and environmental commitments that were discussed in Note 11 to the consolidated financial statements in the 2010 Form 10-K.

Note 8 – Financing Receivables

The Company has recorded financing receivables, which are defined as a contractual right to receive money recognized as an asset, on its Consolidated Balance Sheets as of April 2, 2011, December 31, 2010 and April 3, 2010. Substantially all of the Company’s financing receivables are for commercial customers. The Company classifies its receivables into three categories: receivables repurchased from under recourse provisions (Recourse Receivables); receivables sold to third-party finance companies (Third-Party Receivables) and customer notes and other (Other Receivables). Recourse Receivables are the result of the contingent recourse arrangements discussed in Note 7 – Commitments and Contingencies. Third-Party Receivables are accounts which have been sold to third-party finance companies, but do not meet the definition of a true sale, and are therefore recorded as a secured obligation with an offsetting balance recorded in Accrued expenses and Other long-term liabilities as discussed in Note 7 – Commitments and Contingencies. Other Receivables are mostly comprised of notes from customers, which were originated by the Company in the normal course of business. Financing receivables are carried at their face amounts less an allowance for doubtful accounts.

The Company sells a broad range of recreation products to a worldwide customer base and extends credit to its customers based upon an ongoing credit evaluation program. The Company’s business units maintain credit organizations to manage financial exposure and perform credit risk assessments on an individual account basis. Accounts are not aggregated into categories for credit risk determinations. Due to the composition of the account portfolio, the Company does not believe that the credit risk posed by the Company’s financing receivables is significant to its operations or financial position.

BRUNSWICK CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

The following are the Company’s financing receivables, excluding trade accounts receivable contractually due within one year, by segment as of April 2, 2011:

(in millions)	Marine Engine		Boat			Fitness			Bowling & Billiards			Corporate		Total

Recourse Receivables:
Short-term	$	—	$	—		$	3.6		$	9.4		$	—	$	13.0
Long-term		—		—			1.9			6.7			—		8.6
Allowance for credit loss		—		—			(2.2	)		(7.8	)		—		(10.0	)
Total		—		—			3.3			8.3			—		11.6

Third-Party Receivables:
Short-term		11.2		2.8			37.2			0.2			—		51.4
Long-term		—		—			42.6			0.2			—		42.8
Allowance for credit loss		—		—			—			—			—		—
Total		11.2		2.8			79.8			0.4			—		94.2

Other Receivables:
Short-term		11.8		0.9			1.3			—			0.8		14.8
Long-term		5.1		0.8			0.7			—			1.8		8.4
Allowance for credit loss		—		(0.8	)		(0.6	)		—			—		(1.4	)
Total		16.9		0.9			1.4			—			2.6		21.8

Total Financing Receivables	$	28.1	$	3.7		$	84.5		$	8.7		$	2.6	$	127.6

The following are the Company’s financing receivables, excluding trade accounts receivable contractually due within one year, by segment as of December 31, 2010:

(in millions)	Marine Engine		Boat			Fitness			Bowling & Billiards			Corporate			Total

Recourse Receivables:
Short-term	$	—	$	—		$	2.9		$	11.2		$	—		$	14.1
Long-term		—		—			1.1			6.8			—			7.9
Allowance for credit loss		—		—			(1.4	)		(8.2	)		—			(9.6	)
Total		—		—			2.6			9.8			—			12.4

Third-Party Receivables:
Short-term		8.1		2.9			38.4			0.2			—			49.6
Long-term		—		—			47.0			0.2			—			47.2
Allowance for credit loss		—		—			—			—			—			—
Total		8.1		2.9			85.4			0.4			—			96.8

Other Receivables:
Short-term		5.7		0.9			1.5			—			6.4			14.5
Long-term		5.6		0.8			0.8			—			2.3			9.5
Allowance for credit loss		—		(0.8	)		(0.7	)		—			(2.8	)		(4.3	)
Total		11.3		0.9			1.6			—