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Restructuring Activities | 9 Months Ended
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Sep. 29, 2012
Restructuring and Related Activities [Abstract] |
Restructuring Activities | 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, as well as restructuring activities initiated between 2007 and 2012, reflected the Company’s response to a difficult marine market, which continued to decline in certain markets and product categories through the third quarter of 2012. These initiatives have resulted in the recognition of restructuring, exit and impairment charges in the Condensed Consolidated Statements of Comprehensive Income during 2012 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 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 the three months and nine months ended September 29, 2012 and October 1, 2011. The 2012 charges consist of expenses related to actions initiated in 2012, 2010, 2009 and 2008. The 2011 charges consist of expenses related to actions initiated in 2011, 2010, 2009 and 2008:
| Three Months Ended |  | Nine Months Ended
(in millions) | September 29, 2012 |  | October 1, 2011 |  | September 29, 2012 |  | October 1, 2011
Restructuring activities: |  |  |  |  |  |  |
Employee termination and other benefits | $ | 0.9 |  |  | $ | 1.3 |  |  | $ | 0.8 |  |  | $ | 2.9 |
Current asset write-downs | 0.9 |  |  | — |  |  | 0.9 |  |  | — |
Transformation and other costs: |  |  |  |  |  |  |  |  |  |  |
Consolidation of manufacturing footprint | 1.4 |  |  | 3.5 |  |  | 5.1 |  |  | 11.3 |
Exit activities: |  |  |  |  |  |  |  |  |  |  |
Transformation and other costs: |  |  |  |  |  |  |  |  |  |  |
Consolidation of manufacturing footprint | — |  |  | 9.8 |  |  | (0.2 | ) |  | 10.4 |
Asset disposition actions: |  |  |  |  |  |  |  |  |  |  |
Trade name impairments | 1.2 |  |  | — |  |  | 1.2 |  |  | — |
Definite-lived asset impairments and (gains) on disposal | 23.8 |  |  | (1.4 | ) |  | 21.6 |  |  | (6.4 | )
Total restructuring, exit and impairment charges | $ | 28.2 |  |  | $ | 13.2 |  |  | $ | 29.4 |  |  | $ | 18.2 |
The Company anticipates it will incur between $5 million and $10 million of additional restructuring charges in 2012 primarily related to known restructuring activities initiated in 2012, 2010 and 2009. The Company expects most of these charges will be incurred in the Boat and Marine Engine segments. Reductions in demand for the Company’s products, further refinement of its product portfolio or further opportunities to reduce costs, may result in additional restructuring, exit or impairment charges in future periods. Actions Initiated in 2012 In connection with the preparation of the financial statements included in this Quarterly Report on Form 10-Q, the Company determined that it would record restructuring charges mainly due to continued weakness in the luxury sportfishing convertible, motoryacht and fiberglass sterndrive boat market segments as well as the refinement of its North American boat product portfolio. The Company recorded $13.8 million of impairment charges associated with its Hatteras and Cabo boat brands as the carrying value of their long-lived assets are not expected to be recovered through future cash flows. The Company also recorded $6.1 million of impairment charges associated with its decision to close its Knoxville, Tennessee production facility and $2.2 million of restructuring charges to consolidate fiberglass cruiser manufacturing and exit Bayliner cruisers in the U.S. and European markets. Long-lived asset impairment charges were also recorded in the third quarter of 2012 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 the three months and nine months ended September 29, 2012, related to actions initiated in 2012, by reportable segment, are summarized below:
| Three Months Ended | Nine Months Ended
(in millions) | September 29, 2012 |  | September 29, 2012
Boat | $ | 27.7 |  |  | $ | 27.9 |
Fitness | 0.1 |  |  | 0.1 |
Total | $ | 27.8 |  |  | $ | 28.0 |
The following is a summary of the charges by category associated with the Company’s 2012 restructuring initiatives:
| Three Months Ended | Nine Months Ended
(in millions) | September 29, 2012 |  | September 29, 2012
Restructuring activities: |  |  |
Employee termination and other benefits | $ | 0.9 |  |  | $ | 1.1 |
Current asset write-downs | 0.9 |  |  | 0.9 |
Transformation and other costs: |  |  |  |  |
Consolidation of manufacturing footprint | 1.0 |  |  | 1.0 |
Asset disposition actions: |  |  |  |  |
Trade name impairments | 1.2 |  |  | 1.2 |
Definite-lived asset impairments | 23.8 |  |  | 23.8 |
Total restructuring, exit and impairment charges | $ | 27.8 |  |  | $ | 28.0 |
The restructuring charges related to actions initiated in 2012, by reportable segment, for the nine months ended September 29, 2012, are summarized below:
(in millions) | Boat |  | Fitness |  | Total
Employee termination and other benefits | $ | 1.0 |  |  | $ | 0.1 |  |  | $ | 1.1 |
Current asset write-downs | 0.9 |  |  | — |  |  | 0.9 |
Transformation and other costs | 1.0 |  |  | — |  |  | 1.0 |
Asset disposition actions | 25.0 |  |  | — |  |  | 25.0 |
Total restructuring, exit and impairment charges | $ | 27.9 |  |  | $ | 0.1 |  |  | $ | 28.0 |
The following table summarizes the activity for restructuring, exit and impairment charges related to actions initiated in 2012 during the nine months ended September 29, 2012. The accrued costs as of September 29, 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 Condensed Consolidated Balance Sheets.
(in millions) | Costs Recognized in 2012 |  | Non-cash Charges |  | Net Cash Payments |  | Accrued Costs as of Sept. 29, 2012
Employee termination and other benefits | $ | 1.1 |  |  | $ | — |  |  | $ | (0.1 | ) |  | $ | 1.0 |
Current asset write-downs | 0.9 |  |  | (0.9 | ) |  | — |  |  | — |
Transformation and other costs: |  |  |  |  |  |  |  |  |  |  |
Consolidation of manufacturing footprint | 1.0 |  |  | (0.3 | ) |  | — |  |  | 0.7 |
Asset disposition actions: |  |  |  |  |  |  |  |
Trade name impairments | 1.2 |  |  | (1.2 | ) |  | — |  |  | — |
Definite-lived asset impairments | 23.8 |  |  | (23.8 | ) |  | — |  |  | — |
Total restructuring, exit and impairment charges | $ | 28.0 |  |  | $ | (26.2 | ) |  | $ | (0.1 | ) |  | $ | 1.7 |
Actions Initiated in 2011 and 2010 There were no restructuring, exit and impairment charges recorded during 2012 for actions initiated during 2011. 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. In the second quarter of 2010, the Company reached a decision to consolidate its Cabo Yachts production into its Hatteras facility in New Bern, North Carolina. 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 the three months and nine months ended September 29, 2012 and October 1, 2011, related to actions initiated in 2011 and 2010, by reportable segment, are summarized below:
| Three Months Ended |  | Nine Months Ended
(in millions) | September 29, 2012 |  | October 1, 2011 |  | September 29, 2012 |  | October 1, 2011
Marine Engine | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (0.2 | )
Boat | — |  |  | 9.0 |  |  | (0.1 | ) |  | 9.8 |
Fitness | — |  |  | — |  |  | — |  |  | 0.1 |
Bowling & Billiards | — |  |  | 0.1 |  |  | — |  |  | 0.1 |
Corporate | — |  |  | — |  |  | — |  |  | 0.1 |
Total | $ | — |  |  | $ | 9.1 |  |  | $ | (0.1 | ) |  | $ | 9.9 |
The following is a summary of the charges by category associated with the Company’s 2011 and 2010 restructuring initiatives:
| Three Months Ended |  | Nine Months Ended
(in millions) | September 29, 2012 |  | October 1, 2011 |  | September 29, 2012 |  | October 1, 2011
Restructuring activities: |  |  |  |  |  |  |
Employee termination and other benefits | $ | — |  |  | $ | 0.1 |  |  | $ | — |  |  | $ | 0.1 |
Transformation and other costs: |  |  |  |  |  |  |  |  |  |  |
Consolidation of manufacturing footprint | — |  |  | 0.5 |  |  | 0.1 |  |  | 1.7 |
Exit activities: |  |  |  |  |  |  |  |  |  |  |
Transformation and other costs: |  |  |  |  |  |  |  |  |  |  |
Consolidation of manufacturing footprint | — |  |  | 9.6 |  |  | (0.2 | ) |  | 10.2 |
Asset disposition actions: |  |  |  |  |  |  |  |  |  |  |
Definite-lived asset gains on disposal | — |  |  | (1.1 | ) |  | — |  |  | (2.1 | )
Total restructuring, exit and impairment charges | $ | — |  |  | $ | 9.1 |  |  | $ | (0.1 | ) |  | $ | 9.9 |
The restructuring charges related to actions initiated in 2011 and 2010, by reportable segment, for the nine months ended September 29, 2012, are summarized below:
(in millions) | Boat |  | Total
Transformation and other costs | $ | (0.1 | ) |  | $ | (0.1 | )
Total restructuring, exit and impairment charges | $ | (0.1 | ) |  | $ | (0.1 | )
The restructuring charges related to actions initiated in 2011 and 2010, by reportable segment, for the nine months ended October 1, 2011, are summarized below:
(in millions) | Marine Engine |  | Boat |  | Fitness |  | Bowling & Billiards |  | Corporate |  | Total
Employee termination and other benefits | $ | (0.2 | ) |  | $ | 0.1 |  |  | $ | — |  |  | $ | 0.1 |  |  | $ | 0.1 |  |  | $ | 0.1 |
Transformation and other costs | — |  |  | 11.8 |  |  | 0.1 |  |  | — |  |  | — |  |  | 11.9 |
Asset disposition actions | — |  |  | (2.1 | ) |  | — |  |  | — |  |  | — |  |  | (2.1 | )
Total restructuring, exit and impairment charges | $ | (0.2 | ) |  | $ | 9.8 |  |  | $ | 0.1 |  |  | $ | 0.1 |  |  | $ | 0.1 |  |  | $ | 9.9 |
The following table summarizes the activity for restructuring, exit and impairment charges related to actions initiated in 2011 and 2010 during the nine months ended September 29, 2012. The accrued costs as of September 29, 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 Condensed Consolidated Balance Sheets.
(in millions) | Accrued Costs as of Jan. 1, 2012 |  | Gains Recognized in 2012 |  | Non-cash Gains |  | Net Cash Payments |  | Accrued Costs as of Sept. 29, 2012
Employee termination and other benefits | $ | 0.8 |  |  | $ | — |  |  | $ | — |  |  | $ | (0.1 | ) |  | $ | 0.7 |
Transformation and other costs: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consolidation of manufacturing footprint | 0.7 |  |  | (0.1 | ) |  | 0.3 |  |  | (0.1 | ) |  | 0.8 |
Retention and relocation costs | 0.2 |  |  | — |  |  | — |  |  | (0.2 | ) |  | — |
Total restructuring, exit and impairment charges | $ | 1.7 |  |  | $ | (0.1 | ) |  | $ | 0.3 |  |  | $ | (0.4 | ) |  | $ | 1.5 |
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 the three months and nine months ended September 29, 2012 and October 1, 2011, related to actions initiated in 2009 and 2008, by reportable segment, are summarized below:
| Three Months Ended |  | Nine Months Ended
(in millions) | September 29, 2012 |  | October 1, 2011 |  | September 29, 2012 |  | October 1, 2011
Marine Engine | $ | 0.4 |  |  | $ | 4.2 |  |  | $ | 3.0 |  |  | $ | 8.4 |
Boat | — |  |  | (0.3 | ) |  | (1.3 | ) |  | (0.2 | )
Bowling & Billiards | — |  |  | 0.2 |  |  | — |  |  | 0.2 |
Corporate | — |  |  | — |  |  | (0.2 | ) |  | (0.1 | )
Total | $ | 0.4 |  |  | $ | 4.1 |  |  | $ | 1.5 |  |  | $ | 8.3 |
The following is a summary of the charges by category associated with the 2009 and 2008 restructuring activities recognized during the three months and nine months ended September 29, 2012 and October 1, 2011:
| Three Months Ended |  | Nine Months Ended
(in millions) | September 29, 2012 |  | October 1, 2011 |  | September 29, 2012 |  | October 1, 2011
Restructuring activities: |  |  |  |  |  |  |
Employee termination and other benefits | $ | — |  |  | $ | 1.2 |  |  | $ | (0.3 | ) |  | $ | 2.8 |
Transformation and other costs: |  |  |  |  |  |  |  |  |  |  |
Consolidation of manufacturing footprint | 0.4 |  |  | 3.0 |  |  | 4.0 |  |  | 9.6 |
Exit activities: |  |  |  |  |  |  |  |  |  |  |
Transformation and other adjustments: |  |  |  |  |  |  |  |  |  |  |
Consolidation of manufacturing footprint | — |  |  | 0.2 |  |  | — |  |  | 0.2 |
Asset disposition actions: |  |  |  |  |  |  |  |  |  |  |
Definite-lived asset gains on disposal | — |  |  | (0.3 | ) |  | (2.2 | ) |  | (4.3 | )
Total restructuring, exit and impairment charges | $ | 0.4 |  |  | $ | 4.1 |  |  | $ | 1.5 |  |  | $ | 8.3 |
The restructuring charges related to actions initiated in 2009 and 2008, by reportable segment, for the nine months ended September 29, 2012, are summarized below:
(in millions) | Marine Engine |  | Boat |  | Corporate |  | Total
Employee termination and other benefits | $ | (0.3 | ) |  | $ | — |  |  | $ | — |  |  | $ | (0.3 | )
Transformation and other costs | 4.2 |  |  | — |  |  | (0.2 | ) |  | 4.0 |
Asset disposition actions | (0.9 | ) |  | (1.3 | ) |  | — |  |  | (2.2 | )
Total restructuring, exit and impairment charges | $ | 3.0 |  |  | $ | (1.3 | ) |  | $ | (0.2 | ) |  | $ | 1.5 |
The restructuring charges related to actions initiated in 2009 and 2008, by reportable segment, for the nine months ended October 1, 2011, are summarized below:
(in millions) | Marine Engine |  | Boat |  | Bowling & Billiards |  | Corporate |  | Total
Employee termination and other benefits | $ | 2.8 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 2.8 |
Transformation and other costs | 9.7 |  |  | — |  |  | 0.2 |  |  | (0.1 | ) |  | 9.8 |
Asset disposition actions | (4.1 | ) |  | (0.2 | ) |  | — |  |  | — |  |  | (4.3 | )
Total restructuring, exit and impairment charges | $ | 8.4 |  |  | $ | (0.2 | ) |  | $ | 0.2 |  |  | $ | (0.1 | ) |  | $ | 8.3 |
The following table summarizes the activity for restructuring, exit and impairment charges related to actions initiated in 2009 and 2008 during the nine months ended September 29, 2012. The accrued costs as of September 29, 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 Condensed 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 Sept. 29, 2012
Employee termination and other benefits | $ | 9.3 |  |  | $ | (0.3 | ) |  | $ | — |  |  | $ | (7.2 | ) |  | $ | 1.8 |
Transformation and other costs: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consolidation of manufacturing footprint | 2.4 |  |  | 4.0 |  |  | — |  |  | (4.7 | ) |  | 1.7 |
Asset disposition actions: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Definite-lived asset impairments and (gains) on disposal | — |  |  | (2.2 | ) |  | 2.2 |  |  | — |  |  | — |
Total restructuring, exit and impairment charges | $ | 11.7 |  |  | $ | 1.5 |  |  | $ | 2.2 |  |  | $ | (11.9 | ) |  | $ | 3.5 |

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- 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 Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB TOPIC 5.P.4) -URI http://asc.fasb.org/extlink&oid=6394695&loc=d3e140904-122747 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6394359&loc=d3e17939-110869 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 146 -Paragraph 20 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 5 -Section P -Subsection 3, 4 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 5.P.3) -URI http://asc.fasb.org/extlink&oid=6394695&loc=d3e140864-122747 + Details
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