Good morning and welcome to Brunswick Corporation's 2008 fourth quarter earnings conference call. All participants are in a listen-only mode until the question and answer period. Today's meeting will be recorded. If you have objections you may disconnect at this time. I would now like to introduce Bruce Byots, Vice President of Corporate and Investor Relations. You may begin.

Good morning and thank you for joining us. On the call this morning is Dusty McCoy, Brunswick's Chairman and CEO and Peter Hamilton, our CFO. Before we begin with our prepared remarks, I would like to remind everyone that during this call our comments will include certain forward-looking statements about future results. Please keep in mind that our actual results could differ materially from these expectations. For the details on the factors to consider, please refer to our 10-K, latest 10-Q and today's press release. All these documents are available on our website at brunswick.com. I would now like to turn it over to Dusty.

Thank you, Bruce. Good morning everyone and thank you for joining us today. You've seen our results for the 2008 fourth quarter and full year. Our results reflect a difficult year that 2008 was for Brunswick and our fourth quarter reflected the deteriorating global economic conditions. We've reported a net loss from continuing operations in the quarter of $0.75 per share. There are a few significant favorable and unfavorable items in our numbers that we've described more fully in our press release and we'll also comment on further in our prepared remarks this morning. The reality of the global economic conditions place Brunswick in a harsh operating environment. Demand is down and there are no factors on the near horizon which will improve demand. Therefore, it is important that we execute well around three principles. First, we must maintain strong liquidity. Second, we will take actions necessary to maintain the health of our dealer network. And third, we will continue to position our businesses to emerge from the global economic crisis stronger than before. We ended the year with $317.5 million of cash on our balance sheet compared to $331 million at year-end 2007. We ended the year with no borrowings under our recently amended revolving credit facility and we did not draw on the facility at any point during the year. Our revolving credit agreement provides us an important financial safety net for our operating cash requirements. Our strong cash performance in 2008 is the result of the execution of a myriad of operating actions throughout our company. Our employees have also significantly contributed to our cash position through salary actions, furloughs, bonus decisions and other measures which have directly impacted their pay and benefits. These significant contributions range from workers in our assembly lines to the staff professionals…

Thanks Dusty. I'll begin by reviewing our cash flows in the quarter and then provide more detail on some of the major considerations affecting our 2008 and 2009 financials. Cash declined by $25 million in the fourth quarter. Our cash flows benefited in the quarter by approximately $33 million of proceeds from asset sales and business dispositions. However, this benefit was more than offset by cash restructuring charges of $43 million and nearly $10 million in fees in connection with the amendment of our revolving credit agreement. Now as Dusty has explained, our objective is to exit 2009 with greater cash balances than year-end 2008 without incurring additional borrowings. Here are some of the significant data points that will be factors in our ability to achieve this goal. D&A is estimated to be about $155 million in 2009. We will reduce capital spending to approximately $60 million versus $102 million in 2008. Taxes will be a cash generator of about $67 million in 2009 primarily from an expected refund. The refund comes from carrying back our losses in 2008 to our '07 and '06 returns, which were years in which we paid taxes. Based on our current 2009 restructuring plans, we anticipate restructuring charges of about $50 million during the year, a majority of which will be cash. This compares to approximately $100 million of cash restructuring in 2008. Cash contributions to our defined benefit pension plan will increase from approximately $3 million in 2008 to between $25 million and $30 million in '09. I will elaborate further on pensions in a moment. And finally, we expect to generate more than 100 million from working capital in '09 as we dial back production and relieve inventories and collect receivables. Now Brunswick traditionally uses cash in the first quarter as our…

Thanks Peter. We've given you our perspective on 2009 in our news release. And although we are there in the new year, it still has limited visibility in what is a very volatile marketplace. We nevertheless would like to share with you a few important facts. We are planning for revenues to be lower in 2009 with higher relative percentage declines occurring in the first half of the year. We are planning for overall profitability as compared to 2008 to be negatively affected by these expected lower sales. In addition, certain factors Peter just reviewed with you, specifically pension expense, the resumption of variable compensation and reduced production and wholesale shipments will lower our earnings in '09. Partially offsetting these factors will be the full year effect of cost reductions implemented in '08 as well as further reductions implemented and planned for 2009. We believe our net fixed cost reductions for 2009 will be nearly $200 million in addition to the $160 million in reductions we realized in 2008. We are well prepared and positioned to continue to manage our business for cash and we can exit 2009 with cash at or above the amount we reported at this year end. We will continue to carefully and periodically evaluate our overall resizing efforts as market conditions evolve. Evaluate capital spending requirements and cost saving opportunities and explore additional opportunities to monetize non-core assets. And when this economic downturn subsides, we will be well positioned to compete and prosper, which will enable us to accomplish our ultimate goal of significantly improving shareholder value. In closing, I would like to note that we make and sell products using recreational activity and our bowling retail business provides a recreational experience. And we do these things very well as evidenced by our leading market share in all of our businesses. And even in today's economic conditions, we want to lead product innovation and continue to do so. As examples, our New Sea Ray 43 Sundancer and our Skyhook positioning system from our Cummins MerCruiser joint venture were recently named best of the year products by a leading industry publication. Consumer spending will return and we intend to remain the market leader in any conditions. Thank you, and we'll be happy now to take your questions.

Okay, thank you. (Operator Instructions) We have Ed Aaron, RBC Capital Markets. Your line is open.

Thanks. Good morning guys and congratulations for testing the absolute limit of my accounting knowledge.

I am surprised you could stay awake.

So Dusty if you assume the current levels of demand holds is going forward. You are cutting a lot of your business, but obviously I think it's impossible to cut fast enough for what's happening out there. And there is a point at which you finally catch up fair to speak and supply matches demand and you're back step one-to-one replenishment level, if current demand holds when do you foresee that that would happen?

Current demand holds, well first we are not planning on current demand holding it, what we believe will reduce some in 2009 especially in the first half.

I meant the current run rates. So if you take what the last couple of months have been and you're sort of seen, and apply the seasonality to it. Is that... is obviously the first half of the year it's going to be considerably down. Let me have some kind of current, concurrent levels. Are you assuming that it gets worse from where it is the last couple of months?

I think I am probably just trying to understand your question correctly and then let me see if I am heading in the right direction. Our goal even in a down market in 2009 is to exit 2009, so that we have pipelines much closer to what we would view as our deal. And frankly our plan is to get in to our deal in most of our businesses. If that works to occur then and the market where to flat, we are going to need to make significant numbers of... have a significant increase in the number of boats and engines that we make it, actually quite significant. So we have made a decision in 2009 to continue to produce at levels that are dramatically lower than even the sort of retail levels you saw in the fourth quarter. And in general thinking that we are... we might need to, if the market were to flatten, increase production by way north of 50% quickly in order to get on an even keel basis. Is that what you are looking for?

Yeah that's very helpful. But do you think that the on your current outlook that your sales in the second half of the year would be back in the positive territory on a year-over-year basis? I guess when you talk of anniversary out of furloughs?

Ed they could be, but we are not looking much past to first half right now. And I want to make sure that we get our dealers position as best we can, so what we think it's going to be a difficult selling season.

Understandable. And then I wanted maybe to talk little bit more about the floor plan financing environment, we've been kind of hearing a lot of talk about more of the small boat builders and smaller dealers who are struggling with that, and you have this long-term relationship with GE, which seems to be an asset. I mean do you expect that this is ultimately going to really provide a meaningful boost to your overall market share? And is there any scenario out there, I know you have a deal with them through 2014, but is there any scenario that you can envision where for one reason or another GE basically expects this space just to get that would be a still kind of devastating to the overall industry, just trying to figure out there's any even remote possibility that it would happen?

Well I can't read GE's mind and can't tell you that there's any scenario. All I can tell you is what our deal is with them and what our agreement is with them. And our judgment is certainly in our relationship they're committed to working with us, committed to moving forward and committed to providing funds. In terms of whether we believe the arrangement can't be a long-term competitive advantage, the answer is yes; in the current lending environment although I am actually quite hopeful that as we watch economic conditions unfold and see banks looking for other lending institutions, looking for good space to go into, we'll reach a point where for competitive regions, some or more vulnerable lenders will stay. This market is beginning to improve. There is an opportunity for us to move in in order to compete with GE, and they'll do so. But right now certainly GE owns a very large percentage of the market and that's why it's important to us that in our agreement we feel that they're committed to go forward with us.

Okay, thanks for taking my question.

No problem.

Okay, thank you. And next Hayley Wolff of Rochdale Securities. Your line is open.

Hi guys.

Hi Hayley.

A couple of quick questions. I'm on the road right now; it's hard to listen. The repurchase obligation that you guys talked about, is there any sense that if they are mostly... (inaudible) model your '07, do they begin to roll off as you get over the next four months, say? Your obligations would be substantially lower against the first quarter earnings reported?

Hayley, yes, there will be some rolling off, but I do not believe our total obligation would get substantially lower in the first quarter.

Okay. Is there a period, I mean what level is that in to the second quarter?

No, because I think the amount of product out there, that far out is relatively small, it's tough as more in between current and that taking up a lot of them floor-planning.

And then in terms of cash usage in the first quarter, would you moderately tap into your revolver in the first quarter or do you see yourself as being self funding?

We're actually not planning to tap in, any time during the year.

Okay. And then last question kind of touching on what Ed talked about, given that if we do get... we expect to see declines in the first half, who knows what happens in the second half? But is there a sense of there is so little '08 inventory out there that any I mean that approaches, same provision with dealers really need to start order because the product will be shown on current at that point?

Well there is...cumulative pricing point there is a substantially less current product unit pipeline right now than is normal. I think as the dealers get to work off the older, I guess if the market flattens or does anything, there is going to need to be a substantial retail and its going to be interesting because on a task for us, our supply chain system in order to meet what could be demand if when the market finally levels out.

Now, will your keep the amount of your changeover in September, October or you will attack to July?

Right now it is currently July. And I am not ready to say it right now, Hayley what is the best thing to do on now and year over.

Okay, right. Thanks, guys.

You're welcome.

All right, thank you. And next Tim Conder, Wachovia Wells Fargo. Your line is open.

Thank you. Dusty, just to follow on the roll off there. Can you just remind us, is there something regarding 18 month provision where your repurchase obligation if the dealer goes bankrupt, is that the roll off point in the 18 months?

Well, no. Our obligations go beyond 18 months, but they're quite low once we get past that point.

And Tim, we are capped at a certain level and the contingent liability number that Dusty set forth is the result of that cap.

Okay, okay. And by the way Peter, thank you for going through all that.... all the detail was very helpful that both of you gentlemen laid out.

It seemed to bore Dusty, so I am glad.

No, no, no it's helpful, thank you. Are you basically implying from a modeling perspective roughly a 0% effective tax, did I understand you right or did I misunderstand something there?

We'll actually have a modest tax provision Tim because we make money in some foreign jurisdictions and will have some state taxes. At the federal level, it overly simplifies it but every dollar we lose evaluation allowance would put up against it, so we'll net to zero on the tax line.

Okay.

We expect a modest tax provision as opposed to what you would ordinarily expect, the benefit.

Okay. And then you talked about potentially monetizing some other things, gentlemen there in your commentary. Can you maybe give us an update on sale lease back transaction, things that you were exploring regarding the recreational centers and the headquarters?

We continue Tim to explore sell or lease backs of appropriate bowling centers. And we are going to decide whether to do that or not to do that on the basis of whether it is a wise financing decision. We don't think it is money that we need for liquidity purposes, so we're only going to do it if we feel that's it's an appropriate inclusion in our overall capital structure and same answer for the office building.

Okay.

The market is so tumultuous out there that we are going to have to look hard before we do either.

And gentlemen, continuing the line of questioning of coming through the dark tunnel and starting to see some potential from positive rays at some point here. Dusty in your commentary regarding the less than 12 months inventory, it would seem then that there is not much of your new leading type of products in the channel at all, and that would imply Zeus, the Axius those types products. On those products in particular which can be a little bit better margins for you, how was your ability to ramp up when the need arises on those products in particular?

First, let me give a little bit of perspective, even though our product, our newer product is down in terms of the amount in finance, a much, much higher percentage of that is Zeus actually is another new technology product than would be normal technology, that's number one. Number two, we're quite comfortable that we'll be able to ramp up and meet demand and believe as demand comes up, that we'll need to be right there with all of this new product and new technology but there will be some thing that consumers would be looking for and that's what we are planning for. So Tim as an example, in our boat businesses we're spending lots and lots of time right now even with our limited capital spending focused on getting the new technology in as much of our product line of as we can, and any new product that we're doing. We are continuing to develop new products, we'll all have the new technology and it also where it's applicable.

Okay, okay. So you are saying but what's actually in the channel there is not that much because of the open to buy flooring being clogged up with the some what other the long ranging products?

What I am actually saying that the percentage is much higher of new product and new technology than old technology.

Okay, okay.

But as the consumers are looking for that and the dealers are doing a good job of selling.

Okay, okay, okay, that's good. Okay, and then this is probably a very difficult question to answer if can at all. By your estimates, what would you think at this point or may be by the middle of the year, how much of your competitive or your competitors effectively out of commission and may not ever come back and therefore we all know that the overall market has shrunk and we'll probably not get back to where it was even in the last 10 years. But I would think that your piece of a pie as the market does recover with some of your competitive situation taking care of by this downturn so to speak that your opportunity here is very substantial.

Tim I don't have any idea, number one. Number two, well it is worth commenting that, while there are boat businesses that our competitors in our boat businesses, there are also customers of our Mercury business and we treat them as so, and want to help them succeed.

Okay. Okay, that's fair, that's fair. Thank you, gentlemen.

You're welcome Tim.

All right, thank you. Next, John Harloe, Barrow Hanley. Your line is open. John Harloe - Barrow, Hanley, Mewhinney & Strauss: Hi everybody, how are you doing?

Hi John. John Harloe - Barrow, Hanley, Mewhinney & Strauss: In your earnings release, how I reversed your variable compensation accruals but there was not a discussion of that in the verbal part of your conference call, and I am sort of baffled this to what that is, how it may affect your operating income numbers by line of business? Where it is in the income statement?

What it is John is we made the decision not to pay any variable compensation in 2008, and for 2008 performance and that is a 2009 cash item. But of course it's an earnings had on in 2008. And what we try to callout is I think we even gave in the press release John the EPS impact of that. John Harloe - Barrow, Hanley, Mewhinney & Strauss: You did.

That was just $0.56. And then what we are building into our plan for 2009 is a return of variable compensation if we can hit all of our operating targets and if we generate sufficient cash. And what we are... again attempting to make sure that everyone knew is there was a $0.56 benefit in 2008 that will not be that benefit perhaps in 2009. John Harloe - Barrow, Hanley, Mewhinney & Strauss: What is the pre-tax number?

We are looking quickly. John Harloe - Barrow, Hanley, Mewhinney & Strauss: Okay.

Yeah 80. John Harloe - Barrow, Hanley, Mewhinney & Strauss: 80 million?

Yes. John Harloe - Barrow, Hanley, Mewhinney & Strauss: And how... if you are trying to see what your operating performance was by line of business excluding that?

The July and... John Harloe - Barrow, Hanley, Mewhinney & Strauss: Indicated across your line of business.

Yeah how is it spread? Well it's a, it is a spread across each of our segments depending upon those segment's variable comp and the reversal that occurred to that variable comp. So all of the segments in this fourth quarter are benefited by that from the P&L point of view.

And in order to help you as to how we divide the $0.56 I think that's what you're looking for? John Harloe - Barrow, Hanley, Mewhinney & Strauss: Yes, in fact $80 million and kind of go back across a lot of business. And then just can we get the amount of ability to judge your performance in terms of cost cutting which on it's before the 80 million it's pretty impressive. I'm sure it would be afterwards there.

But John, it was 60 million not including the 80.

In this year. John Harloe - Barrow, Hanley, Mewhinney & Strauss: Okay. I'll tell you what, I'd like to call back and if somebody walk me through that, but I've got one more question, can I ask it now?

Of course. John Harloe - Barrow, Hanley, Mewhinney & Strauss: When I look at the 12 month cash flow statement and compare to the nine months on the income tax is another. There's a big swing in the number which implies something occurred in the fourth quarter that was pretty large and I am baffled at that. You guys have done a pretty good of baffling with me on the accounting?

Well we have endeavor John to... John Harloe - Barrow, Hanley, Mewhinney & Strauss: How are doing....

Take the confusing accounting and make it simple, but the swing is as a result of applying this valuation allowance, it comes from FAS 109 to our results in the fourth quarter and so it's... John Harloe - Barrow, Hanley, Mewhinney & Strauss: Is that a bigger source of cash as it implies looking the number side by side?

No, the whole valuation allowance FAS 109 situation has nothing to do with cash or tax booked cash. John Harloe - Barrow, Hanley, Mewhinney & Strauss: Okay. Let me ask you one other small question. If the government were to change, do you carry back from two years to five years, what would that do for press concerns of bringing cash on to the balance sheet?

That would enable us to take losses incurred in this year '09 and carry them back to another way the legislation is currently drafted in another three years, right, which would result in a cash tax refund in the year 2010? John Harloe - Barrow, Hanley, Mewhinney & Strauss: And that may a part to what number?

It's very hard to say at this point because it's depending on our '09 performance but it could be as much as $70 million. John Harloe - Barrow, Hanley, Mewhinney & Strauss: $70 million. Okay, thanks a lot.

Thank you, John. John Harloe - Barrow, Hanley, Mewhinney & Strauss: Thank you, Dusty.

Thank you. Next we have Justin L. Boisseau, Gates Capital Management. Your line is open.

Yes I guess a follow-up here, I have a similar question. Do you happen to have to the allocation of the $81.2 million SG&A add back for the fourth quarters; how it's allocated among the segment?

It will be in our.... you get to see it in our 10-K.

Okay, okay. And then next question again on the tax side, I think you said understanding its rough numbers, just to carry back were changed to five years. Did I understand you just say it will be about $70 million benefit?

Yes.

And that is in addition to I think you said a $67 million benefit you already expecting in to '09?

Yes well that benefit that we referred to in our commentary is for a tax refund that has already been filed and that we expect to receive in the first half of the year '09. And that carries our losses back two years. If this legislation goes through as planned, we could carry back another three years and we would get the cash benefit of that in 2010.

Got it. And finally other, or how much would you estimate in terms of dollars. Do you have a non-core assets remained to be sold?

One I want to comment on that, if you're thinking of from a proceeds perspective, it will not be dramatic and it will be in double-digits but it's not going to be a dramatic number.

Okay. Thanks.

You are welcome.

Thank you. We are showing no further questions at this time.

I thank everyone for joining us today. Thanks for working through with us what are actually quite difficult accounting issues. I hope we've provided you with the best understanding that we possibly could of a complicated set of numbers so that you can build your models and understand how we are performing. Thanks, and with that we'll sign off.