Good morning, and welcome to the Brunswick Corporation 2011 First Quarter Earnings Conference Call. All participants will be in a listen-only mode, until the question-and-answer portion. Today's meeting will be recorded, if you have any objections you may disconnect at this time. I would now like to introduce Bruce Byots, Vice President of Corporate and Investor Relations. Please proceed.

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 my mind that our actual results could differ materially from these expectations. For the details on the factors to consider, please refer to our recent SEC filings in today's press release. All of these documents are available on our website at brunswick.com. I would now like to turn the call over to Dusty McCoy

Thank you Bruce, and good morning everyone. By now I hope you’ve had the opportunity to review our first quarter earnings release. Our strong performance in the first quarter reflected higher marine wholesale shipments compared to the prior year. Our marine engine segment continued to perform well across its entire product offering, including its parts and accessory business. Life fitness experienced strong revenue and earnings growth, and as we experienced throughout 2010, our consolidated results continue to reflect strong levels of operating leverage. Our first quarter results have put us in an excellent position to achieve our previously-stated target of returning to profitability in 2011. I will discuss in my outlook, comment some of the factors that need to be considered when evaluating our potential results in the remaining three quarters. Our results in the quarter reflect revenue growth of 17%, and net earnings of $0.30 per share including $0.05 per share of restructuring charges. This compares to a loss of $0.15 per share in the prior year which included $0.08 per share of restructuring charges and $0.02 per share of benefit from special tax items. Operating earnings excluding the restructuring exit any impairment charges were 72 million in the quarter and the improvement of 55 million as compared to the prior year period. Our operating margin excluding restructuring charges was 7.3% representing our highest consolidated operating margin for a first quarter since 2001. In addition to higher sales levels, our earnings benefited from increased fixed cost absorption, improved operating efficiencies and companywide cost reductions. SG&A remained relatively consistent and decreased as a percentage of net sales during the quarter. The decrease was primarily a result of our successful cost reduction efforts and a gain on a sales of a distribution facility. Our cash and marketable securities totaled just under…

Thank you, Dusty. I’d like to begin with an overview of certain items included in our first quarter P&L, and I’ll also comment on certain forward-looking data points. Let me start with restructuring exit and impairment charges, which were 5.3 million or $0.05 per-share in the quarter. The charges in the quarter primarily reflect actions at our marine operations including those relating to plant consolidation actions at Mercury and the consolidation of production of our Cabo Yacht brand into our existing Hatteras manufacturing facility. Our current estimate for full-year restructuring charges continues to be $15 million. Net interest expense, which includes interest expense, interest income, and debt extinguishment losses was 27 million in the quarter, an increase of 3 million versus the same period in 2010. During the first quarter of 2011, we recorded a debt extinguishment loss of 4.3 million on the retirement of 18.7 million of 11.75%, 2013 notes, which will retire at a premium versus their book value. This compares to a debt extinguishment loss of 300,000 in the first quarter of 2010. In March, we entered into a new 300 million revolving credit facility. The new revolver provides us with improved terms and conditions that enhance our overall financial flexibility and will lower our interest cost in subsequent quarters. In the first quarter however, our interest expense did include approximately $1 million of additional charges that resulted from the write-off of capitalized expenses associated with our previous revolver. In addition to the 19 million of debt retirements completed in the first quarter, we have thus far purchased 20 million of debt in the second quarter. Second quarter activities reflect purchases of our 11.75%, 2013 notes and 7 18% 2027 adventures. As a result of the additional second quarter debt retirements combined with lower cost associated with…

Thanks, Peter. I’ll conclude the call today by reviewing our 2011 outlook. As in 2010, we will continue in 2011 to remain disciplined to generate positive free cash flow, perform better than the market, and demonstrate outstanding operating leverage. Our 2011 operating leverage will be strong, but we do expect quarter-to-quarter variations throughout the year as a result of timing of fixed-cost savings, and potential quarterly differences and variable compensation expense. While we are only three-plus months into the year and are just beginning to retail marine season, our view is that 2011 is unfolding as we discussed with you in January. As we stated then, and reiterate today, we believe that significant decline in the industry marine retail demand bottomed in 2010. But at this early point in the season, we’re unable to determine if 2011 marine retail demand will match our plan for a flat market. It remains our view that smaller boats, as it did in 2010, will continue to outperform larger ones. The first quarter demand statistics that are previously sited support this assumption as larger fiberglass boats continue to show signs of softness. We’re planning for a solid consolidated revenue growth for the company with the level of 2011 revenue and earnings growth primarily governed by a marine retail demand as well as by the success of the company’s efforts to improve market share in all of its business segments. Our 2011 net income should also benefit from our previously announced marine plant consolidations as well as from the items Peter’s already discussed with you; lower restructuring cost, along with the reduced net interest, pension, and depreciation expenses. After taking all these factors into consideration, we expect our 2011 earnings per-share to be in a range of $0.30 per share to $0.50 per share. As a result of seasonal factors that affect our marine business, we currently expect to report a profitable second quarter followed by a net loss in the second half of the year. In order to truly understand our guidance and evaluate our potential future results, you should understand that marine retail market materially – that should the marine retail market materially decline in 2011, the remainder of the year would be at risk to lower levels of marine wholesale unit shipments in order to keep our dealers inventories at the desired healthy levels. As we look at 2011 retail demand, we are continuing to watch the development of higher crude oil prices and the headwind they’re creating in the economy. At the time of our next earnings release, we should have a better view of marine retail demand for 2011 and we will provide an updated outlook at that time. Thanks for your attention and lets now take your questions.

(Operator Instructions). Your first question comes from the line of Ed Aaron with RBC Capital Markets. Please proceed. Ed Aaron – RBC Capital Markets: Thanks. Good morning, everybody.

Good morning, Ed. Ed Aaron – RBC Capital Markets: I wanted to maybe start with the guidance change to the full year. I’m just wondering how much of that increase comes from a chance in your kind of operating expectations versus other factors like the lower tax?

Actually, the main is we’ve become a bit more comfortable about the flat market and our ability to gain share, Ed. Those are the real two drivers of the change. But I do have to say our businesses are operating very well and we continue to remain confident about our ability to operate. Ed Aaron – RBC Capital Markets: And I guess on that note, you know, you’re feeling more confident with the flat market potential. I guess when I kind of read the press release and listened to your prepared remarks, I kind of got the sense that you were talking a little bit more about the risk of a down market this year than the possibility of an up market. And I’m just wondering if that was an accurate read on my part, just to get a little bit better sense on how your thought processes evolved or changed during the past 90 days or so?

Sure. I would say that the possibility of a down market exceeds that of an up market. And I think the longer we go with higher crude oil prices, food costs, all of the things that in the real world effect consumers, the longer those continue, we’re more convinced that there is more downside risk, versus upside. It is just too early for us to call, sitting here today, whether our plan that the market would be flat is right or wrong, but we are going to get a real good feel here in the coming weeks. Ed Aaron – RBC Capital Markets: Okay, one more and then I will jump back in the queue. I guess you were vindicated a little bit on your call on the market for 2010 being revised to down 10 %, so should we be thinking about your flat outlook for this year as being relative to that revised 139,000 unit market, or should we think about it more in an absolute sense, relative to what you thought the market decline last year?

You ought to compare to the 139, Ed. Ed Aaron – RBC Capital Markets: Okay, thank you.

You’re welcome.

Your next question comes from the line of Jane Hardman from James Hardiman from Longbow Research. Please proceed. James Hardiman – Longbow Research: Good morning. Couple of questions for you guys. Obviously, there is a lot of focus on the overall industry numbers, all in, I think you guys said down 1 % if you aggregate everything, as you think about your particular business, obviously, the negative is that you are more highly exposed to the fiberglass boats and so your mix of end markets from an industry perspective would look a little bit worse, but then from a market share perspective, I guess I was hoping you could sort of compare what you are seeing with what the industry is looking like at least through the first quarter, and then beyond that just generally what the momentum looked like within the quarter, if you could help with that as well.

Sure. First, we are clearly moving smaller product. Just to give everybody a couple of take points because this keeps coming up – and we can take any time period, but let’s say from 2008, our aluminum sales in the first quarter have gone from 42 % of wholesale sales, this is in units, to 58 % in 2011, and we have seen a small increase, for instance in a brand like Searay, over the same time period in a number of sport boats, as a percentage of total unit sales. We have felt that coming, and I think we have been talking about it for a whole bunch of quarters, now, and I think the first thing to understand is all of the work we have done in our aluminum business. Our aluminum business was profitable in Q1, in fact, it was nicely profitable. That is through a lot of work to get the brands right, a lot of work around products and significant changes in the manufacturing footprint in that business. So while in years past, this would have been a lot more of a problem, it would have been a significant problem for our boat business, but you can see the improvement in earnings on a quarter to quarter basis in our boat business, even with this mix down that is occurring. As far as momentum, the momentum is all over the map. You can go to different cities in the same state, different states, and one gets a different answer, but here is what I would say; momentum has not been increasing as we go through the month of April, and we are going to get a better look in a couple of weeks as to whether it leveled or began to decline. I do want to keep highlighting that we are watching crude oil process and the impact on the economy, and I think we all have to understand that they’re impacting the economy negatively and how it will translate in the boat sales is a bit yet to be seen. I’ve seen nothing that would tell us that momentum is improving. We are hoping for a flat momentum, and we will see whether the momentum is declining in April. James Hardiman – Longbow Research: The market share piece, did you feel like you were up/down/flat in the first quarter?

It depends on the segment. Overall, our view is that we have gained share. There is probably only one relatively small segment where we did not think we gained share, and it would be insignificant in terms of earnings perspective. All of our other businesses, we are pretty relaxed that we are gaining share. James Hardiman – Longbow Research: Okay, great. Just a couple of questions, here. Gross margins looked really strong within the quarter. Obviously, a lot of that was some leverage from the strong sales levels, but could you tell us about what some of the other puts and takes were? Was it a better, more profitable mix of product that you were selling, was it currency impact, was it better cost save? What drove the gross margin in the quarter?

It’s Peter, James. It was basically a function, as you say, a volume, plus the significant cost reduction activities that we have put in place, plus the depreciation reduction that we have talked about in the past. Those were the really big factors.

We have slightly less discounts that we also had.

That’s true as well. James Hardiman – Longbow Research: Great. Thanks.

You’re welcome.

Your next question comes from the line of Rommel Dionisio from Wedbush Securities. Please proceed. Rommel Dionisio – Wedbush Securities, Inc: Yes, good morning, thank you. My question is actually on the fitness business. It is my understanding that your fastest growing customers have been the value priced fitness chains, so I would have that product mix might be negative, but you said it was positive. Could you just walk through some of the drivers as to why? That was a pleasant surprise. Why was favorable mix shift there?

We actually experienced sales growth across all of our segments in fitness, and it was greater with larger clubs and bigger accounts, but in our smaller accounts in the US and in the stronger economy areas of overseas like Asia and Germany and France, we experienced strong growth, so there really has not been a large variation in the growth we have seen. We have seen it across virtually all of our segments in fitness.

If I could add one more thing, also. I think the assumption was built in to your question, as a value club is a place where we make less margin, and I don’t think that is an assumption you ought to use. We have pretty consistent margins across all of our product lines.

That’s true, because the value clubs buy commercial grade equipment. Rommel Dionisio – Wedbush Securities, Inc: Okay, great. Thank you very much.

You’re welcome.

Your next question comes from the line of Tim Conder from Wells Fargo. Please proceed. Tim Conder – Wells Fargo Securities: Thank you. Just a couple here, gentlemen on your overall market expectations in Marine, and then your share gains. First of all, any color on the first quarter as to whether there was some inkling that weather impacts in different regions? Secondly, any feedback yet on April, given that the mid-west in particular, and down in the south, especially over the last couple of weeks has had a significant amount of rain, whether that is positively or negatively impacting anything at retail? Then just a couple of follow-ups after that.

One of the things we laughingly talk about here is we hate attribute any impact to the weather because there is weather every day, all around the world, but with a bit less tongue and cheek. I think globally first, we have seen a weather impact. Weather was pretty tough in the first quarter in significant parts of Europe that are good boating areas, and especially so in Scandinavia, so that part of the market coming back has been very slow. Here in the US, while we don’t try to quantify, Tim, there was absolutely no question that weather has had an impact in some regions. Probably not the southeast, but at least up until this front froze, and began to hammer Missouri, Arkansas, Tennessee, Kentucky places like that. So, there probably has been some impact on weather, but honestly, we do not measure it and we try to look past it because there is not a lot we can do about it. Tim Conder – Wells Fargo Securities: Okay. Then, what are you seeing, or expectations-you’re saying at this point in time you are kind of looking at a flat markets for the new side of the units, what about total, given that a lot of the products have been exhausted? How would you look at the total new and used power boat market on a year over year basis here in ’11?

First, I want to be really careful. We are not predicting what the market will do. We are just telling you how we are planning, then we have to be nimble and able to react to the market, Tim. Our plan right now is flat and based upon what we have seen to date, although it is early, it looks like our plan was pretty well right, and we will keep executing it, but we will change if we have to. As to the total market, my judgment is it will be flat also, because there no longer can be a big influx of used boats. I think we really saw the used boat market stabilize in 2010, and therefore the real movement will be driven by the new boat category, and again, if our plan is flat, the math says then the total market ought to be flat. Tim Conder – Wells Fargo Securities: Okay. Then, lastly, gentlemen, operating leverage. I think you referenced before that on incremental revenue all in, you are looking at about a 30 % slow down rate. I think you referenced that that was beyond this year, but for this year it could be a little bit higher. Could you just give us a little bit of an update there on your assumption?

It’s Peter, Tim. You are correct that we said that over time we expect about a 30 % variable contribution margin, and that would be enhanced this year by things like that depreciation and amortization improvement in cost, and it would be improved this year by the effects of the continuing cost reduction efforts, particularly at Mercury. Those would be the big factors that would drive the 30 % to something somewhat more than that. Tim Conder – Wells Fargo Securities: For this, year, correct Peter?

Yes. Next year, and the subsequent years, it is a question of what other fixed cost variations can be driven in to the years? Tim Conder – Wells Fargo Securities: Okay. Then round that 30 % looking forward would still be reasonable?

Yes. In this business, with our consolation businesses, which incidentally have varying variable contribution margins, it is not as if all of our portfolios have the same percentage, and that is why this margin will differ over various quarters, because we have the different mix of businesses due to seasonality over the various quarters. As we look out over this years, we look out over next year as 30 % seems very reasonable. I’m not talking about a five or ten year period, we are talking about a one or two year period. Tim Conder – Wells Fargo Securities: Right. Thank you, gentlemen.

You’re welcome.

Your next question comes from the line of Joe Hovorak of Raymond James. Please proceed. Joe Hovorak – Raymond James : Thanks. A couple of quick questions. Did you give the week’s inventory number for the dealers?

I don’t think I gave it in weeks. I gave it in the number of units that it had increased, but we can sure come up with that. We are at 37.5 weeks. Joe Hovorak – Raymond James : Okay, and I must have missed the unit number too. What was the unit number increase?

1400 more units-an 8 % increase. Joe Hovorak – Raymond James : Okay, and to clarify, you gave the aluminum as a percent of mix going from 42-58, was that in 1Q ’10 to 1Q ’11 is that what the time frame was?

No, that was 1Q ’08 , to 1Q ‘ 11. Joe Hovorak – Raymond James : 1Q ’08, okay. I think the mix is if I remember, in revenues, we have from about 80 % fiberglass in to ’09 frame to 75 in ’10, and I’m assuming that goes over again in ’11. Do I have those numbers right?

Yeah, you are right. Joe Hovorak – Raymond James : I think you gave last time, I think you gave 65 fiberglass turn drive, 15 fiberglass outboard, and 25 aluminum? How would I update that?

I don’t have that in front of me.

I think I gave you those. I think that’s a fair assessment, still. Joe Hovorak – Raymond James : Still fair for ’11? Okay. I think the other questions were answered. Thanks, guys.

Thanks, Joe.

Your next question is a follow-up question from the line of Tim Conder from Wells Fargo. Please proceed. Tim Conder – Wells Fargo: Yeah, I guess this goes back to your market share expectations. To what degree do you feel that competitors are more supply constrained than yourselves? Obviously it all depends on the trajectory of the market, but given that you guys remain fairly on a relative basis, liquid relative to most of the rest of the manufacturers in the industry and were able to pay people, and then of course some of the disruptions that come from the unfortunate events in Japan, how does that all factor in to your market share opportunities? Then, a totally separate question, Peter, any details on the gain on sale from that facility?

I will answer your last question, first. You can actually see the dimension of that gain in the cash flow state now because it is listed as a non-cash gain in the first third of the cash flow statement 7.4 million. Tim Conder – Wells Fargo: Okay, I apologize. Thanks.

No, that’s fine. It’s hard to take out.

Tim, I don’t think any of our boat competitors are supply constrained. It remains to be seen from an engine competitor perspective because we primarily compete against three Japanese outboard engine manufacturers, and they are clearly in a bit of a different situation than we are, except for under 30 horse power engines which are produced in joint-venture in Japan. We are going to have to watch that one play out, but clearly they have been slightly supply constrained up to this point, but we have no idea what their inventories look like around the world and their ability to supply their boat [inaudible] and dealer customers. I don’t think that really is going to be an issue that we ought to worry about longer term. Frankly, I think our ability to gain share is probably driven more in 2011 by our dealer network than anything. We have often cited that the overall dealer network was down as a result of the issues, and marine industry and the economy, in the range of 30 % in our dealer network in terms of store fronts is fundamentally flat, and I think there is the opportunity for us to get share gain, and that is what we feel like we are seeing here in the first quarter. Tim Conder – Wells Fargo: Okay, thank you.

You’re welcome.

Your next question comes from the line of Jimmy Barco from B. Riley and Company. Please proceed. Jimmy Barco – B.Riley & Company: Good morning, I just have a couple of follow-ons to the share gaining comments and I guess also to mix. The market share gain expectations that you said are kind of built in to your guidance, are you speaking about expected gains in both the boat group and Mercury?

Yes. Jimmy Barco – B.Riley & Company: Correct me if I’m wrong, and this is not what you are observing, but it seems like we are seeing more meaningful disproportionate strength in the pontoon market, relative to fiberglass. I’m wondering if you could break out your aluminum sales. What percentage of those sales are pontoon?

Jimmy, that is not something I’m going to do, but it is strictly for competitive purposes. Jimmy Barco – B.Riley & Company: Okay, would you say that pontoons are a segment in the market that you feel like you might be under exposed to? I know you have some pontoon lines, but have you or would you consider adding to that portfolio, especially since most pontoons are sold without boards, where Mercury doesn’t enjoy the kind of share that it has in [inaudible]?

I don’t think we will be adding to our product line, but we will continue to invest in existing brands that we have because you are right, it is a nicely growing segment. Jimmy Barco – B.Riley & Company: Okay. Then my last question, could you talk about opportunities or your desire to selectively grow your dealer base as the market recovers?

I don’t know that we have any particular growth plans with the dealer base, and anything we will be doing will be fundamentally to replace dealers that may have issues, and the like. The reason is, we want to insure that our dealers for various brands are competing against dealers who carry competing brands, and not against the dealer who is carrying one of our brands. So, we work fairly hard to make sure that there is appropriate separation between all of our dealers, and I think to begin to add to the dealer network, overall in the United States is probably not something we will be doing. Now, we are looking to grow and strengthen the dealer base outside the United States, and we have a fairly active process underway to continue that. Jimmy Barco – B.Riley & Company: Okay, thank you.

You're welcome.

Your next question is a follow up question from the line of Ed Aaron, from RBC Capital Markets. Please proceed. Ed Aaron – RBC Capital Markets : Great, thank you. I am just trying to get a better sense of how mix is going to look within the boat segment over the balance of the year. The reason I ask is I seem to remember in this quarter last year, you had shipments in units of about 35 %, but the dollar growth was quite a bit lower than that because there was a negative mix in that quarter, and I am wondering if the mix comparison is getting somewhat more normalized as you move to the year, is that going to put more pressure on the year over year ASP trends moving through the year?

We don’t anticipate any significant change in our ASP over the year, Ed, based on how we see the market right now. Our view is that dollar growth will be slightly less than unit growth for the remainder of the year.

Your next question comes from the line of James Hardiman from longbow Research, Please proceed. James your line is open. James Hardiman – Longbow Research: …overall is essentially flat. The mix is decidedly towards aluminum. I guess at the end of the day, I don’t know if you guys actually have this date, but would you say that retail sales of Brunswick boats is specifically in line with that 1 % decline? Is it better than that, is it worse than that? How should I think about wrapping all of those things together.

The way to think about it is better for us and that is why we think we are gaining share. James Hardiman – Longbow Research: Okay, so you think that sales of your boats are better than that down 1, so flat up at this stage of the game.

Yeah, I’ll just say they are better. Potentially flat. James Hardiman – Longbow Research: Okay, and then sort of a related question, you touched one why, ultimately, the 17 % increase in your marine segment isn’t necessarily indicative of better demand, obviously you are saying that you’re still shipping more boats in to the channel than are being sold out, but ultimately, conversations with your dealers, can you just characterize those conversations? Are these guys more optimistic than they have been? It seemed like it was a pretty good boat show season, and certainly once you get more towards pull versus push, is there more pulling taking place, to the extent that some of the boats that are being ordered have some lead times?

We are on a strictly pull model right now, and therefore our whole sale sales are strictly being pulled by the dealer network, so I think that tells you that certainly the majority of our dealers are quite bullish right now. What we are watching with them, and what we all want to be careful about is what is going on in the economy and what’s going to be the ultimate impact on US marine retail demand as well as global retail demand. We and they are going to be ready to make adjustments as soon as we see any difference if anything happens at all. James Hardiman – Longbow Research: Excellent, that’s really helpful. Thanks guys.

At this time, I would like to turn the call back over to Dusty Mccoy for concluding remarks.

Thank you. Thanks for everyone’s attention. We have been going nearly an hour, and as always, I appreciate the quality of the questions and the candor by which we get the questions. We look forward to seeing you guys at investor events that are coming up over the next several months, and more importantly, we look forward to talking to you in July when we have a much better feel for what marine demand is. Thanks everyone for your time, we do appreciate it.

Ladies and gentlemen, that concludes today’s conference. Thank you for your participation. You may now disconnect. Have a great day.