Good morning and welcome to Brunswick Corporation's 2012 Third Quarter Earnings Conference Call. All participants will be in a listen-only mode until the question-and-answer period. 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, 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 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 and today's press release. All of these documents are available on our website at brunswick.com. Also during our presentation today, we are using certain non-GAAP financial information. Reconciliations of GAAP to non-GAAP financial measures are provided in this presentation as well as in the Supplemental Information Section of the consolidated financial statements of company's today's release. I would now like to turn the call over to Dusty McCoy.

Thanks, Bruce, good morning, everyone. I am going to start with an overview of our third quarter results. As you are aware earlier this month we announced a series of restructuring and impairment actions in our Boat segment which represented third quarter charges that we estimated to be in the range of $25 million to $32 million pretax. As Peter will explain the amount actually booked in the quarter is approximately $28 million. Because this amount is significant, we will be describing many of our financial metrics for the quarter on an adjusted basis which excludes restructuring and impairment charges, losses on debt retirement and any special tax item. We believe that this adjusted comparison provides the necessary important perspective on the company's operating performance, in addition to GAAP comparisons and will improve comparability versus past periods. In addition, we expect further restructuring charges related to previously announced actions in the fourth quarter this year, as well as further debt extinguishment expenses and so we will be referring to adjusted financial metrics in Q4 and for the full year as well. Our third quarter results demonstrated continued success of our business strategy. Short-term financial performance continues to improve even as we make increased investments for long-term organic growth. Gross profit, as well as adjusted operating earnings and net earnings per diluted share, each increased by double digit percentages versus prior year. Our Engine segment experienced strong revenue growth during the quarter, but was partially offset by lower sales in our Boat, Fitness and Bowling and Billiards segments. We experienced lower sales in Europe in all four of our segments. For the total company, excluding Sealine, revenues declined about 15% in this region. If we include 2011 Sealine sales, European sales declined 19%. Revenue generated from our U.S. and rest of…

Thanks, Steve. I would like to begin with an overview of certain items included in our third quarter of P&L and also (inaudible) some forward looking data points. Let me start with restructuring assets and impairment charges which approximately $28 million in the quarter with most of the charges beamed on cash. Approximately $17 million of charges pertained to impairments associated with (inaudible) European and Asia Pacific footprints. These charges mainly reflect the continued weakness inboard sport efficient products as well as weak powerboat demand in Europe and certain Asia pacific regions. We also recorded about $8 million of charges associated with the decision to close our Knoxville facility, consolidated cruiser manufacturing and exit Bayliner cruisers in the US and European markets. These charges primarily include impairments, severance and other costs. Dusty will further elaborate on this consolidation action in his closing comments. We anticipate that additional charges pertaining to our current year actions will be recognized in future periods. In the fourth quarter of 2012, we estimate charges into $5 million to $10 million range. Therefore our current estimate for full year 2012 restructuring charges is in the $34 million to $39 million range or $0.37 to $0.42 for share. Net interest expense which includes interest expense, interest income and debt extinguishment losses was $23.8 million in the quarter, a decrease of $6.3 million versus the same period in 2011. Reduction was the result of lower losses on the early extinguishment of debt and the impact of lower debt balances. In the third quarter, we repurchased approximately $78 million of debt. We plan to opportunistically repurchase additional debt during the fourth quarter which could result in an additional $20 million to $25 million in debt reduction and extinguishment charges of approximately $3 million to $4 million. Our estimated net…

Thanks Peter. Earlier this month, we announced that our Bayliner boat ramp plans to refine it's North American and European product portfolio are focusing its core Bowrider and deckboat models. As well as other deckboat craft types new to the brands such as jet boats. The complexion of the global marine marketplace continues to evolve and it's our continuing challenge to adapt our brands, models and technologies to best appeal for today’s boating consumers as well as the shifting global marine marketplace. We believe this effort will solidify our position in the market and offer dealers and boaters a lot variety of choices and models. Additionally, Bayliner will make its Brazil operations as a center for its cruiser business but we will suspend the brands cruiser sales and production outside of South America. We will continue to maintain our leadership position in the North American cruiser segment with our Sea Ray brand. This strategic repositioning of Bayliner further reduces the need to maintain the Bow Group’s current cruiser production capacity in the United States, particularly in view of the current market weakness for cruisers that I mentioned in my earlier comments. As a result, we will consolidate our US cruiser production for Sea Ray into our Palm Coast, Florida and the Tennessee facilities. This will be more efficient and still allowed us to retaining capacity for the three times our current worldwide cruiser demand, enabling us to adequately increase production when the market improves. As a result of this consolidation, our cruiser plant in Knoxville, Tennessee will seize production by the end of 2012. We believe these actions will save approximately $10 million to $12 million a year once fully implemented. We continue to be pleased with the progress we are making in our numerous growth initiatives which are underway…

(Operator Instructions). Your first question comes from the line of Ed Aaron from RBC Capital Markets. Please proceed.

I guess I wanted to maybe start by asking about the gross margin. You have to go back an awful long time to find a quarter with a gross margin at this rate that you did in Q3. And I am just wondering first, if there are any unusual or less sustainable factors that might have benefited you this quarter? And then just looking at the full year gross margin guidance of 24% and implies flat to down Q4 I think on a gross margin basis with accelerating sales. So I am wondering why you might not be able to do a little bit better than the 24% on a four year basis?

We think we might do a little north of 24% Ed. There is nothing strange if you will in our gross margin numbers. But we are seeing and let's take Mercury as an example. This is an indication of the cost structure we created throughout this company and what it can deliver once we begin to get volume. And if we take a look up at Mercury in the third quarter, we first have overcome the production issues we were having both with sterndrives and the ability to fulfill demand for our new 150 horsepower engine and 75, 90 and 115 engines. So when things like that begin to flow through this cost structure, we're still recognizing the benefits of closing the Stillwater facility. When you add all that together, and you get volume in any of our businesses, we're going to get great gross margin growth. So we are comfortable with 24%, and I am gong to have to admit to you it will probably ought to be a little north of 24%, probably still have 24% in the first two numbers, there will be a point some, but they ought to be a little higher than what we are projecting here.

Okay, thanks and then Dusty, could you also address your Q3 market share performance. I think your Boat retail sales globally moderated by just a couple of points, but the market in the U.S. anyway slowed I think by more than that especially in the big boat segments where your over index and then presumably Europe and the rest of the world were a little tougher this quarter. So moving that 5% retail number seems pretty good relative to that; I am wondering if anything kind of stands out in terms of a driver what seem like an improved share trend at least relative to maybe Q2?

Yes, and then let me just go through everything, we modestly would do places for a little weaker places for very strong edges just to get at by levels there. As we're looking to run about 20 feet in our Sea Ray brand, we de-emphasized focus there and what we have done there we have lost a little share there. And the larger run about which go up to 30 feet we have had significant share growth there and that’s great focus of our team and I am really proud of what they have been doing. In the cruiser and larger segment, even though their market continues to decline and we have a lot of market share there, we continued to grow that share. And our outboard fiberglass were flattish and then in our aluminum business, I just can’t pat our fellows on the back and up in that business, we are having just remarkable unit growth and even though that part of the market is strong, we continue to gain share across our brands there; primarily in fish boats and slight share gains in pontoon, so that’s how the whole picture looks at.

Your next question comes from the line of Tim Conder from Wells Fargo Securities. Please proceed.

Thank you and guys thanks for just staying on task and on plan here. A clarification question first if I may, is the outboard backlog generally resolved or will that take you through the fourth quarter and may be into early first before that’s totally satisfied?

I think it’s not totally satisfied; we continue to work it down and then it will take us through the end of the year and may be Tim, as you say even in the first quarter to get it completely in that.

Okay. And then from the perspective of what you are doing with Bayliner in the cruiser segment, (inaudible) that’s going to be focused now on the cruiser part in Latin America, Brazil in particular and then kind of going away in the U.S. and Europe. Is there anyway to say, hey is this part we should take out account sales, and again, we’ve got a mix bag here; it’s not a clean thing like happened with the Sealine just totally getting out that. Is there anything you can kind of give us directly as far as modeling going forward from that perspective?

I wouldn’t worry about the modeling.

Okay, enough said. And then I guess from a broader question and then I will get back in queue here also. The three scenarios that you outlined, the base case and then to plus five, and a base case and a plus five and a plus 10 scenario at the Miami Boat Show. Given what's going on in Europe, given the changes that you are making with the operating structure, with the changes here in Bayliner, anything you can kind of update us on as far as those, the base scenario and the other two scenarios now?

Yeah, where nine months into a three year plan. But as I am looking at, as we look at right now, Tim, I would say we are somewhere between the base case and the 5% case.

Okay. So overall your do scenarios and your views are still valid Dusty, obviously some puts and takes to get there, but those scenarios are still valid and then you are being between the base and the 5% case, am I perceiving that correctly?

Absolutely, Tim. That sort of stamps in our forehead; we’ve made a commitment and we’ve got our sleeve rolled up to the load.

Your next question comes from the line of Mike Swartz from SunTrust. Please proceed.

Maybe you could just talk about Europe in general kind of at a high level, did you see any kind of incremental deceleration there or is it kind of hanging in there as it was in the second quarter at about down high teens 20%.

I don't think we followed any additional deceleration. You know as I believe it used to look ugly. And as we are sitting here right now we don't see anything in the near term that's going to change Mike.

Also in the press release you go after some of the longer term investments that you've been making in the engine business. Could you maybe flush those out a little more than give us an idea when we should begin to see those investments I guess come to life.

I don't want to give away too much companion of information. So let me try to put it into (inaudible). Firstly we have a fair bit of new product coming to the market in ’14. But we also are expecting continued increase in demand especially in outboard product. So we have been making investment as we speak even in improving our capacity as we work in ’13, and then you’ll see a fair bit product come to the marketplace in ’14. And in ’13 and ’14 and perhaps even in ’15 we are going to continue to invest the increased capacity. So we've got a lot to get invested up at Mercury. We've got a great engineering team, great R&D team up there, good operations but they’ve got a lot coming in and a lot to get done and it’s a business that's performing really well in this marketplace and it’s a place we want to continue to invest significantly.

Your next question comes from the line of James Hardiman from Longbow Research.

Couple of quick questions here, you touched on third quarter worldwide, you had that 5% demand increase from a unit perspective wholesale shipments were only up 1%, you may have touched on this but I just wanted to clarify here how should we think about that delta for the fourth quarter, if I recall correctly you increased your base line inventory in last year’s fourth quarter on some of the aluminum boats and outboard engines should the wholesale and retail be the same in the fourth quarter, should wholesale maybe be a little bit ahead of retail obviously you are facing a tough comp. How should I think about that?

We are going to bring wholesale and retail much closer in line in fourth quarter and that will be, its frankly a (inaudible) in our aluminum business which is doing really well. It’s going to have to get pretty well cranked up in the fourth quarter. In the fiber glass business in which we see all the number game continues to suffer from our overall market decline but we will ensure that our wholesale shipments are more closely matching retail in the fourth quarter.

And then along those same lines $1.81 in adjusted earnings through three quarters. The guidance is $1.65 to $1.75 so that basically assumes a decline of $0.06 to $0.16 for the fourth quarter. Coming out of second quarter there was some hope that you might be able to breakeven in the fourth quarter. Are you backing off of that or is it more sort of like the gross margin, you would like to be able to get there but you are being conservative here.

Well, I think realistically we're backing off a little. We lost $0.30 on an adjusted basis in the fourth quarter last year. We were obviously kind of kick the heck out of it, but as we sat here and watch the economic difficulties around the world, everybody is sort of holding their breath waiting for this election to be over and what's going to happen afterward. We paired back our view a little bit of what we're going to be able to do in the fourth quarter and we think that’s the responsible thing to do right now. The real key always James that drives us is ensuring that we have the appropriate level of inventory in the field to match the market place. And again as we're looking at the market place (inaudible) right now. So we're going to act prudently in the fourth quarter.

Your next question comes from the line of Jimmy Baker from B. Riley & Company. Please proceed. Jimmy Baker - B. Riley & Company: So first just wonder, since I have some questions on Mercury. I mean it's just hard not to turn to look at the margins that you put up the last couple of quarters and without inferring that there should be some potentially fairly significant upside to what you laid out in the three year plan for that division. So at this point, would you say Mercury is outperforming your expectations or is it, maybe better to think about this that you expect some significant margin dilution from ramping in to whether diesel initiatives or non-Marine verticals that would prevent margins from continuing to improve as volume increased?

Here is a way to think about it as. I think it's fair to say, Mercury is from a financial standpoint, better than perhaps we’ve plan but our folks there are responding magnificently to a different market place that we envisioned. This mix has changed dramatically and we were talking in Miami Jimmy we were thinking as a market increased it would be the sort of increase that would pull all product type through relatively equally and that’s just not what’s happened. So as a result, yes mercury has got incredible demand for its outboard product. We have been taking share with the new product, so from a financial standpoint yes a little bit driven by marketplace adjustment. But as we look across the whole company of course that also has an impact on our boat business because we have seen the mix to be different, so as we look at our total look at what we think we can do in 2014 we have to balance those two. Jimmy Baker - B. Riley & Company: Okay, that’s helpful and staying on the boat side and then want to deliver your pipeline management strategy but I am just I guess I am surprised you didn’t ship a little bit more into the dealer pipeline given the trends you have seen at retail or even adjusting for kind of mix issues can you just talk about the rationale there either in terms of conservatives among your end or lack of appetite from your dealers versus may be some capacity issues on the aluminum side?

Frankly it’s all for you there. As dealers sit in and look at all the economic conditions and uncertainly in the political environment that everyone else they want to be careful. We want to be careful because we see all that our sales and we therefore don’t want to overload dealers. And we always have a bit of capacity issues as we do model changeover in our plants in third quarter, so many at all that, we are comfortable with where the pipeline is but as we did say. We increased wholesale fairly dramatically and our pipeline is still down, so we got some work to do in order to get our dealers ready for the next model in Europe, the next selling seat. Jimmy Baker - B. Riley & Company: Okay, and just last one from me, if I can just be a little bit, new sided of the revenue growth implication for Q4, obviously that the strongest of the year. Can you maybe just walk through your segments ranking them and in terms of kind of where you expect the strong growth on a year-over-year basis in the fourth quarter?

Can I sort of do it this way? Again, that might be a little more details giving than I am liking about. Here’s how we are thinking about it. In the engine business you know we have addressed, work hard to address capacity bottlenecks in our outboard business. and we are really working now to satisfy backlog of pent up demand and our new four stroke and the 75, 91, 50 and we think there is continued growth on top of that has been in the outboard and the fishing boat both are aluminum and fiberglass and the (inaudible) segments. As we look over at our fitness business, we got incredible amount of new product that will begin to sell and delivered the market place this quarter. And we got our new Discover counsel, the Synergy 360 products that we have talked about, the new lifecycle [GX] and our new elevation series cardio product are all going to be flowing into the market place very differently in the fourth quarter versus what we have done in the past. And as we look at our bowling business, we've got a nice international bowling capital equipment backlog which we are going to have to satisfy in the fourth quarter and then as we look at the boat business, we believe there is going to be favorable comparisons in our outboard fishing and outboard fiber glass businesses in the fourth quarter. So without giving you any percentages it’s just generally across the board, of course some will be higher than others but we've got a nice even view toward how we are going to be able to increase in the fourth quarter. Jimmy Baker - B. Riley & Company: That's very helpful. Thanks for the color and great execution as always it has been.

Well, again I would say that the people you are talking to have little to do with the great execution. I appreciate you saying that. A lot of our employees listen to this and thank you for mentioning it.

Your next question comes from the line of Rommel Dionisio from Wedbush Securities. Please proceed.

Just on the, just looking at the portfolio of both brands, the way you have them set up today even after this Bayliner restructuring, should these market trends continue, do you give some thought as to what to do with the rest of the cruiser business I mean you still got the (inaudible) business and so forth, is there or are you sort of just position that business to see even in the case of the recovery of that market to be prepared to have the capacity to take advantage of that?

No we are in the cruiser business. It has been one of the real center pieces of our Sea Ray brand. We continue to gain share with that brand even in declining market. We are comfortable and assured that the cruiser market will ultimately return. We are continuing to invest in new models there. So we are solidly into cruiser business and we are not going to getting now, but we have made a decision. Our Sea Ray brands what’s really carrying the water in that segment and we want to get that brand position to continue to do well in the future. So we will not ever be adjusting our portfolio to get out of that.

And one quick follow-up if I may, with continued weakness in your, I realized of last question prior conference calls but just with continued weakness in Europe, could you just give us an update on the state of dealer health of your dealers in the European market if they are still viable, still hanging in there?

Generally their health is good. We went through some tough times with some dealers in Scandinavia interestingly, Greece, Southern Europe, but as we look across the dealer network and look at outstandings with them etcetera. They are quite healthy. It’s a bit like the United States; I can just give one more piece of color.

Sure.

Once you get through the real shock of how far things can drop and the weaker dealers fail, then what you have are there are just some great dealers who are great small business people who begin to make the adjustments they need to make in order to do well and I think that's what we are seeing.

Your next question comes from the line of Craig Kennison from Robert W. Baird. Please proceed.

Dusty, would you comment on the used boat market especially any trends in the used boat prices?

First, the used boat market continues to be a healthy part of the industry. We continue to hear especially for instance in the cruiser segment. If a good used cruiser comes in the marketplace, it sells immediately. But what's been interesting to know is one would normally expect in that sort of environment that perhaps used crossing would (inaudible) between the historical gap between new and used and we haven't really seen that. And we don’t sell or day used product but this is anecdotally in discussions with our dealer network and that is consistent with the research we've done as cruiser owners who tell us we're continuing to boat, we are going new one, we feel better about the economy and our personal situation and the only treasure we want to do is we think we're getting a good deal. So they are very educated buyers, they’re great boaters, they understand the marketplace well and they got to have that good deal and demand that the good deal is one that maintains what they view is the historical spread between.

And as a follow-up, could you characterize the general loan terms of these small boat versus a large boat just in terms of the duration of a typical loan?

I think they’re generally about five years to seven years.

It doesn’t necessarily get longer in a cruiser segment for example?

Yeah, it would. It could go up to 15.

Your next question comes from the line of Gerrick Johnson from BMO Capital Markets. Please proceed.

In the fitness segment, can you talk about the other US distribution channels that saw declines? What were those? And then in the club channel, how is that performing, do you see any deceleration of growth in the club channel? Thanks.

The declines where in military and hospitality. In the club market, there are some really great club owners who are doing some great things that our customers and we continue to see those guys growing.

Okay, good and the 5% increase in global retail demand in the third quarter, pardon me if I missed it, but did you break that out or can you break that up between the US and international?

We didn’t and it’s not something we would care to do.

Okay. And then may be…

Though I did described that we thought market share changes had been in the US earlier.

Okay and that’s in units do you have a dollar number for that retail demand growth?

No.

And you have a follow-up question from the line of Ed Aaron from RBC Capital Markets. Please proceed.

Just a follow-up on the fitness question. Do you think that the slowing that you saw in Q3, is this just really a function of comparisons and may be some timing around new products or do you sort of see any kind of macroeconomic impact on that business? I am just trying to test in your conviction around putting up mid-to-high single-digit type of top line growth in that business going forward over the next year or two?

The former not the later.

Your next question comes from the line of Carla Casella from JPMorgan. Please proceed.

I just wanted to ask about your capital structure, would you considering taking out your 11.25 bond given that you guys have enough liquidity to do so and given the pricey coupon?

The 11.25 are out to 2013s, the 2016s, it is still economically not in our best interest, not in our shareholders’ best interest to take them out at this time. The call expense would exceed the benefits we would get from refinancing them at this time. Interest rates would have to go up considerably for to it had been a bad decision for us to wait as we expect to do until the some point year.

Last question comes from line of (inaudible). Please proceed.

Hey, guys. Thanks for getting me in under the wire here. Fantastic job let me start with that. I have a question about big comments that you made today and have made overtime about investments and growth and all of directors comments particularly to the engine side of the business and I guess some of the boat side of the business, let’s call it marine. Can you talk about the distribution of the investments from two particular advantages? Investments and innovation to kind of grow new markets or to take market share as some of the existing aggregate demand may kind of go away for the foreseeable future versus investments in process such that we retain some of the high operating margins that we are seeing currently, that is my first question and now one for Peter. Peter, if you can give us any update on your discussions with the rating agencies maybe some type of a glide path to the investment grade rating. Thank you.

Looking at an investment up there, you know I'm probably not smart enough to around quite the way you have and the assumptions we are making of that is that we've retained the (inaudible) that we have and if we bring new product in that (inaudible) we actually expect the margins to get better on that product. But what's the great thing (inaudible) is that we've got into the four stroke engines is (inaudible) that off the four stroke (inaudible) going to have two strokes and therefore Mercury would always go through market (inaudible). So what we are doing now is that really great (inaudible) so we are going to see now (inaudible) and then with that we are getting better from an operating standpoint (inaudible) kind of prospect and you add all that up (inaudible) ability to maintain margins and (inaudible).

On that rating agencies (inaudible).

Alright ladies and gentlemen at this time we would like to turn the call back to Dustan McCoy for closing remarks. Please proceed.

Thank you, ma’am. As always we appreciate all the interest, the great questions we get and with that we are going to sign off and go back to work. We are living in a tough world and we've got our hands full, but we are going to keep delivering what we've been saying we will. So thanks everybody.

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