UNITED STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
_____________________________________
FORM
11-K
_____________________________________
[X]
Annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934
For the
fiscal year ended December 31, 2008
OR
[ ]
Transition report pursuant to Section 15(d) of the Securities Exchange Act of
1934
For the
transition period from
to
Commission
file number 001-01043
_____________________________________
A. Full
title of the plans and the address of the plans, if different from that of the
issuer named below:
Brunswick
Retirement Savings Plan
Brunswick
Rewards Plan
B. Name
of issuer of the securities held pursuant to the plan and the address of its
principal executive office:
BRUNSWICK
CORPORATION
1
N. Field Court
Lake
Forest, Illinois 60045-4811
Financial
Statements and Supplemental Schedules
Brunswick
Retirement Savings Plan
Years
Ended December 31, 2008 and 2007
With
Report of Independent Registered Public Accounting
Firm
Brunswick
Retirement Savings Plan
Financial
Statements and Supplemental Schedule
Years
Ended December 31, 2008 and 2007
Contents
|
Report
of Independent Registered Public Accounting
Firm..........................................................................1
|
|
Audited
Financial Statements
|
|
Statements
of Net Assets Available for
Benefits.............................................................................................2
|
|
Statements
of Changes in Net Assets Available for
Benefits........................................................................3
|
|
Notes
to Financial
Statements.............................................................................................................................4
|
|
Supplemental
Schedule
|
|
Schedule
H, Line 4i – Schedule of Assets (Held at End of
Year)..................................................................13
|
Report of
Independent Registered Public Accounting Firm
The
Benefits Administration Committee
Brunswick
Corporation
We have
audited the accompanying statements of net assets available for benefits of the
Brunswick Retirement Savings Plan (the Plan) as of December 31, 2008 and 2007,
and the related statements of changes in net assets available for benefits for
the years then ended. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. We were not engaged to perform an
audit of the Plan's internal control over financial reporting. Our audits
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the Plan's
internal control over financial reporting. Accordingly, we express no such
opinion. An audit also includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the net assets available for benefits of the Plan at December
31, 2008 and 2007, and the changes in its net assets available for benefits for
the years then ended, in conformity with US generally accepted accounting
principles.
Our
audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedule of assets
(held at end of year) as of December 31, 2008, is presented for purposes of
additional analysis and is not a required part of the financial statements but
is supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. This supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the auditing
procedures applied in our audits of the financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
/s/ ERNST & YOUNG, LLP
Chicago,
Illinois
June 25,
2009
1
Brunswick
Retirement Savings Plan
Statements
of Net Assets Available for Benefits
|
December
31
|
||||||||
|
2008
|
2007
|
|||||||
|
Assets
|
||||||||
|
Investments
at fair value
|
$ | 230,276,495 | $ | 342,208,377 | ||||
|
Employer
contributions receivable
|
4,614 | 2,039,872 | ||||||
|
Net
assets available for benefits, at fair value
|
230,281,109 | 344,248,249 | ||||||
|
Adjustment
from fair value to contract value for fully
|
||||||||
|
benefit-responsive
investment contracts
|
221,419 | (149,091 | ) | |||||
|
Net
assets available for benefits
|
$ | 230,502,528 | $ | 344,099,158 | ||||
|
The
Notes to Financial Statements are an integral part of these
statements.
|
||||||||
2
Brunswick
Retirement Savings Plan
Statements
of Changes in Net Assets Available for Benefits
|
Year
Ended December 31
|
||||||||
|
2008
|
2007
|
|||||||
|
Additions
|
||||||||
|
Investment
income:
|
||||||||
|
Interest
and dividends
|
$ | 5,963,440 | $ | 16,245,522 | ||||
|
Contributions:
|
||||||||
|
Participants
|
11,864,495 | 14,199,565 | ||||||
|
Rollovers
|
36,961 | 117,186 | ||||||
|
Employer
|
343,376 | 2,506,523 | ||||||
|
Total
additions
|
18,208,272 | 33,068,796 | ||||||
|
Deductions
|
||||||||
|
Distributions
and withdrawals to participants
|
36,565,188 | 36,168,658 | ||||||
|
Administrative
expenses
|
74,722 | 56,584 | ||||||
|
Total
deductions
|
36,639,910 | 36,225,242 | ||||||
|
Net
depreciation in fair value of investments
|
(95,140,739 | ) | (11,433,909 | ) | ||||
|
Transfers
into the Plan
|
9,610 | 55,647 | ||||||
|
Interplan
transfers, net
|
(33,863 | ) | (3,227,581 | ) | ||||
|
Net
decrease in net assets available for benefits
|
(113,596,630 | ) | (17,762,289 | ) | ||||
|
Net
assets available for benefits:
|
||||||||
|
Beginning
of year
|
344,099,158 | 361,861,447 | ||||||
|
End
of year
|
$ | 230,502,528 | $ | 344,099,158 | ||||
|
The
Notes to Financial Statements are an integral part of these
statements.
|
||||||||
3
Brunswick
Retirement Savings Plan
Notes to Financial
Statements
December
31, 2008
1.
Description of the Plan
The
following description of the Brunswick Retirement Savings Plan (the Plan)
provides only general information. Participants should refer to the plan
agreement for a more complete description of the Plan’s
provisions. Certain amounts previously reported in the 2007 financial
statements have been reclassified to conform with the 2008
presentation.
General
The Plan,
established by Brunswick Corporation (the Company) effective January 1, 1986, is
a defined-contribution plan subject to the requirements of the Employee
Retirement Income Security Act of 1974 (ERISA). Any related company, as defined
in the Plan, may, with the Company’s consent, adopt the Plan. The Plan is
administered by the Benefits Administration Committee consisting of at least
three members appointed for indefinite terms by the Company’s Board of
Directors. The Vanguard Group, Inc. (the Trustee) is the Trustee of the Plan
under a trust agreement with the Company.
Participation
Eligible
employees of the Company and certain subsidiaries may participate in the Plan.
Eligible salaried and hourly employees who are not eligible to participate in
the Brunswick Rewards Plan are eligible to participate in the Plan on the date
on which the following requirements are met: (a) attainment of age 21 years, and
(b) employment by the Company or a related company to which the Plan has been
extended. Eligible employees include all employee groups as outlined in the plan
document.
Employees
working at least 24 hours per week are eligible to participate in the Plan on
the first day of the month following or coinciding with 60 days of employment.
Employees working less than 24 hours per week are eligible to participate on the
first day of the month following or coinciding with 12 months of
employment.
Participant
Accounts
Each
participant’s account is credited with the participant’s contributions and
allocations of: (a) the Company’s contributions, and (b) the Plan’s
earnings (losses). Allocations are based on participant earnings or account
balances, as defined in the Plan. The benefit to which a participant is entitled
is the benefit that can be provided from the participant’s account
balances.
4
Brunswick
Retirement Savings Plan
Notes to
Financial Statements (continued)
1.
Description of the Plan (continued)
Administrative
Expenses
Investment
management fees, agent fees, and brokerage commissions are paid by the Plan’s
participants. The Plan charges an administrative fee of $700 to accounts
requiring a qualified domestic relations order split. The Plan also charges an
administrative fee of $30 to initiate a loan and an annual loan maintenance fee
of $25 for the life of the loan.
Contributions
Participants
may make pretax contributions from 1% to 40% of compensation, as defined in the
Plan. Contributions are made via payroll deductions and are remitted to the
Trustee on the earliest date on which funds can be segregated from the Company’s
funds. Participant pretax contributions were limited to $15,500 in 2008 and
2007.
The
Company’s basic matching contribution is 5% of pretax deferrals. Additional
contributions are granted at the discretion of senior management. The first 6%
of pretax contributions is eligible for discretionary matching contributions.
Such contributions are limited to 25% of total pretax contributions that do not
exceed 6% of compensation. Discretionary matching contributions for the year
ended December 31, 2007, were $2,034,308. There were no
discretionary matching contributions for the year ended December 31,
2008.
The Plan
provides a true-up feature, which allows the Company to make up for any missed
match that may have occurred. The true-up is performed during the first quarter
of the following plan year. It takes into account the maximum matching
contribution that could have been received and makes up for any difference in
comparison to the matching contributions that were actually made.
Participants
may direct their own contributions and related company contributions into any of
the Plan’s fund options. Participants may change their elections and transfer
balances between funds at anytime.
Vesting
Participants
are fully vested in the balance of all of their accounts at all
times.
5
Brunswick
Retirement Savings Plan
Notes to
Financial Statements (continued)
1.
Description of the Plan (continued)
Forfeitures
Forfeitures
are used to reduce eligible Plan expenses. Effective December 31, 2008, the
Plan was amended to allow the use of forfeited amounts to reduce future Company
contributions. Unallocated forfeiture balances as of December 31, 2008
and 2007, were approximately $479,264 and $498,904, respectively, and
forfeitures used to reduce eligible Plan expenses for 2008 and 2007 were $3,553
and $2,601, respectively.
Participant
Loans
Active
participants may borrow from their interest in the funds held by the Trustee.
The minimum loan amount is $1,000. Effective January 1, 2006, a participant is
not permitted to have more than one loan outstanding at any one time. Any
participants with two loans outstanding prior to January 1, 2006, will have both
loans grandfathered. After the grandfathered loans are paid off, only one loan
is allowed at a time. These loans bear interest, are secured by the
participants’ accounts, and are payable over a period not to exceed five years
unless the loan is for the purchase of a home, in which case, the loan term may
be up to 10 years. The interest rate on loans is fixed at the prime rate
reported by Reuters at the initiation of the loan.
Benefits
Upon
termination of employment, participants may elect account balances to be rolled
into another qualified retirement vehicle or receive a lump-sum distribution.
Terminated participants with balances exceeding $1,000 may elect to remain in
the Plan and defer payment until age 65. Account balances less than $1,000 are
distributed as soon as administratively possible following termination of
employment.
Plan
Termination
Although
it has not expressed any intent to do so, the Company has the right under the
Plan to discontinue its contributions at any time and to terminate the Plan
subject to the provisions of ERISA.
Interplan
Transfers
At
various times during the year, employees may transfer positions within Brunswick
Corporation. If an employee transfers to a Brunswick entity that is covered by a
different plan, then an interplan transfer occurs to move that employee’s assets
into another Brunswick plan. On a consolidated Brunswick sponsored plan basis,
the interplan transfers net to zero.
6
Brunswick
Retirement Savings Plan
Notes to
Financial Statements (continued)
2.
Significant Accounting Policies
Basis
of Accounting
The
accompanying financial statements of the Plan have been prepared under the
accrual basis of accounting.
Investment
Valuation and Income Recognition
Investments
held by the Plan are stated at fair value. Fair value is defined as the price
that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date (an exit
price). See Note 4 for further discussion of fair value
measurements.
The
Vanguard Retirement Savings Trust invests in fully benefit-responsive investment
contracts. These investment contracts are recorded at fair value (see Note 4);
however, since these contracts are fully benefit-responsive, an adjustment is
reflected in the statements of net assets available for benefits to present
these investments at contract value. Contract value is the relevant measurement
attributable to fully benefit-responsive investment contracts because contract
value is the amount participants would receive if they were to initiate
permitted transactions under the terms of the Plan. The contract value
represents contributions plus earnings, less participant withdrawals and
administrative expenses.
The
Brunswick ESOP Common Stock Fund is a fund composed principally of Brunswick
stock. Dividends received on shares held in the Brunswick ESOP Common Stock Fund
may be reinvested in the Plan or received as cash.
Purchases
and sales of investments are recorded on a trade-date basis. Interest income is
accrued when earned. Dividend income is recorded on the ex-dividend date.
Capital gain distributions are included in dividend income.
Use
of Estimates
The
preparation of financial statements in conformity with U.S. generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
7
Brunswick
Retirement Savings Plan
Notes to
Financial Statements (continued)
2.
Significant Accounting Policies (continued)
Payment
of Benefits
Benefit
payments are recorded when paid.
During
2008 and 2007, the Plan’s investments (including investments purchased, sold, as
well as held during the year) appreciated (depreciated) in fair value as
determined by quoted market prices as follows:
|
Year
Ended December 31
|
||||||||
|
2008
|
2007
|
|||||||
|
Common
stock
|
$ | (16,242,463 | ) | $ | (19,655,571 | ) | ||
|
Mutual
funds
|
(78,898,276 | ) | 8,221,662 | |||||
| $ | (95,140,739 | ) | $ | (11,433,909 | ) | |||
The fair
value of individual investments that represent 5% or more of the net assets
available for benefits at fair value is as follows:
|
December
31
|
||||||||
|
2008
|
2007
|
|||||||
|
Brunswick
ESOP Common Stock Fund
|
$ | * | $ | 22,637,106 | ||||
|
Vanguard
500 Index Fund
|
38,698,344 | 68,466,187 | ||||||
|
Vanguard
Morgan Growth Fund
|
22,029,272 | 41,918,461 | ||||||
|
Vanguard
Prime Money Market Fund
|
17,534,632 | * | ||||||
|
Vanguard
Retirement Savings Trust
|
16,936,777 | 19,704,135 | ||||||
|
Vanguard
Short-Term Bond Index Fund
|
17,146,393 | 19,627,396 | ||||||
|
Vanguard
Total Bond Market Index Fund
|
16,529,937 | * | ||||||
|
Vanguard
Total International Stock Index Fund
|
* | 24,701,823 | ||||||
|
Vanguard
Wellington Fund Investor Shares
|
38,087,534 | 55,386,239 | ||||||
|
Vanguard
Windsor II Fund Investor Shares
|
* | 18,824,846 | ||||||
*Did not
meet 5% threshold.
8
Brunswick
Retirement Savings Plan
Notes to
Financial Statements (continued)
4.
Fair Value Measurements
Effective
January 1, 2008, the Plan adopted Statement of Financial Accounting Standards
(SFAS) No. 157, Fair Value
Measurements. SFAS No. 157 defines fair value as the exchange price that
would be received for an asset or paid to transfer a liability (an exit price)
in the principal or most advantageous market for the asset or liability in an
orderly transaction between market participants on the measurement date.
Valuation techniques used to measure fair value under SFAS No. 157 must maximize
the use of observable inputs and minimize the use of unobservable inputs. The
standard established a fair value hierarchy based on three levels of inputs, of
which the first two are considered observable and the last
unobservable.
|
|
·
|
Level
1 – Quoted prices in active markets for identical assets or liabilities.
These are typically obtained from real-time quotes for transactions in
active exchange markets involving identical
assets.
|
|
|
·
|
Level
2 – Inputs, other than quoted prices included within Level 1, which are
observable for the asset or liability, either directly or indirectly.
These are typically obtained from readily available pricing sources for
comparable instruments.
|
|
|
·
|
Level
3 – Unobservable inputs, where there is little or no market activity for
the asset or liability. These inputs reflect the reporting entity’s own
assumptions of the data that market participants would use in pricing the
asset or liability based on the best information available in the
circumstances.
|
Following
is a description of the valuation methodologies used for assets measured at fair
value.
Common stock: Valued at
quoted market price of securities held by the Plan at year-end.
Mutual funds: Valued at
quoted market prices, which represent the net asset value (NAV) of shares held
by the Plan at year-end.
Participant loans: Valued at
amortized cost, which approximates fair value.
Common collective trust fund:
Valued at the NAV provided by the administrator of the fund. The NAV is based on
the value of the underlying assets owned by the fund, minus its liabilities,
divided by the number of units outstanding.
9
Brunswick
Retirement Savings Plan
Notes to
Financial Statements (continued)
4.
Fair Value Measurements (continued)
The
following tables set forth, by level within the fair value hierarchy, the Plan
investment assets at fair value. As required by SFAS No. 157, assets are
classified in their entirety based on the lowest level of input that is
significant to the fair value measurement.
|
Level
1
|
Level
2
|
Level
3
|
Total
|
|||||||||||||
|
Assets
|
||||||||||||||||
|
Common
stock
|
$ | 8,903,028 | $ | – | $ | – | $ | 8,903,028 | ||||||||
|
Mutual
funds
|
199,611,057 | – | – | 199,611,057 | ||||||||||||
|
Participant
loans
|
– | – | 4,825,633 | 4,825,633 | ||||||||||||
|
Common
collective trust fund
|
– | 16,936,777 | – | 16,936,777 | ||||||||||||
|
Total
assets
|
$ | 208,514,085 | $ | 16,936,777 | $ | 4,825,633 | $ | 230,276,495 | ||||||||
The table
below sets forth a summary of changes in the fair value of the Plan’s Level 3
investment assets for the year ended December 31, 2008:
|
Participant
Loans
|
||||
|
Balance
at January 1, 2008
|
$ | 5,643,554 | ||
|
Purchases,
sales, issuances, and settlements, net
|
(817,921 | ) | ||
|
Balance
at December 31, 2008
|
$ | 4,825,633 | ||
The Plan
has received a determination letter from the Internal Revenue Service dated
June 17, 2002, stating that the Plan is qualified under Section 401(a) of
the Internal Revenue Code (the Code) and, therefore, the related trust is exempt
from taxation. Subsequent to the issuance of the determination letter, the Plan
was amended and restated. Once qualified, the Plan is required to operate in
conformity with the Code to maintain its qualification. The plan administrator
believes the Plan is being operated in compliance with the applicable
requirements of the Code and, therefore, believes that the Plan, as amended, is
qualified and the related trust is tax-exempt.
10
Brunswick
Retirement Savings Plan
Notes to
Financial Statements (continued)
6.
Risks and Uncertainties
The Plan
invests in various investment securities. Investment securities are exposed to
various risks such as interest rate, market, and credit risks. Due to the level
of risk associated with certain investment securities, it is at least reasonably
possible that changes in the value of certain investment securities will occur
in the near term and that such changes could materially affect participants’
account balances and the amounts reported in the statements of net assets
available for benefits.
7.
Reconciliation to Form 5500
The
following is a reconciliation of net assets available for benefits per the
financial statements to the Form 5500:
|
December
31
2008
|
December
31
2007
|
|||||||
|
Net
assets available for benefits per the financial statements
|
$ | 230,502,528 | $ | 344,099,158 | ||||
|
Adjustment
from contract value to fair value for fully benefit-responsive investment
contracts
|
(221,419 | ) | 149,091 | |||||
|
Net
assets available for benefits per Form 5500
|
$ | 230,281,109 | $ | 344,248,249 | ||||
The
following is a reconciliation of the net decrease in net assets available for
benefits per the financial statements to the Form 5500:
|
December
31
2008
|
||||
|
Net
decrease in net assets available for benefits per the financial
statements
|
$ | 113,596,630 | ||
|
Adjustment
from contract value to fair value at beginning of year
|
149,091 | |||
|
Adjustment
from contract value to fair value at end of year
|
221,419 | |||
|
Net
decrease in net assets available for benefits per the Form
5500
|
$ | 113,967,140 | ||
11
12
Brunswick
Retirement Savings Plan
Schedule
H, Line 4i – Schedule of Assets (Held at End of Year)
EIN
#36-0848180 Plan #154
December 31, 2008
|
Current
|
||||
|
Identity
of Issuer
|
Value
|
|||
|
Brunswick
ESOP Common Stock Fund*
|
$ | 8,903,028 | ||
|
Royce
Premier Fund*
|
11,412,016 | |||
|
Vanguard
500 Index Fund*
|
38,698,344 | |||
|
Vanguard
Morgan Growth Fund*
|
22,029,272 | |||
|
Vanguard
Prime Money Market Fund*
|
17,534,632 | |||
|
Vanguard
Retirement Savings Trust*
|
16,936,777 | |||
|
Vanguard
Short-Term Bond Index Fund*
|
17,146,393 | |||
|
Vanguard
Short-Term Corporate Fund*
|
8,563,761 | |||
|
Vanguard
Target Retirement 2005*
|
1,376,564 | |||
|
Vanguard
Target Retirement 2015*
|
4,039,945 | |||
|
Vanguard
Target Retirement 2025*
|
1,979,066 | |||
|
Vanguard
Target Retirement 2035*
|
349,377 | |||
|
Vanguard
Target Retirement 2045*
|
376,800 | |||
|
Vanguard
Target Retirement Inc*
|
263,126 | |||
|
Vanguard
Total Bond Market Index Fund*
|
16,529,937 | |||
|
Vanguard
Total International Stock Index Fund*
|
11,329,003 | |||
|
Vanguard
Wellington Fund Investor Shares*
|
38,087,534 | |||
|
Vanguard
Windsor II Fund Investor Shares*
|
9,895,287 | |||
|
Participant
loans:*
|
||||
|
Varying
maturities with interest rates ranging
from 4% to 8.5%
|
4,825,633 | |||
| $ | 230,276,495 | |||
|
*Party-in-interest
investments.
|
||||
13
Financial
Statements and Supplemental Schedules
Brunswick
Rewards Plan
Years
Ended December 31, 2008 and 2007
With
Report of Independent Registered Public Accounting
Firm
Brunswick
Rewards Plan
Financial
Statements and Supplemental Schedule
Years
Ended December 31, 2008 and 2007
Contents
|
Report
of Independent Registered Public Accounting
Firm..........................................................................1
|
|
Audited
Financial Statements
|
|
Statements
of Net Assets Available for
Benefits.............................................................................................2
|
|
Statements
of Changes in Net Assets Available for
Benefits........................................................................3
|
|
Notes
to Financial
Statements.............................................................................................................................4
|
|
Supplemental
Schedule
|
|
Schedule
H, Line 4i – Schedule of Assets (Held at End of
Year)...................................................................15
|
Report of
Independent Registered Public Accounting Firm
The
Benefits Administration Committee
Brunswick
Corporation
We have
audited the accompanying statements of net assets available for benefits of the
Brunswick Rewards Plan (the Plan) as of December 31, 2008 and 2007, and the
related statements of changes in net assets available for benefits for the years
then ended. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. We were not engaged to perform an
audit of the Plan's internal control over financial reporting. Our audits
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the Plan's
internal control over financial reporting. Accordingly, we express no such
opinion. An audit also includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the net assets available for benefits of the Plan at December
31, 2008 and 2007, and the changes in its net assets available for benefits for
the years then ended, in conformity with US generally accepted accounting
principles.
Our
audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedule of assets
(held at end of year) as of December 31, 2008, is presented for purposes of
additional analysis and is not a required part of the financial statements but
is supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. This supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the auditing
procedures applied in our audits of the financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
/s/ ERNST & YOUNG,
LLP
Chicago,
Illinois
June 25,
2009
1
Brunswick
Rewards Plan
Statements
of Net Assets Available for Benefits
|
December
31
|
||||||||
|
2008
|
2007
|
|||||||
|
Assets
|
||||||||
|
Investments
at fair value
|
$ | 476,416,061 | $ | 662,241,818 | ||||
|
Employer
contributions receivable
|
941,385 | 28,237,950 | ||||||
|
Net
assets available for benefits, at fair value
|
477,357,446 | 690,479,768 | ||||||
|
Adjustment
from fair value to contract value for fully
|
||||||||
|
benefit-responsive
investment contracts
|
474,449 | (299,651 | ) | |||||
|
Net
assets available for benefits
|
$ | 477,831,895 | $ | 690,180,117 | ||||
|
The
Notes to Financial Statements are an integral part of these
statements.
|
||||||||
2
Brunswick
Rewards Plan
Statements
of Changes in Net Assets Available for Benefits
|
Year
Ended December 31
|
||||||||
|
2008
|
2007
|
|||||||
|
Additions
|
||||||||
|
Investment
income:
|
||||||||
|
Interest
and dividends
|
$ | 12,405,700 | $ | 28,218,864 | ||||
|
Contributions:
|
||||||||
|
Participants
|
29,073,523 | 23,978,985 | ||||||
|
Rollovers
|
1,059,223 | 2,488,554 | ||||||
|
Employer
|
16,096,669 | 45,363,336 | ||||||
|
Total
additions
|
58,635,115 | 100,049,739 | ||||||
|
Deductions
|
||||||||
|
Distributions
and withdrawals to participants
|
84,952,658 | 61,345,056 | ||||||
|
Administrative
expenses
|
258,994 | 125,648 | ||||||
|
Total
deductions
|
85,211,652 | 61,470,704 | ||||||
|
Net
depreciation in fair value of investments
|
(186,089,209 | ) | (5,141,796 | ) | ||||
|
Transfer
from Brunswick Rewards Plan with
|
||||||||
|
Variable
Profit Sharing
|
– | 84,894,746 | ||||||
|
Transfers
into the Plan
|
283,661 | 75,028 | ||||||
|
Other
interplan transfers, net
|
33,863 | 6,727,644 | ||||||
|
Net
(decrease) increase in net assets available for benefits
|
(212,348,222 | ) | 125,134,657 | |||||
|
Net
assets available for benefits:
|
||||||||
|
Beginning
of year
|
690,180,117 | 565,045,460 | ||||||
|
End
of year
|
$ | 477,831,895 | $ | 690,180,117 | ||||
|
The
Notes to Financial Statements are an integral part of these
statements.
|
||||||||
3
Brunswick
Rewards Plan
Notes to
Financial Statements
December
31, 2008
1.
Description of the Plan
The
following description of the Brunswick Rewards Plan (the Plan) provides only
general information. Participants should refer to the plan agreement for a more
complete description of the Plan’s provisions. Certain amounts
previously reported in the 2007 financial statements have been reclassified to
conform with the 2008 presentation.
Effective
December 28, 2007, the Brunswick Rewards Plan with Variable Profit Sharing was
merged into the Plan and approximately $84.9 million of assets were transferred
into the Plan.
General
The Plan,
established by Brunswick Corporation (the Company) effective April 1, 1999, is a
defined-contribution plan subject to the requirements of the Employee Retirement
Income Security Act of 1974 (ERISA). Any related company, as defined in the
Plan, may, with the Company’s consent, adopt the Plan. The Plan is administered
by the Benefits Administration Committee consisting of at least three members
appointed for indefinite terms by the Company’s Board of Directors. The Vanguard
Group, Inc. (the Trustee) is the Trustee of the Plan under a trust agreement
with the Company.
Participation
Eligible
employees include all groups as identified by the Benefits Administration
Committee.
Employees
working at least 24 hours per week are eligible to participate in both
components of the Plan on the first day of the month following or coinciding
with 60 days of employment. Employees working less than 24 hours per week are
eligible to participate on the first day of the month following or coinciding
with 12 months of employment. Employees are eligible to participate in the Plan
provided they are employed as members of a group of employees of an employer to
which the Plan has been extended and are at least 18 years old.
Effective
January 1, 2006, new employees are automatically enrolled in the Plan at a
deferral rate of 3% of eligible compensation. Employees have a window of 60 days
from the date their demographic data is received at the Trustee in which to opt
out of the Plan before automatic enrollment. Employees can increase, decrease,
or cancel their deferrals at any time.
4
Brunswick
Rewards Plan
Notes to
Financial Statements (continued)
1.
Description of the Plan (continued)
Participant
Accounts
Each
participant’s account is credited with the participant’s contributions and
allocations of: (a) the Company’s contributions, and (b) the Plan’s
earnings (losses). Allocations are based on participant earnings or account
balances as defined in the Plan. The benefit to which a participant is entitled
is the benefit that can be provided from the participant’s account
balances.
Administrative
Expenses
Investment
management fees, agent fees, and brokerage commissions are paid by the Plan’s
participants. The Plan charges an administrative fee of $700 to accounts
requiring a qualified domestic relations order split. The Plan also
charges an administrative fee of $30 to initiate a loan and an annual loan
maintenance fee of $25 for the life of the loan.
Contributions
The Plan
has two basic components: the savings portion (including the employee deferral
and Company-matching contributions), in which participation is voluntary, and
the profit-sharing portion, in which participation is automatic. Newly eligible
employees are automatically enrolled in the Plan at a deferral rate of 3% of
eligible compensation. Employees have a window of 60 days from the date their
demographic data is received at the Trustee in which to opt out of the Plan
before automatic enrollment. Employees can increase, decrease, or cancel their
deferrals at any time.
Participants
may make pretax contributions from 1% to 40% of compensation as defined in the
Plan. Contributions are made via payroll deductions and are remitted to the
Trustee on the earliest date on which funds can be segregated from the Company’s
funds. Participant pretax contributions were limited to $15,500 in 2008 and
2007.
Subject
to certain limitations, the Company makes a basic biweekly matching contribution
equal to 100% of the first 3% of participant contributions plus 50% of the next
2% of contributions.
Effective
January 1, 2008, the Company makes an annual variable profit-sharing
contribution of up to 9% of eligible compensation to the accounts of
participants employed by the Company. Profit-sharing contributions are invested
in accordance with the participant’s investment elections.
5
Brunswick
Rewards Plan
Notes to
Financial Statements (continued)
1.
Description of the Plan (continued)
A
participant must be employed with the Company on the last business day of the
plan year in order to be eligible for variable profit sharing or have met
certain other requirements at the discretion of the Company. Variable
profit-sharing contributions may not exceed 9% of compensation for the plan
year. Variable profit sharing for the year ended December 31, 2007, was
$14,943,171. No profit sharing was paid for the year ended December
31, 2008.
The Plan
provides a true-up feature, which allows the Company to make up for any missed
match that may have occurred. The true-up is performed during the first quarter
of the following plan year. It takes into account the maximum matching
contribution that could have been received and makes up for any difference in
comparison to the matching contributions that were actually made.
For the
years ended December 31, 2008 and 2007, $0.9 million and $5.1 million,
respectively, relating to the true-ups of certain participant accounts were
contributed to the plan. The current year true-up
balance is reflected as a component of employer contributions
receivable in the accompanying statements of net assets available for
benefits.
Participants
may direct their own contributions and related company contributions into any of
the Plan’s fund options. Participants may change their elections and transfer
balances between funds at any time.
Vesting
Participants
are fully vested in the balance of all of their accounts at all
times.
Forfeitures
Forfeitures
are used to reduce eligible Plan expenses. Effective December 31, 2008, the Plan
was amended to allow the use of forfeited amounts to reduce future Company
contributions. Unallocated forfeiture balances as of December 31, 2008 and
2007, were approximately $922,240 and $784,452, respectively, and forfeitures
used to reduce eligible Plan expenses for 2008 and 2007 were $16,246 and
$244,240, respectively.
Participant
Loans
Active
participants may borrow from their interest in the funds held by the Trustee.
The minimum loan amount is $1,000. A participant is not permitted to have more
than one loan outstanding at any one time. Any participants with two loans
outstanding prior to January 1, 2006, will have both loans grandfathered. After
the grandfathered loans are paid off, only one loan is allowed at a time. These
loans bear interest, are secured by the participants’ accounts, and are
payable over a period not to exceed five years unless the loan is for the
purchase of a home, in which case, the loan term may be up to 10 years. The
interest rate on loans is fixed at the prime rate reported by Reuters at the
initiation of the loan.
6
Brunswick
Rewards Plan
Notes to
Financial Statements (continued)
1.
Description of the Plan (continued)
Benefits
Upon
termination of employment, participants may elect account balances to be rolled
into another qualified retirement vehicle or receive a lump-sum distribution.
Terminated participants with balances exceeding $1,000 may elect to remain in
the Plan and defer payment until age 65. Account balances less than $1,000 are
distributed as soon as administratively possible following termination of
employment.
Plan
Termination
Although
it has not expressed any intent to do so, the Company has the right under the
Plan to discontinue its contributions at any time and to terminate the Plan
subject to the provisions of ERISA.
Other
Interplan Transfers
At
various times during the year, employees may transfer positions within Brunswick
Corporation. If an employee transfers to a Brunswick entity that is covered by a
different plan, an interplan transfer occurs to move that employee’s assets into
another Brunswick plan. On a consolidated Brunswick-sponsored plan basis, the
other interplan transfers net to zero.
2.
Significant Accounting Policies
Basis
of Accounting
The
accompanying financial statements of the Plan have been prepared under the
accrual basis of accounting.
Investment
Valuation and Income Recognition
Investments
held by the Plan are stated at fair value. Fair value is defined as the price
that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date (an exit
price). See Note 4 for further discussion of fair value
measurements.
7
Brunswick
Rewards Plan
Notes to
Financial Statements (continued)
2.
Significant Accounting Policies (continued)
The
Vanguard Retirement Savings Trust invests in fully benefit-responsive investment
contracts. These investment contracts are recorded at fair value (see Note 4);
however, since these contracts are fully benefit-responsive, an adjustment is
reflected in the statements of net assets available for benefits to present
these investments at contract value. Contract value is the relevant measurement
attributable to fully benefit-responsive investment contracts because contract
value is the amount participants would receive if they were to initiate
permitted transactions under the terms of the Plan. The contract value
represents contributions plus earnings, less participant withdrawals and
administrative expenses.
The
Brunswick ESOP Common Stock Fund is a fund composed principally of Brunswick
stock. Dividends received on shares held in the Brunswick ESOP Common Stock Fund
may be reinvested in the Plan or received as cash.
Purchases
and sales of investments are recorded on a trade-date basis. Interest income is
accrued when earned. Dividend income is recorded on the ex-dividend date.
Capital gain distributions are included in dividend income.
Use
of Estimates
The
preparation of financial statements in conformity with U.S. generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
Payment
of Benefits
Benefit
payments are recorded when paid.
8
Brunswick
Rewards Plan
Notes to
Financial Statements (continued)
3.
Investments
During
2008 and 2007, the Plan’s investments (including investments purchased, sold, as
well as held during the year) appreciated (depreciated) in fair value as
determined by quoted market prices as follows:
|
Year
Ended December 31
|
||||||||
|
2008
|
2007
|
|||||||
|
Common
stock
|
$ | (17,539,997 | ) | $ | (19,523,824 | ) | ||
|
Mutual
funds
|
(168,549,212 | ) | 14,382,028 | |||||
| $ | (186,089,209 | ) | $ | (5,141,796 | ) | |||
The fair
value of individual investments that represent 5% or more of the net assets
available for benefits at fair value is as follows:
|
December
31
|
||||||||
|
2008
|
2007
|
|||||||
|
Royce Premier Fund
|
$ | 32,286,853 | $ | 47,341,791 | ||||
|
Vanguard
500 Index Fund
|
57,910,528 | 99,953,622 | ||||||
|
Vanguard
Morgan Growth Fund
|
42,448,114 | 78,018,423 | ||||||
|
Vanguard
Prime Money Market Fund
|
27,709,687 | * | ||||||
|
Vanguard
Retirement Savings Trust
|
36,291,541 | 39,602,521 | ||||||
|
Vanguard
Short-Term Bond Index Fund
|
36,740,699 | 39,448,286 | ||||||
|
Vanguard
Total Bond Market Index Fund
|
33,900,853 | * | ||||||
|
Vanguard
Total International Stock Index Fund
|
32,355,755 | 65,666,959 | ||||||
|
Vanguard
Wellington Fund Investor Shares
|
75,712,229 | 111,921,868 | ||||||
|
Vanguard
Windsor II Fund Investor Shares
|
* | 35,820,838 | ||||||
*Did not
meet 5% threshold.
9
Brunswick
Rewards Plan
Notes to
Financial Statements (continued)
4.
Fair Value Measurements
Effective
January 1, 2008, the Plan adopted Statement of Financial Accounting Standards
(SFAS) No. 157, Fair Value
Measurements. SFAS No. 157 defines fair value as the exchange price that
would be received for an asset or paid to transfer a liability (an exit price)
in the principal or most advantageous market for the asset or liability in an
orderly transaction between market participants on the measurement date.
Valuation techniques used to measure fair value under SFAS No. 157 must maximize
the use of observable inputs and minimize the use of unobservable inputs. The
standard established a fair value hierarchy based on three levels of inputs, of
which the first two are considered observable and the last
unobservable.
|
|
·
|
Level
1 – Quoted prices in active markets for identical assets or liabilities.
These are typically obtained from real-time quotes for transactions in
active exchange markets involving identical
assets.
|
|
|
·
|
Level
2 – Inputs, other than quoted prices included within Level 1, which are
observable for the asset or liability, either directly or indirectly.
These are typically obtained from readily available pricing sources for
comparable instruments.
|
|
|
·
|
Level
3 – Unobservable inputs, where there is little or no market activity for
the asset or liability. These inputs reflect the reporting entity’s own
assumptions of the data that market participants would use in pricing the
asset or liability based on the best information available in the
circumstances.
|
Following
is a description of the valuation methodologies used for assets measured at fair
value.
Common stock: Valued at
quoted market price of securities held by the Plan at year-end.
Mutual funds: Valued at
quoted market prices, which represent the net asset value (NAV) of shares held
by the Plan at year-end.
Participant loans: Valued at
amortized cost, which approximates fair value.
Common collective trust fund:
Valued at the NAV provided by the administrator of the fund. The NAV is based on
the value of the underlying assets owned by the fund, minus its liabilities,
divided by the number of units outstanding.
10
Brunswick
Rewards Plan
Notes to
Financial Statements (continued)
4.
Fair Value Measurements (continued)
The
following tables set forth, by level within the fair value hierarchy, the Plan
investment assets at fair value. As required by SFAS No. 157, assets are
classified in their entirety based on the lowest level of input that is
significant to the fair value measurement.
|
Level
1
|
Level
2
|
Level
3
|
Total
|
|||||||||||||
|
Assets
|
||||||||||||||||
|
Common
stock
|
$ | 10,900,422 | $ | – | $ | – | $ | 10,900,422 | ||||||||
|
Mutual
funds
|
414,736,579 | – | – | 414,736,579 | ||||||||||||
|
Participant
loans
|
– | – | 14,487,519 | 14,487,519 | ||||||||||||
|
Common
collective trust fund
|
– | 36,291,541 | – | 36,291,541 | ||||||||||||
|
Total
assets
|
$ | 425,637,001 | $ | 36,291,541 | $ | 14,487,519 | $ | 476,416,061 | ||||||||
The table
below sets forth a summary of changes in the fair value of the Plan’s Level 3
investment assets for the year ended December 31, 2008:
|
Participant
Loans
|
||||
|
Balance
at January 1, 2008
|
$ | 17,759,577 | ||
|
Purchases,
sales, issuances, and settlements, net
|
(3,272,058 | ) | ||
|
Balance
at December 31, 2008
|
$ | 14,487,519 | ||
11
Brunswick
Rewards Plan
Notes to
Financial Statements (continued)
5.
Income Tax Status
The Plan
has received a determination letter from the Internal Revenue Service dated June
27, 2002, stating that the Plan is qualified under Section 401(a) of the
Internal Revenue Code (the Code), and therefore, the related trust is exempt
from taxation. Subsequent to this issuance of the determination letter, the Plan
was amended and restated. Once qualified, the Plan is required to operate in
conformity with the Code to maintain its qualification. The plan sponsor has
indicated that it will take the necessary steps, if any, to bring the Plan’s
operations into compliance with the Code.
6.
Risks and Uncertainties
The Plan
invests in various investment securities. Investment securities are exposed to
various risks such as interest rate, market, and credit risks. Due to the level
of risk associated with certain investment securities, it is at least reasonably
possible that changes in the value of certain investment securities will occur
in the near term and that such changes could materially affect participants’
account balances and the amounts reported in the statements of net assets
available for benefits.
7.
Reconciliation to Form 5500
The
following is a reconciliation of net assets available for benefits per the
financial statements to the Form 5500:
|
December
31
2008
|
December
31
2007
|
|||||||
|
Net
assets available for benefits per the financial statements
|
$ | 477,831,895 | $ | 690,180,117 | ||||
|
Adjustment
from contract value to fair value for fully benefit-responsive investment
contracts
|
(474,449 | ) | 299,651 | |||||
|
Net
assets available for benefits per Form 5500
|
$ | 477,357,446 | $ | 690,479,768 | ||||
12
Brunswick
Rewards Plan
Notes to
Financial Statements (continued)
7.
Reconciliation to Form 5500 (continued)
The
following is a reconciliation of the net decrease in net assets available for
benefits per the financial statements to the Form 5500:
|
December
31
2008
|
||||
|
Net
decrease in net assets available for benefits per the financial
statements
|
$ | 212,348,222 | ||
|
Adjustment
from contract value to fair value at beginning of year
|
299,651 | |||
|
Adjustment
from contract value to fair value at end of year
|
474,449 | |||
|
Net
decrease in net assets available for benefits per the Form
5500
|
$ | 213,122,322 | ||
13
Supplemental
Schedule
14
Brunswick
Rewards Plan
Schedule
H, Line 4i – Schedule of Assets
(Held at
End of Year)
EIN
#36-0848180 Plan
#170
December
31, 2008
|
Current
|
||||
|
Identity
of Issuer
|
Value
|
|||
|
Brunswick
ESOP Common Stock Fund*
|
$ | 10,900,422 | ||
|
Royce
Premier Fund*
|
32,286,853 | |||
|
Vanguard
500 Index Fund*
|
57,910,528 | |||
|
Vanguard
Asset Allocation Fund*
|
2,825 | |||
|
Vanguard
Morgan Growth Fund*
|
42,448,114 | |||
|
Vanguard
Prime Money Market Fund*
|
27,709,687 | |||
|
Vanguard
Retirement Savings Trust*
|
36,291,541 | |||
|
Vanguard
Short-Term Bond Index Fund*
|
36,740,699 | |||
|
Vanguard
Short-Term Corporate Fund*
|
18,350,132 | |||
|
Vanguard
Target Retirement 2005*
|
1,033,223 | |||
|
Vanguard
Target Retirement 2015*
|
6,674,351 | |||
|
Vanguard
Target Retirement 2025*
|
10,714,761 | |||
|
Vanguard
Target Retirement 2035*
|
9,458,234 | |||
|
Vanguard
Target Retirement 2045*
|
8,444,958 | |||
|
Vanguard
Target Retirement Inc*
|
1,291,105 | |||
|
Vanguard
Total Bond Market Index Fund*
|
33,900,853 | |||
|
Vanguard
Total International Stock Index Fund*
|
32,355,755 | |||
|
Vanguard
Wellington Fund Investor Shares*
|
75,712,229 | |||
|
Vanguard
Windsor II Fund Investor Shares*
|
19,702,272 | |||
|
Participant
loans:*
|
||||
|
Varying
maturities with interest rates ranging from
4% to 10%
|
14,487,519 | |||
| $ | 476,416,061 | |||
|
*Party-in-interest
investments.
|
||||
15
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the trustee (or
other persons who administer the employee benefit plans) has duly caused this
annual report to be signed on its behalf by the undersigned hereunto duly
authorized.
| Brunswick Retirement Savings Plan | |||
| Brunswick Rewards Plan | |||
| (Name of plans) | |||
| By: BRUNSWICK CORPORATION | |||
| as Aministrator of the Plans | |||
|
Date:
June 25, 2009
|
By:
|
/s/ B. RUSSELL LOCKRIDGE | |
| B. Russell Lockridge | |||
| Benefits Administration Committee | |||
EXHIBIT
INDEX
|
Exhibit No.
|
Description of Exhibit
|
|
23.1
|
Consent
of Independent Registered Public Accounting Firm
|
|
23.2
|
Statement
in Lieu of Consent of Independent Public
Accountants
|