Certain statements in Management's Discussion and Analysis are based on non-GAAP financial measures. Specifically, the discussion of the Company's cash flows includes an analysis of free cash flows. GAAP refers to generally accepted accounting principles in the United States. A "non-GAAP financial measure" is a numerical measure of a registrant's historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the Statement of operations, balance sheet or statement of cash flows of the issuer; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. Operating and statistical measures are not non-GAAP financial measures.

The Company includes non-GAAP financial measures in Management's Discussion and Analysis, as Brunswick's management believes that these measures and the information they provide are useful to investors because they permit investors to view Brunswick's performance using the same tools that management uses and to better evaluate the Company's ongoing business performance.

Certain other statements in Management's Discussion and Analysis are forward-looking as defined in the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations that are subject to risks and uncertainties. Actual results may differ materially from expectations as of the date of this filing because of factors discussed in Item 1A - Risk Factors.

During the first quarter of 2009, the Company realigned the management of its marine service, parts and accessories businesses. The Boat segment's parts and accessories businesses of Attwood, Land 'N' Sea, Benrock, Kellogg Marine and Diversified Marine Products are now being managed as part of the Marine Engine segment's service and parts business. As a result, the marine service, parts and accessories operating results previously reported in the Boat segment are now being reported in the Marine Engine segment. Segment results have been restated for all periods presented to reflect the change in Brunswick's reported segments.

Overview and Outlook

General

Management believes that the Company has adequate sources of liquidity to meet the Company's short-term and long-term needs. Management expects that the Company's interim cash requirements, which have declined due to lower spending, will be met out of existing cash balances and cash flow. The Company's current objective is to end the calendar year with cash in excess of $400 million. Additionally, the Company anticipates ending 2009 with approximately $80 million of available borrowing capacity under its asset-based revolving credit facility, which would give the Company no less than $480 million of total available liquidity entering 2010.

The Company is continuing its efforts to achieve appropriate levels of marine dealer and on-hand inventories by reducing production and wholesale shipments of boats and marine engines by a greater amount than the reduction in retail demand for marine products and expects to continue furloughing employees at several of its engine and boat manufacturing facilities for periods throughout 2009.

Net sales during the second quarter of 2009 decreased 52 percent to $718.3 million from $1,485.4 million in the second quarter of 2008. During the six months ended July 4, 2009, net sales decreased 49 percent to $1,453.0 million from $2,832.2 million during the six months ended June 28, 2008. For the three and six months ended July 4, 2009, the Company reported lower global sales across all of its segments. Reduction in marine industry demand and demand for other consumer discretionary products as a result of a weak global economy, the credit market crisis, soft U.S. housing markets, and decreased consumer confidence have all contributed to the decrease in demand for the Company's products and have lowered the Company's net sales. In addition, the Company has implemented an inventory management and pipeline reduction strategy to produce fewer boat units than it sells wholesale to dealers, and to sell to dealers wholesale at lower levels than dealers are selling to customers at retail. While this strategy is enabling the Company to reduce its overall boat and marine engine inventories and has assisted our dealers in reducing the number of boats and engines in stock to appropriate pipeline inventory levels, it has also resulted in greater declines in wholesale sales compared with declines in retail demand. The overall decline in net sales has led to lower fixed cost absorption, which has contributed to the decrease in Company earnings during the quarter and year to date periods.

Retail unit sales of powerboats in the United States have been declining since 2005, with an increasing year over year rate of decline. This prolonged downturn has negatively affected our dealers' financial results and position, causing some dealers to experience restructuring, closing or filing for bankruptcy. This weak retail demand, and the resulting constraints on dealers, has resulted in lower revenues in the Company's Boat and Marine Engine segments. In addition to weak consumer demand, a constriction of the availability and increased cost of floorplan financing has caused dealers to carry less inventory and has led to a decrease in dealer wholesale orders. Several floorplan lenders have exited the market, or taken steps to reduce their exposure, and other lenders have imposed stricter lending criteria, which translates into higher costs for dealers. Finally, the overall supply of boats available to the retail market has been affected by units that are entering the system through repossessions or liquidations, which has increased the need for discounts and sales incentives to allow the Company to achieve our goal of reducing the number of boats, particularly non-current product, in our dealers' stock. Lower equipment orders from fitness and bowling product customers, along with lower consumer spending on discretionary items such as fitness equipment and billiards tables, has also led to lower Company sales.

Operating losses in the second quarter of 2009 were $145.4 million with negative operating margins of 20.2 percent. These results included $35.5 million of restructuring, exit and impairment charges. In the three months ended June 28, 2008, quarterly operating losses were $17.2 million, with negative operating margins of 1.2 percent, which included restructuring, exit and impairment charges of $83.1 million. Operating losses during the six months ended July 4, 2009, were $272.9 million, which included $75.1 million of restructuring, exit and impairment charges, while operating losses during the six months ended June 28, 2008, were $6.9 million, which included restructuring, exit and impairment charges of $105.3 million. In addition to larger operating losses during the first six months of 2009 compared with the similar 2008 period, operating margins went from negative 0.2 percent during the first six months of 2008 to negative 18.8 percent during the first six months of 2009.

The larger operating losses and negative operating margins during the second quarter of 2009 compared with the second quarter of 2008 were primarily the result of lower sales from marine operations and reduced fixed-cost absorption due to reduced production rates in the Company's marine businesses in an effort to achieve appropriate dealer pipeline inventory levels. Also contributing to the larger operating losses in 2009 were higher pension and bad debt expenses and increased dealer incentive programs as a percentage of sales. These factors were partially offset by successful cost-reduction initiatives, as discussed in Note 2 - Restructuring Activities in the Notes to Consolidated Financial Statements, and lower restructuring, exit and impairment charges.

In March 2008, Brunswick sold its interest in its bowling joint venture in Japan for $40.4 million gross cash proceeds, $37.4 million net of cash paid for taxes and other costs. For the six months ended June 28, 2008, the sale resulted in a $20.9 million pretax gain, $9.9 million after-tax, and was recorded in Investment sale gain in the Consolidated Statements of Operations. As a result of post-closing adjustments made during the second quarter of 2008, an additional $1.2 million pretax gain, $0.8 million after-tax, was recorded as an Investment sale gain in the Consolidated Statements of Operations.

During the second quarter of 2009, the Company recognized a tax benefit of $3.3 million on a loss before income taxes of $167.0 million for an effective tax rate of 2.0 percent. In periods in which there is a pretax operating loss and pretax income in Other comprehensive income, the pretax income in Other comprehensive income is considered a source of income and reduces a corresponding portion of the valuation allowance. The reduction in valuation allowance resulted in an income tax benefit during the period.

During the six months ended July 4, 2009, the Company recognized a tax provision of $31.1 million on losses before income taxes. Typically, the Company would recognize a tax benefit on losses before income taxes; however, due to the uncertainty of the realization of certain state and foreign net deferred tax assets, a $36.6 million valuation allowance was recorded during the first quarter of 2009 to reduce certain state and foreign net deferred tax assets to their anticipated realizable value.

Restructuring Activities

In November 2006, Brunswick announced restructuring initiatives to improve the Company's cost structure, better utilize overall capacity and improve general operating efficiencies. These initiatives reflected the Company's response to a difficult marine market. As the marine market has continued to decline, Brunswick expanded its restructuring activities across all business segments during 2007, 2008 and 2009 in order to improve performance and better position the Company for current market conditions and longer-term growth.

The Company has classified its restructuring initiatives into three classifications: exit activities; restructuring activities; and asset disposition actions. The Company considers employee termination and other costs, lease exit costs, inventory write-downs and facility shutdown costs related to the sale of certain Baja boat business assets, the closure of its bowling pin manufacturing facility, the sale of the Valley-Dynamo business and the divestiture of MotoTron, a designer and supplier of engine control and vehicle networking systems, to be exit activities. All other actions taken are considered to be restructuring activities. Other employee termination costs, costs to retain and relocate employees, consulting costs and costs to consolidate the manufacturing footprint are considered restructuring activities. Also, asset disposition actions primarily relate to sales of assets and definite-lived impairments on fixed assets, tooling, patents and proprietary technology, and dealer networks. See Note 2 - Restructuring Activities in the Notes to Consolidated Financial Statements for further details.

The restructuring, exit and impairment charges taken during 2009 and 2008, for each of the Company's reportable segments is summarized below:

                                  Three Months Ended             Six Months Ended
                               July 4,         June 28,      July 4,        June 28,
        (in millions)           2009             2008          2009           2008

        Marine Engine         $     9.6       $     17.6     $   21.3      $     19.1
        Boat                       17.9             37.6         42.9            51.4
        Fitness                     0.2              1.3          1.2             1.3
        Bowling & Billiards         3.2             19.8          4.0            25.4
        Corporate                   4.6              6.8          5.7             8.1

        Total                 $    35.5       $     83.1     $   75.1      $    105.3

The actions taken under these initiatives are expected to benefit future operations by removing fixed costs in excess of $100 million from Cost of sales and in excess of $300 million from Selling, general and administrative in the Consolidated Statements of Operations by the end of 2009 compared with 2007 spending levels. The majority of these cost reductions are expected to be cash savings once all restructuring initiatives are complete. The Company began to see savings related to these initiatives during 2008 and expects savings to be realized through 2009.

The Company anticipates that it will incur approximately $20 million of additional costs, which are predominately cash items, through the remainder of 2009 related to the 2009 and 2008 restructuring initiatives; however, more significant reductions in demand for the Company's products may necessitate additional restructuring or exit charges in 2009. The Company expects most of the $20 million in charges will be incurred in the Boat and Marine Engine segments.

Other

Operating earnings and margins for 2009 are expected to continue to be adversely affected by the reduction in production and wholesale shipments resulting from weak demand and pipeline inventory reductions, as discussed above. These actions are expected to have an unfavorable effect on margins due to reduced gross margins on lower sales volumes and lower fixed-cost absorption on reduced production. These reductions in sales demand and production volumes, along with incremental pension-related expenses of approximately $75 million pretax, the potential resumption of variable compensation, and increased dealer incentive program costs as a percentage of sales, are expected to lead to lower earnings and margins in 2009 when compared with 2008 earnings and margins before goodwill and trade name impairments.

Partially offsetting the above factors are expected to be $260 million of net cost reductions resulting from the full-year effect of restructuring and cost reduction actions taken in 2008 and further cost reduction activities implemented and planned in 2009. Also partially mitigating the impact of lower sales and production is the effect of lower projected restructuring charges of approximately $80 million in 2009 versus 2008. Further reductions in demand for the Company's products may necessitate additional restructuring, exit or impairment charges in 2009. The Company is currently considering alternatives to consolidate its domestic engine manufacturing footprint with the objective of reducing its variable and fixed manufacturing cost structure, as well as the related selling, general and administrative expenses. The Company also continues to evaluate its boat manufacturing footprint and brand portfolio in light of existing levels of retail demand. The potential cash requirements and impacts associated with these actions have not been considered in the Company's forecasted restructuring, exit and impairment charges. If the Company is unable to achieve the desired outcome from its restructuring activities, it may be required to take impairment charges on its goodwill and indefinite-lived intangible assets as required under Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets," (SFAS 142), or on its definite-lived assets under SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets."

Matters Affecting Comparability

The following events have occurred during the three months and six months ended July 4, 2009, and June 28, 2008, which the Company believes affect the comparability of the results of operations:

Restructuring, exit and impairment charges. Brunswick announced initiatives to improve the Company's cost structure, better utilize overall capacity and improve general operating efficiencies. During the second quarter of 2009, the Company recorded a charge of $35.5 million related to restructuring activities as compared with $83.1 million in the second quarter of 2008. Restructuring charges during the first six months of 2009 were $75.1 million, compared with $105.3 million during the first six months of 2008. See Note 2 - Restructuring Activities in the Notes to Consolidated Financial Statements for further details.

Investment sale gains. In March 2008, Brunswick sold its interest in its bowling joint venture in Japan for $40.4 million gross cash proceeds, $37.4 million net of cash paid for taxes and other costs. For the six months ended June 28, 2008, the sale resulted in a $20.9 million pretax gain, $9.9 million after-tax, and was recorded in Investment sale gain in the Consolidated Statements of Operations. As a result of post-closing adjustments made during the second quarter of 2008, an additional $1.2 million pretax gain, $0.8 million after-tax, was recorded as an Investment sale gain in the Consolidated Statements of Operations.

Tax Items. During the second quarter of 2009, the Company recognized a tax benefit of $3.3 million on a loss before income taxes of $167.0 million for an effective tax rate of 2.0 percent. In periods in which there is a pretax operating loss and pretax income in Other comprehensive income, the pretax income in Other comprehensive income is considered a source of income and reduces a corresponding portion of the valuation allowance. The reduction in the valuation allowance resulted in an income tax benefit during the period.

During the six months ended July 4, 2009, the Company recognized a tax provision of $31.1 million on losses before income taxes. Typically, the Company would recognize a tax benefit on losses before income taxes; however, due to the uncertainty of the realization of certain state and foreign net deferred tax assets, a $36.6 million valuation allowance was recorded during the first quarter of 2009 to reduce certain state and foreign net deferred tax assets to their anticipated realizable value. This special charge was partially offset by the income tax benefit on the movement of a valuation allowance from Other Comprehensive Income during the second quarter described above. During the three months and six months ended June 28, 2008, the Company recognized $2.5 million and $2.0 million of tax benefits, respectively, primarily from an interest refund received from the Internal Revenue Service (IRS). Partially offsetting this benefit during the six months ended June 28, 2008, was a higher tax rate on the sale of the Company's interest in its joint venture in Japan.

Results of Operations

Consolidated

The following table sets forth certain amounts, ratios and relationships
calculated from the Consolidated Statements of Operations for the three months
ended:
                                                                                   2009 vs. 2008
                                                 Three Months Ended             Increase/(Decrease)
                                               July 4,       June 28,
(in millions, except per share data)            2009           2008              $                 %

Net sales                                     $   718.3      $ 1,485.4      $    (767.1 )         (51.6 ) %
Gross margin (A)                              $    74.0      $   303.4      $    (229.4 )         (75.6 ) %
Restructuring, exit and impairment charges    $    35.5      $    83.1      $     (47.6 )         (57.3 ) %
Operating loss                                $  (145.4 )    $   (17.2 )    $    (128.2 )            NM
Net loss                                      $  (163.7 )    $    (6.0 )    $    (157.7 )            NM

Diluted loss per share                        $   (1.85 )    $   (0.07 )    $     (1.78 )            NM

Expressed as a percentage of Net sales:
Gross margin                                       10.3 %         20.4 %                             NM
Selling, general and administrative expense        22.6 %         13.8 %                       880 bpts
Research and development expense                    3.0 %          2.2 %                        80 bpts
Restructuring, exit and impairment charges          4.9 %          5.6 %                      (70) bpts
Operating margin                                  (20.2 )%        (1.2 )%                            NM


__________

bpts = basis points
NM = not meaningful

(A) Gross margin is defined as Net sales less Cost of sales as presented in the Consolidated Statements of Operations.

The decrease in net sales was primarily due to reduced global demand levels across all segments compared with the second quarter of 2008, most notably with respect to lower demand in the recreational marine industry. Uncertainty in the global economy and increased credit constraints that limit the Company's customers' and retail consumers' purchasing power have curtailed both retail and wholesale activity. The reduction in the Marine Engine segment's net sales was less severe than the percentage reduction in the Boat segment's net sales in the second quarter of 2009 due to continued consumer purchases during the boating season from the Marine Engine segment's marine service, parts and accessories businesses. International sales declines in the Marine Engine segment were also less severe when compared with the Company's Boat segment results in the second quarter of 2009. Net sales in the Fitness and Bowling & Billiards segments also declined in the second quarter of 2009 as operators in these industries remained cautious about making capital purchases.

As a result of the prolonged decline in marine retail demand and tighter credit markets, a number of the Company's dealers have filed for bankruptcy or voluntarily ceased operations. Over the past 18 months, the financial losses associated with repurchasing the Company's product from finance companies under contractual repurchase obligations, and reselling the repurchased inventory to stronger dealers, have been approximately $8 million. If additional dealers file for bankruptcy or cease operations as expected, additional losses associated with the repurchase of the Company's products will be incurred. As of July 4, 2009, the Company had accruals totaling $15.7 million to cover losses associated with this activity. In addition to these losses, Brunswick's net sales and earnings may be unfavorably affected as a result of lower market coverage and the associated decline in sales.

The decrease in gross margin percentage in the second quarter of 2009 compared with the same period last year was primarily due to lower fixed-cost absorption and inefficiencies due to reduced production rates as a result of the Company's effort to achieve appropriate levels of marine customer pipeline inventories in light of lower retail demand, as well as higher pension expense and increased dealer incentive programs as a percentage of sales. This decrease was partially offset by successful cost-reduction efforts.

Selling, general and administrative expense declined by $42.9 million to $162.6 million in the second quarter of 2009. The decrease was primarily a result of successful cost reduction initiatives, partially offset by increased pension expense and bad debt costs.

The Company recorded $47.6 million lower restructuring, exit and impairment charges in the second quarter of 2009 when compared with the second quarter of 2008. During the second quarter of 2009, the Company continued to reduce headcount throughout the organization and pursue additional programs to realign the Company's cost structure and marine manufacturing footprint. During the second quarter of 2008, the Company announced the closing of its production facility in Newberry, South Carolina, as a result of the decision to cease production of its Bluewater Marine brands, including Sea Pro, Sea Boss, Palmetto and Laguna, the write-down of certain assets of the Valley-Dynamo coin-operated commercial billiards business and the reduction of its employee workforce across the Company. See Note 2 - Restructuring Activities in the Notes to Consolidated Financial Statements for further details.

The larger operating loss in the second quarter of 2009 compared with the second quarter of 2008 was mainly due to reduced sales volumes and the factors affecting gross margin and operating expenses, but was partially offset by lower restructuring, exit and impairment charges.

Equity earnings (loss) decreased $10.4 million to a loss of $4.1 million in the second quarter of 2009 compared with earnings of $6.3 million in the second quarter of 2008. The decrease in equity earnings was mainly the result of lower earnings from the Company's marine joint ventures.

Interest expense increased $6.9 million in the second quarter of 2009 compared with the same period in 2008, primarily as a result of higher interest rates on outstanding debt in 2009 as the Company refinanced $250 million of floating rate notes during the third quarter of 2008 with notes that have an 11.75% interest rate. Interest income decreased $0.5 million in the second quarter of 2009 compared with the same period in 2008, primarily as a result of a decline in interest rates on investments.

During the second quarter of 2009, the Company recognized a tax benefit of $3.3 million on a loss before income taxes of $167.0 million for an effective tax rate of 2.0 percent. In periods in which there is a pretax operating loss and pretax income in Other comprehensive income, the pretax income in Other comprehensive income is considered a source of income and reduces a corresponding portion of the valuation allowance. The reduction in valuation allowance resulted in an income tax benefit during the period.

During the second quarter of 2008, the Company recognized a tax benefit of $12.8 million on a loss before income taxes of $18.8 million for an effective tax rate of 68.2 percent. The tax benefit was due to $2.5 million of tax benefits primarily related to an interest refund received from the IRS, partially offset by a higher tax rate on the sale of the Company's interest in its joint venture in Japan.

The larger net loss and diluted loss per share in the second quarter of 2009 when compared with the second quarter of 2008 was primarily due to the same factors discussed above in operating loss, increased equity losses from the Company's joint ventures, increased interest expense and a lower income tax benefit.

The following table sets forth certain amounts, ratios and relationships calculated from the Consolidated Statements of Operations for the six months ended:

                                                                                    2009 vs. 2008
                                                  Six Months Ended               Increase/(Decrease)
                                               July 4,       June 28,
(in millions, except per share data)            2009           2008               $                 %

Net sales                                     $ 1,453.0      $ 2,832.2      $   (1,379.2 )          (48.7 )%
Gross margin (A)                              $   165.2      $   573.0      $     (407.8 )          (71.2 )%
Restructuring, exit and impairment charges    $    75.1      $   105.3      $      (30.2 )          (28.7 )%
Operating loss                                $  (272.9 )    $    (6.9 )    $     (266.0 )             NM
Net earnings (loss)                           $  (347.9 )    $     7.3      $     (355.2 )             NM

Diluted earnings (loss) per share             $   (3.94 )    $    0.08      $      (4.02 )             NM

Expressed as a percentage of Net sales:
Gross margin                                       11.4 %         20.2 %                       (880) bpts
Selling, general and administrative expense        21.9 %         14.4 %                         750 bpts
Research and development expense                    3.1 %          2.3 %                          80 bpts
Restructuring, exit and impairment charges          5.2 %          3.7 %                         150 bpts
Operating margin                                  (18.8 )%        (0.2 )%                              NM


__________

bpts = basis points
NM = not meaningful

(A) Gross margin is defined as Net sales less Cost of sales as presented in the Consolidated Statements of Operations.

. . .