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 identified 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 expects to end calendar year 2009 with solid levels of liquidity with the possibility of modestly higher levels of net debt (defined as total debt, less Cash and cash equivalents) than at the end of the third quarter.

Net sales during the third quarter of 2009 decreased 36 percent to $665.8 million from $1,038.8 million in the third quarter of 2008. During the nine months ended October 3, 2009, net sales decreased 45 percent to $2,118.8 million from $3,871.0 million during the nine months ended September 27, 2008. For the three months and nine months ended October 3, 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, causing some dealers to restructure their operations, close or file for bankruptcy. This weak retail demand, and the resulting constraints on dealers, have 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 translate 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 its goal of reducing the number of boats, particularly non-current product, in dealers' stock. Lower equipment orders from fitness and bowling product customers due to weak economic conditions and customers' reduced access to capital, along with lower consumer spending on discretionary items such as fitness equipment and billiards tables, have also led to lower Company sales.

Operating losses in the third quarter of 2009 were $109.4 million with negative operating margins of 16.4 percent. These results included $28.8 million of restructuring, exit and impairment charges. In the three months ended September 27, 2008, operating losses were $566.3 million, with negative operating margins of 54.5 percent, which included goodwill impairment charges of $374.0 million; trade name impairment charges of $121.1 million; and restructuring, exit and impairment charges of $39.1 million. Operating losses during the nine months ended October 3, 2009 were $382.3 million, which included $103.9 million of restructuring, exit and impairment charges, while operating losses during the nine months ended September 27, 2008 were $573.2 million, which included goodwill impairment charges of $377.2 million; trade name impairment charges of $133.9 million; and restructuring, exit and impairment charges of $128.4 million.

The smaller operating losses and negative operating margins during the third quarter of 2009 compared with the third quarter of 2008 were primarily the result of the absence of goodwill and trade name impairments, as well as 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. The reductions were partially offset by lower sales across all segments, 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, higher pension expense and increased dealer incentive programs as a percentage of sales.

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 nine months ended September 27, 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.

In September 2008, Brunswick sold its investment in a foundry located in Mexico for $5.1 million gross cash proceeds. The sale resulted in a $2.1 million pretax gain and was recorded as Investment sale gains in the Consolidated Statements of Operations.

During the third quarter of 2009, the Company recognized a tax benefit of $21.6 million on a loss before income taxes of $135.9 million for an effective tax rate of 15.9 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 a $9.4 million income tax benefit during the three months ended October 3, 2009. In addition, the Company filed its 2008 federal income tax return in the third quarter of 2009, which generated a $10.3 million income tax benefit for the quarter.

The Company recognized an income tax provision of $9.5 million for the nine months ended October 3, 2009 on losses before taxes of $452.7 million. The provision is primarily due to uncertainty concerning the realization of certain state and foreign net deferred tax assets, as prescribed by ASC 740, "Income Taxes." A valuation allowance of $36.6 million was recorded during the first quarter of 2009 to reduce certain state and foreign net deferred tax assets to their anticipated realizable value. The remaining realizable value was determined by evaluating the potential to recover the value of these assets through the utilization of loss carrybacks. Partially offsetting this were the items impacting the third quarter of 2009, noted above, that resulted in a tax benefit for the nine month period ending October 3, 2009. The effective tax rate, which is calculated as the income tax provision as a percent of pretax losses, for the nine months ended October 3, 2009, was (2.0) percent.

The Company recognized an income tax provision for both the three months and nine months ended September 27, 2008, despite losses before taxes for each of the periods. The provision is primarily due to uncertainty concerning the realization of certain net deferred tax assets, as prescribed by ASC 740. A valuation allowance of $292.7 million was recorded during the third quarter of 2008 to reduce certain net deferred tax assets to their anticipated realizable value. The remaining realizable value was determined by evaluating the potential to recover the value of these assets through the utilization of loss carrybacks and certain tax planning strategies. The effective tax rate from continuing operations, which is calculated as the income tax provision as a percent of pretax losses, for the three months and nine months ended September 27, 2008 was
(26.7) percent and (26.9) percent, respectively.

Brunswick has experienced continued losses through recent periods. While the Company has a plan to restore itself to profitability, as discussed in Note 2 - Restructuring Activities in the Notes to Consolidated Financial Statements, it has no assurance that the plan will be achieved or that the Company will return to profitability in the foreseeable future. As a result, the Company may be required to take an impairment charge in the fourth quarter of 2009 as part of its annual impairment testing for goodwill to the extent that the carrying value of the reporting unit's goodwill may not be recoverable. As of October 3, 2009, the carrying value of goodwill at the Company's Fitness and Marine Engine segments was $272.4 million and $20.2 million, respectively. While the Company does not believe it will incur an impairment loss on its Marine Engine segment in the fourth quarter of 2009, a reasonable possibility exists that an impairment loss might be required for the Fitness segment. The Fitness segment's fair value exceeded its carrying value by approximately 10% during the testing performed in 2008. The outcome of the testing performed in the fourth quarter of 2009 will be largely dependent on the segment's forecasted future cash flows and the selection of an appropriate discount rate to apply to those future cash flows. The Fitness segment's fourth quarter has historically represented approximately 50% of the segment's operating earnings for the entire year, and as a result, the operating earnings for the fourth quarter of 2009 will have a significant impact on the Company's forecasted future cash flows used in the 2009 annual goodwill impairment test.

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 and Integrated Dealer Systems businesses 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 are summarized below:

                                 Three Months Ended             Nine Months Ended
                              Oct. 3,        Sept. 27,       Oct. 3,        Sept. 27,
       (in millions)           2009             2008           2009           2008

       Marine Engine         $    18.8       $     14.1     $     40.1     $      33.2
       Boat                        6.6             14.6           49.5            59.3
       Fitness                     0.4              0.8            1.6             2.1
       Bowling & Billiards         0.8              1.8            4.8            17.9
       Corporate                   2.2              7.8            7.9            15.9

       Total                 $    28.8       $     39.1     $    103.9     $     128.4

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 $320 million from Selling, general and administrative and Research and development 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 further savings to be realized in 2009 and beyond.

The Company anticipates that it will incur approximately $15 to $20 million of additional costs, which are predominantly cash items, through the remainder of 2009 as 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 $15 to $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, 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. Additionally, in the fourth quarter of 2008, the Company recorded an expense reduction of $81 million, representing the reversal of variable compensation and benefit accruals that had been recorded in each of the Company's operating segments during the first three quarters of 2008. As the Company is not presently anticipating the benefit to be repeated in the fourth quarter of 2009, the absence of the reversal of the variable compensation combined with the current year benefit accrual will negatively impact 2009 earnings when compared to 2008 earnings.

The Company expects $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 to partially offset the factors described above. Also partially mitigating the impact of lower sales and production is the effect of lower projected restructuring charges of approximately $60 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 continues to evaluate its boat manufacturing footprint and brand portfolio in light of existing levels of retail demand. The potential cash requirements and earnings impacts associated with these actions have not been considered in the Company's forecasted restructuring, exit and impairment charges.

Matters Affecting Comparability

The following events have occurred during the three months and nine months ended October 3, 2009 and September 27, 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 third quarter of 2009, the Company recorded a charge of $28.8 million related to restructuring activities as compared with $39.1 million in the third quarter of 2008. Restructuring charges during the first nine months of 2009 were $103.9 million, compared with $128.4 million during the first nine months of 2008. See Note 2 - Restructuring Activities in the Notes to Consolidated Financial Statements for further details.

Goodwill impairment charges. As a result of the continued reduction in demand for certain Brunswick products, along with lower than projected profits across certain Brunswick brands, management revised its future cash flow expectations in the third quarter of 2008. The revised future cash flow expectations resulted in the Company lowering its estimate of fair value of certain businesses and required the Company to record a $374.0 million pretax goodwill impairment charge during the third quarter of 2008, as prescribed by ASC 350, as compared with no goodwill impairment charge during the third quarter of 2009.

During the nine months ended September 27, 2008, the Company incurred $377.2 million of goodwill impairment charges, which include the aforementioned $374.0 million, along with impairments related to the analyses of its Baja boat business and its Valley-Dynamo coin-operated commercial billiards business in the second quarter of 2008. There were no comparable charges recognized during the nine months ended October 3, 2009.

Trade name impairment charges. In conjunction with the goodwill impairment testing, the Company analyzed the valuation of its trade names in accordance with ASC 350. The analysis resulted in a pretax trade name impairment charge of $121.1 million during the third quarter of 2008, representing the excess of the carrying cost of the trade names over the calculated fair value. There were no comparable charges recognized during the third quarter of 2009.

During the nine months ended September 27, 2008, the Company has recorded $133.9 million of trade name impairment charges, which include the aforementioned $121.1 million and additional impairments related to its Bluewater Marine boat business and its Valley-Dynamo coin-operated commercial billiards business recorded in the second quarter of 2008, as compared with no trade name impairments during the nine months ended October 3, 2009.

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 nine months ended September 27, 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.

In September 2008, Brunswick sold its investment in a foundry located in Mexico for $5.1 million gross cash proceeds. The sale resulted in a $2.1 million pretax gain and was recorded as Investment sale gains in the Consolidated Statements of Operations.

There were no comparable gains recognized during the three and nine month periods ended October 3, 2009.

Tax Items. During the third quarter of 2009, the Company recognized a tax benefit of $21.6 million on a loss before income taxes of $135.9 million for an effective tax rate of 15.9 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 a $9.4 million income tax benefit during the three months ended October 3, 2009. In addition, the Company filed its 2008 federal income tax return in the third quarter of 2009, which generated a $10.3 million income tax benefit for the quarter.

The Company recognized an income tax provision of $9.5 million for the nine months ended October 3, 2009 on losses before taxes of $452.7 million. The provision is primarily due to uncertainty concerning the realization of certain state and foreign net deferred tax assets, as prescribed by ASC 740, "Income Taxes." A valuation allowance of $36.6 million was recorded during the first quarter of 2009 to reduce certain state and foreign net deferred tax assets to their anticipated realizable value. The remaining realizable value was determined by evaluating the potential to recover the value of these assets through the utilization of loss carrybacks. Partially offsetting this were the items impacting the third quarter of 2009, noted above, that resulted in a tax benefit for the nine month period ending October 3, 2009. The effective tax rate, which is calculated as the income tax provision as a percent of pretax losses, for the nine months ended October 3, 2009, was (2.0) percent.

The Company recognized an income tax provision for both the three months and nine months ended September 27, 2008, despite losses before taxes for each of the periods. The provision is primarily due to uncertainty concerning the realization of certain net deferred tax assets, as prescribed by ASC 740. A valuation allowance of $292.7 million was recorded during the third quarter of 2008 to reduce certain net deferred tax assets to their anticipated realizable value. The remaining realizable value was determined by evaluating the potential to recover the value of these assets through the utilization of loss carrybacks and certain tax planning strategies. The effective tax rate from continuing operations, which is calculated as the income tax provision as a percent of pretax losses, for the three months and nine months ended September 27, 2008 was
(26.7) percent and (26.9) percent, respectively.

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)

(in millions, except per        October 3,        September 27,
share data)                        2009               2008                  $                 %

Net sales                      $      665.8      $       1,038.8      $     (373.0 )          (35.9 ) %
Gross margin (A)               $       75.6      $         176.5      $     (100.9 )          (57.2 ) %
Goodwill impairment charges    $          -      $         374.0      $     (374.0 )             NM
Trade name impairment
charges                        $          -      $         121.1      $     (121.1 )             NM
Restructuring, exit and
impairment charges             $       28.8      $          39.1      $      (10.3 )          (26.3 ) %
Operating loss                 $     (109.4 )    $        (566.3 )    $      456.9               NM
Net loss                       $     (114.3 )    $        (729.1 )    $      614.8               NM

Diluted loss per share         $      (1.29 )    $         (8.26 )    $       6.97               NM

Expressed as a percentage of
Net sales:
Gross margin                           11.4 %               17.0 %                            (560) bpts
Selling, general and
administrative expense                 20.5 %               17.1 %                              340 bpts
Research and development
expense                                 2.9 %                3.0 %                             (10) bpts
Goodwill impairment charges               -                 36.0 %                               NM
Trade name impairment
charges                                   -                 11.7 %                               NM
Restructuring, exit and
impairment charges                      4.3 %                3.8 %                               50 bpts
Operating margin                      (16.4 )%             (54.5 )%                              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 third quarter of 2008, most notably 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 third 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 third quarter of 2009. Net sales in the Fitness and Bowling & Billiards segments also declined in the third quarter of 2009 as operators in these industries continue to experience reduced access to capital, as well as remain 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. During the three months ended October 3, 2009, 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 $1 million. If additional dealers file for bankruptcy or cease operations as expected, additional losses associated with the repurchase of the Company's products will . . .