Brunswick earnings estimates reduced

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Analysts from Wachovia Capital Markets are lowering their earnings estimates for Brunswick Corp. because of the continuing economic situation, which likely will necessitate further boat and engine production cuts.

The investment firm is lowering its estimates to a loss of $1.59 per share for fiscal 2009, compared to a previous loss estimate of 30 cents per share. This includes an estimated 26 cents per share in restructuring charges.

Despite the lower estimate, Brunswick’s liquidity remains manageable, reported Tim Conder, managing director of leisure equity research for Wachovia. He said free cash flow should approximate 50 cents per share as the additional production cuts generate incremental cash flow from working capital.

He went on to say in the report that technical violations of covenants under the company’s unsecured revolving credit facility in the 2008 fourth quarter should not be a major issue, as the company appears close to consummating a new secured revolving credit agreement.

“Additionally, we believe the company is close to positively amending its covenants — more breathing room — for its wholesale financing joint venture with GE Capital,” Conder wrote in his report. “Other incremental avenues of liquidity include a sale/leaseback of the company's recreational bowling centers and, under a very dire scenario, a sale of its remaining non-marine assets.”

Finally, Conder said industry sources indicate that Brunswick’s largest customer, MarineMax, is also close to consummating a revised revolving credit facility.

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