UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
x☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  For the quarterly period ended September 30, 2017
 or
April 01, 2023
o☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to


Commission file number 001-01043
____________
 smallhiresa62.jpgBrunswick Logo_Midnight Blue (1).jpg
Brunswick Corporation

(Exact name of registrant as specified in its charter)
Delaware36-0848180
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)

26125 N. Riverwoods Blvd., Suite 500, Mettawa, IllinoisIL 60045-3420

(Address of principal executive offices, including zipoffices) (Zip code)

(847) 735-4700

(Registrant’s telephone number, including area code)
 N/A
 N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x☒  No o☐
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x☒  No o☐
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filer☒Accelerated Filer☐
Large accelerated filerNon-accelerated Filerx☐Accelerated filero
Non-accelerated filer
o  (Do not check if a smaller reporting company)
Smaller reporting companyo☐
Emerging growth companyo☐


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o☐ No x☒
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Common stock, par value $0.75 per shareBCNew York Stock Exchange
Chicago Stock Exchange
6.500% Senior Notes due 2048BC-ANew York Stock Exchange
6.625% Senior Notes due 2049BC-BNew York Stock Exchange
6.375% Senior Notes due 2049BC-CNew York Stock Exchange
The number of shares of Common Stock ($0.75 par value) of the registrant outstanding as of October 30, 2017of May 1, 2023 was 87,689,887.70,713,195.





BRUNSWICK CORPORATION
INDEX TO QUARTERLY REPORT ON FORM 10-Q
September 30, 2017April 1, 2023
 
 
TABLE OF CONTENTS


PART I – FINANCIAL INFORMATIONPage
3
PART I – FINANCIAL INFORMATIONPage
Condensed Consolidated Financial Statements (unaudited)
Condensed Consolidated Statements of Comprehensive Income for the three months and nine months ended September 30, 2017 and October 1, 2016
3
Condensed Consolidated Balance Sheets as of September 30, 2017, December 31, 2016 and October 1, 2016
4
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and October 1, 2016
6
Notes to Condensed Consolidated Financial Statements
7
Item 2.
2521
3631
3631
PART II – OTHER INFORMATION
3732
3732
33
3835


Table of Contents
PART I - FINANCIAL INFORMATION


Item 1. Condensed Consolidated Financial Statements


BRUNSWICK CORPORATION
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)

 Three Months Ended
(in millions, except per share data)April 1,
2023		April 2,
2022
Net sales$1,743.6 $1,695.7 
Cost of sales1,238.0 1,212.1 
Selling, general and administrative expense211.3 192.7 
Research and development expense48.7 51.4 
Restructuring, exit and impairment charges9.5 — 
Operating earnings236.1 239.5 
Equity earnings2.2 0.8 
Other expense, net(0.9)(1.5)
Earnings before interest and income taxes237.4 238.8 
Interest expense(28.2)(18.4)
Interest income2.2 0.1 
Loss on early extinguishment of debt— (0.1)
Earnings before income taxes211.4 220.4 
Income tax provision99.0 46.4 
Net earnings from continuing operations112.4 174.0 
Net (loss) earnings from discontinued operations, net of tax(0.1)0.2 
Net earnings$112.3 $174.2 
Earnings per common share:
Basic
Earnings from continuing operations$1.57 $2.26 
(Loss) earnings from discontinued operations(0.00)0.00 
Net earnings$1.57 $2.26 
Diluted
Earnings from continuing operations$1.56 $2.25 
(Loss) earnings from discontinued operations(0.00)0.00 
Net earnings$1.56 $2.25 
Weighted average shares used for computation of:
Basic earnings per common share71.5 76.9 
Diluted earnings per common share71.8 77.4 
Comprehensive income$115.9 $184.1 
The Notes to Condensed Consolidated Financial Statements are an integral part of these condensed consolidated statements.

3
BRUNSWICK CORPORATION
Condensed Consolidated Statements of Comprehensive Income
(unaudited)

 Three Months Ended Nine Months Ended
(in millions, except per share data)September 30,
2017		 October 1,
2016		 September 30,
2017		 October 1,
2016
Net sales$1,141.5
 $1,093.0
 $3,653.8
 $3,405.5
Cost of sales828.2
 783.3
 2,671.5
 2,460.4
Selling, general and administrative expense159.3
 150.3
 476.7
 451.7
Research and development expense35.5
 34.5
 108.6
 104.2
Restructuring, exit and integration charges6.8
 2.4
 27.7
 8.8
Operating earnings111.7
 122.5
 369.3
 380.4
Equity earnings1.5
 1.4
 5.2
 3.2
Other income, net1.5
 0.8
 6.0
 1.7
Earnings before interest and income taxes114.7
 124.7
 380.5
 385.3
Interest expense(6.6) (7.0) (19.9) (20.8)
Interest income0.9
 0.4
 1.8
 1.2
Earnings before income taxes109.0
 118.1
 362.4
 365.7
Income tax provision30.0
 32.8
 99.1
 109.1
Net earnings from continuing operations79.0
 85.3
 263.3
 256.6
        
Net earnings from discontinued operations, net of tax
—
 0.1
 —
 1.7
        
Net earnings$79.0
 $85.4
 $263.3
 $258.3
        
Earnings per common share:     
  
Basic       
Earnings from continuing operations$0.89
 $0.94
 $2.94
 $2.80
Earnings from discontinued operations—
 0.00
 —
 0.02
Net earnings$0.89
 $0.94
 $2.94
 $2.82
        
Diluted       
Earnings from continuing operations$0.88
 $0.93
 $2.91
 $2.78
Earnings from discontinued operations—
 0.00
 —
 0.02
Net earnings$0.88
 $0.93
 $2.91
 $2.80
        
Weighted average shares used for computation of:     
  
Basic earnings per common share89.1
 91.1
 89.7
 91.5
Diluted earnings per common share89.8
 91.9
 90.5
 92.4
        
Comprehensive income$90.7
 $88.7
 $285.9
 $272.4
        
Cash dividends declared per common share$0.165
 $0.15
 $0.495
 $0.45
        
The Notes to Condensed Consolidated Financial Statements are an integral part of these consolidated statements.

Table of Contents

BRUNSWICK CORPORATION

Condensed Consolidated Balance Sheets
(Unaudited)
(in millions)April 1,
2023		December 31,
2022		April 2,
2022
Assets
Current assets  
Cash and cash equivalents, at cost, which approximates fair value$387.8 $595.6 $680.1 
Restricted cash11.1 12.9 12.2 
Short-term investments in marketable securities0.8 4.5 6.8 
Total cash and short-term investments in marketable securities399.7 613.0 699.1 
Accounts and notes receivable, less allowances of $10.6, $10.2, $11.2698.0 543.0 664.7 
Inventories
Finished goods858.6 836.1 752.4 
Work-in-process218.4 209.1 195.4 
Raw materials429.0 426.2 397.9 
Net inventories1,506.0 1,471.4 1,345.7 
Prepaid expenses and other74.7 67.8 81.7 
Current assets2,678.4 2,695.2 2,791.2 
Property   
Land42.8 42.4 34.5 
Buildings and improvements582.7 564.4 497.5 
Equipment1,506.7 1,488.1 1,351.8 
Total land, buildings and improvements and equipment2,132.2 2,094.9 1,883.8 
Accumulated depreciation(1,074.2)(1,051.4)(1,002.3)
Net land, buildings and improvements and equipment1,058.0 1,043.5 881.5 
Unamortized product tooling costs235.5 227.3 196.6 
Net property1,293.5 1,270.8 1,078.1 
Other assets   
Goodwill974.0 967.6 889.4 
Other intangibles, net992.4 997.4 1,038.4 
Deferred income tax asset148.3 203.3 137.9 
Operating lease assets122.6 114.8 92.4 
Equity investments61.5 54.0 48.1 
Other long-term assets17.9 18.2 17.5 
Other assets2,316.7 2,355.3 2,223.7 
Total assets$6,288.6 $6,321.3 $6,093.0 
The Notes to Condensed Consolidated Financial Statements are an integral part of these condensed consolidated statements.
4
Table of Contents
BRUNSWICK CORPORATION
Condensed Consolidated Balance Sheets
(unaudited)
(in millions)September 30,
2017		 December 31,
2016		 October 1,
2016
Assets     
Current assets     
Cash and cash equivalents, at cost, which approximates fair value$391.1
 $422.4
 $437.2
Restricted cash10.7
 11.2
 12.7
Short-term investments in marketable securities0.8
 35.8
 0.8
Total cash and short-term investments in marketable securities402.6
 469.4
 450.7
Accounts and notes receivable, less allowances of $10.2, $12.8 and $14.2476.4
 417.3
 454.6
Inventories     
Finished goods530.5
 502.7
 476.3
Work-in-process126.7
 91.1
 102.7
Raw materials191.4
 168.3
 176.0
Net inventories848.6
 762.1
 755.0
Prepaid expenses and other49.1
 39.7
 38.5
Current assets1,776.7
 1,688.5
 1,698.8
      
Property 
  
  
Land25.0
 24.3
 24.3
Buildings and improvements414.6
 406.4
 399.1
Equipment1,008.9
 979.2
 948.2
Total land, buildings and improvements and equipment1,448.5
 1,409.9
 1,371.6
Accumulated depreciation(888.4) (892.3) (891.9)
Net land, buildings and improvements and equipment560.1
 517.6
 479.7
Unamortized product tooling costs146.3
 127.7
 117.0
Net property706.4
 645.3
 596.7
      
Other assets 
  
  
Goodwill426.3
 413.8
 413.0
Other intangibles, net165.5
 164.8
 164.1
Equity investments21.7
 20.7
 16.3
Deferred income tax asset256.1
 307.8
 304.8
Other long-term assets46.5
 43.8
 47.5
Other assets916.1
 950.9
 945.7
      
Total assets$3,399.2
 $3,284.7
 $3,241.2
      
The Notes to Condensed Consolidated Financial Statements are an integral part of these consolidated statements.

(in millions)April 1,
2023		December 31,
2022		April 2,
2022
Liabilities and shareholders' equity  
Current liabilities  
Short-term debt and current maturities of long-term debt$89.8 $89.0 $2.3 
Accounts payable594.0 662.6 660.0 
Accrued expenses754.8 738.3 665.9 
Current liabilities1,438.6 1,489.9 1,328.2 
Long-term liabilities   
Debt2,420.5 2,420.0 2,498.2 
Operating lease liabilities106.3 97.8 72.2 
Postretirement benefits48.3 49.5 65.5 
Deferred income tax liability12.4 60.7 2.9 
Other200.0 161.1 146.1 
Long-term liabilities2,787.5 2,789.1 2,784.9 
Shareholders' equity   
Common stock; authorized: 200,000,000 shares, $0.75 par value; issued: 102,538,000 shares; outstanding: 70,891,000, 71,365,000 and 76,338,000 shares76.9 76.9 76.9 
Additional paid-in capital376.0 391.3 374.5 
Retained earnings3,372.3 3,288.5 2,866.3 
Treasury stock, at cost: 31,647,000, 31,173,000 and 26,200,000 shares(1,736.8)(1,684.9)(1,316.2)
Accumulated other comprehensive loss(25.9)(29.5)(21.6)
Shareholders' equity2,062.5 2,042.3 1,979.9 
Total liabilities and shareholders' equity$6,288.6 $6,321.3 $6,093.0 
The Notes to Condensed Consolidated Financial Statements are an integral part of these condensed consolidated statements.
5
BRUNSWICK CORPORATION
Condensed Consolidated Balance Sheets
(unaudited)

(in millions)September 30,
2017		 December 31,
2016		 October 1,
2016
Liabilities and shareholders’ equity     
Current liabilities     
Current maturities of long-term debt$4.2
 $5.9
 $4.2
Accounts payable397.3
 392.7
 364.0
Accrued expenses578.6
 566.3
 549.5
Current liabilities980.1
 964.9
 917.7
      
Long-term liabilities 
  
  
Debt437.6
 436.5
 448.0
Postretirement benefits226.5
 276.3
 271.9
Other184.9
 166.9
 168.9
Long-term liabilities849.0
 879.7
 888.8
      
Shareholders’ equity 
  
  
Common stock; authorized: 200,000,000 shares, $0.75 par value; issued: 102,538,000 shares; outstanding: 87,687,000, 89,317,000 and 89,835,000 shares76.9
 76.9
 76.9
Additional paid-in capital371.5
 382.0
 380.0
Retained earnings2,100.2
 1,881.0
 1,878.0
Treasury stock, at cost: 14,851,000, 13,221,000 and 12,703,000 shares(566.5) (465.2) (440.2)
Accumulated other comprehensive loss, net of tax(412.0) (434.6) (460.0)
Shareholders’ equity1,570.1
 1,440.1
 1,434.7
      
Total liabilities and shareholders’ equity$3,399.2
 $3,284.7
 $3,241.2
      
The Notes to Condensed Consolidated Financial Statements are an integral part of these consolidated statements.
Table of Contents

BRUNSWICK CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 Three Months Ended
(in millions)April 1,
2023		April 2,
2022
Cash flows from operating activities  
Net earnings$112.3 $174.2 
Less: net (loss) earnings from discontinued operations, net of tax(0.1)0.2 
Net earnings from continuing operations, net of tax112.4 174.0 
Stock compensation expense5.9 4.4 
Depreciation and amortization64.7 53.6 
Pension funding, net of expense(0.6)(0.2)
Asset impairment charges1.2 — 
Deferred income taxes2.2 4.5 
Changes in certain current assets and current liabilities(269.7)(394.5)
Long-term extended warranty contracts and other deferred revenue2.5 2.4 
Income taxes78.4 16.2 
Other, net(11.5)(1.3)
Net cash used for operating activities of continuing operations(14.5)(140.9)
Net cash used for operating activities of discontinued operations(1.3)(1.0)
Net cash used for operating activities(15.8)(141.9)
Cash flows from investing activities  
Capital expenditures(93.5)(100.9)
Purchases of marketable securities— (6.0)
Sales or maturities of marketable securities3.8 — 
Investments(7.6)(4.2)
Proceeds from the sale of property, plant and equipment2.7 2.2 
Cross currency swap settlement— 16.7 
Net cash used for investing activities(94.6)(92.2)
Cash flows from financing activities  
Proceeds from issuances of short-term debt1.4 125.0 
Payments of short-term debt(0.2)(125.0)
Net proceeds from issuances of long-term debt— 741.8 
Payments of long-term debt including current maturities(0.6)(57.1)
Common stock repurchases(60.0)(79.8)
Cash dividends paid(28.5)(28.0)
Tax withholding associated with shares issued for share-based compensation(13.0)(15.8)
Other, net— (2.0)
Net cash (used for) provided by financing activities(100.9)559.1 
Effect of exchange rate changes1.7 0.6 
Net (decrease) increase in Cash and cash equivalents and Restricted cash(209.6)325.6 
Cash and cash equivalents and Restricted cash at beginning of period608.5 366.7 
Cash and cash equivalents and Restricted cash at end of period398.9 692.3 
Less: Restricted cash11.1 12.2 
Cash and cash equivalents at end of period$387.8 $680.1 
The Notes to Condensed Consolidated Financial Statements are an integral part of these condensed consolidated statements.

6
BRUNSWICK CORPORATION
Condensed Consolidated Statements of Cash Flows
(unaudited)
 Nine Months Ended
(in millions)September 30,
2017		 October 1,
2016
Cash flows from operating activities   
Net earnings$263.3
 $258.3
Less: earnings from discontinued operations, net of tax—
 1.7
Net earnings from continuing operations263.3
 256.6
Depreciation and amortization83.2
 77.0
Pension funding, net of expense(51.0) (61.7)
Deferred income taxes50.0
 74.6
Equity in earnings of unconsolidated affiliates(5.2) (3.2)
Changes in certain current assets and current liabilities(100.6) (66.5)
Income taxes(16.5) 7.1
Other, net31.9
 9.3
Net cash provided by operating activities of continuing operations255.1
 293.2
Net cash used for operating activities of discontinued operations(0.3) (3.3)
Net cash provided by operating activities254.8
 289.9
    
Cash flows from investing activities 
  
Capital expenditures(153.4) (131.9)
Sales or maturities of marketable securities35.0
 10.7
Investments4.5
 9.8
Acquisition of businesses, net of cash acquired(15.5) (269.5)
Proceeds from the sale of property, plant and equipment8.0
 1.7
Other, net(0.5) 1.3
Net cash used for investing activities(121.9) (377.9)
    
Cash flows from financing activities 
  
Net proceeds from issuances of long-term debt—
 0.8
Payments of long-term debt including current maturities(1.3) (0.3)
Common stock repurchases(120.0) (90.3)
Cash dividends paid(44.0) (40.7)
Proceeds from share-based compensation activity6.1
 12.5
Tax withholding associated with shares issued for share-based compensation(14.5) (18.4)
Other, net—
 (1.3)
Net cash used for financing activities(173.7) (137.7)
    
Effect of exchange rate changes9.0
 5.6
Net decrease in Cash and cash equivalents and Restricted cash(31.8) (220.1)
Cash and cash equivalents and Restricted cash at beginning of period433.6
 670.0
    
Cash and cash equivalents and Restricted cash at end of period401.8
 449.9
     Less: Restricted cash10.7
 12.7
Cash and cash equivalents at end of period$391.1
 $437.2
    
The Notes to Condensed Consolidated Financial Statements are an integral part of these consolidated statements.

   
Table of Contents

Brunswick Corporation
Condensed Consolidated Statements of Shareholders' Equity
(Unaudited)
(in millions, except per share data)Common StockAdditional Paid-in CapitalRetained EarningsTreasury StockAccumulated Other Comprehensive Income (Loss)Total
Balance at December 31, 2022$76.9 $391.3 $3,288.5 $(1,684.9)$(29.5)$2,042.3 
Net earnings— — 112.3 — — 112.3 
Other comprehensive income— — — — 3.6 3.6 
Dividends ($0.40 per common share)
— — (28.5)— — (28.5)
Compensation plans and other— (15.3)— 8.5 — (6.8)
Common stock repurchases— — — (60.4)— (60.4)
Balance at April 1, 2023$76.9 $376.0 $3,372.3 $(1,736.8)$(25.9)$2,062.5 

(in millions, except per share data)Common StockAdditional Paid-in CapitalRetained EarningsTreasury StockAccumulated Other Comprehensive Income (Loss)Total
Balance at December 31, 2021$76.9 $394.5 $2,720.1 $(1,245.8)$(31.5)$1,914.2 
Net earnings— — 174.2 — — 174.2 
Other comprehensive income— — — — 9.9 9.9 
Dividends ($0.365 per common share)— — (28.0)— — (28.0)
Compensation plans and other— (20.0)— 9.4 — (10.6)
Common stock repurchases— — — (79.8)— (79.8)
Balance at April 2, 2022$76.9 $374.5 $2,866.3 $(1,316.2)$(21.6)$1,979.9 

The Notes to Condensed Consolidated Financial Statements are an integral part of these condensed consolidated statements.
7
Table of Contents
BRUNSWICK CORPORATION
Notes to Condensed Consolidated Financial Statements
(unaudited)(Unaudited)
 
Note 1 – Significant Accounting Policies


Basis of Presentation. Effective January 1, 2023, Brunswick Corporation ("Brunswick" or "the Company") changed its management reporting and updated its reportable segments to Propulsion, Engine Parts and Accessories ("Engine P&A"), Navico Group and Boat to align with our internal operating structure. As a result of this change, the Company has recast all segment information for all prior periods presented. For further information, refer to our Current Report on Form 8-K filed with the Securities and Exchange Commission ("SEC") on April 10, 2023 and Note 9 – Segment Data.

Interim Financial Statements. TheBrunswick's unaudited interim condensed consolidated financial statements of Brunswick Corporation (Brunswick or the Company) have been prepared pursuant to Securities and Exchange Commission (SEC)SEC rules and regulations. Therefore, certain information and disclosures normally included in financial statements and related notes prepared in accordance with accounting principles generally accepted in the United States of America (GAAP)("GAAP") have been condensed or omitted. Certain previously reported amounts have been reclassified to conform to the current period presentation, including reclassifying the Deferred income tax liability in the prior period to Other long-term liabilities on the Condensed Consolidated Balance Sheets.


These financial statements should be read in conjunction with, and have been prepared in conformity with, the accounting principles reflected in the consolidated financial statements and related notes included in Brunswick’s 2016Brunswick's 2022 Annual Report on Form 10-K for the year ended December 31, 2016 (the 20162022 ("the 2022 Form 10-K)10-K"). These results include, in management's opinion, all normal and recurring adjustments necessary to present fairly Brunswick's financial position, results of operations and cash flows. Due to the seasonality of Brunswick’sBrunswick's businesses, the interim results are not necessarily indicative of the results that may be expected for the remainder of the year.


The Company maintains its financial records on the basis of a fiscal year ending on December 31, with the fiscal quarters spanning approximately thirteen weeks. The first quarter ends on the Saturday closest to the end of the first thirteen-week period. The second and third quarters are thirteen weeks in duration and the fourth quarter is the remainder of the year. The first three quartersquarter of fiscal year 20172023 ended on April 1, 2017, July 1, 2017 and September 30, 2017,2023 and the first three quartersquarter of fiscal year 20162022 ended on April 2, 2016, July 2, 2016 and October 1, 2016.2022.


RecentRecently Adopted Accounting Pronouncements. The following are recent accounting pronouncements that have been adopted during 2017, or will be adopted in future periods.Standards


Hedge AccountingSupplier Finance Programs: In August 2017,September 2022, the Financial Accounting Standards Board (FASB) amended the("FASB") issued Accounting Standards Codification (ASC)Update ("ASU") 2022-04, Liabilities — Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations, which adds disclosure requirements associated with participation in supplier finance programs. ASU 2022-04 requires the buyer in a supplier finance program to simplifydisclose qualitative and quantitative information about the applicationprogram including key terms and obligations outstanding at the end of hedge accounting and to better align an entity's risk management activities with the financial reporting of hedging relationships. The amendmentperiod. ASU 2022-04 is effective for financial statements for interim and annual periods beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the impact of adopting this ASC amendment, but does not expect it will have a material impact on its condensed consolidated financial statements.

Presentation of Benefit Costs: In March 2017, the FASB amended the ASC related to the income statement presentation of the components of net periodic benefit cost for an entity’s sponsored defined benefit pension and other postretirement plans. The amendments require entities to present the current-service-cost component with other current compensation costs in the income statement and present the other components outside of income from operations. The amendment is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted. The Company is currently evaluating the impact of adopting this ASC amendment, but does not expect it will have a material impact on its condensed consolidated financial statements.

Statement of Cash Flows Classifications: In August 2016, the FASB amended the ASC to add and/or clarify guidance on the classification of certain transactions in the statement of cash flows. The amendment is to be applied retrospectively and is effective for fiscal years, and the interim periods within those years, beginning after December 15, 2017, with early adoption permitted. The Company is currently evaluating the impact it will have on its Condensed Consolidated Statements of Cash Flows.

Share-Based Compensation: In March 2016, the FASB amended the ASC to simplify the accounting for employee share-based payment transactions.2022. The Company adopted this amendment during the first quarterguidance in ASU 2022-04 on January 1, 2023.

Under our supplier finance program, the Company agrees to pay Bank of 2017, and recognized $7.7 millionAmerica ("the Bank") the stated amount of net excess tax benefits related to share-based paymentsconfirmed invoices from our suppliers on the original invoice payment due date. Our suppliers may request payment from the Bank at a date earlier than the payment due date stated on the original invoice in exchange for a fee in the income tax provisionform of a discounted invoice amount. Brunswick or the Bank may terminate the agreement upon at least 90 days’ notice. The supplier invoices that have been confirmed as valid under the program require payment ranging from 60 to 120 days from the invoice date, consistent with the terms of the original invoice. The Company does not pay the Bank any service fees or subscription fees under the program. In addition, the Company does not pledge any assets as security or provide other forms of guarantees for the nine months ended September 30, 2017. These net excess tax benefits were historically recorded in additional paid-in capital when recognized. Additionally,committed payment to the Bank. As of April 1, 2023, December 31, 2022, and April 2, 2022, the Company adoptedhad $19.9 million, $18.2 million and $16.1 million confirmed invoices under the amendment retrospectively for presentation of net excess tax benefitssupplier finance program, respectively, which were included in Accounts payable on the Condensed Consolidated Statements of Cash Flows, resulting in an increase of $11.1 million in Net cash provided by operating activities and Net cash used for financing activities for the nine months ended October 1, 2016. The Company also elected to recognize forfeitures of share-based awards as they occur. The remaining amendments, including those related to statutory withholding requirements, did not have a material impact.

Recognition of Leases: In February 2016, the FASB amended the ASC to require lessees to recognize assets and liabilities on the balance sheet for all leases with terms greater than twelve months. Lessees will recognize expenses similar to current lease

Balance Sheets.
7
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BRUNSWICK CORPORATION
Notes to Condensed Consolidated Financial Statements
(unaudited)
    

accounting. The amendment is to be applied using a modified retrospective method with certain practical expedients, and is effective for fiscal years and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the impact that the adoption of the new standard will have on its condensed consolidated financial statements.

Note 2 – Revenue Recognition: In May 2014,

The following table presents the FASB issued a final standard onCompany's revenue recognition which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. This standard will supersede current revenue recognition guidance. Undercategories that depict how the new standard, entities are required to identify the contract with a customer; identify the separate performance obligations in the contract; determine the transaction price; allocate the transaction price to the separate performance obligations in the contract;nature, amount, timing, and recognize the appropriate amountuncertainty of revenue when (or as) the entity satisfies each performance obligation. In August 2015, the FASB amended the ASC to delay the effective date to fiscal years, and the interim periods within those years, beginning on or after January 1, 2018, from the original effective date of January 1, 2017, with early adoption permitted no earlier than January 1, 2017. Entities have the option of using either retrospective transition or a modified retrospective approach in applying the new standard.cash flows are affected by economic factors:

The Company plans to use the modified retrospective approach in applying the new standard. The Company’s implementation process is progressing as planned and there are no significant implementation matters that have yet to be addressed. The Company does not expect the standard to have a material impact on its condensed consolidated financial statements, however, the most meaningful changes will be in the Boat and Fitness segments. In the Boat segment, certain customers are offered retail promotions that are currently recorded at the later of when the program has been communicated to the customer or at the time of sale. Under the new standard, these promotions will now be estimated and recognized at the time of sale, primarily upon shipment to customers. In the Fitness segment, certain customer contracts include product rebates recorded in cost of sales at the time of sale. Under the new standard, the Company will no longer record the rebate at the time of sale; however a portion of revenue will be deferred and not recognized until the rebate is redeemed. As a result, the Company expects a change in the timing of recording certain promotions and rebates, including but not limited to those described above, however, it does not expect a change in the total amount of cumulative revenue recognized for each transaction.


Three Months Ended
April 1, 2023
(in millions)PropulsionEngine P&ANavico GroupBoatTotal
Geographic Markets
United States$495.8 $202.9 $182.3 $440.0 $1,321.0 
Europe115.5 27.0 65.4 51.1 259.0 
Asia-Pacific58.5 27.9 18.6 7.3 112.3 
Canada28.4 18.8 5.2 65.9 118.3 
Rest-of-World53.4 12.0 5.8 10.9 82.1 
Segment Eliminations(113.7)(2.0)(33.1)(0.3)(149.1)
Total$637.9 $286.6 $244.2 $574.9 $1,743.6 
Three Months Ended
April 2, 2022
(in millions)PropulsionEngine P&ANavico GroupBoatTotal
Geographic Markets
United States$452.7 $224.6 $203.1 $368.4 $1,248.8 
Europe113.4 35.5 73.2 45.6 267.7 
Asia-Pacific63.3 32.1 22.2 9.1 126.7 
Canada33.2 24.0 8.3 62.2 127.7 
Rest-of-World43.3 14.1 4.8 7.5 69.7 
Segment Eliminations(109.2)(2.1)(33.6)— (144.9)
Total$596.7 $328.2 $278.0 $492.8 $1,695.7 
8
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BRUNSWICK CORPORATION
Notes to Condensed Consolidated Financial Statements
(unaudited)
    

Three Months Ended
April 1, 2023
(in millions)PropulsionEngine P&ANavico GroupBoatTotal
Major Product Lines
Outboard Engines$593.2 $— $— $— $593.2 
Controls, Rigging, and Propellers106.0 — — — 106.0 
Sterndrive Engines52.4 — — — 52.4 
Distribution Parts & Accessories— 175.3 — — 175.3 
Products— 113.3 — — 113.3 
Navico Group— — 277.3 — 277.3 
Aluminum Freshwater Boats— — — 230.4 230.4 
Recreational Fiberglass Boats— — — 198.4 198.4 
Saltwater Fishing Boats— — — 113.1 113.1 
Business Acceleration— — — 39.8 39.8 
Boat Eliminations/Other— — — (6.5)(6.5)
Segment Eliminations(113.7)(2.0)(33.1)(0.3)(149.1)
Total$637.9 $286.6 $244.2 $574.9 $1,743.6 
Three Months Ended
April 2, 2022
(in millions)PropulsionEngine P&ANavico GroupBoatTotal
Major Product Lines
Outboard Engines$546.1 $— $— $— $546.1 
Controls, Rigging, and Propellers98.5 — — — 98.5 
Sterndrive Engines61.3 — — — 61.3 
Distribution Parts & Accessories— 203.5 — — 203.5 
Products— 126.8 — — 126.8 
Navico Group— — 311.6 — 311.6 
Aluminum Freshwater Boats— — — 220.6 220.6 
Recreational Fiberglass Boats— — — 164.4 164.4 
Saltwater Fishing Boats— — — 89.2 89.2 
Business Acceleration— — — 19.6 19.6 
Boat Eliminations/Other— — — (1.0)(1.0)
Segment Eliminations(109.2)(2.1)(33.6)— (144.9)
Total$596.7 $328.2 $278.0 $492.8 $1,695.7 

As of December 31, 2022, $178.5 million of contract liabilities associated with extended warranties and customer deposits were reported in Accrued expenses and Other long-term liabilities, of which $19.0 million were recognized as revenue during the three months ended April 1, 2023. As of April 1, 2023, total contract liabilities were $189.4 million. The total amount of the transaction price allocated to unsatisfied performance obligations as of April 1, 2023 was $179.9 million for contracts greater than one year, which primarily relates to extended warranties. The Company expects to recognize $48.8 million of this amount in 2023, $40.4 million in 2024, and $90.7 million thereafter.

Note 23 – Restructuring, Exit and IntegrationImpairment Activities


InThe Company recorded restructuring, exit and impairment charges in the third quarterCondensed Consolidated Statements of 2017,Comprehensive Income in 2023.

During the three months ended April 1, 2023, the Company recorded restructuring charges within the Fitness segment for the write-down of inventoryEngine P&A, Navico Group, Boat and toolingCorporate segments related to the exit of the InMovement product line as a result of declining demand.

In the second and third quarters of 2017, the Company implemented headcount reductions inand related costs associated with streamlining the Fitnessenterprise-wide cost structure and Boat segments aimed at improving general operating efficiencies. As a result of these actions, the Company recorded restructuring charges within these segments during 2017.

In the first quarter of 2017, the Company announced that it will close its boat manufacturing facility in Joinville, Santa Catarina, Brazil, as a result of continued market weakness due partially to unfavorable foreign currency impacts in the region. The facility manufactures certain Bayliner and Sea Ray boat models for the Latin American market. The long-lived assets at this facility were previously fully impaired.

In the first quarter of 2017, the Company also recorded restructuring charges within Corporate related to the transition of certain corporate officers.

The Company acquired Cybex International, Inc. (Cybex) and Indoor Cycling Group GmbH (ICG) in the first and third quartersestimates approximately $16 million of 2016, respectively, and initiated certain integration activitiescharges, primarily within the Fitness segmentNavico Group, Boat and Corporate segments, will be incurred related to these acquisitions. As a result, the Company recorded integration charges in 2017 and 2016 related to Cybex and recorded integration charges in 2016 related to ICG.actions during 2023.


The following table is a summary of the expense associated with the restructuring, exit and integration activities for the three months ended September 30, 2017 and October 1, 2016, as discussed above:
10
 September 30, 2017 October 1, 2016
(in millions)Fitness Total Fitness Total
Restructuring and exit activities:       
Employee termination and other benefits$1.6
 $1.6
 $—
 $—
Current asset write-downs2.6
 2.6
 —
 —
Other0.4
 0.4
 —
 —
Integration activities:       
Employee termination and other benefits0.4
 0.4
 0.6
 0.6
Professional fees1.6
 1.6
 1.6
 1.6
Other0.2
 0.2
 0.2
 0.2
Total restructuring, exit and integration charges$6.8
 $6.8
 $2.4
 $2.4

The following table is a summary of the expense associated with the restructuring, exit and integration activities for the nine months ended September 30, 2017 and October 1, 2016, as discussed above:
 September 30, 2017 October 1, 2016
(in millions)Corporate Fitness Boat Total Fitness Total
Restructuring and exit activities:           
Employee termination and other benefits$2.4
 $3.7
 $2.6
 $8.7
 $—
 $—
Current asset write-downs—
 2.6
 7.2
 9.8
 —
 —
Professional fees—
 —
 0.8
 0.8
 —
 —
Other—
 0.4
 1.0
 1.4
 —
 —
Integration activities:           
Employee termination and other benefits—
 2.4
 —
 2.4
 2.7
 2.7
Professional fees—
 4.2
 —
 4.2
 3.8
 3.8
Other—
 0.4
 —
 0.4
 2.3
 2.3
Total restructuring, exit and integration charges$2.4
 $13.7
 $11.6
 $27.7
 $8.8
 $8.8


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BRUNSWICK CORPORATION
Notes to Condensed Consolidated Financial Statements
(unaudited)
    

The following table is a summary of expenses for the three months ended April 1, 2023:
During 2017,
(in millions)Engine P&ANavico GroupBoatCorporateTotal
Restructuring, exit and impairment activities:
Employee termination and other benefits$0.7 $2.4 $1.4 $0.7 $5.2 
Asset-related— 1.2 — — 1.2 
Professional fees— — — 3.1 3.1 
Total restructuring, exit and impairment charges$0.7 $3.6 $1.4 $3.8 $9.5 
Total cash payments for restructuring, exit and impairment charges (A)
$0.2 $1.3 $0.7 $0.3 $2.5 
Accrued charges at end of the period (B)
$0.5 $5.2 $0.7 $3.5 $9.9 

(A) Cash payments for the Company made cash payments of $12.5 million relating to all restructuring, exit and integration activities, includingthree months ended April 1, 2023 may include payments related to prior period activities. As of September 30, 2017, accruals remaining for restructuring,charges.
(B) Restructuring, exit and integration activities totaled $10.4 million andimpairment charges accrued as of April 1, 2023 are expected to be paid during 2017 and 2018.in the next twelve months.

.
Note 34 – Acquisitions

On September 1, 2017,2022 Acquisitions

During the second quarter of 2022, the Company acquired 100 percent of Lankhorst Taselaar B.V. (Lankhorst Taselaar), a leadingcertain Freedom Boat Club franchise operations and territory rights as well as certain marine parts and accessories distribution company basedassets in the NetherlandsSoutheast United States. These acquisitions enable opportunities across a wide spectrum, building upon the growth Brunswick has cultivated throughout the Company's shared access portfolio and Germany. The acquisition augments the marine parts and accessories businesses through a broader product line and an expanded distribution network. Lankhorst Taselaar is managednew digital platforms. These acquisitions are included as part of the Company's Marine EngineBoat segment.


The Company paid net cash consideration the Company paid to acquire Lankhorst Taselaar was $15.5 million. The preliminary recording of the fair value of the assets acquired and liabilities assumed resulted in $4.6 million of identifiable intangible assets, including customer relationships and trade names for $3.2 million and $1.4 million, respectively, along with $5.8$93.9 million for goodwillthese acquisitions. The opening balance sheets, which is not deductible for tax purposes. The amount assigned to Lankhorst Taselaar's customer relationships will be amortized over its estimated useful life of approximately 15 years. These amounts recorded are preliminary and are subject to change withinin the measurement period as the Company finalizes itsthe purchase price allocation and fair value estimates.estimates, include $71.1 million of goodwill and $11.9 million of customer relationships. The amount assigned to customer relationships will be amortized over the estimated useful life of 10 years. Transaction costs associated with these acquisitions of $1.4 million were expensed as incurred within Selling, general and administrative expense in 2022. The acquisitions are not material to the Company's net sales, results of operations, or total assets during any period presented. Accordingly, the Company's consolidated results of operations do not differ materially from historical performance as a result of the acquisitions, and pro forma results for prior periods are not presented.


Note 45 – Financial Instruments


The Company operates globally with manufacturing and sales facilities around the world. Due to the Company’s global operations, the Company engages in activities involving both financial and market risks. The Company utilizes normal operating and financing activities, along with derivative financial instruments, to minimize these risks. See Note 1413 in the Notes to Consolidated Financial Statements in the 20162022 Form 10-K for further details regarding the Company's financial instruments and hedging policies.


Foreign Currency Derivatives. Forward exchangeCross-Currency Swaps. The Company enters into cross-currency swaps to hedge Euro currency exposures of the net investment in certain foreign subsidiaries. During 2022, the Company settled $450.0 million of cross-currency swap contracts resulting in a deferred gain of $42.5 million within Accumulated other comprehensive loss. As a result, there were no cross-currency swaps outstanding as of April 1, 2023 andDecember 31, 2022, respectively. As of April 2, 2022, the notional value of cross-currency swap contracts outstanding at September 30, 2017,was $250.0 million. The cross-currency swaps were designated as net investment hedges, with the amount of gain or loss associated with the change in fair value of these instruments included within Accumulated other comprehensive loss and recognized upon termination of the respective investment. In the first quarter of 2022, the Company settled $200.0 million of cross-currency swap contracts resulting in a deferred gain of $16.7 million within Accumulated other comprehensive loss.



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Notes to Condensed Consolidated Financial Statements
(unaudited)
Commodity Price. The Company uses commodity swaps to hedge anticipated purchases of aluminum. As of April 1, 2023, December 31, 20162022 and October 1, 2016 hadApril 2, 2022, the notional contract valuesvalue of $294.7commodity swap contracts outstanding was $28.5 million $263.7, $24.1 million and $248.9$19.3 million, respectively. Optionrespectively, and the contracts outstanding at September 30, 2017, December 31, 2016mature through 2024. The amount of gain or loss associated with the change in fair value of these instruments is deferred in Accumulated other comprehensive loss and October 1, 2016 had notional contract valuesrecognized in Cost of $18.0 million, $30.4 million and $39.3 million, respectively. The forward and option contracts outstanding at September 30, 2017 maturesales in the same period or periods during 2017 and 2018 and mainly relate towhich the Euro, Japanese yen, Canadian dollar, Australian dollar, Swedish krona, British pound, Brazilian real, Mexican peso, Norwegian krone, New Zealand dollar, Hungarian forint and Taiwan dollar.hedged transaction affects earnings. As of September 30, 2017,April 1, 2023, the Company estimates that, during the next 12 months, it will reclassify approximately $9.6$0.6 million of in net losses (based on current prices) from Accumulated other comprehensive loss to Cost of sales.

Foreign Currency Derivatives. Forward exchange contracts outstanding as of April 1, 2023, December 31, 2022 and April 2, 2022 had notional contract values of $690.6 million, $684.8 million and $651.8 million, respectively. The forward contracts outstanding as of April 1, 2023 mature through 2024 and mainly relate to the Euro, Australian dollar, Canadian dollar, and Japanese yen. As of April 1, 2023, the Company estimates that during the next 12 months, it will reclassify approximately $7.6 million of net gains (based on current rates) from Accumulated other comprehensive loss to Cost of sales.


Interest RateInterest-Rate Derivatives. During the first quarter of 2022, the Company entered into and settled a series of treasury-lock swaps to hedge the interest-rate risk associated with debt issuances, resulting in a net deferred gain of $5.1 million. As a result, there were no treasury-lock swaps outstanding as of April 1, 2023, December 31, 2022 or April 2, 2022.

The Company enters into fixed-to-floating interest ratehad net deferred gains associated with previously settled forward-starting interest-rate swaps to convert a portionand the treasury-lock swaps discussed above of the Company's long-term debt from fixed to floating rate debt. As$3.3 million, $3.2 million, and $2.9 million as of September 30, 2017, April 1, 2023, December 31, 20162022, and October 1, 2016, the outstanding swaps had notional contract values of $200.0 million, of which $150.0 million corresponds to the Company's 4.625 percent Senior notes due 2021April 2, 2022, respectively. These instruments were designated as cash flow hedges with gains and $50.0 million corresponds to the Company's 7.375 percent Debentures due 2023.

As of September 30, 2017, December 31, 2016 and October 1, 2016, the Company had $3.7 million, $4.5 million and $4.8 million, respectively, of net deferred losses associated with all settled forward-starting interest rate swaps, which were included in Accumulated other comprehensive loss. As of September 30, 2017,April 1, 2023, the Company estimates that during the next 12 months, it will reclassify approximately $1.0$0.1 million of net losses resulting from settled forward-starting interest rate swapsgains from Accumulated other comprehensive loss to Interest expense.


Commodity Price Derivatives. There were no commodity swap contracts outstanding at September 30, 2017 andAs of April 1, 2023, December 31, 2016. As2022 and April 2, 2022, the fair values of October 1, 2016, the notional value of commodity swap contracts outstanding was $2.3 million.Company’s derivative instruments were:


(in millions)Fair Value
Asset DerivativesApril 1, 2023December 31, 2022April 2, 2022
Derivatives Designated as Cash Flow Hedges
Foreign exchange contracts$12.9 $15.2 $9.4 
Commodity contracts0.3 0.3 4.6 
Total$13.2 $15.5 $14.0 
Derivatives Designated as Net Investment Hedges
Cross-currency swaps$— $— $0.1 
Other Hedging Activity
Foreign exchange contracts$0.7 $0.6 $0.1 
Liability Derivatives
Derivatives Designated as Cash Flow Hedges
Foreign exchange contracts$6.0 $8.0 $4.2 
Commodity contracts1.0 1.1 — 
Total$7.0 $9.1 $4.2 
Derivatives Designated as Net Investment Hedges
Cross-currency swaps$— $— $1.0 
Other Hedging Activity
Foreign exchange contracts$0.9 $0.8 $2.5 
10
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BRUNSWICK CORPORATION
Notes to Condensed Consolidated Financial Statements
(unaudited)
    

As of September 30, 2017,April 1, 2023, December 31, 20162022 and October 1, 2016,April 2, 2022, asset derivatives are included within Prepaid expenses and other and Other long-term assets, and liability derivatives are included within Accrued expenses and Other long-term liabilities in the fair values of the Company’s derivative instruments were:Condensed Consolidated Balance Sheets.
(in millions)            
  Derivative Assets Derivative Liabilities
Instrument Balance Sheet Location Fair Value Balance Sheet Location Fair Value
    Sep 30, 2017 Dec 31, 2016 Oct 1, 2016   Sep 30, 2017 Dec 31, 2016 Oct 1, 2016
Derivatives Designated as Cash Flow Hedges              
Foreign exchange contracts Prepaid expenses and other $1.7
 $7.2
 $3.1
 Accrued expenses $10.5
 $2.6
 $3.1
Commodity contracts Prepaid expenses and other —
 —
 —
 Accrued expenses —
 —
 0.1
Total   $1.7
 $7.2
 $3.1
   $10.5
 $2.6
 $3.2
                 
Derivatives Designated as Fair Value Hedges              
Interest rate contracts Prepaid expenses and other $2.9
 $2.1
 $2.9
 Accrued expenses $2.3
 $1.7
 $2.1
Interest rate contracts Other long-term assets 2.3
 0.7
 7.0
 Other long-term liabilities —
 0.2
 —
Total   $5.2
 $2.8
 $9.9
   $2.3
 $1.9
 $2.1
                 
Other Hedging Activity              
Foreign exchange contracts Prepaid expenses and other $0.3
 $1.2
 $0.2
 Accrued expenses $0.3
 $0.3
 $0.5
Commodity contracts Prepaid expenses and other —
 —
 —
 Accrued expenses —
 —
 0.3
Total   $0.3
 $1.2
 $0.2
   $0.3
 $0.3
 $0.8


The effect of derivative instruments on the Condensed Consolidated Statements of Comprehensive Income for the three months ended April 1, 2023 and nine months ended September 30, 2017 and October 1, 2016 was: April 2, 2022 is as shown in the tables below.

(in millions)                  
Derivatives Designated as Cash Flow Hedging Instruments Amount of Gain (Loss) on Derivatives Recognized in Accumulated Other Comprehensive Loss (Effective Portion) Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Earnings (Effective Portion) 
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Earnings (Effective Portion)
  Three Months Ended Nine Months Ended   Three Months Ended Nine Months Ended
  Sep 30, 2017 Oct 1, 2016 Sep 30, 2017 Oct 1, 2016   Sep 30, 2017 Oct 1, 2016 Sep 30, 2017 Oct 1, 2016
Interest rate contracts $—
 $—
 $—
 $—
 Interest expense $(0.3) $(0.3) $(0.8) $(0.3)
Foreign exchange contracts (10.4) (0.2) (15.3) (3.2) Cost of sales (0.9) 0.4
 1.2
 3.1
Commodity contracts —
 0.0
 —
 0.0
 Cost of sales —
 (0.1) (0.0) (0.5)
Total $(10.4) $(0.2) $(15.3) $(3.2)   $(1.2) $0.0
 $0.4
 $2.3
The amount of gain (loss) on derivatives recognized in Accumulated other comprehensive loss was as follows:

(in millions)
Derivatives Designated as Cash Flow Hedging InstrumentsApril 1, 2023April 2, 2022
Interest-rate contracts$— $5.3 
Foreign exchange contracts3.3 2.6 
Commodity contracts(0.2)5.0 
Total$3.1 $12.9 
Derivatives Designated as Net Investment Hedging Instruments
Cross-currency swaps$— $1.4 

Derivatives Designated as Fair Value Hedging Instruments 
Location of Gain on Derivatives
Recognized in Earnings
 Amount of Gain on Derivatives Recognized in Earnings
    Three Months Ended Nine Months Ended
    Sep 30, 2017 Oct 1, 2016 Sep 30, 2017 Oct 1, 2016
Interest rate contracts Interest expense $0.5
 $0.6
 $1.6
 $2.2
The amount of gain (loss) reclassified from Accumulated other comprehensive loss into earnings was as follows:

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BRUNSWICK CORPORATION
Notes to Condensed Consolidated Financial Statements
(unaudited)


Other Hedging Activity 
Location of Gain (Loss) on Derivatives
Recognized in Earnings
 Amount of Gain (Loss) on Derivatives Recognized in Earnings
 Three Months Ended Nine Months Ended
 Sep 30, 2017 Oct 1, 2016 Sep 30, 2017 Oct 1, 2016
Foreign exchange contracts Cost of sales $(4.9) $(2.2) $(11.8) $(8.6)
(in millions)(in millions)
Derivatives Designated as Cash Flow Hedging InstrumentsDerivatives Designated as Cash Flow Hedging InstrumentsLocation of Gain (Loss)April 1, 2023April 2, 2022
Interest-rate contractsInterest-rate contractsInterest expense$(0.1)$— 
Foreign exchange contracts Other income, net (0.1) 0.3
 (1.1) 1.0
Foreign exchange contractsCost of sales7.5 2.7 
Commodity contracts Cost of sales —
 0.1
 —
 0.3
Commodity contractsCost of sales(0.6)1.6 
Total   $(5.0) $(1.8) $(12.9) $(7.3)Total$6.8 $4.3 
Derivatives Designated as Fair Value Hedging InstrumentsDerivatives Designated as Fair Value Hedging Instruments
Interest-rate contractsInterest-rate contractsInterest expense$0.2 $0.2 
Other Hedging ActivityOther Hedging Activity
Foreign exchange contractsForeign exchange contractsCost of sales$(0.7)$(3.6)
Foreign exchange contractsForeign exchange contractsOther expense, net(0.1)— 
TotalTotal$(0.8)$(3.6)
    
Fair Value of Other Financial Instruments. The carrying values of the Company’sCompany's short-term financial instruments, including cash and cash equivalents and accounts and notes receivable, and short-term debt approximate their fair values because of the short maturity of these instruments. At September 30, 2017,As of April 1, 2023, December 31, 20162022 and October 1, 2016,April 2, 2022, the fair value of the Company’s long-term debt, including short-term debt and current maturities, was approximately $492.8$2,257.4 million, $498.5$2,225.0 million and $485.4$2,464.8 million, respectively, and was determined using Level 1 and Level 2 inputs described in Note 7 – Fair Value Measurements, in6 to the Notes to Consolidated Financial Statements in the 20162022 Form 10-K. The carrying value of long-term debt, including short-term debt and current maturities, was $441.8$2,541.2 million, $444.6$2,540.5 million and $447.9$2,534.1 million as of September 30, 2017,April 1, 2023, December 31, 20162022 and October 1, 2016,April 2, 2022, respectively.



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BRUNSWICK CORPORATION
Notes to Condensed Consolidated Financial Statements
(unaudited)
    

Note 56 – Fair Value Measurements


The following table summarizes the Company’sCompany's financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2017:basis:
(in millions)Fair Value
CategoryFair Value LevelApril 1, 2023December 31, 2022April 2, 2022
Cash equivalents1$0.2 $0.4 $69.2 
Short-term investments in marketable securities10.8 4.5 6.8 
Restricted cash111.1 12.9 12.2 
Derivative assets213.9 16.1 14.2 
Derivative liabilities27.9 9.9 7.7 
Deferred compensation11.3 1.6 1.2 
Deferred compensation215.2 14.1 17.7 
Liabilities measured at net asset value11.6 10.4 11.1 

(in millions)Level 1 Level 2 Total
Assets:     
Cash equivalents$0.4
 $34.0
 $34.4
Short-term investments in marketable securities0.8
 —
 0.8
Restricted cash10.7
 —
 10.7
Derivatives—
 7.2
 7.2
Total assets$11.9
 $41.2
 $53.1
      
Liabilities: 
  
  
Derivatives$—
 $13.1
 $13.1
Deferred compensation4.0
 28.4
 32.4
Total liabilities at fair value$4.0
 $41.5
 $45.5
Liabilities measured at net asset value    11.2
Total liabilities    $56.7

The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2016:
(in millions)Level 1 Level 2 Total
Assets:     
Cash equivalents$4.6
 $14.3
 $18.9
Short-term investments in marketable securities0.8
 35.0
 35.8
Restricted cash11.2
 —
 11.2
Derivatives—
 11.2
 11.2
Total assets$16.6
 $60.5
 $77.1
      
Liabilities: 
  
  
Derivatives$—
 $4.8
 $4.8
Deferred compensation4.2
 28.1
 32.3
Total liabilities at fair value$4.2
 $32.9
 $37.1
Liabilities measured at net asset value    11.6
Total liabilities    $48.7


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BRUNSWICK CORPORATION
Notes to Condensed Consolidated Financial Statements
(unaudited)

The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis as of October 1, 2016:
(in millions)Level 1 Level 2 Total
Assets:     
Cash equivalents$0.6
 $—
 $0.6
Short-term investments in marketable securities0.8
 —
 0.8
Restricted cash12.7
 —
 12.7
Derivatives—
 13.2
 13.2
Total assets$14.1
 $13.2
 $27.3
      
Liabilities: 
  
  
Derivatives$—
 $6.1
 $6.1
Deferred compensation3.9
 27.6
 31.5
Total liabilities at fair value$3.9
 $33.7
 $37.6
Liabilities measured at net asset value    15.0
Total liabilities    $52.6

In addition to the items shown in the tables above, refer to Note 17 in the Notes to Consolidated Financial Statements in the 2016 Form 10-Kfor further discussion regarding the fair value measurements associated with the Company’s postretirement benefit plans.

Note 6 – Share-Based Compensation

Under the Brunswick Corporation 2014 Stock Incentive Plan, the Company may grant stock options, stock appreciation rights (SARs), non-vested stock awards and performance awards to executives, other employees and non-employee directors from treasury shares and from authorized, but unissued, shares of common stock, in addition to: (i) the forfeiture of past awards; (ii) shares not issued upon the net settlement of SARs; or (iii) shares delivered to or withheld by the Company to pay the withholding taxes related to awards. As of September 30, 2017, 5.4 million shares remained available for grant.

Non-vested stock awards

The Company grants both stock-settled and cash-settled non-vested stock units and awards to key employees as determined by management and the Human Resources and Compensation Committee of the Board of Directors. The Company granted a nominal number of stock awards during the three months ended September 30, 2017 and did not grant any stock awards during the three months ended October 1, 2016. The Company granted 0.2 million and 0.3 million of stock awards during the nine months ended September 30, 2017 and October 1, 2016, respectively. The Company recognizes the cost of non-vested stock units and awards on a straight-line basis over the requisite vesting period. Additionally, cash-settled non-vested stock units and awards are recorded as a liability on the balance sheet and adjusted to fair value each reporting period through stock compensation expense. During the three months and nine months ended September 30, 2017, the Company charged $2.9 million and $8.5 million, respectively, and charged $2.9 million and $7.4 million during the three months and nine months ended October 1, 2016, respectively, to compensation expense for non-vested stock awards.

As of September 30, 2017, there was $10.8 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements. The Company expects this cost to be recognized over a weighted average period of 1.3 years.

Performance awards

In February of both 2017 and 2016, the Company granted 0.1 million performance shares to certain senior executives. The 2017 and 2016 share awards are based on three performance measures: a cash flow return on investment (CFROI) measure, an operating margin (OM) measure and a total shareholder return (TSR) modifier. Performance shares are earned based on a three-year performance period commencing at the beginning of the calendar year of each grant. The performance shares earned are then subject to a TSR modifier based on stock returns measured against stock returns of a predefined comparator group over a three-

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BRUNSWICK CORPORATION
Notes to Condensed Consolidated Financial Statements
(unaudited)

year performance period. Additionally, in February 2017 and 2016, the Company granted 26,300 and 37,430 performance shares, respectively, to certain officers and certain senior managers based on the respective measures and performance periods described above but excluding the TSR modifier. During the three months and nine months ended September 30, 2017, the Company charged $2.8 million and $5.9 million, respectively, and charged $1.4 million and $4.4 million for the three months and nine months ended October 1, 2016, respectively, to compensation expense based on projections of probable attainment of the performance measures and the projected TSR modifier used to determine the performance awards.

The fair values of the senior executives' performance share award grants with a TSR modifier for grants in 2017 and 2016 were $64.82 and $38.54, respectively, which were estimated using the Monte Carlo valuation model, and incorporated the following assumptions:
 2017 2016
Risk-free interest rate1.5% 0.8%
Dividend yield1.1% 1.0%
Volatility factor38.3% 40.8%
Expected life of award2.9 years
 2.9 years

The fair value of the certain officers' and certain senior managers' performance awards granted based solely on the CFROI and OM performance factors was $58.77 and $37.76 in 2017 and 2016, respectively, which was equal to the stock price on the date of grant in 2017 and 2016, respectively, less the present value of expected dividend payments over the vesting period.

As of September 30, 2017, the Company had $4.7 million of total unrecognized compensation cost related to performance awards. The Company expects this cost to be recognized over a weighted average period of 1.1 years.

Director Awards

The Company issues stock awards to non-employee directors in accordance with the terms and conditions determined by the Nominating and Corporate Governance Committee of the Board of Directors.  A portion of each director’s annual fee is paid in Brunswick common stock, the receipt of which may be deferred until a director retires from the Board of Directors.  Each director may elect to have the remaining portion paid in cash, in Brunswick common stock distributed at the time of the award or in deferred Brunswick common stock with a 20 percent premium.


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BRUNSWICK CORPORATION
Notes to Condensed Consolidated Financial Statements
(unaudited)

Note 7 – Earnings per Common Share

Basic earnings per common share is calculated by dividing Net earnings by the weighted average outstanding shares which includes certain vested, unissued equity awards. Diluted earnings per common share is calculated similarly, except that the calculation includes the dilutive effect of stock-settled SARs, non-vested stock awards and performance awards.

Basic and diluted earnings per common share for the three months and nine months ended September 30, 2017 and October 1, 2016 were calculated as follows:
 Three Months Ended Nine Months Ended
(in millions, except per share data)September 30,
2017		 October 1,
2016		 September 30,
2017		 October 1,
2016
Net earnings from continuing operations$79.0
 $85.3
 $263.3
 $256.6
Net earnings from discontinued operations, net of tax—
 0.1
 —
 1.7
Net earnings$79.0
 $85.4
 $263.3
 $258.3
        
Weighted average outstanding shares-basic89.1
 91.1
 89.7
 91.5
Dilutive effect of common stock equivalents0.7
 0.8
 0.8
 0.9
Weighted average outstanding shares-diluted89.8
 91.9
 90.5
 92.4
        
Basic earnings per common share:       
Continuing operations$0.89
 $0.94
 $2.94
 $2.80
Discontinued operations—
 0.00
 —
 0.02
Net earnings$0.89
 $0.94
 $2.94
 $2.82
        
Diluted earnings per common share:       
Continuing operations$0.88
 $0.93
 $2.91
 $2.78
Discontinued operations—
 0.00
 —
 0.02
Net earnings$0.88
 $0.93
 $2.91
 $2.80

There were no anti-dilutive shares of SARs that were excluded from the computation of diluted earnings per share for the periods ended September 30, 2017 and October 1, 2016.

Note 87 – Commitments and Contingencies
On January 21, 2015, Cobalt Boats, LLC (Cobalt) filed a patent infringement lawsuit against the Company alleging that certain of the Company’s Sea Ray branded boats include a feature that infringes a Cobalt patent relating to a submersible swim step. On October 31, 2017, the US District Court in the Eastern District of Virginia entered an amended judgment on the jury verdict awarding total damages, including enhanced damages, in the amount of $5.4 million plus attorneys' fees of $2.5 million and applicable interest. The Company believes it has meritorious defenses and will pursue an appeal.

There were no other material changes during the three months and nine months ended September 30, 2017 to the financial commitments or the legal and environmental commitments that were discussed in Note 13 in the Notes to Consolidated Financial Statements in the 2016 Form 10-K.


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BRUNSWICK CORPORATION
Notes to Condensed Consolidated Financial Statements
(unaudited)


Product Warranties


The following activity related to product warranty liabilities was recorded in Accrued expenses during the ninethree months ended September 30, 2017April 1, 2023 and October 1, 2016:April 2, 2022:
(in millions)April 1, 2023April 2, 2022
Balance at beginning of period$146.7 $129.3 
Payments(19.4)(14.3)
Provisions/additions for contracts issued/sold25.2 21.2 
Aggregate changes for preexisting warranties0.3 (0.7)
Foreign currency translation0.3 — 
Other1.3 (0.2)
Balance at end of period$154.4 $135.3 
(in millions)September 30,
2017		 October 1,
2016
Balance at beginning of period$112.6
 $106.3
Payments made(53.5) (50.7)
Provisions/additions for contracts issued/sold54.8
 55.6
Aggregate changes for preexisting warranties(1.1) (8.1)
Foreign currency translation2.3
 0.8
Acquisitions—
 6.7
Other(1.3) —
Balance at end of period$113.8
 $110.6


Extended Product Warranties
Additionally, end users of the Company's products may purchase a contract from the Company that extends product warranty beyond the standard period. For certain extended warranty contracts in which the Company retains the warranty or administration obligation, a deferred revenue liability is recorded based on the aggregate sales price for contracts sold. The liability is reduced and revenue is recognized on a straight-line basis over the contract period during which corresponding costs are expected to be incurred.


The following activity related to deferred revenue for extended product warranty contracts was recorded in Accrued expenses and Other long-term liabilities during the ninethree months ended September 30, 2017April 1, 2023 and October 1, 2016:April 2, 2022:
(in millions)April 1, 2023April 2, 2022
Balance at beginning of period$112.5 $99.5 
Extended warranty contracts sold8.9 7.8 
Revenue recognized on existing extended warranty contracts(6.3)(5.5)
Foreign currency translation— 0.2 
Other(0.1)(0.1)
Balance at end of period$115.0 $101.9 
14
(in millions)September 30,
2017		 October 1,
2016
Balance at beginning of period$90.6
 $78.3
Extended warranty contracts sold39.3
 28.6
Revenue recognized on existing extended warranty contracts(23.8) (20.7)
Foreign currency translation1.1
 (0.1)
Acquisitions—
 2.6
Balance at end of period$107.2
 $88.7
Table of Contents

Notes to Condensed Consolidated Financial Statements
(unaudited)
Note 98 – Goodwill and Other Intangibles


Changes in the Company's goodwill during the ninethree months ended September 30, 2017,April 1, 2023 and April 2, 2022, by segment, are summarized below:
(in millions)PropulsionEngine P&ANavico GroupBoatTotal
December 31, 2022$14.0 $232.8 $595.8 $125.0 $967.6 
Adjustments— — 1.7 4.7 6.4 
April 1, 2023$14.0 $232.8 $597.5 $129.7 $974.0 
December 31, 2021$14.7 $233.1 $581.8 $58.8 $888.4 
Adjustments— (0.1)0.8 0.3 1.0 
April 2, 2022$14.7 $233.0 $582.6 $59.1 $889.4 
(in millions)December 31,
2016		 Acquisitions Impairments Adjustments September 30,
2017
Marine Engine$25.1
 $5.8
 $—
 $1.4
 $32.3
Boat2.2
 —
 —
 —
 2.2
Fitness386.5
 —
 —
 5.3
 391.8
    Total$413.8
 $5.8
 $—
 $6.7
 $426.3


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BRUNSWICK CORPORATION
Notes to Condensed Consolidated Financial Statements
(unaudited)

ChangesAdjustments in the Company's goodwill during the nine months ended October 1, 2016, by segment, are summarized below:
(in millions)December 31,
2015		 Acquisitions Impairments Adjustments October 1,
2016
Marine Engine$26.2
 $—
 $—
 $(0.3) $25.9
Boat—
 2.5
 —
 —
 2.5
Fitness272.5
 112.5
 —
 (0.4) 384.6
    Total$298.7
 $115.0
 $—
 $(0.7) $413.0

Adjustments for the nine months ended September 30, 2017 and October 1, 2016 primarily relate toboth periods include the effect of foreign currency translation on goodwill denominated in currencies other than the U.S. dollar. See Note 3 - Acquisitions for further details onIn addition, adjustments during the Company's acquisitions.

Asthree months ended April 1, 2023 also include $4.5 million of September 30, 2017, December 31, 2016 and October 1, 2016, the Company hadpurchase accounting adjustments from 2022 Freedom Boat Club acquisitions, related to boat fleet fair market value adjustments. There was no accumulated impairment loss.loss on Goodwill as of April 1, 2023, December 31, 2022 or April 2, 2022. As discussed in Note 1 – Significant Accounting Policies, effective January 1, 2023, we changed our reportable segments. Concurrent with the change in reportable segments, the Navico Group operating segment is now also the reporting unit at which we evaluate goodwill for impairment. As a result of this change, we evaluated impairment indicators at the previous reporting units immediately prior to the change and at the Navico Group reporting unit immediately following the change and concluded there were no indicators of impairment.


The Company's intangible assets, included within Other intangibles, net on the Condensed Consolidated Balance Sheets as of September 30, 2017,April 1, 2023, December 31, 20162022 and October 1, 2016,April 2, 2022, are summarized by intangible asset type below:
April 1, 2023December 31, 2022April 2, 2022
(in millions)Gross AmountAccumulated AmortizationGross AmountAccumulated AmortizationGross AmountAccumulated Amortization
Intangible assets:
  Customer relationships$897.7 $(397.5)$897.4 $(386.1)$889.1 $(351.9)
  Trade names305.5 — 305.4 — 305.9 — 
  Developed technology160.0 (16.0)160.0 (13.3)160.0 (5.3)
  Other79.2 (36.5)67.6 (33.6)64.1 (23.5)
    Total$1,442.4 $(450.0)$1,430.4 $(433.0)$1,419.1 $(380.7)
 September 30, 2017 December 31, 2016 October 1, 2016
(in millions)Gross Amount Accumulated Amortization Gross Amount Accumulated Amortization Gross Amount Accumulated Amortization
Intangible assets:           
  Customer relationships$305.7
 $(236.5) $300.1
 $(231.1) $298.2
 $(229.6)
  Trade names89.9
 —
 88.1
 —
 87.4
 —
  Other22.5
 (16.1) 22.4
 (14.7) 22.5
 (14.4)
    Total$418.1
 $(252.6) $410.6
 $(245.8) $408.1
 $(244.0)


Other intangible assets primarily consist of patents. See Note 3 - Acquisitions for further details on intangibles acquired during 2017.software, patents and franchise agreements. Gross amounts and related accumulated amortization amounts include adjustments related to the impact of foreign currency translation. Aggregate amortization expense for intangibles was $2.1$16.6 million and $6.2$15.9 million for the three months ended April 1, 2023 and nine months ended September 30, 2017,April 2, 2022, respectively. Aggregate amortization expense

The Company tests its intangible assets for intangibles was $1.7 millionimpairment during the fourth quarter of each year, or whenever a significant change in events and $4.7 million forcircumstances (triggering event) occurs that indicates the fair value of intangible assets may be below their carrying values. The Company did not record an impairment charge during the three months and nine months ended OctoberApril 1, 2016, respectively.2023 or April 2, 2022.



Note 10 – Segment Data

Reportable Segments

The following table sets forth net sales and operating earnings (loss) of each of the Company's reportable segments, for the three months and nine months ended September 30, 2017 and October 1, 2016:
15
 Net Sales Operating Earnings (Loss)
 Three Months Ended Nine Months Ended Three Months Ended Nine Months Ended
(in millions)Sep 30,
2017		 Oct 1,
2016		 Sep 30,
2017		 Oct 1,
2016		 Sep 30,
2017		 Oct 1,
2016		 Sep 30,
2017		 Oct 1,
2016
Marine Engine$669.2
 $625.7
 $2,067.2
 $1,940.9
 $115.2
 $109.5
 $351.9
 $326.8
Boat309.3
 307.0
 1,104.1
 1,011.9
 0.1
 6.8
 28.0
 45.9
Marine eliminations(79.8) (77.3) (246.4) (233.0) —
 —
 —
 —
Total Marine898.7
 855.4
 2,924.9
 2,719.8
 115.3
 116.3
 379.9
 372.7
Fitness242.8
 237.6
 728.9
 685.7
 19.4
 29.1
 56.2
 73.3
Pension costs—
 —
 —
 —
 (2.3) (3.6) (7.0) (11.0)
Corporate/Other—
 —
 —
 —
 (20.7) (19.3) (59.8) (54.6)
Total$1,141.5
 $1,093.0
 $3,653.8
 $3,405.5
 $111.7
 $122.5
 $369.3
 $380.4

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BRUNSWICK CORPORATION
Notes to Condensed Consolidated Financial Statements
(unaudited)
    

Note 9 – Segment Data


Change in Reportable Segments
Effective January 1, 2023, the Company changed its management reporting and updated its reportable segments to Propulsion, Engine P&A, Navico Group and Boat to align with our internal operating structure.

Reportable Segments

The following table sets forth total assets of each of theCompany's segments are defined by management's reporting structure and operating activities. The Company's reportable segments:
segments are the following:
 Total Assets
(in millions)Sep 30,
2017		 Dec 31,
2016		 Oct 1,
2016
Marine Engine$1,195.3
 $1,079.5
 $1,060.5
Boat467.7
 425.2
 437.0
     Total Marine1,663.0
 1,504.7
 1,497.5
Fitness1,005.0
 947.5
 922.4
Corporate/Other731.2
 832.5
 821.3
Total$3,399.2
 $3,284.7
 $3,241.2


AsPropulsion. The Propulsion segment manufactures and markets a full range of September 30, 2017, December 31, 2016outboard, sterndrive, and October 1, 2016,inboard engines, as well as propulsion-related controls, rigging, and propellers. These products are principally sold directly to boat builders, including Brunswick's Boat segment, and through marine retail dealers worldwide. The Propulsion segment primarily markets under the Company had $6.3 million, $13.2 millionMercury, Mercury MerCruiser, Mariner, Mercury Racing, and $14.2 million, respectively, of net assets classified as held-for-sale within Net propertyMercury Diesel brands. The segment's engine manufacturing plants are located mainly in the Condensed Consolidated Balance Sheets.United States and China, along with a joint venture in Japan, with sales mainly to markets in the Americas, Europe, and Asia-Pacific.



Engine P&A. The Engine P&A segment manufactures, markets, supplies and distributes products for both marine and non-marine markets. These products are designed for and sold mostly to aftermarket retailers, distributors, and distribution businesses, as well as original equipment manufacturers (including Brunswick brands). Company-branded products include consumables, such as engine oils and lubricants, and are sold under the Mercury, Mercury Precision Parts, Quicksilver, and Seachoice brands. The Engine P&A segment also includes distribution businesses such as Land 'N' Sea, Kellogg Marine Supply, Lankhorst Taselaar, BLA, and Payne's Marine Group, which distribute third-party and Company products. These businesses are leading distributors of marine parts and accessories throughout North America, Europe, and Asia-Pacific. The segment's manufacturing and distribution facilities are primarily located in North America, Europe, Australia, and New Zealand.

Navico Group. The Navico Group segment designs, develops, manufactures, and markets products and systems for the marine, RV, specialty vehicle and industrial markets. Navico Group's brand portfolio includes the Ancor, Attwood, B&G, BEP, Blue Sea Systems, C-MAP, CZone, Garelick, Lenco, Lowrance, Marinco, Mastervolt, MotorGuide, Progressive Industries, ProMariner, RELiON, Simrad and Whale brand names. These brands span multiple categories, including marine electronics, sensors, control systems, instruments, power systems, and general accessories. The segment's manufacturing and distribution facilities are primarily located in North America, Europe, Australia, and New Zealand.

Boat. The Boat segment designs, manufactures, and markets the following boat brands and products: Sea Ray sport boats and cruisers; Bayliner sport cruisers, runabouts, and Heyday wake boats; Boston Whaler fiberglass offshore boats; Lund fiberglass fishing boats; Crestliner, Cypress Cay, Harris, Lowe, Lund and Princecraft aluminum fishing, utility, pontoon boats, and deck boats; Thunder Jet heavy-gauge aluminum boats; and Veer recreational and fishing boats, designed specifically to support electric propulsion. The Boat segment procures substantially all of its outboard engines, gasoline sterndrive engines, and gasoline inboard engines from Brunswick's Propulsion segment. The Boat segment also includes Brunswick boat brands based in Europe and Asia-Pacific, which include Quicksilver, Uttern, and Rayglass (including Protector and Legend). The Boat segment's products are manufactured mainly in the United States, Europe, Mexico, and Canada and sold through a global network of dealer and distributor locations, primarily in North America and Europe.

The Boat segment includes Business Acceleration which, through innovative service models, shared access solutions, including the Freedom Boat Club business acquired in 2019, dealer services and emerging technology, aims to provide exceptional experiences to attract a wide range of customers to the marine industry and shape the future of boating.

The Company evaluates performance based on segment operating earnings. Segment operating earnings do not include the expenses of corporate administration, impairments or gains on the sale of equity investments, earnings from unconsolidated affiliates, other expenses and income of a non-operating nature, transaction financing charges, interest expense, and income or provisions or benefits for income taxes.
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BRUNSWICK CORPORATION
Notes to Condensed Consolidated Financial Statements
(unaudited)
    


Corporate/Other results include items such as corporate staff and administrative costs, investments in technology solutions, business development and other growth-related expenses, including IT enhancements. Corporate/Other total assets consist of mainly cash, cash equivalents and investments in short-term marketable securities, restricted cash, income tax balances and investments in unconsolidated affiliates.

Segment eliminations adjust for sales between the Company's reportable segments and primarily relate to the sale of engines and parts and accessories to various boat brands, which are consummated at established arm's length transfer prices as the intersegment pricing for these engines and parts and accessories are based upon and consistent with selling prices to third-party customers.

Information about the operations of Brunswick's reportable segments is set forth below:
Net SalesOperating Earnings (Loss)
Three Months EndedThree Months Ended
(in millions)April 1,
2023		April 2,
2022		April 1,
2023		April 2,
2022
Propulsion$751.6 $705.9 $151.1 $125.3 
Engine P&A288.6 330.3 47.8 61.0 
Navico Group277.3 311.6 12.8 30.6 
Boat575.2 492.8 57.8 45.3 
Corporate/Other— — (33.4)(22.7)
Segment Eliminations(149.1)(144.9)— — 
Total$1,743.6 $1,695.7 $236.1 $239.5 
 Total Assets
(in millions)April 1,
2023		December 31,
2022		April 2,
2022
Propulsion$1,634.0 $1,516.7 $1,358.0 
Engine P&A940.6 868.6 918.5 
Navico Group2,152.7 2,169.0 2,172.6 
Boat882.5 829.8 673.7 
Corporate/Other678.8 937.2 970.2 
Total$6,288.6 $6,321.3 $6,093.0 
Note 1110 – Comprehensive Income


Accumulated other comprehensive loss in the Condensed Consolidated Balance Sheets includes foreign currency cumulative translation adjustments; prior service costs and credits and net actuarial gains and losses for defined benefit plans; and unrealized derivative gains and losses, all net of tax. Changes in the components of Accumulated other comprehensive loss, all net of tax, for the three months ended April 1, 2023 and nine months ended September 30, 2017 and October 1, 2016 wereApril 2, 2022 are as follows:
Three Months Ended
(in millions)April 1,
2023		April 2,
2022
Net earnings$112.3 $174.2 
Other comprehensive income (loss):
Foreign currency cumulative translation adjustments6.3 2.1 
Net change in unamortized actuarial gains0.1 0.2 
Net change in unrealized derivative gains(2.8)7.6 
Total other comprehensive income3.6 9.9 
Comprehensive income$115.9 $184.1 

17
 Three Months Ended Nine Months Ended
(in millions)Sep 30, 2017 Oct 1, 2016 Sep 30, 2017 Oct 1, 2016
Net earnings$79.0
 $85.4
 $263.3
 $258.3
Other comprehensive income (loss): 
  
    
Foreign currency cumulative translation adjustment16.6
 0.7
 28.0
 10.2
Net change in unamortized prior service credits(0.2) (0.1) (0.4) (0.3)
Net change in unamortized actuarial losses1.7
 2.7
 5.9
 7.9
Net change in unrealized derivative losses(6.4) (0.0) (10.9) (3.7)
Total other comprehensive income11.7
 3.3
 22.6
 14.1
Comprehensive income$90.7
 $88.7
 $285.9
 $272.4
Table of Contents

Notes to Condensed Consolidated Financial Statements
(unaudited)
The following table presents the changes in Accumulated other comprehensive loss by component, all net of tax, for the three months ended September 30, 2017:April 1, 2023:
(in millions)Foreign currency translationPrior service creditsNet actuarial gainsUnrealized investment gainsNet derivative gainsTotal
Beginning balance$(71.3)$(4.1)$9.7 $0.2 $36.0 $(29.5)
Other comprehensive income before reclassifications (A)
6.3 — — — 2.1 8.4 
Amounts reclassified from Accumulated other comprehensive loss (B)
— — 0.1 — (4.9)(4.8)
Net other comprehensive income (loss)6.3 — 0.1 — (2.8)3.6 
Ending balance$(65.0)$(4.1)$9.8 $0.2 $33.2 $(25.9)
(in millions)Foreign currency translation Prior service credits Net actuarial losses Net derivative losses Total
Beginning balance$(40.5) $(5.3) $(367.8) $(10.1) $(423.7)
Other comprehensive income (loss) before reclassifications (A)
16.6
 —
 (0.6) (7.2) 8.8
Amounts reclassified from Accumulated other comprehensive loss (B)
—
 (0.2) 2.3
 0.8
 2.9
Net other comprehensive income (loss)16.6
 (0.2) 1.7
 (6.4) 11.7
Ending balance$(23.9) $(5.5) $(366.1) $(16.5) $(412.0)


(A) The tax effects for the three months ended September 30, 2017April 1, 2023 were $(1.6)$(0.1) million for foreign currency translation $0.2 million for net actuarial losses arising during the period and $3.2$(1.0) million for derivatives.
(B) See the table depicting reclassification adjustments out of Accumulated other comprehensive loss below for the tax effects for the three months ended September 30, 2017.April 1, 2023.


The following table presents the changes in Accumulated other comprehensive loss by component, all net of tax, for the nine months ended September 30, 2017:
(in millions)Foreign currency translation Prior service credits Net actuarial losses Net derivative losses Total
Beginning balance$(51.9) $(5.1) $(372.0) $(5.6) $(434.6)
Other comprehensive income (loss) before reclassifications (A)
28.0
 —
 (0.8) (10.5) 16.7
Amounts reclassified from Accumulated other comprehensive loss (B)
—
 (0.4) 6.7
 (0.4) 5.9
Net other comprehensive income (loss)28.0
 (0.4) 5.9
 (10.9) 22.6
Ending balance$(23.9) $(5.5) $(366.1) $(16.5) $(412.0)

(A) The tax effects for the nine months ended September 30, 2017 were $(4.8) million for foreign currency translation, $0.4 million for net actuarial losses arising during the period and $4.8 million for derivatives.
(B) See the table below for the tax effects for the nine months ended September 30, 2017.


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BRUNSWICK CORPORATION
Notes to Condensed Consolidated Financial Statements
(unaudited)

The following table presents the changes in Accumulated other comprehensive loss by component, all net of tax, for the three months ended October 1, 2016:April 2, 2022:
(in millions)Foreign currency translationPrior service creditsNet actuarial lossesUnrealized investment gainsNet derivative gainsTotal
Beginning balance$(34.5)$(3.7)$(3.4)$0.2 $9.9 $(31.5)
Other comprehensive income before reclassifications (A)
2.1 — — — 10.8 12.9 
Amounts reclassified from Accumulated other comprehensive loss (B)
— — 0.2 — (3.2)(3.0)
Net other comprehensive income2.1 — 0.2 — 7.6 9.9 
Ending balance$(32.4)$(3.7)$(3.2)$0.2 $17.5 $(21.6)

(in millions)Foreign currency translation Prior service credits Net actuarial losses Net derivative losses Total
Beginning balance$(46.9) $(4.9) $(401.9) $(9.6) $(463.3)
Other comprehensive income (loss) before reclassifications (A)
0.7
 —
 0.0
 0.0
 0.7
Amounts reclassified from Accumulated other comprehensive loss (B)
—
 (0.1) 2.7
 (0.0) 2.6
Net other comprehensive income (loss)0.7
 (0.1) 2.7
 (0.0) 3.3
Ending balance$(46.2) $(5.0) $(399.2) $(9.6) $(460.0)

(A) The tax effects for the three months ended October 1, 2016April 2, 2022 were $0.1$1.6 million for foreign currency translation $(0.0)and $(3.5) million for net actuarial losses arising during the period and $0.2 million for derivatives.
(B) See the table depicting reclassification adjustments out of Accumulated other comprehensive loss below for the tax effects for the three months ended October 1, 2016.April 2, 2022

The following table presents the changes in Accumulated other comprehensive loss by component, all net of tax, for the nine months ended October 1, 2016:
(in millions)Foreign currency translation Prior service credits Net actuarial losses Net derivative losses Total
Beginning balance$(56.4) $(4.7) $(407.1) $(5.9) $(474.1)
Other comprehensive income (loss) before reclassifications (A)
10.2
 —
 (0.5) (2.0) 7.7
Amounts reclassified from Accumulated other comprehensive loss (B)
—
 (0.3) 8.4
 (1.7) 6.4
Net other comprehensive income (loss)10.2
 (0.3) 7.9
 (3.7) 14.1
Ending balance$(46.2) $(5.0) $(399.2) $(9.6) $(460.0)

(A) The tax effects for the nine months ended October 1, 2016were $2.3 million for foreign currency translation, $(0.2) million for net actuarial losses arising during the period and $1.2 million for derivatives.
(B) See the table below for the tax effects for the nine months ended October 1, 2016.


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BRUNSWICK CORPORATION
Notes to Condensed Consolidated Financial Statements
(unaudited)


The following table presents reclassification adjustments out of Accumulated other comprehensive loss during the three months and ninethree months ended September 30, 2017April 1, 2023 and October 1, 2016:April 2, 2022:

Three Months Ended
Details about Accumulated other comprehensive (loss) income components (in millions)April 1,
2023		April 2,
2022		Affected line item in the statement where net income is presented
Amortization of defined benefit items:
Net actuarial losses$(0.1)$(0.2)Other expense, net
(0.1)(0.2)Earnings before income taxes
— — Income tax provision
$(0.1)$(0.2)Net earnings from continuing operations
Amount of (loss) gain reclassified into earnings on derivative contracts:
Interest-rate contracts$(0.1)$— Interest expense
Foreign exchange contracts7.5 2.7 Cost of sales
Commodity contracts(0.6)1.6 Cost of sales
6.8 4.3 Earnings before income taxes
(1.9)(1.1)Income tax provision
$4.9 $3.2 Net earnings from continuing operations
18
(in millions) Three Months Ended Nine Months Ended  
Details about Accumulated other comprehensive income (loss) components Sep 30,
2017		 Oct 1,
2016		 Sep 30,
2017		 Oct 1,
2016		 Affected line item in the statement where net income is presented
Amortization of defined benefit items:          
Prior service credits $0.1
 $0.1
 $0.5
 $0.4
 
(A) 
Net actuarial losses (3.6) (4.3) (10.8) (13.0) 
(A) 
  (3.5) (4.2) (10.3) (12.6) Earnings before income taxes
  1.4
 1.6
 4.0
 4.5
 Income tax provision
  $(2.1) $(2.6) $(6.3) $(8.1) Net earnings from continuing operations
           
Amount of gain (loss) reclassified into earnings on derivative contracts:          
Interest rate contracts $(0.3) $(0.3) $(0.8) $(0.3) Interest expense
Foreign exchange contracts (0.9) 0.4
 1.2
 3.1
 Cost of sales
Commodity contracts —
 (0.1) (0.0) (0.5) Cost of sales
  (1.2) 0.0
 0.4
 2.3
 Earnings before income taxes
  0.4
 (0.0) 0.0
 (0.6) Income tax provision
  $(0.8) $0.0
 $0.4
 $1.7
 Net earnings from continuing operations

(A) These Accumulated other comprehensive loss components are included in the computation of net pension and other benefit costs. See Note 13 – Postretirement Benefits for additional details.

Note 12 – Income Taxes

The Company recognized an income tax provision from continuing operations for the three months and nine months ended September 30, 2017 of $30.0 million and $99.1 million, respectively, and included a net tax benefit of $0.8 million and $9.1 respectively, primarily associated with the net excess tax benefits related to share-based compensation which was recognized as an income tax benefit in accordance with recent changes in accounting guidance as discussed in Note 1 –Significant Accounting Policies. The Company recognized an income tax provision from continuing operations for the three months and nine months ended October 1, 2016 of $32.8 million and $109.1 million, respectively, which included net tax benefits of $3.2 million and $3.3 million, respectively, mainly associated with the reassessment of tax reserves and favorable valuation allowance adjustments. The effective tax rate from continuing operations, which is calculated as the income tax provision as a percentage of pre-tax income, for the three months and nine months ended September 30, 2017 was 27.5 percent and 27.3 percent, respectively. The effective tax rate from continuing operations for the three months and nine months ended October 1, 2016 was 27.8 percent and 29.8 percent, respectively.

No deferred income taxes have been provided as of September 30, 2017, December 31, 2016 or October 1, 2016 on the applicable undistributed earnings of the non-U.S. subsidiaries where the indefinite reinvestment assertion has been applied. If at some future date these earnings cease to be indefinitely reinvested and are repatriated, the Company may be subject to additional U.S. income taxes and foreign withholding and other taxes on such amounts. The Company continues to provide deferred taxes, as required, on the undistributed net earnings of foreign subsidiaries and unconsolidated affiliates that are not deemed to be indefinitely reinvested in operations outside the United States.

As of September 30, 2017, December 31, 2016 and October 1, 2016, the Company had $2.3 million, $3.5 million and $3.8 million of gross unrecognized tax benefits, including interest, respectively.  The Company believes it is reasonably possible that the total amount of gross unrecognized tax benefits as of September 30, 2017 could decrease by approximately $0.7 million in the next 12 months due to settlements with taxing authorities or lapses in the applicable statute of limitations.  Due to the various jurisdictions in which the Company files tax returns and the uncertainty regarding the timing of the settlement of tax audits, it is

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BRUNSWICK CORPORATION
Notes to Condensed Consolidated Financial Statements
(unaudited)
    

Note 11 – Income Taxes
possible that there could
The effective tax rate for the three months ended April 1, 2023 and April 2, 2022 was 46.8 percent and 21.1 percent, respectively. In the first quarter of 2023, we completed an intercompany sale of certain intellectual property rights in order to better align the ownership of those rights with how our business operates. The completion of this sale from one of our affiliates in Norway to the United States resulted in $52.9 million of discrete income tax expense. The income tax will be significant changes in the amount of unrecognizedpaid over time as permitted under current Norwegian tax benefits in 2017, but the amount cannot be estimated.law.


The Company is regularly audited by federal, state and foreign tax authorities. The Internal Revenue Service (IRS)("IRS") has completed its field examination and has issued its Revenue Agents Report through the 20122014 tax year and all open issues have been resolved. The Company is currently open to tax examinations by the IRS for the 20142019 through 20162021 tax years. The 2014 tax year is currently under examination and the Company has been notified by the IRS that it will also be examining the 2015 tax year. Primarily as a result of filing amended returns, which were generated by the closing of federal income tax audits, the Company is still open to state and local tax audits in major tax jurisdictions dating back to the 20122017 taxable year. The Company is no longer subject to income tax examinations by any major foreign tax jurisdiction for years prior to 2013.2015.


Note 1312 – Postretirement BenefitsDebt


The Company has defined contribution plans, qualified and nonqualified defined benefit pension plans and other postretirement benefit plans covering substantially all of its employees. The Company's contributions to its defined contribution plans include matching and annual discretionary contributions which are based on various percentages of compensation, and in some instances are based onfollowing table provides the amount of the employees' contributions to the plans. See Note 17changes in the Notes to Consolidated Financial Statements in the 2016 Form 10-K for further details regarding these plans.
Pension and other postretirement benefit costs included the following componentsCompany's debt for the three months and nine months ended September 30, 2017 and OctoberApril 1, 2016:2023:

 Pension Benefits Other Postretirement Benefits
 Three Months Ended Nine Months Ended Three Months Ended Nine Months Ended
(in millions)Sep 30,
2017		 Oct 1,
2016		 Sep 30,
2017		 Oct 1,
2016		 Sep 30,
2017		 Oct 1,
2016		 Sep 30,
2017		 Oct 1,
2016
Interest cost$7.0
 $8.9
 $21.2
 $26.8
 $0.3
 $0.4
 $1.0
 $1.1
Expected return on plan assets(8.3) (9.6) (25.0) (28.8) —
 —
 —
 —
Amortization of prior service credits—
 —
 —
 —
 (0.1) (0.1) (0.5) (0.4)
Amortization of net actuarial losses3.6
 4.3
 10.8
 13.0
 —
 —
 —
 —
Net pension and other benefit costs$2.3
 $3.6
 $7.0
 $11.0
 $0.2
 $0.3
 $0.5
 $0.7
(in millions)Short-term debt and current maturities of long-term debtLong-term debtTotal
Balance as of December 31, 2022$89.0 $2,420.0 $2,509.0 
Proceeds from issuances of debt1.4 — 1.4 
Repayments of debt(0.8)— (0.8)
Reclassification of long-term debt0.2 (0.2)— 
Other— 0.7 0.7 
Balance as of April 1, 2023$89.8 $2,420.5 $2,510.3 


Portions of Net pension and other benefit costs are recorded in Cost of sales as well as Selling, general and administrative expenses in the Condensed Consolidated Statements of Comprehensive Income.

Employer Contributions and Benefit Payments. During the nine months ended September 30, 2017 and October 1, 2016, the Company contributed $55.0 million and $70.0 million, respectively, to its qualified pension plans. Company contributions are subject to change based on funding regulations and Company discretion. During the nine months ended September 30, 2017 and October 1, 2016, the Company contributed $3.1 million and $2.7 million, respectively, to fund benefit payments to its nonqualified pension plan.

Note 14 – Debt

There was no significant activity in Long-term debt during the nine months ended September 30, 2017 and October 1, 2016. See Note 16 in the Notes to Consolidated Financial Statements in the 2016 Form 10-K for details regarding the Company's debt.

In June 2016, the Company entered into an Amended and Restated Credit Agreement (Credit Facility). The Credit Facility amends and restates the Company's existing credit agreement, dated as of March 2011, as amended and restated as of June 2014. The Credit Facility provides for $300 million of borrowing capacity and is in effect through June 2021. No borrowings were outstanding as of or during the nine months ended September 30, 2017, and available borrowing capacity totaled $295.7 million, net of $4.3 million of letters of credit outstanding under the Credit Facility. As of September 30, 2017, the CompanyApril 1, 2023, Brunswick was in compliance with the financial covenants associated with its debt.

2032 and 2052 Notes

In March 2022, the Company issued an aggregate principal amount of $450.0 million of 4.400% Senior Notes due 2032 (the "2032 Notes") and $300.0 million of 5.100% Senior Notes due 2052 (the "2052 Notes" and, together with the 2032 Notes, the "Notes") in a public offering, which resulted in aggregate net proceeds to the Company of $741.8 million. The Company used the net proceeds from the sale of the Notes for general corporate purposes.

The 2032 Notes bear interest at a rate of 4.400% per year and the 2052 Notes bear interest at a rate of 5.100% per year. Interest on the 2032 Notes is payable semiannually in arrears on March 15 and September 15 of each year, and the first interest payment date was September 15, 2022. Interest on the 2052 Notes is payable semiannually in arrears on April 1 and October 1 of each year, and the first interest payment date was October 1, 2022. The 2032 Notes will mature on September 15, 2032, and the 2052 Notes will mature on April 1, 2052.

The Company may redeem the Notes of each series, in whole or in part, at any time and from time to time prior to maturity. If the Company elects to redeem the Notes at any time prior to (i) with respect to the 2032 Notes, June 15, 2032 (the date that is three months prior to the maturity of the 2032 Notes) or (ii) with respect to the 2052 Notes, October 1, 2051 (the date that is six months prior to the maturity of the 2052 Notes), it will pay a “make-whole” redemption price set forth in the Credit Facility. See Note 16Fifth Supplemental Indenture dated as of March 29, 2022 ("Fifth Supplemental Indenture"). On or after June 15, 2032, in the case of the 2032 Notes, to Consolidated Financial Statementsor October 1, 2051, in the 2016 Form 10-K for details regardingcase of the Company's Credit Facility.2052 Notes, the Company may, at its option, redeem the Notes of each series, in whole or in part at any time and from time to time, at a redemption price equal to 100% of the principal amount thereof. In addition to the redemption price, the Company will pay accrued and unpaid interest, if any, to, but not including, the redemption date.



23
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BRUNSWICK CORPORATION
Notes to Condensed Consolidated Financial Statements
(unaudited)
    

If the Company experiences a change-of-control triggering event with respect to a series of Notes, as defined in the Fifth Supplemental Indenture, each holder of such series of Notes may require the Company to repurchase some or all of its Notes at a price equal to 101% of their principal amount, plus accrued and unpaid interest to, but not including, the repurchase date.

Term Loan

During the three months ended April 2, 2022, the Company made the remaining principal repayments, totaling $56.3 million, of its 2023 floating-rate term loan. The term loan was redeemed at 100 percent of the principal amount plus accrued interest in accordance with the redemption provisions of the term loan. The Company recognized a loss on early extinguishment of debt of $0.1 million related to the term loan redemption.

Credit Facility

The Company maintains a Revolving Credit Agreement ("Credit Facility"). In March 2022, the Company amended its Credit Facility with certain wholly-owned subsidiaries of the Company as subsidiary borrowers and lenders as parties, and JPMorgan Chase Bank, N.A., as administrative agent. This amends and restates the Credit Facility, dated as of March 21, 2011, as amended and restated on July 16, 2021. The amended Credit Facility increased the revolving commitments to $750.0 million, with the capacity to add up to $100.0 million of additional revolving commitments, and amended the Credit Facility in certain respects, including, among other things:

•Extending the maturity date to March 31, 2027, with up to two one-year extensions available.

•Transitioning the reference rate for loans denominated in U.S. dollars from the London Interbank Offered Rate ("LIBOR") to the term Secured Overnight Financing Rate ("SOFR"), with a credit-spread adjustment of 10 basis points to be added to the reference rate for borrowings of U.S. dollar loans for each interest period.

During the three months ended April 1, 2023, there were no borrowings under the Credit Facility, and available borrowing capacity totaled $741.9 million, net of $8.1 million of letters of credit outstanding, under the Credit Facility.

During the three months ended April 2, 2022, gross borrowings under the Credit Facility totaled $125.0 million. As of April 2, 2022, there were no borrowings outstanding and available borrowing capacity totaled $747.2 million, net of $2.8 million of letters of credit outstanding, under the Credit Facility. The maximum amount utilized under the Credit Facility during the three months ended April 2, 2022, including letters of credit outstanding under the Credit Facility, was $127.8 million.Refer to Note 15 – Subsequent Events

On October 17, 2017, the Company's Board of Directors declared a quarterly dividend on its common stock of $0.19 per share. The dividend will be payable December 15, 2017 to shareholders of record as of November 21, 2017.

On October 25, 2017, settlement payments totaling $132.6 million were made from the Brunswick Pension Plan For Hourly Bargaining Unit Employees and the Brunswick Pension Plan For Salaried Employees to purchase group annuity contracts to cover future benefit payments. The Company anticipates incurring settlement charges in the fourthNotes to Consolidated Financial Statements in the 2022 Form 10-K for details regarding Brunswick's Credit Facility.

Commercial Paper

In December 2019, the Company entered into an unsecured commercial paper program ("CP Program") pursuant to which the Company may issue short-term, unsecured commercial paper notes ("CP Notes"). During the second quarter relatedof 2022, the Company increased the size of its CP Program to these actions.

Additionally on October 25, 2017, settlement payments totaling $101.7allow the issuance of CP Notes in an aggregate principal amount not to exceed $500.0 million were madeoutstanding at any time. The CP Program previously allowed the Company to issue CP Notes in an aggregate principal amount not to exceed $300.0 million outstanding at any time. Amounts available under the CP Program may be borrowed, repaid and re-borrowed from the Brunswick Pension Plan For Hourly Employees and the Brunswick Pension Plan For Hourly Wage Employees in connectiontime to time, with the previously announced terminationsaggregate principal amount of these plans. The settlement payments included group annuity contractsCP Notes outstanding under the CP Program at any time not exceeding the lower of $500.0 million or the available borrowing amount under the Credit Facility. During the first three months of 2023, borrowings under the CP Program totaled $85.0 million, all of which were repaid during the period. During the three months ended April 1, 2023, the maximum amount utilized under the CP Program was $85.0 million. Refer to cover future benefit payments as well as lump-sum benefit payments to certain participants. The Company anticipates incurring settlement chargesNote 15 in the fourth quarter relatedNotes to these actions.Consolidated Financial Statements in the 2022 Form 10-K for details regarding Brunswick's CP Program.


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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations


Certain statements in Management's Discussion and Analysis of Financial Condition and Results of Operations of Brunswick Corporation (the Company, we, us, our) are forward-looking statements. Forward-looking statements are based on current expectations, estimates, and projections about our business and by their nature address matters that are, to different degrees, uncertain. Actual results may differ materially from expectations and projections as of the date of this filing due to various risks and uncertainties. For additional information regarding forward-looking statements, refer to Forward-Looking Statements below.

Certain statements in Management’sManagement's Discussion and Analysis are based on non-GAAP financial measures. Specifically,GAAP refers to generally accepted accounting principles in the discussion of Brunswick Corporation's (Brunswick or the Company) cash flows includes an analysis of free cash flows and total liquidity, the discussion of the Company's net sales includes comparisons of net sales on a constant currency basis and excluding acquisitions, and the discussion of the Company's earnings includes comparisons of diluted earnings per common share, as adjusted.United States. A “non-GAAP"non-GAAP financial measure”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 consolidated statements of comprehensive income,operations, balance sheets or statements 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. For example, the discussion of our cash flows includes an analysis of free cash flows and total liquidity; the discussion of our net sales includes net sales on a constant currency basis; the discussion of our net sales includes net sales excluding acquisitions; the discussion of our earnings includes a presentation of operating earnings and operating margin excluding restructuring, exit and impairment charges, purchase accounting amortization, acquisition-related costs and other applicable charges and of diluted earnings per common share, as adjusted. Non-GAAP financial measures do not include operating and statistical measures.


The Company includesWe include non-GAAP financial measures in Management’sManagement'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’sour performance using the same tools that management uses andto evaluate our ongoing business performance. In order to better align our reported results with the internal metrics management uses to evaluate business performance as well as to provide better comparisons to prior periods and peer data, non-GAAP measures exclude the Company’s ongoing business performance.impact of purchase accounting amortization related to acquisitions, among other adjustments.


Certain 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 Part I, Item 1A – Risk Factors in Brunswick’s 2016 Annual Report on Form 10-K for the year ended December 31, 2016 (the 2016 Form 10-K).

Brunswick doesWe do not provide forward-looking guidance for certain financial measures on a GAAP basis because it iswe are unable to predict certain items contained in the GAAP measures without unreasonable efforts. These items may include pension settlement charges, restructuring, exit integration and impairment costs, special tax items, acquisition-related costs, and certain other unusual adjustments.


Change in Reportable Segments

Effective January 1, 2023, the Company changed its management reporting and updated its reportable segments to Propulsion, Engine P&A, Navico Group and Boat to align with its internal operating structure. For further information, refer to our Current Report on Form 8-K filed with the Securities and Exchange Commission on April 10, 2023 and Note 9 – Segment Data in the Notes to Condensed Consolidated Financial Statements.

Acquisitions

During the second quarter of 2022, we acquired certain Freedom Boat Club franchise operations and territory rights as well as certain marine assets in the Southeast United States for net cash consideration of $93.9 million. Refer to Note 4 – Acquisitions in the Notes to Condensed Consolidated Financial Statements for further information.








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Overview and Outlook


General

Net sales increased 43 percent during the thirdfirst quarter of 20172023 when compared with the thirdfirst quarter of 2016. Excluding2022. Our Propulsion business delivered outstanding results driven by increased shipments of high-horsepower outboard products to international customers and original equipment manufacturers ("OEM"), enabled by the impactrecent manufacturing capacity expansion. Our Engine P&A business experienced sales declines versus the record first quarter of acquisitions, net sales increased 3 percent over the comparative period.Marine Engine segment net sales increased due to strong growth in outboard engines and solid growth in the marine parts and accessories businesses, partially offset by declines in sterndrive engines.Boat segment net sales increased slightly as strong growth in the aluminum outboard boat business was mostly offset by declines in large sterndrive/inboard boards. Additionally, production disruptions resulting from Hurricane Irma affected sales of products manufactured at the Company's Florida-based operations, particularly fiberglass outboard operations. Fitness segment net sales increased resulting from the Indoor Cycling Group GmbH (ICG) acquisition and reflected flat overall global market demand, with growth in sales to value-oriented clubs being offset2022 driven by softness in the international markets and our third-party distribution businesses as dealers and retailers right-sized inventories. Navico Group sales declined versus the first quarter of 2022 due to traditional clubslower sales into the retail channel and other vertical markets. Internationalto RV OEMs, and unfavorable currency exchange rate fluctuations. Our Boat business experienced robust sales growth with all product categories contributing to the performance. Our international net sales for the Companydecreased 3 percent and increased 81 percent in the thirdfirst quarter of 2017 on a GAAP and constant currency basis, when compared with the third quarter of 2016. Excluding acquisitions, international sales increased 6 percent, driven by increases in Asia-Pacific, Europe, Latin America and Canada.respectively.

Net sales during the first nine months of 2017 increased 7 percent on a GAAP basis and 6 percent excluding the impact of acquisitions when compared with the same prior year period. The increases reflect the same factors as the quarterly period above, except there was also strong sales growth in fiberglass outboard boats and Fitness segment international sales increased. International net sales increased 10 percent on a GAAP basis and increased 7 percent when excluding the impact of acquisitions. Increases were mainly driven by Asia-Pacific, Latin America, Europe and Canada.

Operating earnings in the third quarter of 2017 were $111.7 million with an operating margin of 9.8 percent, which included restructuring, exit and integration charges of $6.8 million. In the third quarter of 2016, the Company reported operating earnings of $122.5 million with an operating margin of 11.2 percent, which included restructuring, exit and integration charges of $2.4 million. The decrease in operating earnings reflected unfavorable changes in sales mix in the Boat and Fitness segments, higher restructuring, exit and integration charges, planned increases in growth investments and manufacturing inefficiencies in the Boat segment, including costs associated with the hurricane. These factors were partially offset by higher net sales and the favorable impact of foreign exchange.


Operating earnings in the first nine monthsquarter of 20172023 were $369.3$236.1 million with an operating margin of 10.1 percent, which included restructuring, exit and integration charges of $27.7 million. In the first nine months of 2016, the Company reported

operating earnings of $380.4$262.4 million which included restructuring, exit and integration charges of $8.8 million. The decline in operating earnings was due to the same factors described in the quarterly period above, except restructuring, exit and integration charges had a much greater unfavorable impact. Additionally, unfavorable warranty adjustments and legal costs in the second quarter negatively impacted the fiberglass sterndrive/inboard boat business.

Despite unanticipated headwinds, the Company continues to expect that 2017 will be another year of strong earnings performance with excellent cash flow generation.The Company is targeting approximately 7 percent net sales growth when compared with 2016, with a slightly lower growth rate in the fourth quarter. The Company's plan reflects the collective marine businesses continuing to generate solid top-line growth over the remainder of the year. The Fitness segment is expected to report fourth quarter sales growth consistent with third quarter growth.

The Company projects gross margin to be down for the year as a percentage of sales, however not to the same degree as the year-to-date comparisons. Operating margins are anticipated to decrease modestly, with operating leverage in the mid-to-high single digit range. The Company projects operating expenses, including research and development expenses, to be higher in 2017 when compared with 2016 as the Company continues to increase investment spending to support growth including new products, productivity initiatives and information technology. Operating expenses are projected to be slightly lower on a percentage of sales basis in 2017 versus 2016.

The Company is planning for its effective tax rate in 2017 to be approximately 27.5percent on a GAAP and As Adjusted basis, respectively. This compares to operating earnings during the first quarter of 2022 of $239.5 million and 28.0 to 28.5 percent, as adjusted, to exclude the impact of pension settlement charges, restructuring, exit$267.5 million on a GAAP and integration charges and special tax items. Effective tax rates are based on existing tax law and the adoption of recent accounting guidance related to net excess tax benefits or deficiencies resulting from share-based compensation activity.an As Adjusted basis, respectively.





Matters Affecting Comparability


Certain events have occurred during the three months and nine months ended September 30, 2017 and October 1, 2016 which the Company believes affect the comparability of the results of operations. The tables below summarize the impact of changes in currency exchange rates as well as the impact of recent acquisitions on the Company's net sales:
 Three Months Ended
 Net Sales 2017 vs. 2016
(in millions)September 30,
2017		 October 1,
2016		 GAAP  Constant Currency Acquisition Contribution
Marine Engine$669.2
 $625.7
 7.0% 6.2% 0.9%
Boat309.3
 307.0
 0.7% 0.2% 0.0%
Marine eliminations(79.8) (77.3)      
Total Marine898.7
 855.4
 5.1% 4.4% 0.7%
          
Fitness242.8
 237.6
 2.2% 2.0% 2.2%
Total$1,141.5
 $1,093.0
 4.4% 3.9% 1.0%
 Nine Months Ended
 Net Sales 2017 vs. 2016
(in millions)September 30,
2017		 October 1,
2016		 GAAP  Constant Currency Acquisition Contribution
Marine Engine$2,067.2
 $1,940.9
 6.5% 6.5% 1.0%
Boat1,104.1
 1,011.9
 9.1% 9.1% 0.9%
Marine eliminations(246.4) (233.0)      
Total Marine2,924.9
 2,719.8
 7.5% 7.5% 1.0%
          
Fitness728.9
 685.7
 6.3% 6.7% 4.5%
Total$3,653.8
 $3,405.5
 7.3% 7.4% 1.7%

Changes in Foreign Currency Rates. Percentage changes in net sales expressed in constant currency are presented to reflect the impact that changes in currency exchange rates had on comparisons of net sales. To determine this information, 2017 net sales transacted in currencies other than the U.S. dollarsdollar have been translated to U.S. dollars using the average exchange rates from 2016 that were in effect during the comparative period. The percentage change in net sales expressed on a constant currency basis better reflects the changes in the underlying business trends, excluding the impact of translation arising from foreign currency exchange rateexchange-rate fluctuations. Approximately 2024 percent of the Company'sour annual net sales are transacted in a currency other than the U.S. dollar. The Company'sOur most material exposures include sales in Euros, Canadian dollars, Australian dollars, and Brazilian reais and British pounds.real.


Additionally, foreign exchange positively affected operating earnings comparisons by approximately $4 million in the third quarter of 2017 when compared with the third quarter of 2016. During the first nine months of 2017, operating earnings comparisons were negatively affected by foreign exchange by approximately $1 million when compared with the same prior year period. These estimates includeThe table below summarizes the impact of translation on all saleschanges in currency exchange rates and costs transacted in a currency other than the U.S. dollar,also the impact of hedging activities and pricing actions in certain international markets in response to changes in the valueacquisitions on our net sales:
Three Months Ended
Net Sales2023 vs. 2022
(in millions)April 1,
2023		April 2,
2022		GAAPCurrency ImpactAcquisition Benefit
Propulsion$751.6 $705.9 6.5 %(1.5)%— %
Engine P&A288.6 330.3 (12.6)%(1.2)%— %
Navico Group277.3 311.6 (11.0)%(1.5)%— %
Boat575.2 492.8 16.7 %(1.0)%3.1 %
Segment Eliminations(149.1)(144.9)2.9 %(0.7)%— %
Total$1,743.6 $1,695.7 2.8 %(1.4)%0.9 %
22
Table of the U.S. dollar.Contents

Acquisitions. The Company completed acquisitions throughout 2017 and 2016 that affect the comparability of net sales. The Company acquired Lankhorst Taselaar B.V. (Lankhorst Taselaar) in the third quarter of 2017 and acquired Cybex International, Inc. (Cybex), Thunder Jet Boats, Inc. (Thunder Jet), ICG and Payne's Marine Group (Payne's) in the first, second, third and fourth quarters of 2016, respectively. Refer to Note 3 –Acquisitions for further details on the 2017 acquisition and Note 4 in the Notes to Consolidated Financial Statements in the 2016 Form 10-K for further details on 2016 acquisitions.


Restructuring, exit and integration charges. The Company recorded restructuring, exit and integration charges of $6.8 million and $27.7 million in the three months and nine months ended September 30, 2017, respectively, compared with $2.4 million and $8.8 million of charges recorded in the three months and nine months ended October 1, 2016, respectively.Refer to Note 2 –Restructuring, Exit and Integration Activities for further information. The Company anticipates it will incur restructuring, exit and integration charges of approximately $33 to $34 million for the full year.

Results of Operations


Consolidated


The following table sets forth certain amounts, ratios and relationships calculated from the Condensed Consolidated Statements of Comprehensive Income for the three months and nine months ended:
 Three Months Ended 2017 vs. 2016 Nine Months Ended 2017 vs. 2016
(in millions, except per share data)Sep 30,
2017		 Oct 1,
2016		 
 $
Change
 
%
Change
 Sep 30,
2017		 Oct 1,
2016		 
 $
Change
 
%
Change
Net sales$1,141.5
 $1,093.0
 $48.5
 4.4 % $3,653.8
 $3,405.5
 $248.3
 7.3 %
Gross margin (A)
313.3
 309.7
 3.6
 1.2 % 982.3
 945.1
 37.2
 3.9 %
Restructuring, exit and integration charges6.8
 2.4
 4.4
 NM
 27.7
 8.8
 18.9
 NM
Operating earnings111.7
 122.5
 (10.8) (8.8)% 369.3
 380.4
 (11.1) (2.9)%
Net earnings from continuing operations79.0
 85.3
 (6.3) (7.4)% 263.3
 256.6
 6.7
 2.6 %
                
Diluted earnings per common share from continuing operations$0.88
 $0.93
 $(0.05) (5.4)% $2.91
 $2.78
 $0.13
 4.7 %
                
Expressed as a percentage of Net sales: 
  
  
  
    
    
Gross margin27.4% 28.3% 

 (90) bpts
 26.9% 27.8% 

 (90) bpts
Selling, general and administrative expense14.0% 13.8%  
 20 bpts
 13.0% 13.3%   (30) bpts
Research and development expense3.1% 3.2%  
 (10) bpts
 3.0% 3.1%   (10) bpts
Restructuring, exit and integration Activities0.6% 0.2%  
 40 bpts
 0.8% 0.3% 

 50 bpts
Operating margin9.8% 11.2%  
 (140) bpts
 10.1% 11.2% 

 (110) bpts
__________
Three Months Ended2023 vs. 2022
(in millions, except per share data)April 1,
2023		April 2,
2022		 $
Change		%
Change
Net sales$1,743.6$1,695.7$47.92.8%
Gross margin(A)
505.6483.622.04.5%
Restructuring, exit and impairment charges9.5—9.5NM
Operating earnings236.1239.5(3.4)(1.4)%
Net earnings from continuing operations112.4174.0(61.6)(35.4)%
Diluted earnings per common share from continuing operations$1.56$2.25$(0.69)(30.7)%
Expressed as a percentage of Net sales:    
Gross margin (A)
29.0 %28.5 %50  bps
Selling, general and administrative expense12.1 %11.4 % 70  bps
Research and development expense2.8 %3.0 % (20) bps
Restructuring, exit and impairment charges0.5 %— % 50  bps
Operating margin13.5 %14.1 % (60) bps


bps = basis points
NM = not meaningful
bpts = basis points

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

Net sales increased duringless Cost of sales as presented in the third quarterCondensed Consolidated Statements of 2017Comprehensive Income.

The following is a summary of Adjusted operating earnings and Adjusted diluted earnings per common share from continuing operations for the three months ended April 1, 2023 when compared with the third quarter of 2016. Marine Engine segment net sales increased due to strong growth in outboard engines and solid growth in marine parts and accessories businesses. Outboard engines benefited from a favorable retail environment, particularly for higher horsepower engines, and continued benefits from market share gains. The marine parts and accessories businesses benefited from recent acquisitions and new product launches, as well as the successful execution of the Company's international growth strategy. Net sales of sterndrive engines declined, reflecting unfavorable demand trends. Boat segment net sales increased slightly as strong growth in the aluminum outboard boat business was mostly offset by declines in large sterndrive/inboard boards. Additionally, production disruptions resulting from Hurricane Irma affected sales of products manufactured at the Company's Florida-based operations, particularly fiberglass outboard operations. Fitness segment net sales increased resulting from the ICG acquisition and reflected flat overall global market demand, with growth in sales to value-oriented clubs being offset by softness in sales to traditional clubs and other vertical markets. International net sales for the Company increased 8 percent in the third quarter of 2017 on a GAAP basis when compared with the third quarter of 2016. Excluding acquisitions, international sales increased 6 percent, driven by increases in Asia-Pacific, Europe, Latin America and Canada.same prior year comparative period:

Three Months Ended
Operating EarningsDiluted Earnings Per Share
(in millions, except per share data)April 1,
2023		April 2,
2022		April 1,
2023		April 2,
2022
GAAP$236.1 $239.5 $1.56 $2.25 
Restructuring, exit and impairment charges9.5 — 0.10 — 
Purchase accounting amortization14.2 23.0 0.16 0.23 
Acquisition, integration and IT-related costs2.6 5.0 0.03 0.05 
Special tax items— — 0.72 — 
As Adjusted$262.4 $267.5 $2.57 $2.53 
GAAP operating margin13.5 %14.1 %
Adjusted operating margin15.0 %15.8 %


Net sales increased 3 percent during the first nine monthsquarter of 2017 increased 7 percent on a GAAP basis and 6 percent excluding the impact of acquisitions2023 when compared with the same prior year period. The increases reflectcomponents of the consolidated net sales change were as follows:

Percent change in net sales compared to the prior comparative period
2023
Product Mix and Price13.0%
Acquisitions0.9%
Volume(9.7)%
Currency(1.4)%
2.8%

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Gross margin percentage increased 50 basis points in the first quarter of 2023 when compared to the same factorsprior year period, driven by increased sales (440 bps), acquisitions (80 bps) and favorable timing of capitalized variances (70 bps), partially offset by higher manufacturing costs including material and labor inflation (460 bps), depreciation (60 bps) and unfavorable foreign currency exchange rate fluctuations (20 bps).

Selling, general and administrative expense as the quarterly period above, except there was strong sales growth in fiberglass outboard boats and Fitness segment international sales increased. Internationala percentage of net sales increased 10 percent on a GAAP70 basis and increased 7 percent when excludingpoints during the impact of acquisitions. Increases were mainly driven by Asia-Pacific, Latin America, Europe and Canada.

Gross margin percentage was down in the thirdfirst quarter of 20172023 when compared with the same prior year period.The decrease in gross margin percentage reflected unfavorable changes in sales mix in the Boat and Fitness segments, manufacturing inefficiencies, including costs associated with the hurricane in the Boat segment, and challenging competitive dynamics in certain international markets in the Fitness segment. In the first nine months of 2017, gross margin percentage declinedperiod, due to the same factors described above as well as unfavorable warranty adjustments in the fiberglass sterndrive/inboard boat businessincreased spending on sales and changes in mix between segments.

Selling, generalmarketing (50 bps) and administrative expenses increased overall and as a percentage of net sales during the third quarter of 2017, but decreased as a percentage of sales during the first nine months of 2017.technology initiatives (20 bps). Research and development remained relatively flat as a percentage of salesexpense decreased in both the third quarter and first nine months of 2017. Both line items reflect increased funding to support investments in new products and growth initiatives. Additionally, legal costs in the fiberglass sterndrive/inboard boat business increased during the first nine months of the year when compared with the same prior year period.2023 versus 2022.


The CompanyWe recorded restructuring,Restructuring, exit and integrationimpairment charges of $6.8 million and $27.7$9.5 million during the three months ended April 1, 2023. We did not recognize any Restructuring, exit and nine months ended September 30, 2017, respectively, and recorded $2.4 million and $8.8 million ofimpairment charges during the three months and nine months ended October 1, 2016, respectively. April 2, 2022. Refer toNote 23 –Restructuring, Exit and IntegrationImpairment Activities in the Notes to Condensed Consolidated Financial Statements for further information.


The CompanyWe recorded Equity earnings of $1.5$2.2 million and $5.2$0.8 million in the three months ended April 1, 2023 and nine months ended September 30, 2017,April 2, 2022, respectively, which were mainly related to the Company'sour marine and technology-related joint ventures. This compares with Equity earnings of $1.4

We recognized $(0.9) million and $3.2 million recorded in the three months and nine months ended October 1, 2016, respectively. The Company recognized $1.5 million and $6.0$(1.5) million in Other income,expense, net in the three months ended April 1, 2023 and nine months ended September 30, 2017, respectively. This compares with $0.8 million and $1.7 million recognized in Other income, net in the three months and nine months ended October 1, 2016,April 2, 2022, respectively. Other income,expense, net primarily includes the amortization of deferred income related to a trademark licensing agreement with AMF Bowling Centers, Inc. as discussed in Note 2 in the Notes to Consolidated Financial Statements in the 2016 Form 10-K as well as remeasurement gains and losses resulting from changes in foreign currency rates.rates and other postretirement benefit costs.


Net interest expense was downincreased for the three months and nine months ended September 30, 2017April 1, 2023 when compared with the same prior year period.period due to timing of average daily debt outstanding.Refer to Note 12 – Debt in the Notes to Condensed Consolidated Financial Statements and Note 15 - Debt in the Notes to Consolidated Financial Statements in the 2022 Form 10-K.


The CompanyWe recognized an incomeIncome tax provision from continuing operations for the three months and nine months ended September 30, 2017April 1, 2023 of $30.0$99.0 million, and $99.1an increase of $52.6 million respectively, and included a net tax benefit of $0.8 when compared to $46.4 million and $9.1 respectively, primarily associated with the net excess tax benefits related to share-based compensation which was recognized as an income tax benefit in accordance with recent changes in accounting guidance. The Company recognized an income tax provision from continuing operations for the three months and nine months ended October 1, 2016 of $32.8 million and $109.1 million, respectively, which included netApril 2, 2022. The increase is due to a discrete income tax benefits of $3.2 million and $3.3 million, respectively, mainly associatedexpense recorded in connection with the reassessment intercompany sale of tax reserves and favorable valuation allowance adjustments. intellectual property rights during the quarter.

The effective tax rate, from continuing operations, which is calculated as the incomeIncome tax provision as a percentage of pre-taxEarnings before income taxes, for the three months ended April 1, 2023 and nine months ended September 30, 2017 April 2, 2022 was 27.546.8 percent and 27.321.1 percent, respectively. The effective tax rate from continuing operations for the three months and nine months ended October 1, 2016 was 27.8 percent and 29.8 percent, respectively.


Due to the factors described in the preceding paragraphs, operatingOperating earnings, netNet earnings from continuing operations, and diluted earnings per common share from continuing operations decreased during the third quarter of 2017. For the first nine months of 2017 when compared with the same prior year period, diluted earnings per common share from continuing operations and net earnings from continuing operations increased, while operating earnings decreased. Diluted earnings per common share from continuing operations also includes decreased during the benefits of common stock repurchases on shares outstanding.

Diluted earnings from continuing operations per common share, as adjusted to exclude the earnings per share impact for restructuring, exit and integration charges and special tax items, remained flat at $0.91 per share in both the thirdfirst quarter of 2017 and 2016 due to the factors discussed in the preceding paragraphs. In the third quarters of 2017 and 2016, restructuring, exit and integration charges from continuing operations were $0.04 per share and $0.02 per share, respectively, and special tax items were a net benefit of $0.01 and $0.04, respectively.


In the first nine months of 2017, diluted earnings from continuing operations per common share, as adjusted, increased by $0.31 per share, or 11 percent, to $3.11 per share2023 when compared with $2.80 per share for the same prior year period. The increase in diluted earnings per share from continuing operations, as adjusted, is due to the factors discussed in the preceding paragraphs. In the first nine months of 2017, restructuring, exit and integration charges were $0.21 per share and special tax items were a net benefit of $0.01 per share. In the first nine months of 2016, restructuring, exit and integration charges were $0.06 per share and special tax items were a net benefit of $0.04 per share.


Marine EnginePropulsion Segment


The following table sets forth Marine Engine segmentPropulsion segment's results for the three months and nine months ended:
Three Months Ended2023 vs. 2022
(in millions)April 1,
2023		April 2,
2022		 $
Change		%
Change
Net sales$751.6 $705.9 $45.7 6.5%
Operating earnings151.1 125.3 25.8 20.6%
Operating margin20.1 %17.8 % 230  bps
 Three Months Ended 2017 vs. 2016 Nine Months Ended 2017 vs. 2016
(in millions)Sep 30,
2017		 Oct 1,
2016		 
 $
Change
 
%
Change
 Sep 30,
2017		 Oct 1,
2016		  $
Change		 %
Change
Net sales$669.2
 $625.7
 $43.5
 7.0% $2,067.2
 $1,940.9
 $126.3
 6.5%
Operating earnings115.2
 109.5
 5.7
 5.2% 351.9
 326.8
 25.1
 7.7%
Operating margin17.2% 17.5%  
 (30) bpts
 17.0% 16.8%   20 bpts

__________

bptsbps = basis points


Net



24
Table of Contents
Propulsion segment's net sales forincreased $45.7 million, or 7 percent, in the Marine Engine segmentfirst quarter of 2023 compared to the first quarter of 2022 driven by continued increased due to strong growth insales of high-horsepower outboard engines and solid growth in the marine parts and accessories businesses.Outboard engines benefited from a favorable retail environment, especially for higher horsepower engines, and continued benefits from market share gains. products. The marine parts and accessories businesses benefited from recent acquisitions and new product launches, as well as the successful executioncomponents of the Company's international growth strategy.Partially offsetting these factors was a decrease in sterndrive enginePropulsion segment's net sales due to the continuing shift to outboards which is resulting in unfavorable global retail demand trends. The revenues from acquired businesses, including Lankhorst Taselaar and Payne's, accounted for one percentage point of the Marine Engine segment's overall revenue growth rate in the third quarter of 2017.change were as follows:

Percent change in net sales compared to the prior comparative period
2023
Product Mix and Price24.2%
Volume(16.2)%
Currency(1.5)%
6.5%

International net sales were 3034 percent of the segment's net sales in the thirdfirst quarter of 2017,2023, and increased 14 1 percent from the prior year on a GAAP basis. On a constant currency basis, and excluding acquisitions, international net sales increased 9 5 percent which included increases across all regions, particularly Asia-Pacific and Africa and the Middle East..


Net sales for the Marine Engine segment increasedPropulsion segment's operating earnings in the first nine monthsquarter of 20172023 were $151.1 million, an increase of 21 percent when compared with the same prior year period due to the same factors describedfirst quarter of 2022, as a result of increased sales, manufacturing efficiencies and timing related to capitalized inventory variances.

Engine P&A Segment

The following table sets forth Engine P&A segment's results for the three months ended:
Three Months Ended2023 vs. 2022
(in millions)April 1,
2023		April 2,
2022		 $
Change		%
Change
Net sales$288.6 $330.3 $(41.7)(12.6)%
GAAP operating earnings$47.8 $61.0 $(13.2)(21.6)%
Restructuring, exit and impairment charges0.7 — 0.7 NM
Adjusted operating earnings$48.5 $61.0 $(12.5)(20.5)%
GAAP operating margin16.6 %18.5 % (190) bps
Adjusted operating margin16.8 %18.5 %(170) bps

NM = not meaningful
bps = basis points

Engine P&A segment's net sales decreased $41.7 million, or 13 percent, in the quarterly period above. first quarter of 2023 versus the first quarter of 2022, as increases in our U.S. products business were more than offset by softness in international markets and in our third-party distribution business. The components of the Engine P&A segment's net sales change were as follows:
Percent change in net sales compared to the prior comparative period
2023
Volume(17.1)%
Product Mix and Price5.7%
Currency(1.2)%
(12.6)%

International net sales were 30 percent of the Engine P&A segment's net sales in the first nine monthsquarter of 2017,2023 and increased 11decreased 19 percent from the prioryear over year on a GAAP basis. On a constant currency basis, and excluding acquisitions, international net sales increased 8 percent with increases across all regions, particularly Asia-Pacific and Europe.decreased 15 percent.


Marine
25
Table of Contents
Engine segmentP&A segment's operating earnings increased in the thirdfirst quarter of 2017 when2023 were $47.8 million, a decrease of 22 percent compared withto the same prior year period as a resultfirst quarter of higher net sales, improved cost efficiencies and favorable impacts from foreign exchange, partially offset by planned increases in growth related investments in advance of new product introductions. Operating earnings for the nine months ended increased when compared with the same prior year period2022 due to decreased sales, material inflation and elevated costs associated with transitioning our distribution hub to our new state of the same factors describedart facility in the quarterly period, except foreign exchange had an unfavorable impact.Brownsburg, Indiana.



BoatNavico Group Segment


The following table sets forth Boat segmentNavico Group segment's results for the three months and nine months ended:
Three Months Ended2023 vs. 2022
(in millions)April 1,
2023		April 2,
2022		 $
Change		%
Change
Net sales$277.3 $311.6 $(34.3)(11.0)%
GAAP operating earnings$12.8 $30.6 $(17.8)(58.2)%
Restructuring, exit and impairment charges3.6 — 3.6 NM
Purchase accounting amortization13.3 22.4 (9.1)(40.6)%
Acquisition, integration, and IT-related costs0.8 2.6 (1.8)(69.2)%
Adjusted operating earnings$30.5 $55.6 $(25.1)(45.1)%
GAAP operating margin4.6 %9.8 % (520) bps
Adjusted operating margin11.0 %17.8 %(680) bps
 Three Months Ended 2017 vs. 2016 Nine Months Ended 2017 vs. 2016
(in millions)Sep 30,
2017		 Oct 1,
2016		  $
Change		 %
Change		 Sep 30,
2017		 Oct 1,
2016		  $
Change		 %
Change
Net sales$309.3
 $307.0
 $2.3
 0.7 % $1,104.1
 $1,011.9
 $92.2
 9.1 %
Restructuring, exit and integration charges—
 —
 —
 NM
 11.6
 —
 11.6
 NM
Operating earnings0.1
 6.8
 (6.7) (98.5)% 28.0
 45.9
 (17.9) (39.0)%
Operating margin0.0% 2.2%  
 (220) bpts
 2.5% 4.5%   (200) bpts
__________


NM = not meaningful
bptsbps = basis points


Boat segmentNavico Group segment's net sales increased slightlydecreased $34.3 million, or 11 percent, in the thirdfirst quarter of 2017 when compared with2023 versus the thirdfirst quarter of 20162022 due to strong growthre-stocking dynamics in the aluminum outboard boat business, which benefited from solid market growthaftermarket channels, unfavorable foreign currency exchange rates and highera reduction in sales to RV manufacturers due to first quarter production levelsshutdowns. The components of pontoon boats. Sales increases were mostly offset by demand-related production reductions in the large sterndrive/inboard boat category. Additionally, production disruptions resulting from Hurricane Irma affected sales of products manufactured at the Company's Florida-based operations, particularly fiberglass outboard boat operations. Average selling prices were slightly lower, as benefits from the continued migration to boats with more content and higher horsepower engines were more than offset by a shift in mix between boat categories, reflecting the factors impacting sales comparisons. The segment also benefited from increased wholesale unit demand. InternationalNavico Group segment's net sales change were 22as follows:

Percent change in net sales compared to the prior comparative period
2023
Volume(11.6)%
Product Mix and Price2.1%
Currency(1.5)%
(11.0)%

International sales were 34 percent of the segment's net sales in the third quarter of 2017, and increased 8 percent from the prior year on a GAAP basis and increased 5 percent on a constant currency basis. Sales increases in Europe and Canada were partially offset by declines in Africa and the Middle East and Asia-Pacific.

Boat segment net sales increased in the first nine months of 2017 when compared with the same prior year period due to the same factors described in the quarterly period above, except average selling prices were up slightly and an acquired business, Thunder Jet, accounted for one percentage point of the Boat segment's overall revenue growth rate. International net sales were 25 percent of theNavico Group segment's net sales in the first nine monthsquarter of 2017,2023 and increased 9decreased 12 percent from the prioryear over year on a GAAP basis. On a constant currency basis, and excluding acquisitions, international net sales increaseddecreased 8 percent as increases in Europe, Canada and Latin America were partially offset by declines in Africa and the Middle East and Asia-Pacific.percent.


Boat segmentNavico Group segment's operating earnings decreased in the third quarter of 2017 when compared with the third quarter of 2016. Benefits from slightly higher sales were more than offset by unfavorable changes in sales mix as well as manufacturing inefficiencies, including costs associated with the hurricane.

Boat segment operating earnings decreased in the first nine months of 2017 compared with 2016 due to the same factors discussed for the quarterly period above as well as higher restructuring, exit and integration charges and operating losses mostly associated with the closure of the manufacturing facility in Brazil, unfavorable warranty adjustments related to larger boats and litigation costs in the fiberglass sterndrive/inboard boats business as well as higher commodity costs in the first quarter of 2017 that affected our aluminum boat business.2023 were $12.8 million, a decrease of 58 percent compared to the first quarter of 2022 as decreased sales, material inflation, temporary margin pressures related to a new product launch and unfavorable foreign currency impacts more than offset reductions in operating expenses due to restructuring actions executed in the quarter.



26
Fitness
Table of Contents
Boat Segment


The following table sets forth Fitness segmentBoat segment's results for the three months and nine months ended:
Three Months Ended2023 vs. 2022
(in millions)April 1,
2023		April 2,
2022		 $
Change		%
Change
Net sales$575.2 $492.8 $82.4 16.7%
GAAP operating earnings$57.8 $45.3 $12.5 27.6%
Restructuring, exit and impairment charges1.4 — 1.4 NM
Acquisition, integration, and IT-related costs1.0 2.4 (1.4)(58.3)%
Purchase accounting amortization0.9 0.6 0.3 50.0%
Adjusted operating earnings$61.1 $48.3 $12.8 26.5%
GAAP operating margin10.0 %9.2 % 80 bps
Adjusted operating margin10.6 %9.8 %80 bps
 Three Months Ended 2017 vs. 2016 Nine Months Ended 2017 vs. 2016
(in millions)Sep 30,
2017		 Oct 1,
2016		  $
Change		 %
Change		 Sep 30,
2017		 Oct 1,
2016		  $
Change		 %
Change
Net sales$242.8
 $237.6
 $5.2
 2.2 % $728.9
 $685.7
 $43.2
 6.3 %
Restructuring, exit and integration charges6.8
 2.4
 4.4
 NM
 13.7
 8.8
 4.9
 55.7 %
Operating earnings19.4
 29.1
 (9.7) (33.3)% 56.2
 73.3
 (17.1) (23.3)%
Operating margin8.0% 12.2%  
 (420) bpts
 7.7% 10.7%   (300) bpts
__________

bpts = basis points
NM = not meaningful

bps = basis points
Fitness segment
Boat segment's net sales increased primarily$82.4 million, or 17 percent, in the first quarter of 2023 versus the first quarter of 2022 due to the ICG acquisition, which contributed 2 percentincreased sales volumes to the segment's growth rate in the quarter. Excluding the impact of acquisitions, Fitness revenues reflected flat overall global market demand, with growth in sales to value-oriented clubs being offset by softness in sales to traditional clubsdealers and other vertical markets. International net sales were 47 percentpositive mix and price. The components of the Boat segment's net sales in the third quarter of 2017 and decreased onechange were as follows:

Percent change in net sales compared to the prior comparative period
2023
Volume9.0%
Product Mix and Price5.6%
Acquisitions3.1%
Currency(1.0)%
16.7%

International sales were24 percent compared with the same prior year period on a GAAP basis. On a constant currency basis and excluding acquisitions, the segment's international net sales decreased 4 percent when compared with the same prior year period as a result of declines in Europe, Africa and the Middle East and Canada, partially offset by increases in Latin America and Asia-Pacific.

Net sales increased in the first nine months of 2017 when compared with the same prior year period due to the same factors described in the quarterly period above, except net sales increased 2 percent excluding the impact of acquisitions. The ICG and Cybex acquisitions accounted for 4 percentage points of the segment's overall revenue growth rate. International net sales were 47 percent of the segment's net sales in the first nine monthsquarter of 20172023 and increased 8 9 percent compared with the same prior year period on a GAAP basis.basis. On a constant currency basis, and excluding acquisitions, the segment's international net sales increased 4 percent12 percent.

Boat segment's operating earnings in the first nine monthsquarter of 2017 as2023 were $57.8 million, an increase of 28 percent when compared to the first quarter of 2022, due to increased sales increasestogether with positive product mix and from the substantial completion of production ramp-up activities in Asia-Pacific and Latin America wereour new Boston Whaler facility, partially offset by decreases in Europe and Canada.

Fitness segment operating earnings decreased incontinued cost inflation, higher discounting levels versus the thirdfirst quarter of 2017 resulting from lower margins, reflecting higher restructuring, exit2022 and integration charges, more challenging competitive dynamics in certain international markets and unfavorable changes in sales mix, which more than offset benefits from acquisitions and cost reduction efforts.

Operating earnings decreased for the nine months ended 2017 as a result of the same factors described in the quarterly period above. Additionally, planned costs associated with capacity expansions, new product introductions and manufacturing facility transitions, the net unfavorable impacts of non-recurring adjustments in the second quarter of both 2017 and 2016 as well as the unfavorable impact of foreign exchange also affected operating earnings. The non-recurring itemsdelayed shipments related to an unfavorable liability adjustment in 2017 and the favorable resolution of a claim in 2016.supplier recall impacting mainly sterndrive fiberglass boats.


Corporate/Other


The following table sets forth Corporate/Other results for the three months and nine months ended:
Three Months Ended2023 vs. 2022
(in millions)April 1,
2023		April 2,
2022		 $
Change		%
Change
Operating loss$(33.4)$(22.7)$(10.7)47.1%
Restructuring, exit and impairment charges3.8 — 3.8 NM
Acquisition, integration, and IT-related costs0.8 — 0.8 NM
Adjusted operating loss$(28.8)$(22.7)$(6.1)26.9%
 Three Months Ended 2017 vs. 2016 Nine Months Ended 2017 vs. 2016
(in millions)Sep 30,
2017		 Oct 1,
2016		  $
Change		 %
Change		 Sep 30,
2017		 Oct 1,
2016		  $
Change		 %
Change
Restructuring, exit and integration charges$—
 $—
 $—
 NM
 $2.4
 $—
 $2.4
 NM
Operating loss(20.7) (19.3) (1.4) (7.3)% (59.8) (54.6) (5.2) (9.5)%
__________


NM = not meaningful



Corporate operating expenses increased in the thirdfirst quarter and nine months ended 2017of 2023 were $33.4 million, an increase of 47 percent when compared to the first quarter of 2022, primarily due to projectincreased spending related toon enterprise growth initiatives. Operating expenses for the nine months ended 2017 also increased due toinitiatives and spending on restructuring exit and integration charges recordedactions executed in the first quarter.quarter.

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Cash Flow, Liquidity and Capital Resources


The following table sets forth an analysis of free cash flow for the ninethree months ended:
(in millions)September 30,
2017		 October 1,
2016
Net cash provided by operating activities of continuing operations$255.1
 $293.2
Net cash provided by (used for): 
  
Capital expenditures(153.4) (131.9)
Proceeds from the sale of property, plant and equipment8.0
 1.7
Effect of exchange rate changes9.0
 5.6
Total free cash flow from continuing operations (A)
$118.7
 $168.6
__________
(in millions)April 1,
2023		April 2,
2022
Net cash used for operating activities of continuing operations$(14.5)$(140.9)
Net cash (used for) provided by:  
Plus: Capital expenditures(93.5)(100.9)
Plus: Proceeds from the sale of property, plant and equipment2.7 2.2 
Plus: Effect of exchange rate changes1.7 0.6 
Total free cash flow (A)
$(103.6)$(239.0)


(A) The Company defines “FreeWe define "Free cash flow from continuing operations”flow" as cash flow from operating and investing activities of continuing operations (excluding cash provided by or used for acquisitions, investments, purchases or sales/maturities of marketable securities and other investing activities) and the effect of exchange rate changes on cash and cash equivalents. Free cash flow from continuing operations is not intended as an alternative measure of cash flow from operations, as determined in accordance with GAAP in the United States. The Company usesWe use this financial measure both in presenting itsour results to shareholders and the investment community and in itsour internal evaluation and management of itsour businesses. Management believesWe believe that this financial measure and the information it provides are useful to investors because it permits investors to view Brunswick’sour performance using the same tool that management useswe use to gauge progress in achieving itsour goals. Management believesWe believe that the non-GAAP financial measure “Free"Free cash flow from continuing operations”flow" is also useful to investors because it is an indication of cash flow that may be available to fund investments in future growth initiatives.


Brunswick’sOur major sources of funds for capital investments, acquisitions, share-repurchase programs and dividend payments and share repurchase programs are cash generated from operating activities, available cash and marketable securities balances, divestitures and potential borrowings. The Company evaluatesWe evaluate potential acquisitions, divestitures and joint ventures in the ordinary course of business.


20172023 Cash Flow


InNet cash used for operating activities of continuing operations in the first ninethree months ended April 1, 2023 totaled $14.5 million versus $140.9 millionin the comparable period of 2017,2022. The decrease is primarily due to decreases in working capital usage and income taxes, partially offset by lower net earnings.

The primary drivers of net cash provided byused for operating activities of continuing operations totaled $255.1 million. The primary driver ofin the cash providedthree months ended April 1, 2023 were seasonal increases in working capital, partially offset by operating activities was net earnings, from continuing operations net of non-cash expense items, partially offset by a seasonal increase in working capital.items. Working capital is defined as Accounts and notes receivable, Inventories and Prepaid expenses and other, net of Accounts payable and AccruedAccrued expenses as presented in the Condensed Consolidated Balance Sheets, excluding the impact of acquisitions and non-cash adjustments. Net inventories Accounts and notes receivable increased $153.8 million, primarily due to increased sales. Inventory increased $38.0 million driven by $90.7seasonal inventory purchases and cost inflation. Accounts payable decreased $59.1 million, primarily due to timing of payments. Accrued expenses decreased $17.4 million, primarily driven by increases to support higher sales volumes, along with new product transitions in the Fitness segment and the impact of Hurricane Irma on boat operations. Accounts and notes receivable increased $51.4 million due primarily to normal seasonal changes in net sales and timing of collections. Partially offsetting these items was an increase in Accrued expenses of $28.5 million, primarily driven by payroll timing, partially offset bylower accrued variable compensation expense, including the payment of the prior year's variable compensation and deferred compensation which had been accrued as of December 31, 2016. Accounts payable increased $11.7 million due to normal volume increases.2022.


Net cash used for investing activities of continuing operations during the first nine months of 2017 totaled $121.9was $94.6 million, which included $93.5 million of capital expenditures and $7.6 million of $153.4 million. The Company's capital spending is focused on new product introductions and capacity expansion projectsinvestments in all segments. Cash paid for the acquisitionour joint venture partially offset by $3.8 million of Lankhorst Taselaar, net of cash acquired, was $15.5 million. Net cash used for investing activities also included net proceeds fromsales or maturities of marketable securities and $2.7 million of $35.0 million and proceeds from the salesales of property, plant and equipment of $8.0 million.equipment. Our capital spending was focused on investments in capacity expansion, new products, and technologies.


Net cash used for financing activities of continuing operations was $173.7$100.9 million during the first nine months of 2017. The cash outflow includedand primarily related to common stock repurchase activityrepurchases and cash dividends paid to common shareholders.


20162022 Cash Flow


InNet cash used for operating activities of continuing operations in the first ninethree months of 2016,2022 totaled $140.9 million versus $17.3 million provided by operating activities in the comparable period of 2021. The decrease is primarily due to unfavorable working capital trends, partially offset by higher net earnings during the quarter.




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The primary drivers of net cash provided byused for operating activities of continuing operations totaled $293.2 million. The primary driver of the cash providedin 2022 were increases in working capital, offset by operating activities was net earnings, from continuing operations net of non-cash expense items. An increase in working capital had a negative effect on net cash provided by operating activities. Net inventories

Accounts and notes receivable increased by $45.7$179.8 million during the first nine months of 2016primarily due to increased sales across all segments. Inventory increased $138.5 million, driven by increases in production to support higher sales volumes.production volumes in advance of the marine selling season. Accrued expenses decreased $26.0$62.3 million, during the first nine monthsprimarily driven by payment of 2016, which included the impact of the payments of the prior year'syear variable compensation and deferred compensation which had been accrued as of December 31, 2015, as well as the timing of certain accruals. Accounts and notes receivable increased $24.0 million during the first nine months of 2016, due primarily to normal seasonal changes in net sales in the Marine Engine segment and timing of collections. Partially offsetting these items was an increase in Accounts payable of $22.0 million, which was the result of increased domestic production in the Company's Marine Engine segment and timing of payments.2021.


Net cash used for investing activities of continuing operations during the first nine months of 2016 totaled $377.9was $92.2 million, which included $100.9 million of capital expenditures and $6.0 million of $131.9 million. The Company's capital spending is focused on new product introductions, capacity expansion projects in all segments and other high priority, profit-enhancing projects. Cash paid for the acquisitions of Cybex, Thunder Jet and ICG in the first, second and third quarters of 2016, respectively, net of cash acquired, totaled $269.5 million in the first nine months of 2016. Partially offsetting these items were net proceeds from sales or maturitiespurchases of marketable securities, partially offset by $16.7 million of $10.7cross-currency swap settlements. Our capital spending was focused on investments in new products and technologies.

Net cash provided by financing activities was $559.1 million and $9.8 million from investments.

Net cash used for financing activitiesprimarily related to proceeds of continuing operations was $137.7 million during the first nine monthsissuances of 2016. The cash outflow includedlong-term debt, partially offset by common stock repurchase activityrepurchases, payments of long-term debt including current maturities, and cash dividends paid to common shareholders. Refer to Note 12 – Debt in the Notes to Condensed Consolidated Financial Statements for further details on our debt activity during the quarter.


Liquidity and Capital Resources


The Company views itsWe view our highly liquid assets as of September 30, 2017,April 1, 2023, December 31, 2016,2022 and October 1, 2016April 2, 2022 as:
(in millions)April 1,
2023		December 31,
2022		April 2,
2022
Cash and cash equivalents$387.8 $595.6 $680.1 
Short-term investments in marketable securities0.8 4.5 6.8 
Total cash, cash equivalents and marketable securities$388.6 $600.1 $686.9 
(in millions)September 30,
2017		 December 31,
2016		 October 1,
2016
Cash and cash equivalents$391.1
 $422.4
 $437.2
Short-term investments in marketable securities0.8
 35.8
 0.8
Total cash, cash equivalents and marketable securities$391.9
 $458.2
 $438.0


The following table sets forth an analysis of total liquidity as of September 30, 2017,April 1, 2023, December 31, 2016,2022 and October 1, 2016:April 2, 2022:
(in millions)April 1,
2023		December 31,
2022		April 2,
2022
Cash, cash equivalents and marketable securities$388.6 $600.1 $686.9 
Amounts available under lending facility (A)
741.9 747.2 747.2 
Total liquidity (B)
$1,130.5 $1,347.3 $1,434.1 
(in millions)September 30,
2017		 December 31,
2016		 October 1,
2016
Cash, cash equivalents and marketable securities$391.9
 $458.2
 $438.0
Amounts available under lending facility(A)
295.7
 295.7
 295.7
Total liquidity (B)
$687.6
 $753.9
 $733.7


(A) In June 2016, the Company amended and restated its existing credit agreement, dated as of March 2011, as amended and restated as of June 2014. See Note 1412 – Debt in the Notes to Condensed Consolidated Financial Statements for further details on the Company'sour lending facility.
(B) The Company definesWe define Total liquidity as Cash and cash equivalents and Short-term investments in marketable securities as presented in the Condensed Consolidated Balance Sheets, plus amounts available for borrowing under its lending facilities. Total liquidity is not intended as an alternative measure to Cash and cash equivalents and Short-term investments in marketable securities as determined in accordance with GAAP in the United States. The Company usesWe use this financial measure both in presenting itsour results to shareholders and the investment community and in itsour internal evaluation and management of itsour businesses. Management believesWe believe that this financial measure and the information it provides are useful to investors because it permits investors to view the Company’sour performance using the same metric that management useswe use to gauge progress in achieving itsour goals. Management believesWe believe that the non-GAAP financial measure “Total liquidity” is also useful to investors because it is an indication of the Company’sour available highly liquid assets and immediate sources of financing.


Cash, cash equivalents and marketablemarketable securities totaled $391.9$388.6 million as of September 30, 2017, April 1, 2023, a decrease of $66.3$211.5 million from $458.2$600.1 million as of December 31, 2016,2022, and a decrease of $46.1$298.3 million from $438.0$686.9 million as of October 1, 2016.April 2, 2022. Total debt as of September 30, 2017,April 1, 2023, December 31, 20162022 and October 1, 2016April 2, 2022 was $441.8$2,510.3 million, $442.4$2,509.0 million and $452.2$2,500.5 million, respectively. The Company'sOur debt-to-capitalization ratio was 22.055 percent as of September 30, 2017, down from 23.5April 1, 2023, consistent with 55 percent as of December 31, 20162022 and a decrease from 24.056 percent as of OctoberApril 2, 2022.

There were no borrowings under the Credit Facility during the three months ended April 1, 2016.

Management believes that2023, and thus we did not have any borrowings outstanding under the Company has adequate sources of liquidity to meet the Company's short-term and long-term needs. The next significant long-term debt maturity is not until 2021.

The Company has executed share repurchases against authorizations approved by the Board of Directors in 2014 and 2016. In 2017, the Company repurchased $120 million of stock under these authorizations and,Credit Facility as of September 30, 2017,April 1, 2023. Available borrowing capacity under the remaining authorizationCredit Facility totaled $741.9 million, net of $8.1 million of letters of credit outstanding. During the three months ended April 1, 2023, the maximum amount utilized under the CP Program was $120$85.0 million.

Net activity in working capital is projected Refer to reflect a usage of cash in 2017 Note 12 – Debt in the range of $30 millionNotes to $50 million. Additionally, the Company plans to make cash contributions to its defined benefit pension plans of approximately $75 million, consistent with prior year levels. The Company is planning for capital expenditures of approximately $185 million to $195 million, reflecting substantial new product investmentsCondensed Consolidated Financial Statements and Note 15 - Debt in the outboard engine and fitness businesses and continued capacity investmentsNotes to support new products and growth. Including these factors, the Company plans to generate free cash flow in 2017 in excess of $250 million.

The Company contributed $55.0 million and $70.0 million to its qualified pension plansConsolidated Financial Statements in the first nine months of 2017 and 2016, respectively, and expects to make additional contributions of $15 million during 2017. In the fourth quarter of 2017, the Company made settlement payments from plan assets to purchase group annuity contracts to cover future benefit payments relating to the Brunswick Pension Plan For Hourly Bargaining Unit Employees and the Brunswick Pension Plan For Salaried Employees; plan assets were also used to purchase group annuity contracts to cover future benefit payments as well as lump-sum benefit payments to certain participants related to the previously announced terminations of the Brunswick Pension Plan For Hourly Employees and the Brunswick Pension Plan For Hourly Wage Employees. The Company expects to incur a total settlement loss of approximately $90 million to $105 million in the fourth quarter of 2017 in conjunction with these actions. Refer to Note 15 –Subsequent Events2022 Form 10-K, for further details.



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The Companylevel of borrowing capacity under our Credit Facility and CP Program is limited by both a leverage and interest coverage test. These covenants also contributed $3.1pertain to termination provisions included in our wholesale financing joint-venture arrangements with Wells Fargo Commercial Distribution Finance. Based on our anticipated earnings generation throughout the year, we expect to maintain sufficient cushion against the existing debt covenants.

2023 Capital Strategy

Our expected full-year capital expenditures remains at approximately $350 million and $2.7our estimate of full-year interest expense remains at approximately $100 million. We increased our anticipated share repurchases for 2023 to now exceed $200 million, lowering our expected average diluted shares outstanding for the year to fund benefit payments in its nonqualified pension plan duringapproximately 71 million shares. Additionally, our estimate of working capital usage remains at approximately $100 million for the first nine monthsyear.

Financing Joint Venture

Details of 2017 and 2016, respectively, and expects to contribute approximately $1 million of additional funding to the plan through the remainder of 2017. Company contributionsour Financing Joint Venture are subject to change based on market conditions, pension funding regulations and Company discretion.

Financial Services

The Company's financial services joint venture, Brunswick Acceptance Company, LLC (BAC), is detailedoutlined in the 20162022 Form 10-K. There have been no material changes in our Financing Joint Venture since December 31, 2022.


Off-Balance Sheet Arrangements and Contractual Obligations


The Company’sOur off-balance sheet arrangements and contractual obligations as of December 31, 2016,2022 are detailed in the 20162022 Form 10-K. There have been no material changes in these arrangements and obligations outside the ordinary course of business since December 31, 2016.2022.


Environmental Regulation


There were no material changes in the Company'sour environmental regulatory requirements since the filing of its 2016our 2022 Form 10-K.


Critical Accounting Policies


There were no material changes in our critical accounting policies since the filing of our 2022 Form 10-K.

As discussed in the 20162022 Form 10-K, the preparation of the consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the amount of reported assets and liabilities and disclosure of contingent assets and liabilities atas of the date of the consolidated financial statements, and revenues and expenses during the periods reported. Actual results may differ from those estimates.

There were no material changes in the Company’s critical accounting policies since the filing of its 2016 Form 10-K.


Recent Accounting Pronouncements


See Note 1 – Significant Accounting Policies in the Notes to Condensed Consolidated Financial Statements for the recentRecent accounting pronouncements that have been adopted during the ninethree months ended September 30, 2017,April 1, 2023, or will be adopted in future periods.periods, are included in Note 1 – Significant Accounting Policies in the Notes to Condensed Consolidated Financial Statements.


Forward-Looking Statements


Certain statements in this Quarterly Report on Form 10-Qare forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on current expectations, estimates, and projections about Brunswick’s business and by their nature address matters that are, to different degrees, uncertain. Words such as “may,” “could,” “should,” “expect,”

"anticipate,"anticipate, "project," "position," “intend,” “target,” “plan,” “seek,” “estimate,” “believe,” “predict,” “outlook”“outlook,” and similar expressions are intended to identify forward-looking statements. SuchForward-looking statements are not guarantees of future performance and involve certain risks and uncertainties that may cause actual results to differ materially from expectations as of the date of this quarterly report. These risks include, but are not limited to: the effect of adverse general economic conditions, including reductions in consumerthe amount of disposable income consumers have available for discretionary spending; negativechanges in currency trends; our ability to completeexchange rates; fiscal and integrate targeted acquisitions; our ability to implement our strategic plan and growth initiatives; adequate financing access for dealers and customers and our ability to access capital and credit markets; maintaining effective distribution; retaining our relationships with dealers, distributors and independent boat builders; credit and collections risks; retaining key customers; protecting our brands and intellectual property; absorbing fixed costs in production; managing expansion or consolidation of manufacturing facilities; meeting supply objectives; meeting pension funding obligations; managing our share repurchases;monetary policy changes; higher energy and fuel costs; competitive pricing pressures; developingadverse capital market conditions; actual or anticipated increases in costs, disruptions of supply, or defects in raw materials, parts, or components we purchase from third parties; supplier manufacturing constraints, increased demand for shipping carriers, and transportation disruptions; managing our manufacturing footprint; international
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business risks, geopolitical tensions or conflicts, sanctions, embargoes, or other regulations; public health emergencies or pandemics, such as the coronavirus (COVID-19) pandemic; adverse weather conditions, climate change events and other catastrophic event risks; our ability to develop new and innovative products and services at a competitive price,price; loss of key customers; our ability to meet demand in legal compliance;a rapidly changing environment; absorbing fixed costs in production; risks associated with joint ventures that do not operate solely for our benefit; our ability to integrate acquisitions, including Navico, and the risk for associated disruption to our business; our ability to successfully implement our strategic plan and growth initiatives; attracting and retaining skilled labor, implementing succession plans for key leadership, and executing organizational and leadership changes; our ability to identify, complete, and integrate targeted acquisitions; the risk that restructuring or strategic divestitures will not provide business benefits; maintaining product qualityeffective distribution; dealers and service standards;customers being able to access adequate financing; requirements for us to repurchase inventory; inventory reductions by dealers, retailers, or independent boat builders; risks related to the Freedom Boat Club franchise business model; outages, breaches, or breaches ofother cybersecurity events regarding our technology systems; competitor activity; product liability, warrantysystems, which could affect manufacturing and other claims risks; increased costs of legalbusiness operations and regulatory compliance; havingcould result in lost or stolen information and associated remediation costs; our ability to record anprotect our brands and intellectual property; changes to U.S. trade policy and tariffs; any impairment to the value of goodwill and other assets; international businessproduct liability, warranty, and other claims risks; attractinglegal, environmental, and retaining key contributors;other regulatory compliance, including increased costs, fines, and weatherreputational risks; changes in income tax legislation or enforcement; managing our share repurchases; and catastrophic event risks.risks associated with certain divisive shareholder activist actions.


Additional risk factors are included in the Company’s Annual Report on2022 Form 10-K for 2016.10-K. Forward-looking statements speak only as of the date on which they are made, and Brunswick does not undertake any obligation to update them to reflect events or circumstances after the date of this presentation or for changes by wire services or Internet service providers.Quarterly Report on Form 10-Q.


Item 3.  Quantitative and Qualitative Disclosures About Market Risk


The Company isWe are exposed to market risk from changes in foreign currency exchange rates, interest rates and commodity prices. The Company entersWe enter into various hedging transactions to mitigate these risks in accordance with guidelines established by the Company’sour management. The Company doesWe do not use financial instruments for trading or speculative purposes. The Company’sOur risk management objectives are described in Note 45 – Financial Instruments in the Notes to Condensed Consolidated Financial Statements and Notes 1 andNote 14 in the Notes to Consolidated Financial Statements in the 20162022 Form 10-K.


There have been no significant changes to the Company’sour market risk since December 31, 2016.2022. For a discussion of exposure to market risk, refer to Part II, Item 7A – Quantitative and Qualitative Disclosures about Market Risk, set forth in the 20162022 Form 10-K.


Item 4.  Controls and Procedures


Under the supervision and with the participation of the Company’sour management, including the Chief Executive Officer and the Chief Financial Officer of the Company (its(our principal executive officer and principal financial officer, respectively), the Company haswe have evaluated itsour disclosure controls and procedures (as defined in Securities Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’sour disclosure controls and procedures are effective. There were no changes in the Company’sour internal control over financial reporting during the fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’sour internal control over financial reporting.

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PART II – OTHER INFORMATION


Item 1A.  Risk Factors


Brunswick’s operations and financial results are subject to various risks and uncertainties that could adversely affect the Company’s business, financial condition, results of operations, cash flows and the trading price of Brunswick’s common stock. There have been no material changes tofrom the risk factors previously disclosed in the 2016Part I, "Item 1A. Risk Factors" in our 2022 Form 10-K.


Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The Company has executed share repurchases against authorization approved by the Board of Directors in 2014 and 2016. In 2017, the Company repurchased $120 million of stock under these authorizations and as of September 30, 2017, the remaining authorization was $120 million.


During the three months ended September 30, 2017,April 1, 2023, we repurchased $60.0 million of stock, and the Companyremaining authorization was $336.4 million.

We repurchased the following shares of its common stock:stock during the three months ended April 1, 2023:
PeriodTotal Number of Shares PurchasedWeighted Average Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced ProgramMaximum Amount of Dollars that May Yet Be Used to Purchase Shares Under the Program
January 1 to January 28154,649 $76.81 154,649 
January 29 to February 25156,070 86.63 156,070 
February 26 to April 1424,508 81.51 424,508 
Total735,227 $81.61 735,227 $336,441,593 
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Period Total Number of Shares Purchased Weighted Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program Maximum Amount of Dollars that May Yet Be Used to Purchase Shares Under the Program
July 2 to July 29 81,186
 $61.59
 81,186
  
July 30 to August 26 631,010
 53.88
 631,010
  
August 27 to September 30 395,412
 53.11
 395,412
  
Total 1,107,608
 $54.17
 1,107,608
 $119,796,620
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Item 5. Other Information


At the May 3, 2023 Annual Meeting of Shareholders of the Company ("Annual Meeting"), Nancy E. Cooper, David C. Everitt, Reginald Fils-Aime, Lauren P. Flaherty, David M. Foulkes, Joseph W. McClanathan, David V. Singer, J. Steven Whisler, Roger J. Wood, and MaryAnn Wright were elected as directors of the Company for terms expiring at the 2024 Annual Meeting of Shareholders of the Company. The number of shares voted with respect to these directors were:
NomineeFor Against Abstain Broker Non-votes
Nancy E. Cooper61,312,2871,548,41233,9663,418,034
David C. Everitt58,701,1404,159,53733,9883,418,034
Reginald Fils-Aime62,482,145364,92047,6003,418,034
Lauren P. Flaherty61,323,3681,535,16936,1283,418,034
David M. Foulkes62,262,829596,63735,1993,418,034
Joseph W. McClanathan62,501,012357,97835,6753,418,034
David V. Singer62,350,802496,56647,2973,418,034
J. Steven Whisler59,069,6333,776,70848,3243,418,034
Roger J. Wood61,065,3651,794,37634,9243,418,034
MaryAnn Wright62,102,672756,85935,1343,418,034
At the Annual Meeting, shareholders voted to approve amendments to the Restated Certification of Incorporation ("Charter") to include officer exculpation language pursuant to the following vote:
Number of Shares
For53,121,562
Against9,639,704
Abstain133,399
Broker Non-votes3,418,034

At the Annual Meeting, shareholders voted to approve amendments to the Charter to clarify, streamline, and modernize the Charter pursuant to the following vote:

Number of Shares
For66,144,920
Against84,123
Abstain83,656
Broker Non-votes—

At the Annual Meeting, shareholders voted to approve amendments to the Charter to eliminate outdated language in the Charter pursuant to the following vote:
Number of Shares
For66,165,340
Against66,935
Abstain80,424
Broker Non-votes—

At the Annual Meeting, shareholders voted for a non-binding resolution approving the compensation of the Company's named executive officers pursuant to the following vote:
Number of Shares
For60,968,530
Against1,816,546
Abstain109,589
Broker Non-votes3,418,034


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At the Annual Meeting, shareholders voted for a non-binding resolution approving annual (every one year) advisory votes to approve the compensation of the Company's named executive officers pursuant to the following vote:
Number of Shares
One Year60,972,936
Two Years32,974
Three Years1,827,848
Abstain60,907
Broker Non-votes—

At the Annual Meeting, shareholders approved the Brunswick Corporation 2023 Stock Incentive Plan pursuant to the following vote:

Number of Shares
For58,856,003
Against3,971,279
Abstain67,383
Broker Non-votes3,418,034

At the Annual Meeting, shareholders ratified the Audit Committee's appointment of Deloitte & Touche LLP as the independent registered public accounting firm for the Company for the fiscal year ending December 31, 2023 pursuant to the following vote:
Number of Shares
For65,910,511
Against370,789
Abstain31,399
Broker Non-votes—
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Item 6.    Exhibits
Amended and Restated Certificate of Incorporation of the Company, dated May 3, 2023.
Certification of CEO Pursuant to 15 U.S.C. Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification of CFO Pursuant to 15 U.S.C. Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification of CEO Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Certification of CFO Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INSXBRL Instance Document
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


BRUNSWICK CORPORATION


November 1, 2017May 4, 2023By: /s/ DANIEL J. TANNERRANDALL S. ALTMAN
Daniel J. TannerRandall S. Altman
Senior Vice President and Controller*


*Mr. TannerAltman is signing this report both as a duly authorized officer and as the principal accounting officer.



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