UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October ~~02, 2021~~01, 2022


☐			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

____________

Brunswick Corporation

(Exact name of registrant as specified in its charter)


Delaware						36-0848180
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

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

(Address of principal executive offices) (Zip code)

(847) 735-4700

(Registrant’s telephone number, including area code)

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

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~~“large accelerated filer,~~" "accelerated~~” “accelerated filer,~~" "smaller~~” “smaller reporting company,"” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer	☒	Accelerated Filer	☐

Non-accelerated Filer	☐	Smaller reporting company	☐

Emerging growth company	☐

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

Common stock, par value $0.75 per share

New York Stock Exchange

Chicago Stock Exchange

6.500% Senior Notes due 2048

BC-A

New York Stock Exchange

6.625% Senior Notes due 2049

BC-B

New York Stock Exchange

6.375% Senior Notes due 2049

BC-C

New York Stock Exchange

The number of shares of Common Stock ($0.75 par value) of the registrant outstanding as of October ~~28, 2021~~27, 2022 was ~~77,095,328~~72,506,515.

BRUNSWICK CORPORATION

INDEX TO QUARTERLY REPORT ON FORM 10-Q

October ~~2, 2021~~1, 2022

TABLE OF CONTENTS


PART I – FINANCIAL INFORMATION		Page

Item 1.	Condensed Consolidated Financial Statements (Unaudited)	3

	~~Condensed Consolidated Statements of Comprehensive Income (unaudited) for the three months and~~ ~~nine~~ ~~months ended~~ ~~October 2, 2021 and~~ ~~September~~ 2 6 ~~, 2020~~	3



	~~Condensed Consolidated Balance Sheets (unaudited) as of~~ ~~October~~ 2 ~~, 2021, December 31, 2020 and~~ ~~September 2~~6 ~~, 2020~~	4

	~~Condensed Consolidated Statements of Cash Flows (unaudited) for the~~ ~~nine~~ ~~months ended~~ ~~October 2, 2021 and~~ ~~September 26, 2020~~	6

	~~Condensed Consolidated Statements of Shareholders' Equity (unaudited) for the three months and~~ ~~nine~~ ~~months ended~~ ~~October 2, 2021 and~~ ~~September~~ 2 6 ~~, 2020~~	7

	~~Notes to Condensed Consolidated Financial Statements (unaudited)~~	8





Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2426

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3536

Item 4.	Controls and Procedures	3537


PART II – OTHER INFORMATION



Item 1A.	Risk Factors	3638

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3638



Item 6.	Exhibits	3739

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

BRUNSWICK CORPORATION

Condensed Consolidated Statements of Comprehensive Income

~~(unaudited)~~(Unaudited)


		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
(in millions, except per share data)	(in millions, except per share data)	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020		(in millions, except per share data)	October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Net sales	Net sales	$	1,427.2	$	1,233.1	$	4,415.2	$	3,186.4	Net sales	$	1,698.2	$	1,427.2	$	5,229.5	$	4,415.2
Cost of sales	Cost of sales	1,016.8		856.2		3,126.0		2,309.7		Cost of sales	1,199.3		1,016.8		3,710.6		3,126.0
Selling, general and administrative expense	Selling, general and administrative expense	165.9		151.3		490.3		381.8		Selling, general and administrative expense	186.2		165.9		586.1		490.3
Research and development expense	Research and development expense	35.5		31.2		107.1		87.8		Research and development expense	50.4		35.5		152.0		107.1
Restructuring, exit and impairment charges	Restructuring, exit and impairment charges	—		1.8		0.7		4.3		Restructuring, exit and impairment charges	24.6		—		24.6		0.7
Operating earnings	Operating earnings	209.0		192.6		691.1		402.8		Operating earnings	237.7		209.0		756.2		691.1
Equity earnings	Equity earnings	0.3		0.6		1.5		3.5		Equity earnings	1.3		0.3		2.8		1.5
Pension settlement (charge) benefit		—		(0.2)		—		1.1

Other expense, net	Other expense, net	(1.6)		(1.2)		(4.4)		(2.7)		Other expense, net	(0.1)		(1.6)		(1.3)		(4.4)
Earnings before interest and income taxes	Earnings before interest and income taxes	207.7		191.8		688.2		404.7		Earnings before interest and income taxes	238.9		207.7		757.7		688.2
Interest expense	Interest expense	(16.9)		(16.4)		(47.1)		(52.0)		Interest expense	(26.1)		(16.9)		(70.4)		(47.1)
Interest income	Interest income	0.8		0.3		1.9		0.9		Interest income	1.9		0.8		2.5		1.9
Loss on early extinguishment of debt	Loss on early extinguishment of debt	(4.2)		—		(4.2)		—		Loss on early extinguishment of debt	—		(4.2)		(0.1)		(4.2)
Transaction financing charges	Transaction financing charges	(4.0)		—		(4.0)		—		Transaction financing charges	—		(4.0)		—		(4.0)
Earnings before income taxes	Earnings before income taxes	183.4		175.7		634.8		353.6		Earnings before income taxes	214.7		183.4		689.7		634.8
Income tax provision	Income tax provision	38.8		38.9		141.4		74.9		Income tax provision	46.5		38.8		148.7		141.4
Net earnings from continuing operations	Net earnings from continuing operations	144.6		136.8		493.4		278.7		Net earnings from continuing operations	168.2		144.6		541.0		493.4

Discontinued operations:
(Loss) earnings from discontinued operations, net of tax		(1.5)		1.5		(1.6)		0.4
Loss on disposal of discontinued operations, net of tax		—		(0.4)		—		(1.5)
Net (loss) earnings from discontinued operations, net of tax		(1.5)		1.1		(1.6)		(1.1)

Net loss from discontinued operations, net of tax										Net loss from discontinued operations, net of tax	(4.4)		(1.5)		(5.7)		(1.6)
Net earnings	Net earnings	$	143.1	$	137.9	$	491.8	$	277.6	Net earnings	$	163.8	$	143.1	$	535.3	$	491.8

Earnings (loss) per common share:
Earnings per common share:										Earnings per common share:
Basic	Basic									Basic
Earnings from continuing operations	Earnings from continuing operations	$	1.86	$	1.72	$	6.33	$	3.51	Earnings from continuing operations	$	2.27	$	1.86	$	7.16	$	6.33
(Loss) earnings from discontinued operations		(0.02)		0.02		(0.02)		(0.02)
Loss from discontinued operations										Loss from discontinued operations	(0.06)		(0.02)		(0.08)		(0.02)
Net earnings	Net earnings	$	1.84	$	1.74	$	6.31	$	3.49	Net earnings	$	2.21	$	1.84	$	7.08	$	6.31

Diluted	Diluted									Diluted
Earnings from continuing operations	Earnings from continuing operations	$	1.85	$	1.71	$	6.28	$	3.49	Earnings from continuing operations	$	2.26	$	1.85	$	7.12	$	6.28
(Loss) earnings from discontinued operations		(0.02)		0.02		(0.02)		(0.02)
Loss from discontinued operations										Loss from discontinued operations	(0.06)		(0.02)		(0.08)		(0.02)
Net earnings	Net earnings	$	1.83	$	1.73	$	6.26	$	3.47	Net earnings	$	2.20	$	1.83	$	7.04	$	6.26

Weighted average shares used for computation of:	Weighted average shares used for computation of:									Weighted average shares used for computation of:
Basic earnings per common share	Basic earnings per common share	77.7		79.4		78.0		79.4		Basic earnings per common share	74.2		77.7		75.6		78.0
Diluted earnings per common share	Diluted earnings per common share	78.3		79.8		78.6		79.9		Diluted earnings per common share	74.5		78.3		76.0		78.6

Comprehensive income	Comprehensive income	$	140.6	$	146.6	$	499.5	$	279.1	Comprehensive income	$	158.0	$	140.6	$	527.1	$	499.5

The Notes to Condensed Consolidated Financial Statements are an integral part of these condensed consolidated statements.	The Notes to Condensed Consolidated Financial Statements are an integral part of these condensed consolidated statements.									The Notes to Condensed Consolidated Financial Statements are an integral part of these condensed consolidated statements.

Table of Contents

BRUNSWICK CORPORATION

Condensed Consolidated Balance Sheets

~~(unaudited)~~(Unaudited)


(in millions)	(in millions)	October 2, 2021		December 31, 2020		September 26, 2020		(in millions)	October 1, 2022		December 31, 2021		October 2, 2021
Assets	Assets							Assets
Current assets	Current assets							Current assets
Cash and cash equivalents, at cost, which approximates fair value	Cash and cash equivalents, at cost, which approximates fair value	$	1,486.4	$	519.6	$	650.4	Cash and cash equivalents, at cost, which approximates fair value	$	457.4	$	354.5	$	1,486.4
Restricted cash	Restricted cash	10.9		10.7		9.1		Restricted cash	11.7		12.2		10.9
Short-term investments in marketable securities	Short-term investments in marketable securities	0.8		56.7		0.8		Short-term investments in marketable securities	34.5		0.8		0.8
Total cash and short-term investments in marketable securities	Total cash and short-term investments in marketable securities	1,498.1		587.0		660.3		Total cash and short-term investments in marketable securities	503.6		367.5		1,498.1
Accounts and notes receivable, less allowances of $10.3, $10.7, $11.1		451.1		337.6		398.8
Accounts and notes receivable, less allowances of $8.9, $9.7, $10.3								Accounts and notes receivable, less allowances of $8.9, $9.7, $10.3	557.7		485.3		451.1
Inventories	Inventories							Inventories
Finished goods	Finished goods	520.2		446.8		347.6		Finished goods	754.4		685.5		520.2
Work-in-process	Work-in-process	162.7		94.0		91.6		Work-in-process	224.0		176.8		162.7
Raw materials	Raw materials	257.6		171.0		150.2		Raw materials	451.4		345.7		257.6
Net inventories	Net inventories	940.5		711.8		589.4		Net inventories	1,429.8		1,208.0		940.5
Prepaid expenses and other	Prepaid expenses and other	52.3		34.1		32.7		Prepaid expenses and other	103.9		63.8		52.3

Current assets	Current assets	2,942.0		1,670.5		1,681.2		Current assets	2,595.0		2,124.6		2,942.0

Property	Property							Property
Land	Land	18.9		17.7		17.6		Land	42.2		34.7		18.9
Buildings and improvements	Buildings and improvements	453.3		435.5		426.4		Buildings and improvements	547.2		479.3		453.3
Equipment	Equipment	1,299.5		1,184.9		1,141.4		Equipment	1,425.1		1,332.4		1,299.5

Total land, buildings and improvements and equipment	Total land, buildings and improvements and equipment	1,771.7		1,638.1		1,585.4		Total land, buildings and improvements and equipment	2,014.5		1,846.4		1,771.7
Accumulated depreciation	Accumulated depreciation	(982.6)		(929.8)		(912.9)		Accumulated depreciation	(1,031.0)		(989.6)		(982.6)
Net land, buildings and improvements and equipment	Net land, buildings and improvements and equipment	789.1		708.3		672.5		Net land, buildings and improvements and equipment	983.5		856.8		789.1
Unamortized product tooling costs	Unamortized product tooling costs	172.4		155.3		146.6		Unamortized product tooling costs	237.6		190.1		172.4
Net property	Net property	961.5		863.6		819.1		Net property	1,221.1		1,046.9		961.5

Other assets	Other assets							Other assets
Goodwill	Goodwill	443.8		417.7		416.3		Goodwill	962.2		888.4		443.8
Other intangibles, net	Other intangibles, net	549.2		552.3		559.6		Other intangibles, net	1,005.4		1,052.1		549.2
Deferred income tax asset	Deferred income tax asset	132.7		136.6		93.7		Deferred income tax asset	137.7		146.0		132.7
Operating lease assets	Operating lease assets	83.1		83.0		82.0		Operating lease assets	111.4		92.8		83.1
Equity investments	Equity investments	41.3		32.5		25.5		Equity investments	47.7		43.8		41.3
Other long-term assets	Other long-term assets	27.0		14.4		13.4		Other long-term assets	44.4		30.4		27.0

Other assets	Other assets	1,277.1		1,236.5		1,190.5		Other assets	2,308.8		2,253.5		1,277.1

Total assets	Total assets	$	5,180.6	$	3,770.6	$	3,690.8	Total assets	$	6,124.9	$	5,425.0	$	5,180.6

The Notes to Condensed Consolidated Financial Statements are an integral part of these condensed consolidated statements.	The Notes to Condensed Consolidated Financial Statements are an integral part of these condensed consolidated statements.							The Notes to Condensed Consolidated Financial Statements are an integral part of these condensed consolidated statements.

Table of Contents


BRUNSWICK CORPORATION Condensed Consolidated Balance Sheets (unaudited)
(in millions)	(in millions)	October 2, 2021		December 31, 2020		September 26, 2020		(in millions)	October 1, 2022		December 31, 2021		October 2, 2021
Liabilities and shareholders' equity	Liabilities and shareholders' equity							Liabilities and shareholders' equity
Current liabilities	Current liabilities							Current liabilities
Short-term debt and current maturities of long-term debt	Short-term debt and current maturities of long-term debt	$	43.2	$	43.1	$	48.4	Short-term debt and current maturities of long-term debt	$	84.9	$	37.4	$	43.2
Accounts payable	Accounts payable	589.8		457.6		392.9		Accounts payable	631.6		693.5		589.8
Accrued expenses	Accrued expenses	623.3		578.5		508.3		Accrued expenses	662.8		711.3		623.3

Current liabilities	Current liabilities	1,256.3		1,079.2		949.6		Current liabilities	1,379.3		1,442.2		1,256.3

Long-term liabilities	Long-term liabilities							Long-term liabilities
Debt	Debt	1,787.7		908.3		1,013.2		Debt	2,419.1		1,779.0		1,787.7
Postretirement benefits	Postretirement benefits	70.8		74.7		71.9		Postretirement benefits	62.7		66.5		70.8
Operating lease liabilities	Operating lease liabilities	67.6		69.8		69.3		Operating lease liabilities	95.7		75.5		67.6
Other	Other	148.5		128.6		128.6		Other	167.1		147.6		148.5

Long-term liabilities	Long-term liabilities	2,074.6		1,181.4		1,283.0		Long-term liabilities	2,744.6		2,068.6		2,074.6

Shareholders' equity	Shareholders' equity							Shareholders' equity
Common stock; authorized: 200,000,000 shares, $0.75 par value; issued: 102,538,000 shares; outstanding: 77,134,000, 77,875,000 and 78,421,000 shares		76.9		76.9		76.9
Common stock; authorized: 200,000,000 shares, $0.75 par value; issued: 102,538,000 shares; outstanding: 72,612,000, 76,933,000 and 77,134,000 shares								Common stock; authorized: 200,000,000 shares, $0.75 par value; issued: 102,538,000 shares; outstanding: 72,612,000, 76,933,000 and 77,134,000 shares	76.9		76.9		76.9
Additional paid-in capital	Additional paid-in capital	388.3		383.8		377.0		Additional paid-in capital	386.0		394.5		388.3
Retained earnings	Retained earnings	2,644.5		2,225.7		2,151.7		Retained earnings	3,173.0		2,720.1		2,644.5
Treasury stock, at cost: 25,404,000, 24,663,000 and 24,117,000 shares		(1,225.0)		(1,133.7)		(1,095.5)
Treasury stock, at cost: 29,926,000, 25,605,000 and 25,404,000 shares								Treasury stock, at cost: 29,926,000, 25,605,000 and 25,404,000 shares	(1,595.2)		(1,245.8)		(1,225.0)

Accumulated other comprehensive loss	Accumulated other comprehensive loss	(35.0)		(42.7)		(51.9)		Accumulated other comprehensive loss	(39.7)		(31.5)		(35.0)
Shareholders' equity	Shareholders' equity	1,849.7		1,510.0		1,458.2		Shareholders' equity	2,001.0		1,914.2		1,849.7

Total liabilities and shareholders' equity	Total liabilities and shareholders' equity	$	5,180.6	$	3,770.6	$	3,690.8	Total liabilities and shareholders' equity	$	6,124.9	$	5,425.0	$	5,180.6

The Notes to Condensed Consolidated Financial Statements are an integral part of these condensed consolidated statements.	The Notes to Condensed Consolidated Financial Statements are an integral part of these condensed consolidated statements.							The Notes to Condensed Consolidated Financial Statements are an integral part of these condensed consolidated statements.

Table of Contents

BRUNSWICK CORPORATION

Condensed Consolidated Statements of Cash Flows

~~(unaudited)~~(Unaudited)


		Nine Months Ended					Nine Months Ended
(in millions)	(in millions)	October 2, 2021		September 26, 2020		(in millions)	October 1, 2022		October 2, 2021
Cash flows from operating activities	Cash flows from operating activities					Cash flows from operating activities
Net earnings	Net earnings	$	491.8	$	277.6	Net earnings	$	535.3	$	491.8
Less: net loss from discontinued operations, net of tax	Less: net loss from discontinued operations, net of tax	(1.6)		(1.1)		Less: net loss from discontinued operations, net of tax	(5.7)		(1.6)
Net earnings from continuing operations, net of tax	Net earnings from continuing operations, net of tax	493.4		278.7		Net earnings from continuing operations, net of tax	541.0		493.4
Stock compensation expense	Stock compensation expense	22.7		19.6		Stock compensation expense	16.8		22.7
Depreciation and amortization	Depreciation and amortization	127.9		110.5		Depreciation and amortization	167.9		127.9
Pension funding, net of expense						Pension funding, net of expense	(0.5)		(1.7)

Asset impairment charges						Asset impairment charges	19.2		0.8

Deferred income taxes	Deferred income taxes	(5.3)		26.5		Deferred income taxes	4.0		(5.3)

Changes in certain current assets and current liabilities	Changes in certain current assets and current liabilities	(223.4)		166.0		Changes in certain current assets and current liabilities	(426.8)		(223.4)
Long-term extended warranty contracts and other deferred revenue	Long-term extended warranty contracts and other deferred revenue	12.0		10.9		Long-term extended warranty contracts and other deferred revenue	12.2		12.0

Income taxes	Income taxes	29.0		8.8		Income taxes	(17.0)		29.0
Other, net	Other, net	18.8		16.4		Other, net	(3.0)		19.7
Net cash provided by operating activities of continuing operations	Net cash provided by operating activities of continuing operations	475.1		637.4		Net cash provided by operating activities of continuing operations	313.8		475.1
Net cash (used for) provided by operating activities of discontinued operations		(10.5)		3.5
Net cash used for operating activities of discontinued operations						Net cash used for operating activities of discontinued operations	(2.4)		(10.5)
Net cash provided by operating activities	Net cash provided by operating activities	464.6		640.9		Net cash provided by operating activities	311.4		464.6

Cash flows from investing activities	Cash flows from investing activities					Cash flows from investing activities
Capital expenditures	Capital expenditures	(180.2)		(120.6)		Capital expenditures	(299.3)		(180.2)

Purchases of marketable securities						Purchases of marketable securities	(60.0)		—
Sales or maturities of marketable securities	Sales or maturities of marketable securities	55.9		—		Sales or maturities of marketable securities	26.3		55.9
Investments	Investments	(9.1)		2.5		Investments	(4.9)		(9.1)
Acquisition of businesses, net of cash acquired	Acquisition of businesses, net of cash acquired	(50.3)		—		Acquisition of businesses, net of cash acquired	(95.7)		(50.3)
Proceeds from the sale of property, plant and equipment	Proceeds from the sale of property, plant and equipment	5.6		2.0		Proceeds from the sale of property, plant and equipment	5.7		5.6
Cross currency swap settlement						Cross currency swap settlement	16.7		—

Net cash used for investing activities of continuing operations		(178.1)		(116.1)
Net cash used for investing activities of discontinued operations		—		(7.5)

Net cash used for investing activities	Net cash used for investing activities	(178.1)		(123.6)		Net cash used for investing activities	(411.2)		(178.1)

Cash flows from financing activities	Cash flows from financing activities					Cash flows from financing activities
Proceeds from issuances of short-term debt	Proceeds from issuances of short-term debt	—		610.0		Proceeds from issuances of short-term debt	127.8		—
Payments of short-term debt	Payments of short-term debt	—		(610.0)		Payments of short-term debt	(125.0)		—
Net proceeds from issuances of long-term debt	Net proceeds from issuances of long-term debt	994.4		—		Net proceeds from issuances of long-term debt	741.8		994.4
Payments of long-term debt including current maturities	Payments of long-term debt including current maturities	(113.6)		(48.4)		Payments of long-term debt including current maturities	(58.4)		(113.6)
Net premium paid on early extinguishment of debt	Net premium paid on early extinguishment of debt	(4.2)		—		Net premium paid on early extinguishment of debt	(0.1)		(4.2)
Common stock repurchases	Common stock repurchases	(98.7)		(79.1)		Common stock repurchases	(360.0)		(98.7)
Cash dividends paid	Cash dividends paid	(73.0)		(57.2)		Cash dividends paid	(82.4)		(73.0)
Proceeds from share-based compensation activity	Proceeds from share-based compensation activity	0.5		1.1		Proceeds from share-based compensation activity	—		0.5
Tax withholding associated with shares issued for share-based compensation	Tax withholding associated with shares issued for share-based compensation	(13.2)		(7.3)		Tax withholding associated with shares issued for share-based compensation	(16.4)		(13.2)
Other, net	Other, net	(7.8)		—		Other, net	(3.9)		(7.8)

Net cash provided by (used for) financing activities		684.4		(190.9)
Net cash provided by financing activities						Net cash provided by financing activities	223.4		684.4

Effect of exchange rate changes	Effect of exchange rate changes	(3.9)		1.2		Effect of exchange rate changes	(21.2)		(3.9)
Net increase in Cash and cash equivalents and Restricted cash	Net increase in Cash and cash equivalents and Restricted cash	967.0		327.6		Net increase in Cash and cash equivalents and Restricted cash	102.4		967.0
Cash and cash equivalents and Restricted cash at beginning of period	Cash and cash equivalents and Restricted cash at beginning of period	530.3		331.9		Cash and cash equivalents and Restricted cash at beginning of period	366.7		530.3

Cash and cash equivalents and Restricted cash at end of period	Cash and cash equivalents and Restricted cash at end of period	1,497.3		659.5		Cash and cash equivalents and Restricted cash at end of period	469.1		1,497.3
Less: Restricted cash	Less: Restricted cash	10.9		9.1		Less: Restricted cash	11.7		10.9
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	1,486.4	$	650.4	Cash and cash equivalents at end of period	$	457.4	$	1,486.4

The Notes to Condensed Consolidated Financial Statements are an integral part of these condensed consolidated statements.	The Notes to Condensed Consolidated Financial Statements are an integral part of these condensed consolidated statements.					The Notes to Condensed Consolidated Financial Statements are an integral part of these condensed consolidated statements.

Table of Contents

Brunswick Corporation

Condensed Consolidated Statements of Shareholders' Equity

~~(unaudited)~~(Unaudited)


(in millions, except per share data)	Common Stock		Additional Paid-in Capital		Retained Earnings		Treasury Stock		Accumulated 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
Net earnings	—		—		197.3		—		—		197.3
Other comprehensive loss	—		—		—		—		(12.3)		(12.3)
Dividends ($0.365 per common share)	—		—		(27.4)		—		—		(27.4)
Compensation plans and other	—		6.3		—		1.0		—		7.3
Common stock repurchases	—		—		—		(140.2)		—		(140.2)
Balance at July 2, 2022	76.9		380.8		3,036.2		(1,455.4)		(33.9)		2,004.6
Net earnings	—		—		163.8		—		—		163.8
Other comprehensive loss	—		—		—		—		(5.8)		(5.8)
Dividends ($0.365 per common share)	—		—		(27.0)		—		—		(27.0)
Compensation plans and other	—		5.2		—		0.2		—		5.4
Common stock repurchases	—		—		—		(140.0)		—		(140.0)
Balance at October 1, 2022	$	76.9	$	386.0	$	3,173.0	$	(1,595.2)	$	(39.7)	$	2,001.0


(in millions, except per share data)	Common Stock		Additional Paid-in Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Total
Balance at December 31, 2020	$	76.9	$	383.8	$	2,225.7	$	(1,133.7)	$	(42.7)	$	1,510.0
Net earnings	—		—		169.3		—		—		169.3
Other comprehensive income	—		—		—		—		5.6		5.6
Dividends ($0.27 per common share)	—		—		(21.0)		—		—		(21.0)
Compensation plans and other	—		(12.6)		—		7.2		—		(5.4)
Common stock repurchases	—		—		—		(15.9)		—		(15.9)
Balance at April 3, 2021	76.9		371.2		2,374.0		(1,142.4)		(37.1)		1,642.6
Net earnings	—		—		179.4		—		—		179.4
Other comprehensive income	—		—		—		—		4.6		4.6
Dividends ($0.335 per common share)	—		—		(26.2)		—		—		(26.2)
Compensation plans and other	—		8.9		—		0.2		—		9.1
Common stock repurchases	—		—		—		(40.0)		—		(40.0)
Balance at July 3, 2021	76.9		380.1		2,527.2		(1,182.2)		(32.5)		1,769.5
Net earnings	—		—		143.1		—		—		143.1
Other comprehensive loss	—		—		—		—		(2.5)		(2.5)
Dividends ($0.335 per common share)	—		—		(25.8)		—		—		(25.8)
Compensation plans and other	—		8.2		—		—		—		8.2
Common stock repurchases	—		—		—		(42.8)		—		(42.8)
Balance at October 2, 2021	$	76.9	$	388.3	$	2,644.5	$	(1,225.0)	$	(35.0)	$	1,849.7

(in millions, except per share data) Common Stock Additional Paid-in Capital Retained Earnings Treasury Stock Accumulated Other Comprehensive Income (Loss) Total
Balance at December 31, 2019 $ 76.9 $ 369.2 $ 1,931.3 $ (1,023.1) $ (53.4) $ 1,300.9
Net earnings — — 69.0 — — 69.0
Other comprehensive loss — — — — (7.9) (7.9)
Dividends ($0.24 per common share) — — (19.2) — — (19.2)
Compensation plans and other — (10.4) — 5.4 — (5.0)
Common stock repurchases — — — (34.1) — (34.1)
Balance at March 28, 2020 76.9 358.8 1,981.1 (1,051.8) (61.3) 1,303.7
Net earnings — — 70.7 — — 70.7
Other comprehensive income — — — — 0.7 0.7
Dividends ($0.24 per common share) — — (19.0) — — (19.0)
Compensation plans and other — 7.7 — 0.6 — 8.3
Balance at June 27, 2020 76.9 366.5 2,032.8 (1,051.2) (60.6) 1,364.4
Net earnings — — 137.9 — — 137.9
Other comprehensive income — — — — 8.7 8.7
Dividends ($0.24 per common share) — — (19.0) — — (19.0)
Compensation plans and other — 10.5 — 0.7 — 11.2
Common stock repurchases — — — (45.0) — (45.0)
Balance at September 26, 2020 $ 76.9 $ 377.0 $ 2,151.7 $ (1,095.5) $ (51.9) $ 1,458.2

The Notes to Condensed Consolidated Financial Statements are an integral part of these condensed consolidated statements.

Table of Contents

BRUNSWICK CORPORATION

Notes to Condensed Consolidated Financial Statements

~~(unaudited)~~(Unaudited)

Note 1 – Significant Accounting Policies

Interim Financial Statements. Brunswick's ("Brunswick" or "the Company") unaudited interim condensed consolidated financial statements 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.

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 ~~2020~~2021 Annual Report on Form 10-K for the year ended December 31, ~~2020 (the 2020~~2021 ("the 2021 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'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 third quarter of fiscal year ~~2021~~2022 ended on October ~~2, 2021~~1, 2022 and the third quarter of fiscal year ~~2020~~2021 ended on ~~September 26, 2020.~~October 2, 2021.

Recently Adopted Accounting Standards

Revenue Contracts Acquired in Business Combinations: In October 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2021-08, Accounting for Contract Assets and Contract Liabilities From Contracts With Customers, which amended the guidance in Accounting Standards Codification ("ASC") 805 to require that the acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 606. The Company early adopted the guidance in ASU 2021-08 on July 2, 2022. The adoption of this standard did not have a material impact on the consolidated financial statements.

Recently Issued Accounting Standards

Fair Value Hedge Accounting: In March 2022, the FASB issued ASU 2022-01, Fair Value Hedging — Portfolio Layer Method, which clarifies the guidance in ASC 815 on fair value hedge accounting of interest-rate risk for portfolios of financial assets. ASU 2022-01 amends the guidance that established the “last-of-layer” method for making the fair value hedge accounting for these portfolios more accessible. The amendment is effective for financial statements for interim and annual periods beginning after December 15, 2022. The adoption of this standard is not expected to have a material impact on the Company's consolidated financial statements.

Supplier Finance Programs: In September 2022, the FASB issued 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 disclose qualitative and quantitative information about the program including key terms and obligations outstanding at the end of the reporting period. ASU 2022-04 is effective for financial statements for interim and annual periods beginning after December 15, 2022. The adoption of this standard is not expected to have a material impact on the Company's consolidated financial statements.

Table of Contents

Notes to Condensed Consolidated Financial Statements

(unaudited)

Note 2 – Revenue Recognition

The following table presents the Company's revenue in categories that depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors:

Three Months Ended
October 2, 2021 September 26, 2020
(in millions) Propulsion Parts & Accessories Boat Total Propulsion Parts & Accessories Boat Total
Geographic Markets
United States $ 433.9 $ 351.8 $ 306.9 $ 1,092.6 $ 355.2 $ 336.7 $ 264.3 $ 956.2
Europe 78.1 57.9 33.7 169.7 56.0 51.2 25.5 132.7
Asia-Pacific 51.8 35.5 6.6 93.9 67.9 31.4 7.4 106.7
Canada 26.2 35.3 49.0 110.5 19.7 30.2 22.9 72.8
Rest-of-World 36.9 13.5 5.3 55.7 27.7 10.4 8.0 46.1
Segment Eliminations (86.8) (8.4) — (95.2) (73.4) (8.0) — (81.4)
Total $ 540.1 $ 485.6 $ 401.5 $ 1,427.2 $ 453.1 $ 451.9 $ 328.1 $ 1,233.1
Nine Months Ended
October 2, 2021 September 26, 2020
(in millions) Propulsion Parts & Accessories Boat Total Propulsion Parts & Accessories Boat Total
Geographic Markets
United States $ 1,259.6 $ 1,055.8 $ 933.6 $ 3,249.0 $ 871.0 $ 841.4 $ 663.0 $ 2,375.4
Europe 306.8 191.3 127.8 625.9 195.4 135.9 95.9 427.2
Asia-Pacific 184.1 117.9 20.6 322.6 183.7 80.7 16.2 280.6
Canada 75.5 94.9 164.2 334.6 47.2 63.4 78.4 189.0
Rest-of-World 108.2 42.6 23.9 174.7 73.2 26.6 16.0 115.8
Segment Eliminations (267.3) (24.3) — (291.6) (182.3) (19.3) — (201.6)
Total $ 1,666.9 $ 1,478.2 $ 1,270.1 $ 4,415.2 $ 1,188.2 $ 1,128.7 $ 869.5 $ 3,186.4


	Three Months Ended
	October 1, 2022								October 2, 2021
(in millions)	Propulsion		Parts & Accessories		Boat		Total		Propulsion		Parts & Accessories		Boat		Total
Geographic Markets
United States	$	514.1	$	405.9	$	397.7	$	1,317.7	$	433.9	$	351.8	$	306.9	$	1,092.6
Europe	75.1		76.4		39.3		190.8		78.1		57.9		33.7		169.7
Asia-Pacific	49.7		51.7		7.8		109.2		51.8		35.5		6.6		93.9
Canada	28.4		37.3		57.1		122.8		26.2		35.3		49.0		110.5
Rest-of-World	47.1		16.5		8.8		72.4		36.9		13.5		5.3		55.7
Segment Eliminations	(99.2)		(15.5)		—		(114.7)		(86.8)		(8.4)		—		(95.2)
Total	$	615.2	$	572.3	$	510.7	$	1,698.2	$	540.1	$	485.6	$	401.5	$	1,427.2

	Nine Months Ended
	October 1, 2022								October 2, 2021
(in millions)	Propulsion		Parts & Accessories		Boat		Total		Propulsion		Parts & Accessories		Boat		Total
Geographic Markets
United States	$	1,450.4	$	1,257.7	$	1,189.2	$	3,897.3	$	1,259.6	$	1,055.8	$	933.6	$	3,249.0
Europe	306.9		284.0		140.9		731.8		306.8		191.3		127.8		625.9
Asia-Pacific	172.5		156.8		24.4		353.7		184.1		117.9		20.6		322.6
Canada	86.1		106.9		189.7		382.7		75.5		94.9		164.2		334.6
Rest-of-World	138.6		51.7		27.7		218.0		108.2		42.6		23.9		174.7
Segment Eliminations	(310.7)		(43.1)		(0.2)		(354.0)		(267.3)		(24.3)		—		(291.6)
Total	$	1,843.8	$	1,814.0	$	1,571.7	$	5,229.5	$	1,666.9	$	1,478.2	$	1,270.1	$	4,415.2

Table of Contents

Notes to Condensed Consolidated Financial Statements

(unaudited)


		Three Months Ended																	Three Months Ended
		October 2, 2021								September 26, 2020									October 1, 2022								October 2, 2021
(in millions)	(in millions)	Propulsion		Parts & Accessories		Boat		Total		Propulsion		Parts & Accessories		Boat		Total		(in millions)	Propulsion		Parts & Accessories		Boat		Total		Propulsion		Parts & Accessories		Boat		Total
Major Product Lines	Major Product Lines																	Major Product Lines
Outboard Engines	Outboard Engines	$	486.3	$	—	$	—	$	486.3	$	410.3	$	—	$	—	$	410.3	Outboard Engines	$	565.2	$	—	$	—	$	565.2	$	486.3	$	—	$	—	$	486.3
Controls, Rigging, and Propellers	Controls, Rigging, and Propellers	87.8		—		—		87.8		76.9		—		—		76.9		Controls, Rigging, and Propellers	96.9		—		—		96.9		87.8		—		—		87.8
Sterndrive Engines	Sterndrive Engines	52.8		—		—		52.8		39.3		—		—		39.3		Sterndrive Engines	52.3		—		—		52.3		52.8		—		—		52.8
Distribution Parts and Accessories	Distribution Parts and Accessories	—		215.7		—		215.7		—		205.0		—		205.0		Distribution Parts and Accessories	—		207.8		—		207.8		—		215.7		—		215.7
Advanced Systems Group		—		128.8		—		128.8		—		113.1		—		113.1
Engine Parts and Accessories	Engine Parts and Accessories	—		149.5		—		149.5		—		141.8		—		141.8		Engine Parts and Accessories	—		152.2		—		152.2		—		149.5		—		149.5

Navico Group																		Navico Group	—		227.8		—		227.8		—		128.8		—		128.8
Aluminum Freshwater Boats	Aluminum Freshwater Boats	—		—		167.5		167.5		—		—		124.5		124.5		Aluminum Freshwater Boats	—				208.2		208.2		—		—		167.5		167.5
Recreational Fiberglass Boats	Recreational Fiberglass Boats	—		—		135.9		135.9		—		—		111.0		111.0		Recreational Fiberglass Boats	—		—		180.8		180.8		—		—		135.9		135.9
Saltwater Fishing Boats	Saltwater Fishing Boats	—		—		86.4		86.4		—		—		82.6		82.6		Saltwater Fishing Boats	—		—		86.6		86.6		—		—		86.4		86.4
Business Acceleration	Business Acceleration	—		—		15.6		15.6		—		—		11.2		11.2		Business Acceleration	—		—		38.7		38.7		—		—		15.6		15.6
Boat Eliminations/Other	Boat Eliminations/Other	—		—		(3.9)		(3.9)		—		—		(1.2)		(1.2)		Boat Eliminations/Other	—		—		(3.6)		(3.6)		—		—		(3.9)		(3.9)
Segment Eliminations	Segment Eliminations	(86.8)		(8.4)		—		(95.2)		(73.4)		(8.0)		—		(81.4)		Segment Eliminations	(99.2)		(15.5)		—		(114.7)		(86.8)		(8.4)		—		(95.2)
Total	Total	$	540.1	$	485.6	$	401.5	$	1,427.2	$	453.1	$	451.9	$	328.1	$	1,233.1	Total	$	615.2	$	572.3	$	510.7	$	1,698.2	$	540.1	$	485.6	$	401.5	$	1,427.2

		Nine Months Ended																	Nine Months Ended
		October 2, 2021								September 26, 2020									October 1, 2022								October 2, 2021
(in millions)	(in millions)	Propulsion		Parts & Accessories		Boat		Total		Propulsion		Parts & Accessories		Boat		Total		(in millions)	Propulsion		Parts & Accessories		Boat		Total		Propulsion		Parts & Accessories		Boat		Total
Major Product Lines	Major Product Lines																	Major Product Lines
Outboard Engines	Outboard Engines	$	1,485.0	$	—	$	—	$	1,485.0	$	1,078.4	$	—	$	—	$	1,078.4	Outboard Engines	$	1,677.1	$	—	$	—	$	1,677.1	$	1,485.0	$	—	$	—	$	1,485.0
Controls, Rigging, and Propellers	Controls, Rigging, and Propellers	278.8		—		—		278.8		187.6		—		—		187.6		Controls, Rigging, and Propellers	301.8		—		—		301.8		278.8		—		—		278.8
Sterndrive Engines	Sterndrive Engines	170.4		—		—		170.4		104.5		—		—		104.5		Sterndrive Engines	175.6		—		—		175.6		170.4		—		—		170.4
Distribution Parts and Accessories	Distribution Parts and Accessories	—		671.5		—		671.5		—		517.0		—		517.0		Distribution Parts and Accessories	—		642.7		—		642.7		—		671.5		—		671.5
Advanced Systems Group		—		401.9		—		401.9		—		303.0		—		303.0
Engine Parts and Accessories	Engine Parts and Accessories	—		429.1		—		429.1		—		328.0		—		328.0		Engine Parts and Accessories	—		424.5		—		424.5		—		429.1		—		429.1

Navico Group																		Navico Group	—		789.9		—		789.9		—		401.9		—		401.9
Aluminum Freshwater Boats	Aluminum Freshwater Boats	—		—		535.4		535.4		—		—		339.2		339.2		Aluminum Freshwater Boats	—		—		666.2		666.2		—		—		535.4		535.4
Recreational Fiberglass Boats	Recreational Fiberglass Boats	—		—		425.5		425.5		—		—		302.4		302.4		Recreational Fiberglass Boats	—		—		532.6		532.6		—		—		425.5		425.5
Saltwater Fishing Boats	Saltwater Fishing Boats	—		—		276.2		276.2		—		—		201.4		201.4		Saltwater Fishing Boats	—		—		286.1		286.1		—		—		276.2		276.2
Business Acceleration	Business Acceleration	—		—		43.6		43.6		—		—		29.5		29.5		Business Acceleration	—		—		94.1		94.1		—		—		43.6		43.6
Boat Eliminations/Other	Boat Eliminations/Other	—		—		(10.6)		(10.6)		—		—		(3.0)		(3.0)		Boat Eliminations/Other	—		—		(7.1)		(7.1)		—		—		(10.6)		(10.6)
Segment Eliminations	Segment Eliminations	(267.3)		(24.3)		—		(291.6)		(182.3)		(19.3)		—		(201.6)		Segment Eliminations	(310.7)		(43.1)		(0.2)		(354.0)		(267.3)		(24.3)		—		(291.6)
Total	Total	$	1,666.9	$	1,478.2	$	1,270.1	$	4,415.2	$	1,188.2	$	1,128.7	$	869.5	$	3,186.4	Total	$	1,843.8	$	1,814.0	$	1,571.7	$	5,229.5	$	1,666.9	$	1,478.2	$	1,270.1	$	4,415.2

As of December 31, ~~2020, $113.0~~2021, $142.1 million of contract liabilities associated with extended warranties and customer deposits were reported in Accrued expenses and Other Long-term liabilities, of which ~~$6.9~~$9.2 million and ~~$28.0~~$34.0 million were recognized as revenue during the three and nine months ended October ~~2, 2021,~~1, 2022, respectively. As of October ~~2, 2021,~~1, 2022, total contract liabilities were ~~$138.8 million.~~$186.7 million. The total amount of the transaction price allocated to unsatisfied performance obligations as of October ~~2, 2021~~1, 2022 was ~~$130.6~~$177.3 million for contracts greater than one year, which primarily relates to extended warranties. The Company expects to recognize ~~$12.9~~$16.1 million of this amount in the fourth quarter of ~~2021, $33.8~~2022, $53.9 million in ~~2022,~~2023, and ~~$83.9~~$107.3 million thereafter.

910

Table of Contents

Notes to Condensed Consolidated Financial Statements

(unaudited)

~~Note 3 – Discontinued Operations~~

On June 27, 2019, the Company completed the sale of its Fitness business to KPS Capital Partners, LP. As a result, this business, which was previously reported in the Company's Fitness segment, is being reported as discontinued operations in the Condensed Consolidated Statements of Comprehensive Income and Condensed Consolidated Statements of Cash Flows for all periods presented. Refer to Note 3 in the 2020 Form 10-K for further information.

~~In connection with the sale of its Fitness business, the Company retained assets of $26.4 million primarily related to VAT receivables, and retained liabilities of~~ ~~$45.1 million~~ ~~primarily related to VAT payables, product warranty liabilities and certain employee benefits. As of October 2, 2021, retained assets and liabilities were $4.1 million and $2.1 million, respectively. As of September 26, 2020, retained assets and liabilities were $9.6 million and $22.8 million, respectively~~.

Note 43 – Restructuring, Exit and Impairment Activities

The Company recorded restructuring, exit and impairment charges in the Condensed Consolidated Statements of Comprehensive Income in ~~2021~~2022 and ~~2020.~~2021.

During the three months ended October 1, 2022, the Company recorded restructuring charges within the Parts & Accessories segment related to headcount reductions associated with the integration of Marine Innovations Group AS ("Navico"). The restructuring activities were substantially completed as of October 1, 2022.

The following table is a summary of ~~those~~ expenses for the three months ended October 1, 2022 and October 2, ~~2021 and September 26, 2020:~~2021:


		October 2, 2021						September 26, 2020								October 1, 2022								October 2, 2021
(in millions)	(in millions)	Parts & Accessories		Boat		Corporate		Total		Parts & Accessories		Boat		Corporate			Total		(in millions)	Parts & Accessories		Boat (A)		Corporate (B)		Total		Parts & Accessories		Boat		Total
Restructuring and exit activities:
Restructuring, exit and impairment activities:																			Restructuring, exit and impairment activities:
Employee termination and other benefits	Employee termination and other benefits	$	—	$	—	$	—	$	—	$	0.5	$	0.4	$	0.1		$	1.0	Employee termination and other benefits	$	6.9	$	—	$	—	$	6.9	$	—	$	—	$	—
Asset-related	Asset-related	—		—		—		—		—		0.4		—			0.4		Asset-related	—		0.3		17.4		17.7		—		—		—

Other		—		—		—		—		—		0.4		—			0.4

Total restructuring, exit and impairment charges	Total restructuring, exit and impairment charges	$	—	$	—	$	—	$	—	$	0.5	$	1.2	$	0.1		$	1.8	Total restructuring, exit and impairment charges	$	6.9	$	0.3	$	17.4	$	24.6	$	—	$	—	$	—

Total cash payments for restructuring, exit and impairment charges (A)		$	0.3	$	0.6	$	—	$	0.9	$	0.5	$	1.3	$	0.5		$	2.3
Accrued charges at end of the period (B)		$	0.1	$	0.1	$	—	$	0.2	$	0.6	$	2.0	$	1.7		$	4.3
Total cash payments for restructuring, exit and impairment charges (C)																			Total cash payments for restructuring, exit and impairment charges (C)	$	1.5	$	0.1	$	—	$	1.6	$	0.3	$	0.6	$	0.9
Accrued charges at end of the period (D)																			Accrued charges at end of the period (D)	$	5.4	$	—	$	—	$	5.4	$	0.1	$	0.1	$	0.2

(A) Includes asset-related impairment charges, net of insurance recoveries, associated with Hurricane Ian.

(B) Includes impairment charges of $17.4 million related to the Company's decision not to place certain capitalized software intangible assets into service during the three months ended October 1, 2022.

(C) Cash payments for the three months ended October 1, 2022 and October 2, 2021 ~~and September 26, 2020~~ may include payments related to prior period charges.

~~(B)~~(D) Restructuring, exit and impairment charges accrued as of October ~~2, 2021~~1, 2022 are expected to be paid ~~primarily during 2021.~~in the next twelve months.

The following table is a summary of ~~those~~ expenses for the nine months ended October 1, 2022 and October 2, ~~2021 and September 26, 2020:~~2021:


		October 2, 2021						September 26, 2020											October 1, 2022							October 2, 2021
(in millions)	(in millions)	Parts & Accessories		Boat		Corporate		Total		Parts & Accessories		Boat		Corporate		Total		(in millions)		Parts & Accessories		Boat (A)		Corporate (B)		Total		Parts & Accessories		Boat		Corporate		Total
Restructuring and exit activities:
Restructuring, exit and impairment activities:																		Restructuring, exit and impairment activities:
Employee termination and other benefits	Employee termination and other benefits	$	0.7	$	—	$	—	$	0.7	$	0.8	$	0.6	$	1.9	$	3.3	Employee termination and other benefits		$	6.9	$	—	$	—	$	6.9	$	0.7	$	—	$	—	$	0.7
Asset-related	Asset-related	—		—		—		—		—		0.5		—		0.5		Asset-related		—		0.3		17.4		17.7		—		—		—		—

Other		—		—		—		—		—		0.4		0.1		0.5

Total restructuring, exit and impairment charges	Total restructuring, exit and impairment charges	$	0.7	—		$	—	$	0.7	$	0.8	$	1.5	$	2.0	$	4.3	Total restructuring, exit and impairment charges		$	6.9	$	0.3	$	17.4	$	24.6	$	0.7	$	—	$	—	$	0.7

Total cash payments for restructuring, exit and impairment charges (A)		$	0.9	$	1.1	$	1.7	$	3.7	$	1.5	$	5.1	$	1.8	$	8.4
Accrued charges at end of the period (B)		$	0.1	$	0.1	$	—	$	0.2	$	0.6	$	2.0	$	1.7	$	4.3
Total cash payments for restructuring, exit and impairment charges (C)																		Total cash payments for restructuring, exit and impairment charges (C)		$	1.5	$	0.2	$	—	$	1.7	$	0.9	$	1.1	$	1.7	$	3.7
Accrued charges at end of the period (D)																		Accrued charges at end of the period (D)		$	5.4	$	—	$	—	$	5.4	$	0.1	$	0.1	$	—	$	0.2

(A) Includes asset-related impairment charges, net of insurance recoveries, associated with Hurricane Ian.

(C) Cash payments for the nine months ended October 1, 2022 and October 2, 2021 ~~and September 26, 2020~~ may include payments related to prior period charges.

~~(B)~~(D) Restructuring, exit and impairment charges accrued as of October ~~2, 2021~~1, 2022 are expected to be paid ~~primarily during 2021.~~in the next twelve months.

1011

Table of Contents

Notes to Condensed Consolidated Financial Statements

(unaudited)

Note 54 – Acquisitions

~~2021~~2022 Acquisitions

~~On September 1, 2021,~~During the ~~Company acquired substantially all~~second quarter of 2022, the assets of RELiON Battery, LLC ("RELiON"). RELiON is a global provider of lithium batteries and related products to multiple industry sectors. The acquisition of RELiON complements our existing portfolio of advanced battery and power management brands. On September 17, 2021, the Company acquired substantially all the assets of SemahTronix, a global supplier of high-complexity electrical wiring harnesses for advanced products in the marine, mobile, and defense industries. The acquisition of the SemahTronix assets enhances our integrated systems offerings by providing our ASG Connect organization and our global customers with access to high-quality, large, complex electrical wire harnessing systems that further enable our end-to-end systems solutions and capabilities. These acquisitions are included as part of the Parts & Accessories segment.

~~On July 9, 2021, the Company acquired Fanautic Club, one of the largest European boat clubs with 23 locations in major coastal cities and tourist centers across Spain. The Company also~~ acquired certain Freedom Boat Club franchise operations and territory rights as well as certain marine assets in the Southeast United ~~States during~~States. These acquisitions enable opportunities across a wide spectrum, building upon the ~~first nine months of 2021. Acquiring such assets enables~~growth Brunswick ~~to accelerate growth by increasing its investments in these markets.~~has cultivated throughout the Company's shared access portfolio and new digital platforms. These acquisitions are included as part of the Company's Boat segment.

The Company paid net cash consideration of ~~$50.3~~$95.7 million for these acquisitions. The opening balance sheets, which are preliminary and subject to change ~~within~~in the measurement period as the Company finalizes the purchase price allocation and fair value estimates, include ~~$26.9~~$75.0 million of goodwill and ~~$21.2~~$11.9 million of ~~identifiable intangible assets, including~~ customer ~~relationships and trade names of $14.3 million and~~ ~~$6.9 million, respectively.~~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 ~~$0.5~~$1.3 million ~~and~~ ~~$1.5 million~~ were expensed as incurred within Selling, general and administrative expense during the ~~three and~~ nine months ended October ~~2, 2021, respectively.~~1, 2022. The acquisitions are not material to ~~our~~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 are not presented.

2021 Acquisitions

On October 4, 2021, the Company acquired all the issued and outstanding shares of Navico, for $1.094 billion net cash consideration. The Company used a combination of the notes issued in the third quarter of 2021 and cash on hand to fund the acquisition.

Navico was a privately held global company based in Egersund, Norway, and is a global leader in marine electronics and sensors, including multi-function displays, fish finders, autopilots, sonar, radar, and cartography. The acquisition of Navico accelerates the Company's ACES ("Autonomy, Connectivity, Electrification, and Shared access") strategy and strengthens the Company's ability to provide complete, innovative digital solutions to consumers and comprehensive, integrated system offerings to the Company's original equipment manufacturer customers. Navico is managed as part of the Company's Parts & Accessories segment.

The Company used the acquisition method of accounting in accordance with ASC 805, Business Combinations, with Brunswick being the acquiring entity, and reflecting estimates and assumptions deemed appropriate by Company management.

Table of Contents

Notes to Condensed Consolidated Financial Statements

(unaudited)

The purchase price allocation for certain deferred tax balances and contingency reserves is preliminary and subject to change within the allowed measurement period as the Company finalizes its fair value estimates. The following table is a summary of the assets acquired, liabilities assumed and net cash consideration paid, net of cash acquired, for the Navico acquisition:


(in millions)	Fair Value		Useful Life
Accounts and notes receivable	$	59.3
Inventory	161.7
Goodwill (A) (B)	438.8
Trade names	133.0		Indefinite
Developed technology	160.0		15 years
Customer relationships	185.0		15 years
Property and equipment	46.1
Other assets	26.9
Total assets acquired	1,210.8

Accounts payable	66.0
Accrued expenses (B)	48.4
Other liabilities	24.0

Total liabilities assumed	138.4

Net cash consideration paid, net of cash acquired	$	1,072.4

(A) The goodwill recorded for the acquisition of Navico is partially deductible for tax purposes.

(B) Includes $3.3 million of purchase accounting adjustments for the nine months ended October 1, 2022 related to contingency reserves.

Pro Forma Financial Information (Unaudited)

The pro forma information has been prepared as if the Navico acquisition and the related debt financing had occurred on January 1, 2021. These pro forma results are based on estimates and assumptions which the Company believes to be reasonable. They are not the results that would have been realized had the acquisition actually occurred on January 1, 2021 and are not necessarily indicative of Brunswick's consolidated net earnings in future periods. The pro forma results include adjustments primarily related to the amortization of intangible assets and interest expense on the notes issued in the third quarter of 2021. Additionally, non-recurring pro forma adjustments include transaction costs of $14.8 million and expenses related to inventory fair value adjustments of $18.1 million for the nine months ended October 2, 2021, recognized as part of the application of purchase accounting.


(in millions)	Three Months Ended				Nine Months Ended
	October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Pro forma Net sales	$	1,698.2	$	1,530.1	$	5,229.5	$	4,787.7
Pro forma Net earnings	163.8		134.3		543.2		488.1

The pro forma results reflect a statutory income tax rate of 21 percent for the three and nine months ended October 1, 2022 and October 2, 2021.

Table of Contents

Notes to Condensed Consolidated Financial Statements

(unaudited)

Other 2021 Acquisitions

On September 1, 2021, the Company acquired substantially all the net assets of RELiON Battery, LLC ("RELiON"). RELiON is a global provider of lithium batteries and related products to multiple industry sectors. The acquisition of RELiON complements the Company's existing portfolio of advanced battery and power management brands. On September 17, 2021, the Company acquired substantially all the net assets of SemahTronix, LLC, a global supplier of high-complexity electrical wiring harnesses for advanced products in the marine, mobile, and defense industries. The acquisition of the SemahTronix assets enhances the Company's integrated systems offerings by providing the Company and the Company's global customers access to high-quality, large, complex electrical wire harnessing systems that further enable the Company's end-to-end systems solutions and capabilities. These acquisitions are included as part of the Parts & Accessories segment. Purchase accounting was finalized for these acquisitions as of October 1, 2022.

On July 9, 2021, the Company acquired Fanautic Club, one of the largest European boat clubs with 23 locations in major coastal cities and tourist centers across Spain. Purchase accounting was finalized for this acquisition as of October 1, 2022. The Company also acquired certain Freedom Boat Club franchise operations and territory rights in the United States during 2021. Acquiring such assets enables Brunswick to accelerate growth by increasing its investments in these markets. These acquisitions are included as part of the Boat segment.

The Company paid net cash consideration of $66.2 million for these acquisitions. The opening balance sheets include $36.9 million of goodwill and $24.1 million of identifiable intangible assets, including customer relationships and trade names of $17.2 million and $6.9 million, respectively. The amount assigned to customer relationships will be amortized over the estimated useful life of 10 years. These 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 are not presented.

Note 65 – Financial Instruments

The Company operates globally with manufacturing and sales facilities around the ~~world, and therefore, is subject~~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 14 in the Notes to Consolidated Financial Statements in the ~~2020~~2021 Form 10-K for further details regarding the Company's financial instruments and hedging policies.

Cross-Currency Swaps. ~~During the second quarter of 2021, the~~The Company ~~entered~~enters into cross-currency swaps to hedge Euro currency exposures of the net investment in certain foreign subsidiaries. As of October 1, 2022, December 31, 2021 and October 2, 2021, the notional value of cross-currency swap contracts outstanding was $250.0 million, $200.0 ~~million.~~ million and $200.0 million, respectively. The cross-currency swaps were designated as net ~~investment~~investment hedges, with the amount of gain or loss associated with the change in fair value of these instruments ~~included within~~deferred in 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.

Commodity Price. The Company uses commodity swaps to hedge anticipated purchases of aluminum. As of October 1, 2022, December 31, 2021 and October 2, 2021, ~~December 31, 2020 and September 26, 2020,~~ the notional ~~values~~value of commodity swap contracts outstanding ~~were $9.6~~was $22.3 million ~~$10.0~~, $25.3 million and ~~$5.2~~$9.6 million, respectively, and the contracts mature through ~~2022.~~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 recognized in Cost of sales in the same period or periods during which the hedged transaction affects earnings. As of October ~~2, 2021,~~1, 2022, the Company estimates that, during the next 12 months, it will reclassify approximately ~~$3.5~~$3.8 million in net ~~gains~~losses (based on current prices) from Accumulated other comprehensive loss to Cost of sales.

~~Foreign Currency Derivatives.~~

~~Forward exchange contracts outstanding as of October 2, 2021, December 31, 2020 and September 26, 2020 had notional contract valu~~

es of $454.1 million, $395.9 million and $293.3 million, respectively. There were no option contracts outstanding as of either October 2, 2021 or December 31, 2020. Option contracts outstanding at September 26, 2020 had a notional contract value of $10.4 million. The forward contracts outstanding as of October 2, 2021 mature through 2022 and mainly relate to the Euro, Australian dollar, Canadian dollar, and Japanese yen. As of October 2, 2021, the Company estimates that during the next 12 months, it will reclassify approximately $4.3 million of net gains (based on current rates) from Accumulated other comprehensive loss to Cost of sales.

1114

Table of Contents

Notes to Condensed Consolidated Financial Statements

(unaudited)

~~Interest Rate~~Foreign Currency Derivatives. InForward exchange contracts outstanding as of October 1, 2022, December 31, 2021 and October 2, 2021 had notional contract values of $544.4 million, $519.8 million and $454.1 million, respectively. The forward contracts outstanding as of October 1, 2022 mature through 2024 and mainly relate to the ~~second half~~Euro, Australian dollar, Canadian dollar, and Japanese yen. As of ~~2019,~~October 1, 2022, the Company ~~settled fixed-to-floating interest rate swaps~~estimates that ~~it had previously executed to convert a portion of its long-term debt from fixed to floating rate debt, resulting in a net deferred gain of~~ ~~$2.5 million~~ ~~included within Debt. The Company will reclassify~~ ~~$0.7 million~~ ~~of net deferred gains from Debt to Interest expense~~ during the next 12 momonths, it will reclassify approximately ~~nths. There were no outstanding fixed-to-floating interest rate swaps as o~~$35.5 million~~f October 2, 2021, December 31, 2020, or September 26, 2020.~~ of net gains (based on current rates) from Accumulated other comprehensive loss to Cost of sales.

Interest-Rate Derivatives. During the first quarter of 2021, the Company entered into forward-starting ~~interest rate~~interest-rate swaps to hedge the ~~interest rate~~interest-rate risk associated with anticipated debt issuances. On August 4, 2021, the ~~company~~Company settled these ~~interest rate~~interest-rate swaps, resulting in a net deferred loss of $1.6 million. As a result, there ~~are~~were no forward-starting interest-rate swaps outstanding ~~forward-starting interest rate~~as of October 1, 2022, December 31, 2021 and October 2, 2021.

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 October ~~2, 2021,~~ 1, 2022, December 31, ~~2020,~~2021 or ~~September 26, 2020~~October 2, 2021.

The Company had net deferred gains (losses) associated with the forward-starting interest-rate swaps and treasury-lock swaps discussed above of . $3.1 millionAs, $(2.4) million, and $(2.6) million as of October 1, 2022, December 31, 2021, and October 2, 2021, ~~December 31, 2020, and September 26, 2020, the Company had $2.6 million,~~ ~~$1.4 million,~~ ~~and~~ ~~$1.5 million, respectively, of net deferred losses associated with previously settled forward-starting interest rate swaps. Forward-starting interest rate swaps are~~respectively. These instruments were designated as cash flow hedges with gains and losses included ~~within~~in Accumulated other comprehensive loss. As of October ~~2, 2021,~~1, 2022, the Company estimates that during the next 12 months, it will reclassify approximately ~~$0.9~~$0.2 million of net losses ~~resulting from settled forward-starting interest rate swaps~~ from Accumulated other comprehensive loss to Interest expense.

As of October ~~2, 2021,~~1, 2022, December 31, ~~2020,~~2021 and ~~September 26, 2020,~~October 2, 2021, the fair values of the ~~Company's~~Company’s derivative instruments were:


(in millions)	(in millions)	Fair Value						(in millions)	Fair Value
Asset Derivatives	Asset Derivatives	Oct 2, 2021		Dec 31, 2020		Sep 26, 2020		Asset Derivatives	October 1, 2022		December 31, 2021		October 2, 2021
Derivatives Designated as Cash Flow Hedges	Derivatives Designated as Cash Flow Hedges							Derivatives Designated as Cash Flow Hedges
Foreign exchange contracts	Foreign exchange contracts	$	7.3	$	1.3	$	2.1	Foreign exchange contracts	$	37.3	$	8.8	$	7.3
Commodity contracts	Commodity contracts	2.8		0.9		0.0		Commodity contracts	—		1.9		2.8

Total	Total	$	10.1	$	2.2	$	2.1	Total	$	37.3	$	10.7	$	10.1

Derivatives Designated as Net Investment Hedges	Derivatives Designated as Net Investment Hedges							Derivatives Designated as Net Investment Hedges
Cross-currency swaps	Cross-currency swaps	$	10.3	$	—	$	—	Cross-currency swaps	$	26.6	$	14.3	$	10.3

Other Hedging Activity	Other Hedging Activity							Other Hedging Activity
Foreign exchange contracts	Foreign exchange contracts	$	0.2	$	—	$	0.5	Foreign exchange contracts	$	1.3	$	0.1	$	0.2

Liability Derivatives	Liability Derivatives							Liability Derivatives
Derivatives Designated as Cash Flow Hedges	Derivatives Designated as Cash Flow Hedges							Derivatives Designated as Cash Flow Hedges
Foreign exchange contracts	Foreign exchange contracts	$	2.2	$	11.3	$	3.2	Foreign exchange contracts	$	3.5	$	2.6	$	2.2
Commodity contracts	Commodity contracts	—		—		0.1		Commodity contracts	4.0		—		—

Total	Total	$	2.2	$	11.3	$	3.3	Total	$	7.5	$	2.6	$	2.2

Other Hedging Activity	Other Hedging Activity							Other Hedging Activity
Foreign exchange contracts	Foreign exchange contracts	$	—	$	0.7	$	0.4	Foreign exchange contracts	$	—	$	0.3	$	—

As of October 1, 2022, December 31, 2021 and October 2, 2021, ~~December 31, 2020 and September 26, 2020,~~ asset ~~derivatives~~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 Condensed Consolidated Balance ~~Sheets.~~Sheets.

1215

Table of Contents

Notes to Condensed Consolidated Financial Statements

(unaudited)

The effect of derivative instruments on the Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended October 1, 2022 and October 2, 2021 ~~and September 26, 2020~~ is as shown in the tables below.

The amount of gain (loss) on on derivatives recognized in Accumulated other comprehensive loss was as follows:


(in millions)	(in millions)	Three Months Ended				Nine Months Ended				(in millions)	Three Months Ended				Nine Months Ended
Derivatives Designated as Cash Flow Hedging Instruments	Derivatives Designated as Cash Flow Hedging Instruments	Oct 2, 2021		Sep 26, 2020		Oct 2, 2021		Sep 26, 2020		Derivatives Designated as Cash Flow Hedging Instruments	October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Interest rate contracts		$	(4.4)	$	—	$	(1.6)	$	—
Interest-rate contracts										Interest-rate contracts	$	—	$	(4.4)	$	5.3	$	(1.6)
Foreign exchange contracts	Foreign exchange contracts	8.1		(3.0)		8.5		3.6		Foreign exchange contracts	20.7		8.1		48.6		8.5
Commodity contracts	Commodity contracts	1.3		—		5.6		(0.1)		Commodity contracts	(3.2)		1.3		(3.9)		5.6
Total	Total	$	5.0	$	(3.0)	$	12.5	$	3.5	Total	$	17.5	$	5.0	$	50.0	$	12.5

Derivatives Designated as Net Investment Hedging Instruments	Derivatives Designated as Net Investment Hedging Instruments									Derivatives Designated as Net Investment Hedging Instruments
Cross-currency swaps	Cross-currency swaps	$	4.4	$	—	$	10.3	$	—	Cross-currency swaps	$	12.4	$	4.4	$	29.0	$	10.3

The amount of gain (loss) reclassified from Accumulated other comprehensive loss into earnings was as follows:


(in millions)	(in millions)		Three Months Ended				Nine Months Ended				(in millions)		Three Months Ended				Nine Months Ended
Derivatives Designated as Cash Flow Hedging Instruments	Derivatives Designated as Cash Flow Hedging Instruments	Location of Gain (Loss)	Oct 2, 2021		Sep 26, 2020		Oct 2, 2021		Sep 26, 2020		Derivatives Designated as Cash Flow Hedging Instruments	Location of Gain (Loss)	October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Interest rate contracts		Interest expense	$	(0.2)	$	(0.1)	$	(0.5)	$	(0.4)
Interest-rate contracts											Interest-rate contracts	Interest expense	$	(0.1)	$	(0.2)	$	(0.2)	$	(0.5)
Foreign exchange contracts	Foreign exchange contracts	Cost of sales	(1.7)		1.4		(8.8)		8.1		Foreign exchange contracts	Cost of sales	7.7		(1.7)		15.7		(8.8)
Commodity contracts	Commodity contracts	Cost of sales	1.6		—		3.1		$	—	Commodity contracts	Cost of sales	(0.8)		1.6		3.1		3.1
Total	Total		$	(0.3)	$	1.3	$	(6.2)	$	7.7	Total		$	6.8	$	(0.3)	$	18.6	$	(6.2)

Derivatives Designated as Fair Value Hedging Instruments	Derivatives Designated as Fair Value Hedging Instruments										Derivatives Designated as Fair Value Hedging Instruments
Interest rate contracts		Interest expense	$	0.2	$	0.2	$	0.5	$	0.5
Interest-rate contracts											Interest-rate contracts	Interest expense	$	0.2	$	0.2	$	0.5	$	0.5

Other Hedging Activity	Other Hedging Activity										Other Hedging Activity
Foreign exchange contracts	Foreign exchange contracts	Cost of sales	$	1.1	$	(0.5)	$	0.1	$	2.9	Foreign exchange contracts	Cost of sales	$	0.3	$	1.1	$	2.1	$	0.1
Foreign exchange contracts	Foreign exchange contracts	Other expense, net	(1.3)		(0.1)		(3.7)		1.1		Foreign exchange contracts	Other expense, net	0.6		(1.3)		0.8		(3.7)
Total	Total		$	(0.2)	$	(0.6)	$	(3.6)	$	4.0	Total		$	0.9	$	(0.2)	$	2.9	$	(3.6)

Fair Value of Other Financial Instruments. The carrying values of the Company's short-term financial instruments, including cash and cash equivalents and accounts and notes receivable, approximate their fair values because of the short maturity of these instruments. As of October ~~2, 2021,~~1, 2022, December 31, ~~2020~~2021 and ~~September 26, 2020,~~October 2, 2021, the fair value of the Company’s long-term debt, including short-term debt and current maturities, was approximately ~~$1,941.1~~$2,132.8 million, ~~$1,062.3~~$1,914.7 million and ~~$1,192.4~~$1,941.1 million, respectively, and was determined using Level 1 and Level 2 inputs described in Note 7 to the Notes to Consolidated Financial Statements in the ~~2020~~2021 Form 10-K. The carrying value of ~~short-term and~~ long-term debt, including short-term debt and current maturities, wa~~s $1,848.1~~was $2,536.2 million, ~~$972.1~~ $1,843.1 million and ~~$1,082.9~~$1,848.1 million as of October ~~2, 2021,~~1, 2022, December 31, ~~2020~~2021 and ~~September 26, 2020,~~October 2, 2021, respectively.

1316

Table of Contents

Notes to Condensed Consolidated Financial Statements

(unaudited)

Note 76 – Fair Value Measurements

The following table summarizes the Company's financial assets and liabilities measured at fair value on a recurring basis:


(in millions)	(in millions)		Fair Value						(in millions)		Fair Value
Category	Category	Fair Value Level	October 2, 2021		December 31, 2020		September 26, 2020		Category	Fair Value Level	October 1, 2022		December 31, 2021		October 2, 2021
Cash equivalents	Cash equivalents	1	$	0.3	$	19.3	$	0.3	Cash equivalents	1	$	42.1	$	0.4	$	0.3
Short-term investments in marketable securities	Short-term investments in marketable securities	1	0.8		56.7		0.8		Short-term investments in marketable securities	1	34.5		0.8		0.8
Restricted cash	Restricted cash	1	10.9		10.7		9.1		Restricted cash	1	11.7		12.2		10.9
Derivative assets	Derivative assets	2	20.6		2.2		2.6		Derivative assets	2	65.2		25.1		20.6
Derivative liabilities	Derivative liabilities	2	2.2		12.0		3.7		Derivative liabilities	2	7.5		2.9		2.2
Deferred compensation	Deferred compensation	2	17.6		19.8		17.3		Deferred compensation	1	1.4		1.4		1.4
Deferred compensation									Deferred compensation	2	12.6		17.7		16.2

Liabilities measured at net asset value	Liabilities measured at net asset value		10.0		10.7		10.1		Liabilities measured at net asset value		9.6		10.2		10.0

In addition to the items shown in the table above, refer to Note 17 in the Notes to Consolidated Financial Statements in the ~~2020~~2021 Form 10-K for further information regarding the fair value measurements associated with the Company's postretirement benefit plans.

~~Note 8 – Share-Based Compensation~~

Under the Brunswick Corporation 2014 Stock Incentive Plan, the Company may grant stock appreciation rights (SARs), non-vested stock units, and performance awards to executives, other employees and non-employee directors from treasury shares and from authorized, but unissued, shares of common stock initially available for grant, as well as from: (i) the forfeiture of past stock units and awards; (ii) shares not issued upon the net settlement of SARs; and (iii) shares delivered to or withheld by the Company to pay the withholding taxes related to stock units and awards. As of October 2, 2021, 4.7 million shares remained available for grant.

~~Share grant amounts, fair values, and fair value assumptions reflect all outstanding stock units and awards for both continuing and discontinued operations.~~

~~Non-Vested Stock Units~~

The Company grants both stock-settled and cash-settled non-vested stock units to key employees as determined by management and the Human Resources and Compensation Committee of the Board of Directors. The Company granted nominal stock units during the three months ended October 2, 2021 and September 26, 2020, respectively. The Company granted 0.2 million and 0.3 million of stock units during the nine months ended October 2, 2021 and September 26, 2020, respectively. The Company recognizes the cost of non-vested stock units on a straight-line basis over the requisite vesting period. Additionally, cash-settled non-vested stock units are recorded as a liability on the balance sheet and adjusted to fair value each reporting period through stock compensation expense. The Company recorded compensation expense for non-vested stock units of $4.3 million and $11.6 million during the three and nine months ended October 2, 2021, respectively, and recorded compensation expense for non-vested stock units of $3.0 million and $9.4 million during the three and nine months ended September 26, 2020, respectively.

As of October 2, 2021, there was $15.3 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 1.2 years.

~~Performance Awards~~

The Company granted a nominal number of performance shares for the three months ended October 2, 2021 and September 26, 2020. The Company granted 0.2 million and 0.1 million performance shares to certain senior executives for the nine months ended October 2, 2021 and September 26, 2020, respectively. Performance 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 the

~~Table of Contents~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(unaudited)~~

Company's stock returns measured against stock returns of a predefined comparator group over a three-year performance period. Additionally, in February 2021 and 2020, the Company granted 24,560 and 26,750 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. The Company recorded compensation expense of $3.5 million and $11.0 million during the three and nine months ended October 2, 2021, respectively, and recorded compensation expense of $7.8 million and $10.2 million during the three and nine months ended September 26, 2020, respectively, based on projections of probable attainment of the performance measures and the projected TSR modifier used to determine the performance awards.

The fair value of the senior executives' performance share award grants with a TSR modifier for grants in 2021 and 2020 was $91.44 and $64.72, respectively. The fair values were estimated using the Monte Carlo valuation model, and incorporated the following assumptions:

2021 2020
Risk-free interest rate 0.2 % 1.4 %
Dividend yield 1.2 % 1.5 %
Volatility factor 65.6 % 46.6 %
Expected life of award 2.9 years 2.9 years

The fair value of certain officers' and certain senior managers' performance awards granted based solely on the CFROI and OM performance factors was $87.48 and $61.91 in 2021 and 2020, respectively, which was equal to the stock price on the date of grant in 2021 and 2020, respectively, less the present value of expected dividend payments over the vesting period.

As of October 2, 2021, the Company had $9.8 million of total unrecognized compensation cost related to performance awards. The Company expects this cost to be recognized over a weighted average period of 1.0 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.

Note 97 – Commitments and Contingencies

Product Warranties

The following activity related to product warranty liabilities was recorded in Accrued expenses during the nine months ended October 1, 2022 and October 2, ~~2021 and September 26, 2020:~~2021:

(in millions) October 2,
2021 September 26, 2020
Balance at beginning of period $ 115.9 $ 117.6
Payments - recurring (48.2) (37.6)
(Payments)/Provisions - Sport Yacht and Yachts and Fitness businesses (2.6) (4.4)
Provisions/additions for contracts issued/sold 57.9 41.2
Aggregate changes for preexisting warranties (2.8) (2.0)
Foreign currency translation (0.7) (0.1)
Acquisitions 1.3 —
Other (1.7) (1.8)
Balance at end of period $ 119.1 $ 112.9


(in millions)	October 1, 2022		October 2, 2021
Balance at beginning of period	$	129.3	$	115.9
Payments	(47.3)		(48.2)

Provisions/additions for contracts issued/sold	62.5		57.9
Aggregate changes for preexisting warranties	(3.0)		(2.8)
Foreign currency translation	(3.0)		(0.7)
Acquisitions	—		1.3

Other	(0.4)		(4.3)
Balance at end of period	$	138.1	$	119.1

1517

Table of Contents

Notes to Condensed Consolidated Financial Statements

(unaudited)

Extended Product Warranties

The following activity related to deferred revenue for extended product warranty contracts was recorded in Accrued expenses and Other long-term liabilities during the nine months ended October 1, 2022 and October 2, ~~2021 and September 26, 2020:~~2021:


(in millions)	(in millions)	October 2, 2021		September 26, 2020		(in millions)	October 1, 2022		October 2, 2021
Balance at beginning of period	Balance at beginning of period	$	87.4	$	75.3	Balance at beginning of period	$	99.5	$	87.4
Extended warranty contracts sold	Extended warranty contracts sold	27.1		23.7		Extended warranty contracts sold	29.8		27.1
Revenue recognized on existing extended warranty contracts	Revenue recognized on existing extended warranty contracts	(14.9)		(12.5)		Revenue recognized on existing extended warranty contracts	(16.6)		(14.9)
Foreign currency translation	Foreign currency translation	0.1		(0.1)		Foreign currency translation	(0.5)		0.1
Other	Other	(0.2)		(0.2)		Other	(0.5)		(0.2)
Balance at end of period	Balance at end of period	$	99.5	$	86.2	Balance at end of period	$	111.7	$	99.5

Note 108 – Goodwill and Other Intangibles

Changes in the Company's goodwill during the nine months ended October 1, 2022 and October 2, 2021, ~~and September 26, 2020,~~ by segment, are summarized below:


(in millions)	(in millions)	Propulsion		Parts and Accessories		Boat		Total		(in millions)	Propulsion		Parts & Accessories		Boat		Total
December 31, 2021										December 31, 2021	$	14.7	$	814.9	$	58.8	$	888.4
Acquisitions										Acquisitions	—		—		75.0		75.0
Adjustments										Adjustments	(1.6)		1.1		(0.7)		(1.2)
October 1, 2022										October 1, 2022	$	13.1	$	816.0	$	133.1	$	962.2

December 31, 2020	December 31, 2020	$	15.3	$	372.5	$	29.9	$	417.7	December 31, 2020	$	15.3	$	372.5	$	29.9	$	417.7
Acquisitions	Acquisitions	—		7.1		19.8		26.9		Acquisitions	—		7.1		19.8		26.9
Adjustments	Adjustments	(0.4)		(0.2)		(0.2)		(0.8)		Adjustments	(0.4)		(0.2)		(0.2)		(0.8)
October 2, 2021	October 2, 2021	$	14.9	$	379.4	$	49.5	$	443.8	October 2, 2021	$	14.9	$	379.4	$	49.5	$	443.8

December 31, 2019		$	14.5	$	371.9	$	28.6	$	415.0
Adjustments		—		—		1.3		1.3
September 26, 2020		$	14.5	$	371.9	$	29.9	$	416.3

~~See~~ ~~Note 5 – Acquisitions~~ ~~for further details on the Company's acquisitions.~~ Adjustments in both periods include the effect of foreign currency translation on goodwill denominated in currencies other than the U.S. dollar. ~~Adjustments in the Boat segment for~~In addition, adjustments during the nine months ended ~~September 26, 2020~~October 1, 2022 also ~~relate to finalizing~~include $3.9 million of purchase accounting ~~related to the Freedom Boat Club acquisition,~~adjustments from 2021 acquisitions, primarily related to ~~deferred taxes.~~contingency reserves. There was no accumulated impairment loss on Goodwill as of October ~~2, 2021,~~1, 2022, December 31, ~~2020~~2021 or ~~September 26, 2020.~~October 2, 2021.

The Company's intangible assets, included within Other intangibles, net on the Condensed Consolidated Balance Sheets as of October ~~2, 2021,~~1, 2022, December 31, ~~2020~~2021 and ~~September 26, 2020,~~October 2, 2021, are summarized by intangible asset type below:


		October 2, 2021				December 31, 2020				September 26, 2020					October 1, 2022				December 31, 2021				October 2, 2021
(in millions)	(in millions)	Gross Amount		Accumulated Amortization		Gross Amount		Accumulated Amortization		Gross Amount		Accumulated Amortization		(in millions)	Gross Amount		Accumulated Amortization		Gross Amount		Accumulated Amortization		Gross Amount		Accumulated Amortization
Intangible assets:	Intangible assets:													Intangible assets:
Customer relationships	Customer relationships	$	701.7	$	(329.9)	$	687.7	$	(306.4)	$	687.0	$	(298.2)	Customer relationships	$	899.5	$	(374.5)	$	889.4	$	(340.9)	$	701.7	$	(329.9)
Trade names	Trade names	173.0		—		166.2		—		165.8		—		Trade names	305.0		—		306.1		—		173.0		—
Developed technology														Developed technology	160.0		(10.7)		160.0		(2.7)		—		—
Other	Other	18.5		(14.1)		18.5		(13.7)		18.4		(13.4)		Other	55.9		(29.8)		62.0		(21.8)		18.5		(14.1)
Total	Total	$	893.2	$	(344.0)	$	872.4	$	(320.1)	$	871.2	$	(311.6)	Total	$	1,420.4	$	(415.0)	$	1,417.5	$	(365.4)	$	893.2	$	(344.0)

Table of Contents

Notes to Condensed Consolidated Financial Statements

(unaudited)

Other intangible assets primarily consist of 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 $15.9 million and $47.2 million for threeand nine months ended October 1, 2022, respectively. Aggregate amortization expense for intangibles was $8.3 million and $24.3 million for threeand nine months ended October 2, 2021, respectively. ~~Aggregate amortization expense for intangibles was $8.0 million and $24.0 million for the three and nine months ended September 26, 2020, respectively.~~

~~Table of Contents~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(unaudited)~~

The Company's intangible assets, included within Other intangibles, net on the Condensed Consolidated Balance Sheets as of October 2, 2021, December 31, 2020 and September 26, 2020, are summarized by segment below:

October 2, 2021 December 31, 2020 September 26, 2020
(in millions) Gross Amount Accumulated Amortization Gross Amount Accumulated Amortization Gross Amount Accumulated Amortization
Propulsion $ 1.0 $ (0.5) $ 1.0 $ (0.5) $ 1.0 $ (0.5)
Parts and Accessories 637.3 (134.8) 618.8 (112.4) 617.6 (104.5)
Boat 254.9 (208.7) 252.6 (207.2) 252.6 (206.6)
Total $ 893.2 $ (344.0) $ 872.4 $ (320.1) $ 871.2 $ (311.6)

The Company tests its intangible assets for impairment during the fourth quarter of each year, or whenever a significant change in events and circumstances (triggering event) occurs that indicates the fair value of intangible assets may be below their carrying values. The Company recorded impairment charges of $17.4 million during the three months ended October 1, 2022 related to capitalized software intangible assets that will not be placed into service. The Company did not record anany other impairment charge during the nine months ended October 1, 2022 or October 2, ~~2021 or September 26, 2020.~~2021.

Note 119 – Segment Data

~~Reportable Segments~~

The Company's segments are defined by management's reporting structure and operating activities. The Company's reportable segments are the following:

Propulsion. The Propulsion segment manufactures and markets a full range of outboard, sterndrive, and 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 Mercury, Mercury MerCruiser, Mariner, Mercury Racing, and Mercury Diesel brands. The segment's engine manufacturing plants are located mainly in the United States and China, along with a joint venture in Japan, with sales mainly to markets in the Americas, Europe, and Asia-Pacific.

Parts & Accessories. The Parts & Accessories ~~(P&A)~~("P&A") segment consists of ~~the Engine Parts and Accessories and the Advanced Systems Group~~aggregated operating ~~segments, which are aggregated and presented as a single reportable segment.~~segments.

The P&A segment manufactures, markets, and supplies parts and accessories 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). ~~Branded~~Company-branded parts and accessories include consumables, such as engine oils and lubricants, and are sold under the Mercury, Mercury Precision Parts, Quicksilver, and Seachoice brands. The P&A segment 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 P&A segment also includes businesses operating under the Ancor, Attwood, BEP, B&G, Blue Sea Systems, C-MAP, CZone, Del City, Garelick, Lenco Marine, Lowrance, Marinco, Mastervolt, MotorGuide, ParkPower, ~~Progressive Industries,~~ ProMariner, RELiON, Simrad, Whale, and ~~ASG~~Navico Connect brand names. Products include marine electronics, sensors, and control systems, instruments, trolling motors, fuel systems, and electrical systems, as well as specialty vehicle, mobile, and transportation aftermarket products.

The P&A 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; and Thunder Jet heavy-gauge aluminum boats. 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~~Mexico and sold through a global network of dealer and distributor locations, primarily in North America and Europe.

Table of Contents

Notes to Condensed Consolidated Financial Statements

(unaudited)

The Boat segment ~~also~~ 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 ~~income and~~ expense, and income or provisions or benefits for income taxes.

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~~third-party customers.

Information about the operations of Brunswick's reportable segments is set forth below:


		Net Sales								Operating Earnings (Loss)									Net Sales								Operating Earnings (Loss)

		Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
(in millions)	(in millions)	Oct 2, 2021		Sep 26, 2020		Oct 2, 2021		Sep 26, 2020		Oct 2, 2021		Sep 26, 2020		Oct 2, 2021		Sep 26, 2020		(in millions)	October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Propulsion	Propulsion	$	626.9	$	526.5	$	1,934.2	$	1,370.5	$	112.5	$	94.1	$	359.1	$	203.1	Propulsion	$	714.4	$	626.9	$	2,154.5	$	1,934.2	$	143.0	$	112.5	$	410.3	$	359.1
Parts and Accessories		494.0		459.9		1,502.5		1,148.0		100.6		99.9		306.9		226.2
Parts & Accessories																		Parts & Accessories	587.8		494.0		1,857.1		1,502.5		87.1		100.6		286.9		306.9
Boat	Boat	401.5		328.1		1,270.1		869.5		24.9		28.3		109.9		35.4		Boat	510.7		401.5		1,571.9		1,270.1		49.7		24.9		153.9		109.9
Corporate/Other	Corporate/Other	—		—		—		—		(29.0)		(29.7)		(84.8)		(61.9)		Corporate/Other	—		—		—		—		(42.1)		(29.0)		(94.9)		(84.8)
Segment Eliminations	Segment Eliminations	(95.2)		(81.4)		(291.6)		(201.6)		—		—		—		—		Segment Eliminations	(114.7)		(95.2)		(354.0)		(291.6)		—		—		—		—
Total	Total	$	1,427.2	$	1,233.1	$	4,415.2	$	3,186.4	$	209.0	$	192.6	$	691.1	$	402.8	Total	$	1,698.2	$	1,427.2	$	5,229.5	$	4,415.2	$	237.7	$	209.0	$	756.2	$	691.1


		Total Assets							Total Assets
(in millions)	(in millions)	October 2, 2021		December 31, 2020		September 26, 2020		(in millions)	October 1, 2022		December 31, 2021		October 2, 2021
Propulsion	Propulsion	$	1,133.7	$	962.4	$	895.7	Propulsion	$	1,460.7	$	1,225.2	$	1,133.7
Parts and Accessories		1,698.5		1,500.6		1,473.4
Parts & Accessories								Parts & Accessories	3,029.0		2,939.4		1,698.5
Boat ~~(A)~~	Boat ~~(A)~~	590.5		488.1		470.4		Boat ~~(A)~~	839.2		609.9		590.5
Corporate/Other ~~(B)~~	Corporate/Other ~~(B)~~	1,757.9		819.5		851.3		Corporate/Other ~~(B)~~	796.0		650.5		1,757.9
Total	Total	$	5,180.6	$	3,770.6	$	3,690.8	Total	$	6,124.9	$	5,425.0	$	5,180.6

(A) The Company had $3.0 million of net assets classified as held for sale which were not related to discontinued operations as of both December 31, 2020 and September 26, 2020. These assets were recorded within Net Property.

~~(B) Corporate/Other total assets at October 2, 2021 include net proceeds received from the Notes issued to finance the acquisition of Navico. Refer to~~ ~~Note 14 – Debt~~ ~~for further details regarding the Notes and~~ ~~Note 15 – Subsequent Events~~ ~~for further details regarding the acquisition of Navico.~~

1820

Table of Contents

Notes to Condensed Consolidated Financial Statements

(unaudited)

Note 1210 – Comprehensive Income

Accumulated other comprehensive loss in the Condensed Consolidated Balance Sheets includes foreign currency cumulative translation adjustments; ~~net changes in~~ 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 and nine months ended October 1, 2022 and October 2, 2021 ~~and September 26, 2020~~ are as follows:


		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
(in millions)	(in millions)	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020		(in millions)	October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Net earnings	Net earnings	$	143.1	$	137.9	$	491.8	$	277.6	Net earnings	$	163.8	$	143.1	$	535.3	$	491.8
Other comprehensive income (loss):
Other comprehensive (loss) income:										Other comprehensive (loss) income:
Foreign currency cumulative translation adjustment	Foreign currency cumulative translation adjustment	(9.9)		12.2		(14.2)		4.7		Foreign currency cumulative translation adjustment	(27.5)		(9.9)		(58.0)		(14.2)

Net change in unamortized prior service credits	Net change in unamortized prior service credits	—		(0.1)		(0.2)		(0.4)		Net change in unamortized prior service credits	—		—		—		(0.2)
Net change in unamortized actuarial gains	Net change in unamortized actuarial gains	0.3		(0.2)		0.6		0.2		Net change in unamortized actuarial gains	0.4		0.3		0.9		0.6
Net change in unrealized derivative gains (losses)		7.1		(3.2)		21.5		(3.0)
Total other comprehensive income (loss)		(2.5)		8.7		7.7		1.5

Net change in unrealized derivative gains										Net change in unrealized derivative gains	21.3		7.1		48.9		21.5
Total other comprehensive (loss) income										Total other comprehensive (loss) income	(5.8)		(2.5)		(8.2)		7.7
Comprehensive income	Comprehensive income	$	140.6	$	146.6	$	499.5	$	279.1	Comprehensive income	$	158.0	$	140.6	$	527.1	$	499.5

The following table presents the changes in Accumulated other comprehensive loss by component, all net of tax, for the three months ended October ~~2, 2021:~~1, 2022:


(in millions)	(in millions)	Foreign currency translation		Prior service credits		Net actuarial losses		Net derivative losses		Total		(in millions)	Foreign currency translation		Prior service credits		Net actuarial losses		Unrealized investment gains		Net derivative gains		Total
Beginning balance	Beginning balance	$	(19.4)	$	(3.7)	$	(8.6)	$	(0.8)	$	(32.5)	Beginning balance	$	(65.0)	$	(3.7)	$	(2.9)	$	0.2	$	37.5	$	(33.9)
Other comprehensive income (loss) before reclassifications (A)		(9.9)		—		0.1		6.9		(2.9)
Amounts reclassified from Accumulated other comprehensive loss (B)		—		—		0.2		0.2		0.4
Other comprehensive (loss) income before reclassifications (A)												Other comprehensive (loss) income before reclassifications (A)	(27.5)		—		0.3		—		26.3		(0.9)
Amounts reclassified from Accumulated other comprehensive loss (income) (B)												Amounts reclassified from Accumulated other comprehensive loss (income) (B)	—		—		0.1		—		(5.0)		(4.9)
Net other comprehensive (loss) income	Net other comprehensive (loss) income	(9.9)		—		0.3		7.1		(2.5)		Net other comprehensive (loss) income	(27.5)		—		0.4		—		21.3		(5.8)
Ending balance	Ending balance	$	(29.3)	$	(3.7)	$	(8.3)	$	6.3	$	(35.0)	Ending balance	$	(92.5)	$	(3.7)	$	(2.5)	$	0.2	$	58.8	$	(39.7)

(A) The tax effects for the three months ended October ~~2, 2021~~1, 2022 were $~~0.4~~5.4 million for foreign currency translation and $(3.6) million for ~~$(2.5) 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 ~~2, 2021.~~1, 2022.

The following table presents the changes in Accumulated other comprehensive loss by component, all net of tax, for the nine months ended October ~~2, 2021:~~1, 2022:


(in millions)	(in millions)	Foreign currency translation		Prior service credits		Net actuarial losses		Net derivative losses		Total		(in millions)	Foreign currency translation		Prior service credits		Net actuarial losses		Unrealized investment gains		Net derivative gains		Total
Beginning balance	Beginning balance	$	(15.1)	$	(3.5)	$	(8.9)	$	(15.2)	$	(42.7)	Beginning balance	$	(34.5)	$	(3.7)	$	(3.4)	$	0.2	$	9.9	$	(31.5)
Other comprehensive income (loss) before reclassifications (A)		(14.2)		—		0.1		17.0		2.9
Amounts reclassified from Accumulated other comprehensive loss (B)		—		(0.2)		0.5		4.5		4.8
Other comprehensive (loss) income before reclassifications (A)												Other comprehensive (loss) income before reclassifications (A)	(58.0)		—		0.3		—		62.7		5.0
Amounts reclassified from Accumulated other comprehensive loss (income) (B)												Amounts reclassified from Accumulated other comprehensive loss (income) (B)	—		—		0.6		—		(13.8)		(13.2)
Net other comprehensive (loss) income	Net other comprehensive (loss) income	(14.2)		(0.2)		0.6		21.5		7.7		Net other comprehensive (loss) income	(58.0)		—		0.9		—		48.9		(8.2)
Ending balance	Ending balance	$	(29.3)	$	(3.7)	$	(8.3)	$	6.3	$	(35.0)	Ending balance	$	(92.5)	$	(3.7)	$	(2.5)	$	0.2	$	58.8	$	(39.7)

(A) The tax effects for the nine months ended October ~~2, 2021~~ 1, 2022were $~~0.4~~8.5 million for foreign currency translation and $(16.3) million for~~$(5.9) million~~ ~~for~~ derivatives.

(B) See the table depicting reclassification adjustments out of Accumulated other comprehensive loss below for the tax effects for the nine months ended October ~~2, 2021.~~

1, 2022.

1921

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 26, 2020:~~October 2, 2021:


(in millions)	(in millions)	Foreign currency translation		Prior service credits		Net actuarial losses		Net derivative losses		Total		(in millions)	Foreign currency translation		Prior service credits		Net actuarial losses		Net derivative losses		Total
Beginning balance	Beginning balance	$	(45.1)	$	(3.3)	$	(6.9)	$	(5.3)	$	(60.6)	Beginning balance	$	(19.4)	$	(3.7)	$	(8.6)	$	(0.8)	$	(32.5)
Other comprehensive income (loss) before reclassifications (A)		12.2		0.1		(0.3)		(2.1)		9.9
Other comprehensive (loss) income before reclassifications (A)												Other comprehensive (loss) income before reclassifications (A)	(9.9)		—		0.1		6.9		(2.9)
Amounts reclassified from Accumulated other comprehensive loss (B)	Amounts reclassified from Accumulated other comprehensive loss (B)	—		(0.2)		0.1		(1.1)		(1.2)		Amounts reclassified from Accumulated other comprehensive loss (B)	—		—		0.2		0.2		0.4
Net other comprehensive (loss) income	Net other comprehensive (loss) income	12.2		(0.1)		(0.2)		(3.2)		8.7		Net other comprehensive (loss) income	(9.9)		—		0.3		7.1		(2.5)
Ending balance	Ending balance	$	(32.9)	$	(3.4)	$	(7.1)	$	(8.5)	$	(51.9)	Ending balance	$	(29.3)	$	(3.7)	$	(8.3)	$	6.3	$	(35.0)

(A) The tax effects for the three months ended ~~September 26, 2020~~October 2, 2021 were ~~$(0.3)~~$0.4 million for foreign currency translation and ~~$0.9~~$(2.5) 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 26, 2020.~~October 2, 2021.

The following table presents the changes in Accumulated other comprehensive loss by component, all net of tax, for the nine months ended ~~September 26, 2020:~~October 2, 2021:


(in millions)	(in millions)	Foreign currency translation		Prior service credits		Net actuarial losses		Net derivative losses		Total		(in millions)	Foreign currency translation		Prior service credits		Net actuarial losses		Net derivative losses		Total
Beginning balance	Beginning balance	$	(37.6)	$	(3.0)	$	(7.3)	$	(5.5)	$	(53.4)	Beginning balance	$	(15.1)	$	(3.5)	$	(8.9)	$	(15.2)	$	(42.7)
Other comprehensive income (loss) before reclassifications (A)		4.7		0.1		(0.2)		2.8		7.4
Amounts reclassified from Accumulated other comprehensive loss (B)		—		(0.5)		0.4		(5.8)		(5.9)
Other comprehensive (loss) income before reclassifications (A)												Other comprehensive (loss) income before reclassifications (A)	(14.2)		—		0.1		17.0		2.9
Amounts reclassified from Accumulated other comprehensive loss (income) (B)												Amounts reclassified from Accumulated other comprehensive loss (income) (B)	—		(0.2)		0.5		4.5		4.8
Net other comprehensive (loss) income	Net other comprehensive (loss) income	4.7		(0.4)		0.2		(3.0)		1.5		Net other comprehensive (loss) income	(14.2)		(0.2)		0.6		21.5		7.7
Ending balance	Ending balance	$	(32.9)	$	(3.4)	$	(7.1)	$	(8.5)	$	(51.9)	Ending balance	$	(29.3)	$	(3.7)	$	(8.3)	$	6.3	$	(35.0)

(A) The tax effects for the nine months ended ~~September 26, 2020~~October 2, 2021 were ~~$0.5~~$0.4 million for foreign currency translation and ~~$(0.7)~~$(5.9) million for derivatives.

(B) See the table depicting reclassification adjustments out of Accumulated other comprehensive loss below for the tax effects for the nine months ended ~~September 26, 2020.~~October 2, 2021.

2022

Table of Contents

Notes to Condensed Consolidated Financial Statements

(unaudited)

The following table presents reclassification adjustments out of Accumulated other comprehensive loss during the three and nine months ended October 1, 2022 and October 2, ~~2021 and September 26, 2020:~~2021:

Three Months Ended Nine Months Ended
Details about Accumulated other comprehensive income (loss) components (in millions) Oct 2,
2021 Sep 26,
2020 Oct 2,
2021 Sep 26,
2020 Affected line item in the statement where net income is presented
Amortization of defined benefit items:
Prior service credits $ — $ 0.2 $ 0.2 $ 0.5 Other expense, net
Net actuarial losses (0.2) (0.1) (0.6) (0.4) Other expense, net
(0.2) 0.1 (0.4) 0.1 Earnings before income taxes
— — 0.1 — Income tax provision
$ (0.2) $ 0.1 $ (0.3) $ 0.1 Net earnings from continuing operations
Amount of gain (loss) reclassified into earnings on derivative contracts:
Interest rate contracts $ (0.2) $ (0.1) $ (0.5) $ (0.4) Interest expense
Foreign exchange contracts (1.7) 1.4 (8.8) 8.1 Cost of sales
Commodity contracts 1.6 — 3.1 — Cost of sales
(0.3) 1.3 (6.2) 7.7 Earnings before income taxes
0.1 (0.2) 1.7 (1.9) Income tax provision
$ (0.2) $ 1.1 $ (4.5) $ 5.8 Net earnings from continuing operations


	Three Months Ended				Nine Months Ended
Details about Accumulated other comprehensive income (loss) components (in millions)	October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021		Affected line item in the statement where net income is presented






Amortization of defined benefit items:
Prior service credits	$	—	$	—	$	—	$	0.2	Other expense, net
Net actuarial losses	(0.4)		(0.2)		(0.9)		(0.6)		Other expense, net
	(0.4)		(0.2)		(0.9)		(0.4)		Earnings before income taxes
	0.3		—		0.3		0.1		Income tax provision
	$	(0.1)	$	(0.2)	$	(0.6)	$	(0.3)	Net earnings from continuing operations

Amount of (loss) gain reclassified into earnings on derivative contracts:
Interest-rate contracts	$	(0.1)	$	(0.2)	$	(0.2)	$	(0.5)	Interest expense
Foreign exchange contracts	7.7		(1.7)		15.7		(8.8)		Cost of sales
Commodity contracts	(0.8)		1.6		3.1		3.1		Cost of sales
	6.8		(0.3)		18.6		(6.2)		Earnings before income taxes
	(1.8)		0.1		(4.8)		1.7		Income tax provision
	$	5.0	$	(0.2)	$	13.8	$	(4.5)	Net earnings from continuing operations

Note 1311 – Income Taxes

The ~~Company recognized an income~~effective tax ~~provision~~rate for the three months ended October 1, 2022 and October 2, 2021 was 21.7 percent and 21.2 percent, respectively. The effective tax rate for the three months ended October 1, 2022 was higher than the same period in the prior year primarily due to higher earnings in the quarter in foreign jurisdictions. The effective tax rate for the nine months ended October ~~2, 2021 of $38.8 million~~1, 2022 and $141.4 million, respectively, which included a net charge of $2.0 million and $5.2 million, respectively. The net charge of $2.0 million is primarily associated with the change in estimates for prior period tax returns. The net charge of $5.2 million includes the aforementioned change in estimates for prior period tax returns, along with branch restructuring charges offset by net excess tax benefits related to share-based compensation and valuation allowance adjustments. The Company recognized an income tax provision for the three and nine months ended September 26, 2020 of $38.9 million and $74.9 million, respectively, which included a net benefit of $0.7 million and $0.6 million, respectively. These net benefits primarily related to a change in unrecognized tax benefits and changes in the valuation allowance. The effective tax rate, which is calculated as the income tax provision as a percentage of earnings before income taxes, for the three and nine months ended October 2, 2021 was ~~21.2~~21.6 percent and 22.3 percent, respectively. The effective tax rate for the ~~three and~~ nine months ended ~~September 26, 2020~~October 1, 2022 was ~~22.1 percent~~lower than the same period in the prior year primarily due to net excess tax benefits related to share-based compensation and ~~21.2 percent, respectively.~~lower deferred tax reassessments.

No deferred income taxes have been provided as of October 2, 2021, December 31, 2020 or September 26, 2020 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 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 October 2, 2021, December 31, 2020 and September 26, 2020, the Company had $4.5 million, $4.1 million and $4.1 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 October 2, 2021 could decrease by approximately $0.5 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 possible that there could be significant changes in the amount of unrecognized tax benefits in 2021, but the amount cannot be estimated at this time.

~~Table of Contents~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(unaudited)~~

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 2014 tax ~~year;~~year and all open issues have been resolved. The Company is currently open to tax examinations by the IRS for the ~~2017~~2018 through ~~2019~~2020 tax years. 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 2014 taxable year. The Company is no longer subject to income tax examinations by any major foreign tax jurisdiction for years prior to 2013.

Table of Contents

Notes to Condensed Consolidated Financial Statements

(unaudited)

Note 1412 – Debt

The following table provides the changes in the Company's ~~long-term~~ debt for the nine months ended October ~~2, 2021:~~1, 2022:


(in millions)	(in millions)	Current maturities of long-term debt		Long-term debt		Total		(in millions)	Short-term debt and current maturities of long-term debt		Long-term debt		Total
Balance as of December 31, 2020		$	43.1	$	908.3	$	951.4
Proceeds from issuances of long-term debt		0.4		994.0		994.4
Balance as of December 31, 2021								Balance as of December 31, 2021	$	37.4	$	1,779.0	$	1,816.4
Proceeds from issuances of debt								Proceeds from issuances of debt	2.8		741.8		744.6
Repayments of long-term debt	Repayments of long-term debt	(0.1)		(113.5)		(113.6)		Repayments of long-term debt	(36.6)		(21.8)		(58.4)
Reclassification of long-term debt								Reclassification of long-term debt	81.3		(81.3)		—
Other	Other	(0.2)		(1.1)		(1.3)		Other	—		1.4		1.4
Balance as of October 2, 2021		$	43.2	$	1,787.7	$	1,830.9
Balance as of October 1, 2022								Balance as of October 1, 2022	$	84.9	$	2,419.1	$	2,504.0

As of October ~~2, 2021,~~1, 2022, Brunswick was in compliance with the financial covenants associated with its debt.

~~Bridge Facility~~

In June 2021, the Company entered into a commitment letter with JPMorgan Chase Bank, N.A. ("JP Morgan") to obtain a 364-day senior unsecured bridge facility in an aggregate amount of principal not to exceed $900.0 million (the "Bridge Facility"). The Company obtained the bridge commitment in anticipation of the acquisition of Navico,2032 and ~~the commitment was terminated in August 2021 when the Company obtained the Notes, as defined below. Refer to~~ ~~Note 15 –Subsequent Events~~ ~~for further details regarding the acquisition of Navico.~~

~~2024 and 2031~~2052 Notes

In ~~August 2021,~~March 2022, the Company issued an aggregate principal amount of $450.0 million of ~~0.850%~~4.400% Senior Notes due ~~2024~~2032 (the ~~"2024~~"2032 Notes") and ~~$550.0~~$300.0 million of ~~2.400%~~5.100% Senior Notes due ~~2031~~2052 (the ~~"2031~~"2052 Notes" and, together with the ~~2024~~2032 Notes, the "Notes") in a public offering, which resulted in aggregate net proceeds to the Company of ~~$992.9~~$741.8 million. ~~Net~~The Company intends to use the net proceeds from the ~~offering were used for~~sale of the ~~acquisition of Navico and~~Notes for general corporate purposes.

The ~~2024 Notes and 2031~~2032 Notes bear interest at ~~rates~~a rate of ~~0.850% and 2.400%~~4.400% per year ~~respectively, each~~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 ~~February 18~~March 15 and ~~August 18,~~September 15 of each year, and the first interest payment date ~~will be February 18,~~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 ~~2024~~2032 Notes will mature on ~~August 18, 2024,~~September 15, 2032, and the ~~2031~~2052 Notes will mature on ~~August 18, 2031.~~April 1, 2052.

~~The 2024 Notes are not redeemable prior to August 18, 2022.~~ The Company may redeem the ~~2031~~ 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 ~~2031~~ Notes at any time prior to ~~May 18, 2031~~(i) with respect to the 2032 Notes, June 15, 2032 (the date that is three months prior to the maturity of the ~~2031~~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"~~“make-whole” redemption price set forth in the ~~Fourth~~Fifth Supplemental ~~Indenture to the~~ Indenture dated as of ~~October 3, 2018~~March 29, 2022 ("~~Fourth~~Fifth Supplemental Indenture"). On or after ~~August 18, 2022,~~June 15, 2032, in the case of the ~~2024~~2032 Notes, or ~~May 18, 2031,~~October 1, 2051, in the case of the ~~2031~~2052 Notes, the Company may, at its option, redeem the ~~2024~~ Notes ~~and the 2031 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.

If the Company experiences a ~~change of control~~change-of-control triggering event with respect to a series of Notes, as defined in the ~~Fourth~~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. Pursuant to the terms of the Notes, the Company and its restricted subsidiaries will be subject to, among other covenants, restrictions on the incurrence of debt secured by liens on Principal Property (as defined in the Indenture dated as of October 3, 2018) or shares of capital stock of such restricted subsidiaries, entering into sale and leaseback transactions in respect of Principal Property and mergers or consolidations with another entity or sales, transfers or leases of the Company's properties and assets substantially as an entirety to another person.

2224

Table of Contents

Notes to Condensed Consolidated Financial Statements

(unaudited)

~~Tender Offers~~Term Loan

~~In August 2021,~~During the nine months ended October 1, 2022, the Company ~~commenced tender offers to purchase for cash~~made the ~~7.375% Debentures due 2023 ("2023 Debentures") and 7.125% Notes due 2027 ("2027 Notes"). The tender offers expired on August 10, 2021. At the expiration date, $23.4~~remaining principal repayments, totaling $56.3 million, of its 2023 floating-rate term loan. The term loan was redeemed at 100 percent of the ~~$103.1 million aggregate~~ principal amount ~~of outstanding 2023 Debentures and $2.5 million~~plus accrued interest in accordance with the redemption provisions of the $163.3 million aggregate principal amount of outstanding 2027 Notes were validly tendered and not validly withdrawn. This amount excludes outstanding securities tendered pursuant to the guaranteed delivery procedures described in the tender offer documents, which remain subject to the holders' performance of the delivery requirements under such procedures.term loan. The Company recognized a loss on early extinguishment of debt of ~~$4.2~~$0.1 million related to the ~~tender offers.~~term loan redemption.

Credit Facility

The Company maintains a Revolving Credit Agreement ("Credit Facility"). In ~~July 2021,~~March 2022, the Company ~~entered into an Amended and Restated~~amended its Credit ~~Agreement (the "Amended Credit Facility")~~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. ~~The Amended Credit Facility~~This amends and restates the Credit Facility, dated as of March 21, 2011, as amended and restated ~~through November 12, 2019.~~on July 16, 2021. The ~~Amended~~amended Credit Facility ~~increases~~increased the revolving commitments to ~~$500.0~~$750.0 million, with the capacity to add up to $100.0 million of additional revolving commitments, and ~~amends~~amended the Credit Facility in certain respects, including, among other things:

•Extending the maturity date to ~~July 16, 2026,~~March 31, 2027, with up to two one-year extensions available.

•~~Modifying~~Transitioning the ~~applicable~~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 ~~rate margin range such that the highest applicable interest rate margin is reduced from 1.90 percent per annum to 1.70 percent per annum.~~period.

•During the ~~Increasing~~nine months ended October 1, 2022, gross borrowings under the ~~net cash offset for purposes of determining the leverage ratio from $150.0 million to $350.0~~Credit Facility totaled $125.0 million.

•Modifying the leverage ratio maintenance covenant to allow for a 12-month increase of the maximum leverage ratio to 4.00 to 1.00 following the consummation of a Qualified Acquisition (as such term is defined in the Amended Credit Facility).

•~~Including "hardwired" LIBOR transition provisions substantially consistent with those published by the Alternative Reference Rates Committee.~~

As of October ~~2, 2021~~1, 2022, there were no borrowings outstanding, and available borrowing capacity totaled ~~$497.2~~$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 nine months ended October 1, 2022, including letters of credit outstanding under the Credit Facility, was $127.8 million. There were no borrowings under the Credit Facility during the nine months ended October 2, 2021. Refer to Note 16 in the Notes to Consolidated Financial Statements in the 2021 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 of 2022, the Company increased the size of its CP Program to allow the issuance of CP Notes in an aggregate principal amount not to exceed $500.0 million outstanding 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 time to time, with the aggregate principal amount of CP 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. Refer to Note 16 in the Notes to Consolidated Financial Statements in the ~~2020~~2021 Form 10-K for details regarding Brunswick's ~~Credit Facility.~~

CP Program

~~Note 15 – Subsequent Events~~

~~On October 4, 2021,~~. During the ~~Company acquired~~nine months of 2022, borrowings under the CP Program totaled $500.0 million, all ~~the issued and outstanding shares~~ of ~~Marine Innovations Group AS, known as "Navico," for $1.094 billion net cash consideration. The Company used a combination of the Notes, as described in~~ ~~Note 14 – Debt~~, and cash on hand to fund the acquisition. Navico was a privately held global company based in Egersund, Norway, and is a global leader in marine electronics and sensors, including multi-function displays, fish finders, autopilots, sonar, radar, and cartography. The acquisition of Navico accelerates our ACES (Autonomy, Connectivity, Electrification, and Shared access) strategy and strengthens our ability to provide complete, innovative digital solutions to consumers and comprehensive, integrated system offerings to our original equipment manufacturer customers. The acquisition will be reported within the Company's Parts & Accessories segment. Given the recent date of the closing, a preliminary purchase price allocation has not yet been completed as of the date these financial statementswhich were ~~issued. Transaction costs associated with this acquisition of $1.6 million and $7.1 million were expensed as incurred within Selling, general and administrative expense~~repaid during the ~~three and~~period. During the nine months ended October ~~2, 2021, respectively.~~

1, 2022, the maximum amount utilized under the CP Program was $300.0 million.

2325

Table of Contents

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 ~~(we,~~(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's Discussion and Analysis are based on non-GAAP financial measures. GAAP refers to generally accepted accounting principles in the United States. A "non-GAAP financial measure" is a numerical measure of a registrant’s historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the consolidated statements of 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.

We include non-GAAP financial measures in Management's Discussion and Analysis as management believes these measures and the information they provide are useful to investors because they permit investors to view our performance using the same tools that management uses to 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 impact of purchase accounting ~~amortization.~~amortization related to acquisitions, among other adjustments.

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

Impact of COVID-19

~~All global manufacturing~~The full extent of the impact of COVID-19 on our business, operations, and ~~distribution facilities continue to focus~~financial results will depend on ~~rigorously applying,~~ evolving ~~and automating COVID-19 mitigation procedures, while continuing to ramp-up glob~~al production to meet unprecedented demand as consumers continue to take advantage of flexible work schedules allowing for more leisure time. The strong demand environment for our products experienced during the second half of 2020 has continued through 2021. COVID-19 related shut-downs have affected operations in the quarter, such as the temporary closure of a key manufacturing and distribution facility in New Zealand. Despite elevated production levels consistent with our plan, the continued surge in retail demand, market share gains, and supply chain challenges continue to drive historically low pipeline inventory levels, with third quarter pipeline inventory for our boat segment down to just over 10 weeks on hand.

factors that we cannot accurately predict. We will continue to actively monitor the impact of COVID-19 and may take further actions that alter business operations as legally required, or that we determine are in the best interests of our employees, customers, dealers, suppliers, and other ~~stakeholders. The full extent of the impact of~~stakeholders. All global manufacturing and distribution facilities remain focused on rigorously applying, evolving, and automating COVID-19 ~~on our business, operations, and financial results will depend on evolving factors that we cannot accurately~~mitigation procedures. ~~predict.~~ Refer to Part I. Item 1A. Risk Factors in ~~our~~ ~~2020~~the Company's Annual Report on Form 10-K for the fiscal year 2021 (the 2021 Form 10-K) for further information.

~~Discontinued Operations~~Impact of Russia-Ukraine Conflict

~~On June 27, 2019, we completed~~We continue to monitor the ~~sale~~conflict in Ukraine and the potential impact to our operations. Our cessation of business in Russia, Belarus, Crimea and the ~~Fitness~~disputed territories has not had a significant financial impact on our business. ~~This business, which was previously reported as our Fitness segment, is being reported as discontinued operations for all periods presented.~~

~~Our results~~

Table of Contents

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 ~~all periods presented, as discussed in Management's Discussion and Analysis, are presented on a continuing operations basis, unless otherwise noted.~~net cash consideration of $95.7 million. Refer to Note 34 – ~~Discontinued Operations~~Acquisitions in the Notes to Condensed Consolidated Financial Statements for further information.

~~Table of Contents~~

~~Acquisitions~~

On October 4, 2021, ~~the Company~~we completed ~~its~~the acquisition of Navico for $1.094 ~~billion.~~billion net cash consideration. Navico was a privately held global company based in Egersund, Norway and is a global leader in marine electronics and sensors, including multi-function displays, fish finders, autopilots, sonar, radar, and cartography. We also completed the acquisitions of substantially all the net assets of RELiON Battery, LLC, SemahTronix, LLC, Fanautic Club, and certain Freedom Boat Club franchise operations and territory rights in the United States during 2021 for net cash consideration of $66.2 million. Refer to Note ~~15 - Subsequent Events~~4 – Acquisitions in the Notes to ~~the~~ Condensed Consolidated Financial Statements for further information.

Overview

Net sales increased 1619 percent during the third quarter of ~~2021~~2022 when compared with the third quarter of ~~2020, primarily attributable~~2021. All segments contributed to the strong performance and reported substantial net sales increases despite ongoing supply chain disruptions, macro volatility and the impacts of Hurricane Ian. The Propulsion segment continues to deliver exceptional results, enabled by higher sales volumes resulting from strong global demand, ~~for marine products,~~capacity increases and market share ~~gains,~~gains. Our Parts & Accessories businesses delivered strong sales growth benefiting from acquisitions completed in 2021, solid engine parts and ~~increased pricing. In~~accessories sales and strong OEM sales from Navico Group. Our Boat segment posted robust top-line growth when compared to the ~~Propulsion segment, strong demand for~~third quarter of 2021 with all product categories ~~together with market share gains, drove higher sales which continue~~contributing favorably to ~~be enabled by increased production levels. In~~ the ~~Parts and Accessories segment, robust aftermarket demand driven by elevated boating participation and favorable late-season weather conditions in many areas resulted in higher sales, for all~~performance, despite Florida boat manufacturing facilities being closed the last week of ~~our businesses. Boat segment sales also increased across all product categories.~~ the quarter due to Hurricane Ian. Our international net sales increased 1915 percent and 1724 percent in the third quarter on a GAAP and constant currency basis, ~~respectively.~~respectively, with all regions contributing to the increase.

Net sales increased 3918 percent during the ~~first~~ nine months ~~of 2021,~~ended October 1, 2022 when compared with the ~~first~~ nine months ~~of 2020~~,ended October 2, 2021, due to the same factors described above. OurOur international net sales increased 4315 percent and 3521 percent ~~during the first nine months of 2021~~ on a GAAP and constant currency basis, respectively, with growth in all regions.

Operating earnings in the third quarter of ~~2021~~2022 were ~~$209.0~~$237.7 million and ~~$221.1~~$278.8 million onon a GAAP and As Adjusted basis, respectively. This compares to operating earnings during the third quarter of ~~2020~~2021 of ~~$192.6~~$209.0 million and ~~$202.9~~$221.1 million on a GAAP and an As Adjusted basis, respectively.

Operating earnings in the ~~first~~ nine months ~~of 2021~~ended October 1, 2022 were ~~$691.1~~$756.2 million and ~~$730.5~~$846.5 million on a GAAP and As Adjusted basis, respectively. This compares to operating earnings ~~during~~in the ~~first~~ nine months ended October 2, 2021 of ~~2020~~ ~~of $402.8~~$691.1 million and ~~$433.3~~$730.5 million on a GAAP and an As Adjusted basis, respectively.

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Matters Affecting Comparability

Changes in Foreign Currency Rates. Percentage changes in net sales expressed in constant currency reflect the impact that changes in currency exchange rates had on comparisons of net sales. To determine this information, net sales transacted in currencies other than the U.S. ~~dollars~~dollar have been translated to U.S. dollars using the average exchange rates 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 rate fluctuations.~~exchange-rate fluctuations. Approximately 25 percent of our annual net sales are transacted in a currency other than the U.S. dollar. Our most material e~~xposures~~exposures include sales in Euros, Canadian dollars, Australian dollars, and ~~Chinese Yuan.~~Brazilian real.

The table below summarizes the impact of changes in currency exchange rates and also the impact of acquisitions on our net sales:


		Three Months Ended						Nine Months Ended						Three Months Ended								Nine Months Ended
		Net Sales				2021 vs. 2020		Net Sales			2021 vs. 2020			Net Sales		2022 vs. 2021						Net Sales					2022 vs. 2021
(in millions)	(in millions)	Oct 2, 2021		Sep 26, 2020		GAAP	Currency impact		Oct 2, 2021		Sep 26, 2020		GAAP		Currency impact		(in millions)	October 1, 2022		October 2, 2021			GAAP		Currency Impact			Acquisition Benefit		October 1, 2022		October 2, 2021		GAAP		Currency Impact		Acquisition Benefit
Propulsion	Propulsion	$	626.9	$	526.5	19.1%	0.9%		$	1,934.2	$	1,370.5	41.1%		2.7%		Propulsion	$	714.4	$	626.9		14.0	%	(2.5)	%		—	%	$	2,154.5	$	1,934.2	11.4	%	(2.2)	%	—	%
Parts & Accessories	Parts & Accessories	494.0		459.9		7.4%	0.9%		1,502.5		1,148.0		30.9%		2.5%		Parts & Accessories	587.8		494.0			19.0	%	(2.5)	%		20.7	%	1,857.1		1,502.5		23.6	%	(2.0)	%	25.2	%
Boat	Boat	401.5		328.1		22.4%	0.5%		1,270.1		869.5		46.1%		1.8%		Boat	510.7		401.5			27.2	%	(1.9)	%		4.7	%	1,571.9		1,270.1		23.8	%	(1.5)	%	3.1	%
Segment Eliminations	Segment Eliminations	(95.2)		(81.4)		17.0%	0.4%		(291.6)		(201.6)		44.6%		1.0%		Segment Eliminations	(114.7)		(95.2)			20.5	%	(0.7)	%		6.5	%	(354.0)		(291.6)		21.4	%	(0.7)	%	5.4	%
Total	Total	$	1,427.2	$	1,233.1	15.7%	0.8%		$	4,415.2	$	3,186.4	38.6%		2.5%		Total	$	1,698.2	$	1,427.2		19.0	%	(2.5)	%		8.1	%	$	5,229.5	$	4,415.2	18.4	%	(2.1)	%	9.1	%

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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 and nine months ended:


		Three Months Ended				2021 vs. 2020				Nine Months Ended				2021 vs. 2020					Three Months Ended						2022 vs. 2021				Nine Months Ended						2022 vs. 2021
(in millions, except per share data)	(in millions, except per share data)	Oct 2, 2021		Sep 26, 2020		$ Change		% Change		Oct 2, 2021		Sep 26, 2020		$ Change		% Change		(in millions, except per share data)	October 1, 2022			October 2, 2021			$ Change		% Change		October 1, 2022			October 2, 2021			$ Change		% Change
Net sales	Net sales	$	1,427.2	$	1,233.1	$	194.1	15.7%		$	4,415.2	$	3,186.4	$	1,228.8	38.6%		Net sales	$	1,698.2		$	1,427.2		$	271.0	19.0%		$	5,229.5		$	4,415.2		$	814.3	18.4%
Gross margin(A)	Gross margin(A)	410.4		376.9		33.5		8.9%		1,289.2		876.7		412.5		47.1%		Gross margin(A)	498.9			410.4			88.5		21.6%		1,518.9			1,289.2			229.7		17.8%
Restructuring, exit and impairment charges	Restructuring, exit and impairment charges	—		1.8		(1.8)		(100.0)%		0.7		4.3		(3.6)		(83.7)%		Restructuring, exit and impairment charges	24.6			—			24.6		NM		24.6			0.7			23.9		NM
Operating earnings	Operating earnings	209.0		192.6		16.4		8.5%		691.1		402.8		288.3		71.6%		Operating earnings	237.7			209.0			28.7		13.7%		756.2			691.1			65.1		9.4%
Net earnings from continuing operations	Net earnings from continuing operations	144.6		136.8		7.8		5.7%		493.4		278.7		214.7		77.0%		Net earnings from continuing operations	168.2			144.6			23.6		16.3%		541.0			493.4			47.6		9.6%

Diluted earnings per common share from continuing operations	Diluted earnings per common share from continuing operations	$	1.85	$	1.71	$	0.14	8.2%		$	6.28	$	3.49	$	2.79	79.9%		Diluted earnings per common share from continuing operations	$	2.26		$	1.85		$	0.41	22.2%		$	7.12		$	6.28		$	0.84	13.4%

Expressed as a percentage of Net sales:	Expressed as a percentage of Net sales:																	Expressed as a percentage of Net sales:
Gross margin (A)	Gross margin (A)	28.8%		30.6%				(180)	bps	29.2%		27.5%				170	bps	Gross margin (A)	29.4		%	28.8		%			60	bps	29.0		%	29.2		%			(20)	bps
Selling, general and administrative expense	Selling, general and administrative expense	11.6%		12.3%				(70)	bps	11.1%		12.0%				(90)	bps	Selling, general and administrative expense	11.0		%	11.6		%			(60)	bps	11.2		%	11.1		%			10	bps
Research and development expense	Research and development expense	2.5%		2.5%				—	bps	2.4%		2.8%				(40)	bps	Research and development expense	3.0		%	2.5		%			50	bps	2.9		%	2.4		%			50	bps
Restructuring, exit and impairment charges		0.0%		0.1%				(10)	bps	0.0%		0.1%				(10)	bps

Operating margin	Operating margin	14.6%		15.6%				(100)	bps	15.7%		12.6%				310	bps	Operating margin	14.0		%	14.6		%			(60)	bps	14.5		%	15.7		%			(120)	bps

bps = basis points

NM = not meaningful

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

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The following is a summary of Adjusted operating earnings and Adjusted diluted earnings per common share from continuing operations for the threeand nine months ended October 1, 2022 when compared with the same prior year comparative period:
Three Months Ended Nine Months Ended
Operating Earnings Diluted Earnings (Loss) Per Share Operating Earnings Diluted Earnings (Loss) Per Share
(in millions, except per share data) Oct 2,
2021 Sep 26,
2020 Oct 2,
2021 Sep 26,
2020 Oct 2,
2021 Sep 26,
2020 Oct 2,
2021 Sep 26,
2020
GAAP $ 209.0 $ 192.6 $ 1.85 $ 1.71 $ 691.1 $ 402.8 $ 6.28 $ 3.49
Restructuring, exit, and impairment charges — 1.8 — 0.02 0.7 4.3 0.01 0.03
Purchase accounting amortization 7.6 7.5 0.07 0.07 22.7 22.6 0.22 0.22
Sport Yacht & Yachts — — — — 3.8 — 0.03 —
Acquisition, integration, and IT related costs 4.5 1.0 0.08 0.01 12.9 3.6 0.15 0.04
Palm Coast reclassified from held-for-sale — — — — 0.8 — 0.01 —
Gain on sale of assets — — — — (1.5) — (0.01) —
Pension settlement benefit — — — — — — — (0.01)
Loss on early extinguishment of debt — — 0.04 — — — 0.04 —
Special tax items — — 0.03 (0.01) — — 0.09 (0.01)
As Adjusted $ 221.1 $ 202.9 $ 2.07 $ 1.80 $ 730.5 $ 433.3 $ 6.82 $ 3.76
GAAP operating margin 14.6% 15.6% 15.7% 12.6%
Adjusted operating margin 15.5% 16.5% 16.5% 13.6%


	Three Months Ended										Nine Months Ended
	Operating Earnings						Diluted Earnings (Loss) Per Share				Operating Earnings						Diluted Earnings (Loss) Per Share
(in millions, except per share data)	October 1, 2022			October 2, 2021			October 1, 2022		October 2, 2021		October 1, 2022			October 2, 2021			October 1, 2022		October 2, 2021
GAAP	$	237.7		$	209.0		$	2.26	$	1.85	$	756.2		$	691.1		$	7.12	$	6.28
Restructuring, exit and impairment charges	24.6			—			0.24		—		24.6			0.7			0.25		0.01
Purchase accounting amortization	14.4			7.6			0.15		0.07		51.5			22.7			0.51		0.22
Acquisition, integration and IT-related costs	2.1			4.5			0.02		0.08		14.2			12.9			0.14		0.15
Sport Yacht & Yachts	—			—			—		—		—			3.8			—		0.03
Palm Coast reclassified from held-for-sale	—			—			—		—		—			0.8			—		0.01
Gain on sale of assets	—			—			—		—		—			(1.5)			—		(0.01)
Loss on early extinguishment of debt	—			—			—		0.04		—			—			—		0.04
Special tax items	—			—			—		0.03		—			—			—		0.09
As Adjusted	$	278.8		$	221.1		$	2.67	$	2.07	$	846.5		$	730.5		$	8.02	$	6.82

GAAP operating margin	14.0		%	14.6		%					14.5		%	15.7		%
Adjusted operating margin	16.4		%	15.5		%					16.2		%	16.5		%

Net sales increased 1619 percent ~~and 39 percent~~ during the third quarter and ~~first~~18 percent during the nine months ~~of 2021, respectively,~~ended October 1, 2022 when compared with the same prior year ~~periods. Sales~~period with all segments benefiting from solid demand, new product performance, and pricing implemented since the third quarter of 2021, partially offset by unfavorable changes in ~~each segment benefited~~foreign currency exchange rates, the impact from ~~increased volume due to strong global demand for marine products, market share gains,~~Hurricane Ian and ~~increased pricing.~~supply chain challenges. Refer to the Propulsion, Parts ~~and~~& Accessories and Boat segments for further details on the drivers of net sales changes.

Gross margin ~~percentage decreased 180~~percentage increased 60 basis points in the third quarter of ~~2021~~2022 when compared to the same prior year period, reflecting increased sales and benefits from operational efficiencies, partially offset by higher material and freight inflationary pressures and unfavorable changes in foreign currency exchange rates. Gross margin decreased 20 basis points during the nine months ended October 1, 2022 when compared with the same prior year period, ~~with all segments benefiting~~resulting from ~~the factors increasing sales~~inflationary pressures, supply chain inefficiencies and ~~favorable~~unfavorable changes in foreign currency exchange rates ~~partially offset by~~more than offsetting increased ~~input costs. Gross margin percentage~~sales across all segments.

Selling, general and administrative expense (SG&A) increased ~~170 basis points in~~during the ~~first~~third quarter and nine months ~~of 2021~~ended October 1, 2022 when compared with the same prior year period, ~~with all segments benefiting from increased sales, favorable factory absorption from increased production, and favorable changes in foreign currency exchange rates.~~

~~Selling, general and administrative expense (SG&A) increased~~primarily due to the businesses acquired during ~~the third quarter and first nine months of 2021 when compared with the same prior year periods. Excluding certain one-time items presented above,~~ 2021. SG&A as a percentage of sales was lower in the third quarter of 2022and ~~first~~higher in the nine months ~~of 2021~~ended October 1, 2022 compared with the same prior year ~~periods, reflecting~~period. The decrease in the ~~strong~~third quarter of 2022 was driven by increased net sales and the benefit from cost-containment measures. The increase in ~~net sales, partially offset by~~the nine months ended October 1, 2022 reflects the impact of 2021 acquisitions, increased spending on sales and marketing, ACES ~~strategy,~~("Autonomy, Connectivity, Electrification and Shared access") programs, and other growth ~~initiatives. SG&A as a percentage of sales was also impacted~~initiatives, partially offset by ~~higher variable compensation costs during the first nine months of 2021 when compared with the same prior year period.~~increased net sales. Research and development expense increased in ~~2021~~2022 versus ~~2020,~~2021, reflecting continued investment in new products in all segments.

We recorded restructuring, exit and impairment charges of $24.6 million during the three and nine months ended October 1, 2022, respectively. We did not recognize any restructuring, exit and impairment charges during the three months ended October 2, 2021, ~~but~~and recorded ~~restructuring, exit and impairment charges of~~ $0.7 million during the nine months ended October 2, 2021. ~~We recorded $1.8 million and $4.3 million of restructuring, exit and impairment charges during the three and nine months ended September 26, 2020, respectively.~~ Refer toNote 3 – ~~Note 4 –~~ Restructuring, Exit and Impairment Activities in the Notes to Condensed Consolidated Financial Statements for further information.

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We recorded Equity earnings of ~~$0.3~~$1.3 million and ~~$1.5~~$2.8 million in the three and nine months ended October ~~2, 2021,~~1, 2022, respectively, which were mainly related to our marine and technology-related joint ventures. This compares with Equity earnings of ~~$0.6~~$0.3 million and ~~$3.5~~$1.5 million in the three and nine months ended October 2, 2021, respectively.

We recognized $(0.1) million and $(1.3) million in Other expense, net in the three and nine months ended ~~September 26, 2020,~~October 1, 2022, respectively.

~~We recognized~~ This compares with $(1.6) million and $(4.4) million recognized in Other expense, net in the three and nine months ended October 2, 2021, respectively. ~~This compares with $(1.2) million and $(2.7) million recognized in Other expense, net in the three and nine~~

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~~months ended September 26, 2020, respectively.~~ Other expense, net primarily includes ~~other postretirement benefit costs and~~ remeasurement gains and losses resulting from changes in foreign currency ~~rates.~~rates and other postretirement benefit costs.

Net interest expense ~~was consistent~~increased for the three ~~months ended October 2, 2021 when compared with the same prior year period. Net interest expense decreased for the~~and nine months ended October ~~2, 2021~~1, 2022 when compared with the same prior year period due to ~~reduction~~an increase in average daily debt outstanding, which was influenced by ~~the timing of debt retirements and~~ debt issuances. Refer toNote 1412 – Debtin the Notes to Condensed Consolidated Financial Statements and Note 16 - Debt in the Notes to Consolidated Financial Statements in the ~~2020~~2021 Form 10-K.

We recognized ~~a $4.2~~an income tax provision for the three and nine months ended October 1, 2022 of $46.5 million ~~loss on early extinguishment of debt~~and $148.7 million, respectively, compared to $38.8 million and $141.4 million for the three and nine months ended October 2, 2021, related to the tender of our 2023 Debentures and 2027 Notes. We also recognized $4.0 million of transaction financing charges for the three and nine months ended October 2, 2021 related to the Bridge Facility that was secured in anticipation of the Navico acquisition. Refer to ~~Note 14 – Debt~~ ~~in the Notes to Condensed Consolidated Financial Statements.~~

~~Income tax provision for the three and nine months ended October 2, 2021 was~~ ~~$38.8 million and $141.4 million, respectively, compared to $38.9 million and $74.9 million for the three and nine months ended September 26, 2020,~~ respectively. ~~The increase for the first nine months compared with the same prior year period is primarily due to increased earnings before income taxes.~~

The effective tax rate, which is calculated as the income tax provision as a percentage of earnings before income taxes, for the three and nine months ended October ~~2, 2021,~~ 1, 2022 was ~~21.2~~21.7 percent and ~~22.3~~21.6 percent, ~~respectively.~~respectively. The effective tax rate for the three and nine months ended ~~September 26, 2020~~October 2, 2021 was ~~22.1~~21.2 percent and ~~21.2~~and 22.3 percent, respectively.

Due to the factors described in the preceding paragraphs, ~~operating~~operating earnings, net earnings from continuing operations, and diluted earnings per common share from continuing operations increased ~~increase~~d during the third quarter of 2022 and ~~first~~ nine months ~~of 2021~~ended October 1, 2022 when compared with the same prior year ~~periods.~~period.

Propulsion Segment

The following table sets forth Propulsion segment results for the three and nine months ended:


		Three Months Ended				2021 vs. 2020				Nine Months Ended				2021 vs. 2020					Three Months Ended						2022 vs. 2021				Nine Months Ended						2022 vs. 2021
(in millions)	(in millions)	Oct 2, 2021		Sep 26, 2020		$ Change		% Change		Oct 2, 2021		Sep 26, 2020		$ Change		% Change		(in millions)	October 1, 2022			October 2, 2021			$ Change		% Change		October 1, 2022			October 2, 2021			$ Change		% Change
Net sales	Net sales	$	626.9	$	526.5	$	100.4	19.1%		$	1,934.2	$	1,370.5	$	563.7	41.1%		Net sales	$	714.4		$	626.9		$	87.5	14.0	%	$	2,154.5		$	1,934.2		$	220.3	11.4	%

Operating earnings	Operating earnings	112.5		94.1		18.4		19.6%		359.1		203.1		156.0		76.8%		Operating earnings	143.0			112.5			30.5		27.1	%	410.3			359.1			51.2		14.3	%
Operating margin	Operating margin	17.9%		17.9%				—	bps	18.6%		14.8%				380	bps	Operating margin	20.0		%	17.9		%			210	bps	19.0		%	18.6		%			40	bps

bps = basis points

Propulsion segment net sales ~~increased $100.4~~increased $87.5 million, or 1914 percent, inin the third quarter of ~~2021~~2022 compared to the third quarter of ~~2020~~2021 due to higher sales volumes driven by strong global demand, capacity increases and market share gains around the ~~factors affecting all of our segments previously mentioned.~~globe.

Propulsion segment net sales increased ~~$563.7~~$220.3 million, or 4111 percent, in the ~~first~~ nine months ~~of 2021 versus prior year as a result of the~~ ~~same factors described above.~~

~~International sales wer~~ended e ~~31 percent of the~~ ~~segment's net sales during the third quarter of 2021 and~~ ~~increased 13 percent~~ ~~from the prior year on a GAAP basis. On a constant currency basis, international~~ ~~net sales increased 10 percent, with increases across all regions except Asia-Pacific.~~ ~~International sales were 35 percent~~ ~~of the segment's net sales through the first nine months of 2021 and increased 35 percent from the prior year on a GAAP basis. On a constant currency basis, international sales~~ ~~increased 28 percent~~ ~~through the first nine months of 2021, with increases across all regions except Asia-Pacific.~~

Propulsion segment operating earnings in the third quarter of 2021 were $112.5 million, an increase of 20 percent when compared to the third quarter of 2020, due to the benefits from more favorable sales mix and favorable absorption, in addition to the factors affecting all of our segments previously mentioned. Operating earnings for the first nine months of 2021 were $359.1 million, an increase of 77 percent as a result of the same factors described above.

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~~Parts & Accessories Segment~~

~~The following table sets forth Parts and Accessories (P&A) segment results for the three and nine months ended:~~

Three Months Ended 2021 vs. 2020 Nine Months Ended 2021 vs. 2020
(in millions) Oct 2,
2021 Sep 26,
2020 $
Change %
Change Oct 2,
2021 Sep 26,
2020 $
Change %
Change
Net sales $ 494.0 $ 459.9 $ 34.1 7.4% $ 1,502.5 $ 1,148.0 $ 354.5 30.9%
GAAP operating earnings $ 100.6 $ 99.9 $ 0.7 0.7% $ 306.9 $ 226.2 $ 80.7 35.7%
Restructuring, exit and impairment charges — 0.5 (0.5) (100.0)% 0.7 0.8 (0.1) (12.5)%
Purchase accounting amortization 7.2 7.1 0.1 1.4% 21.6 21.5 0.1 0.5%
Acquisition, integration and IT costs 1.9 — 1.9 NM 7.7 — 7.7 NM
Gain on sale of assets — — — NM (1.5) — (1.5) NM
Adjusted operating earnings $ 109.7 $ 107.5 $ 2.2 2.0% $ 335.4 $ 248.5 $ 86.9 35.0%
GAAP operating margin 20.4% 21.7% (130) bps 20.4% 19.7% 70 bps
Adjusted operating margin 22.2% 23.4% (120) bps 22.3% 21.6% 70 bps

~~NM = not meaningful~~

~~bps = basis points~~

~~P&A segment net sales increased~~ ~~$34.1 million, or 7 percent, in the third quarter of 2021 versus the third quarter of 2020 due~~ ~~to the factors impacting all of our segments previously mentioned.~~

~~P&A segment net sales increased $354.5 million, or 31 percent, in the first nine months of 2021~~October 1, 2022 versus prior year as a result of the same factors described above.

International sales were 2928 percent of the ~~P&A~~ segment's net sales in the third quarter of ~~2021~~2022, and increased 154 percent ~~year-over-year~~from the prior year on a GAAP basis. On a constant currency basis, international net sales increased 12 percent, with increases across all regions. International sales were 33 percent of the segment's net sales in the nine months ended October 1, 2022, and increased 4 percent from the prior year on a GAAP basis. On a constant currency basis, international sales increased 11 percent in the nine months ended October 1, 2022, with increases across all regions except Asia-Pacific due to strong performance in the comparable prior period.

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Propulsion segment operating earnings in the third quarter of 2022 were $143.0 million, an increase of 27 percent when compared to the third quarter of 2021, as a result of increased sales and lower operating expenses, partially offset by investments in capacity and product development. Operating earnings for the nine months ended October 1, 2022 were $410.3 million, an increase of 14 percent, as a result of the same factors described above.

Parts & Accessories Segment

The following table sets forth P&A segment results for the three and nine months ended:


	Three Months Ended						2022 vs. 2021			Nine Months Ended						2022 vs. 2021
(in millions)	October 1, 2022			October 2, 2021			$ Change		% Change	October 1, 2022			October 2, 2021			$ Change		% Change
Net sales	$	587.8		$	494.0		$	93.8	19.0 %	$	1,857.1		$	1,502.5		$	354.6	23.6 %

GAAP operating earnings	$	87.1		$	100.6		$	(13.5)	(13.4 %)	$	286.9		$	306.9		$	(20.0)	(6.5 %)
Restructuring, exit and impairment charges	6.9			—			6.9		NM	6.9			0.7			6.2		NM
Purchase accounting amortization	13.4			7.2			6.2		86.1 %	49.2			21.6			27.6		NM
Acquisition, integration, and IT-related costs	1.0			1.9			(0.9)		(47.4 %)	8.9			7.7			1.2		15.6 %
Gain on sale of assets	—			—			—		NM	—			(1.5)			1.5		(100.0 %)
Adjusted operating earnings	$	108.4		$	109.7		$	(1.3)	(1.2 %)	$	351.9		$	335.4		$	16.5	4.9 %

GAAP operating margin	14.8		%	20.4		%			(560) bps	15.4		%	20.4		%			(500) bps
Adjusted operating margin	18.4		%	22.2		%			(380) bps	18.9		%	22.3		%			(340) bps

NM = not meaningful

bps = basis points

P&A segment net sales increased $93.8 million, or 19 percent, in the third quarter of 2022 versus the third quarter of 2021 primarily due to the acquisitions of Navico, RELiON, and SemahTronix. Excluding the impact from acquisitions and currency, P&A revenues increased 1 percent.

P&A segment net sales increased $354.6 million, or 24 percent, in the nine months ended October 1, 2022 versus prior year, as a result of the same factors described above.

International sales were 31 percent of the P&A segment's net sales in the ~~first nine months~~third quarter of ~~2021~~2022 and increased 4628 percent ~~year-over-year~~year over year on a GAAP basis. On a constant currency basis, international net sales increased 3637 percent, ~~through~~with increases across all regions. International sales were 32 percent of the ~~first~~P&A segment's net sales in the nine months ~~of 2021,~~ended October 1, 2022, and increased 34 percent year over year on a GAAP basis. On a constant currency basis, international sales increased 41 percent in the nine months ended October 1, 2022, with increases across all regions.

P&A segment operating earnings ~~were $100.6 million~~ in the third quarter of ~~2021, an increase~~2022 were $87.1 million, a decrease of 113.4 percent ~~when~~ compared to the third quarter of ~~2020. Operating earnings, while positively impacted~~2021 with sales benefits being offset by ~~the factors impacting all of our segments previously mentioned, were also negatively impacted by the closure of a key manufacturing~~outsized material and ~~distribution location in New Zealand for a large portion of the quarter due to national COVID-19 lockdowns.~~freight inflation and negative currency impacts, as well as incremental purchase accounting amortization and restructuring, exit and impairment charges. Operating earnings for the ~~first~~ nine months ended October 1, 2022 were $286.9 million, a decrease of ~~2021 were $306.9 million, an increase of 36~~7 percent,, as a result of the same factors described above.

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Boat Segment

The following table sets forth Boat segment results for the three and nine months ended:


		Three Months Ended				2021 vs. 2020				Nine Months Ended				2021 vs. 2020					Three Months Ended						2022 vs. 2021			Nine Months Ended						2022 vs. 2021
(in millions)	(in millions)	Oct 2, 2021		Sep 26, 2020		$ Change		% Change		Oct 2, 2021		Sep 26, 2020		$ Change		% Change		(in millions)	October 1, 2022			October 2, 2021			$ Change		% Change	October 1, 2022			October 2, 2021			$ Change		% Change
Net sales	Net sales	$	401.5	$	328.1	$	73.4	22.4%		$	1,270.1	$	869.5	$	400.6	46.1%		Net sales	$	510.7		$	401.5		$	109.2	27.2 %	$	1,571.9		$	1,270.1		$	301.8	23.8 %

GAAP operating earnings	GAAP operating earnings	$	24.9	$	28.3	$	(3.4)	(12.0)%		$	109.9	$	35.4	$	74.5	NM		GAAP operating earnings	$	49.7		$	24.9		$	24.8	99.6 %	$	153.9		$	109.9		$	44.0	40.0 %
Restructuring, exit and impairment charges	Restructuring, exit and impairment charges	—		1.2		(1.2)		(100.0)%		—		1.5		(1.5)		(100.0)%		Restructuring, exit and impairment charges	0.3			—			0.3		NM	0.3			—			0.3		NM
Acquisition, integration, and IT-related costs																		Acquisition, integration, and IT-related costs	1.0			2.5			(1.5)		(60.0 %)	5.2			5.1			0.1		2.0 %
Purchase accounting amortization																		Purchase accounting amortization	1.0			0.4			0.6		NM	2.3			1.1			1.2		NM
Sport Yacht & Yachts	Sport Yacht & Yachts	—		—		—		NM		3.8		—		3.8		NM		Sport Yacht & Yachts	—			—			—		NM	—			3.8			(3.8)		(100.0 %)
Acquisition, integration, and IT related costs		2.5		0.4		2.1		NM		5.1		1.7		3.4		200.0%
Palm Coast reclassified from held-for-sale	Palm Coast reclassified from held-for-sale	—		—		—		NM		0.8		—		0.8		NM		Palm Coast reclassified from held-for-sale	—			—			—		NM	—			0.8			(0.8)		(100.0 %)
Purchase accounting amortization		0.4		0.4		—		NM		1.1		1.1		—		NM
Adjusted operating earnings	Adjusted operating earnings	$	27.8	$	30.3	$	(2.5)	(8.3)%		$	120.7	$	39.7	$	81.0	NM		Adjusted operating earnings	$	52.0		$	27.8		$	24.2	87.1 %	$	161.7		$	120.7		$	41.0	34.0 %

GAAP operating margin	GAAP operating margin	6.2%		8.6%				(240)	bps	8.7%		4.1%				460	bps	GAAP operating margin	9.7		%	6.2		%			350 bps	9.8		%	8.7		%			110 bps
Adjusted operating margin	Adjusted operating margin	6.9%		9.2%				(230)	bps	9.5%		4.6%				490	bps	Adjusted operating margin	10.2		%	6.9		%			330 bps	10.3		%	9.5		%			80 bps

NM = not meaningful

bps = basis points

Boat segment net sales increased ~~$73.4~~$109.2 million, or 2227 percent, in the third quarter of ~~2021~~2022 versus the third quarter of ~~2020, driven by lower discount levels, as well as the factors affecting all of our segments previously mentioned.~~2021 due to increased sales volumes to dealers.

Boat segment net sales increased ~~$400.6~~$301.8 million, or 4624 percent, in the ~~first~~ nine months ~~of 2021 versus prior year as a result of~~ended October 1, 2022, resulting from the same ~~factors~~factor described above.

International sales were 24 22 percent of the segment's net sales in the third quarter of ~~2021~~2022 and increased 4819 percent on a GAAP basis. On a constant currency basis, international sales increased 27 percent, with increases across all regions. International sales were 24 percent of the segment's net sales in the nine months ended October 1, 2022, and increased 14 percent on a GAAP basis. On a constant currency basis, international sales increased 4620 percent ~~with increases in Canada, Europe, Middle East and Africa offset by decreases in Rest-of-World and Asia-Pacific. International sales were 26 percent of the segment's net sales~~ in the ~~first~~ nine months ~~of 2021 and increased 63 percent on a GAAP basis. On a constant currency basis, international sales increased 56 percent through the first nine months of 2021,~~ended October 1, 2022, with increases across all regions.

Boat segment operating earnings in the third quarter of ~~2021~~2022 were ~~$24.9~~ $49.7 million, ~~a decrease~~an increase of ~~12 percent~~$24.8 million when compared to the third quarter of ~~2020, as~~2021, due to increased sales ~~volume and pricing,~~ together with ~~lower retail discount levels, were more than~~operational efficiencies and positive mix. The increase was partially offset by ~~material~~inefficiencies resulting from supply chain disruptions, inflation pressures and ~~higher costs due to manufacturing inefficiencies.~~the loss of production from Hurricane Ian. Operating earnings infor the ~~first~~ nine months ~~of 2021~~ended October 1, 2022 were ~~$109.9~~$153.9 million, an increase of ~~$74.5 million,~~40 percent, as ~~benefits from increased sales for~~a result of the ~~year more than offset the higher input costs and manufacturing inefficiencies previously mentioned.~~same factors described above.

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Corporate/Other

The following table sets forth Corporate/Other results for the three and nine months ended:


		Three Months Ended				2021 vs. 2020			Nine Months Ended				2021 vs. 2020				Three Months Ended				2022 vs. 2021			Nine Months Ended				2022 vs. 2021
(in millions)	(in millions)	Oct 2, 2021		Sep 26, 2020		$ Change		% Change	Oct 2, 2021		Sep 26, 2020		$ Change		% Change	(in millions)	October 1, 2022		October 2, 2021		$ Change		% Change	October 1, 2022		October 2, 2021		$ Change		% Change
GAAP operating loss		$	(29.0)	$	(29.7)	$	0.7	(2.4)%	$	(84.8)	$	(61.9)	$	(22.9)	37.0%
Operating loss																Operating loss	$	(42.1)	$	(29.0)	$	(13.1)	45.2 %	$	(94.9)	$	(84.8)	$	(10.1)	11.9 %
Restructuring, exit and impairment charges	Restructuring, exit and impairment charges	—		0.1		(0.1)		(100.0)%	—		2.0		(2.0)		(100.0)%	Restructuring, exit and impairment charges	17.4		—		17.4		NM	17.4		—		17.4		NM
Acquisition, integration, and IT related costs		0.1		0.6		(0.5)		(83.3)%	0.1		1.9		(1.8)		(94.7)%
Acquisition, integration, and IT-related costs																Acquisition, integration, and IT-related costs	0.1		0.1		—		NM	0.1		0.1		—		NM
Adjusted operating loss	Adjusted operating loss	$	(28.9)	$	(29.0)	$	0.1	(0.3)%	$	(84.7)	$	(58.0)	$	(26.7)	46.0%	Adjusted operating loss	$	(24.6)	$	(28.9)	$	4.3	(14.9 %)	$	(77.4)	$	(84.7)	$	7.3	(8.6 %)

~~NM = not meaningful~~

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Corporate operating expenses in the third quarter of ~~2021~~2022 were ~~$29.0~~$42.1 million, ~~a decrease~~an increase of ~~$0.7~~$13.1 million when compared to the third quarter of ~~2020~~2021, primarily due to the impairment of capitalized software intangible assets as well as. an increase in investments in enterprise growth initiatives. This was partially offset by a decrease in variable compensation expense and favorable mark-to-market adjustments for deferred compensation arrangements.

Corporate operating expenses increased 3712 percent in the ~~first~~ nine months ended October 1, 2022 versus 2021 as a result of ~~2021 versus 2020, primarily due to an increase in variable compensation expense as well as an increase in spending on certain enterprise initiatives including ACES.~~the same factors described above.

Cash Flow, Liquidity and Capital Resources

The following table sets forth an analysis of free cash flow for the nine months ended:


(in millions)	(in millions)	October 2, 2021		September 26, 2020		(in millions)	October 1, 2022		October 2, 2021
Net cash provided by operating activities of continuing operations	Net cash provided by operating activities of continuing operations	$	475.1	$	637.4	Net cash provided by operating activities of continuing operations	$	313.8	$	475.1
Net cash (used for) provided by:	Net cash (used for) provided by:					Net cash (used for) provided by:
Plus: Capital expenditures	Plus: Capital expenditures	(180.2)		(120.6)		Plus: Capital expenditures	(299.3)		(180.2)
Plus: Proceeds from the sale of property, plant and equipment	Plus: Proceeds from the sale of property, plant and equipment	5.6		2.0		Plus: Proceeds from the sale of property, plant and equipment	5.7		5.6

Plus: Effect of exchange rate changes	Plus: Effect of exchange rate changes	(3.9)		1.2		Plus: Effect of exchange rate changes	(21.2)		(3.9)

Total free cash flow (A)	Total free cash flow (A)	$	296.6	$	520.0	Total free cash flow (A)	$	(1.0)	$	296.6

(A) We define "Free cash 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 is not intended as an alternative measure of cash flow from operations, as determined in accordance with GAAP in the United States. We use this financial measure both in presenting our results to shareholders and the investment community and in our internal evaluation and management of our businesses. ~~Management believes~~We believe that this financial measure and the information it provides are useful to investors because it permits investors to view our performance using the same tool that ~~management uses~~we use to gauge progress in achieving ~~its~~our goals. ~~Management believes~~We believe that the non-GAAP financial measure "Free cash 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.

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

~~2021~~2022 Cash Flow

Net cash provided by operating activities of continuing operations in the nine months ended October 1, 2022 totaled $313.8 million versus $475.1 millionin the comparable period of 2021. The decrease is primarily due to increases in working capital, partially offset by higher net earnings.

The primary drivers of net cash provided by operating activities of continuing operations in the ~~first~~ nine months ended October 1, 2022 were net earnings, net of ~~2021 totaled $475.1 million versus $637.4 million in the comparable period of 2020. The decrease is primarily due to increased working capital,~~non-cash items, partially offset by ~~higher net earnings during the first nine months of 2021.~~increases in working capital. Working capital is defined as Accounts and notes receivable, Inventories and Prepaid expenses and other, net of Accounts payable and ~~Accrued~~Accrued expenses as presented in the Condensed Consolidated Balance Sheets, excluding the impact of acquisitions and non-cash adjustments. Accounts and notes receivable increased $95.3 million, primarily due to increased sales across all segments. Inventory increased $270.0 million driven by increases to support higher production volumes. Accrued expenses decreased $53.2 million primarily driven by lower accrued variable compensation expense, including the payment of prior year variable compensation which had been accrued as of December 31, 2021.

Net cash used for investing activities of continuing operations was $411.2 million, which included $299.3 million of capital expenditures, $95.7 million of cash paid for acquisitions, net of cash acquired and $60.0 million of purchases of marketable securities, partially offset by $26.3 million of sales or maturities of marketable securities and $16.7 million of cross-currency swap settlements. Our capital spending was focused on investments in capacity expansion, new products, and technologies.

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Net cash provided by financing activities was $223.4 million and primarily related to proceeds of issuances of long-term debt, partially offset by common stock repurchases, 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.

2021 Cash Flow

Net cash provided by operating activities of continuing operations in the nine months ended October 2, 2021 totaled $475.1 million. The primary drivers of net cash provided by operating activities of continuing operations in the nine months ended October 2, 2021 were net earnings, net of non-cash items, partially offset by the impact of increasing working capital, including increasing inventory levels to help ensure manufacturing continuity and rebuild pipeline inventories. Accounts and notes receivable increased $110.6 million primarily

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due to increased sales across all segments. Inventory increased $235.8 million, driven by increases to support higher production volumes. Accounts payable increased $114.6 million primarily due to timing of payments and higher inventory levels across all reportable segments. Accrued expenses increased $22.1 million primarily driven by increased variable compensation.

Net cash used for investing activities of continuing operations was $178.1 million, which primarily included capital expenditures of $180.2 million, acquisitions of businesses of $50.3 million, offset by sales of marketable securities of $55.9 million. Our capital spending was focused on investments in new products and technologies as well as increased ~~production~~ capacity.

Net cash provided by financing activities was $684.4 million and primarily related to net proceeds from issuances of long-term debt in connection with the Navico acquisition, offset by payments of long-term debt including current maturities, common stock repurchases, and cash dividends paid to common shareholders. Refer to Note ~~14 –Debt~~12 – Debt in the Notes to Condensed Consolidated Financial Statements for further details on our debt activity during the quarter.

~~2020 Cash Flow~~

Net cash provided by operating activities of continuing operations in the first nine months of 2020 totaled $637.4 million. The primary drivers of cash provided by operating activities of continuing operations were net earnings net of non-cash expense items and favorable working capital usage. During the first nine months of 2020, Inventory decreased $233.0 million primarily due to the strong increase in net sales in the period and production disruptions earlier in the year. Accounts and notes receivable increased $76.0 million primarily due to the strong increase in net sales towards the end of the period. Accounts payable increased $13.5 million primarily due to production increases, which was partially offset by timing of payments.

Net cash used for investing activities of continuing operations was $116.1 million, which included capital expenditures of $120.6 million. The Company's capital spending was focused on investments in new products and expediting existing capital projects given the available free cash flow during the year.

~~Net cash used for financing activities was $190.9 million, primarily related to~~ ~~payments of long-term debt including current maturities,~~ ~~common stock repurchases and cash dividends paid to common shareholders.~~ ~~Refer to Note 16 - Debt in the Notes to Consolidated Financial Statements in the 2020 Form 10-K for further details on our 2020 debt activity.~~

Liquidity and Capital Resources

We view our highly liquid assets as of October 1, 2022, December 31, 2021 and October 2, 2021 ~~December 31, 2020 and September 26, 2020~~ as:


(in millions)	(in millions)	October 2, 2021		December 31, 2020		September 26, 2020		(in millions)	October 1, 2022		December 31, 2021		October 2, 2021
Cash and cash equivalents	Cash and cash equivalents	$	1,486.4	$	519.6	$	650.4	Cash and cash equivalents	$	457.4	$	354.5	$	1,486.4
Short-term investments in marketable securities	Short-term investments in marketable securities	0.8		56.7		0.8		Short-term investments in marketable securities	34.5		0.8		0.8
Total cash, cash equivalents and marketable securities	Total cash, cash equivalents and marketable securities	$	1,487.2	$	576.3	$	651.2	Total cash, cash equivalents and marketable securities	$	491.9	$	355.3	$	1,487.2

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The following table sets forth an analysis of total liquidity as of October ~~2, 2021,~~1, 2022, December 31, ~~2020~~2021 and ~~September 26, 2020:~~October 2, 2021:


(in millions)	(in millions)	October 2, 2021		December 31, 2020		September 26, 2020		(in millions)	October 1, 2022		December 31, 2021		October 2, 2021
Cash, cash equivalents and marketable securities	Cash, cash equivalents and marketable securities	$	1,487.2	$	576.3	$	651.2	Cash, cash equivalents and marketable securities	$	491.9	$	355.3	$	1,487.2
Amounts available under lending facility (A)	Amounts available under lending facility (A)	497.2		395.0		387.9		Amounts available under lending facility (A)	747.2		497.2		497.2
Total liquidity (B)	Total liquidity (B)	$	1,984.4	$	971.3	$	1,039.1	Total liquidity (B)	$	1,239.1	$	852.5	$	1,984.4

(A) See Note 1412 – Debt in the Notes to Condensed Consolidated Financial Statements for further details on our lending facility.

(B) We 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. We use this financial measure both in presenting our results to shareholders and the investment community and in our internal evaluation and management of our businesses. ~~Management believes~~We believe that this financial measure and the information it provides are useful to investors because it permits investors to view our performance using the same metric that ~~management uses~~we use to gauge progress in achieving our goals. ~~Management believes~~We believe that the non-GAAP financial measure “Total liquidity” is also useful to investors because it is an indication of our available highly liquid assets and immediate sources of financing.

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Cash, cash equivalents and ~~marketable~~marketable securities totaled$491.9 million as of October 1, 2022, an increase of $136.6 million from $355.3 million as of December 31, 2021, and a decrease of $995.3 million from $1,487.2 million as of October 2, ~~2021, an increase of $910.9 million from $576.3 million as of December 31, 2020, and an increase of $836.0 million from $651.2 million as of September 26, 2020.~~2021. Total debt as of October 1, 2022, December 31, 2021 and October 2, 2021 ~~December 31, 2020 and September 26, 2020~~ was ~~$1,830.9~~$2,504.0 million, ~~$951.4~~$1,816.4 million and ~~$1,061.6~~$1,830.9 million, respectively. Our debt-to-capitalization ratio was ~~49.7~~56 percent as of October 1, 2022, an increase from 49 percent as of December 31, 2021 and from 50 percent as of October 2, ~~2021, an increase from 38.7 percent as of December 31, 2020 and from 42.1 percent as of September 26, 2020.~~

2021.

~~We believe that we have adequate sources of liquidity to meet our short-term (for at least the next twelve months) and foreseeable long-term needs.~~

~~There was no borrowing activity~~ We borrowed $125.0 million under the Credit Facility during the ~~first~~ nine months ended October 1, 2022, all of ~~2021,~~which was repaid and thus we did not have any borrowings outstanding under the Credit Facilityas of October ~~2, 2021. Available~~1, 2022. Available borrowing capacity ~~totaled $497.2~~under the Credit Facility totaled $747.2 million, net of ~~$2.8~~$2.8 million of letters of credit ~~outstanding~~outstanding. During the nine months ended October 1, 2022, the maximum amount utilized under the ~~Credit Facility. During the first nine months of 2021, there~~CP Program was ~~no borrowing activity under our unsecured commercial paper program (CP Program), pursuant to which we may issue short-term, unsecured commercial paper notes.~~$300.0 million. Refer to Note 1412 – Debt in the Notes to Condensed Consolidated Financial Statements and Note 16 - Debt in the Notes to Consolidated Financial Statements in the ~~2020~~2021 Form 10-K, for further details.

The level of borrowing capacity under our Credit Facility and CP Program is limited by both a leverage and interest coverage test. These covenants also pertain to termination provisions included in our wholesale financing ~~joint venture~~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.

To finance the acquisition of Navico, we issued the Notes for aggregate net proceeds of $992.9 million. We also tendered our 2023 Debentures and 2027 Notes in the process, resulting in the retirement of $25 million of debt and a loss on early extinguishment of debt of $4.2 million. Refer to ~~Note 14 – Debt~~ ~~and~~ ~~Note 15 – Subsequent Events~~ ~~in the Notes to Condensed Consolidated Financial Statements for further details.~~

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~~2021~~2022 Capital Strategy

~~Our capital strategy assumptions have not materially changed since last quarter. The Notes issued in connection with~~We narrowed the ~~Navico acquisition create slightly higher interest expense~~range for ~~the year. We have also increased the amount of long-term debt obligations we plan to retire to approximately $125 million, in part as a result of the tender offers described above.~~

We plan to continue our systematic approach to share repurchases. With share repurchases of $98.7 million completed during the first nine months of 2021, we anticipate completing approximately $120 million of repurchases in 2021. Additionally, we expectfull year capital expenditures to ~~be in the range of approximately $270~~$375 million to ~~$300~~$400 million ~~intended~~ to support ~~and in some cases accelerate,~~ growth initiatives throughout our organization. ~~This spending~~Our estimate of full year interest expense remains at approximately $95 million. Our decision to accelerate share repurchases to take advantage of current market and sector value dislocation will ~~be directed~~result in an increase in total targeted share repurchases for 2022 to ~~new product investments~~approximately $450 million, lowering our average diluted shares outstanding for the year to approximately 75 million shares. Additionally, we anticipate a higher build in ~~all of~~working capital for the year, primarily related to our businesses ~~cost reduction and automation projects, and select additional capacity-related initiatives~~holding higher levels of inventory to support ~~demand and future growth, primarily in the Propulsion business.~~

production levels.

These actions follow the increase of our dividend to 33.5 cents a share, a 24 percent dividend increase that was approved by the Board of Directors in April 2021, as we continue to balance increases in shareholder return and investment in growth initiatives.

Financing Joint Venture

On March 10, 2021, through our Brunswick Financial Services Corporation subsidiary, we entered into an amended and restated joint venture agreement with Wells Fargo Commercial Distribution Finance to extend the term of our financial services joint venture, Brunswick Acceptance Company, LLC (BAC), through December 31, 2025. The amendment did not otherwise materially change the terms of the agreement. BAC is detailed further in the ~~2020~~2021 Form 10-K.

Off-Balance Sheet Arrangements and Contractual Obligations

Our off-balance sheet arrangements and contractual obligations as of December 31, ~~2020~~2021 are detailed in the ~~2020~~2021 Form 10-K. There have been no material changes in these arrangements and obligations outside the ordinary course of business since December 31, ~~2020.~~2021.

Environmental Regulation

There were no material changes in our environmental regulatory requirements since the filing of our ~~2020~~2021 Form 10-K.

Critical Accounting Policies

There were no ~~further~~ material changes in our critical accounting policies since the filing of our ~~2020~~2021 Form 10-K.

As discussed in the ~~2020~~2021 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 as of the date of the consolidated financial statements, and revenues and expenses during the periods reported. Actual results may differ from those estimates.

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Recent Accounting Pronouncements

Recent accounting pronouncements that have been adopted during the three months ended October ~~2, 2021,~~1, 2022, or will be adopted in future 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-Q are 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," "project," "position," "intend," "target," "plan," "seek," "estimate," "believe," "predict," "outlook," and similar expressions are intended to identify forward-looking statements. Forward-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

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adverse general economic conditions, including the amount of disposable income consumers have available for discretionary spending; fiscal and monetary policy concerns; adverse capital market conditions; changes in currency exchange rates; ~~fiscal policy concerns; adverse economic, credit, and capital market conditions;~~ higher energy and fuel costs; competitive pricing pressures; interest-rate risk related to our debt; the coronavirus (COVID-19) pandemic and the emergence of variant strains; managing our manufacturing footprint; adverse weather conditions, climate change events and other catastrophic event risks; international business risks; our ability to develop new and innovative products and services at a competitive price; our ability to meet demand in a rapidly changing environment; loss of key customers; actual or anticipated increases in costs, disruptions of supply, or defects in raw materials, parts, or components we purchase from third parties, including as a result of pressures due to the pandemic; supplier manufacturing constraints, increased demand for shipping carriers, and transportation disruptions; managing our manufacturing footprint; adverse weather conditions, climate change events and other catastrophic event risks; international business risks, geopolitical tensions or conflicts, sanctions, embargoes, or other regulations; our ability to develop new and innovative products and services at a competitive price; our ability to meet demand in a rapidly changing environment; loss of key customers; absorbing fixed costs in production; risks associated with joint ventures that do not operate solely for our benefit; ~~our ability to successfully implement our strategic plan and growth initiatives;~~ our ability to integrate acquisitions, including Navico, and the risk for associated disruption to our business; the risk that unexpected costs will be incurred in connection with the Navico transaction or the possibility that the expected synergies and value creation from the transaction will not be realized or will not be realized within the expected time period; 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 strategic divestitures will not provide business benefits; maintaining effective distribution; ~~adequate financing access for~~risks related to dealers and ~~customers;~~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 other cybersecurity events regarding our technology systems, which could affect manufacturing and business operations and could result in lost or stolen information and associated remediation costs; our ability to protect our brands and intellectual property; changes to U.S. trade policy and tariffs; any impairment to the value of goodwill and other assets; product liability, warranty, and other claims risks; legal, environmental, and other regulatory compliance, including increased costs, fines, and reputational risks; changes in income tax legislation or enforcement; managing our share repurchases; and risks associated with certain divisive shareholder activist actions.

Additional risk factors are included in the ~~2020~~2021 Form ~~10-K and subsequent Quarterly Reports on Form 10-Q.~~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 Quarterly Report on Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risk from changes in foreign currency exchange rates, interest rates and commodity prices. We enter into various hedging transactions to mitigate these risks in accordance with guidelines established by our management. We do not use financial instruments for trading or speculative purposes. Our risk management objectives are described in Note 65 – Financial Instruments in the Notes to Condensed Consolidated Financial Statements and Note 14 in the Notes to Consolidated Financial Statements in the ~~2020~~2021 Form 10-K.

There have been no significant changes to our market risk since December 31, ~~2020.~~2021. 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 ~~2020~~2021 Form 10-K.

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Item 4. Controls and Procedures

Under the supervision and with the participation of our management, including the Chief Executive Officer and the Chief Financial Officer (our principal executive officer and principal financial officer, respectively), we have evaluated our 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 our disclosure controls and procedures are effective. There were no changes in our internal control over financial reporting during the fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, our 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 2020~~Part I, "Item 1A. Risk Factors" in our 2021 Form ~~10-K and subsequent Quarterly Reports on Form 10-Q, other than as set forth below.~~

~~The inability to successfully integrate new acquisitions, including Navico, could negatively impact financial results.~~

On October 4, 2021, Brunswick acquired Navico, a global leader in marine electronics and sensors. Acquisitions pose risks, such as our ability to project and evaluate market demand; maximize potential synergies and cost savings; make accurate accounting estimates; and achieve anticipated business objectives. The Navico acquisition and other recent or future acquisitions present these and other integration risks, including:

•~~disruptions in core, adjacent, or acquired businesses that could make it more difficult to maintain business and operational relationships, including customer and supplier relationships;~~

•~~the possibility that the expected synergies and value creation will not be realized or will not be realized within the expected time period;~~

•~~the risk that unexpected costs will be incurred;~~

•~~diversion of management attention; and~~

•~~difficulties retaining employees.~~

If we fail to timely and successfully integrate new businesses, including Navico, into existing operations, we may see higher production costs, lost sales, or otherwise diminished earnings and financial results.10-K.

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

On July ~~20, 2021,~~19, 2022, our Board of Directors ~~expanded~~approved a $500 million increase to our share repurchase ~~authorization for an additional amount of $350 million, which was in addition to the prior authorization of $600 million from July 2019. Such repurchase authorizations do not have an expiration date~~.authorization. During the ~~first~~ nine months ~~of 2021,~~ended October 1, 2022, we repurchased ~~approximately $98.7~~$360.0 million of ~~our common~~ stock, and as of October 1, 2022, the remaining authorization was ~~$367.8~~$486.4 million.

We repurchased the following shares of common stock during the three months ended October ~~2, 2021:~~1, 2022:

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 4 to July 31 81,807 $ 97.79 81,807
August 1 to August 28 112,379 101.69 112,379
August 29 to October 2 239,748 97.62 239,748
Total 433,934 $ 98.71 433,934 $ 367,808,363


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 3 to July 30	140,483	$	71.18	140,483
July 31 to August 27	548,687	81.37		548,687
August 28 to October 1	1,178,098	72.45		1,178,098
Total	1,867,268	$	74.98	1,867,268	$	486,441,313

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Item 6. Exhibits






























~~4.1~~			Base Indenture, dated as of October 3, 2018, between the Company and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to Brunswick’s Current Report on Form 8-K filed October 3, 2018), filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 18, 2021 and hereby incorporated by reference
~~4.2~~			Fourth Supplemental Indenture, dated as of August 18, 2021, between the Company and U.S. Bank National Association, as trustee, filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 18, 2021 and hereby incorporated by reference
31.1			Certification of CEO Pursuant to 15 U.S.C. Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2			Certification of CFO Pursuant to 15 U.S.C. Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1			Certification of CEO Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2			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.INS			XBRL Instance Document
101.SCH			XBRL Taxonomy Extension Schema Document
101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF			XBRL Taxonomy Extension Definition Linkbase Document
101.LAB			XBRL Taxonomy Extension Label Linkbase Document
101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document
104			Cover 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, ~~2021~~2022	By:	/s/ RANDALL S. ALTMAN
		Randall S. Altman
		Senior Vice President and Controller*

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

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	2021		2020
Risk-free interest rate	0.2	%	1.4	%
Dividend yield	1.2	%	1.5	%
Volatility factor	65.6	%	46.6	%
Expected life of award	2.9 years		2.9 years