10-Q 1 bcorp-20220402.htm 10-Q bcorp-20220402
000001493012/3175,729,9172022Q1FALSE11.29.79.8200,000,000200,000,000200,000,000200,000,000200,000,0000.750.750.750.750.75102,538,000102,538,000102,538,000102,538,000102,538,00076,338,00076,933,00077,941,00026,200,00025,605,00024,597,00011Discontinued 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 2021 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 April 2, 2022, retained assets and liabilities were $4.0 million and $2.2 million, respectively. As of April 3, 2021, retained assets and liabilities were $4.1 million and $2.2 million, respectively.
26.445.14.02.24.12.2Restructuring, Exit and Impairment Activities
The Company recorded restructuring, exit and impairment charges in the Condensed Consolidated Statements of Comprehensive Income in 2022 and 2021.

The following table is a summary of those expenses for the three months ended April 2, 2022 and April 3, 2021:
April 2, 2022April 3, 2021
(in millions)BoatParts & AccessoriesBoatCorporateTotal
Restructuring and exit activities:
Employee termination and other benefits$— $0.5 $— $— $0.5 
Other$— $— $— $— $ 
Total restructuring, exit and impairment charges$— $0.5 $— $— $0.5 
Total cash payments for restructuring, exit and impairment charges (A)
$0.1 $0.3 $0.2 $1.6 $2.1 
Accrued charges at end of the period (B)
$0.1 $0.5 $1.0 $0.1 $1.6 

(A) Cash payments for the three months ended April 2, 2022 and April 3, 2021 may include payments related to prior period charges.
(B) Restructuring, exit and impairment charges accrued as of April 2, 2022 are expected to be paid primarily during 2022.
The following table is a summary of those expenses for the three months ended April 2, 2022 and April 3, 2021:
April 2, 2022April 3, 2021
(in millions)BoatParts & AccessoriesBoatCorporateTotal
Restructuring and exit activities:
Employee termination and other benefits$— $0.5 $— $— $0.5 
Other$— $— $— $— $ 
Total restructuring, exit and impairment charges$— $0.5 $— $— $0.5 
Total cash payments for restructuring, exit and impairment charges (A)
$0.1 $0.3 $0.2 $1.6 $2.1 
Accrued charges at end of the period (B)
$0.1 $0.5 $1.0 $0.1 $1.6 

(A) Cash payments for the three months ended April 2, 2022 and April 3, 2021 may include payments related to prior period charges.
(B) Restructuring, exit and impairment charges accrued as of April 2, 2022 are expected to be paid primarily during 2022.
0.50.50.50.50.10.30.21.62.10.10.51.00.11.6(A) Cash payments for the three months ended April 2, 2022 and April 3, 2021 may include payments related to prior period charges.(B) Restructuring, exit and impairment charges accrued as of April 2, 2022 are expected to be paid primarily during 2022.1515100P1Y7M6DP2Y10M24DP2Y10M24DP1Y6M0D76.978.277.478.8P13Y3M18DP11Y8M12DPostretirement Benefits
The Company has defined contribution plans, nonqualified defined benefit pension plans, and other postretirement benefit plans covering substantially all of its employees. The Company's contributions to its defined contribution plans include matching and annual discretionary contributions which are based on various percentages of compensation, and in some instances are based on the amount of the employees' contributions to the plans. See Note 17 in the Notes to Consolidated Financial Statements in the 2021 Form 10-K for further details regarding these plans.

Pension and other postretirement benefit costs included the following components for the three months ended April 2, 2022 and April 3, 2021:
Pension BenefitsOther Postretirement Benefits
(in millions)April 2,
2022
April 3,
2021
April 2,
2022
April 3,
2021
Pension and other postretirement benefit costs included the following components for the three months ended April 2, 2022 and April 3, 2021:
Pension BenefitsOther Postretirement Benefits
(in millions)April 2,
2022
April 3,
2021
April 2,
2022
April 3,
2021
4/2/20524/2/2032
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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 April 02, 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
____________
 bcorp-20220402_g1.jpg
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 accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
Accelerated Filer
Non-accelerated FilerSmaller 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 ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Common stock, par value $0.75 per share
BC
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 May 6, 2022 was 75,729,917.



BRUNSWICK CORPORATION
INDEX TO QUARTERLY REPORT ON FORM 10-Q
April 2, 2022
 
 
TABLE OF CONTENTS



PART I - FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

BRUNSWICK CORPORATION
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)

 Three Months Ended
(in millions, except per share data)April 2,
2022
April 3,
2021
Net sales$1,695.7 $1,433.2 
Cost of sales1,212.1 1,015.9 
Selling, general and administrative expense192.7 150.8 
Research and development expense51.4 34.1 
Restructuring, exit and impairment charges 0.5 
Operating earnings239.5 231.9 
Equity earnings0.8 0.8 
Other expense, net(1.5)(1.3)
Earnings before interest and income taxes238.8 231.4 
Interest expense(18.4)(14.8)
Interest income0.1 0.2 
Loss on early extinguishment of debt(0.1) 
Earnings before income taxes220.4 216.8 
Income tax provision46.4 47.4 
Net earnings from continuing operations174.0 169.4 
Net earnings (loss) from discontinued operations, net of tax0.2 (0.1)
Net earnings$174.2 $169.3 
Earnings per common share:
Basic
Earnings from continuing operations$2.26 $2.17 
Earnings (loss) from discontinued operations0.00 (0.00)
Net earnings$2.26 $2.17 
Diluted
Earnings from continuing operations$2.25 $2.15 
Earnings (loss) from discontinued operations0.00 (0.00)
Net earnings$2.25 $2.15 
Weighted average shares used for computation of:
Basic earnings per common share76.9 78.2 
Diluted earnings per common share77.4 78.8 
Comprehensive income$184.1 $174.9 
The Notes to Condensed Consolidated Financial Statements are an integral part of these condensed consolidated statements.

3

BRUNSWICK CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
(in millions)April 2,
2022
December 31,
2021
April 3,
2021
Assets
Current assets  
Cash and cash equivalents, at cost, which approximates fair value$680.1 $354.5 $471.9 
Restricted cash12.2 12.2 9.7 
Short-term investments in marketable securities6.8 0.8 7.3 
Total cash and short-term investments in marketable securities699.1 367.5 488.9 
Accounts and notes receivable, less allowances of $11.2, $9.7, $9.8
664.7 485.3 539.1 
Inventories
Finished goods752.4 685.5 463.7 
Work-in-process195.4 176.8 125.4 
Raw materials397.9 345.7 176.5 
Net inventories1,345.7 1,208.0 765.6 
Prepaid expenses and other81.7 63.8 42.1 
Current assets2,791.2 2,124.6 1,835.7 
Property   
Land34.5 34.7 17.6 
Buildings and improvements497.5 479.3 440.3 
Equipment1,351.8 1,332.4 1,198.2 
Total land, buildings and improvements and equipment1,883.8 1,846.4 1,656.1 
Accumulated depreciation(1,002.3)(989.6)(944.9)
Net land, buildings and improvements and equipment881.5 856.8 711.2 
Unamortized product tooling costs196.6 190.1 161.2 
Net property1,078.1 1,046.9 872.4 
Other assets   
Goodwill889.4 888.4 422.7 
Other intangibles, net1,038.4 1,052.1 544.3 
Deferred income tax asset137.9 146.0 126.4 
Operating lease assets92.4 92.8 80.7 
Equity investments48.1 43.8 36.3 
Other long-term assets17.5 30.4 24.7 
Other assets2,223.7 2,253.5 1,235.1 
Total assets$6,093.0 $5,425.0 $3,943.2 
The Notes to Condensed Consolidated Financial Statements are an integral part of these condensed consolidated statements.
4

(in millions)April 2,
2022
December 31,
2021
April 3,
2021
Liabilities and shareholders' equity  
Current liabilities  
Short-term debt and current maturities of long-term debt$2.3 $37.4 $43.8 
Accounts payable660.0 693.5 532.4 
Accrued expenses665.9 711.3 552.8 
Current liabilities1,328.2 1,442.2 1,129.0 
Long-term liabilities   
Debt2,498.2 1,779.0 900.9 
Postretirement benefits65.5 66.5 72.3 
Operating lease liabilities72.2 75.5 64.9 
Other149.0 147.6 133.5 
Long-term liabilities2,784.9 2,068.6 1,171.6 
Shareholders' equity   
Common stock; authorized: 200,000,000 shares, $0.75 par value; issued: 102,538,000 shares; outstanding: 76,338,000, 76,933,000 and 77,941,000 shares
76.9 76.9 76.9 
Additional paid-in capital374.5 394.5 371.2 
Retained earnings2,866.3 2,720.1 2,374.0 
Treasury stock, at cost: 26,200,000, 25,605,000 and 24,597,000 shares
(1,316.2)(1,245.8)(1,142.4)
Accumulated other comprehensive loss(21.6)(31.5)(37.1)
Shareholders' equity1,979.9 1,914.2 1,642.6 
Total liabilities and shareholders' equity$6,093.0 $5,425.0 $3,943.2 
The Notes to Condensed Consolidated Financial Statements are an integral part of these condensed consolidated statements.
5

BRUNSWICK CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 Three Months Ended
(in millions)April 2,
2022
April 3,
2021
Cash flows from operating activities  
Net earnings$174.2 $169.3 
Less: net earnings (loss) from discontinued operations, net of tax0.2 (0.1)
Net earnings from continuing operations, net of tax174.0 169.4 
Stock compensation expense4.4 6.1 
Depreciation and amortization53.6 41.6 
Pension funding, net of expense(0.2)(0.8)
Deferred income taxes4.5 7.9 
Changes in certain current assets and current liabilities(394.5)(236.2)
Long-term extended warranty contracts and other deferred revenue2.4 2.4 
Income taxes16.2 29.6 
Other, net(1.3)(2.7)
Net cash (used for) provided by operating activities of continuing operations(140.9)17.3 
Net cash used for operating activities of discontinued operations(1.0)(9.0)
Net cash (used for) provided by operating activities(141.9)8.3 
Cash flows from investing activities  
Capital expenditures(100.9)(42.9)
Purchases of marketable securities(6.0) 
Sales or maturities of marketable securities 49.4 
Investments(4.2)(3.9)
Acquisition of businesses, net of cash acquired (5.3)
Proceeds from the sale of property, plant and equipment2.2 4.2 
Cross currency swap settlement16.7  
Net cash (used for) provided by investing activities(92.2)1.5 
Cash flows from financing activities  
Proceeds from issuances of short-term debt125.0  
Payments of short-term debt(125.0) 
Net proceeds from issuances of long-term debt741.8 1.9 
Payments of long-term debt including current maturities(57.1)(9.2)
Common stock repurchases(79.8)(15.9)
Cash dividends paid(28.0)(21.0)
Proceeds from share-based compensation activity 0.5 
Tax withholding associated with shares issued for share-based compensation(15.8)(12.7)
Other, net(2.0)(0.1)
Net cash provided by (used for) financing activities559.1 (56.5)
Effect of exchange rate changes0.6 (2.0)
Net increase (decrease) in Cash and cash equivalents and Restricted cash325.6 (48.7)
Cash and cash equivalents and Restricted cash at beginning of period366.7 530.3 
Cash and cash equivalents and Restricted cash at end of period692.3 481.6 
Less: Restricted cash12.2 9.7 
Cash and cash equivalents at end of period$680.1 $471.9 
The Notes to Condensed Consolidated Financial Statements are an integral part of these condensed consolidated statements.

6

Brunswick Corporation
Condensed Consolidated Statements of Shareholders' Equity
(Unaudited)
(in millions, except per share data)Common StockAdditional Paid-in CapitalRetained EarningsTreasury StockAccumulated Other Comprehensive Income (Loss)Total
Balance at December 31, 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 

(in millions, except per share data)Common StockAdditional Paid-in CapitalRetained EarningsTreasury StockAccumulated 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 

The Notes to Condensed Consolidated Financial Statements are an integral part of these condensed consolidated statements.
7

BRUNSWICK CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
 
Note 1 – Significant Accounting Policies

Interim Financial Statements. Brunswick's unaudited interim condensed consolidated financial statements have been prepared pursuant to Securities and Exchange Commission ("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") 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 2021 Annual Report on Form 10-K for the year ended December 31, 2021 (the 2021 Form 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 first quarter of fiscal year 2022 ended on April 2, 2022 and the first quarter of fiscal year 2021 ended on April 3, 2021.

Recently Issued Accounting Standards

Fair Value Hedge Accounting: In March 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2022-01, Fair Value Hedging — Portfolio Layer Method, which clarifies the guidance in Accounting Standards Codification ("ASC") 815 on fair value hedge accounting of interest-rate risk for portfolios of financial assets. The ASU 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.
8

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
April 2, 2022
(in millions)PropulsionParts & AccessoriesBoatTotal
Geographic Markets
United States$452.7 $407.5 $368.4 $1,228.6 
Europe113.4 108.0 45.6 267.0 
Asia-Pacific63.3 52.9 9.1 125.3 
Canada33.2 30.5 62.2 125.9 
Rest-of-World43.3 18.9 7.5 69.7 
Segment Eliminations(109.2)(11.6) (120.8)
Total$596.7 $606.2 $492.8 $1,695.7 
Three Months Ended
April 3, 2021
PropulsionParts & AccessoriesBoatTotal
Geographic Markets
United States$421.3 $312.3 $312.6 $1,046.2 
Europe109.0 63.5 41.6 214.1 
Asia-Pacific65.7 42.5 6.7 114.9 
Canada25.2 25.4 48.4 99.0 
Rest-of-World36.6 15.9 10.2 62.7 
Segment Eliminations(94.9)(8.8) (103.7)
Total$562.9 $450.8 $419.5 $1,433.2 
9

Notes to Condensed Consolidated Financial Statements
(unaudited)
    
Three Months Ended
April 2, 2022
(in millions)PropulsionParts & AccessoriesBoatTotal
Major Product Lines
Outboard Engines$546.1 $ $ $546.1 
Controls, Rigging, and Propellers98.5   98.5 
Sterndrive Engines61.3   61.3 
Distribution Parts & Accessories 203.5  203.5 
Engine Parts & Accessories 125.6  125.6 
Advanced Systems Group 151.9  151.9 
Navico 136.8  136.8 
Aluminum Freshwater Boats  220.6 220.6 
Recreational Fiberglass Boats  164.4 164.4 
Saltwater Fishing Boats