UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



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

For the quarterly period ended ~~June~~March 30, ~~2018~~2019



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

For the transition period from to

Commission file number 001-01043

____________

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, Illinois 60045-3420

(Address of principal executive offices, including 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 x No o

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer	x	Accelerated filer	o

Non-accelerated filer	o ~~(Do not check if a smaller reporting company)~~	Smaller reporting company	o

Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

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

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



Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common stock, par value $0.75 per share 6.500% Senior Notes due 2048 6.625% Senior Notes due 2049 6.375% Senior Notes due 2049	BC BC-A BC-B BC-C	New York Stock Exchange

The number of shares of Common Stock ($0.75 par value) of the registrant outstanding as of ~~July 30, 2018~~April 29, 2019 was ~~86,722,762.~~

87,076,644.

BRUNSWICK CORPORATION

INDEX TO QUARTERLY REPORT ON FORM 10-Q

~~June~~March 30, ~~2018~~2019

TABLE OF CONTENTS



PART I – FINANCIAL INFORMATION		Page

Item 1.	Condensed Consolidated Financial Statements (unaudited)

	Condensed Consolidated Statements of Comprehensive Income for the three months ended March 30, 2019 and ~~six months ended June 30,~~March 31, 2018 ~~and July 1, 2017~~	3

	Condensed Consolidated Balance Sheets as of ~~June~~March 30, ~~2018,~~2019, December 31, ~~2017~~2018 and ~~July 1, 2017~~March 31, 2018	4

	Condensed Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~June~~March 30, ~~2018~~2019 and ~~July 1, 2017~~March 31, 2018	6

	Condensed Consolidated Statements of Shareholders' Equity for the three months ended March 30, 2019 and March 31, 2018	7

	Notes to Condensed Consolidated Financial Statements	78

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2825

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4036

Item 4.	Controls and Procedures	4137


PART II – OTHER INFORMATION

Item 1A.	Risk Factors	4238

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4238

Item 6.	Exhibits	4439

PART I - FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

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

	Three Months Ended						Six Months Ended						Three Months Ended
(in millions, except per share data)	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017			March 30, 2019			March 31, 2018
Net sales	$	1,400.9		$	1,352.0		$	2,612.3		$	2,512.3		$	1,275.9		$	1,211.4
Cost of sales	1,051.2			982.1			1,952.6			1,841.2			938.4			901.4
Selling, general and administrative expense	168.8			156.6			332.3			314.6			189.6			163.5
Research and development expense	39.4			36.5			77.0			73.1			35.0			37.6
Restructuring, exit, integration and impairment charges	34.8			5.7			38.6			20.9			141.5			3.8
Operating earnings	106.7			171.1			211.8			262.5
Operating earnings (loss)													(28.6		)	105.1
Equity earnings	1.4			1.4			2.4			3.7			1.9			1.0
Other income (expense), net	(2.5		)	0.3			(2.5		)	(0.4		)
Earnings before interest and income taxes	105.6			172.8			211.7			265.8
Other expense, net													(1.6		)	(0.0		)
Earnings (loss) before interest and income taxes													(28.3		)	106.1
Interest expense	(8.2		)	(6.7		)	(14.9		)	(13.3		)	(19.8		)	(6.7		)
Interest income	0.6			0.4			1.3			0.9			0.4			0.7
Earnings before income taxes	98.0			166.5			198.1			253.4
Income tax provision	19.0			47.1			46.2			69.1
Net earnings	$	79.0		$	119.4		$	151.9		$	184.3
Earnings (loss) before income taxes													(47.7		)	100.1
Income tax provision (benefit)													(11.4		)	27.2
Net earnings (loss)													$	(36.3	)	$	72.9

Earnings per common share:
Earnings (loss) per common share:
Basic	$	0.90		$	1.33		$	1.73		$	2.05		$	(0.42	)	$	0.83
Diluted	$	0.90		$	1.32		$	1.72		$	2.03		$	(0.42	)	$	0.82

Weighted average shares used for computation of:
Basic earnings per common share	87.6			89.8			87.8			90.0
Diluted earnings per common share	88.2			90.6			88.5			90.8
Basic earnings (loss) per common share													87.5			88.1
Diluted earnings (loss) per common share													87.5			88.8

Comprehensive income	$	68.6		$	123.1		$	152.5		$	195.2

Cash dividends declared per common share	$	0.19		$	0.165		$	0.38		$	0.33
Comprehensive income (loss)													$	(35.3	)	$	83.9

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

BRUNSWICK CORPORATION Condensed Consolidated Balance Sheets (unaudited)	BRUNSWICK CORPORATION Condensed Consolidated Balance Sheets (unaudited)									BRUNSWICK CORPORATION Condensed Consolidated Balance Sheets (unaudited)

(in millions)	June 30, 2018			December 31, 2017			July 1, 2017			March 30, 2019			December 31, 2018			March 31, 2018
Assets
Current assets
Cash and cash equivalents, at cost, which approximates fair value	$	435.9		$	448.8		$	437.2		$	161.5		$	294.4		$	284.0
Restricted cash	9.4			9.4			10.7			9.1			9.0			9.4
Short-term investments in marketable securities	0.8			0.8			0.8			0.8			0.8			0.8
Total cash and short-term investments in marketable securities	446.1			459.0			448.7			171.4			304.2			294.2
Accounts and notes receivable, less allowances of $10.0, $9.2 and $10.2	578.1			485.3			524.6
Accounts and notes receivable, less allowances of $10.0, $11.3 and $9.4										683.7			550.7			623.6
Inventories
Finished goods	508.6			521.3			489.4			650.2			614.2			562.0
Work-in-process	111.8			119.3			106.3			112.1			106.1			133.1
Raw materials	194.9			187.1			173.6			228.8			223.4			208.0
Net inventories	815.3			827.7			769.3			991.1			943.7			903.1
Prepaid expenses and other	47.1			74.7			35.2			91.6			81.6			41.8
Current assets	1,886.6			1,846.7			1,777.8			1,937.8			1,880.2			1,862.7

Property
Land	25.2			25.1			26.9			24.0			24.0			25.2
Buildings and improvements	435.9			412.8			398.6			477.6			469.7			420.1
Equipment	1,050.9			1,027.7			1,001.4			1,145.5			1,128.9			1,038.6
Total land, buildings and improvements and equipment	1,512.0			1,465.6			1,426.9			1,647.1			1,622.6			1,483.9
Accumulated depreciation	(934.0		)	(895.8		)	(885.4		)	(967.7		)	(952.4		)	(910.6		)
Net land, buildings and improvements and equipment	578.0			569.8			541.5			679.4			670.2			573.3
Unamortized product tooling costs	138.1			136.2			140.7			131.8			135.1			149.4
Net property	716.1			706.0			682.2			811.2			805.3			722.7

Other assets
Goodwill	424.0			425.3			417.6			634.1			767.1			428.3
Other intangibles, net	144.1			149.1			161.7			636.7			646.4			148.0
Operating lease assets										99.2			—			—
Deferred income tax asset										109.4			96.1			171.0
Equity investments	30.0			25.1			22.5			38.5			34.6			29.5
Deferred income tax asset	169.5			165.6			272.8
Other long-term assets	50.7			40.4			49.1			62.9			56.0			42.4
Other assets	818.3			805.5			923.7			1,580.8			1,600.2			819.2

Total assets	$	3,421.0		$	3,358.2		$	3,383.7		$	4,329.8		$	4,285.7		$	3,404.6

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

BRUNSWICK CORPORATION Condensed Consolidated Balance Sheets (unaudited)	BRUNSWICK CORPORATION Condensed Consolidated Balance Sheets (unaudited)									BRUNSWICK CORPORATION Condensed Consolidated Balance Sheets (unaudited)

(in millions)	June 30, 2018			December 31, 2017			July 1, 2017			March 30, 2019			December 31, 2018			March 31, 2018
Liabilities and shareholders’ equity
Current liabilities
Current maturities of long-term debt	$	4.7		$	5.6		$	5.8
Short-term debt and current maturities of long-term debt										$	40.9		$	41.3		$	5.1
Accounts payable	426.4			420.5			393.8			473.3			527.8			431.0
Accrued expenses	679.7			609.0			586.2			691.5			687.4			640.3
Current liabilities	1,110.8			1,035.1			985.8			1,205.7			1,256.5			1,076.4

Long-term liabilities
Debt	429.0			431.8			438.2			1,245.6			1,179.5			428.9
Operating lease liabilities										83.8			—			—
Postretirement benefits	180.6			220.8			233.7			70.0			71.6			218.9
Other	199.6			187.6			178.2			197.8			195.5			199.6
Long-term liabilities	809.2			840.2			850.1			1,597.2			1,446.6			847.4

Shareholders’ equity
Common stock; authorized: 200,000,000 shares, $0.75 par value; issued: 102,538,000 shares; outstanding: 86,792,000, 87,537,000 and 88,776,000 shares	76.9			76.9			76.9
Common stock; authorized: 200,000,000 shares, $0.75 par value; issued: 102,538,000 shares; outstanding: 87,063,000, 86,757,000 and 87,277,000 shares										76.9			76.9			76.9
Additional paid-in capital	361.8			374.4			365.9			359.9			371.1			357.4
Retained earnings	2,056.9			1,966.8			2,035.9			2,081.1			2,135.7			1,994.4
Treasury stock, at cost: 15,746,000, 15,001,000 and 13,762,000 shares	(635.4		)	(575.4		)	(507.2		)
Accumulated other comprehensive loss, net of tax	(359.2		)	(359.8		)	(423.7		)
Treasury stock, at cost: 15,475,000, 15,781,000 and 15,261,000 shares										(628.9		)	(638.0		)	(599.1		)
Accumulated other comprehensive loss										(362.1		)	(363.1		)	(348.8		)
Shareholders’ equity	1,501.0			1,482.9			1,547.8			1,526.9			1,582.6			1,480.8

Total liabilities and shareholders’ equity	$	3,421.0		$	3,358.2		$	3,383.7		$	4,329.8		$	4,285.7		$	3,404.6

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

BRUNSWICK CORPORATION Condensed Consolidated Statements of Cash Flows (unaudited)	BRUNSWICK CORPORATION Condensed Consolidated Statements of Cash Flows (unaudited)						BRUNSWICK CORPORATION Condensed Consolidated Statements of Cash Flows (unaudited)

	Six Months Ended						Three Months Ended
(in millions)	June 30, 2018			July 1, 2017			March 30, 2019			March 31, 2018
Cash flows from operating activities
Net earnings	$	151.9		$	184.3
Net earnings (loss)							$	(36.3	)	$	72.9
Depreciation and amortization							39.8			27.8
Stock compensation expense	7.2			8.7			3.3			1.9
Depreciation and amortization	62.6			55.2
Pension (funding), net of expense	(33.3		)	(37.5		)
Pension expense, net of funding							0.3			0.9
Asset impairment charges	25.3			7.2			138.7			—
Deferred income taxes	12.9			35.0			(3.4		)	20.0
Changes in certain current assets and current liabilities	(65.8		)	(88.8		)	(211.2		)	(224.2		)
Long-term extended warranty contracts and other deferred revenue	8.2			8.8			1.2			2.6
Fitness business separation costs	4.2			—			7.8			—
Cash paid for Fitness business separation costs	(1.8		)	—			(1.5		)	—
Income taxes	35.8			10.8			(16.2		)	32.5
Other, net	(6.3		)	(11.9		)	(1.9		)	(1.5		)
Net cash provided by operating activities of continuing operations	200.9			171.8
Net cash used for operating activities of discontinued operations	—			(0.3		)
Net cash provided by operating activities	200.9			171.5
Net cash used for operating activities							(79.4		)	(67.1		)

Cash flows from investing activities
Capital expenditures	(90.3		)	(107.9		)	(88.1		)	(37.1		)
Sales or maturities of marketable securities	—			35.0
Investments	(5.8		)	2.0			(3.8		)	(4.8		)
Proceeds from the sale of property, plant and equipment	0.2			7.8			—			0.1
Other, net	(0.2		)	(0.5		)	—			(0.2		)
Net cash used for investing activities	(96.1		)	(63.6		)	(91.9		)	(42.0		)

Cash flows from financing activities
Proceeds from issuances of short-term debt							215.0			—
Payments of short-term debt							(215.0		)	—
Net proceeds from issuances of long-term debt							222.0			—
Payments of long-term debt including current maturities	(0.3		)	(0.3		)	(159.0		)	(0.1		)
Common stock repurchases	(70.0		)	(60.0		)	—			(35.0		)
Cash dividends paid	(33.1		)	(29.4		)	(18.3		)	(16.6		)
Proceeds from share-based compensation activity	1.2			5.8			0.5			1.0
Tax withholding associated with shares issued for share-based compensation	(12.0		)	(14.2		)	(6.8		)	(9.3		)
Net cash used for financing activities	(114.2		)	(98.1		)
Other, net							(0.2		)	—
Net cash provided by (used for) financing activities							38.2			(60.0		)

Effect of exchange rate changes	(3.5		)	4.5			0.3			4.3
Net (decrease) increase in Cash and cash equivalents and Restricted cash	(12.9		)	14.3
Net decrease in Cash and cash equivalents and Restricted cash							(132.8		)	(164.8		)
Cash and cash equivalents and Restricted cash at beginning of period	458.2			433.6			303.4			458.2

Cash and cash equivalents and Restricted cash at end of period	445.3			447.9			170.6			293.4
Less: Restricted cash	9.4			10.7			9.1			9.4
Cash and cash equivalents at end of period	$	435.9		$	437.2		$	161.5		$	284.0

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

Brunswick Corporation Condensed Consolidated Statements of Shareholders' Equity (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, 2018	$	76.9	$	371.1		$	2,135.7		$	(638.0	)	$	(363.1	)	$	1,582.6
Net loss	—		—			(36.3		)	—			—			(36.3		)
Other comprehensive income	—		—			—			—			1.0			1.0
Dividends ($0.21 per common share)	—		—			(18.3		)	—			—			(18.3		)
Compensation plans and other	—		(11.2		)	—			9.1			—			(2.1		)
Balance at March 30, 2019	$	76.9	$	359.9		$	2,081.1		$	(628.9	)	$	(362.1	)	$	1,526.9



(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, 2017	$	76.9	$	374.4		$	1,966.8		$	(575.4	)	$	(359.8	)	$	1,482.9
Net earnings	—		—			72.9			—			—			72.9
Other comprehensive income	—		—			—			—			11.0			11.0
Dividends ($0.19 per common share)	—		—			(16.6		)	—			—			(16.6		)
Compensation plans and other	—		(17.0		)	—			11.3			—			(5.7		)
Common stock repurchases	—		—			—			(35.0		)	—			(35.0		)
ASU No. 2014-09 adoption	—		—			(28.7		)	—			—			(28.7		)
Balance at March 31, 2018	$	76.9	$	357.4		$	1,994.4		$	(599.1	)	$	(348.8	)	$	1,480.8

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

BRUNSWICK CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

Note 1 – Significant Accounting Policies

Interim Financial Statements. The unaudited interim condensed consolidated financial statements of Brunswick Corporation (Brunswick or the Company) 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. ~~Certain previously reported amounts have been reclassified to conform to the current period presentation.~~

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 ~~2017~~2018 Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018 (the ~~2017~~2018 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 ~~second~~first quarter of fiscal year 2019 ended on March 30, 2019 and the first quarter of fiscal year 2018 ended on ~~June 30, 2018 and the second quarter of fiscal year 2017 ended on July 1, 2017.~~

As a result of the Company's June 25, 2018 announcement ending the sale process for its Sea Ray business, starting in the second quarter of 2018, the results of the Sea Ray business are reported in continuing operations. Refer to the Form 8-K dated July 19, 2018 and ~~Note 3 –~~ ~~Discontinued Operations~~ ~~in the Notes to Condensed Consolidated Financial Statements for further information.~~March 31, 2018.

On March 1, 2018, the ~~Company announced that its~~Company's Board of Directors authorized proceeding with separating its Fitness business from the Company portfolio. While the Company continues to maintain its preparedness for a spin-off of ~~its Fitness business. Following the proposed transaction,~~ the Fitness business, ~~will be an independent, standalone, publicly-traded company, which will be formally named at~~there has been a ~~later date. The proposed transaction is anticipated to be tax-free to Brunswick shareholders and is expected to be completed~~strong level of buyer interest in the ~~first~~sales process. Should the separation take the form of a sale, the Company anticipates a sale would be announced in the second quarter of 2019.

Recently Adopted Accounting Standards

~~Presentation~~Recognition of ~~Benefit Costs~~Leases: In ~~March 2017,~~February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) ~~2017-07,~~2016-02, ~~Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~Leases, (new leasing standard), which amended the Accounting Standards Codification (ASC) ~~related~~ to require lessees to recognize assets and liabilities on the ~~income statement presentation of~~balance sheet for all leases with terms greater than twelve months. On January 1, 2019, the components of net periodic benefit cost for an entity’s sponsored defined benefit pension and other postretirement plans. The amendment requires entities to present the current-service-cost component with other current compensation costs in the income statement within income from operations and present the other components outside of income from operations. The Company adopted ~~this amendment retrospectively during~~ the ~~first quarter of 2018. As a result, $1.0 million~~new leasing standard and $1.5 million were reclassified from Cost of sales and Selling, general and administrative expense, respectively, to Other income (expense), net for the three months ended July 1, 2017. The Company reclassified $2.1 million and $2.8 million from Cost of sales and Selling, general and administrative expense, respectively, to Other income (expense), net for the six months ended July 1, 2017.all related amendments. The Company elected ~~to apply~~the optional transition method provided by the FASB in ASU 2018-11, Leases (Topic 842): Targeted Improvements, and as a result, has not restated its condensed consolidated financial statements for prior periods presented. The Company has elected the practical ~~expedient~~expedients upon transition to retain the lease classification and initial direct costs for any leases that ~~permits the use of previously disclosed service cost and other costs from the~~existed prior ~~year postretirement benefits footnote in the comparative periods as appropriate estimates when retrospectively changing the presentation of these costs.~~to adoption. The Company has also not reassessed whether any contracts entered into prior to adoption are leases.

~~Statement of Cash Flows Classifications: In August 2016, the FASB issued ASU 2016-15,~~ ~~Classification of Certain Cash Receipts and Cash Payments, which amended the~~ ~~ASC~~ ~~to add and/or clarify guidance on the classification of certain transactions in the statement of cash flows.~~ The amendment is to be applied retrospectively and is effective for fiscal years, and the interim periods within those years, beginning after December 15, 2017, with early adoption permitted. The Company adopted this amendment during the first quarter of 2018. The adoption of this standard did not have a material impact on the Company's ~~consolidated financial statements.~~

~~Revenue Recognition: In May 2014, the FASB issued ASU 2014-09,~~ ~~Revenue from Contracts with Customers~~, (new revenue standard), which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. On January 1, 2018, the Company adopted the new revenue standard and all related amendments for all contracts using

~~Table of Contents~~

~~BRUNSWICK CORPORATION~~

~~Notes to~~ Condensed Consolidated ~~Financial~~ Statements

~~(unaudited)~~

~~the modified retrospective method. The Company did not elect to separately evaluate contract modifications occurring before the adoption date. The Company recognized the cumulative effect~~ of initially applying the new revenue standard as an adjustment to the January 1, 2018 balance of retained earnings. Prior period information has not been restated and continues to be reported under the accounting standards in effect for those periods.

The Company recognizes revenue in accordance with the terms of sale, primarily upon shipment to customers. Under the new revenue standard, estimated costs associated with retail sales promotions anticipated to be offered to customers within the Company's Boat segment are recognized at the time of sale, whereas under previous guidance, these promotions were recorded at the later of when the program was communicated to the customer or the time of sale. In addition, certain Fitness segment customer contracts offer incentives in the form of rebates settled with free product. These rebates are deemed to be separate performance obligations under the new revenue standard, and the revenue associated with the product rebates is deferred and recognized upon customer redemption. Under previous guidance, these product rebates were recorded in Cost of sales at the time of product sale. These impacts result in a change in the timing of when certain promotions and rebates are recorded, however, the total amount of cumulative revenue recognized over the life of the contract remains unchanged.

Comprehensive Income. The cumulative effect of the changes made to the Company's ~~Condensed~~ Consolidated Balance ~~Sheets~~Sheet as of January 1, ~~2018~~2019 for the adoption of the new ~~revenue~~leasing standard was as follows:

(in millions) Balance as of December 31, 2017 Adjustments Due to ASC 606 Balance as of January 1, 2018
Assets
Accounts and notes receivable $ 485.3
$ 1.2
$ 486.5
Deferred income tax asset 165.6
9.3
174.9

Liabilities
Accrued expenses 609.0
39.1
648.1

Shareholders' equity
Retained earnings 1,966.8
(28.6 ) 1,938.2

The impact to the Company's Condensed Consolidated Statements of Comprehensive Income and Condensed Consolidated Balance Sheets as of and for the three and six months ended June 30, 2018 as a result of applying the new revenue standard was as follows:

Three Months Ended June 30, 2018
(in millions) As Reported Effect of Change Balances without adoption of ASC 606
Net sales $ 1,400.9
$ 9.7
$ 1,410.6
Cost of sales 1,051.2
(0.9 ) 1,050.3

Earnings before income taxes 98.0
10.6
108.6
Income tax provision 19.0
2.0
21.0
Net earnings $ 79.0
$ 8.6
$ 87.6

~~Table of Contents~~

~~BRUNSWICK CORPORATION~~

Notes to Condensed Consolidated Financial Statements

(unaudited)

Six Months Ended June 30, 2018
(in millions) As Reported Effect of Change Balances without adoption of ASC 606
Net sales $ 2,612.3
$ 4.9
$ 2,617.2
Cost of sales 1,952.6
(0.1 ) 1,952.5

Earnings before income taxes 198.1
5.0
203.1
Income tax provision 46.2
0.8
47.0
Net earnings $ 151.9
$ 4.2
$ 156.1



(in millions)	Balance as of December 31, 2018		Adjustments Due to ASC 842			Balance as of January 1, 2019
Assets
Operating lease assets	$	—	$	101.2		$	101.2

Current liabilities
Accrued expenses	687.4		19.3			706.7

Long-term liabilities
Other	195.5		(3.4		)	192.1
Operating lease liabilities	—		85.3			85.3

As of June 30, 2018
As Reported Effect of Change Balances without adoption of ASC 606
Assets
Accounts and notes receivable $ 578.1
$ 1.4
$ 579.5
Deferred income tax asset 169.5
(10.5 ) 159.0

Liabilities
Accrued expenses 679.7
(33.5 ) 646.2

Shareholders' equity
Retained earnings 2,056.9
24.4
2,081.3
The Company determines if an arrangement is a lease at lease inception. Operating lease right-of-use (ROU) assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of the Company's lease contracts do not include an implicit rate, the Company uses its incremental borrowing rate based on information available at commencement date in determining the present value of future payments. The incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in economic environments where the leased asset is located. The operating lease ROU asset also includes any initial direct costs and lease payments made prior to lease commencement, and excludes lease incentives incurred.

~~Revenue~~

The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Operating lease expense for minimum lease payments is recognized as performance obligations under the terms of contracts with customers are satisfied; this occurs when control of promised goods (engines, engine parts and accessories, boats, and fitness equipment) is transferred to the customer. The Company recognizes revenue related to the sale of extended warranty contracts that extend the coverage period beyond the standard warranty periodon a straight-line basis over the ~~life of the extended warranty period.~~

~~Revenue is measured as the amount of consideration expected to be entitled in exchange for transferring goods or providing services.~~lease term. The Company has ~~excluded sales, value add,~~certain lease agreements that contain both lease and ~~other taxes collected concurrent with revenue-producing activities from the determination of the transaction price for all contracts. The Company~~non-lease components, which it has elected to account for ~~shipping and handling activities that occur after the customer has obtained control of a good~~ as a ~~fulfillment activity. For~~single lease component for all ~~contracts with customers,~~asset classes.

Measurement of Goodwill Impairment: In January 2017, the ~~Company has not adjusted~~FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350), Simplifying the ~~promised amount~~Test for Goodwill Impairment. The standard simplifies the subsequent measurement of ~~consideration for~~goodwill by eliminating step two from the ~~effects of a significant financing component~~goodwill impairment test. Instead, goodwill impairment is measured as the ~~period~~difference between the ~~transfer~~fair value and the carrying value of the ~~promised goods and~~reporting unit. The standard also clarifies the ~~customer's payment is expected to be one year or less.~~

~~Recently Issued Accounting Standards~~treatment of the income tax effect of tax-deductible goodwill when measuring goodwill impairment loss. The Company early adopted this amendment on January 1, 2019.

Tax Effects in Other Comprehensive Income: In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (AOCI), which requires certain new disclosures and permits companies to reclassify the disproportionate income tax effects of the Tax Cuts and Jobs Act of 2017 on items within AOCI to retained earnings. The ~~ASU also requires certain new disclosures. The amendment is effective for interim~~Company currently records its stranded tax effects in AOCI using the portfolio approach. Upon adoption, the Company elected not to reclassify stranded tax effects in AOCI to retained earnings and ~~annual periods beginning after December 15, 2018, with early adoption permitted.The Company is currently evaluating the impact of adopting this ASC amendment, but does not expect it will have a material~~there was no impact on its consolidated financial statements.

Hedge Accounting: In August 2017, the FASB issued ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities, to simplify the application of hedge accounting and to better align an entity's risk management activities with the financial reporting of hedging relationships. The ~~amendment is effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted. The~~ Company ~~is currently evaluating the impact of adopting~~adopted this ASC amendment ~~but does~~and it did not ~~expect it will~~ have a material impact on its consolidated financial statements.

~~Table of Contents~~

~~BRUNSWICK CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(unaudited)~~

~~Recognition of Leases: In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases,~~ which amended the ASC to require lessees to recognize assets and liabilities on the balance sheet for all leases with terms greater than twelve months. Lessees will recognize expenses similar to current lease accounting. The amendment is to be applied using a modified retrospective method with certain practical expedients, and is effective for fiscal years and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the impact that the adoption of the new standard will have on its condensed consolidated financial statements.

Note 2 – Revenue Recognition

The following table presents the Company's revenue ~~for the three months and six months ended June 30, 2018~~ into categories that depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors:

Three Months Ended June 30, 2018
Marine Engine Boat Fitness Total
Geographic Markets
United States $ 594.4
$ 279.9
$ 132.4
$ 1,006.7
Europe 113.2
42.0
45.9
201.1
Asia-Pacific 50.5
6.9
38.9
96.3
Canada 39.4
58.1
7.1
104.6
Rest-of-World 36.8
8.0
27.9
72.7
Marine eliminations (80.5 ) —
—
(80.5 )
Total $ 753.8
$ 394.9
$ 252.2
$ 1,400.9

Major Product Lines
Propulsion $ 426.3
$ —
$ —
$ 426.3
Parts & Accessories 408.0
—
—
408.0
Aluminum Freshwater Boats —
170.4
—
170.4
Recreational Fiberglass Boats —
140.5
—
140.5
Saltwater Fishing Boats —
84.0
—
84.0
Commercial Cardio Fitness Equipment —
—
141.4
141.4
Commercial Strength Fitness Equipment —
—
91.7
91.7
Consumer Fitness Equipment —
—
19.1
19.1
Marine eliminations (80.5 ) —
—
(80.5 )
Total $ 753.8
$ 394.9
$ 252.2
$ 1,400.9

~~Table of Contents~~

~~BRUNSWICK CORPORATION~~

Notes to Condensed Consolidated Financial Statements

(unaudited)


											Three Months Ended
	Six Months Ended June 30, 2018										March 30, 2019
	Marine Engine			Boat		Fitness		Total			Marine Engine			Boat		Fitness		Total
Geographic Markets
United States	$	1,070.9		$	554.6	$	254.0	$	1,879.5		$	524.2		$	273.9	$	115.1	$	913.2
Europe	211.0			85.1		99.3		395.4			119.2			36.7		45.4		201.3
Asia-Pacific	100.9			13.9		81.0		195.8			56.1			5.4		35.7		97.2
Canada	68.3			104.9		14.2		187.4			31.3			50.0		6.4		87.7
Rest-of-World	70.3			12.9		48.1		131.3			35.2			7.3		22.6		65.1
Marine eliminations	(177.1		)	—		—		(177.1		)	(88.6		)	—		—		(88.6		)
Total	$	1,344.3		$	771.4	$	496.6	$	2,612.3		$	677.4		$	373.3	$	225.2	$	1,275.9

Major Product Lines
Propulsion	$	805.3		$	—	$	—	$	805.3		$	400.0		$	—	$	—	$	400.0
Parts & Accessories	716.1			—		—		716.1			366.0			—		—		366.0
Aluminum Freshwater Boats	—			333.5		—		333.5			—			166.2		—		166.2
Recreational Fiberglass Boats	—			268.2		—		268.2			—			115.0		—		115.0
Saltwater Fishing Boats	—			169.7		—		169.7			—			90.2		—		90.2
Commercial Cardio Fitness Equipment	—			—		275.5		275.5			—			—		121.5		121.5
Commercial Strength Fitness Equipment	—			—		180.8		180.8			—			—		84.8		84.8
Consumer Fitness Equipment	—			—		40.3		40.3			—			—		18.9		18.9
Other											—			1.9		—		1.9
Marine eliminations	(177.1		)	—		—		(177.1		)	(88.6		)	—		—		(88.6		)
Total	$	1,344.3		$	771.4	$	496.6	$	2,612.3		$	677.4		$	373.3	$	225.2	$	1,275.9

For product sales, the Company transfers control and recognizes revenue at the time the product ships from a manufacturing or distribution facility ("free on board shipping point"), or at the time the product arrives at the customer's facility ("free on board destination"). When the shipping terms are "free on board shipping point", the customer obtains control and is able

Notes to direct the use of, and obtain substantially all of the benefits from, the products at the time the products are shipped. For shipments provided under “free on board destination”, control transfers to the customer upon delivery. Payment terms vary but are generally due within 30 days of transferring control. For the Company's Boat and Marine Engine segments, most product sales are wholesale financed by customers through the Company's joint venture, Brunswick Acceptance Company, LLC (BAC), or other lending institutions, and payment is typically due in the month of shipment. For further information on the BAC joint venture, refer to Note 10 –~~Financial Services, in the Notes to~~Condensed Consolidated Financial Statements ~~in the 2017 Form 10-K. In addition, periodically the Company may require the customer to provide up front cash deposits in advance of performance.~~

The Company also sells separately priced extended warranty contracts that extend the coverage period beyond the standard warranty period included with the product sale. When determining an appropriate allocation of the transaction price to the extended warranty performance obligation, the Company uses an observable price to determine the stand-alone selling price. Extended warranties typically range from an additional 1 year to 3 years. The Company receives payment at the inception of the contract and recognizes revenue over the extended warranty coverage period. This time-elapsed method is used to measure progress because the Company, on average, satisfies its performance obligation evenly over the warranty period.(unaudited)

For certain customers within the Fitness segment, the Company provides rebate incentives settled in free product. These rebates provide the customer with a material right which would not have been received without entering into the contract and, therefore, represent a separate performance obligation to which revenue is allocated based on the products' stand-alone selling price. This revenue is deferred and recognized at a point in time upon rebate redemption, with a commensurate charge to Cost of sales for related product costs. The Company also provides product installation services to certain customers for which the Company recognizes revenue at the time of installation, using an observable price to determine the stand-alone selling price.



	Three Months Ended
	March 31, 2018
	Marine Engine			Boat		Fitness		Total
Geographic Markets
United States	$	476.5		$	274.7	$	121.6	$	872.8
Europe	97.8			43.1		53.4		194.3
Asia-Pacific	50.4			7.0		42.1		99.5
Canada	28.9			46.8		7.1		82.8
Rest-of-World	33.5			4.9		20.2		58.6
Marine eliminations	(96.6		)	—		—		(96.6		)
Total	$	590.5		$	376.5	$	244.4	$	1,211.4

Major Product Lines
Propulsion	$	379.0		$	—	$	—	$	379.0
Parts & Accessories	308.1			—		—		308.1
Aluminum Freshwater Boats	—			161.6		—		161.6
Recreational Fiberglass Boats	—			127.7		—		127.7
Saltwater Fishing Boats	—			85.7		—		85.7
Commercial Cardio Fitness Equipment	—			—		132.3		132.3
Commercial Strength Fitness Equipment	—			—		90.9		90.9
Consumer Fitness Equipment	—			—		21.2		21.2
Other	—			1.5		—		1.5
Marine eliminations	(96.6		)	—		—		(96.6		)
Total	$	590.5		$	376.5	$	244.4	$	1,211.4

As of January 1, ~~2018, $170.8~~2019, $178.7 million of contract liabilities associated with extended warranties, customer deposits, and product rebates were reported in Accrued expenses and Other Long-term liabilities and ~~$18.4 million and $48.5~~$28.2 million of this amount was recognized as revenue during the three ~~and six~~ months ended ~~June~~March 30, ~~2018, respectively. The revenue recognized primarily related to customer deposits.~~2019. As of ~~June~~March 30, ~~2018,~~2019, total contract liabilities were ~~$182.4~~$187.7 million. The total amount of the transaction price allocated to unsatisfied performance obligations as of ~~June~~March 30, ~~2018 is $158.8~~2019 was $163.1 million for contracts greater than one ~~year.~~year, which includes both extended warranties and product rebates. The Company expects to recognize approximately ~~$35.3~~$45.3 million of this amount in ~~2018, $57.6~~2019, $57.7 million in ~~2019,~~2020, and ~~$65.9~~

~~Table of Contents~~

~~BRUNSWICK CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(unaudited)~~

$60.1 million thereafter. ~~Contract assets as of January 1, 2018 and June 30, 2018 were not material. In addition, costs to obtain and fulfill contracts during the period were not material.~~

The amount of consideration received can vary, primarily because of customer incentive or rebate arrangements. In addition, the Company provides customers the right to return eligible products under certain circumstances. The Company estimates variable consideration based on the expected value of total consideration to which customers are likely to be entitled based on historical experience and projected market expectations. Included in the estimate, is an assessment as to whether any variable consideration is constrained. Revenue estimates are adjusted at the earlier of a change in the expected value of consideration or when the consideration becomes fixed. As a result, the Company recognized a decrease to revenue from prior period for the three months ended June 30, 2018 of $12.5 million, primarily related to additional retail sales promotions for Sport Yacht and Yacht operations.

~~Note 3 –~~ ~~Discontinued Operations~~

On December 5, 2017, the Board of Directors authorized the Company to exit its Sea Ray business, including the Meridian brand, as a result of, among other things, a material change in strategic direction and a review of the expected future cash flows, market conditions and business trends. The Company engaged in a thorough sales process and determined that the offers received did not reflect an appropriate value for the brand. As a result, the Board of Directors authorized the Company to end the sale process for its Sea Ray business. This action was announced on June 25, 2018. As part of this action, the Company decided to restructure, including discontinuing Sea Ray Sport Yacht and Yacht models and winding down yacht production in the third quarter of 2018, while reinventing Sea Ray Sport Boat and Sport Cruiser operations.

Due to the change in the plan of sale discussed above, the Sea Ray long-lived assets were measured at the lower of their carrying amount before being classified as held for sale, adjusted for any depreciation expense that would have been recognized had the assets been continuously classified as held and used, or their fair value at the date of the subsequent decision not to sell. As a result, the Company recorded a charge of $9.4 million, $7.3 million after-tax, for an impairment of long-lived assets in the second quarter of 2018. The Company used independent market appraisals (a Level 2 input) to estimate the fair value of the two yacht manufacturing facilities. Additionally, the Company utilized experience from similar historical disposals and internal expertise related to current marketplace conditions (Level 3 inputs) to estimate the fair value of specific fixed assets related to the production of yacht models to be discontinued. The reassessment indicated that the carrying value, which included $3.8 million of catch-up depreciation for the period the assets were classified as held for sale, was greater than the fair value.

In connection with the wind down of Sea Ray Sport Yacht and Yacht operations, the Company recorded a $15.5 million reduction of revenue related to estimated retail sales promotions payable to customers to support the sale of sport yachts and yachts in the dealer pipeline at the date of announcement. Further, the Company recorded charges necessary to facilitate the wind down of yacht production as discussed in ~~Note 5 –~~ ~~Restructuring, Exit, Integration and Impairment Activities~~.

The assets and liabilities of the Sea Ray business, which were previously reported as held for sale, have been reclassified to assets and liabilities in the Condensed Consolidated Balance Sheets for all periods presented. Additionally, the results of these businesses are no longer presented as discontinued operations in the Condensed Consolidated Statements of Cash Flows, the Condensed Consolidated Statements of Comprehensive Income and the Notes to Condensed Consolidated Financial Statements in any period presented.

~~Note 4 – Acquisitions~~

Effective June 28, 2018, the Company entered into a definitive agreement to acquire Power Products – Global Marine & Mobile (Power Products) business for $910 million in cash. The acquisition is expected to close mid-August of 2018, subject to certain conditions. Power Products is a privately held manufacturing and distribution company based in Menomonee Falls, Wisconsin, with approximately $233 million of sales for the trailing 12-month period ending March 31, 2018. Power Products manufactures and distributes a broad portfolio of products, including battery and power management and digital switching, to marine and other recreational and specialty vehicle markets. The group also manufactures and distributes a broad and diverse portfolio of marine and transportation parts and accessories. Power Products will be managed as part of the Marine Engine segment.

~~Table of Contents~~

~~BRUNSWICK CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(unaudited)~~

Note 53 – Restructuring, Exit, Integration and Impairment Activities

~~In the second quarter of 2018, the Company ended the sale process of its Sea Ray business and as a result of a change in the plan of sale, recorded an impairment of long-lived assets as~~As discussed in Note 39 – ~~Discontinued Operations~~Goodwill and Other Intangibles~~. The~~, in the first quarter of 2019 the Company determined that the carrying value of its Fitness reporting unit was in excess of its fair value. As a result, the Company recorded ~~charges in connection with~~a goodwill impairment charge of $137.2 million within the wind down of Sport Yacht and Yacht production, mainly relating to inventory write-downs, increased warranty liabilities and employee severance and retention bonuses. The Company also incurred transaction costs during the sale process. These costs were partially offset by the reversal of the valuation allowance for estimated transaction costs which was recorded when the assets and liabilities of Sea Ray were initially reclassified as held for sale.Fitness segment.

In ~~2018 and 2017,~~the first quarter of 2019, the Company ~~executed~~recorded restructuring charges within the Boat segment related to consolidating its commercial and government products operations in order to rationalize its product line to better align with customer demand.

In the first quarter of 2019, the Company recorded charges within Corporate for headcount reductions aimed at streamlining the cost structure.

In the first quarter of 2019 and 2018, the Company implemented headcount reductions in the Fitness ~~and Boat segments~~segment aimed at improving general operating efficiencies.

~~In 2018 and 2017, the Company recorded charges within Corporate related~~

Notes to ~~the transition of certain corporate officers.~~Condensed Consolidated Financial Statements

(unaudited)

In 2018 and 2017, the Company executed integration activities within the Fitness segment related to its acquisition of Cybex International, Inc. As of June 30, 2018, all Cybex integration activities were complete.

In the first quarter of 2017, the Company announced the closure of its boat manufacturing facility in Joinville, Santa Catarina, Brazil, as a result of continued market weakness due partially to unfavorable foreign currency impacts in the region. As a result, theThe Company recorded restructuring, exit, integration and impairment charges ~~including~~in the ~~write-down~~Condensed Consolidated Statements of ~~inventory. The facility manufactured certain Bayliner and Sea Ray boat models for~~Comprehensive Income as a result of the ~~Latin American market. The long-lived assets at this facility were previously fully impaired.~~

activities described above. The following table is a summary of the expense associated with the restructuring, exit, integration and impairment activities for the three months ended ~~June~~March 30, ~~2018~~2019 and ~~July 1, 2017,~~March 31, 2018, as discussed above:


	June 30, 2018											July 1, 2017						March 30, 2019								March 31, 2018
(in millions)	Corporate		Fitness			Boat			Total			Fitness		Boat		Total		Fitness		Boat		Corporate		Total		Fitness			Boat		Total
Restructuring and exit activities:
Employee termination and other benefits	$	0.7	$	0.4		$	4.7		$	5.8		$	2.1	$	0.4	$	2.5	$	1.1	$	0.4	$	1.2	$	2.7	$	0.8		$	2.0	$	2.8
Current asset write-downs (gains on disposal)	—		(0.2		)	15.5			15.3			—		—		—		—		0.2		—		0.2		(0.4		)	—		(0.4		)
Professional fees	—		—			2.9			2.9			—		—		—		—		—		—		—		—			0.6		0.6
Other	—		—			6.0			6.0			—		0.8		0.8		—		0.1		—		0.1		—			—		—
Asset disposition and impairment actions:
Goodwill impairment																		137.2		—		—		137.2		—			—		—
Definite-lived and other asset impairments	—		0.4			9.4			9.8			—		—		—		—		1.3		—		1.3		—			—		—
Disposal group valuation allowance reversal	—		—			(5.0		)	(5.0		)	—		—		—
Integration activities:
Employee termination and other benefits	—		—			—			—			0.9		—		0.9		—		—		—		—		0.0			—		0.0
Professional fees	—		—			—			—			1.4		—		1.4		—		—		—		—		0.7			—		0.7
Other	—		—			—			—			0.1		—		0.1		—		—		—		—		0.1			—		0.1
Total restructuring, exit, integration and impairment charges	$	0.7	$	0.6		$	33.5		$	34.8		$	4.5	$	1.2	$	5.7	$	138.3	$	2.0	$	1.2	$	141.5	$	1.2		$	2.6	$	3.8

Total cash payments for restructuring, exit, integration and impairment charges ^(A)	$	—	$	3.8		$	1.0		$	4.8		$	1.4	$	1.3	$	2.9	$	0.7	$	5.0	$	0.2	$	5.9	$	2.0		$	0.2	$	2.5
Accrued charges at end of the period ^(B)	$	0.9	$	1.0		$	16.0		$	17.9		$	5.9	$	3.5	$	10.3	$	4.0	$	10.8	$	2.0	$	16.8	$	4.4		$	3.4	$	8.0

(A) Total cash payments for the three months ended ~~June 30, 2017~~March 31, 2018 also include ~~$0.2~~$0.3 million of payments for Corporate restructuring, exit, integration and impairment charges. Cash payments may include payments related to prior period charges.

(B) Restructuring, exit, integration and impairment charges accrued as of ~~June 30, 2017~~March 31, 2018 also include ~~$0.9~~$0.2 million of Corporate charges. The accrued charges as of March 30, 2019 are expected to be paid during ~~2018~~2019 and ~~2019.~~2020.

Note 4 – Acquisitions

2018 Acquisitions

~~Table~~On August 9, 2018, the Company completed its acquisition of ~~Contents~~the Global Marine & Mobile business of Power Products Holdings, LLC (Power Products) for $909.6 million in cash, on a cash-free, debt-free basis. Brunswick used proceeds from a combination of 364-day, three-year and five-year term loans (Term Loans) totaling $800.0 million as described in the 2018 Form 10-K along with cash on hand to fund this acquisition.

~~BRUNSWICK CORPORATION~~

Power Products is a leading provider of electrical products to marine and other recreational and specialty vehicle markets. The acquisition advances Brunswick’s leadership by adding integrated electrical systems solutions to the marine market and an array of other mobile, specialty vehicle and industrial applications. Power Products is managed as part of the Marine Engine segment.

The purchase price allocation for the assets acquired and liabilities assumed 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 for the Power Products acquisition during 2018:

Notes to Condensed Consolidated Financial Statements

(unaudited)

The following table is a summary of the expense associated with the restructuring, exit, integration and impairment activities for the six months ended June 30, 2018 and July 1, 2017, as discussed above:

June 30, 2018 July 1, 2017
(in millions) Corporate Fitness Boat Total Corporate Fitness Boat Total
Restructuring and exit activities:
Employee termination and other benefits $ 0.7
$ 1.2
$ 6.7
$ 8.6
$ 2.4
$ 2.1
$ 2.6
$ 7.1
Current asset write-downs (gains on disposal) —
(0.6 ) 15.5
14.9
—
—
7.2
7.2
Professional fees —
—
3.5
3.5
—
—
0.8
0.8
Other —
—
6.0
6.0
—
—
1.0
1.0
Asset disposition and impairment actions:
Definite-lived and other asset impairments —
0.4
9.4
9.8
—
—
—
—
Valuation allowance reversal —
—
(5.0 ) (5.0 ) —
—
—
—
Integration activities:
Employee termination and other benefits —
0.0
—
0.0
—
2.0
—
2.0
Professional fees —
0.7
—
0.7
—
2.6
—
2.6
Other —
0.1
—
0.1
—
0.2
—
0.2
Total restructuring, exit, integration and impairment charges $ 0.7
$ 1.8
$ 36.1
$ 38.6
$ 2.4
$ 6.9
$ 11.6
$ 20.9

Total cash payments for restructuring, exit, integration and impairment charges ^(A)
$ 0.3
$ 5.8
$ 1.2
$ 7.3
$ 0.7
$ 4.9
$ 2.8
$ 8.4
Accrued charges at end of the period ^(B)
$ 0.9
$ 1.0
$ 16.0
$ 17.9
$ 0.9
$ 5.9
$ 3.5
$ 10.3



(in millions)	Fair Value		Useful Life
Accounts and notes receivable	$	38.3
Inventory	64.3
Goodwill ^{(A) (B)}	348.6
Trade names	111.0		Indefinite
Customer relationships	430.0		15 years
Property and equipment	10.6
Other assets	5.6
Total assets acquired	1,008.4

Accounts payable ^(B)	24.3
Accrued expenses ^(B)	19.8
Deferred tax liabilities	54.7
Total liabilities assumed	98.8

Net cash consideration paid	$	909.6

(A) ~~Cash payments may include payments~~The goodwill recorded for the acquisition of Power Products is partially deductible for tax purposes.

(B) Includes $4.4 million of purchase accounting adjustments in the first quarter of 2019 related to ~~prior period charges.~~contingency reserves.

~~(B)~~

Pro Forma Financial Information (Unaudited)

The ~~accrued charges~~pro forma information has been prepared as if the Power Products acquisition and the related debt financing had occurred on January 1, 2018. These pro forma results are ~~expected~~based on estimates and assumptions which the Company believes to be ~~paid during~~reasonable. They are not the results that would have been realized had the acquisition actually occurred on January 1, 2018 and ~~2019.~~are not necessarily indicative of Brunswick's consolidated net earnings in future periods. The pro forma results include adjustments primarily related to interest expense on the Term Loans and amortization of intangible assets.



	Three Months Ended
(in millions)	March 30, 2019			March 31, 2018
Pro forma Net sales	$	1,275.9		$	1,272.7
Pro forma Operating earnings (loss)	(28.6		)	93.8
Pro forma Net earnings (loss)	(34.9		)	59.2

The pro forma results reflect an effective income tax rate of 23.9 percent and 22.5 percent for the three months ended March 30, 2019 and March 31, 2018, respectively.

Note 65 – Financial Instruments

The Company operates globally with manufacturing and sales facilities around the world. Due to the Company’s global operations, the Company engages in activities involving both financial and market risks. The Company utilizes normal operating and financing activities, along with derivative financial instruments, to minimize these risks. See Note 1415 in the Notes to Consolidated Financial Statements in the ~~2017~~2018 Form 10-K for further details regarding the Company's financial instruments and hedging policies.

Foreign Currency Derivatives. Forward exchange contracts outstanding at ~~June~~March 30, ~~2018,~~2019, December 31, ~~2017~~2018 and ~~July 1, 2017~~March 31, 2018 had notional contract values of ~~$333.1~~$493.8 million, ~~$312.6~~$424.1 million and ~~$309.3~~$436.0 million, respectively. There were no option contracts outstanding at March 30, 2019. Option contracts outstanding at ~~June 30,~~December 31, 2018 and ~~December~~March 31, ~~2017 both~~2018 had notional contract values of $27.2 million and $18.0 ~~million. There were no options~~million, respectively. The forward contracts outstanding at ~~July 1, 2017. The forward and option contracts outstanding at June~~March 30, ~~2018~~2019 mature through ~~2019~~2020 and mainly relate to the Euro, Japanese yen, Canadian dollar ~~Japanese yen~~ and Australian dollar. As of ~~June~~March 30, ~~2018,~~2019, the Company estimates

Notes to Condensed Consolidated Financial Statements

(unaudited)

that during the next 12 months, it will reclassify approximately ~~$3.4~~$6.8 million of net gains (based on current rates) from Accumulated other comprehensive loss to Cost of sales.

Interest Rate Derivatives. The Company enters into fixed-to-floating interest rate swaps to convert a portion of the Company's long-term debt from fixed to floating rate debt. As of ~~June~~March 30, ~~2018,~~2019, December 31, ~~2017~~2018 and ~~July 1, 2017,~~March 31, 2018, the outstanding swaps had notional contract values of $200.0 million, of which $150.0 million corresponds to the Company's 4.625 percent Senior notes due 2021 and $50.0 million corresponds to the Company's 7.375 percent Debentures due 2023. These instruments have been designated as fair value hedges, with the fair value recorded in long-term debt.

As of ~~June~~March 30, ~~2018,~~2019, December 31, ~~2017~~2018 and ~~July 1, 2017,~~March 31, 2018, the Company had ~~$2.9~~$2.4 million, ~~$3.4~~$2.5 million and ~~$4.0~~$3.2 million, respectively, of net deferred losses associated with all settled forward-starting interest rate swaps, which were designated as cash

~~Table of Contents~~

~~BRUNSWICK CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(unaudited)~~

flow hedges with gains and losses included in Accumulated other comprehensive loss. As of ~~June~~March 30, ~~2018,~~2019, the Company estimates that during the next 12 months, it will reclassify approximately $0.6 million of net losses resulting from settled forward-starting interest rate swaps from Accumulated other comprehensive loss to Interest expense.

As of ~~June~~March 30, ~~2018,~~2019, December 31, ~~2017~~2018 and ~~July 1, 2017,~~March 31, 2018, the fair values of the Company’s derivative instruments were:


(in millions)
		Derivative Assets							Derivative Liabilities								Derivative Assets							Derivative Liabilities
Instrument		Balance Sheet Location	Fair Value						Balance Sheet Location	Fair Value							Balance Sheet Location	Fair Value						Balance Sheet Location	Fair Value
			Jun 30, 2018		Dec 31, 2017		Jul 1, 2017			Jun 30, 2018		Dec 31, 2017		Jul 1, 2017				Mar 30, 2019		Dec 31, 2018		Mar 31, 2018			Mar 30, 2019		Dec 31, 2018		Mar 31, 2018
Derivatives Designated as Cash Flow Hedges	Derivatives Designated as Cash Flow Hedges															Derivatives Designated as Cash Flow Hedges
Foreign exchange contracts		Prepaid expenses and other	$	5.7	$	2.5	$	2.0	Accrued expenses	$	1.7	$	5.5	$	3.2		Prepaid expenses and other	$	6.9	$	8.1	$	2.8	Accrued expenses	$	1.0	$	1.1	$	5.8

Derivatives Designated as Fair Value Hedges	Derivatives Designated as Fair Value Hedges															Derivatives Designated as Fair Value Hedges
Interest rate contracts		Prepaid expenses and other	$	2.1	$	2.1	$	2.1	Accrued expenses	$	2.1	$	1.8	$	1.7		Prepaid expenses and other	$	0.0	$	0.0	$	2.9	Accrued expenses	$	0.2	$	0.1	$	2.6
Interest rate contracts		Other long-term assets	—		0.7		3.3		Other long-term liabilities	3.1		0.3		—			Other long-term assets	0.9		—		—		Other long-term liabilities	0.4		1.8		2.8
Total			$	2.1	$	2.8	$	5.4		$	5.2	$	2.1	$	1.7			$	0.9	$	0.0	$	2.9		$	0.6	$	1.9	$	5.4

Other Hedging Activity	Other Hedging Activity															Other Hedging Activity
Foreign exchange contracts		Prepaid expenses and other	$	1.4	$	0.7	$	0.3	Accrued expenses	$	0.1	$	0.1	$	0.3		Prepaid expenses and other	$	1.3	$	1.0	$	0.4	Accrued expenses	$	0.2	$	0.1	$	0.5

The effect of derivative instruments on the Condensed Consolidated Statements of Comprehensive Income for the three months ended March 30, 2019 and ~~six months ended June 30,~~March 31, 2018 ~~and July 1, 2017~~ was:

(in millions)
Derivatives Designated as Cash Flow Hedging Instruments Amount of Gain (Loss) on Derivatives Recognized in Accumulated Other Comprehensive Loss (Effective Portion) Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Earnings (Effective Portion)
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Earnings (Effective Portion)
Three Months Ended Six Months Ended Three Months Ended Six Months Ended
Jun 30,
2018 Jul 1,
2017 Jun 30,
2018 Jul 1,
2017 Jun 30,
2018 Jul 1,
2017 Jun 30,
2018 Jul 1,
2017
Interest rate contracts $ —
$ —
$ —
$ —
Interest expense $ (0.2 ) $ (0.2 ) $ (0.5 ) $ (0.5 )
Foreign exchange contracts 7.8
(2.4 ) 4.2
(4.9 ) Cost of sales (1.9 ) 1.1
(4.5 ) 2.1
Total $ 7.8
$ (2.4 ) $ 4.2
$ (4.9 ) $ (2.1 ) $ 0.9
$ (5.0 ) $ 1.6


Derivatives Designated as Fair Value Hedging Instruments	Location of Gain (Loss) on Derivatives Recognized in Earnings	Amount of Gain (Loss) on Derivatives Recognized in Earnings
		Three Months Ended					Six Months Ended
(in millions)
Derivatives Designated as Cash Flow Hedging Instruments												Amount of Gain (Loss) on Derivatives Recognized in Accumulated Other Comprehensive Loss					Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Earnings	Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Earnings
		Jun 30, 2018			Jul 1, 2017		Jun 30, 2018			Jul 1, 2017		Mar 30, 2019		Mar 31, 2018				Mar 30, 2019			Mar 31, 2018
Interest rate contracts	Interest expense	$	(0.2	)	$	0.5	$	(0.0	)	$	1.1	$	—	$	—		Interest expense	$	(0.1	)	$	(0.3	)
Foreign exchange contracts												1.5		(3.6		)	Cost of sales	2.8			(2.6		)
Total												$	1.5	$	(3.6	)		$	2.7		$	(2.9	)

~~Table of Contents~~

~~BRUNSWICK CORPORATION~~

Notes to Condensed Consolidated Financial Statements

(unaudited)

Other Hedging Activity
Location of Gain (Loss) on Derivatives
Recognized in Earnings
Amount of Gain (Loss) on Derivatives Recognized in Earnings
Three Months Ended Six Months Ended
Jun 30,
2018 Jul 1,
2017 Jun 30,
2018 Jul 1,
2017
Foreign exchange contracts Cost of sales $ 11.1
$ (3.0 ) $ 7.4
$ (6.9 )
Foreign exchange contracts Other income (expense), net 1.8
(0.3 ) 0.7
(1.0 )
Total $ 12.9
$ (3.3 ) $ 8.1
$ (7.9 )



Derivatives Designated as Fair Value Hedging Instruments	Location of Gain (Loss) on Derivatives Recognized in Earnings	Amount of Gain (Loss) on Derivatives Recognized in Earnings
		Mar 30, 2019			Mar 31, 2018
Interest rate contracts	Interest expense	$	(0.1	)	$	0.2



Other Hedging Activity	Location of Gain (Loss) on Derivatives Recognized in Earnings	Amount of Gain (Loss) on Derivatives Recognized in Earnings
		Mar 30, 2019		Mar 31, 2018
Foreign exchange contracts	Cost of sales	$	1.3	$	(3.7	)
Foreign exchange contracts	Other expense, net	0.0		(1.1		)
Total		$	1.3	$	(4.8	)

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. At ~~June~~March 30, ~~2018,~~2019, December 31, ~~2017~~2018 and ~~July 1, 2017,~~March 31, 2018, the fair value of the Company’s long-term debt was approximately ~~$491.4~~$1,363.0 million, ~~$492.1~~$1,292.9 million and ~~$499.3~~$497.6 million, respectively, and was determined using Level 1 and Level 2 inputs described in Note ~~7 – Fair Value Measurements, in~~8 to the Notes to Consolidated Financial Statements in the ~~2017~~2018 Form 10-K. The carrying value of long-term debt, including current maturities, was ~~$438.8~~$1,310.1 million, ~~$439.1~~$1,226.4 million and ~~$443.1~~$438.8 million as of ~~June~~March 30, ~~2018,~~2019, December 31, ~~2017~~2018 and ~~July 1, 2017,~~March 31, 2018, respectively.

~~Table of Contents~~

~~BRUNSWICK CORPORATION~~

~~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 as of ~~June~~March 30, ~~2018:~~2019:


(in millions)	Level 1		Level 2		Total		Level 1		Level 2		Total
Assets:
Cash equivalents							$	0.2	$	—	$	0.2
Short-term investments in marketable securities	$	0.8	$	—	$	0.8	0.8		—		0.8
Restricted cash	9.4		—		9.4		9.1		—		9.1
Derivatives	—		9.2		9.2		—		9.1		9.1
Total assets	$	10.2	$	9.2	$	19.4	$	10.1	$	9.1	$	19.2

Liabilities:
Derivatives	$	—	$	7.0	$	7.0	$	—	$	1.8	$	1.8
Deferred compensation	3.9		30.0		33.9		3.8		24.6		28.4
Total liabilities at fair value	$	3.9	$	37.0	$	40.9	$	3.8	$	26.4	$	30.2
Liabilities measured at net asset value					10.3						10.2
Total liabilities					$	51.2					$	40.4

Notes to Condensed Consolidated Financial Statements

(unaudited)

The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis as of December 31, ~~2017:~~2018:

(in millions) Level 1 Level 2 Total
Assets:
Cash equivalents $ 34.4
$ —
$ 34.4
Short-term investments in marketable securities 0.8
—
0.8
Restricted cash 9.4
—
9.4
Derivatives —
6.0
6.0
Total assets $ 44.6
$ 6.0
$ 50.6

Liabilities:

Derivatives $ —
$ 7.7
$ 7.7
Deferred compensation 4.0
30.1
34.1
Total liabilities at fair value $ 4.0
$ 37.8
$ 41.8
Liabilities measured at net asset value 11.8
Total liabilities $ 53.6

~~Table of Contents~~

~~BRUNSWICK CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(unaudited)~~



(in millions)	Level 1		Level 2		Total
Assets:
Short-term investments in marketable securities	$	0.8	$	—	$	0.8
Restricted cash	9.0		—		9.0
Derivatives	—		9.1		9.1
Total assets	$	9.8	$	9.1	$	18.9

Liabilities:
Derivatives	$	—	$	3.1	$	3.1
Deferred compensation	3.5		22.9		26.4
Total liabilities at fair value	$	3.5	$	26.0	$	29.5
Liabilities measured at net asset value					10.2
Total liabilities					$	39.7

The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis as of ~~July 1, 2017:~~March 31, 2018:


(in millions)	Level 1		Level 2		Total		Level 1		Level 2		Total
Assets:
Cash equivalents	$	1.4	$	—	$	1.4
Short-term investments in marketable securities	0.8		—		0.8		$	0.8	$	—	$	0.8
Restricted cash	10.7		—		10.7		9.4		—		9.4
Derivatives	—		7.7		7.7		—		6.1		6.1
Total assets	$	12.9	$	7.7	$	20.6	$	10.2	$	6.1	$	16.3

Liabilities:
Derivatives	$	—	$	5.2	$	5.2	$	—	$	11.7	$	11.7
Deferred compensation	4.6		29.9		34.5		3.6		27.8		31.4
Total liabilities at fair value	$	4.6	$	35.1	$	39.7	$	3.6	$	39.5	$	43.1
Liabilities measured at net asset value					11.3						8.8
Total liabilities					$	51.0					$	51.9

In addition to the items shown in the tables above, refer to Note 1718 in the Notes to Consolidated Financial Statements in the ~~2017~~2018 Form 10-K for further discussion regarding the fair value measurements associated with the Company’s postretirement benefit plans.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Note 87 – Share-Based Compensation

Under the Brunswick Corporation 2014 Stock Incentive Plan, the Company may grant ~~stock options,~~ stock appreciation rights (SARs), non-vested stock awards and performance awards to executives, other employees and non-employee directors from treasury shares and from authorized, but unissued, shares of common stock initially available for grant, in addition to: (i) the forfeiture of past awards; (ii) shares not issued upon the net settlement of SARs; or (iii) shares delivered to or withheld by the Company to pay the withholding taxes related to awards. As of ~~June~~March 30, ~~2018, 5.2~~2019, 4.9 million shares remained available for grant.

~~Non-vested~~Non-Vested Stock Awards

The Company grants both stock-settled and cash-settled non-vested stock units and awards to key employees as determined by management and the Human Resources and Compensation Committee of the Board of Directors. The Company granted ~~a nominal number of stock awards during the three months ended June 30, 2018 and did not grant any stock awards during the three months ended July 1, 2017. The Company granted~~ 0.3 ~~million and 0.2~~ million of stock awards during both the ~~six~~three months ended ~~June~~March 30, ~~2018~~2019 and ~~July 1, 2017, respectively.~~March 31, 2018. The Company recognizes the cost of non-vested stock units and awards on a straight-line basis over the requisite vesting period. Additionally, cash-settled non-vested stock units and awards are recorded as a liability on the balance sheet and adjusted to fair value each reporting period through stock compensation expense. During the three months ended March 30, 2019 and ~~six months ended June 30,~~March 31, 2018, the Company charged ~~$3.4~~$2.6 million and ~~$5.9~~$2.5 million, ~~respectively, and charged $2.8 million and $5.6 million during the three months and six months ended July 1, 2017,~~ respectively, to compensation expense for non-vested stock awards.

As of ~~June~~March 30, ~~2018,~~2019, there was ~~$18.4~~$27.1 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 ~~1.5~~2.4 years.

Performance Awards

In both February of ~~2018~~2019 and ~~2017,~~2018, the Company granted 0.1 million performance shares to certain senior executives. 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 Company's stock returns measured against stock returns of a predefined comparator group over a three-year performance

~~Table of Contents~~

~~BRUNSWICK CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(unaudited)~~

period. Additionally, in February ~~2018~~2019 and ~~2017,~~2018, the Company granted ~~24,490~~24,605 and ~~26,300~~24,490 performance shares, respectively, to certain officers and certain senior managers based on the respective measures and performance periods described above but excluding the TSR modifier. During the three months ended March 30, 2019 and ~~six months ended June 30,~~March 31, 2018, the Company ~~charged $1.7~~recognized a charge of $0.7 million and ~~$1.2~~a benefit of $0.5 million, respectively, ~~and charged $1.8 million and $3.1 million for the three months and six months ended July 1, 2017, respectively, to compensation expense~~ based on projections of probable attainment of the performance measures and the projected TSR modifier used to determine the performance awards.

The fair values of the senior executives' performance share award grants with a TSR modifier for grants in 2019 and 2018 were $49.64 and ~~2017 were~~ $61.59, ~~and $64.82,~~ respectively, which were estimated using the Monte Carlo valuation model, and incorporated the following assumptions:


	2018		2017		2019		2018
Risk-free interest rate	2.4	%	1.5	%	2.9	%	2.4	%
Dividend yield	1.3	%	1.1	%	1.7	%	1.3	%
Volatility factor	38.9	%	38.3	%	41.0	%	38.9	%
Expected life of award	2.9 years		2.9 years		2.9 years		2.9 years

The fair value of ~~the~~ certain officers' and certain senior managers' performance awards granted based solely on the CFROI and OM performance factors was $47.61 and $57.19 in 2019 and ~~$58.77 in~~ 2018, ~~and 2017,~~ respectively, which was equal to the stock price on the date of grant in ~~2018~~2019 and ~~2017,~~2018, respectively, less the present value of expected dividend payments over the vesting period.

As of ~~June~~March 30, ~~2018,~~2019, the Company had ~~$6.8~~$8.4 million of total unrecognized compensation cost related to performance awards. The Company expects this cost to be recognized over a weighted average period of ~~1.3~~1.5 years.

Notes to Condensed Consolidated Financial Statements

(unaudited)

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.

~~Table of Contents~~

~~BRUNSWICK CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(unaudited)~~

~~Note 9 –~~ ~~Earnings per Common Share~~

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

~~Basic and diluted earnings per common share for the three months and six months ended June 30, 2018 and July 1, 2017 were calculated as follows:~~

Three Months Ended Six Months Ended
(in millions, except per share data) June 30,
2018 July 1,
2017 June 30,
2018 July 1,
2017
Net earnings $ 79.0
$ 119.4
$ 151.9
$ 184.3

Weighted average outstanding shares-basic 87.6
89.8
87.8
90.0
Dilutive effect of common stock equivalents 0.6
0.8
0.7
0.8
Weighted average outstanding shares-diluted 88.2
90.6
88.5
90.8

Basic earnings per common share: $ 0.90
$ 1.33
$ 1.73
$ 2.05

Diluted earnings per common share: $ 0.90
$ 1.32
$ 1.72
$ 2.03

~~Share awards that were not included in the computation of diluted earnings per share because their inclusion was anti-dilutive were immaterial for all periods presented.~~

Note 108 – Commitments and Contingencies

There were no material changes during the three months ~~and six months~~ ended ~~June~~March 30, ~~2018~~2019 to the financial commitments or the legal and environmental ~~commitments~~contingencies that were discussed in Note 1314 in the Notes to Consolidated Financial Statements in the ~~2017~~2018 Form 10-K.

Product ~~Warranties and Extended~~ Warranties

The following activity related to product warranty liabilities was recorded in Accrued expenses during the ~~six~~three months ended ~~June~~March 30, ~~2018~~2019 and ~~July 1, 2017:~~March 31, 2018:


(in millions)	June 30, 2018			July 1, 2017			March 30, 2019			March 31, 2018
Balance at beginning of period	$	127.2		$	112.6		$	141.9		$	127.2
Payments made	(36.4		)	(34.1		)	(23.4		)	(16.2		)
Provisions/additions for contracts issued/sold	39.1			38.0			18.9			19.0
Aggregate changes for preexisting warranties	7.5			(0.3		)	0.1			(4.3		)
Foreign currency translation	(0.8		)	1.0			(0.0		)	0.7
Other	0.3			(1.7		)	0.5			(0.1		)
Balance at end of period	$	136.9		$	115.5		$	138.0		$	126.3

Extended 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 ~~six~~three months ended ~~June~~March 30, ~~2018~~2019 and ~~July 1, 2017:~~

~~Table of Contents~~

~~BRUNSWICK CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(unaudited)~~

March 31, 2018:


(in millions)	June 30, 2018			July 1, 2017			March 30, 2019			March 31, 2018
Balance at beginning of period	$	112.1		$	90.6		$	133.1		$	112.1
Extended warranty contracts sold	30.7			26.0			16.8			12.9
Revenue recognized on existing extended warranty contracts	(18.7		)	(14.5		)	(14.1		)	(10.1		)
Foreign currency translation	(0.4		)	0.3			0.1			0.5
Balance at end of period	$	123.7		$	102.4		$	135.9		$	115.4

Note 119 – Goodwill and Other Intangibles

Changes in the Company's goodwill during the ~~six~~three months ended ~~June~~March 30, ~~2018,~~2019, by segment, are summarized below:


(in millions)	December 31, 2017		Acquisitions		Impairments		Adjustments			June 30, 2018		December 31, 2018		Impairments			Adjustments			March 30, 2019
Marine Engine	$	31.7	$	—	$	—	$	(0.4	)	$	31.3	$	375.1	$	—		$	4.5		$	379.6
Boat	2.2		—		—		—			2.2		2.2		—			—			2.2
Fitness	391.4		—		—		(0.9		)	390.5		389.8		(137.2		)	(0.3		)	252.3
Total	$	425.3	$	—	$	—	$	(1.3	)	$	424.0	$	767.1	$	(137.2	)	$	4.2		$	634.1

Notes to Condensed Consolidated Financial Statements

(unaudited)

Changes in the Company's goodwill during the ~~six~~three months ended ~~July 1, 2017,~~March 31, 2018, by segment, are summarized below:


(in millions)	December 31, 2016		Acquisitions		Impairments		Adjustments		July 1, 2017		December 31, 2017		Impairments		Adjustments		March 31, 2018
Marine Engine	$	25.1	$	—	$	—	$	0.8	$	25.9	$	31.7	$	—	$	1.2	$	32.9
Boat	2.2		—		—		—		2.2		2.2		—		—		2.2
Fitness	386.5		—		—		3.0		389.5		391.4		—		1.8		393.2
Total	$	413.8	$	—	$	—	$	3.8	$	417.6	$	425.3	$	—	$	3.0	$	428.3

Due to recent, significant progress made toward the planned Fitness business separation and the strong level of buyer interest in the sales process, the Company re-evaluated the fair value of the Fitness reporting unit in the first quarter of 2019. To assess fair value, the Company performed a quantitative test using a combination of the market approach and the income approach. Fair value under the market approach was informed by significant progress made on the sale process during the quarter. The income approach calculates the fair value of the reporting unit using a discounted cash flow approach utilizing a Gordon Growth model. Internally forecasted future cash flows are discounted using a weighted average cost of capital (Discount Rate) developed for each reporting unit. The Discount Rate is developed using market observable inputs, as well as considering whether or not there is a measure of risk related to the specific reporting unit’s forecasted performance.

As a result of performing the fair value test, the Company determined the fair value of the Fitness reporting unit was less than its carrying value resulting in a pre-tax goodwill impairment charge of $137.2 million ($103.0 million after tax) for the three months ended March 30, 2019. The impairment was calculated in accordance with ASU 2017-04 as discussed in Note 1 - Significant Accounting Policies in the Notes to Condensed Consolidated Financial Statements. The charge was recorded within the Company’s Fitness segment within Restructuring, exit, integration and impairment in the Condensed Consolidated Statements of Comprehensive Income.

Adjustments for the ~~six~~three months ended ~~June~~March 30, ~~2018 and~~2019 mainly relate to refining purchase accounting related to the Power Products acquisition. See ~~July 1, 2017 primarily relate to~~Note 4 – 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.

As of ~~June~~March 30, ~~2018, December 31, 2017 and July 1, 2017,~~2019 the Company had $137.2 million of accumulated impairment loss on Goodwill. There was no accumulated impairment ~~loss.~~loss on Goodwill as of December 31, 2018 and March 31, 2018.

The Company's intangible assets, included within Other intangibles, net on the Condensed Consolidated Balance Sheets as of ~~June~~March 30, ~~2018,~~2019, December 31, ~~2017~~2018 and ~~July 1, 2017,~~March 31, 2018, are summarized by intangible asset type below:

June 30, 2018 December 31, 2017 July 1, 2017
(in millions) Gross Amount Accumulated Amortization Gross Amount Accumulated Amortization Gross Amount Accumulated Amortization
Intangible assets:
  Customer relationships $ 304.8
$ (241.4 ) $ 305.4
$ (238.1 ) $ 301.2
$ (234.6 )
  Trade names 75.7
—
75.9
—
88.3
—
  Patents and other 22.4
(17.4 ) 22.5
(16.6 ) 22.3
(15.5 )
    Total $ 402.9
$ (258.8 ) $ 403.8
$ (254.7 ) $ 411.8
$ (250.1 )

~~Table of Contents~~

~~BRUNSWICK CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(unaudited)~~



	March 30, 2019					December 31, 2018					March 31, 2018
(in millions)	Gross Amount		Accumulated Amortization			Gross Amount		Accumulated Amortization			Gross Amount		Accumulated Amortization
Intangible assets:
Customer relationships	$	734.3	$	(265.2	)	$	734.4	$	(256.5	)	$	306.5	$	(240.1	)
Trade names	164.5		(0.6		)	164.4		—			76.1		—
Other	22.4		(18.7		)	22.3		(18.2		)	22.6		(17.1		)
Total	$	921.2	$	(284.5	)	$	921.1	$	(274.7	)	$	405.2	$	(257.2	)


	June 30, 2018					December 31, 2017					July 1, 2017					March 30, 2019					December 31, 2018					March 31, 2018
(in millions)	Gross Amount		Accumulated Amortization			Gross Amount		Accumulated Amortization			Gross Amount		Accumulated Amortization			Gross Amount		Accumulated Amortization			Gross Amount		Accumulated Amortization			Gross Amount		Accumulated Amortization
Intangible assets:
Marine Engine	$	77.8	$	(39.3	)	$	78.3	$	(38.5	)	$	73.1	$	(37.5	)	$	618.6	$	(59.7	)	$	618.3	$	(52.0	)	$	79.1	$	(39.2	)
Boat	223.4		(203.4		)	223.3		(202.8		)	223.5		(202.4		)	223.4		(204.2		)	223.4		(203.9		)	223.6		(203.2		)
Fitness	101.7		(16.1		)	102.2		(13.4		)	115.2		(10.2		)	79.2		(20.6		)	79.4		(18.8		)	102.5		(14.8		)
Total	$	402.9	$	(258.8	)	$	403.8	$	(254.7	)	$	411.8	$	(250.1	)	$	921.2	$	(284.5	)	$	921.1	$	(274.7	)	$	405.2	$	(257.2	)

Notes to Condensed Consolidated Financial Statements

(unaudited)

Other intangible assets primarily consist of patents. Gross amounts and related accumulated amortization amounts include adjustments related to the impact of foreign currency translation. Aggregate amortization expense for intangibles was ~~$2.2~~$9.8 million and ~~$4.4~~$2.2 million for the three months ended March 30, 2019 and ~~six months ended June 30,~~March 31, 2018, ~~respectively. Aggregate amortization expense for intangibles was $2.1 million and $4.1 million for the three months and six months ended July 1, 2017,~~ respectively.

Note 1210 – Segment Data

Reportable Segments

The following table sets forth net sales and operating earnings (loss) of each of the Company's reportable segments for the three months ended March 30, 2019 and ~~six months ended June 30, 2018 and July 1, 2017:~~March 31, 2018:


	Net Sales												Operating Earnings (Loss)
	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended						Net Sales						Operating Earnings (Loss)
(in millions)	Jun 30, 2018			Jul 1, 2017			Jun 30, 2018			Jul 1, 2017			Jun 30, 2018			Jul 1, 2017			Jun 30, 2018			Jul 1, 2017			March 30, 2019			March 31, 2018			March 30, 2019			March 31, 2018
Marine Engine	$	834.3		$	766.2		$	1,521.4		$	1,398.0		$	149.1		$	148.3		$	244.8		$	236.9		$	766.0		$	687.1		$	112.9		$	95.7
Boat	394.9			412.1			771.4			794.8			(32.2		)	24.7			(17.8		)	27.9			373.3			376.5			22.0			14.4
Marine eliminations	(80.5		)	(76.8		)	(177.1		)	(166.6		)	—			—			—			—			(88.6		)	(96.6		)	—			—
Total Marine	1,148.7			1,101.5			2,115.7			2,026.2			116.9			173.0			227.0			264.8			1,050.7			967.0			134.9			110.1
Fitness	252.2			250.5			496.6			486.1			14.3			18.5			25.3			36.8			225.2			244.4			(139.1		)	11.0
Corporate/Other	—			—			—			—			(24.5		)	(20.4		)	(40.5		)	(39.1		)	—			—			(24.4		)	(16.0		)
Total	$	1,400.9		$	1,352.0		$	2,612.3		$	2,512.3		$	106.7		$	171.1		$	211.8		$	262.5		$	1,275.9		$	1,211.4		$	(28.6	)	$	105.1

The following table sets forth total assets of each of the Company's reportable segments:


	Total Assets						Total Assets
(in millions)	Jun 30, 2018		Dec 31, 2017		Jul 1, 2017		March 30, 2019		December 31, 2018		March 31, 2018
Marine Engine	$	1,345.7	$	1,205.0	$	1,220.2	$	2,628.4	$	2,380.9	$	1,384.6
Boat	408.1		411.6		433.8		433.6		423.2		449.7
Total Marine	1,753.8		1,616.6		1,654.0		3,062.0		2,804.1		1,834.3
Fitness	979.1		1,012.8		951.3		844.9		972.7		1,004.9
Corporate/Other	688.1		728.8		778.4		422.9		508.9		565.4
Total	$	3,421.0	$	3,358.2	$	3,383.7	$	4,329.8	$	4,285.7	$	3,404.6

As of ~~June~~March 30, ~~2018,~~2019, December 31, ~~2017~~2018 and ~~July 1, 2017,~~March 31, 2018, the Company had ~~$12.9~~$8.9 million, ~~$12.7~~$8.9 million and ~~$6.3~~$12.8 million, respectively, of net assets classified as held-for-sale within Net property in the Condensed Consolidated Balance Sheets.

~~Table of Contents~~

~~BRUNSWICK CORPORATION~~

Notes to Condensed Consolidated Financial Statements

(unaudited)

Note 1311 – Comprehensive Income

Accumulated other comprehensive loss in the Condensed Consolidated Balance Sheets includes foreign currency cumulative translation adjustments; prior service costs and credits and net actuarial gains and losses for defined benefit plans; and unrealized derivative gains and losses, all net of tax. Changes in the components of Accumulated other comprehensive loss, all net of tax, for the three months ended March 30, 2019 and ~~six months ended June 30,~~March 31, 2018 ~~and July 1, 2017~~ were as follows:


	Three Months Ended						Six Months Ended
(in millions)	Jun 30, 2018			Jul 1, 2017			Jun 30, 2018			Jul 1, 2017			March 30, 2019			March 31, 2018
Net earnings	$	79.0		$	119.4		$	151.9		$	184.3
Net earnings (loss)													$	(36.3	)	$	72.9
Other comprehensive income (loss):
Foreign currency cumulative translation adjustment	(19.6		)	4.0			(9.7		)	11.4			0.1			9.9
Net change in unamortized prior service credits	(0.1		)	(0.1		)	(0.2		)	(0.2		)	(0.1		)	(0.1		)
Net change in unamortized actuarial losses	2.3			2.1			4.2			4.2			1.9			1.9
Net change in unrealized derivative losses	7.0			(2.3		)	6.3			(4.5		)	(0.9		)	(0.7		)
Total other comprehensive income (loss)	(10.4		)	3.7			0.6			10.9
Comprehensive income	$	68.6		$	123.1		$	152.5		$	195.2
Total other comprehensive income													1.0			11.0
Comprehensive income (loss)													$	(35.3	)	$	83.9

The following table presents the changes in Accumulated other comprehensive loss by component, all net of tax, for the three months ended ~~June~~March 30, ~~2018:~~2019:


(in millions)	Foreign currency translation			Prior service credits			Net actuarial losses			Net derivative losses			Total			Foreign currency translation			Prior service credits			Net actuarial losses			Net derivative losses			Total
Beginning balance	$	(21.7	)	$	(5.7	)	$	(308.9	)	$	(12.5	)	$	(348.8	)	$	(48.9	)	$	(6.1	)	$	(306.2	)	$	(1.9	)	$	(363.1	)
Other comprehensive income (loss) before reclassifications ^(A)	(19.6		)	—			0.5			5.5			(13.6		)	0.1			—			(0.0		)	1.0			1.1
Amounts reclassified from Accumulated other comprehensive loss ^(B)	—			(0.1		)	1.8			1.5			3.2			—			(0.1		)	1.9			(1.9		)	(0.1		)
Net other comprehensive income (loss)	(19.6		)	(0.1		)	2.3			7.0			(10.4		)	0.1			(0.1		)	1.9			(0.9		)	1.0
Ending balance	$	(41.3	)	$	(5.8	)	$	(306.6	)	$	(5.5	)	$	(359.2	)	$	(48.8	)	$	(6.2	)	$	(304.3	)	$	(2.8	)	$	(362.1	)

(A) The tax effects for the three months ended ~~June~~March 30, ~~2018~~2019 were ~~$2.1~~$0.2 million for foreign currency translation, ~~$(0.2)~~$0.0 million for net actuarial losses arising during the period and ~~$(2.3)~~$(0.5) million for derivatives.

(B) See the table below for the tax effects for the three months ended ~~June~~March 30, ~~2018.~~

~~The following table presents the changes in Accumulated other comprehensive loss by component, all net of tax, for the six months ended June 30, 2018:~~

(in millions) Foreign currency translation Prior service credits Net actuarial losses Net derivative losses Total
Beginning balance $ (31.6 ) $ (5.6 ) $ (310.8 ) $ (11.8 ) $ (359.8 )
Other comprehensive income (loss) before reclassifications ^(A)
(9.7 ) —
0.4
2.7
(6.6 )
Amounts reclassified from Accumulated other comprehensive loss ^(B)
—
(0.2 ) 3.8
3.6
7.2
Net other comprehensive income (loss) (9.7 ) (0.2 ) 4.2
6.3
0.6
Ending balance $ (41.3 ) $ (5.8 ) $ (306.6 ) $ (5.5 ) $ (359.2 )

(A) The tax effects for the six months ended June 30, 2018 were $2.3 million for foreign currency translation, $(0.1) million for net actuarial losses arising during the period and $(1.5) million for derivatives.

~~(B) See the table below for the tax effects for the six months ended June 30, 2018.~~

~~Table of Contents~~

~~BRUNSWICK CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(unaudited)~~

2019.

The following table presents the changes in Accumulated other comprehensive loss by component, all net of tax, for the three months ended ~~July 1, 2017:~~March 31, 2018:


(in millions)	Foreign currency translation			Prior service credits			Net actuarial losses			Net derivative losses			Total			Foreign currency translation			Prior service credits			Net actuarial losses			Net derivative losses			Total
Beginning balance	$	(44.5	)	$	(5.2	)	$	(369.9	)	$	(7.8	)	$	(427.4	)	$	(31.6	)	$	(5.6	)	$	(310.8	)	$	(11.8	)	$	(359.8	)
Other comprehensive income (loss) before reclassifications ^(A)	4.0			—			(0.1		)	(1.6		)	2.3			9.9			—			(0.1		)	(2.8		)	7.0
Amounts reclassified from Accumulated other comprehensive loss ^(B)	—			(0.1		)	2.2			(0.7		)	1.4			—			(0.1		)	2.0			2.1			4.0
Net other comprehensive income (loss)	4.0			(0.1		)	2.1			(2.3		)	3.7			9.9			(0.1		)	1.9			(0.7		)	11.0
Ending balance	$	(40.5	)	$	(5.3	)	$	(367.8	)	$	(10.1	)	$	(423.7	)	$	(21.7	)	$	(5.7	)	$	(308.9	)	$	(12.5	)	$	(348.8	)

(A) The tax effects for the three months ended ~~July 1, 2017~~March 31, 2018 were ~~$(1.6)~~$0.2 million for foreign currency translation, ~~$(0.1)~~$0.1 million for net actuarial losses arising during the period and $0.8 million for derivatives.

(B) See the table below for the tax effects for the three months ended ~~July 1, 2017.~~

~~The following table presents the changes in Accumulated other comprehensive loss by component, all net of tax, for the six months ended July 1, 2017:~~

(in millions) Foreign currency translation Prior service credits Net actuarial losses Net derivative losses Total
Beginning balance $ (51.9 ) $ (5.1 ) $ (372.0 ) $ (5.6 ) $ (434.6 )
Other comprehensive income (loss) before reclassifications ^(A)
11.4
—
(0.2 ) (3.3 ) 7.9
Amounts reclassified from Accumulated other comprehensive loss ^(B)
—
(0.2 ) 4.4
(1.2 ) 3.0
Net other comprehensive income (loss) 11.4
(0.2 ) 4.2
(4.5 ) 10.9
Ending balance $ (40.5 ) $ (5.3 ) $ (367.8 ) $ (10.1 ) $ (423.7 )

~~(A) The tax effects for the six months ended July 1, 2017were $(3.2) million for foreign currency translation, $(0.2) million for net actuarial losses arising during the period and $1.6 million for derivatives.~~

~~(B) See the table below for the tax effects for the six months ended July 1, 2017.~~March 31, 2018.

~~Table of Contents~~

~~BRUNSWICK CORPORATION~~

Notes to Condensed Consolidated Financial Statements

(unaudited)

The following table presents reclassification adjustments out of Accumulated other comprehensive loss during the three months ended March 30, 2019 and ~~six months ended June 30, 2018 and July 1, 2017:~~March 31, 2018:


(in millions)	Three Months Ended						Six Months Ended
Details about Accumulated other comprehensive income (loss) components	Jun 30, 2018			Jul 1, 2017			Jun 30, 2018			Jul 1, 2017			Affected line item in the statement where net income is presented
Details about Accumulated other comprehensive income (loss) components (in millions)														March 30, 2019			March 31, 2018			Affected line item in the statement where net income is presented
Amortization of defined benefit items:
Prior service credits	$	0.1		$	0.2		$	0.3		$	0.4		Other income (expense), net	$	0.2		$	0.2		Other expense, net
Net actuarial losses	(2.6		)	(3.6		)	(5.1		)	(7.2		)	Other income (expense), net	(2.5		)	(2.5		)	Other expense, net
	(2.5		)	(3.4		)	(4.8		)	(6.8		)	Earnings before income taxes	(2.3		)	(2.3		)	Earnings (loss) before income taxes
	0.8			1.3			1.2			2.6			Income tax provision	0.5			0.4			Income tax provision (benefit)
	$	(1.7	)	$	(2.1	)	$	(3.6	)	$	(4.2	)	Net earnings	$	(1.8	)	$	(1.9	)	Net earnings (loss)

Amount of gain (loss) reclassified into earnings on derivative contracts:
Interest rate contracts	$	(0.2	)	$	(0.2	)	$	(0.5	)	$	(0.5	)	Interest expense	$	(0.1	)	$	(0.3	)	Interest expense
Foreign exchange contracts	(1.9		)	1.1			(4.5		)	2.1			Cost of sales	2.8			(2.6		)	Cost of sales
	(2.1		)	0.9			(5.0		)	1.6			Earnings before income taxes	2.7			(2.9		)	Earnings (loss) before income taxes
	0.6			(0.2		)	1.4			(0.4		)	Income tax provision	(0.8		)	0.8			Income tax provision (benefit)
	$	(1.5	)	$	0.7		$	(3.6	)	$	1.2		Net earnings	$	1.9		$	(2.1	)	Net earnings (loss)

Note 1412 – Income Taxes

The Company recognized an income tax benefit of $(11.4) million and an income tax provision of $27.2 million for the three months ended March 30, 2019 and ~~six months ended June 30,~~March 31, 2018, ~~of $19.0 million and $46.2 million,~~ respectively, which included a net ~~tax~~ benefit of ~~$2.6~~$(0.6) million and a net ~~tax~~ charge of ~~$2.7~~$6.7 million, respectively. The net ~~tax~~ benefit of ~~$2.6~~$(0.6) million ~~is primarily~~ related to ~~the excess~~certain special tax ~~benefit related to share based compensation and the release of foreign valuation allowances.~~items. The net ~~tax~~ charge of ~~$2.7~~$6.7 million was due primarily ~~associated with~~to updates related to 2017 tax reform net of the aforementioned three month tax benefits. The Company recognized an income tax provision for the three months and six months ended July 1, 2017 of $47.1 million and $69.1 million, respectively, which included net tax benefits of $2.3 million and $7.6 million, respectively. The net tax benefits of $2.3 million and $7.6 million were associated with the net excess tax benefits related to share-based compensation.reform. The effective tax rate, which is calculated as the income tax provision (benefit) as a percentage of ~~pre-tax~~earnings (loss) before income taxes, for the three months ended March 30, 2019 and ~~six months ended June 30,~~March 31, 2018 was ~~19.4~~23.9 percent and ~~23.3~~27.2 percent, respectively. ~~The effective tax rate for the three months and six months ended July 1, 2017 was 28.3 percent and 27.3 percent, respectively.~~

On December 22, 2017, tax legislation commonly known as the Tax Cuts and Jobs Act (TCJA) was signed into law. The TCJA made significant changes to the U.S. tax code effective for 2018, with certain provisions having impacted the Company’s 2017 financial results. The changes that impacted 2017 included, but were not limited to, the write-down of deferred tax assets resulting from the lowering of the corporate income tax rate from 35 percent to 21 percent, imposing a one-time repatriation tax on certain unremitted earnings of foreign subsidiaries, and bonus depreciation that allowed for immediate full expensing of qualified property. The TCJA also established new corporate tax laws that are effective in 2018 but did not impact the Company’s 2017 financial results. These 2018 changes include, but are not limited to, lowering the U.S. federal corporate income tax rate, a general elimination of U.S. federal income taxes on dividends from foreign subsidiaries, a new tax on global intangible low-taxed income (GILTI) net of allowable foreign tax credits, a new deduction for foreign derived intangible income (FDII), the repeal of the domestic production activity deduction, new limitations on the deductibility of certain executive compensation and interest expense, and limitations on the use of foreign tax credits to reduce the U.S. federal income tax liability.

Due to the complexities involved in accounting for the enactment of the TCJA, the SEC staff issued Staff Accounting Bulletin (SAB) 118 which provided guidance on accounting for the income tax effects of the TCJA. SAB 118 provides a measurement period that should not extend beyond one year from the TCJA enactment date to complete the accounting for the impact of the TCJA. SAB 118 allowed the Company to provide provisional estimates of the impact of the TCJA in our financial statements for the fourth quarter and year ended December 31, 2017. Accordingly, based on information and IRS guidance available as of the year ended December 31, 2017, we recorded a discrete net tax expense of $71.8 million in the fourth quarter and year ended

~~Table of Contents~~

~~BRUNSWICK CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(unaudited)~~

December 31, 2017. This expense consisted primarily of a net expense of $56.5 million for the write down of our net deferred tax assets due to the U.S. corporate income tax rate reduction and a net expense of $15.3 million for the one-time deemed repatriation tax. On the basis of updated guidance from the IRS and updates to our calculations, for the six months ended June 30, 2018, we recorded an additional discrete tax expense of $7.0 million primarily related to the one-time deemed repatriation tax. The Company has not completed its accounting for the income tax effects of the TCJA and the provisional amounts will continue to be refined as needed during the measurement period allowed by SAB 118. While the Company has made reasonable estimates of the impact of the U.S. corporate income tax rate reduction and the one-time deemed repatriation tax on unremitted earnings of foreign subsidiaries, these estimates could change as the Company completes its 2017 consolidated federal income tax return which could adjust deferred tax balances, refines its calculations of earnings and profits which could impact the repatriation tax calculation, and analyzes new IRS guidance related to the TCJA.

The TCJA created a new requirement that certain income (commonly referred to as "GILTI") earned by controlled foreign corporations (CFC’s) must be included currently in the gross income of the CFC’s U.S. shareholder. Because of the complexity of the new GILTI tax rules we are continuing to evaluate this provision of the TCJA. Under U.S. GAAP, we are allowed to make an accounting policy choice of either (1) treating taxes due on U.S. inclusions in taxable income related to GILTI as a current period expense when incurred (the “period cost method”) or (2) factoring such amounts into the Company’s measurement of its deferred taxes (the “deferred method”). Our selection of an accounting policy with respect to the new GILTI tax rules will depend, in part, on analyzing our global income to determine whether we expect to have future U.S. inclusions in taxable income related to GILTI and, if so, what the impact is expected to be. Whether we expect to have future U.S. inclusions in taxable income related to GILTI depends not only on our current structure and estimated future results of global operations but also our intent and ability to modify our structure and/or our business. The Company has included an estimate of the GILTI tax in the Company’s annualized effective tax rate used to determine tax expense for the three months and six months ended June 30, 2018. However, we have not yet made a policy choice regarding whether to record deferred taxes on GILTI.

The Company will continue to analyze the effects of the TCJA on its financial statements and operations. Additional impacts from the enactment of the TCJA will be recorded as they are identified during the measurement period as allowed by SAB 118.

No deferred income taxes have been provided as of ~~June~~March 30, ~~2018,~~2019, December 31, ~~2017~~2018 or ~~July 1, 2017~~March 31, 2018 on the applicable undistributed earnings of the non-U.S. subsidiaries where the indefinite reinvestment assertion has been applied. If at some future date these earnings cease to be indefinitely reinvested and are repatriated, the Company may be subject to additional U.S. income taxes and foreign withholding ~~and other~~ taxes on such amounts. The Company continues to provide deferred taxes, as required, on the undistributed net earnings of foreign subsidiaries and unconsolidated affiliates that are not deemed to be indefinitely reinvested in operations outside the United States.

As of ~~June~~March 30, ~~2018,~~2019, December 31, ~~2017~~2018 and ~~July 1, 2017,~~March 31, 2018, the Company had ~~$2.8~~$2.7 million, $2.3 million and ~~$3.5~~$2.8 million of gross unrecognized tax benefits, including interest, respectively. The Company believes it is reasonably possible that the total amount of gross unrecognized tax benefits as of ~~June~~March 30, ~~2018~~2019 could decrease by approximately ~~$0.9~~$1.0 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 ~~2018,~~2019, but the amount cannot be ~~estimated.~~estimated at this time.

The Company is regularly audited by federal, state and foreign tax authorities. The Internal Revenue Service (IRS) has completed its field examination and has issued its Revenue Agents Report through the 2014 tax year and all open issues have been resolved. The Company is currently open to tax examinations by the IRS for the 2014 through ~~2016~~2017 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 2012 taxable year. The Company is no longer subject to income tax examinations by any major foreign tax jurisdiction for years prior to 2013.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Note 1513 – Postretirement Benefits

The Company has defined contribution plans, qualified and nonqualified defined benefit pension plans and other postretirement benefit plans covering substantially all of its employees. The Company's contributions to its defined contribution plans include matching and annual discretionary contributions which are based on various percentages of compensation, and in some instances are based on the amount of the employees' contributions to the plans. See Note 1718 in the Notes to Consolidated Financial Statements in the ~~2017~~2018 Form 10-K for further details regarding these plans.

~~Table of Contents~~

~~BRUNSWICK CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(unaudited)~~

Pension and other postretirement benefit costs included the following components for the three months ended March 30, 2019 and ~~six months ended June 30, 2018 and July 1, 2017:~~March 31, 2018:


	Pension Benefits												Other Postretirement Benefits
	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended						Pension Benefits						Other Postretirement Benefits
(in millions)	Jun 30, 2018			Jul 1, 2017			Jun 30, 2018			Jul 1, 2017			Jun 30, 2018			Jul 1, 2017			Jun 30, 2018			Jul 1, 2017			March 30, 2019			March 31, 2018			March 30, 2019			March 31, 2018
Interest cost	$	5.7		$	7.1		$	11.4		$	14.2		$	0.2		$	0.4		$	0.5		$	0.7		$	2.6		$	5.7		$	0.3		$	0.3
Expected return on plan assets	(6.4		)	(8.3		)	(12.7		)	(16.7		)	—			—			—			—			(3.3		)	(6.3		)	—			—
Amortization of prior service credits	—			—			—			—			(0.1		)	(0.2		)	(0.3		)	(0.4		)	—			—			(0.2		)	(0.2		)
Amortization of net actuarial losses	2.6			3.6			5.1			7.2			—			—			—			—			2.5			2.5			—			—
Net pension and other benefit costs	$	1.9		$	2.4		$	3.8		$	4.7		$	0.1		$	0.2		$	0.2		$	0.3		$	1.8		$	1.9		$	0.1		$	0.1

Employer Contributions and Benefit Payments. ~~During the six months ended June 30, 2018 and July 1, 2017, the~~The Company ~~contributed $35.0 million and $40.0 million, respectively,~~did not make contributions to its qualified pension ~~plans. Company contributions are subject to change based on funding regulations and Company discretion.~~plans during the three months ended March 30, 2019 or March 31, 2018. During the ~~six~~three months ended ~~June~~March 30, ~~2018~~2019 and ~~July 1, 2017,~~March 31, 2018, the Company contributed ~~$2.1~~$1.5 million and $1.0 million, respectively, to fund benefit payments to its nonqualified pension plan.

Note 1614 – Debt

~~There was no significant activity~~In March 2019, the Company issued an aggregate principal amount of $230.0 million of its 6.375% Senior Notes (2049 Notes) due April 2049 in ~~Long-term debt during~~a public offering, which resulted in aggregate net proceeds to the ~~six months ended June 30, 2018~~Company of $222.0 million. Net proceeds from the offering of the 2049 Notes were used to prepay all of the $150.0 million, 3-year tranche loan due 2021 and ~~July 1, 2017. See Note 16~~for general corporate purposes. Interest on the 2049 Notes is due quarterly, commencing on April 15, 2019. The Company may, at its option, redeem the 2049 Notes on or after (but not prior to) April 15, 2024, either in whole or in part, at a redemption price equal to 100 percent of the principal amount plus any accrued and unpaid interest. Additionally, in the event of a change in control, the Company may be required to repurchase some or all of its 2049 Notes at a price equal to ~~Consolidated Financial Statements in~~101 percent of the ~~2017 Form 10-K for details regarding the Company's debt.~~principal amount plus any accrued and unpaid interest. The 2049 Notes are unsecured and do not contain subsidiary guarantees.

~~In June 2016, the~~Scheduled maturities, net:



(in millions)
Remainder of 2019	$	31.2
2020	41.6
2021	190.1
2022	36.0
2023	304.2
Thereafter	683.4
Total debt	$	1,286.5

The Company ~~entered into~~maintains an Amended and Restated Credit Agreement (Credit Facility)~~. The Credit Facility amended and restated the Company's existing credit agreement, dated as of March 2011, as amended and restated as of June 2014. The Credit Facility provides~~ providing for ~~$300~~$400.0 million of borrowing capacity ~~and is~~ in effect through ~~June 2021.~~September 2023. The Credit Facility includes provisions to add up to $100.0 million of additional borrowing capacity and extend the facility for two additional one-year terms, subject to lender approval. During the first quarter of 2019, borrowings under the Credit Facility totaled $215.0 million, all of which were repaid during the quarter. No borrowings were outstanding as of ~~or during the six months ended June~~March 30, ~~2018,~~2019, and available borrowing capacity totaled ~~$296.0~~$396.4 million, net of ~~$4.0~~$3.6 million of letters of credit outstanding under the Credit Facility. ~~As of June 30, 2018, the Company was in compliance with the financial covenants in~~The maximum amount utilized under the Credit ~~Facility.~~Facility during the three months ended March 30, 2019, including letters of credit outstanding, was $163.4 million. See Note 1617 in the Notes to Consolidated Financial Statements in the ~~2017~~2018 Form 10-K for details regarding the Company's Credit Facility.

~~On June 28, 2018,~~Notes to Condensed Consolidated Financial Statements

(unaudited)

As of March 30, 2019, the Company ~~entered into an agreement~~was in compliance with ~~Morgan Stanley Senior Funding, Inc. to obtain a $1.1 billion, 364-Day Senior Unsecured Bridge Facility (Bridge Facility). This agreement was completed in anticipation of~~ the ~~acquisition of Power Products. Refer to~~ ~~Note 4 – Acquisitions~~ ~~for further details regarding~~financial covenants associated with the acquisition. On July 13, 2018, the Company executed the First Amendment to its Credit Facility to remove certain restrictions on the Company to incur unsecured debt with a maturity date before the Credit facility termination date. Simultaneously, $300 million of commitments related to the Bridge Facility were permanently terminated resulting in $800 million remaining under this facility.Company's debt.

Note 1715 – ~~Subsequent Events~~Leases

~~On July 17, 2018,~~The Company has operating lease agreements for offices, branches, factories, distribution and service facilities and certain personal property. Leases with an initial lease term of 12 months or less are not recorded on the balance sheet. Finance leases are not material to the Company's ~~Board~~condensed consolidated financial statements.

Several leases include one or more options to renew, with renewal terms that can extend the lease term from one to five years or more. The exercise of ~~Directors declared a quarterly dividend~~lease renewal options is at our sole discretion. Certain of our lease agreements include rental payments that vary based on ~~its common stock~~changes in volume activity, storage activity, or changes in the Consumer Price Index (CPI) or other indices. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

A summary of ~~$0.19 per share. The dividend will be payable September 14, 2018 to shareholders of record~~the Company's lease assets and lease liabilities as of ~~August 21, 2018.~~March 30, 2019 is as follows:



(in millions)	Classification	March 30, 2019
Lease Assets
Operating lease assets	Operating lease assets	$	99.2

Lease Liabilities
Current operating lease liabilities	Accrued expenses	23.2
Non-current operating lease liabilities	Operating lease liabilities	83.8
Total lease liabilities		$	107.0

~~Refer to~~ ~~Note 16 –~~ ~~Debt~~ inA summary of the Company's total lease cost for the three months ended March 30, 2019 is as follows:



(in millions)	Classification	March 30, 2019
Operating lease cost	Selling, general, and administrative expense	$	5.0
	Cost of sales	8.7
Variable lease cost	Selling, general, and administrative expense	1.2
	Cost of sales	2.0
Total lease cost ^(A)		$	16.9

(A) Includes total short-term lease cost which is immaterial.

The Company's maturity analysis of its operating lease liabilities as of March 30, 2019 is as follows:



(in millions)
2019	$	21.9
2020	24.7
2021	20.6
2022	17.6
2023	14.8
Thereafter	23.0
Total lease payments	$	122.6
Less: Interest	(15.6		)
Present value of lease liabilities	$	107.0

Notes to Condensed Consolidated Financial Statements ~~for details on acquisition-related debt activities occurring subsequent to June 30, 2018.~~

(unaudited)

The total weighted-average discount rate and remaining lease term for the Company's operating leases was 4.92 percent and 5.15 years, respectively, as of March 30, 2019. Total operating cash flows from operating leases were $7.3 million for the three months ended March 30, 2019.

The following represents the Company's future minimum rental payments at December 31, 2018 for agreements classified as operating leases under ASC 840 with non-cancelable terms in excess of one year:



(in millions)
2019	$	40.3
2020	32.3
2021	26.5
2022	17.7
2023	13.7
Thereafter	22.9
Total (not reduced by minimum sublease income of $0.1)	$	153.4

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 (Brunswick or the Company) are forward-looking as defined in the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations that are subject to risks and uncertainties. Actual results may differ materially from expectations as of the date of this filing because of factors discussed in Part I, Item 1A – Risk Factors in Brunswick’s 2018 Annual Report on Form 10-K for the year ended December 31, 2018 (the 2018 Form 10-K).

Certain statements in the Management’s Discussion and Analysis are based on non-GAAP financial measures. GAAP refers to generally accepted accounting principles in the United States. For example, the discussion of ~~Brunswick Corporation's (Brunswick or~~ the ~~Company)~~Company’s cash flows includes an analysis of free cash flows and total ~~liquidity,~~liquidity; the discussion of the Company's net sales includes ~~comparisons~~a discussion of net sales on a constant currency basis and excluding acquisitions and Sport Yacht and Yacht operations; the discussion of the Company's earnings includes ~~comparisons~~a presentation of operating earnings (loss) and operating margin excluding restructuring, exit, integration and impairment charges, Sport Yacht and Yacht operations, purchase accounting amortization and costs related to the planned Fitness business separation; gross margin excluding Sport Yacht and Yacht operations and purchase accounting amortization; and diluted earnings per common share, as adjusted. 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 ~~comprehensive income,~~operations, balance sheets or statements of cash flows of the issuer; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. Non-GAAP financial measures do not include operating and statistical measures.

The Company includes non-GAAP financial measures in Management’s Discussion and Analysis, as Brunswick’s management believes that these measures and the information they provide are useful to investors because they permit investors to view Brunswick’s performance using the same tools that management uses and to better evaluate the Company’s ongoing business performance.

~~Certain statements in Management’s Discussion~~ In order to better align Brunswick's reported results with the internal metrics used by the Company's management to evaluate business performance as well as to provide better comparisons to prior periods and ~~Analysis are forward-looking as defined in~~peer data, non-GAAP measures exclude the ~~Private Securities Litigation Reform Act~~impact of ~~1995. These statements are based on current expectations that are subject~~purchase accounting amortization related to ~~risks and uncertainties. Actual results may differ materially from expectations as of~~ the ~~date of this filing because of factors discussed in Part I, Item 1A – Risk Factors in Brunswick’s 2017 Annual Report on Form 10-K for the year ended December 31, 2017 (the 2017 Form 10-K).~~Power Products acquisition.

Brunswick does not provide forward-looking guidance for certain financial measures on a GAAP basis because it is unable to predict certain items contained in the GAAP measures without unreasonable efforts. These items may include pension settlement charges, restructuring, exit, integration and impairment costs, special tax items, ~~wind down activities~~costs related to ~~Sport Yacht and Yacht operations~~the planned Fitness business separation, acquisition-related costs, and certain other unusual adjustments.

~~Overview~~Fitness Business Separation and ~~Outlook~~Goodwill Impairment

The Company has made significant progress on the separation of the Fitness business and has received a strong level of buyer interest in the sales process. While the Company continues to maintain its preparedness for a spin-off of the Fitness business, the Company expects to be in a position to announce a sale of the Fitness business as expeditiously as possible in the second quarter of 2019.

As a result of the ~~June 25, 2018 announcement regarding Sea Ray, starting in~~events described above, the ~~second quarter of 2018,~~Company re-evaluated the ~~results~~fair value of the ~~entire Sea Ray business are reported in continuing operations for GAAP purposes for all periods presented. Non-GAAP results exclude~~Fitness reporting unit and recorded a goodwill impairment charge of $137.2 million within the Sport Yacht and Yacht component of the Sea Ray business, which is being wound down, but include the Sport Boat and Sport Cruiser component of the Sea Ray business, which the Company will continue to operate and reinvent. Outlook statements incorporate these changes unless otherwise noted.Fitness segment. Refer to ~~the Form 8-K dated July 19, 2018 and~~ Note 39 – ~~Discontinued Operations~~Goodwill and Other Intangibles in the Notes to Condensed Consolidated Financial Statements for further information.

Presentation of Sea Ray Results

As discussed in Note 3 - Discontinued Operations in the 2018 Form 10-K, the Company wound down its Sea Ray Sport Yacht and Yacht operations during 2018. As the wind-down was largely completed by the end of 2018, non-GAAP figures for 2018 exclude the results of Sport Yacht and Yacht operations.

Acquisition of Power Products

On August 9, 2018, the Company completed its acquisition of the Global Marine Business of Power Products Holdings, LLC (Power Products) for $909.6 million in cash, on a cash-free, debt-free basis. For further discussion regarding the acquisition, refer to Note 4 – Acquisitions in the Notes to Condensed Consolidated Financial Statements.

Overview and Outlook

Overview

Net sales increased 45 percent during the ~~second~~first quarter of ~~2018~~2019 when compared with the ~~second~~first quarter of ~~2017. On a constant currency basis,~~2018 and the Company's combined marine segments' net sales increased 39 percent over the comparative period. The Marine Engine segment reported strong net sales increases led by benefits from the Power Products acquisition and healthy demand for recently introduced higher horsepower outboard products. Boat segment net sales decreased slightly and were negatively affected by the wind down of Sport Yacht and Yacht operations ~~had an unfavorable impact on sales comparisons~~in the second half of ~~3 percent. Marine Engine~~2018. This headwind was partially offset by gains in premium product offerings including Sea Ray Sport Boats and Sport Cruisers. Consistent with expectations, Fitness segment ~~net sales increased~~revenues declined due to strong growth in both the outboard engine and parts and accessories businesses. Boat segment net sales decreased as significant declines in Sport Yacht and Yacht sales were partly offset by solid growth in the aluminum freshwater boat business, the recreational fiberglass boat businesses excluding sport yachts and yachts, and solid growth for Boston Whaler. Fitness segment net sales increased slightly reflecting solid growth in commercial strength driven bylower sales to ~~domestic health~~value-oriented clubs ~~mostly offset by declines~~along with softness in ~~cardio products led by continued weakness in Cybex sales.~~certain international markets. International net sales for the Company increased 64 percent in the ~~second~~first quarter of ~~2018~~2019 on a GAAP basis when compared with the ~~second~~first quarter of ~~2017. On~~2018, and increased 5 percent on a constant currency basis ~~international~~and excluding the impact of acquisitions. International sales ~~increased 3 percent,~~increases were driven by ~~increases in~~Rest-of-World regions (which includes all regions other than the United States, Europe, ~~rest-of-world regions~~Asia-Pacific and Canada), Europe and Canada, partially offset by slight declines in Asia-Pacific.

~~Net sales during~~Operating losses in the first ~~six months~~quarter of ~~2018 increased 4 percent on~~2019 were $(28.6) million and included $141.5 million of restructuring, exit, integration and impairment charges, mainly resulting from a ~~GAAP basis compared with~~$137.2 million goodwill impairment charge in the Fitness segment. Additionally, the Company incurred $7.8 million of costs related to the planned Fitness business separation and $7.2 million of purchase accounting amortization related to the Power Products acquisition. Excluding these items, operating earnings for the first ~~six months of 2017. International net sales increased 8 percent on a GAAP basis and increased 4 percent on a constant currency basis.Increases in international sales were primarily driven by Europe and Canada.~~

~~Operating earnings in the second~~ quarter of ~~2018~~2019 were ~~$106.7~~$127.9 million with an operating margin of ~~7.6 percent, which included~~10.0 percent. In the first quarter of 2018, the Company reported operating earnings of $105.1 million including restructuring, exit, integration and impairment charges of ~~$34.8~~$3.8 million, losses of ~~$27.4~~$8.1 million related to Sport Yacht and Yacht operations ~~in addition to restructuring, exit, integration~~ and ~~impairment charges, $2.5~~$1.7 million of ~~charges~~costs related to the planned Fitness business separation, acquisition-related costs of $2.5 million and $1.6 million of costs associated with an additional product field campaign in the Fitness segment. In the second quarter of 2017, the Company reportedseparation.Excluding these items, operating ~~earnings of $171.1 million~~

with an operating margin of 12.7 percent, which included restructuring, exit, integration and impairment charges of $5.7 million and losses of $3.4 million related to Sport Yacht and Yacht operations. The decrease in operating earnings reflected the factors described above as well as margin challenges in the Fitness and Marine Engine segments. These factors were partially offset by higher net sales and the favorable impact of foreign exchange.

~~Operating~~ earnings in the first ~~half~~quarter of 2018 were ~~$211.8~~$118.7 million with an operating margin of ~~8.1 percent,~~which included restructuring, exit, integration and impairment charges of $38.6 million, losses of $35.5 million related to Sport Yacht and Yacht operations in addition to restructuring, exit, integration and impairment charges, $4.2 million of charges related to the planned Fitness business separation, acquisition-related costs of $2.5 million and $1.6 million of costs associated with an additional product field campaign in the Fitness segment. In the first half of 2017, the Company reported operating earnings of $262.5 million, which included restructuring, exit, integration and impairment charges of $20.9 million and losses of $11.4 million related to Sport Yacht and Yacht operations.9.9 percent. The decrease in operating earnings (loss) reflected the ~~same factors~~charges discussed above as well as declines in the ~~quarterly period above.~~Fitness segment resulting from lower net sales along with investments in product and systems ahead of the separation, cost inflation and inefficiencies. Partially offsetting these items were increased operating earnings in the Marine Engine segment which benefited from increased sales and favorable changes in sales mix.

Outlook

Brunswick does not provide forward-looking guidance for certain financial measures on a GAAP basis because it is unable to predict certain items contained in the GAAP measures without unreasonable efforts. These items may include pension settlement charges, restructuring, exit, integration and impairment costs, special tax items, wind down activities related to Sport Yacht and Yacht operations and certain other unusual adjustments.

The Company ~~continues~~is projecting 2019 to ~~expect that 2018 will~~ be another year of ~~outstanding~~strong revenue and earnings growth with excellent free cash flow ~~generation.~~generation in excess of $320 million, with approximately $20 million attributable to the Company's Fitness segment. The Company is targeting ~~approximately~~net sales growth in its combined marine segments in the range of 8 percent to 910 percent, ~~net sales growth when compared with 2017,~~ including an approximate 4 percent benefit from completed acquisitions, and mid single-digit percent declines in the ~~impact of announced acquisitions, international demand impacts from tariffs and changes in foreign currency exchange rates.~~ Fitness segment.

The ~~Company's plan reflects the combined~~ marine ~~business revenue performance~~segments are expected to benefit from a steady global marine market, ongoing benefits from customer migration to higher horsepower engines and boats with increased technology and content, and market share gains due in part to the continued strong demand and acceptance of new ~~products and~~outboard products. The Company anticipates the ~~successful execution of our M&A strategy.~~Marine Engine segment will increase net sales at a low-double-digit percentage rate including the Power Products acquisition as well as continued market share gains in outboard engines, especially in the greater than 175 horsepower categories. Boat segment net sales are expected to grow low-

single digit percent including benefits from growth in premium brands in the U.S. The Company expects Fitness segment ~~is expected~~net sales to ~~benefit from recently introduced new products, including console~~decline, reflecting lower sales to value-oriented health clubs and ~~technology enhancements.~~stable market demand.

The Company ~~projects~~is planning to deliver higher earnings before income taxes in 2019 resulting from increased revenue and improvements in both gross margin to be down for the year as a percentage of sales, however not to the same degree as comparisons for the first half of the year, including the factors impacting net sales as discussed above. Operating margins are anticipated to decrease slightly, withand operating ~~leverage~~margin levels. Margin gains reflect strong improvement in the ~~high single digits.~~combined marine segments, partially offset by a margin decline in the Fitness segment. The Company projects operating expenses ~~including research and development expenses,~~ to ~~be higher~~increase in ~~2018 when compared with 2017~~2019 as ~~the Company~~it continues to ~~increase investment spending~~fund incremental investments to support growth ~~including~~and incur costs in connection with the Fitness business separation.

Gross margins for the Company's marine segments in 2019 are anticipated to benefit from new products, ~~productivity initiatives~~volume leverage and ~~information technology.~~cost reduction activities; additionally, the Marine Engine segment will benefit from the Power Products acquisition. Partially offsetting these positive factors are the estimated impacts of tariffs and unfavorable movements in foreign exchange rates, which are expected to have an incremental negative impact on gross margins versus 2018. Operating expenses for the marine segments are ~~projected~~estimated to be slightly lower than 2018 on a percentage of sales ~~basis~~basis. Fitness segment gross margins in 2019 are anticipated to remain consistent with 2018 ~~versus 2017.~~levels, including benefits from cost reduction initiatives. Operating margins are expected to decline due to planned investments in new products and modernizing information technology platforms which are intended to position the Fitness business to succeed as an independent entity.

The Company is planning for its effective tax rate in ~~2018~~2019 to be approximately ~~21 percent to 22~~23 percent based on existing tax ~~laws.~~

~~Discontinued Operations~~

On December 5, 2017, the Board of Directors authorized the Company to exit its Sea Ray business, including the Meridian brand, as a result of, among other things, a material change in strategic direction and a review of the expected future cash flows, market conditions and business trends. The Company engaged in a thorough sales process and determined that the offers received did not reflect an appropriate value for the brands. As a result, the Board of Directors authorized the Company to end the sale process for its Sea Ray business. This action was announced on June 25, 2018. As part of this action, the Company decided to restructure, including discontinuing Sea Ray Sport Yacht and Yacht models and winding down yacht production in the third quarter of 2018, while continuing to operate and reinvent Sea Ray Sport Boat and Sport Cruiser operations.

law.

Matters Affecting Comparability

Certain events have occurred ~~during the three months and six months ended June 30, 2018 and July 1, 2017~~ which the Company believes affect the comparability of the results of operations. The ~~tables~~table below ~~summarize~~summarizes the impact of changes in currency exchange rates, ~~as well as~~ the impact of recent acquisitions and the impact of Sport Yacht and Yacht operations on the Company's net sales:


	Three Months Ended
	Net Sales						2018 vs. 2017								Net Sales						Q1 2019 vs. Q1 2018
(in millions)	June 30, 2018			July 1, 2017			GAAP		Constant Currency Impact		Acquisition Benefit		Impact of Sport Yacht and Yacht		Q1 2019			Q1 2018			GAAP	Currency Impact	Acquisition Impact	Impact of Sport Yacht and Yacht
Marine Engine	$	834.3		$	766.2		8.9	%	(1.0	)%	1.3	%	—		$	766.0		$	687.1		11.5%	(2.1)%	8.2%	—
Boat	394.9			412.1			(4.2	)%	(0.9	)%	—		(8.6	)%	373.3			376.5			(0.8)%	(1.0)%	—	(4.1)%
Marine eliminations	(80.5		)	(76.8		)									(88.6		)	(96.6		)
Total Marine	1,148.7			1,101.5			4.3	%	(1.0	)%	0.9	%	(3.4	)%	1,050.7			967.0			8.7%	(1.8)%	5.7%	(1.6)%

Fitness	252.2			250.5			0.7	%	(0.9	)%	—		—		225.2			244.4			(7.9)%	(1.5)%	—	—
Total	$	1,400.9		$	1,352.0		3.6	%	(1.0	)%	0.7	%	(2.7	)%	$	1,275.9		$	1,211.4		5.3%	(1.8)%	4.5%	(1.3)%

Six Months Ended
Net Sales 2018 vs. 2017
(in millions) June 30,
2018 July 1,
2017 GAAP Constant Currency Impact Acquisition Benefit Impact of Sport Yacht and Yacht
Marine Engine $ 1,521.4
$ 1,398.0
8.8 % (1.4 )% 1.2 % —
Boat 771.4
794.8
(2.9 )% (1.2 )% —
(7.7 )%
Marine eliminations (177.1 ) (166.6 )
Total Marine 2,115.7
2,026.2
4.4 % (1.4 )% 0.8 % (3.2 )%

Fitness 496.6
486.1
2.2 % (1.6 )% —
—
Total $ 2,612.3
$ 2,512.3
4.0 % (1.4 )% 0.7 % (2.5 )%
Acquisitions. The Company completed the Power Products acquisition during 2018 which affected the comparability of net sales. The impacts on consolidated and segment sales comparisons are reflected above. Refer to Note 4 – Acquisitions in the Notes to Consolidated Financial Statements for further information.

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 U.S. dollars 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. Approximately 2522 percent of the Company's annual net sales are transacted in a currency other than the U.S. dollar. The Company's most material exposures include sales in Euros, Canadian dollars, Australian dollars and Brazilian ~~reais and British pounds.~~reais.

Additionally, operating earnings comparisons were ~~positively~~negatively affected by foreign exchange rates by approximately ~~$5 million and $8~~$3 million in the ~~second~~first quarter ~~and first half, respectively,~~ of ~~2018~~2019 when compared with ~~2017.~~2018. These estimates include the impact of translation on all sales and costs transacted in a currency other than the U.S. dollar and the impact of hedging ~~activities~~activities.

Sport Yacht and ~~pricing actions~~Yacht Wind-down. As discussed in ~~certain international markets in response to the changes~~Note 3 - Discontinued Operations in the ~~exchange rate between~~2018 Form 10-K, the ~~local currency~~Company wound down its Sea Ray Sport Yacht and Yacht operations during 2018. The results of Sport Yacht and Yacht operations for the ~~U.S. dollar.~~three months ended March 31, 2018 are summarized in the table below:



(in millions)	March 31, 2018
Net sales	$	15.1
Gross margin	(3.6		)
Restructuring, exit, integration and impairment charges	1.4
Operating loss	(8.1		)

Restructuring, exit, integration and impairment charges. The Company recorded restructuring, exit, integration and impairment charges during the three months ended March 30, 2019 and ~~six months ended June 30, 2018 and July 1, 2017.~~March 31, 2018. The following table summarizes these charges by cash charges and non-cash charges.


	Three Months Ended				Six Months Ended
(in millions)	June 30, 2018		July 1, 2017		June 30, 2018			July 1, 2017		March 30, 2019		March 31, 2018
Cash charges:
Boat	$	13.6	$	1.2	$	16.2		$	4.4	$	0.5	$	2.6
Fitness	0.4		4.5		2.0			6.9		1.1		1.6
Corporate	0.7		—		0.7			2.4		1.2		—
Total cash charges	14.7		5.7		18.9			13.7		2.8		4.2
Non-cash charges (gains on disposal):
Boat	19.9		—		19.9			7.2		1.5		—
Fitness	0.2		—		(0.2		)	—
Fitness ^(A)										137.2		(0.4		)
Total non-cash charges	20.1		—		19.7			7.2		138.7		(0.4		)
Total restructuring, exit, integration and impairment charges	$	34.8	$	5.7	$	38.6		$	20.9	$	141.5	$	3.8

(A) 2019 includes a $137.2 million goodwill impairment charge. Refer to Note 9 – Goodwill and Other Intangibles in the Notes to Condensed Consolidated Financial Statements for more information.

Refer to Note 53 – Restructuring, Exit, Integration and Impairment Activities in the Notes to Condensed Consolidated Financial Statements for further information.

~~Retention of the Sea Ray business and wind down of Sport Yacht and Yacht operations.~~ ~~As a result of the decision to retain and restructure the Sea Ray business as discussed in~~ ~~Note 3 –~~ ~~Discontinued Operations~~ in the Notes to Condensed Consolidated Financial Statements, starting in the second quarter of 2018, the results of the Sea Ray business are reported in continuing operations for GAAP purposes. As part of the restructuring, the Sport Yacht and Yacht component of the Sea Ray business is being wound down. The results of Sport Yacht and Yacht operations that are being wound down are summarized in the table below.

Three Months Ended 2018 vs. 2017 Six Months Ended 2018 vs. 2017
(in millions) June 30,
2018 July 1,
2017 $
Change %
Change June 30,
2018 July 1,
2017 $
Change %
Change
Net sales ^(A)
$ 19.9
$ 53.1
$ (33.2 ) (62.5 )% $ 35.0
$ 92.0
$ (57.0 ) (62.0 )%
Gross margin ^(A)
(23.3 ) 0.6
(23.9 ) NM
(26.9 ) (1.5 ) (25.4 ) NM
Restructuring, exit, integration and impairment charges 33.4
0.6
32.8
NM
34.2
0.9
33.3
NM
Operating loss ^(A)
(60.8 ) (4.0 ) (56.8 ) NM
(69.7 ) (12.3 ) (57.4 ) NM

(A) In the three months and six months ended June 30, 2018, Sport Yacht and Yacht results include $15.5 million of charges within Net sales related to estimated retail sales promotions to support the sale of sport yachts and yachts currently in the dealer pipeline.

~~Acquisitions.~~ The Company acquired Lankhorst Taselaar B.V. (Lankhorst Taselaar) in the third quarter of 2017. Refer to Note 4 in the Notes to Consolidated Financial Statements in the 2017 Form 10-K for further details.

Fitness business separation charges. On March 1, 2018, the Company's Board of Directors authorized proceeding with separating its Fitness business from the Company portfolio. While the Company continues to maintain its preparedness for a spin-off of ~~its~~the Fitness ~~business.~~business, the Company expects to be in a position to announce a sale of the Fitness business as expeditiously as possible in the second quarter of 2019. In connection with this ~~planned~~ action, the Company incurred ~~$2.5~~$7.8 million and ~~$4.2~~$1.7 million of charges within Selling, general and administrative expense during the three months ended March 30, 2019 and ~~six months ended June 30,~~March 31, 2018, respectively. ~~There were no comparable charges in 2017.~~

~~Adoption~~Purchase accounting amortization. As part of ~~new revenue standard.~~ ~~On January 1,~~purchase accounting for the Power Products acquisition completed in the third quarter of 2018, the Company ~~adopted ASU 2014-09,~~ ~~Revenue from Contracts with Customers, (new revenue standard) using~~recognized definite-lived intangible assets which will be amortized over their useful lives. During the ~~modified retrospective method. As a result~~first quarter of ~~applying the new revenue standard,~~2019, the Company recorded $7.2 million of purchase accounting amortization within Selling, general and administrative expense.

Tax items. The Company recognized ~~a decrease~~an income tax benefit of ~~$9.7~~$(11.4) million and ~~$4.9~~an income tax provision of $27.2 million ~~in Net sales and a decrease of $10.6 million and $5.0 million in Operating earnings during~~for the three months ended March 30, 2019 and ~~six~~March 31, 2018, respectively, which included a net benefit of $(0.6) million and a net charge of $6.7 million, respectively. The net benefit of $(0.6) million related to certain special tax items. The net charge of $6.7 million was due primarily to updates related to 2017 tax reform. The effective tax rate, which is calculated as the income tax provision (benefit) as a percentage of earnings (loss) before income taxes, for the three months ended ~~June~~March 30, 2019 and March 31, 2018 ~~respectively, when compared with previous GAAP. Refer to~~was 23.9 percent and 27.2 percent, respectively.

See Note 112 – ~~Significant Accounting Policies~~Income Taxes in the Notes to Condensed Consolidated Financial Statements for further ~~information on the impact of the new revenue standard on the Company's consolidated financial statements. Refer to~~ ~~Note 2 –~~ ~~Revenue Recognition~~ ~~in the Notes to Condensed Consolidated Financial Statements for further discussion of the Company's revenue recognition policies and a presentation of disaggregated revenue.~~details.

Results of Operations

Consolidated

The following table sets forth certain amounts, ratios and relationships calculated from the Condensed Consolidated Statements of Comprehensive Income for the three months ~~and six months~~ ended:

Three Months Ended 2018 vs. 2017 Six Months Ended 2018 vs. 2017
(in millions, except per share data) June 30,
2018 July 1,
2017
$
Change

%
Change
June 30,
2018 July 1,
2017
$
Change

%
Change
Net sales ^(B)
$ 1,400.9
$ 1,352.0
$ 48.9
3.6 % $ 2,612.3
$ 2,512.3
$ 100.0
4.0 %
Gross margin ^{(A) (B)}
349.7
369.9
(20.2 ) (5.5 )% 659.7
671.1
(11.4 ) (1.7 )%
Restructuring, exit, integration and impairment charges 34.8
5.7
29.1
NM
38.6
20.9
17.7
84.7 %
Operating earnings ^{(B) (C) (D) (E)}
106.7
171.1
(64.4 ) (37.6 )% 211.8
262.5
(50.7 ) (19.3 )%
Net earnings ^{(B) (C) (D) (E) (F)}
79.0
119.4
(40.4 ) (33.8 )% 151.9
184.3
(32.4 ) (17.6 )%

Diluted earnings per common share $ 0.90
$ 1.32
$ (0.42 ) (31.8 )% $ 1.72
$ 2.03
$ (0.31 ) (15.3 )%

Expressed as a percentage of Net sales:

Gross margin ^(B)
25.0 % 27.4 %

(240) bpts
25.3 % 26.7 %

(140) bpts
Selling, general and administrative expense ^{(B) (C) (D) (E)}
12.0 % 11.6 %
40 bpts
12.7 % 12.5 % 20 bpts
Research and development expense 2.8 % 2.7 %
10 bpts
2.9 % 2.9 % 0 bpts
Restructuring, exit, integration and impairment charges 2.5 % 0.4 %
210 bpts
1.5 % 0.8 %

70 bpts
Operating margin ^{(B) (C) (D) (E)}
7.6 % 12.7 %
(510) bpts
8.1 % 10.4 %

(230) bpts

~~__________~~



(in millions, except per share data)	March 30, 2019			March 31, 2018			$ Change			% Change
Net sales ^(A)	$	1,275.9		$	1,211.4		$	64.5		5.3	%
Gross margin ^{(B) (A)}	337.5			310.0			27.5			8.9	%
Restructuring, exit, integration and impairment charges ^{(A) (C)}	141.5			3.8			137.7			NM
Operating earnings (loss) ^(D)	(28.6		)	105.1			(133.7		)	NM
Net earnings (loss)	(36.3		)	72.9			(109.2		)	NM

Diluted earnings (loss) per common share	$	(0.42	)	$	0.82		$	(1.24	)	NM

Expressed as a percentage of Net sales:
Gross margin	26.5		%	25.6		%				90 bps
Selling, general and administrative expense ^(D)	14.9		%	13.5		%				140 bps
Research and development expense	2.7		%	3.1		%				(40) bps
Restructuring, exit, integration and impairment charges ^(C)	11.1		%	0.3		%				NM
Operating margin	(2.2		)%	8.7		%				NM

NM = not meaningful

~~bpts~~bps = basis points

(A) 2018 results include Sport Yacht and Yacht operations. In the first quarter of 2018, Sport Yacht and Yacht operations reported Net sales of $15.1 million, Gross margin of $(3.6) million, Restructuring, exit, integration and impairment charges of $1.4 million and Operating earnings (loss) of $(8.1) million.


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


~~(B)~~	Refer to the Matters Affecting Comparability section of the Management's Discussion and Analysis for the impact of Sea Ray Sport Yacht and Yacht operations on the Condensed Consolidated Statements of Comprehensive Income.


(C)	~~The Company recorded $2.5 million and $4.2 million in the second quarter and first half of 2018, respectively, of charges within SGA related to the planned Fitness business separation.~~


~~(D)~~	~~The Company recorded acquisition-related costs of $2.5~~2019 includes a $137.2 million ~~in the both the second quarter and first half of 2018, respectively, within SGA.~~goodwill impairment charge. Refer to Note 49 –~~Acquisitions~~ Goodwill and Other Intangibles in the Notes to Condensed Consolidated Financial Statements for ~~further details.~~more information.

~~(E)~~(D)

~~In both~~Includes $7.8 million and $1.7 million in the ~~second~~first quarters of 2019 and 2018, respectively, of charges related to the planned Fitness business separation. The first quarter ~~and first half~~ of ~~2018, the Company recorded $1.6~~2019 includes $7.2 million of ~~charges within COS~~purchase accounting amortization related to ~~an additional product field campaign within~~ the ~~Fitness segment.~~


~~(F)~~	~~Excludes a $1.0 million net benefit and a $0.2 million net benefit for special tax items for~~acquisition of Power Products in the ~~second quarters~~third quarter of ~~2018 and 2017, respectively, and excludes a $5.7 million net charge and a $0.7 million net benefit for special tax items for the first halves of 2018 and 2017, respectively.~~2018.

Net sales increased during the ~~second~~first quarter of ~~2018~~2019 when compared with the ~~second~~first quarter of ~~2017.~~2018 as a result of strong sales increases in the Marine Engine segment, ~~net sales increased due to strong growth~~partially offset by slight declines in ~~propulsion,~~the Boat segment and declines in the Fitness segment. Growth in the Marine Engine segment was led by ~~increases in outboard engines, particularly in~~benefits from the Power Products acquisition and a healthy demand for recently introduced higher horsepower ~~categories, as well as strong~~outboard products. Additionally, the organic marine parts and accessories business continued its steady performance, with weather negatively influencing U.S. market growth in the ~~parts and accessories businesses in both the product and the distribution categories.~~quarter. Boat segment net sales decreased ~~due mostly to significant declines in Sport Yacht~~slightly and ~~Yacht sales. These declines~~ were ~~partly offset~~negatively affected by ~~solid growth in~~ the ~~aluminum freshwater boat business, the recreational fiberglass boat businesses excluding the impact~~wind down of Sport Yacht and Yacht operations in 2018, partially offset by gains in premium offerings including Sea Ray Sport Boats and ~~solid growth for Boston Whaler. Growth in the aluminum freshwater boat business benefited from successful efforts~~Sport Cruisers. Average selling prices expanded due to ~~increase production levels of pontoon boats.~~positive mix benefits and increased content on boats, along with inflationary price increases. As anticipated, Fitness segment ~~net sales increased slightly resulting from solid growth in commercial strength driven by~~revenues declined due to lower sales to ~~domestic health~~value-oriented clubs ~~mostly offset by declines~~along with softness in ~~cardio products led by continued weakness in Cybex sales.~~certain international markets. International net sales for the Company ~~were 33 percent of consolidated net sales and~~ increased 64 percent in the ~~second~~first quarter of ~~2018~~2019 on a GAAP basis when compared with the ~~second~~first quarter of ~~2017. On~~2018, and increased 5 percent on a constant currency basis ~~international~~and excluding the impact of acquisitions. International sales ~~increased 3 percent,~~increases were driven by ~~increases in~~Rest-of-World regions, Europe ~~rest-of-world regions~~ and Canada, partially offset by slight declines in Asia-Pacific.

~~Net sales during the first six months of 2018 increased compared with the first six months of 2017, reflecting the same factors as the quarterly period above.International net sales were 34 percent of consolidated net sales and increased 8 percent on a GAAP basis and increased 4 percent on a constant currency basis.Increases in international sales were primarily driven by Europe and Canada.~~

Gross margin ~~percentage was down~~percent increased in the ~~second~~first quarter of ~~2018~~2019 when compared with the same prior year ~~period. The decrease~~period, reflecting strong performance in ~~gross~~the Marine Engine segment resulting from favorable impacts of changes in sales mix, as well as margin ~~percentage reflected significant declines in~~benefits from the absence of the Sea Ray Sport Yacht and Yacht operations ~~including estimated retail sales promotions to support the sale of sport yachts and yachts currently~~ in ~~the dealer pipeline, charges to facilitate winding down the business and lower sales volumes.~~2019, which had a negative gross margin impact in 2018. Additionally, ~~several~~ unfavorable factors drove lower gross margins in the Fitness segment ~~contributed to gross margin declines~~ including ~~higher freight costs,~~ unfavorable changes in sales mix and cost inflation, and inefficiencies and sales mix. Partially offsetting these factors were volume benefits and favorable movements in foreign exchange rates. In the first six months of 2018, gross margin percentage declined due to the same factors described above.partially offset by cost reduction efforts.

Selling, general and administrative expense (SG&A) increased during the first three months of 2019 when compared with the prior year period. SG&A in 2019 included purchase accounting amortization associated with the Power Products acquisition while SG&A in both 2019 and ~~Research and development expense increased overall and~~2018 included costs associated with the planned Fitness business separation. Excluding these items, SG&A as a percentage of ~~net~~ sales ~~during~~was slightly higher in the ~~second~~first quarter of ~~2018 when~~2019 compared with the ~~second~~first quarter of ~~2017. Both line items reflected planned~~2018. Research

and development expense decreased overall in the first quarter of 2019 as spending increases to support new product ~~promotion and~~ development in the prior year were largely completed, partly offset by continued investment in new product in the Marine Engine segment. Additionally, Selling, general and administrative expense included costs related to the planned Fitness business separation announced in the first quarter of 2018 and acquisition-related costs. In the first six months of 2018, Selling, general and administrative expense increased due to the same factors described above.

The Company recorded restructuring, exit, integration and ~~integration~~impairment charges of ~~$34.8~~$141.5 million and ~~$38.6~~$3.8 million during the three months ended March 30, 2019 and ~~six months ended June 30,~~March 31, 2018, ~~respectively, and recorded $5.7 million and $20.9 million of charges during the three months and six months ended July 1, 2017,~~ respectively. Refer to Note 53 – Restructuring, Exit, Integration and Impairment Activitiesin the Notes to Condensed Consolidated Financial Statementsfor further information.

The Company recorded Equity earnings of ~~$1.4~~$1.9 million and ~~$2.4~~$1.0 million in the three months ended March 30, 2019 and ~~six months ended June 30,~~March 31, 2018, respectively, which were mainly related to the Company's marine and technology-related joint ventures. ~~This compares with Equity earnings of $1.4 million and $3.7 million recorded in the three months and six months ended July 1, 2017, respectively.~~

The Company recognized ~~$(2.5)~~$(1.6) million and $(0.0) million in Other ~~income (expense),~~expense, net in the three months ended March 30, 2019 and ~~six months ended June 30, 2018. This compares with $0.3 million and $(0.4) million recognized in Other income (expense), net in the three months and six months ended July 1, 2017,~~March 31, 2018, respectively. Other ~~income (expense),~~expense, net primarily includes pension and other postretirement benefit costs, the amortization of deferred income related to a trademark licensing agreement with AMF Bowling Centers, Inc. as discussed in Note 1 in the Notes to Consolidated Financial Statements in the ~~2017~~2018 Form 10-K, as well as remeasurement gains and losses resulting from changes in foreign currency rates.

Net interest expense increased ~~slightly~~$13.4 million for the three months ~~and six months~~ ended ~~June~~March 30, ~~2018~~2019 when compared with the same prior year period as a result of recent debt issuances as discussed in Note 14 – Debt in the Notes to Condensed Consolidated Financial Statements and ~~included~~Note 17 in the ~~mark-to-market impact of~~Notes to Consolidated Financial Statements in the ~~Company's fixed-to-floating rate interest rate swaps.~~2018 Form 10-K.

The Company recognized an income tax benefit of $(11.4) million and an income tax provision of $27.2 million for the three months ended March 30, 2019 and ~~six months ended June 30,~~March 31, 2018, ~~of $19.0 million and $46.2 million,~~ respectively, which included a net ~~tax~~ benefit of ~~$2.6~~$(0.6) million and a net ~~tax~~ charge of ~~$2.7~~$6.7 million, respectively. The net ~~tax~~ benefit of ~~$2.6~~$(0.6) million ~~is primarily~~ related to ~~the excess~~certain special tax ~~benefit related to share-based compensation and the release of foreign valuation allowances.~~items. The net ~~tax~~ charge of ~~$2.7~~$6.7 million was due primarily ~~associated with~~to updates related to 2017 tax reform net of excess tax benefits related to share-based compensation. The Company recognized an income tax provision for the three months and six months ended July 1, 2017 of $47.1 million and $69.1 million, respectively, which included net tax benefits of $2.3 million and $7.6 million, respectively. The net tax benefits of $2.3 million and $7.6 million were associated with the net excess tax benefits related to share-based compensation.reform. The effective tax rate, which is calculated as the income tax provision (benefit) as a percentage of ~~pre-tax~~earnings (loss) before income taxes, for the three months ended March 30, 2019 and ~~six months ended June 30,~~March 31, 2018 was ~~19.4~~23.9 percent and ~~23.3 percent, respectively. The effective tax rate for the three months and six months ended July 1, 2017 was 28.3 percent and 27.3~~27.2 percent, respectively.

Due to the factors described in the preceding paragraphs, operating earnings (loss), net earnings (loss) and diluted earnings (loss) per common share decreased during ~~both~~ the ~~second~~first quarter ~~and first six months~~ of ~~2018 when~~2019 compared with the same prior year ~~periods. Diluted earnings per common share includes the benefits of common stock repurchases on shares outstanding.~~period.

Diluted earnings per common share, as adjusted, ~~increased~~decreased by ~~$0.12~~$(0.02) per share, or 9(2) percent, to ~~$1.50~~$0.99 per share for the ~~second~~first quarter of ~~2018~~2019 when compared with the ~~second~~first quarter of ~~2017,~~2018, and included adjustments for the following items: a $1.29 per share charge for restructuring, exit, integration and impairment, ~~charges were $0.32~~a $0.07 per share ~~losses related to Sport Yacht and Yacht operations were $0.24 per share, costs associated with the planned~~charge for Fitness business separation ~~were $0.02~~costs, a $0.06 per share ~~acquisition-related costs were $0.02 per share, costs related to an additional product field campaign in the Fitness segment were~~charge for purchase accounting amortization and a $0.01 per share ~~and~~net benefit for special tax ~~items were~~

~~a net benefit of $0.01 per share.~~items. In ~~2017,~~2018, Diluted earnings per common share, as adjusted, ~~included $0.04~~was $1.01 per share ofand included the following items: a $0.03 per share charge for restructuring, exit, integration and impairment, ~~charges and a $0.02 per share unfavorable impact from Sport Yacht and Yacht operations.~~

Diluted earnings per common share, as adjusted, increased by $0.22 per share, or 10 percent, to $2.51 per share for the first half of 2018 when compared with the first half of 2017, and included adjustments for the following items: restructuring, exit, integration and impairment charges were $0.34 per share, losses related to Sport Yacht and Yacht operations were $0.32 per share, special tax items were a net charge of $0.06 per share, costs associated with the planned Fitness business separation were $0.04 per share, acquisition-related costs were $0.02 per share and costs related to an additional product field campaign in the Fitness segment were $0.01 per share. In 2017, Diluted earnings per common share, as adjusted included $0.19 per share of restructuring, exit, integration and impairment charges, an $0.08 per share ~~unfavorable impact related to~~net charge for special tax items, $0.07 per share of losses ~~from~~for Sport Yacht and Yacht operations and a $0.01 per share ~~of net benefits from special tax items.~~charge for Fitness business separation costs.

Marine Engine Segment

The following table sets forth Marine Engine segment results for the three months ~~and six months~~ ended:

Three Months Ended 2018 vs. 2017 Six Months Ended 2018 vs. 2017
(in millions) June 30,
2018 July 1,
2017
$
Change

%
Change
June 30,
2018 July 1,
2017 $
Change %
Change
Net sales $ 834.3
$ 766.2
$ 68.1
8.9 % $ 1,521.4
$ 1,398.0
$ 123.4
8.8 %
Operating earnings ^(A)
149.1
148.3
0.8
0.5 % 244.8
236.9
7.9
3.3 %
Operating margin ^(A)
17.9 % 19.4 %
(150) bpts
16.1 % 16.9 % (80) bpts

~~__________~~



(in millions)	March 30, 2019			March 31, 2018			$ Change		% Change
Net sales	$	766.0		$	687.1		$	78.9	11.5	%
Operating earnings ^(A)	112.9			95.7			17.2		18.0	%
Operating margin ^(A)	14.7		%	13.9		%			80 bps

~~bpts~~bps = basis points

(A) Includes ~~$2.5~~$7.2 million of ~~acquisition-related costs~~purchase accounting amortization in ~~the second quarter of 2018.~~2019.

The Marine Engine segment reported strong net sales ~~increased due to strong growth in propulsion,~~increases led by ~~increases in outboard engines, particularly in~~benefits from the Power Products acquisition. The propulsion business benefited from healthy demand for recently introduced higher horsepower ~~categories, as well as strong~~outboard products, including the new 175 to 300 horsepower outboards. These new outboard products drove sales mix improvements, market share gains and margin accretion. The organic marine parts and accessories business continued its steady performance, with weather negatively influencing U.S. market growth in the ~~parts and accessories businesses in both the product and the distribution categories.~~quarter. Revenues from the ~~Lankhorst Taselaar~~Power Products acquisition completed in the third quarter of ~~2017~~2018 accounted for ~~1 percent~~8 percentage points of the Marine Engine segment's ~~overall~~ revenue growth ~~rate in the second quarter of 2018.~~rate. International net sales were 2932 percent of the segment's net sales in the ~~second~~first quarter of ~~2018~~2019 and increased 1115 percent from the prior year on a GAAP basis. On a constant

currency basis and excluding the impact of anthe Power Products acquisition, international net sales increased 313 percent due to increases in all regions, particularly in Europe and ~~rest-of-world regions, partially offset by declines in Asia-Pacific.~~

Net sales for the Marine Engine segment increased in the first six months of 2018 when compared with the same prior year period due to the same factors described in the quarterly period above. International net sales were 30 percent of the segment's net sales in the first six months of 2018, and increased 10 percent from the prior year on a GAAP basis. On a constant currency basis and excluding the impact of an acquisition, international net sales increased 1 percent with increases in rest-of-world regions being partially offset by declines in Asia-Pacific.

Marine Engine segment operating earnings increased ~~slightly in the second quarter of 2018 when compared with the same prior year period~~ as a result of higher net sales and favorable impacts from changes in sales mix and ~~changes~~benefits from the Power Products acquisition. Partially offsetting these items were continued investments in ~~foreign currency exchange rates. These factors were partially offset by unfavorable plant efficiencies associated with~~capacity expansions aimed at furthering engine production ramp-up for new products and warehouse management integration, planned spending increases for product promotion and development, and acquisition-related costs. Operating earnings for the first six months of 2018 increased when compared with the same prior year period due to the same factors described in the quarterly period.capabilities.

Boat Segment

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

Three Months Ended 2018 vs. 2017 Six Months Ended 2018 vs. 2017
(in millions) June 30,
2018 July 1,
2017 $
Change %
Change June 30,
2018 July 1,
2017 $
Change %
Change
Net sales ^(A)
$ 394.9
$ 412.1
$ (17.2 ) (4.2 )% $ 771.4
$ 794.8
$ (23.4 ) (2.9 )%
Restructuring, exit, integration and impairment charges ^(A)
33.5
1.2
32.3
NM
36.1
11.6
24.5
NM
Operating earnings ^(A)
(32.2 ) 24.7
(56.9 ) NM
(17.8 ) 27.9
(45.7 ) NM
Operating margin ^(A)
(8.2 )% 6.0 %
NM
(2.3 )% 3.5 % NM

~~__________~~



(in millions)	March 30, 2019			March 31, 2018			$ Change			% Change
Boat segment:
Net sales	$	373.3		$	376.5		$	(3.2	)	(0.8	)%
Restructuring, exit, integration and impairment charges	2.0			2.6			(0.6		)	(23.1	)%
Operating earnings	22.0			14.4			7.6			52.8	%
Operating margin	5.9		%	3.8		%				210 bps

Sport Yacht and Yacht operations:
Net sales	0.3			15.1			(14.8		)	(98.0	)%
Restructuring, exit, integration and impairment charges	—			1.4			(1.4		)	NM
Operating loss	(1.1		)	(8.1		)	7.0			86.4	%

bps = basis points

NM = not meaningful

~~(A) Refer to the Matters Affecting Comparability section of the Management's Discussion and Analysis for the impact of Sport Yacht and Yacht operations on the Boat segment results.~~

Boat segment net sales decreased ~~due mostly to significant declines in~~slightly with comparisons negatively affected by the wind down of Sport Yacht and Yacht operations in 2018. Excluding this factor, sales ~~which negatively affected~~increased due in part to sales ~~comparisons by 9 percent. These declines were partly offset by solid growth~~increases for aspirational brands with premium content, including Sea Ray Sport Boats and Sport Cruisers. Unit volumes declined due mostly to softness in value categories, due in part to weather delaying the ~~aluminum freshwater boat business~~start of the retail season. Average selling prices expanded due to positive mix benefits and the recreational fiberglass boat business excluding Sport Yacht and Yacht, and Boston Whaler. Growth in the aluminum freshwater boat business benefited from successful efforts to increase production levels of pontoon boats; and was partially offset by declines in aluminum fishingincreased content on boats, ~~reflecting the impact of Bass Pro's acquisition of Cabela's, which was a large distribution channel for the Lowe boat brand. Additionally, saltwater fishing net~~along with inflationary price increases. International sales were flat as solid sales growth at Boston Whaler, evidencing the continuing trend of consumers favoring outboard powered boats, was offset by declines in smaller brands in this category. Global wholesale boat shipments were down slightly, but sales increases were aided by higher average selling prices as customers continue to migrate to boats with more content and higher horsepower engines. In addition, price increases were implemented in response to inflation, particularly in pontoons. International net sales were 29 percent of the segment's net sales in the second quarter of 2018, and increased 4 percent from the prior year on a GAAP basis and increased 1 percent on a constant currency basis. Sales increases in Canada were partially offset by decreases in rest-of-world regions and Europe.

Boat segment net sales increased in the first six months of 2018 when compared with the same prior year period due to the same factors described in the quarterly period above, except Sport Yacht and Yacht sales negatively affected sales comparisons by 8 percent. International net sales were 2827 percent of the segment's net sales in the first ~~six months~~quarter of ~~2018,~~2019 and ~~increased 6~~decreased 2 percent ~~from the prior year~~ on a GAAP basis. On a constant currency basis, international ~~net~~ sales increased 21 percent, ~~as increases~~reflecting sales growth in Canada ~~were~~and Rest-of-World, partially offset by ~~decreases~~declines in ~~rest-of-world regions.~~Europe and Asia-Pacific.

Boat segment operating earnings ~~decreased~~increased in the ~~second~~first quarter of ~~2018~~2019 when compared with the ~~second~~first quarter of ~~2017. The decrease was a result~~2018, primarily reflecting benefits from the wind-down of ~~higher restructuring, exit, integration~~Sea Ray Sport Yacht and ~~impairment charges mainly as a result of~~Yacht operations completed in 2018. Excluding the ~~winding down~~impact of Sport Yacht and Yacht operations, weaker operating performance of Sport Yacht and Yacht operations, including estimated retail sales promotions to support the sale of sport yachts and yachts currently in the dealer pipeline. Additionally, operating earnings ~~were affected by~~decreased slightly as a result of less favorable plant efficiencies at certain of our boat facilities, due in part to new product ~~integrations.~~integrations, and planned spending on profit improvement initiatives. These negative factors were partially offset by ~~increased net~~positive changes in sales ~~outside of Sport Yacht and Yacht operations.~~mix.

Boat segment operating earnings decreased in the first six months of 2018 compared with 2017 due to the same factors discussed for the quarterly period above, except net sales outside of Sport Yacht and Yacht operations also included positive timing benefits from the adoption and implementation of the new revenue standard.

Fitness Segment

The following table sets forth Fitness segment results for the three months ~~and six months~~ ended:

Three Months Ended 2018 vs. 2017 Six Months Ended 2018 vs. 2017
(in millions) June 30,
2018 July 1,
2017 $
Change %
Change June 30,
2018 July 1,
2017 $
Change %
Change
Net sales $ 252.2
$ 250.5
$ 1.7
0.7 % $ 496.6
$ 486.1
$ 10.5
2.2 %
Restructuring, exit, integration and impairment charges 0.6
4.5
(3.9 ) NM
1.8
6.9
(5.1 ) (73.9 )%
Operating earnings ^(A)
14.3
18.5
(4.2 ) (22.7 )% 25.3
36.8
(11.5 ) (31.3 )%
Operating margin 5.7 % 7.4 %
(170) bpts
5.1 % 7.6 % (250) bpts

~~__________~~



(in millions)	March 30, 2019		March 31, 2018		$ Change			% Change
Net sales	225.2		244.4		$	(19.2	)	(7.9	)%
Restructuring, exit, integration and impairment charges ^(A)	138.3		1.2		137.1			NM
Operating earnings (loss) ^(B)	(139.1	)	11.0		(150.1		)	NM
Operating margin ^(B)	(61.8	)%	4.5	%				NM

~~bpts = basis points~~

NM = not meaningful

(A) InCharges in 2019 primarily relate to a $137.2 million goodwill impairment charge as discussed in Note 9 – Goodwill and Other Intangibles in the ~~second quarter of 2018, $1.6~~Notes to Condensed Consolidated Financial Statements.

(B) Includes $1.7 million of separation costs ~~were recorded for an additional product field campaign.~~in 2019.

Consistent with expectations, Fitness segment ~~net sales increased slightly, resulting from solid growth in commercial strength as demand for these products increased, mostly~~revenues declined due to ~~our well-positioned product offering and changing exerciser preferences. Commercial strength growth was mostly offset by a slight decrease in commercial cardio due~~lower sales to ~~declines in sales of Cybex product.Sales growth was also negatively influenced by delayed shipments due to challenges at certain domestic warehouses.~~International net sales were 48 percent of the segment's net sales in the second quarter of 2018 and increased nominally on a GAAP basis and decreased 2 percent on a constant currency basis, reflecting declines in Asia-Pacific and Canada,Planet Fitness along with ~~increases~~softness in ~~rest-of-world regions.~~certain international markets.

~~Net sales for the Fitness segment increased in the first six months of 2018 when compared with the same prior year period due to the same factors described in the quarterly period above.~~ International net sales were 49 percent of the segment's net sales in the first ~~six months~~quarter of ~~2018,~~2019 and ~~increased 7~~decreased 10 percent ~~from the prior year~~ on a GAAP ~~basis. On~~basis and 7 percent on a constant currency basis, ~~international net sales increased 3 percent as a result of~~reflecting declines in Asia-Pacific and Europe partially offset by increases in ~~Europe and rest-of-world~~Rest-of-World regions.

Fitness segment operating earnings decreased as a result of ~~several factors including~~ higher freight costs, cost inflation and inefficiencies, an unfavorable impact from changes in sales mix and costs related to an additional product field campaign. These factors were partially offset by lower restructuring, exit, integration and impairment charges, lower net sales and ~~benefits from~~several factors affecting gross margin including unfavorable changes in sales mix and cost inflation, partially offset by cost reduction efforts. Additionally, operating expenses increased as a result of higher ~~sales. Fitness segment operating earnings decreased~~separation costs and investments in products and technology in advance of the ~~first six months of 2018 compared with 2017 due to the same factors discussed for the quarterly period above.~~separation.

Corporate/Other

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

Three Months Ended 2018 vs. 2017 Six Months Ended 2018 vs. 2017
(in millions) June 30,
2018 July 1,
2017 $
Change %
Change June 30,
2018 July 1,
2017 $
Change %
Change
Restructuring, exit, integration and impairment charges $ 0.7
$ —
$ 0.7
NM
$ 0.7
$ 2.4
$ (1.7 ) NM
Operating loss ^(A)
(24.5 ) (20.4 ) (4.1 ) (20.1 )% (40.5 ) (39.1 ) (1.4 ) (3.6 )%

~~__________~~



(in millions)	March 30, 2019			March 31, 2018			$ Change			% Change
Restructuring, exit, integration and impairment charges	$	1.2		$	—		$	1.2		NM
Operating loss ^(A)	(24.4		)	(16.0		)	(8.4		)	(52.5	)%

NM = not meaningful

(A) ~~In the three months and six months ended June 30, 2018, Corporate incurred $2.5~~Includes $6.1 million and ~~$4.2~~$1.7 million ~~respectively,~~ of ~~costs~~charges in 2019 and 2018, respectively, related to the ~~planned~~ Fitness business separation.

Corporate operating expenses increased in the ~~second~~first quarter of ~~2018 due in part to~~2019 as a result of increased costs ~~stemming from~~associated with the planned Fitness business ~~separation. Operating expenses increased in the first half of 2018 due to the same factors as the quarterly period, except favorable~~separation and unfavorable mark-to-market adjustments for deferred compensation ~~arrangements were recorded in the first quarter of 2018.~~arrangements.

Cash Flow, Liquidity and Capital Resources

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

(in millions) June 30,
2018 July 1,
2017
Net cash provided by operating activities of continuing operations $ 200.9
$ 171.8
Net cash provided by (used for):

Plus: Capital expenditures (90.3 ) (107.9 )
Plus: Proceeds from the sale of property, plant and equipment 0.2
7.8
Plus: Effect of exchange rate changes (3.5 ) 4.5
Less: Cash paid for Fitness business separation costs, net of tax (1.0 ) —
Less: Cash impact of Sport Yacht and Yacht operations, net of tax (13.8 ) (8.2 )
Free cash flow ^(A)
$ 122.1
$ 84.4

~~__________~~



(in millions)	March 30, 2019			March 31, 2018
Net cash used for operating activities	$	(79.4	)	$	(67.1	)
Net cash provided by (used for):
Plus: Capital expenditures	(88.1		)	(37.1		)
Plus: Proceeds from the sale of property, plant and equipment	—			0.1
Plus: Effect of exchange rate changes	0.3			4.3
Less: Cash paid for Fitness business separation costs, net of tax	0.3			—
Total free cash flow ^(A)	$	(167.5	)	$	(99.8	)

(A) The Company defines “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, as well as cash paid for Fitness business separation costs, ~~net of tax, and the cash impact of Sport Yacht and Yacht operations,~~ net of tax) 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. The Company uses this financial measure both in presenting its results to shareholders and the investment community and in its internal evaluation and management of its businesses. Management believes that this financial measure and the information it provides are useful to investors because it permits investors to view Brunswick’s performance using the same tool that management uses to gauge progress in achieving its goals. Management believes 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.

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

~~2018~~2019 Cash Flow

Net cash used for operating activities in the first quarter of 2019 totaled $79.4 million versus $67.1 million in the comparable period of 2018. This comparison reflected lower net earnings, net of non-cash items (depreciation and amortization, impairments and income tax impacts not yet realized in cash) in 2019, which were partially offset by favorable working capital usage trends. For further details on factors influencing cash flows in both periods, refer to the following discussion.

In the first ~~six months~~quarter of ~~2018,~~2019, net cash ~~provided by~~used for operating activities ~~of continuing operations~~ totaled ~~$200.9~~$79.4 million. The primary driver of the cash ~~provided by~~used for operating activities was a seasonal increase in working capital, partially offset by net earnings net of non-cash expense ~~items, partially offset by a seasonal increase in working capital.~~items. Working capital is defined as Accounts and notes receivable, Inventories and Prepaid expenses and other, net of Accounts payable and Accrued expenses as presented in the Condensed Consolidated Balance Sheets, excluding the impact of acquisitions and non-cash adjustments. Accounts and notes receivable increased ~~$93.2~~$133.3 million primarily due ~~primarily~~ to ~~normal~~ seasonal changes in net sales ~~and timing of collections~~ in the Marine Engine segment. ~~Partially offsetting these items was an increase in Accrued expenses of $25.1~~Net inventories increased by $47.7 million, primarily driven by ~~restructuring and other charges related~~increases to support higher production volumes in advance of the ~~wind down of Sport Yacht and Yacht operations, partially offset~~marine selling season. Accrued expenses decreased $26.1 million, primarily driven by the ~~payment~~impact of payments of the prior year's variable compensation, which had been accrued as of December 31, ~~2017. Accounts payable increased $17.2 million due to normal volume increases.~~2018.

Net cash used for investing activities ~~during the first six months of 2018~~ totaled ~~$96.1~~$91.9 million, which included capital expenditures of ~~$90.3~~$88.1 million. The Company's capital spending focused on investments in new products as well as capacity expansion initiatives, mostly in the Marine ~~segments.~~Engine segment.

Net cash ~~used for~~provided by financing activities was ~~$114.2~~$38.2 million ~~during the first six months~~and primarily related to net issuances of ~~2018. The cash outflow included common stock repurchase activity and~~long-term debt, partially offset by cash dividends paid to common shareholders. Refer to Note 14 – Debt in the Notes to Condensed Consolidated Financial Statements for further details on the Company's debt activity during the quarter.

~~2017~~2018 Cash Flow

In the first ~~six months~~quarter of ~~2017,~~2018, net cash ~~provided by~~used for operating activities ~~of continuing operations~~ totaled ~~$171.8~~$67.1 million. The primary driver of the cash ~~provided by~~used for operating activities ~~of continuing operations~~ was a seasonal increase in working capital, partially offset by net earnings net of non-cash expense items ~~partially offset by a seasonal increase in working capital.~~and an income tax refund. Accounts and notes receivable increased ~~$107.6~~$114.8 million due primarily due to ~~normal~~ seasonal changes in net sales ~~and timing of collections~~ in the Marine Engine segment. Net inventories increased by ~~$14.4 million due to increases in production. Partially offsetting these items was an increase in Accrued expenses of $16.0~~$75.4 million, primarily driven by ~~accrued rebates associated with~~increases to support higher ~~sales, partially offset~~production volumes in advance of marine selling season. Accrued expenses decreased $35.0 million, primarily driven by the ~~payment~~impact of payments of the prior year's variable compensation, which had been accrued as of December 31, ~~2016. Accounts payable increased $12.7 million due to normal volume increases.~~2017.

Net cash used for investing activities during the first ~~half~~quarter of ~~2017~~2018 totaled ~~$63.6~~$42.0 million, which included capital expenditures of ~~$107.9~~$37.1 million. The Company's capital spending ~~was~~ focused on investments in new ~~product introductions and~~products as well as capacity expansion ~~projects~~initiatives, mostly in ~~all~~the marine segments. ~~Capital spending was partially offset by net proceeds from maturities of marketable securities of $35.0 million and proceeds from the sale of property, plant and equipment of $7.8 million.~~

Net cash used for financing activities of continuing operations was ~~$98.1~~$60.0 million during the first ~~half~~quarter of ~~2017.~~2018. The cash outflow included common stock repurchase activity and cash dividends paid to common shareholders.

Liquidity and Capital Resources

The Company views its highly liquid assets as of ~~June~~March 30, ~~2018,~~2019, December 31, ~~2017,~~2018 and ~~July 1, 2017~~March 31, 2018 as:


(in millions)	June 30, 2018		December 31, 2017		July 1, 2017		March 30, 2019		December 31, 2018		March 31, 2018
Cash and cash equivalents	$	435.9	$	448.8	$	437.2	$	161.5	$	294.4	$	284.0
Short-term investments in marketable securities	0.8		0.8		0.8		0.8		0.8		0.8
Total cash, cash equivalents and marketable securities	$	436.7	$	449.6	$	438.0	$	162.3	$	295.2	$	284.8

The following table sets forth an analysis of total liquidity as of ~~June~~March 30, ~~2018,~~2019, December 31, ~~2017,~~2018 and ~~July 1, 2017:~~March 31, 2018:


(in millions)	June 30, 2018		December 31, 2017		July 1, 2017		March 30, 2019		December 31, 2018		March 31, 2018
Cash, cash equivalents and marketable securities	$	436.7	$	449.6	$	438.0	$	162.3	$	295.2	$	284.8
Amounts available under lending facility ^(A)	296.0		295.7		295.7		396.4		295.7		295.7
Total liquidity ^(B)	$	732.7	$	745.3	$	733.7	$	558.7	$	590.9	$	580.5

(A) See Note 1614 – Debt in the Notes to Condensed Consolidated Financial Statements for further details on the Company's lending facility.

(B) The Company defines Total liquidity as Cash and cash equivalents and Short-term investments in marketable securities as presented in the Condensed Consolidated Balance Sheets, plus amounts available for borrowing under its lending facilities. Total liquidity is not intended as an alternative measure to Cash and cash equivalents and Short-term investments in marketable securities as determined in accordance with GAAP in the United States. The Company uses this financial measure both in presenting its results to shareholders and the investment community and in its internal evaluation and management of its businesses. Management believes that this financial measure and the information it provides are useful to investors because it permits investors to view the Company’s performance using the same metric that management uses to gauge progress in achieving its goals. Management believes that the non-GAAP financial measure “Total liquidity” is also useful to investors because it is an indication of the Company’s available highly liquid assets and immediate sources of financing.

Cash, cash equivalents and marketable securities totaled ~~$436.7~~$162.3 million as of ~~June~~March 30, ~~2018,~~2019, a decrease of ~~$12.9~~$132.9 million from ~~$449.6~~$295.2 million as of December 31, ~~2017,~~2018, and a decrease of ~~$1.3~~$122.5 million from ~~$438.0~~$284.8 million as of ~~July 1, 2017.~~March 31, 2018. Total debt as of ~~June~~March 30, ~~2018,~~2019, December 31, ~~2017~~2018 and ~~July 1, 2017~~March 31, 2018 was ~~$433.7~~$1,286.5 million, ~~$437.4~~$1,220.8 million and ~~$444.0~~$434.0 million, respectively. The Company's debt-to-capitalization ratio was ~~22.4~~45.7 percent as of ~~June~~March 30, ~~2018, down~~2019, up from ~~22.8~~43.5 percent as of December 31, ~~2017~~2018 and up from ~~22.3~~22.7 percent as of ~~July 1, 2017.~~March 31, 2018.

In ~~anticipation~~the first quarter of 2019, and consistent with the Company's plan to substantially reduce all of its near-term maturity debt, the Company issued $230 million of 30-year senior notes and used $150 million of the ~~acquisition of Power Products,~~proceeds to retire its 3-year tranche loan due 2021. Refer to Note 14 – Debt in the ~~Company entered into an agreement with Morgan Stanley Senior Funding, Inc. on June 28, 2018~~Notes to obtain a $1.1 billion, 364-Day Senior Unsecured Bridge Facility (Bridge Facility). On July 13, 2018, the Company executed the First Amendment to its Amended and Restated Credit Agreement (Credit Facility) to remove certain restrictionsCondensed Consolidated Financial Statements for further details on the ~~Company to incur unsecured~~Company's debt ~~with a maturity date before~~activity during the Credit Facility termination date. Simultaneously, $300 million of commitments related to the Bridge Facility were permanently terminated resulting in $800 million remaining under the facility. At or prior to the planned closing of the acquisition in mid-August of 2018, the Company plans to replace the Bridge Facility with a combination of 1, 3 and 5 year term loan agreements. Later in 2018, the Company plans to refinance a portion of the term loans with long-term debt.

quarter. Management believes that the Company has adequate sources of liquidity to meet the Company's short-term and long-term needs.

During the first quarter of 2019, the Company borrowed a total of $215.0 million under the Credit Facility, all of which was repaid during the quarter. The maximum amount utilized under the Credit Facility during the period, including letters of credit outstanding, was $163.4 million. The Company did not borrow under the Credit Facility during 2018.

The Company ~~has executed share repurchases against authorizations approved by~~did not make contributions to its qualified pension plans during the ~~Board of Directors in 2014~~three months ended March 30, 2019 or March 31, 2018. During the three months ended March 30, 2019 and ~~2016. In~~March 31, 2018, the Company ~~repurchased $70~~contributed $1.5 million ~~of stock under these authorizations~~ and ~~as of June 30, 2018, the remaining authorization was $40 million. The Company plans~~$1.0 million, respectively, to ~~pause the repurchase program until completion of the financing activities associated with the Power Products acquisition and the Fitness separation actions.~~fund benefit payments to its nonqualified pension plan.

~~Quarterly dividend payments for the remainder of 2018 are expected to remain consistent with current levels. However, the Company may increase these levels as earnings~~2019 Cash Flow Outlook and ~~cash flows improve, consistent with its capital strategy.~~Capital Plan

The Company is projecting an increase in net earnings in 2019 when compared with 2018. Net activity in working capital ~~activity~~ is projected to reflect a usage of cash in ~~2018~~2019 in the range of ~~$20~~$10 million to ~~$40 million, excluding the after-tax cash impact of winding down Sea Ray Sport Yacht and Yacht operations.~~$30 million. Additionally, the Company is planning for capital expenditures of approximately ~~$220~~$240 million to ~~$230~~$260 million, ~~for the full year, reflecting increased~~including investments in capacity ~~to support growth, continued investments in product leadership~~and new products, as well as ~~our decision~~cash payments in the first quarter of 2019 that relate to ~~increase investment as a result of cash benefits from U.S. tax reform.~~2018 engine manufacturing capacity projects. Including ~~the factors mentioned above~~these and other factors, ~~and also excluding the after-tax cash impact of winding down Sea Ray Sport Yacht and Yacht operations and the after-tax cash payments related to the planned Fitness business separation,~~ the Company plans to generate free cash flow in 2019 in excess of $320 million, with approximately $20 million attributable to the ~~range of $200 million to $220 million.~~Company's Fitness segment.

The Company ~~contributed $35.0~~plans on reducing debt by at least $150 million to ~~its qualified pension plans in~~$200 million primarily toward the ~~first half~~end of ~~2018 compared~~2019, with ~~$40.0 million in the first half of 2017. The Company expects to make total contributions~~estimated interest expense in the range of ~~$150~~$73 million to ~~$160 million during~~$75 million. Upon completion of the Fitness business separation, the Company will re-assess its debt retirement objectives, potential future acquisitions and share repurchase activities. The 2019 capital plan does not incorporate the utilization of any net proceeds the Company may receive in connection with the Fitness business separation.

Including the previously described planned debt actions in 2019, the Company plans to substantially reduce all of its near-term maturity debt (maturities 2023 and prior). To date, the Company has mostly funded reductions with proceeds from 30-year senior notes issued since October 2018. The ~~increase~~remainder is expected to be funded primarily through free cash flow, potentially augmented by proceeds from the Fitness business separation.

Quarterly dividend payments in ~~contributions is~~the 2019 plan are anticipated to be $0.21 per share, consistent with current levels. However, the ~~Company's accelerated de-risking plan and previously announced actions. These amounts~~Company may ~~be adjusted for several factors, including market conditions, pension funding regulations and Company discretion.~~ adjust these levels as it evaluates opportunities to grow dividends.

The Company ~~also contributed $2.1~~plans to fully exit its qualified defined benefit pension plans in 2019, which will require a residual pre-tax contribution of approximately $15 million to ~~fund benefit payments in its nonqualified pension plan during~~$25 million. Additionally, the ~~first six months of both 2018 and 2017, respectively, and~~Company expects to ~~contribute approximately $2 million~~incur charges in connection with this action, including the recognition of ~~additional funding to the plan through the remainder of 2018. Company contributions are subject to change based on market conditions, pension funding regulations and Company discretion.~~

~~Income Taxes~~actuarial losses as well as certain income tax consequences.

The Company expects its cash tax rate to be in the ~~low-single~~high-single digit percentage range in 2018, reflecting the recently enacted Tax Cuts and Jobs Act (TCJA) which reduced the U.S federal statutory rate from 35 percent to 21 percent. This also includes benefits from an income tax refund, deductions resulting from planned capital spending and increased pension contributions.

Additionally, as a result of the TCJA, specifically the imposition of a one-time deemed repatriation tax on certain unremitted earnings of foreign subsidiaries, the Company reevaluated its indefinite reinvestment assertion as of December 31, 2017 and has since determined that certain non-U.S. subsidiaries will remain permanently reinvested. As a result of the TCJA, the Company is considering remitting cash back to the U.S. in 2018 from non-U.S. subsidiaries. These remittances would not result in any U.S. federal tax liability. The Company is continuing to analyze the effects of the TCJA including the impact on future repatriations and any related withholding taxes from non-U.S. subsidiaries. Future repatriations could result in additional funds to execute the Company's capital strategy.2019.

~~Financial Services~~Financing Joint Venture

~~On February 16, 2018,~~Through the ~~Company, through its~~Company's Brunswick Financial Services Corporation subsidiary, ~~entered into an amended and restated~~Brunswick owns a 49 percent interest in a joint venture, Brunswick Acceptance Company, LLC (BAC). Under the terms of the joint venture agreement, ~~with CDF Ventures, LLC, a~~BAC provides secured wholesale inventory floorplan financing to Brunswick's boat and engine dealers. A subsidiary of Wells Fargo ~~and~~& Company ~~to extend~~owns the ~~term of their~~remaining 51 percent. The Company's financial services joint venture, Brunswick Acceptance Company, LLC, ~~(BAC), through December 31, 2022. BAC~~ is detailed ~~further~~ in the ~~2017~~2018 Form 10-K.

Off-Balance Sheet Arrangements and Contractual Obligations

The Company’s off-balance sheet arrangements and contractual obligations, as of December 31, ~~2017,~~2018, are detailed in the ~~2017~~2018 Form 10-K. There have been no material changes in these arrangements and obligations outside the ordinary course of business since December 31, ~~2017.~~2018.

Environmental Regulation

There were no material changes in the Company's environmental regulatory requirements since the filing of its ~~2017~~2018 Form 10-K.

Critical Accounting Policies

As discussed in the ~~2017~~2018 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 at the date of the consolidated financial statements and revenues and expenses during the periods reported. Actual results may differ from those estimates.

As a result of the early adoption of ASU 2017-04, Intangibles-Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment as discussed in Note 1 – Significant Accounting Policies in the Notes to Condensed Consolidated Financial Statements, the Company no longer uses the two-step goodwill impairment test described in the 2018 Form 10-K. Previously, the first step of the goodwill impairment test compared the fair value of a reporting unit with its carrying value. If the carrying amount exceeded fair value, a second step was performed to measure the implied fair value of goodwill and compare it with the carrying value of goodwill. Under the new standard, the second step is not performed; the goodwill impairment is simply measured as the carrying value of the reporting unit less its fair value, not to exceed the carrying value of goodwill. The Company applied the new standard in calculating the $137.2 million goodwill impairment recorded within the Fitness segment in the first quarter of 2019 as discussed in Note 9 – Goodwill and Other Intangibles in the Notes to Condensed Consolidated Financial Statements.

Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors. As a result, there can be no assurance that the estimates and assumptions made for the purposes of this impairment will prove to be an accurate prediction of the future.

Brunswick is currently working to separate the Fitness business, which could involve either a sale or spin-off transaction. There are several factors that could result in the need for an additional impairment charge. For example, the separation may result in a sale and proceeds may be different than our current assumptions, or the assumptions underlying the income approach may vary, including possible declines in future operating results. It is not possible to predict what the valuation outcome will be and how the facts and circumstances at the time will influence the Brunswick Board of Directors’ final decision on the method of separation.

There were no further material changes in the Company’s critical accounting policies since the filing of its ~~2017~~2018 Form 10-K.

Recent Accounting Pronouncements

See Note 1 – Significant Accounting Policies in the Notes to Condensed Consolidated Financial Statements for the recent accounting pronouncements that have been adopted during the ~~six~~three months ended ~~June~~March 30, ~~2018,~~2019, or will be adopted in future periods.

Forward-Looking Statements

Certain statements in this ~~news release~~Quarterly Report on Form 10-Q are forward-looking 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,” “expect,” “intend,” “target,” “plan,” ~~“seek,~~“goal,” ~~“goal,~~“seek,” “estimate,” “believe,” “predict,” “outlook,” “anticipates” and similar expressions are intended to identify forward-looking statements. Such 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 ~~news release.~~quarterly report. These risks include, but are not limited to: the effect of adverse general economic conditions, including ~~reductions in~~the amount of disposable income consumers have available for discretionary spending, tight consumer ~~discretionary spending;~~credit markets, and the level of consumer confidence on the demand for our products and services; our ability to successfully implement our strategic plan and growth initiatives; our ability to ~~complete and~~ integrate targeted ~~acquisitions; that strategic~~ acquisitions, ~~or divestitures may not provide business benefits;~~including the Global Marine & Mobile Business of Power Products; the possibility that the proposed Fitness business separation may not provide business benefits, or ~~announced acquisition of the Global Marine Business of Power Products will~~may not be consummated within the anticipated time period or at ~~all, including as~~all; having to record an impairment to the ~~result~~value of ~~regulatory, market, or~~goodwill and other ~~factors;~~assets; changes to U.S. trade policy and tariffs; the inability to identify and complete targeted acquisitions; the risk that strategic divestitures may not provide business benefits; the potential for disruption to our business in connection with the Fitness business separation or Power Products acquisition, making it more difficult to maintain business and operational relationships; the risk that unexpected costs will be incurred in connection with these transactions; the possibility that the expected synergies and value creation from these transactions ~~and the potential that Brunswick~~ will not ~~realize all of~~be realized or will not be realized within the expected ~~benefits of these transactions;~~time period; negative currency ~~trends;~~trends, including shifts in exchange rates; fiscal policy concerns; adequate financing access for dealers and customers and our ability to access capital and credit markets; maintaining effective distribution; adverse economic, credit, and capital market conditions; loss of key customers; attracting and retaining skilled labor and implementing succession plans for key leadership; inventory reductions by dealers, retailers, or independent boat builders; requirements for us to repurchase inventory; ~~attracting~~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 the result of new tariffs on raw materials, increased demand for shipping carriers, and ~~retaining skilled labor and implementing succession plans for key leadership; our ability to meet supply objectives;~~transportation disruptions; higher energy and fuel costs; our ability to protect our brands and intellectual property; absorbing fixed costs in production; managing ~~expansion of~~our manufacturing ~~facilities;~~footprint; outages, breaches, or ~~breaches of~~other cybersecurity events regarding our technology ~~systems;~~systems, which could result in lost or stolen information and associated remediation costs; our ability to meet pension funding obligations; managing our share repurchases; competitive pricing pressures; our ability to develop new and innovative products and services at a competitive price, in legal compliance with existing rules; maintaining product quality and service standards; product liability, warranty, and other claims risks; legal and regulatory compliance, including increased costs, fines, and reputational risks; changes in income tax legislation or enforcement; ~~having to record an impairment to the value of goodwill and other assets;~~ certain divisive shareholder activist actions; joint ventures that do not operate solely for our benefit; international business risks; and weather and catastrophic event risks.

Additional risk factors are included in the ~~Company’s Annual Report on~~2018 Form 10-K ~~for 2017, Quarterly Report on Form 10-Q for the period ended March 31, 2018,~~ and under Part II, Item 1a, “Risk Factors,” of this ~~Quarterly Report on Form 10-Q for the period ended June 30, 2018.~~report. 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.~~report or for changes by wire services or Internet service providers.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to market risk from changes in foreign currency exchange rates, interest rates and commodity prices. The Company enters into various hedging transactions to mitigate these risks in accordance with guidelines established by the Company’s management. The Company does not use financial instruments for trading or speculative purposes. The Company’s risk management objectives are described in Note 65 – Financial Instruments in the Notes to Condensed Consolidated Financial Statements and Notes 1 and 1415 in the Notes to Consolidated Financial Statements in the ~~2017~~2018 Form 10-K.

There have been no significant changes to the Company’s market risk since December 31, ~~2017.~~2018. 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 ~~2017~~2018 Form 10-K.

Item 4. Controls and Procedures

Under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and the Chief Financial Officer of the Company (its principal executive officer and principal financial officer, respectively), the Company has evaluated its disclosure controls and procedures (as defined in Securities Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective. The Company implemented internal controls to ensure the adequate evaluation of ~~contracts~~all leases and proper assessment of the impact of the new ~~accounting~~leasing standard ~~related to revenue recognition~~ (ASC ~~606)~~842) on the financial statements to facilitate the adoption and implementation on January 1, ~~2018.~~2019. There were no material changes to the Company's internal control over financial reporting due to the adoption of the new standard. There were no changes in the Company’s internal control over financial reporting during the fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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 to the risk factors previously disclosed in the ~~2017~~2018 Form 10-K, ~~and the Quarterly Report on Form 10-Q for the period ended March 31, 2018.~~ other than ascertain updates to the risk factor set forth below.

The ~~inability~~anticipated Fitness business separation could be disruptive to ~~complete~~ the ~~acquisition~~business and our operations, and there can be no assurance that it will provide business benefits or that it will be consummated within the anticipated time period or at all.

The Fitness business separation, whether a sale or spin-off transaction, like any business separation, involves risks, including difficulties associated with the separation of operations, services, and personnel, disruption in our operations or businesses, the ~~Global Marine Business~~potential loss of ~~Power Products, or~~key employees, and adverse effects on relationships with business partners. In addition, we will incur significant expense in connection with the ~~failure to successfully integrate that business, could negatively impact financial results.~~

On June 28, 2018, the Company entered into a definitive agreement to acquire Power Products – Global Marine & Mobile business, which includes the global marine, specialty vehicle, mobile, industrial power,separation, and transportation aftermarket products businesses of Power Products. The closing of the transaction is subject to usual and customary closing conditions as well as regulatory review and approval. However, we cannot assure the timing and likelihood of completion of the proposed acquisition, including the timing, receipt, and terms and conditions of any required governmental and regulatory approvals for the proposed transaction. In addition, there is a risk of the occurrence of an event, change, or other circumstance that could give rise to the termination of the proposed transaction, and the possibility that the proposed transaction does not close, including due to the failure to satisfy closing conditions.

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 acquisition of the Power Products – Global Marine & Mobile business presents these and other integration risks, including:

~~the risk that the businesses of Brunswick and the Global Marine Business of Power Products will not be integrated successfully;~~

~~disruption from the proposed transaction could make it more difficult to maintain business and operational relationships;~~

~~the possibility that the expected synergies and value creation from the proposed~~ transaction will require significant amounts of management time and effort, which may divert management’s attention from other aspects of our business operations. If we do not ~~be realized or will not be realized within the expected time period;~~

~~the risk that unexpected costs will be incurred.~~

~~If the acquired business does not achieve projected results, our growth may be limited and our results adversely affected.~~

~~Changes to U.S. trade policy, tariffs, and import/export regulations may have a material adverse effect on~~successfully manage these risks, our business, financial condition, and results of ~~operations.~~

~~Changes~~operations could be adversely affected. Likewise, we cannot assure that we will be able to complete the business separation within the announced timeline, or at all. Unanticipated developments, including disruptions in ~~laws and policies governing foreign trade~~general market conditions or other developments, could delay, prevent, or otherwise adversely affect the separation. Delays or failure to consummate the separation could negatively affect our ~~business.~~business and financial results.

The proposed separation may not achieve the intended results, or results may take longer to realize than expected. The anticipated benefits of the separation are based on a number of factors that we cannot predict. In the first quarter of 2019, the Company recorded a $137.2 million ($103.0 million after tax) goodwill impairment within the Fitness segment. If the separation results in a sale, the proceeds may be different than our current assumptions, or the assumptions underlying the income approach may vary, including possible declines in future operating results, resulting in the need for an additional impairment charge. It is difficult to predict the valuation outcome in the event of a sale. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors. As a result, there can be no assurance that the estimates and assumptions made for the purposes of ~~recent policy changes, there may~~the first quarter impairment will prove to be ~~greater restrictions~~an accurate prediction as of the time of the separation.

In addition to these risks, we face other risks specific to a spin-off of the Fitness business, as opposed to a sale, including the risk that a spin-off could result in significant tax liability to the Company or our shareholders, despite the steps we have taken to avoid this result. Completion of the spin-off is conditioned on our receipt of a written legal opinion to the effect that the distribution of Life Fitness common stock will qualify for non-recognition of gain and ~~economic disincentives~~loss for U.S. Federal income tax purposes.

The legal opinion will not address any U.S. state or local or foreign tax consequences of the spin-off, and will rely on ~~international trade.~~the continuing effectiveness and validity of the favorable private letter ruling (the “IRS Ruling”) from the U.S. Internal Revenue Service (the “IRS”) regarding such U.S. Federal income tax consequences of the spin-off. The ~~new tariffs and other changes in U.S. trade policy could trigger retaliatory actions by affected countries, and certain foreign governments have instituted or are considering imposing trade sanctions~~Company has received the IRS Ruling, which relies on certain ~~U.S. goods. The Company, similar~~facts, assumptions, representations, and undertakings from the Fitness business and from Brunswick. If any of these facts, assumptions, representations, or undertakings are incorrect or not otherwise satisfied, we may not be able to ~~many other multinational corporations, does~~rely on the IRS Ruling. In addition, the IRS ruling is not a ~~significant amount of business that would be impacted by changes to~~comprehensive ruling from the ~~trade policies~~IRS regarding all aspects of the U.S. Federal income tax consequences of the transactions. Accordingly, notwithstanding the legal opinion and ~~foreign countries (including governmental action related~~the IRS Ruling, there can be no assurance that the IRS will not assert, or that a court would not sustain, a contrary position.

Further, the legal opinion will be based on certain representations as to ~~tariffs~~factual matters from the Company and ~~international trade agreements). Such~~the Fitness business. The opinion cannot be relied on if any of the assumptions, representations, or covenants is incorrect, incomplete, or inaccurate, or is violated in any material respect. If the distribution of Life Fitness common stock were determined not to qualify for non-recognition of gain and loss for U.S. Federal income tax purposes, U.S. holders could be subject to significant tax consequences.

The final determination to proceed with a spin-off or sale is a decision of our Board of Directors, and this determination could have an adverse impact on the Company's financial results. There are many factors that could impact the structure or timing of, the anticipated benefits from, or determination to ultimately proceed with, the separation, including global economic conditions, tax considerations, market conditions, and changes ~~have~~in the ~~potential to~~regulatory or legal environment, any of which could adversely impact the ~~U.S. economy,~~value of the separation transaction to our ~~industry,~~shareholders. Additionally, the completion of the separation will be complex, costly, and time-consuming, and an inability to realize the ~~global demand for our products and,~~full extent of the anticipated benefits, as ~~a result,~~well as delays encountered in the process, could have ~~a material~~an adverse effect ~~on our business, financial condition~~upon the revenues, costs, and operating results of ~~operations.~~the Company.

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

The Company has executed share repurchases against authorization approved by the Board of Directors in 2014 and 2016. In ~~2018,~~2019, the Company ~~repurchased $70 million of~~did not repurchase any stock under these authorizations and as of ~~June~~March 30, ~~2018,~~2019, the remaining authorization was ~~$40~~approximately $35 million.

~~During the three months ended June 30, 2018, the Company repurchased the following shares of its common stock:~~

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
April 1 to April 28 121,109
$ 59.22
121,109

April 29 to May 26 279,106
61.03
279,106

May 27 to June 30 164,296
65.63
164,296

Total 564,511
$ 61.98
564,511
$ 39,819,107

Item 6. Exhibits



~~2.1~~10.1*	~~Agreement~~2019 Brunswick Performance Plan Summary Terms and Conditions
10.2*	2019 Performance Share Grant Terms and Conditions Pursuant to the Brunswick Corporation 2014 Stock Incentive Plan
10.3*	2019 Performance Share Grant Terms and Conditions Pursuant to the Brunswick Corporation 2014 Stock Incentive Plan ~~of Merger,~~--TSR Participants
10.4*	2019 Stock-Settled Restricted Stock Unit Grant Terms and Conditions for Select Key Employees Pursuant to the Brunswick Corporation 2014 Stock Incentive Plan
10.5*	2019 Stock-Settled Restricted Stock Unit Grant Terms and Conditions Pursuant to the Brunswick Corporation 2014 Stock Incentive Plan
10.6*	2019 Cash-Settled Restricted Stock Unit Grant Terms and Conditions Pursuant to the Brunswick Corporation 2014 Stock Incentive Plan
10.7*	2019 Cash-Settled Restricted Stock Unit Grant Terms and Conditions for Select Key Employees Pursuant to the Brunswick Corporation 2014 Stock Incentive Plan (the "Plan")
10.8*	2019 Stock-Settled Stock Appreciation Right Grant Terms and Conditions Pursuant to the Brunswick Corporation 2014 Stock Incentive Plan
10.9*	Brunswick Corporation 2005 Automatic Deferred Compensation Plan As Amended and Restated
19.9	Third Supplemental Indenture, dated as of ~~June 28, 2018, by and among~~March 4, 2019, between the Company ~~Whitecap Company Merger Sub, LLC, Power Products Holdings, LLC, Power Products Industries, LLC, Genstar Capital Management LLC~~ and U.S. Bank National Association, as Trustee, filed as Exhibit 4.2 to the ~~other parties thereto,~~Company's Current Report on Form 8-K as filed with the Securities and Exchange Commission on ~~July 3, 2018~~March 4, 2019, 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

* Management contract or compensatory plan or arrangement.

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
~~August~~May 1, ~~2018~~2019	By:	/s/ DANIEL J. TANNER
		Daniel J. Tanner
		Vice President and Controller*

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

4540



(in millions)	Balance as of December 31, 2017		Adjustments Due to ASC 606			Balance as of January 1, 2018
Assets
Accounts and notes receivable	$	485.3	$	1.2		$	486.5
Deferred income tax asset	165.6		9.3			174.9

Liabilities
Accrued expenses	609.0		39.1			648.1

Shareholders' equity
Retained earnings	1,966.8		(28.6		)	1,938.2



	Three Months Ended June 30, 2018
(in millions)	As Reported		Effect of Change			Balances without adoption of ASC 606
Net sales	$	1,400.9	$	9.7		$	1,410.6
Cost of sales	1,051.2		(0.9		)	1,050.3

Earnings before income taxes	98.0		10.6			108.6
Income tax provision	19.0		2.0			21.0
Net earnings	$	79.0	$	8.6		$	87.6



	As of June 30, 2018
	As Reported		Effect of Change			Balances without adoption of ASC 606
Assets
Accounts and notes receivable	$	578.1	$	1.4		$	579.5
Deferred income tax asset	169.5		(10.5		)	159.0

Liabilities
Accrued expenses	679.7		(33.5		)	646.2

Shareholders' equity
Retained earnings	2,056.9		24.4			2,081.3



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
April 1 to April 28	121,109	$	59.22	121,109
April 29 to May 26	279,106	61.03		279,106
May 27 to June 30	164,296	65.63		164,296
Total	564,511	$	61.98	564,511	$	39,819,107