BRUNSWICK CORPORATION

INDEX TO QUARTERLY REPORT ON FORM 10-Q

~~June 27, 2020~~July 3, 2021

TABLE OF CONTENTS



PART I – FINANCIAL INFORMATION		Page

Item 1.	Condensed Consolidated Financial Statements

	Condensed Consolidated Statements of Comprehensive Income (unaudited) for the three months and six months ended ~~June 27, 2020~~July 3, 2021 and June ~~29, 2019~~ 2 7 , 2020	34



	Condensed Consolidated Balance Sheets (unaudited) as of ~~June 27, 2020,~~July 3, 2021, December 31, ~~2019~~2020 and June ~~29, 2019~~ 2 7 , 2020	45

	Condensed Consolidated Statements of Cash Flows (unaudited) for the ~~six~~s ix months ended ~~June 27, 2020~~July 3, 2021 and June ~~29, 2019~~ 2 7 , 2020	67

	Condensed Consolidated Statements of Shareholders' Equity (unaudited) for the three months and six months ended ~~June 27, 2020~~July 3, 2021 and June ~~29, 2019~~ 2 7 , 2020	78

	Notes to Condensed Consolidated Financial Statements (unaudited)	89

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

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4236

Item 4.	Controls and Procedures	4237


PART II – OTHER INFORMATION



Item 1A.	Risk Factors	4338

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4338

Item 6.5.	~~Exhibits~~Other Information	4439

Item 6.	Exhibits	39

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

BRUNSWICK CORPORATION

Condensed Consolidated Statements of Comprehensive Income

(unaudited)


	Three Months Ended				Six Months Ended
(in millions, except per share data)	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Net sales	$	1,554.8	$	987.8	$	2,988.0	$	1,953.3
Cost of sales	1,093.3		731.8		2,109.2		1,453.5
Selling, general and administrative expense	173.6		119.2		324.4		230.5
Research and development expense	37.5		27.7		71.6		56.6
Restructuring, exit and impairment charges	0.2		2.1		0.7		2.5
Operating earnings	250.2		107.0		482.1		210.2
Equity earnings	0.4		1.1		1.2		2.9

Other expense, net	(1.5)		(0.9)		(2.8)		(0.2)
Earnings before interest and income taxes	249.1		107.2		480.5		212.9
Interest expense	(15.4)		(18.7)		(30.2)		(35.6)
Interest income	0.9		0.3		1.1		0.6

Earnings before income taxes	234.6		88.8		451.4		177.9
Income tax provision	55.2		17.6		102.6		36.0
Net earnings from continuing operations	179.4		71.2		348.8		141.9

Discontinued operations:
Loss from discontinued operations, net of tax	(0.0)		(0.5)		(0.1)		(1.1)
Loss on disposal of discontinued operations, net of tax	0		0		0		(1.1)
Net loss from discontinued operations, net of tax	(0.0)		(0.5)		(0.1)		(2.2)
Net earnings	$	179.4	$	70.7	$	348.7	$	139.7

Earnings (loss) per common share:
Basic
Earnings from continuing operations	$	2.30	$	0.89	$	4.47	$	1.78
Loss from discontinued operations	(0.00)		(0.00)		(0.00)		(0.03)
Net earnings	$	2.30	$	0.89	$	4.47	$	1.75

Diluted
Earnings from continuing operations	$	2.29	$	0.89	$	4.44	$	1.77
Loss from discontinued operations	(0.00)		(0.00)		(0.00)		(0.02)
Net earnings	$	2.29	$	0.89	$	4.44	$	1.75

Weighted average shares used for computation of:
Basic earnings per common share	78.0		79.6		78.0		79.8
Diluted earnings per common share	78.5		79.8		78.6		80.0

Comprehensive income	$	184.0	$	71.4	$	358.9	$	132.5



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

BRUNSWICK CORPORATION
Condensed Consolidated Statements of Comprehensive Income
(unaudited)

Three Months Ended
Six Months Ended
(in millions, except per share data) June 27,
2020
June 29,
2019
June 27,
2020
June 29,
2019
Net sales $ 987.8
$ 1,163.5
$ 1,953.3
$ 2,214.2
Cost of sales 731.8
835.5
1,453.5
1,606.7
Selling, general and administrative expense 119.2
126.4
230.5
259.9
Research and development expense 27.7
33.5
56.6
62.2
Restructuring, exit and impairment charges 2.1
5.4
2.5
8.6
Operating earnings 107.0
162.7
210.2
276.8
Equity earnings 1.1
1.6
2.9
3.5
Other expense, net (0.9 ) (0.1 ) (0.2 ) (1.7 )
Earnings before interest and income taxes 107.2
164.2
212.9
278.6
Interest expense (18.7 ) (20.8 ) (35.6 ) (40.6 )
Interest income 0.3
0.4
0.6
0.8
Earnings before income taxes 88.8
143.8
177.9
238.8
Income tax provision 17.6
31.7
36.0
50.5
Net earnings from continuing operations 71.2
112.1
141.9
188.3

Discontinued operations:
(Loss) earnings from discontinued operations, net of tax (0.5 ) 6.9
(1.1 ) (105.6 )
Loss on disposal of discontinued operations, net of tax —
(41.5 ) (1.1 ) (41.5 )
Net loss from discontinued operations, net of tax (0.5 ) (34.6 ) (2.2 ) (147.1 )
Net earnings $ 70.7
$ 77.5
$ 139.7
$ 41.2

Earnings (loss) per common share:
Basic
Earnings from continuing operations $ 0.89
$ 1.29
$ 1.78
$ 2.16
Loss from discontinued operations (0.00 ) (0.40 ) (0.03 ) (1.69 )
Net earnings $ 0.89
$ 0.89
$ 1.75
$ 0.47

Diluted
Earnings from continuing operations $ 0.89
$ 1.28
$ 1.77
$ 2.15
Loss from discontinued operations (0.00 ) (0.39 ) (0.02 ) (1.68 )
Net earnings $ 0.89
$ 0.89
$ 1.75
$ 0.47

Weighted average shares used for computation of:
Basic earnings per common share 79.6
86.9
79.8
87.2
Diluted earnings per common share 79.8
87.3
80.0
87.7

Comprehensive income $ 71.4
$ 93.1
$ 132.5
$ 57.8

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

Table of Contents

BRUNSWICK CORPORATION

Condensed Consolidated Balance Sheets

(unaudited)


(in millions)	July 3, 2021		December 31, 2020		June 27, 2020
Assets
Current assets
Cash and cash equivalents, at cost, which approximates fair value	$	590.2	$	519.6	$	541.5
Restricted cash	9.7		10.7		11.6
Short-term investments in marketable securities	0.8		56.7		0.8
Total cash and short-term investments in marketable securities	600.7		587.0		553.9
Accounts and notes receivable, less allowances of $10.3, $10.7, $12.1	503.3		337.6		452.6
Inventories
Finished goods	468.6		446.8		411.5
Work-in-process	147.6		94.0		99.3
Raw materials	218.9		171.0		166.1
Net inventories	835.1		711.8		676.9
Prepaid expenses and other	48.9		34.1		30.7

Current assets	1,988.0		1,670.5		1,714.1

Property
Land	17.6		17.7		17.8
Buildings and improvements	446.8		435.5		423.0
Equipment	1,244.4		1,184.9		1,124.5

Total land, buildings and improvements and equipment	1,708.8		1,638.1		1,565.3
Accumulated depreciation	(964.5)		(929.8)		(895.4)
Net land, buildings and improvements and equipment	744.3		708.3		669.9
Unamortized product tooling costs	167.7		155.3		145.5
Net property	912.0		863.6		815.4

Other assets
Goodwill	434.3		417.7		415.4
Other intangibles, net	536.3		552.3		567.1
Deferred income tax asset	117.2		136.6		102.9
Operating lease assets	85.9		83.0		81.9
Equity investments	41.4		32.5		29.4
Other long-term assets	23.4		14.4		12.9

Other assets	1,238.5		1,236.5		1,209.6

Total assets	$	4,138.5	$	3,770.6	$	3,739.1

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

Table of Contents

BRUNSWICK CORPORATION
Condensed Consolidated Balance Sheets
(unaudited)
(in millions) June 27,
2020 December 31,
2019 June 29,
2019
Assets
Current assets
Cash and cash equivalents, at cost, which approximates fair value $ 541.5
$ 320.3
$ 656.1
Restricted cash 11.6
11.6
11.6
Short-term investments in marketable securities 0.8
0.8
0.8
Total cash and short-term investments in marketable securities 553.9
332.7
668.5
Accounts and notes receivable, less allowances of $12.1, $8.5 and $8.7 452.6
331.8
484.5
Inventories
Finished goods 411.5
554.3
528.8
Work-in-process 99.3
101.3
98.2
Raw materials 166.1
168.9
174.8
Net inventories 676.9
824.5
801.8
Prepaid expenses and other 30.7
36.8
56.6
Current assets 1,714.1
1,525.8
2,011.4

Property

Land 17.8
17.8
17.9
Buildings and improvements 423.0
415.4
396.8
Equipment 1,124.5
1,090.1
1,043.9
Total land, buildings and improvements and equipment 1,565.3
1,523.3
1,458.6
Accumulated depreciation (895.4 ) (863.8 ) (836.5 )
Net land, buildings and improvements and equipment 669.9
659.5
622.1
Unamortized product tooling costs 145.5
136.9
124.9
Net property 815.4
796.4
747.0

Other assets

Goodwill 415.4
415.0
410.7
Other intangibles, net 567.1
583.5
599.4
Operating lease assets 81.9
83.2

80.4
Deferred income tax asset 102.9
118.7
144.2
Equity investments 29.4
29.5
32.7
Other long-term assets 12.9
12.3

15.0
Other assets 1,209.6
1,242.2
1,282.4

Total assets $ 3,739.1
$ 3,564.4
$ 4,040.8

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


BRUNSWICK CORPORATION Condensed Consolidated Balance Sheets (unaudited)
(in millions)	July 3, 2021		December 31, 2020		June 27, 2020
Liabilities and shareholders' equity
Current liabilities
Short-term debt and current maturities of long-term debt	$	43.5	$	43.1	$	225.3
Accounts payable	588.2		457.6		328.3
Accrued expenses	619.6		578.5		501.0

Current liabilities	1,251.3		1,079.2		1,054.6

Long-term liabilities
Debt	832.0		908.3		1,060.4
Postretirement benefits	71.9		74.7		71.8
Operating lease liabilities	69.5		69.8		69.0
Other	144.3		128.6		118.9

Long-term liabilities	1,117.7		1,181.4		1,320.1

Shareholders' equity
Common stock; authorized: 200,000,000 shares, $0.75 par value; issued: 102,538,000 shares; outstanding: 77,554,000, 77,875,000 and 79,135,000 shares	76.9		76.9		76.9
Additional paid-in capital	380.1		383.8		366.5
Retained earnings	2,527.2		2,225.7		2,032.8
Treasury stock, at cost: 24,984,000, 24,663,000 and 23,403,000 shares	(1,182.2)		(1,133.7)		(1,051.2)






Accumulated other comprehensive loss	(32.5)		(42.7)		(60.6)
Shareholders' equity	1,769.5		1,510.0		1,364.4

Total liabilities and shareholders' equity	$	4,138.5	$	3,770.6	$	3,739.1

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

BRUNSWICK CORPORATION
Condensed Consolidated Balance Sheets
(unaudited)

(in millions) June 27,
2020 December 31,
2019 June 29,
2019
Liabilities and shareholders’ equity
Current liabilities
Short-term debt and current maturities of long-term debt $ 225.3
$ 41.3
$ 40.3
Accounts payable 328.3
393.5
412.9
Accrued expenses 501.0
509.6
562.5
Current liabilities 1,054.6
944.4
1,015.7

Long-term liabilities

Debt 1,060.4
1,068.0
1,240.1
Operating lease liabilities 69.0
70.1

67.1
Postretirement benefits 71.8

73.6

69.2
Other 118.9
107.4

111.4
Long-term liabilities 1,320.1
1,319.1
1,487.8

Shareholders’ equity

Common stock; authorized: 200,000,000 shares, $0.75 par value; issued: 102,538,000 shares; outstanding: 79,135,000, 79,569,000 and 85,687,000 shares 76.9
76.9
76.9
Additional paid-in capital 366.5
369.2
363.0
Retained earnings 2,032.8
1,931.3
2,140.5
Treasury stock, at cost: 23,403,000, 22,969,000 and 16,851,000 shares (1,051.2 ) (1,023.1 ) (696.6 )
Accumulated other comprehensive loss (60.6 ) (53.4 ) (346.5 )
Shareholders’ equity 1,364.4
1,300.9
1,537.3

Total liabilities and shareholders’ equity $ 3,739.1
$ 3,564.4
$ 4,040.8

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

Table of Contents

BRUNSWICK CORPORATION

Condensed Consolidated Statements of Cash Flows

(unaudited)


	Six Months Ended
(in millions)	July 3, 2021		June 27, 2020
Cash flows from operating activities
Net earnings	$	348.7	$	139.7
Less: net loss from discontinued operations, net of tax	(0.1)		(2.2)
Net earnings from continuing operations, net of tax	348.8		141.9
Stock compensation expense	14.8		8.8
Depreciation and amortization	84.6		72.2
Pension funding, net of expense	(1.3)		(2.5)

Asset impairment charges	0.8		0

Deferred income taxes	12.3		15.6

Changes in certain current assets and current liabilities	(136.5)		(38.6)
Long-term extended warranty contracts and other deferred revenue	9.0		6.1


Income taxes	10.0		7.0
Other, net	8.0		5.2
Net cash provided by operating activities of continuing operations	350.5		215.7
Net cash (used for) provided by operating activities of discontinued operations	(9.1)		0.9
Net cash provided by operating activities	341.4		216.6

Cash flows from investing activities
Capital expenditures	(110.3)		(90.7)

Sales or maturities of marketable securities	55.9		0
Investments	(9.1)		(1.1)
Acquisition of businesses, net of cash acquired	(16.7)		0
Proceeds from the sale of property, plant and equipment	4.6		1.6



Net cash used for investing activities	(75.6)		(90.2)

Cash flows from financing activities
Proceeds from issuances of short-term debt	0		610.0
Payments of short-term debt	0		(425.0)
Net proceeds from issuances of long-term debt	1.9		0
Payments of long-term debt including current maturities	(78.5)		(9.4)

Common stock repurchases	(55.9)		(34.1)
Cash dividends paid	(47.2)		(38.2)
Proceeds from share-based compensation activity	0.5		0.6
Tax withholding associated with shares issued for share-based compensation	(12.8)		(6.7)
Other, net	(3.7)		0


Net cash (used for) provided by financing activities	(195.7)		97.2

Effect of exchange rate changes	(0.5)		(2.4)
Net increase in Cash and cash equivalents and Restricted cash	69.6		221.2
Cash and cash equivalents and Restricted cash at beginning of period	530.3		331.9

Cash and cash equivalents and Restricted cash at end of period	599.9		553.1
Less: Restricted cash	9.7		11.6
Cash and cash equivalents at end of period	$	590.2	$	541.5

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

BRUNSWICK CORPORATION
Condensed Consolidated Statements of Cash Flows
(unaudited)
Six Months Ended
(in millions) June 27,
2020 June 29,
2019
Cash flows from operating activities
Net earnings $ 139.7
$ 41.2
Less: net loss from discontinued operations, net of tax (2.2 ) (147.1 )
Net earnings from continuing operations, net of tax 141.9
188.3
Stock compensation expense 8.8
7.0
Depreciation and amortization 72.2
66.4
Pension expense, net of (funding) (2.5 ) 1.2
Asset impairment charges —
2.9
Deferred income taxes 15.6
29.3
Changes in certain current assets and current liabilities (38.6 ) (154.0 )
Long-term extended warranty contracts and other deferred revenue 6.1
6.1
Income taxes 7.0
6.4
Other, net 5.2
(6.2 )
Net cash provided by operating activities of continuing operations 215.7
147.4
Net cash provided by (used for) operating activities of discontinued operations 0.9
(8.1 )
Net cash provided by operating activities 216.6
139.3

Cash flows from investing activities

Capital expenditures (90.7 ) (135.2 )
Investments (1.1 ) (0.2 )
Acquisition of businesses, net of cash acquired —
(64.4 )
Proceeds from the sale of property, plant and equipment 1.6
—
Net cash used for investing activities of continuing operations (90.2 ) (199.8 )
Net cash provided by investing activities of discontinued operations —
481.9
Net cash (used for) provided by investing activities (90.2 ) 282.1

Cash flows from financing activities

Proceeds from issuances of short-term debt 610.0
655.0
Payments of short-term debt (425.0 ) (655.0 )
Net proceeds from issuances of long-term debt —
223.1
Payments of long-term debt including current maturities (9.4 ) (168.1 )
Common stock repurchases (34.1 ) (69.8 )
Cash dividends paid (38.2 ) (36.4 )
Proceeds from share-based compensation activity 0.6
0.9
Tax withholding associated with shares issued for share-based compensation (6.7 ) (8.0 )
Other, net —
(0.2 )
Net cash provided by (used for) financing activities 97.2
(58.5 )

Effect of exchange rate changes (2.4 ) 1.4
Net increase in Cash and cash equivalents and Restricted cash 221.2
364.3
Cash and cash equivalents and Restricted cash at beginning of period 331.9
303.4

Cash and cash equivalents and Restricted cash at end of period 553.1
667.7
Less: Restricted cash 11.6
11.6
Cash and cash equivalents at end of period $ 541.5
$ 656.1

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

Table of Contents

Brunswick Corporation
Condensed Consolidated Statements of Shareholders' Equity
(unaudited)
(in millions, except per share data) Common Stock Additional Paid-in Capital Retained Earnings Treasury Stock Accumulated Other Comprehensive Income (Loss) Total
Balance at December 31, 2019 $ 76.9
$ 369.2
$ 1,931.3
$ (1,023.1 ) $ (53.4 ) $ 1,300.9
Net earnings —
—
69.0
—
—
69.0
Other comprehensive loss —
—
—
—
(7.9 ) (7.9 )
Dividends ($0.24 per common share) —
—
(19.2 ) —
—
(19.2 )
Compensation plans and other —
(10.4 ) —
5.4
—
(5.0 )
Common stock repurchases —
—
—
(34.1 ) —
(34.1 )
Balance at March 28, 2020 76.9
358.8
1,981.1
(1,051.8 ) (61.3 ) 1,303.7
Net earnings —
—
70.7
—
—
70.7
Other comprehensive income —
—
—
—
0.7
0.7
Dividends ($0.24 per common share) —
—
(19.0 ) —
—
(19.0 )
Compensation plans and other —
7.7
—
0.6
—
8.3
Balance at June 27, 2020 $ 76.9
$ 366.5
$ 2,032.8
$ (1,051.2 ) $ (60.6 ) $ 1,364.4
Brunswick Corporation

Condensed Consolidated Statements of Shareholders' Equity

(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
Net earnings —
—
77.5
—
—
77.5
Other comprehensive income —
—
—
—
15.6
15.6
Dividends ($0.21 per common share) —
—
(18.1 ) —
—
(18.1 )
Compensation plans and other —
3.1
—
2.1
—
5.2
Common stock repurchases —
—
—
(69.8 ) —
(69.8 )
Balance at June 29, 2019 $ 76.9
$ 363.0
$ 2,140.5
$ (696.6 ) $ (346.5 ) $ 1,537.3
(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, 2020	$	76.9	$	383.8	$	2,225.7	$	(1,133.7)	$	(42.7)	$	1,510.0
Net earnings	0		0		169.3		0		0		169.3
Other comprehensive income	0		0		0		0		5.6		5.6
Dividends ($0.27 per common share)	0		0		(21.0)		0		0		(21.0)
Compensation plans and other	0		(12.6)		0		7.2		0		(5.4)
Common stock repurchases	0		0		0		(15.9)		0		(15.9)

Balance at April 3, 2021	76.9		371.2		2,374.0		(1,142.4)		(37.1)		1,642.6
Net earnings	0		0		179.4		0		0		179.4
Other comprehensive income	0		0		0		0		4.6		4.6
Dividends ($0.335 per common share)	0		0		(26.2)		0		0		(26.2)
Compensation plans and other	0		8.9		0		0.2		0		9.1
Common stock repurchases	0		0		0		(40.0)		0		(40.0)

Balance at July 3, 2021	$	76.9	$	380.1	$	2,527.2	$	(1,182.2)	$	(32.5)	$	1,769.5


(in millions, except per share data)	Common Stock		Additional Paid-in Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Total
Balance at December 31, 2019	$	76.9	$	369.2	$	1,931.3	$	(1,023.1)	$	(53.4)	$	1,300.9
Net earnings	0		0		69.0		0		0		69.0
Other comprehensive loss	0		0		0		0		(7.9)		(7.9)
Dividends ($0.24 per common share)	0		0		(19.2)		0		0		(19.2)
Compensation plans and other	0		(10.4)		0		5.4		0		(5.0)
Common stock repurchases	0		0		0		(34.1)		0		(34.1)

Balance at March 28, 2020	76.9		358.8		1,981.1		(1,051.8)		(61.3)		1,303.7
Net earnings	0		0		70.7		0		0		70.7
Other comprehensive income	0		0		0		0		0.7		0.7
Dividends ($0.24 per common share)	0		0		(19.0)		0		0		(19.0)
Compensation plans and other	0		7.7		0		0.6		0		8.3


Balance at June 27, 2020	$	76.9	$	366.5	$	2,032.8	$	(1,051.2)	$	(60.6)	$	1,364.4

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

Table of Contents

BRUNSWICK CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

Note 1 – Significant Accounting Policies

~~Basis of Presentation.~~ Effective January 1, 2020, the Company changed its management reporting and updated its reportable segments to Propulsion, Parts and Accessories (P&A) and Boat (inclusive of Business Acceleration) to align with its strategy. As a result of this change, the Company has recast all segment information for all prior periods presented. Refer to ~~Note 11 – Segment Data~~ ~~for further information on the Company's reportable segments.~~

Interim Financial Statements. ~~The~~Brunswick's 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.

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 2019~~Brunswick's 2020 Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 (the ~~2019~~2020 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~~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 quarter of fiscal year ~~2020~~2021 ended on ~~June 27, 2020~~July 3, 2021 and the second quarter of fiscal year ~~2019~~2020 ended on June ~~29, 2019.~~

27, 2020.

On June 27, 2019, the Company completed the sale of its Fitness business. The Company determined that the sale of its Fitness business represented a strategic shift that had a major effect on the Company's operations and financial results. Refer to ~~Note 3 – Discontinued Operations~~ ~~for further information.~~

~~Recently Adopted Accounting Standards~~

~~Current Expected Credit Loss: In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-13,~~ ~~Measurement of Credit Losses on Financial Instruments,~~ which updated the Accounting Standards Codification (ASC) to add an impairment model that is based on expected losses rather than incurred losses. On January 1, 2020, the Company adopted this standard and the adoption did not have an impact on the condensed consolidated financial statements.

~~Table of Contents~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(unaudited)~~

Note 2 – Revenue Recognition

~~Consistent with the Company's change in reportable segments described in~~ ~~Note 1 – Significant Accounting Policies,~~ ~~the Company has made a change to its revenue disaggregation presentation to align with the new segment structure.~~The following table presents the Company's revenue into categories that depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors:


	Three Months Ended
	July 3, 2021								June 27, 2020
(in millions)	Propulsion		Parts & Accessories		Boat		Total		Propulsion		Parts & Accessories		Boat		Total
Geographic Markets
United States	$	404.4	$	391.7	$	314.1	$	1,110.2	$	224.9	$	293.8	$	183.2	$	701.9
Europe	119.7		69.9		52.5		242.1		69.8		41.9		35.3		147.0
Asia-Pacific	66.6		39.9		7.3		113.8		66.5		24.6		3.2		94.3
Canada	24.1		34.2		66.8		125.1		13.4		19.5		23.7		56.6
Rest-of-World	34.7		13.2		8.4		56.3		20.8		6.7		4.5		32.0
Segment Eliminations	(85.6)		(7.1)		0		(92.7)		(39.8)		(4.2)		0		(44.0)
Total	$	563.9	$	541.8	$	449.1	$	1,554.8	$	355.6	$	382.3	$	249.9	$	987.8

	Six Months Ended
	July 3, 2021								June 27, 2020
(in millions)	Propulsion		Parts & Accessories		Boat		Total		Propulsion		Parts & Accessories		Boat		Total
Geographic Markets
United States	$	825.7	$	704.0	$	626.7	$	2,156.4	$	515.8	$	504.7	$	398.7	$	1,419.2
Europe	228.7		133.4		94.1		456.2		139.4		84.7		70.4		294.5
Asia-Pacific	132.3		82.4		14.0		228.7		115.8		49.3		8.8		173.9
Canada	49.3		59.6		115.2		224.1		27.5		33.2		55.5		116.2
Rest-of-World	71.3		29.1		18.6		119.0		45.5		16.2		8.0		69.7
Segment Eliminations	(180.5)		(15.9)		0		(196.4)		(108.9)		(11.3)		0		(120.2)
Total	$	1,126.8	$	992.6	$	868.6	$	2,988.0	$	735.1	$	676.8	$	541.4	$	1,953.3

Three Months Ended
June 27, 2020
(in millions) Propulsion Parts & Accessories Boat Total
Geographic Markets
United States $ 224.9
$ 293.8
$ 183.2
$ 701.9
Europe 69.8
41.9
35.3
147.0
Asia-Pacific 66.5
24.6
3.2
94.3
Canada 13.4
19.5
23.7
56.6
Rest-of-World 20.8
6.7
4.5
32.0
Segment Eliminations (39.8 ) (4.2 ) —
(44.0 )
Total $ 355.6
$ 382.3
$ 249.9
$ 987.8

Major Product Lines
Outboard Engines $ 314.3
$ —
$ —
$ 314.3
Controls, Rigging, and Propellers 53.2
—
—
53.2
Sterndrive Engines 27.9
—
—
27.9
Distribution Parts and Accessories —
190.7
—
190.7
Advanced Systems Group —
86.8
—
86.8
Engine Parts and Accessories —
109.0
—
109.0
Aluminum Freshwater Boats —
—
94.2
94.2
Recreational Fiberglass Boats —
—
89.6
89.6
Saltwater Fishing Boats —
—
59.0
59.0
Business Acceleration —
—
8.3
8.3
Boat Eliminations/Other —
—
(1.2 ) (1.2 )
Segment Eliminations (39.8 ) (4.2 ) —
(44.0 )
Total $ 355.6
$ 382.3
$ 249.9
$ 987.8

Table of Contents

Notes to Condensed Consolidated Financial Statements

(unaudited)

Note 5 – Acquisitions

~~Acquisitions~~

~~2019~~2021 Acquisitions

On ~~May 21, 2019,~~June 23, 2021, the Company ~~acquired 100 percent~~entered into a definitive agreement to acquire all of ~~Freedom Boat Club,~~the issued and outstanding shares of Marine Innovations Group AS, known as "Navico," for $1.05 billion. The Company intends to use a ~~leading boat club operator~~combination of debt and cash to fund the acquisition, which is expected to close during the second half of 2021 subject to usual and customary closing conditions as well as regulatory review and approval. Navico is a privately held global company based in ~~Florida. The acquisition expands the Company's presence~~Egersund, Norway, and ~~scale within the emerging~~is a global leader in marine electronics and ~~fast-growing boat club market, providing its~~sensors, including multi-function displays, fish finders, autopilots, sonar, radar, and cartography.

~~members access to a fleet of boats. Freedom Boat Club is included as part of the Company's Boat segment.~~

The net cash consideration the Company paid to acquire Freedom Boat Club was $64.1 million. The final opening balance sheet included $29.2 million of identifiable intangible assets, including customer relationships, franchise agreements and trade names for $11.1 million, $4.9 million and $13.2 million, respectively, along with $27.3 million of goodwill, most of which is deductible for tax purposes. Included in the goodwill amount is $0.9 million of purchase accounting adjustments, primarily related to deferred taxes recorded in the three months ended June 27, 2020. The amount assigned to Freedom Boat Club's customer relationships and franchise agreements will be amortized over their estimated useful lives of approximately 10 years and 15 years, respectively. Refer to Note 5 in the 2019 Form 10-K for further information.

Note 6 – Financial Instruments

The Company operates globally with manufacturing and sales facilities around the world. Due to the ~~Company’s~~Company's global operations, the Company engages in activities involving both financial and market risks. The Company ~~uses~~utilizes normal operating and financing activities, along with derivative financial instruments, to minimize these risks. See Note 14 in the Notes to Consolidated Financial Statements in the ~~2019~~2020 Form 10-K for further details regarding the Company's financial instruments and hedging policies.

Cross-Currency Swaps. During the second quarter of 2021, the Company entered into cross-currency swaps to hedge Euro currency exposures of the net investment in certain foreign subsidiaries. As of July 3, 2021, the notional value of cross-currency swap contracts outstanding was $200.0 million. The cross-currency swaps were designated as net investment hedges, with the amount of gain or loss associated with the change in fair value of these instruments included in Accumulated other comprehensive loss and recognized upon termination of the respective investment.

Commodity Price. The Company uses commodity swaps to hedge anticipated purchases of aluminum. As of July 3, 2021, December 31, 2020 and June 27, 2020, the notional value of commodity swap contracts outstanding ~~was~~were $11.2 million, $10.0 million and $1.0 million, ~~with~~respectively, and the contracts ~~maturing~~mature through ~~2021. The Company had no outstanding commodity swap contracts at December 31, 2019 and June 29, 2019.~~2022. The amount of gain or loss associated with the change in fair value of these instruments is deferred in Accumulated other comprehensive loss and recognized in Cost of sales in the same period or periods during which the hedged transaction affects earnings. As of ~~June 27, 2020,~~July 3, 2021, the Company estimates that during the next 12 months it will reclassify approximately ~~$0.1~~$3.6 million in net ~~losses~~gains (based on current prices) from Accumulated other comprehensive loss to Cost of sales.

Foreign Currency Derivatives. Forward exchange contracts outstanding at July 3, 2021, December 31, 2020 and June 27, 2020 ~~December 31, 2019 and June 29, 2019~~ had notional contract values of $481.1 million, $395.9 million and $270.6 million, ~~$332.5 million and $395.6 million,~~ respectively. ~~The notional contract values of~~There were no option contracts outstanding ~~totaled $17.8 million~~ at ~~June 27, 2020,~~either July 3, 2021 or December 31, ~~2019 and June 29, 2019, respectively. The forward~~2020. Option contracts outstanding at June 27, 2020 had a notional contract value of $17.8 million. The forward contracts outstanding at July 3, 2021 mature through ~~2021~~2022 and mainly relate to the Euro, ~~Canadian dollar,~~ Australian dollar, Japanese yen, and ~~Japanese yen.~~ Canadian dollar. As of ~~June 27, 2020,~~July 3, 2021, the Company estimates that during the next 12 months, it will reclassify approximately ~~$2.5~~$4.5 million of net ~~gains~~losses (based on current rates) from Accumulated other comprehensive loss to Cost of sales.

Interest Rate Derivatives. The Company previously entered into fixed-to-floating interest rate swaps to convert a portion of its long-term debt from fixed to floating rate debt. In the second half of 2019, the Company settled its fixed-to-floating interest rate swaps, resulting in a net deferred gain of ~~$2.5~~$2.5 million included within Debt. The Company will reclassify ~~$0.7~~$0.7 million of net deferred gains from Debt to Interest expense during the next 12 ~~months. As a result of the settlement, there are~~months. There were no outstanding fixed-to-floating interest rate swaps as ofof July 3, 2021, December 31, 2020 or June 27, ~~2020 or December 31, 2019.~~2020.

During the first quarter of 2021, the Company entered into forward-starting interest rate swaps to hedge the interest rate risk associated with anticipated debt issuances. As of ~~June 29, 2019,~~July 3, 2021, the outstanding forward-starting interest rate swaps had a total notional contract value of ~~$200.0 million. These instruments have been designated as fair value hedges, with the fair value recorded in long-term debt.~~

$150.0 million. As of ~~June 27, 2020, December 31, 2019 and June 29, 2019,~~July 3, 2021, the Company had $1.7 million ~~$2.0~~of net deferred gains associated with forward-starting interest rate swaps. As of December 31, 2020 and June 27, 2020, the Company had $1.4 million and ~~$2.2~~$1.7 million, respectively, of net deferred losses associated with ~~all~~previously settled forward-starting interest rate swaps. Forward-starting interest rate swaps ~~which were~~are designated as cash flow hedges with gains and losses included in Accumulated other comprehensive loss. As of ~~June 27, 2020,~~July 3, 2021, the Company estimates that during the next 12 months, it will reclassify approximately ~~$0.6~~$0.6 million of net losses resulting from settled forward-starting interest rate swaps from Accumulated other comprehensive loss to Interest expense.

Table of Contents

Notes to Condensed Consolidated Financial Statements

(unaudited)

As of July 3, 2021, December 31, 2020 and June 27, 2020, ~~December 31, 2019 and June 29, 2019,~~ the fair values of the ~~Company’s~~Company's derivative instruments were:



(in millions)	Fair Value
Asset Derivatives	July 3, 2021		December 31, 2020		June 27, 2020
Derivatives Designated as Cash Flow Hedges
Foreign exchange contracts	$	3.4	$	1.3	$	2.8
Commodity contracts	3.3		0.9		0
Interest rate contracts	2.8		0		0
Total	$	9.5	$	2.2	$	2.8

Derivatives Designated as Net Investment Hedges
Cross-currency swaps	$	5.9	$	0	$	0



Other Hedging Activity
Foreign exchange contracts	$	0.2	$	0.0	$	0.7

Liability Derivatives
Derivatives Designated as Cash Flow Hedges
Foreign exchange contracts	$	5.4	$	11.3	$	1.8
Commodity contracts	0		0		0.1

Total	$	5.4	$	11.3	$	1.9






Other Hedging Activity
Foreign exchange contracts	$	0.3	$	0.7	$	0.6

As of July 3, 2021, December 31, 2020 and June 27, 2020, asset derivatives are included within Prepaid expenses and other, and Other long-term assets and liability derivatives are included within Accrued expenses and Other long-term liabilities in the Condensed Consolidated Balance Sheets.

(in millions)
Derivative Assets Derivative Liabilities
Instrument Balance Sheet Location Fair Value Balance Sheet Location Fair Value
June 27, 2020 Dec 31, 2019 June 29, 2019 June 27, 2020 Dec 31, 2019 June 29,
2019
Derivatives Designated as Cash Flow Hedges
Foreign exchange contracts Prepaid expenses and other $ 2.8
$ 4.1
$ 4.6
Accrued expenses $ 1.8
$ 2.3
$ 1.8
Commodity contracts Prepaid expenses and other —
—
—
Accrued expenses 0.1
—
—
Total $ 2.8
$ 4.1
$ 4.6
$ 1.9
$ 2.3
$ 1.8

Derivatives Designated as Fair Value Hedges
Interest rate contracts Other long-term assets $ —
$ —
$ 2.2
Other long-term liabilities $ —
$ —
$ —
Total $ —
$ —
$ 2.2
$ —
$ —
$ —

Other Hedging Activity
Foreign exchange contracts Prepaid expenses and other $ 0.7
$ 0.1
$ 0.5
Accrued expenses $ 0.6
$ 0.9
$ 0.4

Table of Contents

Notes to Condensed Consolidated Financial Statements

(unaudited)

The effect of derivative instruments on the Condensed Consolidated Statements of Comprehensive Income for the three ~~months~~ and six months ended July 3, 2021 and June 27, 2020 ~~and June 29, 2019 was:~~ is as shown in the tables below.

(in millions)
Derivatives Designated as Cash Flow Hedging Instruments Amount of Gain (Loss) on Derivatives Recognized in Accumulated Other Comprehensive Loss Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Earnings
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Earnings
Three Months Ended Six Months Ended Three Months Ended Six Months Ended
June 27,
2020 June 29,
2019 June 27,
2020 June 29,
2019 June 27,
2020 June 29,
2019 June 27,
2020 June 29,
2019
Interest rate contracts $ —
$ —
$ —
$ —
Interest expense $ (0.2 ) $ (0.2 ) $ (0.3 ) $ (0.3 )
Foreign exchange contracts (2.9 ) (0.3 ) 6.6
1.0
Cost of sales 4.0
2.9
6.7
5.4
Commodity contracts 0.0
—
(0.1 ) —
Cost of sales 0.0
—
0.0
—
Total $ (2.9 ) $ (0.3 ) $ 6.5
$ 1.0
$ 3.8
$ 2.7
$ 6.4
$ 5.1

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
June 27,
2020 June 29,
2019 June 27,
2020 June 29,
2019
Interest rate contracts Interest expense $ 0.1
$ (0.1 ) $ 0.3
$ (0.2 )

~~Table of Contents~~

~~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
June 27,
2020 June 29,
2019 June 27, 2020 June 29, 2019
Foreign exchange contracts Cost of sales $ (1.4 ) $ (0.8 ) $ 3.4
$ 0.7
Foreign exchange contracts Other expense, net 0.1
0.6
1.2
0.6
Commodity contracts Cost of sales 0.0
—
0.0
—
Total $ (1.3 ) $ (0.2 ) $ 4.6
$ 1.3

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


(in millions)	Three Months Ended				Six Months Ended
Derivatives Designated as Cash Flow Hedging Instruments	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Interest rate contracts	$	(7.0)	$	0	$	2.8	$	0
Foreign exchange contracts	(2.2)		(2.9)		0.4		6.6
Commodity contracts	2.2		0.0		4.3		(0.1)
Total	$	(7.0)	$	(2.9)	$	7.5	$	6.5

Derivatives Designated as Net Investment Hedging Instruments
Cross-currency swaps	$	5.9	$	0	$	5.9	$	0

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


(in millions)		Three Months Ended				Six Months Ended
Derivatives Designated as Cash Flow Hedging Instruments	Location of Gain (Loss)	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Interest rate contracts	Interest expense	$	(0.2)	$	(0.2)	$	(0.3)	$	(0.3)
Foreign exchange contracts	Cost of sales	(4.0)		4.0		(7.1)		6.7
Commodity contracts	Cost of sales	1.2		0.0		1.5		0.0
Total		$	(3.0)	$	3.8	$	(5.9)	$	6.4

Derivatives Designated as Fair Value Hedging Instruments
Interest rate contracts	Interest expense	$	0.1	$	0.1	$	0.3	$	0.3

Other Hedging Activity
Foreign exchange contracts	Cost of sales	$	(2.8)	$	(1.4)	$	(1.0)	$	3.4
Foreign exchange contracts	Other expense, net	(0.2)		0.1		(2.4)		1.2
Total		$	(3.0)	$	(1.3)	$	(3.4)	$	4.6

Fair Value of Other Financial Instruments. The carrying values of the ~~Company’s~~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. AtAs of July 3, 2021, December 31, 2020 and June 27, 2020, ~~December 31, 2019 and June 29, 2019,~~ the fair value of the Company’s long-term debt, including short-term debt and current maturities, was approximately ~~$1,382.7~~$1,001.4 million ~~$1,214.6~~, $1,062.3 million and ~~$1,358.1~~$1,382.7 million, respectively, and was determined using Level 1 and Level 2 inputs described in Note 7 to the Notes to Consolidated Financial Statements in the ~~2019~~2020 Form 10-K. The carrying value of long-term debt, including short-term debt and current maturities, was ~~$1,307.3~~$895.6 million ~~$1,131.6~~, $972.1 million and ~~$1,301.9~~$1,307.3 million as of July 3, 2021, December 31, 2020 and June 27, 2020, ~~December 31, 2019 and June 29, 2019,~~ respectively.

Table of Contents

Notes to Condensed Consolidated Financial Statements

(unaudited)

Note 7 – Fair Value Measurements

The following table summarizes the ~~Company’s~~Company's financial assets and liabilities measured at fair value on a recurring ~~basis as of June 27, 2020:~~basis:


(in millions)		Fair Value
Category	Fair Value Level	July 3, 2021		December 31, 2020		June 27, 2020
Cash equivalents	1	$	0.2	$	19.3	$	0.2
Short-term investments in marketable securities	1	0.8		56.7		0.8
Restricted cash	1	9.7		10.7		11.6
Derivatives assets	2	15.6		2.2		3.5
Derivative liabilities	2	5.7		12.0		2.5
Deferred compensation	2	18.2		19.8		16.4

Liabilities measured at net asset value		9.3		10.7		9.4

(in millions) Level 1 Level 2 Total
Assets:
Cash equivalents $ 0.2
$ —
$ 0.2
Short-term investments in marketable securities 0.8
—
0.8
Restricted cash 11.6
—
11.6
Derivatives —
3.5
3.5
Total assets $ 12.6
$ 3.5
$ 16.1

Liabilities:

Derivatives $ —
$ 2.5
$ 2.5
Deferred compensation 0.9
15.5
16.4
Total liabilities at fair value $ 0.9
$ 18.0
$ 18.9
Liabilities measured at net asset value 9.4
Total liabilities $ 28.3

~~Table of Contents~~

~~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, 2019:~~

(in millions) Level 1 Level 2 Total
Assets:
Cash equivalents $ 0.3
$ —
$ 0.3
Short-term investments in marketable securities 0.8
—
0.8
Restricted cash 11.6
—
11.6
Derivatives —
4.2
4.2
Total assets $ 12.7
$ 4.2
$ 16.9

Liabilities:

Derivatives $ —
$ 3.2
$ 3.2
Deferred compensation 1.2
18.8
20.0
Total liabilities at fair value $ 1.2
$ 22.0
$ 23.2
Liabilities measured at net asset value 8.5
Total liabilities $ 31.7

~~The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis as of June 29, 2019:~~

(in millions) Level 1 Level 2 Total
Assets:
Cash equivalents $ 150.2
$ —
$ 150.2
Short-term investments in marketable securities 0.8
—
0.8
Restricted cash 11.6
—
11.6
Derivatives —
7.3
7.3
Total assets $ 162.6
$ 7.3
$ 169.9

Liabilities:

Derivatives $ —
$ 2.2
$ 2.2
Deferred compensation 2.7
25.7
28.4
Total liabilities at fair value $ 2.7
$ 27.9
$ 30.6
Liabilities measured at net asset value 11.5
Total liabilities $ 42.1

In addition to the items shown in the tables above, refer to Note 717 in the Notes to Consolidated Financial Statements in the ~~2019~~2020 Form 10-K for further information regarding the fair value measurements associated with the ~~Company’s~~Company's postretirement benefit plans.

Note 8 – Share-Based Compensation

Under the Brunswick Corporation 2014 Stock Incentive Plan, the Company may grant stock appreciation rights (SARs), non-vested stock units, ~~and 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:~~as well as from: (i) the forfeiture of past stock units and 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 stock units and awards. As of ~~June 27, 2020, 4.8~~July 3, 2021, 4.7 million shares remained available for grant.

~~Table of Contents~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(unaudited)~~

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

Non-Vested Stock Units

The Company grants both stock-settled and cash-settled non-vested stock units to key employees as determined by management and the Human Resources and Compensation Committee of the Board of Directors. The Company granted ~~0.1 million~~nominal stock units during ~~both~~ the three months ended July 3, 2021 and June 27, 2020, ~~and June 29, 2019,~~ respectively. The Company granted ~~0.3~~0.2 million and ~~0.4~~0.3 million of stock units during the six months ended July 3, 2021 and June 27, 2020, ~~and June 29, 2019,~~ respectively. The Company recognizes the cost of non-vested stock units on a straight-line basis over the requisite vesting period. Additionally, cash-settled non-vested stock units are recorded as a liability on the balance sheet and adjusted to fair value each reporting period through stock compensation expense. ~~During~~The Company recorded compensation expense for non-vested stock units of $4.4 million and $7.3 million during the three and six months ended July 3, 2021, respectively, and recorded compensation expense for non-vested stock units of $4.4 million and $6.4 million during the three and six months ended June 27, 2020, the Company charged $4.4 million and $6.4 million, respectively, and charged $1.6 million and $3.7 million during the three months and six months ended June 29, 2019, respectively to compensation expense for non-vested stock units.respectively.

As of ~~June 27, 2020,~~July 3, 2021, there was ~~$19.4~~$19.1 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 ~~1.6~~1.4 years.

Performance Awards

~~In both February~~The Company did not grant any performance shares for the three months ended July 3, 2021 and granted a nominal number of ~~2020~~performance shares for the three months ended June 27, 2020. The company granted 0.2 million and ~~2019, the Company granted~~ 0.1 million performance shares to certain senior ~~executives.~~executives for the six months ended July 3, 2021 and June 27, 2020, respectively. Performance share awards are based on three performance measures: a cash flow return on investment (CFROI) measure, an operating margin (OM) measure and a total shareholder return (TSR) modifier. Performance shares are earned based on a three-year performance period commencing at the beginning of the calendar year of each grant. The performance shares earned are then subject to a TSR modifier based on the Company's stock returns measured against stock returns of a predefined comparator group over a

Table of Contents

Notes to Condensed Consolidated Financial Statements

(unaudited)

three-year performance period. Additionally, in February ~~2020~~2021 and ~~2019,~~2020, the Company granted ~~26,750~~24,560 and ~~24,605~~26,750 performance shares, respectively, to certain officers and certain senior managers based on the respective measures and performance periods described above but excluding the TSR modifier. ~~During~~The Company recorded compensation expense of $4.3 million and $7.5 million during the three and six months ended July 3, 2021, respectively, and recorded compensation expense of $4.5 million and $2.4 million during the three and six months ended June 27, 2020, ~~the Company recognized a charge of $4.5 million and $2.4 million,~~ respectively, ~~and charged $2.6 million and $3.3 million for the three months and six months ended June 29, 2019, 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~~value of the senior executives' performance share award grants with a TSR modifier for grants in 2021 and 2020 was $91.44 and ~~2019 were~~ $64.72, ~~and $49.64, respectively, which~~respectively. The fair values were estimated using the Monte Carlo valuation model, and incorporated the following assumptions:


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

2020 2019
Risk-free interest rate 1.4 % 2.9 %
Dividend yield 1.5 % 1.7 %
Volatility factor 46.6 % 41.0 %
Expected life of award 2.9 years
2.9 years

Table of ~~hedging activities.~~Contents

~~Acquisition and IT related costs.~~ In connection with the Freedom Boat Club acquisition that occurred in the second quarter of 2019, the Company recorded $0.6 million and $1.3 million of acquisition costs in Selling, general and administrative expense (SG&A) within the Boat segment, for the three and six months ended June 27, 2020, respectively.

In addition, the Company recorded $0.6 million and $1.3 million for the three and six months ended June 27, 2020; and $0.5 million for both the three and six months ended June 29, 2019 of IT transformation costs in SG&A within Corporate/Other resulting from the Fitness separation.

~~Restructuring, exit and impairment charges.~~ The Company recorded restructuring, exit, and impairment charges of $2.1 million and $5.4 million during the three months ended June 27, 2020 and June 29, 2019, respectively, and charges of $2.5 million and $8.6 million for the six months ended June 27, 2020 and June 29, 2019. Refer to ~~Note 4 – Restructuring, Exit and Impairment Activities~~ ~~in the Notes to Condensed Consolidated Financial Statements for further information.~~

~~Pension settlement benefit~~. During the third quarter of 2019, the Company fully exited its remaining defined benefit pension plans and as a result, recorded a $1.3 million benefit in the three months ended June 27, 2020 associated with a final settlement true-up. The Company did not record any pension settlement charges in the six months ended June 29, 2019.

~~Tax items.~~ The Company recognized an income tax provision for the three months and six months ended June 27, 2020 of $17.6 million and $36.0 million, respectively, which included a net charge of $0.4 million and $0.1 million, respectively. These charges primarily related to a change in the valuation allowance. The Company recognized an income tax provision for the three months and six months ended June 29, 2019 of $31.7 million and $50.5 million, respectively, which included a net charge of $1.8 million and $0.1 million, respectively. The net charge of $1.8 million primarily related to an increase in the valuation allowance and the net charge of $0.1 million was related to the aforementioned valuation allowance increase and other various special tax items. The effective tax rate, which is calculated as the income tax provision as a percentage of earnings before income taxes, for the three months and six months ended June 27, 2020, was 19.8 percent and 20.2 percent, respectively. The effective tax rate for

~~the three months and six months ended June 29, 2019 was 22.0 percent and 21.1 percent, respectively. Refer to~~ ~~Note 13 – Income Taxes~~ ~~in the Notes to Condensed Consolidated Financial Statements for further 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				2021 vs. 2020				Six Months Ended				2021 vs. 2020
(in millions, except per share data)	July 3, 2021		June 27, 2020		$ Change		% Change		Jul 3, 2021		Jun 27, 2020		$ Change		% Change
Net sales	$	1,554.8	$	987.8	$	567.0	57.4%		$	2,988.0	$	1,953.3	$	1,034.7	53.0%
Gross margin(A)	461.5		256.0		205.5		80.3%		878.8		499.8		379.0		75.8%
Restructuring, exit and impairment charges	0.2		2.1		(1.9)		(90.5%)		0.7		2.5		(1.8)		(72.0)%
Operating earnings	250.2		107.0		143.2		133.8%		482.1		210.2		271.9		129.4%
Net earnings from continuing operations	179.4		71.2		108.2		152.0%		348.8		141.9		206.9		145.8%

Diluted earnings per common share from continuing operations	$	2.29	$	0.89	$	1.40	157.3%		$	4.44	$	1.77	$	2.67	150.8%

Expressed as a percentage of Net sales:
Gross margin (A)	29.7%		25.9%				380	bps	29.4%		25.6%				380	bps
Selling, general and administrative expense	11.2%		12.1%				(90)	bps	10.9%		11.8%				(90)	bps
Research and development expense	2.4%		2.8%				(40)	bps	2.4%		2.9%				(50)	bps
Restructuring, exit and impairment charges	0.0%		0.2%				(20)	bps	0.0%		0.1%				(10)	bps
Operating margin	16.1%		10.8%				530	bps	16.1%		10.8%				530	bps

Three Months Ended 2020 vs. 2019 Six Months Ended 2020 vs. 2019
(in millions, except per share data) June 27,
2020 June 29,
2019
$
Change

%
Change
June 27,
2020 June 29,
2019
$
Change

%
Change
Net sales $ 987.8
$ 1,163.5
$ (175.7 ) (15.1 )% $ 1,953.3
$ 2,214.2
$ (260.9 ) (11.8 )%
Gross margin^(A)
256.0
328.0
(72.0 ) (22.0 )% 499.8
607.5
(107.7 ) (17.7 )%
Restructuring, exit and impairment charges 2.1
5.4
(3.3 ) (61.1 )% 2.5
8.6
(6.1 ) (70.9 )%
Operating earnings 107.0
162.7
(55.7 ) (34.2 )% 210.2
276.8
(66.6 ) (24.1 )%
Net earnings from continuing operations 71.2
112.1
(40.9 ) (36.5 )% 141.9
188.3
(46.4 ) (24.6 )%

Diluted earnings per common share from continuing operations $ 0.89
$ 1.28
$ (0.39 ) (30.5 )% $ 1.77
$ 2.15
$ (0.38 ) (17.7 )%

Expressed as a percentage of Net sales:

Gross margin^(A)
25.9 % 28.2 % (230) bpts
25.6 % 27.4 % (180) bpts
Selling, general and administrative expense 12.1 % 10.9 %
120 bpts
11.8 % 11.7 % 10 bpts
Research and development expense 2.8 % 2.9 %
(10) bpts
2.9 % 2.8 % 10 bpts
Restructuring, exit and impairment charges 0.2 % 0.5 %
(30) bpts
0.1 % 0.4 % (30) bpts
Operating margin 10.8 % 14.0 %
(320) bpts
10.8 % 12.5 % (170) bpts

~~bpts~~bps = basis points


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

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

Table of Contents

The following is a summary of Adjusted operating earnings and Adjusted diluted earnings per common share from continuing operations for the three ~~months~~ and six months ended when compared with the same prior year comparative period:


	Three Months Ended								Six Months Ended
	Operating Earnings				Diluted Earnings (Loss) Per Share				Operating Earnings				Diluted Earnings (Loss) Per Share
(in millions, except per share data)	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
GAAP	$	250.2	$	107.0	$	2.29	$	0.89	$	482.1	$	210.2	$	4.44	$	1.77
Restructuring, exit, and impairment charges	0.2		2.1		0.00		0.02		0.7		2.5		0.00		0.02
Purchase accounting amortization	7.6		7.6		0.08		0.07		15.1		15.1		0.15		0.15
Sport Yacht & Yachts	1.3		—		0.01		—		3.8		—		0.04		—
Acquisition, integration, and IT related costs	7.1		1.2		0.07		0.01		8.4		2.6		0.08		0.03
Palm Coast reclassified from held-for-sale	—		—		—		—		0.8		—		0.01		—
Gain on sale of assets	—		—		—		—		(1.5)		—		(0.01)		—
Pension settlement benefit	—		—		—		(0.01)		—		—		—		(0.01)
Special tax items	—		—		0.07		0.01		—		—		0.05		(0.00)
As Adjusted	$	266.4	$	117.9	$	2.52	$	0.99	$	509.4	$	230.4	$	4.76	$	1.96

GAAP operating margin	16.1%		10.8%						16.1%		10.8%
Adjusted operating margin	17.1%		11.9%						17.0%		11.8%

Three Months Ended Six Months Ended
Operating Earnings Diluted Earnings (Loss) Per Share Operating Earnings Diluted Earnings (Loss) Per Share
(in millions, except per share data) June 27,
2020 June 29,
2019 June 27,
2020 June 29,
2019 June 27,
2020 June 29,
2019 June 27,
2020 June 29,
2019
GAAP $ 107.0
$ 162.7
$ 0.89
$ 1.28
$ 210.2
$ 276.8
$ 1.77
$ 2.15
Restructuring, exit, and impairment charges 2.1
5.4
0.02
0.05
2.5
8.6
0.02
0.07
Purchase accounting amortization 7.6
7.3
0.07
0.06
15.1
14.5
0.15
0.13
Acquisition and IT related costs 1.2
1.8
0.01
0.01
2.6
1.8
0.03
0.01
Special tax items —
—
0.01
0.02
—
—
(0.00 ) (0.00 )
Sport Yacht & Yachts —
2.9
—
0.03
—
2.9
—
0.03
Pension settlement benefit —
—
(0.01 ) —
—
—
(0.01 ) —
As Adjusted $ 117.9
$ 180.1
$ 0.99
$ 1.45
$ 230.4
$ 304.6
$ 1.96
$ 2.39

Operating margin GAAP 10.8 % 14.0 % 10.8 % 12.5 %
Operating margin, as adjusted 11.9 % 15.5 % 11.8 % 13.8 %

Net sales ~~decreased 15.1~~increased 57 percent and ~~11.8~~53 percent during the second quarter and first half of ~~2020,~~2021, respectively, when compared with the same prior year period. Refer to ~~the discussion of~~ the Propulsion, Parts and Accessories, and Boat segments for further details on the drivers of net sales changes.

Gross margin percentage ~~decreased 230~~increased 380 basis points ~~and 180 basis points~~ in both the second quarter and ~~the~~ first half of ~~2020, respectively,~~2021 when compared with the same prior year ~~period, reflecting the impacts of~~period, with all segments benefiting from increased sales resulting from strong global demand, favorable factory absorption from increased production, ~~suspensions~~ and ~~stay-at-home restrictions, unfavorable~~favorable changes in foreign currency exchange ~~rates, and tariffs, which were partially offset by benefits from cost reduction activities.~~rates.

Selling, general and administrative expense (SG&A) ~~decreased~~increased during the second quarter and ~~the first~~second half of ~~2020~~2021 when compared with the same prior year period. ~~SG&A includes purchase accounting amortization, acquisition and IT transformation-related costs, and impacts of Sport Yacht & Yachts operations, as applicable.~~ Excluding ~~these~~certain one-time items presented above, SG&A as a percentage of sales was ~~higher~~lower in the second quarter and first half of ~~2020~~2021 compared with the same prior year ~~period,~~periods, reflecting the ~~decrease~~strong increase in net sales, partially offset by ~~benefits of cost reduction measures.~~ higher variable compensation costs and increased spending on sales and marketing and ACES/other growth initiatives. Research and development expense ~~decreased~~increased in ~~both the second quarter and the first half of~~2021 versus 2020 ~~but were consistent year over year as a percentage of Net sales.~~

, reflecting continued investment in new products in all segments.

~~The Company~~

We recorded restructuring, exit and impairment charges of $0.2 million and $0.7 million during the three and six months ended July 3, 2021, respectively, and recorded $2.1 million and $2.5 million during the three ~~months~~ and six months ended June 27, 2020, ~~respectively, and recorded $5.4 million and $8.6 million during the three months and six months ended June 29, 2019,~~ respectively. Refer to Note 4 – Restructuring, Exit and Impairment Activities in the Notes to Condensed Consolidated Financial Statements for further information.

~~The Company~~We recorded Equity earnings of $0.4 million and $1.2 million in the three and six months ended July 3, 2021, respectively, which were mainly related to our marine and technology-related joint ventures. This compares with Equity earnings of $1.1 million and $2.9 million in the three and six months ended June 27, 2020, ~~respectively, which were mainly related to the Company's marine and technology-related joint ventures. This compares with Equity earnings of $1.6~~respectively.

We recognized $(1.5) million and ~~$3.5~~$(2.8) million in Other expense, net in the three and six months ended ~~June 29, 2019,~~July 3, 2021, respectively.

~~The Company recognized~~ This compares with $(0.9) million and $(0.2) million recognized in Other expense, net in the three and six months ended June 27, 2020, ~~respectively. This compares with $(0.1) million and $(1.7) million recognized in Other expense, net in the three and six months ended June 29, 2019,~~ respectively. Other expense, net primarily includes other postretirement benefit costs and remeasurement gains and losses resulting from changes in foreign currency rates.

Net interest expense decreased for the three and six months ended ~~June 27, 2020~~July 3, 2021 when compared with the same prior year period due to reduction in average daily debt outstanding, which was influenced by the timing of debt retirements and debt issuances. Refer to Note 1514 – Debt in the Notes to Condensed Consolidated Financial Statements and Note 16 in the Notes to Consolidated Financial Statements in the ~~2019~~2020 Form 10-K.

~~The Company recognized an income~~

Table of Contents

Income tax provision for the three and six months ended July 3, 2021 was $55.2 million and $102.6 million, respectively, compared to $17.6 million and $36.0 million for the three and six months ended June 27, 2020, of $17.6 million and $36.0 million, respectively, which included a net charge of $0.4 million and $0.1 million, respectively. These charges primarily related to a change in the valuation allowance. The Company recognized an income tax provision for the three months and six months ended June 29, 2019 of $31.7 million and $50.5 million, respectively, which included a net charge of $1.8 million and $0.1 million, respectively. The ~~net charge of $1.8 million~~increase compared with the same prior year periods is primarily ~~related~~due to ~~an increase in the valuation allowance and the net charge of $0.1 million was related to the aforementioned valuation allowance increase and other various special tax items.~~increased earnings before income taxes.

The effective tax rate, which is calculated as the income tax provision as a percentage of earnings before income taxes, for the three and six months ended July 3, 2021, was 23.5 percent and 22.7 percent, respectively. The effective tax rate for the three and six months ended June 27, 2020 was 19.8 percent ~~and~~and 20.2 percent, respectively. ~~The effective tax rate for the three months and six months ended June 29, 2019 was 22.0 percent and 21.1 percent, respectively.~~

Due to the factors described in the preceding paragraphs, operating earnings, net earnings from continuing operations, and diluted earnings per common share from continuing operations ~~decreased~~increased during the second quarter and first half of ~~2020~~2021 when compared with the same prior year ~~period.~~periods.

Propulsion Segment

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


	Three Months Ended				2021 vs. 2020				Six Months Ended				2021 vs. 2020
(in millions)	July 3, 2021		June 27, 2020		$ Change		% Change		July 3, 2021		June 27, 2020		$ Change		% Change
Net sales	$	649.5	$	395.4	$	254.1	64.3%		$	1,307.3	$	844.0	$	463.3	54.9%

Operating earnings	122.1		47.7		74.4		156.0%		246.6		109.0		137.6		126.2%
Operating margin	18.8%		12.1%				670	bps	18.9%		12.9%				600	bps

Three Months Ended 2020 vs. 2019 Six Months Ended 2020 vs. 2019
(in millions) June 27,
2020 June 29,
2019
$
Change

%
Change
June 27,
2020 June 29,
2019 $
Change %
Change
Net sales $ 395.4
$ 461.5
$ (66.1 ) (14.3 )% $ 844.0
$ 913.9
$ (69.9 ) (7.6 )%
Operating earnings 47.7
71.0
(23.3 ) (32.8 )% 109.0
130.9
(21.9 ) (16.7 )%
Operating margin 12.1 % 15.4 % (330) bpts
12.9 % 14.3 % (140) bpts

~~bpts~~bps = basis points

~~The~~ Propulsion segment net sales ~~decreased $66.1~~increased $254.1 million, or ~~14.3~~64 percent, in the second quarter ~~versus 2019,~~of 2021 compared to the second quarter of 2020 as a result of strong global demand for all product categories and continued market share gains. The Propulsion segment gained substantial U.S. retail market share in every outboard engine horsepower category in excess of 75 horsepower, with outsized gains in engines over 200 horsepower, and also experienced continued strong ~~demand for higher horsepower outboard engine categories and related controls and systems was offset, as anticipated, by production disruptions at Mercury and its OEM engine customers due~~sales growth in international markets. Our increased capacity enabled continued elevated sales to the ~~COVID-19 pandemic.~~independent OEM and international channels.

~~The~~ Propulsion segment net sales ~~decreased $69.9~~increased $463.3 million, or ~~7.6~~55 percent, in the first half of ~~2020~~2021 versus prior year as a result of the same factors described above.

International sales were 38 percent of the segment's net sales during the second quarter of 2021 and increased 44 percent from the prior year on a GAAP basis. On a constant currency basis, international net sales increased 32 percent, with increases across all regions. International sales were 37 percent of the segment's net sales through the first half of 2021 and increased 47 percent from the prior year on a GAAP basis. On a constant currency basis, international sales increased 37 percent through the first half of 2021, with increases across all regions.

Propulsion segment operating earnings in the second quarter of 2021 were $122.1 million, an increase of 156 percent when compared to the second quarter of 2020, as a result of increased net sales in addition to the factors affecting all of our segments previously mentioned. Operating earnings for the first half of 2021 were $246.6 million, an increase of 126 percent as a result of the same factors described above.

~~International sales increased 12 percent on a GAAP basis and 18 percent on a constant currency basis in the second quarter~~

Table of 2020, from prior year primarily due to increases in Asia-Pacific particularly in higher horsepower engines in commercial applications, partially offset by declines in Europe and Canada, resulting mostly from the impact of production disruptions on OEMs and dealers due to COVID-19. For the first half of 2020, International sales increased 12 percent on a GAAP basis and 16 percent on a constant currency basis from prior year.Contents

Propulsion segment operating earnings for the quarter was $47.7 million, a decrease of 32.8 percent, as benefits from cost reduction activities were more than offset by lower net sales and the unfavorable impact of absorption resulting from production disruptions, as well as the unfavorable impact of changes in tariffs and foreign exchange rates. Operating earnings for the first half of 2020 were $109.0 million, a decrease of 16.7 percent.

Parts & Accessories Segment

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


	Three Months Ended				2021 vs. 2020				Six Months Ended				2021 vs. 2020
(in millions)	July 3, 2021		June 27, 2020		$ Change		% Change		July 3, 2021		June 27, 2020		$ Change		% Change
Net sales	$	548.9	$	386.5	$	162.4	42.0%		$	1,008.5	$	688.1	$	320.4	46.6%

GAAP operating earnings	$	114.4	$	80.1	$	34.3	42.8%		$	206.3	$	126.3	$	80.0	63.3%
Restructuring, exit and impairment charges	0.2		—		0.2		NM		0.7		0.3		0.4		133.3%
Purchase accounting amortization	7.2		7.2		—		NM		14.4		14.4		—		NM
Acquisition, integration and IT costs	5.8		—		5.8		NM		5.8		—		5.8		NM
Gain on sale of assets	—		—		—		NM		(1.5)		—		(1.5)		NM
Adjusted operating earnings	$	127.6	$	87.3	$	40.3	46.2%		$	225.7	$	141.0	$	84.7	60.1%

GAAP operating margin	20.8%		20.7%				10	bps	20.5%		18.4%				210	bps
Adjusted operating margin	23.2%		22.6%				60	bps	22.4%		20.5%				190	bps

Three Months Ended 2020 vs. 2019 Six Months Ended 2020 vs. 2019
(in millions) June 27,
2020 June 29,
2019
$
Change

%
Change
June 27,
2020 June 29,
2019 $
Change %
Change
Net sales $ 386.5
$ 410.0
$ (23.5 ) (5.7 )% $ 688.1
$ 723.6
$ (35.5 ) (4.9 )%

Operating Earnings GAAP $ 80.1
$ 88.2
$ (8.1 ) (9.2 )% $ 126.3
$ 136.0
$ (9.7 ) (7.1 )%
Purchase accounting amortization 7.2
7.2
—
— % 14.4
14.4
—
— %
Restructuring, exit and impairment charges —
0.6
(0.6 ) NM
0.3
0.6
(0.3 ) (50.0 )%
Operating Earnings, as adjusted $ 87.3
$ 96.0
$ (8.7 ) (9.1 )% $ 141.0
$ 151.0
$ (10.0 ) (6.6 )%

Operating margin GAAP 20.7 % 21.5 % (80) bpts
18.4 % 18.8 % (40) bpts
Operating margin, as adjusted 22.6 % 23.4 % (80) bpts
20.5 % 20.9 % (40) bpts

NM = not meaningful

~~bpts~~bps = basis points

~~The~~ P&A segment net sales ~~decreased $23.5~~increased $162.4 million, or ~~5.7~~42 percent in the second quarter of ~~2020~~2021 versus the second quarter of ~~2019, as~~2020 due to strong sales growth ~~within the distribution~~across all product categories. Net sales increases in our aftermarket business ~~was offset~~were driven by ~~lower sales~~a continued increase in ~~other businesses. The decrease in sales was impacted by stay-at-home restrictions,~~boating participation, which ~~disrupted dealer, retail~~elevated parts and ~~OEM operations~~service needs, and favorable weather conditions in many ~~locations~~areas. Net sales also increased in the ~~first half~~OEM component of the ~~quarter. The Advanced Systems Group was more affected by~~business, as we leveraged investments in technology to take advantage of strong demand from boat ~~builder closures than the rest of the segment~~builders as ~~it has a higher percentage of sales~~they continued to ~~OEM customers than Engine P&A or the distribution business.~~increase production.

~~The~~ P&A segment net sales ~~decreased $35.5~~increased $320.4 million, or ~~4.9~~47 percent, in the first half of ~~2020~~2021 versus prior year as a result of the same factors described above.

International sales were 2429 percent of the P&A segment's net sales in the second quarter of ~~2020~~2021 and ~~decreased 15~~increased 70 percent year over year on a GAAP basis. On a constant currency basis, international net sales ~~decreased 11 percent. For the first half of 2020, international~~increased 54 percent, with increases across all regions. International sales were 2730 percent of the P&A segment's net sales in the first half of 2021 and ~~decreased 12~~increased 66 percent year over year on a GAAP ~~basis and 9 percent on~~basis. On a constant currency ~~basis. The decrease in~~basis, international net sales inincreased 53 percent through the ~~second quarter and~~ first half of ~~2020 were due to~~2021, with increases ~~in Asia-Pacific, which were offset by declines in most other regions due to the impact of stay-at-home restrictions.~~across all regions.

P&A segment operating earnings were ~~$80.1~~$114.4 million ~~a decrease of 9.2 percent, and $126.3 million, a decrease of 7.1 percent. for~~in the second quarter ~~and~~of 2021, an increase of 43 percent when compared to the second quarter of 2020, as a result of strong sales increases in addition to the factors affecting all of our segments previously mentioned. Operating earnings for the first half of ~~2020, respectively, which~~2021 were ~~relatively consistent with~~$206.3 million, an increase of 63 percent, as a result of the ~~revenue decline, partially offset by cost reduction measures.~~same factors described above.

Table of Contents

Boat Segment

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


	Three Months Ended				2021 vs. 2020				Six Months Ended				2021 vs. 2020
(in millions)	July 3, 2021		June 27, 2020		$ Change		% Change		July 3, 2021		June 27, 2020		$ Change		% Change
Net sales	$	449.1	$	249.9	$	199.2	79.7%		$	868.6	$	541.4	$	327.2	60.4%

GAAP operating earnings	$	44.2	$	2.0	$	42.2	NM		$	85.0	$	7.1	$	77.9	NM
Restructuring, exit and impairment charges	—		0.3		(0.3)		(100.0)%		—		0.3		(0.3)		(100.0)%
Sport Yacht & Yachts	1.3		—		1.3		NM		3.8		—		3.8		NM
Acquisition, integration, and IT related costs	1.3		0.6		0.7		116.7%		2.6		1.3		1.3		100.0%
Palm Coast reclassified from held-for-sale	—		—		—		NM		0.8		—		0.8		NM
Purchase accounting amortization	0.4		0.4		—		NM		0.7		0.7		—		NM
Adjusted operating earnings	$	47.2	$	3.3	$	43.9	NM		$	92.9	$	9.4	$	83.5	NM

GAAP operating margin	9.8%		0.8%				900	bps	9.8%		1.3%				850	bps
Adjusted operating margin	10.5%		1.3%				920	bps	10.7%		1.7%				900	bps

Three Months Ended 2020 vs. 2019 Six Months Ended 2020 vs. 2019
(in millions) June 27,
2020 June 29,
2019 $
Change %
Change June 27,
2020 June 29,
2019 $
Change %
Change
Net sales $ 249.9
$ 366.6
$ (116.7 ) (31.8 )% $ 541.4
$ 739.9
$ (198.5 ) (26.8 )%

Operating Earnings GAAP $ 2.0
$ 25.8
$ (23.8 ) (92.2 )% $ 7.1
$ 52.8
$ (45.7 ) (86.6 )%
Restructuring, exit and impairment charges 0.3
2.6
(2.3 ) (88.5 )% 0.3
4.6
(4.3 ) (93.5 )%
Acquisition related costs 0.6
1.3
(0.7 ) (53.8 )% 1.3
1.3
—
— %
Purchase accounting amortization 0.4
0.1
0.3
NM
0.7
0.1
0.6
NM
Sport Yacht & Yachts —
2.9
(2.9 ) NM
—
2.9
(2.9 ) NM
Operating Earnings, as adjusted $ 3.3
$ 32.7
(29.4 ) (89.9 )% $ 9.4
$ 61.7
(52.3 ) (84.8 )%

Operating margin GAAP 0.8 % 7.0 %
(620) bpts
1.3 % 7.1 % (580) bpts
Operating margin, as adjusted 1.3 % 8.9 %

(760) bpts
1.7 % 8.3 %

(660) bpts

NM = not meaningful

~~bpts~~bps = basis points

Boat segment net sales ~~decreased $116.7~~increased $199.2 million, or ~~31.8~~80 percent, in the second quarter of 2021 versus the second quarter of 2020, ~~versus 2019, resulting~~resulting from ~~significantly lower wholesale volume due~~increased sales volumes to ~~the temporary suspension of manufacturing~~dealers in most plants in April and the associated ramp-up of activities into May. Freedom Boat Club, which is part of Business Acceleration, also had another solid quarter, contributing more than 2 percent of sales in the quarter.order to meet continued strong retail customer demand.

Boat segment net sales ~~decreased $198.5~~increased $327.2 million, or ~~26.8~~60 percent, in the first half of ~~2020,~~2021, resulting from the same ~~factors~~factor described above.

International sales were 2730 percent of the segment's net sales in the second quarter of ~~2020~~2021 and ~~decreased 30~~increased 102 percent on a GAAP basis. On a constant currency basis, international sales ~~decreased 28~~increased 89 percent, ~~reflecting declines in Canada and Rest-of-World.~~with increases across all regions. International sales were 2628 percent of the ~~Boat~~ segment's net sales in the first half of ~~2020~~2021 and ~~decreased 27~~increased 70 percent ~~year over year~~ on a GAAP ~~basis and 25 percent on~~basis. On a constant currency basis, ~~reflecting declines in Rest-of-World.~~international sales increased 60 percent through the first half of 2021, with increases across all regions.

Boat segment operating earnings ~~decreased~~ in ~~both~~ the second quarter ~~and first half~~of 2021 were $44.2 million, an increase of $42.2 million when compared to the second quarter of 2020, due to increased sales, lower ~~net sales along with unfavorable impact~~retail discount levels, and success in mitigating supply chain challenges, in addition to the factors affecting all of ~~absorption resulting from production disruptions, which were partially offset by benefits from cost reduction measures. The segment remained profitable~~our segments. Operating earnings in the ~~quarter, which is~~first half of 2021 were $85.0 million, an increase of $77.9 million, as a ~~testament to~~result of the ~~footprint reduction, cost containment and efficiency actions taken in recent years.~~same factors described above.

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Corporate/Other

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


	Three Months Ended				2021 vs. 2020			Six Months Ended				2021 vs. 2020
(in millions)	July 3, 2021		June 27, 2020		$ Change		% Change	July 3, 2021		June 27, 2020		$ Change		% Change
GAAP operating loss	$	(30.5)	$	(22.8)	$	(7.7)	33.8%	$	(55.8)	$	(32.2)	$	(23.6)	73.3%
Restructuring, exit and impairment charges	—		1.8		(1.8)		(100.0)%	—		1.9		(1.9)		(100.0)%
Acquisition, integration, and IT related costs	—		0.6		(0.6)		(100.0)%	—		1.3		(1.3)		(100.0)%
Adjusted operating loss	$	(30.5)	$	(20.4)	$	(10.1)	49.5%	$	(55.8)	$	(29.0)	$	(26.8)	92.4%

Three Months Ended 2020 vs. 2019 Six Months Ended 2020 vs. 2019
(in millions) June 27,
2020 June 29,
2019 $
Change %
Change June 27,
2020 June 29,
2019 $
Change %
Change
Operating loss GAAP $ (22.8 ) $ (22.3 ) $ (0.5 ) (2.2 )% $ (32.2 ) $ (42.9 ) $ 10.7
24.9 %
Restructuring, exit and impairment charges 1.8
2.2
(0.4 ) (18.2 )% 1.9
3.4
(1.5 ) (44.1 )%
IT transformation cost 0.6
0.5
0.1
20.0 % 1.3
0.5
0.8
NM
Operating loss, as adjusted $ (20.4 ) $ (19.6 ) (0.8 ) (4.1 )% $ (29.0 ) $ (39.0 ) 10.0
25.6 %

NM = not meaningful

Corporate operating expenses in the second quarter of 2021 were $30.5 million, an increase of $7.7 million when compared to the second quarter of 2020, primarily due to an increase in variable compensation expense as well as an increase in spending on certain enterprise initiatives including ACES.

Corporate operating expenses increased 2.2 percent in the second quarter versus 2019, as a result of several factors which included expenses associated with the Company's non-qualified deferred compensation and long-term incentive arrangements, which were slightly offset by cost reduction measures.

~~Corporate operating expenses decreased 24.9~~73 percent in the first half of 2021 versus 2020, ~~versus 2019, primarily due to favorable mark-to-market adjustments of deferred compensation arrangements, decreased cost related to IT project spending, and cost reduction measures.~~resulting from the same factors described above.

Cash Flow, Liquidity and Capital Resources

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


(in millions)	July 3, 2021		June 27, 2020
Net cash provided by operating activities of continuing operations	$	350.5	$	215.7
Net cash (used for) provided by:
Plus: Capital expenditures	(110.3)		(90.7)
Plus: Proceeds from the sale of property, plant and equipment	4.6		1.6

Plus: Effect of exchange rate changes	(0.5)		(2.4)

Total free cash flow (A)	$	244.3	$	124.2

(in millions) June 27,
2020 June 29,
2019
Net cash provided by operating activities of continuing operations $ 215.7
$ 147.4
Net cash provided by (used for):
Capital expenditures (90.7 ) (135.2 )
Proceeds from the sale of property, plant and equipment 1.6
—
Effect of exchange rate changes (2.4 ) 1.4
Total free cash flow from continuing operations ^(A)
$ 124.2
$ 13.6

(A) ~~The Company defines “Free~~We define "Free cash ~~flow”~~flow" as cash flow from operating and investing activities of continuing operations (excluding cash provided by or used for acquisitions, investments, purchases or sales/maturities of marketable securities and other investing activities) and the effect of exchange rate changes on cash and cash equivalents. Free cash flow is not intended as an alternative measure of cash flow from operations, as determined in accordance with GAAP in the United States. ~~The Company uses~~We use this financial measure both in presenting ~~its~~our results to shareholders and the investment community and in ~~its~~our internal evaluation and management of ~~its~~our businesses. Management believes that this financial measure and the information it provides are useful to investors because it permits investors to view ~~Brunswick’s~~our performance using the same tool that management uses to gauge progress in achieving its goals. Management believes that the non-GAAP financial measure ~~“Free~~"Free cash ~~flow”~~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~~Our 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, ~~proceeds from divestitures~~ and potential borrowings. ~~The Company evaluates~~We evaluate potential acquisitions, divestitures and joint ventures in the ordinary course of business.

~~2020~~2021 Cash Flow

Net cash provided by operating activities of continuing operations in the first six months of ~~2020~~2021 totaled ~~$215.7~~$350.5 million versus ~~$147.4~~$215.7 million in the comparable period of ~~2019. This comparison reflected favorable working capital usage, which was~~2020. The increase is primarily due to higher net earnings during the first half of 2021, partially offset by ~~lower net earnings.~~working capital. 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.

The primary drivers of net cash provided by operating activities of continuing operations in 2021 were net earnings, net of non-cash items, partially offset by the seasonal impact of increasing working capital. Accounts and notes receivable increased

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$167.5 million primarily due to increased sales across all segments. Inventory increased $129.9 million, driven by increases to support higher production volumes. Accounts payable increased $129.8 million primarily due to timing of payments and higher inventory levels across all reportable segments. Accrued expenses increased $42.1 million primarily driven by increases in program-related volume discounts and rebates.

Net cash used for investing activities of continuing operations was $75.6 million, which primarily included capital expenditures of $110.3 million, offset by sales of marketable securities of $55.9 million. Our capital spending was focused on investments in new products and technologies.

Net cash used for financing activities was $195.7 million and primarily related to payments of long-term debt including current maturities, common stock repurchases, and cash dividends paid to common shareholders. Refer to Note 14 –Debt in the Notes to Condensed Consolidated Financial Statements for further details on our debt activity during the quarter.

2020 Cash Flow

Net cash provided by operating activities of continuing operations in the first six months of 2020 totaled $215.7 million. The primary driver of cash used for operating activities of continuing operations was favorable working capital usage, which was partially offset by net earnings net of non-cash expense items. During the first six months of 2020, Inventory decreased $146.2 million due to higher net sales in the period and production disruptions due to COVID-19. Accounts and notes receivable increased $129.6 million primarily due to the seasonal changes in net sales. Accounts payable decreased $49.6 million primarily due to timing of payments and lower production levels across all reportable segments due to temporary production suspensions in response to COVID-19. Accrued expenses decreased $6.3 million, primarily driven by the impact of payments of the prior year's variable compensation, which had been accrued as of December 31, 2019.

Net cash used for investing activities of continuing operations was $90.2 million, which included capital expenditures of $90.7 million. The Company's capital spending was focused on investments in new products and expediting existing capital projects given the available free cash flow during the year.

Net cash provided by financing activities was $97.2 million and primarily related to net proceeds from ~~issuances from~~ short-term debt, which exceeded common stock repurchases and cash dividends paid to common shareholders. Refer to Note 16 - Debt in the Notes to Consolidated Financial Statements in the 2020 Form 10-K, for further details on our 2020 debt activity.

Liquidity and Capital Resources

We view our highly liquid assets as of July 3, 2021, December 31, 2020 and June 27, 2020 as:


(in millions)	July 3, 2021		December 31, 2020		June 27, 2020
Cash and cash equivalents	$	590.2	$	519.6	$	541.5
Short-term investments in marketable securities	0.8		56.7		0.8
Total cash, cash equivalents and marketable securities	$	591.0	$	576.3	$	542.3

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The following table sets forth an analysis of total liquidity as of July 3, 2021, December 31, 2020 and June 27, 2020:


(in millions)	July 3, 2021		December 31, 2020		June 27, 2020
Cash, cash equivalents and marketable securities	$	591.0	$	576.3	$	542.3
Amounts available under lending facility (A)	397.2		395.0		202.9
Total liquidity (B)	$	988.2	$	971.3	$	745.2

(A) See Note 1514 – Debt in the Notes to Condensed Consolidated Financial Statements for further details on ~~the Company's debt activity during the year.~~

~~2019 Cash Flow~~

In the first six months of 2019, net cash used for operating activities of continuing operations totaled $147.4 million. The primary driver of the cash provided by operating activities was net earnings after adding back non-cash expense items, partially offset by a seasonal increase in working capital. Accounts and notes receivable increased $96.4 million primarily due to seasonal changes in net sales in the Propulsion and P&A segment and timing of collections. Net inventories increased by $27.7 million, primarily driven by lower than anticipated net sales. Accrued expenses decreased $14.6 million, primarily driven by the impact of payments of the prior year's variable compensation, which had been accrued as of December 31, 2018. Accounts payable decreased $13.0 million.

Net cash used for investing activities of continuing operations during the first six months of 2019 totaled $199.8 million, which included capital expenditures of $135.2 million and cash paid for the acquisition of Freedom Boat Club of $64.4 million. The Company's capital spending focused on investments in capacity expansion initiatives as well as new products, mostly in the Propulsion segment. Net cash provided by investing activities of discontinued operations was $481.9 million and mainly related to proceeds from the Fitness separation.

Net cash used for financing activities was $58.5 million, primarily related to common stock repurchases and cash dividends paid to common shareholders, partially offset by net proceeds from issuances of long-term debt.

~~Liquidity and Capital Resources~~

~~The Company views its highly liquid assets as of June 27, 2020, December 31, 2019 and June 29, 2019 as:~~

(in millions) June 27,
2020 December 31,
2019 June 29,
2019
Cash and cash equivalents $ 541.5
$ 320.3
$ 656.1
Short-term investments in marketable securities 0.8
0.8
0.8
Total cash, cash equivalents and marketable securities $ 542.3
$ 321.1
$ 656.9

~~The following table sets forth an analysis of total liquidity as of June 27, 2020, December 31, 2019 and June 29, 2019:~~

(in millions) June 27,
2020 December 31,
2019 June 29,
2019
Cash, cash equivalents and marketable securities $ 542.3
$ 321.1
$ 656.9
Amounts available under lending facility ^(A)
202.9
387.9
396.4
Total liquidity ^(B)
$ 745.2
$ 709.0
$ 1,053.3

~~(A) See~~ ~~Note 15 – Debt~~ ~~in the Notes to Condensed Consolidated Financial Statements for further details on the Company's~~our lending facility.

(B) ~~The Company defines~~We define Total liquidity as Cash and cash equivalents and Short-term investments in marketable securities as presented in the Condensed Consolidated Balance Sheets, plus amounts available for borrowing under its lending facilities. Total liquidity is not intended as an alternative measure to Cash and cash equivalents and Short-term investments in marketable securities as determined in accordance with GAAP in the United States. ~~The Company uses~~We use this financial measure both in presenting ~~its~~our results to shareholders and the investment community and in ~~its~~our internal evaluation and management of ~~its~~our 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~~our performance using the same metric that management uses to gauge progress in achieving ~~its~~our 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~~our available highly liquid assets and immediate sources of financing.

Cash, cash equivalents and marketable securities totaled $591.0 million as of July 3, 2021, an increase of $14.7 million from $576.3 million as of December 31, 2020, and an increase of $48.7 million from $542.3 million as of June 27, 2020. Total debt as of July 3, 2021, December 31, 2020 ~~an increase~~and June 27, 2020 was $875.5 million, $951.4 million and $1,285.7 million, respectively. Our debt-to-capitalization ratio was 33.1 percent as of ~~$221.2 million~~July 3, 2021, down from ~~$321.1 million~~38.7 percent as of December 31, ~~2019,~~2020 and ~~a decrease of $114.6 million~~ from $656.9 million as of June 29, 2019. Total debt as of June 27, 2020, December 31, 2019 and June 29, 2019 was $1,285.7 million, $1,109.3 million and $1,280.4 million, respectively. The Company's debt-to-capitalization ratio was 48.5 percent as of June 27, ~~2020, up from 46.0 percent as~~2020.

We believe that we have adequate sources of ~~December 31, 2019~~liquidity to meet our short-term (for at least the next twelve months) and ~~from 45.4 percent as of June 29, 2019.~~

foreseeable long-term needs.

~~During the first six months of 2020, borrowings~~

There was no borrowing activity under the Credit Facility ~~totaled $610.0 million, of which $425.0 million were repaid~~ during the ~~period. The Company had $185.0 million~~first half of 2021, and we did not have any borrowings outstanding as of ~~June 27, 2020, and available~~July 3, 2021. Available borrowing capacity totaled ~~$202.9~~$397.2 million, net of ~~$12.1~~$2.8 million of letters of credit outstanding under the Credit Facility. ~~In addition, during~~During the first ~~six months~~half of ~~2020, borrowings~~2021, there was no borrowing activity under ~~the CP Program totaled $175.0 million, all of~~our unsecured commercial paper program (CP Program), pursuant to which ~~were repaid during the first six months of 2020. During the six months ended June 27, 2020, the maximum amount outstanding under the CP Program was $100.0 million.~~we may issue short-term, unsecured commercial paper notes. Refer toNote 1514 – Debt in the Notes to Condensed Consolidated Financial Statements and Note 16 - Debt in the Notes to Consolidated Financial Statements in the 2020 Form 10-K, for further details.

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

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2021 Capital Strategy

In anticipation of the acquisition of Navico, we entered into a commitment letter with JPMorgan Chase Bank, N.A on June 23, 2021, to obtain a 364-day senior unsecured bridge facility in an aggregate amount of principal not to exceed $900 million. Permanent financing for the acquisition is expected to include a mix of senior unsecured notes and ~~will~~cash on hand. Refer to Note 5 – Acquisitions in the Notes to Condensed Consolidated Financial Statements for further details.

Aside from financing related to the acquisition of Navico, our capital strategy assumptions have not materially changed since last quarter. We have taken steps to strengthen our overall liquidity and shareholder return profile. In July, we extended and expanded our revolving credit agreement, which is now in effect through July 2026 and provides for $500 million of borrowing capacity, an increase of $100 million. Refer to Note 15 – Subsequent Events in the Notes to Condensed Consolidated Financial Statements for further details. On July 20, 2021, our Board of Directors approved a $350 million increase to our share repurchase authorization, and we now have over $400 million approved for repurchases, which we plan to systemically deploy consistent with our capital strategy, including between $80 million and $120 million of repurchases in 2021. These actions follow the increase of our dividend to 33.5 cents a share, a 24 percent dividend increase that was approved by the Board of Directors in April 2021, as we continue to ~~monitor opportunities to increase liquidity.~~balance increases in shareholder return and investment and growth initiatives.

~~2020 Cash Flow Outlook and Capital Plan~~

~~Net activity in working capital is projected to reflect a usage of cash in 2020 in the range of $0 million to $10 million. Additionally, the Company is~~We are planning for capital expenditures in the range of approximately ~~$160~~$270 million to ~~$170~~$300 million ~~including~~to support, and in some cases accelerate, growth initiatives throughout our organization. This spending will be directed to new product investments in ~~critical product programs~~all of our businesses, cost reduction and ~~digital~~automation projects, and select additional capacity-related initiatives ~~that will drive~~to support demand and future ~~earnings~~ growth, ~~and market share gains, and potentially expediting additional capital projects, assuming economic conditions do not deteriorate. Including these and other factors,~~primarily in the ~~Company plans~~Propulsion business. Additionally, we plan to ~~generate free cash flow (FCF) in excess of $325 million for 2020.~~

~~The Company ended the second quarter of 2020 with $553.1~~retire approximately $100 million of cash on hand, which included FCF generation in the first half of 2020 of $124 million and the remaining $185 million of borrowings under its Credit Facility. The Company's FCF generation during first half of 2020, was approximately $110 million greater than first half of 2019 which relates to a significant decrease in working capital usage driven primarily by decreases in inventory levels. The FCF projection for the remainder of the year assumes favorable seasonal working capital trends and positive earnings. The Company anticipates using $60 million of the FCF generation to repay an additional portion of the 2023 term loan, consistent with the initial plan to start the year. This will result in totalour long-term debt ~~retirement of $100 million for the year, helping the Company's debt to EBITDA leverage to be approximately 1.5 times on a gross basis by the end of the year.~~obligations.

~~The Company repurchased $34.1 million of shares in the first half of 2020, specifically in the first quarter of 2020, lowering the total remaining authorization to $200.7 million.~~

~~The Company estimated its effective tax rate to be between 21 and 22 percent for the year, with its cash tax rate in the low double digit percentage range.~~

Financing Joint Venture

~~Through the Company's~~On March 10, 2021, through our Brunswick Financial Services Corporation subsidiary, ~~Brunswick owns a 49 percent interest in a joint venture, Brunswick Acceptance Company, LLC (BAC). Under the terms of the~~we entered into an amended and restated joint venture agreement ~~BAC provides secured wholesale inventory floorplan financing to Brunswick's boat and engine dealers. A subsidiary of~~with Wells Fargo ~~& Company owns~~Commercial Distribution Finance to extend the ~~remaining 51 percent. The Company's~~term of our financial services joint venture, Brunswick Acceptance Company, LLC (BAC), through December 31, 2025. The amendment did not otherwise materially change the terms of the agreement. BAC is detailed further in the ~~2019~~2020 Form 10-K.

Off-Balance Sheet Arrangements and Contractual Obligations

~~The Company’s~~Our off-balance sheet arrangements and contractual obligations as of December 31, ~~2019,~~2020 are detailed in the ~~2019~~2020 Form 10-K. There have been no material changes in these arrangements and obligations outside the ordinary course of business since December 31, ~~2019.~~2020.

Environmental Regulation

There were no material changes in ~~the Company's~~our environmental regulatory requirements since the filing of ~~its 2019~~our 2020 Form 10-K.

Critical Accounting Policies

There were no further material changes in ~~the Company’s~~our critical accounting policies since the filing of ~~its 2019~~our 2020 Form 10-K.

As discussed in the ~~2019~~2020 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.

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Recent Accounting Pronouncements

~~Refer to~~Recent accounting pronouncements that have been adopted during the three months ended July 3, 2021, or will be adopted in future periods, are included in Note 1 ~~– Significant~~–Significant Accounting Policies in the Notes to Condensed Consolidated Financial ~~Statements for the recent accounting pronouncements that have been adopted during the six months ended June 27, 2020, or will be adopted in future periods.~~Statements.

Forward-Looking Statements

Certain statements in this Quarterly Report on Form 10-Q are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on current expectations, estimates, and projections about Brunswick’s business and by their nature address matters that are, to different degrees, uncertain. Words such as ~~“may,” “could,” “expect,”~~"may," "could," "should," "expect," "anticipate," "project," "position," ~~“intend,” “target,” “plan,” “seek,” “estimate,” “believe,” “predict,” “outlook,”~~"intend," "target," "plan," "seek," "estimate," "believe," "predict," "outlook," and similar expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties that may cause actual results to differ materially from expectations as of the date of this ~~Quarterly Report Form 10-Q.~~quarterly report. These risks include, but are not limited to: the coronavirus (COVID-19) pandemic, including, without limitation, the impact on global economic conditions and capital and financial markets, changes in consumer behavior and demand, the potential unavailability of personnel or key facilities, modifications to our operations, and the potential implementation of regulatory actions, the effect of adverse general economic conditions, including the amount of disposable income consumers have available for discretionary spending, tight consumer 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 identify, complete, and integrate targeted acquisitions; the risk that unexpected costs will be incurredspending; changes in connection with these transactions; the possibility that the expected synergies and value creation from these transactions will not be realized or will not be realized within the expected time period; having to record an impairment to the value of goodwill and other assets; changes to U.S. trade policy and tariffs; negative currency ~~trends, including changes 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; higher energy and fuel costs; competitive pricing pressures; the coronavirus (COVID-19) pandemic and the emergence of variant strains; managing our manufacturing footprint; adverse weather conditions, climate change events, and other catastrophic event risks; international business risks; our ability to develop new and innovative products and services at a competitive price; our ability to meet demand in a rapidly changing environment; loss of key customers; attracting and retaining skilled labor, implementing succession plans for key leadership, and executing organizational and leadership changes; inventory reductions by dealers, retailers, or independent boat builders; requirements for us to repurchase inventory; actual or anticipated increases in costs, disruptions of supply, or defects in raw materials, parts, or components we purchase from third parties, including as a result of ~~new tariffs on raw materials,~~pressures due to the pandemic; supplier manufacturing constraints, increased demand for shipping carriers, and transportation disruptions; ~~higher energy and fuel costs; our ability to protect our brands and intellectual property;~~ absorbing fixed costs in production; ~~managing~~risks associated with joint ventures that do not operate solely for our ~~manufacturing footprint;~~benefit; our ability to successfully implement our strategic plan and growth initiatives; the possibility that the announced acquisition of Navico will not be consummated within the anticipated time period or at all, including as the result of regulatory, market, or other factors; our ability to integrate acquisitions, including Navico; the potential for disruption to our business in connection with the Navico acquisition, making it more difficult to maintain business and operational relationships; the risk that unexpected costs will be incurred in connection with the Navico transaction; the possibility that the expected synergies and value creation from the Navico transaction will not be realized or will not be realized within the expected time period; attracting and retaining skilled labor, implementing succession plans for key leadership, and executing organizational and leadership changes; our ability to identify, complete, and integrate targeted acquisitions; the risk that strategic divestitures will not provide business benefits; maintaining effective distribution; adequate financing access for dealers and customers; requirements for us to repurchase inventory; inventory reductions by dealers, retailers, or independent boat builders; risks related to the Freedom Boat Club franchise business model; outages, breaches, or other cybersecurity events regarding our technology systems, which could affect manufacturing and business operations and could result in lost or stolen information and associated remediation costs; ~~managing our share repurchases; competitive pricing pressures;~~ our ability to ~~develop new~~protect our brands and ~~innovative products~~intellectual property; changes to U.S. trade policy and ~~services at a competitive price, in legal compliance with existing rules; maintaining product quality~~tariffs; any impairment to the value of goodwill and ~~service standards;~~other assets; 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; managing our share repurchases; and risks associated with certain divisive shareholder activist ~~actions; joint ventures that do not operate solely for our benefit; international business risks; and weather and catastrophic event risks.~~actions.

Additional risk factors are included in the ~~2019~~2020 Form ~~10-K and in subsequent Quarterly Reports on Form 10-Q.~~10-K. Forward-looking statements speak only as of the date on which they are made, and Brunswick does not undertake any obligation to update them to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

~~The Company is~~We are exposed to market risk from changes in foreign currency exchange rates, interest rates and commodity prices. ~~The Company enters~~We enter into various hedging transactions to mitigate these risks in accordance with guidelines established by ~~the Company’s~~our management. ~~The Company does~~We do not use financial instruments for trading or speculative purposes. ~~The Company’s~~Our risk management objectives are described in Note 6 ~~– Financial~~–Financial Instruments in the Notes to Condensed Consolidated Financial Statements and Note 14 in the Notes to Consolidated Financial Statements in the ~~2019~~2020 Form 10-K.

There have been no significant changes to ~~the Company’s~~our market risk since December 31, ~~2019.~~2020. 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 ~~2019~~2020 Form 10-K.

Table of Contents

Item 4. Controls and Procedures

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

Table of Contents

PART II – OTHER INFORMATION

Item 1A. Risk Factors

~~The Company's~~Brunswick's operations and financial results are subject to ~~certain~~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 ~~our Annual Report on~~the 2020 Form 10-K ~~for~~other than as set forth below.

The inability to complete the ~~year ended December 31, 2019~~Navico acquisition, or the failure to successfully integrate Navico, could negatively impact our business.

On June 23, 2021, Brunswick entered into a share purchase agreement to acquire Navico, which produces marine electronics and ~~in subsequent Quarterly Reports on Form 10-Q.~~sensors. The closing of the transaction is subject to usual and customary closing conditions as well as regulatory review and approval. However, we cannot provide assurance regarding the timing and ultimate completion of the proposed acquisition, including the timing, receipt, and terms and conditions of any required governmental and regulatory approvals. 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 Navico acquisition presents these and other integration risks, including:

•the risk that the businesses of Brunswick and Navico 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 not be realized or will not be realized within the expected time period; and

•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.

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

~~The Company has executed share repurchases against authorization approved by the~~On July 20, 2021, our Board of Directors expanded our share repurchase authorization for an additional amount of $350 million, which was in ~~2016, 2019, and 2020. In 2020,~~addition to the ~~Company~~prior authorization of $600 million from July 2019. Such repurchase authorizations do not have an expiration date. During the first six months of 2021, we repurchased approximately ~~$34.1~~$55.9 million of our common stock ~~under these authorizations~~ and, ~~as of June 27, 2020,~~including the increase effective July 20, 2021, the remaining authorization was ~~$200.7~~$410.6 million.

We repurchased the following shares of common stock during the three months ended July 3, 2021:


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 4 to May 1	48,960	$	102.12	48,960
May 2 to May 29	210,525	104.02		210,525
May 30 to July 3	135,038	97.02		135,038
Total	394,523	$	101.39	394,523	$	410,640,787

Table of Contents

Item 6. Exhibits






























~~31.1~~2.1			Share Purchase Agreement, dated as of June 23 , 2021, by and among Brunswick Corporation, Altor Group AB, West Street Capital Partners VII Investments, L.P., West Street Capital Partners VII Offshore Investments, L.P., West Street Capital Partners VII – Parallel, SLP, Nanna MFN AS and Nanna MFN II AS , filed as Exhibit 2.1 to the Company's Current Repo rt on F orm 8-K filed with the Securities and Exchange Commission on June 25, 2021 and hereby incorporated by reference
2.2			Management Warranty Agreement, dated as of June 23, 2021, by and among Brunswick Corporation and the persons listed on Schedule 1.1 thereto, filed as Exhibit 2.2 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 25, 2021 and hereby incorporated by reference
10.1			Amended and Restated Credit Agreement, dated as of March 21, 2011, as amended and restated as of June 26, 2014, as further amended and restated as of June 30, 2016, as further amended as of July 13, 2018, as further amended and restated as of September 26, 2018, as further amended as of November 12, 2019, and as further amended and restated as of July 16, 2021, among Brunswick Corporation, the subsidiary borrowers party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent, filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on July 19, 2021 and hereby incorporated by reference
31.1			Certification of CEO Pursuant to 15 U.S.C. Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2			Certification of CFO Pursuant to 15 U.S.C. Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1			Certification of CEO Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2			Certification of CFO Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS			XBRL Instance Document
101.SCH			XBRL Taxonomy Extension Schema Document
101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF			XBRL Taxonomy Extension Definition Linkbase Document
101.LAB			XBRL Taxonomy Extension Label Linkbase Document
101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document
104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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 ~~4, 2020~~2, 2021	By:	/s/ RANDALL S. ALTMAN
		Randall S. Altman
		Vice President and Controller*

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



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


Large Accelerated Filer		☒			Accelerated Filer		☐

~~Large Accelerated Filer~~		☒	~~Accelerated Filer~~	☐

Non-accelerated Filer	☐		Smaller reporting company			☐

Emerging growth company		☐


(in millions)	July 3, 2021		June 27, 2020
Balance at beginning of period	$	115.9	$	117.6
Payments - Recurring	(31.1)		(22.5)
(Payments)/Provisions - Sport Yacht and Yachts and Fitness businesses	(1.7)		(2.8)
Provisions/additions for contracts issued/sold	37.8		25.2
Aggregate changes for preexisting warranties	(1.8)		(2.5)
Foreign currency translation	(0.2)		(0.6)


Other	(1.2)		0
Balance at end of period	$	117.7	$	114.4



(in millions)	June 27, 2020			June 29, 2019
Balance at beginning of period	$	117.6		$	116.8
Payments - Recurring	(22.5		)	(27.3		)
Payments - Sport Yacht and Yachts and Fitness businesses	(2.8		)	(7.7		)
Provisions/additions for contracts issued/sold	25.2			32.1
Aggregate changes for preexisting warranties	(2.5		)	1.0
Foreign currency translation	(0.6		)	0.2
Other ^(A)	—			7.2
Balance at end of period	$	114.4		$	122.3


	July 3, 2021				December 31, 2020				June 27, 2020
(in millions)	Gross Amount		Accumulated Amortization		Gross Amount		Accumulated Amortization		Gross Amount		Accumulated Amortization
Intangible assets:
Customer relationships	$	687.6	$	(322.3)	$	687.7	$	(306.4)	$	686.6	$	(290.2)
Trade names	166.3		0		166.2		0		165.6		0
Other	18.5		(13.8)		18.5		(13.7)		18.3		(13.2)
Total	$	872.4	$	(336.1)	$	872.4	$	(320.1)	$	870.5	$	(303.4)



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



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



	Three Months Ended
	June 29, 2019
(in millions)	Propulsion			Parts & Accessories			Boat			Total
Geographic Markets
United States	$	309.9		$	300.8		$	271.2		$	881.9
Europe	75.1			50.6			34.6			160.3
Asia-Pacific	33.5			23.9			6.4			63.8
Canada	16.2			23.3			47.4			86.9
Rest-of-World	26.8			11.4			7.0			45.2
Segment Eliminations	(67.9		)	(6.7		)	—			(74.6		)
Total	$	393.6		$	403.3		$	366.6		$	1,163.5

Major Product Lines
Outboard Engines	$	353.9		$	—		$	—		$	353.9
Controls, Rigging, and Propellers	57.8			—			—			57.8
Sterndrive Engines	49.8			—			—			49.8
Distribution Parts and Accessories	—			174.6			—			174.6
Advanced Systems Group	—			120.8			—			120.8
Engine Parts and Accessories	—			114.6			—			114.6
Aluminum Freshwater Boats	—			—			160.8			160.8
Recreational Fiberglass Boats	—			—			119.5			119.5
Saltwater Fishing Boats	—			—			82.6			82.6
Business Acceleration	—			—			4.3			4.3
Boat Eliminations/Other	—			—			(0.6		)	(0.6		)
Segment Eliminations	(67.9		)	(6.7		)	—			(74.6		)
Total	$	393.6		$	403.3		$	366.6		$	1,163.5



(in millions)
	Derivative Assets							Derivative Liabilities
Instrument	Balance Sheet Location	Fair Value						Balance Sheet Location	Fair Value
		June 27, 2020		Dec 31, 2019		June 29, 2019			June 27, 2020		Dec 31, 2019		June 29, 2019
Derivatives Designated as Cash Flow Hedges
Foreign exchange contracts	Prepaid expenses and other	$	2.8	$	4.1	$	4.6	Accrued expenses	$	1.8	$	2.3	$	1.8
Commodity contracts	Prepaid expenses and other	—		—		—		Accrued expenses	0.1		—		—
Total		$	2.8	$	4.1	$	4.6		$	1.9	$	2.3	$	1.8

Derivatives Designated as Fair Value Hedges
Interest rate contracts	Other long-term assets	$	—	$	—	$	2.2	Other long-term liabilities	$	—	$	—	$	—
Total		$	—	$	—	$	2.2		$	—	$	—	$	—

Other Hedging Activity
Foreign exchange contracts	Prepaid expenses and other	$	0.7	$	0.1	$	0.5	Accrued expenses	$	0.6	$	0.9	$	0.4



(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
	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	June 27, 2020			June 29, 2019			June 27, 2020			June 29, 2019			June 27, 2020			June 29, 2019			June 27, 2020			June 29, 2019
Interest rate contracts	$	—		$	—		$	—		$	—	Interest expense	$	(0.2	)	$	(0.2	)	$	(0.3	)	$	(0.3	)
Foreign exchange contracts	(2.9		)	(0.3		)	6.6			1.0		Cost of sales	4.0			2.9			6.7			5.4
Commodity contracts	0.0			—			(0.1		)	—		Cost of sales	0.0			—			0.0			—
Total	$	(2.9	)	$	(0.3	)	$	6.5		$	1.0		$	3.8		$	2.7		$	6.4		$	5.1



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
		June 27, 2020		June 29, 2019			June 27, 2020		June 29, 2019
Interest rate contracts	Interest expense	$	0.1	$	(0.1	)	$	0.3	$	(0.2	)



(in millions)	Level 1		Level 2		Total
Assets:
Cash equivalents	$	0.2	$	—	$	0.2
Short-term investments in marketable securities	0.8		—		0.8
Restricted cash	11.6		—		11.6
Derivatives	—		3.5		3.5
Total assets	$	12.6	$	3.5	$	16.1

Liabilities:
Derivatives	$	—	$	2.5	$	2.5
Deferred compensation	0.9		15.5		16.4
Total liabilities at fair value	$	0.9	$	18.0	$	18.9
Liabilities measured at net asset value					9.4
Total liabilities					$	28.3



	2020		2019
Risk-free interest rate	1.4	%	2.9	%
Dividend yield	1.5	%	1.7	%
Volatility factor	46.6	%	41.0	%
Expected life of award	2.9 years		2.9 years



(in millions)	December 31, 2019		Acquisitions		Adjustments			June 27, 2020
Propulsion ^(A)	$	14.5	$	—	$	(0.2	)	$	14.3
Parts and Accessories ^(A)	371.9		—		(0.3		)	371.6
Boat	28.6		—		0.9			29.5
Total	$	415.0	$	—	$	0.4		$	415.4



(in millions)	December 31, 2018		Acquisitions		Adjustments		June 29, 2019
Propulsion ^(A)	$	14.6	$	—	$	—	$	14.6
Parts and Accessories ^(A)	360.5		—		7.4		367.9
Boat	2.2		26.0		—		28.2
Total	$	377.3	$	26.0	$	7.4	$	410.7


(in millions)	Propulsion		Parts and Accessories		Boat		Total
December 31, 2020	$	15.3	$	372.5	$	29.9	$	417.7
Acquisitions	0		0		16.8		16.8
Adjustments	(0.2)		0		0		(0.2)
July 3, 2021	$	15.1	$	372.5	$	46.7	$	434.3

December 31, 2019	$	14.5	$	371.9	$	28.6	$	415.0
Adjustments	(0.2)		(0.3)		0.9		0.4
June 27, 2020	$	14.3	$	371.6	$	29.5	$	415.4


	Net Sales								Operating Earnings (Loss)

	Three Months Ended				Six Months Ended				Three Months Ended				Six Months Ended
(in millions)	Jul 3, 2021		Jun 27, 2020		July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Propulsion	$	649.5	$	395.4	$	1,307.3	$	844.0	$	122.1	$	47.7	$	246.6	$	109.0
Parts and Accessories	548.9		386.5		1,008.5		688.1		114.4		80.1		206.3		126.3
Boat	449.1		249.9		868.6		541.4		44.2		2.0		85.0		7.1
Corporate/Other	0		0		0		0		(30.5)		(22.8)		(55.8)		(32.2)
Segment Eliminations	(92.7)		(44.0)		(196.4)		(120.2)		0		0		0		0
Total	$	1,554.8	$	987.8	$	2,988.0	$	1,953.3	$	250.2	$	107.0	$	482.1	$	210.2


(in millions)	Foreign currency translation		Prior service credits		Net actuarial losses		Net derivative losses		Total
Beginning balance	$	(22.6)	$	(3.7)	$	(8.7)	$	(2.1)	$	(37.1)
Other comprehensive income (loss) before reclassifications (A)	3.2		0		0		(0.9)		2.3
Amounts reclassified from Accumulated other comprehensive loss (B)	0		0		0.1		2.2		2.3
Net other comprehensive (loss) income	3.2		0		0.1		1.3		4.6
Ending balance	$	(19.4)	$	(3.7)	$	(8.6)	$	(0.8)	$	(32.5)


	Three Months Ended				Six Months Ended
Details about Accumulated other comprehensive income (loss) components (in millions)	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020		Affected line item in the statement where net income is presented






Amortization of defined benefit items:
Prior service credits	$	0	$	0.1	$	0.2	$	0.3	Other expense, net
Net actuarial losses	(0.2)		(0.2)		(0.4)		(0.3)		Other expense, net
	(0.2)		(0.1)		(0.2)		0.0		Earnings before income taxes
	0.1		0.0		0.1		0.0		Income tax provision
	$	(0.1)	$	(0.1)	$	(0.1)	$	0.0	Net earnings from continuing operations

Amount of gain (loss) reclassified into earnings on derivative contracts:
Interest rate contracts	$	(0.2)	$	(0.2)	$	(0.3)	$	(0.3)	Interest expense
Foreign exchange contracts	(4.0)		4.0		(7.1)		6.7		Cost of sales
Commodity contracts	1.2		(0.0)		1.5		(0.0)		Cost of sales
	(3.0)		3.8		(5.9)		6.4		Earnings before income taxes
	0.8		(1.0)		1.6		(1.7)		Income tax provision
	$	(2.2)	$	2.8	$	(4.3)	$	4.7	Net earnings from continuing operations


(in millions)	Current maturities of long-term debt		Long-term debt		Total
Balance as of December 31, 2020	$	43.1	$	908.3	$	951.4
Proceeds from issuances of long-term debt	0.9		1.0		1.9
Repayments of long-term debt	(0.1)		(78.4)		(78.5)
Other	(0.4)		1.1		0.7
Balance as of July 3, 2021	$	43.5	$	832.0	$	875.5



	Pension Benefits												Other Postretirement Benefits
	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
(in millions)	June 27, 2020			June 29, 2019			June 27, 2020			June 29, 2019			June 27, 2020			June 29, 2019			June 27, 2020			June 29, 2019
Interest cost	$	0.1		$	2.6		$	0.3		$	5.2		$	0.2		$	0.3		$	0.4		$	0.6
Expected return on plan assets	—			(3.4		)	—			(6.7		)	—			—			—			—
Amortization of prior service credits	—			—			—			—			(0.1		)	(0.2		)	(0.3		)	(0.4		)
Amortization of net actuarial losses	0.2			2.6			0.3			5.1			—			—			—			—
Settlement benefit	(1.3		)	—			(1.3		)	—			—			—			—			—
Net pension and other benefit costs	$	(1.0	)	$	1.8		$	(0.7	)	$	3.6		$	0.1		$	0.1		$	0.1		$	0.2



(in millions)
Remainder of 2020	$	215.9
2021	42.8
2022	36.0
2023	306.1
2024	0.4
Thereafter	684.5
Total debt	$	1,285.7



	Three Months Ended						2020 vs. 2019					Six Months Ended						2020 vs. 2019
(in millions, except per share data)	June 27, 2020			June 29, 2019			$ Change			% Change		June 27, 2020			June 29, 2019			$ Change			% Change
Net sales	$	987.8		$	1,163.5		$	(175.7	)	(15.1	)%	$	1,953.3		$	2,214.2		$	(260.9	)	(11.8	)%
Gross margin^(A)	256.0			328.0			(72.0		)	(22.0	)%	499.8			607.5			(107.7		)	(17.7	)%
Restructuring, exit and impairment charges	2.1			5.4			(3.3		)	(61.1	)%	2.5			8.6			(6.1		)	(70.9	)%
Operating earnings	107.0			162.7			(55.7		)	(34.2	)%	210.2			276.8			(66.6		)	(24.1	)%
Net earnings from continuing operations	71.2			112.1			(40.9		)	(36.5	)%	141.9			188.3			(46.4		)	(24.6	)%

Diluted earnings per common share from continuing operations	$	0.89		$	1.28		$	(0.39	)	(30.5	)%	$	1.77		$	2.15		$	(0.38	)	(17.7	)%

Expressed as a percentage of Net sales:
Gross margin^(A)	25.9		%	28.2		%				(230) bpts		25.6		%	27.4		%				(180) bpts
Selling, general and administrative expense	12.1		%	10.9		%				120 bpts		11.8		%	11.7		%				10 bpts
Research and development expense	2.8		%	2.9		%				(10) bpts		2.9		%	2.8		%				10 bpts
Restructuring, exit and impairment charges	0.2		%	0.5		%				(30) bpts		0.1		%	0.4		%				(30) bpts
Operating margin	10.8		%	14.0		%				(320) bpts		10.8		%	12.5		%				(170) bpts