000001493012/3177,095,3282021Q3FALSE11————————P1Y2M12D——P2Y10M24DP2Y10M24DP1Y0M0D——77.779.478.379.8———P13Y3M18DP11Y8M12D000Postretirement BenefitsThe Company has defined contribution plans, nonqualified defined benefit pension plans, and other postretirement benefit plans covering substantially all of its employees. The Company's contributions to its defined contribution plans include matching and annual discretionary contributions which are based on various percentages of compensation, and in some instances are based on the amount of the employees' contributions to the plans. See Note 17 in the Notes to Consolidated Financial Statements in the 2020 Form 10-K for further details regarding these plans.
Pension and other postretirement benefit costs included the following components for the three months ended October 2, 2021 and September 26, 2020:
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| | | | | Pension Benefits | | | | | | Other Postretirement Benefits |
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| (in millions) | | | | | October 2,
2021 | | September 26,
2020 | | | | | | October 2,
2021 | | September 26,
2020 |
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Pension and other postretirement benefit costs included the following components for the three months ended October 2, 2021 and September 26, 2020:
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| | | | | Pension Benefits | | | | | | Other Postretirement Benefits |
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| (in millions) | | | | | October 2,
2021 | | September 26,
2020 | | | | | | October 2,
2021 | | September 26,
2020 |
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q | | | | | |
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended October 02, 2021
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| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 001-01043
____________
(Exact name of registrant as specified in its charter)
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| Delaware | | 36-0848180 |
| (State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
26125 N. Riverwoods Blvd., Suite 500, Mettawa, IL 60045-3420 (Address of principal executive offices) (Zip code)
(847) 735-4700
(Registrant’s telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
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| Large Accelerated Filer | ☒ | Accelerated Filer | ☐ |
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| Non-accelerated Filer | ☐ | Smaller reporting company | ☐ |
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| Emerging growth company | ☐ | | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Securities registered pursuant to Section 12(b) of the Act:
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| Title of Each Class | | Trading Symbol(s) | | Name of Each Exchange on Which Registered |
Common stock, par value $0.75 per share | | BC | | New York Stock Exchange |
| | Chicago Stock Exchange |
6.500% Senior Notes due 2048 | | BC-A | | New York Stock Exchange |
6.625% Senior Notes due 2049 | | BC-B | | New York Stock Exchange |
6.375% Senior Notes due 2049 | | BC-C | | New York Stock Exchange |
The number of shares of Common Stock ($0.75 par value) of the registrant outstanding as of October 28, 2021 was 77,095,328.
BRUNSWICK CORPORATION
INDEX TO QUARTERLY REPORT ON FORM 10-Q
October 2, 2021
TABLE OF CONTENTS
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| PART I – FINANCIAL INFORMATION | Page |
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| PART II – OTHER INFORMATION | |
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PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
BRUNSWICK CORPORATION
Condensed Consolidated Statements of Comprehensive Income
(unaudited)
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| | Three Months Ended | | Nine Months Ended |
| (in millions, except per share data) | October 2,
2021 | | September 26,
2020 | | October 2,
2021 | | September 26,
2020 |
| Net sales | $ | 1,427.2 | | | $ | 1,233.1 | | | $ | 4,415.2 | | | $ | 3,186.4 | |
| Cost of sales | 1,016.8 | | | 856.2 | | | 3,126.0 | | | 2,309.7 | |
| Selling, general and administrative expense | 165.9 | | | 151.3 | | | 490.3 | | | 381.8 | |
| Research and development expense | 35.5 | | | 31.2 | | | 107.1 | | | 87.8 | |
| Restructuring, exit and impairment charges | — | | | 1.8 | | | 0.7 | | | 4.3 | |
| Operating earnings | 209.0 | | | 192.6 | | | 691.1 | | | 402.8 | |
| Equity earnings | 0.3 | | | 0.6 | | | 1.5 | | | 3.5 | |
| Pension settlement (charge) benefit | — | | | (0.2) | | | — | | | 1.1 | |
| Other expense, net | (1.6) | | | (1.2) | | | (4.4) | | | (2.7) | |
| Earnings before interest and income taxes | 207.7 | | | 191.8 | | | 688.2 | | | 404.7 | |
| Interest expense | (16.9) | | | (16.4) | | | (47.1) | | | (52.0) | |
| Interest income | 0.8 | | | 0.3 | | | 1.9 | | | 0.9 | |
| Loss on early extinguishment of debt | (4.2) | | | — | | | (4.2) | | | — | |
| Transaction financing charges | (4.0) | | | — | | | (4.0) | | | — | |
| Earnings before income taxes | 183.4 | | | 175.7 | | | 634.8 | | | 353.6 | |
| Income tax provision | 38.8 | | | 38.9 | | | 141.4 | | | 74.9 | |
| Net earnings from continuing operations | 144.6 | | | 136.8 | | | 493.4 | | | 278.7 | |
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| Discontinued operations: | | | | | | | |
| (Loss) earnings from discontinued operations, net of tax | (1.5) | | | 1.5 | | | (1.6) | | | 0.4 | |
| Loss on disposal of discontinued operations, net of tax | — | | | (0.4) | | | — | | | (1.5) | |
Net (loss) earnings from discontinued operations, net of tax | (1.5) | | | 1.1 | | | (1.6) | | | (1.1) | |
| Net earnings | $ | 143.1 | | | $ | 137.9 | | | $ | 491.8 | | | $ | 277.6 | |
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| Earnings (loss) per common share: | | | | | | | |
| Basic | | | | | | | |
| Earnings from continuing operations | $ | 1.86 | | | $ | 1.72 | | | $ | 6.33 | | | $ | 3.51 | |
| (Loss) earnings from discontinued operations | (0.02) | | | 0.02 | | | (0.02) | | | (0.02) | |
| Net earnings | $ | 1.84 | | | $ | 1.74 | | | $ | 6.31 | | | $ | 3.49 | |
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| Diluted | | | | | | | |
| Earnings from continuing operations | $ | 1.85 | | | $ | 1.71 | | | $ | 6.28 | | | $ | 3.49 | |
| (Loss) earnings from discontinued operations | (0.02) | | | 0.02 | | | (0.02) | | | (0.02) | |
| Net earnings | $ | 1.83 | | | $ | 1.73 | | | $ | 6.26 | | | $ | 3.47 | |
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| Weighted average shares used for computation of: | | | | | | | |
| Basic earnings per common share | 77.7 | | | 79.4 | | | 78.0 | | | 79.4 | |
| Diluted earnings per common share | 78.3 | | | 79.8 | | | 78.6 | | | 79.9 | |
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| Comprehensive income | $ | 140.6 | | | $ | 146.6 | | | $ | 499.5 | | | $ | 279.1 | |
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| The Notes to Condensed Consolidated Financial Statements are an integral part of these condensed consolidated statements. | | |
BRUNSWICK CORPORATION
Condensed Consolidated Balance Sheets
(unaudited)
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| (in millions) | October 2,
2021 | | December 31,
2020 | | September 26,
2020 | | |
| Assets | | | | | | | |
| Current assets | | | | | | | |
| Cash and cash equivalents, at cost, which approximates fair value | $ | 1,486.4 | | | $ | 519.6 | | | $ | 650.4 | | | |
| Restricted cash | 10.9 | | | 10.7 | | | 9.1 | | | |
| Short-term investments in marketable securities | 0.8 | | | 56.7 | | | 0.8 | | | |
| Total cash and short-term investments in marketable securities | 1,498.1 | | | 587.0 | | | 660.3 | | | |
Accounts and notes receivable, less allowances of $10.3, $10.7, $11.1 | 451.1 | | | 337.6 | | | 398.8 | | | |
| Inventories | | | | | | | |
| Finished goods | 520.2 | | | 446.8 | | | 347.6 | | | |
| Work-in-process | 162.7 | | | 94.0 | | | 91.6 | | | |
| Raw materials | 257.6 | | | 171.0 | | | 150.2 | | | |
| Net inventories | 940.5 | | | 711.8 | | | 589.4 | | | |
| Prepaid expenses and other | 52.3 | | | 34.1 | | | 32.7 | | | |
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| Current assets | 2,942.0 | | | 1,670.5 | | | 1,681.2 | | | |
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| Property | | | | | | | |
| Land | 18.9 | | | 17.7 | | | 17.6 | | | |
| Buildings and improvements | 453.3 | | | 435.5 | | | 426.4 | | | |
| Equipment | 1,299.5 | | | 1,184.9 | | | 1,141.4 | | | |
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| Total land, buildings and improvements and equipment | 1,771.7 | | | 1,638.1 | | | 1,585.4 | | | |
| Accumulated depreciation | (982.6) | | | (929.8) | | | (912.9) | | | |
| Net land, buildings and improvements and equipment | 789.1 | | | 708.3 | | | 672.5 | | | |
| Unamortized product tooling costs | 172.4 | | | 155.3 | | | 146.6 | | | |
| Net property | 961.5 | | | 863.6 | | | 819.1 | | | |
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| Other assets | | | | | | | |
| Goodwill | 443.8 | | | 417.7 | | | 416.3 | | | |
| Other intangibles, net | 549.2 | | | 552.3 | | | 559.6 | | | |
| Deferred income tax asset | 132.7 | | | 136.6 | | | 93.7 | | | |
| Operating lease assets | 83.1 | | | 83.0 | | | 82.0 | | | |
| Equity investments | 41.3 | | | 32.5 | | | 25.5 | | | |
| Other long-term assets | 27.0 | | | 14.4 | | | 13.4 | | | |
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| Other assets | 1,277.1 | | | 1,236.5 | | | 1,190.5 | | | |
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| Total assets | $ | 5,180.6 | | | $ | 3,770.6 | | | $ | 3,690.8 | | | |
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| The Notes to Condensed Consolidated Financial Statements are an integral part of these condensed consolidated statements. | | |
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BRUNSWICK CORPORATION Condensed Consolidated Balance Sheets (unaudited)
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| (in millions) | October 2,
2021 | | December 31,
2020 | | September 26,
2020 | | |
| Liabilities and shareholders' equity | | | | | | | |
| Current liabilities | | | | | | | |
| Short-term debt and current maturities of long-term debt | $ | 43.2 | | | $ | 43.1 | | | $ | 48.4 | | | |
| Accounts payable | 589.8 | | | 457.6 | | | 392.9 | | | |
| Accrued expenses | 623.3 | | | 578.5 | | | 508.3 | | | |
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| Current liabilities | 1,256.3 | | | 1,079.2 | | | 949.6 | | | |
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| Long-term liabilities | | | | | | | |
| Debt | 1,787.7 | | | 908.3 | | | 1,013.2 | | | |
| Postretirement benefits | 70.8 | | | 74.7 | | | 71.9 | | | |
| Operating lease liabilities | 67.6 | | | 69.8 | | | 69.3 | | | |
| Other | 148.5 | | | 128.6 | | | 128.6 | | | |
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| Long-term liabilities | 2,074.6 | | | 1,181.4 | | | 1,283.0 | | | |
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| Shareholders' equity | | | | | | | |
Common stock; authorized: 200,000,000 shares, $0.75 par value; issued: 102,538,000 shares; outstanding: 77,134,000, 77,875,000 and 78,421,000 shares | 76.9 | | | 76.9 | | | 76.9 | | | |
| Additional paid-in capital | 388.3 | | | 383.8 | | | 377.0 | | | |
| Retained earnings | 2,644.5 | | | 2,225.7 | | | 2,151.7 | | | |
Treasury stock, at cost: 25,404,000, 24,663,000 and 24,117,000 shares | (1,225.0) | | | (1,133.7) | | | (1,095.5) | | | |
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| Accumulated other comprehensive loss | (35.0) | | | (42.7) | | | (51.9) | | | |
| Shareholders' equity | 1,849.7 | | | 1,510.0 | | | 1,458.2 | | | |
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| Total liabilities and shareholders' equity | $ | 5,180.6 | | | $ | 3,770.6 | | | $ | 3,690.8 | | | |
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| 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)
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| | Nine Months Ended |
| (in millions) | October 2,
2021 | | September 26,
2020 |
| Cash flows from operating activities | | | |
| Net earnings | $ | 491.8 | | | $ | 277.6 | |
| Less: net loss from discontinued operations, net of tax | (1.6) | | | (1.1) | |
| Net earnings from continuing operations, net of tax | 493.4 | | | 278.7 | |
| Stock compensation expense | 22.7 | | | 19.6 | |
| Depreciation and amortization | 127.9 | | | 110.5 | |
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| Deferred income taxes | (5.3) | | | 26.5 | |
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| Changes in certain current assets and current liabilities | (223.4) | | | 166.0 | |
| Long-term extended warranty contracts and other deferred revenue | 12.0 | | | 10.9 | |
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| Income taxes | 29.0 | | | 8.8 | |
| Other, net | 18.8 | | | 16.4 | |
| Net cash provided by operating activities of continuing operations | 475.1 | | | 637.4 | |
| Net cash (used for) provided by operating activities of discontinued operations | (10.5) | | | 3.5 | |
| Net cash provided by operating activities | 464.6 | | | 640.9 | |
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| Cash flows from investing activities | | | |
| Capital expenditures | (180.2) | | | (120.6) | |
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| Sales or maturities of marketable securities | 55.9 | | | — | |
| Investments | (9.1) | | | 2.5 | |
| Acquisition of businesses, net of cash acquired | (50.3) | | | — | |
| Proceeds from the sale of property, plant and equipment | 5.6 | | | 2.0 | |
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| Net cash used for investing activities of continuing operations | (178.1) | | | (116.1) | |
| Net cash used for investing activities of discontinued operations | — | | | (7.5) | |
| Net cash used for investing activities | (178.1) | | | (123.6) | |
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| Cash flows from financing activities | | | |
| Proceeds from issuances of short-term debt | — | | | 610.0 | |
| Payments of short-term debt | — | | | (610.0) | |
| Net proceeds from issuances of long-term debt | 994.4 | | | — | |
| Payments of long-term debt including current maturities | (113.6) | | | (48.4) | |
| Net premium paid on early extinguishment of debt | (4.2) | | | — | |
| Common stock repurchases | (98.7) | | | (79.1) | |
| Cash dividends paid | (73.0) | | | (57.2) | |
| Proceeds from share-based compensation activity | 0.5 | | | 1.1 | |
| Tax withholding associated with shares issued for share-based compensation | (13.2) | | | (7.3) | |
| Other, net | (7.8) | | | — | |
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| Net cash provided by (used for) financing activities | 684.4 | | | (190.9) | |
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| Effect of exchange rate changes | (3.9) | | | 1.2 | |
| Net increase in Cash and cash equivalents and Restricted cash | 967.0 | | | 327.6 | |
| Cash and cash equivalents and Restricted cash at beginning of period | 530.3 | | | 331.9 | |
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| Cash and cash equivalents and Restricted cash at end of period | 1,497.3 | | | 659.5 | |
| Less: Restricted cash | 10.9 | | | 9.1 | |
| Cash and cash equivalents at end of period | $ | 1,486.4 | | | $ | 650.4 | |
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The Notes to Condensed Consolidated Financial Statements are an integral part of these condensed consolidated statements.
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Brunswick Corporation
Condensed Consolidated Statements of Shareholders' Equity
(unaudited)
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| (in millions, except per share data) | Common Stock | | Additional Paid-in Capital | | Retained Earnings | | Treasury Stock | | Accumulated Other Comprehensive Income (Loss) | | Total |
| Balance at December 31, 2020 | $ | 76.9 | | | $ | 383.8 | | | $ | 2,225.7 | | | $ | (1,133.7) | | | $ | (42.7) | | | $ | 1,510.0 | |
| Net earnings | — | | | — | | | 169.3 | | | — | | | — | | | 169.3 | |
| Other comprehensive income | — | | | — | | | — | | | — | | | 5.6 | | | 5.6 | |
Dividends ($0.27 per common share) | — | | | — | | | (21.0) | | | — | | | — | | | (21.0) | |
| Compensation plans and other | — | | | (12.6) | | | — | | | 7.2 | | | — | | | (5.4) | |
| Common stock repurchases | — | | | — | | | — | | | (15.9) | | | — | | | (15.9) | |
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| Balance at April 3, 2021 | 76.9 | | | 371.2 | | | 2,374.0 | | | (1,142.4) | | | (37.1) | | | 1,642.6 | |
| Net earnings | — | | | — | | | 179.4 | | | — | | | — | | | 179.4 | |
| Other comprehensive income | — | | | — | | | — | | | — | | | 4.6 | | | 4.6 | |
Dividends ($0.335 per common share) | — | | | — | | | (26.2) | | | — | | | — | | | (26.2) | |
| Compensation plans and other | — | | | 8.9 | | | — | | | 0.2 | | | — | | | 9.1 | |
| Common stock repurchases | — | | | — | | | — | | | (40.0) | | | — | | | (40.0) | |
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| Balance at July 3, 2021 | 76.9 | | | 380.1 | | | 2,527.2 | | | (1,182.2) | | | (32.5) | | | 1,769.5 | |
| Net earnings | — | | | — | | | 143.1 | | | — | | | — | | | 143.1 | |
| Other comprehensive loss | — | | | — | | | — | | | — | | | (2.5) | | | (2.5) | |
Dividends ($0.335 per common share) | — | | | — | | | (25.8) | | | — | | | — | | | (25.8) | |
| Compensation plans and other | — | | | 8.2 | | | — | | | — | | | — | | | 8.2 | |
| Common stock repurchases | — | | | — | | | — | | | (42.8) | | | — | | | (42.8) | |
| Balance at October 2, 2021 | $ | 76.9 | | | $ | 388.3 | | | $ | 2,644.5 | | | $ | (1,225.0) | | | $ | (35.0) | | | $ | 1,849.7 | |
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| (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) | — | | | |
