BRUNSWICK CORP

Item 1. Condensed Consolidated Financial Statements

Condensed Consolidated Statements of Comprehensive Income

Condensed Consolidated Balance Sheets

Condensed Consolidated Statements of Cash Flows

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

Brunswick Corporation

Condensed Consolidated Statements of Shareholders' Equity

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

Note 1 – Significant Accounting Policies

Interim Financial Statements

Brunswick's unaudited interim condensed consolidated financial statements have been prepared pursuant to 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 Annual Report on Form 10-K for the year ended December 31, 2025 (the 2025 Form 10-K). These results include, in management's opinion, all normal and recurring adjustments that are necessary to present fairly Brunswick's financial position, results of operations, and cash flows. Due to the seasonality of Brunswick's businesses, the interim results are not necessarily indicative of the results that may be expected for the remainder of the year.

The Company maintains its financial records on the basis of a fiscal year ending on December 31, with the fiscal quarters spanning approximately thirteen weeks. The first quarter ends on the Saturday closest to the end of the first thirteen-week period. The second and third quarters are thirteen weeks in duration and the fourth quarter is the remainder of the year. The second quarter of fiscal year 2026 ended on July 4, 2026, and the second quarter of fiscal year 2025 ended on June 28, 2025.

Recently Issued Accounting Standards

Income Statement: In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This guidance requires disclosures about significant expense categories, including but not limited to, inventory purchases, employee compensation, depreciation, amortization, and selling expenses. ASU 2024-03 is effective for financial statements for annual periods beginning after December 15, 2026. We are currently evaluating the impact of adopting this guidance on the consolidated financial statements.

Note 2 –Revenue Recognition

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

During 2025, Navico Group realigned its business unit structure to align product portfolios and management structure. During the third quarter of 2025, the Company changed the presentation of major product lines for the Navico Group segment to disaggregate the previous Navico Group product line into Electronic Solutions, Power Solutions, and Performance Solutions to conform to Navico Group's new organizational structure. Prior period amounts have been reclassified to conform to the current period presentation.

As of December 31, 2025,$194.0 million of contract liabilities associated with extended warranties, deferred revenue and customer deposits were reported in Accrued expenses and Other long-term liabilities, of which $38.4 million was recognized as revenue during the six months ended July 4, 2026. As of July 4, 2026, total contract liabilities were $215.1 million. The total amount of the transaction price allocated to unsatisfied performance obligations as of July 4, 2026 was $211.6 million for contracts greater than one year, which primarily relates to extended warranties. The Company expects to recognize $43.9 million of this amount in 2026, $55.1 million in 2027, and $112.6 million thereafter.

Note 3 –Restructuring, Exit, and Impairment Activities

During the three and six months ended July 4, 2026, and June 28, 2025, the Company recorded restructuring charges related to headcount reductions and related costs associated with streamlining the enterprise-wide cost structure and improving operating efficiencies. The Company also incurred charges related to the rationalization of its manufacturing footprint, including the decision in the third quarter of 2025 to rationalize our fiberglass boat manufacturing footprint and exit our facilities in Reynosa, Mexico and Flagler Beach, Florida and consolidate production from those facilities into existing U.S. facilities.

The following table is a summary of these expenses for the three months ended July 4, 2026:

The following table is a summary of these expenses for the three months ended June 28, 2025:

The following table is a summary of these expenses for the six months ended July 4, 2026:

The following table is a summary of these expenses for the six months ended June 28, 2025:

Cash payments for the respective periods above include payments related to prior period charges. Restructuring, exit, and impairment charges accrued as of July 4, 2026 are expected to be paid in the next twelve months.

Note 4 –Acquisitions

2026 Acquisition

On April 16, 2026, the Company acquired another Freedom Boat Club franchise operation and territory across Greater Boston, Cape Cod and surrounding areas to further expand Freedom Boat Club's growing corporate club portfolio in the Northeast. The transaction also includes a maintenance operations center and dealership, strengthening Freedom's regional maintenance and fleet resale capabilities to support continued growth. The acquisition is included as part of the Company's Boat segment.

The Company paid net cash consideration of $28.2 million for the acquisition and total deferred consideration of $7.7 million due one year from the acquisition date. The opening balance sheet, which is preliminary and subject to change in the measurement period as the Company finalizes the purchase price allocation and fair value estimates, includes $18.6 million of goodwill and $2.7 million of customer relationships. The amount assigned to customer relationships will be amortized over the estimated useful life of 10 years. Transaction costs associated with the acquisition were not material to the Company's consolidated results of operations. The acquisition is not material to the Company's net sales, results of operations, or total assets during any period presented. Accordingly, the Company's consolidated results of operations do not differ materially from historical performance as a result of the acquisition, and pro forma results for prior periods are not presented.

Note 5 –Financial Instruments

The Company operates globally with manufacturing and sales facilities around the world. Due to the Company’s global operations, the Company engages in activities involving both financial and market risks. The Company utilizes normal operating and financing activities, along with derivative financial instruments, to minimize these risks. See Note 12 in the Notes to Consolidated Financial Statements in the 2025 Form 10-K for further details regarding the Company's financial instruments and hedging policies.

The following table summarizes the notional values of the Company's derivative instruments as of July 4, 2026, December 31, 2025, and June 28, 2025:

(A) Commodity contracts outstanding as of July 4, 2026 mature through 2027.

(B) The amount of gain or loss that is expected to be reclassified from Accumulated other comprehensive loss to earnings in the next twelve months is immaterial.

(C) Forward contracts outstanding as of July 4, 2026 mature through 2028 and mainly relate to the Euro, Australian dollar, Canadian dollar, and Mexican peso.

As of July 4, 2026, December 31, 2025, and June 28, 2025, the fair values of the Company’s derivative instruments were:

As of July 4, 2026, December 31, 2025, and June 28, 2025, 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.

The effect of derivative instruments on the Condensed Consolidated Statements of Comprehensive Income for the three and six months ended July 4, 2026 and June 28, 2025 is shown in the tables below.

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

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

The amount of gain (loss) on derivatives recognized directly into earnings was as follows:

Note 6 –Fair Value Measurements

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

Fair Value of Other Financial Instruments. The carrying values of the Company's short-term financial instruments, including cash and cash equivalents and accounts and notes receivable, approximate their fair values because of the short maturity of these instruments. The fair value of the Company's long-term debt, including current maturities, and short-term debt is determined using Level 1 and Level 2 inputs described in Note 6 to Notes to Consolidated Financial Statements in the 2025 Form 10-K. The fair value and carrying value of long-term debt, including current maturities, and short-term debt as of July 4, 2026, December 31, 2025, and June 28, 2025 was as follows:

Note 7 –Commitments and Contingencies

Product Warranties

The following activity related to product warranty liabilities was recorded in Accrued expenses during the six months ended July 4, 2026 and June 28, 2025:

Extended Product Warranties

The following activity related to deferred revenue for extended product warranty contracts was recorded in Accrued expenses and Other long-term liabilities during the six months ended July 4, 2026 and June 28, 2025:

Note 8 –Goodwill and Other Intangibles

Changes in the Company's goodwill during the six months ended July 4, 2026 and June 28, 2025, by segment, are summarized below:

Adjustments in both periods include the effect of foreign currency translation on goodwill denominated in currencies other than the U.S. dollar. The accumulated impairment loss on Navico Group goodwill was $385.8 million as of July 4, 2026 and December 31, 2025, and $80.0 million as of June 28, 2025, respectively.

The Company's intangible assets, included within Other intangibles, net on the Condensed Consolidated Balance Sheets as of July 4, 2026, December 31, 2025, and June 28, 2025, are summarized by intangible asset type below:

Other intangible assets primarily consist of software, patents, and franchise agreements. Gross amounts and related accumulated amortization amounts include adjustments related to the impact of foreign currency translation. Aggregate amortization expense for intangibles was $19.3 million and $38.8 million for the three and six months ended July 4, 2026, respectively. Aggregate amortization expense for intangibles was $20.1 million and $39.3 million for the three and six months ended June 28, 2025, respectively.

The Company tests its intangible assets for impairment during the fourth quarter of each year, or whenever a change in events and circumstances (triggering event) occurs that indicates the fair value of intangible assets may be below their carrying values. The Company did not record any impairment charges for the six months ended July 4, 2026 or June 28, 2025.

Note 9 –Segment Information

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

(A) Net sales include $69.9 million, $1.8 million, $22.3 million, and $0.3 million of segment eliminations for the Propulsion, Engine P&A, Navico Group and Boat reportable segments, respectively.

(B) Includes $3.4 million of Cost of sales related restructuring, exit, and impairment charges.

(C) Includes $251.0 million of Selling, general, and administrative expense, $50.4 million of Research and development expense and $3.6 million of Restructuring, exit, and impairment charges.

(A) Net sales include $73.2 million, $1.9 million, $21.6 million and $0.2 million of segment eliminations for the Propulsion, Engine P&A, Navico Group and Boat reportable segments, respectively.

(B) Includes $2.1 million of Cost of sales related Restructuring, exit, and impairment charges.

(C) Includes $216.6 million of Selling, general, and administrative expense, $41.8 million of Research and development expense and $5.9 million of Restructuring, exit, and impairment charges.

(A) Net sales include $144.9 million, $3.5 million, $46.0 million, and $1.1 million of segment eliminations for the Propulsion, Engine P&A, Navico Group and Boat reportable segments, respectively.

(B) Includes $6.7 million of Cost of sales related restructuring, exit, and impairment charges.

(C) Includes $493.2 million of Selling, general, and administrative expense, $96.7 million of Research and development expense and $5.1 million of Restructuring, exit, and impairment charges.

(A) Net sales include $146.5 million, $4.3 million, $46.3 million and $0.6 million of segment eliminations for the Propulsion, Engine P&A, Navico Group and Boat reportable segments, respectively.

(B) Includes $2.8 million of Cost of sales related Restructuring, exit, and impairment charges.

(C) Includes $424.6 million of Selling, general, and administrative expense, $80.3 million of Research and development expense and $6.3 million of Restructuring, exit, and impairment charges.

Note 10 – Comprehensive Income

Changes in the components of Comprehensive income, net of tax, for the three and six months ended July 4, 2026 and June 28, 2025 are as follows:

The following table presents the changes in Accumulated other comprehensive loss, net of tax, by component for the three months ended July 4, 2026:

(A) The tax effect for the three months ended July 4, 2026 was $0.5 million for foreign currency translation and $0.1 million for derivatives.

(B) The tax effect for the three months ended July 4, 2026 was $0.6 million for derivatives.

(C) The reclassification adjustments from Accumulated other comprehensive loss and associated tax effects related to defined benefit items were not material for the three months ended July 4, 2026. Refer to Note 5 – Financial Instruments for the reclassification adjustments from Accumulated other comprehensive loss, net of tax related to derivatives.

The following table presents the changes in Accumulated other comprehensive loss, net of tax, by component for the three months ended June 28, 2025:

(A) The tax effect for the three months ended June 28, 2025 was $(8.2) million for foreign currency translation and $11.4 million for derivatives.

(B) The tax effect for the three months ended June 28, 2025 was $0.4 million for derivatives.

(C) The reclassification adjustments from Accumulated other comprehensive loss and associated tax effects related to defined benefit items were not material for the three months ended June 28, 2025. Refer to Note 5 – Financial Instruments for the reclassification adjustments from Accumulated other comprehensive loss, net of tax related to derivatives.

The following table presents the changes in Accumulated other comprehensive loss, net of tax, by component for the six months ended July 4, 2026:

(A) The tax effect for the six months ended July 4, 2026 was $0.9 million for foreign currency translation and $(4.6) million for derivatives.

(B) The tax effect for the six months ended July 4, 2026 was $0.9 million for derivatives.

(C) The reclassification adjustments from Accumulated other comprehensive loss and associated tax effects related to defined benefit items were not material for the six months ended July 4, 2026. Refer to Note 5 – Financial Instruments for the reclassification adjustments from Accumulated other comprehensive loss, net of tax related to derivatives.

The following table presents the changes in Accumulated other comprehensive loss, net of tax, by component for the six months ended June 28, 2025:

(A) The tax effect for the six months ended June 28, 2025 was $(11.8) million for foreign currency translation and $14.9 million for derivatives.

(B) The tax effect for the six months ended June 28, 2025 was $0.9 million for derivatives.

(C) The reclassification adjustments from Accumulated other comprehensive loss and associated tax effects related to defined benefit items were not material for the six months ended June 28, 2025. Refer to Note 5 – Financial Instruments for the reclassification adjustments from Accumulated other comprehensive loss, net of tax related to derivatives.

Note 11 –Debt

The following table provides the changes in the Company's debt for the six months ended July 4, 2026:

Credit Facility

The Company maintains a Revolving Credit Agreement (Credit Facility). During the six months ended July 4, 2026, and June 28, 2025, there were no borrowings under the Credit Facility. As of July 4, 2026, available borrowing capacity totaled $983.9 million, net of $16.1 million of letters of credit outstanding under the Credit Facility. As of June 28, 2025, available borrowing capacity totaled $997.0 million, net of $3.0 million of letters of credit outstanding under the Credit Facility. Refer to Note 14 in the Notes to Consolidated Financial Statements in the 2025 Form 10-K for details regarding Brunswick's Credit Facility.

Commercial Paper

The Company maintains an unsecured commercial paper program (CP Program) pursuant to which the Company may issue short-term, unsecured commercial paper notes (CP Notes). During the six months ended July 4, 2026, borrowings under the CP Program totaled $470.0 million. As of July 4, 2026, the Company had $290.0 million of borrowings outstanding under the CP Program with a weighted average interest rate of 4.34%. During the six months ended July 4, 2026, the maximum amount utilized under the CP Program was $540.0 million. During the six months ended June 28, 2025, borrowings under the CP Program totaled $504.4 million. As of June 28, 2025, the Company had $170.0 million of borrowings outstanding under the CP Program. During the six months ended June 28, 2025, the maximum amount utilized under the CP Program was $445.5 million. Refer to Note 14 in the Notes to Consolidated Financial Statements in the 2025 Form 10-K for details regarding Brunswick's CP Program.

Note 12 –Supplier Finance Program Obligations

As of July 4, 2026, December 31, 2025, and June 28, 2025, the Company had $13.3 million, $6.2 million, and $9.1 million confirmed invoices under the supplier finance program, respectively, which were included in Accounts payable on the Condensed Consolidated Balance Sheets.