424B5 1 s002408x5_424b5.htm 424B5

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Filed Pursuant to Rule 424(b)(5)
Registration No. 333-213509

CALCULATION OF REGISTRATION FEE

Title of each Class of
Securities to be Registered
Amount
to be
Registered
Maximum
Offering Price
Maximum
Aggregate
Offering Price
Amount of
Registration Fee(1)
6.500% Debentures Due 2048
$
175,000,000
 
 
100.00
%
$
201,250,000
 
$
24,391.50
 

(1) Calculated in accordance with Rule 457(r) under the Securities Act of 1933. This “Calculation of Registration Fee” table shall be deemed to update the “Calculation of Registration Fee” table in our Registration Statement on Form S-3 (File No. 333-213509).

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PROSPECTUS SUPPLEMENT
(To prospectus dated September 6, 2016)

$175,000,000


Brunswick Corporation
6.500% Senior Notes due 2048

We are offering $175,000,000 aggregate principal amount of our 6.500% Senior Notes due 2048 (the “Notes”). We have granted the underwriters the option to purchase, exercisable during the 30-day period beginning on the date of this prospectus supplement, up to an additional $26,250,000 aggregate principal amount of the Notes. The Notes will bear interest at a rate of 6.500% per year, payable quarterly in arrears on January 15, April 15, July 15 and October 15 of each year, commencing January 15, 2019. The Notes will mature on October 15, 2048.

We may, at our option, redeem some or all of the Notes at any time on or after October 15, 2023 at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. See “Description of the Notes—Optional Redemption”. If we experience a change of control triggering event, as described in this prospectus supplement, each holder of the Notes may require us to repurchase some or all of its Notes at a price equal to 101% of their principal amount, plus accrued and unpaid interest to, but excluding, the repurchase date. See “Description of the Notes—Certain Covenants—Offer to Repurchase Notes Upon Change of Control Triggering Event”.

The Notes will be our direct, unsecured and unsubordinated obligations and will rank equally in right of payment with our existing and future unsecured and unsubordinated indebtedness. The Notes will be effectively subordinated to any of our secured indebtedness to the extent of the assets securing such indebtedness. In addition, the Notes will be structurally subordinated to all existing and future indebtedness and other liabilities of our subsidiaries. The Notes will be issued only in registered form in denominations of $25.00 and any integral multiples of $25.00 in excess thereof.

Investing in the Notes involves risks that are described in the “Risk Factors” beginning on page S-15 of this prospectus supplement and in the documents that we incorporate by reference into this prospectus supplement and the accompanying prospectus.

 
Per Note
Total
Public offering price(1)
 
100.000
%
$
175,000,000
 
Underwriting discount(2)
 
3.150
%
$
5,512,500
 
Proceeds, before expenses, to Brunswick Corporation
 
96.850
%
$
169,487,500
 
(1) Plus accrued interest from October 3, 2018, if settlement occurs after that date.
(2) We have granted the underwriters the option to purchase, exercisable during the 30-day period beginning on the date of this prospectus supplement, up to an additional $26,250,000 aggregate principal amount of the Notes. If the underwriters exercise this option in full, the total underwriting discounts and commissions payable by us will be $6,339,375 and total proceeds to us before expenses will be $194,910,625.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

We intend to apply for the listing of the Notes on The New York Stock Exchange (the “NYSE”). If approved for listing, trading on NYSE is expected to commence within 30 days after the Notes are first issued. We expect that the Notes will be ready for delivery in book-entry form only through The Depository Trust Company and its direct participants, including Euroclear Bank S.A./N.V. and Clearstream Banking, société anonyme on or about October 3, 2018.

Joint Book-Running Managers

Morgan Stanley
BofA Merrill Lynch
Wells Fargo Securities

Joint Lead Manager

J.P. Morgan

Co-Managers

Citizens Capital Markets
SunTrust Robinson Humphrey
US Bancorp
BMO Capital Markets
KBC Securities USA

The date of this prospectus supplement is October 1, 2018.

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Page
Prospectus Supplement
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
Prospectus
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

You should rely only on the information contained or incorporated by reference in this prospectus supplement, the accompanying prospectus and any free writing prospectus. We have not, and the underwriters have not, authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus supplement, the accompanying prospectus, any free writing prospectus and the documents incorporated by reference is accurate only as of their respective dates. Our business, financial condition, results of operations and prospects may have changed since those dates.

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ABOUT THIS PROSPECTUS SUPPLEMENT

This document is in two parts. The first part is this prospectus supplement, which describes the specific terms of the Notes we are currently offering and certain other matters relating to us and our financial condition. The second part, the prospectus, gives more general information about securities we may offer from time to time, some of which does not apply to the Notes we are currently offering. Generally, when we refer to the prospectus, we are referring to both parts of this document combined. The information in this prospectus supplement supersedes any inconsistent information included in the accompanying prospectus.

Prior to any purchase of Notes hereunder, you should read the prospectus, together with the additional information referred to under “Documents Incorporated by Reference”.

We are responsible for the information contained and incorporated by reference in the prospectus and any related free writing prospectus we prepare or authorize. We and the underwriters have not authorized anyone to give you any other information, and we and the underwriters take no responsibility for any other information that others may give you. We are not, and the underwriters are not, making an offer of the Notes in any jurisdiction where the offer or sale is not permitted. You should assume that the information contained and incorporated by reference in the prospectus and any free writing prospectus with respect to this offering filed by us with the Securities and Exchange Commission (the “SEC”) is only accurate as of the respective dates of such documents. Our business, financial condition, results of operations and prospects may have changed since those dates.

All references to “Brunswick”, the “Company”, “we”, “us” and “our” in the prospectus mean Brunswick Corporation and its wholly owned subsidiaries and other entities controlled by Brunswick Corporation except in “Description of the Notes” and where it is clear from the context that the term means only the issuer, Brunswick Corporation.

You should not consider any information in the prospectus to be investment, legal or tax advice. You should consult your own counsel, accountants and other advisers for legal, tax, business, financial and related advice regarding the purchase of any of the Notes offered by this prospectus supplement.

DOCUMENTS INCORPORATED BY REFERENCE

This prospectus incorporates documents by reference which are not presented in or delivered with this prospectus.

All documents that we file pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), after the date of this prospectus supplement and prior to the termination of the offering of the Notes described in this prospectus supplement are incorporated by reference into and are deemed to be a part of this prospectus from the date of filing of those documents; provided, however, that we are not incorporating by reference any documents, portions of documents or other information that is deemed to have been “furnished” and not “filed” with the SEC.

The following documents, which we have filed with the SEC, are incorporated by reference into this prospectus:

Annual Report on Form 10-K for the year ended December 31, 2017, filed February 20, 2018 (including the portions of the Definitive Proxy Statement on Schedule 14A for our 2018 Annual Meeting of Shareholders, filed March 22, 2018, that are incorporated by reference into such annual report);
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2018, filed May 3, 2018, and June 30, 2018, filed August 1, 2018; and
Current Reports on Form 8-K filed on March 1, 2018, June 27, 2018, July 3, 2018, July 19, 2018, August 9, 2018, September 28, 2018 and October 1, 2018.

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Any statement contained in a document incorporated or deemed to be incorporated by reference into this prospectus will be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained in this prospectus or any other subsequently filed document that is deemed to be incorporated by reference into this prospectus modifies or supersedes the statement. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this prospectus.

The documents incorporated by reference into this prospectus are available from us upon your request. We will provide a copy of any and all of the information that is incorporated by reference into this prospectus to any person, without charge, upon written or oral request. If exhibits to the documents incorporated by reference into this prospectus are not themselves specifically incorporated by reference into this prospectus, then the exhibits will not be provided. You should not rely on or assume the accuracy of any representation or warranty in any agreement that we have filed or incorporated by reference as an exhibit to this prospectus because such representation or warranty may be subject to exceptions and qualifications contained in separate disclosure schedules, may have been included in such agreement for the purpose of allocating risk between the parties to the particular transaction, may apply standards of materiality in a manner different from what may be viewed as material to you or other investors or may no longer continue to be true as of any given date.

Requests for documents relating to us should be directed to:

General Counsel
Brunswick Corporation
26125 N. Riverwoods Blvd. Suite 500
Mettawa, Illinois 60045-3420
(847) 735-4700

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STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This prospectus and the documents incorporated by reference herein contain, and any other offering materials and documents deemed to be incorporated by reference herein may contain, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Exchange Act. 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”, “anticipate”, “intend”, “target”, “plan”, “seek”, “estimate”, “believe”, “predict”, “outlook” and similar expressions are intended to identify forward-looking statements. Such statements are not guarantees of future performance and involve certain risks and uncertainties that may cause actual results to differ materially from expectations as of the date of this prospectus supplement. See “Risk Factors” in this prospectus supplement and in our most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q. These risks include, but are not limited to:

the effect of adverse general economic conditions, including the amount of disposable income available to consumers for discretionary purchases, tight consumer credit markets and the level of consumer confidence on the demand for our products and services;
negative currency trends, including shifts in exchange rates;
the ability to make targeted acquisitions and successfully integrate newly acquired businesses;
our ability to successfully implement our strategic plan and growth initiatives;
our ability to effectively manage our portfolio of businesses, including completing and realizing benefits from strategic divestitures, such as the Proposed Spin-off (as defined and described in “Summary—Recent Developments—Proposed Spin-off” and “Proposed Spin-off”) of our Fitness business, or that such divestitures, including the Proposed Spin-off, do not occur due to the failure of one or more conditions outside of the control of Brunswick;
adequate financing access for dealers and customers and our ability to access capital and credit markets;
retaining our relationships with dealers, distributors and independent boat builders;
the ability to maintain effective distribution and develop alternative distribution channels without disrupting incumbent distribution partners;
the ability to successfully manage pipeline inventories;
credit and collections risks, including the potential obligation to repurchase dealer inventory;
the risk of losing significant business from a key customer or a critical supplier;
protecting our brands and intellectual property;
absorbing fixed costs in production;
managing expansion or consolidation of manufacturing facilities;
meeting supply objectives, including the ability to obtain components, parts and raw materials from suppliers in a timely manner and for a reasonable price;
actual or anticipated increases in costs, disruptions of supply or defects in raw materials, parts or components we purchase from third parties, including as the result of new tariffs on raw materials;
higher energy and fuel costs, increased demand for shipping carriers and transportation disruptions;
meeting pension funding obligations;
managing our share repurchases;
competitive pricing pressures, including the impact of changing foreign currency exchange rates, inflation and increased competition from international competitors;
developing new and innovative products at a competitive price and in compliance with applicable laws;

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maintaining product quality and service standards;
the continued use of legacy information technology systems and the risk of a failure of or attacks on our information technology systems, which could result in data breaches, lost or stolen assets or information and associated remediation costs;
competition from other leisure pursuits that may affect the level of participation in boating and fitness activities;
the risk of product liability, warranty and other claims in connection with the manufacture and sale of products;
the ability to protect our intellectual property and risks associated with our information technology systems;
the ability to respond to and minimize the negative financial impact of legislative and regulatory developments, including those related to environmental restrictions and remediation efforts, climate change, healthcare costs, taxes and employment obligations;
the risk of having to record an impairment to the value of goodwill and other assets;
international business risk, including risks of international political instability, civil unrest and operations in emerging markets;
the ability to attract and retain key contributors and to successfully implement succession plans;
the effect of weather conditions on demand for marine products;
the effect that catastrophic events, including hurricanes, floods, earthquakes, environmental spills and other natural disasters, may have on consumer demand and the ability to manufacture products;
the risk that, following the acquisition (the “Acquisition”) of the Global Marine Business of Power Products (each as defined and described in “Summary—Recent Developments—Acquisition of Power Products’ Global Marine Business”), such business will not be successfully integrated into ours;
the possibility that the expected synergies and value creation from the Acquisition will not be realized or will not be realized within the expected time period;
disruptions from the Acquisition making it more difficult to maintain business and operational relationships;
the risk that unexpected costs will be incurred as a result of the Acquisition; and
the effect on our business of our increased level of indebtedness, our ability to make payments on or service our indebtedness and our ability to obtain financing as needed.

Additional factors that may cause risks and uncertainties include those discussed in the sections entitled “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and any subsequent Quarterly Reports on From 10-Q, and may also include risk factors and other information discussed in other documents that are incorporated or deemed to be incorporated by reference in this prospectus.

You should take care not to place undue reliance on our forward-looking statements, which represent our views only as of the date they are made. We undertake no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

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SUMMARY

Brunswick Corporation

Brunswick Corporation is a Delaware corporation incorporated on December 31, 1907. We are a leading global designer, manufacturer, and marketer of recreation products, including marine engines, boats, fitness equipment and active recreation products, and have three reportable segments: Marine Engine, Boat and Fitness.

Our Marine Engine segment consists of the Mercury Marine Group (“Mercury Marine”). Mercury Marine manufactures and markets a full range of outboard engines, sterndrive and inboard engine and propulsion systems under, among other brand names, the Mercury, Mercury MerCruiser, Mariner, Mercury Racing and Mercury Diesel brands. In addition, Mercury Marine manufactures and markets parts and accessories under the Quicksilver, Mercury Precision Parts, Mercury Propellers, Attwood, Garelick, Whale, BLA, Talamex, Besto, Seachoice and MotorGuide brand names, including marine electronics and control integration systems, steering systems, instruments, controls, propellers, trolling motors, fuel systems, service parts and lubricants. Mercury Marine supplies integrated, high-speed diesel propulsion systems to the worldwide recreational and commercial marine markets. To promote advanced propulsion systems with improved handling, performance and efficiency, Mercury Marine also manufactures and markets advanced boat steering and engine control systems. Marine Engine segment products are principally sold directly to boat builders, including Brunswick's Boat segment, or through marine retail dealers and distributors worldwide. The Company's engine manufacturing plants are located mainly in the United States, China and Japan, with sales mainly to markets in the Americas, Europe and Asia-Pacific.

We recently acquired the Global Marine Business of Power Products (each as defined and described in “—Recent Developments—Global Marine Business Acquisition”). Prior to the closing of the Acquisition, Power Products consummated a reorganization such that we only acquired the Global Marine Business. Power Products is a leading provider of branded electrical products, such as battery and power management and digital switching, to marine and other recreational and specialty vehicle markets. Power Products sells its products under the Ancor, BEP, Blue Sea Systems, Czone, Del City, Lenco Marine, Marinco, Mastervolt, Park Power, Progressive Industries and ProMariner brands. The Acquisition benefits the Company’s systems integration and connected boat initiatives by combining an industry leading provider of integrated electrical systems solutions for boat and other original equipment manufacturers with the Company’s leading integrated propulsion system solutions. Power Products will be managed as a part of the Marine Engine segment.

Our Boat segment consists of the Brunswick Boat Group (“Boat Group”), which designs, manufactures and markets the following types of boats: fiberglass pleasure, sport cruiser, sport fishing and center-console, offshore fishing, aluminum and fiberglass fishing, pontoon, utility, deck, inflatable and heavy-gauge aluminum. The Boat Group includes the following boat brands: Bayliner sport cruisers, runabouts and Heyday wake boats; Boston Whaler fiberglass offshore boats; Lund fiberglass fishing boats; Crestliner, Cypress Cay, Harris, Lowe, Lund and Princecraft aluminum fishing, utility, pontoon boats and deck boats; Thunder Jet heavy-gauge aluminum boats; and Sea Ray sport boats and sport cruisers. The Boat Group also includes a commercial and governmental sales unit that sells products to commercial customers, as well as to the United States government and state, local and foreign governments. The Boat Group procures most of its outboard engines, gasoline sterndrive engines and gasoline inboard engines from Brunswick's Marine Engine segment. The Boat Group’s products are manufactured mainly in the United States, Europe and Mexico and sold through a global network of dealer and distributor locations, primarily in North America and Europe.

Our Fitness segment is comprised of our Fitness business that we are planning to spin off to our shareholders. See “—Recent Developments—Proposed Spin-off” and “Proposed Spin-off”. Our Fitness business designs, manufactures and markets a broad portfolio of cardiovascular fitness equipment (including treadmills, total body cross-trainers, stair climbers and stationary exercise bicycles) and strength-training fitness equipment for both the commercial and consumer markets under the Life Fitness, Hammer Strength, Cybex, Indoor Cycling Group and SCIFIT brands. Our Fitness business also has an active recreation business that includes billiards and other gaming tables, as well as related game room furniture and accessories. Fitness products are manufactured mainly in the United States and Hungary or are sourced from international suppliers. Fitness equipment is sold mainly in the Americas, Europe and Asia to health clubs, corporate, university, hospitality, military and government facilities, and to consumers through selected mass merchants, specialty retail dealers and through the Company’s website.

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In 2018, we continue to execute our growth strategy, emphasizing new product investments, continued product leadership and targeted acquisitions, as well as productivity and efficiency initiatives. We believe this strategy positions the Company to grow revenues and expand margins. In our Marine Engine segment, over the past several years, we have introduced new high-quality propulsion products to market, including a major launch of 19 outboard engines in 2018. By the end of 2018, we expect that approximately 80% of our outboard propulsion revenues will come from products introduced since 2012. We have also grown our marine parts and accessories business, transforming it into what we believe is the largest marine parts and accessories business in the world. We expect that after giving effect to the acquisition of Power Products and the Proposed Spin-off of our Fitness Business, approximately 35% of Brunswick’s revenue will be related to aftermarket sales, which we believe are less cyclical and capable of delivering more consistent revenue and gross margins throughout an economic cycle. In our Boat segment, we have aligned the portfolio to maximize the synergies with our marine propulsion and parts and accessories businesses to enhance Brunswick’s marine portfolio value. With the Proposed Spin-off of our Fitness business and the initiatives discussed above, we believe we are creating a company that is more focused, competitive, resilient and positioned for strong growth.

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Recent Developments

Acquisition of Power Products’ Global Marine Business

As previously disclosed in the Current Report on Form 8-K filed by the Company with the SEC on July 3, 2018 (the “July 3 Current Report”), the Company entered into an agreement, effective on June 28, 2018, to acquire the Global Marine Business (the “Global Marine Business”) of Power Products Holdings, LLC (“Power Products”). On August 9, 2018 (the “Closing Date”), the Company completed the Acquisition. Prior to the closing of the Acquisition, Power Products consummated a reorganization such that the Company only acquired the Global Marine Business. The Company paid a purchase price of $910 million in cash to the sellers and acquired Power Products on a cash-free, debt-free basis, subject to customary post-closing adjustments.

The foregoing description of the Acquisition is not complete and is qualified in its entirety by reference to the Agreement and Plan of Merger (the “Merger Agreement”), by and among the Company, Power Products and certain other parties thereto, which is filed as Exhibit 2.1 to the July 3 Current Report and is incorporated herein by reference.

Revolving Credit Agreement

On September 26, 2018, the Company entered into an Amended and Restated Credit Agreement (the “Revolving Credit Agreement”) with certain wholly-owned subsidiaries of the Company as subsidiary borrowers and lenders as parties, and JPMorgan Chase Bank, N.A. (“JPMorgan”), as administrative agent. The Revolving Credit Agreement amended and restated the Company’s prior 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 and as further amended as of July 13, 2018 (the “Prior Credit Agreement”). The Revolving Credit Agreement provides for increased revolving commitments to $400.0 million, with the capacity to add up to $100.0 million of additional revolving commitments, and amends the Prior Credit Agreement in certain respects, including, among other things, extending the maturity date to September 26, 2023, with up to two additional one-year extensions available at any time, subject to lender approval, modifying certain representations and warranties, affirmative covenants and negative covenants to reflect the pre-approved amendments set forth in Schedule 10.02 (the “Approved Amendments”) to the Company’s existing Term Loan Credit Agreement (as defined below) and removing certain restrictions and other provisions from the Prior Credit Agreement to reflect the Company’s current investment grade rating.

The foregoing description of the Revolving Credit Agreement is not compete and is qualified in its entirety by reference to the Revolving Credit Agreement, which is filed as Exhibit 10.1 to the Current Report on Form 8-K filed by the Company with the SEC on September 28, 2018, and is incorporated herein by reference.

Term Loan Facilities

On August 7, 2018, the Company entered into a Term Loan Credit Agreement (as amended by the Amendment (as defined below), the “Term Loan Credit Agreement”), among the Company, the lenders party thereto and JPMorgan, as administrative agent. Pursuant to the Term Loan Credit Agreement, the Company borrowed from the lenders on the Closing Date term loans in an aggregate principal amount of $800.0 million (the “Term Loans”), consisting of (a) a $300.0 million 364-day tranche (the “364-Day Facility”), (b) a $150.0 million 3-year tranche (the “3-Year Facility”) and (c) a $350.0 million 5-year tranche (the “5-Year Facility” and, together with the 364-Day Facility and the 3-Year Facility, the “Term Loan Facilities”). The proceeds of the Term Loans were used by the Company to finance in part the Acquisition, including repayment of certain outstanding debt of Power Products under its existing credit facilities and payment of fees and expenses in connection with the foregoing.

The Term Loans will mature on the earlier to occur of (a) (i) in the case of the 364-Day Facility, the date that is 364 days after the Closing Date, (ii) in the case of the 3-Year Facility, the date that is three years after the Closing Date, and (iii) in the case of the 5-Year Facility, the date that is five years after the Closing Date, and (b) the date on which the maturity of the Term Loans is accelerated in accordance with the terms of the Term Loan Credit Agreement.

On September 26, 2018, the Company entered into the First Amendment (the “Amendment”) to the Term Loan Credit Agreement with JPMorgan, as administrative agent. The Amendment effectuated the Approved Amendments to conform to the modifications of the corresponding provisions of the Revolving Credit Agreement and required the sole consent of JPMorgan, as administrative agent.

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The foregoing description of the Term Loan Credit Agreement is not compete and is qualified in its entirety by reference to the Term Loan Credit Agreement, which is filed as Exhibit 10.1 to the Current Report on Form 8-K filed by the Company with the SEC on August 9, 2018, and as amended by the Amendment, filed as Exhibit 10.2 to the Current Report on Form 8-K filed by the Company with the SEC on September 28, 2018, and each is incorporated herein by reference.

We intend to use the net proceeds of this offering, together with cash on hand, to prepay $175.0 million of the 364-Day Facility under the Term Loan Facilities.

Proposed Spin-off

On March 1, 2018, Brunswick announced that its board of directors authorized proceeding with a spin-off of its Fitness business to its shareholders (the “Proposed Spin-off”). The Fitness business currently is one of Brunswick’s three reportable segments. Following completion of the Proposed Spin-off, the Fitness business would be an independent, standalone, publicly traded company which we refer to in this prospectus supplement as “FitnessCo”. The Proposed Spin-off is anticipated to be tax-free to Brunswick shareholders and is currently expected to be completed in the first quarter of 2019.

Although Brunswick intends to complete the Proposed Spin-off, Brunswick is not party to any binding agreement to complete the Proposed Spin-off, and the Proposed Spin-off is expected to be subject to numerous conditions, some of which are outside of Brunswick’s control. These include finalizing the assets and liabilities that would be contributed to FitnessCo and those that would be retained by Brunswick, the effectiveness of a Form 10 registration statement to be filed with the SEC, the receipt of a written opinion of Cravath, Swaine and Moore LLP, counsel to Brunswick, to the effect that the Distribution (as defined in “Proposed Spin-off”) will qualify for non-recognition of gain and loss under Section 355 of the Code, the receipt of a favorable private letter ruling (the “IRS Ruling”) from the U.S. Internal Revenue Service (the “IRS”) regarding certain U.S. federal income tax consequences of the Proposed Spin-off that continues to be effective and valid, the approval of the listing of FitnessCo’s common stock on a national securities exchange, the ability of FitnessCo to obtain financing on acceptable terms, final approval from Brunswick’s board of directors and other customary conditions. Brunswick may otherwise elect to dispose of all or a portion of its Fitness business in one or more alternate transactions. No assurance can be provided as to whether or when the Proposed Spin-off or any alternate transaction will occur.

Brunswick anticipates that, in connection with the Proposed Spin-off, FitnessCo will incur indebtedness and, immediately prior to the Proposed Spin-off, pay a dividend to Brunswick. The amount of any such dividend will depend upon FitnessCo’s borrowing capacity, which, in turn, will depend upon its historic and anticipated business, financial performance and liquidity as well as market conditions, credit ratings and other factors, some of which are outside our control. Brunswick may retain up to 19.9% of the FitnessCo common stock. Because the market value of FitnessCo’s common stock will be determined only after the completion of the Proposed Spin-off, the value of such stock to be retained by Brunswick is uncertain. Brunswick intends to use the cash distributed to it by FitnessCo from the dividend for one or all of the following: to reduce its indebtedness, fund pension obligations or return capital to shareholders, and Brunswick intends to use the cash proceeds of the disposition of any retained FitnessCo shares for general corporate purposes. If Brunswick receives a smaller cash distribution than anticipated from FitnessCo or the value of the retained FitnessCo shares is less than Brunswick anticipates, Brunswick’s ability to reduce its indebtedness and other liabilities, fund pension obligations or return capital to shareholders could be reduced. See “Risk Factors—Risks Relating to the Proposed Spin-off”.

Historically, Brunswick has benefited from its ownership of the Fitness business. Prospective investors are cautioned to carefully consider the impact of the Proposed Spin-off on Brunswick prior to making any investment in the Notes offered hereby.

All of the statements in this prospectus supplement regarding the Proposed Spin-off and any potential alternate transactions with respect to the Fitness business are forward-looking statements as described under “Cautionary Statement Concerning Forward Looking Statements”. Such statements are based on Brunswick’s current expectations and by their nature address matters that are uncertain. Such statements are not guarantees of future potential events and involve risks and uncertainties that may cause actual events with respect to the Fitness business to differ materially from expectations as of the date of this prospectus supplement. See “Proposed Spin-off” and “Risk Factors—Risks Relating to the Proposed Spin-off” for additional information related to the Proposed Spin-off.

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Risk Factors

Investment in the Notes involves risks. You should carefully consider the information under “Risk Factors”, the information under the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2017, any subsequent Quarterly Reports on Form 10-Q and all other information in this prospectus and the documents incorporated by reference herein.

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The Offering

The following is a brief summary of some of the terms of this offering. For a more complete description of the terms of the Notes, you should carefully read the section of this prospectus supplement entitled “Description of the Notes”.

Issuer
Brunswick Corporation
Notes offered
$175,000,000 aggregate principal amount of 6.500% Senior Notes due 2048 (issued in minimum denominations of $25.00 and integral multiples of $25.00 in excess thereof). We have granted the underwriters the option to purchase, exercisable during the 30-day period beginning on the date of this prospectus supplement, up to an additional $26,250,000 aggregate principal amount of the Notes.
Issue Date
October 3, 2018.
Maturity
October 15, 2048.
Interest payment dates
The Notes will bear interest from the date of original issue until maturity at a rate of 6.500% per year, payable quarterly in arrears on January 15, April 15, July 15 and October 15, commencing on January 15, 2019. If an interest payment date falls on a day other than a business day, the applicable interest payment will be made on the next business day, and no additional interest will accrue as a result of such delayed payment.
Ranking
The Notes:
will be our unsecured unsubordinated obligations;
will rank equally and ratably with all our existing and future unsecured unsubordinated indebtedness;
will be senior to any of our future subordinated indebtedness;
will be effectively subordinated to any of our secured indebtedness to the extent of the assets securing such indebtedness; and
will be structurally subordinated to all existing and future indebtedness and other liabilities of our subsidiaries, including trade payables and any borrowings by a subsidiary under the Credit Facilities (as defined below).

As of June 30, 2018, on a pro forma as adjusted basis, giving effect to the Acquisition, the Credit Facilities and the issuance of the Notes, assuming we use the net proceeds of this offering, together with cash on hand, to prepay $175.0 million of the 364-Day Facility under the Term Loan Facilities, and based on the assumptions described under “Unaudited Pro Forma Condensed Combined Financial Information” and “Capitalization”:

we would have had outstanding approximately $1,222.9 million of indebtedness, including $18.9 million of secured indebtedness;
we would have had no borrowings under the Revolving Credit Agreement (as defined and described in “Summary—Recent Developments” and, together with the Term Loan Facilities, the “Credit Facilities”), and we would

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have had $396.0 million of availability under the Revolving Credit Agreement (after giving effect to $4.0 million of outstanding letters of credit); and

our subsidiaries would have had outstanding $4.1 million of indebtedness and other liabilities.

The pro forma as adjusted data does not give effect to the Proposed Spin-off.

Although our obligations under the Credit Facilities currently are not guaranteed by any of our subsidiaries, if any of our subsidiaries guarantees specified indebtedness, certain of our domestic subsidiaries may be required to guarantee our obligations under the Term Loan Facilities. In addition, certain of our subsidiaries are permitted to borrow directly under the Revolving Facility. The obligations of any such subsidiary borrowing would be guaranteed by us and any such subsidiary borrowing would be structurally senior to the Notes.

Optional redemption
We may redeem the Notes in whole or in part on and after October 15, 2023 at a redemption price equal to 100% of the principal amount to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
Change of control triggering
event
If we experience a change of control triggering event, as described in this prospectus supplement, each holder of the Notes may require us to repurchase some or all of its Notes at a price equal to 101% of their principal amount, plus accrued and unpaid interest to, but excluding, the repurchase date. The disposition of our Fitness business, including pursuant to the Proposed Spin-off, will not constitute a change of control under the Notes. See “Description of the Notes—Certain Covenants—Offer to Repurchase Notes Upon Change of Control Triggering Event”.
Covenants
The indenture governing the Notes contains covenants that, among other things, limit our ability and the ability of our restricted subsidiaries to:
incur debt secured by liens on Principal Property or shares of capital stock of restricted subsidiaries;
enter into sale and leaseback transactions in respect of Principal Property; or
merge or consolidate with another entity or sell, transfer or lease our property and assets substantially as an entirety to another person.

These covenants are subject to important exceptions and qualifications. See “Description of the Notes” in this prospectus supplement.

Use of proceeds
We estimate that our net proceeds from this offering, after deducting underwriting discounts, but before deducting expenses and fees, will be approximately $169.5 million (or approximately $194.9 million if the underwriters exercise their option to purchase additional Notes in full). We intend to use the net proceeds of this offering, together with cash on hand, to prepay $175.0 million of the 364-Day Facility under the Term Loan Facilities (as described

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under “—Recent Developments”, “Capitalization” and “Description of Other Indebtedness”) and, to the extent of any remaining proceeds, consistent with our previously disclosed capital strategy, for general corporate purposes. See “Use of Proceeds”.

Conflicts of Interest
As described in “Use of Proceeds”, we expect to use the net proceeds from this offering, together with cash on hand, to prepay $175.0 million of the 364-Day Facility (and may prepay additional amounts outstanding thereunder if the underwriters exercise their option to purchase additional Notes). Certain affiliates of the underwriters are lenders under our 364-Day Facility. Because affiliates of Morgan Stanley & Co. LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Wells Fargo Securities LLC and J.P. Morgan Securities LLC will receive 5% or more of the net proceeds of this offering due to the repayment of borrowings under our 364-Day Facility, Morgan Stanley & Co. LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Wells Fargo Securities, LLC and J.P. Morgan Securities LLC are deemed to have a conflict of interest within the meaning of FINRA Rule 5121. Accordingly, this offering will be conducted in accordance with Rule 5121. The appointment of a “qualified independent underwriter” is not required in connection with this offering as the Notes will be rated by one or more of the nationally recognized statistical rating organizations in one of the four highest generic rating categories. Pursuant to FINRA Rule 5121, Morgan Stanley & Co. LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Wells Fargo Securities, LLC and J.P. Morgan Securities LLC will not confirm any sales to any account over which they exercise discretionary authority without the specific written approval of the account holder.
Listing
We intend to apply for the listing of the Notes on the NYSE. If approved for listing, trading on NYSE is expected to commence within 30 days after the Notes are first issued.
Risk Factors
Investment in the Notes involves certain risks. You should carefully consider the information in the section entitled “Risk Factors” and all other information included or incorporated by reference in this prospectus supplement before investing in the Notes.
Form of Notes
The Notes will be represented by global securities that will be deposited with or on behalf of, and registered in the name of, The Depository Trust Company (“DTC”) or its nominee. Except in limited circumstances, you will not receive certificates for the Notes. Beneficial interests in the Notes will be represented through book-entry accounts of financial institutions acting on behalf of beneficial owners as direct and indirect participants in DTC. Investors may elect to hold interests in the Notes through either DTC, if they are a participant, or indirectly through organizations which are participants in DTC.
Governing Law
The Notes and the indenture under which the Notes are being issued will be governed by and construed in accordance with the laws of the State of New York.
Trustee
U.S. Bank National Association

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Summary Consolidated Financial Information

We have provided the following summary historical financial information for your reference. We have derived the summary financial information for each of the years ended December 31, 2015 through December 31, 2017 from our audited consolidated financial statements incorporated by reference into this prospectus, and we have derived the summary financial information for each of the six months ended June 30, 2018 and July 1, 2017 from our unaudited financial statements incorporated by reference into this prospectus. The summary financial information for each of the six months ended June 30, 2018 and July 1, 2017 includes all adjustments (consisting of normal recurring items) which are, in our opinion, necessary for a fair presentation of our financial position as of such dates and results of operations for such periods. The results of operations for the six months ended June 30, 2018 are not necessarily indicative of the results for our full fiscal year ending December 31, 2018.

The summary unaudited pro forma condensed combined financial information for the six months ended June 30, 2018 and the fiscal year ended December 31, 2017 give effect to (i) the Acquisition and our related borrowings under the Term Loan Facilities as if each had been consummated on January 1, 2017, the beginning of Brunswick’s most recently completed fiscal year and (ii) the assumptions and adjustments described in the accompanying notes to the unaudited pro forma condensed combined financial statements. The unaudited pro forma condensed combined balance sheet data gives effect to these events, assumptions and adjustments as if they occurred as of June 30, 2018, our latest balance sheet date. The assumptions used and pro forma adjustments derived from such assumptions are based on currently available information and we believe such assumptions are reasonable under the circumstances. See “Unaudited Pro Forma Condensed Combined Financial Statements”.

The summary unaudited pro forma condensed combined financial information is not necessarily indicative of our results of operations or financial condition had the Acquisition and our related borrowings under the Term Loan Facilities been completed on the dates assumed. Such information may not reflect the results of operations or financial condition that would have resulted had Brunswick owned and operated Power Products during such periods presented. In addition, such information may not necessarily be indicative of our future results of operations or financial condition. The unaudited pro forma condensed combined financial information does not give effect to the potential impact of anticipated synergies, operating efficiencies or cost savings that may result from the Acquisition or of any integration costs. The summary unaudited pro forma condensed combined financial information does not give effect to the consummation of this offering or the Proposed Spin-off.

This summary financial information should be read in conjunction with the sections entitled “Ratios of Earnings to Fixed Charges” and “Unaudited Pro Forma Condensed Combined Financial Information” contained in this prospectus supplement and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2017, and our quarterly reports on Form 10-Q for the quarters ended March 31, 2018 and June 30, 2018, which are incorporated by reference in this prospectus. See “Where You Can Find More Information” in the accompanying prospectus.

 
Six Months Ended
Year Ended December 31,
 
Pro Forma
Combined
June 30,
2018
June 30,
2018
July 1,
2017
Pro Forma
Combined
2017
2017
2016
2015
($ in millions)
 
 
 
 
 
 
 
Results of Operations Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
$
2,730.3
 
$
2,612.3
 
$
2,512.3
 
$
5,048.9
 
$
4,510.0
 
$
4,153.9
 
$
3,780.2
 
Operating earnings
 
226.6
 
 
211.8
 
 
262.5
 
 
316.6
 
 
354.9
 
 
406.9
 
 
331.3
 
Earnings before interest and income taxes
 
226.3
 
 
211.7
 
 
265.8
 
 
320.7
 
 
367.1
 
 
414.4
 
 
340.3
 
Earnings before income taxes
 
202.9
 
 
198.1
 
 
253.4
 
 
266.1
 
 
343.3
 
 
389.0
 
 
314.8
 
Net earnings from continuing operations(1)
 
 
 
 
 
 
 
138.5
 
 
187.3
 
 
272.6
 
 
230.9
 
Earnings / (Loss) from discontinued operations, net of tax
 
 
 
 
 
 
 
 
 
(40.9
)
 
3.4
 
 
10.5
 
Net earnings
 
158.2
 
 
151.9
 
 
184.3
 
 
138.5
 
 
146.4
 
 
276.0
 
 
241.4
 

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Six Months Ended
Year Ended December 31,
 
Pro Forma
Combined
June 30,
2018
June 30,
2018
July 1,
2017
2017
2016
2015
($ in millions)
 
 
 
 
 
 
Balance Sheet Data (end of period):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total cash and short-term investments in marketable securities
$
325.4
 
$
446.1
 
$
448.7
 
$
459.0
 
$
469.4
 
 
681.5
 
Total assets
 
4,303.9
 
 
3,421.0
 
 
3,383.7
 
 
3,358.2
 
 
3,284.7
 
 
3,152.5
 
Short-term debt
 
303.6
 
 
4.7
 
 
5.8
 
 
5.6
 
 
5.6
 
 
6.0
 
Long-term debt
 
926.7
 
 
429.0
 
 
438.2
 
 
431.8
 
 
433.8
 
 
442.5
 
Total liabilities
 
2,815.8
 
 
1,920.0
 
 
1,835.9
 
 
1,875.3
 
 
1,844.6
 
 
1,871.2
 
Shareholders’ equity
 
1,488.1
 
 
1,501.0
 
 
1,547.8
 
 
1,482.9
 
 
1,440.1
 
 
1,281.3
 
Total capitalization(2)
 
2,414.8
 
 
1,930.0
 
 
1,986.0
 
 
1,914.7
 
 
1,873.9
 
 
1,723.8
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ratios of earnings to fixed charges(3)
 
7.1
x
 
9.6
x
 
 
 
 
8.7
x
 
10.1
x
 
9.0
x
(1) Pro forma combined net earnings from continued operations for the year ended December 31, 2017 includes an adjustment to reflect $(40.9) million for the Sea Ray business discontinued operations reversal. See “Unaudited Pro Forma Condensed Combined Financial Information”.
(2) We define total capitalization as the sum of long-term debt and shareholders’ equity.
(3) For more information about the calculation of these ratios of earnings to fixed charges, see “Ratios of Earnings to Fixed Charges” in this prospectus supplement.

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RISK FACTORS

An investment in the Notes is subject to various risks. In addition to the other information contained elsewhere or incorporated by reference in this prospectus, you should carefully consider the following risk factors, as well as the “Risk Factors” section in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and any subsequent Quarterly Reports on Form 10-Q before you decide to invest in the Notes.

Risks Related to the Notes

Our indebtedness may impair our financial condition and prevent us from fulfilling our obligations under the Notes and our other debt instruments.

As of June 30, 2018, on a pro forma as adjusted basis based on the assumptions described under “Unaudited Pro Forma Condensed Combined Financial Information” and “Capitalization”, our total outstanding debt, excluding unused commitments made by lenders, would have been approximately $1,222.9 million, of which amount approximately $18.9 million would have been secured. In addition, we would have had $396.0 million of availability under our Credit Facilities (after giving effect to outstanding letters of credit and assuming we use the net proceeds of this offering, together with cash on hand, to prepay $175.0 million of the 364-Day Facility under the Term Loan Facilities). See “Capitalization”.

Our indebtedness could have important consequences to you, including:

making it more difficult for us to satisfy our obligations with respect to the Notes;
limiting our ability to execute our growth strategy, pursue acquisitions, fund capital expenditures and working capital, meet debt service requirements and other purposes;
requiring us to dedicate a substantial portion of our cash flow from operations to pay interest on our debt, which would reduce availability of our cash flow to fund working capital, capital expenditures, acquisitions, execution of our strategy and other general corporate purposes;
making us more vulnerable to adverse changes in general economic, industry and government regulations and in our business by limiting our flexibility in planning for, and making it more difficult for us to react quickly to, changing conditions;
placing us at a competitive disadvantage compared with those of our competitors that have less debt; and
exposing us to risks inherent in interest rate fluctuations because some of our borrowings are at variable rates of interest, which could result in higher interest expense in the event of increases in market interest rates.

In addition, we may not be able to generate sufficient cash flow from our operations to repay our indebtedness when it becomes due and to meet our other cash needs. If we are not able to pay our debts as they become due, we will be required to pursue one or more alternative strategies, such as refinancing or restructuring our indebtedness, selling assets or selling additional debt or equity securities. We may not be able to refinance our debt or sell additional debt or equity securities or our assets on favorable terms, if at all, and if we must sell our assets, it may negatively affect our ability to generate revenues.

There are limited covenants and protections in the Indenture.

Other than the covenants described under “Description of the Notes — Certain Covenants”, the Indenture does not contain any provisions that would limit our ability to incur secured indebtedness or undertake corporate restructurings or other activities that could significantly increase our leverage. In addition, the Indenture does not limit our ability to incur additional unsecured indebtedness, pay dividends, make distributions or repurchase shares of our common stock. The Indenture also does not limit our ability to incur debt that is secured by assets other than our Principal Properties or capital stock of our restricted subsidiaries. Any such transaction could adversely affect our ability to make required principal and interest payments on our indebtedness, including the Notes.

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The Notes will be effectively subordinated to any secured indebtedness of our Company to the extent of the value of the property securing that indebtedness.

The Notes will not be secured by any of our assets. As a result, the Notes will be effectively subordinated to any secured debt we may incur in the future. The effect of this subordination is that upon a default in payment on, or the acceleration of, any of our secured indebtedness, or in the event of bankruptcy, insolvency, liquidation, dissolution or reorganization of our Company, the proceeds from the sale of assets securing our secured indebtedness will be available to pay obligations on the Notes only after any secured debt has been paid in full. As a result, the holders of the Notes may receive less, ratably, than the holders of secured debt in the event of our bankruptcy, insolvency, liquidation, dissolution or reorganization.

The Notes will not be guaranteed by any of our subsidiaries and will be structurally subordinated to the indebtedness and other liabilities of our subsidiaries and to any of our debt that our subsidiaries guarantee.

The Notes will be our obligations exclusively and will not be guaranteed by any of our subsidiaries. Because we conduct some operations through subsidiaries, our cash flow and our consequent ability to service our debt, including the Notes, are dependent in part on the earnings of our subsidiaries. Our subsidiaries are separate legal entities and have no obligation to pay any amounts under the Notes or make any amounts available for such payments.

As a result, the Notes will be structurally subordinated to all existing and future indebtedness and other liabilities of our subsidiaries. In the event of a bankruptcy, liquidation or similar proceedings involving any of our subsidiaries, the creditors of that subsidiary will generally be entitled to payment of their claims from the assets of that subsidiary before any assets are made available for distribution to us, except to the extent that we may also have a claim as a creditor of that subsidiary, in which case our claims would still be subordinated to any security interests in, or mortgages on, the assets of that subsidiary and would be subordinate to any debt of that subsidiary that is senior to that held by us.

Although our obligations under the Credit Facilities currently are not guaranteed by any of our subsidiaries, if any of our subsidiaries guarantees specified indebtedness, certain of our domestic subsidiaries may be required to guarantee our obligations under the Term Loan Facilities. In addition, certain of our subsidiaries are permitted to borrow directly under the Revolving Facility. The obligations of any such subsidiary borrowing would be guaranteed by us, and any such subsidiary borrowing would be structurally senior to the Notes.

The Notes will also be effectively subordinated to all of our future debt that is guaranteed by our subsidiaries to the extent of those guarantees. In the event of our bankruptcy, liquidation or similar proceeding, the holders of any such guaranteed debt would be entitled to require the subsidiaries providing a guarantee of that debt to pay such debt, while holders of the Notes would not have any similar rights against applicable subsidiaries.

As of June 30, 2018, our subsidiaries had approximately $4.1 million in aggregate principal amount of indebtedness and other liabilities.

Restrictions in our Credit Facilities may limit our activities.

Our Credit Facilities contain restrictive covenants, including covenants requiring us to maintain a specified interest coverage ratio and leverage ratio. Our ability to meet these financial ratios can be affected by events beyond our control, and these covenants may restrict our ability to engage in transactions that would otherwise be in our best interests. See “Description of Other Indebtedness”.

A breach of the covenants or other terms of our Credit Facilities could result in an event of default under either or both Credit Facilities. Such an event of default may allow the lenders under the applicable Credit Facility to accelerate the debt outstanding thereunder and may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies. In addition, an event of default under any Credit Facility would permit the lenders under such facility to terminate all commitments to extend further credit under such facility. In the event that our lenders accelerate the repayment of our borrowings under the Credit Facilities, we and our subsidiaries may not have sufficient assets to repay that indebtedness.

We may choose to redeem the Notes prior to maturity.

We may redeem the Notes in whole or in part on and after October 15, 2023 at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding,

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the redemption date. See “Description of the Notes—Optional Redemption”. If prevailing interest rates are lower at the time of redemption, you may not be able to reinvest the redemption proceeds in a comparable security at an interest rate as high as the interest rate of the Notes being redeemed.

We may not be able to repurchase the Notes upon a change of control triggering event, which could result in a default under the Notes.

Unless we exercise our right to redeem the Notes, we will be required to offer to repurchase the Notes upon the occurrence of a change of control triggering event, as described in this prospectus supplement. If we experience a change of control triggering event, we may not have sufficient financial resources available to satisfy our obligations to repurchase the Notes. Our failure to purchase the Notes as required under the indenture governing the Notes would result in a default under the indenture, which could have material adverse consequences for us and you. Such an event of default may cause the acceleration of our other debt, including debt under our Credit Facilities. Our Credit Facilities contain and future debt also may contain restrictions on repayment requirements with respect to specified events or transactions that constitute a change of control under the Indenture. See “Description of the Notes—Certain Covenants—Offer to Repurchase Notes Upon Change of Control Triggering Event”.

The Notes do not have an established trading market, which may negatively affect their market value and your ability to transfer or sell the Notes.

The Notes are a new issuance of securities with no established trading market. We intend to list the Notes on the NYSE, but the NYSE may not accept the Notes for listing. Even if the Notes are approved for listing by the NYSE, an active trading market on the NYSE for the Notes may not develop or, even if it develops, may not last, in which case the trading price of the Notes could be adversely affected and your ability to transfer the Notes will be limited. If an active trading market does develop on the NYSE, the Notes may trade at prices lower than the offering price. The trading price of the Notes will depend on many factors, including:

prevailing interest rates;
the market for similar securities;
general economic and financial market conditions;
our issuance of debt or preferred equity securities; and
our financial condition, results of operations and prospects.

We have been advised by the underwriters that they intend to make a market in the Notes pending any listing of the Notes on the NYSE, but they are not obligated to do so and may discontinue market-making at any time without notice.

A ratings decline could adversely affect the value of the Notes.

We expect the Notes to be rated by one or more nationally recognized statistical rating organizations. The ratings of the Notes will primarily reflect a rating agency’s view of our financial strength and prospects and will change in accordance with the assessment by such ratings agency of our financial strength and prospects. A rating is not a recommendation to purchase, sell or hold any particular security, including the Notes. Ratings do not comment as to market price or suitability for a particular investor. In addition, ratings at any time may be lowered or withdrawn in their entirety. The ratings of the Notes may not reflect the potential impact of all risks related to any trading market for, or trading value of, the Notes. Our ratings may be downgraded as a result of any future changes in Brunswick’s business, including any failure to achieve the anticipated benefits of the Proposed Spin-off. Actual or anticipated changes or downgrades in our credit ratings, including any announcement that our ratings are under further review for a downgrade, could affect the market value of the Notes and increase our corporate borrowing costs, in particular in the event that the Notes are rated below investment grade by any ratings agency.

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Risks Related to the Acquisition

We may not realize all of the anticipated benefits of the Acquisition or those benefits may take longer to realize than expected. We may also encounter significant unexpected difficulties in integrating Power Products.

Our ability to realize the anticipated benefits of the Acquisition will depend, to a large extent, on our ability to integrate Power Products. The integration of this business with our business may not go as planned. As a result, we may be required to devote significant management attention and resources to integrating Power Products’ business practices and operations with our existing business practices and operations. The integration process may disrupt the businesses and, if implemented ineffectively or if impacted by unforeseen negative economic or market conditions or other factors, we may not realize the full anticipated benefits of the Acquisition. Our failure to meet the challenges involved in integrating Power Products or to realize the anticipated benefits of the Acquisition could cause an interruption of, or a loss of momentum in, our activities and could adversely affect our results of operations.

Further, we will need to integrate Power Products into our financial reporting and internal controls framework. This integration may place significant demands on our management, administrative and operational resources, including accounting systems and resources. We expect to incur additional expenses for the purpose of addressing these integration requirements, and those expenses may be significant. Any failure by us to achieve and maintain effective financial reporting and internal controls following the Acquisition could have a material adverse effect on our business, financial condition or results of operations.

In addition, the overall integration of the businesses may result in material unanticipated problems, expenses, liabilities, competitive responses, loss of customer relationships, and diversion of management’s attention. The difficulties of combining the operations of the companies include, among others:

the diversion of management’s attention to integration matters;
the possibility that the expected synergies and value creation from the Acquisition will not be realized or will not be realized within the expected time period;
difficulties entering new markets or manufacturing in new geographies where we have no or limited direct prior experience;
difficulties in the integration of operations and systems;
difficulties in the assimilation of employees;
difficulties in managing the expanded operations of a larger and more complex company;
disruptions from the Acquisition making it more difficult to maintain business and operational relationships; and
challenges in maintaining existing, and establishing new, business relationships.

Many of these factors will be outside of our control, and any one of them could result in increased costs, decreases in the amount of expected revenues and diversion of management’s time and energy, which could materially impact the business, financial condition and results of operations of the combined company. In addition, even if the operations of our business and Power Products are integrated successfully, we may not realize the full benefits of the Acquisition, including the synergies, cost savings or sales or growth opportunities that we expect. These benefits may not be achieved within the anticipated time frame, or at all. Furthermore, additional unanticipated costs may be incurred in the integration of the businesses. All of these factors could decrease or delay the expected benefits of the Acquisition and negatively impact us. As a result, we cannot be certain that the combination of our and Power Products’ operations will result in the realization of the full benefits anticipated from the Acquisition.

Our actual financial position and results of operations may differ materially from the Unaudited Pro Forma Condensed Combined Financial Information included and incorporated by reference in this prospectus supplement.

The Unaudited Pro Forma Condensed Combined Financial Information (as defined and described in “Unaudited Pro Forma Condensed Combined Financial Information”) included and incorporated by reference in this prospectus supplement is presented for illustrative purposes only and is not necessarily indicative of what

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our actual financial position or results of operations would have been had the Acquisition, this offering and the Term Loan Facilities been completed on the dates indicated. The Unaudited Pro Forma Condensed Combined Financial Information has been derived from the audited and unaudited historical financial statements of Brunswick and Power Products and reflects assumptions and adjustments that are based upon preliminary estimates and our successful consummation of this offering. The assets and liabilities of Power Products have been measured at fair value based on various preliminary estimates using assumptions that our management believes are reasonable utilizing information currently available. The process for estimating the fair value of acquired assets and assumed liabilities requires the use of judgment in determining the appropriate assumptions and estimates. These estimates may be revised as additional information becomes available and as additional analyses are performed. Accordingly, the final acquisition accounting adjustments may differ materially from the pro forma adjustments reflected herein. In addition, the assumptions used in preparing the Unaudited Pro Forma Condensed Combined Financial Information may not prove to be accurate, and other factors may adversely affect our financial condition or results of operations. As a result, our actual consolidated results of operations or financial position following the Acquisition may be different, possibly materially, from the Unaudited Pro Forma Condensed Combined Financial Information included in this prospectus supplement. See “Unaudited Pro Forma Condensed Combined Financial Information”.

Risks Related to the Proposed Spin-off

There can be no assurance that the spin-off of our Fitness business will occur following the offering, or at all, and until it occurs, the terms of the Proposed Spin-off may change.

Although we intend to complete the spin-off of our Fitness business by way of the Proposed Spin-off, there can be no assurance that the Proposed Spin-off will occur within our proposed time frame, or at all, and the spin-off of our Fitness business may be effected at a different time or in a different manner. The Proposed Spin-off will require the creation of a new publicly traded FitnessCo with a capital structure appropriate for that company, the creation and staffing of operational and corporate functional groups and the creation of transition services arrangements between us and FitnessCo. The Proposed Spin-off may result in additional and unforeseen expenses to Brunswick.

The Proposed Spin-off is expected to be subject to numerous conditions, some of which are outside of our control. These include finalizing the assets and liabilities that would be contributed to FitnessCo and those that would be retained by us, the effectiveness of a Form 10 registration statement to be filed with the SEC, the receipt of a written opinion of Cravath, Swaine and Moore LLP, counsel to Brunswick, to the effect that the Distribution (as defined in “Proposed Spin-off”) will qualify for non-recognition of gain and loss under Section 355 of the Code, the receipt of an IRS Ruling regarding certain U.S. federal income tax consequences of the Proposed Spin-off that continues to be effective and valid, the approval of the listing of FitnessCo’s common stock on a national securities exchange, the ability of FitnessCo to obtain financing on acceptable terms, final approval from our board of directors and other customary conditions. There can be no assurance that the Fitness business will be able to obtain any such consents and approvals or financing on the expected timeline of the Proposed Spin-off, or at all. We may elect to dispose of all or a portion of our Fitness business in one or more alternate transactions, or the separation of the Fitness business may not occur at all. Until the Proposed Spin-off occurs, we will have the discretion to determine and change the terms of the Proposed Spin-off or to determine not to proceed with the Proposed Spin-off.

The Proposed Spin-off could result in significant tax liability to Brunswick.

Completion of the Proposed Spin-off is conditioned on Brunswick’s receipt of a written opinion of Cravath, Swaine & Moore LLP to the effect that the Distribution (as defined in “Proposed Spin-off”) will qualify for non-recognition of gain and loss under Section 355 of the Code and the receipt and continuing effectiveness and validity of the IRS Ruling.

The opinion of counsel will not address any U.S. state or local or foreign tax consequences of the Proposed Spin-off. The opinion will assume that the Proposed Spin-off will be completed according to the terms of the Separation and Distribution Agreement (as described in “Proposed Spin-off”) and will rely on the facts as stated in the Separation and Distribution Agreement, the Tax Matters Agreement, the other ancillary agreements (each as described in the “Proposed Spin-off”), the Form 10 registration statement and other documents, as well as the continuing effectiveness and validity of the IRS Ruling. In addition, the opinion will be based on certain

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representations as to factual matters from, and certain covenants by, Brunswick and us. The opinion cannot be relied on if any of the assumptions, representations or covenants is incorrect, incomplete or inaccurate or is violated in any material respect.

Brunswick has received the IRS Ruling. The IRS Ruling relies on certain facts, assumptions, representations and undertakings from Brunswick and FitnessCo regarding the past and future conduct of Brunswick’s and FitnessCo’s businesses and other matters. If any of these facts, assumptions, representations or undertakings is incorrect or not otherwise satisfied, Brunswick may not be able to rely on the IRS Ruling. In addition, the IRS Ruling is not be a comprehensive ruling from the IRS regarding all aspects of the U.S. federal income tax consequences of the transactions. Accordingly, notwithstanding the opinion of counsel and the IRS Ruling, there can be no assurance that the IRS will not assert, or that a court would not sustain, a contrary position.

If the Distribution were determined not to qualify for non-recognition of gain and loss for U.S. federal income tax purposes, Brunswick could be subject to tax. This tax liability could be significant and adversely affect our business, financial condition and results of operations.

FitnessCo could have an indemnification obligation to Brunswick if the Proposed Spin-off were determined not to qualify for non-recognition treatment or for certain liabilities incurred in connection with the Proposed Spin-off or their respective businesses, which FitnessCo may be unable to pay based on its financial performance and creditworthiness.

If it were determined that the Distribution did not qualify for non-recognition of gain and loss under Section 355 of the Code, FitnessCo could, under certain circumstances, be required to indemnify Brunswick for the resulting taxes and related expenses. FitnessCo and Brunswick also expect to indemnify the other and each of the other’s current and former directors, officers and employees, and each of their successors and assigns against certain liabilities incurred in connection with the Proposed Spin-off and their respective businesses.

FitnessCo’s ability to indemnify Brunswick will depend upon its ability to generate cash in the future from operations, financings or asset sales. Brunswick anticipates that the indebtedness FitnessCo expects to incur in connection with the Proposed Spin-off may include covenants imposing operating and financial restrictions on FitnessCo and its subsidiaries. FitnessCo may be unable to indemnify Brunswick because it does not have sufficient cash on hand and is restricted from incurring additional debt or selling certain assets. Any such unpaid indemnification obligation could adversely affect Brunswick’s business, financial condition and results of operations. See “Proposed Spin-off”.

No market for FitnessCo common stock currently exists and an active trading market may not develop or be sustained after the Proposed Spin-off. Following the Proposed Spin-off, FitnessCo’s stock price may fluctuate significantly, and as such, the value of Brunswick’s retained stake in FitnessCo, if any, is uncertain.

Currently, there is no public market for FitnessCo common stock. Though FitnessCo intends to list its common stock on a national securities exchange, an active trading market for its common stock may not develop following the Proposed Spin-off or may not be sustained in the future. The lack of an active market may make it more difficult for shareholders, including ourselves if we elect to retain a stake in FitnessCo, to sell FitnessCo shares and could lead to its share price being depressed or volatile. We cannot predict the prices at which FitnessCo common stock may trade after the Proposed Spin-off. The market price of its common stock may fluctuate widely, depending on many factors. Accordingly, it is uncertain as to when or at what price we may be able to sell any retained shares of FitnessCo common stock.

We cannot predict the amount of the dividend we expect to receive from FitnessCo in connection with the Proposed Spin-off.

Brunswick anticipates that, in connection with the Proposed Spin-off, FitnessCo will incur indebtedness and, immediately prior to the Proposed Spin-off, pay a dividend to Brunswick. The amount of any such dividend will depend upon FitnessCo’s borrowing capacity which, in turn, will depend upon its historic and anticipated business, financial performance and liquidity as well as market conditions, credit ratings and other factors, some of which are outside our control. These and other factors could cause the amount of any such dividend to vary. As such, we cannot predict the amount of the dividend that we expect to receive from FitnessCo in connection with the Proposed Spin-off.

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Brunswick and its stockholders may not realize the potential benefits from the Proposed Spin-off, including the anticipated cash distribution and ability to monetize retained shares of FitnessCo common stock.

Brunswick and its stockholders may not realize the potential benefits expected from the Proposed Spin-Off of our Fitness business following the completion of the offering, or at all. In addition, Brunswick may incur significant costs and adverse effects from the separation of its Fitness business, including diminished diversification of revenue sources, which may increase volatility of results of operations, cash flows and working capital. In connection with the Proposed Spin-off, FitnessCo intends to obtain new debt financing, and Brunswick anticipates that a substantial portion of the proceeds of such financing would be distributed to Brunswick in connection with the Proposed Spin-off. There can be no assurance that the Fitness business would be able to obtain such financing and, as a result, Brunswick may not receive the cash proceeds associated with FitnessCo’s anticipated debt financing.

In addition, until the market has fully analyzed the value of Brunswick after the Proposed Spin-off of our Fitness business, Brunswick securities, including the Notes offered hereby, may experience increased price volatility. In addition, it is possible that the combined market prices of our common stock and the common stock of the new Fitness business immediately after the separation will be less than the market price of shares of our common stock immediately before the separation, which could reduce our access to capital. In addition to the anticipated distribution of cash to us in connection with the Proposed Spin-off, we may retain up to 19.9% of FitnessCo’s common stock. If the market price of the FitnessCo common stock is less than we anticipate, the shares of FitnessCo common stock to be retained by us in the Proposed Spin-off will be less valuable.

We intend to use the cash distributed to us by FitnessCo from the dividend for one or all of the following: to reduce our indebtedness, fund pension obligations or return capital to shareholders, and we intend to use the cash proceeds of the disposition of any retained FitnessCo shares for general corporate purposes. If we receive a smaller cash distribution than anticipated from FitnessCo or the value of the retained FitnessCo shares is less than we anticipate, our ability to reduce our indebtedness and other liabilities, fund pension obligations or return capital to shareholders could be adversely affected, which could result in reduced liquidity and increased volatility in the market value of the Notes.

If we complete the Proposed Spin-off, we will not be able to rely on the earnings, assets or cash flows of our Fitness business for working capital and cash flow requirements, and our ability to service our debt, including the Notes offered hereby, may be adversely affected.

Historically, we have benefited from our ownership of the Fitness business. Following completion of the Proposed Spin-off or any other disposition of the Fitness business, we will not be able to rely on the earnings, assets or cash flow of our Fitness business, and FitnessCo will not provide funds to finance our working capital or other cash requirements. For the year ended December 31, 2017 and the six months ended June 30, 2018, net sales attributable to the Fitness operating segment represented 22.9% and 19.0%, respectively, of our total net sales. For the year ended December 31, 2017 and the six months ended June 30, 2018, operating earnings attributable to the Fitness operating segment represented 18.1% and 11.9%, respectively, of our total operating earnings. As a result of the Proposed Spin-off or any other disposition of the Fitness business, our ability to service our debt, including the Notes offered hereby, may be adversely affected.

Historical financial data for our Fitness business presented in this prospectus is not necessarily representative of results our Fitness business would have achieved as an independent, publicly traded company for the periods presented herein and has not been prepared on the same basis as carve-out financial statements that may be disclosed in connection with the filing of a Form 10 registration statement for the Proposed Spin-off.

Our Fitness business has been operated as an operating segment of Brunswick, and the historical financial information related to the Fitness business included in this prospectus supplement has been derived from our financial statements and accounting records and reflects assumptions and allocations made by us. The historical financial information for the Fitness business presented herein was not prepared on a “carve out” basis and is not necessarily indicative of carve out financial statements that may be disclosed in connection with any filing of a Form 10 registration statement for the Proposed Spin-off. The financial information of the Fitness business, as presented, does not necessarily reflect the results of operations and financial condition the Fitness business would have achieved as an independent, publicly traded company during the periods presented, or those that it will achieve in the future.

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In particular, the historical financial information related to the Fitness business included in this prospectus supplement includes certain allocations and direct charges for costs incurred by Brunswick, such as information technology costs and other costs incurred by its corporate functions. We expect that the FitnessCo “carve out” basis financial statements will include additional allocations of Brunswick’s costs not allocated in the preparation of the segment financial information. Brunswick may not be able to reduce these corporate costs immediately or at all as a result of the Proposed Spin-off, or Brunswick’s corporate allocations and charges to its segments may not fully reflect the costs of operating its remaining businesses following the Proposed Spin-off. You should not assume that the allocations of Brunswick’s costs to the Fitness business or to FitnessCo in the FitnessCo “carve out” basis financial statements that will be included in the Form 10 registration statement can be interpreted to mean that the costs of operating Brunswick’s remaining businesses following the Proposed Spin-off will be reduced by an equivalent amount. See “Proposed Spin-Off—Financial and Other Information About the Fitness Business”. Accordingly, Brunswick’s reported costs or those of its remaining segments may vary following the Proposed Spin-off.

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RATIOS OF EARNINGS TO FIXED CHARGES

The following table sets forth our ratios of earnings to fixed charges(1) for each of the periods indicated.

 
 
Year Ended December 31,
 
Six Months Ended
June 30, 2018
2017
2016
2015
2014
2013
Ratios of Earnings to Fixed Charges
 
9.6x
 
 
8.7x
 
 
10.1x
 
 
9.0x
 
 
8.7x
 
 
5.0x
 
(1) For computation of the ratios of earnings to fixed charges, earnings has been calculated by adding fixed charges, excluding capitalized interest, to earnings from continuing operations before income taxes and dividends received from equity affiliates, then deducting the impairment of equity method investment and undistributed earnings (loss) of affiliates. Fixed charges consist of interest expense, estimated interest portion of rent expense and capitalized interest.

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USE OF PROCEEDS

We estimate that our net proceeds from this offering, after deducting underwriting discounts, but before deducting expenses and fees, will be approximately $169.5 million (or approximately $194.9 million if the underwriters exercise their option to purchase additional Notes in full). We intend to use the net proceeds of this offering, together with cash on hand, to prepay $175.0 million of the 364-Day Facility (as described under “Summary—Recent Developments” and “Description of Other Indebtedness”) and, to the extent of any remaining proceeds, consistent with our previously disclosed capital strategy, for general corporate purposes, which may include the prepayment of additional amounts outstanding under the 364-Day Facility.

Certain of our underwriters and/or their affiliates are lenders under the 364-Day Facility. Accordingly, such underwriters and their affiliates will receive a portion of the proceeds from this offering pursuant to the repayment of the term loans under the 364-Day Facility.

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CAPITALIZATION

The following table sets forth our unaudited capitalization as of June 30, 2018 (i) on an actual basis, (ii) on a pro forma basis to give effect to the Acquisition and the Term Loan Facilities and (iii) on a pro forma as adjusted basis to give effect to the consummation of this offering (assuming no exercise of the underwriters’ option to purchase additional Notes) and the prepayment of $175.0 million of indebtedness under our 364-Day Facility using the net proceeds from this offering and cash on hand. Neither the pro forma nor the pro forma as adjusted data gives effect to the Proposed Spin-off. See “Risk Factors—Risks Related to the Proposed Spin-off”, “Unaudited Pro Forma Condensed Combined Financial Information” and “Proposed Spin-off” for additional information regarding the Proposed Spin-off.

This table should be read in conjunction with “Summary—Summary Consolidated Financial Information”, “Unaudited Pro Forma Condensed Combined Financial Information” and our consolidated financial statements and related notes incorporated by reference in this prospectus. See “Where You Can Find More Information” in the accompanying prospectus.

 
June 30, 2018
 
Actual
Pro Forma
Pro Forma
As Adjusted
($ in millions)
(In millions)
Total cash and short-term investments in marketable securities(A):
$
446.1
 
$
325.4
 
$
316.6
 
Indebtedness:
 
 
 
 
 
 
 
 
 
Short-term debt, including current maturities of long-term debt(B)
 
4.7
 
 
303.6
 
 
129.2
 
Long-term debt
 
429.0
 
 
926.7
 
 
1,093.7
 
Revolving Facility(C)
 
 
 
 
 
 
Term Loan Facilities
 
 
 
497.7
 
 
497.7
 
3-Year Facility
 
 
 
149.4
 
 
149.4
 
5-Year Facility
 
 
 
348.3
 
 
348.3
 
7.125% Notes, net of discount of $0.4 and debt issuance costs of $0.5
 
162.4
 
 
162.4
 
 
162.4
 
4.625% Notes, net of debt issuance costs of $1.3(D)
 
146.3
 
 
146.3
 
 
146.3
 
7.375% Debentures, net of discount of $0.1 and debt issuance costs of $0.2(D)
 
102.1
 
 
102.1
 
 
102.1
 
2.0% Loan with Fond du Lac County Economic Development Corporation due 2021, net of discount of $2.7 and debt issuance costs of $0.1
 
14.9
 
 
14.9
 
 
14.9
 
Notes, various up to 5.8% payable through 2027, net of discount of $0.2
 
3.3
 
 
3.3
 
 
3.3
 
6.500% Senior Notes due 2048 offered hereby, net of discount of $5.5 and debt issuance costs of $2.5
 
 
 
 
 
167.0
 
Total debt
 
433.7
 
 
1,230.3
 
 
1,222.9
 
 
 
 
 
 
 
 
 
 
 
Shareholders’ equity:
 
 
 
 
 
 
 
 
 
Total shareholders’ equity
$
1,501.0
 
$
1,488.1
 
$
1,488.1
 
Total capitalization(E)
$
1,930.0
 
$
2,414.8
 
$
2,581.8
 
(A) Includes $445.3 million of cash and cash equivalents and $0.8 million of short-term investments in marketable securities on an actual basis.
(B) Includes $298.9 million of indebtedness under the 364-Day Facility included in the Term Loan Facilities, $175.0 million of which is expected to be prepaid with the net proceeds of this offering and cash on hand.
(C) As of June 30, 2018, on a pro forma as adjusted basis and after giving effect to the Revolving Credit Agreement, we had availability under the Revolving Facility of $396.0 million (after giving effect to $4.0 million of outstanding letters of credit under the Revolving Facility). The Revolving Facility includes provisions to add an additional $100.0 million of borrowing capacity, subject to lender approval. See “Description of Other Indebtedness”.
(D) Includes the estimated aggregate fair values related to fixed-to-floating interest rate swaps.
(E) We define total capitalization as the sum of long-term debt and shareholders’ equity.

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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following sets forth certain unaudited pro forma condensed combined financial information (the “Unaudited Pro Forma Condensed Combined Financial Information”) giving effect to the Company’s Acquisition of the Global Marine Business of Power Products and related borrowings under the Term Loan Facilities. See “Summary—Recent Developments” and Brunswick’s Current Report on Form 8-K filed with the SEC on September 28, 2018. The unaudited pro forma financial information does not reflect the Proposed Spin-off of our Fitness business. See “Risk Factors—Risks Related to the Proposed Spin-off” and “Proposed Spin-off”.

On August 9, 2018, the Company completed its Acquisition of the Global Marine Business of Power Products Holdings, LLC (“Power Products”) for $910.0 million in cash, on a cash-free, debt-free basis, pursuant to the Agreement and Plan of Merger, dated June 28, 2018. Prior to the closing of the Acquisition, Power Products conducted a reorganization such that the Company only acquired the Global Marine Business. Power Products is a leading provider of electrical products to marine and other recreational and specialty vehicle markets.

Brunswick used the Term Loan Facilities (as defined and described in “Summary—Recent Developments—Term Loan Facilities” and “Description of Other Indebtedness”), totaling $800.0 million, along with cash on hand, to finance the Acquisition. Brunswick expects to seek to refinance a portion of the short-term term loans with long-term debt.

The following Unaudited Pro Forma Condensed Combined Financial Information was prepared in accordance with Regulation S-X under the Securities Act using accounting policies in accordance with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”). The Unaudited Pro Forma Condensed Combined Financial Information (1) was prepared using the acquisition method of accounting in accordance with the business combination accounting guidance as provided in Accounting Standards Codification 805, Business Combinations, with Brunswick being the acquiring entity, (2) is based on the Company's historical consolidated financial statements and Power Products’ historical consolidated financial statements prepared on a carve-out basis and (3) reflects estimates and assumptions deemed appropriate by Company management to give effect to the Acquisition and related borrowings under the Term Loan Facilities as if each had been completed effective June 30, 2018, with respect to the Unaudited Pro Forma Condensed Combined Balance Sheet, and as of January 1, 2017, with respect to the Unaudited Pro Forma Condensed Combined Statements of Operations. In the opinion of the Company's management, the Unaudited Pro Forma Condensed Combined Financial Information includes all material adjustments necessary to be in accordance with Article 11 of Regulation S-X under the Securities Act.

The Company’s historical financial statements have been adjusted in the Unaudited Pro Forma Condensed Combined Financial Information to give effect to pro forma events that are (1) directly attributable to the Acquisition, (2) factually supportable and (3) with respect to the Unaudited Pro Forma Condensed Combined Statements of Operations, expected to have a continuing impact on the combined results of the Company after the Acquisition. The purchase price allocation reflected in the following Unaudited Pro Forma Condensed Combined Financial Information is preliminary in nature as the final, actual purchase price and certain valuations have not been finalized. Accordingly, although these amounts represent Company management’s current best estimate of fair value, the final purchase price allocation may differ materially from the preliminary allocation utilized in the following Unaudited Pro Forma Condensed Combined Financial Information. The pro forma adjustments are described in the accompanying Notes to the Unaudited Pro Forma Condensed Combined Financial Information. In addition, as a result of Brunswick’s announcement on June 25, 2018 to end the sale process for its Sea Ray businesses, which had previously been reported in Brunswick’s 2017 Form 10-K as discontinued operations, the Unaudited Condensed Combined Statement of Operations for Brunswick's year ended December 31, 2017 has been adjusted to report the Sea Ray businesses as continuing operations. See Note 2 - Discontinued Operations Reversal.

The Unaudited Pro Forma Condensed Combined Financial Information does not give effect to the potential impact of anticipated revenue and operating synergies or cost savings that may result from the Acquisition or of any integration costs. In addition, the Unaudited Pro Forma Condensed Combined Financial Information does not give effect to the Company’s Proposed Spin-off of its Fitness business to its shareholders, announced by the Company on March 1, 2018.

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The Unaudited Pro Forma Condensed Combined Financial Information should be read in conjunction with the:

Accompanying Notes to the Unaudited Pro Forma Condensed Combined Financial Information;
Separate historical financial statements of Brunswick included in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2017 and in the Company’s Quarterly Report on Form 10-Q as of and for the six months ended June 30, 2018; and
Separate historical financial statements of Power Products included within this Current Report on Form 8-K as Exhibit 99.1 as of and for the nine months ended May 31, 2018.

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BRUNSWICK CORPORATION
Unaudited Pro Forma Condensed Combined Balance Sheet
(in millions)

 
June 30, 2018
 
Brunswick
Power Products
After
Reclassifications
(Note 4)
Pro Forma
Adjustments
Notes
(Note 5)
Pro Forma
Combined
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments in marketable securities
$
446.1
 
$
25.7
 
$
(146.4
)
(a)
$
325.4
 
Accounts and notes receivable, net
 
578.1
 
 
37.0
 
 
(0.7
)
(b)
 
614.4
 
Net inventories
 
815.3
 
 
51.6
 
 
9.2
 
(c)
 
876.1
 
Prepaid expenses and other
 
47.1
 
 
4.0
 
 
(3.1
)
(d)
 
48.0
 
Current assets
 
1,886.6
 
 
118.3
 
 
(141.0
)
 
 
1,863.9
 
Net property
 
716.1
 
 
11.6
 
 
 
 
 
727.7
 
Goodwill
 
424.0
 
 
158.2
 
 
191.4
 
(e)
 
773.6
 
Other intangibles, net
 
144.1
 
 
158.1
 
 
382.9
 
(f)
 
685.1
 
Other long-term assets
 
250.2
 
 
0.1
 
 
3.3
 
(g)
 
253.6
 
Total assets
$
3,421.0
 
$
446.3
 
$
436.6
 
 
$
4,303.9
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and shareholders' equity
 
 
 
 
 
 
 
 
 
 
 
 
 
Current liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
Current maturities of long-term debt
$
4.7
 
$
4.5
 
$
294.4
 
(h)
$
303.6
 
Accounts payable
 
426.4
 
 
21.7
 
 
(0.7
)
(b)
 
447.4
 
Accrued expenses
 
679.7
 
 
21.0
 
 
2.5
 
(i)
 
703.2
 
Current liabilities
 
1,110.8
 
 
47.2
 
 
296.2
 
 
 
1,454.2
 
Long-term debt
 
429.0
 
 
435.7
 
 
62.0
 
(h)
 
926.7
 
Other long-term liabilities
 
380.2
 
 
14.1
 
 
40.6
 
(g)
 
434.9
 
Shareholders' equity
 
1,501.0
 
 
(50.7
)
 
37.8
 
(j)
 
1,488.1
 
Total liabilities and shareholders' equity
$
3,421.0
 
$
446.3
 
$
436.6
 
 
$
4,303.9
 

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BRUNSWICK CORPORATION
Unaudited Pro Forma Condensed Combined Statement of Operations
(in millions, except per share data)

 
Six Months Ended June 30, 2018
 
Brunswick
Power
Products
Pro Forma
Adjustments
Notes
(Note 5)
Pro Forma
Combined
Net sales
$
2,612.3
 
$
126.7
 
$
(8.7
)
(k)
$
2,730.3
 
Cost of sales
 
1,952.6
 
 
71.6
 
 
(8.7
)
(k)
 
2,015.5
 
Selling, general and administrative expense
 
332.3
 
 
32.2
 
 
4.2
 
(l)
 
368.7
 
Research and development expense
 
77.0
 
 
3.9
 
 
 
 
 
80.9
 
Restructuring, exit, integration and impairment charges
 
38.6
 
 
 
 
 
 
 
38.6
 
Operating earnings (loss)
 
211.8
 
 
19.0
*
 
(4.2
)
 
 
226.6
**
Equity earnings
 
2.4
 
 
 
 
 
 
 
2.4
 
Other expense, net
 
(2.5
)
 
(0.2
)
 
 
 
 
(2.7
)
Earnings (loss) before interest and income taxes
 
211.7
 
 
18.8
 
 
(4.2
)
 
 
226.3
 
Interest expense
 
(14.9
)
 
(14.4
)
 
4.6
 
(m)
 
(24.7
)
Interest income
 
1.3
 
 
 
 
 
 
 
1.3
 
Earnings before income taxes
 
198.1
 
 
4.4
 
 
0.4
 
 
 
202.9
 
Income tax provision (benefit)
 
46.2
 
 
(1.6
)
 
0.1
 
(n)
 
44.7
 
Net earnings (loss)
$
151.9
 
$
6.0
 
$
0.3
 
 
$
158.2
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per common share:
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
$
1.73
 
 
 
 
 
 
 
 
$
1.80
 
Diluted
$
1.72
 
 
 
 
 
 
 
 
$
1.79
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares used for computation of:
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic earnings per common share
 
87.8
 
 
 
 
 
 
 
 
 
87.8
 
Diluted earnings per common share
 
88.5
 
 
 
 
 
 
 
 
 
88.5
 
* Includes depreciation and amortization expense of $10.5 million along with carve-out adjustments of $4.8 million for costs related to certain corporate and shared services functions that were not included in the Acquisition.
** Includes Power Products' depreciation expense of $1.5 million, amortization expense of $14.3 million reflecting the application of purchase accounting along with carve-out adjustments of $4.8 million for costs related to certain corporate and shared services functions that were not included in the Acquisition.

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BRUNSWICK CORPORATION
Unaudited Pro Forma Condensed Combined Statement of Operations
(in millions, except per share data)

 
Twelve Months Ended December 31, 2017
 
Brunswick
10-K
As
Reported
Discontinued
Operations
Reversal
(Note 2)
Brunswick
As
Adjusted
Power
Products
Pro Forma
Adjustments
Notes
(Note 5)
Pro Forma
Combined
Net sales
$
4,510.0
 
$
325.9
 
$
4,835.9
 
$
229.0
 
$
(16.0
)
(o)
$
5,048.9
 
Cost of sales
 
3,275.3
 
 
298.5
 
 
3,573.8
 
 
134.6
 
 
(16.0
)
(o)
 
3,692.4
 
Selling, general and administrative expense
 
608.1
 
 
27.0
 
 
635.1
 
 
59.3
 
 
12.7
 
(p)
 
707.1
 
Research and development expense
 
138.5
 
 
7.9
 
 
146.4
 
 
7.5
 
 
 
 
 
153.9
 
Pension settlement charge
 
96.6
 
 
 
 
96.6
 
 
 
 
 
 
 
96.6
 
Restructuring, exit, integration and impairment charges
 
36.6
 
 
45.7
 
 
82.3
 
 
 
 
 
 
 
82.3
 
Operating earnings (loss)
 
354.9
 
 
(53.2
)
 
301.7
 
 
27.6
*
 
(12.7
)
 
 
316.6
**
Equity earnings
 
6.1
 
 
 
 
6.1
 
 
 
 
 
 
 
6.1
 
Other income (expense), net
 
6.1
 
 
(8.9
)
 
(2.8
)
 
0.8
 
 
 
 
 
(2.0
)
Earnings (loss) before interest and income taxes
 
367.1
 
 
(62.1
)
 
305.0
 
 
28.4
 
 
(12.7
)
 
 
320.7
 
Interest expense
 
(26.4
)
 
 
 
(26.4
)
 
(27.2
)
 
(3.6
)
(q)
 
(57.2
)
Interest income
 
2.6
 
 
 
 
2.6
 
 
 
 
 
 
 
2.6
 
Earnings (loss) before income taxes
 
343.3
 
 
(62.1
)
 
281.2
 
 
1.2
 
 
(16.3
)
 
 
266.1
 
Income tax provision (benefit)
 
156.0
 
 
(21.2
)
 
134.8
 
 
(1.0
)
 
(6.2
)
(r)
 
127.6
 
Net earnings (loss) from continuing operations
$
187.3
 
$
(40.9
)
$
146.4
 
$
2.2
 
$
(10.1
)
 
$
138.5
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per common share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
$
2.10
 
 
 
 
$
1.64
 
 
 
 
 
 
 
 
$
1.55
 
Diluted
$
2.08
 
 
 
 
$
1.62
 
 
 
 
 
 
 
 
$
1.54
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares used for computation of:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic earnings per common share
 
89.4
 
 
 
 
 
89.4
 
 
 
 
 
 
 
 
 
89.4
 
Diluted earnings per common share
 
90.1
 
 
 
 
 
90.1
 
 
 
 
 
 
 
 
 
90.1
 
* Includes depreciation and amortization expense of $21.3 million along with carve-out adjustments of $10.8 million for costs related to certain corporate and shared services functions that were not included in the Acquisition.
** Includes Power Products' depreciation expense of $3.3 million, amortization expense of $28.7 million reflecting the application of purchase accounting along with carve-out adjustments of $10.8 million for costs related to certain corporate and shared services functions that were not included in the Acquisition.

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Note 1 – Description of Transaction and Basis of Presentation

The Unaudited Pro Forma Condensed Combined Financial Information was prepared in accordance with Regulation S-X under the Securities Act using accounting policies in accordance with U.S. GAAP. The Unaudited Pro Forma Condensed Combined Financial Information was derived from the historical consolidated financial statements of Brunswick and Power Products, and gives effect to the Acquisition and the related borrowings under the Term Loan Facilities as if each had occurred on June 30, 2018 with respect to the Unaudited Pro Forma Condensed Combined Balance Sheet, and as of January 1, 2017 (the beginning of Brunswick's fiscal year 2017), with respect to the Unaudited Pro Forma Condensed Combined Statements of Operations. The Term Loan Facilities consist of (1) a $300.0 million 364-day tranche; (2) a $150.0 million 3-year tranche; and (3) a $350.0 million 5-year tranche.

The pro-forma adjustments to the Unaudited Pro Forma Condensed Combined Financial Information eliminate transactions between Brunswick and Power Products using balances as of June 30, 2018 and conform the accounting principles of Power Products to those of Brunswick in preparing the Unaudited Pro Forma Condensed Combined Financial Information.

Brunswick has a different fiscal year end than Power Products. Power Products utilizes a fiscal year ending August 31, and Brunswick's fiscal year ends on December 31 of each year. As the Brunswick and Power Products’ fiscal years differ by more than 93 days, pursuant to Rule 11-02(c)(3) of Regulation S-X, Power Products historical unaudited financial information was prepared for the purpose of presenting the Unaudited Pro Forma Condensed Combined Statements of Operations for the year ended December 31, 2017 and six months ended June 30, 2018. The Unaudited Pro Forma Condensed Combined Statement of Operations for the year ended December 31, 2017 was prepared using Brunswick’s historical audited condensed consolidated statement of operations for the year ended December 31, 2017 and Power Products’ historical unaudited condensed consolidated statement of operations for the twelve months ended February 28, 2018. The historical unaudited condensed consolidated statement of operations for Power Products for the twelve months ended February 28, 2018 was prepared by taking the audited consolidated statement of operations for the nine months ended May 31, 2018, subtracting the unaudited quarterly consolidated statement of operations for the three months ended May 31, 2018, and adding the unaudited consolidated statement of operations for the six months ended August 31, 2017 to form the twelve months ended February 28, 2018. The Unaudited Pro Forma Condensed Combined Statement of Operations for the six months ended June 30, 2018 was prepared using Brunswick’s historical unaudited condensed consolidated statement of operations for the six months ended June 30, 2018 and Power Products’ historical unaudited condensed consolidated statement of operations for the six months ended May 31, 2018. The historical unaudited condensed consolidated statement of operations for Power Products for the six months ended May 31, 2018 was prepared by taking the audited consolidated statement of operations for the nine months ended May 31, 2018 and subtracting the unaudited consolidated statement of operations for the three months ended November 30, 2017 to form the six months ended May 31, 2018. Given the different fiscal year ends of Brunswick and Power Products, Power Products’ historical unaudited condensed consolidated statement of operations for the three months ended February 28, 2018 has been included in both the fiscal year ended December 31, 2017 and the six months ended June 30, 2018 Unaudited Pro Forma Condensed Combined Statements of Operations. The Power Products’ unaudited condensed consolidated balance sheet information is presented as of May 31, 2018.

The Unaudited Pro Forma Condensed Combined Financial Information was prepared using the acquisition method of accounting in accordance with the business combination accounting guidance as provided in Accounting Standards Codification 805, Business Combinations, with Brunswick being the acquiring entity, and reflects estimates and assumptions deemed appropriate by Company management. In the opinion of the Company’s management, the Unaudited Pro Forma Condensed Combined Financial Information includes all material adjustments necessary to be in accordance with Article 11 of Regulation S-X under the Securities Act.

The Unaudited Pro Forma Condensed Combined Financial Information does not give effect to the potential impact of anticipated revenue and operating synergies or cost savings that may result from the Acquisition or of any integration costs. In addition, the Unaudited Pro Forma Condensed Combined Financial Information does not give effect to the Company’s Proposed Spin-off of its Fitness business to its shareholders, announced by the Company on March 1, 2018.

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Note 2 – Discontinued Operations Reversal

As a result of Brunswick’s announcement on June 25, 2018 to end the sale process for its Sea Ray businesses, which had previously been reported in Brunswick’s 2017 Form 10-K as discontinued operations, the Unaudited Condensed Combined Statement of Operations for Brunswick’s year ended December 31, 2017 has been adjusted to report the Sea Ray businesses as continuing operations.

Note 3 – Preliminary Purchase Price Allocation

For the Unaudited Pro Forma Condensed Combined Balance Sheet, the $910.0 million purchase price has been allocated based on Power Products' June 30, 2018 financial information and the Company’s preliminary estimate of the fair value of the assets acquired and liabilities assumed. The final purchase price allocation will be based on the fair value of the assets acquired and liabilities assumed as of the closing date of the Acquisition. The following table summarizes the allocation of the preliminary purchase price as of the date of the Acquisition (in millions):

Accounts receivable
$
37.0
 
Inventory
 
60.8
 
Property and equipment
 
11.6
 
Other assets
 
7.4
 
Trade names
 
111.0
 
Customer relationships
 
430.0
 
Goodwill
 
349.6
 
Accounts payable
 
(21.7
)
Accrued expenses
 
(21.0
)
Other long-term liabilities
 
(0.1
)
Deferred tax liabilities
 
(54.6
)
Total consideration
$
910.0
 

Customer relationships will be amortized on a straight line basis over 15 years.

This preliminary purchase price allocation has been used to prepare pro forma adjustments for purposes of the pro forma balance sheet and statements of operations. The final purchase price allocation will be determined when the Company has completed the detailed valuations and necessary calculations. The final allocation could differ materially from the preliminary allocation used in the pro forma adjustments. The final allocation may include changes in allocations to intangible assets such as trade names and customer relationships as well as goodwill and other changes to assets and liabilities, including deferred tax assets and liabilities.

Note 4 – Reclassification of Power Products' Historical Financial Information

Certain reclassifications have been made to Power Products' historical financial statements to conform to Brunswick's financial statement presentation. Reclassifications reflected in the Unaudited Pro Forma Condensed Combined Balance Sheet are presented below (in millions):

 
As of June 30, 2018
 
Power Products
Before
Reclassification
Reclassifications
Power Products
After
Reclassification
Accrued compensation expenses
$
7.2
 
$
(7.2
)
$
 
Income taxes payable
 
2.3
 
 
(2.3
)
 
 
Accrued interest
 
3.0
 
 
(3.0
)
 
 
Warranty liability
 
2.5
 
 
(2.5
)
 
 
Accrued rebates
 
2.4