BRUNSWICK CORP

Note 1 – Significant Accounting Policies

Basis of Presentation. Effective January 1, 2023, Brunswick Corporation (we, us, our, the Company, or Brunswick) changed its management reporting and updated its reportable segments to Propulsion, Engine Parts and Accessories (Engine P&A), Navico Group and Boat to align with our internal operating structure. As a result of this change, the Company has recast all segment information for all prior periods presented. For further information, refer to Note 5 –Segment Information. The Company has prepared its consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain previously reported amounts have been reclassified to conform with current period presentation. Brunswick's results reflect continuing operations only, unless otherwise noted.

Principles of Consolidation. Brunswick's consolidated financial statements include the accounts of all majority owned and controlled domestic and foreign subsidiaries. Intercompany balances and transactions have been eliminated.

Use of Estimates. The preparation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States (GAAP) requires management to make certain estimates. Actual results could differ materially from those estimates. These estimates affect:

•The reported amounts of revenues and expenses during the reporting periods;

•The reported amounts of assets and liabilities at the date of the financial statements; and

•The disclosure of contingent assets and liabilities at the date of the financial statements.

Estimates in these consolidated financial statements include, but are not limited to:

•Allowances for doubtful accounts;

•Inventory valuation reserves;

•Variable consideration related to recorded revenue;

•Reserves related to repurchase and recourse obligations;

•Warranty related reserves;

•Losses on litigation and other contingencies;

•Environmental reserves;

•Insurance reserves;

•Valuation of goodwill and other intangible assets;

•Impairments of long-lived assets;

•Reserves related to restructuring, exit and impairment activities;

•Postretirement benefit liabilities;

•Valuation allowances on deferred tax assets; and

•Income tax reserves.

Cash and Cash Equivalents. The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. These investments include, but are not limited to, investments in money market funds, bank deposits, federal government and agency debt securities and commercial paper.

Restricted Cash. Restricted Cash is primarily related to cash deposited in a trust that is pledged as collateral against certain workers' compensation-related obligations. Refer to Note 11 – Commitments and Contingencies for more information.

Investments in Marketable Securities. The Company classifies investments in debt securities that are not considered to be cash equivalents as Short-term investments in marketable securities as discussed in Note 7 – Investments. Short-term investments in marketable securities have a stated maturity of twelve months or less from the balance sheet date. These securities are considered as available-for-sale and are reported at fair value. Unrealized gains and losses on these debt securities are recorded net of tax as a component of Accumulated other comprehensive income (loss) in Unrealized investment gains (losses) within Shareholders' equity. Declines in market value from the original cost deemed to be "other-than-temporary" are charged to Other income (expense), net in the Consolidated Statements of Operations in the period in which the loss occurs. The Company considers both the duration and extent of which a decline in value has occurred in its determination of whether a decline in value has been "other-than-temporary." Realized gains and losses are calculated based on the specific identification method and are included in Other income (expense), net in the Consolidated Statements of Operations.

Accounts and Notes Receivable and Allowance for Doubtful Accounts. The Company carries its accounts and notes receivable at their face amounts less an allowance for doubtful accounts. On a regular basis, the Company records an allowance for uncollectible receivables based upon known bad debt risks and past loss history, customer payment practices and economic conditions. Actual collection experience may differ from the current estimate of net receivables. A change to the allowance for doubtful accounts may be required if a future event or other change in circumstances results in a change in the estimate of the ultimate collectability of a specific account.

Inventories. Inventories are valued at the lower of cost or net realizable value, with net realizable value equal to the estimated selling price less the estimated costs to transact. Approximately 51 percent and 54 percent of the Company's inventories were determined by the first-in, first-out method (FIFO) as of December 31, 2023 and December 31, 2022, respectively. Remaining inventories valued at the last-in, first-out method (LIFO) were $192.1 million and $170.6 million lower than the FIFO cost of inventories as of December 31, 2023 and 2022, respectively. Inventory cost includes material, labor and manufacturing overhead. There were no liquidations of LIFO inventory layers in 2023, 2022 or 2021.

Property. Property, including major improvements and product tooling costs, is recorded at cost. Product tooling costs principally comprise the cost to acquire and construct various long-lived molds, dies and other tooling the Company uses in its manufacturing processes. Design and prototype development costs associated with product tooling are expensed as incurred. Maintenance and repair costs are also expensed as incurred. Depreciation is recorded over the estimated service lives of the related assets, principally using the straight-line method. Buildings and improvements are depreciated over a useful life of five to forty years. Equipment is depreciated over a useful life of two to twenty years. Product tooling costs are amortized over the shorter of the useful life of the tooling or the anticipated life of the applicable product, for a period up to eight years. The Company capitalizes interest on qualifying assets during the construction period and capitalized $2.7 million and $6.9 million in the periods ending December 31, 2023 and 2022, respectively. The Company presents capital expenditures on a cash basis within the Consolidated Statements of Cash Flows. There were $34.1 million and $56.2 million of unpaid capital expenditures within Accounts payable as of December 31, 2023 and 2022, respectively. The Company includes gains and losses recognized on the sale and disposal of property in either Cost of sales, Selling, general and administrative expenses or Restructuring, exit and impairment charges as appropriate. The amount of gains and losses for the years ended December 31 were as follows:

Goodwill. Goodwill results from the excess of purchase price over the net assets of businesses acquired. The Company reviews goodwill for impairment annually and whenever events or changes in circumstances indicate that the fair value of a reporting unit may be below its carrying value. As part of the annual test, the Company may perform a qualitative, rather than quantitative, assessment to determine whether the fair values of its reporting units are "more likely than not" to exceed their carrying values. In performing this qualitative analysis, the Company considers various factors, including the effect of market or industry changes and the reporting units' actual results compared to projected results.

If the fair value of a reporting unit does not meet the "more likely than not" criteria discussed above, the Company performs a quantitative assessment, which begins by measuring the fair value of the reporting unit. If the carrying value of the reporting unit exceeds its fair value, a goodwill impairment is recorded equal to the carrying value of the reporting unit less its fair value, not to exceed the carrying value of goodwill.

The Company calculates the fair value of its reporting units considering both the income approach and the guideline public company method. The income approach calculates the fair value of the reporting unit using a discounted cash flow approach utilizing a Gordon Growth model. Internally forecasted future cash flows, which the Company believes reasonably approximate market participant assumptions, are discounted using a weighted average cost of capital (Discount Rate) developed for each reporting unit. The Discount Rate is developed using market observable inputs, as well as considering whether or not there is a measure of risk related to the specific reporting unit’s forecasted performance. Fair value under the guideline public company method is determined for each reporting unit by applying market multiples for comparable public companies to the reporting unit’s current and forecasted financial results. The key uncertainties in these calculations are the assumptions used in determining the reporting unit’s forecasted future performance, including revenue growth and operating margins, as well as the perceived risk associated with those forecasts in determining the Discount Rate, along with selecting representative market multiples.

The Company did not record any goodwill impairments in 2023, 2022 or 2021.

Other intangible assets. The Company's primary other intangible assets are customer relationships, trade names, and developed technology acquired in business combinations. Intangible assets are initially valued using a methodology commensurate with the intended use of the asset. Customer relationships, trade names and developed technology are valued using the income approach. The fair value of customer relationships is measured using the multi-period excess earnings method (MPEEM). The fair value of trade names and developed technology are measured using a relief-from-royalty (RFR) approach, which assumes the value of the trade name or technology is the discounted amount of cash flows that would be paid to third parties had the Company not owned the trade name or technology and instead licensed the trade name or technology from another company. Higher royalty rates are assigned to premium brands within the marketplace based on name recognition and profitability, while other brands receive lower royalty rates. The basis for future sales projections for both the RFR and MPEEM are internal revenue forecasts which the Company believes represent reasonable market participant assumptions. The future cash flows are discounted using an applicable Discount Rate as well as any potential risk premium to reflect the inherent risk of holding a standalone intangible asset.

The key uncertainties in the RFR and MPEEM calculations, as applicable, are: the selection of an appropriate royalty rate, assumptions used in developing internal revenue growth and expense forecasts, assumed customer attrition rates, as well as the perceived risk associated with those forecasts in determining the Discount Rate and risk premium.

The costs of amortizable intangible assets are recognized over their expected useful lives, typically between three and fifteen years, using the straight-line method. Intangible assets that are subject to amortization are evaluated for impairment using a process similar to that used to evaluate long-lived assets described below. Intangible assets not subject to amortization are assessed for impairment at least annually and whenever events or changes in circumstances indicate that it is more likely than not that an asset may be impaired. The impairment test for indefinite-lived intangible assets consists of a comparison of the fair value of the intangible asset with its carrying amount. An impairment loss is recognized for the amount by which the carrying value exceeds the fair value of the asset. The Company recorded $16.6 million of intangible asset impairment charges in 2023 recognized in Restructuring, exit and impairment charges in the Consolidated Statements of Operations, including a $13.0 million impairment of the Navico trade name and a $3.0 million impairment associated with the Garelick trade name. The Company recorded $17.4 million of intangible asset impairment charges in 2022 recognized in Restructuring, exit and impairment charges in the Consolidated Statements of Operations related to capitalized software intangible assets that will not be placed into service. The Company did not record any intangible asset impairments in 2021.

Refer to Note 4 – Acquisitionsand Note 9 – Goodwill and Other Intangibles in the Notes to Consolidated Financial Statements for more information.

Software Development Costs for Internal Use. The Company expenses all software development and implementation costs incurred until the Company has determined that the software will result in probable future economic benefit and management has committed to funding the project. Once this is determined, external direct costs of material and services, payroll-related costs of employees working on the project and related interest costs incurred during the application development stage are capitalized. These capitalized costs are amortized over three to seven years. All other related costs, including training costs and costs to re-engineer business processes, are expensed as incurred.

Equity Investments. For investments in which the Company owns or controls from 20 percent to 50 percent of the voting shares, the Company uses the equity method of accounting. The Company's share of net earnings or losses from equity method investments is included in the Consolidated Statements of Operations. The Company carries other investments, for which the Company does not have the ability to exercise significant influence, at fair value, with changes in fair value recognized in net income. For equity investments that do not have a readily determinable fair value, the Company measures the investment at cost less impairment, plus or minus observable equity price changes. The Company periodically evaluates the carrying value of its investments. During the year ended December 31, 2023, the Company recorded an impairment charge of $19.2 million due to a decline in the fair value of its investment in TN-BC Holdings LLC (the Joint Venture), as a result of a reduction in value of certain of the Joint Venture's underlying investments. See Note 7 – Investments for further details about the Company's evaluation of the fair value of its investments.

Long-Lived Assets. The Company continually evaluates whether events and circumstances have occurred that indicate the remaining estimated useful lives of its definite-lived intangible assets and other long-lived assets may warrant revision or that the remaining balance of such assets may not be recoverable. Once an impairment indicator is identified, the Company tests for recoverability of the related asset group using an estimate of undiscounted cash flows over the asset group's remaining life. If an asset group's carrying value is not recoverable, the Company records an impairment loss based on the excess of the carrying value of the asset group over the long-lived asset group's fair value. Fair value is determined using observable inputs, including the use of appraisals from independent third parties, when available, and, when observable inputs are not available, based on the Company's assumptions of the data that market participants would use in pricing the asset, based on the best information available in the circumstances. Specifically, the Company uses discounted cash flows to determine the fair value of the asset when observable inputs are unavailable. The Company tested its long-lived asset balances for impairment as indicators arose during 2023, 2022 and 2021, resulting in impairment charges of $1.3 million, $1.5 million and $0.8 million, respectively, which are recognized either in Restructuring, exit and impairment charges or Selling, general and administrative expense in the Consolidated Statements of Operations.

Other Long-Term Assets. Other long-term assets consists mainly of capitalized financing costs and deposits.

Revenue Recognition. Revenue is recognized as performance obligations under the terms of contracts with customers are satisfied; this occurs when control of promised goods is transferred to the customer. The Company recognizes revenue related to the sale of extended warranty contracts that extend the coverage period beyond the standard warranty period over the life of the extended warranty period.

Revenue is measured as the amount of consideration the Company expects to be entitled to in exchange for transferring goods or providing services. The Company has excluded sales, value add and other taxes collected concurrent with revenue-producing activities from the determination of the transaction price for all contracts. The Company has elected to account for shipping and handling activities that occur after the customer has obtained control of a good as a fulfillment activity. For all contracts with customers, the Company has not adjusted the promised amount of consideration for the effects of a significant financing component as the period between the transfer of the promised goods and the customer's payment is expected to be one year or less.

For product sales, the Company transfers control and recognizes revenue at the time the product ships from a manufacturing or distribution facility ("free on board shipping point"), or at the time the product arrives at the customer's facility ("free on board destination"). When the shipping terms are "free on board shipping point", the customer obtains control and is able to direct the use of, and obtain substantially all of the benefits from, the products at the time the products are shipped. For shipments provided under "free on board destination", control transfers to the customer upon delivery. Payment terms vary but are generally due within 30 days of transferring control. For the Company's Boat and Propulsion segments, most product sales to dealers are wholesale financed through the Company's joint venture, Brunswick Acceptance Company, LLC (BAC), or other lending institutions, and payment is typically due in the month of shipment. For further information on the BAC joint venture, refer to Note 8 – Financing Joint Venture. In addition, periodically the Company may require the customer to provide upfront cash deposits in advance of performance.

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

See Note 2 – Revenue Recognitionfor more information.

Advertising Costs. The Company records advertising and promotion costs in Selling, general and administrative expense in the Consolidated Statements of Operations in the period when the advertising first takes place. Advertising and promotion costs were $28.5 million, $39.9 million and $33.2 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Foreign Currency. The functional currency for the majority of Brunswick's operations is the U.S. dollar. All assets and liabilities of operations with a functional currency other than the U.S. dollar are translated at period-end currency exchange rates. The resulting translation adjustments are recorded in Accumulated other comprehensive income (loss). Revenues and expenses of operations with a functional currency other than the U.S. dollar are translated at the average exchange rates for the period. Transaction gains and losses resulting from changes in foreign currency exchange rates are recorded in either Cost of sales or Other income (expense), net in the Consolidated Statements of Operations.

Share-Based Compensation. The Company records amounts for all share-based compensation, including non-vested stock awards and performance-based share awards, over the vesting period in the Consolidated Statements of Operations based upon their fair values at the date of the grant. Share-based compensation costs are included in Selling, general and administrative expense in the Consolidated Statements of Operations. See Note 16 – Stock Plans and Management Compensation for a description of the Company's accounting for share-based compensation plans.

Research and Development. Research and development costs are expensed as incurred.

Derivatives. The Company uses derivative financial instruments to manage its risk associated with movements in foreign currency exchange rates, interest rates and commodity prices. These instruments are used in accordance with guidelines established by the Company's management and are not used for trading or speculative purposes. The Company records all derivatives on the Consolidated Balance Sheets at fair value. See Note 12 – Financial Instruments for further discussion.

IT Security Incident. As previously announced on June 13, 2023, the Company experienced an IT security incident that impacted some of its systems and global facilities. The Company activated its response protocols, including pausing operations in some locations, engaging leading security experts and coordinating with relevant law enforcement agencies. Normal global business operations resumed over the course of nine days following the incident. While we were able to quickly restore our operations, the incident resulted in disruption to sales as well as non-recurring costs. We will attempt to recover a portion of the lost operating earnings from lost sales and non-recurring costs from our insurance carriers. Non-recurring costs include labor while plants were idle, IT-related costs and costs for legal, consulting and other professional services directly related to this incident. The Company incurred non-recurring costs related to the IT security incident of $10.1 million during the year ended December 31, 2023. A portion of the non-recurring costs are included in Cost of sales and a portion in Selling, general and administrative expense in the Consolidated Statements of Operations. We estimate the incident resulted in lost revenue of approximately $80 million to $85 million and operating earnings of $35 million to $40 million during the year ended December 31, 2023.

Recently Adopted Accounting Standards

Supplier Finance Programs: In September 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU)2022-04, Liabilities — Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations, which adds disclosure requirements associated with participation in supplier finance programs. ASU 2022-04 requires the buyer in a supplier finance program to disclose qualitative and quantitative information about the program including key terms and obligations outstanding at the end of the reporting period. ASU 2022-04 is effective for financial statements for interim and annual periods beginning after December 15, 2022. The Company adopted the guidance in ASU 2022-04 on January 1, 2023. For further information, refer to Note 20 – Supplier Finance Program Obligations.

Fair Value Hedge Accounting: In March 2022, the FASB issued ASU 2022-01, Fair Value Hedging — Portfolio Layer Method, which clarifies the guidance in ASC 815 on fair value hedge accounting of interest-rate risk for portfolios of financial assets. The ASU amends the guidance that established the “last-of-layer” method for making the fair value hedge accounting for these portfolios more accessible. The amendment was effective for financial statements for interim and annual periods beginning after December 15, 2022. The adoption of this standard did not have a material impact on the Company's consolidated financial statements.

Revenue Contracts Acquired in Business Combinations: In October 2021, the FASB issued ASU 2021-08, Accounting for Contract Assets and Contract Liabilities From Contracts With Customers, which amended the guidance in Accounting Standards Codification (ASC) 805 to require that the acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 606. The Company early adopted the guidance in ASU 2021-08 on July 2, 2022. The adoption of this standard did not have a material impact on the Company's consolidated financial statements.

Recently Issued Accounting Standards

Segment Reporting: In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) — Improvements to Reportable Segment Disclosures, which adds new disclosure requirements related to significant segment expenses regularly provided to the chief operating decision maker (CODM) and included in each reported measure of segment profit or loss, other segment items that constitute the difference between segment revenues less significant segment expenses and the measure of profit or loss, disclosure of the CODMs title and position as well as an explanation of how the CODM uses the reported measures and expanded interim disclosures. ASU 2023-07 is effective for financial statements for annual periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. We are currently evaluating the potential impact of adopting this guidance on the consolidated financial statements.

Income Taxes: In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) — Improvements to Income Tax Disclosures. Under this ASU, entities must disclose, on an annual basis, specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. In addition, ASU 2023-09 requires entities to disclose additional information about income taxes paid. ASU 2023-09 is effective for financial statements for annual periods beginning after December 15, 2024. We are currently evaluating the potential impact of adopting this guidance on the consolidated financial statements.

Note 2 –Revenue Recognition

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

As of January 1, 2023, $178.5 million of contract liabilities associated with extended warranties and customer deposits were reported in Accrued expenses and Other Long-term liabilities, of which $61.8 million of this amount was recognized as revenue during year ended December 31, 2023. As of December 31, 2023, total contract liabilities were $187.1 million. The total amount of the transaction price allocated to unsatisfied performance obligations as of December 31, 2023 is $183.6 million for contracts greater than one year, which includes extended warranties. The Company expects to recognize approximately $60.7 million of this amount in 2024 and $122.9 million thereafter. Contract assets as of January 1, 2023 and December 31, 2023 were not material. In addition, costs to obtain and fulfill contracts during the period were not material.

Note 3 –Restructuring, Exit and Impairment Activities

The Company has announced and implemented a number of initiatives designed to improve its cost structure, general operating efficiencies and its utilization of production capacity. These initiatives resulted in the recognition of restructuring, exit and impairment charges in the Consolidated Statements of Operations during 2023, 2022 and 2021. Restructuring, exit and impairment costs include employee termination and other benefits, inventory adjustments to lower of cost or net realizable value, costs to retain and relocate employees, consulting costs, consolidation of manufacturing footprint, facility shutdown costs, and asset disposition and impairment actions. The Company recognizes the expense in the accounting period when it has committed to or incurred the cost, as appropriate.

The following table is a summary of the net expense associated with the restructuring, exit and impairment activities. Restructuring, exit and impairment charges in 2023 relate to headcount reductions and related costs associated with streamlining the enterprise-wide cost structure and improving operating efficiencies as well as asset-related impairments. Restructuring, exit and impairment charges in 2022 primarily relate to asset-related impairments and headcount reductions associated with the integration of Navico. Restructuring, exit and impairment charges in 2021 primarily relate to organizational realignment within the Navico Group segment, specifically in Europe.

(A) Includes impairment charges of $13.0 million associated with an impairment of the Navico trade name and $3.0 million associated with the Company's decision to no longer go to market under the Garelick trade name during the year ended December 31, 2023.

(B) Includes impairment charges of $17.4 million related to the Company's decision not to place certain capitalized software intangible assets into service during the year ended December 31, 2022.

The following tables summarize the change in accrued restructuring, exit and impairment charges within Accrued expenses in the Consolidated Balance Sheets for the years ended December 31, 2023, 2022 and 2021:

(A) Cash payments may include payments related to prior period charges.

(B) The accrued charges as of December 31, 2023 are expected to be paid in the next twelve months.

Reductions in demand for the Company's products, further refinement of its product portfolio, further opportunities to reduce costs or the cost of integrating future acquisitions may result in additional restructuring, exit and impairment charges in future periods.

Note 4 –Acquisitions

2023 Acquisitions

During the fourth quarter of 2023, the Company acquired additional Freedom Boat Club franchise operations and territories in the Southeast United States. These acquisitions should unlock operational efficiencies while providing members with additional boating destinations, as the Company plans for continued expansion across the Southeast Coastal region. These acquisitions are included as part of the Company's Boat segment.

The Company paid net cash consideration of $16.0 million for these acquisitions. The opening balance sheets, which are preliminary and subject to change in the measurement period as the Company finalizes the purchase price allocation and fair value estimates, include $14.0 million of goodwill and $3.3 million of customer relationships. The amount assigned to customer relationships will be amortized over the estimated useful life of 10 years. Transaction costs associated with these acquisitions were not material to the Company's consolidated results of operations.

On September 1, 2023, the Company acquired all of the issued and outstanding shares of Fliteboard Pty Ltd (Fliteboard) for $87.6 million net cash consideration. Fliteboard is a leader in eFoiling technology, which combines advanced hydrofoils and electric propulsion on the water. The acquisition of Fliteboard allows the Company to enter the emerging electric-foiling surfboard market and presents the opportunity for technological, manufacturing, commercial and consumer synergies with our existing portfolio. Fliteboard is included as part of the Company's Propulsion segment.

The opening balance sheet, which is preliminary and subject to change in the measurement period as the Company finalizes the purchase price allocation and fair value estimates, includes $38.5 million of goodwill, $20.7 million of trade names, $8.4 million of customer relationships, and $7.1 million of developed technology. The amounts assigned to customer relationships and developed technology will be amortized over the estimated useful lives of 15 years and 10 years, respectively. Transaction costs associated with the acquisition of $1.9 million were expensed as incurred within Selling, general and administrative expense.

These 2023 acquisitions are not material to the Company's net sales, results of operations or total assets during any period presented. Accordingly, the Company's consolidated results of operations do not differ materially from historical performance as a result of the acquisitions, and pro forma results for prior periods are not presented.

2022 Acquisitions

During the second quarter of 2022, the Company acquired certain Freedom Boat Club franchise operations and territory rights as well as certain marine assets in the Southeast United States. These acquisitions enable opportunities across a wide spectrum, building upon the growth Brunswick has cultivated throughout the Company's shared access portfolio and new digital platforms. These acquisitions are included as part of the Company's Boat segment.

The Company paid net cash consideration of $93.9 million for these acquisitions. The opening balance sheets include $71.4 million of goodwill and $11.9 million of customer relationships. The amount assigned to customer relationships will be amortized over the estimated useful life of 10 years. Transaction costs associated with these acquisitions of $1.4 million were expensed as incurred within Selling, general and administrative expense in 2022. The acquisitions are not material to the Company's net sales, results of operations or total assets during any period presented. Accordingly, the Company's consolidated results of operations do not differ materially from historical performance as a result of the acquisitions, and pro forma results for prior periods are not presented. Purchase accounting is final for these acquisitions.

2021 Acquisitions - Navico

On October 4, 2021, the Company acquired all the issued and outstanding shares of Marine Innovations Group AS, known as "Navico", for $1.094 billion net cash consideration. The Company used a combination of the 2024 and 2031 Notes, as described in Note 14 – Debt, and cash on hand to fund the acquisition.

Navico was a privately held global company based in Egersund, Norway, and is a global leader in marine electronics and sensors, including multi-function displays, fish finders, autopilots, sonar, radar and cartography. The acquisition of Navico accelerates the Company's ACES (Autonomy, Connectivity, Electrification and Shared access) strategy and strengthens the Company's ability to provide complete, innovative digital solutions to consumers and comprehensive, integrated system offerings to our original equipment manufacturer customers. Navico is managed as part of the Company's Navico Group segment.

The Company used the acquisition method of accounting in accordance with ASC 805, Business Combinations, with Brunswick being the acquiring entity, and reflecting estimates and assumptions deemed appropriate by Company management. Transaction costs related to the acquisition were expensed as incurred within Selling, general and administrative expense and totaled $1.0 million and $13.8 million for the years ended December 31, 2022 and 2021, respectively. The net sales and operating loss, respectively, of Navico included in Brunswick's consolidated financial statements since the date of acquisition through December 31, 2021 was $120.4 million and $7.4 million, which includes $9.0 million of expense related to inventory fair value adjustments and $5.8 million of intangible asset amortization.

The following table is a summary of the assets acquired, liabilities assumed and net cash consideration paid, net of cash acquired, for the Navico acquisition:

(A) Includes $1.8 million of purchase accounting adjustments related to inventory reserves.

(B) The goodwill recorded for the acquisition of Navico is partially deductible for tax purposes.

(C) Includes $3.5 million of purchase accounting adjustments related to contingency reserves.

(D) Includes $18.4 million of purchase accounting adjustments related to taxes.

Pro Forma Financial Information (Unaudited)

The pro forma information has been prepared as if the Navico acquisition and the related debt financing had occurred on January 1, 2021. These pro forma results are based on estimates and assumptions which the Company believes to be reasonable. They are not the results that would have been realized had the acquisition actually occurred on January 1, 2021 and are not necessarily indicative of Brunswick's consolidated net earnings in future periods. The pro forma results include adjustments primarily related to the amortization of intangible assets and interest expense on the notes issued in the third quarter of 2021 as noted in Note 14 – Debt. Additionally, non-recurring pro forma adjustments include transaction costs of $13.8 million and expenses related to inventory fair value adjustments of $18.1 million, recognized as part of the application of purchase accounting.

The pro forma results reflect an effective income tax rate of 21 percent for the years ended December 31, 2022 and December 31, 2021. Purchase accounting is final for the Navico acquisition.

Other 2021 Acquisitions

On September 1, 2021, the Company acquired substantially all the net assets of RELiON Battery, LLC (RELiON). RELiON is a global provider of lithium batteries and related products to multiple industry sectors. The acquisition of RELiON complements the Company's existing portfolio of advanced battery and power management brands. On September 17, 2021, the Company acquired substantially all the net assets of SemahTronix, LLC, a global supplier of high-complexity electrical wiring harnesses for advanced products in the marine, mobile and defense industries. The acquisition of the SemahTronix assets enhances the Company's integrated systems offerings by providing the Company and the Company's global customers access to high-quality, large, complex electrical wire harnessing systems that further enable the Company's end-to-end systems solutions and capabilities. These acquisitions are included as part of the Navico Group segment. Purchase accounting is final for these acquisitions.

On July 9, 2021, the Company acquired Fanautic Club, one of the largest European boat clubs with 23 locations in major coastal cities and tourist centers across Spain. The Company also acquired certain Freedom Boat Club franchise operations and territory rights in the United States during 2021. Acquiring such assets enables Brunswick to accelerate growth by increasing its investments in these markets. These acquisitions are included as part of the Boat segment. Purchase accounting is final for these acquisitions.

The Company paid net cash consideration of $66.1 million for these acquisitions. The opening balance sheets included $36.8 million of goodwill and $24.1 million of identifiable intangible assets, including customer relationships and trade names of $17.2 million and $6.9 million, respectively. The amount assigned to customer relationships will be amortized over the estimated useful life of 10 years. Transaction costs associated with these acquisitions of $1.8 million were expensed as incurred within Selling, general and administrative expense during 2021. The acquisitions are not material to our net sales, results of operations or total assets during any period presented. Accordingly, the Company's consolidated results of operations do not differ materially from historical performance as a result of the acquisitions, and pro forma results for prior periods are not presented.

Note 5 –Segment Information

Effective January 1, 2023, the Company changed its management reporting and updated its reportable segments to Propulsion, Engine P&A, Navico Group and Boat to align with our internal operating structure.

The Company's segments are defined by management's reporting structure and operating activities. The Company's reportable segments are the following:

Propulsion. The Propulsion segment manufactures and markets a full range of outboard, sterndrive, and inboard engines, as well as propulsion-related controls, rigging, and propellers. These products are principally sold directly to boat builders, including Brunswick's Boat segment, and through marine retail dealers worldwide. The Propulsion segment primarily markets under the Mercury, Mercury MerCruiser, Mariner, Mercury Racing, Mercury Diesel, Avator and Fliteboard brands. The segment's engine manufacturing plants are located mainly in the United States and China, along with a joint venture in Japan, with sales mainly to markets in the Americas, Europe and Asia-Pacific.

Engine P&A. The Engine P&A segment manufactures, markets, supplies and distributes products for both marine and non-marine markets. These products are designed for and sold mostly to aftermarket retailers, distributors, and distribution businesses, as well as original equipment manufacturers (including Brunswick brands). Company-branded products include consumables, such as engine oils and lubricants, and are sold under the Mercury, Mercury Precision Parts, Quicksilver and Seachoice brands. The Engine P&A segment also includes distribution businesses such as Land 'N' Sea, Kellogg Marine Supply, Lankhorst Taselaar, BLA and Payne's Marine Group, which distribute third party and Company products. These businesses are leading distributors of marine parts and accessories throughout North America, Europe and Asia-Pacific. The segment's manufacturing and distribution facilities are primarily located in North America, Europe, Australia and New Zealand.

Navico Group. The Navico Group segment designs, develops, manufactures, and markets products and systems for the marine, RV, specialty vehicle, mobile and industrial markets, as well as aftermarket channels. Navico Group's brand portfolio includes the Ancor, Attwood, B&G, BEP, Blue Sea Systems, C-MAP, CZone, Lenco, Lowrance, Marinco, Mastervolt, MotorGuide, Progressive Industries, ProMariner, RELiON, Simrad and Whale brand names. These brands span multiple categories, including marine electronics, sensors, control systems, instruments, power systems and general accessories. The segment's manufacturing and distribution facilities are primarily located in North America, Europe, Australia and New Zealand.

Boat. The Boat segment designs, manufactures, and markets the following boat brands and products: Sea Ray sport boats and cruisers; Bayliner sport cruisers, runabouts, and Heyday wake boats; Boston Whaler fiberglass offshore boats; Lund fiberglass fishing boats; Crestliner, Harris, Lowe, Lund and Princecraft aluminum fishing, utility, pontoon boats, and deck boats; Thunder Jet heavy-gauge aluminum boats; and Veer recreational and fishing boats designed specifically to support electric propulsion. The Boat segment also includes Brunswick boat brands based in Europe and Asia-Pacific, which include Quicksilver, Navan, Rayglass (including Protector and Legend) and Uttern. The Boat segment procures substantially all of its engines from Brunswick's Propulsion segment, and boats often include other parts and accessories supplied by the Engine P&A and Navico Group segments. The Boat segment's products are manufactured mainly in the United States, Europe, Mexico and Canada and sold through a global network of dealer and distributor locations, primarily in North America and Europe.

The Boat segment also includes Business Acceleration which, through innovative service models, shared access solutions, including the Freedom Boat Club business acquired in 2019, dealer services and emerging technology, aims to provide exceptional experiences to attract a wide range of customers to the marine industry and shape the future of boating.

The Company evaluates performance based on segment operating earnings. Segment operating earnings do not include the expenses of corporate administration, impairments or gains on the sale of equity investments, earnings from unconsolidated affiliates, other expenses and income of a non-operating nature, transaction financing charges, interest expense and income or provisions or benefits for income taxes.

Corporate/Other results include items such as corporate staff and administrative costs, investments in technology solutions, business development and other growth-related expenses, including IT enhancements. Corporate/Other total assets consist of mainly cash, cash equivalents and investments in short-term marketable securities, restricted cash, income tax balances and investments in unconsolidated affiliates.

Segment eliminations adjust for sales between the Company's reportable segments and primarily relate to the sale of engines and parts and accessories to various boat brands, which are consummated at established arm's length transfer prices as the intersegment pricing for these engines and parts and accessories are based upon and consistent with selling prices to third-party customers.

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

Geographic Segments

Note 6 –Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. There is a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable.

•Level 1 - Quoted prices in active markets for identical assets or liabilities. These are typically obtained from real-time quotes for transactions in active exchange markets involving identical assets or liabilities.

•Level 2 - Inputs, other than quoted prices included within Level 1, which are observable for the asset or liability, either directly or indirectly. These are typically obtained from readily available pricing sources for comparable instruments.

•Level 3 - Unobservable inputs for which there is little or no market activity for the asset or liability. These inputs reflect the reporting entity's own assumptions of the data that market participants would use in pricing the asset or liability, based on the best information available in the circumstances.

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

Refer to Note 12 – Financial Instrumentsfor additional information related to the fair value of derivative assets and liabilities by class.

Note 7 – Investments

Investments in Marketable Securities

The Company may invest a portion of its cash reserves in marketable debt securities. These investments are reported in Short-term investments in marketable securities on the Consolidated Balance Sheets.

The following is a summary of the fair values, which were equal to the amortized costs, of the Company's available-for-sale securities, all due in one year or less, as of December 31, 2023 and 2022.

The Company had $3.8 million, $56.4 million and $55.9 million of maturities of available-for-sale securities in 2023, 2022, and 2021, respectively.

Equity Investments

The Company has certain unconsolidated international and domestic affiliates that are accounted for using the equity method. The equity method is applied in situations in which the Company has the ability to exercise significant influence, but not control, over the investees. Management reviews equity investments for impairment whenever indicators are present, suggesting that the carrying value of an investment is not recoverable. The following items are examples of impairment indicators: significant, sustained declines in an investee’s revenue, earnings, and cash flow trends; adverse market conditions of the investee’s industry or geographic area; the investee’s inability to execute its operating plan; the investee’s inability to continue operations measured by several items, including liquidity; and other factors. Once an impairment indicator is identified, management uses considerable judgment to determine if the decline in value is other-than-temporary. If the decline in value is determined to be other-than-temporary, then the equity investment is written down to its estimated fair value. Such a write down could negatively impact reported results of operations.

The Company has a 50 percent interest in TN-BC Holdings LLC (the Joint Venture), which is a joint venture accounted for as an equity method investment, between the Company and TechNexus Holdings LLC formed in 2017. During the year ended December 31, 2023, the Company recorded an impairment charge of $19.2 million due to a decline in the fair value of its investment in the Joint Venture, as a result of a reduction in value of certain of the Joint Venture's underlying investments. The impairment charge is included in Equity (loss) earnings in the Consolidated Statements of Operations.

The Company has a 50 percent interest in a Japanese manufacturing company, Tohatsu Marine Corporation (TMC), which is accounted for as an equity method investment. The Company purchases engines from TMC, which are sold mostly in international markets. The Company reported a net amount payable to TMC of $15.5 million and $43.1 million as of December 31, 2023 and December 31, 2022, respectively, within Accounts payable in the Consolidated Balance Sheets. Purchases from TMC were $80.2 million, $137.7 million and $135.1 million in 2023, 2022, and 2021, respectively.

Refer to Note 8 – Financing Joint Venture for more details on the Company’s Brunswick Acceptance Company, LLC joint venture.

Note 8 –Financing Joint Venture

The Company, through its Brunswick Financial Services Corporation (BFS) subsidiary, owns a 49 percent interest in a joint venture, Brunswick Acceptance Company, LLC (BAC). CDF Joint Ventures, LLC (CDFJV), a subsidiary of Wells Fargo and Company, owns the remaining 51 percent.

In March of 2021, the parties entered into an amended and restated joint venture agreement (JV Agreement) to extend the term of their financial services through December 31, 2025, which included expanded financing to Freedom Boat Club franchisees. The JV Agreement contains a financial covenant that conforms to the maximum leverage ratio test in the Credit Facility described in Note 14 – Debt. The JV Agreement contains provisions allowing for the renewal of the agreement or the purchase of the other party's interest in the joint venture at the end of its term. Alternatively, either partner may terminate the agreement at the end of its term.

BAC is funded in part through a $1.0 billion secured borrowing facility from Wells Fargo Commercial Distribution Finance, LLC (WFCDF), which is in place through the term of the joint venture, and with equity contributions from both partners. BAC also sells a portion of its receivables to a securitization facility, the Wells Fargo Dealer Floorplan Master Note Trust, which is arranged by Wells Fargo. The sales of these receivables meet the requirements of a "true sale" and are therefore not retained on the financial statements of BAC. Neither the Company nor any of its subsidiaries guarantee the indebtedness of BAC. In addition, BAC is not responsible for any continuing servicing costs or obligations with respect to the securitized receivables.

The Company considers BFS's investment in BAC as an investment in a variable interest entity of which the Company is not the primary beneficiary. As a result, the Company accounts for BFS's investment in BAC under the equity method and records it as a component of Equity investments in its Consolidated Balance Sheets. The Company records BFS's share of income or loss in BAC based on its ownership percentage in the joint venture in Equity (loss) earnings in its Consolidated Statements of Operations. BFS's equity investment is adjusted monthly to maintain a 49 percent interest in accordance with the capital provisions of the JV Agreement. The Company funds its investment in BAC through cash contributions and reinvested earnings. BFS's total investment in BAC as of December 31, 2023 and December 31, 2022 was $27.2 million and $20.3 million, respectively.

The Company's maximum loss exposure relating to BAC is detailed as follows:

(A)Repurchase and recourse obligations are off-balance sheet obligations provided by the Company for the Propulsion, Engine P&A, Navico Group and Boat segments, respectively, and are included within the Maximum Potential Obligations disclosed in Note 11 – Commitments and Contingencies. Repurchase and recourse obligations include a North American repurchase agreement with WFCDF and could be reduced by repurchase activity occurring under other similar agreements with WFCDF and affiliates. The Company's risk under these repurchase arrangements is partially mitigated by the value of the products repurchased as part of the transaction. Amounts above exclude any potential recoveries from the value of the repurchased product.

(B)Represents accrued amounts for potential losses related to recourse exposure and the Company's expected losses on obligations to repurchase products, after giving effect to proceeds anticipated to be received from the resale of these products to alternative dealers.

BFS recorded income related to the operations of BAC of $8.6 million, $4.5 million and $2.1 million in Equity (loss) earnings in the Consolidated Statements of Operations for the years ended December 31, 2023, 2022 and 2021, respectively.

Cash Flows

BFS reported cash flows from operating activities of $8.2 million, $4.3 million and $2.1 million within Other, net on the Consolidated Statements of Cash Flows in 2023, 2022 and 2021, respectively.

In 2023, BFS reported net cash flows from investing activities within Investments on the Consolidated Statements of Cash Flows. Such cash flows for 2023 were $(6.4) million, consisting of $7.2 million of cash received and $(13.6) million of cash contributions; in 2022 were $(9.2) million, consisting of $2.8 million of cash received and $(12.0) million of cash contributions; and in 2021 were $2.5 million, consisting of $6.5 million of cash received and $(4.0) million of cash contributions.

Note 9 –Goodwill and Other Intangibles

Changes in the Company's goodwill by segment during the periods ended December 31, 2023 and 2022 are summarized below:

See Note 4 – Acquisitionsfor further details on the Company's acquisitions. Adjustments in both periods include the effect of foreign currency translation on goodwill denominated in currencies other than the U.S. dollar. In addition, adjustments during the year ended December 31, 2023 also include $4.8 million of purchase accounting adjustments from 2022 Freedom Boat Club acquisitions, a majority of which related to boat fleet fair market value adjustments.

As discussed in Note 1 – Significant Accounting Policies, effective January 1, 2023, we changed our reportable segments. Concurrent with the change in reportable segments, the Navico Group operating segment is now also the reporting unit at which we evaluate goodwill for impairment. As a result of this change, we evaluated impairment indicators at the previous reporting units immediately prior to the change and at the Navico Group reporting unit immediately following the change and concluded there were no indicators of impairment.

The Company performed its required fourth quarter goodwill impairment assessment and determined the fair value of its reporting units exceeded the carrying value, and therefore, no goodwill impairment was recorded. As part of the impairment assessment, we determined that our Navico Group reporting unit had an estimated fair value that was not significantly in excess of its carrying value. The Navico Group reporting unit has goodwill assigned to it of $599.7 million as of December 31, 2023 and its fair value exceeded its carrying value by approximately 10% in the current year impairment assessment. As the fair value is not significantly in excess of the carrying value, we performed sensitivity analyses on certain assumptions. Holding other assumptions constant, a 100 basis point increase in the discount rate results in the fair value of the reporting unit approximating its carrying value. Holding other assumptions constant, a 100 basis point decrease in the forecasted revenue compound annual growth rate would not result in an impairment. There was no accumulated impairment loss on Goodwill as of December 31, 2023 or 2022.

The Company's intangible assets, included within Other intangibles, net on the Consolidated Balance Sheets as of December 31, 2023 and 2022, are summarized by intangible asset type below:

(A) The weighted average remaining amortization period for Customer relationships, Developed technology and Other intangibles assets was 11.2 years, 12.7 years, and 4.0 years, respectively, as of December 31, 2023.

Other intangible assets primarily consist of software, patents and franchise agreements. Gross and related accumulated amortization amounts include adjustments related to the impact of foreign currency translation. See Note 4 – Acquisitions for further details on intangibles acquired during 2023 and 2022. Aggregate amortization expense for intangibles was $68.6 million, $63.3 million and $36.0 million for the years ended December 31, 2023, 2022 and 2021, respectively. Estimated amortization expense for intangible assets is $69.3 million for each of the years ending December 31, 2024, 2025, 2026, and 2027, and $69.1 million for the year ending December 31, 2028.

The Company tests its intangible assets for impairment during the fourth quarter of each year, or whenever a change in events and circumstances (triggering event) occurs that indicates the fair value of intangible assets may be below their carrying values. The Company recorded impairment charges of $16.6 million during the year ended December 31, 2023, including a $13.0 million impairment of its Navico trade name as a result of declines in forecasted revenues primarily driven by macroeconomic factors and a decline in market conditions and a $3.0 million impairment associated with the decision to no longer go to market under the Garelick trade name. The Company recorded $17.4 million of impairment charges during the year ended December 31, 2022 related to capitalized software intangible assets that will not be placed into service. The Company did not record any intangible asset impairments in 2021.

Note 10 –Income Taxes

The sources of Earnings before income taxes were as follows:

The Income tax provision consisted of the following:

Temporary differences and carryforwards giving rise to deferred tax assets and liabilities as of December 31, 2023 and 2022 are summarized in the table below:

As of December 31, 2023, the Company had a total valuation allowance against its deferred tax assets of$71.3 million. The remaining realizable value of deferred tax assets as of December 31, 2023 was determined by evaluating the potential to recover the value of these assets through the utilization of tax loss and credit carrybacks, the reversal of existing taxable temporary differences and carryforwards, certain tax planning strategies and future taxable income exclusive of reversing temporary differences and carryforwards. As of December 31, 2023, the Company retained valuation allowance reserves of $50.2 million against deferred tax assets in the U.S. primarily related to state tax credits that are subject to restrictive rules for future utilization, various state operating loss carryforwards, and non-amortizable intangibles and valuation allowances of $21.1 million for deferred tax assets related to foreign jurisdictions, primarily Luxembourg.

As of December 31, 2023, the tax benefit of loss carryforwards totaling $60.3 million was available to reduce future tax liabilities. This deferred tax asset was comprised of $1.1 million for the tax benefit of federal net operating loss (NOL) carryforwards, $24.0 million for the tax benefit of state NOL carryforwards and $35.2 million for the tax benefit of foreign NOL carryforwards. NOL carryforwards of $43.1 million expire at various intervals between the years 2024 and 2043, while $17.2 million have an unlimited life.

As of December 31, 2023, tax credit carryforwards totaling $56.1 million were available to reduce future tax liabilities. This deferred tax asset was comprised of $6.6 million related to federal tax credits, $48.4 million of various state tax credits related to research and development, capital investment and job incentives and $1.1 million related to foreign tax credits. These tax credit carryforwards expire at various intervals between the years 2024 and 2042.

No deferred income taxes have been provided as of December 31, 2023 or 2022 on the applicable undistributed earnings of the non-U.S. subsidiaries where the indefinite reinvestment assertion has been applied. If at some future date these earnings cease to be indefinitely reinvested and are repatriated, the Company may be subject to additional U.S. income taxes and foreign withholding and other taxes on such amounts. Remittances from foreign subsidiaries are generally not subject to U.S. income taxation. These remittances are either excluded from U.S. taxable income as earnings that have already been subjected to taxation or in the alternative are subject to a 100 percent foreign dividends received deduction. The Company continues to provide deferred taxes, primarily related to foreign withholding taxes, on the undistributed net earnings of foreign subsidiaries and unconsolidated affiliates that are not deemed to be indefinitely reinvested in operations outside the United States, although such amounts were immaterial as of December 31, 2023 and 2022. We have not provided for deferred taxes on the outside basis differences in our investments in our foreign subsidiaries. A determination of the unrecognized deferred taxes related to these outside basis differences is not practicable.

As of December 31, 2023, 2022 and 2021 the Company had $9.3 million, $7.8 million and $10.1 million of gross unrecognized tax benefits, including interest, respectively. Substantially all of these amounts, if recognized, would impact the Company's tax provision and the effective tax rate.

The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense. As of December 31, 2023, 2022 and 2021, the amounts accrued for interest and penalties were not material.

The following is a reconciliation of the total amounts of unrecognized tax benefits excluding interest and penalties for the 2023, 2022 and 2021 annual reporting periods:

The Company believes it is reasonably possible that the total amount of gross unrecognized tax benefits as of December 31, 2023 could decrease by approx imately$2.1 million in 2024 due to settlements with taxing authorities or lapses in applicable statutes of limitation. Due to the various jurisdictions in which the Company files tax returns and the uncertainty regarding the timing of the settlement of tax audits, it is possible that there could be significant changes in the amount of unrecognized tax benefits in 2024, but the amount cannot be estimated at this time.

The Company is regularly audited by federal, state and foreign tax authorities. The Internal Revenue Service (IRS) has completed its field examination and has issued its Revenue Agents Report through the 2014 tax year and all open issues have been resolved. The Company is currently open to tax examinations by the IRS for the 2020 through 2022 tax years. The Company is open to state and local tax audits in major tax jurisdictions dating back to the 2017 taxable year. The Company is no longer subject to income tax examinations by any major foreign tax jurisdiction for years prior to 2015.

Many countries are implementing local legislation based upon the Organization for Economic Co-operation and Development’s base erosion and profit shifting project, the Pillar Two framework, which imposes a global minimum corporate tax rate of 15%. The Company will continue to monitor the implementation of the Pillar Two rules in the jurisdictions in which it operates.

The difference between the actual income tax provision and the tax provision computed by applying the statutory Federal income tax rate to Earnings before income taxes is attributable to the following:

For the year ended December 31, 2023, the Company recorded $17.8 million of income tax expense related to an increase in its valuation allowance on deferred tax assets and $53.1 million of income tax expense related to the intercompany sales of intellectual property (IP) rights. The valuation allowance increase is primarily due to certain federal tax credits, impairment of certain investments, and state credits and NOLs that may not be realized in future years. The sales of the IP rights were to better align the ownership of these rights with how our business operates.

During 2021, the Company recorded a $21.0 million income tax benefit related to the release of a portion of the Company’s valuation allowance. This was due to a reassessment of the realizability of certain federal tax credits, state tax credits and state NOLs. The conclusion to release the valuation allowance was based upon sustained positive operating performance of its U.S. operations and the availability of expected future taxable income, leading the Company to believe that it is more likely than not that the benefit of these U.S. deferred tax assets will be realized.

Note 11 –Commitments and Contingencies

Financial Commitments

The Company has entered into guarantees of indebtedness of third parties, primarily in connection with customer financing programs. Under these arrangements, the Company has guaranteed customer obligations to the financial institutions in the event of customer default, generally subject to a maximum amount that is less than the total outstanding obligations. The Company has also extended guarantees to third parties that have purchased customer receivables from Brunswick and, in certain instances, has guaranteed secured term financing of its customers. Potential payments in connection with these customer financing arrangements generally extend over several years. The single year and maximum potential cash obligations associated with these customer financing arrangements as of December 31, 2023 and December 31, 2022 were $66.6 millionand $71.7 million, respectively.

In most instances, upon repurchase of the receivable or note, the Company receives rights to the collateral securing the financing. The Company’s risk under these arrangements is partially mitigated by the value of the collateral that secures the financing.

The Company has accounts receivable sale arrangements with third parties which are included in the guarantee arrangements discussed above. The Company treats the sale of receivables in which the Company retains an interest as a secured obligation as the transfers of the receivables under these arrangements do not meet the requirements of a "true sale." Accordingly, the current portion of receivables underlying these arrangements of $4.3 million and $4.1 million was recorded in Accounts and notes receivable and Accrued expenses as of December 31, 2023 and December 31, 2022, respectively. As of December 31, 2023 and 2022, the Company did not have any long-term receivables related to these arrangements.

The Company has also entered into arrangements with third party lenders in which it has agreed, in the event of a customer or franchisee default, to repurchase from the third party lender those Brunswick products repossessed from the customer or franchisee. These arrangements are typically subject to a maximum repurchase amount. The single year and maximum potential cash payments the Company could be required to make to repurchase collateral as of December 31, 2023 and December 31, 2022 were $81.1 million and $69.9 million, respectively. Included within this repurchase amount are amounts related to BAC, as discussed in Note 8 – Financing Joint Venture.

The Company’s risk under these repurchase arrangements is partially mitigated by the value of the products repurchased as part of the transaction. The Company had $1.7 million and $0.8 million accrued for potential losses related to repurchase exposure as of December 31, 2023 and December 31, 2022, respectively. The Company’s repurchase accrual represents the expected losses that could result from obligations to repurchase products, after giving effect to proceeds anticipated to be received from the resale of those products to alternative dealers.

The Company has recorded its estimated net liability associated with losses from these guarantee and repurchase obligations on its Consolidated Balance Sheets based on historical experience and current facts and circumstances. Historical cash requirements and losses associated with these obligations have not been significant, but could increase if dealer defaults exceed current expectations.

Financial institutions have issued standby letters of credit and surety bonds conditionally guaranteeing obligations on behalf of the Company totaling $8.5 million and $18.4 million, respectively, as of December 31, 2023. A large portion of these standby letters of credit and surety bonds are related to the Company’s self-insured workers' compensation program as required by its insurance companies and various state agencies. The Company has recorded reserves to cover the anticipated liabilities associated with these programs. Under certain circumstances, such as an event of default under the Company's revolving credit facility, or, in the case of surety bonds, a ratings downgrade, the Company could be required to post collateral to support the outstanding letters of credit and surety bonds. The Company was not required to post letters of credit as collateral against surety bonds as of December 31, 2023.

The Company has a collateral trust arrangement with insurance carriers and a trustee bank. The trust is owned by the Company, but the assets are pledged as collateral against workers’ compensation related obligations in lieu of other forms of collateral including letters of credit. In connection with this arrangement, the Company had $8.3 million and $8.0 million of cash in the trust as of December 31, 2023 and December 31, 2022, respectively, which was classified as Restricted cash in the Company's Consolidated Balance Sheets.

Product Warranties

The Company records a liability for product warranties at the time of the related product sale. The liability is estimated using historical warranty experience, projected claim rates and expected costs per claim. The Company adjusts its liability for specific warranty matters when they become known and the exposure can be estimated. Product failure rates as well as material usage and labor costs incurred in correcting a product failure affect the Company's warranty liabilities. If actual costs differ from estimated costs, the Company must make a revision to the warranty liability. Changes in the Company's warranty liabilities resulting from the Company's experience and adjustments related to changes in estimates are included as aggregate changes for preexisting warranties presented in the table below.

The following activity related to product warranty liabilities was recorded in Accrued expenses during the years ended December 31, 2023 and December 31, 2022:

Extended Product Warranties

End users of the Company's products may purchase a contract from the Company that extends product warranty beyond the standard period. For certain extended warranty contracts in which the Company retains the warranty or administration obligation, a deferred revenue liability is recorded based on the aggregate sales price for contracts sold. The liability is reduced and revenue is recognized on a straight-line basis over the contract period during which corresponding costs are expected to be incurred.

The following activity related to deferred revenue for extended product warranty contracts was recorded in Accrued expenses and Other long-term liabilities during the years ended December 31, 2023 and December 31, 2022:

Legal

The Company accrues for litigation exposure when it is probable that future costs will be incurred and such costs can be reasonably estimated. Adjustments to estimates are recorded in the period they are identified. Management does not believe that there is a reasonable possibility that a material loss exceeding the amounts already recognized for the Company's litigation claims and matters, if any, has been incurred. In light of existing accruals, the Company's litigation claims, when finally resolved, are not expected, in the opinion of management, to have a material adverse effect on the Company's consolidated financial position, results of operations or cash flows.

Environmental

The Company is involved in certain legal and administrative proceedings under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 and other federal and state legislation governing the generation and disposal of certain hazardous wastes. These proceedings, which involve both on- and off-site waste disposal or other contamination, in many instances seek compensation or remedial action from the Company as a waste generator under Superfund legislation, which authorizes action regardless of fault, legality of original disposition or ownership of a disposal site. The Company has established accruals based on a range of cost estimates for all known claims.

The environmental remediation and clean-up projects in which the Company is involved have an aggregate estimated range of exposure of approximately $14.4 million to $37.8 million as of December 31, 2023. As of December 31, 2023 and 2022, the Company had accruals for environmental liabilities of $14.7 million and $15.4 million, respectively, which were recorded within Accrued expenses and Other long-term liabilities in the Consolidated Balance Sheets. The Company recorded $0.7 million, $0.1 million and $0.4 million of environmental provisions for the years ended December 31, 2023, 2022 and 2021, respectively.

The Company accrues for environmental remediation-related activities for which commitments or clean-up plans have been developed and for which costs can be reasonably estimated. All accrued amounts are generally determined in consultation with third party experts on an undiscounted basis and do not consider recoveries from third parties until such recoveries are realized. In light of existing accruals, the Company's environmental claims, when finally resolved, are not expected to have a material adverse effect on the Company's consolidated financial position, results of operations or cash flows.

Note 12 –Financial Instruments

The Company operates globally with manufacturing and sales facilities around the world, and therefore, is subject to both financial and market risk. The Company utilizes normal operating and financing activities, along with derivative financial instruments, to minimize these risks.

Derivative Financial Instruments. The Company uses derivative financial instruments to manage its risks associated with movements in foreign currency exchange rates and interest rates. Derivative instruments are not used for trading or speculative purposes. The Company formally documents its hedge relationships, including identification of the hedging instruments and the hedged items, as well as its risk management objectives and strategies for undertaking the hedge transaction. This process includes linking derivatives that are designated as hedges to specific forecasted transactions. The Company also assesses, both at the hedge’s inception and monthly thereafter, whether the derivatives used in hedging transactions are highly effective in offsetting the changes in the anticipated cash flows of the hedged item. If the hedging relationship ceases to be highly effective, or it becomes probable that a forecasted transaction is no longer expected to occur, the Company discontinues hedge accounting prospectively and immediately recognizes the gains and losses associated with those hedges. There were no material adjustments as a result of ineffectiveness to the results of operations for the years ended December 31, 2023, 2022 and 2021. The fair value of derivative financial instruments is determined through market-based valuations and may not be representative of the actual gains or losses that will be recorded when these instruments mature due to future fluctuations in the markets in which they are traded. The effects of derivative financial instruments are not expected to be material to the Company’s financial position or results of operations when considered together with the underlying exposure being hedged. Use of derivative financial instruments exposes the Company to credit-risk with its counterparties when the fair value of a derivative contract is an asset. The Company mitigates this risk by entering into derivative contracts with highly rated counterparties. The maximum amount of loss due to counterparty credit-risk is limited to the asset value of derivative financial instruments.

Cash Flow Hedges. The Company enters into certain derivative instruments that are designated and qualify as cash flow hedges. The Company executes both forward and option contracts, based on forecasted transactions, to manage foreign currency exchange exposure mainly related to inventory purchase and sales transactions.

A cash flow hedge requires that as changes in the fair value of derivatives occur, the portion of the change deemed to be effective is recorded temporarily in Accumulated other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. As of December 31, 2023, the term of derivative instruments hedging forecasted transactions ranged up to 21 months.

The following activity related to cash flow hedges was recorded in Accumulated other comprehensive income (loss) as of December 31:

Other Hedging Activity. The Company has entered into certain foreign currency forward contracts that have not been designated as a hedge for accounting purposes. These contracts are used to manage foreign currency exposure related to changes in the value of assets or liabilities caused by changes in foreign exchange rates. The change in the fair value of the foreign currency derivative contract and the corresponding change in the fair value of the asset or liability of the Company are both recorded through earnings, each period as incurred.

Cross-Currency Swaps. The Company enters into cross-currency swaps to hedge Euro currency exposures of the net investment in certain foreign subsidiaries. The cross-currency swaps were designated as net investment hedges, with the amount of gain or loss associated with the change in fair value of these instruments deferred within Accumulated other comprehensive income (loss) and recognized upon termination of the respective investment. During the fourth quarter of 2023, the company entered into $250.0 million of cross-currency swap contracts. During 2022, the company settled $450.0 million of cross-currency swap contracts resulting in a deferred gain of $42.5 million within Accumulated other comprehensive income (loss). As of December 31, 2023, the notional value of cross-currency swap contracts outstanding was $250.0 million. There were no cross-currency swaps outstanding as of December 31, 2022.

Commodity Price. The Company uses commodity swaps to hedge anticipated purchases of aluminum and copper. As of December 31, 2023 and 2022, the notional value of commodity swap contracts outstanding was$31.8 million and $24.1 million, respectively. The amount of gain or loss associated with the change in fair value of these instruments is deferred in Accumulated other comprehensive income (loss) and recognized in Cost of sales in the same period or periods during which the hedged transaction affects earnings. As of December 31, 2023, the Company estimates that during the next 12 months it will reclassify$0.9 million ofnet losses (based on current prices) from Accumulated other comprehensive income (loss) to Cost of sales.

Foreign Currency Derivatives. The Company enters into forward and option contracts to manage foreign exchange exposure related to forecasted transactions and assets and liabilities that are subject to risk from foreign currency rate changes. These exposures include: product costs; revenues and expenses; associated receivables and payables; intercompany obligations and receivables and other related cash flows.

Forward exchange contracts outstanding as of December 31, 2023 and December 31, 2022 had notional contract values of $694.6 million and $684.8 million, respectively. There were no option contracts outstanding as of December 31, 2023 or December 31, 2022. The forward contracts outstanding as of December 31, 2023 mature during 2024 and 2025 and mainly relate to the Euro, Australian dollar, Norwegian krone and Canadian dollar. As of December 31, 2023, the Company estimates that, during the next 12 months, it will reclassify approximately$1.7 million of net gains (based on rates as of December 31, 2023) from Accumulated other comprehensive income (loss) to Cost of sales.

Interest-Rate Derivatives. The Company previously entered into forward-starting interest rate swaps to hedge the interest rate risk associated with anticipated debt issuances. During 2022, the Company entered into and settled a series of treasury-lock swaps to hedge the interest-rate risk associated with debt issuances, resulting in a net deferred gain of $5.1 million. There were no forward-starting interest rate swaps or treasury-lock swaps outstanding as of December 31, 2023 or December 31, 2022.

The Company had net deferred gains associated with forward-starting interest-rate swaps and the treasury-lock swaps discussed above of $3.3 million and $3.2 million, as of December 31, 2023 and December 31, 2022, respectively. These instruments were designated as cash flow hedges with gains and losses included in Accumulated other comprehensive income (loss). As of December 31, 2023, the Company estimates that during the next 12 months, it will reclassify approximately $0.1 million of net gain resulting from Accumulated other comprehensive income (loss) to Interest expense.

As of December 31, 2023 and December 31, 2022, the fair values of the Company’s derivative instruments were:

As of December 31, 2023 and December 31, 2022, asset derivatives are included within Prepaid expenses and other, and liability derivatives are included within Accrued expenses and Other long-term liabilities in the Consolidated Balance Sheets.

The effect of derivative instruments on the Consolidated Statements of Operations for the years ended December 31, 2023 and December 31, 2022 is as shown in the tables below.

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

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

Fair Value of Other Financial Instruments. The carrying values of the Company’s short-term financial instruments, including cash and cash equivalents and accounts and notes receivable, approximate their fair values because of the short maturity of these instruments. As of December 31, 2023 and December 31, 2022, the fair value of the Company’s long-term debt, including current maturities, and short-term debt was approximately $2,228.2 million and $2,225.0 million, respectively, and was determined using Level 1 and Level 2 inputs described in Note 6 – Fair Value Measurements, including quoted market prices or discounted cash flows based on quoted market rates for similar types of debt. The carrying value of long-term debt, including current maturities, and short-term debt was $2,458.7 million and $2,540.5 million as of December 31, 2023 and December 31, 2022, respectively.

Note 13 –Accrued Expenses

Accrued Expenses as of December 31, 2023 and 2022 were as follows:

Note 14 – Debt

The following table provides the changes in the Company's debt for the year ended December 31, 2023:

(A) During the third quarter of 2023, $450.0 million of 0.85% Senior Notes due 2024 were reclassified from Long-term debt to Current maturities of long-term debt.

Long-term debt as of December 31, 2023 and December 31, 2022 consisted of the following:

(A) Included in Debentures,7.375% due 2023 as of December 31, 2022, are the aggregate fair values related to the fixed-to-floating interest rate swaps as discussed in Note 12 – Financial Instruments. During the third quarter of 2022, the Debentures were reclassified from Long-term debt to Current maturities of long-term debt, of which the remaining principal payments were paid during the third quarter of 2023.

There were no debt issuance costs paid in 2023. Debt issuance costs paid for the years ended December 31, 2022 and 2021 were $8.2 million and $7.1 million, respectively. Debt issuance costs are reported in Net proceeds from issuances of long-term debt within cash flows from financing activities on the Consolidated Statements of Cash Flows.

Scheduled maturities as of December 31, 2023 consisted of the following:

Activity

2032 and 2052 Notes

In March 2022, the Company issued an aggregate principal amount of $450.0 million of 4.400% Senior Notes due 2032 (the 2032 Notes) and $300.0 million of 5.100% Senior Notes due 2052 (the 2052 Notes and, together with the 2032 Notes, the Notes) in a public offering, which resulted in aggregate net proceeds to the Company of $741.8 million. The Company used the net proceeds from the sale of the Notes for general corporate purposes.

2024 and 2031 Notes

In August 2021, the Company issued an aggregate principal amount of $450.0 million of 0.850% Senior Notes due 2024 (the 2024 Notes) and $550.0 million of 2.400% Senior Notes due 2031 (the 2031 Notes) in a public offering, which resulted in aggregate net proceeds to the Company of $992.9 million. Net proceeds from the offering were used for the acquisition of Navico and for general corporate purposes.

Tender Offers

In August 2021, the Company commenced tender offers to purchase for cash the 7.375% debentures due 2023 (2023 Debentures) and 7.125% Notes due 2027 (2027 Notes). The tender offers expired on August 10, 2021. At the expiration date, $23.4 million of the $103.1 million aggregate principal amount of outstanding 2023 Debentures and $2.5 million of the $163.3 million aggregate principal amount of outstanding 2027 Notes were validly tendered and not validly withdrawn. This amount excludes outstanding securities tendered pursuant to the guaranteed delivery procedures described in the tender offer documents, which remain subject to the holders' performance of the delivery requirements under such procedures. The Company recognized a loss on early extinguishment of debt of $4.2 million related to the tender offers.

Debentures

During 2023, the Company made the remaining principal repayments, totaling $79.7 million, of its 2023 Debentures. The debentures were repaid at 100 percent of the principal amount plus accrued interest in accordance with the provisions of the debentures.

Term Loan

During 2022, the Company made the remaining principal repayments, totaling $56.3 million, of its 2023 floating-rate term loan. The term loan was redeemed at 100 percent of the principal amount plus accrued interest in accordance with the redemption provisions of the term loan. The Company recognized a loss on early extinguishment of debt of $0.1 million related to the term loan redemption. During 2021, the Company made principal repayments totaling $95.0 million.

Senior Notes due 2049

In March 2019, the Company issued an aggregate principal amount of $230.0 million of its 6.375% Senior Notes due April 2049 (6.375% Notes) in a public offering, which resulted in aggregate net proceeds to the Company of $222.0 million. Net proceeds from the offering of the 6.375% Notes were used to prepay all of the $150.0 million, 3-year tranche loan due 2021 and for general corporate purposes.

Credit Facility

The Company maintains a Revolving Credit Agreement (Credit Facility). In March 2022, the Company amended its Credit Facility with certain wholly-owned subsidiaries of the Company as subsidiary borrowers and lenders as parties, and JPMorgan as administrative agent. This amends and restates the Credit Facility dated as of March 21, 2011, as amended and restated on July 16, 2021. The amended Credit Facility increased the revolving commitments to $750.0 million, with the capacity to add up to $100.0 million of additional revolving commitments, and amended the Credit Facility in certain respects, including, among other things:

•Extending the maturity date to March 31, 2027, with up to two one-year extensions available.

•Transitioning the reference rate for loans denominated in U.S. dollars from the London Interbank Offered Rate (LIBOR) to the term Secured Overnight Financing Rate (SOFR) with a credit-spread adjustment of 10 basis points to be added to the reference rate for borrowings of U.S. dollar loans for each interest period.

The Company currently pays a credit facility fee of 15 basis points per annum. The facility fee per annum will be within a range of 12.5 to 30 basis points based on the Company's credit rating. Under the terms of the Credit Facility, the Company has two borrowing options: borrowing at a rate tied to adjusted SOFR rate plus 10 basis points plus a spread of 110 basis points or a base rate plus a margin of 10 basis points. The rates are determined by the Company's credit ratings, with spreads ranging from 100 to 170 basis points for SOFR rate borrowings and 0 to 70 basis points for base rate borrowings. The Company is required to maintain compliance with two financial covenants included in the Credit Facility: a minimum interest coverage ratio and a maximum net leverage ratio. The minimum interest coverage ratio, as defined in the agreement, is not permitted to be less than 3.00 to 1.00. The maximum net leverage ratio, as defined in the agreement, is not permitted to be more than 3.50 to 1.00 but allows for a 12-month increase to 4.00 to 1.00 following the consummation of a Qualified Acquisition (as such term is defined in the Amended Credit Facility). As of December 31, 2023, the Company was in compliance with the financial covenants in the Credit Facility.

During 2023, there were no borrowings under the Credit Facility, and available borrowing capacity as of December 31, 2023 totaled $741.9 million, net of $8.1 million of letters of credit outstanding under the Credit Facility.

During 2022, gross borrowings under the Credit Facility totaled $125.0 million. As of December 31, 2022, there were no borrowings outstanding, and available borrowing capacity totaled $747.2 million, net of $2.8 million of letters of credit outstanding under the Credit Facility. The maximum amount utilized during 2022, including letters of credit outstanding under the Credit Facility, was $127.8 million.

Commercial Paper

In December 2019, the Company entered into an unsecured commercial paper program (CP Program) pursuant to which the Company may issue short-term, unsecured commercial paper notes (CP Notes). During 2022, the Company increased the size of its CP Program to allow the issuance of CP Notes in an aggregate principal amount not to exceed $500.0 million. The CP Program previously allowed the Company to issue CP Notes in an aggregate principal amount not to exceed $300.0 million outstanding at any time. Amounts available under the CP Program may be borrowed, repaid and re-borrowed from time to time with the aggregate principal amount of CP Notes outstanding under the CP Program at any time not exceeding the lower of $500.0 million or the available borrowing amount under the Credit Facility. The net proceeds of the issuances of the CP Notes are expected to be used for general corporate purposes. The maturities of the CP Notes will vary but may not exceed 397 days from the date of issue. The CP Notes will be sold under customary terms in the commercial paper market and will be issued at a discount to par or alternatively, will be issued at par and bear varying interest rates on a fixed or floating basis. During 2023, borrowings under the CP Program totaled $485.0 million, all of which were repaid during the period. During 2023, the maximum amount utilized under the CP Program was $125.0 million. During 2022, borrowings under the CP Program totaled $500.0 million, all of which were repaid during the period. During 2022, the maximum amount utilized under the CP Program was $300.0 million.

General Provisions

The table below summarizes the general provisions of these long-term debt instruments.

(A) If the Company elects to redeem the debt instrument, it will pay a "make-whole" redemption price set forth in the respective indenture.

(B) If the Company experiences a change of control, subject to certain circumstances, the Company may be required to repurchase some or all of the notes for an amount equal to 101 percent of the outstanding principal plus any accrued and unpaid interest.

Note 15 –Postretirement Benefits

Defined Contribution Plan and Other Pension/Postretirement Benefit Plans. The Company has defined contribution plans and makes contributions including matching and annual discretionary contributions which are based on various percentages of compensation and in some instances, are based on the amount of the employees' contributions to the plans. The expense related to the defined contribution plans was $47.0 million in 2023, $58.0 million in 2022 and $47.1 million in 2021.

The Company also maintains a nonqualified pension plan and an other postretirement benefit plan. The funded status of the nonqualified pension plan includes projected and accumulated benefit obligations of $17.0 million and $18.6 million as of December 31, 2023 and 2022, respectively. The other postretirement plan is frozen. The funded status of the other postretirement benefit plan includes projected and accumulated benefit obligations of $19.9 million and $21.1 million as of December 31, 2023 and 2022, respectively.

The Company's foreign pension and other postretirement plans are not significant, individually or in the aggregate. The projected benefit obligation, net of plan assets for the Company's foreign pension plans, was $15.1 million and $11.5 million as of December 31, 2023 and 2022, respectively.

Activity impacting the Consolidated Statements of Operations and Consolidated Statements of Cash Flows related to these plans was immaterial in 2023, 2022, and 2021.

Note 16 –Stock Plans and Management Compensation

On May 3, 2023, the Company's shareholders approved the Brunswick Corporation 2023 Stock Incentive Plan (Plan), which replaced the Company's 2014 Stock Incentive Plan. Under the Plan, the Company may grant stock options, stock appreciation rights (SARs), non-vested stock units, performance awards, and other share-based or cash-based awards to executives, other employees, non-employee directors and persons expected to become officers, other employees and non-employee directors with shares from treasury shares and from authorized, but unissued, shares of common stock initially available for grant, in addition to: (i) the forfeiture of past awards; (ii) shares not issued upon the net settlement of SARs; or (iii) shares delivered to or withheld by the Company to pay the withholding taxes related to awards. As of December 31, 2023,3.6 million shares remained available for grant.

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

Non-Vested Stock Units

The Company grants both stock-settled and cash-settled non-vested stock units to key employees as determined by management and the Human Resources and Compensation Committee of the Board of Directors. Non-vested stock units have vesting periods of three years. Non-vested stock units are eligible for dividends, which are reinvested, and are non-voting. All non-vested units have restrictions on the sale or transfer of such awards during the vesting period.

Generally, grants of non-vested stock units are forfeited if employment is terminated prior to vesting. Non-vested stock units vest pro rata over one year if (i) the grantee has attained the age of 62, as long as the grantee also has a minimum of three years of continuous service from his or her most recent hire date, or (ii) the grantee's age plus total years of service equals 70 or more.

The Company recognizes the cost of non-vested stock units on a straight-line basis over the requisite service period. Additionally, cash-settled, non-vested stock units are recorded as a liability on the balance sheet and adjusted to fair value each reporting period through stock compensation expense. During the years ended December 31, 2023, 2022 and 2021, the Company charged $20.4 million, $18.2 million and $16.3 million, respectively, to compensation expense for non-vested stock units. The related income tax benefit recognized in 2023, 2022 and 2021 was $5.0 million, $4.5 million and $4.0 million, respectively. The fair value of shares vested during 2023, 2022 and 2021 was $24.5 million, $16.7 million and $11.3 million, respectively.

The weighted average price per non-vested stock unit at grant date was $88.00, $93.62 and $91.14 for units granted in 2023, 2022 and 2021, respectively. Non-vested stock unit activity for the year ended December 31, 2023 was as follows:

As of December 31, 2023, there was $14.2 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements. The Company expects this expense to be recognized over a weighted average period of 1.4 years.

Performance Awards

In 2023, 2022 and 2021, the Company granted performance shares to certain senior executives. Performance share awards are based on three performance measures: a cash flow return on investment (CFROI) measure, an operating margin (OM) measure and a total shareholder return (TSR) modifier. Performance shares are earned based on a three-year performance period commencing at the beginning of the calendar year of each grant. The performance shares earned are then subject to a TSR modifier based on stock returns measured against stock returns of a predefined comparator group over a three-year performance period. Additionally, in 2023, 2022 and 2021, the Company granted 36,170,24,320 and 24,560 performance shares, respectively, to certain officers and certain senior managers based on the respective measures and performance periods described above but excluding a TSR modifier.

The fair values of the senior executives' performance share award grants with a TSR modifier at the grant date in 2023, 2022 and 2021 were $88.47, $94.59 and $91.44, respectively, which were estimated using the Monte Carlo valuation model, and incorporated the following assumptions:

The fair value of certain officers' and certain senior managers' performance awards granted based solely on the CFROI and OM performance factors was $83.97, $91.62 and $87.48, which was equal to the stock price on the date of grant in 2023, 2022 and 2021, respectively, less the present value of dividend payments over the vesting period.

The Company recorded compensation expense related to performance awards of $2.1 million, $3.6 million and $13.5 million in 2023, 2022 and 2021, respectively. The related income tax benefit recognized in 2023, 2022 and 2021 was $0.5 million, $0.9 million and $3.3 million, respectively. The fair value of awards vested during 2023, 2022 and 2021 was $16.2 million, $14.6 million and $18.6 million, respectively.

Performance award activity for the year ended December 31, 2023 was as follows:

As of December 31, 2023, the Company had $1.3 million of total unrecognized compensation expense related to performance awards. The Company expects this expense to be recognized over a weighted average period of 1.6 years.

Director Awards

The Company issues stock awards to non-employee directors in accordance with the terms and conditions determined by the Nominating and Corporate Governance Committee of the Board of Directors. A portion of each director’s annual fee is paid in Brunswick common stock, the receipt of which may be deferred until a director retires from the Board of Directors. Each director may elect to have the remaining portion paid in cash, in Brunswick common stock distributed at the time of the award, or in deferred Brunswick common stock units with a 20 percent premium.

Note 17 –Comprehensive Income (Loss)

The following table presents reclassification adjustments out of Accumulated other comprehensive income (loss) during the years ended December 31, 2023, 2022 and 2021:

Note 18 –Treasury Stock

The Company has executed share repurchases against an authorization approved by the Board of Directors in 2022. In 2023, the Company repurchased$275.0 million of stock under this authorization and as of December 31, 2023, the remaining authorization was$121.5 million.

Treasury stock activity for the years ended December 31, 2023, 2022 and 2021 was as follows:

Note 19 – Leases

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

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

Several leases include one or more options to renew, with renewal terms that can extend the lease term from one to five years or more. The exercise of lease renewal options is at our sole discretion. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Certain of our lease agreements include rental payments that vary based on changes in volume activity, storage activity or changes in the Consumer Price Index or other indices. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Operating lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The Company has certain lease agreements that contain both lease and non-lease components, which it has elected to account for as a single lease component for all asset classes.

A summary of the Company's lease assets and lease liabilities as of December 31, 2023 and December 31, 2022 is as follows:

A summary of the Company's total lease cost for the years ended December 31, 2023, December 31, 2022 and December 31, 2021 is as follows:

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

The Company's maturity analysis of its operating lease liabilities as of December 31, 2023 is as follows:

The total weighted-average discount rate and remaining lease term for the Company's operating leases were 6.5 percent and 9.3 years, respectively, as of December 31, 2023. Total operating lease payments reflected in operating cash flows were $30.0 million for the year ended December 31, 2023.

As of December 31, 2023, we have entered into leases with total lease payments of approximately $80.5 million, primarily for office space and equipment, that have not yet commenced. These leases are expected to commence in 2024 and 2025, with lease terms of up to 14 years.

Note 20 –Supplier Finance Program Obligations

Under our supplier finance program, the Company agrees to pay Bank of America (the Bank) the stated amount of confirmed invoices from our suppliers on the original invoice payment due date. Our suppliers may request payment from the Bank at a date earlier than the payment due date stated on the original invoice in exchange for a fee in the form of a discounted invoice amount. Brunswick or the Bank may terminate the agreement upon at least 90 days’ notice. The supplier invoices that have been confirmed as valid under the program require payment ranging from 60 to 120 days from the invoice date, consistent with the terms of the original invoice. The Company does not pay the Bank any service fees or subscription fees under the program. In addition, the Company does not pledge any assets as security or provide other forms of guarantees for the committed payment to the Bank. As of December 31, 2023 and 2022, the Company had $11.6 million and $18.2 million confirmed invoices under the supplier finance program, respectively, which were included in Accounts payable on the Consolidated Balance Sheets. The roll-forward of the Company's outstanding obligations confirmed as valid under its supplier finance program for the year ended December 31, 2023 is as follows: