Brunswick Corporation Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Significant Accounting Policies

Significant Accounting Policies

12 Months Ended

Dec. 31, 2023

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


(in millions)	Propulsion		Engine P&A		Navico Group		Boat		Total
December 31, 2021	$	14.7	$	233.1	$	581.8	$	58.8	$	888.4
Acquisitions	—		—		—		66.6		66.6
Adjustments	(0.7)		(0.3)		14.0		(0.4)		12.6
December 31, 2022	$	14.0	$	232.8	$	595.8	$	125.0	$	967.6
Acquisitions	38.5		—		—		14.0		52.5
Adjustments	1.6		0.2		3.9		4.9		10.6
December 31, 2023	$	54.1	$	233.0	$	599.7	$	143.9	$	1,030.7

See Note 4 – Acquisitions for 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:


	2023				2022
(in millions)	Gross Amount		Accumulated Amortization		Gross Amount		Accumulated Amortization
Intangible assets:
Customer relationships (A)	$	907.3	$	(428.6)	$	897.4	$	(386.1)
Trade names	311.5		—		305.4		—
Developed technology (A)	167.5		(24.3)		160.0		(13.3)
Other (A)	91.2		(46.6)		67.6		(33.6)
Total	$	1,477.5	$	(499.5)	$	1,430.4	$	(433.0)

(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.