Annual report pursuant to Section 13 and 15(d)

Investments

v2.4.0.6
Investments
 12 Months Ended
Dec. 31, 2011
Investments [Abstract]  
Investments
Note 7 – Investments

Investments in Marketable Securities

The Company invests a portion of its cash reserves in marketable debt securities. These investments, which have an original maturity of up to two years, are reported in either Short-term or Long-term investments in marketable securities on the Consolidated Balance Sheets. Furthermore, the debt securities have readily determinable market values and are being accounted for as available-for-sale investments. These investments are recorded at fair market value with unrealized gains and losses reflected in Accumulated other comprehensive loss, a component of Shareholders' equity on the Company's Consolidated Balance Sheets, on an after-tax basis.

The following is a summary of the Company's available-for-sale securities as of December 31, 2011:

 
(in millions)
  
Amortized
cost
    
Gross
unrealized
gains
    
Gross
 unrealized
 losses
  
Fair value
(net carrying
 amount)
                       
Agency Bonds
   $ 97.7     $ -     $ (0.1 )   $ 97.6
Corporate Bonds
     51.7       -       -       51.7
Commercial Paper
     19.5       -       -       19.5
U.S. Treasury Bills
     0.8       -       -       0.8
                               
Total available-for-sale securities
   $ 169.7     $ -     $ (0.1 )   $ 169.6

The following is a summary of the Company's available-for-sale securities as of December 31, 2010:

 
(in millions)
  
Amortized
cost
    
Gross
unrealized
 gains
    
Gross
 unrealized
 losses
    
Fair value
 (net carrying
 amount)
                       
Corporate Bonds
   $ 44.5     $ -     $ (0.1 )   $ 44.4
Agency Bonds
     31.0       -       -       31.0
Commercial Paper
     29.5       -       -       29.5
U.S. Treasury Bills
     0.8       -       -       0.8
                               
Total available-for-sale securities
   $ 105.8     $ -     $ (0.1 )   $ 105.7

The net carrying value and estimated fair value of debt securities at December 31, 2011, by contractual maturity, are shown below:

(in millions)
  
Amortized
 cost
    
Fair value
 (net carrying
 amount)
     
Available-for-sale debt securities:
    
Due in one year or less
   $ 76.7     $ 76.7
Due after one year through two years
     93.0       92.9
               
Total available-for-sale debt securities
   $ 169.7     $ 169.6
 
The net carrying value and estimated fair value of debt securities at December 31, 2010, by contractual maturity, are shown below:
 
(in millions)
  
Amortized
 cost
    
Fair value
 (net carrying
amount)
     
Available-for-sale debt securities:
    
Due in one year or less
   $ 84.8     $ 84.7
Due after one year through two years
     21.0       21.0
               
Total available-for-sale debt securities
   $ 105.8     $ 105.7

There were $125.4 million in sales and $71.5 million in redemptions of available-for-sale securities during 2011. There were no sales or redemptions of available-for-sale securities in 2010. The net adjustment to Unrealized investment losses on available-for-sale securities included in Accumulated other comprehensive loss on the Consolidated Balance Sheets was ($0.1) million at December 31, 2011 and December 31, 2010.

At each reporting date, management reviews the debt securities to determine if any loss in the value of a security below its amortized cost should be considered “other-than-temporary.” For the evaluation, management determines whether it intends to sell, or if it is more likely than not that it will be required to sell the securities. This determination considers current and forecasted liquidity requirements, regulatory and capital requirements and the strategy for managing the Company's securities portfolio. For all impaired debt securities for which there was no intent or expected requirement to sell, the evaluation considers all available evidence to assess whether it is likely the amortized cost value will be recovered. The Company also considers the nature of the securities, the credit rating or financial condition of the issuer, the extent and duration of the unrealized loss, market conditions and whether the Company intends to sell or more likely than not the Company will be required to sell the debt securities.  The Company has not made a decision to sell securities with unrealized losses and believes it is more likely than not that it would not be required to sell such securities before recovering its amortized cost. Based on the results of this evaluation, management concluded that as of December 31, 2011, the unrealized losses related to debt securities are temporary.

The majority of the unrealized losses relates to changes in interest rates and market spreads subsequent to purchase. The Company does not consider the credit-related unrealized losses on its debt securities to be material. The securities that have unrealized losses at December 31, 2011 are Agency Bonds that are highly-rated.

Equity Investments

The Company has certain unconsolidated international and domestic affiliates that are accounted for using the equity method. Refer to Note 8 – Financial Services for more details on the Company's Brunswick Acceptance Company, LLC joint venture. The Company did not make any contributions to its other joint ventures in 2011, but contributed $12.4 million and $0.7 million in 2010 and 2009, respectively.
 
Brunswick received dividends from its unconsolidated affiliates of $0.4 million, $2.4 million and $0.3 million for the years ended December 31, 2011, 2010 and 2009, respectively.
 
The Company's sales to and purchases from its equity investments, along with the corresponding receivables and payables, were not material to the Company's overall results of operations for the years ended December 31, 2011, 2010 and 2009, or its financial position as of December 31, 2011 and 2010.

In December 2011, the Company announced plans to dissolve its Cummins MerCruiser Diesel Marine LLC joint venture between Brunswick's Mercury Marine division and Cummins Marine, a division of Cummins Inc., by the end of the second quarter of 2012. This announcement resulted in a $3.8 million charge to Equity loss in the Consolidated Statements of Operations during the year ended December 31, 2011.