Annual report pursuant to Section 13 and 15(d)

Investments

v2.4.0.8
Investments
 12 Months Ended
Dec. 31, 2013
Investments [Abstract]  
Investments
Note 8 – 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, 2013:
 
(in millions)
Amortized
cost
 
Gross
unrealized
gains
 
Gross
unrealized
losses
 
Fair value
(net carrying amount)
Corporate Bonds
$
11.9

 
$
—

 
$
—

 
$
11.9

U.S. Treasury Bills
0.8

 
—

 
—

 
0.8

Total available-for-sale securities
$
12.7

 
$
—

 
$
—

 
$
12.7


The following is a summary of the Company’s available-for-sale securities as of December 31, 2012:
 
(in millions)
Amortized
cost
 
Gross
unrealized
gains
 
Gross
unrealized
losses
 
Fair value
(net carrying amount)
Agency Bonds
$
59.2

 
$
—

 
$
—

 
$
59.2

Corporate Bonds
66.4

 
—

 
—

 
66.4

Commercial Paper
16.0

 
—

 
—

 
16.0

Certificate of Deposit
2.0

 
—

 
—

 
2.0

U.S. Treasury Bills
0.8

 
—

 
—

 
0.8

Total available-for-sale securities
$
144.4

 
$
—

 
$
—

 
$
144.4


The net carrying value and estimated fair value of debt securities at December 31, 2013, 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
$
12.7

 
$
12.7

Total available-for-sale debt securities
$
12.7

 
$
12.7


The net carrying value and estimated fair value of debt securities at December 31, 2012, 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
$
92.3

 
$
92.3

Due after one year through two years
52.1

 
52.1

Total available-for-sale debt securities
$
144.4

 
$
144.4


 
The Company had $35.7 million in sales and $116.9 million in redemptions of available-for-sale securities during 2013. During the second quarter of 2013, proceeds from the redemptions and sales of available-for-sale securities were used to partially fund the repurchase of the remaining outstanding Senior notes due in 2016. Refer to Note 15 – Debt for more information. The Company had $48.9 million in sales and $178.8 million in redemptions of available-for-sale securities during 2012. The net adjustment to Unrealized investment losses on available-for-sale securities included in Accumulated other comprehensive loss on the Consolidated Balance Sheets was $0.0 million and $0.1 million for the years ended December 31, 2013 and 2012, respectively. 

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 whether it is more likely than not the Company will be required to sell the debt securities.   As of December 31, 2013, there were no unrealized losses related to debt securities that required management evaluation.

Equity Investments

The Company has certain unconsolidated international and domestic affiliates that are accounted for using the equity method. Refer to Note 9 – Financial Services for more details on the Company’s Brunswick Acceptance Company, LLC joint venture. In 2013, the Company contributed $0.8 million to fund a part ownership of Mercury Finance, a joint venture between Brunswick's Mercury Marine division and KHS, an Australian-based finance company. The Company did not make any contributions to its other joint ventures in 2012 or 2011.

Brunswick received dividends from its unconsolidated affiliates of $0.6 million, $0.3 million, and $0.4 million, for the years ended December 31, 2013, 2012 and 2011, 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, 2013, 2012, and 2011, or its financial position as of December 31, 2013 and 2012.

In December 2011, the Company announced plans to dissolve the Cummins MerCruiser Diesel Marine LLC joint venture between Brunswick's Mercury Marine division and Cummins Marine, a division of Cummins Inc. 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. During the second quarter of 2012, the joint venture ceased operations and began the liquidation process as the joint venture's business activities were transitioned to the parent companies. The liquidation process was completed in 2013.