XML 51 R12.htm IDEA: XBRL DOCUMENT
v2.4.0.6

Commitments and Contingencies | 9 Months Ended
--- | ---
Sep. 29, 2012
Commitments and Contingencies Disclosure [Abstract] |
Commitments and Contingencies | Note 7 – 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 total obligations outstanding. 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 potential cash obligations associated with these customer financing arrangements as of September 29, 2012 and October 1, 2011 were:
| Single Year Obligation |  | Maximum Obligation
(in millions) | September 29, 2012 |  | October 1, 2011 |  | September 29, 2012 |  | October 1, 2011
Marine Engine | $ | 4.1 |  |  | $ | 6.2 |  |  | $ | 4.1 |  |  | $ | 6.2 |
Boat | 2.5 |  |  | 2.3 |  |  | 2.5 |  |  | 2.3 |
Fitness | 26.9 |  |  | 36.4 |  |  | 31.5 |  |  | 42.0 |
Bowling & Billiards | 1.2 |  |  | 2.9 |  |  | 2.0 |  |  | 5.3 |
Total | $ | 34.7 |  |  | $ | 47.8 |  |  | $ | 40.1 |  |  | $ | 55.8 |
In most instances, upon repurchase of the debt obligation, 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 had $2.7 million and $5.0 million accrued for potential losses related to recourse exposure at September 29, 2012 and October 1, 2011, respectively. The Company has also entered into arrangements with third-party lenders where it has agreed, in the event of a default by the customer, to repurchase from the third-party lender those Brunswick products repossessed from the customer. These arrangements are typically subject to a maximum repurchase amount. The potential cash payments the Company could be required to make to repurchase collateral as of September 29, 2012 and October 1, 2011 were:
| Single Year Obligation |  | Maximum Obligation
(in millions) | September 29, 2012 |  | October 1, 2011 |  | September 29, 2012 |  | October 1, 2011
Marine Engine | $ | 1.5 |  |  | $ | 1.6 |  |  | $ | 1.5 |  |  | $ | 1.6 |
Boat | 81.0 |  |  | 85.5 |  |  | 101.0 |  |  | 105.5 |
Bowling & Billiards | — |  |  | 0.1 |  |  | — |  |  | 0.1 |
Total | $ | 82.5 |  |  | $ | 87.2 |  |  | $ | 102.5 |  |  | $ | 107.2 |
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 $2.1 million and $1.7 million accrued for potential losses related to repurchase exposure at September 29, 2012 and October 1, 2011, respectively. The Company’s repurchase accrual represents the expected losses resulting 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 Condensed 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. 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 these arrangements do not meet the requirements of a “true sale.” Accordingly, the current portion of these arrangements of $39.2 million and $45.0 million was recorded in Accounts and notes receivable and Accrued expenses as of September 29, 2012 and December 31, 2011, respectively. Further, the long-term portion of these arrangements of $23.9 million and $33.2 million as of September 29, 2012 and December 31, 2011, respectively, was recorded in Other long-term assets and Other long-term liabilities. Financial institutions have issued standby letters of credit and surety bonds conditionally guaranteeing obligations on behalf of the Company totaling $44.9 million as of September 29, 2012. 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 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 below investment grade, the Company could be required to post collateral to support the outstanding letters of credit and surety bonds. As the Company’s current long-term debt ratings are below investment grade, the Company has posted letters of credit totaling $6.2 million as collateral against $19.0 million of outstanding surety bonds as of September 29, 2012. During the third quarter of 2011, the Company entered into a collateral trust arrangement with an insurance carrier and a trustee bank. The trust is owned by the Company, but the assets are pledged as collateral against workers’ compensation related obligations. In connection with this arrangement, the Company transferred $20.0 million of cash into the trust, and canceled an equal amount of letters of credit which had been previously provided as collateral against these obligations. The cash assets included in the trust are classified as Restricted cash on the Company’s Condensed Consolidated Balance Sheet. Product Warranties The Company records a liability for product warranties at the time revenue is recognized. 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. The Company’s warranty reserves are affected by product failure rates as well as material usage and labor costs incurred in correcting a product failure. If actual costs differ from estimated costs, the Company must make a revision to the warranty reserve. The following activity related to product warranty liabilities was recorded in Accrued expenses during the nine months ended September 29, 2012 and October 1, 2011:
| Nine Months Ended
(in millions) | September 29, 2012 |  | October 1, 2011
Balance at beginning of period | $ | 133.2 |  |  | $ | 151.3 |
Payments made | (56.6 | ) |  | (63.7 | )
Provisions/additions for contracts issued/sold | 48.5 |  |  | 51.8 |
Aggregate changes for preexisting warranties | (2.2 | ) |  | (0.6 | )
Warranty liability assumed from joint venture | 7.4 |  |  | — |
Balance at end of period | $ | 130.3 |  |  | $ | 138.8 |
In the second quarter of 2012, the Company assumed its share of the warranty liability from Cummins MerCruiser Diesel Marine LLC, the joint venture between Brunswick’s Mercury Marine division and Cummins Marine, a division of Cummins Inc., in connection with the dissolution of the joint venture as discussed in Note 10 – Investments. Additionally, customers in the Company's Marine Engine, Boat and Fitness segments 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 liability is recorded based on the aggregate sales price for contracts sold. The deferred liability is reduced and revenue is recognized over the contract period during which costs are expected to be incurred. Deferred revenue associated with contracts sold by the Company that extend product protection beyond the standard product warranty period, not included in the table above, was $47.9 million and $41.4 million at September 29, 2012 and December 31, 2011, respectively, and is recorded in Accrued expenses and Other long-term liabilities. Legal and Environmental The Company accrues for litigation exposure based upon its assessment, made in consultation with counsel, of the likely range of exposure stemming from the claim. Management does not expect, in light of existing reserves, that the Company’s litigation claims, when finally resolved, will have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. If current estimates for the cost of resolving any claims are later determined to be inadequate, results of operations could be adversely affected in the period in which additional provisions are required. Aside from the discussion set forth under Part II, Item 1 "Legal Proceedings" of the Quarterly Report on Form 10-Q for the period ended March 31, 2012, there were no significant changes to the legal and environmental commitments that were discussed in Note 11 to the consolidated financial statements in the 2011 Form 10-K.

X
- Details
Name: | us-gaap_CommitmentsAndContingenciesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for commitments and contingencies. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 450 -SubTopic 20 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6952336&loc=d3e14435-108349 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 460 -SubTopic 10 -Section 50 -Paragraph 8 -URI http://asc.fasb.org/extlink&oid=6398077&loc=d3e12565-110249 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name FASB Interpretation (FIN) -Number 14 -Paragraph 3 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 440 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6394976&loc=d3e25287-109308 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 5 -Paragraph 9, 10, 11, 12 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.25) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6449706&loc=d3e16207-108621 + Details
Name: | us-gaap_CommitmentsAndContingenciesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration