Black & Decker 2011 Annual Report Download - page 68

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POSTRETIREMENT DEFINED BENEFIT PLAN — The Company uses the corridor approach to determine expense recognition
for each defined benefit pension and other postretirement plan. The corridor approach defers actuarial gains and losses resulting from
variances between actual and expected results (based on economic estimates or actuarial assumptions) and amortizes them over future
periods. For pension plans, these unrecognized gains and losses are amortized when the net gains and losses exceed 10% of the greater
of the market-related value of plan assets or the projected benefit obligation at the beginning of the year. For other postretirement
benefits, amortization occurs when the net gains and losses exceed 10% of the accumulated postretirement benefit obligation at the
beginning of the year. For ongoing, active plans, the amount in excess of the corridor is amortized on a straight-line basis over the
average remaining service period for active plan participants. For plans with primarily inactive participants, the amount in excess of
the corridor is amortized on a straight-line basis over the average remaining life expectancy of inactive plan participants.
INCOME TAXES — The Company accounts for income taxes under the asset and liability method in accordance with ASC 740,
which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been
included in the financial statements. Deferred tax assets and liabilities are determined based on the differences between the financial
statements and tax basis of assets and liabilities using the enacted tax rates in effect for the year in which the differences are expected
to reverse. Any changes in tax rates on deferred tax assets and liabilities are recognized in income in the period that includes the
enactment date.
The Company records net deferred tax assets to the extent that it is more likely than not that these assets will be realized. In making
this determination, Management considers all available positive and negative evidence, including future reversals of existing taxable
temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. In the event that it is
determined that an asset is not more likely that not to be realized, a valuation allowance is recorded against the asset.
The Company records uncertain tax positions in accordance with ASC 740 which requires a two step process, first management
determines whether it is more likely than not that a tax position will be sustained based on the technical merits of the position and
second, for those tax positions that meet the more likely than not threshold, management recognizes the largest amount of the tax
benefit that is greater than 50 percent likely to be realized upon ultimate settlement with the related taxing authority. The Company
maintains an accounting policy of recording interest and penalties on uncertain tax positions as a component of the income tax
expense on continuing operations in the Consolidated Statement of Operations.
EARNINGS PER SHARE — Basic earnings per share equals net earnings attributable to Stanley Black & Decker, Inc., less earnings
allocated to restricted stock units with non-forfeitable dividend rights, divided by weighted-average shares outstanding during the
year. Diluted earnings per share include the impact of common stock equivalents using the treasury stock method when the effect is
dilutive.
B. ACCOUNTS AND NOTES RECEIVABLE
(Millions of Dollars)
2011
2010
Trade accounts receivable ................................................................
.........
$ 1,484.0
$ 1,322.6
Trade notes receivable ................................................................
...............
100.3
57.1
Other accounts receivable ................................................................
.........
32.8
75.4
Gross accounts and notes receivable ................................
.........................
1,617.1
1,455.1
Allowance for doubtful accounts ................................
..............................
(63.9
)
(55.4)
Accounts and notes receivable, net ................................
...........................
$ 1,553.2
$ 1,399.7
Long-term trade notes receivable, net ................................
.......................
$ 131.2
$ 110.6
Trade receivables are dispersed among a large number of retailers, distributors and industrial accounts in many countries. Adequate
reserves have been established to cover anticipated credit losses. Long-term trade financing receivables of $131.2 million and $110.6
million at December 31, 2011 and January 1, 2011, respectively, are reported within Other Assets in the Consolidated Balance Sheets.
Financing receivables and long-term financing receivables are predominately related to certain security equipment leases with
commercial businesses. Generally, the Company retains legal title to any equipment leases and bears the right to repossess such
equipment in an event of default. All financing receivables are interest bearing and the Company has not classified any financing
receivables as held-for-sale. Interest income earned from financing receivables that are not delinquent is recorded on the effective
interest method. The Company considers any financing receivable that has not been collected within 90 days of original billing date as
past-due or delinquent. Additionally, the Company considers the credit quality of all past-due or delinquent financing receivables as
nonperforming.
The Company has $43.4 million of accounts receivable for sales contracts accounted for under the percentage of completion method
as of December 31, 2011. This balance relates to the Niscayah business acquired in 2011.