Black & Decker 2014 Annual Report Download - page 111

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As discussed in Note A. Significant Accounting Policies, the Company adopted ASU 2013-11 during the first quarter of 2014.
This ASU provides that a liability related to an unrecognized tax benefit would be offset against a deferred tax asset for a net
operating loss carryforward, a similar tax loss or a tax credit carryforward if such settlement is required or expected in the event
the uncertain tax position is disallowed. As a result, the Company reclassified $142.9 million of unrecognized tax benefits as of
January 3, 2015, which is reflected in the Operating loss, capital loss and tax credit carryforwards line above.
The Company’s liability on undistributed foreign earnings decreased by$49.7 million during 2014, of which $6.0 million was
recorded to the income tax provision and $43.7 million was recorded to currency translation adjustments within Accumulated
other comprehensive loss. The amount recorded to currency translation adjustments was driven by the significant fluctuations
in foreign exchange rates during 2014, which had the effect of reducing the liability.
Net operating loss carry forwards of $1,097.0 million as of January 3, 2015, are available to reduce future tax obligations of certain
U.S. and foreign companies. The net operating loss carry forwards have various expiration dates beginning in 2015 with certain
jurisdictions having indefinite carry forward periods. The U.S. federal capital loss carry forward of $763.3 million begins expiring
in 2015. The capital loss carry forward is primarily attributable to the sale of shares for the U.S. HHI business during the tax year
ended December 29, 2012. The U.S. foreign tax credit carry forwards of $112.4 million and research and development tax credit
carry forwards of $18.1 million begin expiring in 2021 and 2030, respectively.
A valuation allowance is recorded on certain deferred tax assets if it has been determined it is more likely than not that all or a
portion of these assets will not be realized. The Company recorded a valuation allowance of $551.9 million and $549.7 million
for deferred tax assets existing as of January 3, 2015 and December 28, 2013, respectively. The valuation allowance is primarily
attributable to foreign and state net operating loss carry forwards and a U.S. federal capital loss carry forward, the majority of
which, was realized upon the sale of the HHI business. Capital losses are only allowed to offset capital gains, of which none are
expected to be realized as of January 3, 2015.
The classification of deferred taxes as of January 3, 2015 and December 28, 2013 is as follows:
(Millions of Dollars) 2014 2013
Deferred
Tax Asset
Deferred
Tax Liability
Deferred
Tax Asset
Deferred
Tax Liability
Current........................................................................... $(137.4) $ 11.9 $(68.0) $ 17.8
Non-current.................................................................... (108.7) 992.7 (170.2) 899.7
Total............................................................................... $(246.1) $ 1,004.6 $(238.2) $ 917.5
Income tax expense (benefit) attributable to continuing operations consisted of the following:
(Millions of Dollars) 2014 2013 2012
Current:
Federal.................................................................................................. $ 18.4 $ 84.0 $ 12.7
Foreign ................................................................................................. 141.1 123.5 104.7
State...................................................................................................... 17.1 (3.0) 8.8
Total current......................................................................................... $ 176.6 $ 204.5 $ 126.2
Deferred:
Federal.................................................................................................. $ 55.3 $(77.1) $ 15.7
Foreign ................................................................................................. (19.3)(50.6)(59.0)
State...................................................................................................... 14.5 (8.2)(7.1)
Total deferred....................................................................................... 50.5 (135.9)(50.4)
Income taxes on continuing operations.................................................. $ 227.1 $ 68.6 $ 75.8
Net income taxes paid during 2014, 2013 and 2012 were $113.7 million, $147.3 million and $197.5 million, respectively. The
2014 amount includes refunds of $47.1 million primarily related to prior year overpayments and closing of tax audits. The 2013
amount includes refunds of $64.5 million primarily related to the closing of a tax audit and a foreign tax credit carry back
claim. The 2012 amount includes refunds of $49.8 million primarily related to U.S. NOL carry back claim.