Black & Decker 2014 Annual Report Download - page 114

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claim experience forms the basis for warranty obligations recognized. Adjustments are recorded to the warranty liability as new
information becomes available.
Following is a summary of the warranty liability activity for the years ended January 3, 2015, December 28, 2013, and
December 29, 2012:
(Millions of Dollars) 2014 2013 2012
Balance beginning of period.................................................................. $ 121.1 $ 123.2 $ 124.8
Warranties and guarantees issued.......................................................... 98.0 92.9 86.3
Liability assumed from acquisitions...................................................... —0.1 0.2
Warranty payments and currency.......................................................... (109.5)(95.1)(88.1)
Balance end of period............................................................................ $ 109.6 $ 121.1 $ 123.2
S. CONTINGENCIES
The Company is involved in various legal proceedings relating to environmental issues, employment, product liability, workers’
compensation claims and other matters. The Company periodically reviews the status of these proceedings with both inside and
outside counsel, as well as an actuary for risk insurance. Management believes that the ultimate disposition of these matters
will not have a material adverse effect on operations or financial condition taken as a whole.
In connection with the 2010 merger with Black & Decker, the Company assumed certain commitments and contingent
liabilities. Black & Decker is a party to litigation and administrative proceedings with respect to claims involving the discharge
of hazardous substances into the environment. Some of these assert claims for damages and liability for remedial investigations
and clean-up costs with respect to sites that have never been owned or operated by Black & Decker but at which Black &
Decker has been identified as a potentially responsible party ("PRP"). Other matters involve current and former manufacturing
facilities.
The Environmental Protection Agency (“EPA”) has asserted claims in federal court in Rhode Island against certain current and
former affiliates of Black & Decker related to environmental contamination found at the Centredale Manor Restoration Project
Superfund ("Centredale") site, located in North Providence, Rhode Island. The EPA has discovered a variety of contaminants at
the site, including but not limited to, dioxins, polychlorinated biphenyls, and pesticides. The EPA alleges that Black & Decker
and certain of its current and former affiliates are liable for site clean-up costs under the Comprehensive Environmental
Response, Compensation, and Liability Act ("CERCLA") as successors to the liability of Metro-Atlantic, Inc., a former
operator at the site, and demanded reimbursement of the EPA’s costs related to this site. Black & Decker and certain of its
current and former affiliates contest the EPA's allegation that they are responsible for the contamination, and have asserted
contribution claims, counterclaims and cross-claims against a number of other PRPs, including the federal government as well
as insurance carriers. The EPA released its Record of Decision ("ROD") in September 2012, which identified and described the
EPA's selected remedial alternative for the site. Black & Decker and certain of its current and former affiliates are contesting
the EPA's selection of the remedial alternative set forth in the ROD, on the grounds that the EPA's actions were arbitrary and
capricious and otherwise not in accordance with law, and have proposed other equally-protective, more cost-effective
alternatives. On June 10, 2014, the EPA issued an Administrative Order under Sec. 106 of CERCLA, instructing Emhart
Industries, Inc. and Black & Decker to perform the remediation of Centredale pursuant to the ROD. Black & Decker and
Emhart Industries, Inc. dispute the factual, legal and scientific bases cited by the EPA for such an Order and have provided EPA
with numerous good-faith bases for Black & Decker’s and Emhart Industries, Inc.’s declination to comply with the Order at this
time. Black & Decker and Emhart Industries, Inc. continue to vigorously litigate the issue of their liability for environmental
conditions at the Centredale site. If either or both entities are found liable, the Company's estimated remediation costs related to
the Centredale site (including the EPA’s past costs as well as costs of additional investigation, remediation, and related costs
such as EPA’s oversight costs, less escrowed funds contributed by primary PRPs who have reached settlement agreements with
the EPA), which the Company considers to be probable and reasonably estimable, range from approximately $68.1 million to
$139.7 million, with no amount within that range representing a more likely outcome until such time as the litigation is
resolved through judgment or compromise. The Company’s reserve for this environmental remediation matter of $68.1 million
reflects the fact that the EPA considers Metro-Atlantic, Inc. to be a primary source of contamination at the site. As the specific
nature of the environmental remediation activities that may be mandated by the EPA at this site have not yet been finally
determined through the on-going litigation, the ultimate remedial costs associated with the site may vary from the amount
accrued by the Company at January 3, 2015.
In the normal course of business, the Company is involved in various lawsuits and claims. In addition, the Company is a party
to a number of proceedings before federal and state regulatory agencies relating to environmental remediation. Also, the