Black & Decker 2015 Annual Report Download - page 52

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38
future product reliability levels and costs of repair as well as the estimated age of certain products submitted for claims, the
ultimate claim costs may differ from the recorded warranty liability. The Company also establishes a reserve for product recalls
on a product-specific basis during the period in which the circumstances giving rise to the recall become known and estimable
for both company-initiated actions and those required by regulatory bodies.
OFF-BALANCE SHEET ARRANGEMENT
SYNTHETIC LEASES — The Company is a party to synthetic leasing programs for certain locations, including one of its
major distribution centers, as well as certain U.S. personal property, predominantly vehicles and equipment. The programs
qualify as operating leases for accounting purposes, such that only the monthly rent expense is recorded in the Statement of
Operations and the liability and value of the underlying assets are off-balance sheet.
These lease programs are utilized primarily to reduce overall cost and to retain flexibility. The cash outflows for lease payments
approximate the $1 million of rent expense recognized in fiscal 2015. As of January 2, 2016 the estimated fair value of assets
and remaining obligations for these properties were $40 million and $34 million, respectively.