Black & Decker 2010 Annual Report Download - page 81

ADVERTISING COSTS — Television advertising is expensed the first time the advertisement airs, whereas
other advertising is expensed as incurred. Advertising costs are classified in SG&A and amounted to
$120.7 million in 2010, $30.8 million in 2009 and $39.3 million in 2008. Expense pertaining to cooperative
advertising with customers reported as a reduction of net sales was $200.0 million in 2010, $23.3 million in
2009 and $29.0 million in 2008. Cooperative advertising with customers classified as SG&A expense
amounted to $5.8 million in 2010, $5.7 million in 2009 and $6.6 million in 2008.
ACQUISITION COSTS — In fiscal 2010 and 2009 costs associated with new business acquisitions are
expensed as incurred as required under SFAS No. 141(R), “Business Combinations,” (“FAS 141(R)”) codified
in ASC 805, “Business Combinations” (“ASC 805”). Refer to the section entitled New Accounting Standards
also included within Note A for further details. Prior to 2009, certain costs directly related to acquisitions
including legal, audit and other fees, were recorded to goodwill.
SALES TAXES — Sales and value added taxes collected from customers and remitted to governmental
authorities are excluded from Net sales reported in the Consolidated Statements of Operations.
SHIPPING AND HANDLING COSTS — The Company generally does not bill customers for freight.
Shipping and handling costs associated with inbound freight are reported in cost of sales. Shipping costs
associated with outbound freight are reported as a reduction of Net sales and amounted to $161.6 million,
$87.1 million and $129.7 million in 2010, 2009 and 2008, respectively. Distribution costs are classified as
SG&A and amounted to $198.1 million, $102.2 million and $122.2 million in 2010, 2009 and 2008,
respectively.
STOCK-BASED COMPENSATION — Compensation cost relating to stock-based compensation grants is
recognized on a straight-line basis over the vesting period, which is generally four years. The expense for stock
options and restricted stock units awarded to retirement eligible employees (those aged 55 and over, and with
10 or more years of service) is recognized on the grant date, or (if later) by the date they become retirement-
eligible.
POSTRETIREMENT DEFINED BENEFIT PLAN — The Company uses the corridor approach to deter-
mine 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 — Income tax expense is based on reported earnings before income taxes. Interest and
penalties related to income taxes are classified as Income taxes on continuing operations in the Consolidated
Statements of Operations. Deferred income taxes reflect the impact of temporary differences between assets
and liabilities recognized for financial reporting purposes and such amounts recognized for tax purposes, and
are measured by applying enacted tax rates in effect in years in which the differences are expected to reverse.
A valuation allowance is recorded to reduce deferred tax assets to the amount that is more likely than not to be
realized.
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.
SUBSEQUENT EVENTS — The Company has evaluated subsequent events through the date of issuance of
the Company’s annual financial statements.
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