Black & Decker 2011 Annual Report Download - page 105

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considers Metro-Atlantic, Inc. to be a primary source of contamination at the site. The Company has determined that it is likely to
contest the EPA’s claims with respect to this site. Further, to the extent that the Company agrees to perform or finance additional
remedial activities at this site, it intends to seek participation or contribution from additional PRPs and insurance carriers. 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, the ultimate remedial costs associated with the site may vary from the amount accrued by the Company at December 31,
2011.
In the event that no amount in the range of probable loss is considered most likely, the minimum loss in the range is accrued. 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 Company, along with many
other companies, has been named as a PRP in a number of administrative proceedings for the remediation of various waste sites,
including 29 active Superfund sites. Current laws potentially impose joint and several liabilities upon each PRP. In assessing its
potential liability at these sites, the Company has considered the following: whether responsibility is being disputed, the terms of
existing agreements, experience at similar sites, and the Company’s volumetric contribution at these sites.
The Company’s policy is to accrue environmental investigatory and remediation costs for identified sites when it is probable that a
liability has been incurred and the amount of loss can be reasonably estimated. The amount of liability recorded is based on an
evaluation of currently available facts with respect to each individual site and includes such factors as existing technology, presently
enacted laws and regulations, and prior experience in remediation of contaminated sites. The liabilities recorded do not take into
account any claims for recoveries from insurance or third parties. As assessments and remediation progress at individual sites, the
amounts recorded are reviewed periodically and adjusted to reflect additional technical and legal information that becomes available.
As of December 31, 2011 and January 1, 2011, the Company had reserves of $164.8 million and $173.0 million, respectively, for
remediation activities associated with Company-owned properties, as well as for Superfund sites, for losses that are probable and
estimable. Of the 2011 amount, $11.7 million is classified as current and $153.1 million as long-term which is expected to be paid
over the estimated remediation period. The range of environmental remediation costs that is reasonably possible is $140.1 million to
$354.6 million which is subject to change in the near term. The Company may be liable for environmental remediation of sites it no
longer owns. Liabilities have been recorded on those sites in accordance with policy.
The environmental liability for certain sites that have cash payments beyond the current year that are fixed or reliably determinable
have been discounted using a rate of 2.1% to 4.4%, depending on the expected timing of disbursements. The discounted and
undiscounted amount of the liability relative to these sites is $19.9 million and $34.3 million, respectively. The payments relative to
these sites are expected to be $1.6 million in 2012, $3.6 million in 2013, $1.5 million in 2014, $1.5 million in 2015, $1.1 million in
2016 and $25.0 million thereafter.
The amount recorded for identified contingent liabilities is based on estimates. Amounts recorded are reviewed periodically and
adjusted to reflect additional technical and legal information that becomes available. Actual costs to be incurred in future periods may
vary from the estimates, given the inherent uncertainties in evaluating certain exposures. Subject to the imprecision in estimating
future contingent liability costs, the Company does not expect that any sum it may have to pay in connection with these matters in
excess of the amounts recorded will have a materially adverse effect on its financial position, results of operations or liquidity.
T. DISCONTINUED OPERATIONS
The Company sold three small businesses during 2011 for total cash proceeds of $27.1 million and a cumulative after-tax loss of $18.8
million. These businesses were sold as the related product lines provided limited growth opportunity or were not considered part of the
Company’s core offerings. The net loss from discontinued operations in 2010 and 2009 is primarily related to the aforementioned
divestitures in 2011, the wind-down of one small business divested in 2009, and purchase price adjustment for CST/berger in 2009
which was divested in 2008.
Two of the businesses that were divested in 2011 were part of the Security segment, while the third business was part of the Industrial
segment.
The results of operations and loss on divestiture for the three small businesses have been reported as discontinued operations, which
are summarized as follows:
(Millions of Dollars)
2
011
2010
2009
Pretax loss ................................................................................................
..............
$ (16.5) $ (2.6
)
$ (5.0)
Income taxes (benefit) ................................................................
...........................
0.2
1.3
(3.7)
Net loss from discontinued operations
................................
................................
$ (16.7) $ (3.9
)
$ (1.3)