Black & Decker 2011 Annual Report Download - page 25

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The Company’s acquisitions may result in certain risks for its business and operations.
In 2011, the Company completed the acquisition of Niscayah and nine smaller acquisitions. In 2010, along with the Merger, the
Company completed the acquisition of CRC-Evans, as well as nine smaller acquisitions. Prior to 2010, the Company completed a
number of acquisitions, including, but not limited to, GdP, Sonitrol and Xmark in 2008. The Company may make additional
acquisitions in the future.
Acquisitions involve a number of risks, including:
• the possibility that the acquired companies will not be successfully integrated or that anticipated cost savings, synergies,
or other benefits will not be realized,
• the acquired businesses will lose market acceptance or profitability,
• the diversion of Company management’s attention and other resources,
• the incurrence of unexpected liabilities, and
• the loss of key personnel and clients or customers of acquired companies.
In addition, the success of the Company’s growth and repositioning strategy will depend in part on its ability to:
• identify suitable future acquisition candidates,
• obtain the necessary financing,
• combine operations,
• integrate departments, systems and procedures, and
• obtain cost savings and other efficiencies from the acquisitions.
Failure to effectively consummate or manage future acquisitions may adversely affect the Company’s existing businesses and harm its
operational results due to large write-offs, contingent liabilities, substantial depreciation, adverse tax or other consequences. The
Company is still in the process of integrating the businesses and operations of Niscayah, CRC-Evans and certain other smaller
acquisitions. The Company cannot ensure that such integrations will be successfully completed or that all of the planned synergies will
be realized.
Income tax payments may ultimately differ from amounts currently recorded by the Company. Future tax law changes may
materially increase the Company’s prospective income tax expense.
The Company is subject to income taxation in the U.S. as well as numerous foreign jurisdictions. Judgment is required in determining
the Company’s worldwide income tax provision and accordingly there are many transactions and computations for which the final
income tax determination is uncertain. The Company is routinely audited by income tax authorities in many tax jurisdictions.
Although management believes the recorded tax estimates are reasonable, the ultimate outcome from any audit (or related litigation)
could be materially different from amounts reflected in the Company’s income tax provisions and accruals. Future settlements of
income tax audits may have a material effect on earnings between the period of initial recognition of tax estimates in the financial
statements and the point of ultimate tax audit settlement. Additionally, it is possible that future income tax legislation may be enacted
that could have a material impact on the Company’s worldwide income tax provision beginning with the period that such legislation
becomes effective. Also, while a reduction in statutory rates would result in a favorable impact on future net earnings, it would require
an initial write down of any deferred tax assets in the related jurisdiction.
The Company’s failure to continue to successfully avoid, manage, defend, litigate and accrue for claims and litigation could
negatively impact its results of operations or cash flows.
The Company is exposed to and becomes involved in various litigation matters arising out of the ordinary routine conduct of its
business, including, from time to time, actual or threatened litigation relating to such items as commercial transactions, product
liability, workers compensation, the Company’s distributors and franchisees, intellectual property claims and regulatory actions.
In addition, the Company is subject to environmental laws in each jurisdiction in which business is conducted. Some of the
Company’s products incorporate substances that are regulated in some jurisdictions in which it conducts manufacturing operations.
The Company could be subject to liability if it does not comply with these regulations. In addition, the Company is currently, and may
in the future, be held responsible for remedial investigations and clean-up costs resulting from the discharge of hazardous substances
into the environment, including sites that have never been owned or operated by the Company but at which it has been identified as a
potentially responsible party under federal and state environmental laws and regulations. Changes in environmental and other laws and
regulations in both domestic and foreign jurisdictions could adversely affect the Company’s operations due to increased costs of
compliance and potential liability for non-compliance.