Black & Decker 2014 Annual Report Download - page 101

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In addition, approximately 6,900 U.S. salaried and non-union hourly employees are eligible to receive a non-contributory
benefit under the Core benefit plan. Core benefit allocations range from 2% to 6% of eligible employee compensation based on
age. Approximately 3,800 U.S. employees also receive a Core transition benefit, allocations of which range from 1% to 2% of
eligible compensation based on age and date of hire. Approximately 1,600 U.S. employees are eligible to receive an additional
average 1% contribution actuarially designed to replace previously curtailed pension benefits. Allocations for benefits earned
under the Core plan were $20.7 million in 2014, $21.1 million million in 2013 and $29.4 million in 2012. Assets held in
participant Core accounts are invested in target date retirement funds which have an age-based allocation of investments.
Shares of the Company's common stock held by the ESOP were purchased with the proceeds of borrowings from the Company
in 1991 ("1991 internal loan"). Shareowners' equity reflects a reduction equal to the cost basis of unearned (unallocated) shares
purchased with the internal borrowings. In 2014 and 2013, the Company made additional contributions to the ESOP for $9.4
million and $9.5 million, respectively, which were used by the ESOP to make additional payments on the 1991 internal loan.
These payments triggered the release of 230,032 and 219,900 shares of unallocated stock, respectively.
The Company accounts for the ESOP under ASC 718-40, “Compensation — Stock Compensation — Employee Stock
Ownership Plans”. Net ESOP activity recognized is comprised of the cost basis of shares released, the cost of the
aforementioned Core and 401(k) match defined contribution benefits, less the fair value of shares released and dividends on
unallocated ESOP shares. The Company’s net ESOP activity resulted in expense of $0.7 million in 2014, $1.9 million in 2013
and $25.9 million in 2012. The decrease in net ESOP expense in 2014 and 2013 is related to the release of 230,032 and
219,900 additional shares, respectively, as discussed above. ESOP expense is affected by the market value of the Company’s
common stock on the monthly dates when shares are released. The market value of shares released averaged $88.05 in 2014,
$80.71 per share in 2013 and $70.98 per share in 2012.
Unallocated shares are released from the trust based on current period debt principal and interest payments as a percentage of
total future debt principal and interest payments. Dividends on both allocated and unallocated shares may be used for debt
service and to credit participant accounts for dividends earned on allocated shares. Dividends paid on the shares acquired with
the 1991 internal loan were used solely to pay internal loan debt service in all periods. Dividends on ESOP shares, which are
charged to shareowners’ equity as declared, were $10.6 million in 2014, $12.3 million in 2013 and $12.4 million in 2012, net of
the tax benefit which is recorded within equity. Dividends on ESOP shares were utilized entirely for debt service in all years.
Interest costs incurred by the ESOP on the 1991 internal loan, which have no earnings impact, were $4.7 million, $6.1 million
and $6.7 million for 2014, 2013 and 2012, respectively. Both allocated and unallocated ESOP shares are treated as outstanding
for purposes of computing earnings per share. As of January 3, 2015, the cumulative number of ESOP shares allocated to
participant accounts was 13,195,195, of which participants held 2,656,924 shares, and the number of unallocated shares was
2,346,162. At January 3, 2015, there were 23,157 released shares in the ESOP trust holding account pending allocation. The
Company made cash contributions totaling $3.4 million in 2014, $30.7 million in 2013 and $36.6 million in 2012 excluding
additional contributions of $9.4 million and $9.5 million in 2014 and 2013, respectively, as discussed previously.
PENSION AND OTHER BENEFIT PLANS — The Company sponsors pension plans covering most domestic hourly and
certain executive employees, and approximately 13,500 foreign employees. Benefits are generally based on salary and years of
service, except for U.S. collective bargaining employees whose benefits are based on a stated amount for each year of service.
The Company contributes to a number of multi-employer plans for certain collective bargaining U.S. employees. The risks of
participating in these multiemployer plans are different from single-employer plans in the following aspects:
a. Assets contributed to the multiemployer plan by one employer may be used to provide benefit to employees of other
participating employers.
b. If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be inherited by
the remaining participating employers.
c. If the Company chooses to stop participating in some of its multiemployer plans, the Company may be required to
pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability.
In addition, the Company also contributes to a number of multiemployer plans outside of the U.S. The foreign plans are
insured, therefore, the Company’s obligation is limited to the payment of insurance premiums.
The Company has assessed and determined that none of the multiemployer plans to which it contributes are individually
significant to the Company’s financial statements. The Company does not expect to incur a withdrawal liability or expect to
significantly increase its contributions over the remainder of the contract period.
In addition to the multiemployer plans, various other defined contribution plans are sponsored worldwide.