Black & Decker 2014 Annual Report Download - page 29

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The Company’s products could be recalled.
The Consumer Product Safety Commission or other applicable regulatory bodies may require the recall, repair or replacement
of the Company’s products if those products are found not to be in compliance with applicable standards or regulations. A recall
could increase costs and adversely impact the Company’s reputation.
The Company is exposed to credit risk on its accounts receivable.
The Company’s outstanding trade receivables are not generally covered by collateral or credit insurance. While the Company
has procedures to monitor and limit exposure to credit risk on its trade and non-trade receivables, there can be no assurance
such procedures will effectively limit its credit risk and avoid losses, which could have an adverse affect on the Company’s
financial condition and operating results.
If the Company were required to write down all or part of its goodwill, indefinite-lived trade names, or other definite-lived
intangible assets, its net income and net worth could be materially adversely affected.
As a result of the Black and Decker merger and other acquisitions, the Company has $7.276 billion of goodwill, $1.593 billion
of indefinite-lived trade names and $1.159 billion of definite-lived intangible assets at January 3, 2015. The Company is
required to periodically, at least annually, determine if its goodwill or indefinite-lived trade names have become impaired, in
which case it would write down the impaired portion of the intangible asset. The definite-lived intangible assets, including
customer relationships, are amortized over their estimated useful lives; such assets are also evaluated for impairment when
appropriate. Impairment of intangible assets may be triggered by developments outside of the Company’s control, such as
worsening economic conditions, technological change, intensified competition or other factors resulting in deleterious
consequences.
If the investments in employee benefit plans do not perform as expected, the Company may have to contribute additional
amounts to these plans, which would otherwise be available to cover operating expenses or other business purposes.
The Company sponsors pension and other post-retirement defined benefit plans. The Company’s defined benefit plan assets are
currently invested in equity securities, government and corporate bonds and other fixed income securities, money market
instruments and insurance contracts. The Company’s funding policy is generally to contribute amounts determined annually on
an actuarial basis to provide for current and future benefits in accordance with applicable law which require, among other
things, that the Company make cash contributions to under-funded pension plans. During 2014, the Company made cash
contributions to its defined benefit plans of $155 million and it expects to contribute $94 million to its defined benefit plans in
2015.
There can be no assurance that the value of the defined benefit plan assets, or the investment returns on those plan assets, will
be sufficient in the future. It is therefore possible that the Company may be required to make higher cash contributions to the
plans in future years which would reduce the cash available for other business purposes, and that the Company will have to
recognize a significant pension liability adjustment which would decrease the net assets of the Company and result in higher
expense in future years. The fair value of these assets at January 3, 2015 was $2.290 billion.
Legal or technological hurdles associated with the expansion of use of RFID and RTLS technologies in Company products
could adversely affect the Company's growth initiatives and long term results.
The Company's growth initiatives call for expansions of use of RFID and RTLS technologies both geographically and through
incorporation of these technologies into new products. In connection with these activities, the Company may encounter both
technological difficulties and legal impediments, including, but not limited to, design requirements, ownership claims and
licensing or permitting requirements, that could delay or prevent the use of these technologies in certain products and/or in
certain geographies. Any such impediments could adversely impact the Company's plans for growth and future results.
Risks associated with hostilities involving North Korea.
The Company has a number of key suppliers in South Korea. Escalation of hostilities with North Korea and/or military action
in the region could cause disruptions in the Company's supply chain which could, in turn, cause product shortages, delays in
delivery and/or increases in the Company's cost incurred to produce and deliver products to its customers.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.