Black & Decker 2015 Annual Report Download - page 105

Download and view the complete annual report

Please find page 105 of the 2015 Black & Decker annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 156

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156

91
The following table presents the carrying values and fair values of the Company's financial assets and liabilities, as well as the
Company's debt, as of January 2, 2016 and January 3, 2015:
January 2, 2016 January 3, 2015
(Millions of Dollars) Carrying
Value Fair
Value Carrying
Value Fair
Value
Other investments ........................................................... $ 11.7 $ 11.7 $ 11.7 $ 11.9
Derivative assets ............................................................. $ 79.3 $ 79.3 $ 144.2 $ 144.2
Derivative liabilities........................................................ $ 96.1 $ 96.1 $ 148.4 $ 148.4
Long-term debt, including current portion...................... $ 3,841.7 $ 4,034.4 $ 3,845.7 $ 4,323.8
The other investments relate to the West Coast Loading Corporation ("WCLC") trust and are considered Level 1 instruments
within the fair value hierarchy. The long-term debt instruments are considered Level 2 instruments and are measured using a
discounted cash flow analysis based on the Company’s marginal borrowing rates. The differences between the carrying values
and fair values of long-term debt are attributable to the stated interest rates differing from the Company's marginal borrowing
rates. The fair values of the Company's variable rate short term borrowings approximate their carrying values at January 2,
2016 and January 3, 2015. The fair values of foreign currency and interest rate swap agreements, comprising the derivative
assets and liabilities in the table above, are based on current settlement values.
As discussed in Note B, Accounts and Notes Receivable, the Company has a deferred purchase price receivable related to sales
of trade receivables. The deferred purchase price receivable will be repaid in cash as receivables are collected, generally within
30 days, and as such the carrying value of the receivable approximates fair value.
Refer to Note I, Derivative Financial Instruments, for more details regarding derivative financial instruments, Note S,
Contingencies, for more details regarding the other investments related to the WCLC trust, and Note H, Long-Term Debt and
Financing Arrangements, for more information regarding the carrying values of the long-term debt.
N. OTHER COSTS AND EXPENSES
Other-net is primarily comprised of intangible asset amortization expense (See Note F, Goodwill and Intangible Assets),
currency related gains or losses, environmental remediation expense and other charges primarily consisting of merger and
acquisition-related transaction costs, as well as pension curtailments and settlements.
Research and development costs, which are classified in SG&A, were $188.0 million, $174.6 million and $170.7 million for
fiscal years 2015, 2014 and 2013, respectively.
O. RESTRUCTURING CHARGES AND ASSET IMPAIRMENTS
A summary of the restructuring reserve activity from January 3, 2015 to January 2, 2016 is as follows (in millions):
1/3/2015 Net Additions Usage Currency 1/2/2016
Severance and related costs ......................................... $ 81.2 $ 32.7 $ (66.5) $ (3.1)$ 44.3
Facility closures and asset impairments....................... 16.4 14.9 (16.6)(0.3)14.4
Total............................................................................. $ 97.6 $ 47.6 $ (83.1) $ (3.4)$ 58.7
During 2015, the Company recognized net restructuring charges and asset impairments of $47.6 million. Net severance charges
totaled $32.7 million relating to the reduction of approximately 1,300 employees, inclusive of reversals due to the elimination
of excess severance accruals and changes in management's strategy for certain prior year actions as a result of new
developments during 2015. The Company also recognized $5.1 million of facility closure costs and $9.8 million of asset
impairments.
The majority of the $58.7 million reserves remaining as of January 2, 2016 is expected to be utilized within the next twelve
months.
Segments: The $47.6 million of net restructuring charges and asset impairments for the twelve months ended January 2, 2016
includes: $17.6 million of net charges pertaining to the Tools & Storage segment; $28.7 million of net charges pertaining to the
Security segment; $12.0 million of net charges pertaining to the Industrial segment; and $10.7 million of net reserve reductions
pertaining to Corporate.