Black & Decker 2015 Annual Report Download - page 109

95
the uncertain tax position is disallowed. As a result, the Company reclassified $30.1 million of unrecognized tax benefits as of
January 2, 2016 and $142.9 million of unrecognized tax benefits as of January 3, 2015, which is reflected in the Operating loss,
capital loss and tax credit carryforwards line in the table above. The reduction in the amount of the reclassification is primarily
due to the utilization of foreign tax credits during 2015.
The Company’s liability on undistributed foreign earnings decreased by $49.3 million during 2015, of which $31.0 million was
recorded to the income tax provision and $18.3 million was recorded to currency translation adjustments within Accumulated
other comprehensive loss. The amount recorded to currency translation adjustments was driven by the significant fluctuations
in foreign exchange rates during 2015, which had the effect of reducing the liability. The amount recorded to the income tax
provision is primarily related to a remeasurement of the liability due to a reduction in the taxable earnings and profits of a
foreign subsidiary.
Net operating loss carryforwards of $1.183 billion as of January 2, 2016, are available to reduce future tax obligations of certain
U.S. and foreign companies. The net operating loss carryforwards have various expiration dates beginning in 2016 with certain
jurisdictions having indefinite carry forward periods. The U.S. federal capital loss carry forward of $672.2 million begins expiring
in 2017. The capital loss carryforward is primarily attributable to the sale of shares for the U.S. HHI business during the tax year
ended December 29, 2012. The U.S. foreign tax credit carryforwards of $15.7 million and research and development tax credit
carryforwards of $1.8 million begin expiring in 2023 and 2035, respectively.
A valuation allowance is recorded on certain deferred tax assets if it has been determined it is more likely than not that all or a
portion of these assets will not be realized. The Company recorded a valuation allowance of $480.7 million and $551.9 million
for deferred tax assets existing as of January 2, 2016 and January 3, 2015, respectively. The valuation allowance is primarily
attributable to foreign and state net operating loss carryforwards and a U.S. federal capital loss carryforward, the majority of which
was realized upon the sale of the HHI business. Capital losses are only allowed to offset capital gains, of which $38 million (tax
effected) was utilized in 2015.
The classification of deferred taxes as of January 2, 2016 and January 3, 2015 is as follows:
2015 2014
(Millions of Dollars) Deferred
Tax Asset Deferred Tax Liability Deferred Tax Asset Deferred Tax Liability
Current........................................................................... $(85.4) $ 18.5 $(137.4) $ 11.9
Non-current.................................................................... (120.5) 825.9 (108.7) 992.7
Total............................................................................... $(205.9) $ 844.4 $(246.1) $ 1,004.6
Income tax expense (benefit) attributable to continuing operations consisted of the following:
(Millions of Dollars) 2015 2014 2013
Current:
Federal.................................................................................................. $ 64.4 $ 18.4 $ 84.0
Foreign................................................................................................. 171.4 141.1 123.5
State...................................................................................................... 14.1 17.1 (3.0)
Total current......................................................................................... $ 249.9 $ 176.6 $ 204.5
Deferred:
Federal.................................................................................................. $ 64.2 $ 55.3 $ (77.1)
Foreign................................................................................................. (47.3)(19.3)(50.6)
State...................................................................................................... (18.2)14.5 (8.2)
Total deferred....................................................................................... (1.3)50.5 (135.9)
Income taxes on continuing operations.................................................. $ 248.6 $ 227.1 $ 68.6
Net income taxes paid during 2015, 2014 and 2013 were $191.6 million, $113.7 million and $147.3 million, respectively. The
2015 and 2014 amounts include refunds of $31.0 million and $47.1 million, respectively, primarily related to prior year
overpayments and closing of tax audits. The 2013 amount includes refunds of $64.5 million primarily related to the closing of a
tax audit and a foreign tax credit carry back claim.