Black & Decker 2015 Annual Report Download - page 40

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Other-net: Other-net totaled $222.0 million of expense in 2015 compared to $239.7 million of expense in 2014. The decrease
was primarily driven by lower amortization expense partially offset by negative impacts of foreign currency.
Other-net amounted to $239.7 million of expense in 2014 compared to $283.9 million of expense in 2013. The decrease was
primarily driven by lower amortization expense and acquisition-related costs in 2014 as compared to 2013.
Gain/Loss on Debt Extinguishment: During the fourth quarter of 2014, the Company extinguished $45.7 million of its notes
payable and recognized a net pre-tax gain of $0.1 million on extinguishment. During the fourth quarter of 2013, the Company
extinguished $300 million of its notes payable and recognized a $20.6 million pre-tax loss on extinguishment.
Interest, net: Net interest expense in 2015 was $165.2 million compared to $163.6 million in 2014 and $147.3 million in 2013.
The increase in net interest expense in 2015 versus 2014 was primarily attributable to the termination of interest rate swaps in
2014 hedging the Company's $400 million 5.20% notes due 2040. The increase in net interest expense in 2014 versus 2013
mainly relates to interest costs associated with the issuance of debt in the fourth quarter of 2013, partially offset by higher
interest income.
Income Taxes: The Company's effective tax rate was 21.6% in 2015, 20.9% in 2014, and 11.7% in 2013. The effective tax rate
in 2015 differed from the U.S. statutory rate primarily due to a portion of the Company's earnings being realized in lower-taxed
foreign jurisdictions, adjustments to tax positions relating to undistributed foreign earnings, and reversals of valuation
allowances for certain foreign and U.S. state net operating losses, which have become realizable. The effective tax rate in 2014
differed from the U.S. statutory rate primarily due to a portion of the Company's earnings being realized in lower-taxed foreign
jurisdictions, the passage of U.S. tax legislation, settlement of various income tax audits and the reversal of valuation
allowances for certain foreign net operating losses which have become realizable. The effective tax rate in 2013 differed from
the U.S. statutory rate primarily due to a portion of the Company's earnings being realized in lower-taxed foreign jurisdictions,
the acceleration of certain tax credits, the recurring benefit of various foreign business integration structures and the reversal of
certain foreign and U.S. state uncertain tax position reserves, related largely to statute expiration.
Business Segment Results
The Company’s reportable segments are aggregations of businesses that have similar products, services and end markets,
among other factors. The Company utilizes segment profit (which is defined as net sales minus cost of sales and SG&A aside
from corporate overhead expense), and segment profit as a percentage of net sales to assess the profitability of each segment.
Segment profit excludes the corporate overhead expense element of SG&A, Other-net (inclusive of intangible asset
amortization expense), restructuring charges, interest income, interest expense, and income tax expense. Corporate overhead is
comprised of world headquarters facility expense, cost for the executive management team and the expense pertaining to
certain centralized functions that benefit the entire Company but are not directly attributable to the businesses, such as legal and
corporate finance functions. Refer to Note O, Restructuring Charges and Asset Impairments, and Note F, Goodwill and
Intangible Assets, for the amount of net restructuring charges and intangibles amortization expense, respectively, attributable to
each segment.
As previously discussed, in the first quarter of 2015, the Company combined the Construction & Do-It-Yourself ("CDIY")
business with certain complementary elements of the Industrial and Automotive Repair ("IAR") and Healthcare businesses
(formerly part of the Industrial and Security segments, respectively) to form one Tools & Storage business. The Company
recast segment net sales and profit for 2014 and 2013 to align with this change in organizational structure. There was no
impact to the consolidated financial statements of the Company as a result of this change.
The Company classifies its business into three reportable segments, which also represent its operating segments: Tools &
Storage, Security and Industrial.
Tools & Storage:
The Tools & Storage segment is comprised of the Power Tools and Hand Tools & Storage businesses. The Power Tools
business includes professional products, consumer products and power tool accessories. Professional products include
professional grade corded and cordless electric power tools and equipment including drills, impact wrenches and drivers,
grinders, saws, routers and sanders, as well as pneumatic tools and fasteners including nail guns, nails, staplers, and staples,
concrete and masonry anchors. Consumer products include corded and cordless electric power tools sold primarily under the
BLACK+DECKER brand, lawn and garden products including hedge trimmers, string trimmers, lawn mowers, edgers, and
related accessories and home products such as hand held vacuums, paint tools and cleaning appliances. Power tool accessories
include drill bits, router bits, abrasives and saw blades. The Hand Tools & Storage business sells measuring, leveling and