Black & Decker 2015 Annual Report Download - page 75

61
in which that determination is made. Conversely, if the Company were to determine that it would be able to realize deferred tax
assets in the future in excess of the net carrying amounts, it would decrease the recorded valuation allowance through a favorable
adjustment to earnings in the period that the determination was made.
The Company records uncertain tax positions in accordance with ASC 740, which requires a two-step process. First,
management determines whether it is more likely than not that a tax position will be sustained based on the technical merits of
the position and second, for those tax positions that meet the more likely than not threshold, management recognizes the largest
amount of the tax benefit that is greater than 50 percent likely to be realized upon ultimate settlement with the related taxing
authority. The Company maintains an accounting policy of recording interest and penalties on uncertain tax positions as a
component of Income taxes on continuing operations in the Consolidated Statements of Operations.
The Company is subject to income tax in a number of locations, including many state and foreign jurisdictions. Significant judgment
is required when calculating the worldwide provision for income taxes. Many factors are considered when evaluating and estimating
the Company's tax positions and tax benefits, which may require periodic adjustments and which may not accurately anticipate
actual outcomes. It is reasonably possible that the amount of the unrecognized benefit with respect to certain of the Company's
unrecognized tax positions will significantly increase or decrease within the next 12 months. These changes may be the result of
settlements of ongoing audits or final decisions in transfer pricing matters. The Company periodically assesses its liabilities and
contingencies for all tax years still subject to audit based on the most current available information, which involves inherent
uncertainty.
EARNINGS PER SHARE — Basic earnings per share equals net earnings attributable to Stanley Black & Decker, Inc., less
earnings allocated to restricted stock units with non-forfeitable dividend rights (if applicable), divided by weighted-average
shares outstanding during the year. Diluted earnings per share include the impact of common stock equivalents using the
treasury stock method when the effect is dilutive.
NEW ACCOUNTING STANDARDS — In January 2016, the Financial Accounting Standards Board (“FASB”) issued
Accounting Standards Update ("ASU") 2016-01, “Financial Instruments - Overall (Subtopic 825-10): Recognition and
Measurement of Financial Assets and Financial Liabilities.” The main objective of this update is to enhance the reporting
model for financial instruments to provide users of financial statements with more decision-useful information. The new
guidance addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. This
ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The
Company is currently evaluating the new guidance to determine the impact it may have on its consolidated financial statements.
In November 2015, the FASB issued ASU 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred
Taxes.” The objective of this update is to simplify the presentation of deferred income taxes by requiring all deferred tax
assets and liabilities to be classified as noncurrent in the statement of financial position. The amendments in this update do not
affect the current requirement to offset deferred tax assets and liabilities for each tax-paying component within a tax
jurisdiction. This ASU is effective for annual periods beginning after December 15, 2016, and interim periods within those
annual periods, and can be applied either prospectively or retrospectively. Early adoption is permitted. The Company is
currently evaluating the impact of this guidance on its consolidated financial statements.
In September 2015, the FASB issued ASU 2015-16, “Business Combinations (Topic 805): Simplifying the Accounting for
Measurement-Period Adjustments.” This update requires that an acquirer recognize adjustments to provisional amounts that
are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The ASU
requires that the acquirer record, in the financial statements of the period in which adjustments to provisional amounts are
determined, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the
change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. This ASU is
effective prospectively for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years,
with early adoption permitted.
In August 2015, the FASB issued ASU 2015-15, "Interest - Imputation of Interest (Subtopic 835-30): Presentation and
Subsequent Measurement of Debt Issuance Costs Associated with Line of Credit Arrangements." This ASU provides additional
guidance to ASU 2015-03, discussed further below, which did not address presentation or subsequent measurement of debt
issuance costs related to line-of-credit arrangements. ASU 2015-15 noted that the SEC staff would not object to an entity
deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably
over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit
arrangement. The Company will adopt this guidance in the first quarter of 2016 and does not expect it to have a material impact
on its consolidated financial statements.