Black & Decker 2015 Annual Report Download - page 77

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In April 2014, the FASB issued ASU 2014-08, "Presentation of Financial Statements (Topic 205) and Property, Plant and
Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity." The
amendments contained in this update change the criteria for reporting discontinued operations and enhance the reporting
requirements for discontinued operations. Under the revised standard, a discontinued operation must represent a strategic shift
that has or will have a major effect on an entity's operations and financial results. Examples could include a disposal of a major
line of business, a major geographical area, a major equity method investment, or other major parts of an entity. The revised
standard will also allow an entity to have certain continuing cash flows or involvement with the component after the disposal.
Additionally, the standard requires expanded disclosures about discontinued operations that will provide financial statement
users with more information about the assets, liabilities, income, and expenses of discontinued operations. This ASU is
effective for reporting periods beginning after December 15, 2014 with early adoption permitted, but only for disposals (or
classifications as held for sale) that have not been reported in financial statements previously issued or available for issue. The
Company adopted this standard in the first quarter of 2015.
B. ACCOUNTS AND NOTES RECEIVABLE
(Millions of Dollars) 2015 2014
Trade accounts receivable............................................................................................ $ 1,165.0 $ 1,204.6
Trade notes receivable ................................................................................................. 130.6 136.4
Other accounts receivable............................................................................................ 109.1 116.4
Gross accounts and notes receivable............................................................................ 1,404.7 1,457.4
Allowance for doubtful accounts................................................................................. (72.9)(60.7)
Accounts and notes receivable, net.............................................................................. $ 1,331.8 $ 1,396.7
Long-term trade notes receivable, net.......................................................................... $ 182.1 $ 169.5
Trade receivables are dispersed among a large number of retailers, distributors and industrial accounts in many countries.
Adequate reserves have been established to cover anticipated credit losses. Long-term trade financing receivables of $182.1
million and $169.5 million at January 2, 2016 and January 3, 2015, respectively, are reported within Other Assets in the
Consolidated Balance Sheets. Financing receivables and long-term financing receivables are predominantly related to certain
security equipment leases with commercial businesses. Generally, the Company retains legal title to any equipment leases and
bears the right to repossess such equipment in an event of default. All financing receivables are interest bearing and the
Company has not classified any financing receivables as held-for-sale. Interest income earned from financing receivables that
are not delinquent is recorded on the effective interest method. The Company considers any financing receivable that has not
been collected within 90 days of original billing date as past-due or delinquent. Additionally, the Company considers the credit
quality of all past-due or delinquent financing receivables as nonperforming.
The Company extended the terms of its accounts receivable sale program to January 5, 2018. According to the terms of that
program the Company is required to sell certain of its trade accounts receivables at fair value to a wholly owned, consolidated,
bankruptcy-remote special purpose subsidiary (“BRS”). The BRS, in turn, must sell such receivables to a third-party financial
institution (“Purchaser”) for cash and a deferred purchase price receivable. The Purchaser’s maximum cash investment in the
receivables at any time is $100.0 million. The purpose of the program is to provide liquidity to the Company. The Company
accounts for these transfers as sales under ASC 860 “Transfers and Servicing.” Receivables are derecognized from the
Company’s Consolidated Balance Sheets when the BRS sells those receivables to the Purchaser. The Company has no retained
interests in the transferred receivables, other than collection and administrative responsibilities and its right to the deferred
purchase price receivable. At January 2, 2016, the Company did not record a servicing asset or liability related to its retained
responsibility, based on its assessment of the servicing fee, market values for similar transactions and its cost of servicing the
receivables sold.
At January 2, 2016 and January 3, 2015, $100.4 million and $100.3 million, respectively, of net receivables were derecognized.
Gross receivables sold amounted to $1,580.4 million ($1,373.5 million, net) for the year ended January 2, 2016 and $1,421.2
million ($1,260.1 million, net) for the year ended January 3, 2015. These sales resulted in a pre-tax loss of $3.9 million and
$3.6 million for the years ended January 2, 2016 and January 3, 2015, respectively. These pre-tax losses include servicing fees
of $0.6 million for both the years ended January 2, 2016 and January 3, 2015. Proceeds from transfers of receivables to the
Purchaser totaled $1,350.4 million and $1,262.1 million for the years ended January 2, 2016 and January 3, 2015, respectively.
Collections of previously sold receivables, including deferred purchase price receivables, and all fees, which are settled one
month in arrears, resulted in payments to the Purchaser of $1,350.4 million and $1,246.8 million for the years ended January 2,
2016 and January 3, 2015, respectively.