Black & Decker 2015 Annual Report Download - page 99

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L. EMPLOYEE BENEFIT PLANS
EMPLOYEE STOCK OWNERSHIP PLAN (“ESOP”) Most U.S. employees may contribute from 1% to 25% of their
eligible compensation to a tax-deferred 401(k) savings plan, subject to restrictions under tax laws. Employees generally direct
the investment of their own contributions into various investment funds. An employer match benefit is provided under the plan
equal to one-half of each employee’s tax-deferred contribution up to the first 7% of their compensation. Participants direct the
entire employer match benefit such that no participant is required to hold the Company’s common stock in their 401(k)
account. The employer match benefit totaled $21.1 million, $19.9 million and $18.8 million in 2015, 2014 and 2013,
respectively.
In addition, approximately 7,200 U.S. salaried and non-union hourly employees are eligible to receive a non-contributory
benefit under the Core benefit plan. Core benefit allocations range from 2% to 6% of eligible employee compensation based on
age. Approximately 3,600 U.S. employees also receive a Core transition benefit, allocations of which range from 1% to 2% of
eligible compensation based on age and date of hire. Approximately 1,500 U.S. employees are eligible to receive an additional
average 1% contribution actuarially designed to replace previously curtailed pension benefits. Allocations for benefits earned
under the Core plan were $22.1 million in 2015, $20.7 million million in 2014 and $21.1 million in 2013. Assets held in
participant Core accounts are invested in target date retirement funds which have an age-based allocation of investments.
Shares of the Company's common stock held by the ESOP were purchased with the proceeds of borrowings from the Company
in 1991 ("1991 internal loan"). Shareowners' equity reflects a reduction equal to the cost basis of unearned (unallocated) shares
purchased with the internal borrowings. In 2015, 2014 and 2013, the Company made additional contributions to the ESOP for
$7.2 million, $9.4 million, and $9.5 million, respectively, which were used by the ESOP to make additional payments on the
1991 internal loan. These payments triggered the release of 184,753, 230,032 and 219,900 shares of unallocated stock,
respectively.
Net ESOP activity recognized is comprised of the cost basis of shares released, the cost of the aforementioned Core and 401(k)
match defined contribution benefits, less the fair value of shares released and dividends on unallocated ESOP shares. The
Company’s net ESOP activity resulted in expense of $0.8 million in 2015, $0.7 million in 2014 and $1.9 million in 2013. ESOP
expense is affected by the market value of the Company’s common stock on the monthly dates when shares are released. The
market value of shares released averaged $101.79 in 2015, $88.05 per share in 2014 and $80.71 per share in 2013.
Unallocated shares are released from the trust based on current period debt principal and interest payments as a percentage of
total future debt principal and interest payments. Dividends on both allocated and unallocated shares may be used for debt
service and to credit participant accounts for dividends earned on allocated shares. Dividends paid on the shares acquired with
the 1991 internal loan were used solely to pay internal loan debt service in all periods. Dividends on ESOP shares, which are
charged to shareowners’ equity as declared, were $9.7 million in 2015, $10.6 million in 2014 and $12.3 million in 2013, net of
the tax benefit which is recorded within equity. Dividends on ESOP shares were utilized entirely for debt service in all years.
Interest costs incurred by the ESOP on the 1991 internal loan, which have no earnings impact, were $3.8 million, $4.7 million
and $6.1 million for 2015, 2014 and 2013, respectively. Both allocated and unallocated ESOP shares are treated as outstanding
for purposes of computing earnings per share. As of January 2, 2016, the cumulative number of ESOP shares allocated to
participant accounts was 13,661,101, of which participants held 2,482,944 shares, and the number of unallocated shares was
1,880,256. At January 2, 2016, there were 23,189 released shares in the ESOP trust holding account pending allocation. The
Company made cash contributions totaling $4.4 million in 2015, $3.4 million in 2014 and $30.7 million in 2013 excluding
additional contributions of $7.2 million, $9.4 million and $9.5 million in 2015, 2014 and 2013, respectively, as discussed
previously.
PENSION AND OTHER BENEFIT PLANS — The Company sponsors pension plans covering most domestic hourly and
certain executive employees, and approximately 14,000 foreign employees. Benefits are generally based on salary and years of
service, except for U.S. collective bargaining employees whose benefits are based on a stated amount for each year of service.
The Company contributes to a number of multi-employer plans for certain collective bargaining U.S. employees. The risks of
participating in these multiemployer plans are different from single-employer plans in the following aspects:
a. Assets contributed to the multiemployer plan by one employer may be used to provide benefit to employees of other
participating employers.
b. If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be inherited by
the remaining participating employers.
c. If the Company chooses to stop participating in some of its multiemployer plans, the Company may be required to
pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability.