Black & Decker CYCLONE BLC12600BUC Manuel d'utilisateur télécharger pdf (Page 43)

components one level below the segment level should be identified as reporting units for purposes of goodwill impairment tests if

certain conditions exists. These conditions include, among other factors, (i) the extent to which an operating component represents a

business (that is, the operating component contains all of the inputs and processes necessary for it to continue to conduct normal

operations if transferred from the segment) and (ii) the disaggregation of economically dissimilar operating components within a

segment. The Corporation has determined that its reporting units, for purposes of its goodwill impairment tests, represent its operating

segments, except with respect to its Hardware and Home Improvement segment for which its reporting units are the plumbing

products and security hardware businesses. Goodwill is allocated to each reporting unit at the time of a business acquisition and is

adjusted upon finalization of the purchase price of an acquisition. The Corporation did not make any material change in the accounting

methodology used to evaluate goodwill impairment during 2009.

The discounted cash flow methodology utilized by the Corporation in estimating the fair value of its reporting units for purposes of its

goodwill impairment testing requires various judgmental assumptions about sales, operating margins, growth rates, discount rates, and

working capital requirements. In determining those judgmental assumptions, the Corporation considers a variety of data, including –

for each reporting unit – its annual budget for the upcoming year (which forms the basis of certain annual incentive targets for

reporting unit management), its longer-term business plan, economic projections, anticipated future cash flows, and market data.

Assumptions are also made for varying perpetual growth rates for periods beyond the longer-term business plan period. When

estimating the fair value of its reporting units in the fourth quarter of 2009, the Corporation assumed operating margins in years 2010

and beyond in excess of the margins realized in 2009 based upon its belief that recovery from the global economic crisis will permit a

return to more normalized sales levels and operating margins for its reporting units. The key assumptions used to estimate the fair

value of the Corporation’s reporting units at the time of its fourth quarter 2009 goodwill impairment test included: (i) an average sales

growth assumption of approximately 3% per annum; (ii) annual operating margins ranging from approximately 8% to 15%; and (iii) a

discount rate of 9.7%, which was determined based upon a market-based weighted average cost of capital.

The Corporation’s goodwill impairment analysis is subject to uncertainties due to uncontrollable events, including the strategic

decisions made in response to economic or competitive conditions, the general economic environment, or material changes in its

relationships with significant customers that could positively or negatively impact anticipated future operating conditions and cash

flows. In addition, the Corporation’s goodwill impairment analysis is subject to uncertainties due to the current global economic crisis,

including the severity of that crisis and the time period before which the global economy recovers.

If the carrying amounts of the Corporation’s reporting units (including recorded goodwill) exceed their respective fair values,

determined through the discounted cash flow methodology described above, goodwill impairment may be present. In such an instance,

the Corporation would measure the goodwill impairment loss, if any, based upon the fair value of the underlying assets and liabilities

of the impacted reporting unit, including any unrecognized intangible assets, and estimate the implied fair value of goodwill. An

impairment loss would be recognized to the extent that a reporting unit’s recorded goodwill exceeded the implied fair value of

goodwill.

The Corporation could be required to evaluate the recoverability of goodwill prior to the next annual assessment if it experiences

unexpected significant declines in operating results (including those associated with a more severe or prolonged global economic

crisis or other business disruptions than currently assumed), a material negative change in its relationships with significant customers,

or divestitures of significant components of the Corporation’s businesses. However, based upon the Corporation’s goodwill

impairment analysis conducted in the fourth quarter of 2009, a hypothetical reduction in the fair value of its reporting units by a

specified percentage, ranging from approximately 12% for one reporting unit to between approximately 30% to 70% for the

Corporation’s other reporting units, would not have resulted in a situation in which the carrying value of the respective reporting unit

exceeded that reduced fair value.

Pension and other postretirement benefits costs and obligations are dependent on assumptions used in calculating such amounts. These

assumptions include discount rates, expected return on plan assets, rates of salary increase, health care cost trend rates, mortality rates,

and other factors. These assumptions are updated on an annual basis prior to the beginning of each year. The Corporation considers

current market conditions, including interest rates, in making these assumptions. The Corporation develops the discount rates by

considering the yields available on high-quality fixed income investments with maturities corresponding to the related benefit

obligation. The Corporation’s discount rate for United States defined benefit pension plans was 5.75% and 6.75% at December 31,

2009 and 2008, respectively. As discussed further in Note 13 of Notes to Consolidated Financial Statements, the Corporation develops

the expected return on plan assets by considering various factors, which include its targeted asset allocation percentages, historic

returns, and expected future returns. The Corporation’s expected long-term rate of return assumption for United States defined benefit

plans for 2009 and 2010 was 8.25%.

Source: BLACK & DECKER CORP, 10-K, February 19, 2010 Powered by Morningstar

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