<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended Commission File Number
October 2, 1994 1-1553
THE BLACK & DECKER CORPORATION
(Exact name of registrant as specified in its charter)
Maryland 52-0248090
(State of Incorporation) (I.R.S. Employer Identification Number)
701 East Joppa Road Towson, Maryland 21286
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (410) 716-3900
Not Applicable
Former Address
Number of shares of common stock outstanding on October 2, 1994:
84,487,435.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
The exhibit index as required by item 601(a) of Regulation S-K is included
in this report.
<PAGE>
<PAGE> - 2 -
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
INDEX - FORM 10-Q
October 2, 1994
Page
PART I - FINANCIAL INFORMATION
Consolidated Statement of Earnings - For the Three Months and
Nine Months Ended October 2, 1994 and October 3, 1993 . . . . . 3
Consolidated Balance Sheet - October 2, 1994
and December 31, 1993 . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statement of Cash Flows -
For the Nine Months Ended October 2, 1994
and October 3, 1993 . . . . . . . . . . . . . . . . . . . . . 5
Notes to Consolidated Financial Statements . . . . . . . . . . . 6
Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . . 9
PART II - OTHER INFORMATION . . . . . . . . . . . . . . . . . . . 18
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
<PAGE>
<PAGE> - 3 -
<TABLE>
CONSOLIDATED STATEMENT OF EARNINGS (Unaudited)
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
(Millions Except Per Share Data)
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
---------------------------- ---------------------------
OCT. 2, OCT. 3, OCT. 2, OCT. 3,
1994 1993 1994 1993
---------- --------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES
Product sales $1,096.6 $ 1,006.7 $ 3,006.7 $ 2,922.8
Information systems and services 226.8 182.9 622.4 522.5
-------- ---------- ---------- ----------
TOTAL REVENUES 1,323.4 1,189.6 3,629.1 3,445.3
Cost of revenues
Products 701.8 666.9 1,917.2 1,896.2
Information systems and services 174.4 137.7 473.5 386.5
Marketing and administrative expenses 355.0 312.1 994.1 947.0
-------- ---------- ---------- ----------
Total operating costs and expenses 1,231.2 1,116.7 3,384.8 3,229.7
-------- ---------- ---------- ----------
OPERATING INCOME 92.2 72.9 244.3 215.6
Interest expense (net of interest income) 45.5 43.0 137.2 129.0
Other income (expense) (2.9) .1 (7.3) (5.3)
-------- ---------- ---------- ----------
EARNINGS BEFORE INCOME TAXES
AND CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE 43.8 30.0 99.8 81.3
Income taxes 14.5 10.5 32.9 28.5
-------- ---------- ---------- ----------
NET EARNINGS BEFORE
CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE 29.3 19.5 66.9 52.8
Cumulative effect to January 1, 1993,
of change in accounting principle for
postemployment benefits - - - (29.2)
-------- ---------- ---------- ----------
NET EARNINGS $ 29.3 $ 19.5 $ 66.9 $ 23.6
======== ========== ========== ==========
NET EARNINGS APPLICABLE TO
COMMON SHARES $ 26.4 $ 16.6 $ 58.1 $ 14.8
======== ========== ========== ==========
NET EARNINGS (LOSS) PER COMMON SHARE:
Net earnings before cumulative
effect of change in
accounting principle $ .31 $ .20 $ .69 $ .53
Cumulative effect adjustment for
postemployment benefits - - - (.35)
-------- ---------- ---------- ----------
NET EARNINGS PER COMMON SHARE $ .31 $ .20 $ .69 $ .18
======== ========== ========== ==========
DIVIDENDS PER COMMON SHARE $ .10 $ .10 $ .30 $ .30
======== ========== ========== ==========
Average Common Shares Outstanding 84.4 83.7 84.1 83.6
======== ========== ========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
<PAGE> - 4 -
<TABLE>
CONSOLIDATED BALANCE SHEET
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
(Millions of Dollars Except Per Share Data)
<CAPTION>
OCTOBER 2, DECEMBER 31,
1994 1993
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 86.6 $ 82.0
Trade accounts receivable 895.2 832.1
Inventories 853.4 728.9
Other current assets 130.1 121.1
-------- --------
TOTAL CURRENT ASSETS 1,965.3 1,764.1
-------- --------
PROPERTY, PLANT AND EQUIPMENT 821.8 796.2
GOODWILL 2,320.0 2,333.6
OTHER ASSETS 425.0 416.7
-------- --------
$5,532.1 $5,310.6
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term borrowings $ 679.8 $ 332.3
Current maturity of long-term debt 5.0 163.1
Trade accounts payable 393.5 307.3
Other accrued liabilities 736.5 705.8
-------- --------
TOTAL CURRENT LIABILITIES 1,814.8 1,508.5
-------- --------
LONG-TERM DEBT 1,929.4 2,069.2
DEFERRED INCOME TAXES 58.7 47.9
POSTRETIREMENT BENEFITS 307.6 319.3
OTHER LONG-TERM LIABILITIES 317.4 316.8
STOCKHOLDERS' EQUITY
Convertible preferred stock, no par value:
Outstanding:
Oct. 2, 1994, and Dec. 31, 1993
- 150,000 shares 150.0 150.0
Common stock, par value $.50 per share:
Outstanding:
Oct. 2, 1994 - 84,487,435 shares
Dec. 31, 1993 - 83,845,194 shares 42.2 41.9
Capital in excess of par value 1,045.1 1,034.8
Retained deficit (24.6) (57.5)
Equity adjustment from translation (108.5) (120.3)
-------- --------
TOTAL STOCKHOLDERS' EQUITY 1,104.2 1,048.9
-------- --------
$5,532.1 $5,310.6
======== ========
</TABLE>
See Notes to Consolidated Financial Statements<PAGE>
<PAGE> - 5 -
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
(Millions of Dollars)
<CAPTION>
NINE MONTHS ENDED
------------------------------
OCTOBER 2, OCTOBER 3,
1994 1993
----------- -------------
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 66.9 $ 23.6
Adjustments to reconcile net earnings
to cash flow from operating activities:
Non-cash charges and credits:
Depreciation and amortization 155.0 151.1
Cumulative effect of change in
accounting principle - 29.2
Other (3.5) 1.2
Changes in selected working capital items:
Trade accounts receivable (21.1) 8.7
Inventories (107.1) (141.5)
Trade accounts payable 79.0 4.6
Restructuring (31.7) (26.5)
Other assets and liabilities (2.9) (132.6)
--------- ---------
CASH FLOW FROM (USED IN) OPERATING ACTIVITIES
BEFORE SALE OF RECEIVABLES 134.6 (82.2)
Sale of receivables (23.0) .5
--------- ---------
CASH FLOW FROM (USED IN) OPERATING ACTIVITIES 111.6 (81.7)
--------- ---------
INVESTING ACTIVITIES
Proceeds from disposal of assets 8.8 -
Capital expenditures (114.5) (142.1)
Cash inflow from hedging activities 957.4 772.7
Cash outflow from hedging activities (995.2) (744.2)
--------- ---------
CASH FLOW USED IN INVESTING ACTIVITIES (143.5) (113.6)
--------- ---------
CASH FLOW BEFORE FINANCING ACTIVITIES (31.9) (195.3)
FINANCING ACTIVITIES
Net increase in short-term borrowings 347.7 56.2
Proceeds from long-term debt
(including revolving credit facility) 1,072.7 1,499.8
Payments on long-term debt
(including revolving credit facility) (1,370.5) (1,306.3)
Issuance of equity interest in a subsidiary 4.3 4.4
Issuance of common stock 10.6 5.3
Cash dividends (34.0) (33.8)
--------- ---------
CASH FLOW FROM FINANCING ACTIVITIES 30.8 225.6
Effect of exchange rate changes on cash 5.7 (4.7)
--------- ---------
INCREASE IN CASH AND CASH EQUIVALENTS 4.6 25.6
Cash and cash equivalents at beginning of period 82.0 66.3
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 86.6 $ 91.9
========= =========
</TABLE>
See Notes to Consolidated Financial Statements<PAGE>
<PAGE> - 6 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
BASIS OF PRESENTATION
The accompanying unaudited consolidated financial
statements have been prepared in accordance with the
instructions to Form 10-Q and do not include all the
information and notes required by generally accepted
accounting principles for complete financial statements. In
the opinion of management, the unaudited consolidated
financial statements include all adjustments consisting only
of normal recurring accruals considered necessary for a fair
presentation of the financial position and the results of
operations. Prior year results have been restated to include
a cumulative charge for the adoption, as of January 1, 1993,
of Statement of Financial Accounting Standard (SFAS) No. 112,
"Employers' Accounting For Postemployment Benefits." Certain
prior year amounts in the consolidated financial statements
have been reclassified to conform to the presentation used for
1994.
Operating results for the three-month and nine-month
periods ended October 2, 1994, are not necessarily indicative
of the results that may be expected for a full fiscal year.
For further information, refer to the consolidated financial
statements and notes included in the Corporation's Annual
Report on Form 10-K for the year ended December 31, 1993.
SALE OF RECEIVABLES
At October 2, 1994, under its sale of receivables program,
the Corporation had sold $195.0 million of receivables
compared to $218.0 million at December 31, 1993. The discount
on sale of receivables is included in "Other income
(expense)." During the second quarter of 1994, the
Corporation negotiated a seasonal expansion of the capacity of
the receivables sale program from $200 million to $275 million
for the period from October 1, 1994 through January 31, 1995.
INVENTORIES
The components of inventory at the end of each period, in
millions of dollars, consisted of the following:
<TABLE>
<CAPTION>
October 2, December 31,
1994 1993
------------ -----------
<S> <C> <C>
FIFO Cost
Raw materials and work-in-process $ 250.6 $ 206.2
Finished products 648.7 567.4
-------- --------
899.3 773.6
Excess of FIFO cost over LIFO
inventory value (45.9) (44.7)
-------- --------
$ 853.4 $ 728.9
======== ========
/TABLE
<PAGE>
<PAGE> - 7 -
Inventories are stated at the lower of cost or market. The
cost of United States inventories is based primarily on the
last-in, first-out (LIFO) method; foreign inventories are
valued on the first-in, first-out (FIFO) method.
GOODWILL
Goodwill at the end of each period, in millions of dollars,
was as follows:
<TABLE>
<CAPTION>
Oct. 2, Dec. 31,
1994 1993
--------- ---------
<S> <C> <C>
Goodwill $2,739.2 $2,699.9
Less accumulated amortization 419.2 366.3
-------- --------
$2,320.0 $2,333.6
======== ========
</TABLE>
DEBT REFINANCING
In the first quarter of 1994, the Corporation issued $250
million of 7% Notes due February 1, 2006 and repaid its 8.375%
Notes due in 1997 and 5.75% deutsche mark bearer bonds that
matured in March 1994.
During the third quarter of 1994, the Corporation reduced
the commitment available under the Corporation's principal
credit facility by $300 million to a maximum of $1.7 billion.
The Corporation has filed a shelf registration statement
for the issuance, from time to time, of up to $500 million in
debt securities, which may consist of debentures, notes or
other unsecured evidences of indebtedness. The debt
securities may be offered in separate series in amounts, at
prices, and on terms to be determined by market conditions at
the time of sale. The net proceeds from the sale of the debt
securities will be available for general corporate purposes,
which may include but are not limited to refinancing of
indebtedness, working capital and capital expenditures. As of
October 2, 1994, the Corporation had issued $26 million
aggregate principal amount of debt securities under the shelf
registration statement.
Indebtedness of subsidiaries of the Corporation in the
aggregate principal amount of $644 million is included in the
accompanying balance sheet as of October 2, 1994.<PAGE>
<PAGE> - 8 -
INTEREST EXPENSE (Net of Interest Income)
Interest expense (net of interest income) for each period,
in millions of dollars, consisted of the following:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------- ----------------------
Oct. 2, Oct. 3, Oct. 2, Oct. 3,
1994 1993 1994 1993
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
Interest expense $ 47.0 $ 44.7 $ 142.7 $ 135.2
Interest (income) (1.5) (1.7) (5.5) (6.2)
-------- -------- -------- --------
$ 45.5 $ 43.0 $ 137.2 $ 129.0
======== ======== ======== ========
</TABLE>
CHANGE IN HEDGE POLICY
As more fully discussed in the Annual Report on Form 10-K for
the year ended December 31, 1993, the Corporation historically
has sought to reduce the effects of foreign currency
fluctuations on its net investments in foreign subsidiaries
through the purchase of foreign currency forward and option
contracts. During the second quarter of 1994, the Corporation
reevaluated its foreign currency hedge policy and concluded
that the benefits of its net investment hedging program no
longer exceeded its costs. Accordingly, the Corporation
intends to hedge only a portion of its net investments in
foreign subsidiaries.
NET EARNINGS PER COMMON SHARE
Net earnings per common share for each period presented are
computed by dividing net earnings applicable to common shares,
which are after preferred dividends of $2.9 million and $8.8
million for each of the three-month and nine-month periods
ended October 2, 1994 and October 3, 1993, by the weighted
average number of common shares outstanding for each period.
<PAGE>
<PAGE> - 9 -
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
For the three-month period ended October 2, 1994, the
Corporation reported net earnings of $29.3 million or $.31 per
common share compared to $19.5 million or $.20 per common
share for the three-month period ended October 3, 1993. For
the nine-month period ended October 2, 1994, net earnings were
$66.9 million or $.69 per common share as compared to $23.6
million or $.18 per common share for the nine-month period
ended October 3, 1993. Excluding the cumulative effect of the
adoption of SFAS No. 112 in 1993, net earnings for the nine-
month period ended October 3, 1993, were $52.8 million or $.53
per common share. The improvement in net earnings before the
cumulative effect of a change in accounting principle is
primarily attributable to improved operating results, stemming
from cost reduction initiatives and leverage improvements
realized from higher sales volumes.
During the nine months ended October 2, 1994, excluding the
effects of the sale of receivables, operating activities of
the Corporation generated cash of $134.6 million as compared
to a cash usage of $82.2 million for the corresponding period
in 1993.
RESULTS OF OPERATIONS
REVENUES
The following chart sets forth an analysis of changes in
revenues for the three-month and nine-month periods ended
October 2, 1994 and October 3, 1993.
<TABLE>
_______________________________________________________________________________________________
<CAPTION>
Analysis of Changes in Revenues ($Millions)
-------------------------------------------
Consolidated Three Months Ended Nine Months Ended
------------ ------------------------ -----------------------
Oct. 2, Oct. 3, Oct. 2, Oct. 3,
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Total revenues $1,323.4 $1,189.6 $3,629.1 $3,445.3
Unit volume - Existing (1) 12 % 4 % 8 % 4 %
- Disposed (2) (3)% - (3)% -
Price 1 % 1 % 1 % 1 %
Currency 1 % (5)% (1)% (3)%
-------- -------- -------- --------
Change in total revenues 11% - % 5% 2 %
_______________________________________________________________________________________________
(1) Existing - Reflects the change in unit volume for
businesses where period-to-period comparability
exists.
(2) Disposed - Reflects the change in total revenues
for businesses that were included in prior year
results but subsequently have been sold.
</TABLE>
<PAGE>
<PAGE>
- 10 -
The Corporation operates in three business segments:
Consumer and Home Improvement Products (Consumer), including
consumer and professional power tools and accessories,
household products, security hardware, lawn and garden and
outdoor recreational products, plumbing products, and product
service; Commercial and Industrial Products (Commercial),
including fastening systems and glass container-making
equipment; and Information Systems and Services (PRC),
including government and commercial information systems
development, consulting, and other related contract services.
The following chart sets forth an analysis of the change in
revenues for the three months and nine months ended October 2,
1994, compared to the three months and nine months ended
October 3, 1993, by geographic area for each business segment.
<PAGE>
<PAGE> - 11 -
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
THREE AND NINE MONTHS ENDED OCTOBER 2, 1994
ANALYSIS OF CHANGES IN REVENUES
(in millions of dollars)
<TABLE>
<CAPTION>
United
States Europe Other Total
------ ------ ----- -----
3 MOS 9 MOS 3 MOS 9 MOS 3 MOS 9 MOS 3 MOS 9 MOS
----- ------- ----- ----- ----- ----- ----- -----
Consumer
- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total Revenues $572.5 $1,464.6 $233.9 $745.8 $155.6 $384.7 $ 962.0 $2,595.1
------ -------- ------ ------ ------ ------ -------- --------
Unit Volume - Existing 9 % 7 % 6 % 4 % 24 % 15 % 11 % 7 %
- Disposed (3)% (4)% - - (1)% (1)% (2)% (2)%
Price 1 % 1 % 1 % 1 % 1 % 1% 1 % 1 %
Currency - - 6 % (2)% (2)% (3)% 1 % (1)%
-- -- -- -- -- -- -- --
7 % 4 % 13 % 3 % 22 % 12 % 11 % 5 %
-- -- -- -- -- -- -- --
____________________________________________________________________________________________________________________________
</TABLE>
<TABLE>
Commercial
- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total Revenues $ 58.1 $ 187.3 $ 47.9 $149.9 $ 28.6 $ 74.4 $134.6 $ 411.6
------ -------- ------ ------ ------ ------ ------ --------
Unit Volume - Existing 7 % 6 % 2 % (4)% (2)% (10)% 3 % (1)%
- Disposed (7)% (8)% (1)% (2)% (15)% (15)% (7)% (7)%
Price 2 % 1 % (1)% 1 % (1)% (1)% - % - %
Currency - - 6 % (1)% 3 % 4 % 3 % 1 %
-- -- -- -- -- -- -- --
2 % (1)% 6 % (6)% (15)% (22) % (1)% (7)%
-- -- -- -- --- -- -- --
____________________________________________________________________________________________________________________________
</TABLE>
<TABLE>
PRC
- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total Revenues $226.8 $ 622.4 $ - $ - $ - $ - $ 226.8 $ 622.4
------ -------- ----- ------ ------ ------ -------- --------
Unit Volume - 24 % 19 % - - - - 24 % 19 %
-- -- -- -- -- -- -- --
____________________________________________________________________________________________________________________________
</TABLE>
<TABLE>
Consolidated
- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total Revenues $857.4 $2,274.3 $281.8 $895.7 $184.2 $459.1 $1,323.4 $3,629.1
------ -------- ------ ------ ------ ------ -------- --------
Unit Volume - Existing 13 % 9 % 4 % 2 % 19 % 10 % 12 % 8 %
- Disposed (3)% (3)% - % - (4)% (4)% (3)% (3)%
Price 1% 1 % 1 % 1 % 1 % 1 % 1 % 1 %
Currency - - 6 % (2)% (1)% (2)% 1 % (1)%
-- -- -- -- -- -- -- --
Change in Total Revenues 11 % 7 % 11 % 1 % 15 % 5 % 11 % 5 %
-- -- -- -- -- -- -- --
____________________________________________________________________________________________________________________________
</TABLE>
<PAGE>
Existing unit volume grew by 12% and 8% for the three-month and
nine-month periods ended October 2, 1994. The strong revenue
growth experienced in the Consumer segment and PRC during the
first half of 1994 continued in the third quarter. Existing unit
volume in the Commercial segment also showed growth during the
third quarter of 1994 over the same period last year. Disposed
unit volume represents the effect of the sale of the Corbin
Russwin and Dynapert businesses during the fourth quarter of
1993. Pricing actions improved revenue comparisons to last year
by 1% during the three months and nine months ended October 2,
1994. The effects of changes in foreign exchange rates contri-
buted a positive 1% to revenues during the three months ended
October 2, 1994, but had a negative 1% impact on revenues during
the nine months then ended.
Consumer and Home Improvement Products
Existing unit volume in the Consumer segment increased by 11%
and 7% for the three-month and nine-month periods ended
October 2, 1994, as compared to the corresponding periods in
1993. The strong domestic revenue growth experienced earlier in
the year continued during the third quarter of 1994, with double-
digit sales increases in power tools, plumbing products and,
excluding the impact of sold businesses, security hardware.
Much of the revenue growth in these businesses is attributable to
recent new product introductions and to an improving economy.
Revenues in the domestic accessories business, while still above
the 1993 levels for the nine-month period ended October 2, 1994,
declined in the third quarter of 1994 over the corresponding
period last year due primarily to the Corporation's exit, during
the second quarter of 1994, from a small, less profitable portion
of the accessories business. The third quarter of 1994 was the
first quarter in the year in which sales of domestic household
products exceeded the prior year's levels. During the three
months ended October 2, 1994, domestic household product revenues
increased at a high single-digit rate over the corresponding
period in 1993; however, revenues for the nine months ended
October 2, 1994, continued below the prior year's level. The
growth in domestic sales of household products during the third
quarter of 1994 was primarily attributable to new product
introductions. Sales of golf club shafts increased at a double-
digit rate during the quarter ended October 2, 1994, compared to
the weak corresponding quarter in 1993. Sales of golf club
shafts for the nine-month period ended October 2, 1994, were
essentially flat as compared to the same period in the prior
year.
Excluding the positive effects of changes in foreign exchange
rates, the Corporation's Consumer businesses in Europe, with the
exception of the business in Germany, benefitted from
strengthening economies and showed improvement during the third
quarter of 1994 as compared to the third quarter of 1993. While
moderate improvement was noted in the United Kingdom during the
quarter ended October 2, 1994, the Consumer businesses in several
European markets, particularly in Scandinavia, experienced
double-digit sales growth over the comparable period in 1993.
Performance of the Consumer businesses in other international
areas for the three-month and nine-month periods ended October 2,
1994, was much improved to last year with double-digit sales
growth continuing in the Latin American and Asia Pacific regions.
Double-digit sales growth over the corresponding period in 1993
was also experienced during the third quarter of 1994 in
Australia, Mexico and, excluding the effects of a sold business,
Canada.
Commercial and Industrial Products
Existing unit volume in the Commercial segment for the three
months ended October 2, 1994, was 3% ahead of the comparable
period of last year. For the nine-month period ended October 2,
1994, existing unit volume was slightly below the prior year's
level. The improved performance during the third quarter of 1994
compared to the third quarter of 1993 was attributable to
continued double-digit growth in the domestic fastenings
business, primarily on the strength of the automotive industry,
and to improved performance in the European fastenings business,
particularly in Scandinavia and Germany. Demand in the glass
machinery business continues to be weak in all geographic areas
and offset much of the improvement experienced by the fastenings
business during the three months and nine months ended October 2,
1994. Order backlog for the glass machinery business was
significantly higher at October 2, 1994 than at December 31,
1993, however, and improving order trends have been experienced
during the nine months ended October 2, 1994.
Information Systems and Services
PRC's revenues for the three-month and nine-month periods ended
October 2, 1994, grew by 24% and 19%, respectively, compared to
the same periods last year. Most of this improvement related to
revenues from the Super-Minicomputer Procurement (SMP) contract
with the United States Government.
EARNINGS
Total operating income as a percentage of revenues for the
three-month and nine-month periods ended October 2, 1994, was
7.0% and 6.7%, respectively, compared to 6.1% and 6.3% for the
comparable periods of 1993.
Gross margin on product sales for the three-month and nine-
month periods ended October 2, 1994, was 36.0% and 36.2%,
respectively, compared to 33.8% and 35.1% for the comparable
periods in 1993. Both the Consumer and Commercial segments
contributed to the gross margin improvements, which resulted
primarily from increased manufacturing productivity, the
implementation of cost containment initiatives, and the effect of
leverage of fixed and semi-fixed costs over a higher sales base.
PRC's gross margin on information systems and services revenues
for the three-month and nine-month periods ended October 2, 1994,
was 23.1% and 23.9%, respectively, compared to 24.7% and 26.0%
for the corresponding periods in 1993. The margin erosion
experienced by PRC in 1994 was primarily the result of the
dilutive effect of the SMP contract during its early stages.
Marketing and administrative expenses as a percentage of total
revenues were essentially flat at 26.8% and 27.4% for the three-
month and nine-month periods ended October 2, 1994, as compared
to 26.2% and 27.5% for the same periods in 1993. The leverage
experienced in gross margin during the three months ended
October 2, 1994, was not repeated with respect to marketing and
administrative expenses during the same period as increased
levels of promotion substantially offset other improvements.
Interest expense for the three-month and nine-month periods
ended October 2, 1994, was higher than in the corresponding
periods of 1993. The effects of an increasing interest rate
environment during the first nine months of 1994 were partially
offset by decreases in average net debt (debt less cash) during
the same period. At October 2, 1994, the Corporation's variable
rate debt to total debt ratio (after considering the effects of
interest rate hedges) was 37% compared to 46% at December 31,
1993. During this period, average debt maturity decreased to 4.7
years from 4.8 years.
The Corporation's effective tax rate for both the three- and
nine-month periods ended October 2, 1994, was 33% compared to 35%
for the comparable periods in 1993. The lower rate for 1994 was
primarily the result of increased operating income in the United
States where the Corporation benefits from existing net operating
loss carryforwards.
FINANCIAL CONDITION
As indicated in the Consolidated Statement of Cash Flows,
operating activities before the sale of receivables generated
cash of $134.6 million for the nine months ended October 2, 1994
compared to a cash usage of $82.2 million for the corresponding
period in 1993. This increase in the level of cash generation
during 1994 was primarily the result of increased profitability
coupled with the Corporation's emphasis on reducing inventory
levels and other working capital requirements as well as the
inclusion of a number of unusual and unfavorable nonrecurring
items in the corresponding 1993 period.
Investing activities for the nine-month period ended October 2,
1994, used cash of $143.5 million compared to $113.6 million of
cash used for the comparable period in 1993. During the first
nine months of 1994, capital expenditures were approximately $28
million below the same period in 1993. This lower level of
capital spending in the nine months ended October 2, 1994,
represented a timing difference, as full year capital expendi-
tures for 1994 are expected to approach 1993 levels. Cash flows
associated with hedging activities resulted in a net cash outflow
of $37.8 million for the nine-month period ended October 2, 1994,
compared to a net cash inflow of $28.5 million for the
corresponding period in 1993.
Cash flow generated from financing activities for the nine-
month period ended October 2, 1994, was $30.8 million as compared
to $225.6 million for the corresponding period in the prior year.
Improved operating cash flow during the nine months ended October
2, 1994, over the same period in 1993 has reduced the
Corporation's requirements for external financing.
The Corporation's net debt (debt less cash) increased by $45.0
million, from $2,482.6 million at December 31, 1993, to $2,527.6
million at October 2, 1994, as compared to an increase of $222.8
million during the first nine months of 1993. The increase in
short-term borrowings from $332.3 million at December 31, 1993,
to $679.8 million at October 2, 1994 (as compared to $404.2
million at October 3, 1993) resulted primarily from the
accounting classification of various types of borrowing
alternatives under the Corporation's principal unsecured
revolving credit facility (the Credit Facility) and was largely
offset by reductions in long-term debt and current maturities of
long-term debt during the nine months ended October 2, 1994.
Subsequent to October 2, 1994, the Corporation renegotiated the
pricing of borrowings under the Credit Facility. As a result of
the renegotiation, borrowings under the Credit Facility will bear
interest at LIBOR plus .4375% or at other variable rates set
forth therein. This pricing represents a reduction of .0625%
over the prior pricing. In addition, the facility fee paid on
the banks' commitment under the Credit Facility, whether used or
unused, was reduced by .075% to .175%.
The Credit Facility includes certain covenants that require the
Corporation to meet specified minimum cash flow coverage and
maximum leverage (debt to equity) ratios. The Corporation's
leverage ratio during the term of the Credit Facility may not
exceed 2.2 at the end of any fiscal quarter. The cash flow
coverage ratio, calculated as of the end of each fiscal quarter,
must exceed 2.5 for any 12-month period ending after December 31,
1993. As of October 2, 1994, the Corporation was in compliance
with all covenants and provisions of the Credit Facility. As of
October 2, 1994, the Corporation's leverage ratio was 1.82 and
its cash flow coverage ratio for the 12 months then ended was
2.90. For additional information in respect of the Credit
Facility, see Note 10 of the Notes to Consolidated Financial
Statements in the Corporation's Annual Report on Form 10-K for
the year ended December 31, 1993.
The Corporation will continue to have cash requirements to
support working and fixed capital needs, to pay interest, to
service debt, and to complete previously announced operational
consolidation and reorganization plans. In order to meet these
cash requirements, the Corporation intends to use internally
generated funds and to borrow under the Credit Facility or under
short-term borrowing facilities. Management believes that cash
generated from these sources will be adequate to meet the
Corporation's cash requirements over the next 12 months.
RESTRUCTURING
At the end of 1992, the Corporation commenced a restructuring
of certain of its operations and accrued costs of $142.4 million,
of which $98.9 million related to the decision to reorganize
Dynapert, the Corporation's printed circuit board assembly
business, including withdrawal from the manufacture of surface-
mount technology. The remainder of the 1992 restructuring plan
included a reduction of manufacturing capacity in other
businesses, predominantly in Europe, at a cost of $43.5 million.
During 1993, the Corporation substantially completed its
restructuring plan with respect to Dynapert by withdrawing from
the manufacture of surface-mount technology. In addition, during
the fourth quarter of 1993, the Corporation sold the Dynapert
through-hole business at a gain of $19.4 million and the Corbin
Russwin commercial hardware business at a gain of $15.9 million.
These gains were reflected as credits to restructuring costs in
1993. Restructuring costs for 1993 included a charge of $29.0
million for the closure and reorganization of certain
manufacturing sites.
The quantification of the major elements of each restructuring
plan, as initially established, is set forth below (in millions):
<TABLE>
1992 1993
---- ----
<S> <C> <C>
Write-off of goodwill associated
with the Dynapert business $ 58.9 $ -
Estimated losses during the Corporation's
withdrawal from its Dynapert business 23.5 -
Employee severance and related costs 33.5 10.6
Write-down of property, plant and
equipment and related costs 9.5 13.2
Lease termination costs 7.1 -
Other 9.9 5.2
------ -----
Total Restructuring Costs $142.4 $29.0
====== =====
</TABLE>
Actions related to the 1992 and 1993 restructuring plans are
proceeding as planned and are expected to be substantially
completed during 1994. Total cash spending for restructuring
during 1994 is expected to be approximately $45 million, of which
approximately $32 million was spent during the first nine months
of 1994. The Corporation anticipates that the reductions in
manufacturing capacity through plant closings and reorganizations
will result in cost reductions, comprised primarily of reduced
labor costs and depreciation expense, of approximately $20
million in 1994 and approximately $40 million annually
thereafter. These actions are part of the Corporation's
continuing effort to identify opportunities to improve its
manufacturing cost structure.
<PAGE>
THE BLACK & DECKER CORPORATION
PART II - OTHER INFORMATION
Item 1 Legal Proceedings
The Corporation is involved in various lawsuits in the ordinary
course of business. These lawsuits primarily involve claims for
damages arising out of the use of the Corporation's products and
allegations of patent and trademark infringement. The
Corporation is also involved in litigation and administrative
proceedings involving employment matters and commercial disputes.
Some of these lawsuits include claims for punitive as well as
compensatory damages. The Corporation, using current product
sales data and historical trends, actuarially calculates the
estimate of its current exposure for product liability claims for
amounts in excess of established deductibles and accrues for the
estimated liability as described above up to the limits of the
deductibles. All other claims and lawsuits are handled on a
case-by-case basis.
The Corporation also is involved in lawsuits and administrative
proceedings with respect to claims involving the discharge of
hazardous substances into the environment. Certain of these
claims assert damages and liability for remedial investigations
and cleanup costs with respect to sites at which the Corporation
has been identified as a potentially responsible party under
federal and state environmental laws and regulations (off-site).
Other matters involve sites that the Corporation currently owns
and operates or has previously sold (on-site). For off-site
claims, the Corporation makes an assessment of the cost involved
based on environmental studies, prior experience at similar
sites, and the experience of other named parties. The
Corporation also considers the ability of other parties to share
costs, the percentage of the Corporation's exposure relative to
all other parties, and the effects of inflation on these
estimated costs. For on-site matters associated with properties
currently owned, an assessment is made as to whether an
investigation and remediation would be required under applicable
federal and state law. For on-site matters associated with
properties previously sold, the Corporation considers the terms
of sale as well as applicable federal and state laws to determine
if the Corporation has any remaining liability. If the
Corporation is determined to have potential liability for
properties currently owned or previously sold, an estimate is
made of the total cost of investigation and remediation and other
potential costs associated with the site.
Reference is made to the discussion in Item 1 of Part I of the
Corporation's Annual Report on Form 10-K for the year ended
December 31, 1993, in respect of certain environmental matters at
the Corporation's facility in Hampstead, Maryland. The
Corporation has received all permits necessary to operate its
expanded groundwater treatment system at the Hampstead facility
and the system is fully operational.
On or about October 11, 1994, suit was filed in the United
States District Court for the District of Maryland against the
Corporation by the owners of a farm that is adjacent to the
plant. (Leister et al. v. The Black & Decker Corporation (Civil
Action No. JFM 94-2809)) Plaintiffs claim that groundwater
contamination, allegedly emanating from the Hampstead facility,
has migrated in groundwater and has adversely affected
plaintiffs' property. Plaintiffs have alleged various claims for
relief, including causes of action under the Federal Resource
Conservation Recovery Act, Comprehensive Environmental Response
Compensation and Liability Act, and the Clean Water Act, as well
as various state tort claims, including claims for negligence,
nuisance, intentional misrepresentation and negligent
misrepresentation. Plaintiffs seek various forms of relief
including compensatory damages of $20,000,000 and punitive
damages of $100,000,000. The Corporation believes that
plaintiffs' claims are without merit and intends to defend
vigorously against the allegations made in this matter.
Management is of the opinion that the ultimate resolution of this
matter will not have a material adverse effect on the
Corporation's consolidated financial statements.
Reference is made to the discussion in Item 1 of Part I of the
Corporation's Annual Report on Form 10-K for the year ended
December 31, 1993, in respect of claims submitted by Emhart
Corporation to several of its insurance carriers regarding costs
incurred with respect to liability for the cleanup of hazardous
wastes at various sites owned by Emhart. Emhart recently settled
a number of the outstanding claims with its insurance carriers.
A number of remaining claims still are pending, however, and they
are being defended vigorously by the remaining insurance carrier.
Reference is made to the discussion in Item 1 of Part II of the
Corporation's Quarterly Report on Form 10-Q for the quarter ended
July 3, 1994, in respect of litigation involving the
Corporation's Price Pfister subsidiary and Masco Corporation of
Indiana. Subsequent to the filing of the Quarterly Report on
Form 10-Q for the quarter ended July 3, 1994, a number of summary
judgment motions were filed by each party and were denied by the
Court. In addition, Price Pfister and Masco have added a
counterclaim and claim, respectively, that their trade secrets
have been misappropriated by the other party. Trial on the
claims and counterclaims in this matter is scheduled to begin on
November 14, 1994. Management is of the opinion that the
ultimate resolution of this matter will not have a material
adverse effect on the Corporation's consolidated financial
statements.
In August 1994, PRC Environmental Management, Inc. ("EMI") was
informed by the Office of the Inspector General of the
Environmental Protection Agency ("EPA") that the Office of the
Inspector General was commencing an investigation into EMI's
subcontractor payment practices. The investigation involves the
timing of EMI's processing of subcontractor payments and the
submission by EMI of invoices to the EPA. PRC and EMI are
cooperating with the Office of the Inspector General and the
United States Attorney's office in this matter and, pursuant to
an agreement with the Office of the Inspector General and the
United States Attorney's office, PRC and EMI are conducting an
internal investigation of the facts and circumstances surrounding
the investigation. The Corporation cannot predict the eventual
outcome of this investigation, but, based on currently available
information, management believes that the investigation will not
have a material adverse effect on the Corporation's consolidated
financial statements.
The Corporation's estimate of the costs associated with legal,
product liability, and environmental exposures is accrued if, in
management's judgment, the likelihood of a loss is probable.
These accrued liabilities are not discounted. Insurance
recoveries for environmental and certain general liability claims
are not recognized until realized.
As of October 2, 1994, the Corporation had no known probable
but inestimable exposures for awards and assessments in
connection with environmental matters and other litigation and
administrative proceedings that could have a material effect on
the Corporation's consolidated financial statements.
Management is of the opinion that the amounts accrued for
awards or assessments in connection with the environmental
matters and other litigation and administrative proceedings to
which the Corporation is a party are adequate and, accordingly,
ultimate resolution of these matters will not have a material
adverse effect on the Corporation's consolidated financial
statements.
Item 6 Exhibits and Reports on Form 8-K
Exhibit No. Description
4 Amendment No. 1 to Credit Agreement
10 The Black & Decker Corporation Deferred Compensation Plan
for Non-Employee Directors, as amended
11 Computation of Earnings Per Common Share
27 Financial Data Schedule
99(a) Computation of Ratio of Earnings to Fixed Charges
99(b) Computation of Leverage and Cash Flow Coverage Ratios
Reports on Form 8-K
The Corporation filed a Current Report on Form 8-K with the
Commission on September 12, 1994. The Current Report on form 8-K
was filed pursuant to Item 5 of Form 8-K and reported the
commencement of a Medium-Term Note Program by the Corporation
under its $500,000,000 shelf registration.
All other items were not applicable.
<PAGE>
THE BLACK & DECKER CORPORATION
S I G N A T U R E S
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
THE BLACK & DECKER CORPORATION
By THOMAS M. SCHOEWE
__________________________________________
Thomas M. Schoewe
Vice President and Chief Financial Officer
Principal Accounting Officer
By STEPHEN F. REEVES
__________________________________________
Stephen F. Reeves
Corporate Controller
Date: November 9, 1994
<PAGE>
EXHIBIT 4
AMENDMENT NO. 1 TO CREDIT AGREEMENT
<PAGE>
AMENDMENT NO. 1
dated as of October 21, 1994
to
CREDIT AGREEMENT
dated as of November 18, 1992
THIS AMENDMENT NO. 1 (this "Amendment"), dated as of
October 21, 1994, among THE BLACK & DECKER CORPORATION, a
Maryland corporation, BLACK & DECKER HOLDINGS INC., a Delaware
corporation, BLACK & DECKER GmbH, a corporation organized under
the laws of Germany, DOM SICHERHEITSTECHNIK GmbH & CO. KG, a
limited partnership organized under the laws of Germany, BLACK &
DECKER (FRANCE) S.A.R.L., a corporation organized under the laws
of France (the "Borrowers"), the banks listed on the signature
pages hereof (the "Banks"), CHEMICAL BANK, CREDIT SUISSE and THE
BANK OF NOVA SCOTIA, as Managing Agents, and CREDIT SUISSE, as
Administrative Agent, with capitalized terms used herein and not
otherwise defined having the meaning ascribed thereto in the
Credit Agreement hereinafter referred to,
W I T N E S E T H:
WHEREAS, the Borrowers, the Banks, the Managing Agents
and the Administrative Agent have entered into a Credit Agreement
dated as of November 18, 1992 (the "Credit Agreement");
WHEREAS, the Borrowers, the Banks, the Managing Agents
and the Administrative Agent have agreed to the amendments to the
Credit Agreement more fully set forth in this Amendment;
NOW, THEREFORE, in consideration of the premises and
for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, BDC and the Foreign
Borrowers, the Banks, the Managing Agents and the Administrative
Agent agree as follows:
1. Amendments. Upon and after this Amendment becomes
effective, the Credit Agreement shall be amended as follows:
(a) Section 1.06(b) shall be amended to read in its
entirety as follows:
"The full unused amount of the Commitments will be
available for Credit Extensions to BDC. No Bank, however,
shall have any obligation to make any Credit Extension to
any Foreign Borrower if after giving effect to such Credit
Extension and any other Credit Extensions then outstanding
or to be made on the same date and to any payment of Credit
Extensions on such date, the aggregate Principal Credit
Exposure of the Banks to the Foreign Borrowers would exceed
the aggregate Credit Extension limit for the Foreign
Borrowers as provided for in this Section 1.06(b). The
aggregate Credit Extension limit for the Foreign Borrowers
shall be $560,000,000, provided that no Foreign Borrower
shall request, and no Bank shall be obligated to make,
RC Loans to any Foreign Borrower in an amount in excess of
(A) the amount authorized in the certified resolutions of
such Foreign Borrower delivered to the Administrative Agent
pursuant to Section 2.01(a) or in any certified resolution
of such Foreign Borrower delivered to the Administrative
Agent at any time thereafter or (B) an amount which will
cause the stated principal amount of any Note delivered by a
Borrower to a Bank pursuant to Section 1.13 to be less than
such Bank's pro rata share of the RC Loans to such Borrower,
and provided further that BDHI shall not request an RC Loan
or request the purchase of a Discounted Note, and no Bank
shall be obligated to make an RC Loan to BDHI or purchase a
Discounted Note from BDHI, if the aggregate principal amount
of all RC Loans outstanding to BDHI and of all outstanding
Discounted Notes, after giving effect to such new RC Loan or
such newly issued Discounted Note, would be in excess of the
amount authorized in the certified resolutions of BDHI
delivered to the Administrative Agent pursuant to Section
2.01(a) or in any certified resolution of BDHI delivered to
the Administrative Agent at any time thereafter. Any
Foreign Borrower to which no Credit Extensions are
outstanding will at that time cease to be a Foreign Borrower
but such Person may again become a Foreign Borrower by
delivering written notice to such effect to the
Administrative Agent provided that (i) such Person is a
Subsidiary of BDC, (ii) the Administrative Agent shall have
received certificates, opinions and other documents of the
type delivered to the Administrative Agent pursuant to
Section 2.01(a)(i)-(vi) with respect to such Person and
(iii) such Person shall have furnished to each Bank the
financial statements required by Section 4.20 for the period
from the date such Person ceased being a Foreign Borrower to
the date such Person again became a Foreign Borrower."
(b) Section 1.11(b) shall be amended by deleting
"0.25%" and inserting "0.175%" in lieu thereof.
(c) Section 9.01 shall be amended by amending the
definition of "Credit Extension Percentage" to read in its
entirety as follows:
"'Credit Extension Percentage'" means, on any day,
(a) with respect to each Foreign Borrower, the Dollar
principal amount of the Credit Extensions outstanding to
such Foreign Borrower on such day divided by the aggregate
amount of the Commitments on such day and (b) with respect
to BDC, the aggregate amount of the Commitments on such day
minus the principal amount of the Credit Extensions
outstanding at such time to the Foreign Borrowers under
Section 1.06(b), divided by the aggregate amount of the
Commitments on such day.
(d) Section 9.01 shall be further amended by amending
the definition of "Eurodollar Rate Margin" by (i) deleting
"0.50%" and inserting "0.4375%" in lieu thereof and (ii) by
deleting "0.375%" and inserting "0.325%" in lieu thereof,
provided that this amendment to the definition of
"Eurodollar Rate Margin" shall not become effective with
regard to any Discount Note that is issued or outstanding on
the Amendment Effective Date.
(e) Section 9.01 shall be further amended by
redesignating clause "m" of the definition of "Permitted
Lien" as clause "n" and by inserting a new clause "m" as
follows: ", (m) liens granted by PRC Inc. or its
Subsidiaries to secure reimbursement obligations with
respect to surety or performance bonds issued at the request
of PRC Inc. or its Subsidiaries."
(f) Section 9.01 shall be further amended by adding
the definition of "Majority Owned Subsidiary" that reads in
its entirety as follows:
"'Majority Owned Subsidiary' means, at any time, any
Subsidiary at least 80% of all voting stock and at least 80%
of all other ownership interests and rights to acquire
ownership of which are, directly or indirectly, owned or
controlled by BDC or one or more Wholly Owned Subsidiaries."
(g) Section 3.10 shall be amended by deleting the word
"Wholly" and inserting the word "Majority" in lieu thereof.
2. Amendment Effective Date.
This Amendment shall become effective as of the date
first written above, but shall not become effective as of such
date until the date (the "Amendment Effective Date") on which
this Amendment has been executed by the Borrowers, the Banks, the
Managing Agents and the Administrative Agent, and the
Administrative Agent shall have received each of the following,
in form and substance satisfactory to it:
(i) either (x) a certificate of an appropriate
officer of each Borrower, dated the Amendment Effective
Date, to the effect that the resolutions, constitutional
documents and bylaws delivered by such Borrower pursuant to
Section 2.01(a) of the Credit Agreement remain in full force
and effect and have not been modified since the Agreement
Date or (y) a certified copy of any such modification;
(ii) in the case of each Borrower organized under
the laws of a jurisdiction that provides good standing or
comparable certificates, such a certificate with respect to
such Borrower, issued as of a recent date by the Secretary
of State or other appropriate official of such jurisdiction;
(iii) an opinion of counsel for each Borrower,
dated the Agreement Date, in form and substance satisfactory
to the Administrative Agent; and
(iv) an opinion of special New York counsel for
each Borrower, dated the Agreement Date, in form and
substance satisfactory to the Administrative Agent.
3. Representations and Warranties. In order to induce
each Bank to enter into this Amendment and to make each Credit
Extension requested to be made by it under the Credit Agreement
as amended by this Amendment, each Borrower represents and
warrants as follows:
(a) Organization; Power; Qualification. Such Borrower
and its Significant Subsidiaries (a) are duly organized, validly
existing and, to the extent such concept is applicable to such
organizations, in good standing under the laws of their
respective jurisdictions of organization, (b) have the power and
authority to own their respective properties and to carry on
their respective businesses as now being and hereafter proposed
to be conducted and (c) to the extent such concepts are
applicable to such organizations, are duly qualified and in good
standing as foreign organizations, and are authorized to do
business, in all jurisdictions in which the character of their
respective properties or the nature of their respective
businesses requires such qualification or authorization, except
for qualifications and authorizations the lack of which, singly
or in the aggregate, has not had and will not have a Materially
Adverse Effect on BDC and its Subsidiaries taken as a whole.
(b) Authorization; Enforceability; Required Consents;
Absence of Conflicts. Such Borrower and each of its
Subsidiaries has the power, and has taken all necessary action
(including, if a corporation, any necessary stockholder action)
to authorize it, to execute, deliver and perform this Amendment,
and to perform the Credit Agreement as amended by this Amendment,
in accordance with its terms. This Amendment has been duly
executed and delivered by such Borrower and each of this
Amendment, and the Credit Agreement as amended by this Agreement,
is, a legal, valid and binding obligation of each such Person,
enforceable against such Person in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting
the enforcement of creditors' rights generally and by general
principles of equity. The execution, delivery and performance in
accordance with its terms by such Borrower of this Amendment and
the performance of the Credit Agreement as amended by this
Amendment will not (a) require any Governmental Approval or any
other consent or approval, including any consent or approval of
any Subsidiary or any consent or approval of the stockholders of
such Borrower or any of its Subsidiaries, other than Governmental
Approvals and other consents and approvals that have been
obtained, are final and not subject to review on appeal or to
collateral attack, are in full force and effect and, in the case
of any such required under any Applicable Law or Contract as in
effect on the Amendment Effective Date, are listed on Schedule
3.02 to the Credit Agreement, or (b) violate, conflict with,
result in a breach of, constitute a default under, or result in
or require the creation of any Lien upon any assets of such
Borrower or any of its Subsidiaries under, (i) any Contract to
which such Borrower or any of its Subsidiaries is a party or by
which such Borrower or any of its Subsidiaries or any of their
respective properties may be bound or (ii) any Applicable Law.
4. Survival. Each of the foregoing representations
and warranties shall be made at and as of the date this Amendment
becomes effective. Each of the representations and warranties
made under the Credit Agreement as amended by this Amendment (and
including those made herein) shall survive to the extent provided
in the Credit Agreement and not be waived by the execution and
delivery of this Amendment, or any investigation by the Managing
Agents, the Administrative Agent or the Banks or any of them.
5. Governing Law. This Amendment shall be construed
in accordance with and governed by the law of the State of New
York (without giving effect to its choice of laws principles).
6. Counterparts. This Amendment may be signed in any
number of counterparts, each of which shall be deemed to be an
original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
7. Reference to Agreement. From and after the
Amendment Effective Date, each reference in the Credit Agreement
to "this Agreement", "hereof", "hereunder" or words of like
import, and all references to the Credit Agreement in any and all
agreements, instruments, documents, notes, certificates and other
writings of every kind and nature shall be deemed to mean the
Credit Agreement as modified and amended by this Amendment.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective authorized officers
all as of the date above first written.
THE BLACK & DECKER CORPORATION
By /S/
Name:
Title:
BLACK & DECKER HOLDINGS INC.
By /S/
Name:
Title:
BLACK & DECKER GmbH
By /S/
Name:
Title:
By /S/
Name:
Title:
DOM SICHERHEITSTECHNIK GmbH &
CO. KG
By DOM Sicherheitstechnik GmbH
By /S/
Name:
Title:
BLACK & DECKER (FRANCE) S.A.R.L.
By /S/
Name:
Title:
<PAGE>
CREDIT SUISSE,
as Administrative Agent, as a
Managing Agent and as a Bank
By /S/
Name:
Title:
By /S/
Name:
Title:
CHEMICAL BANK,
as a Managing Agent and as a
Bank
By /S/
Name:
Title:
THE BANK OF NOVA SCOTIA,
as a Managing Agent and as a
Bank
By /S/
Name:
Title:
CANADIAN IMPERIAL BANK OF COMMERCE
By /S/
Name:
Title:
LTCB TRUST COMPANY
By /S/
Name:
Title:
<PAGE>
BANK OF AMERICA, NT & SA
By /S/
Name:
Title:
CITIBANK, N.A.
By /S/
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By /S/
Name:
Title:
THE FUJI BANK, LTD.
By /S/
Name:
Title:
MIDLAND BANK PLC
By /S/
Name:
Title:
NATIONSBANK OF NORTH CAROLINA, N.A.
By /S/
Name:
Title:
<PAGE>
COMMERZBANK AKTIENGESELLSCHAFT
By /S/
Name:
Title:
By /S/
Name:
Title:
DRESDNER BANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES
By /S/
Name:
Title:
By /S/
Name:
Title:
THE INDUSTRIAL BANK OF JAPAN, LTD.
By /S/
Name:
Title:
SOCIETE GENERALE
By /S/
Name:
Title:
<PAGE>
BANCA COMMERCIALE ITALIANA
NEW YORK BRANCH
By /S/
Name:
Title:
By /S/
Name:
Title:
BANK BRUSSELS LAMBERT
NEW YORK BRANCH
By /S/
Name:
Title:
By /S/
Name:
Title:
BANK OF MONTREAL
By /S/
Name:
Title:
By /S/
Name:
Title:
<PAGE>
BAYERISCHE VEREINSBANK AG
(UNION BANK OF BAVARIA)
By /S/
Name:
Title:
By /S/
Name:
Title:
THE DAI-ICHI KANGYO BANK, LIMITED
NEW YORK BRANCH
By /S/
Name:
Title:
DG BANK DEUTSCHE
GENOSSENSCHAFTSBANK
By /S/
Name:
Title:
By /S/
Name:
Title:
ISTITUTO BANCARIO SAN PAOLO
DI TORINO, SPA
By /S/
Name:
Title:
ROYAL BANK OF CANADA
By /S/
Name:
Title:
<PAGE>
THE SAKURA BANK, LIMITED
By /S/
Name:
Title:
SKANDINAVISKA ENSKILDA BANKEN
By /S/
Name:
Title:
By /S/
Name:
Title:
WESTDEUTSCHE LANDESBANK
GIROZENTRALE
NEW YORK BRANCH/CAYMAN
ISLANDS BRANCH
By /S/
Name:
Title:
By /S/
Name:
Title:
ABN AMRO BANK N.V.
By /S/
Name:
Title:
By /S/
Name:
Title:
<PAGE>
YASUDA TRUST AND BANKING
By /S/
Name:
Title:
THE CHASE MANHATTAN BANK, N.A.
By /S/
Name:
Title:
PNC BANK, N.A.
By /S/
Name:
Title:
THE SUMITOMO BANK, LTD.
By /S/
Name:
Title:
THE BANK OF CALIFORNIA
By /S/
Name:
Title:
ARAB BANK PLC
By /S/
Name:
Title:
<PAGE>
MITSUI TRUST AND BANKING COMPANY
By /S/
Name:
Title:
BANCO DI NAPOLI
By /S/
Name:
Title:
By /S/
Name:
Title:
THE NORTHERN TRUST COMPANY
By /S/
Name:
Title:
DAIWA BANK TRUST COMPANY
By /S/
Name:
Title:
AUSTRALIA AND NEW ZEALAND BANKING
GROUP LTD
By /S/
Name:
Title:
<PAGE>
EXHIBIT 10
THE BLACK & DECKER CORPORATION
DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS, AS AMENDED
<PAGE>
As Amended
October 20,
1994
THE BLACK & DECKER CORPORATION
DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
1. Eligibility.
Each member of the Board of Directors of The Black & Decker
Corporation (the "Corporation") who is not an employee of
the Corporation or any of the Corporation's subsidiaries, is
eligible to participate in this Deferred Compensation Plan
for Non-Employee Directors (the "Plan").
2. Administration of Plan.
The Plan will be administered by a committee of three
persons (the "Committee") consisting of the persons who from
time to time shall be: (a) the Chief Executive Officer of
the Corporation, (b) the Chief Financial Officer of the
Corporation, and (c) the Secretary of the Corporation. The
Committee shall have full power to interpret and administer
the Plan, and the Committee's interpretations and actions
shall be binding and conclusive on all persons for all
purposes. The Committee shall act by vote or written
consent of a majority of its members. Neither the Committee
nor any person acting on its behalf shall be liable to any
person for any action taken or omitted in connection with
the interpretation and administration of the Plan unless
attributable to willful misconduct or lack of good faith.
3. Participation.
a. An eligible director may elect to defer all or any part
of the compensation which would otherwise have been
payable currently for services as a member of the Board
of Directors (including fees payable for services as a
member of a committee of the Board). An election must
be executed and filed with the Committee prior to the
date on which the compensation will be earned. A new
director may elect to participate in the Plan by
executing and filing an election with the Committee
prior to the commencement of the director's term of
office.
b. An election shall be in writing substantially in the
form attached as Exhibit A.
c. An election to participate in the Plan shall be
effective from the date of the election and for all
subsequent years until the calendar year following the
year in which the participant files a revised election
or a notice of termination.
d. A participant may terminate participation in the Plan
by executing and filing with the Committee a notice of
termination. Any such termination shall be effective
at the end of the calendar year in which the notice is
given. In the event of termination, the amount already
deferred under the Plan and interest thereon shall be
paid to the participant only as indicated in Section 5,
Distribution from Plan. A director who has filed a
termination of election may thereafter file an election
to participate in the Plan for any calendar year
commencing after filing the election.
4. Deferred Compensation Account.
A general ledger account, hereinafter referred to as the
Deferred Compensation Account (the "Account") shall be
established for the purpose of reflecting deferred
compensation. All deferred compensation otherwise payable
to the participant for the calendar year to which the
election applies shall be credited to the Account, together
with interest compounded semi-annually on January 1 and July
1 at a rate equal to the yield on the Income Fund of The
Black & Decker Thrift and Incentive Plan during the period
then ended. Title to and beneficial ownership of the
Account shall remain in the Corporation. The obligation to
pay shall be a general unsecured obligation of the
Corporation, and the participating director and his
designated beneficiaries shall not have any property
interest whatsoever in any specific assets of the
Corporation. The Corporation may, however, establish a
"Rabbi Trust" for individual participants or all
participants as a group. With the consent of a participant,
the Trustee of a "Rabbi Trust" established for that
participant may be directed to invest the participant's
deferred compensation in common stock of the Corporation,
and if that is done, (1) neither the Corporation nor the
trustee shall have any liability for any decrease in the
value of the stock held in the trust and (2) the timing of
any distribution from the trust shall be in accordance with
the election made under section 5 of the Plan.
5. Distribution from Plan.
a. All compensation deferred under the Plan, plus
accumulated interest, shall be distributed in a lump
sum or in approximately equal annual installments not
exceeding ten, as specified by the participant at the
time of making the election. The first installment, or
the lump sum distribution, shall be paid on the first
day of the calendar year immediately following the year
in which the participant ceases to be a director of the
Corporation. Subsequent installments shall be paid on
the first day of each succeeding calendar year until
all amounts in the participant's Deferred Compensation
Account have been paid.
b. Notwithstanding the above, if a participant incurs a
severe financial hardship, the Committee administering
the Plan may, in its sole discretion, revise the
payment schedule to the extent reasonably necessary to
eliminate the severe financial hardship. The severe
financial hardship must have been caused by an
accident, illness or other event beyond the control of
the participant. In the event a participant ceases to
be a director of the Corporation and becomes a
proprietor, officer, partner, employee or otherwise
becomes affiliated with any business that is in
competition with the Corporation or any of its
subsidiaries, or becomes employed by any governmental
agency having jurisdiction over the activities of the
Corporation or any of its subsidiaries, the Committee,
at its sole discretion, may pay to the participant the
entire balance of the participant's Deferred
Compensation Account. In the event a participant dies
before all deferred amounts are distributed, the
remaining balance of the participant's Deferred
Compensation Account shall be paid on the first day of
the calendar year following the year of death, to the
beneficiaries most recently designated by the director
in writing. If no beneficiaries are designated or
being designated, fail to survive the participant,
payment shall be made to the estate of the participant.
6. Rights.
The right of a participant in the Plan to any deferred
compensation or interest thereon shall not be subject to
assignment, anticipation, alienation, transfer, pledge, or
encumbrance except by laws of descent and distribution.
7. No Trusts.
Nothing contained in the Plan and no action taken pursuant
to the provisions of the Plan shall be construed to create a
trust of any kind or an escrow arrangement of any form.
8. Copies of Plan.
Copies of the Plan and any and all amendments thereto shall
be made available to all members of the Board of Directors
during normal business hours at the office of the Secretary
of the Corporation.
<PAGE>
Exhibit A
THE BLACK & DECKER CORPORATION
Election to Defer Compensation
Deferred Compensation Plan
for Non-Employee Directors
I acknowledge receiving a copy of the Deferred Compensation Plan for
Non-Employee Directors.
Pursuant to the terms of the Plan, I elect to defer receiving the
following:
__ Board retainers
__ Board attendance fees
__ Committee attendance fees
My election will continue in effect until the first day of the calendar
year following the year in which I file written notice of termination or of
amendment of this election with the Secretary of the Corporation.
I also elect that all amounts deferred under the Plan, together with
accumulated interest earned thereon, shall be distributed to me in _________
(specify number, not exceeding ten) annual installment(s) commencing on the
first day of the calendar year immediately following the year in which I cease
to be a director of the Corporation, and subsequent installments shall be paid
on the first day of each succeeding calendar year until the entire amount
credited to my account shall have been paid.
If I die prior to distribution of the entire amount, I direct that the
remaining amount be paid to:
________________________________________
______________________________________
(name) (relationship)
______________________________________________________________________________
___
(street address)
______________________________________________________________________________
___
(city, state, zip code)
_______________________________________
______________________________________
(dated) (signature)
______________________________________
(printed name)
FOR CORPORATION'S USE
_____________________________
_____________________________________
Date Received Corporate Secretary
<PAGE>
EXHIBIT 11
COMPUTATION OF EARNINGS PER COMMON SHARE
<PAGE>
<PAGE>
<TABLE>
Exhibit 11
THE BLACK & DECKER CORPORATION
-----------------------------
COMPUTATION OF EARNINGS PER SHARE
---------------------------------
(Amounts in Millions Except Per Share Data)
<CAPTION>
For Nine Months Ended
---------------------
October 2, 1994 October 3, 1993
----------------- ------------------
Per Per
Amount Share Amount Share
------ ----- ------ -----
<S> <C> <C> <C> <C>
Primary:
- -------
Average shares outstanding 84.1 83.6
Dilutive stock options and
purchase plans--based on the
Treasury stock method using
the average market price (Note 1) (Note 1)
-------- --------
Adjusted shares outstanding 84.1 83.6
===== =======
Net earnings $66.9 $ 23.6
Less preferred stock dividend 8.8 8.8
----- -------
Net earnings attributable to
common stock $58.1 $.69 $ 14.8 $ .18
===== ==== ======= ======
Fully Diluted: (Note 2)
- -------------
Average shares outstanding 84.1 83.6
Dilutive stock options and
purchase plans--based on the
Treasury stock method using
the average market price (Note 1) (Note 1)
-------- ---------
Adjusted shares outstanding 84.1 83.6
Average shares assumed to be
converted through convertible
preferred stock 6.4 6.4
----- -------
Fully diluted average
shares outstanding 90.5 90.0
===== =======
Net earnings $66.9 $.74 $ 23.6 $ .26
===== ==== ======= ======
Notes: 1. Dilutive effect of common stock equivalents is less than 3% for the
nine- month periods ended October 2, 1994, and October 3, 1993, and has
not been shown.
2. The calculation of fully diluted earnings per share is anti-dilutive
and, therefore, is not presented in the financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
Exhibit 11
THE BLACK & DECKER CORPORATION
-----------------------------
COMPUTATION OF EARNINGS PER SHARE
---------------------------------
(Amounts in Millions Except Per Share Data)
<CAPTION>
For Three Months Ended
----------------------
October 2, 1994 October 3, 1993
----------------- ------------------
Per Per
Amount Share Amount Share
------ ----- ------ -----
<S> <C> <C> <C> <C>
Primary:
- -------
Average shares outstanding 84.4 83.7
Dilutive stock options and
purchase plans--based on the
Treasury stock method using
the average market price (Note 1) (Note 1)
-------- --------
Adjusted shares outstanding 84.4 83.7
===== =====
Net earnings $29.3 $19.5
Less preferred stock dividend 2.9 2.9
----- -----
Net earnings attributable to
common stock $26.4 $.31 $16.6 $.20
===== ==== ===== ====
Fully Diluted: (Note 2)
- -------------
Average shares outstanding 84.4 83.7
Dilutive stock options and
purchase plans--based on the
Treasury stock method using
the average market price (Note 1) (Note 1)
-------- --------
Adjusted shares outstanding 84.4 83.7
Average shares assumed to be
converted through convertible
preferred stock 6.4 6.4
----- -----
Fully diluted average
shares outstanding 90.8 90.1
===== =====
Net earnings $29.3 $.32 $19.5 $.22
===== ==== ===== ====
Notes: 1. Dilutive effect of common stock equivalents is less than 3% for the
three- month periods ended October 2, 1994, and October 3, 1993, and has
not been shown.
2. The calculation of fully diluted earnings per share is anti-dilutive
and, therefore, is not presented in the financial statements.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains financial information extracted from the Corporation's
unaudited interim financial statements as of and for the nine months ended
October 2, 1994, and the accompanying footnotes and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> OCT-02-1994
<CASH> 86,600
<SECURITIES> 0
<RECEIVABLES> 895,200<F1>
<ALLOWANCES> 0
<INVENTORY> 853,400
<CURRENT-ASSETS> 1,965,300
<PP&E> 821,800<F2>
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,532,100
<CURRENT-LIABILITIES> 1,814,800
<BONDS> 1,929,400
<COMMON> 42,200
0
150,000
<OTHER-SE> 912,000
<TOTAL-LIABILITY-AND-EQUITY> 5,532,100
<SALES> 3,006,700
<TOTAL-REVENUES> 622,400
<CGS> 1,917,200
<TOTAL-COSTS> 3,384,800
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 142,700
<INCOME-PRETAX> 99,800
<INCOME-TAX> 32,900
<INCOME-CONTINUING> 66,900
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 66,900
<EPS-PRIMARY> .69
<EPS-DILUTED> 0<F3>
<FN>
<F1>Represents net trade receivables.
<F2>Represents net property, plant and equipment.
<F3>Fully diluted earnings per share are anti-dilutive and are not presented.
</FN>
</TABLE>
<PAGE>
EXHIBIT 99(a)
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<PAGE>
<PAGE>
<TABLE>
EXHIBIT 99(a)
THE BLACK & DECKER CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Millions of Dollars)
<CAPTION>
Three Months Ended Nine Months
Ended
------------------ --------------
- ---
October 2, 1994 October 2,
1994
--------------- -------------
- --
<S> <C> <C>
EARNINGS:
Earnings before income taxes,
extraordinary item, and
cumulative effect of change
in accounting principle $ 43.8 $ 99.8
Interest expense 47.0 142.7
Portion of rent expense representative
of an interest factor 7.1 21.3
------ ------
Adjusted earnings before taxes and
fixed charges $ 97.9 $263.8
====== ======
FIXED CHARGES:
Interest expense $ 47.0 $142.7
Portion of rent expense representative
of an interest factor 7.1 21.3
------ ------
Total fixed charges $ 54.1 $164.0
====== ======
RATIO OF EARNINGS TO FIXED CHARGES 1.81 1.61
</TABLE>
<PAGE>
EXHIBIT 99(b)
COMPUTATION OF RATIOS
<PAGE>
<PAGE>
<TABLE>
Exhibit 99(b)
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
Computation of Ratios
(Millions of Dollars)
<CAPTION>
October 2,
1994
------------
<S> <C>
A. Cash Flow Coverage Ratio
------------------------
1.EBITDA (Earnings before income taxes for such period as set forth on BDC's
consolidated statements of earnings for such period, minus [or plus] other
income [or expense] for such period to the extent included in earnings before
income taxes, plus Consolidated Net Interest Expense, plus all charges
in such period for depreciation and amortization as set forth in BDC's
consolidated statements of cash flows for such period, minus net income
of BFS to the extent such net income is derived from any business activity
unrelated to BDC or any subsidiary of BDC) for the period from October 3, 1993
to October 2, 1994, the Reporting Date. $ 528.2
--------
2.Consolidated Net Interest Expense (Total interest expense [including the
interest component of capital leases and Discount accrued during such
period] of BDC and its Subsidiaries for such period, plus all dividends
declared in such period on Mandatorily Redeemable Stock, minus total interest
income of BDC and its Subsidiaries) for the same period. $ 182.1
--------
3.Quotient obtained by dividing Line 1 by Line 2 2.90
--------
The calculation of the Cash Flow Coverage Ratio excludes all effects of FAS 106,
FAS 109 and FAS 112 and unusual or non-recurring credits or charges.
B. Leverage Ratio
--------------
1.The sum, without duplication, of all Reported Debt less cash and cash
equivalents of BDC and its Consolidated Subsidiaries at such time, plus
all outstanding Mandatorily Redeemable Stock of BDC and its Subsidiaries
at such time, determined on a consolidated basis, plus all outstanding
obligations of other Persons for money borrowed (except employee obligations
not exceeding $10,000 in aggregate at such time outstanding) Guaranteed by,
or secured by a Lien on any assets of, BDC and its Subsidiaries at such
time, determined on a consolidated basis, plus the book value on the books
of the purchasers thereof of accounts receivable sold by BDC and its
Subsidiaries (other than to BDC or any of its Subsidiaries). $2,778.6
--------
2.Consolidated Net Worth at such time, minus cumulative consolidated net
income of BFS to the extent such net income is derived from any business
activity unrelated to BDC or any Subsidiary of BDC minus (or plus) the
amount by which the equity adjustment for foreign currency translations
used in determining Consolidated Net Worth at such time exceeds (is less
than) the amount thereof used in determining Consolidated Net Worth as
at September 27, 1992. $1,530.8
--------
3.Quotient obtained by dividing Line 1 by Line 2 1.82
--------
The calculation of the Leverage Ratio excludes all effects of FAS 106,
FAS 109 and FAS 112 and unusual or non-recurring credits or charges after
September 27, 1992.
Note: The information described herein is as of the last day of the
fiscal quarter ended October 2, 1994 (the Reporting Date).
Capitalized terms used herein shall have the meanings set forth
in the Credit Facility, dated as of November 18, 1992.
</TABLE>
