<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 1, 1995 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 1, 1995:
86,009,753.
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> - 2 -
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
INDEX - FORM 10-Q
October 1, 1995
Page
PART I - FINANCIAL INFORMATION
Consolidated Statement of Earnings - For the Three Months and
Nine Months Ended October 1, 1995 and October 2, 1994 . . . . . 3
Consolidated Balance Sheet - October 1, 1995
and December 31, 1994 . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statement of Cash Flows -
For the Nine Months Ended October 1, 1995
and October 2, 1994 . . . . . . . . . . . . . . . . . . . . . 5
Notes to Consolidated Financial Statements . . . . . . . . . . . 6
Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . . 10
PART II - OTHER INFORMATION . . . . . . . . . . . . . . . . . . . 20
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
<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
--------------------------- ----------------------------
OCTOBER 1, OCTOBER 2, OCTOBER 1, OCTOBER 2,
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES
Product sales $ 1,168.9 $ 1,096.6 $ 3,325.7 $ 3,006.7
Information technology
and services 207.9 226.8 579.9 622.4
---------- ---------- ---------- ----------
TOTAL REVENUES 1,376.8 1,323.4 3,905.6 3,629.1
Cost of revenues
Products 744.8 701.8 2,103.5 1,917.2
Information technology
and services 159.3 174.4 443.9 473.5
Marketing and administrative
expenses 358.0 355.0 1,053.6 994.1
---------- ---------- ---------- ----------
Total operating costs and
expenses 1,262.1 1,231.2 3,601.0 3,384.8
---------- ---------- ---------- ----------
OPERATING INCOME 114.7 92.2 304.6 244.3
Interest expense (net of
interest income) 47.7 45.5 141.9 137.2
Other expense 4.9 2.9 6.9 7.3
---------- ---------- ---------- ----------
EARNINGS BEFORE INCOME TAXES 62.1 43.8 155.8 99.8
Income taxes 18.6 14.5 51.8 32.9
---------- ---------- ---------- ----------
NET EARNINGS $ 43.5 $ 29.3 $ 104.0 $ 66.9
========== ========== ========== ==========
NET EARNINGS APPLICABLE TO
COMMON SHARES $ 40.6 $ 26.4 $ 95.3 $ 58.1
========== ========== ========== ==========
NET EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE:
Primary $ .46 $ .31 $ 1.09 $ .69
========== ========== ========== ==========
Assuming full dilution $ .46 $ .31 $ 1.08 $ .69
========== ========== ========== ==========
DIVIDENDS PER COMMON SHARE $ .10 $ .10 $ .30 $ .30
========== ========== ========== ==========
SHARES USED IN COMPUTING NET
EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE:
Primary 88.5 84.4 87.7 84.1
========== ========== ========== ==========
Assuming full dilution 95.1 84.4 88.2 84.1
========== ========== ========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE> - 4 -
<TABLE>
CONSOLIDATED BALANCE SHEET
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
(Millions of Dollars Except Per Share Data)
<CAPTION>
OCTOBER 1, DECEMBER 31,
1995 1994
----------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 112.1 $ 65.9
Trade accounts receivable 902.6 910.9
Inventories 929.0 723.0
Other current assets 153.1 133.4
---------- ----------
TOTAL CURRENT ASSETS 2,096.8 1,833.2
---------- ----------
PROPERTY, PLANT AND EQUIPMENT 839.6 858.1
GOODWILL 2,239.7 2,293.0
OTHER ASSETS 464.4 449.4
---------- ----------
$ 5,640.5 $ 5,433.7
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term borrowings $ 497.5 $ 549.0
Current maturity of long-term debt 280.9 121.1
Trade accounts payable 449.6 405.2
Other accrued liabilities 782.2 804.5
---------- ----------
TOTAL CURRENT LIABILITIES 2,010.2 1,879.8
---------- ----------
LONG-TERM DEBT 1,677.3 1,723.2
DEFERRED INCOME TAXES 48.8 45.4
POSTRETIREMENT BENEFITS 310.7 328.2
OTHER LONG-TERM LIABILITIES 301.9 287.7
STOCKHOLDERS' EQUITY
Convertible preferred stock, no par value:
Outstanding:
October 1, 1995, and December 31, 1994
- 150,000 shares 150.0 150.0
Common stock, par value $.50 per share:
Outstanding:
October 1, 1995 - 86,009,753 shares
December 31, 1994 - 84,688,803 shares 43.0 42.3
Capital in excess of par value 1,075.8 1,049.1
Retained earnings 94.1 24.6
Equity adjustment from translation (71.3) (96.6)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 1,291.6 1,169.4
---------- ----------
$ 5,640.5 $ 5,433.7
========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE> - 5 -
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
(Millions of Dollars)
<CAPTION>
NINE MONTHS ENDED
----------------------------------
OCTOBER 1, OCTOBER 2,
1995 1994
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 104.0 $ 66.9
Adjustments to reconcile net earnings
to cash flow from operating activities:
Non-cash charges and credits:
Depreciation and amortization 167.2 155.0
Other 11.5 (3.5)
Changes in selected working capital items:
Trade accounts receivable 22.8 (21.1)
Inventories (201.2) (107.1)
Trade accounts payable 50.2 67.8
Other assets and liabilities (58.9) (23.4)
--------- ---------
CASH FLOW FROM OPERATING ACTIVITIES
BEFORE SALE OF RECEIVABLES 95.6 134.6
Sale of receivables (48.0) (23.0)
--------- ---------
CASH FLOW FROM OPERATING ACTIVITIES 47.6 111.6
--------- ---------
INVESTING ACTIVITIES
Proceeds from disposal of assets and businesses 106.5 8.8
Capital expenditures (130.9) (114.5)
Cash inflow from hedging activities 425.1 957.4
Cash outflow from hedging activities (420.9) (995.2)
--------- ---------
CASH FLOW USED IN INVESTING ACTIVITIES (20.2) (143.5)
--------- ---------
CASH FLOW BEFORE FINANCING ACTIVITIES 27.4 (31.9)
FINANCING ACTIVITIES
Net (decrease) increase in short-term borrowings (51.2) 347.7
Proceeds from long-term debt
(including revolving credit facility) 234.5 1,072.7
Payments on long-term debt
(including revolving credit facility) (148.3) (1,370.5)
Issuance of equity interest in a subsidiary - 4.3
Issuance of common stock 16.7 10.6
Cash dividends (34.4) (34.0)
--------- ---------
CASH FLOW FROM FINANCING ACTIVITIES 17.3 30.8
Effect of exchange rate changes on cash 1.5 5.7
--------- ---------
INCREASE IN CASH AND CASH EQUIVALENTS 46.2 4.6
Cash and cash equivalents at beginning of period 65.9 82.0
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 112.1 $ 86.6
========= =========
</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. Certain prior year
amounts in the consolidated financial statements have been
reclassified to conform to the presentation used for 1995.
Operating results for the three-month and nine-month
periods ended October 1, 1995, 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, 1994, as
amended.
SALE OF RECEIVABLES
At October 1, 1995, under its sale of receivables program, the
Corporation had sold $196.0 million of receivables compared to
$244.0 million at December 31, 1994. The discount on sale of
receivables is included in "Other expense".
SALE OF SUBSIDIARIES
The Corporation sold PRC Realty Systems, Inc. ("RSI") on March
31, 1995, and sold PRC Environmental Management, Inc. ("EMI")
on September 15, 1995, for approximately $60 million and $35
million, respectively. RSI and EMI were components of the
Corporation's Information Technology and Services segment
("PRC"). The gain on the sale of these businesses is included
in "Other expense". The pre-tax gains were substantially
offset by tax expense associated with the sales.
In the aggregate, RSI and EMI represented 2.1% and 3.5% of
the Corporation's consolidated revenues for the nine months
ended October 1, 1995 and October 2, 1994, respectively. For
the quarter ended October 1, 1995 and October 2, 1994, RSI and
EMI together represented 1.6% and 3.3% of the Corporation's
consolidated revenues, respectively.
<PAGE> - 7 -
INVENTORIES
The components of inventory at the end of each period, in
millions of dollars, consisted of the following:
<TABLE>
<CAPTION>
October 1, December 31,
1995 1994
------------ ------------
<S> <C> <C>
FIFO Cost
Raw materials and work-in-process $ 250.1 $ 220.4
Finished products 724.6 543.8
-------- --------
974.7 764.2
Excess of FIFO cost over LIFO
inventory value (45.7) (41.2)
-------- --------
$ 929.0 $ 723.0
======== ========
</TABLE>
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>
October 1, December 31,
1995 1994
---------- ------------
<S> <C> <C>
Goodwill $2,735.3 $2,735.5
Less accumulated amortization 495.6 442.5
-------- --------
$2,239.7 $2,293.0
======== ========
</TABLE>
LONG-TERM DEBT
Indebtedness of subsidiaries of the Corporation in the
aggregate principal amounts of $878.6 million and $773.8
million were included in the Consolidated Balance Sheet at
October 1, 1995, and December 31, 1994, respectively, under
the captions short-term borrowings, current maturity of long-
term debt, and long-term debt.
<PAGE> - 8 -
On November 9, 1995, Emhart Corporation ("Emhart"), a wholly
owned subsidiary of the Corporation, gave notice of redemption
of its 9-1/4% sinking fund debentures. The sinking fund
debentures are to be redeemed by Emhart on December 18, 1995.
Accordingly, current maturity of long-term debt in the
accompanying balance sheet as of October 1, 1995, includes
$120.5 million with respect to the sinking fund debentures,
consisting of $150.0 million principal amount net of related
debt discount of $29.5 million.
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
------------------------- --------------------------
October 1, October 2, October 1, October 2,
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Interest expense $ 49.5 $ 47.0 $ 147.8 $ 142.7
Interest (income) (1.8) (1.5) (5.9) (5.5)
-------- -------- -------- --------
$ 47.7 $ 45.5 $ 141.9 $ 137.2
======== ======== ======== ========
</TABLE>
NET EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE
Primary earnings per common and common equivalent share for
each period presented are computed by dividing net earnings
applicable to common shares, which are after preferred
dividends, by the weighted average number of common shares
outstanding plus, for the three- and nine-month periods ended
October 1, 1995, the incremental shares that would be
outstanding under certain employee benefit plans and assuming
the exercise of dilutive stock options. For the three- and
nine-month periods ended October 2, 1994, those incremental
shares were immaterial and, accordingly, were not considered
in the calculation of primary earnings per share.
Preferred dividends were $2.9 million and $8.7 million for
the three- and nine-month periods ended October 1, 1995,
respectively, and $2.9 million and $8.8 million for the three-
and nine-month periods ended October 2, 1994, respectively.
Fully diluted earnings per share for the quarter ended
October 1, 1995, are computed by dividing net earnings by the
weighted average number of common shares outstanding plus the
incremental shares that would be outstanding under certain
employee benefit plans and assuming exercise of dilutive stock
options and conversion of the preferred shares.
<PAGE> - 9 -
For the nine-month periods ended October 1, 1995 and
October 2, 1994 and for the quarter ended October 2, 1994,
conversion of the preferred shares is anti-dilutive and is,
therefore, not considered in the computation of fully diluted
earnings per share. Fully diluted earnings per share for the
nine months ended October 1, 1995 and for the three and nine
months ended October 2, 1994, are computed by dividing net
earnings applicable to common shares, which are after
preferred stock dividends, by the weighted average number of
common shares outstanding plus, for the nine months ended
October 1, 1995, the incremental shares that would be
outstanding under certain employee benefit plans and assuming
exercise of dilutive stock options. For the three- and nine-
month periods ended October 2, 1994, those incremental shares
were immaterial and, accordingly, were not considered in the
calculation of fully diluted earnings per share.
<PAGE> - 10 -
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Net earnings for the three months ended October 1, 1995,
increased 48% to $43.5 million compared to $29.3 million for
the same quarter last year. Earnings per common share
increased 48% to $.46 for the third quarter of 1995 on both a
primary and a fully diluted basis, compared to $.31 in the
same quarter last year. For the first nine months of 1995,
net earnings were $104.0 million compared to $66.9 million for
the first nine months of 1994. Earnings per common share for
the nine-month period ended October 1, 1995, were $1.09 on a
primary basis and $1.08 on a fully diluted basis compared to
$.69 and $.69, respectively, for the same period in 1994.
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 1, 1995, and October 2, 1994:
<TABLE>
_______________________________________________________________________________________________
<CAPTION>
Analysis of Changes in Revenues (in Millions of Dollars)
--------------------------------------------------------
Consolidated Three Months Ended Nine Months Ended
------------ ----------------------- -----------------------
October 1, October 2, October 1, October 2,
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <S> <S> <S> <S>
Total revenues $1,376.8 $1,323.4 $3,905.6 $3,629.1
Unit volume - Existing (1) 3 % 12 % 5 % 8 %
- Disposed (2) (2)% (3)% (1)% (3)%
Price 1 % 1 % 1 % 1 %
Currency 2 % 1 % 3 % (1)%
-------- -------- -------- --------
Change in total revenues 4 % 11 % 8 % 5 %
_______________________________________________________________________________________________
(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> - 11 -
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, outdoor products (composed of
electric lawn and garden and recreational products), plumbing
products, and product service; Commercial and Industrial
Products (Commercial), including fastening systems and glass
container-making equipment; and Information Technology and
Services (PRC), including government and commercial 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 1,
1995, compared to the three months and nine months ended
October 2, 1994, by geographic area for each business segment.
<PAGE> - 12 -
<TABLE>
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
THREE AND NINE MONTHS ENDED OCTOBER 1, 1995
ANALYSIS OF CHANGES IN REVENUES
(in Millions of Dollars)
<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 $ 583.1 $1,545.6 $ 275.2 $ 874.1 $ 148.9 $ 404.4 $1,007.2 $2,824.1
-------- -------- -------- -------- -------- -------- -------- --------
Unit Volume - Existing 1 % 5 % 9 % 6 % (5)% 5 % 2 % 5 %
- Disposed - % - % - % - % - % - % - % - %
Price 1 % 1 % - % - % 5 % 4 % 1 % 1 %
Currency - % - % 9 % 11 % (4)% (4)% 2 % 3 %
-- -- -- -- -- -- -- --
2 % 6 % 18 % 17 % (4)% 5 % 5 % 9 %
-- -- -- -- -- -- -- --
______________________________________________________________________________________________________________
Commercial
- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total Revenues $ 59.8 $ 192.6 $ 70.7 $ 216.1 $ 31.2 $ 92.9 $ 161.7 $ 501.6
-------- -------- -------- -------- -------- -------- -------- --------
Unit Volume - Existing 2 % 2 % 35 % 28 % 3 % 13 % 14 % 13 %
- Disposed - % - % - % - % - % - % - % - %
Price 1 % 1 % 1 % 1 % (1)% - % 1 % 1 %
Currency - % - % 11 % 15 % 7 % 12 % 5 % 8 %
-- -- -- -- -- -- -- --
3 % 3 % 47 % 44 % 9 % 25 % 20 % 22 %
-- -- -- -- -- -- -- --
______________________________________________________________________________________________________________
PRC
- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total Revenues $ 207.9 $ 579.9 $ - $ - $ - $ - $ 207.9 $ 579.9
-------- -------- -------- -------- -------- -------- -------- --------
Unit Volume - Existing 2 % - % - % - % - % - % 2 % - %
Disposed (10)% (7)% - % - % - % - % (10)% (7)%
-- -- -- -- -- -- -- --
(8)% (7)% - % - % - % - % (8)% (7)%
-- -- -- -- -- -- -- --
______________________________________________________________________________________________________________
Consolidated
- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total Revenues $ 850.8 $2,318.1 $ 345.9 $1,090.2 $ 180.1 $ 497.3 $1,376.8 $3,905.6
-------- -------- -------- -------- -------- -------- -------- --------
Unit Volume - Existing 1 % 3 % 14 % 10 % (4)% 6 % 3 % 5 %
- Disposed (3)% (2)% - % - % - % - % (2)% (1)%
Price 1 % 1 % - % - % 4 % 3 % 1 % 1 %
Currency - % - % 9 % 12 % (2)% (1)% 2 % 3 %
-- -- -- -- -- -- -- --
Change in Total Revenues (1)% 2 % 23 % 22 % (2)% 8 % 4 % 8 %
-- -- -- -- -- -- -- --
______________________________________________________________________________________________________________
</TABLE>
<PAGE> - 13 -
Existing unit volume grew by 3% and 5% for the three-month and
nine-month periods ended October 1, 1995, respectively, over
prior year levels. The effects of a weaker United States dollar
compared to most major foreign currencies accounted for 2% and 3%
of the increase in revenues for the three- and nine-month periods
ended October 1, 1995, respectively, over the comparable periods
in 1994. Pricing actions modestly improved revenue comparisons
for the quarter and nine months ended October 1, 1995, compared
to the corresponding periods in 1994. The sale of the
Corporation's RSI business in March 1995 and EMI business in
September 1995 resulted in a decrease in unit volume of 2% and 1%
for the three- and nine-month periods ended October 1, 1995,
respectively, as compared to 1994. RSI and EMI were components
of PRC, the Corporation's Information Technology and Services
segment.
Existing unit volume in the Consumer segment increased by 2%
and 5% for the three-month and nine-month periods ended October
1, 1995, respectively, as compared to the same periods last year.
Revenues in the Corporation's Consumer businesses in the
United States grew by 2% and 6% for the three-month and nine-
month periods ended October 1, 1995, respectively, over 1994
levels. In the domestic power tools and accessories business,
sales of consumer products, spurred by the introduction of the
cordless VersaPak line, contributed to good revenue growth for
the three months ended October 1, 1995, compared to the
corresponding quarter in 1994. For the nine months ended October
1, 1995, revenues in the domestic power tools and accessories
business were well ahead of prior year levels due largely to the
continued success during 1995 of the DeWalt professional power
tools line, coupled with the introduction of the VersaPak line.
Despite continued strong sales of the SnakeLight flexible
flashlight, a revenue decline was experienced during the third
quarter of 1995 over the prior year level in the Corporation's
domestic household products business as the business continued
the efforts it began earlier in the year to exit certain of its
lower margin product lines if it were unable to improve
profitability. For the nine months ended October 1, 1995,
revenues in the domestic household products business continued to
be strongly ahead of the prior year level, primarily on the
strength of 1995 SnakeLight sales. The Corporation's domestic
security hardware business experienced moderate sales growth for
the three-month and nine-month periods ended October 1, 1995,
over prior year levels. Revenues in the Corporation's plumbing
products business during the quarter ended October 1, 1995,
showed a modest increase over prior year levels, partially
reversing the revenue declines experienced in the first half of
1995 when poor weather-related building conditions in the western
United States and the resulting soft demand in professional
distribution channels caused a substantial decrease in revenues
over 1995 levels. Soft demand in these professional distribution
channels, however, continued in the third quarter of 1995. Despite
<PAGE> - 14 -
improvements during the third quarter of 1995, revenues in the
plumbing products business for the nine months ended October 1,
1995, continued below 1994 levels.
Excluding the substantial positive effect of changes in
foreign exchange rates, revenues in the Corporation's Consumer
businesses in Europe increased during the quarter and nine months
ended October 1, 1995, by 9% and 6%, respectively, over the
comparable periods in 1994. For the quarter ended October 1,
1995, revenue increases over prior year levels were experienced
across all major markets, as the Corporation benefitted from the
sell-in of its relaunched consumer power tools line, and from the
security hardware business. While the European Consumer
businesses were up 6% for the nine months ended October 1, 1995,
exclusive of positive foreign currency effects, results in
individual countries in Europe varied, with some countries up
substantially over the corresponding period in 1994 and other
countries experiencing declines period over period.
The Corporation's Consumer businesses in other geographic
regions experienced a 5% decrease in existing unit volume, offset
by a 5% increase in price, for the three-month period ended
October 1, 1995, over the same quarter in 1994. For the nine
months ended October 1, 1995, those businesses experienced a 5%
increase in existing unit volume and a 4% increase in price over
the corresponding period in 1995. Economic turmoil caused by the
monetary crisis negatively affected sales in Mexico for all of
1995. In the Canadian household products business, actions
taken by the Corporation to improve profitability or exit certain
low margin product lines caused a sales decline in the third
quarter of 1995 over the prior year. While sales declines
occurred during the third quarter of 1995 in certain other
businesses, including the Far East and Australia, strong revenue
growth continued in other areas, most notably Brazil.
Excluding the significant positive effect of changes in
foreign currencies, revenues in the Commercial segment for the
three months and nine months ended October 1, 1995, were 15% and
14% higher than the corresponding periods in 1994. The increased
revenue levels experienced during the third quarter of 1995 were
driven by strong revenue growth in the glass-container making
equipment business, particularly in Europe.
Excluding the effects of the RSI business sold in March 1995
and the EMI business sold in September 1995, PRC's total revenues
increased by 2% for the quarter ended October 1, 1995, compared
to the same period last year and, for the nine months ended
October 1, 1995, approximated the 1994 level. The increase in
revenues for the third quarter of 1995 was attributable to
increased sales under PRC's Super-Minicomputer Procurement (SMP)
contract and under several other large contracts.
<PAGE> - 15 -
Earnings
Operating income for the third quarter of 1995 increased 24% to
$114.7 million compared to $92.2 million in the third quarter of
1994. Operating income for the first nine months of 1995
increased 25% to $304.6 million compared to $244.3 million in the
first nine months of 1994. Operating income as a percentage of
revenues for the three-month and nine-month periods ended October
1, 1995, was 8.3% and 7.8%, respectively, compared to 7.0% and
6.7% for the corresponding periods in 1994. The higher operating
income levels for the three-month and nine-month periods ended
October 1, 1995, resulted from improvements in a number of the
Corporation's businesses, including the power tools business, the
fastening systems business, the glass container-making equipment
business and, in particular, the household products business,
which were partially offset by operating income declines in the
plumbing products business as a result of lower sales in the
first half of 1995.
Excluding the effects of the sold RSI and EMI businesses,
operating income as a percentage of sales at PRC for the three
and nine months ended October 1, 1995, was 5.2% and 4.3%,
respectively, compared to 3.3% and 3.0% for the corresponding
periods in 1994. The higher operating income levels for the
three and nine months ended October 1, 1995, was the result of
improved profitability on several large contracts during the
third quarter of 1995 as well as tight controls on administrative
expenses during 1995.
Gross margin on product sales as a percentage of revenues for
the three-month and nine-month periods ended October 1, 1995, was
36.3% and 36.8%, respectively, compared to 36.0% and 36.2% for
the comparable periods of 1994. These improvements resulted
primarily from increased manufacturing productivity and the
implementation of cost reduction initiatives, partially offset by
commodity price pressures.
Excluding the effects of the RSI and EMI businesses sold
during 1995, PRC's gross margin as a percentage of revenues for
the three-month and nine-month periods ended October 1, 1995, was
23.6% and 23.6%, respectively, compared to 22.9% and 23.6% for
the comparable periods last year.
Marketing and administrative expenses as a percentage of total
revenues for the three-month and nine-month periods ended October
1, 1995, were 26.0% and 27.0%, respectively, compared to 26.8%
and 27.4% for the comparable periods of last year.
Net interest expense (interest expense less interest income)
for the three-month and nine-month periods ended October 1, 1995,
of $47.7 million and $141.9 million, respectively, was slightly
above levels experienced in the comparable periods in 1994 as
<PAGE> - 16 -
higher interest rates in 1995 were substantially offset by lower
average borrowing levels during 1995.
The Corporation maintains a portfolio of interest rate hedge
instruments for the purpose of managing interest rate exposure.
During the nine-month period ended October 1, 1995, the
Corporation decreased its portfolio by the net reduction of
$400.0 million notional principal amount of interest rate hedges.
This net reduction consisted of the following (in millions of
dollars of notional principal amounts):
<TABLE>
<CAPTION>
Less:
Maturities
Plus: and Early
Outstanding at New Termina- Outstanding at
December 31, 1994 Hedges tions October 1, 1995
<S> <C> <C> <C> <C>
Interest rate swaps:
Fixed to variable rates $850.0 $100.0 $(250.0) $700.0
Variable to fixed rates 750.0 150.0 (450.0) 450.0
Rate basis swaps 200.0 50.0 (50.0) 200.0
U.S. rates to
foreign rates 175.0 175.0
Interest rate caps purchased 100.0 100.0 (50.0) 150.0
</TABLE>
Deferred gains and losses on the early termination of interest
rate swaps as of October 1, 1995, were not significant. The net
reduction of the Corporation's interest rate hedge portfolio
during the nine-month period ended October 1, 1995, coupled with
the issuance of fixed rate debt during the first quarter of 1995,
had the effect of reducing the Corporation's variable rate debt
to total debt ratio from 34% at December 31, 1994, to 33% at
October 1, 1995.
On November 9, 1995, the Corporation's Emhart subsidiary gave
notice of redemption of its 9-1/4% sinking fund debentures. The
sinking fund debentures are to be redeemed by Emhart on December
18, 1995. Accordingly, current maturity of long-term debt in the
accompanying balance sheet as of October 1, 1995, includes $120.5
million with respect to the sinking fund debentures, consisting
of $150.0 million principal amount net of related debt discount
of $29.5 million. As a result of the announced early redemption,
the Corporation expects to recognize an extraordinary loss on
extinguishment of debt of approximately $30.0 million during the
fourth quarter of 1995. The estimated extraordinary loss
consists primarily of the write-off of the debt discount plus
premiums and costs associated with the redemption, net of
applicable income taxes. The Corporation will finance Emhart's
redemption of the sinking fund debentures through internally
generated cash and proceeds from the previously announced and
completed sales of PRC's RSI and EMI businesses.
<PAGE> - 17 -
The Corporation's effective tax rate for the three-month and
nine-month periods ended October 1, 1995, was 30% and 33%,
respectively, compared to 33% for the three-month and nine-month
periods ended October 2, 1994. The higher effective tax rate for
the nine months ended October 1, 1995, as compared to the three
months then ended was a result of the sale of RSI during the
first quarter of 1995. Tax expense recognized as a result of the
sale of RSI offset the pre-tax gain recognized on the sale during
the first quarter of 1995. Tax expense recognized as a result of
the sale of EMI was not significant. Excluding the effects of
the RSI sale, the lower rate for 1995 as compared to 1994 was the
result of a change in the mix of the Corporation's operating
income from subsidiaries in higher rate tax jurisdictions to
those in lower rate tax jurisdictions or to those that benefit
from the utilization of net operating loss carryforwards.
As more fully described in the Corporation's Annual Report on
Form 10-K for the year ended December 31, 1994, based on taxable
earnings (losses) history over the past several years and the
volatility of comprehensive taxable earnings (losses) in the
United States due to foreign exchange contracts, a full valuation
allowance was considered necessary on net tax assets in the
United States. In addition, a full valuation allowance on net
tax assets in certain foreign taxing jurisdictions was considered
necessary based on the history of taxable earnings (losses), the
tax carryforward periods, and projected earnings. During the
fourth quarter of 1995, the Corporation will reevaluate the
necessity for full valuation allowances in the United States and
certain foreign tax jurisdictions. Depending on comprehensive
taxable earnings in the United States and certain foreign taxing
jurisdictions during the fourth quarter of 1995, the
Corporation's tax valuation allowance may be reduced by the end
of 1995.
FINANCIAL CONDITION
Cash flow from operating activities before the sale of
receivables for the nine months ended October 1, 1995, provided
cash of $95.6 million compared to cash generation of $134.6
million for the first nine months of 1994. Higher working capital
requirements, primarily as a result of increased inventory
levels, were partially offset by improved net earnings.
Inventory levels at October 1, 1995, were, in part, higher than
prior year levels in support of the Corporation's new product
launches into various markets and in response to recent plant
rationalizations in Europe and the United States.
<PAGE> - 18 -
Investing activities for the nine months ended October 1, 1995,
used cash of $20.2 million compared to $143.5 million last year.
The improvement in cash flow from investing activities is
primarily attributable to the receipt of approximately $95
million in proceeds from the sales of the Corporation's RSI and
EMI businesses and to the effects of the Corporation's hedging of
a portion of its net investment in subsidiaries located outside
the United States. During the nine months ended October 1, 1995,
these hedging activities resulted in a net cash inflow of $4.2
million as compared to a net cash outflow of $37.8 million for
the corresponding period in 1994.
As more fully described in the Corporation's Annual Report on
Form 10-K for the year ended December 31, 1994, the Corporation
has historically hedged a portion of its net investment in
foreign subsidiaries. In the third quarter of 1995, the
Corporation decided to limit the future hedging of its net
investment in foreign subsidiaries. This action may increase the
volatility of reported equity in the future but will result in
more predictable cash flows from hedging activities.
Financing activities generated cash of $17.3 million for the
nine months ended October 1, 1995, compared to cash generated of
$30.8 million in the first nine months of 1994. During the first
nine months of 1995, the Corporation issued $85.0 million of
Medium Term Notes under its shelf registration statement and
decreased its short-term borrowings by $51.2 million. At October
1, 1995, average debt maturity was 4.0 years compared to 4.9
years at December 31, 1994.
In addition to measuring its cash flow generation and usage
based upon the operating, investing, and financing
classifications included in the Consolidated Statement of Cash
Flows, the Corporation also measures its free cash flow. Free
cash flow, a measure commonly employed by bond rating agencies
and banks, is defined by the Corporation as cash available for
debt reduction (including short-term borrowings), prior to the
effects of cash received from divested businesses, equity
offerings, and sales of receivables. Free cash flow, a more
inclusive measure of the Corporation's cash flow generation than
cash flow from operating activities included in the Consolidated
Statement of Cash Flows, considers items such as cash used for
capital expenditures and dividends, as well as net cash inflows
or outflows from hedging activities. During the nine months
ended October 1, 1995, the Corporation experienced negative free
cash flow of $80.4 million compared to negative free cash flow of
$33.1 million for the corresponding period in 1994. This $47.3
million decrease in free cash flow during the first nine months
of 1995 over 1994 was primarily the result of increased working
capital levels as a result of higher inventories required in
connection with the Corporation's new product introductions and
plant rationalizations, partially offset by improved net
earnings, as well as the timing of capital expenditures.
<PAGE> - 19 -
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. As of October 1, 1995,
the Corporation was in compliance with all covenants and
provisions of the Credit Facility, with a leverage ratio of 1.55
and cash flow coverage ratio of 3.49.
<PAGE> - 20 -
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 an
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 involves 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
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 is 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, 1994, and to the discussion in Item 1 of Part II of
the Corporation's Quarterly Report on Form 10-Q for the quarter
ended July 2, 1995, in respect of the suit filed by the owners of
a farm that is adjacent to the Corporation's Hampstead, Maryland
facility. Plaintiffs in this matter have filed a motion seeking
<PAGE> - 21 -
leave to amend their complaint and have requested the right to
reallege two claims previously dismissed. The Court has not yet
ruled on that motion.
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, 1994, and to the discussion in Item 1 of Part II of
the Corporation's Quarterly Report on Form 10-Q for the three
months ended July 2, 1995, in respect of claims brought by the
Attorney General of the State of California against the
Corporation's Price Pfister subsidiary to the effect that lead
which leaches from faucets constitutes a prohibited discharge of
lead under California's Proposition 65. Subsequent to the end of
the quarter ended July 2, 1995, the Attorney General of the State
of California filed a petition for review with the Supreme Court
of the State of California of the decision of the Court of Appeal
of the State of California upholding the trial court's decision
rejecting the Attorney General's claim and concluding that lead
which leaches from faucets is not a prohibited discharge of lead
into a "source of drinking water." The Attorney General's
petition for review has been granted. Motions filed by the
Natural Resources Defense Council ("NRDC") and the Environmental
Law Foundation ("ELF") to intervene in the petition for review
were denied by the Supreme Court.
A number of Price Pfister's codefendants in the pending cases
have settled the claims against them. Although Price Pfister has
discussed the possibility of settling this matter, there can be
no assurance that discussions with the plaintiffs will continue
or result in a settlement of the pending claims. Pending the
results of those discussions, Price Pfister intends to defend the
Attorney General's appeal vigorously. At this time, it is not
anticipated that a hearing before the Supreme Court would occur
before late 1996 or early 1997. Price Pfister anticipates that
it will file motions with the trial courts before which the suits
by the Attorney General, the NRDC and the ELF are pending seeking
to postpone the trials in these matters until the Supreme Court
has issued its opinion on the Attorney General's appeal.
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, 1994, and to the discussion in Item 1 of Part II of
the Corporation's Quarterly Report on Form 10-Q for the quarter
ended July 2, 1995, in respect of claims made by the successor to
Orkem S.A. concerning the Corporation's obligations to indemnify
the successor for certain environmental liabilities associated
with the Corporation's former Bostik chemical adhesive business.
The Corporation and the successor have resolved the existing
disputes with respect to the environmental liability claims, and
the Corporation has paid claims totalling approximately $1.5
million.
<PAGE> - 22 -
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 1, 1995, the Corporation has 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.
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.
Item 6 Exhibits and Reports on Form 8-K
Exhibit No. Description
11 Computation of Earnings Per Share.
12 Computation of Ratios.
27 Financial Data Schedule.
99 Computation of Leverage and Cash Flow Coverage Ratios.
The Corporation did not file any reports on Form 8-K during the
three-month period ended October 1, 1995.
All other items were not applicable.
<PAGE> - 23 -
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, 1995
<PAGE>
<TABLE> Exhibit 11
THE BLACK & DECKER CORPORATION
------------------------------
COMPUTATION OF EARNINGS PER SHARE
---------------------------------
(Millions of Dollars Except Per Share Data)
<CAPTION>
For Nine Months Ended
---------------------
October 1, 1995 October 2, 1994
----------------- -----------------
Per Per
Amount Share Amount Share
------ ----- ------ -----
<S> <C> <C> <C> <C>
Primary:
- -------
Average shares outstanding 85.4 84.1
Dilutive stock options and
purchase plans--based on the
Treasury stock method using
the average market price 2.3 (Note 1)
----- ---------
Adjusted shares outstanding 87.7 84.1
===== =====
Net earnings $104.0 $ 66.9
Less preferred stock dividend 8.7 (Note 3) 8.8
------- ------
Net earnings attributable to
common stock $ 95.3 $1.09 $ 58.1 $ .69
====== ===== ====== ======
Fully Diluted:
- -------------
Average shares outstanding 85.4 84.1
Dilutive stock options and
purchase plans--based on the
Treasury stock method using
the higher of average market
price or ending market price 2.8 (Note 1)
----- --------
Adjusted shares outstanding 88.2 84.1
Average shares assumed to be
converted through convertible
preferred stock (Note 2) 6.4 6.4
----- ------
Fully diluted average
shares outstanding 94.6 90.5
====== ======
Net earnings $104.0 $1.10 $ 66.9 $ .74
====== ===== ====== =====
<FN>
Notes: 1. Dilutive effect of common stock equivalents is less than 3% for the nine-
month period ended October 2, 1994, and has not been shown.
2. The assumed conversion of convertible preferred stock is anti-dilutive and,
therefore, is not used in the calculation of fully diluted earnings per
share included in the financial statements.
3. Difference from prior year is due to rounding.
</TABLE>
<PAGE>
<TABLE> Exhibit 11
THE BLACK & DECKER CORPORATION
------------------------------
COMPUTATION OF EARNINGS PER SHARE
---------------------------------
(Millions of dollars, except per share data)
<CAPTION> For Three Months Ended
----------------------
October 1, 1995 October 2, 1994
----------------- -----------------
Per Per
Amount Share Amount Share
------ ----- ------ -----
<S> <C> <C> <C> <C>
Primary:
- -------
Average shares outstanding 85.9 84.4
Dilutive stock options and
purchase plans--based on the
Treasury stock method using
the average market price 2.6 (Note 1)
----- --------
Adjusted shares outstanding 88.5 84.4
===== =====
Net earnings $43.5 $29.3
Less preferred stock dividend 2.9 2.9
----- -----
Net earnings attributable to
common stock $40.6 $.46 $26.4 $.31
===== ==== ===== ====
Fully Diluted:
- -------------
Average shares outstanding 85.9 84.4
Dilutive stock options and
purchase plans--based on the
Treasury stock method using
the higher of average market
price or ending market price 2.8 (Note 1)
----- ---------
Adjusted shares outstanding 88.7 84.4
Average shares assumed to be
converted through convertible
preferred stock 6.4 6.4 (Note 2)
----- ------
Fully diluted average
shares outstanding 95.1 90.8
===== ======
Net earnings $43.5 $.46 $29.3 $.32
===== ==== ====== ====
<FN>
Notes: 1. Dilutive effect of common stock equivalents is less than 3% for the three-
month period ended October 2, 1994, and has not been shown.
2. The assumed conversion of convertible preferred stock is anti-dilutive and,
therefore, is not used in the calculation of fully diluted earnings per
share included in the financial statements.
</TABLE>
<PAGE>
<TABLE>
EXHIBIT 12
THE BLACK & DECKER CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Millions of Dollars, Except Ratios)
<CAPTION>
Three Months Ended Nine Months Ended
------------------ -----------------
October 1, 1995 October 1, 1995
--------------- ---------------
<S> <C> <C>
EARNINGS:
Earnings before income taxes $ 62.1 $155.8
Interest expense 49.5 147.8
Portion of rent expense
representative of an
interest factor 7.6 22.7
------ ------
Adjusted earnings before taxes
and fixed charges $119.2 $326.3
====== ======
FIXED CHARGES:
Interest expense $ 49.5 $147.8
Portion of rent expense repre-
sentative of an interest
factor 7.6 22.7
------ ------
Total fixed charges $ 57.1 $170.5
====== ======
RATIO OF EARNINGS TO FIXED CHARGES 2.09 1.91
====== ======
</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 1, 1995, and the accompanying footnotes and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<CIK> 0000012355
<NAME> THE BLACK & DECKER CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> OCT-1-1995
<CASH> 112,100
<SECURITIES> 0
<RECEIVABLES> 902,600<F1>
<ALLOWANCES> 0
<INVENTORY> 929,000
<CURRENT-ASSETS> 2,096,800
<PP&E> 839,600<F2>
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,640,500
<CURRENT-LIABILITIES> 2,010,200
<BONDS> 1,677,300
<COMMON> 43,000
0
150,000
<OTHER-SE> 1,098,600
<TOTAL-LIABILITY-AND-EQUITY> 5,640,500
<SALES> 3,325,700
<TOTAL-REVENUES> 3,905,600
<CGS> 2,103,500
<TOTAL-COSTS> 3,601,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 147,800
<INCOME-PRETAX> 155,800
<INCOME-TAX> 51,800
<INCOME-CONTINUING> 104,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 104,000
<EPS-PRIMARY> 1.09
<EPS-DILUTED> 1.08
<FN>
<F1>Represents net trade receivables.
<F2>Represents net property, plant and equipment.
</FN>
</TABLE>
<PAGE>
<TABLE>
Exhibit 99
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
Computation of Ratios
(Millions of Dollars)
<CAPTION>
October 1, 1995
---------------
<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, 1994,
to October 1, 1995, the Reporting Date. $ 680.6
--------
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. $ 194.9
--------
3. Quotient obtained by dividing Line 1 by Line 2 3.49
========
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). $2,599.2
--------
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. $1,678.5
--------
3. Quotient obtained by dividing Line 1 by Line 2 1.55
========
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 1, 1995 (the Reporting Date).
Capitalized terms used herein shall have the meanings set forth
in the Credit Facility, dated as of November 18, 1992.
</TABLE>
