UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 28, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 1-1553
THE BLACK & DECKER CORPORATION
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(Exact name of registrant as specified in its charter)
Maryland 52-0248090
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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701 East Joppa Road Towson, Maryland 21286
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(Address of principal executive offices) (Zip Code)
(410) 716-3900
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address, and former fiscal year, if changed since last
report.)
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 (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. X YES NO
The number of shares of Common Stock outstanding as of September 28, 1997:
94,808,961
The exhibit index as required by item 601(a) of Regulation S-K is included in
this report.
<PAGE>
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
INDEX - FORM 10-Q
September 28, 1997
Page
PART I - FINANCIAL INFORMATION
Consolidated Statement of Earnings (Unaudited) For the Three
Months and Nine Months Ended September 28, 1997 and September 29, 1996......3
Consolidated Balance Sheet
September 28, 1997 (Unaudited) and December 31, 1996.......................4
Consolidated Statement of Cash Flows (Unaudited)
For the Nine Months Ended September 28, 1997 and September 29, 1996.........5
Notes to Consolidated Financial Statements (Unaudited).........................6
Management's Discussion and Analysis of Financial Condition and
Results of Operations......................................................10
PART II - OTHER INFORMATION...................................................18
SIGNATURES....................................................................20
<PAGE>
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CONSOLIDATED STATEMENT OF EARNINGS (Unaudited)
The Black & Decker Corporation and Subsidiaries
(Dollars in Millions Except Per Share Data)
<TABLE>
<CAPTION>
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Three Months Ended Nine Months Ended
September September September September
28, 1997 29, 1996 28, 1997 29, 1996
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<S> <C> <C> <C> <C>
Sales $1,224.9 $1,186.7 $3,422.1 $3,459.6
Cost of goods sold 788.9 757.5 2,201.2 2,209.5
Selling, general, and administrative expenses 309.3 315.1 916.6 943.5
Restructuring costs - - - 81.6
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Operating Income 126.7 114.1 304.3 225.0
Interest expense (net of interest income) 32.7 32.5 93.9 106.3
Other expense 4.2 5.3 10.1 14.5
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Earnings From Continuing Operations
Before Income Taxes 89.8 76.3 200.3 104.2
Income taxes 31.4 20.6 70.1 35.6
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Earnings From Continuing Operations 58.4 55.7 130.2 68.6
Earnings from discontinued operations (net
of income taxes) - - - 70.4
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Net Earnings $ 58.4 $ 55.7 $ 130.2 $ 139.0
===================================================================================================================
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Net Earnings Applicable to Common
Shares $ 58.4 $ 52.8 $ 130.2 $ 130.3
===================================================================================================================
Net Earnings Per Common and Common
Equivalent Share:
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Primary:
Earnings from continuing operations $ .60 $ .59 $ 1.35 $ .67
Earnings from discontinued operations - - - .78
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Primary Earnings Per Share $ .60 $ .59 $ 1.35 $ 1.45
===================================================================================================================
Shares Used in Computing Primary Earnings
Per Share (in Millions) 97.1 90.2 96.5 89.9
===================================================================================================================
Assuming Full Dilution:
Earnings from continuing operations $ .60 $ .58 $ 1.35 $ .71
Earnings from discontinued operations - - - .73
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Fully Diluted Earnings Per Share $ .60 $ .58 $ 1.35 $ 1.44
===================================================================================================================
Shares Used in Computing Fully Diluted
Earnings Per Share (in Millions) 97.1 96.6 96.6 96.4
===================================================================================================================
Dividends Per Common Share $ .12 $ .12 $ .36 $ .36
===================================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements (Unaudited)
<PAGE>
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CONSOLIDATED BALANCE SHEET
The Black & Decker Corporation and Subsidiaries
(Dollars in Millions Except Per Share Amount)
<TABLE>
<CAPTION>
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(Unaudited)
September 28, 1997 December 31, 1996
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<S> <C> <C>
Assets
Cash and cash equivalents $ 187.3 $ 141.8
Trade receivables 856.5 672.4
Inventories 924.1 747.8
Other current assets 120.3 242.2
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Total Current Assets 2,088.2 1,804.2
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Property, Plant, and Equipment 875.2 905.8
Goodwill 1,880.6 2,012.2
Other Assets 529.0 431.3
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$5,373.0 $5,153.5
===================================================================================================================
Liabilities and Stockholders' Equity
Short-term borrowings $ 122.8 $ 235.9
Current maturities of long-term debt 40.1 54.1
Trade accounts payable 398.1 380.7
Other accrued liabilities 664.7 835.9
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Total Current Liabilities 1,225.7 1,506.6
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Long-Term Debt 1,879.1 1,415.8
Deferred Income Taxes 80.4 67.5
Postretirement Benefits 300.6 310.3
Other Long-Term Liabilities 193.8 220.9
Stockholders' Equity
Common stock, par value $.50 per share
(outstanding: September 28, 1997--94,808,961 shares;
December 31, 1996--94,248,807 shares) 47.4 47.1
Capital in excess of par value 1,274.6 1,261.7
Retained earnings 476.3 380.2
Equity adjustment from translation (104.9) (56.6)
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Total Stockholders' Equity 1,693.4 1,632.4
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$5,373.0 $5,153.5
===================================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements (Unaudited)
<PAGE>
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CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
The Black & Decker Corporation and Subsidiaries
(Dollars in Millions)
<TABLE>
<CAPTION>
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Nine Months Ended
September 28, 1997 September 29, 1996
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<S> <C> <C>
Operating Activities
Net earnings $ 130.2 $ 139.0
Adjustments to reconcile net earnings to cash flow from
operating activities of continuing operations:
Non-cash charges and credits:
Restructuring charges - 81.6
Depreciation and amortization 163.1 159.3
Other (2.6) 8.7
Earnings of discontinued operations - (70.4)
Changes in selected working capital items:
Trade receivables (93.9) 4.9
Inventories (220.8) 22.5
Trade accounts payable 33.4 (28.4)
Other assets and liabilities (45.4) (159.7)
Net decrease in receivables sold (134.0) (39.0)
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Cash flow from operating activities of continuing operations (170.0) 118.5
Cash flow from operating activities of discontinued operations - (12.3)
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Cash Flow From Operating Activities (170.0) 106.2
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Investing Activities
Proceeds from sale of discontinued operations - 413.8
Proceeds from disposal of assets 4.1 29.7
Capital expenditures (132.2) (122.9)
Cash inflow from hedging activities 303.4 324.0
Cash outflow from hedging activities (281.9) (325.2)
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Cash Flow From Investing Activities (106.6) 319.4
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Cash Flow Before Financing Activities (276.6) 425.6
Financing Activities
Net decrease in short-term borrowings (75.3) (336.8)
Proceeds from long-term debt (including revolving credit facility) 647.5 471.8
Payments on long-term debt (including revolving credit facility) (219.2) (550.2)
Issuance of common stock 9.3 20.9
Cash dividends (34.1) (40.2)
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Cash Flow From Financing Activities 328.2 (434.5)
Effect of exchange rate changes on cash (6.1) -
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Increase (Decrease) In Cash And Cash Equivalents 45.5 (8.9)
Cash and cash equivalents at beginning of period 141.8 131.6
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Cash And Cash Equivalents At End Of Period $ 187.3 $ 122.7
===================================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements (Unaudited)
<PAGE>
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
The Black & Decker Corporation and Subsidiaries
NOTE 1: 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 1997.
Operating results for the three- and nine-month periods ended September 28,
1997, 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, 1996.
NOTE 2: SALE OF RECEIVABLES
Under its sale of receivables program, the Corporation had sold $78.0 million of
receivables at September 28, 1997, compared to $212.0 million at December 31,
1996, and had sold $191.0 million of receivables at September 29, 1996, compared
to $230.0 million at December 31, 1995. The discount on sale of receivables is
included in "Other expense."
The liquidity facility that supports the current sale of receivables
program expires in February 1998. In March 1997, the Corporation reduced the
amount available under the facility to $185.0 million and eliminated the
seasonal expansion feature included in the previous program.
NOTE 3: INVENTORIES
The components of inventory at the end of each period, in millions of dollars,
consisted of the following:
<TABLE>
<CAPTION>
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September 28, 1997 December 31, 1996
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<S> <C> <C>
FIFO cost
Raw materials and work-in-process $232.7 $211.1
Finished products 722.9 567.7
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955.6 778.8
Excess of FIFO cost over LIFO inventory value (31.5) (31.0)
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$924.1 $747.8
===================================================================================================================
</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;
all other inventories are based on the first-in, first-out (FIFO) method.
<PAGE>
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NOTE 4: GOODWILL
Goodwill at the end of each period, in millions of dollars, was as follows:
<TABLE>
<CAPTION>
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September 28, 1997 December 31, 1996
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<S> <C> <C>
Goodwill $2,487.5 $2,571.5
Less accumulated amortization 606.9 559.3
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$1,880.6 $2,012.2
===================================================================================================================
</TABLE>
NOTE 5: LONG-TERM DEBT
Indebtedness of subsidiaries of the Corporation in the aggregate principal
amounts of $941.0 million and $586.5 million were included in the Consolidated
Balance Sheet at September 28, 1997 and December 31, 1996, respectively, under
the captions short-term borrowings, current maturities of long-term debt, and
long-term debt.
NOTE 6: 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>
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Three Months Ended Nine Months Ended
September September September September
28, 1997 29, 1996 28, 1997 29, 1996
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<S> <C> <C> <C> <C>
Interest expense $33.6 $34.0 $99.0 $111.6
Interest (income) (.9) (1.5) (5.1) (5.3)
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$32.7 $32.5 $93.9 $106.3
===================================================================================================================
</TABLE>
NOTE 7: DISCONTINUED OPERATIONS
As more fully described in Note 2 of Notes to Consolidated Financial Statements
included in the Corporation's Annual Report on Form 10-K for the year ended
December 31, 1996, on February 16, 1996, the Corporation completed the
previously announced sale of PRC Inc., the remaining business in the
discontinued information technology and services (PRC) segment, for $425.0
million to Litton Industries, Inc. No earnings from discontinued operations were
recognized during the three months ended September 29, 1996. Earnings from
discontinued operations of $70.4 million for the nine months ended September 29,
1996, consist primarily of the gain on the sale of PRC Inc., net of applicable
income taxes of $55.6 million. Revenues and operating income of PRC Inc. for the
period from January 1, 1996 through February 15, 1996, were not significant. The
terms of the sale of PRC Inc. provide for an adjustment to the sales price,
expected to be finalized later in 1997, based upon the changes in the net assets
of PRC Inc. through February 15, 1996.
<PAGE>
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NOTE 8: RESTRUCTURING
During the three months ended March 31, 1996, the Corporation commenced a
restructuring of certain of its operations and recorded a restructuring charge
of $81.6 million. As more fully described in Note 3 of Notes to Consolidated
Financial Statements and in Management's Discussion and Analysis of Financial
Condition and Results of Operations under the caption Restructuring included in
the Corporation's Annual Report on Form 10-K for the year ended December 31,
1996, the Corporation modified portions of the initial restructuring plan later
in 1996 as a result of changed business conditions and the insight of new
management in certain businesses. The net effect of these modifications, which
occurred in the second half of 1996, was to increase the total restructuring
charge recognized in 1996 to $91.3 million.
NOTE 9: NET EARNINGS PER COMMON SHARE
Primary earnings per common and common equivalent share are computed by dividing
net earnings, after deducting, for the three and nine months ended September 29,
1996, preferred stock dividends, by the weighted average number of common shares
outstanding during each period plus the incremental shares that would have been
outstanding under certain employee benefit plans and upon the assumed exercise
of dilutive stock options. As more fully described in Note 15 of Notes to
Consolidated Financial Statements included in the Corporation's Annual Report on
Form 10-K for the year ended December 31, 1996, the Corporation exercised its
conversion option in respect of all of the issued and outstanding shares of
Series B Cumulative Convertible Preferred Stock in October 1996, and in
connection therewith issued 6,350,000 shares of common stock in exchange for the
existing Series B Cumulative Convertible Preferred Stock.
Fully diluted earnings per share for the three and nine months ended
September 28, 1997 and September 29, 1996, are computed by dividing net earnings
by the weighted average number of common shares outstanding during the period
plus the incremental shares that would have been outstanding under certain
employee benefit plans and upon the assumed exercise of dilutive stock options
and, for the three and nine months ended September 29, 1996, the assumed
conversion of the preferred shares.
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share," which is
required to be adopted on December 31, 1997. At that time, the Corporation will
be required to change the method currently used to compute earnings per share
and to restate all prior periods. Under SFAS No. 128, the dilutive effect of
stock options will be excluded from the calculation of primary earnings per
share (known as "basic earnings per share" in the new standard). Under SFAS No.
128, the calculation of fully diluted earnings per share (known as "diluted
earnings per share" in the new standard) uses income from continuing
operations--before the effect of discontinued operations, extraordinary items,
and the cumulative effect of accounting changes--as the benchmark to determine
whether securities are dilutive. Under the existing standard, net earnings is
used as the benchmark to determine whether securities are dilutive.
<PAGE>
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The following table sets forth the Corporation's pro forma earnings per
share, calculated in accordance with SFAS No. 128.
<TABLE>
<CAPTION>
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Three Months Ended Nine Months Ended
September September September September
28, 1997 29, 1996 28, 1997 29, 1996
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Basic earnings per share:
Earnings from continuing operations $ .62 $ .60 $ 1.38 $ .69
Earnings from discontinued operations - - - .80
- -------------------------------------------------------------------------------------------------------------------
Basic earnings per share $ .62 $ .60 $ 1.38 $ 1.49
===================================================================================================================
Diluted earnings per share:
Earnings from continuing operations $ .60 $ .58 $ 1.35 $ .67
Earnings from discontinued operations - - - .78
- -------------------------------------------------------------------------------------------------------------------
Diluted earnings per share $ .60 $ .58 $ 1.35 $ 1.45
===================================================================================================================
</TABLE>
NOTE 10: STOCKHOLDERS' EQUITY
As more fully described in Note 15 of Notes to Consolidated Financial Statements
included in the Corporation's Annual Report on Form 10-K for the year ended
December 31, 1996, the Corporation's capitalization at the end of 1996 included
5,000,000 authorized but unissued shares of Series Preferred Stock without par
value, of which 1,500,000 shares had been designated as Series A Junior
Participating Preferred Stock (Series A) and 150,000 shares had been designated
as Series B Cumulative Convertible Preferred Stock (Series B). In July 1997, the
Corporation reclassified the previously designated shares of Series A and Series
B stock into undesignated Series Preferred Stock.
<PAGE>
-10-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Corporation reported net earnings of $58.4 million or $.60 per share on a
fully diluted basis for the three-month period ended September 28, 1997,
compared to net earnings of $55.7 million or $.58 per share on a fully diluted
basis for the three-month period ended September 29, 1996. Improved operating
results during the quarter ended September 28, 1997, as compared to the
corresponding quarter in 1996, principally in the Corporation's power tools and
accessories business, were partially offset by a higher effective tax rate.
The Corporation reported net earnings of $130.2 million or $1.35 per share
on a fully diluted basis for the nine-month period ended September 28, 1997,
compared to net earnings of $139.0 million or $1.44 per share on a fully diluted
basis for the nine-month period ended September 29, 1996. Net earnings for the
nine months ended September 29, 1996, included a gain of $70.4 million or $.73
per share on a fully diluted basis from the sale of PRC Inc., part of the
Corporation's discontinued information technology and services segment,
partially offset by a restructuring charge of $81.6 million ($67.0 million after
tax) or $.70 per share on a fully diluted basis. Excluding both the gain on sale
and the restructuring charge, which were recognized in the first quarter of
1996, net earnings for the nine months ended September 29, 1996, would have been
$135.6 million or $1.41 per share on a fully diluted basis. The decline in net
earnings, excluding the gain on sale of PRC Inc. and the restructuring charge,
from the first nine months of 1996 to the first nine months of 1997 was due to a
number of factors. The primary factors were the sharply lower sales of the
Corporation's SnakeLight(R) flexible flashlight and a higher effective tax rate,
partially offset by reduced interest expense as a result of lower borrowing
levels and lower interest rates.
CONTINUING OPERATIONS
SALES
The following chart sets forth an analysis of the consolidated changes in sales
for the three- and nine-month periods ended September 28, 1997 and September 29,
1996.
<TABLE>
<CAPTION>
ANALYSIS OF CHANGES IN SALES OF CONTINUING OPERATIONS
- -------------------------------------------------------------------------------------------------------------------
For the Three Months Ended For the Nine Months Ended
September September September September
(Dollars in Millions) 28, 1997 29, 1996 28, 1997 29, 1996
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total sales $1,224.9 $1,186.7 $3,422.1 $3,459.6
Unit volume 9% 3% 3% 5%
Price (2)% -% (1)% -%
Currency (4)% (1)% (3)% (1)%
- -------------------------------------------------------------------------------------------------------------------
Change in total sales 3% 2% (1)% 4%
===================================================================================================================
</TABLE>
<PAGE>
-11-
The Corporation operates in two 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 tools and recreational products), plumbing
products, and product service; and Commercial and Industrial Products
(Commercial), including fastening and assembly systems and glass
container-forming and inspection equipment.
The following chart sets forth an analysis of the change in sales of
continuing operations for the three and nine months ended September 28, 1997,
compared to the three and nine months ended September 29, 1996, by geographic
area for each business segment.
ANALYSIS OF CHANGES IN SALES OF CONTINUING OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 28, 1997
<TABLE>
<CAPTION>
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United States Europe Other Total
(Dollars in Millions) 3 Months 9 Months 3 Months 9 Months 3 Months 9 Months 3 Months 9 Months
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Consumer
Total sales $663.5 $1,709.7 $243.0 $786.4 $151.2 $412.9 $1,057.7 $2,909.0
Unit volume 12% 3% 5% 3% 1% 2% 9% 3%
Price (3)% (2)% (1)% (1)% -% -% (2)% (1)%
Currency -% -% (12)% (8)% (2)% (1)% (4)% (3)%
- ----------------------------------------------------------------------------------------------------------------------
9% 1% (8)% (6)% (1)% 1% 3% (1)%
- ----------------------------------------------------------------------------------------------------------------------
Commercial
Total sales $ 68.4 $ 224.9 $ 66.9 $195.6 $ 31.9 $ 92.6 $ 167.2 $ 513.1
Unit volume 13% 15% 6% (5)% 21% 4% 11% 4%
Price (2)% (1)% -% -% (1)% -% (1)% -%
Currency -% -% (16)% (9)% (5)% (7)% (8)% (5)%
- ----------------------------------------------------------------------------------------------------------------------
11% 14% (10)% (14)% 15% (3)% 2% (1)%
- ----------------------------------------------------------------------------------------------------------------------
Consolidated
Total sales $731.9 $1,934.6 $309.9 $982.0 $183.1 $505.5 $1,224.9 $3,422.1
Unit volume 12% 4% 5% 1% 4% 2% 9% 3%
Price (3)% (2)% (1)% -% -% -% (2)% (1)%
Currency -% -% (13)% (9)% (2)% (2)% (4)% (3)%
- ----------------------------------------------------------------------------------------------------------------------
Change in total sales 9% 2% (9)% (8)% 2% -% 3% (1)%
======================================================================================================================
</TABLE>
The negative effects of a stronger United States dollar compared to most
major foreign currencies caused a 4% decrease in the Corporation's consolidated
sales from the prior year's level for the three months ended September 28, 1997,
and a 3% decrease for the nine months ended September 28, 1997. Pricing actions
had a 2% and 1% negative effect on sales for the three- and nine-month periods
ended September 28, 1997, compared to the corresponding periods in 1996. Unit
volume increased by 9% and 3% for the three- and nine-month periods ended
September 28, 1997, respectively, compared to the prior year's levels.
<PAGE>
-12-
Unit volume in the Consumer segment for the three- and nine-month periods
ended September 28, 1997, increased by 9% and 3% compared to the corresponding
periods in 1996.
Sales in the Corporation's Consumer businesses in the United States
increased by 9% and 1% for the three- and nine-month periods ended September 28,
1997, over the 1996 levels. Unit volume increases accounted for 12% and 3%,
respectively, of those sales increases for the quarter and nine months ended
September 28, 1997, offset by pricing actions having a negative effect of 3% and
2% for the three- and nine-months periods ended September 28, 1997. Those
pricing actions were taken in response to competitive pressures and to reduce
inventory levels, particularly with respect to older or discontinued models. For
the quarter ended September 28, 1997, sales in each of the Corporation's
domestic Consumer businesses exceeded the prior year's levels. Excluding the
significant sales decline experienced by the Corporation's household products
business in the nine months ended September 28, 1997, sales in the Corporation's
other domestic Consumer businesses for that period exceeded the prior year's
levels.
Sales in the domestic power tools and accessories business increased at
double and mid-single digit rates, respectively, during the three- and
nine-month periods ended September 28, 1997, over the corresponding periods in
1996. These sales increases were driven primarily by the introduction of new
products, including DEWALT(R) bench and stationary tools as well as the Extreme
Cordless(R) 18-volt reciprocating saw, during the three- and nine-month periods
ended September 28, 1997, and the Wood HawkTM consumer circular saw and the
WizardTM rotary tool line during the quarter ended September 28, 1997. The
incremental sales benefit realized from sell-in of new products was partially
offset by price reductions on core professional and consumer products and, for
the nine months ended September 28, 1997, by weaker sales of consumer power
tools and accessories. In the domestic security hardware business, sales during
the quarter and nine months ended September 28, 1997, increased at mid-single
digit rates over the comparable periods in 1996. In the plumbing products
business, sales during the quarter ended September 28, 1997, increased at a
mid-single digit rate over the corresponding quarter in 1996, while sales for
the first nine months of 1997 increased at a low-single digit rate over the 1996
level.
Sales in the domestic household products business increased at a mid-single
digit rate for the quarter ended September 28, 1997, over the prior year level,
principally on the strength of the ScumBusterTM cordless submersible tub and
tile scrubber, which was introduced in late 1996, partially offset by weakness
in other product categories. While sales in the quarter ended September 28,
1997, of the SnakeLight flexible flashlight continued to be weak, SnakeLight
sales were similarly weak in the corresponding period in 1996 and, thus, did not
adversely impact the year-over-year comparison of the business's quarterly
sales. The significant sales decline experienced in the domestic household
products business during the nine months ended September 28, 1997, compared to
the corresponding periods in 1996 resulted from sharply lower sales of the
SnakeLight flexible flashlight. Sales decreases, however, also were experienced
during the nine months ended September 28, 1997, in most other product
categories with the exception of cleaning products, where sales increased on the
strength of the ScumBuster cordless submersible tub and tile scrubber.
<PAGE>
-13-
Excluding the significant negative effect of changes in foreign exchange
rates, sales in the Corporation's Consumer businesses in Europe improved by 4%
and 2% for the three and nine months ended September 28, 1997, from the
corresponding periods in 1996. Increased sales of professional power tools,
accessories, and outdoor lawn and garden tools in Europe during the three and
nine months ended September 28, 1997, as compared to the prior year's levels
more than offset declines during those periods in sales of household products,
product service, and, for the nine-month period, security hardware. Excluding
the negative effect of changes in foreign exchange rates, sales of consumer
power tools in Europe for the quarter ended September 28, 1997, equaled the
prior year's level, while sales for the nine months then ended increased at a
low single-digit rate over the prior year's level. Excluding the negative effect
of changes in foreign exchange rates, sales of security hardware for the quarter
ended September 28, 1997, increased at a low single-digit rate over the prior
year's level.
Sales of the Corporation's Consumer businesses in Other geographic areas
for the three and nine months ended September 28, 1997, increased by 1% and 2%,
respectively, over the same periods in 1996, excluding the 2% and 1% negative
effects of changes in foreign exchange rates for the three and nine months ended
September 28, 1997. Increased sales by Consumer businesses in a number of
countries during the three and nine months ended September 28, 1997, were
substantially offset by sales declines by household products businesses in other
countries, particularly, Australia and Brazil.
Excluding the significant negative effect of changes in foreign exchange
rates, sales in the Corporation's Commercial businesses increased by 10% during
the three months ended September 28, 1997, over the prior year's level. This
increase resulted from a high-single digit rate of sales growth experienced by
the Corporation's fastening and assembly systems business, coupled with a
double-digit rate of sales growth in the glass container-forming and inspection
equipment business as a consequence of increased equipment sales during the
third quarter of 1997.
Excluding the significant negative effect of changes in foreign exchange
rates, sales in the Corporation's Commercial businesses increased by 4% during
the nine months ended September 28, 1997, over the prior year's level. This
increase resulted from a mid-single digit rate of sales growth experienced by
the Corporation's fastening and assembly systems business during the nine months
ended September 28, 1997, while sales of the glass container-forming and
inspection equipment business equaled the prior year's level.
EARNINGS
Operating income for the quarter ended September 28, 1997, increased by 11% to
$126.7 million from $114.1 million for the corresponding quarter in 1996.
Operating income as a percentage of sales was 10.3% for the three months ended
September 28, 1997, compared to 9.6% for the comparable period in 1996. This
increase in operating income as a percentage of sales was a result of increased
profitability in the Corporation's power tools and accessories and security
hardware businesses, partially offset by decreased profitability in the plumbing
products and glass container-forming and inspection equipment businesses.
Profitability in the household products and fastening and assembly systems
businesses for the quarter ended September 28, 1997, approximated the prior
year's levels.
Operating income for the nine months ended September 28, 1997, was $304.3
million, compared to $225.0 million for the corresponding period in 1996.
Excluding the effects of the $81.6 million restructuring charge recognized in
the first quarter of 1996, operating income of $304.3 million for the first nine
months of 1997 approximated the $306.6 million recognized in the first nine
months of 1996. Operating income as a percentage of sales was 8.9% for both
nine-month periods ended September 28,
<PAGE>
-14-
1997 and September 29, 1996, excluding the 1996 restructuring charge. Increases
in operating income as a percentage of sales experienced in the Corporation's
power tools and accessories, security hardware, and fastening and assembly
systems businesses for the nine months ended September 28, 1997, compared to the
corresponding period in 1996 were offset by decreases experienced in its
household products, plumbing products, and glass container-forming and
inspection equipment businesses.
Gross margin as a percentage of sales was 35.6% and 35.7% for the three-
and nine-month periods ended September 28, 1997, respectively, compared to 36.2%
and 36.1% for the corresponding periods in 1996. The decline in gross margin
during the three and nine months ended September 28, 1997, was primarily due to
selective price reductions, particularly in the Corporation's domestic power
tools and accessories and household products businesses; pricing constraints due
to competitive pressures; currency-related cost pressures that resulted from
stronger currencies in countries in which certain products are manufactured
relative to currencies of countries in which those products are sold; and, for
the nine months ended September 28, 1997, the decline during that period in
sales of the Corporation's higher margin SnakeLight product. These negative
impacts on gross margin were partially offset by higher production volumes and
better-than-average margins on new products introduced late in the second
quarter and in the third quarter of 1997. The currency-related cost pressures
have been partially mitigated by the Corporation's hedge program as more fully
described in Management's Discussion and Analysis of Financial Condition and
Results of Operations and in Note 11 of Notes to Consolidated Financial
Statements, included in the Corporation's Annual Report on Form 10-K for the
year ended December 31, 1996. The Corporation will experience increased margin
pressure at current exchange rates when hedges, which the Corporation entered
into prior to the current appreciation of certain currencies in jurisdictions in
which it manufactures, expire.
Selling, general, and administrative expenses as a percentage of total
sales for the three- and nine-month periods ended September 28, 1997, were 25.3%
and 26.8%, respectively, compared to 26.6% and 27.3% for the comparable periods
in 1996.
Net interest expense (interest expense less interest income) for the three-
and nine-month periods ended September 28, 1997, was $32.7 million and $93.9
million, respectively, as compared to $32.5 million and $106.3 million for the
corresponding periods in 1996. The lower level of net interest expense for the
nine months ended September 28, 1997, was primarily the result of reduced debt
levels coupled with a lower average interest rate inherent in the Corporation's
debt portfolio. Interest expense was basically flat for the three-month period
ended September 28, 1997.
The Corporation maintains a portfolio of interest rate hedge instruments
for the purpose of managing interest rate exposure. During the nine months ended
September 28, 1997, the Corporation increased its portfolio through the addition
of an interest rate swap in the aggregate notional principal amount of $15.0
million, maturing in 1998, that swaps from fixed rate United States dollars into
fixed rate Japanese yen. During the nine months ended September 28, 1997, the
Corporation decreased its portfolio through the scheduled maturities of the
following instruments: interest rate caps with an aggregate notional principal
amount of $100.0 million; variable to fixed rate interest rate swaps with an
aggregate notional principal amount of $150.0 million; and interest rate swaps
with an aggregate notional principal amount of $50.0 million that swapped from
fixed rate United States dollars into fixed rate Japanese yen. Deferred gains
and losses on the early termination of interest rate swaps as of September 28,
1997, were not significant. An increase in variable rate borrowings during the
nine
<PAGE>
-15-
months ended September 28, 1997, coupled with the changes in the Corporation's
interest rate hedge portfolio described above, had the effect of increasing the
Corporation's variable rate debt to total debt ratio from 35% at December 31,
1996, to 60% at September 28, 1997.
Other expense for the three and nine months ended September 28, 1997 and
September 29, 1996, primarily includes the discount on the sale of receivables
and, for the 1997 periods, currency losses.
For the three months ended September 28, 1997, income tax expense of $31.4
million was recognized on the Corporation's pre-tax earnings from continuing
operations of $89.8 million, compared to income tax expense of $20.6 million on
pre-tax earnings from continuing operations of $76.3 million for the
corresponding quarter in 1996. The Corporation's reported tax rate on its
continuing operations was 35% for the quarter ended September 28, 1997, compared
to 27% for the corresponding quarter in 1996.
The Corporation's reported tax rate on its continuing operations for the
nine months ended September 28, 1997, was 35% compared to an effective rate,
exclusive of the income tax benefit associated with the 1996 restructuring
charge, of 27% for the corresponding period in 1996. For the nine months ended
September 28, 1997, income tax expense of $70.1 million was recognized on the
Corporation's pre-tax earnings from continuing operations of $200.3 million,
compared to income tax expense of $35.6 million on pre-tax earnings from
continuing operations of $104.2 million for the corresponding period in 1996.
Income tax expense of $35.6 million for the nine months ended September 29,
1996, reflected a $14.6 million income tax benefit associated with the $81.6
million restructuring charge recognized in the first quarter of 1996.
The increase in the effective tax rate in 1997 resulted from the fact that,
by the end of 1996, the Corporation had fully recognized the benefit of domestic
deferred tax assets, exclusive of foreign tax credits, for financial reporting
purposes. The benefit of the previously unrecognized deferred tax assets had
lowered the domestic portion of tax expense for 1996 as well as for a number of
prior years.
DISCONTINUED OPERATIONS
On February 16, 1996, the Corporation completed the sale of PRC Inc., the
remaining business in the discontinued PRC segment. Proceeds of $425.0 million,
less cash selling expenses of $11.2 million paid in the first nine months of
1996, were used to reduce indebtedness during the nine months ended September
29, 1996. Earnings from discontinued operation of $70.4 million ($.73 per share
on a fully diluted basis) for the nine months ended September 29, 1996,
primarily consist of the gain on sale of PRC Inc., net of applicable income
taxes of $55.6 million. Revenues and operating income of PRC Inc. for the period
from January 1, 1996, through the date of sale were not significant. Operating
results and cash flows of the discontinued PRC segment have been segregated in
the accompanying Consolidated Financial Statements.
FINANCIAL CONDITION
Operating activities of continuing operations before the sale of receivables
used cash of $36.0 million for the nine months ended September 28, 1997,
compared to $157.5 million of cash provided for the corresponding period in
1996. This increased cash usage was principally the result of changes in working
capital. Increased cash generation during 1996 resulted in the Corporation
reducing its working capital at December 31, 1996, to a lower level than at the
1995 year end. The increase in working capital at September 28, 1997, from the
lower base at December 31, 1996, was, as a result,
<PAGE>
-16-
higher than the increase in working capital at September 29, 1996, from the
higher base at December 31, 1995. This is particularly evident with respect to
inventories. Typically, the Corporation builds inventories during the first nine
months of the year in order to support its historically higher sales in the
fourth quarter of the year. This was the case at September 28, 1997, when the
inventory build from the 1996 year-end level also included investments in
inventories to improve service levels. However, as a result of the high level of
inventory on hand at December 31, 1995, and the Corporation's focus on reducing
those inventories during the early part of 1996, inventories at September 29,
1996, actually declined from the 1995 year-end level. In addition, the increase
in accounts receivable, prior to the sale of receivables, at September 28, 1997,
over the prior year end, compared to the slight decrease experienced at
September 29, 1996, was principally the result of a higher level of sales in the
third quarter of 1997.
In addition, cash spending during the first nine months of 1997 in the
amount of $19.5 million reduced the restructuring reserve from $37.7 million at
December 31, 1996, to $18.2 million at September 28, 1997. The Corporation
anticipates that the remaining restructuring reserve at September 28, 1997, will
be substantially spent in 1997.
Investing activities for the nine months ended September 28, 1997, used
cash of $106.6 million compared to $94.4 million of cash used in the
corresponding period in 1996, exclusive of the $413.8 million of net proceeds
from the sale of PRC Inc. received in the first nine months of 1996.
Financing activities provided cash of $328.2 million in the nine months
ended September 28, 1997, compared to cash used of $20.7 million in the first
nine months of 1996, exclusive of the $413.8 million in debt repayments which
occurred in the first nine months of 1996 upon receipt of the net proceeds from
the sale of PRC Inc. That higher level of cash generated from financing
activities in the first nine months of 1997 over the corresponding period in
1996 was principally the result of borrowings to fund working capital increases
at September 28, 1997, over the 1996 year-end level. Average debt maturity was
4.0 years at September 28, 1997, compared to 4.5 years at December 31, 1996.
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, issuances of equity, 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 September 28, 1997, the Corporation experienced negative free cash
flow of $166.0 million compared to positive free cash flow of $16.6 million for
the corresponding period in 1996. This $182.6 million decrease in free cash flow
during the first nine months of 1997 from the 1996 level was primarily the
result of reduced cash flows from operating activities.
As indicated in the Corporation's Annual Report on Form 10-K for the year
ended December 31, 1996, the Corporation is committed to continuous productivity
improvement and, as part of its periodic strategic planning review, continues to
evaluate additional opportunities for cost reduction. As part of the current
strategic planning cycle, management is in the process of evaluating the
productivity of each of its business units and product lines and its existing
asset base with a view toward those actions that are in the best interest of the
Corporation and its stockholders. There can be no assurance
<PAGE>
-17-
at this time as to the effect any such action, if taken by the Corporation, may
have on the financial condition or results of operations of the Corporation.
FORWARD LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes statements that constitute "forward
looking statements" within the meaning of Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934 and that are
intended to come within the safe harbor protection provided by those sections.
By their nature, all forward looking statements involve risk and uncertainties.
Actual results may differ materially from those contemplated by the forward
looking statements for a number of reasons, including but not limited to: market
acceptance of the significant new products introduced in 1997; the level of
sales generated from these new products relative to expectation, based on the
existing investments in productive capacity and commitments of the Corporation
to fund advertising and product promotions in connection with the introduction
of these new products; the ability of the Corporation and its suppliers to
achieve scheduled new product introduction timetables; unforeseen competitive
pressures or other difficulty in penetrating new channels of distribution;
adverse changes in currency exchange rates or raw material commodity prices,
both in absolute terms and relative to competitors' risk profiles; delays in or
unanticipated inefficiencies resulting from manufacturing reorganization actions
in progress or contemplated; and the continuation of modest economic growth in
the United States and gradual improvement of the economic environment in Europe.
The Corporation's ability to realize the anticipated benefits during 1997 of the
existing restructuring program also could be affected by those factors
identified in the discussion of the restructuring program in Management's
Discussion and Analysis of Financial Condition and Results of Operations
included in the Corporation's Annual Report on Form 10-K for the year ended
December 31, 1996.
<PAGE>
-18-
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. The 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 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.
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 September 28, 1997, 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.
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, 1996,
in respect of the suits filed by the owners of a farm that is adjacent to the
Corporation's Hampstead, Maryland facility. On July 8, 1997, the United States
Court of Appeals for the Fourth Circuit upheld the decision of the United States
District Court granting the
<PAGE>
-19-
Corporation's motion to dismiss and entering summary judgment for the
Corporation. On October 6, 1997, prior to the hearing before the Maryland Court
of Special Appeals on plaintiffs' appeal of the Baltimore County Circuit Court
decision granting summary judgment for the Corporation, the Corporation and the
plaintiffs entered into a settlement agreement. In connection with the
settlement agreement, the state court case has been dismissed.
Reference is made to the discussion in Item 3 of Part I of the
Corporation's Annual Report on Form 10-K for the year ended December 31, 1996,
in respect of the suit filed by Emerson Electric Company ("Emerson") against the
Corporation. The United States District Court for the Southern District of New
York granted the Corporation's motion to dismiss Emerson's claims for fraud and
negligent misrepresentation. The Court denied the Corporation's motion to
dismiss Emerson's breach of contract and contribution claims. The Corporation
intends to continue to defend vigorously against the allegations made in this
matter. In the opinion of management, the ultimate resolution of this matter
will not have a material adverse 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.
The Corporation did not file any reports on Form 8-K during the three-month
period ended September 28, 1997.
All other items were not applicable.
<PAGE>
-20-
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 /s/ THOMAS M. SCHOEWE
Thomas M. Schoewe
Senior Vice President and Chief Financial Officer
Principal Accounting Officer
By /s/ STEPHEN F. REEVES
Stephen F. Reeves
Vice President and Controller
Date: November 6, 1997
Exhibit 11(a)
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(Amounts in Millions Except Per Share Data)
<TABLE>
<CAPTION>
For The Three Months Ended
September 28, 1997 September 29, 1996
Amount Per Share Amount Per Share
Primary:
<S> <C> <C> <C> <C>
Average shares outstanding 94.8 87.8
Dilutive stock options and stock
issuable under employee benefit
plans-based on the Treasury stock
method using the average market price 2.3 2.4
----- -----
Adjusted shares outstanding 97.1 90.2
===== =====
Earnings from continuing operations $58.4 $55.7
Less preferred stock dividend - (Note 1) 2.9
----- -----
Earnings from continuing operations
attributable to common stock $58.4 $.60 $52.8 $.59
===== ==== ===== ====
Fully Diluted:
Average shares outstanding 94.8 87.8
Dilutive stock options and stock
issuable under employee benefit
plans-based on the Treasury stock
method using the higher of the
average market price or ending market
price 2.3 2.5
----- -----
Adjusted shares outstanding 97.1 90.3
Average shares assumed to be
converted through convertible
preferred stock - (Note 1) 6.3
----- -----
Fully diluted average
shares outstanding 97.1 96.6
===== =====
Earnings from continuing operations $58.4 $.60 $55.7 $.58
===== ==== ===== ====
<FN>
Notes: 1. The convertible preferred stock was converted to common stock on October 14, 1996.
</FN>
</TABLE>
<PAGE>
Exhibit 11(b)
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(Amounts in Millions Except Per Share Data)
<TABLE>
<CAPTION>
For The Three Months Ended
September 28, 1997 September 29, 1996
Amount Per Share Amount Per Share
Primary:
<S> <C> <C> <C> <C>
Average shares outstanding 94.8 87.8
Dilutive stock options and stock
issuable under employee benefit
plans-based on the Treasury stock
method using the average market price 2.3 2.4
----- -----
Adjusted shares outstanding 97.1 90.2
===== =====
Net earnings $58.4 $55.7
Less preferred stock dividend - (Note 1) 2.9
----- -----
Net earnings attributable to common stock $58.4 $.60 $52.8 $ .59
===== ==== ===== =====
Fully Diluted:
Average shares outstanding 94.8 87.8
Dilutive stock options and stock
issuable under employee benefit
plans-based on the Treasury stock
method using the higher of the
average market price or ending market
price 2.3 2.5
----- -----
Adjusted shares outstanding 97.1 90.3
Average shares assumed to be
converted through convertible
preferred stock - (Note 1) 6.3
----- -----
Fully diluted average
shares outstanding 97.1 96.6
===== =====
Net earnings $58.4 $.60 $55.7 $ .58
===== ==== ===== =====
<FN>
Notes: 1. The convertible preferred stock was converted to common stock on October 14, 1996.
</FN>
</TABLE>
<PAGE>
Exhibit 11(c)
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(Amounts in Millions Except Per Share Data)
<TABLE>
<CAPTION>
For The Nine Months Ended
September 28, 1997 September 29, 1996
Amount Per Share Amount Per Share
Primary:
<S> <C> <C> <C> <C>
Average shares outstanding 94.5 87.4
Dilutive stock options and stock
issuable under employee benefit
plans-based on the Treasury stock
method using the average market price 2.0 2.5
----- -----
Adjusted shares outstanding 96.5 89.9
===== =====
Earnings from continuing operations $130.2 $68.6
Less preferred stock dividend - (Note 1) 8.7
----- -----
Earnings from continuing operations
attributable to common stock $130.2 $1.35 $59.9 $.67
====== ===== ===== ====
Fully Diluted:
Average shares outstanding 94.5 87.4
Dilutive stock options and stock
issuable under employee benefit
plans-based on the Treasury stock
method using the higher of the
average market price or ending market
price 2.1 2.6
----- -----
Adjusted shares outstanding 96.6 90.0
Average shares assumed to be
converted through convertible
preferred stock - (Note 1) 6.4
----- -----
Fully diluted average
shares outstanding 96.6 96.4
===== =====
Earnings from continuing operations $130.2 $1.35 $68.6 $.71
====== ===== ===== ====
<FN>
Notes: 1. The convertible preferred stock was converted to common stock on October 14, 1996.
</FN>
</TABLE>
<PAGE>
Exhibit 11(d)
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(Amounts in Millions Except Per Share Data)
<TABLE>
<CAPTION>
For The Nine Months Ended
September 28, 1997 September 29, 1996
Amount Per Share Amount Per Share
Primary:
<S> <C> <C> <C> <C>
Average shares outstanding 94.5 87.4
Dilutive stock options and stock
issuable under employee benefit
plans-based on the Treasury stock
method using the average market price 2.0 2.5
----- -----
Adjusted shares outstanding 96.5 89.9
===== =====
Net earnings $130.2 $139.0
Less preferred stock dividend - (Note 1) 8.7
----- -----
Net earnings attributable to common stock $130.2 $1.35 $130.3 $1.45
====== ===== ====== =====
Fully Diluted:
Average shares outstanding 94.5 87.4
Dilutive stock options and stock
issuable under employee benefit
plans-based on the Treasury stock
method using the higher of the
average market price or ending market
price 2.1 2.6
----- -----
Adjusted shares outstanding 96.6 90.0
Average shares assumed to be
converted through convertible
preferred stock - (Note 1) 6.4
----- -----
Fully diluted average
shares outstanding 96.6 96.4
===== =====
Net earnings $130.2 $1.35 $139.0 $1.44
====== ===== ====== =====
<FN>
Notes: 1. The convertible preferred stock was converted to common stock on October 14, 1996.
</FN>
</TABLE>
EXHIBIT 12
<TABLE>
<CAPTION>
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Millions of Dollars Except Ratios)
Three Months Ended Nine Months Ended
September 28, 1997 September 28, 1997
------------------ ------------------
EARNINGS:
<S> <C> <C>
Earnings from continuing operations before
income taxes $89.8 $200.3
Interest expense 33.6 99.0
Portion of rent expense representative of an
interest factor 5.8 17.6
------ ------
Adjusted earnings from continuing operations
before taxes and fixed charges $129.2 $316.9
====== ======
FIXED CHARGES:
Interest expense $33.6 $99.0
Portion of rent expense representative of an
interest factor 5.8 17.6
------ ------
Total fixed charges $39.4 $116.6
====== ======
RATIO OF EARNINGS TO FIXED CHARGES 3.28 2.72
====== ======
</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 three and nine months
ended September 28, 1997, and the accompanying footnotes and is qualified in its
entirety by the 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-31-1997
<PERIOD-END> Sep-28-1997
<CASH> 187,300
<SECURITIES> 0
<RECEIVABLES> 856,500<F1>
<ALLOWANCES> 0
<INVENTORY> 924,100
<CURRENT-ASSETS> 2,088,200
<PP&E> 875,200<F2>
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,373,000
<CURRENT-LIABILITIES> 1,225,700
<BONDS> 1,879,100
0
0
<COMMON> 47,400
<OTHER-SE> 1,646,000
<TOTAL-LIABILITY-AND-EQUITY> 5,373,000
<SALES> 3,422,100
<TOTAL-REVENUES> 3,422,100
<CGS> 2,201,200
<TOTAL-COSTS> 3,117,800
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 99,000
<INCOME-PRETAX> 200,300
<INCOME-TAX> 70,100
<INCOME-CONTINUING> 130,200
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 130,200
<EPS-PRIMARY> 1.35
<EPS-DILUTED> 1.35
<FN>
<F1>Represents net trade receivables.
<F2>Represents net property, plant, and equipment.
</FN>
</TABLE>
