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 June 29, 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 June 29, 1997:
94,502,742
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
June 29, 1997
Page
PART I - FINANCIAL INFORMATION
Consolidated Statement of Earnings (Unaudited) For the Three
Months and Six Months Ended June 29, 1997 and June 30, 1996 ................3
Consolidated Balance Sheet
June 29, 1997 (Unaudited) and December 31, 1996 ............................4
Consolidated Statement of Cash Flows (Unaudited)
For the Six Months Ended June 29, 1997 and June 30, 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>
CONSOLIDATED STATEMENT OF EARNINGS (Unaudited)
The Black & Decker Corporation and Subsidiaries
(In Millions Except Per Share Amounts)
<TABLE>
<CAPTION>
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Three Months Ended Six Months Ended
June 29, 1997 June 30, 1996 June 29, 1997 June 30, 1996
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<S> <C> <C> <C> <C>
Sales $1,182.2 $1,207.9 $2,197.2 $2,272.9
Cost of goods sold 761.8 781.9 1,412.3 1,452.0
Selling, general, and administrative expenses 316.1 322.2 607.3 628.4
Restructuring costs - - - 81.6
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Operating Income 104.3 103.8 177.6 110.9
Interest expense (net of interest income) 30.6 35.9 61.2 73.8
Other expense 3.6 5.8 5.9 9.2
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Earnings From Continuing Operations
Before Income Taxes 70.1 62.1 110.5 27.9
Income taxes 24.6 16.8 38.7 15.0
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Earnings From Continuing Operations 45.5 45.3 71.8 12.9
Earnings from discontinued operations (net
of income taxes) - - - 70.4
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Net Earnings $ 45.5 $ 45.3 $ 71.8 $ 83.3
===================================================================================================================
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Net Earnings Applicable to Common
Shares $ 45.5 $ 42.4 $ 71.8 $ 77.5
===================================================================================================================
Net Earnings Per Common and Common
Equivalent Share:
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Primary:
Earnings from continuing operations $ .47 $ .47 $ .75 $ .08
Earnings from discontinued operations - - - .78
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Primary Earnings Per Share $ .47 $ .47 $ .75 $ .86
===================================================================================================================
Shares Used in Computing Primary Earnings
Per Share (in Millions) 96.3 90.1 96.2 89.7
===================================================================================================================
Assuming Full Dilution:
Earnings from continuing operations $ .47 $ .47 $ .74 $ .08
Earnings from discontinued operations - - - .78
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Fully Diluted Earnings Per Share $ .47 $ .47 $ .74 $ .86
===================================================================================================================
Shares Used in Computing Fully Diluted
Earnings Per Share (in Millions) 96.6 96.4 96.5 89.9
===================================================================================================================
Dividends Per Common Share $ .12 $ .12 $ .24 $ .24
===================================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements (Unaudited)
<PAGE>
CONSOLIDATED BALANCE SHEET
The Black & Decker Corporation and Subsidiaries
(In Millions Except Per Share Amount)
<TABLE>
<CAPTION>
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(Unaudited)
June 29, 1997 December 31, 1996
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<S> <C> <C>
Assets
Cash and cash equivalents $ 126.3 $ 141.8
Trade receivables 719.6 672.4
Inventories 898.1 747.8
Other current assets 180.7 242.2
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Total Current Assets 1,924.7 1,804.2
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Property, Plant, and Equipment 878.6 905.8
Goodwill 1,929.3 2,012.2
Other Assets 518.7 431.3
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$ 5,251.3 $ 5,153.5
===================================================================================================================
Liabilities and Stockholders' Equity
Short-term borrowings $ 100.1 $ 235.9
Current maturities of long-term debt 49.7 54.1
Trade accounts payable 400.4 380.7
Other accrued liabilities 724.8 835.9
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Total Current Liabilities 1,275.0 1,506.6
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Long-Term Debt 1,796.9 1,415.8
Deferred Income Taxes 77.9 67.5
Postretirement Benefits 305.0 310.3
Other Long-Term Liabilities 142.4 220.9
Stockholders' Equity
Common stock, par value $.50 per share
(outstanding: June 29, 1997--94,502,742 shares;
December 31, 1996--94,248,807 shares) 47.3 47.1
Capital in excess of par value 1,268.3 1,261.7
Retained earnings 429.3 380.2
Equity adjustment from translation (90.8) (56.6)
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Total Stockholders' Equity 1,654.1 1,632.4
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$ 5,251.3 $ 5,153.5
===================================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements (Unaudited)
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
The Black & Decker Corporation and Subsidiaries
(In Millions)
<TABLE>
<CAPTION>
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Six Months Ended
June 29, 1997 June 30, 1996
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<S> <C> <C>
Operating Activities
Net earnings $ 71.8 $ 83.3
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 110.5 105.3
Other (2.6) (.1)
Earnings of discontinued operations - (70.4)
Changes in selected working capital items:
Trade receivables 2.1 82.4
Inventories (177.1) (2.1)
Trade accounts payable 29.9 (45.7)
Other assets and liabilities (136.5) (119.5)
Net decrease in receivables sold (76.0) (48.5)
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Cash flow from operating activities of continuing operations (177.9) 66.3
Cash flow from operating activities of discontinued operations - (10.1)
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Cash Flow From Operating Activities (177.9) 56.2
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Investing Activities
Proceeds from partial sale of discontinued operations - 414.2
Proceeds from disposal of assets 4.2 22.4
Capital expenditures (85.0) (82.9)
Cash inflow from hedging activities 219.4 208.6
Cash outflow from hedging activities (208.6) (212.6)
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Cash Flow From Investing Activities (70.0) 349.7
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Cash Flow Before Financing Activities (247.9) 405.9
Financing Activities
Net decrease in short-term borrowings (101.6) (358.9)
Proceeds from long-term debt (including revolving credit facility) 544.0 459.3
Payments on long-term debt (including revolving credit facility) (186.1) (486.7)
Issuance of common stock 2.9 19.1
Cash dividends (22.7) (26.8)
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Cash Flow From Financing Activities 236.5 (394.0)
Effect of exchange rate changes on cash (4.1) (1.8)
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Increase In Cash And Cash Equivalents (15.5) 10.1
Cash and cash equivalents at beginning of period 141.8 131.6
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Cash And Cash Equivalents At End Of Period $ 126.3 $ 141.7
===================================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements (Unaudited)
<PAGE>
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 six-month periods ended June 29, 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 $136.0 million
of receivables at June 29, 1997, compared to $212.0 million at December 31,
1996, and had sold $181.5 million of receivables at June 30, 1996, compared to
$230.0 million at December 31, 1995. The discount on sale of receivables is
included in "Other expense."
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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June 29, 1997 December 31, 1996
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FIFO Cost
<S> <C> <C>
Raw materials and work-in-process $ 228.0 $ 211.1
Finished products 701.8 567.7
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929.8 778.8
Excess of FIFO cost over LIFO inventory value (31.7) (31.0)
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$ 898.1 $ 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>
NOTE 4: GOODWILL
Goodwill at the end of each period, in millions of dollars, was as follows:
<TABLE>
<CAPTION>
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June 29, 1997 December 31, 1996
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<S> <C> <C>
Goodwill $ 2,520.5 $ 2,571.5
Less accumulated amortization 591.2 559.3
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$ 1,929.3 $ 2,012.2
===================================================================================================================
</TABLE>
NOTE 5: LONG-TERM DEBT
Indebtedness of subsidiaries of the Corporation in the aggregate principal
amounts of $838.7 million and $586.5 million were included in the Consolidated
Balance Sheet at June 29, 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 Six Months Ended
June 29, 1997 June 30, 1996 June 29, 1997 June 30, 1996
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<S> <C> <C> <C> <C>
Interest expense $32.1 $37.7 $65.4 $77.6
Interest (income) (1.5) (1.8) (4.2) (3.8)
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$30.6 $35.9 $61.2 $73.8
===================================================================================================================
</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 June 30, 1996. Earnings from
discontinued operations of $70.4 million for the six months ended June 30, 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>
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 six months ended June 30, 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 six months ended June
29, 1997, and for the three months ended June 30, 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 months ended June 30, 1996, the assumed conversion of
the preferred shares. For the six months ended June 30, 1996, conversion of the
preferred shares would have been anti-dilutive and, therefore, was not
considered in the computation of fully diluted earnings per share. Fully diluted
earnings per share for the six months ended June 30, 1996, were computed by
dividing net earnings, after deducting preferred stock dividends, by the
weighted average number of common shares outstanding plus the incremental shares
that would have been outstanding under certain employee benefit plans and upon
the assumed exercise of dilutive stock options.
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>
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 Six Months Ended
June 29, 1997 June 30, 1996 June 29, 1997 June 30, 1996
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Basic earnings per share:
<S> <C> <C> <C> <C>
Earnings from continuing operations $ .48 $ .48 $ .76 $ .08
Earnings from discontinued operations - - - .81
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Basic earnings per share $ .48 $ .48 $ .76 $ .89
===================================================================================================================
Diluted earnings per share:
Earnings from continuing operations $ .47 $ .47 $ .75 $ .08
Earnings from discontinued operations - - - .79
- -------------------------------------------------------------------------------------------------------------------
Diluted earnings per share $ .47 $ .47 $ .75 $ .87
===================================================================================================================
</TABLE>
NOTE 10: SUBSEQUENT EVENT
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>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Corporation reported net earnings of $45.5 million or $.47 per share on a
fully diluted basis for the three-month period ended June 29, 1997, compared to
net earnings of $45.3 million or $.47 per share on a fully diluted basis for the
three-month period ended June 30, 1996. Improved operating results during
the quarter ended June 29, 1997, as compared to the corresponding quarter in
1996, principally in the Corporation's power tools and accessories business,
coupled with reduced interest expense offset profitability declines in the
second quarter of 1997 associated with sharply lower sales of the Corporation's
SnakeLight(R) flexible flashlight and a higher effective tax rate.
The Corporation reported net earnings of $71.8 million or $.74 per share on
a fully diluted basis for the six-month period ended June 29, 1997, compared to
net earnings of $83.3 million or $.86 per share on a fully diluted basis for the
six-month period ended June 30, 1996. Net earnings for the six months ended June
30, 1996, included a gain of $70.4 million or $.78 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 $.75 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 six
months ended June 30, 1996, would have been $79.9 million or $.83 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 half of 1996 to the first
half of 1997 was due to a number of factors. The primary factors were the
sharply lower sales of the Corporation's SnakeLight 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 six-month periods ended June 29, 1997 and June 30, 1996.
<TABLE>
<CAPTION>
ANALYSIS OF CHANGES IN SALES OF CONTINUING OPERATIONS
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For the Three Months Ended For the Six Months Ended
(Dollars in Millions) June 29, 1997 June 30, 1996 June 29, 1997 June 30, 1996
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total sales $1,182.2 $1,207.9 $2,197.2 $2,272.9
Unit volume 1% 8% -% 6%
Price (1)% 1% (1)% -%
Currency (2)% (3)% (2)% (1)%
- -------------------------------------------------------------------------------------------------------------------
Change in total sales (2)% 6% (3)% 5%
===================================================================================================================
</TABLE>
<PAGE>
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 six months ended June 29, 1997, compared
to the three and six months ended June 30, 1996, by geographic area for each
business segment.
ANALYSIS OF CHANGES IN SALES OF CONTINUING OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 29, 1997
<TABLE>
<CAPTION>
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United States Europe Other Total
(Dollars in Millions) 3 Months 6 Months 3 Months 6 Months 3 Months 6 Months 3 Months 6 Months
- ----------------------------------------------------------------------------------------------------------------------
Consumer
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total sales $584.0 $1,046.1 $273.9 $543.5 $150.1 $261.7 $1,008.0 $1,851.3
Unit volume 1% (2)% 4% 2% 2% 2% 1% -%
Price (2)% (1)% (1)% (1)% 1% -% (1)% (1)%
Currency -% -% (7)% (6)% (1)% -% (2)% (2)%
- ----------------------------------------------------------------------------------------------------------------------
(1)% (3)% (4)% (5)% 2% 2% (2)% (3)%
- ----------------------------------------------------------------------------------------------------------------------
Commercial
Total sales $ 76.1 $ 156.5 $ 65.1 $128.7 $ 33.0 $ 60.7 $ 174.2 $ 345.9
Unit volume 10% 16% (16)% (10)% 14% (3)% (1)% 1%
Price -% -% -% -% -% -% -% -%
Currency -% -% (6)% (6)% (8)% (8)% (4)% (4)%
- ----------------------------------------------------------------------------------------------------------------------
10% 16% (22)% (16)% 6% (11)% (5)% (3)%
- ----------------------------------------------------------------------------------------------------------------------
Consolidated
Total sales $660.1 $1,202.6 $339.0 $672.2 $183.1 $322.4 $1,182.2 $2,197.2
Unit volume 2% -% (1)% (1)% 4% 1% 1% -%
Price (2)% (1)% -% -% 1% -% (1)% (1)%
Currency -% -% (7)% (7)% (2)% (2)% (2)% (2)%
- ----------------------------------------------------------------------------------------------------------------------
Change in total sales -% (1)% (8)% (8)% 3% (1)% (2)% (3)%
======================================================================================================================
</TABLE>
The negative effects of a stronger United States dollar compared to most
major foreign currencies caused a 2% decrease in the Corporation's consolidated
sales from the prior year's level for both the three and six months ended June
29, 1997. Pricing actions had a 1% negative effect on sales for both the
three-and six-month periods ended June 29, 1997, compared to the corresponding
periods in 1996. Unit volume increased by 1% for the three-month period ended
June 29, 1997, compared to the prior year's level. For the six-month period
ended June 29, 1997, unit volume essentially matched the 1996 level.
<PAGE>
Unit volume in the Consumer segment for the three months ended June 29,
1997, increased by 1% compared to the corresponding quarter in 1996 while, for
the six months ended June 29, 1997, unit volume equaled the 1996 level.
Sales in the Corporation's Consumer businesses in the United States
decreased by 1% and 3% for the three- and six-month periods ended June 29, 1997,
from the 1996 levels. Pricing actions taken, principally in the domestic power
tools and accessories and household products businesses, accounted for 2% and
1%, respectively, of those sales decreases for the quarter and six months ended
June 29, 1997. Those pricing actions were taken in response to competitive
pressures and to reduce inventory levels, particularly with respect to older or
discontinued models. Excluding the significant sales decline experienced by the
Corporation's household products business in the three and six months ended June
29, 1997, sales in the Corporation's other domestic Consumer businesses for
those periods exceeded the prior year's levels.
Sales in the domestic power tools and accessories business increased at
mid-single digit rates during the three- and six-month periods ended June 29,
1997, over the corresponding periods in 1996. The domestic power tools and
accessories business benefited from the continued strength of the DEWALT(R)
professional power tools and accessories line during the three- and six-month
periods ended June 29, 1997, but that benefit was partially offset by weakness
during the same periods in sales of consumer power tools and accessories,
outdoor products, and product service, particularly in the first quarter of
1997. Sales of DEWALT professional power tools and accessories during the
quarter ended June 29, 1997, were aided by shipments of new products late in the
quarter, including bench and stationary tools as well as the Extreme CordlessTM
18 volt reciprocating saw. In the domestic security hardware business, sales
during the quarter ended June 29, 1997, increased at a mid-single digit rate
over the corresponding quarter in 1996 while sales for the first half of 1997
increased at a low-single digit rate over the 1996 level. In the plumbing
products business, sales during the three and six months ended June 29, 1997,
increased at a low-single digit rate over the prior year's levels.
The significant sales decline experienced in the domestic household products
business during the three- and six-month periods ended June 29, 1997, compared
to the corresponding periods in 1996 resulted from sharply lower sales of the
SnakeLight flexible flashlight. Sales decreases, however, also were experienced
in most other product categories with the exception of cleaning products, where
sales increased on the strength of the ScumBusterTM cordless submersible tub and
tile scrubber, which was introduced in late 1996.
Excluding the significant negative effect of changes in foreign exchange
rates, sales in the Corporation's Consumer businesses in Europe improved by 3%
and 1% for the three and six months ended June 29, 1997, from the corresponding
periods in 1996. Increased sales of consumer and professional power tools and
accessories and outdoor lawn and garden tools in Europe during the three and six
months ended June 29, 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 six-month period, security hardware. Excluding the
negative effect of changes in foreign exchange rates, sales of security hardware
essentially equaled the prior year's level for the quarter ended June 29, 1997.
Sales of the Corporation's Consumer businesses in Other geographic areas for
the three and six months ended June 29, 1997, increased by 3% and 2%,
respectively, over the same periods in 1996, excluding the 1% negative effect of
changes in foreign exchange rates for the three months ended June 29, 1997. The
net effect of changes in foreign exchange rates did not have a significant
impact on the sales of those businesses during the six months ended June 29,
1997. Increased sales by Consumer businesses in a number of countries during the
three and six months ended June 29, 1997, were partially offset by sales
declines by household products businesses in other countries, particularly,
Australia and Brazil.
<PAGE>
Excluding the negative effect of changes in foreign exchange rates, sales in
the Corporation's Commercial businesses decreased by 1% during the three months
ended June 29, 1997, from the prior year's level. The mid-single digit rate of
sales growth experienced by the Corporation's fastening and assembly systems
business during the quarter ended June 29, 1997, was not sufficient to offset a
sales decline in the glass container-forming and inspection equipment business
from the prior year's level. The sales decline in the glass container-forming
and inspection equipment business, however, was in comparison to a strong second
quarter in 1996, and closing backlog at the end of the second quarter in 1997
was over 10% higher than at the end of the second quarter in 1996.
Excluding the negative effect of changes in foreign exchange rates, sales in
the Corporation's Commercial businesses increased by 1% during the six months
ended June 29, 1997, over the prior year's level. The mid-single digit rate of
sales growth experienced by the Corporation's fastening and assembly systems
business during the six months ended June 29, 1997, was substantially offset by
a decline in sales of the glass container-forming and inspection equipment
business from the prior year's level.
EARNINGS
Operating income for the quarter ended June 29, 1997, was $104.3 million or 8.8%
of sales, compared to $103.8 million or 8.6% of sales for the corresponding
quarter 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, security hardware, and fastening and assembly systems businesses,
partially offset by decreased profitability in the household products, plumbing
products, and glass container-forming and inspection equipment businesses.
Decreased profitability in the household products and glass container-forming
and inspection equipment businesses during the quarter ended June 29, 1997,
compared to the prior year's level was principally a function of lower sales
while decreased profitability in the plumbing products business resulted, in
part, from manufacturing issues associated with the transition of production to
a lower cost facility in Mexicali, Mexico.
Operating income for the six months ended June 29, 1997, was $177.6 million,
compared to $110.9 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 for the first six months of 1997 decreased to
$177.6 million from $192.5 million for first six months of 1996. Operating
income as a percentage of sales was 8.1% for the six-month period ended June 29,
1997, compared to 8.5% for the corresponding period in 1996, excluding the 1996
restructuring charge. This operating income decline was experienced in the
Corporation's household products, security hardware, plumbing products, and
glass container-forming and inspection equipment businesses and was partially
offset by increased profitability in the Corporation's power tools and
accessories and fastening and assembly systems businesses.
<PAGE>
Gross margin as a percentage of sales was 35.6% and 35.7% for the three- and
six-month periods ended June 29, 1997, respectively, compared to 35.3% and 36.1%
for the corresponding periods in 1996. Competitive pressures continued to
constrain pricing during the three and six months ended June 29, 1997. The
improvement in gross margin during the second quarter of 1997 was in comparison
to the low gross margin percentage realized in the second quarter of 1996 which
resulted, in part, from the negative effects of inventory reductions that took
place during that quarter in 1996. The decline in gross margin during the first
half of 1997 was primarily a result of the decline during that period in sales
of the Corporation's higher margin SnakeLight product and pricing constraints
due to competitive pressures.
Selling, general, and administrative expenses as a percentage of total sales
for the three- and six-month periods ended June 29, 1997, were 26.7% and 27.6%,
respectively, unchanged from the comparable periods in 1996.
Net interest expense (interest expense less interest income) for the three-
and six-month periods ended June 29, 1997, was $30.6 million and $61.2 million,
respectively, as compared to $35.9 million and $73.8 million for the same
periods ended June 30, 1996. The lower level of net interest expense for the
three and six months ended June 29, 1997, was primarily the result of reduced
debt levels coupled with a lower average interest rate inherent in the
Corporation's debt portfolio.
The Corporation maintains a portfolio of interest rate hedge instruments for
the purpose of managing interest rate exposure. During the six months ended June
29, 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 six months ended June 29, 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 $100.0 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 June 29, 1997, were
not significant. An increase in variable rate borrowings during the six months
ended June 29, 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 54% at
June 29, 1997.
Other expense for the three- and six-month periods ended June 29, 1997 and
June 30, 1996, primarily includes the discount on the sale of receivables.
For the three months ended June 29, 1997, income tax expense of $24.6
million was recognized on the Corporation's pre-tax earnings from continuing
operations of $70.1 million, compared to income tax expense of $16.8 million on
pre-tax earnings from continuing operations of $62.1 million for the
corresponding quarter in 1996. The Corporation's reported tax rate on its
continuing operations was 35% for the quarter ended June 29, 1997, as compared
to 27% for the corresponding quarter in 1996.
<PAGE>
The Corporation's reported tax rate on its continuing operations for the six
months ended June 29, 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 six months ended June 29, 1997, income
tax expense of $38.7 million was recognized on the Corporation's pre-tax
earnings from continuing operations of $110.5 million, compared to income tax
expense of $15.0 million on pre-tax earnings from continuing operations of $27.9
million for the corresponding period in 1996. Income tax expense of $15.0
million for the six months ended June 30, 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 $10.8 million paid in the first half of 1996, were
used to reduce indebtedness during the six months ended June 30, 1996. Earnings
from discontinued operation of $70.4 million ($.78 per share on a fully diluted
basis) for the six months ended June 30, 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 $101.9 million for the six months ended June 29, 1997, compared to
$114.8 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 June 29, 1997, from the lower base at
December 31, 1996, was, as a result, higher than the increase in working capital
at June 30, 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 half of the year in order to support its
historically higher sales in the second half of the year. This was the case at
June 29, 1997, when the inventory build from the 1996 year-end level also
included inventories to improve service levels as well as those in support of
new product launches planned for the latter part of 1997. 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 June 30, 1996, were essentially flat to the 1995 year-end level.
<PAGE>
In addition, cash spending during the first half of 1997 in the amount of
$10.5 million reduced the restructuring reserve from $37.7 million at December
31, 1996, to $27.2 million at June 29, 1997. The Corporation anticipates that
the remaining restructuring reserve at June 29, 1997, will be substantially
spent in 1997.
Investing activities for the six months ended June 29, 1997, used cash of
$70.0 million which approximated the $64.5 million of cash used in the
corresponding period in 1996, exclusive of the $414.2 million of net proceeds
from the sale of PRC Inc. received in the first half of 1996.
Financing activities generated cash of $236.5 million in the six months
ended June 29, 1997, compared to cash generated of $20.2 million in the first
six months of 1996, exclusive of the $414.2 million in debt repayments which
occurred in the first half 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 half of 1997 over the corresponding period in 1996 was principally
the result of borrowings to fund working capital increases at June 29, 1997,
over the 1996 year-end level. Average debt maturity was 4.3 years at June 29,
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 six
months ended June 29, 1997, the Corporation experienced negative free cash flow
of $183.3 million compared to positive free cash flow of $22.3 million for the
corresponding period in 1996. This $205.6 million decrease in free cash flow
during the first six months of 1997 from the 1996 level was primarily the result
of reduced cash flows from operating activities.
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 scheduled for introduction over the
balance of the year; 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
<PAGE>
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>
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 June 29, 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.
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.
<PAGE>
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
Exhibit No. Description
3(a)(1) Articles of Restatement of the Charter of the
Corporation, as filed with the State Department of
Assessments and Taxation of the State of Maryland on
July 17, 1997.
3(a)(2) Articles Supplementary of the Corporation, as filed
with the State Department of Assessments and Taxation
of the State of Maryland on July 17, 1997.
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 June 29, 1997.
All other items were not applicable.
<PAGE>
THE BLACK & DECKER CORPORATION
S I G N A T U R E S
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE BLACK & DECKER CORPORATION
By /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: August 7, 1997
Exhibit 3(a)(1)
THE BLACK & DECKER CORPORATION
ARTICLES OF RESTATEMENT
The Black & Decker Corporation, a Maryland corporation (the
"Corporation"), hereby certifies as follows:
FIRST: The Corporation desires to restate its Charter as currently in
effect.
SECOND: The provisions set forth in these Articles of Restatement (these
"Articles") are all the provisions of the Charter of the Corporation (the
"Charter") currently in effect:
I. The name of said corporation is "THE BLACK & DECKER CORPORATION."
II. The purpose for which and for any of which the Corporation is
formed, and the business and objects to be carried on and promoted by it are as
follows, to-wit: to carry on a general machine and manufacturing business; to
manufacture, sell, or otherwise dispose of all manner and kinds of machinery,
engines and trucks, and conduct a general machine repairing business; to
purchase, own, hold, lease, convey, mortgage, pledge, transfer or otherwise
acquire or dispose of lands, water rights, mills, factories, buildings and other
structures; and all other property, both real and personal, of every class and
description, or any interest therein necessary or desirable for the carrying on
of the aforesaid object; to acquire, by purchase, lease, or otherwise, the
property rights, business, good will, franchises and assets of every kind of any
corporation, association, firm or individual, carrying on, in whole or in part,
the aforesaid business or any other business in whole or in part that the
Corporation may be authorized to carry on, and to undertake, guarantee, assume
and pay the indebtedness and liabilities thereof, and to pay for any property
rights, business, good will, franchises and assets so acquired in the stock,
bonds, or other securities of the Corporation or otherwise; to apply for,
acquire, hold, use, sell, mortgage, license, assign, or otherwise dispose of
letters patent of the United States or any foreign country, and any and all
patent rights, licenses, privileges, inventions, improvements, processes and
trademarks relating to or useful in connection with any business carried on by
the Corporation; to carry on any other business, whether manufacturing or
otherwise, which may be calculated directly or indirectly to effectuate the
aforesaid objects or to facilitate it in the transaction of any other business
that may be calculated directly or indirectly, to enhance the value of its
property and rights. The business which the Corporation is to carry on is from
time to time to do any one or more of the acts and things hereinbefore set
forth, provided that in the transaction of its business the Corporation shall be
subject to the laws and statutes of each state or foreign country in which the
same may be transacted or its property may be located.
III. The present post office address of the place at which the
principal office of the Corporation is located in this State is 701 East Joppa
Road, Towson, Baltimore County, Maryland 21286.
<PAGE>
The present resident agent of the Corporation is Barbara B. Lucas,
whose post office address is c/o The Black & Decker Corporation, 701 East Joppa
Road, Towson, Maryland 21286. Said resident agent is a citizen of the State of
Maryland and actually resides therein.
IV. The total number of shares of stock of all classes that the
Corporation has authority to issue is one hundred fifty-five million
(155,000,000). One hundred fifty million (150,000,000) shares shall be Common
Stock of the par value of fifty cents ($0.50) per share, having an aggregate par
value of seventy-five million dollars ($75,000,000), and five million
(5,000,000) shares shall be Series Preferred Stock without par value. The Series
Preferred Stock may be issued, from time to time, in one or more series as
authorized by the Board of Directors. Prior to issuance of a series, the Board
of Directors by resolution shall designate that series to distinguish it from
other series and classes of stock of the Corporation, shall specify the number
of shares to be included in the series, and shall fix the terms, rights,
restrictions and qualifications of the shares of the series, including any
preferences, voting powers, dividend rights and redemption, sinking fund and
conversion rights. Subject to the express terms of any other series of Series
Preferred Stock outstanding at the time, the Board of Directors may increase or
decrease the number of shares or alter the designation or classify or reclassify
any unissued shares of a particular series of Series Preferred Stock by fixing
or altering in any one or more respects from time to time before issuing the
shares any terms, rights, restrictions and qualifications of the shares.
V. At the time of the adoption of this restatement the Corporation
has eight (8) Directors, whose names are as follows:
Nolan D. Archibald
Norman R. Augustine
Barbara L. Bowles
Malcolm Candlish
Alonzo G. Decker, Jr.
Anthony Luiso
Mark H. Willes
M. Cabell Woodward, Jr.
VI. The management of the property, business and affairs of the
Corporation shall be vested in the Board of Directors, who shall dictate its
general business policy, and, subject to any provisions of statute or to vote of
its stockholders, determine all matters and questions pertaining to its business
affairs.
The Board of Directors shall from time to time determine whether and
to what extent, and at what times and places, and under what conditions and
regulations, the accounts and books of the Corporation, or any of them, shall be
open to the inspection of stockholders, and no stockholder shall have any right
to inspect any account or book or document of the
- 2 -
<PAGE>
Corporation except as conferred by the law and statutes of Maryland or as
authorized by the Board of Directors or by a resolution of the stockholders.
The Board of Directors shall have the power in its discretion to sell,
lease or otherwise dispose of any real estate, leasehold or personal property
belonging to the Corporation, and to authorize the President or Vice President
to execute such deeds, leases or other instruments which may be requisite.
The above granted powers to the Corporation and to the Board of
Directors thereof are in furtherance and not in limitation of the general powers
conferred by law upon the directors and the Corporation.
VII. The following provisions for the regulation of the business and
conduct of the affairs of the Corporation are hereby made:
1. The holders of shares of capital stock of the Corporation of
any class shall have no preferential, preemptive or other right, as
stockholders, to subscribe for or purchase any proportionate or other
part of any issue of additional capital stock of any class, now or
hereafter authorized, which may be issued by the Corporation, whether
issued for money, for a consideration other than money or otherwise,
except such right, if any, as may be conferred by the Board of
Directors in authorizing such issuance.
2. The Board of Directors shall have the right from time to time
to authorize and direct the purchase by the Corporation of shares of
its outstanding capital stock of any class, whether for retirement or
otherwise, as they may determine. This right, however, is subject (1)
to the laws of the State of Maryland, in force at the time such right
may be exercised, with regard to the purchase by a corporation of its
own stock, and (2) to the provisions of the Articles of Incorporation
of the Corporation as heretofore and hereafter amended.
3. The Board of Directors shall have absolute discretion to
determine, from time to time, what sum shall be retained as working
capital for the Corporation, out of its surplus profits, before the
declaration of any dividend upon the Common Stock, and the
stockholders shall have no right to insist upon the distribution of
any part of any profits so reserved by the Board of Directors.
4. No contract or other transaction between the Corporation and
any other corporation shall be affected or invalidated by reason of
the fact that any one or more of the Board of Directors of the
Corporation is or are interested in, or is a director or officer of
such other corporation, and any Director may be a party to or may be
interested in any contract or transaction of the Corporation, or in
which the Corporation is interested, and no such contract or
transaction shall be affected or invalidated by reason thereof.
- 3 -
<PAGE>
VIII.To the fullest extent permitted by Maryland law, as it may be
amended from time to time, no person who at any time was or is a director or
officer of the Corporation shall be personally liable to the Corporation or its
stockholders for money damages. No amendment of the charter of the Corporation
or repeal of any of its provisions shall limit or eliminate any of the benefits
provided to directors and officers under this Article VIII in respect of any act
or omission that occurred prior to such amendment or repeal.
THIRD: The restatement of the Charter has been approved by a majority
of the entire Board of Directors.
FOURTH: The Charter is not amended by these Articles.
FIFTH: The current address of the principal office of the Corporation
is set forth in Article SECOND Section III.
SIXTH: The name and address of the current resident agent of the
Corporation are set forth in Article SECOND Section III.
SEVENTH: The Board of Directors of the Corporation has the number of
members set forth in Article SECOND Section V. The names of those currently
serving as directors of the Corporation are set forth in Article SECOND Section
V.
IN WITNESS WHEREOF, The Black & Decker Corporation has caused these
Articles of Restatement to be signed in its name and on its behalf on this 17th
day of July 1997, by its President who acknowledges that these Articles of
Restatement are the act of the Corporation and that to the best of his
knowledge, information and belief and under penalties of perjury, all matters
and facts contained in these Articles of Restatement are true in all material
respects.
ATTEST: THE BLACK & DECKER CORPORATION
/s/Barbara B. Lucas______ By:/s/Nolan D. Archibald_______(SEAL)
Barbara B. Lucas Nolan D. Archibald
Secretary Chairman, President and
Chief Executive Officer
- 4 -
Exhibit 3(a)(2)
ARTICLES SUPPLEMENTARY
OF
THE BLACK & DECKER CORPORATION
The Black & Decker Corporation, a Maryland corporation (the
"Corporation"), certifies as follows:
FIRST: Pursuant to the authority granted to the Board of Directors of
the Corporation by Article IV of the Charter of the Corporation, on July 17,
1997, the Board of Directors of the Corporation, reclassified 1,500,000 unissued
shares of the Series A Junior Participating Preferred Stock of the Corporation
as 1,500,000 shares of undesignated Series Preferred Stock.
SECOND: Pursuant to the authority granted to the Board of Directors of
the Corporation by Article IV of the Charter of the Corporation, on July 17,
1997, the Board of Directors of the Corporation, reclassified 150,000 unissued
shares of the Series B Cumulative Convertible Preferred Stock of the Corporation
as 150,000 shares of undesignated Series Preferred Stock.
THIRD: In accordance with the provisions of Article IV of the Charter
of the Corporation, the shares of Series Preferred Stock may be issued, from
time to time, in one or more series as authorized by the Board of Directors and
on the terms and conditions designated by the Board of Directors, including
terms, rights, restrictions and qualifications, and any preferences, voting
powers, dividend rights and redemption, sinking fund and conversion rights.
IN WITNESS WHEREOF, the Corporation has caused these Articles
Supplementary to be signed in its name and on its behalf on this 17th day of
July 1997, by its President who acknowledges that these Articles Supplementary
are the act of the Corporation and that to the best of his knowledge,
information and belief and under penalties for perjury, all matters and facts
contained in these Articles Supplementary are true in all material respects.
ATTEST: THE BLACK & DECKER CORPORATION
/s/Barbara B. Lucas_____ By:/s/Nolan D. Archibald______(SEAL)
Barbara B. Lucas Nolan D. Archibald
Secretary Chairman, President and
Chief Executive Officer
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
June 29,1997 June 30, 1996
Amount Per Share Amount Per Share
Primary:
<S> <C> <C> <C> <C>
Average shares outstanding 94.5 87.6
Dilutive stock options and stock issuable
under employee benefit plans-based on the
Treasury stock method using the average
market price 1.8 2.5
----- -----
Adjusted shares outstanding 96.3 90.1
===== =====
Earnings from continuing operations $45.5 $45.3
Less preferred stock dividend - (Note 1) 2.9
----- -----
Earnings from continuing operations
attributable to common stock $45.5 $.47 $42.4 $.47
===== ==== ===== ====
Fully Diluted:
Average shares outstanding 94.5 87.6
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 2.5
----- -----
Adjusted shares outstanding 96.6 90.1
Average shares assumed to be
converted through convertible
preferred stock - (Note 1) 6.3
----- -----
Fully diluted average
shares outstanding 96.6 96.4
===== =====
Earnings from continuing operations $45.5 $.47 $45.3 $.47
===== ==== ===== ====
<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
June 29,1997 June 30, 1996
Amount Per Share Amount Per Share
Primary:
<S> <C> <C> <C> <C>
Average shares outstanding 94.5 87.6
Dilutive stock options and stock issuable
under employee benefit plans-based on the
Treasury stock method using the average
market price 1.8 2.5
----- -----
Adjusted shares outstanding 96.3 90.1
===== =====
Net earnings $45.5 $45.3
Less preferred stock dividend - (Note 1) 2.9
----- -----
Net earnings attributable to common stock $45.5 $.47 $42.4 $.47
===== ==== ===== ====
Fully Diluted:
Average shares outstanding 94.5 87.6
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 2.5
----- -----
Adjusted shares outstanding 96.6 90.1
Average shares assumed to be
converted through convertible
preferred stock - (Note 1) 6.3
----- -----
Fully diluted average
shares outstanding 96.6 96.4
===== =====
Net earnings $45.5 $.47 $45.3 $.47
===== ==== ===== ====
<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 Six Months Ended
June 29,1997 June 30, 1996
Amount Per Share Amount Per Share
Primary:
<S> <C> <C> <C> <C>
Average shares outstanding 94.4 87.3
Dilutive stock options and stock issuable
under employee benefit plans-based on the
Treasury stock method using the average
market price 1.8 2.4
----- -----
Adjusted shares outstanding 96.2 89.7
===== =====
Earnings from continuing operations $71.8 $12.9
Less preferred stock dividend - (Note 1) 5.8
----- -----
Earnings from continuing operations
attributable to common stock $71.8 $.75 $ 7.1 $.08
===== ==== ===== ====
Fully Diluted:
Average shares outstanding 94.4 87.3
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 96.5 89.9
Average shares assumed to be
converted through convertible
preferred stock - (Note 1) 6.3 (Note 2)
----- -----
Fully diluted average
shares outstanding 96.5 96.2
===== =====
Earnings from continuing operations $71.8 $.74 $12.9 $.13
===== ==== ===== ====
<FN>
Notes: 1. The convertible preferred stock was converted to common stock on
October 14, 1996.
2. The assumed conversion of convertible preferred stock was
anti-dilutive and, therefore, was not used in the calculation of
fully diluted earnings per share included in the financial
statements.
</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 Six Months Ended
June 29,1997 June 30, 1996
Amount Per Share Amount Per Share
Primary:
<S> <C> <C> <C> <C>
Average shares outstanding 94.4 87.3
Dilutive stock options and stock issuable
under employee benefit plans-based on the
Treasury stock method using the average
market price 1.8 2.4
----- -----
Adjusted shares outstanding 96.2 89.7
===== =====
Net earnings $71.8 $83.3
Less preferred stock dividend - (Note 1) 5.8
----- -----
Net earnings attributable to common stock $71.8 $.75 $77.5 $.86
===== ==== ===== ====
Fully Diluted:
Average shares outstanding 94.4 87.3
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 96.5 89.9
Average shares assumed to be
converted through convertible
preferred stock - (Note 1) 6.3 (Note 2)
----- -----
Fully diluted average
shares outstanding 96.5 96.2
===== =====
Net earnings $71.8 $.74 $83.3 $.87
===== ==== ===== ====
<FN>
Notes: 1. The convertible preferred stock was converted to common stock on
October 14, 1996.
2. The assumed conversion of convertible preferred stock was
anti-dilutive and, therefore, was not used in the calculation of
fully diluted earnings per share included in the financial
statements.
</FN>
</TABLE>
EXHIBIT 12 EXHIBIT 12
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Millions of Dollars Except Ratios)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 29, 1997 June 29, 1997
------------- -------------
<S> <C> <C>
EARNINGS:
Earnings from continuing operations before
income taxes $45.5 $71.8
Interest expense 32.1 65.4
Portion of rent expense representative of an
interest factor 5.9 11.8
----- ------
Adjusted earnings from continuing operations
before taxes and fixed charges $83.5 $149.0
===== ======
FIXED CHARGES:
Interest expense $32.1 $65.4
Portion of rent expense representative of an
interest factor 5.9 11.8
----- ------
Total fixed charges $38.0 $77.2
===== =====
RATIO OF EARNINGS TO FIXED CHARGES 2.20 1.93
==== ====
</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 six months
ended June 29, 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-29-1997
<CASH> 126,300
<SECURITIES> 0
<RECEIVABLES> 719,600<F1>
<ALLOWANCES> 0
<INVENTORY> 898,100
<CURRENT-ASSETS> 1,924,700
<PP&E> 878,600<F2>
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,251,300
<CURRENT-LIABILITIES> 1,275,000
<BONDS> 1,796,900
0
0
<COMMON> 47,300
<OTHER-SE> 1,606,800
<TOTAL-LIABILITY-AND-EQUITY> 5,251,300
<SALES> 2,197,200
<TOTAL-REVENUES> 2,197,200
<CGS> 1,412,300
<TOTAL-COSTS> 2,019,600
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 65,400
<INCOME-PRETAX> 110,500
<INCOME-TAX> 38,700
<INCOME-CONTINUING> 71,800
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 71,800
<EPS-PRIMARY> .75
<EPS-DILUTED> .74
<FN>
<F1>Represents net trade receivables.
<F2>Represents net property, plant, and equipment.
</FN>
</TABLE>
