-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NIAoPm1k5N21s4GkX7TvXJNtUhoJXI5NyjH6Plcozrdn8YszProoNbsa3HQDRipY 3t+PQO3lCMAHgiOy6c17Ag== 0000012355-97-000014.txt : 19970808 0000012355-97-000014.hdr.sgml : 19970808 ACCESSION NUMBER: 0000012355-97-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19970629 FILED AS OF DATE: 19970807 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BLACK & DECKER CORP CENTRAL INDEX KEY: 0000012355 STANDARD INDUSTRIAL CLASSIFICATION: METALWORKING MACHINERY & EQUIPMENT [3540] IRS NUMBER: 520248090 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-03593 FILM NUMBER: 97653309 BUSINESS ADDRESS: STREET 1: 701 E JOPPA RD CITY: TOWSON STATE: MD ZIP: 21286 BUSINESS PHONE: 4107163310 MAIL ADDRESS: STREET 1: 701 EAST JOPPA ROAD STREET 2: MAIL STOP TW 290 CITY: TOWSON STATE: MD ZIP: 21286 FORMER COMPANY: FORMER CONFORMED NAME: BLACK & DECKER MANUFACTURING CO DATE OF NAME CHANGE: 19850206 10-Q 1 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 - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Maryland 52-0248090 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) - -------------------------------------------------------------------------------- 701 East Joppa Road Towson, Maryland 21286 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (410) 716-3900 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Not Applicable - -------------------------------------------------------------------------------- (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. 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 CONSOLIDATED STATEMENT OF EARNINGS (Unaudited) The Black & Decker Corporation and Subsidiaries (In Millions Except Per Share Amounts)
- ------------------------------------------------------------------------------------------------------------------- Three Months Ended Six Months Ended June 29, 1997 June 30, 1996 June 29, 1997 June 30, 1996 - ------------------------------------------------------------------------------------------------------------------- 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 - ------------------------------------------------------------------------------------------------------------------- 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 - ------------------------------------------------------------------------------------------------------------------- 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 - ------------------------------------------------------------------------------------------------------------------- Earnings From Continuing Operations 45.5 45.3 71.8 12.9 Earnings from discontinued operations (net of income taxes) - - - 70.4 - ------------------------------------------------------------------------------------------------------------------- Net Earnings $ 45.5 $ 45.3 $ 71.8 $ 83.3 =================================================================================================================== - ------------------------------------------------------------------------------------------------------------------- Net Earnings Applicable to Common Shares $ 45.5 $ 42.4 $ 71.8 $ 77.5 =================================================================================================================== Net Earnings Per Common and Common Equivalent Share: - ------------------------------------------------------------------------------------------------------------------- Primary: Earnings from continuing operations $ .47 $ .47 $ .75 $ .08 Earnings from discontinued operations - - - .78 - ------------------------------------------------------------------------------------------------------------------- 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 - ------------------------------------------------------------------------------------------------------------------- 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 ===================================================================================================================
See Notes to Consolidated Financial Statements (Unaudited) CONSOLIDATED BALANCE SHEET The Black & Decker Corporation and Subsidiaries (In Millions Except Per Share Amount)
- ------------------------------------------------------------------------------------------------------------------- (Unaudited) June 29, 1997 December 31, 1996 - ------------------------------------------------------------------------------------------------------------------- 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 - ------------------------------------------------------------------------------------------------------------------- Total Current Assets 1,924.7 1,804.2 - ------------------------------------------------------------------------------------------------------------------- Property, Plant, and Equipment 878.6 905.8 Goodwill 1,929.3 2,012.2 Other Assets 518.7 431.3 - ------------------------------------------------------------------------------------------------------------------- $ 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 - ------------------------------------------------------------------------------------------------------------------- Total Current Liabilities 1,275.0 1,506.6 - ------------------------------------------------------------------------------------------------------------------- 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) - ------------------------------------------------------------------------------------------------------------------- Total Stockholders' Equity 1,654.1 1,632.4 - ------------------------------------------------------------------------------------------------------------------- $ 5,251.3 $ 5,153.5 ===================================================================================================================
See Notes to Consolidated Financial Statements (Unaudited) CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) The Black & Decker Corporation and Subsidiaries (In Millions)
- ------------------------------------------------------------------------------------------------------------------- Six Months Ended June 29, 1997 June 30, 1996 - ------------------------------------------------------------------------------------------------------------------- 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) - ------------------------------------------------------------------------------------------------------------------- Cash flow from operating activities of continuing operations (177.9) 66.3 Cash flow from operating activities of discontinued operations - (10.1) - ------------------------------------------------------------------------------------------------------------------- Cash Flow From Operating Activities (177.9) 56.2 - ------------------------------------------------------------------------------------------------------------------- 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) - ------------------------------------------------------------------------------------------------------------------- Cash Flow From Investing Activities (70.0) 349.7 - ------------------------------------------------------------------------------------------------------------------- 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) - ------------------------------------------------------------------------------------------------------------------- Cash Flow From Financing Activities 236.5 (394.0) Effect of exchange rate changes on cash (4.1) (1.8) - ------------------------------------------------------------------------------------------------------------------- Increase In Cash And Cash Equivalents (15.5) 10.1 Cash and cash equivalents at beginning of period 141.8 131.6 - ------------------------------------------------------------------------------------------------------------------- Cash And Cash Equivalents At End Of Period $ 126.3 $ 141.7 ===================================================================================================================
See Notes to Consolidated Financial Statements (Unaudited) 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:
- ------------------------------------------------------------------------------------------------------------------- June 29, 1997 December 31, 1996 - ------------------------------------------------------------------------------------------------------------------- FIFO Cost Raw materials and work-in-process $ 228.0 $ 211.1 Finished products 701.8 567.7 - ------------------------------------------------------------------------------------------------------------------- 929.8 778.8 Excess of FIFO cost over LIFO inventory value (31.7) (31.0) - ------------------------------------------------------------------------------------------------------------------- $ 898.1 $ 747.8 ===================================================================================================================
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. NOTE 4: GOODWILL Goodwill at the end of each period, in millions of dollars, was as follows:
- ------------------------------------------------------------------------------------------------------------------- June 29, 1997 December 31, 1996 - ------------------------------------------------------------------------------------------------------------------- Goodwill $ 2,520.5 $ 2,571.5 Less accumulated amortization 591.2 559.3 - ------------------------------------------------------------------------------------------------------------------- $ 1,929.3 $ 2,012.2 ===================================================================================================================
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:
- ------------------------------------------------------------------------------------------------------------------- Three Months Ended Six Months Ended June 29, 1997 June 30, 1996 June 29, 1997 June 30, 1996 - ------------------------------------------------------------------------------------------------------------------- Interest expense $32.1 $37.7 $65.4 $77.6 Interest (income) (1.5) (1.8) (4.2) (3.8) - ------------------------------------------------------------------------------------------------------------------- $30.6 $35.9 $61.2 $73.8 ===================================================================================================================
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. 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. The following table sets forth the Corporation's pro forma earnings per share, calculated in accordance with SFAS No. 128.
- ------------------------------------------------------------------------------------------------------------------- Three Months Ended Six Months Ended June 29, 1997 June 30, 1996 June 29, 1997 June 30, 1996 - ------------------------------------------------------------------------------------------------------------------- Basic earnings per share: Earnings from continuing operations $ .48 $ .48 $ .76 $ .08 Earnings from discontinued operations - - - .81 - ------------------------------------------------------------------------------------------------------------------- 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 ===================================================================================================================
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. 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.
ANALYSIS OF CHANGES IN SALES OF CONTINUING OPERATIONS - ------------------------------------------------------------------------------------------------------------------- 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 - ------------------------------------------------------------------------------------------------------------------- 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% ===================================================================================================================
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
- ---------------------------------------------------------------------------------------------------------------------- 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 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)% ======================================================================================================================
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. 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. 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. 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. 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. 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 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. 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. 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. 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 EX-3 2 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. 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 - 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 - 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 - EX-3 3 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 EX-11 4 Exhibit 11(a) THE BLACK & DECKER CORPORATION AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE (Amounts in Millions Except Per Share Data)
For The Three Months Ended June 29,1997 June 30, 1996 Amount Per Share Amount Per Share Primary: 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 ===== ==== ===== ==== Notes: 1. The convertible preferred stock was converted to common stock on October 14, 1996.
Exhibit 11(b) THE BLACK & DECKER CORPORATION AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE (Amounts in Millions Except Per Share Data)
For The Three Months Ended June 29,1997 June 30, 1996 Amount Per Share Amount Per Share Primary: 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 ===== ==== ===== ==== Notes: 1. The convertible preferred stock was converted to common stock on October 14, 1996.
Exhibit 11(c) THE BLACK & DECKER CORPORATION AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE (Amounts in Millions Except Per Share Data)
For The Six Months Ended June 29,1997 June 30, 1996 Amount Per Share Amount Per Share Primary: 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 ===== ==== ===== ==== 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.
Exhibit 11(d) THE BLACK & DECKER CORPORATION AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE (Amounts in Millions Except Per Share Data)
For The Six Months Ended June 29,1997 June 30, 1996 Amount Per Share Amount Per Share Primary: 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 ===== ==== ===== ==== 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.
EX-12 5 EXHIBIT 12 EXHIBIT 12 THE BLACK & DECKER CORPORATION AND SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (Millions of Dollars Except Ratios)
Three Months Ended Six Months Ended June 29, 1997 June 29, 1997 ------------- ------------- 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 ==== ====
EX-27 6
5 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. 0000012355 THE BLACK & DECKER CORPORATION 1,000 6-MOS DEC-31-1997 JUN-29-1997 126,300 0 719,600 0 898,100 1,924,700 878,600 0 5,251,300 1,275,000 1,796,900 0 0 47,300 1,606,800 5,251,300 2,197,200 2,197,200 1,412,300 2,019,600 0 0 65,400 110,500 38,700 71,800 0 0 0 71,800 .75 .74 Represents net trade receivables. Represents net property, plant, and equipment.
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