-----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, Dxb1dr6lj2atxtRelSCyXzpcrcr3hq2EQX4tKfse17XGbtSmctJRrZf7s9p038Nz HZPaSjXRqFnladJ+tZHECg== 0000012355-99-000021.txt : 19990722 0000012355-99-000021.hdr.sgml : 19990722 ACCESSION NUMBER: 0000012355-99-000021 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990721 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990721 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: 8-K SEC ACT: SEC FILE NUMBER: 333-03593 FILM NUMBER: 99667534 BUSINESS ADDRESS: STREET 1: 701 E JOPPA RD CITY: TOWSON STATE: MD ZIP: 21286 BUSINESS PHONE: 4107163900 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 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) July 21, 1999 THE BLACK & DECKER CORPORATION (Exact name of registrant as specified in its charter) Maryland 1-1553 52-0248090 (State of Incorporation) (Commission File Number) (I.R.S. Employer Identification Number) 701 East Joppa Road, Towson, Maryland 21286 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 410-716-3900 Not Applicable (Former name or former address, if changed since last report) ITEM 5. OTHER EVENTS On July 21, 1999, the Corporation reported its earnings for the three and six months ended July 4, 1999. Attached to this Current Report on Form 8-K as Exhibit 99 is a copy of the Corporation's related press release dated July 21, 1999. FORWARD-LOOKING STATEMENTS This Current Report on Form 8-K 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 risks 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 new products introduced in 1998 and 1999 and scheduled for introduction in the balance of 1999; the level of sales generated from these new products relative to expectations, 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 meet scheduled timetables of new product introductions; unforeseen competitive pressure or other difficulty in maintaining mutually beneficial relationships with key distributors or 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 and administrative reorganization actions in progress or contemplated by the strategic repositioning described in the Corporation's Annual Report on Form 10-K for the year ended December 31, 1998, as updated in the Corporation's Quarterly Report on Form 10-Q for the quarter ended April 4, 1999; the degree of working capital investment required to meet customer service levels; gradual improvement in the economic environment in Asia and Latin America; and economic growth in North America which more than offsets economic softness in Europe. In addition to the foregoing, the Corporation's ability to realize the anticipated benefits of the restructuring actions undertaken in 1998 and 1999 is dependent upon current market conditions, as well as the timing and effectiveness of the relocation or consolidation of production and administrative processes. The ability to realize the benefits inherent in the balance of the restructuring actions is dependent on the selection and implementation of economically viable projects in addition to the restructuring actions taken to date. The ability to achieve certain sales and profitability targets and cash flow projections also is dependent upon the Corporation's ability to identify appropriate acquisitions that are complementary to the Corporation's existing businesses at acquisition prices that are consistent with these objectives. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS Exhibit 99 Press Release of the Corporation dated July 21, 1999. 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 hereunto duly authorized. THE BLACK & DECKER CORPORATION By /s/ STEPHEN F. REEVES Stephen F. Reeves Vice President and Controller EX-99 2 PRESS RELEASE DATED JULY 21, 1999 Contact: Barbara B. Lucas Senior Vice President-Public Affairs (410) 716-2980 F. Robert Hunter Vice President-Investor Relations (410) 716-3979 FOR IMMEDIATE RELEASE: Wednesday, July 21, 1999 SUBJECT: Black & Decker Reports Record Core Sales and Earnings in Second Quarter TOWSON, MD - The Black & Decker Corporation (NYSE:BDK) announced today that sales of retained businesses in the second quarter of 1999 were 7% higher, excluding the effects of foreign currency translation, than in the same period of 1998. Due to business divestitures and the effects of foreign currency translation, however, total sales declined to $1.08 billion from $1.17 billion last year. For the first six months of 1999, sales of retained businesses increased 9%, excluding the effects of foreign currency translation, over the same period of 1998. Total sales, however, declined 5% for the first half of the year due to divestitures and foreign currency effects. Net earnings for the second quarter of 1999 were a record $70.7 million or 80 cents per diluted share compared to $54.2 million or 57 cents per diluted share, excluding a non-recurring gain on sale of businesses of $4.2 million (4 cents per share), in the same quarter of 1998. The 40% improvement in earnings per share resulted from lower restructuring-related costs, lower average outstanding shares of the Corporation's stock due to a stock repurchase program, and operating improvements. For the first six months of 1999, net earnings were a record $109.9 million or $1.24 per diluted share. In the same period last year, the Corporation reported a net loss of $913.0 million or $9.65 per share. Excluding non-recurring items consisting of a $900 million write-off of goodwill, a $100 million after-tax restructuring charge, and a $4.2 million after-tax gain on sale of businesses and including the dilutive effect of options for the first six months of 1998, net earnings would have been $82.8 million or 86 cents per diluted share for the period. Therefore, comparable earnings per share for the first six months of 1999 improved 44% due to lower restructuring-related costs, operating improvements, and lower average outstanding shares. (more) Page 2 Commenting on the results, Nolan D. Archibald, Chairman and Chief Executive Officer, said, "Black & Decker is having a very solid year. Sales and earnings for both the first and second quarters were well ahead of comparable 1998 results. A steady flow of innovative new products, intense end-user focus, strong customer partnerships, productivity gains, and lower restructuring-related costs coupled with restructuring benefits continue to drive our success. "Power Tools and Accessories reported impressive increases of 7% in sales and 30% in profit for the second quarter. These results were powered by double-digit rates of sales growth in both professional and consumer tools in North America and also reflected benefits from restructuring and improved manufacturing performance. Our cordless power tool business remains particularly strong, and we expect to maintain our leadership position in this high-growth category with the introduction of a 24-volt line of DEWALT(R) tools later this year. Power tool sales were slightly higher than last year in Europe, where strong growth in Scandinavia was largely offset by negative comparisons in Eastern Europe and Germany. "Sales in Building Products (security hardware and plumbing products) were approximately the same as in the second quarter last year, although sales were up 6% year-to-date. While Kwikset posted sales growth during the quarter, Price Pfister experienced a decline compared to a relatively strong period last year. Consistent with our objective of increasing Price Pfister's return on assets, however, this business is focused on improved profitability rather than sales growth. Second-quarter profit for Building Products declined 9%. As we continue to execute our restructuring plan to lower manufacturing costs and improve manufacturing efficiency, particularly at Kwikset, we expect increased profitability in this segment later this year. "Fastening and Assembly Systems had another excellent quarter, with sales up 9% and profit up 7%. This highly profitable business continues to benefit from successful new products, healthy automotive industries in North America and Europe, and aggressive productivity improvement. "Year-to-date free cash flow was a use of $98 million. The increase from a use of $50 million last year was primarily due to a planned build-up in power tool inventory to ensure adequate customer service levels during this period of strong sales growth and to support the launch of new products in North America over the next several months. (more) Page 3 "Based on our current outlook for continued strength in the North American economy, as well as for additional benefits from restructuring and our Six Sigma initiative, we remain optimistic about achieving further gains in sales and profitability during the remainder of the year. We also expect to continue to invest in long-term growth initiatives such as the hiring of additional engineers and end-user marketing specialists to expand our capacity to develop and promote successful new products." This release includes 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. By their nature, all forward-looking statements involve risks and uncertainties. For a more detailed discussion of the risks and uncertainties that may affect Black & Decker's operating and financial results and its ability to achieve the financial objectives discussed in this press release, interested parties should review Black & Decker's reports filed with the Securities and Exchange Commission, including the Current Report on Form 8-K, filed July 21, 1999. Black & Decker is a leading global manufacturer and marketer of power tools, hardware, and building products used in and around the home and for commercial applications. * * * THE BLACK & DECKER CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF EARNINGS (Unaudited) (Dollars in Millions Except Per Share Amounts) Three Months Ended --------------------------------- July 4, 1999 June 28, 1998 -------------- --------------- SALES $ 1,084.2 $ 1,169.7 Cost of goods sold 671.2 771.9 Selling, general, and administrative expenses 285.9 285.5 Gain on sale of businesses - 36.5 -------------- --------------- OPERATING INCOME 127.1 148.8 Interest expense (net of interest income) 22.5 29.8 Other expense .7 2.7 -------------- --------------- EARNINGS BEFORE INCOME TAXES 103.9 116.3 Income taxes 33.2 57.9 -------------- --------------- NET EARNINGS $ 70.7 $ 58.4 ============== =============== NET EARNINGS PER COMMON SHARE - BASIC $ .81 $ .62 ============== =============== Shares Used in Computing Basic Earnings Per Share (in Millions) 87.0 94.1 ============== =============== NET EARNINGS PER COMMON SHARE - ASSUMING DILUTION $ .80 $ .61 ============== =============== Shares Used in Computing Diluted Earnings Per Share (in Millions) 88.4 95.8 ============== =============== THE BLACK & DECKER CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF EARNINGS (Unaudited) (Dollars in Millions Except Per Share Amounts) Six Months Ended --------------------------------- July 4, 1999 June 28, 1998 -------------- --------------- SALES $ 2,062.7 $ 2,178.0 Cost of goods sold 1,299.4 1,430.2 Selling, general, and administrative expenses 557.8 565.4 Write-off of goodwill - 900.0 Restructuring and exit costs - 140.0 Gain on sale of businesses - 36.5 -------------- --------------- OPERATING INCOME (LOSS) 205.5 (821.1) Interest expense (net of interest income) 44.7 58.2 Other (income) expense (.8) 2.4 -------------- --------------- EARNINGS (LOSS) BEFORE INCOME TAXES 161.6 (881.7) Income taxes 51.7 31.3 -------------- --------------- NET EARNINGS (LOSS) $ 109.9 $ (913.0) ============== =============== NET EARNINGS (LOSS) PER COMMON SHARE - BASIC $ 1.26 $ (9.65) ============== =============== Shares Used in Computing Basic Earnings Per Share (in Millions) 87.1 94.6 ============== =============== NET EARNINGS (LOSS) PER COMMON SHARE - ASSUMING DILUTION $ 1.24 $ (9.65) ============== =============== Shares Used in Computing Diluted Earnings Per Share (in Millions) 88.5 94.6 ============== =============== THE BLACK & DECKER CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (Millions of Dollars) July 4, 1999 December (Unaudited) 31, 1998 ------------- ------------- ASSETS Cash and cash equivalents $ 134.7 $ 87.9 Trade receivables 797.1 792.4 Inventories 806.5 636.9 Other current assets 200.8 234.6 ------------- ------------- TOTAL CURRENT ASSETS 1,939.1 1,751.8 ------------- ------------- PROPERTY, PLANT, AND EQUIPMENT 701.4 727.6 GOODWILL 742.1 768.7 OTHER ASSETS 629.5 604.4 ------------- ------------- $ 4,012.1 $ 3,852.5 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Short-term borrowings $ 421.9 $ 152.5 Current maturities of long-term debt 58.7 59.2 Trade accounts payable 399.0 348.8 Other accrued liabilities 687.5 814.2 ------------- ------------- TOTAL CURRENT LIABILITIES 1,567.1 1,374.7 ------------- ------------- LONG-TERM DEBT 1,058.7 1,148.9 DEFERRED INCOME TAXES 276.8 279.9 POSTRETIREMENT BENEFITS 261.4 263.5 OTHER LONG-TERM LIABILITIES 231.6 211.5 STOCKHOLDERS' EQUITY 616.5 574.0 ------------- ------------- $ 4,012.1 $ 3,852.5 ============= ============= THE BLACK & DECKER CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION ABOUT BUSINESS SEGMENTS (Unaudited) (Millions of Dollars) Reportable Business Segments ----------------------------------------- Power Fasten- Tools ing & & Acces- Building Assembly Three Months Ended July 4, 1999 sories Products Systems Total - -------------------------------------------------------------------------- Sales to unaffiliated customers $ 761.3 $ 215.1 $ 128.0 $1,104.4 Segment profit (loss) (for Consolidated, operating income) 86.7 28.8 22.4 137.9 Depreciation and amortization 21.0 8.6 3.8 33.4 Capital expenditures 23.3 9.6 5.5 38.4 Three Months Ended June 28, 1998 - -------------------------------------------------------------------------- Sales to unaffiliated customers $ 712.7 $ 214.7 $ 117.6 $1,045.0 Segment profit (loss) (for Consolidated, operating income before gain on sale of businesses) 66.5 31.8 20.9 119.2 Depreciation and amortization 21.7 6.5 3.6 31.8 Capital expenditures 13.0 4.3 4.1 21.4 Six Months Ended July 4, 1999 - -------------------------------------------------------------------------- Sales to unaffiliated customers $1,404.3 $ 429.9 $ 254.4 $2,088.6 Segment profit (loss) (for Consolidated, operating income) 126.3 54.8 43.6 224.7 Depreciation and amortization 42.3 17.4 7.7 67.4 Capital expenditures 43.4 16.8 8.6 68.8 Six Months Ended June 28, 1998 - -------------------------------------------------------------------------- Sales to unaffiliated customers $1,294.3 $ 404.3 $ 235.9 $1,934.5 Segment profit (loss) (for Consolidated, operating income before restructuring and exit costs, write-off of goodwill, and gain on sale of businesses) 98.4 56.6 40.1 195.1 Depreciation and amortization 44.5 12.6 6.8 63.9 Capital expenditures 30.5 13.6 6.1 50.2 THE BLACK & DECKER CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION ABOUT BUSINESS SEGMENTS (Unaudited) (Millions of Dollars) Corporate, Adjust- Currency ments, All Translation & Elimi- Consoli- Three Months Ended July 4, 1999 Others Adjustments nations dated - -------------------------------------------------------------------------- Sales to unaffiliated customers $ -- $ (20.2) $ -- $1,084.2 Segment profit (loss) (for Consolidated, operating income) -- (2.2) (8.6) 127.1 Depreciation and amortization -- (.5) 6.8 39.7 Capital expenditures -- (.6) .1 37.9 Three Months Ended June 28, 1998 - -------------------------------------------------------------------------- Sales to unaffiliated customers $135.8 $ (11.1) $ -- $1,169.7 Segment profit (loss) (for Consolidated, operating income before gain on sale of businesses) 8.1 (1.6) (13.4) 112.3 Depreciation and amortization -- (.3) 6.3 37.8 Capital expenditures 6.4 (.3) .1 27.6 Six Months Ended July 4, 1999 - -------------------------------------------------------------------------- Sales to unaffiliated customers $ -- $ (25.9) $ -- $2,062.7 Segment profit (loss) (for Consolidated, operating income) -- (2.7) (16.5) 205.5 Depreciation and amortization -- (.8) 14.0 80.6 Capital expenditures -- (1.1) .2 67.9 Six Months Ended June 28, 1998 - -------------------------------------------------------------------------- Sales to unaffiliated customers $266.0 $ (22.5) $ -- $2,178.0 Segment profit (loss) (for Consolidated, operating income before restructuring and exit costs, write-off of goodwill, and gain on sale of businesses) 12.2 (3.4) (21.5) 182.4 Depreciation and amortization -- (.7) 13.4 76.6 Capital expenditures 9.9 (.6) .3 59.8 The reconciliation of segment profit to the Corporation's earnings (loss) before income taxes for each period, in millions of dollars, is as follows: Three Months Ended - -------------------------------------------------------------------------- July 4, June 28, 1999 1998 - -------------------------------------------------------------------------- Segment profit for total reportable business segments $137.9 $119.2 Segment profit for all other businesses -- 8.1 Items excluded from segment profit: Adjustment of budgeted foreign exchange rates to actual rates (2.2) (1.6) Depreciation of Corporate property and amortization of goodwill (6.8) (6.3) Adjustment to businesses' postretirement benefit expenses booked in consolidation 8.4 8.2 Adjustment to eliminate net interest and non-operating expenses from results of certain operations in Brazil, Mexico, Venezuela, and Turkey .6 1.1 Other adjustments booked in consolidation directly related to reportable business segments .1 (17.6) Amounts allocated to businesses in arriving at segment profit in excess of (less than) Corporate center operating expenses, eliminations, and other amounts identified above (10.9) 1.2 - -------------------------------------------------------------------------- Operating income before restructuring and exit costs, write-off of goodwill, and gain on sale of businesses 127.1 112.3 Restructuring and exit costs -- -- Write-off of goodwill -- -- Gain on sale of businesses -- 36.5 - -------------------------------------------------------------------------- Operating income (loss) 127.1 148.8 Interest expense, net of interest income 22.5 29.8 Other (income) expense .7 2.7 - -------------------------------------------------------------------------- Earnings (loss) before taxes $103.9 $116.3 ========================================================================== Six Months Ended - -------------------------------------------------------------------------- July 4, June 28, 1999 1998 - -------------------------------------------------------------------------- Segment profit for total reportable business segments $224.7 $ 195.1 Segment profit for all other businesses -- 12.2 Items excluded from segment profit: Adjustment of budgeted foreign exchange rates to actual rates (2.7) (3.4) Depreciation of Corporate property and amortization of goodwill (14.0) (13.4) Adjustment to businesses' postretirement benefit expenses booked in consolidation 16.6 16.5 Adjustment to eliminate net interest and non-operating expenses from results of certain operations in Brazil, Mexico, Venezuela, and Turkey 1.1 2.6 Other adjustments booked in consolidation directly related to reportable business segments (3.6) (19.0) Amounts allocated to businesses in arriving at segment profit in excess of (less than) Corporate center operating expenses, eliminations, and other amounts identified above (16.6) (8.2) - -------------------------------------------------------------------------- Operating income before restructuring and exit costs, write-off of goodwill, and gain on sale of businesses 205.5 182.4 Restructuring and exit costs -- 140.0 Write-off of goodwill -- 900.0 Gain on sale of businesses -- 36.5 - -------------------------------------------------------------------------- Operating income (loss) 205.5 (821.1) Interest expense, net of interest income 44.7 58.2 Other (income) expense (.8) 2.4 - -------------------------------------------------------------------------- Earnings (loss) before taxes $161.6 $(881.7) ========================================================================== Basis of Presentation: The Corporation operates in three reportable business segments: Power Tools and Accessories, Building Products, and Fastening and Assembly Systems. The Power Tools and Accessories segment has worldwide responsibility for the manufacture and sale of consumer and professional power tools and accessories, cleaning and lighting products, and electric lawn and garden tools, as well as for product service. In addition, the Power Tools and Accessories segment has responsibility for the sale of plumbing products to customers outside North America and for sales of the retained household products business. The Building Products segment has worldwide responsibility for the manufacture and sale of security hardware and for the manufacture of plumbing products as well as responsibility for the sale of plumbing products to customers in North America. The Fastening and Assembly Systems segment has worldwide responsibility for the manufacture and sale of fastening and assembly systems. The Corporation also operated several businesses that do not constitute reportable business segments. These businesses included the manufacture and sale of glass container-forming and inspection equipment, as well as recreational and household products. In 1998, the Corporation completed the sale or recapitalization of its glass container-forming and inspection equipment business, Emhart Glass; its recreational products business, True Temper Sports; and its household products business (excluding certain assets associated with the Corporation's cleaning and lighting products) in North America, Latin America (excluding Brazil), and Australia. Because True Temper Sports, Emhart Glass, and the household products business in North America, Latin America (excluding Brazil), and Australia are not treated as discontinued operations under generally accepted accounting principles, they remain a part of the Corporation's reported results from continuing operations, and the results of operations and financial positions of these businesses have been included in the consolidated financial statements through the dates of consummation of the respective transactions. Amounts relating to these businesses are included in the segment table above under the caption "All Others." The results of the household products business included under the caption "All Others" are based upon certain assumptions and allocations. The household products businesses sold during 1998 were jointly operated with the cleaning and lighting products businesses retained by the Corporation. Further, the Corporation's divested household products businesses in Australia and Latin America (excluding Brazil) were operated jointly with the Corporation's power tools and accessories businesses. Accordingly, the results of the household products businesses included in the segment table under the caption "All Others" were determined using certain assumptions and allocations that the Corporation believes are reasonable under the circumstances. The Corporation assesses the performance of its reportable business segments based upon a number of factors, including segment profit. In general, segments follow the same accounting policies as those described in Note 1 of the Corporation's Annual Report on Form 10-K for the year ended December 31, 1998, except with respect to foreign currency translation and except as further indicated below. The financial statements of a segment's operating units located outside the United States, except those units operating in highly inflationary economies, are measured using the local currency as the functional currency. For these units located outside the United States, segment assets and elements of segment profit are translated using budgeted rates of exchange. Budgeted rates of exchange are established annually, and once established all prior period segment data is restated to reflect the newly established budgeted rates of exchange. The amounts included in the segment table above under the captions "Reportable Business Segments," "All Others," and "Corporate, Adjustments, & Eliminations" are reflected at the Corporation's current budgeted exchange rates. The amounts included in the segment table above under the caption "Currency Translation Adjustments" represent the difference between consolidated amounts determined using budgeted rates of exchange and those determined based upon the rates of exchange applicable under accounting principles generally accepted in the United States. Segment profit excludes interest income and expense, non-operating income and expense, goodwill amortization, adjustments to eliminate intercompany profit in inventory, and income tax expense. In addition, segment profit excludes restructuring and exit costs and, for 1998, the write-off of goodwill and gain on sale of businesses. For certain operations located in Brazil, Mexico, Venezuela, and Turkey, segment profit is reduced by net interest expense and non-operating expenses. In determining segment profit, expenses relating to pension and other postretirement benefits are based solely upon estimated service costs. Corporate expenses are allocated to each segment based upon budgeted amounts. No corporate expenses have been allocated to divested businesses. While sales and transfers between segments are accounted for at cost plus a reasonable profit, the effects of intersegment sales are excluded from the computation of segment profit. Intercompany profit in inventory is excluded from segment assets and is recognized as a reduction of cost of sales by the selling segment when the related inventory is sold to an unaffiliated customer. Because the Corporation compensates the management of its various businesses on, among other factors, segment profit, the Corporation may elect to record certain segment-related expense items of an unusual or nonrecurring nature in consolidation rather than reflect such items in segment profit. In addition, certain segment-related items of income or expense may be recorded in consolidation in one period and transferred to the Corporation's various segments in a later period. -----END PRIVACY-ENHANCED MESSAGE-----