black&decker 10Q_Q107

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  • 1. UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, 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 April 1, 2007or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from toCommission File Number: 1-1553THE BLACK & DECKER CORPORATION(Exact name of registrant as specified in its charter) Maryland52-0248090 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)701 East Joppa RoadTowson, Maryland 21286 (Address of principal executive offices)(Zip Code) (410) 716-3900 (Registrants 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 YESNO Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. Large accelerated filer X Accelerated filer ___ Non-accelerated filer ___ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES X NO The number of shares of Common Stock outstanding as of April 27, 2007:65,966,692

2. -2- THE BLACK & DECKER CORPORATION INDEX FORM 10-Q April 1, 2007PagePART I FINANCIAL INFORMATIONItem 1. Financial Statements Consolidated Statement of Earnings (Unaudited) For the Three Months Ended April 1, 2007 and April 2, 2006 3 Consolidated Balance Sheet (Unaudited) April 1, 2007 and December 31, 20064 Consolidated Statement of Stockholders Equity (Unaudited) For the Three Months Ended April 1, 2007 and April 2, 2006 5 Consolidated Statement of Cash Flows (Unaudited) For the Three Months Ended April 1, 2007 and April 2, 2006 6 Notes to Consolidated Financial Statements (Unaudited) 7 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations 16 Item 3. Quantitative and Qualitative Disclosures about Market Risk24 Item 4. Controls and Procedures 24PART II OTHER INFORMATIONItem 1. Legal Proceedings 25 Item 1A. Risk Factors 25 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 25 Item 4. Submission of Matters to a Vote of Security Holders 26Item 6. Exhibits26 SIGNATURES28 3. -3- PART I FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTSCONSOLIDATED STATEMENT OF EARNINGS (Unaudited) The Black & Decker Corporation and Subsidiaries (Dollars in Millions Except Per Share Amounts) Three Months Ended April 1, 2007April 2, 2006 Sales $ 1,577.2$ 1,528.9 Cost of goods sold1,016.6985.3 Selling, general, and administrative expenses 391.0375.4 Operating Income 169.6168.2Interest expense (net of interest income)21.5 13.7Other expense 1.1 Earnings Before Income Taxes 147.0154.5Income taxes 38.9 41.4 Net Earnings$108.1$ 113.1 Net Earnings Per Common Share Basic $ 1.66$ 1.49 Shares Used in Computing Basic Earnings Per Share (in Millions) 65.1 76.0Net Earnings Per Common Share Assuming Dilution $ 1.61$ 1.45 Shares Used in Computing Diluted Earnings Per Share (in Millions) 67.1 78.2Dividends Per Common Share$ .42 $.38 See Notes to Consolidated Financial Statements (Unaudited). 4. -4- CONSOLIDATED BALANCE SHEET (Unaudited) The Black & Decker Corporation and Subsidiaries (Dollars in Millions Except Per Share Amount)April 1, 2007 December 31, 2006Assets Cash and cash equivalents$ 226.3$ 233.3 Trade receivables 1,195.31,149.6 Inventories 1,098.71,063.5 Other current assets243.3257.0 Total Current Assets 2,763.6 2,703.4 Property, Plant, and Equipment 602.5 622.2 Goodwill 1,188.7 1,195.6 Other Assets 720.2 726.5$ 5,275.0$ 5,247.7 Liabilities and Stockholders Equity Short-term borrowings$ 234.3$ 258.9 Current maturities of long-term debt 150.1150.2 Trade accounts payable 567.9458.5 Other current liabilities846.8912.0 Total Current Liabilities1,799.1 1,779.6 Long-Term Debt 1,170.2 1,170.3 Postretirement Benefits482.9 482.4 Other Long-Term Liabilities651.5 651.8 Stockholders Equity Common stock, par value $.50 per share 32.933.4 Capital in excess of par value Retained earnings1,466.5 1,473.0 Accumulated other comprehensive income (loss) (328.1) (342.8) Total Stockholders Equity 1,171.3 1,163.6$ 5,275.0$ 5,247.7 See Notes to Consolidated Financial Statements (Unaudited). 5. -5- CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (Unaudited) The Black & Decker Corporation and Subsidiaries (Dollars in Millions Except Per Share Data) Accumulated Outstanding Capital in Other Total Common ParExcess ofRetained ComprehensiveStockholdersSharesValuePar ValueEarningsIncome (Loss) Equity Balance at December 31, 200577,357,370$ 38.7$ 398.8$ 1,511.4 $ (385.7)$ 1,563.2 Comprehensive income (loss):Net earnings 113.1 113.1Net (loss) on derivative instruments (net of tax) (1.2)(1.2)Foreign currency translation adjustments, less effect of hedging activities (net of tax) 18.818.8 Comprehensive income 113.1 17.6130.7 Cash dividends ($.38 per share) (28.8) (28.8) Common stock issued under stock-based plans (net of forfeitures) 160,695.112.0 12.1 Purchase and retirement of common stock(1,769,000)(.9) (147.4) (148.3) Balance at April 2, 200675,749,065$ 37.9$263.4 $ 1,595.7 $ (368.1)$ 1,528.9Accumulated Outstanding Capital in Other Total Common ParExcess ofRetained ComprehensiveStockholdersSharesValuePar ValueEarningsIncome (Loss) Equity Balance at December 31, 200666,734,843$ 33.4$ $ 1,473.0 $ (342.8)$ 1,163.6 Comprehensive income (loss):Net earnings 108.1 108.1Net (loss) on derivative instruments (net of tax) (2.8)(2.8)Foreign currency translation adjustments, less effect of hedging activities (net of tax) 11.111.1Amortization of actuarial losses and prior service cost (net of tax) 6.4 6.4 Comprehensive income 108.1 14.7122.8 Cumulative effect of adopting FASB Interpretation No. 48 (7.3)(7.3) Cash dividends ($.42 per share) (27.6) (27.6) Common stock issued under stock-based plans (net of forfeitures) 102,045.110.4 10.5 Purchase and retirement of common stock(1,139,300)(.6) (10.4)(79.7) (90.7) Balance at April 1, 200765,697,588$ 32.9$ $ 1,466.5$ (328.1) $ 1,171.3 See Notes to Consolidated Financial Statements (Unaudited). 6. -6- CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) The Black & Decker Corporation and Subsidiaries (Dollars in Millions)Three Months Ended April 1, 2007April 2, 2006 Operating Activities Net earnings $ 108.1 $ 113.1 Adjustments to reconcile net earnings to cash flow fromoperating activities:Non-cash charges and credits: Depreciation and amortization37.237.4 Stock-based compensation6.4 8.1 Amortization of actuarial losses andprior service cost 6.4 7.2 Other.3 1.7Changes in selected working capital items (net of effects of business acquired): Trade receivables(48.4) (17.6) Inventories(36.2) (30.3) Trade accounts payable 110.0 77.3 Other current liabilities(61.0)(180.5)Other assets and liabilities 30.7(21.2) Cash Flow From Operating Activities153.5(4.8) Investing Activities Capital expenditures(20.1)(23.9) Proceeds from disposal of assets3.6 5.6 Purchase of business, net of cash acquired (160.3) Reduction in purchase price of previously acquired business 16.1 Cash outflow from hedging activities (7.0) (1.8) Other investing activities .3 Cash Flow From Investing Activities (23.5) (164.0) Financing Activities Net decrease in short-term borrowings (24.4) (112.5) Payments on long-term debt(.1) (154.7) Purchase of common stock(90.7) (148.3) Issuance of common stock5.6 6.7 Cash dividends(27.6)(28.8) Cash Flow From Financing Activities (137.2)(437.6) Effect of exchange rate changes on cash .22.8 Decrease In Cash And Cash Equivalents (7.0)(603.6) Cash and cash equivalents at beginning of period 233.3967.6 Cash And Cash Equivalents At End Of Period $ 226.3 $ 364.0 See Notes to Consolidated Financial Statements (Unaudited). 7. -7- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) The Black & Decker Corporation and SubsidiariesNOTE 1: ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited consolidated financial statements of The Black & Decker Corporation (collectively with its subsidiaries, the Corporation) have been prepared in accordance with the instructions to Form 10-Q and do not include all the information and notes required by accounting principles generally accepted in the United States 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.Operating results for the three-month period ended April 1, 2007, 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 Corporations Annual Report on Form 10-K for the year ended December 31, 2006.Certain amounts presented for the three months ended April 2, 2006, have been reclassified to conform to the 2007 presentation.Adoption of FASB Interpretation No. 48 In June 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes an interpretation of FASB Statement No. 109 (FIN 48). FIN 48 provides guidance for the recognition, derecognition and measurement in financial statements of tax positions taken in previously filed tax returns or tax positi