The Black & Decker Corporation

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The Black & Decker Corporation

Contact Information:

headquarters: 701 e. joppa rd. towson, md 21286 phone: (410)716-3900 fax: (410)716-2933 toll free: (800)54-how-to url: http://www.blackanddecker.com

OVERVIEW

The Black & Decker Corporation is the world's largest manufacturer of small power tools and electric lawn and garden tools with sales of $4.94 billion in 1997, compared to $4.91 billion in 1996. Black & Decker is a world leader in the production of specialty fastening systems, glass container-making equipment, steel golf club shafts, and security hardware (deadbolt, locksets, electronic locks). Alligator, Black & Decker, DeWalt, Dynalite, and Dustbuster are a few of the brand names manufactured by Black & Decker. In North America, Black & Decker was also the largest full-line supplier of small household appliances until it sold the home appliance line in 1998.

COMPANY FINANCES

Black & Decker's overall sales have been growing at a slow but steady pace, increasing from $4.76 billion in 1995 to $4.91 billion in 1996 and $4.94 billion in 1997. Of the company's 1997 sales, 42 percent were generated by its power tools division; 14 percent came from commercial and industrial products; 13 percent from household products; 12 percent from security hardware; 7 percent from outdoor products; 7 percent from accessories; and 5 percent from plumbing products. Operating income for the 1995-97 period was more volatile, decreasing from $426.1 million in 1995 to $356.9 million in 1996, but jumping to $489.3 million in 1997.

The company's earnings per share (EPS) also dropped in 1996, from $2.29 in 1995 to $1.66. In 1997 it climbed to $2.35 again, and in May of 1998 was as high as $8.13. Dividends paid to stockholders remained the same from 1996 to 1997, at $.48 per share.

On the stock market Black & Decker was performing well during 1998, with a stock price hovering between $50 and $55 per share. The company's 52-week low was $33 3/4, and its 52-week high was $55 1/16.

ANALYSTS' OPINIONS

Analysts seem to approve of Black & Decker's latest moves. Zacks Investment Research granted the company a "strong buy" rating. Part of this may be due to the company's sale of the home appliance line and return to its roots in the power tool business. Since the announcement of the sale in January of 1998, Black & Decker's stock price has risen close to 15 percent, even more concrete evidence of investor approval.

The American Marketing Association awarded its 1997 Edison Award, the marketing profession's highest honor, to Nolan D. Archibald, chairman, president, and CEO of Black & Decker for making lasting and significant contributions to marketing during his business career. According to the Association, "This man has led the Black & Decker Corporation into a rise of profitability; from his leadership with new product development success, concern for customer service, marketing expertise and strong customer partnerships."

HISTORY

In 1910 two young men in Baltimore, Maryland, S. Duncan Black and Alonzo G. Decker, started The Black & Decker Manufacturing Co. with an initial investment of $1,200. They built specialized machinery, including a milk bottle cap machine, a vest pocket adding machine, a postage stamp splitting and coiling machine, machinery for the U.S. Mint, a candy-dipping machine, and a cotton picker. In 1916 the world's first portable half-inch electric drill was put on the market. This innovation, introducing portability, changed the small tool industry.

The company's first plant opened in Towson, Maryland, in 1917 and remains the company's world headquarters. In 1922 a Canadian subsidiary was formed, and by 1925 the company expanded to include a subsidiary in England (Black & Decker, Ltd.). During the Great Depression of the 1930s the company continued to expand, establishing a subsidiary in Australia and adding on to the Towson plant. The company also began expansion into the consumer housewares market. In 1933 new products were added such as a portable circular saw, an adjustable-clutch electric screwdriver, an electric fender straightener for automotive repair, and an electric heat gun.

Black & Decker went public on the New York Stock Exchange in 1936. During World War II the company manufactured fuses, gun shells, and other ordinances for the military as part of the war effort. After the war, Black & Decker introduced the Home Utility line of small tools for the do-it-yourself market.

In 1951 Alonzo G. Decker became president after S. Duncan Black, president since 1910, died. Black & Decker continued to expand internationally in 1956 by building plants in South Africa and in Victoria, Australia. In that same year, Alonzo G. Decker died and was replaced by Robert D. Black, S. Duncan Black's brother, as president and chairman of the board.

In 1961 the first cordless electric drill was introduced, further bolstering Black & Decker's place in the home tool market. A new concept in household appliance technology revolutionized its industry in 1978 with the introduction of the Dustbuster, a hand-held, cordless vacuum cleaner. Technical sophistication added to the company's product offerings with the introduction of electronic power tools for consumers in 1980, including a drill press with a built-in microcomputer and digital display panel. In 1984 they acquired General Electric Company's small household appliance division and its manufacturing plants. Black & Decker continued to expand globally, buying and leasing manufacturing plants around the world.

In 1988, Black & Decker was inducted into the U.S. Space Foundation's Space Technology Hall of fame for its cordless power tool achievements and its contributions to NASA's Gemini and Apollo programs. In 1968 it developed a unique power head for the Apollo Lunar Surface Drill that removed core samples from the moon; and in 1988 it advanced cordless technology with The Univolt Universal Voltage Charging System, the world's first global battery charger featuring interchangeable energy packs.

STRATEGY

A November 1996 Washington Times article reported, "Black & Decker's business strategy in the 1990s has been straight from the business school textbooks: get back to core operations, boost product development, divest extraneous holdings, and cut the fat out of manufacturing processes and management to improve margins." Innovative product development seems to be the lynchpin of Black & Decker's success. As the world leader in small tool and appliance sales, Black & Decker plans to remain in the forefront by continuing to introduce innovative tools and appliances. The tool-buying public's quest for new and innovative products was illustrated by the SnakeLight flexible flashlight, which was so popular when it hit the market in 1994 that supply trailed its enormous demand for over a year. The company vigorously defended the SnakeLight against patent infringement by Catalina Lighting Inc., which was marketing a flexible flashlight under other brand names.

The company's decision in 1998 to sell off the home appliance line is yet another example of this continuing strategy. By divesting itself of its household appliance division, Black & Decker continues its return to core products. The company's plans in 1998 include highlighting its high-end power tools, distributed under the DeWalt brand name. Since starting the line six years ago, DeWalt has come to represent 20 percent of the company's sales.

FAST FACTS: About The Black & Decker Corporation

Ownership: Black & Decker is a publicly owned company traded on the New York Stock Exchange.

Ticker symbol: BDK

Officers: Nolan D. Archibald, Chmn., Pres. & CEO, 54; Thomas M. Schoewe, Sr. VP & CFO, 45; Leonard A. Strom, Sr. VP Human Resources, 52; Charles E. Fenton, Sr. VP & Gen. Counsel, 49

Employees: 28,600

Principal Subsidiary Companies: Black & Decker Corporation's principal subsidiaries are: Advanced Technology Inc. of Delaware; Black & Decker (U.K.); Black & Decker Canada Inc.; Black & Decker Eletrodomesticos Ltda. (Brazil); Black & Decker G.m.b.H. (Germany); Black & Decker Housewares Ltd. (Singapore); Black & Decker Inc.; Black & Decker (U.S. Pte.) Inc.; Black & Decker Italia S.p.A. (Italy); Black & Decker (Australasia) Pty. Ltd. (Australia); Black & Decker (Belgium) S.A.; Black & Decker, S.A. de C.V. (Mexico); Black & Decker (France) S.A.R.L.; Emhart Corporation; Emhart Deutschland G.m.b.H. (Germany); Emhart Industries, Inc.; Emhart International Ltd. (U.K.); Emhart Scandia AB (Sweden); Planning Research Corporation; and PRC Business Information Systems, Inc.

Chief Competitors: As a manufacturer and marketer of power tools, hardware, and building products, Black & Decker's primary competitors include: Stanley Works; Snap-On; Makita; Bosch; and Sears.

Black & Decker's research and development efforts to create innovative tools are also a major part of the company's manufacturing and marketing strategy. In marketing products, they emphasize the reputation of quality and reliability of the brand name—part of the tradition of the company for many years. The company's corporate attitude, "the customer is king," is demonstrated by concern with pricing, quality, and service. Another leading component of its marketing strategy is Black & Decker's well-advertised service centers. The company operates 170 service centers, with roughly half located in the United States.

INFLUENCES

Because Black & Decker manufactures not only appliances and tools, but also commands a huge worldwide market for its fastening systems (blind riveting; stud welding, and assembly systems; specialty screws; prevailing torque nuts and assemblies; insert systems), and is diversified in other areas such as security hardware, it was somewhat buffered against the cyclical nature of appliance and tool sales in the United States. However, in late 1996 declining profit margins on the core industry of power tools, economic problems in Europe, and high manufacturing start-up costs in Latin American took its toll on Black & Decker profit margins.

David Leibowitz, an analyst with Burnham Securities in New York, was quoted in the Washington Post as saying "Black & Decker has gone through a series of ups and downs in the last seven years, with the downs being largely attributable to Archibald's $2.8-billion purchase in 1989 of Emhart Corp., a manufacturer of door locks, water faucets and computer software." While the purchase gave Black & Decker rights to Kwikset locks and Price Phister faucets, it also gave it a number of incompatible businesses, such as PRC Inc., an information services firm. He also noted that, "A favorable tax adjustment, coupled with the cost savings in Europe, aggressive marketing campaigns in North America and an improving competitive picture in Latin America will help mitigate any earning disappointments."

CURRENT TRENDS

The growth of the "do-it-yourself" and home improvement market after World War II, along with the maturing of the "baby boom" generation (as they began to buy and remodel homes) benefited Black & Decker greatly, and the company situated itself to take advantage of the trend toward home improvement. However, increased competition by tool companies such as Makita and Bosch was impacting strongly upon Black & Decker's hardware sales, and profits in this area were not as great as in earlier years. Renewed focus on the high-end power tool market seems to be helping. The DeWalt brand, one of the company's more expensive lines, seems to appeal to growing numbers of consumers, while the brand was once purchased primarily by contractors and other building professionals.

PRODUCTS

Black & Decker manufactures power tools and accessories, electric lawn and garden tools, glass container-making equipment, security hardware, and many other lesser-known products. These are marketed under various brand names such as Price Pfister, Kwikset, DeWalt, Brew N Go, and Alligator, among others.

As part of Black & Decker's long-held reputation as an innovator, the company often introduces new tools and appliances that are reasonably priced. These have included the DustBuster cordless hand-held vacuum cleaner, Space Saver "under the cabinet" appliances, the SnakeLight flexible flashlight, the FloorBuster cordless room vacuum with full-length upright handle, and the ScumBuster cordless submersible tub and tile scrubber. A new component-type system was the VersaPak System, which consists of 20 products—each of which run off one or two VersaPak interchangeable batteries.

CHRONOLOGY: Key Dates for The Black & Decker Corporation

1910:: The Black & Decker Manufacturing Co. founded
1916:: Markets the first portable 1/2" electric drill
1917:: Opens first plant in Towson, Maryland
1922:: Forms a Canadian subsidiary
1925:: Adds a subsidiary in England
1936:: Black & Decker goes public on the New York Stock Exchange
1946:: Introduces the first power tools for the consumer market
1956:: Builds plants in South Africa and Victoria, Australia
1961:: Introduces the first cordless electric drill
1968:: Creates a tool to remove core samples of the moon for NASA
1978:: Introduces the Dustbuster
1984:: Acquires General Electric Company's small appliance division
1988:: Introduces the Univolt Universal Voltage Charging System
1992:: Introduces the DeWalt line
1994:: Introduces the SnakeLight
1998:: Announces plans to sell home appliance line

Black & Decker also is a world leader in the manufacture of fastening and assembly systems products. These are marketed under the trademarks and trade names Emhart Fastening Teknologies, Dodge, Gripco, Gripco Assemblies, HeliCoil, NPR, POP, Tucker, Warren, DrilKwik, Jack Nut, KALEI, Plastifast, PLASTI-KWICK, POP-matic, POP NUT, WELL-NUT, Parker-Kalon, and others. The principal markets for these products are the automotive, transportation, construction, electronics, aerospace, machine tool, and appliance industries.

GLOBAL PRESENCE

Black & Decker has a major presence in international markets and plans to keep expanding global markets. Its products are currently marketed in more than 100 countries. In 1997, Europe represented 28 percent of Black & Decker's global sales, or $2.85 billion. Other countries outside the United States accounted for 14 percent of worldwide sales, or $716 million. Altogether, foreign operations account for 42 percent of the company's revenues. In 1997, European operations improved despite the impact of currency fluctuation, according the Black & Decker's annual report. Latin America was also performing well; however, Brazil and Asia experienced some difficulties. Black & Decker planned to restructure its global operations in 1998, closing plants in Canada, Singapore, and Italy, and eliminating some design centers. They also planned to consolidate distribution and transportation operations in Europe, centralize services, and streamline management.

The Black & Decker Manufacturing Company began its development into a global business in the early 1920s. Burgeoning overseas sales towards the end of World War I led the company to expand into Canada, Great Britain, the Soviet Union, Australia, and Japan. With the introduction of the world's first power tools for the consumer market in 1946, the success of this inexpensive Home Utility line was expanded to include a set of circular saws in 1949, in addition to a finishing sander and jigsaw in 1953. The company also continued to market new tools for professional users, such as an impact socket wrench in 1949, and two heavy-duty routers in 1957. By 1969 foreign operations accounted for 43 percent of Black & Decker's sales and earnings. In 1973 the Workmate portable work-table and accessories were first marketed in England, and proved successful around the world.

TIM "THE TOOL MAN" TAYLOR WOULD BE PROUD

Looking to add a new deck to the back of the house? Or perhaps just anchoring some screws for that latest picture on the wall? Dewalt, the high-end power tool division of Black and Decker, has become one of the leading choices of today's consumers who are trying to keep up with the Joneses. These high-end power tools, once the domain of professional contractors and tradesmen, have moved into the homes of consumers, who are no longer satisfied with ordinary household equipment. Today, no self-respecting handyman or woman would be caught using anything less than a professional quality power tool for those necessary household chores. So, although the only time these tools may come out of the box is at Christmas to assemble presents, high-end power tools have become a status symbol in many of today's homes.

EMPLOYMENT

Of the 28,600 persons employed by Black & Decker's operations worldwide, approximately 2,000 employees in the United States are covered by collective bargaining agreements. The corporation also has government-mandated collective bargaining arrangements or union contracts with employees in other countries. Black & Decker's operations had not been affected significantly by work stoppages in the 1990s. In the opinion of company management, employee relations were good.