1. UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED COMMISSION FILE NUMBER
December 31, 2006 1-1553
THE BLACK & DECKER CORPORATION
(Exact name of registrant as specified in its charter)
Maryland 52-0248090
(State of Incorporation) (I.R.S. Employer Identification Number)
Towson, Maryland 21286
(Address of principal executive offices) (Zip Code)
410-716-3900
Registrant’s telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, par value $.50 per share New York Stock Exchange
None
Securities registered pursuant to Section 12(g) of the Act:
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes X No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or
Section 15(d) of the Act. Yes No X
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 twelve 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. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K
is not contained herein, and will not be contained, to the best of registrant’s knowledge, in defini-
tive proxy or information statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
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. (check one):
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 Act).
Yes No X
The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 30, 2006,
was $6.18 billion.
The number of shares of Common Stock outstanding as of January 26, 2007, was 65,600,202.
The exhibit index as required by Item 601(a) of Regulation S-K is included in Item 15 of Part IV of this report.
Documents Incorporated by Reference: Portions of the registrant’s definitive Proxy Statement for the
2007 Annual Meeting of Stockholders are incorporated by reference in Part III of this Report.

2. PART I
ITEM 1. BUSINESS mation about the discontinued European security
hardware business, see the discussion in Note 3
(a) General Development of Notes to Consolidated Financial Statements
of Business included in Item 8 of Part II of this report.
The Black & Decker Corporation (collectively with
(b) Financial Information About
its subsidiaries, the Corporation), incorporated in
Business Segments
M
aryland in 1910, is a leading global manufacturer
and marketer of power tools and accessories, The Corporation operates in three reportable
hardware and home improvement products, and business segments: Power Tools and Accessories,
technology-based fastening systems. With products including consumer and industrial power tools
and services marketed in over 100 countries, the and accessories, lawn and garden tools, electric
C
orporation enjoys worldwide recognition of its cleaning, automotive, and lighting products, and
strong brand names and a superior reputation for product service; Hardware and Home Improvement,
quality, design, innovation, and value. including security hardware and plumbing products;
and Fastening and Assembly Systems. For additional
The Corporation is one of the world’s leading
information about these segments, see Note 18
p
roducers of power tools, power tool accesso-
of Notes to Consolidated Financial Statements
ries, and residential security hardware, and the
included in Item 8 of Part II, and Management’s
Corporation’s product lines hold leading market
D
iscussion and Analysis of Financial Condition
share positions in these industries. The Corpora-
and Results of Operations included in Item 7 of
tion is also a major global supplier of engineered
Part II of this report.
fastening and assembly systems. The Corpora-
tion is one of the leading producers of faucets
(c) Narrative Description
in North America. These assertions are based on
of the Business
total volume of sales of products compared to
the total market for those products and are sup- The following is a brief description of each of the
ported by market research studies sponsored by Corporation’s reportable business segments.
the Corporation as well as independent industry
POWER TOOLS AND ACCESSORIES
s
tatistics available through various trade organiza-
tions and periodicals, internally generated market The Power Tools and Accessories segment has
data, and other sources. worldwide responsibility for the manufacture
and sale of consumer (home use) and industrial
During the first quarter of 2006, the Corporation
corded and cordless electric power tools and equip-
acquired Vector Products, Inc. (Vector). The ad-
ment, lawn and garden tools, consumer portable
dition of Vector to the Corporation’s Power Tools
power products, home products, accessories and
and Accessories segment allows the Corporation
attachments for power tools, and product service.
to offer customers a broader range of products.
In addition, the Power Tools and Accessories
During the fourth quarter of 2004, the Corpora- segment has responsibility for the sale of security
tion acquired the Porter-Cable and Delta Tools hardware to customers in Mexico, Central America,
Group from Pentair, Inc. The Porter-Cable and the Caribbean, and South America; for the sale
Delta Tools Group (also referred to herein as the of plumbing products to customers outside of
“Tools Group”) included the Porter-Cable, Delta, the United States and Canada; and for sales of
DeVilbiss Air Power Company, Oldham Saw, and household products, principally in Europe and
FLEX businesses. The Corporation sold the FLEX Brazil.
business in November 2005.
Power tools and equipment include drills, screw-
In November 2005, the Corporation completed drivers, impact wrenches and drivers, hammers,
the sale of DOM security hardware. In January wet/dry vacuums, lights, radio/chargers, saws,
2004, the Corporation completed the sale of two grinders, band saws, plate joiners, jointers, lathes,
European security hardware businesses, Corbin dust management systems, routers, planers,
and NEMEF . The divested businesses are reflected sanders, benchtop and stationary machinery, air
as discontinued operations in the Consolidated tools, building instruments, air compressors, gen-
Financial Statements included in Item 8 of Part erators, laser products, jobsite security systems,
II of this report, and as such, operating results, and WORKMATE® project centers and related
assets and liabilities, and cash flows of the dis- products. Lawn and garden tools include hedge
continued European security hardware business t
rimmers, string trimmers, lawn mowers, edgers,
have been reported separately from the continuing pruners, shears, shrubbers, blower/vacuums,
power sprayers, pressure washers, and related
operations of the Corporation. For additional infor-
1
BLACK & DECKER

3. accessories. Consumer portable power prod- The Corporation’s product service program sup-
ports its power tools and lawn and garden tools.
ucts include inverters, jump-starters, vehicle
R
eplacement parts and product repair services are
battery chargers, rechargeable spotlights, and
available through a network of company-operated
other related products. Home products include
s
ervice centers, which are identified and listed in
stick, canister and hand-held vacuums; flexible
p
roduct information material generally included in
flashlights; and wet scrubbers. Power tool ac-
product packaging. At December 31, 2006, there
cessories include drill bits, hammer bits, router
were approximately 125 such service centers, of
bits, hacksaws and blades, circular saw blades,
which roughly three-quarters were located in the
jig and reciprocating saw blades, screwdriver
United States. The remainder was located around
bits and quick-change systems, bonded and
the world, primarily in Canada and Asia. These
other abrasives, and worksite tool belts and bags.
c
ompany-operated service centers are supple-
P
roduct service provides replacement parts and
mented by several hundred authorized service
repair and maintenance of power tools, equip-
centers operated by independent local owners.
ment, and lawn and garden tools.
The Corporation also operates reconditioning
Power tools, lawn and garden tools, portable c
enters in which power tools, lawn and garden
power products, home products, and acces- tools, and electric cleaning and lighting products
sories are marketed around the world under are reconditioned and then re-sold through numer-
the BLACK & DECKER name as well as other ous company-operated factory outlets and service
trademarks, and trade names, including, with- c
enters and various independent distributors.
out limitation, BLACK & DECKER; ORANGE AND
Most of the Corporation’s consumer power tools,
BLACK COLOR SCHEME; POWERFUL SOLUTIONS;
l
awn and garden tools, and electric cleaning,
FIRESTORM; GELMAX COMFORT GRIP; MOUSE;
automotive, and lighting products sold in the
BULLSEYE; PIVOT DRIVER; STORMSTATION;
United States carry a two-year warranty, pursu-
WORKMATE; BLACK & DECKER XT; VERSAPAK;
ant to which the consumer can return defective
SMARTDRIVER; QUANTUM PRO; CYCLONE;
p
roducts during the two years following the
N AV I G ATO R ; D R AG S T E R ; S A N D S TO R M ;
p
urchase in exchange for a replacement product
PROJECTMATE; PIVOTPLUS; QUICK CLAMP;
or repair at no cost to the consumer. Most of
SIGHT LINE; CROSSFIRE; CROSSHAIR; 360°;
the Corporation’s industrial power tools sold in
QUATTRO; DECORMATE; LASERCROSS; AUTO-
the United States carry a one-year service war-
WRENCH; SHOPMASTER BY DELTA; DEWALT;
ranty and a three-year warranty for manufacturing
YELLOW AND BLACK COLOR SCHEME; GUAR-
defects. Products sold outside of the United States
ANTEED TOUGH; XRP; SITELOCK; PORTER-
generally have varying warranty arrangements,
CABLE; GRAY AND BLACK COLOR SCHEME;
depending upon local market conditions and laws
TIGER SAW; PORTA-BAND; POWERBACK;
and regulations.
EASY AIR; JOB BOSS; DELTA; THE DELTA
TRIANGLE LOGO; UNISAW; BIESEMEYER; The Corporation’s product offerings in the Power
BLACK AND WHITE COLOR SCHEME; DAPC; Tools and Accessories segment are sold primarily
EMGLO; AFS AUTOMATIC FEED SPOOL; GROOM to retailers, wholesalers, distributors, and jobbers,
‘N’ EDGE; HEDGE HOG; GRASS HOG; EDGE HOG; a
lthough some discontinued or reconditioned pow-
LEAF HOG; LAWN HOG; STRIMMER; REFLEX; er tools, lawn and garden tools, consumer portable
VAC ‘N’ MULCH; EXCELL; ALLIGATOR; TRIM power products, and electric cleaning and light-
‘N’ EDGE; HDL; TOUGH TRUCK; FLEX TUBE; ing products are sold through company-operated
VECTOR; ELECTROMATE; SIMPLE START; DUST- service centers and factory outlets directly to end
BUSTER; SNAKELIGHT; SCUMBUSTER; STEAM- u
sers. Sales to two of the segment’s customers,
BUSTER; CYCLOPRO; SWEEP & COLLECT; CLICK The Home Depot and Lowe’s Home Improvement
& GO; B&D; BULLET; QUANTUM PRO; PIRANHA; Warehouse, accounted for greater than 10% of the
SCORPION; QUICK CONNECT; PILOT POINT; Corporation’s consolidated sales for 2006, 2005,
RAPID LOAD; ROCK CARBIDE; TOUGH CASE; MAX and 2004. For additional information regarding
LIFE; RAZOR; OLDHAM; DEWALT SERVICENET; sales to The Home Depot and Lowe’s Home
DROP BOX EXPRESS; and GUARANTEED REPAIR Improvement Warehouse, see Note 18 of Notes
COST (GRC). to Consolidated Financial Statements included in
Item 8 of Part II of this report.
The composition of the Corporation’s sales by
product groups for 2006, 2005, and 2004 is The principal materials used in the manufacturing
included in Note 18 of Notes to Consolidated of products in the Power Tools and Accessories
Financial Statements included in Item 8 of Part II segment are batteries, copper, aluminum, steel,
of this report. Within each product group shown, certain electronic components, engines, and plas-
there existed no individual product that accounted tics. These materials are used in various forms.
for greater than 10% of the Corporation’s consoli- For example, aluminum or steel may be used in
dated sales for 2006, 2005, or 2004. the form of wire, sheet, bar, and strip stock.
2 BLACK & DECKER

4. The materials used in the various manufacturing For additional information with respect to these
p
rocesses are purchased on the open market, and and other properties owned or leased by the Cor-
the majority are available through multiple sources poration, see Item 2, “Properties.”
and are in adequate supply. The Corporation has
The Corporation holds various patents and licens-
experienced no significant work stoppages to date
es on many of its products and processes in the
as a result of shortages of materials.
Power Tools and Accessories segment. Although
The Corporation has certain long-term commit- these patents and licenses are important, the Cor-
ments for the purchase of various component poration is not materially dependent on such pat-
parts and raw materials and believes that it is ents or licenses with respect to its operations.
unlikely that any of these agreements would be
The Corporation holds various trademarks that are
terminated prematurely. Alternate sources of sup-
e
mployed in its businesses and operates under
ply at competitive prices are available for most
v
arious trade names, some of which are stated
items for which long-term commitments exist.
previously. The Corporation believes that these
Because the Corporation is a leading producer of
trademarks and trade names are important to the
power tools and accessories, in a limited number
m
arketing and distribution of its products.
of instances, the magnitude of the Corporation’s
purchases of certain items is of such significance A significant portion of the Corporation’s sales
that a change in the Corporation’s established in the Power Tools and Accessories segment is
supply relationship may cause disruption in the derived from the do-it-yourself and home modern-
marketplace and/or a temporary price imbalance. ization markets, which generally are not seasonal
While the Corporation believes that the termination in nature. However, sales of certain consumer and
of any of these commitments would not have a industrial power tools tend to be higher during the
material adverse effect on the operating results of period immediately preceding the Christmas gift-
the Power Tools and Accessories segment over the giving season, while the sales of most lawn and
long term, the termination of a limited number of garden tools are at their peak during the late winter
these commitments would have an adverse effect and early spring period. Most of the Corporation’s
over the short term. In this regard, the Corporation other product lines within this segment generally
defines long term as a period of time in excess are not seasonal in nature, but are influenced by
of 12 months and short term as a period of time other general economic trends.
under 12 months.
The Corporation is one of the world’s leaders in
Principal manufacturing and assembly facilities of the manufacturing and marketing of portable
the power tools, lawn and garden tools, electric power tools, electric lawn and garden tools, and
c
leaning and lighting products, and accessories accessories. Worldwide, the markets in which
b
usinesses the
in United States located Jackson,
are in the Corporation sells these products are highly
Tennessee; Decatur, Arkansas; Shelbyville, Ken- c
ompetitive on the basis of price, quality, and af-
tucky; and Tampa, Florida. The principal distri- ter-sale service. A number of competing domestic
bution facilities in the United States, other than and foreign companies are strong, well-established
those located at the manufacturing and assembly manufacturers that compete on a global basis.
f
acilities listed above, are located in Fort Mill, Some of these companies manufacture products
South Carolina, and Rialto, California. that are competitive with a number of the Corpo-
ration’s product lines. Other competitors restrict
Principal manufacturing and assembly facilities
their operations to fewer categories, and some
of the power tools, lawn and garden tools, elec-
offer only a narrow range of competitive products.
tric cleaning and lighting products, and acces-
C
ompetition from certain of these manufacturers
sories businesses outside of the United States
has been intense in recent years and is expected
are located in Suzhou, China; Usti nad Labem,
to ontinue.
c
Czech Republic; Buchlberg, ermany; Perugia,
G
Italy; Spennymoor, England; Reynosa, Mexico;
HARDWARE AND HOME IMPROvEMENT
and Uberaba, Brazil. In addition to the principal
facilities described above, the manufacture and The Hardware and Home Improvement segment
assembly of products for the Power Tools and has worldwide responsibility for the manufacture
Accessories segment also occurs at the facility and sale of security hardware products (except for
of its 50%-owned joint venture located in Shen the sale of security hardware in Mexico, Central
Zhen, China. The principal distribution facilities America, the Caribbean, and South America). It
o
utside of the United States, other than those also has responsibility for the manufacture of
l
ocated at the manufacturing facilities listed above, plumbing products and for the sale of plumbing
consist of a central-European distribution center products to customers in the United States and
in Tongeren, Belgium, and facilities in Aarschot, Canada. Security hardware products consist of
Belgium; Northampton, England; Dubai, United residential and light commercial door locksets,
Arab Emirates; and Brockville, Canada.
3
BLACK & DECKER

5. e
lectronic keyless entry systems, exit devices, key- sold outside of the United States for residential
use generally have similar warranty arrangements.
ing systems, tubular and mortise door locksets,
Such arrangements vary, however, depending upon
general hardware, decorative hardware, lamps, and
local market conditions and laws and regulations.
brass ornaments. General hardware includes door
Most of the Corporation’s plumbing products sold
hinges, cabinet hinges, door stops, kick plates,
in the United States carry a lifetime warranty with
and house numbers. Decorative hardware includes
r
espect to function and finish, pursuant to which
cabinet hardware, switchplates, door pulls, and
the consumer can return defective product in
push plates. Plumbing products consist of a variety
exchange for a replacement product or repair at
of conventional and decorative lavatory, kitchen,
no cost to the consumer.
and tub and shower faucets, bath and kitchen
a
ccessories, and replacement parts.
The Corporation’s product offerings in the Hard-
ware and Home Improvement segment are sold
Security hardware products are marketed under a
primarily to retailers, wholesalers, distributors,
variety of trademarks and trade names, including,
and jobbers. Certain security hardware products
w
ithout limitation, KWIKSET SECURITY; KWIKSET
are sold to commercial, institutional, and industrial
M
AXIMUM SECURITY; KWIKSET ULTRAMAX;
customers. Sales to two of the segment’s custom-
SIGNATURES; KWIKSET; BEAUTY OF STRENGTH;
ers, The Home Depot and Lowe’s Home Improve-
BLACK & DECKER; TYLO; POLO; AVALON;
ment Warehouse, accounted for greater than
ASHFIELD; SMARTSCAN; SMARTKEY; SMART-
10% of the Corporation’s consolidated sales for
CODE; VENETIAN BRONZE; POWERBOLT; KWIK
2006, 2005, and 2004. For additional information
INSTALL; GEO; SAFE-LOCK BY BLACK & DECKER;
r
egarding sales to The Home Depot and Lowe’s
BALDWIN; THE ESTATE COLLECTION; THE
Home Improvement Warehouse, see Note 18 of
IMAGES COLLECTION; ARCHETYPES; LIFETIME
Notes to Consolidated Financial Statements in-
F I N I S H ; T I M E L E S S C R A F T S M A N S H I P ;
cluded in Item 8 of Part II of this report.
L
OGAN; SPRINGFIELD; HAMILTON; BLAKE-
LY; MANCHESTER; CANTERBURY; MADISON;
The principal materials used in the manufacturing
STONEGATE; EDINBURGH; KENSINGTON;
of products in the Hardware and Home Improve-
BRISTOL; TREMONT; PEYTON; PASADENA; RICH-
ment segment are zamak, brass, aluminum,
LAND; WEISER; WEISER LOCK; COLLECTIONS
steel, and ceramics. The materials used in the
BY WEISER LOCK; WELCOME HOME SERIES;
various manufacturing processes are purchased
ELEMENTS SERIES; BASICS BY WEISER LOCK;
on the open market, and the majority are available
B
RILLIANCE LIFETIME ANTI-TARNISH FINISH;
through multiple sources and are in adequate sup-
POWERBOLT; POWERBOLT KEYLESS ACCESS ply. The Corporation has experienced no significant
S
YSTEM; WEISERBOLT; and ENTRYSETS. work stoppages to date as a result of shortages
Plumbing products are marketed under the of materials.
trademarks and trade names PRICE PFISTER;
The Corporation has certain long-term com-
CLASSIC SERIES BY PRICE PFISTER; PRICE
mitments for the purchase of various finished
PFISTER PROFESSIONAL SERIES; BACH; SOLO;
goods, component parts, and raw materials
CONTEMPRA; MARIELLE; CARMEL; PARISA;
and believes that it is unlikely that any of these
S
AVANNAH; CATALINA; GEORGETOWN; TREVISO;
agreements would be terminated prematurely.
AVALON; and ASHFIELD.
Alternate sources of supply at competitive prices
The composition of the Corporation’s sales by are available for most items for which long-term
p
roduct groups for 2006, 2005, and 2004 is commitments exist. Because the Corporation is a
included in Note 18 of Notes to Consolidated leading producer of residential security hardware
Financial Statements included in Item 8 of Part II and faucets, in a limited number of instances, the
of this report. Within each product group shown, magnitude of the Corporation’s purchases of cer-
there existed no individual product that accounted tain items is of such significance that a change in
for greater than 10% of the Corporation’s consoli- the Corporation’s established supply relationship
dated sales for 2006, 2005, or 2004. may cause disruption in the marketplace and/or
a temporary price imbalance. While the Corpora-
Most of the Corporation’s security hardware
tion believes that the termination of any of these
p
roducts sold in the United States carry a war-
commitments would not have a material adverse
ranty, pursuant to which the consumer can return
effect on the operating results of the Hardware
defective product during the warranty term in
and Home Improvement segment over the long
exchange for a replacement product at no cost
term, the termination of a limited number of these
to the consumer. Warranty terms vary by product
commitments would have an adverse effect over
and carry a lifetime warranty with respect to
the short term. In this regard, the Corporation
mechanical operations and range from a 5-year to
defines long term as a period of time in excess
a lifetime warranty with respect to finish. Products
4 BLACK & DECKER

6. of 12 months and short term as a period of time ture products that are competitive with a number
of the Corporation’s product lines. Other competi-
under 12 months.
tors restrict their operations to fewer categories,
From time to time, the Corporation enters into
and some offer only a narrow range of competi-
commodity hedges on certain raw materials used
tive products. Competition from certain of these
in the manufacturing process to reduce the risk
manufacturers has been intense in recent years
of market price fluctuations. As of December 31, and is expected to continue.
2006, the amount of commodity hedges outstand-
ing was not material. FASTENING AND ASSEMBLY SYSTEMS
Principal manufacturing and assembly facilities of The Corporation’s Fastening and Assembly Systems
the Hardware and Home Improvement segment in segment has worldwide responsibility for the de-
the United States are located in Denison, Texas; velopment, manufacture and sale of an extensive
and Reading, Pennsylvania. line of metal and plastic fasteners and engineered
fastening systems for commercial applications,
Principal manufacturing and assembly facilities
including blind riveting, stud welding, specialty
of the Hardware and Home Improvement seg-
screws, prevailing torque nuts and assemblies,
ment outside of the United States are located in
insert systems, metal and plastic fasteners, and
Mexicali and Nogales, Mexico. The principal dis-
self-piercing riveting systems. The fastening and
tribution facilities in the United States, other than
assembly systems products are marketed under a
those located at the manufacturing and assembly
variety of trademarks and trade names, including,
facilities listed above, are located in Mira Loma,
without limitation, EMHART TEKNOLOGIES;
C
alifornia; and Charlotte, North Carolina.
EMHART FASTENING TEKNOLOGIES; EMHART;
For additional information with respect to these AUTOSET; DODGE; DRIL-KWICK; F-SERIES; GRIPCO;
and other properties owned or leased by the GRIPCO ASSEMBLIES; HELI-COIL; JACK NUT;
C
orporation, see Item 2, “Properties.” KALEI; MASTERFIX; NPR; NUT-FAST; PARKER-
KALON; PLASTIFAST; PLASTI-KWICK; POINT &
The Corporation holds various patents and
SET; POP; POP-LOK; POPMATIC; POPNUT; POP-
l
icenses on many of its products and processes
SERT; POWERLINK; PROSET; SMARTSET; SWS;
in the Hardware and Home Improvement seg-
TUCKER; ULTRA-GRIP; ULTRASERT; WARREN;
ment. Although these patents and licenses are
WELDFAST; and WELL-NUT. The Fastening and
important, the Corporation is not materially
A
ssembly Systems segment provides platform-
d
ependent on such patents or licenses with respect
m
anagement and engineering services in addition
to its operations.
to the manufacture and sale of the products
The Corporation holds various trademarks that p
reviously described.
are employed in its businesses and operates
The composition of the Corporation’s sales by
under various trade names, some of which are
p
roduct groups for 2006, 2005, and 2004 is
stated above. The Corporation believes that these
included in Note 18 of Notes to Consolidated
trademarks and trade names are important to the
Financial Statements included in Item 8 of Part II
m
arketing and distribution of its products.
of this report. Within each product group shown,
A significant portion of the Corporation’s sales there existed no individual product that accounted
in the Hardware and Home Improvement seg- for greater than 10% of the Corporation’s consoli-
ment is derived from the do-it-yourself and home dated sales for 2006, 2005, or 2004.
modernization markets, which generally are not
The principal markets for these products include
seasonal in nature, but are influenced by trends
the automotive, transportation, electronics, aero-
in the residential and commercial construction
space, machine tool, and appliance industries.
m
arkets and other general economic trends.
S
ubstantial sales are made to automotive manu-
The Corporation is one of the world’s leading facturers worldwide.
p
roducers of residential security hardware and
Products are marketed directly to customers and
is one of the leading producers of faucets in
also through distributors and representatives.
North America. Worldwide, the markets in which
These products face competition from many
the Corporation sells these products are highly
manufacturers in several countries. Product
c
ompetitive on the basis of price, quality, and
q
uality, performance, reliability, price, delivery,
after-sale service. A number of competing
and technical and application engineering services
domestic and foreign companies are strong, well-
are the primary competitive factors. There is little
established manufacturers that compete on a
seasonal variation in sales.
g
lobal basis. Some of these companies manufac-
5
BLACK & DECKER

7. The Corporation owns a number of United States As of December 31, 2006, the Corporation
e
mployed approximately 25,500 persons in its
and foreign patents, trademarks, and license
operations worldwide. Approximately 500 employ-
rights relating to the fastening and assembly
ees in the United States are covered by collective
s
ystems business. While the Corporation considers
bargaining agreements. During 2006, no collective
those patents, trademarks, and license rights to
bargaining agreements were negotiated. One
be valuable, it is not materially dependent upon
agreement is scheduled for negotiation during
such patents or license rights with respect to
2007. Also, the Corporation has government-
its operations.
m
andated collective bargaining arrangements or
Principal manufacturing facilities of the Fastening union contracts with employees in other countries.
and Assembly Systems segment in the United The Corporation’s operations have not been
States are located in Danbury, Connecticut; Mont- a
ffected significantly by work stoppages and, in
pelier, Indiana; Campbellsville and Hopkinsville, the opinion of management, employee relations
Kentucky; and Chesterfield, Michigan. Principal are good. As more fully described under the
manufacturing and assembly facilities outside caption “Restructuring and Integration Actions”
of the United States are located in Birmingham, in Management’s Discussion and Analysis of
England; Giessen, Germany; and Toyohashi, Japan. Financial Condition and Results of Operations,
For additional information with respect to these the Corporation is committed to continuous pro-
and other properties owned or leased by the ductivity improvement and continues to evaluate
C
orporation, see Item 2, “Properties.” opportunities to reduce fixed costs, simplify or
improve processes, and eliminate excess capac-
The raw materials used in the fastening and as-
ity. As a consequence, the Corporation may,
sembly systems business consist primarily of
from time to time, transfer production from one
ferrous and nonferrous metals in the form of wire,
manufacturing facility to another, outsource cer-
bar stock, and strip and sheet metals; plastics;
tain production, or close certain manufacturing
and rubber. These materials are readily available
facilities. Such production transfers, outsourcing,
from a number of suppliers.
and/or facility closures may result in a dete-
rioration of employee relations at the impacted
OTHER INFORMATION
l
ocations or elsewhere in the Corporation.
The Corporation’s product development program
The Corporation’s operations are subject to foreign,
for the Power Tools and Accessories segment is
f
ederal, state, and local environmental laws and
coordinated from the Corporation’s headquarters
r
egulations. Many foreign, federal, state, and local
in Towson, Maryland. Additionally, product
g
overnments also have enacted laws and regula-
d
evelopment activities are performed at facilities
tions that govern the labeling and packaging of
within the United States in Fort Lauderdale, Florida,
products and limit the sale of products containing
H
ampstead, Maryland, and Jackson, Tennessee, and
certain materials deemed to be environmentally
at facilities in Maltby and Spennymoor, England;
s
ensitive. These laws and regulations not only
Brockville, Canada; Perugia, Italy; Suzhou, China;
limit the acceptable methods for the discharge
Buchlberg and Idstein, Germany; Mooroolbark,
of pollutants and the disposal of products and
A
ustralia; Uberaba, Brazil; and Reynosa, Mexico.
components that contain certain substances, but
Product development activities for the Hardware also require that products be designed in a man-
and Home Improvement segment are performed ner to permit easy recycling or proper disposal
at facilities in Lake Forest, California, and Reading, of environmentally sensitive components such as
Pennsylvania. nickel cadmium batteries. The Corporation seeks
to comply fully with these laws and regulations.
Product development activities for the Fastening
Although compliance involves continuing costs,
and Assembly Systems segment are performed
the ongoing costs of compliance with existing
at facilities within the United States in Danbury
e
nvironmental laws and regulations have not had,
and Shelton, Connecticut; Montpelier, Indiana;
nor are they expected to have, a material adverse
Campbellsville, Kentucky; Chesterfield and
effect upon the Corporation’s capital expenditures
F
armington Hills, Michigan; and at facilities in
or financial position.
Birmingham, England; Maastricht, Netherlands;
Giessen, Germany; and Toyohashi, Japan. Pursuant to authority granted under the Compre-
hensive Environmental Response, Compensation
Costs associated with development of new prod-
and Liability Act of 1980 (CERCLA), the United
ucts and changes to existing products are charged
States Environmental Protection Agency (EPA) has
to operations as incurred. See Note 1 of Notes
issued a National Priority List (NPL) of sites at
to Consolidated Financial Statements included
which action is to be taken to mitigate the risk of
in Item 8 of Part II of this report for amounts of
r
elease of hazardous substances into the environ-
expenditures for product development activities.
6 BLACK & DECKER

8. ment. The Corporation is engaged in continuing particular fiscal quarter or year, in the opinion
activities with regard to various sites on the NPL of management there exists no known potential
and other sites covered under analogous state exposures that would have a material adverse ef-
environmental laws. As of December 31, 2006, fect on the financial condition or on the financial
the Corporation had been identified as a poten- results of the Corporation beyond any such fiscal
tially responsible party (PRP) in connection with quarter or year.
a
pproximately 25 sites being investigated by fed-
eral or state agencies under CERCLA or analogous (d) Financial Information
state environmental laws. The Corporation also is
About Geographic Areas
engaged in site investigations and remedial activi-
ties to address environmental contamination from Reference is made to Note 18 of Notes to
past operations at current and former manufactur- C
onsolidated Financial Statements, entitled “Busi-
ing facilities in the United States and abroad. ness Segments and Geographic Information”,
included in Item 8 of Part II of this report.
To minimize the Corporation’s potential liability
with respect to these sites, management has under-
(e) Available Information
taken, when appropriate, active participation in
steering committees established at the sites and
The Corporation files annual, quarterly, and cur-
has agreed to remediation through consent orders
rent reports, proxy statements, and other docu-
with the appropriate government agencies. Due to
ments with the Securities and Exchange Commis-
uncertainty as to the Corporation’s involvement in
sion (SEC) under the Securities Exchange Act of
some of the sites, uncertainty over the remedial
1934 (the Exchange Act). The public may read
m
easures to be adopted, and the fact that
and copy any materials that the Corporation files
i
mposition of joint and several liability with the
with the SEC at the SEC’s Public Reference Room
right of contribution is possible under CERCLA
at 100 F Street, NE, Washington, DC 20549. The
and other laws and regulations, the liability of
public may obtain information on the operation
the Corporation with respect to any site at which
of the Public Reference Room by calling the SEC
remedial measures have not been completed can-
at 1-800-SEC-0330. Also, the SEC maintains an
not be established with certainty. On the basis of
Internet website that contains reports, proxy and
periodic reviews conducted with respect to these
i
nformation statements, and other information
sites, however, the Corporation has established
r
egarding issuers, including the Corporation, that
appropriate liability accruals. The Corporation’s
file electronically with the SEC. The public can
estimate of the costs associated with environmen-
o
btain any documents that the Corporation files
tal exposures is accrued if, in management’s judg-
with the SEC at http://www.sec.gov.
ment, the likelihood of a loss is probable and the
amount of the loss can be reasonably estimated. The Corporation also makes available free of charge on
or through its Internet website (http://www.bdk.com)
As of December 31, 2006, the Corporation’s
the Corporation’s Annual Report on Form 10-K,
a
ggregate probable exposure with respect to
Q
uarterly Reports on Form 10-Q, Current Reports
environmental liabilities, for which accruals have
on Form 8-K, and, if applicable, amendments
been established in the consolidated financial
to those reports filed or furnished pursuant to
statements, was $76.4 million. In the opinion of
Section 13(a) of the Exchange Act as soon as
management, the amount accrued for probable
r
easonably practicable after the Corporation
exposure for aggregate environmental liabilities is
e
lectronically files such material with, or furnishes
adequate and, accordingly, the ultimate resolution
it to, the SEC.
of these matters is not expected to have a material
adverse effect on the Corporation’s consolidated
Black & Decker’s Corporate Governance Poli-
financial statements. As of December 31, 2006, cies and Procedures Statement is available free
the Corporation had no known probable but inesti- of charge on or through its Internet website
mable exposures relating to environmental matters (http://www.bdk.com) or in print by calling (800)
that are expected to have a material adverse effect 992-3042 or (410) 716-2914. The Statement
on the Corporation. There can be no assurance, contains charters of the standing committees of
however, that unanticipated events will not require the Board of Directors, the Code of Ethics and
the Corporation to increase the amount it has Standards of Conduct, and the Code of Ethics for
accrued for any environmental matter or accrue Senior Financial Officers.
for an environmental matter that has not been
In April 2006, the Corporation submitted to the
p
reviously accrued because it was not considered
New York Stock Exchange the CEO certification
probable. While it is possible that the increase or
r
equired by Section 303A.12(a) of the New York
establishment of an accrual could have a mate-
Stock Exchange Listed Company Manual.
rial adverse effect on the financial results for any
7
BLACK & DECKER

9. (f) Executive Officers and • LES H. IRELAND – 42
Other Senior Officers Vice President of the Corporation and
President – Europe/Middle East/Africa,
of the Corporation
Power Tools and Accessories,
The current Executive Officers and Other Senior
January 2005 – present;
O
fficers of the Corporation, their ages, current
Vice President of the Corporation and
offices or positions, and their business experience
Managing Director – Commercial Operations,
during the past five years are set forth below.
Europe, Black & Decker Consumer Group,
• NOLAN D. ARCHIBALD – 63 Power Tools and Accessories Group,
November 2001 – January 2005.
Chairman, President, and
Chief Executive Officer,
• THOMAS D. KOOS – 43
January 1990 – present.
Group Vice President of the Corporation and
President – Consumer Products Group,
• BRUCE W. BROOKS – 42
Power Tools and Accessories,
Vice President of the Corporation and President –
March 2004 – present;
Construction Tools, Industrial Products Group,
Power Tools and Accessories, Vice President of the Corporation and President –
May 2005 – present; Black & Decker Consumer Products,
Power Tools and Accessories Group,
Vice President and General Manager –
January 2001 – March 2004.
Construction Tools, Industrial Products Group,
Power Tools and Accessories,
• MICHAEL D. MANGAN – 50
October 2004 – May 2005;
Senior Vice President and Chief Financial Officer,
Vice President Marketing – DeWALT Professional
January 2000 – present.
Products, Power Tools and Accessories Group,
July 2003 – October 2004; • PAUL F. McBRIDE – 51
Senior Vice President – Human Resources
Vice President Marketing –
and Corporate Initiatives,
Black & Decker Consumer Products,
March 2004 – present;
Power Tools and Accessories Group,
July 2000 – July 2003. Executive Vice President of the Corporation
and President – Power Tools and
• jAMES T. CAUDILL – 39 Accessories Group,
Group Vice President of the Corporation and April 1999 – March 2004.
President – Hardware and Home Improvement,
July 2006 – present; • CHRISTINA M. McMULLEN – 51
Vice President and Controller,
Vice President of the Corporation and President –
April 2000 – present.
Hardware and Home Improvement,
May 2005 – July 2006;
• jAMES R. RASKIN – 46
Vice President and General Manager – Vice President of the Corporation and
Accessories, Industrial Products Group, Vice President – Business Development,
Power Tools and Accessories Group, July 2006 – present;
October 2004 – May 2005;
Vice President – Business Development,
Vice President – Accessories, May 2002 – July 2006;
DeWALT Professional Products, Vice President – Marketing,
Power Tools and Accessories Group, Consumer Products Group,
November 2001 – October 2004. September 2001 – May 2002.
• CHARLES E. FENTON – 58 • STEPHEN F. REEvES – 47
Senior Vice President and General Counsel, Vice President of the Corporation and
December 1996 – present. Vice President – Global Finance,
Power Tools and Accessories,
March 2004 – present;
Vice President of the Corporation and
Vice President – Finance, Power Tools
and Accessories Group,
April 2000 – March 2004.
8 BLACK & DECKER

10. • MARK M. ROTHLEITNER – 48 • MICHAEL A. TYLL – 50
Vice President – Investor Relations and Treasurer, Group Vice President of the Corporation and
January 2000 – present. President – Fastening and Assembly Systems,
April 2006 – present;
• ROBERT I. ROWAN – 46 President – Automotive Division,
Vice President of the Corporation and President – Fastening and Assembly Systems,
Power Tools and Accessories, Consumer January 2001 – April 2006.
Products Group, Power Tools and Accessories,
February 2006 – present;
(g) Forward-Looking Statements
Vice President and General Manager,
The Private Securities Litigation Reform Act of
Consumer Power Tools and Accessories,
1995 (the Reform Act) provides a safe harbor
Power Tools and Accessories,
for forward-looking statements made by or on
July 2003 – February 2006;
b
ehalf of the Corporation. The Corporation and its
Vice President – Outdoor Products, r
epresentatives may, from time to time, make written
Consumer Products Group, Power Tools or verbal forward-looking statements, including
and Accessories Group, statements contained in the Corporation’s filings
September 2001 – July 2003. with the Securities and Exchange Commission
and in its reports to stockholders. Generally, the
• EDWARD j. SCANLON – 52 inclusion of the words “believe,” “expect,” “intend,”
Vice President of the Corporation and “estimate,” “anticipate,” “will,” and similar expres-
President – Commercial Operations, North and sions identify statements that constitute “forward-
South America, Power Tools and Accessories, l
ooking statements” within the meaning of Section
27A of the Securities Act of 1933 and Section
March 2004 – present;
21E of the Securities Exchange Act of 1934 and
Vice President of the Corporation and
that are intended to come within the safe harbor
President – Commercial Operations,
protection provided by those sections. All state-
North America, Power Tools and
ments addressing operating performance, events,
Accessories Group,
or developments that the Corporation expects or
May 1999 – March 2004. anticipates will occur in the future, including state-
ments relating to sales growth, earnings or earnings
• jOHN W. SCHIECH – 48 per share growth, and market share, as well as
Group Vice President of the Corporation statements expressing optimism or pessimism
and President – Industrial Products Group, about future operating results, are forward-looking
Power Tools and Accessories, statements within the meaning of the Reform Act.
March 2004 – present; The forward-looking statements are and will be
based upon management’s then-current views and
Vice President of the Corporation and President –
a
ssumptions regarding future events and operat-
DeWALT Professional Products, Power Tools
ing performance, and are applicable only as of
and Accessories Group,
the dates of such statements. The Corporation
January 2001 – March 2004.
undertakes no obligation to update or revise any
f
orward-looking statements, whether as a result of
• NATALIE A. SHIELDS – 50 new information, future events, or otherwise.
Vice President and Corporate Secretary,
By their nature, all forward-looking statements
April 2006 – present;
i
nvolve risks and uncertainties, including without
International Tax and Trade Counsel, limitations the risks described under the caption
June 1993 – April 2006. “Risk Factors” that could materially harm the
Corporation’s business, financial condition, and
• BEN S. SIHOTA – 48 results of operations. You are cautioned not to
Vice President of the Corporation and President – place undue reliance on the Corporation’s forward-
Asia Pacific, Power Tools and Accessories, looking statements.
February 2006 – present;
President – Asia, Power Tools and Accessories,
September 2000 – February 2006.
9
BLACK & DECKER

11. ITEM 1A. RISK FACTORS i
ncreases in the costs of purchased raw materials,
component parts or finished goods could result in
Many of the factors that affect our business and manufacturing interruptions, delays, inefficiencies
o
perations involve risk and uncertainty. The factors or our inability to market products. In addition,
described below are some of the risks that could
our profit margins would decrease if prices of
m
aterially harm our business, financial condition,
purchased raw materials, component parts, or
and results of operations.
finished goods increase and we are unable to pass
• Our business depends on the strength of the on those increases to our customers.
economies in various parts of the world, par-
• We face significant global competition. The
ticularly in the United States and Europe. We
markets in which we sell products are highly
conduct business in various parts of the world, competitive on the basis of price, quality, and
primarily in the United States and Europe and, after-sale service. A number of competing do-
to a lesser extent, in Mexico, Central America, mestic and foreign companies are strong, well-
the Caribbean, South America, Canada, Asia and established manufacturers that compete globally
Australia. As a result of this worldwide exposure, with us. Some of our major customers sell their
our net revenue and profitability could be harmed own “private label” brands that compete directly
as a result of economic conditions in our major with our products. Price reductions taken by us in
markets, including, but not limited to, recession, response to customer and competitive pressures,
inflation and deflation, general weakness in retail, as well as price reductions and promotional ac-
automotive and construction markets, and changes tions taken to drive demand that may not result
in consumer purchasing power. in anticipated sales levels, could also negatively
impact our business. Competition has been intense
• Changes in customer preferences, the inability
in recent years and is expected to continue. If we
to maintain mutually beneficial relationships with
are unable to maintain a competitive advantage,
large customers, and the inability to penetrate
loss of market share, revenue, or profitability may
new channels of distribution could adversely
result.
affect our business. We have a number of major
• Low demand for new products and the inability
customers, including two large customers that, in
to develop and introduce new products at favorable
the aggregate, constituted approximately 33% of
margins could adversely impact our performance
our consolidated sales in 2006. The loss of either of
and prospects for future growth. Our competitive
these large customers, a material negative change
advantage is due in part to our ability to develop
in our relationship with these large customers or
and introduce new products in a timely manner
other major customers, or changes in consumer
at favorable margins. The uncertainties associated
preferences or loyalties could have an adverse
with developing and introducing new products,
effect on our business. Our major customers are
such as market demand and costs of develop-
volume purchasers, a few of which are much larger
ment and production, may impede the successful
than us and have strong bargaining power with
development and introduction of new products
suppliers. This limits our ability to recover cost
on a consistent basis. Market acceptance of the
increases through higher selling prices. Changes
new products introduced in 2006 and scheduled
in purchasing patterns by major customers could for introduction in 2007 may not meet sales
negatively impact manufacturing volumes and expectations due to various factors, such as our
inventory levels. Further, our inability to continue failure to accurately predict market demand and
to penetrate new channels of distribution may evolving industry standards, to resolve technical
have a negative impact on our future results. challenges in a timely and cost-effective manner,
and to achieve manufacturing efficiencies. Our
• The inability to obtain raw materials, compo-
investments in productive capacity and commit-
nent parts, and/or finished goods in a timely
ments to fund advertising and product promotions
and cost-effective manner from suppliers would
in connection with these new products could be
adversely affect our ability to manufacture and
excessive if those expectations are not met.
market our products. We purchase raw materials
and component parts from suppliers to be used • Price increases could impact the demand for
in the manufacturing of our products. In addition, our products from customers and end-users. We
we purchase certain finished goods from suppli- have recently increased the prices of our products
for our U.S. power tools and accessories business
ers. In a limited number of circumstances, the
and hardware and home improvement business.
magnitude of our purchases of certain items is of
An adverse reaction by our customers or end-users
such significance that a change in our established
to these price increases could negatively impact
supply relationships may cause disruption in the
our anticipated sales, profitability, manufacturing
marketplace, a temporary price imbalance, or both.
volumes, and/or inventory levels.
Changes in our relationships with suppliers or
10 BLACK & DECKER

12. • The inability to generate sufficient cash flows manufacturing failures, telephone or information
technology (IT) system failure, computer viruses
to support operations and other activities could
or other third-party tampering with IT systems,
prevent future growth and success. Our inability
could halt or delay manufacturing and hinder our
to generate sufficient cash flows to support capi-
ability to ship in a timely manner or otherwise
tal expansion, business acquisition plans, share
routinely conduct business. Any of these events
repurchases and general operating activities could
could result in the loss of customers, a decrease
negatively affect our operations and prevent our
in revenue, or the incurrence of significant costs
expansion into existing and new markets. Our
to eliminate the problem or failure.
ability to generate cash flows is dependent in part
upon obtaining necessary financing at favorable • Our products could be subject to product liability
interest rates. Interest rate fluctuations and other claims and litigation. We manufacture products
capital market conditions may prevent us from that create exposure to product liability claims
doing so. and litigation. If our products are not properly
manufactured or designed, personal injuries or
• Our success depends on our ability to improve
property damage could result, which could subject
productivity and streamline operations to control
us to claims for damages. The costs associated
or reduce costs. We are committed to continuous
with defending product liability claims and payment
productivity improvement and continue to evaluate
of damages could be substantial. Our reputation
opportunities to reduce fixed costs, simplify or
could also be adversely affected by such claims,
improve processes, and eliminate excess capac-
whether or not successful.
ity. We have also undertaken restructuring and
integration actions as described in Note 20 of • Our products could be recalled. The Consumer
Notes to Consolidated Financial Statements and Product Safety Commission or other applicable
in “Management’s Discussion and Analysis of regulatory bodies may require the recall, repair
Financial Condition and Results of Operations”. or replacement of our products if those products
The ultimate savings realized from restructuring are found not to be in compliance with applicable
and integration actions may be mitigated by many standards or regulations. A recall could increase
factors, including economic weakness, competitive costs and adversely impact our reputation.
pressures, and decisions to increase costs in areas
• We may have additional tax liabilities. We are
such as promotion or research and development
subject to income taxes in the United States and
above levels that were otherwise assumed. Our
numerous foreign jurisdictions. Significant judg-
failure to achieve projected levels of efficiencies
ment is required in determining our worldwide
and cost reduction measures and to avoid delays
provision for income taxes. In the ordinary course
in or unanticipated inefficiencies resulting from
of our business, there are many transactions and
manufacturing and administrative reorganiza-
calculations where the ultimate tax determination
tion actions in progress or contemplated would
is uncertain. We are regularly under audit by tax
adversely affect our results of operations.
authorities. Although we believe our tax estimates
• The inability to successfully integrate the are reasonable, the final outcome of tax audits and
operations of acquired businesses or to identify any related litigation could be materially different
new acquisition opportunities could negatively than that which is reflected in historical income
impact our prospect for future growth and prof- tax provisions and accruals. Based on the status
itability. We expend significant resources on of a given tax audit or related litigation, a material
identifying opportunities to acquire new lines of effect on our income tax provision or net income
business and companies that could contribute may result in the period or periods from initial
to our success and expansion into existing and recognition in our reported financial results to
new markets. Our inability to successfully identify the final closure of that tax audit or settlement of
a
cquisition opportunities, integrate the operations related litigation when the ultimate tax and related
of acquired businesses, or realize the anticipated cash flow is known with certainty.
cost savings, synergies and other benefits related
• We are subject to current environmental and
to the acquisition of those businesses could have
other laws and regulations. We are subject to
a material adverse effect on our business, financial
environmental laws in each jurisdiction in which
condition and future growth. Acquisitions may also
we conduct business. Some of our products in-
have a material adverse effect on our operating
corporate substances that are regulated in some
results due to large write-offs, contingent liabilities,
jurisdictions in which we conduct manufacturing
substantial depreciation, or other adverse tax or
operations. We could be subject to liability if we
audit consequences.
do not comply with these regulations. In addition,
• Failures of our infrastructure could have a we are currently and may, in the future, be held
material adverse effect on our business. We responsible for remedial investigations and clean-
are heavily dependent on our infrastructure. Sig- up costs resulting from the discharge of hazard-
nificant problems with our infrastructure, such as ous substances into the environment, including
11
BLACK & DECKER

13. sites that have never been owned or operated could adversely affect our results of operations.
We have outstanding variable-rate and fixed-rate
by us but at which we have been identified as a
borrowings. To meet our cash requirements, we
potentially responsible party under federal and
may incur additional borrowings in the future
state environmental laws and regulations. Changes
u
nder our existing or future borrowing facilities.
in environmental and other laws and regulations
An increase in interest rates could adversely affect
in both domestic and foreign jurisdictions could
our results of operations.
adversely affect our operations due to increased
costs of compliance and potential liability for • We operate a global business that exposes
non-compliance.
us to additional risks. Our sales outside of the
• If our goodwill or indefinite-lived intangible United States accounted for approximately 36% of
assets become impaired, we may be required to our consolidated net revenue in 2006. We continue
record a significant charge to earnings. Under to expand into foreign markets. The future growth
U
nited States generally accepted accounting and profitability of our foreign operations are
subject to a variety of risks and uncertainties,
p
rinciples, goodwill and indefinite-lived intangible
such as tariffs, nationalization, exchange controls,
assets are not amortized but are reviewed for
interest rate fluctuations, civil unrest, governmen-
i
mpairment on an annual basis or more frequently
tal changes, limitations on foreign investment in
whenever events or changes in circumstances
local business and other political, economic and
i
ndicate that their carrying value may not be recov-
regulatory risks inherent in conducting business
erable. We may be required to record a significant
internationally. Over the past several years, such
charge to earnings in our financial statements
factors have become increasingly important as a
during the period in which any impairment of
result of our higher percentage of manufactur-
our goodwill or indefinite-lived intangible assets is
ing in China, Mexico and the Czech Republic and
determined, resulting in an impact on our results
purchases of products and components from
of operations.
foreign countries.
• Changes in accounting may affect our reported
• Catastrophic events may disrupt our business.
earnings. For many aspects of our business,
Unforeseen events, including war, terrorism and
United States generally accepted accounting
other international conflicts, public health issues,
principles, including pronouncements, implemen-
and natural disasters such as earthquakes,
tation guidelines, and interpretations, are highly
h
urricanes or other adverse weather and climate
complex and require subjective judgments. Changes
conditions, whether occurring in the United States
in these accounting principles, including their
or abroad, could disrupt our operations, disrupt
interpretation and application, could significantly
the operations of our suppliers or customers, or
change our reported earnings, adding significant
result in political or economic instability. These
volatility to our reported results without a compa-
events could reduce demand for our products and
rable underlying change in our cash flows.
make it difficult or impossible for us to manufac-
• We are exposed to adverse changes in currency ture our products, deliver products to customers,
exchange rates, raw material commodity prices or or to receive products from suppliers.
interest rates, both in absolute terms and relative
The foregoing list is not exhaustive. There can be
to competitors’ risk profiles. We have a number
no assurance that we have correctly identified
of manufacturing sites throughout the world and
and appropriately assessed all factors affecting
sell our products in more than 100 countries.
our business or that the publicly available and
As a result, we are exposed to movements in the
other information with respect to these matters
exchange rates of various currencies against the
is complete and correct. Additional risks and
United States dollar and against the currencies of
uncertainties not presently known to us or that
countries in which we have manufacturing facili-
we currently believe to be immaterial also may
ties. We believe our most significant foreign cur-
adversely impact our business. Should any risks
rency exposures are the euro, pound sterling and
or uncertainties develop into actual events, these
Chinese renminbi. A decrease in the value of the
developments could have material adverse effects
euro and pound sterling relative to the U.S. dollar
on our business, financial condition, and results
could adversely affect our results of operations.
of operations.
An increase in the value of the Chinese renminbi
relative to the U.S. dollar could adversely affect
ITEM 2. PROPERTIES
our results of operations. We utilize materials in
the manufacturing of our products that include The Corporation operates 41 manufacturing facili-
certain components and raw materials that are ties around the world, including 25 located outside
subject to commodity price volatility. We believe of the United States in 9 foreign countries. The
our most significant commodity-related exposures major properties associated with each business
are to steel, resins, copper, aluminum, and zinc. segment are listed in “Narrative Description of the
An increase in the market prices of these items Business” in Item 1(c) of Part I of this report.
12 BLACK & DECKER