Black & Decker 2011 Annual Report Download - page 34

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The tax effect on the above charges, some of which were not tax deductible, in 2011 was $56 million, resulting in an after-tax charge
of $200 million, or $1.18 per diluted share.
2010
The Company reported $538 million in pre-tax charges in 2010, pertaining to the Merger and other acquisition activities, which were
comprised of the following:
• $195 million in Cost of sales related primarily to inventory step-up amortization stemming from the initial turn of the
Black & Decker and CRC-Evans acquired inventories, which were written-up in purchase accounting to fair value, by
$174 million. Additionally, Cost of sales includes $21 million of facility closure-related charges;
• $82 million in Selling, general & administrative expenses for certain executive and merger-related compensation costs and
integration-related consulting fees;
• $37 million in Other-net for transaction costs, inclusive of $20 million of pension curtailment gains.
• $224 million in Restructuring and asset impairment charges primarily for severance (including costs for certain Black &
Decker executives triggered by the change in control), as well as charges associated with the closure of facilities.
The tax effect on the above charges during 2010, some of which were not tax deductible, was $117 million, resulting in after-tax
merger and acquisition-related charges of $421 million, or $2.80 per diluted share.
2009
In the fourth quarter of 2009, the Company incurred $18 million in after-tax charges, or $0.22 per diluted share, primarily related to
the transaction and integration planning costs associated with the Merger.
Outlook for 2012
This outlook discussion is intended to provide broad insight into the Company’s near-term earnings and cash flow generation
prospects. The Company expects diluted earnings per share to approximate $4.71 to $4.97 in 2012, inclusive of $242 million of
merger and acquisition-related charges as well as the charges associated with the newly announced $150 million in cost actions.
Excluding such charges, 2012 earnings per dilutive share is expected to be in the range of $5.75 to $6.00. The Company expects free
cash flow, excluding merger & acquisition related charges and payments, to approximate $1.2 billion. The 2012 outlook assumes that
organic net sales will increase 1-2% on a pro-forma basis (assumes Niscayah was owned for the full year 2011); the Company will
continue to execute on Black & Decker cost and revenue synergies, along with the cost synergies associated with the Niscayah
integration; and the Company will deliver on proactive cost containment actions in addition to integration driven cost synergies as part
of offsetting continued inflation headwinds and adverse foreign exchange movements.
RESULTS OF OPERATIONS
Below is a summary of the Company’s operating results at the consolidated level, followed by an overview of business segment
performance.
Terminology: The terms “legacy Stanley”, “organic” and “core” are utilized to describe results aside from the impact of the Merger
and acquisitions during their initial 12 months of ownership. This ensures appropriate comparability to operating results of prior
periods.
The Company has included information as if the Merger had occurred on January 3, 2010 for the year ended January 1, 2011 (“pro
forma” information) which also includes a discussion regarding legacy Black & Decker’s performance in relation to the prior year.
This “pro forma” analysis is provided to aid understanding of the current year trends compared to the prior year since the Merger
occurred March 12, 2010.
Net Sales: Net sales were $10.376 billion in 2011, as compared to $8.344 billion in 2010, a 24% increase. Organic sales volume
provided a 5% increase in net sales, the impact of a full year of results from the Merger provided an 11% increase to sales, the impact
of other acquisitions (primarily Niscayah and CRC-Evans), provided an additional 7% increase in net sales while the favorable effects
of foreign currency translation in all regions, but most significantly in Europe and Asia, contributed an additional 1% to net sales. The
primary drivers of the organic volume growth continues to be new product introductions resulting in market share gains and continued
high growth rates in emerging markets, inclusive of continued revenue synergy realizations from the Merger. On a geographic basis,
2011 organic sales increased 5% in the Americas (25% in Latin America), 3% in Europe and 6% in Asia. Excluding the engineered
fastening business in Japan and China, where it has experienced the continued effects of the first quarter 2011 Japanese earthquake
and tsunami, organic sales in Asia were up 25% as compared to full year 2010. On a pro forma basis, net sales increased 12%, with
acquisitions accounting for 6% of the increase, organic growth providing 4% of the increase and 2% reflecting the benefit of foreign
currency translation.