Black & Decker 2010 Annual Report Download - page 45

impairments, interest income, interest expense, and income tax expense. Corporate overhead is comprised of
world headquarters facility expense, cost for the executive management team and the expense pertaining to
certain centralized functions that benefit the entire Company but are not directly attributable to the businesses,
such as legal and corporate finance functions. Refer to Note O, Restructuring and Asset Impairments, and
Note F, Goodwill and Other Intangible Assets, of the Notes to the Consolidated Financial Statements for the
amount of restructuring charges and asset impairments, and intangibles amortization expense, respectively,
attributable to each segment. As discussed previously, the Company’s operations are classified into three
business segments: CDIY, Security, and Industrial.
CDIY:
(Millions of Dollars) 2010 2009 2008
Net sales from continuing operations ......................... $4,446 $1,295 $1,656
Segment profit from continuing operations ..................... $476 $154 $191
% of Net sales .......................................... 10.7% 11.9% 11.5%
CDIY net sales from continuing operations increased $3.151 billion, or 243%, in 2010 compared with 2009.
Black & Decker generated 241% of the increase. Favorable foreign currency translation contributed 1% to
sales and price had a negative 1% impact. Segment unit volume increased over 2%, reflecting a 3% increase
in the Americas and 14% in Asia, which was partially offset by a 2% decline in Europe. Organic sales growth
was aided by new product introductions including Bostitch hand tools and Stanley-branded storage units, and
strength in Latin America. These factors more than offset sluggish market conditions in developed countries in
North America, Western Europe and Australia. Additionally, CDIY further improved service levels (fill rates)
over 2009. Pro forma Black & Decker sales increased 8% over 2009 with negative 1% price offset by 1%
favorable currency translation. Black & Decker benefited from the successful global launch of the 12-volt
compact lithium ion power tools marketed under the DeWalt, Porter Cable and Black & Decker brands, other
new product introductions in home products, and strength in emerging markets. Segment profit increased
$322 million and reflects $128 million of merger and acquisition-related charges comprised of inventory
step-up amortization from the initial turn of the Black & Decker inventory and facility closure-related costs.
Excluding the merger and acquisition-related charges, segment profit was $603 million, or 13.6% of sales. The
expansion of the segment profit amount and rate, excluding merger and acquisition-related charges, was
attributable to achievement of integration cost synergies, sales volume leverage and annual productivity
initiatives. Negative inflation/ price arbitrage partially offset this profit rate expansion.
CDIY net sales from continuing operations decreased 22% in 2009 from 2008. Customer pricing contributed
2% to sales which was more than offset by 3% of unfavorable foreign currency translation in all regions.
Segment unit volumes declined 21% overall, comprised of 22% in both the Americas and Europe and 16% in
Asia. The sales volume declines were more pronounced in fastening systems (Bostitch), which has higher
commercial construction and industrial channel content, than in consumer tools and storage. However the
majority of this segment is driven by consumer and residential construction channels which were largely
stabilized. Key customer point of sale data remained steady. Segment profit declined $37 million attributable
to the sales volume pressure. The ongoing integration of the Bostitch business into consumer tools and storage
generated efficiencies that significantly aided the segment profit rate recovery from a trough of 6.4% in the
fourth quarter of 2008. The aforementioned Bostitch integration, along with other cost actions and productivity
initiatives, as well as the carryover effect of price increases and lower commodity costs, enabled the 40 basis
point improvement in the segment profit rate despite sharply lower sales.
Security:
(Millions of Dollars) 2010 2009 2008
Net sales from continuing operations ......................... $2,113 $1,560 $1,497
Segment profit from continuing operations ..................... $306 $307 $269
% of Net sales .......................................... 14.5% 19.7% 17.9%
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