Black & Decker 2011 Annual Report Download - page 37

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25
CDIY:
The CDIY segment is comprised of the professional power tool and accessories businesses, the consumer power tool business and the
hand tools, fasteners & storage business. The professional power tool and accessories business sells professional grade corded and
cordless electric power tools and equipment including drills, impact wrenches and drivers, grinders, saws, routers and sanders. The
consumer power tool business sells corded and cordless power tools, lawn and garden products and home products. The hand tools,
fasteners & storage business sells measuring and leveling tools, planes, hammers, demolition tools, knives, saws and chisels.
Fastening products include pneumatic tools and fasteners including nail guns, nails, staplers and staples. Storage products include tool
boxes, sawhorses and storage units.
(Millions of Dollars)
2011
2010
2009
Net sales
................................................................................................
.
$ 5,237
$ 4,368
$ 1,258
Segment profit ................................................................
.......................
$ 682
$ 459
$ 141
% of Net sales ................................................................
........................
13.0%
10.5% 11.2%
CDIY net sales increased $869 million, or 20%, in 2011 compared with 2010. The inclusion of a full year of Black & Decker results
generated 14% of the increase, unit volume sales growth contributed 4% and favorable foreign currency translation contributed 2% to
the sales increase. The segment unit volume increase was a function of growth in the Americas, Asia and emerging markets since
2010. Organic sales growth was primarily due to approximately 13% of incremental growth in the professional power tools and
accessories business driven by the success of the 18-volt and 20-volt MAX lithium ion product lines launched in 2011, in addition to
the continued strength of the 12-volt lithium ion power tool products launched in 2010, all three of which are marketed under the
DEWalt, Porter Cable, and Black & Decker brands. Other contributing factors include a continued focus on Merger related revenue
synergies, increases in sales of the newly launched DEWalt hand tool line, which began shipping to distributors in June and select
promotional activity for older product lines, primarily Ni-Cad.
Segment profit increased $223 million from 2010, inclusive of $20 million in merger and acquisition-related charges. Excluding those
charges, 2011 segment profit was $702 million, or 13.4% of net sales, which compares to 2010 segment profit excluding merger and
acquisition-related charges of $585 million, or a consistent segment profit rate of 13.4%. Aside from the impact of merger and
acquisition-related charges declining by $107 million, segment profit increased in 2011 due to the favorable impact of cost synergies,
higher sales volume and continued growth in Latin America. CDIY segment profits in 2011 also reflect the unfavorable impact of
unrecovered commodity cost inflation, the impact of promotional spending associated with older generation products (which offset
other product list price increases), and the continued impact of the previously discussed Pfister business loss.
CDIY net sales increased $3.110 billion, or 247%, in 2010 compared with 2009. Black & Decker generated 245% 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 $318 million and
reflects $127 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
$585 million, or 13.4% 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.
Security:
The Security segment is comprised of the electronic security solutions and the mechanical access solutions businesses. The electronic
security solutions business designs, supplies and installs electronic security systems and provides electronic security services,
including alarm monitoring, video surveillance, fire alarm monitoring, systems integration and system maintenance. Purchasers of
these systems typically contract for ongoing security systems monitoring and maintenance at the time of initial equipment installation.
The electronic security business also sells healthcare solutions which include medical carts and cabinets, asset tracking, infant
protection, pediatric protection, patient protection, wander management, fall management, and emergency call products. The
mechanical access solutions business sells automatic doors, residential and commercial hardware, locking mechanisms, electronic
keyless entry systems, keying systems, tubular and mortise door locksets.
(Millions of Dollars)
2011
2010
2009
Net sales
................................................................................................ $ 2,639
$ 2,084
$ 1,543
Segment profit ...................................................................................... $ 399
$ 309
$ 305
% of Net sales ....................................................................................... 15.1%
14.8% 19.8%