Black & Decker 2015 Annual Report Download - page 42

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by field cost inefficiencies within the North America electronics business and the deleveraging impact of lower volumes in
emerging markets.
Security net sales decreased $34.7 million, or 2%, in 2014 compared to 2013. Organic sales were relatively flat year-over-year
while foreign currency fluctuations resulted in a 2% decrease in net sales. Organic growth of 1% in North America and
emerging markets was primarily due to growth within the commercial electronics business as a result of vertical selling
solutions and the automatic doors business, partially offset by lower installation and recurring revenues in Europe in addition to
declines in the U.S. commercial lock business due to a business model transition.
Segment profit amounted to $259.2 million, or 11.5% of net sales, in 2014 compared to $235.2 million, or 10.2% of net sales,
in 2013. Excluding merger and acquisition-related charges of $37.8 million, segment profit was $273.0 million, or 11.9% of net
sales, in 2013. The decrease in segment profit rate year-over-year was driven by installation field inefficiencies and negative
installation and recurring revenue mix in Europe, which offset improved operating performances in North America and
emerging markets.
Industrial:
The Industrial segment is comprised of the Engineered Fastening and Infrastructure businesses. The Engineered Fastening
business primarily sells engineered fastening products and systems designed for specific applications. The product lines include
stud welding systems, blind rivets and tools, blind inserts and tools, drawn arc weld studs, engineered plastic and mechanical
fasteners, self-piercing riveting systems, precision nut running systems, micro fasteners, and high-strength structural fasteners.
The Infrastructure business consists of the Oil & Gas and Hydraulics businesses. The Oil & Gas business sells and rents custom
pipe handling, joint welding and coating equipment used in the construction of large and small diameter pipelines, and provides
pipeline inspection services. The Hydraulics business sells hydraulic tools and accessories.
(Millions of Dollars) 2015 2014 2013
Net sales.................................................................................................. $ 1,938 $ 2,044 $ 1,889
Segment profit......................................................................................... $ 340 $ 351 $ 280
% of Net sales ......................................................................................... 17.5% 17.1% 14.8%
Industrial net sales decreased $106.2 million, or 5%, in 2015 compared with 2014 as organic growth of 2% was more than
offset by unfavorable foreign currency of 7%. Engineered Fastening achieved organic growth of 4% during 2015, which was
mainly attributable to strong global automotive revenues. Infrastructure organic sales decreased 4% primarily due to lower
Hydraulics volumes as a result of difficult scrap steel market conditions, which more than offset modest organic growth in Oil
& Gas.
Segment profit totaled $339.9 million, or 17.5% of net sales, in 2015 compared to $350.6 million, or 17.1% of net sales, in
2014. The year-over-year increase in segment profit rate was primarily due to favorable volume leverage from Engineered
Fastening, productivity gains and cost controls, which more than offset negative impacts from foreign currency and lower
Hydraulics volumes.
Industrial net sales increased $155.8 million, or 8%, in 2014 compared with 2013. Organic sales and acquisitions (primarily
Infastech) provided increases of 5% and 4% in net sales, respectively, while unfavorable effects of foreign currency translation
decreased net sales by 1%. Engineered Fastening achieved organic growth of 7%, which was mainly attributable to strong
global automotive and electronic revenues. Infrastructure organic sales were relatively flat year-over-year as solid Hydraulics
growth was offset by lower volumes in Oil & Gas due primarily to project delays resulting from geopolitical situations in
certain emerging markets as well as the recent contraction in oil prices and resulting slowdown in pipeline construction.
Segment profit totaled $350.6 million, or 17.1% of net sales, in 2014 compared to $280.2 million, or 14.8% of net sales, in
2013. Excluding $20.1 million of merger and acquisition-related charges, segment profit was $300.3 million, or 15.9% of net
sales, in 2013. The year-over-year increase in segment profit rate was primarily due to favorable volume leverage, price, supply
chain productivity gains and SG&A cost controls, partially offset by negative impacts from foreign currency fluctuations.
RESTRUCTURING ACTIVITIES
A summary of the restructuring reserve activity from January 3, 2015 to January 2, 2016 is as follows (in millions):