Black & Decker (B&D) dominated the power tool industry but sought to diversify to achieve growth beyond 4% annual market increases. CEO Archibald acquired GE appliances and pursued other acquisitions. However, the $2.8 billion purchase of Emhart proved troublesome as it required divesting assets shareholders saw as poor strategic fits. While profits eventually rose, high debt from acquisitions concerned shareholders. The report suggests B&D expanded too quickly beyond its core competency through risky acquisitions.

1. Introduction
Since 1910 Black and Decker (B&D) has dominated the tool industryi. With clear dominance in the this
industry, B&D set it’s eyes on expanding. Did B&D bite off more than it could chew? How do
potential shareholders feel about a company known for making drills expanding its portfolio as far out
as golf clubs? This report will address the mistakes B&D made, and may still be making.
How does the best get better?
The power tool market is a mature and cyclical market, with an annual growth rate around 4%.ii CEO
Archibald felt that diversifying out of B&D’s core competency of power tools, was necessary to
achieve satisfactory corporate growth.
Black & Decker
Manufacturing
Company
(1984)
Global Leader in
Consumer & Power
Tools
B&D Acquires GE Small Appliances
Division (1984)
B&D Acquires GE Small Appliances
Division (1984)
Advantages Disadvantages
Market Leader Low profit margin
(25%) ½ revenue comes
from 1/150 product)
$500 million Strong brand alliance

2. annual revenue to GE
“Would you buy a
toaster from a
drillmaker?”
Black & Decker
Corporation
(1985)
Emphasis being
on marketing &
sales of consumer
products
CEO Archibald had turned a B&D which had posted $156.4 million loss in 1985, into a thriving
profitable firm posting profits of $91.7 million in 1988. Archibald’s success lies within his strategy.
ARCHIBALD’S STRATEGY
ARCHIBALD’S STRATEGY
Consolidate Production – Boost factory Increase Research and Development –
production by utilizing newer plants more Goaled division to produce 12+/year
efficiently & closing down the older ones.
Centralized Global Operations – product Diversification – growth as a company lied
variations reduced, and production runs within expanding products and services
were lengthened.
Archibald Goes Overboard
With a successful rebranding strategy of GE products previously acquired under his belt, Archibald
attempted to acquire two other firms unsuccessfully. In 1989, B&D agreed to acquire Emhart
Corporation for $2.8 billion.
Concerns with Emhart Purchase
Stockholders failed to see ‘strategic
fit’
Substantially larger than B&D per
businesses and products

3. Acquired heavy loans to finance
purchase
Paid 3x the book value per share
Maximum Debt/Equity Ratios (per
creditors)
Source: SEC Filings (1988) BDK
Emhart operated in over a dozen different product categories under three specific business divisions. In
order to satisfy requirements of the financing B&D agreed upon, divesting assets was a necessity.
Source: 1988 Annual Report (BDK)
Correct Decision to Divest
I nformation/Electronic Systems Recreational Outdoor Products Glass Container Forming

4. Operational
Cost too high
Minimal Growth
Potential
Fierce
Competition
Lack of
Synergy/Strategic Fit
Poor Decision to Divest
Corbin Russwin Dynapert Household Products
*See Appendix for weight evaluations
High Market
Potential/Share
High Brand
Equity

5. Synergy w/
B&D products
Strategic Fit
Black and Decker Today
B&D Companies
(2005)
Black and Decker
Dewalt
Porter-Cable
Delta Machinery
Kwikset
Baldwin
Weiser Lock
Price Pfister
Emhart
Teknologies
Black and Decker currently own a variety of brands under 9 different companies. Net income has
continued to rise for B&D since 2001 with net income last
reported of $543.9 million.

6. Black and Decker continues its quest to perfect its portfolio. B&D purchased Baldwin Hardware
Corporation and Weiser Lock Corporation from Masco for $275 million in 2003.iii B&D companies
like Porter-Cable and Delta were purchased as a part of Tools Group from Pentair, Inc in 2004 for $775
million.iv
Stockholder’s Point of View
For nearly 100 years B&D has been discovering new ways to tap a mature market. Innovations like the
Snakelight flashlight and cordless tools have found ways to keep demand alive in a saturated market.
Stockholders today shouldn’t be surprised that B&D look constantly to find ways and means to make
the company more profitable. The only realm B&D is not willing to do business outside of is the realm
of profitless opportunities.
Quick Current
Shareholders should take notice the drastic difference
1996 .54 1.20
1997 .86 1.51
1998 .64 1.27
1999 .62 1.22
2000 .56 1.20
2001 .89 1.77
2002 .86 1.51
2003 .85 1.68
2004 .87 1.63
2005 .93 1.48
between the quick and the current ratios. The difference is showing that in order to meet all current
liabilities,
inventory would have to be sold.1
1996 1.04
1997 1.04
1998 2.37
1999 1.55

7. 2000 1.80
2001 1.65
2002 2.08
2003 1.08
2004 .77
2005 1.15
Debt/Equity Ratio
Shareholders should be aware that B&D isn’t afraid to finance their
Growth and expansion as shown by a not
favorable Debt/Equity Ratio.
Profits are on the rise, as well as corporate growth on the whole. Earnings Per Share have increased
steadily since 1998 to a 10 year in 2005.v
Some at B&D will argue they paid down the entire balance of their Emhart acquisition loan as early as
1990.
Since so much of their operations are financed by debt, could it be possible they merely “robbed Peter
to pay Paul?”
Stockholder Suggestion: Due to high debt burden, slow market growth (4%) and risk taking
management, Do not purchase Black and Decker.
Conclusion
While B&D was trying to get their sales figures in line with the goals and expectations of the creditors,
they ignored the shareholders. B&G was stretched too thin. In a firm highly leveraged by debt, it can
not afford to tarnish its reputation and credibility with creditors. Shareholders come second to the bank
in the decision making process. To have to acquire the “package deal” of Emhart was not a sound
strategic move. Opportunity Costs of other firms that could have been easier managed were not an
option. Selling many of the firms under management expectations is another indication of its
dissatisfactory performance. B&D would have been better off doing nothing than trying to triple
products over night.
1 All data used for ratios were provided by Securities Exchange Commission Reports/Annual Reports
from 1996-2005 for Black and Decker Corporation (BDK)
i Black and Decker Corporation. http://www.bdk.com/ 2006
ii “Tool market to exceed $13 billion”, Assembly 43 (5) May 2000

8. iii Black & Decker Company Information.
http://www.blackanddecker.com/CustomerCenter/Company-Information.aspx 2006
iv Black & Decker Company Information.
http://www.blackanddecker.com/CustomerCenter/Company-Information.aspx 2006
v SEC Filings for BDK Annual Reports
1