Correction: Fitch Affirms Black & Decker's Rating; Outlook Revised to Stable

Business Wire,  August 7, 2007  

Tags: Black & Decker Corp., Microsoft Outlook

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NEW YORK -- (This is an amended version of a press release issued earlier today containing revised rating information on the short-term IDR.)

Fitch Ratings has affirmed its ratings on The Black & Decker Corporation (BDK) and Black & Decker Holdings Inc. (BDH) as follows:

--Issuer Default Rating (IDR) at 'BBB';

--Short-term IDR 'F2';

--Bank credit facility at 'BBB';

--Senior unsecured notes at 'BBB';

--Commercial paper at 'F2'.

The Rating Outlook has been revised to Stable from Positive.

Fitch's ratings apply to BDK's $1.0 billion senior unsecured debt, BDH's $150 million senior unsecured debt, BDK's and BDH's $1 billion revolving bank credit facility and BDK's and BDH's $1 billion commercial paper program.

The ratings reflect: an improved cost structure resulting from a low cost manufacturing footprint; continued productivity improvements, which have helped mitigate rising raw material costs; innovative and successful product introductions; strong market positions; geographic diversity; sustained improvement in financial protection measures; and a demonstrated ability to integrate acquisitions. In addition, the company has generated sizeable free cash flow, which has helped finance acquisitions.

BDK has kept its leverage on a cash flow basis at relatively strong levels over the past four years. The balance sheet is strong. As of July 1, 2007, balance sheet debt was lower by $169 million to $1.4 billion from 2006 year-end levels. Cash balances totaled $262 million and leverage, as measured by total debt/EBITDA, was at 1.6 times (x) for the latest 12 month period. Nonetheless, stock repurchases, while relatively minor in the first half of 2007, are expected to increase in the second half limiting debt reduction for the year.

At the 'BBB' level, there is room for additional leverage and operational shortfalls because cash flow is expected to remain strong. However, the Rating Outlook revision reflects the domestic housing downturn including weakening home repair/remodeling and continuing commodity cost pressure, as well as the expectation that free cash flow will be directed to bolt-on acquisitions and stock repurchases. For 2007, earnings are anticipated to decline modestly and result in some minor deterioration in credit measures. While the domestic housing environment appears to be worsening, which may prolong any recovery well into 2008 or beyond, BDK's dependence on new housing is only about 20% of revenue.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

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