UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K
                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934


    FOR THE FISCAL YEAR ENDED                     COMMISSION FILE NUMBER

        December 31, 1999                                 1-1553
-----------------------------------          -----------------------------------


                         THE BLACK & DECKER CORPORATION
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


           Maryland                                     52-0248090
-----------------------------------          -----------------------------------
    (State of Incorporation)                        (I.R.S. Employer
                                                     Identification Number)


        Towson, Maryland                                   21286
-----------------------------------          -----------------------------------
     (Address of principal                               (Zip Code)
       executive offices)

Registrant's telephone number, including area code: 410-716-3900
--------------------------------------------------------------------------------


Securities registered pursuant to Section 12(b) of the Act:

                                                       Name of each exchange
         Title of each class                            on which registered
-----------------------------------          -----------------------------------
       Common Stock, par value                        New York Stock Exchange
          $.50 per share                               Pacific Stock Exchange


Securities registered pursuant to Section 12(g) of the Act:        None
                                                           ---------------------


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding  twelve months (or for such shorter period that the registrant was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes X No ___

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. (X)

The  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant as of January 28, 2000, was $3,280,608,594.

The number of shares of Common Stock  outstanding  as of January 28,  2000,  was
87,192,255.

The exhibit  index as required by Item 601(a) of  Regulation  S-K is included in
Item 14 of Part IV of this report.

Documents  Incorporated by Reference:  Portions of the  registrant's  definitive
Proxy Statement for the 2000 Annual Meeting of Stockholders  are incorporated by
reference in Part III of this Report.




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                                        1


                                     PART I

ITEM 1.  BUSINESS

(a)  GENERAL DEVELOPMENT OF BUSINESS
The  Black  &  Decker  Corporation  (collectively  with  its  subsidiaries,  the
Corporation),  incorporated  in  Maryland  in  1910,  is a global  marketer  and
manufacturer of quality  products used in and around the home and for commercial
applications.  With products and services  marketed in over 100  countries,  the
Corporation  enjoys  worldwide  recognition of strong brand names and a superior
reputation for quality, design, innovation, and value.
   The Corporation is one of the world's leading producers of power tools, power
tool  accessories,  and residential  security  hardware,  and the  Corporation's
product  lines hold leading  market share  positions  in these  industries.  The
Corporation  is a major global  supplier of  engineered  fastening  and assembly
systems.  The  Corporation  is one of the leading  producers of faucets in North
America.  These  assertions  are  based on  total  volume  of sales of  products
compared to the total  market for those  products  and are  supported  by market
research  studies  sponsored by the Corporation as well as independent  industry
statistics  available  through  various  trade  organizations  and  periodicals,
internally generated market data, and other sources.
   As more fully described in Management's  Discussion and Analysis of Financial
Condition and Results of Operations included in Item 7 of Part II of this report
under  the  caption  "Strategic  Repositioning"  and  in  Note  2  of  Notes  to
Consolidated  Financial Statements included in Item 8 of Part II of this report,
in January  1998,  the Board of  Directors  approved a  comprehensive  strategic
repositioning of the Corporation, consisting of three separate elements.
   The  Corporation  completed the first element of the strategic  repositioning
plan in 1998  through the  divestiture  of its  non-strategic  businesses:  True
Temper Sports,  its  recreational  products  business;  Emhart Glass,  its glass
container-forming and inspection equipment business;  and the household products
businesses (other than certain assets associated with the Corporation's cleaning
and lighting business) in North America,  Central America, the Caribbean,  South
America (excluding Brazil),  and Australia.  In connection with the divestitures
of these  businesses  during  1998,  the  Corporation  received  aggregate  cash
proceeds,  net of selling expenses and taxes paid, of approximately $625 million
and  recognized a pre-tax gain on sale of  businesses of $114.5  million  ($16.5
million after tax).  The net proceeds from these  divestitures  were utilized in
the repurchase of a portion of the Corporation's outstanding common stock and to
fund the restructuring program described below.
   The second  element of the strategic  repositioning  plan - the repurchase of
approximately  10% of its outstanding  common stock over a two-year period - was
completed during 1999 when the Corporation  repurchased 610,900 shares of common
stock at an aggregate cost of $32.1 million,  supplementing the 9,025,400 shares
of common stock repurchased  during 1998 at an aggregate cost of $464.3 million.
Net proceeds  from the sale of divested  businesses  were used to fund the stock
repurchase program.
   As of December 31,  1999,  the  Corporation  neared  completion  of the third
element of the strategic repositioning plan - a restructuring program undertaken
to reduce fixed costs. The Corporation  commenced the restructuring  program and
recorded a restructuring  charge of $164.7 million during 1998. During 1999, the
Corporation recognized $13.1 million of additional restructuring and exit costs,
offset by a gain  realized in 1999 on the sale of a facility,  exited as part of
the restructuring actions taken in 1998, that had a fair value exceeding its net
book value at the time of the 1998 charge and by the reversal of $4.2 million of
accruals, which were no longer required.
   As a consequence of the strategic repositioning plan, the Corporation elected
to change the basis upon which it evaluates  goodwill for  impairment  effective
January  1,  1998.  The  change,  from the  undiscounted  cash flow basis to the
discounted  cash flow  basis,  resulted  in the  write-off  of $900  million  of
goodwill through a non-cash charge to operations in the first quarter of 1998.
   For additional  information  about the strategic  repositioning  plan and the
change in accounting with respect to the measurement of goodwill impairment, see
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations  included  in  Item 7 of Part II of this  report  under  the  caption
"Strategic  Repositioning"  and  Note  2  of  Notes  to  Consolidated  Financial
Statements included in Item 8 of Part II of this report.

(b)  FINANCIAL INFORMATION ABOUT BUSINESS SEGMENTS
The Corporation operates in three reportable business segments:  Power Tools and
Accessories,  including  consumer and professional  power tools and accessories,
electric lawn and garden tools,  electric  cleaning and lighting  products,  and
product service; Hardware and Home Improvement,  including security hardware and
plumbing   products;   and  Fastening  and  Assembly  Systems.   For  additional
information about these segments, see Note 17 of Notes to Consolidated Financial
Statements  included  in Item 8 of Part  II,  and  Management's  Discussion  and
Analysis of Financial  Condition and Results of Operations included in Item 7 of
Part II of this report.

(c)  NARRATIVE DESCRIPTION OF THE BUSINESS
The following is a brief  description  of each of the  Corporation's  reportable
business segments.

Power Tools and Accessories
---------------------------
The Power Tools and  Accessories  segment has worldwide  responsibility  for the
manufacture  and sale of consumer  (home use) and  professional  power tools and
accessories,  outdoor products (composed of electric lawn and garden tools), and
electric  cleaning and lighting  products,  as well as for product  service.  In
addition,  the Power Tools and Accessories  segment has  responsibility  for the
sale of plumbing  products to customers  outside of the United States and Canada
and for sales of the retained portion of the household products business,  which
is principally in Europe and Brazil. Power tools


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                                        2


include  both  corded  and  cordless  electric  power  tools,  such  as  drills,
screwdrivers,  saws,  sanders,  and grinders;  Workmate(R)  project  centers and
related  products;  and  bench and  stationary  machinery.  Accessories  include
accessories and attachments for power tools.  Outdoor products include a variety
of both corded and cordless  electric lawn and garden  tools,  such as hedge and
yard (string) trimmers, lawn mowers, edgers, blower/vacuums, power sprayers, and
related lawn and garden  accessories.  Electric  cleaning and lighting  products
include cordless upright and hand-held vacuums,  flexible  flashlights,  and wet
scrubbers.
   Power tools,  electric lawn and garden tools,  electric cleaning and lighting
products,  and related accessories are marketed around the world under the BLACK
& DECKER name as well as other  trademarks and trade names,  including,  without
limitation,  DEWALT; ELU; VERSAPAK; WOOD HAWK; WIZARD; PIVOT DRIVER;  SANDSTORM;
WORKMATE;  FIRESTORM; MOUSE; QUANTUM PRO; SCRUGUN; HOLGUN; WILDCAT; POWERDRIVER;
QUATTRO; ALLIGATOR; POWERFILE; TWISTLOK;  VERSA-CLUTCH;  GROOM `N' EDGE; VAC `N'
MULCH; MASTERVAC;  LEAFBUSTER;  STRIMMER;  POWER COMBI; REFLEX; HEDGE HOG; HEDGE
HOG XB; GRASS HOG; LEAF HOG; EDGE HOG; LOG HOG; 4 X 4;  DUSTBUSTER;  SCUMBUSTER;
FLOORBUSTER;  SNAKELIGHT; SPOTLITER; SAFELITER; SERIES 20; SERIES 40; SERIES 60;
B&D; PIRANHA; ROCK CARBIDE;  BULLET; PILOT POINT;  SCORPION ANTI-SLIP;  MAGNETIC
DRILL AND DRIVE SYSTEM; RAPID LOAD; TOUGH PACK; and MASTER SERIES.
   The composition of the Corporation's  sales by product groups for 1999, 1998,
and 1997 is included in Note 17 of Notes to  Consolidated  Financial  Statements
included in Item 8 of Part II of this report.  Within each product  group shown,
there existed no individual  product that  accounted for greater than 10% of the
Corporation's consolidated sales for 1999, 1998, or 1997.
   The Corporation's  product service program supports its power tools, electric
lawn and garden tools, and electric cleaning and lighting products.  Replacement
parts  and  product  repair   services  are  available   through  a  network  of
company-operated  service  centers,  which are  identified and listed in product
information  material generally  included in product packaging.  At December 31,
1999,  there were  approximately  135 such  service  centers,  of which  roughly
two-thirds were located in the United States.  The remainder were located around
the world, primarily in Canada, Europe, and Asia. These company-operated service
centers are supplemented by several hundred  authorized service centers operated
by independent  local owners.  The  Corporation  also operates a  reconditioning
center in which  power  tools,  electric  lawn and garden  tools,  and  electric
cleaning  and  lighting  products are  reconditioned  and then  re-sold  through
numerous company-operated factory outlets and service centers.
   Most of the  Corporation's  consumer  power tools,  electric  lawn and garden
tools,  and electric  cleaning and lighting  products  sold in the United States
carry a two-year  warranty,  pursuant to which the consumer can return defective
products  during  the  two  years  following  the  purchase  in  exchange  for a
replacement  product  or  repair  at no  cost  to  the  consumer.  Most  of  the
Corporation's  professional  power  tools  sold  in the  United  States  carry a
one-year warranty with similar  provisions.  Products sold outside of the United
States generally have similar warranty  arrangements.  Such  arrangements  vary,
however, depending upon local market conditions and laws and regulations.
   The  Corporation's  product  offerings  in the Power  Tools  and  Accessories
segment are sold primarily to retailers, wholesalers, distributors, and jobbers,
although some  reconditioned  power tools,  electric lawn and garden tools,  and
electric  cleaning  and  lighting  products  are sold  through  company-operated
service  centers and factory  outlets  directly to end users.  Sales to The Home
Depot,  one of the  segment's  customers,  accounted for greater than 10% of the
Corporation's  consolidated  sales for 1999,  1998,  and  1997.  For  additional
information  regarding  sales  to The  Home  Depot,  see  Note  17 of  Notes  to
Consolidated Financial Statements included in Item 8 of Part II of this report.
   The principal  materials used in the  manufacturing  of products in the Power
Tools and Accessories segment are plastics,  aluminum,  copper,  steel,  certain
electronic components, and batteries. These materials are used in various forms.
For example,  aluminum or steel may be used in the form of wire, sheet, bar, and
strip stock.
   The materials  used in the various  manufacturing  processes are purchased on
the open market, and the majority are available through multiple sources and are
in  adequate  supply.  The  Corporation  has  experienced  no  significant  work
stoppages to date as a result of shortages of  materials.  The  Corporation  has
certain  long-term  commitments for the purchase of various  component parts and
raw  materials  and believes  that it is unlikely  that any of these  agreements
would be  terminated  prematurely.  Alternate  sources of supply at  competitive
prices  are  available  for most,  if not all,  materials  for  which  long-term
commitments exist. The Corporation believes that the termination of any of these
commitments would not have a material adverse effect on operations. From time to
time, the Corporation enters into commodity hedges on certain raw materials used
in the manufacturing process to reduce the risk of market price fluctuations. As
of December  31,  1999,  the amount of product  under  commodity  hedges was not
material to the Corporation.
   As a global marketer and manufacturer,  the Corporation  purchases  materials
and  supplies  from  suppliers  in many  different  countries  around the world.
Certain  of the  finished  products  and  component  parts  are  purchased  from
suppliers that have manufacturing operations in mainland China. In addition, the
Corporation carries on manufacturing  operations in that country. China has been
granted  Normal  Trade  Relations  (NTR)  status  through  early July 2000,  and
currently there are no significant trade restrictions or tariffs imposed on such
products.  The  Corporation  has  investigated  alternate  sources of supply and
production  arrangements  in case the NTR  status is not  extended.  Alternative
sources  of  supply  are  available,  or can be  developed,  for  many of  these
products,  and  alternative  production  arrangements  can be made  available at
certain of the Corporation's  other  manufacturing  facilities.  The Corporation
believes that,  although there could be some disruption in the supply of certain
of these  finished  products  and  component  parts if China's NTR status is not
extended or if significant trade restrictions or tariffs are imposed, the impact
would not have a material  adverse effect on the operating  results of the Power
Tool and Accessories segment over the


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                                        3


long term. However, the Corporation believes that, in the event that China's NTR
status is not extended or significant trade restrictions or tariffs are imposed,
the impact  would likely have a  significant  negative  effect on the  operating
results  of  the  Power  Tool  and  Accessories   segment,   and  therefore  the
Corporation,  over the short term.  For purposes of evaluating the impact on the
operating  results of the Power Tools and Accessories  segment in the event that
China's NTR status is not extended or that  significant  trade  restrictions  or
tariffs are  imposed,  the  Corporation  defines  the long term as an  estimated
period of time in excess of 18 to 24 months  from  inception  of such action and
the short term as an  estimated  period of time from  inception  of such  action
extending for the next 18 to 24 months.
   Principal  manufacturing and assembly facilities of the power tools, electric
lawn and garden tools, electric cleaning and lighting products,  and accessories
businesses in the United States are located in Fayetteville, North Carolina, and
Easton and Hampstead,  Maryland. Principal distribution facilities in the United
States,  other than those located at the manufacturing  facilities listed above,
are located in Fort Mill, South Carolina, and Rancho Cucamonga, California.
   Principal  manufacturing and assembly facilities of the power tools, electric
lawn and garden tools, electric cleaning and lighting products,  and accessories
businesses  outside of the  United  States are  located in  Buchlberg,  Germany;
Perugia, Italy; Spennymoor and Rotherham,  England;  Mexicali,  Mexico; Uberaba,
Brazil; and Suzhou, China. The principal distribution  facilities outside of the
United States,  other than those located at the manufacturing  facilities listed
above, were located in Northampton,  England, and Idstein,  Germany. The Idstein
facility  was  sold in late  1999  and is being  replaced  in 2000 by a  managed
central-European distribution center in Tongeren, Belgium.
   For additional  information  with respect to these and other properties owned
or leased by the Corporation, see Item 2, "Properties."
   The  Corporation  holds various  patents and licenses on many of its products
and processes in the Power Tools and Accessories segment. Although these patents
and licenses are important,  the Corporation is not materially dependent on such
patents or licenses with respect to its operations.
   The Corporation holds various  trademarks that are employed in its businesses
and operates  under  various trade names,  some of which are stated  above.  The
Corporation  believes that these trademarks and trade names are important to the
marketing and distribution of its products.
   A  significant  portion  of the  Corporation's  sales in the Power  Tools and
Accessories  segment is derived from the  do-it-yourself  and home modernization
markets,  which generally are not seasonal in nature.  However, sales of certain
consumer  and  professional  power  tools  tend to be higher  during  the period
immediately  preceding the Christmas gift-giving season, while the sales of most
electric  lawn and garden  tools are at their  peak  during the winter and early
spring period. Most of the Corporation's other product lines within this segment
generally  are not seasonal in nature,  but may be  influenced  by other general
economic trends.
   The  Corporation  is one of the  world's  leaders  in the  manufacturing  and
marketing  of  portable  power  tools,  electric  lawn  and  garden  tools,  and
accessories.  Worldwide,  the  markets  in which  the  Corporation  sells  these
products are highly competitive on the basis of price,  quality,  and after-sale
service.  A number of  competing  domestic  and  foreign  companies  are strong,
well-established  manufacturers  that compete on a global  basis.  Some of these
companies  manufacture  products  that  are  competitive  with a  number  of the
Corporation's  product lines.  Other  competitors  restrict their  operations to
fewer  categories,  and some offer only a narrow range of competitive  products.
Competition from certain of these manufacturers has been intense in recent years
and is expected to continue.

Hardware and Home Improvement
-----------------------------
The Hardware and Home Improvement  segment has worldwide  responsibility for the
manufacture  and sale of security  hardware  products,  for the  manufacture  of
plumbing  products,  and for the sale of plumbing  products to  customers in the
United States and Canada.  Security hardware products consist of residential and
commercial  door locksets,  including  high-security  and  electronic  locks and
locking  devices;  door  closers,  hinges and exit  devices;  and master  keying
systems.  Plumbing  products consist of a variety of conventional and decorative
lavatory, kitchen, and tub and shower faucets, bath accessories, and replacement
parts.
   Security  hardware  products  are marketed  under a variety of trademarks and
trade names, including, without limitation,  KWIKSET; KWIKSET PLUS; TITAN; TITAN
COMMERCIAL  SERIES;  ACCESSONE;   LOCKMINDER;   NIGHTSIGHT;  THE  SOCIETY  BRASS
COLLECTION;  BLACK & DECKER;  BLACK & DECKER PLUS; GEO; DOM; DIAMANT;  PENTAGON;
NEMEF;  and CORBIN CO.  Plumbing  products are marketed under the trademarks and
trade names PRICE PFISTER; BLACK & DECKER; THE PFABULOUS PFAUCET WITH THE PFUNNY
NAME; THE PFABULOUS PFAUCET.  PFOREVER;  PFOREVER WARRANTY; PFILTER PFAUCET; THE
SOCIETY BRASS COLLECTION; TWISTPFIT; JOB PACK; GENESIS; CARMEL; TRIBECA; PARISA;
GEORGETOWN; SAVANNAH; EUROSTYLE; and MATCHMAKERS.
   The composition of the Corporation's  sales by product groups for 1999, 1998,
and 1997 is included in Note 17 of Notes to  Consolidated  Financial  Statements
included in Item 8 of Part II of this report.  Within each product  group shown,
there existed no individual  product that  accounted for greater than 10% of the
Corporation's consolidated sales for 1999, 1998, or 1997.
   Most of the  Corporation's  security  hardware  products  sold in the  United
States carry a warranty,  pursuant to which the  consumer  can return  defective
product  during the warranty  term in exchange for a  replacement  product at no
cost to the consumer. Warranty terms vary by product and range from a 10-year to
a lifetime warranty with respect to mechanical operations and from a 5-year to a
lifetime  warranty  with respect to finish.  Products sold outside of the United
States for residential use generally have similar  warranty  arrangements.  Such
arrangements vary, however,  depending upon local market conditions and laws and
regulations.  Most of the  Corporation's  plumbing  products  sold in the United
States carry a lifetime warranty with respect to function and a limited lifetime
warranty  with  respect to finish,  pursuant  to which the  consumer  can return
defective product in exchange for a replacement  product or repair at no cost to
the consumer.

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                                        4


   The  Corporation's  product  offerings in the  Hardware and Home  Improvement
segment are sold primarily to retailers, wholesalers, distributors, and jobbers.
Certain security  hardware products are sold to commercial,  institutional,  and
industrial  customers.  Sales to The Home Depot, one of the segment's customers,
accounted for greater than 10% of the Corporation's consolidated sales for 1999,
1998, and 1997. For additional  information  regarding  sales to The Home Depot,
see Note 17 of Notes to Consolidated  Financial Statements included in Item 8 of
Part II of this report.
   The principal materials used in the manufacturing of products in the Hardware
and Home Improvement  segment are plastics,  aluminum,  steel, brass, zamak, and
ceramics.
   The materials  used in the various  manufacturing  processes are purchased on
the open market, and the majority are available through multiple sources and are
in  adequate  supply.  The  Corporation  has  experienced  no  significant  work
stoppages to date as a result of shortages of  materials.  The  Corporation  has
certain  long-term  commitments for the purchase of various  component parts and
raw  materials  and believes  that it is unlikely  that any of these  agreements
would be  terminated  prematurely.  Alternate  sources of supply at  competitive
prices  are  available  for most,  if not all,  materials  for  which  long-term
commitments exist. The Corporation believes that the termination of any of these
commitments would not have a material adverse effect on operations. From time to
time, the Corporation enters into commodity hedges on certain raw materials used
in the manufacturing process to reduce the risk of market price fluctuations. As
of December  31,  1999,  the amount of product  under  commodity  hedges was not
material to the Corporation.
   As a global marketer and manufacturer,  the Corporation  purchases  materials
and  supplies  from  suppliers  in many  different  countries  around the world.
Certain  of the  finished  products  and  component  parts  are  purchased  from
suppliers that have  manufacturing  operations in mainland  China. As previously
noted,  China has been granted Normal Trade Relations (NTR) status through early
July 2000, and currently there are no significant trade  restrictions or tariffs
imposed on such products.  The Corporation has investigated alternate sources of
supply  and  production  arrangements  in case the NTR  status is not  extended.
Alternative  sources of supply are available,  or can be developed,  for many of
these products, and alternative production arrangements can be made available at
certain of the Corporation's  other  manufacturing  facilities.  The Corporation
believes that,  although there could be some disruption in the supply of certain
of these  finished  products  and  component  parts if China's NTR status is not
extended or if significant trade restrictions or tariffs are imposed, the impact
would  not have a  material  adverse  effect  on the  operating  results  of the
Hardware and Home Improvement segment.
   Principal  manufacturing  and  assembly  facilities  of the Hardware and Home
Improvement  segment in the United  States are located in Anaheim  and  Pacoima,
California; Denison, Texas; Waynesboro, Georgia; and Bristow, Oklahoma.
   Principal  manufacturing  and  assembly  facilities  of the Hardware and Home
Improvement segment outside of the United States are located in Bruhl,  Germany;
Mexicali, Mexico; and Apeldoorn, Netherlands.
   For additional  information  with respect to these and other properties owned
or leased by the Corporation, see Item 2, "Properties."
   The  Corporation  holds various  patents and licenses on many of its products
and  processes in the  Hardware and Home  Improvement  segment.  Although  these
patents and licenses are important,  the Corporation is not materially dependent
on such patents or licenses with respect to its operations.
   The Corporation holds various  trademarks that are employed in its businesses
and operates  under  various trade names,  some of which are stated  above.  The
Corporation  believes that these trademarks and trade names are important to the
marketing and distribution of its products.
   A  significant  portion of the  Corporation's  sales in the Hardware and Home
Improvement  segment is derived from the  do-it-yourself  and home modernization
markets,  which  generally are not seasonal in nature,  but may be influenced by
trends in the residential and commercial  construction markets and other general
economic trends.
   The  Corporation  is one of the  world's  leading  producers  of  residential
security  hardware  and is one of the  leading  producers  of  faucets  in North
America.  Worldwide,  the markets in which the Corporation  sells these products
are highly competitive on the basis of price, quality, and after-sale service. A
number of competing domestic and foreign companies are strong,  well-established
manufacturers   that  compete  on  a  global  basis.  Some  of  these  companies
manufacture  products that are  competitive  with a number of the  Corporation's
product lines. Other competitors  restrict their operations to fewer categories,
and some offer only a narrow range of  competitive  products.  Competition  from
certain of these  manufacturers has been intense in recent years and is expected
to continue.

Fastening and Assembly Systems
------------------------------
The   Corporation's   Fastening  and  Assembly  Systems  segment  has  worldwide
responsibility  for the  manufacture  and sale of an extensive line of metal and
plastic fasteners and engineered fastening systems for commercial  applications,
including blind riveting,  stud welding and assembly systems,  specialty screws,
prevailing  torque  nuts and  assemblies,  insert  systems,  metal  and  plastic
fasteners,  and  self-piercing  riveting  systems.  The  fastening  and assembly
systems  products are marketed  under a variety of  trademarks  and trade names,
including,  without limitation,  EMHART FASTENING  TEKNOLOGIES;  EMHART;  DODGE;
GRIPCO; GRIPCO ASSEMBLIES;  HELICOIL; NPR; PARKER-KALON; POP; POP-LOK; POWERLINK
30; T-RIVET; ULTRA-GRIP;  TUCKER; WARREN; DRIL-KWIK;  PARABOLT; JACK NUT; KALEI;
PLASTIFAST;  PLASTI-KWICK; POPMATIC; POPNUT; POP-SERT; SWAGEFORM; WELDFAST; SWS;
SPLITFAST; NUT-FAST; and WELL-NUT.
   The composition of the Corporation's  sales by product groups for 1999, 1998,
and 1997 is included in Note 17 of Notes to  Consolidated  Financial  Statements
included in Item 8 of Part II of this report.  Within each product  group shown,
there existed no individual  product that  accounted for greater than 10% of the
Corporation's consolidated sales for 1999, 1998, or 1997.
   The   principal   markets  for  these   products   include  the   automotive,
transportation,   construction,   electronics,   aerospace,  machine  tool,  and
appliance  industries.  Substantial  sales are made to automotive  manufacturers
worldwide.
<PAGE>
                                       5

   Products are marketed directly to customers and also through distributors and
representatives.  These products face  competition  from many  manufacturers  in
several countries. Product quality, performance,  reliability,  price, delivery,
and technical and application  engineering  services are the primary competitive
factors.  Except  for  sales to  automotive  manufacturers,  which  historically
schedule plant  shutdowns  during July and August of each year,  there is little
seasonal variation.
   The  Corporation  owns  a  number  of  United  States  and  foreign  patents,
trademarks,  and license rights  relating to the fastening and assembly  systems
business. While the Corporation considers those patents, trademarks, and license
rights to be  valuable,  it is not  materially  dependent  upon such  patents or
license rights with respect to its operations.
   Principal  manufacturing  facilities of the  Fastening  and Assembly  Systems
segment in the United  States are located in Danbury,  Connecticut;  Montpelier,
Indiana;  Campbellsville and Hopkinsville,  Kentucky; and Mt. Clemens, Michigan.
Principal  facilities  outside of the United  States are located in  Birmingham,
England; Giessen, Germany; and Toyohashi, Japan. For additional information with
respect to these and other properties  owned or leased by the  Corporation,  see
Item 2, "Properties."
   The raw materials used in the fastening and assembly systems business consist
primarily of ferrous and nonferrous  metals in the form of wire, bar stock,  and
strip and sheet  metals;  plastics;  and  rubber.  These  materials  are readily
available from a number of suppliers.

Backlog
-------
The following is a summary of total backlog by business segment,  in millions of
dollars, as of the referenced dates.
--------------------------------------------------------------------------------
                                                                  December 31,
                                                               -----------------
                                                                 1999       1998
--------------------------------------------------------------------------------

Power Tools and Accessories                                     $  45      $  56
Hardware and Home Improvement                                      27         29
Fastening and Assembly Systems                                     67         66
--------------------------------------------------------------------------------
                                                                $ 139      $ 151
================================================================================

Other Information
-----------------
The  Corporation's   product   development  program  for  the  Power  Tools  and
Accessories  segment  is  coordinated  from the  Corporation's  headquarters  in
Towson,  Maryland, in the United States and from Slough, England, outside of the
United States.  Additionally,  product  development  activities are performed at
facilities in Rotherham and Spennymoor,  England;  Brockville,  Canada; Perugia,
Italy; and Idstein, Germany.
   Product development  activities for the Hardware and Home Improvement segment
are performed at facilities in Anaheim and Pacoima,  California;  and Apeldoorn,
Netherlands.
   Product development activities for the Fastening and Assembly Systems segment
are currently  performed at various product or business group headquarters or at
principal manufacturing locations as previously noted.
   Costs  associated  with  development  of new products and changes to existing
products  are  charged  to  operations  as  incurred.  See  Note 1 of  Notes  to
Consolidated  Financial  Statements included in Item 8 of Part II of this report
for amounts of expenditures for product development activities.
   As of December  31,  1999,  the  Corporation  employed  approximately  22,100
persons in its operations worldwide. Approximately 1,000 employees in the United
States  are  covered by  collective  bargaining  agreements.  During  1999,  two
collective  bargaining  agreements in the United States were negotiated  without
material  disruption to operations.  One agreement is scheduled for  negotiation
during 2000. Also, the Corporation has government-mandated collective bargaining
arrangements  or  union  contracts  with  employees  in  other  countries.   The
Corporation's  operations have not been affected significantly by work stoppages
and, in the opinion of management, employee relations are good.
   The  Corporation's  operations  worldwide  are  subject to  certain  foreign,
federal,  state, and local  environmental  laws and  regulations.  Many foreign,
federal, state and local governments also have enacted laws and regulations that
govern the  labeling  and  packaging  of products and limit the sale of products
containing certain materials deemed to be environmentally  sensitive. These laws
and regulations  not only limit the acceptable  methods for disposal of products
and components that contain certain  substances,  but also require that products
be  designed  in a manner  to  permit  easy  recycling  or  proper  disposal  of
environmentally  sensitive  components  such as nickel  cadmium  batteries.  The
Corporation  seeks to comply  fully with these  laws and  regulations.  Although
compliance  involves  continuing costs, it has not materially  increased capital
expenditures and has not had a material adverse effect on the Corporation.
   Pursuant to authority granted under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (CERCLA), the United States Environmental
Protection  Agency (EPA) has issued a National  Priority  List (NPL) of sites at
which action is to be taken by the EPA or state authorities to mitigate the risk
of release of hazardous  substances  into the  environment.  The  Corporation is
engaged in  continuing  activities  with regard to various  sites on the NPL and
other sites covered under CERCLA.  As of December 31, 1999, the  Corporation had
been  identified as a  potentially  responsible  party (PRP) in connection  with
approximately  24 sites being  investigated  by federal or state  agencies under
CERCLA.  The  Corporation  also is engaged in site  investigations  and remedial
activities  to  address  environmental  contamination  from past  operations  at
current and former manufacturing facilities in the United States and abroad.
   To  minimize  the  Corporation's   potential  liability,   when  appropriate,
management has undertaken,  among other things, active participation in steering
committees  established  at the sites  and has  agreed  to  remediation  through
consent orders with the appropriate government agencies. Due to uncertainty over
the  Corporation's  involvement  in  some of the  sites,  uncertainty  over  the
remedial  measures to be adopted at various sites and  facilities,  and the fact
that imposition of joint and several liability with the right of contribution is
possible  under  CERCLA and other laws and  regulations,  the  liability  of the
Corporation  with respect to any site at which  remedial  measures have not been
completed cannot be established with certainty. On the basis of periodic reviews
conducted with respect to these sites,  however, the Corporation has established
appropriate  liability  accruals.  As of December  31, 1999,  the  Corporation's
aggregate probable exposure with respect of environmental liabilities, for which
accruals have


<PAGE>
                                        6


been established in the Consolidated  Financial  Statements,  was $26.9 million.
With respect to environmental liabilities, the Corporation does not believe that
its liability with respect to any individual site will exceed $10.0 million.
   In the  opinion  of  management,  the costs of  compliance  with  respect  to
environmental  matters have been adequately accrued, and the ultimate resolution
of these matters will not have a material adverse effect on the Corporation. The
ongoing costs of compliance  with existing  environmental  laws and  regulations
have not had, nor are they expected to have, a material  adverse effect upon the
Corporation's capital expenditures or financial position.

(d)  FINANCIAL INFORMATION ABOUT GEOGRAPHIC AREAS
Reference  is made to Note 17 of Notes  to  Consolidated  Financial  Statements,
entitled "Business Segments and Geographic  Information",  included in Item 8 of
Part II of this report.

(e) EXECUTIVE  OFFICERS AND OTHER SENIOR OFFICERS OF THE CORPORATION
The current  Executive  Officers and Other Senior  Officers of the  Corporation,
their ages, current offices or positions,  and their business  experience during
the past five years are set forth below.

   Nolan D. Archibald - 56
   Chairman, President, and Chief Executive Officer;
      January 1990 - present.

   Paul A. Gustafson - 57
   Executive Vice President of the Corporation and President - Fastening and
      Assembly Systems Group,
      December 1996 - present;
   Group Vice President and President - Emhart Fastening Teknologies,
      July 1996 - December 1996;
   President - Emhart Fastening Teknologies,
      April 1990 - July 1996.

   Paul F. McBride - 43
   Executive Vice President of the Corporation and President - Power Tools and
      Accessories Group,
      April 1999 - present;
   Vice President - General Electric Company, GE Silicones,
      January 1998 - April 1999;
   President - GE Plastics Asia Pacific,
      August 1997 - January 1998;
   General Manager - GE Cycolac Resin,
      October 1995 - July 1997;
   General Manager - GE Plastics Automotive,
      October 1993 - September 1995.

   Charles E. Fenton - 51
   Senior Vice President and General Counsel,
      December 1996 - present;
   Vice President and General Counsel,
      May 1989 - December 1996.

   Barbara B. Lucas - 54
   Senior Vice President - Public Affairs and Corporate Secretary,
      December 1996 - present;
   Vice President - Public Affairs and Corporate Secretary,
      July 1985 - December 1996.

   Michael D. Mangan - 43
   Senior Vice President and Chief Financial Officer,
      January 2000 - present;
   Vice President - Investor Relations,
      November 1999 - January 2000;
   Executive Vice President and Chief Financial Officer - The Ryland Group,
      Inc.,
      November 1994 - September 1999.

   Thomas M. Schoewe - 47
   Senior Vice President and Chief Financial Officer,
      December 1996 - January 2000;
   Vice President and Chief Financial Officer,
      October 1993 - December 1996.
   Mr. Schoewe left the Corporation in January 2000.

   Leonard A. Strom - 54
   Senior Vice President - Human Resources,
      December 1996 - present;
   Vice President - Human Resources,
      May 1986 - December 1996.

   Christopher T. Metz - 34
   Vice President of the Corporation and President - Kwikset, Hardware and Home
      Improvement Group,
      July 1999 - present;
   President - Kwikset, Hardware and
      Home Improvement Group,
      June 1999 - July 1999;
   Vice President and General Manager - Professional Tools and Accessories,
      Europe,
      August 1996 - May 1999;
   Director - Professional Power Tools, North American Power Tools,
      July 1995 - July 1996;
   Group Product  Manager - North  American  Power Tools,
      February  1994 - June 1995.


<PAGE>
                                        7


   Stephen F. Reeves - 40
   Vice President - Finance and Strategic Planning,
      January 2000 - present;
   Vice President and Controller,
      September 1996 - January 2000;
   Corporate Controller,
      May 1994 - September 1996.

   James J. Roberts - 41
   Vice President of the Corporation and President - Accessories, Power Tools
      and Accessories Group,
      May 1999 - present;
   Vice President of the Corporation and Vice President/General Manager - U.S.
      Accessories, Power Tools and Accessories Group,
      December 1996 - May 1999;
   Vice President and General Manager - U.S. Accessories,
      August 1996 - December 1996;
   Vice President and General Manager - Professional Power Tools,  Europe,
      April 1994 - August 1996.

   Mark M. Rothleitner - 41
   Vice President - Investor Relations and Treasurer,
      January 2000 - present;
   Vice President and Treasurer,
      March 1997 - January 2000;
   Treasurer - Dresser Industries, Inc.,
      December 1996 - March 1997;
   Assistant Treasurer, International,
      June 1994 - December 1996.

   Edward J. Scanlon - 45
   Vice President of the Corporation and President - Commercial Operations,
      Power Tools and Accessories Group,
      May 1999 - present;
   Vice President of the Corporation and Vice President/General Manager - The
      Home Depot Division, Power Tools and Accessories Group,
      December 1997 - May 1999;
   Senior Vice President Sales - North American Power Tools and Accessories,
      August 1995 - December 1997;
   Vice President Sales - The Home Depot  Division,  North American Power Tools,
      February 1994 - August 1995.

   John W. Schiech - 41
   Vice President of the Corporation and President - North American Professional
      Power Tools, Power Tools and Accessories Group,
      May 1999 - present;
   Vice President of the Corporation and Vice President/General Manager - North
      American Professional Power Tools, Power Tools and Accessories Group,
      December 1997 - May 1999;
   Vice President and General Manager - Professional Power Tools,
      October 1995 - December 1997;
   Vice President  Engineering - North American Power Tools,
      July 1994 - October 1995.

   Frederik B. van den Bergh - 54
   Vice President of the Corporation and President - European Power Tools, Power
      Tools and Accessories Group,
      July 1997 - present;
   Executive Vice President, Coleman Company Inc., and President, Coleman
      International,
      May 1996 - July 1997;
   Member, Board of Management, Braun A.G. Business Management and Group Sales,
      April 1992 - May 1996.

(f)  FORWARD-LOOKING STATEMENTS
This  Annual  Report  on  Form  10-K   includes   statements   that   constitute
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities  Exchange Act of 1934 and that are
intended to come within the safe harbor  protection  provided by those sections.
By their nature, all forward-looking  statements involve risk and uncertainties.
Actual  results  may  differ   materially   from  those   contemplated   by  the
forward-looking  statements  for a number of reasons,  including but not limited
to: market  acceptance of the new products  introduced in 1999 and scheduled for
introduction  in 2000;  the level of sales  generated  from  these new  products
relative  to  expectations,  based on the  existing  investments  in  productive
capacity and  commitments  of the  Corporation to fund  advertising  and product
promotions  in  connection  with the  introduction  of these new  products;  the
ability of the  Corporation  and its suppliers to meet scheduled  timetables for
new product introductions; unforeseen competitive pressure or other difficulties
in maintaining


<PAGE>
                                        8


mutually  beneficial  relationships  with key distributors or in penetrating new
channels of  distribution;  adverse  changes in currency  exchange  rates or raw
material  commodity prices,  both in absolute terms and relative to competitors'
risk  profiles;  delays  in  or  unanticipated   inefficiencies  resulting  from
manufacturing  and   administrative   reorganization   actions  in  progress  or
contemplated by the strategic repositioning plan announced by the Corporation in
January 1998 and  described  herein;  the degree of working  capital  investment
required to meet customer  service levels;  gradual  improvement in the economic
environment in Asia and Latin America;  and the  continuation of economic growth
in North America which more than offsets economic softness in Europe.
   In  addition  to the  foregoing,  the  Corporation's  ability to realize  the
anticipated benefits of the restructuring actions undertaken in 1998 and 1999 is
dependent   upon  current  market   conditions,   as  well  as  the  timing  and
effectiveness   of  the   relocation  or   consolidation   of   production   and
administrative  processes.  The ability to realize the benefits  inherent in the
balance  of  the  restructuring  actions  is  dependent  on  the  selection  and
implementation of economically  viable projects in addition to the restructuring
actions taken to date.

ITEM 2.  PROPERTIES

The Corporation operates 37 manufacturing facilities around the world, including
18  located  outside  of the  United  States in 9 foreign  countries.  The major
properties  associated  with each  business  segment  are  listed in  "Narrative
Description of the Business" in Item 1(c) of Part I of this report.
   The  Corporation  owns  most of its  facilities  with  the  exception  of the
following major leased facilities:
   In the United  States:  Mt.  Clemens,  Michigan,  and  Hampstead  and Towson,
Maryland.
   Outside of the United States: Rotherham, England; Tongeren, Belgium; Idstein,
Germany; and Mexicali, Mexico.
   Additional  property  both  owned and  leased by the  Corporation  in Towson,
Maryland,  is used for administrative  offices.  Subsidiaries of the Corporation
lease certain  locations  primarily for smaller  manufacturing  and/or  assembly
operations,  service  operations,  sales  and  administrative  offices,  and for
warehousing and distribution  centers. The Corporation also owns a manufacturing
plant which is located on leased land in Suzhou, China.
   The Corporation's  average utilization rate for its manufacturing  facilities
for 1999 was in the range of 79% to 89%. The  Corporation  continues to evaluate
its worldwide  manufacturing cost structure to identify opportunities to improve
capacity utilization and will take appropriate action as deemed necessary.
   Management  believes  that its owned and leased  facilities  are suitable and
adequate to meet the Corporation's anticipated needs.

ITEM 3.  LEGAL PROCEEDINGS

The  Corporation  is involved  in various  lawsuits  in the  ordinary  course of
business. These lawsuits primarily involve claims for damages arising out of the
use of the  Corporation's  products  and  allegations  of patent  and  trademark
infringement.  The Corporation also is involved in litigation and administrative
proceedings involving employment matters and commercial disputes.  Some of these
lawsuits  include  claims for  punitive  as well as  compensatory  damages.  The
Corporation, using current product sales data and historical trends, actuarially
calculates the estimate of its exposure for product  liability.  The Corporation
is insured for  product  liability  claims for amounts in excess of  established
deductibles and accrues for the estimated liability as described above up to the
limits of the  deductibles.  All other  claims  and  lawsuits  are  handled on a
case-by-case basis.
   As previously noted under Item 1(e) of Part I of this report, the Corporation
also is party to  litigation  and  administrative  proceedings  with  respect to
claims  involving the discharge of hazardous  substances  into the  environment.
Certain  of  these   matters   assert   damages  and   liability   for  remedial
investigations and clean-up costs with respect to sites at which the Corporation
has been  identified  as a PRP under  federal and state  environmental  laws and
regulations.  Other matters involve sites that the Corporation owns and operates
or previously sold.
   The   Corporation   and  a  customer  of  the   Corporation's   former  glass
container-forming   and  inspection   equipment  business  are  parties  to  two
arbitration proceedings pending in the Court of Arbitration of the International
Chamber of Commerce in London. In these  proceedings,  the customer alleges that
the Corporation breached two contracts for the construction and equipping of two
separate glass manufacturing  plants owned by the customer and currently asserts
that it is  entitled  to damages of  approximately  $40  million.  Although  the
Corporation  has sold  its  glass  container-forming  and  inspection  equipment
business,  the Corporation has retained  responsibility for the defense of these
proceedings  and any  damages  awarded  the  customer  in excess  of $1  million
(exclusive of legal fees and other  costs).  The  Corporation  intends to defend
vigorously against the allegations made in these proceedings.
   In the opinion of  management,  amounts  accrued for awards or assessments in
connection with the matter specified above and with respect to environmental and
other  litigation and  administrative  proceedings to which the Corporation is a
party are adequate and,  accordingly,  the ultimate  resolution of these matters
will not have a material adverse effect on the  Corporation.  As of December 31,
1999, the Corporation had no known probable but inestimable exposures for awards
and assessments in connection  with the matter  specified above and with respect
to environmental and other litigation and administrative  proceedings that could
have a material adverse effect on the Corporation.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

<PAGE>
                                        9


                                     PART II

ITEM 5.  MARKET FOR THE COMPANY'S STOCK AND RELATED STOCKHOLDER MATTERS

(a)  MARKET INFORMATION
The Corporation's  Common Stock is listed on the New York Stock Exchange and the
Pacific Stock Exchange.
   The following table sets forth, for the periods  indicated,  the high and low
sale prices of the Common Stock as reported in the consolidated reporting system
for the New York Stock Exchange Composite Transactions:
--------------------------------------------------------------------------------
Quarter                    1999                         1998
--------------------------------------------------------------------------------

January to
   March           $60-1/16 to $47-5/8         $53-5/16  to $37-15/16
April to June      $64-1/8  to $52-23/32       $60-13/16 to $48-3/4
July to
   September       $64-5/8  to $45-5/16        $65-1/2   to $41-5/8
October to
   December        $52-1/4  to $41             $58-1/2   to $38-15/16
--------------------------------------------------------------------------------

(b)  HOLDERS OF THE CORPORATION'S CAPITAL STOCK
As of January 28, 2000, there were 17,470 holders of record of the Corporation's
Common Stock.

(c)  DIVIDENDS
The Corporation  has paid  consecutive  quarterly  dividends on its Common Stock
since 1937.  Future  dividends  necessarily  will depend upon the  Corporation's
earnings,  financial condition,  and other factors. The Credit Facility does not
restrict  the  Corporation's  ability to pay regular  dividends  in the ordinary
course of business on the Common Stock.
   Quarterly  dividends  per common  share for the most  recent two years are as
follows:
--------------------------------------------------------------------------------
Quarter                                        1999       1998
--------------------------------------------------------------------------------

January to March                               $.12       $.12
April to June                                   .12        .12
July to September                               .12        .12
October to December                             .12        .12
--------------------------------------------------------------------------------
                                               $.48       $.48
================================================================================
Common Stock:
-------------
150,000,000 shares authorized,  $.50 par value, 87,190,240 shares and 87,498,424
shares outstanding as of December 31, 1999 and 1998, respectively.

Preferred Stock:
----------------
5,000,000  shares  authorized,  without par value,  no shares  outstanding as of
December 31, 1999 and 1998.

(d)  ANNUAL MEETING OF STOCKHOLDERS
The 2000 Annual Meeting of  Stockholders  of the  Corporation is scheduled to be
held on April 25, 2000, at 9:00 a.m. at Black & Decker, 4041 Pleasant Road, Fort
Mill, South Carolina 29715.


ITEM 6.  SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
FIVE-YEAR SUMMARY
----------------------------------------------------------------------------------------------------------------------------
(Millions of Dollars Except Per Share Data)                     1999         1998(a)      1997          1996(b)      1995(c)
----------------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>          <C>          <C>           <C>          <C>
Sales                                                       $4,520.5     $4,559.9     $4,940.5      $4,914.4     $4,766.1
Earnings (loss) from continuing operations                     300.3       (754.8)       227.2         159.2        216.5
Earnings from discontinued operations (d)                         --           --           --          70.4         38.4
Extraordinary items                                               --           --           --            --        (30.9)
Net earnings (loss)                                            300.3       (754.8)       227.2         229.6        224.0
Net earnings (loss) per common share - basic:
   Continuing operations                                        3.45        (8.22)        2.40          1.69         2.39
   Discontinued operations                                        --           --           --           .79          .45
   Extraordinary items                                            --           --           --            --         (.36)
Net earnings (loss) per common share - basic                    3.45        (8.22)        2.40          2.48         2.48
Net earnings (loss) per common share - assuming dilution:
   Continuing operations                                        3.40        (8.22)        2.35          1.66         2.29
   Discontinued operations                                        --           --           --           .73          .41
   Extraordinary items                                            --           --           --            --         (.33)
Net earnings (loss) per common share - assuming dilution        3.40        (8.22)        2.35          2.39         2.37
Total assets                                                 4,012.7      3,852.5      5,360.7       5,153.5      5,545.3
Long-term debt                                                 847.1      1,148.9      1,623.7       1,415.8      1,704.5
Cash dividends per common share                                  .48          .48          .48           .48          .40
----------------------------------------------------------------------------------------------------------------------------
<FN>

(a)Earnings from continuing operations for 1998 include a write-off of  goodwill
   of $900.0  million,  a  restructuring  charge of $164.7  million before taxes
   ($117.3 million after taxes),  and a gain on the sale of businesses of $114.5
   million before taxes ($16.5 million after taxes).
(b)Earnings from continuing  operations for 1996 include a restructuring  charge
   of $91.3 million before taxes ($74.8 million after taxes) and a $10.6 million
   reduction  in income tax expense as a result of the  reversal of a portion of
   the Corporation's deferred tax asset valuation allowance.
(c)Earnings  from  continuing  operations  for  1995  include  a  $65.0  million
   reduction  in income tax expense as a result of the  reversal of a portion of
   the  Corporation's  deferred  tax asset  valuation  allowance.  In 1995,  the
   Corporation   recognized  a  $30.9  million  extraordinary  loss  from  early
   extinguishment of debt, net of income tax benefit of $2.6 million.
(d)Earnings  from  discontinued   operations  represent  the  earnings,  net  of
   applicable income taxes, of the Corporation's  discontinued PRC segment.  The
   earnings  of the  discontinued  PRC  segment  do not  reflect  any charge for
   interest allocated to that segment by the Corporation.
</FN>
</TABLE>



<PAGE>
                                       10


ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

OVERVIEW
The Corporation reported net earnings of $300.3 million, or $3.40 per share on a
diluted basis,  for the year ended December 31, 1999,  compared to a net loss of
$754.8  million,  or $8.22  per  share on a diluted  basis,  for the year  ended
December 31, 1998. The net loss of $754.8 million for 1998 was  principally  due
to the  recognition  of pre-tax  restructuring  and exit costs of $164.7 million
($117.3  million  net of tax) and the  write-off  of  goodwill  in the amount of
$900.0 million,  partially offset by a pre-tax gain on the sale of businesses of
$114.5 million ($16.5 million net of tax).  Excluding the effects of the gain on
sale of businesses,  restructuring charge, and goodwill write-off,  net earnings
for the year ended December 31, 1998,  would have been $246.0 million,  or $2.63
per diluted  share,  compared to net  earnings of $300.3  million,  or $3.40 per
diluted share, for the year ended December 31, 1999. The rise in net earnings in
1999 over the 1998 level,  excluding  those  items  described  in the  preceding
sentence, resulted from lower  restructuring-related  expenses and operating and
productivity improvements.
   As more fully described under the caption  "Strategic  Repositioning"  and in
Note 2 of Notes to Consolidated  Financial  Statements,  by the end of 1999, the
Corporation neared completion of the comprehensive strategic repositioning plan,
which was approved by the Board of Directors in January 1998.
   In the  discussion  and  analysis  of  financial  condition  and  results  of
operations that follows, the Corporation generally attempts to list contributing
factors in order of significance to the point being addressed.

STRATEGIC REPOSITIONING
As more fully described in Note 2 of Notes to Consolidated Financial Statements,
as of December 31, 1999, the Corporation  neared completion of the comprehensive
strategic  repositioning  plan approved by the Board of Directors on January 26,
1998.  The plan  included  the  following  components:  (i) the  divestiture  of
non-strategic  businesses;  (ii)  the  repurchase  of  approximately  10% of the
Corporation's  outstanding  common  stock  over a two-year  period;  and (iii) a
restructuring of remaining  operations.  Also, on January 26, 1998, the Board of
Directors  elected to authorize a change in the basis upon which the Corporation
evaluates goodwill for impairment.
   The first element of the strategic repositioning plan - designed to focus the
Corporation  on its  strategic  businesses  - was  completed in 1998 through the
divestiture of non-strategic  businesses:  True Temper Sports,  its recreational
products  business;  Emhart Glass,  its glass  container-forming  and inspection
equipment  business;  and the household products  businesses (other than certain
assets  associated  with the  Corporation's  cleaning and lighting  business) in
North America, Central America, the Caribbean, South America (excluding Brazil),
and Australia.  The Corporation received proceeds of approximately $625 million,
net of selling expenses and taxes paid, in 1998 for these businesses.
   In June 1998, the  Corporation  closed on the sale of its household  products
businesses in North America,  Central America, the Caribbean,  and South America
(excluding  Brazil).  The  household  products  business in  Australia  was sold
earlier in 1998.
   In September 1998, the  Corporation  announced that it had closed on the sale
of  Emhart  Glass.  Also  in  September  1998,  the  Corporation  completed  the
recapitalization of True Temper Sports. The Corporation  retained  approximately
6% of preferred and common stock of the recapitalized company, now known as True
Temper  Corporation,  valued at  approximately  $4 million.  In addition to cash
proceeds  included in the aggregate  $625 million noted above,  the  Corporation
received a senior, increasing-rate discount note, bearing interest at a variable
rate, in an initial  accreted  amount of $25.0  million in  connection  with the
recapitalization.  Because True Temper  Corporation is a highly leveraged entity
and there was no active market for the note, the Corporation  fully reserved the
$25.0 million note at the time of the  divestiture  and continued to reserve the
note through December 31, 1999.
   The pre-tax gain on the sale of businesses of $114.5  million  ($16.5 million
net of tax)  recognized by the Corporation  during 1998  represented the gain on
the divested  Emhart  Glass,  True Temper  Sports,  and the  household  products
businesses  (excluding  certain assets associated with the cleaning and lighting
product  lines) in North America,  Central  America,  the  Caribbean,  and South
America  (excluding  Brazil).  That  gain  was  net  of an  impairment  loss  of
approximately  $15  million  recognized  in June  1998 in  connection  with  the
then-anticipated  exit from the household  products business in Brazil. Due to a
lack of response from qualified  buyers,  the  Corporation  has ceased  actively
marketing its household products business in Brazil.
   Because  True  Temper  Sports,  Emhart  Glass,  and  the  household  products
businesses in North  America,  Central  America,  the  Caribbean,  South America
(excluding  Brazil),  and Australia were not treated as discontinued  operations
under  generally  accepted  accounting  principles,  they remained a part of the
Corporation's  reported  results from  continuing  operations  until their sale.
Under the accounting  prescribed by Statement of Financial  Accounting Standards
(SFAS) No. 121,  Accounting  for the  Impairment  of  Long-Lived  Assets and for
Long-Lived  Assets to be Disposed of, the  Corporation  reflected the long-lived
assets of these  businesses  at the  lower of their  carrying  amounts  or their
expected  fair  value  less  costs  to  sell,  and  ceased  depreciation  of the
businesses'   fixed  assets  and  amortization  of  goodwill  related  to  these
businesses  during the period held for sale. Had  depreciation not ceased on the
fixed  assets of these  businesses  while  they  were  held for sale,  aggregate
depreciation in 1998 through the dates of their sale or  recapitalization  would
have approximated $10 million.

<PAGE>
                                       11


   Proceeds from these divestitures,  net of selling expenses and taxes paid, of
approximately  $625 million were utilized in the  repurchase of a portion of the
Corporation's  common  stock  and to fund the  restructuring  program  described
below.
   The  second  element  of  the  strategic  repositioning  plan  - the  planned
repurchase of approximately 10% of its common stock over a two-year period - was
also completed in 1999. During 1999, the Corporation  repurchased 610,900 shares
of its common stock at an aggregate  cost of $32.1  million,  bringing the total
repurchased under this element of the strategic  repositioning plan in both 1999
and 1998 to 9,636,300 shares at an aggregate cost of $496.4 million.
   By the close of 1999, the Corporation  neared completion of the third element
of the strategic  repositioning  plan - a  restructuring  program  undertaken to
reduce  fixed  costs.  As part of the  restructuring  program,  the  Corporation
undertook  significant  change  in its  European  power  tools  and  accessories
businesses by  consolidating  distribution and  transportation  and centralizing
finance,   marketing,  and  support  services.  These  changes  in  Europe  were
accompanied by investment in state-of-the-art information systems similar to the
investments  made in the North  American  business.  In addition,  the worldwide
power  tools and  accessories  business  rationalized  its  manufacturing  plant
network,  resulting  in the  closure of a number of  manufacturing  plants.  The
restructuring  program  also  included  actions to improve the cost  position of
other businesses.
   This  restructuring  program  resulted in a pre-tax  charge of $164.7 million
during  the  year  ended   December  31,  1998  ($117.3   million   after  tax).
Restructuring  and exit costs  recognized  by the  Corporation  during 1998 were
principally  associated with severance benefits and voluntary retirement program
costs,  as well as the  write-down  to net  realizable  value of  certain  land,
buildings, and equipment in accordance with SFAS No. 121.
   In connection with the restructuring component of the strategic repositioning
plan, the Corporation  recorded severance  obligations when the liability became
probable under its established severance policies or as provided statutorily or,
when no policy or  statutory  provision  existed or  applied,  based on when the
benefits were communicated to affected  employees.  The timing of the charge was
dictated  based on the later of: (i) approval by management  having the ultimate
authority to approve the actions; (ii) resolution of contingencies affecting the
feasibility  of,  or  returns  from,  the  project;   or  (iii)  if  applicable,
notification of affected employees.
   The severance component of the restructuring  reserve established in 1998, as
adjusted  in 1999,  is net of  adjustments  that  occurred  due to:  (i)  actual
attrition  factors  that  differed  from those  initially  estimated;  (ii) more
cost-effective  methods of severing  employment that became probable,  typically
based on negotiations  with trade unions or local government  institutions;  and
(iii) amendments to the initial plan that were approved by the appropriate level
of management,  based primarily on changes in market  conditions that dictated a
modification  to the intended  course of action.  None of the adjustments to the
severance  obligations recorded as part of the strategic  repositioning plan was
individually material.
   A summary of restructuring activity during 1998 is as follows (in millions of
dollars):
--------------------------------------------------------------------------------
                                       Utilization of Reserve
                         Reserve As         During 1998            Reserve at
                        Established    ----------------------    December 31,
                            in 1998       Cash       Non-Cash            1998
--------------------------------------------------------------------------------

Severance benefits
   and cost of
   voluntary
   retirement
   program                   $121.3     $(52.8)        $(28.6)          $39.9
Write-down to
   net realizable
   value of certain
   land, buildings,
   and equipment               29.5         --          (29.5)             --
Other charges                  13.9       (2.8)           (.2)           10.9
--------------------------------------------------------------------------------
Total                        $164.7     $(55.6)        $(58.3)          $50.8
================================================================================
   Asset write-downs taken as part of the 1998 restructuring  charge principally
related to the book value of manufacturing  equipment and furniture and fixtures
net of estimated salvage, which was negligible.  The carrying values of land and
building  to be  abandoned  or sold  were  written  down to  their  fair  value,
generally  based on third party  offers,  when that fair value was less than net
book  value.  Gains were  realized  when two  facilities,  exited as part of the
restructuring,  that had a fair value exceeding their net book value at the time
of the  charge,  were sold.  Those  gains,  when  realized,  were  reported as a
reduction of the 1998 restructuring charge.
   In the preceding table, the $28.6 million non-cash utilization of the reserve
established  for  severance  benefits and cost of voluntary  retirement  program
represents  the present  value of payments to be made as a result of a voluntary
retirement  program for employees in the United  States.  Those payments will be
made from the assets of the  Corporation's  pension  plan trust rather than from
working capital of the Corporation.
   During 1999, the Corporation  recognized $13.1 million of additional  pre-tax
restructuring  and exit costs  associated with  restructuring  of North American
accessories and packaging  operations and Latin American power tool  operations,
exiting certain small foreign entities, and the settlement of claims regarding a
divested  business.  That $13.1 million charge was offset,  however,  by an $8.9
million gain  realized in 1999 on the sale of a facility,  exited as part of the
restructuring  actions  taken in 1998,  that had a fair value  exceeding its net
book  value at the time of the  charge and by the  reversal  of $4.2  million of
severance accruals  established as part of the 1998 charge, which will no longer
be required.

<PAGE>
                                       12


A summary of restructuring  activity during 1999 is set forth below (in millions
of dollars):
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                            Reserves
                                                         Established
                                             Reserve at     in 1999,                     Utilization of Reserve      Reserve at
                                           December 31,  Net of Gain  Reversal of        ----------------------    December 31,
                                                   1998   Recognized     Reserves          Cash        Non-Cash            1999
------------------------------------------------------------------------------------------------------------------------------------
<S>                                               <C>          <C>          <C>          <C>              <C>             <C>
Severance benefits and cost of
   voluntary retirement program                   $39.9        $ 4.4        $(4.2)       $(21.4)          $   -           $18.7
Write-down to net realizable value of
   certain land, buildings, and equipment             -         (4.2)           -             -             4.2               -
Other charges                                      10.9          4.0            -          (5.3)           (5.9)            3.7
------------------------------------------------------------------------------------------------------------------------------------
Total                                             $50.8        $ 4.2        $(4.2)       $(26.7)          $(1.7)          $22.4
====================================================================================================================================
</TABLE>
   In the preceding  table,  the negative $1.7 million of non-cash reserve usage
in 1999  represents  $7.2  million  of  non-cash  reserve  usage,  including  an
additional  $4.7 million  write-down  of property to its net  realizable  value,
offset  by  the  $8.9  million  gain  on the  sale  of  the  facility  described
previously.
   In addition to the  restructuring  and exit costs  recognized  as part of the
strategic  repositioning plan, the Corporation also recognized related expenses,
incremental to the cost of the restructuring  plans being  implemented,  that do
not qualify as restructuring or exit costs under generally  accepted  accounting
principles  ("restructuring-related  expenses"). Operating results for the years
ended  December 31, 1999 and 1998,  included  $15.0  million and $44.4  million,
respectively,  of restructuring-related  expenses. Included in the $44.4 million
of  restructuring-related  expenses  recognized  in 1998 were  $11.5  million of
inventory  write-downs  associated  with  products in the retained  cleaning and
lighting business that were being discontinued.
   Incremental benefits  realized during  1999 from the restructuring element of
the strategic repositioning plan were approximately $40 million. Those benefits,
in addition to the estimated $30 million of restructuring  benefits  realized in
1998,  resulted in annual  restructuring  savings for 1999 of $70  million.  The
Corporation  estimates that an additional $30 million in restructuring  benefits
will be  realized - in roughly  equal  amounts - in 2000 and 2001 as it realizes
the benefits of  restructuring  actions in the European power tools business and
in the  Hardware  and Home  Improvement  segment.  As a result,  total  expected
benefits from the restructuring element of the strategic  repositioning plan are
estimated at approximately  $100 million on an annual,  pre-tax basis by the end
of 2001.
   As indicated in Note 2 of Notes to  Consolidated  Financial  Statements,  the
severance  and  voluntary  retirement  accrual  included  in the $164.7  million
restructuring  charge  taken in  1998,  as  adjusted  in  1999,  related  to the
elimination of approximately 5,000 positions.  As the Corporation shifts certain
production and other activities and replaces certain employees who retired under
the United  States  voluntary  retirement  program,  it is  anticipated  that an
additional  2,200  positions  will be created.  As a result,  the  Corporation's
estimate of annual, pre-tax savings of approximately $100 million, expected once
the restructuring actions taken in 1998 and 1999 are fully implemented, reflects
the  savings  from  a  net  reduction  of  approximately  2,800  positions.  The
Corporation's   estimate  of  savings  was  based  upon  a  comparison   to  the
pre-restructuring  cost base.  Actual  savings  will likely be mitigated by such
factors as continued economic  deterioration in foreign markets and decisions to
increase  costs in such areas as promotion  and research and  development  above
levels that were otherwise assumed.
   As a consequence of the strategic repositioning plan, the Corporation elected
to change its method of measuring goodwill  impairment from an undiscounted cash
flow approach to a discounted cash flow approach, effective January 1, 1998. The
Corporation  believes  that  measurement  of the value of  goodwill  through the
discounted  cash flow  approach,  as more fully  described in Note 2 of Notes to
Consolidated  Financial  Statements,  is preferable in that the discounted  cash
flow  measurement  facilitates  the timely  identification  of impairment of the
carrying  value of  investments  in businesses and provides a more current - and
with respect to the businesses sold,  provided a more realistic - valuation than
the undiscounted  approach.  The adoption of this discounted cash flow approach,
however,  may  result  in  greater  earnings  volatility  because  decreases  in
projected  discounted  cash flows of certain  businesses  will  result in timely
recognition of future impairment.
   In connection  with this change in accounting with respect to the measurement
of goodwill  impairment,  a non-cash  charge of $900.0 million was recognized in
January  1998 ($9.80 per share both on a basic and a diluted  basis for the year
ended  December 31,  1998).  The $900.0  million  write-down,  which  related to
goodwill  associated  with the  Fastening and Assembly  Systems  segment and the
Hardware and Home Improvement segment and included a $40.0 million write-down of
goodwill associated with one of the divested businesses,  represented the amount
necessary to reduce the carrying values of goodwill for those  businesses to the
Corporation's best estimate,  as of January 1, 1998, of those businesses' future
discounted  cash flows  using the  methodology  described  in Note 2 of Notes to
Consolidated Financial Statements. As a result of the goodwill write-off and the
cessation of goodwill  amortization  related to the  businesses  sold,  goodwill
amortization  declined to $25.7  million  and $25.2  million for the years ended
December 31, 1999 and 1998, respectively,  from $63.3 million for the year ended
December 31, 1997.


<PAGE>
                                       13


SALES
The following  chart provides an analysis of the  consolidated  changes in sales
for the years ended December 31, 1999, 1998, and 1997.
--------------------------------------------------------------------------------
                                                 For the Year Ended December 31,
                                                 -------------------------------
(Dollars in millions)                               1999       1998       1997
--------------------------------------------------------------------------------

Total sales                                     $4,520.5   $4,559.9   $4,940.5
================================================================================
Unit volume - existing (a)                            10%         2%         5%
Unit volume - disposed (b)                            (8)%       (8)%       --
Price                                                 (1)%       (1)%       (1)%
Currency                                              (2)%       (1)%       (3)%
--------------------------------------------------------------------------------
Change in total sales                                 (1)%       (8)%        1%
================================================================================
(a)  Represents   change  in  unit  volume  for  businesses  where  year-to-year
     comparability exists.
(b)  Represents change in unit volume for businesses that were included in prior
     years results but were sold or recapitalized in 1998.

   Total  consolidated  sales for the year ended  December 31, 1999,  were $4.52
billion,  which represented a 1% decrease from 1998 sales of $4.56 billion. Unit
volume  growth  in  existing  businesses  was  offset  by unit  volume  declines
associated with the divested  household  products,  recreational  products,  and
glass  container-forming  and  inspection  equipment  businesses.  The  negative
effects of a stronger United States dollar compared to other foreign  currencies
caused  a 2%  decrease  in the  Corporation's  consolidated  sales  during  1999
compared to the prior year.  Pricing  actions,  taken in response to competitive
pressures and as a result of  volume-related  price  reductions  associated with
higher unit volumes in the North American power tools and accessories  business,
had a 1% negative effect on sales for the year ended December 31, 1999, compared
to the 1998 level.
   Total  consolidated  sales for the year ended  December 31, 1998,  were $4.56
billion,  which represented an 8% decrease from 1997 sales of $4.94 billion. The
negative  effects of a stronger  United  States  dollar  compared  to most major
foreign currencies caused a 1% decrease in the Corporation's  consolidated sales
during  1998 from the prior  year's  level.  Pricing  actions  had a 1% negative
effect on sales for 1998 as compared to 1997.  Total unit volume  declined by 6%
during 1998 from the 1997 level,  as increased unit volume in the  Corporation's
existing  businesses was more than offset by unit volume declines as a result of
the  divestitures  during 1998 of the  household  products  businesses  in North
America,  Central America, the Caribbean,  South America (excluding Brazil), and
Australia, of the glass container-forming and inspection equipment business, and
of the recreational products business.

EARNINGS
The  Corporation  reported  consolidated  operating  income of $536.3 million on
sales of $4,520.5  million in 1999 compared to a consolidated  operating loss of
$466.2  million  on  sales  of  $4,559.9  million  in 1998  and to  consolidated
operating income of $489.3 million on sales of $4,940.5 million in 1997.
   Consolidated  operating  income as a  percentage  of sales was 11.9% for 1999
compared to 10.6% for 1998,  excluding the $900.0 million write-off of goodwill,
the  $114.5  million  gain  on  sale  of  businesses,  and  the  $164.7  million
restructuring charge, all recognized in 1998, and 9.9% for 1997.
   As  more  fully  described  under  the  caption  "Strategic   Repositioning",
operating results for the years ended December 31, 1999 and 1998, included $15.0
million and $44.4  million,  respectively,  of  restructuring-related  expenses.
Excluding the effects of these  restructuring-related  expenses in 1999 and 1998
and,  for  1998,  excluding  the  restructuring  and exit  costs,  the  goodwill
write-off, and the gain on sale of businesses,  operating income as a percentage
of sales  was  12.2%  for 1999  compared  to 11.6%  and 9.9% for 1998 and  1997,
respectively.  In addition to the  realization  of benefits  from  restructuring
actions taken in 1998, a major  contributor to this increase in operating income
as a percentage  of sales from 1997 to 1998 was the $38.1  million  reduction in
goodwill  amortization  in 1998 as  compared  to  1997.  This  reduced  goodwill
amortization   was  a  result  of  the  goodwill   write-off  and  cessation  of
amortization of goodwill associated with the divested businesses.
   Consolidated  gross  margin  as a  percentage  of sales  for  1999 was  37.3%
compared  to 35.3% for 1998 and 35.9% for 1997.  The  increase  in gross  margin
during   1999  over   1998   primarily   resulted   from   significantly   lower
restructuring-related  expenses, cost benefits from restructuring actions taken,
and Six Sigma and other  productivity  improvements,  partially offset by excess
capacity and product mix issues in the Kwikset business of the Hardware and Home
Improvement  segment and negative pricing  actions.  The decline in gross margin
during 1998 from 1997 primarily  resulted from adverse foreign  exchange effects
on product costs, principally in the European operations;  competitive pressures
that  continued  to  constrain  pricing;  manufacturing  inefficiencies  in  the
security  hardware  portion of the Hardware and Home  Improvement  segment;  and
restructuring-related  expenses;  partially offset by higher production  volumes
and the decline in sales of lower  margin  products in the  household  products,
recreational  products,  and glass  container-forming  and inspection  equipment
businesses as a result of the divestiture of those businesses in 1998.
   Consolidated selling, general, and administrative expenses as a percentage of
sales were  25.4% for 1999  compared  to 24.7% for 1998 and 25.9% for 1997.  The
increase in selling,  general,  and  administrative  expenses as a percentage of
sales  in  1999  over  1998  resulted,   in  part,  from  increased  promotional
activities,  particularly in the power tools and accessories businesses in North
America, which increased the number of end-user specialists. The improvements in
1998  compared to 1997 were the result of lower  goodwill  amortization  in 1998
compared  to 1997  as a  result  of the  goodwill  write-off  and  cessation  of
amortization  of  goodwill  related  to the  businesses  to be sold,  as well as
benefits realized from restructuring  actions taken in 1998, partially offset by
restructuring-related expenses in 1998.
   Consolidated net interest expense (interest expense less interest income) was
$95.8 million in 1999 compared to $114.4  million in 1998 and $124.6  million in
1997. The lower net interest expense for 1999 compared to 1998 was primarily the
result of lower average borrowing levels. The lower net


<PAGE>
                                       14


interest  expense for 1998  compared to 1997 was  primarily  the result of lower
debt levels in 1998,  due to improved cash flows from  operating  activities and
debt reductions that occurred with net proceeds from business sales in excess of
amounts  used to  repurchase  common  stock,  and as a result of more  favorable
interest rates and debt mix in 1998.
   Consolidated   other   (income)   expense  for  1999  was  not   significant.
Consolidated  other expense for 1998 and 1997 principally  consisted of currency
losses and, for 1997, the discount on the sale of receivables.
   Consolidated  income tax  expense of $141.0  million  was  recognized  on the
Corporation's pre-tax income of $441.3 million for 1999. Consolidated income tax
expense of $166.5  million was recognized on the  Corporation's  pre-tax loss of
$588.3 million for 1998.  Consolidated  income tax expense of $122.3 million was
recognized  on the  Corporation's  pre-tax  income  of $349.5  million  in 1997.
Excluding  the income  tax  benefits  of $47.4  million  related to the  pre-tax
restructuring  charge of $164.7 million  recognized in 1998, the  non-deductible
write-off of goodwill in the amount of $900.0  million  recognized in 1998,  and
the income tax expense of $98.0 million recognized on the $114.5 million pre-tax
gain on sale of businesses in 1998, the Corporation's  reported tax rate was 32%
in 1999 and 1998 compared to 35% in 1997. The decrease in the effective tax rate
in 1999 and 1998  compared  to that in 1997  resulted  primarily  from the lower
amount  of  goodwill  amortization,  which  is not  tax  deductible,  due to the
write-off  of goodwill in 1998.  An analysis of taxes on earnings is included in
Note 12 of Notes to Consolidated Financial Statements.
   The  Corporation  reported  net  earnings  of  $300.3  million,  or per share
earnings of $3.45 and $3.40 on a basic and a diluted  basis,  respectively,  for
the year ended December 31, 1999. The Corporation  reported a net loss of $754.8
million,  or $8.22 per share both on a basic and a diluted  basis,  for the year
ended December 31, 1998,  principally as a result of the goodwill  write-off and
restructuring and exit costs, less the gain on sale of businesses, recognized in
1998.  Because the  Corporation  reported a net loss for the year ended December
31, 1998,  the  calculation  of reported  earnings per share on a diluted  basis
excludes  the  impact  of  stock   options  since  their   inclusion   would  be
anti-dilutive - that is, decrease the per-share loss. For comparative  purposes,
however,  the  dilutive  effect  of  these  options  has been  included  for the
evaluation of the Corporation's performance that follows.  Excluding the effects
of the goodwill  write-off of $900.0 million,  after-tax  restructuring and exit
costs of $117.3  million,  and the after-tax gain on sale of businesses of $16.5
million, net earnings for 1998 would have been $246.0 million or $2.63 per share
on this diluted basis  compared to net earnings of $300.3 million,  or $3.40 per
diluted share, for 1999 and net earnings of $227.2 million, or $2.35 per diluted
share, for 1997.

BUSINESS SEGMENTS
As  more  fully  described  in  Note  17  of  Notes  to  Consolidated  Financial
Statements,  the Corporation  operates in three  reportable  business  segments:
Power Tools and Accessories,  Hardware and Home  Improvement,  and Fastening and
Assembly Systems.
   Expenses   directly  related  to  reportable   business  segments  booked  in
consolidation  and,  thus,  excluded  from  segment  profit  for the  reportable
business segments were $12.4 million,  $20.4 million,  and $17.6 million for the
years ended December 31, 1999, 1998, and 1997,  respectively.  The $12.4 million
of  segment-related  expenses  excluded  from segment  profit in 1999  primarily
related to reserves  established  in  consolidation  for certain  legal  matters
associated   with  the  Power  Tools  and  Accessories  and  Hardware  and  Home
Improvement  segments.  The $20.4 million of  segment-related  expenses excluded
from   segment    profit   in   1998    primarily    consisted   of   unbudgeted
restructuring-related  expenses,  including  the  aforementioned  $11.5  million
write-down of cleaning and lighting inventory to net realizable value associated
with the product  line  rationalization  undertaken  to  integrate  the retained
cleaning and lighting business into the Power Tools and Accessories  operations.
The $17.6 million of  segment-related  expenses  excluded from segment profit in
1997  consisted of certain  unbudgeted  costs  recognized by the  Corporation on
behalf  of the  Power  Tools  and  Accessories  segment,  primarily  related  to
deteriorating  business  conditions  in Asia,  and on behalf of the Hardware and
Home Improvement segment, primarily related to the cost of programs initiated by
the prior management of that segment.
   As  indicated  above  and in  Note  17 of  Notes  to  Consolidated  Financial
Statements,  the determination of segment profit excludes restructuring and exit
costs. Of the $164.7 million pre-tax charge taken in 1998 for  restructuring and
exit  costs,  $97.8  million  related  to  businesses  in the  Power  Tools  and
Accessories segment, $15.4 million related to the businesses in the Hardware and
Home  Improvement  segment,  $3.3 million related to businesses in the Fastening
and Assembly Systems segment,  and $17.1 million related to divested businesses.
The balance of $31.1 million related principally to the $28.6 million charge for
the voluntary retirement for employees in the United States,  including those of
all three  reportable  business  segments and of the Corporate  center.  As more
fully described under the caption  "Strategic  Repositioning",  during 1999, the
Corporation  recognized $13.1 million of additional  pre-tax  restructuring  and
exit costs  associated  with  restructuring  of the Power Tools and  Accessories
segment,  exiting  certain  small  foreign  entities  in  the  Power  Tools  and
Accessories and Hardware and Home  Improvement  segments,  and the settlement of
claims  regarding a divested  business.  That $13.1  million  charge was offset,
however, by an $8.9 gain realized in 1999 on the sale of a Power Tools facility,
exited as part of the restructuring actions taken in 1998, that had a fair value
exceeding  its net book value at the time of the 1998 charge and by the reversal
during 1999 of $4.2 million of restructuring  reserves  established in the prior
year.

Power Tools and Accessories
---------------------------
Segment sales and profit for the Power Tools and Accessories segment, determined
on the basis described in Note 17 of Notes to Consolidated Financial Statements,
were as follows (in millions of dollars):
--------------------------------------------------------------------------------
For the Year Ended December 31,                 1999          1998          1997
--------------------------------------------------------------------------------

Sales to unaffiliated customers             $3,209.3      $2,946.4      $2,936.4
Segment profit                                 377.3         293.4         290.7
--------------------------------------------------------------------------------

<PAGE>
                                       15


   Sales to unaffiliated  customers in the Power Tools and  Accessories  segment
during 1999 increased 9% over the 1998 level despite  negative  pricing  actions
taken in response to  competitive  pressures  and as a result of  volume-related
price  reductions.  Sales of power tool products in North America benefited from
double-digit  rates of growth in sales of consumer  and  DEWALT(R)  professional
power tools due, in part, to new product introductions.  Sales of accessories in
North America grew at a high single-digit rate during 1999 over the 1998 level.
   Sales in Europe during 1999  increased  slightly over the 1998 level as solid
growth in some  countries  was offset by  weakness  in  Germany.  Sales in other
geographic  areas during 1999 increased  over the 1998 level,  but that increase
was offset by the impact of a currency devaluation in Brazil.
   Segment  profit as a percentage of sales for the Power Tools and  Accessories
segment  was  11.8% in 1999  compared  to 10.0% in 1998.  Higher  sales in 1999,
coupled with improved  gross margins  resulting from  restructuring  benefits as
well  as Six  Sigma  and  other  productivity  improvements,  more  than  offset
increased  selling,  general,  and  administrative  expenses  in 1999 to support
investments in marketing, promotion, and technical staff.
   Sales to unaffiliated  customers in the Power Tools and  Accessories  segment
during 1998  approximated  the 1997 level  despite  competitive  pressures  that
resulted in price  reductions.  Sales of power tool  products  in North  America
benefited from double-digit rates of growth in sales of the DEWALT  professional
power tools and  outdoor  products  lines in the United  States  coupled  with a
double-digit  growth rate in the power tools business in Canada.  This growth in
North America,  however,  was offset by a sharp decline in sales of cleaning and
lighting  products.  In addition,  sales of  accessories in North America during
1998  declined  slightly  from the 1997  level as that  business  undertook  SKU
reduction efforts and exited its fastening line in 1998.
   Sales in Europe  increased at a  low-single-digit  rate in 1998 over the 1997
level  as  increased  sales  of  consumer  and  professional   power  tools  and
accessories  offset  declines in sales of  household  products  and cleaning and
lighting products.  Sales of outdoor products in Europe in 1998 approximated the
1997 level.
   Sales in other geographic areas declined at a double-digit  rate in 1998 from
the 1997 levels,  due principally to continued  economic  turmoil in Asia during
1998 and worsening  economic  conditions in Latin America during the latter part
of 1998.
   Segment  profit as a percentage of sales for the Power Tools and  Accessories
segment was 10.0% in 1998 compared to 9.9% in 1997.

Hardware and Home Improvement
-----------------------------
Segment  sales  and  profit  for the  Hardware  and  Home  Improvement  segment,
determined on the basis described in Note 17 of Notes to Consolidated  Financial
Statements, were as follows (in millions of dollars):
--------------------------------------------------------------------------------
For the Year Ended December 31,                 1999          1998          1997
--------------------------------------------------------------------------------

Sales to unaffiliated customers               $881.8        $851.1        $804.8
Segment profit                                 124.0         125.2         121.3
--------------------------------------------------------------------------------
   Sales to unaffiliated  customers in the Hardware and Home Improvement segment
during  1999  increased  4% over the 1998  level  as a 6%  increase  in sales by
Kwikset was  mitigated  by a 1% increase in sales by Price  Pfister and a slight
decline in sales by the European security hardware businesses.
   Segment profit as a percentage of sales for the Hardware and Home Improvement
segment  declined from 14.7% in 1998 to 14.1% in 1999. This decrease in 1999 was
driven by margin  declines at Kwikset,  which  continues  to  experience  excess
capacity  and  product  mix  issues,  and  European  security  hardware  but was
partially offset by significant margin  improvements at Price Pfister,  stemming
from Six Sigma and other  productivity  initiatives as well as higher margin new
products.
   Sales to unaffiliated  customers in the Hardware and Home Improvement segment
during 1998 increased 6% over the 1997 level, due principally to increased sales
of security hardware and plumbing products in North America,  driven by sales of
TITAN(R)  locksets  and new  plumbing  product  introductions,  and of  security
hardware in Europe.  These  increases  were  partially  offset by lower sales of
security hardware products in Latin America and Asia.
   Segment profit as a percentage of sales for the Hardware and Home Improvement
segment  was  14.7% in 1998  compared  to 15.1% in  1997.  Segment  profit  as a
percentage  of  sales  in  1998  declined  from  the  1997  level  as  decreased
profitability with respect to security hardware products, principally associated
with  manufacturing  inefficiencies,  more than  offset  profitability  gains in
plumbing products experienced in 1998. Those gains,  however, were in comparison
to an extremely weak 1997.

Fastening and Assembly Systems
------------------------------
Segment  sales and  profit  for the  Fastening  and  Assembly  Systems  segment,
determined on the basis described in Note 17 of Notes to Consolidated  Financial
Statements, were as follows (in millions of dollars):
--------------------------------------------------------------------------------
For the Year Ended December 31,                 1999          1998          1997
--------------------------------------------------------------------------------

Sales to unaffiliated customers               $497.7        $463.0        $451.3
Segment profit                                  84.3          76.6          69.7
--------------------------------------------------------------------------------
   Sales to unaffiliated customers in the Fastening and Assembly Systems segment
during  1999 were 7% higher  than the 1998 level as strong  sales to  automotive
customers in North America and Europe offset weakness in the European industrial
sector.
   Segment  profit as a  percentage  of sales  for the  Fastening  and  Assembly
Systems segment increased from 16.5% in 1998 to 16.9% in 1999.
   Sales to unaffiliated customers in the Fastening and Assembly Systems segment
increased  3% in 1998  over  the  1997  level,  due in part to the  strength  of
European  automotive  sales,  despite  lower  automotive  sales during 1998 as a
result of softness in Asia and the effects of a strike at General  Motors in the
United States.
   Segment  profit as a  percentage  of sales  for the  Fastening  and  Assembly
Systems  segment  increased  from  15.4% in 1997 to 16.5% in 1998 as a result of
cost reduction initiatives.


<PAGE>
                                       16


HEDGING ACTIVITIES
The Corporation  has a number of  manufacturing  sites  throughout the world and
sells its  products in more than 100  countries.  As a result,  it is exposed to
movements in the exchange rates of various  currencies against the United States
dollar and against the  currencies  of countries in which it  manufactures.  The
major foreign currencies in which foreign currency risks exist are the euro (and
its legacy currencies, including the deutsche mark, Dutch guilder, French franc,
and Italian lira), pound sterling, Canadian dollar, Swedish krona, Japanese yen,
Australian  dollar,  Mexican  peso,  and  Brazilian  real.  Through  its foreign
currency activities,  the Corporation seeks to minimize the risk that cash flows
resulting from the sales of products  manufactured in a currency  different from
that of the selling subsidiary will be affected by changes in exchange rates.
   At the time of the  euro's  introduction  on  January  1,  1999,  the  eleven
participating  member countries of the European Monetary Union established fixed
conversion  rates  between  their  legacy  currencies  and the  euro.  During  a
three-year  phase-in  period during which special  conversion  rules apply,  the
legacy  currencies will continue to be used as legal tender. On January 1, 2002,
the legacy currencies will be canceled and replaced by the euro as legal tender.
The  Corporation  has initiated  actions to ensure that computer  systems in its
European operation will be in a position to accommodate the adoption of the euro
by no later than January 1, 2002. The Corporation believes that the introduction
of the euro has  resulted in  increased  competitive  pressures  in  continental
Europe due to the heightened transparency of intra-European pricing structures.
   From time to time, currency  devaluations may occur in countries in which the
Corporation  sells or manufactures its product.  While the Corporation will take
actions to mitigate the impacts of any future currency devaluations, there is no
assurance that such devaluations will not adversely affect the Corporation.
   In January  1999,  a  devaluation  of the  Brazilian  real took place and, in
response,  a lesser  devaluation  in the  value of the  Mexican  peso  occurred.
Because the  Corporation's  exposures in Brazil and Mexico either offset or were
partially  hedged,  the impact of the January 1999  devaluations on its reported
results was not material.  While the  Corporation  will take actions to mitigate
its  exposures,  there can be no assurance  that any future  devaluation  of the
Brazilian real or Mexican peso will not adversely affect the Corporation.
   Assets and liabilities of  subsidiaries  located outside of the United States
are  translated  at rates of exchange  at the  balance  sheet date as more fully
explained in Note 1 of Notes to Consolidated Financial Statements. The resulting
translation  adjustments  are included in the  accumulated  other  comprehensive
income component of stockholders' equity. During 1999, translation  adjustments,
recorded  in  the   accumulated   other   comprehensive   income   component  of
stockholders' equity,  decreased  stockholders' equity by $10.2 million compared
to a decrease of $37.7 million in 1998.
   In order to minimize  the  volatility  of reported  equity,  the  Corporation
hedges, on a limited basis, the exposure to foreign currency fluctuations on its
net investments in subsidiaries located outside of the United States through the
use of currency swaps, forward contracts,  and options. These hedging activities
generate  cash  inflows and  outflows  that offset the  translation  adjustment.
During 1999 and 1998, these activities  netted to a cash inflow of $30.4 million
and $3.4  million,  respectively.  The  corresponding  gains and losses on these
hedging activities were recorded in the accumulated other  comprehensive  income
component  of  stockholders'  equity.  The  increased  cash inflow from  hedging
activities  in 1999  compared to 1998  resulted  from the  maturities of certain
interest  rate swaps that  swapped  from fixed  United  States  dollars to fixed
foreign currencies.  Also included in the accumulated other comprehensive income
component were the costs of maintaining the hedge portfolio of foreign  exchange
contracts. These hedge costs were not significant in 1999 and 1998.
   As more  fully  explained  in  Note 10 of  Notes  to  Consolidated  Financial
Statements,  the Corporation seeks to issue debt  opportunistically,  whether at
fixed or variable rates, at the lowest possible costs. Based upon its assessment
of the future interest rate  environment  and its desired  variable rate debt to
total debt ratio,  the  Corporation  may later  convert  such debt from fixed to
variable  or from  variable  to fixed  interest  rates,  or from  United  States
dollar-based  rates to rates  based upon  another  currency,  through the use of
interest rate swap agreements.
   In  order  to meet  its  goal of  fixing  or  limiting  interest  costs,  the
Corporation  maintains  a  portfolio  of interest  rate hedge  instruments.  The
variable rate debt to total debt ratio,  after taking  interest rate hedges into
account, was 52% at December 31, 1999, compared to 47% at December 31, 1998, and
63% at December 31, 1997.  At December 31, 1999,  average debt  maturity was 6.2
years  compared to 6.7 years at December 31, 1998, and 3.9 years at December 31,
1997.

Interest Rate Sensitivity
-------------------------
The following  table  provides  information  as of December 31, 1999,  about the
Corporation's  derivative financial  instruments and other financial instruments
that are sensitive to changes in interest rates,  including  interest rate swaps
and debt obligations.  For debt obligations,  the table presents  principal cash
flows and related  average  interest rates by contractual  maturity  dates.  For
interest  rate  swaps,  the  table  presents  notional   principal  amounts  and
weighted-average  interest rates by contractual maturity dates. Notional amounts
are used to  calculate  the  contractual  payments  to be  exchanged  under  the
interest rate swaps.  Weighted-average variable rates are generally based on the
London  Interbank  Offered Rate (LIBOR) as of the reset dates. The cash flows of
these  instruments are denominated in a variety of currencies.  Unless otherwise
indicated, the information is presented in U.S. dollar equivalents, which is the
Corporation's reporting currency, as of December 31, 1999.



<PAGE>
                                       17


<TABLE>
<CAPTION>
Principal Payments and Interest Rate Detail by Contractual Maturity Dates
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                      Fair Value
                                                                                                                       (Assets)/
(U.S. Dollars in Millions)          2000        2001        2002        2003       2004    Thereafter       Total    Liabilities
------------------------------------------------------------------------------------------------------------------------------------
<S>                               <C>          <C>         <C>        <C>         <C>          <C>       <C>            <C>
Liabilities
Short-term borrowings
Variable rate (U.S. dollars)      $144.7       $  --       $  --      $   --      $  --        $   --    $  144.7       $  144.7
   Average interest rate            6.47%                                                                    6.47%
Variable rate (other currencies)  $ 38.5       $  --       $  --      $   --      $  --        $   --    $   38.5       $   38.5
   Average interest rate            7.04%                                                                    7.04%
Long-term debt
Fixed rate (U.S. dollars)         $208.7       $35.8       $32.3      $309.5      $  --        $454.6    $1,040.9       $1,004.3
   Average interest rate            6.63%       8.95%       8.86%       7.50%                    6.87%       7.14%
Fixed rate (other currencies)     $  4.5       $ 4.9       $ 1.8      $   .7      $  --        $   --    $   11.9       $   11.9
   Average interest rate            5.50%       5.35%       1.03%       1.05%                                4.43%
Variable rate (U.S. dollars)      $   --       $ 7.5       $  --      $   --      $  --        $   --    $    7.5       $    7.5
   Average interest rate                       L+.70%(a)
Interest Rate Derivatives
Fixed to Variable Rate Interest
Rate Swaps (U.S. dollars)         $ 50.0       $  --       $  --      $125.0      $  --        $275.0    $  450.0       $   26.7
   Average pay rate (b)
   Average receive rate             5.54%                               6.02%                    6.01%       5.96%
------------------------------------------------------------------------------------------------------------------------------------
<FN>

 (a)Variable rate  specified is based upon LIBOR plus the specified  margin over
    LIBOR.
 (b)The average pay rate is based upon 6-month forward LIBOR,  except for $150.0
    million in notional  principal  amount which matures after 2004 and is based
    upon 3-month forward LIBOR.
</FN>
</TABLE>

Foreign Currency Exchange Rate Sensitivity
------------------------------------------
As discussed  above,  the  Corporation  is exposed to market risks  arising from
changes in foreign  exchange rates. As of December 31, 1999, the Corporation has
hedged a substantial portion of its 2000 estimated foreign currency transactions
using  forward  exchange  contracts  and  purchased  options.   The  Corporation
estimated  the effect on 2000 gross  profits,  based upon a recent  estimate  of
foreign exchange  exposures,  of a uniform 10% strengthening in the value of the
United  States  dollar and a uniform  10%  weakening  in the value of the United
States  dollar.  The larger loss computed was that under an assumed  uniform 10%
strengthening of the United States dollar, which the Corporation estimated would
have the effect of reducing gross profits for 2000 by approximately $19 million.
   In addition to their direct  effects,  changes in exchange  rates also affect
sales volumes and foreign currency sales prices as competitors'  products become
more or less attractive.  The sensitivity  analysis of the effects of changes in
foreign  currency  exchange rates  described  above does not reflect a potential
change in sales  levels or local  currency  prices  nor does it  reflect  higher
exchange  rates,  compared to those  experienced  during  1999,  inherent in the
foreign exchange hedging portfolio at December 31, 1999.

IMPACT OF YEAR 2000
The year 2000 ("Y2K")  issue arose out of the fact that many  computer  programs
were written using two digits to identify the  applicable  year rather than four
digits.  It was feared that computer  programs with  date-sensitive  software or
equipment with embedded date-sensitive technology might misinterpret a two-digit
code;  for example,  "00," entered in a date-field for the year "2000," might be
wrongly  interpreted  as the year  "1900."  This error could result in system or
equipment failures or miscalculations and disruptions of operations.
   During the last several years, the Corporation has spent  approximately $13.6
million to  address  issues  related to the Y2K  problem.  These  costs  include
internal  information  systems  resources  redirected to the  Corporation's  Y2K
program.   Other  costs  for  implementing   systems   improvements  within  the
Corporation  that  were  planned  primarily  for  operational  and  supply-chain
improvements  and  were not  accelerated  as a result  of Y2K  concerns  are not
included in the  foregoing  costs.  The  external  costs  associated  with these
systems improvements, which are significant,  generally have been capitalized as
part of other assets. The internal information systems department costs that are
included  above as Y2K costs are expensed as incurred,  were funded by cash flow
from operations, and did not have a material adverse effect on the Corporation.
   As of December 31, 1999, the Corporation had completed all aspects of its Y2K
readiness  program  and,  through  February 10, 2000,  the  Corporation  has not
experienced any significant problems related to the Y2K issue.

FINANCIAL CONDITION
Operating  activities  generated  cash of  $375.5  million  for the  year  ended
December 31, 1999,  compared to $366.3  million of cash  generated  for the year
ended  December 31, 1998.  This  increase in cash  generation  was the result of
higher operating income and a decrease in restructuring spending. These benefits
to cash flow from operating  activities were partially offset by cash usage from
increases in working  capital,  primarily  inventory  and  accounts  receivable,
compared to cash  generation  from  reductions in working  capital in 1998.  The
increased  inventory levels during 1999 reflect an investment by the Power Tools
and Accessories  business,  principally in North America, to better meet service
level requirements


<PAGE>
                                       18


compared  to the  reduction  in  inventories  that  occurred  during  1998 which
adversely affected service levels.  Accounts receivable increased principally as
a result of higher  sales in the fourth  quarter of 1999  compared  to the prior
year.
   In addition to analyzing absolute cash flows, the Corporation reviews certain
working capital  metrics.  For example,  the Corporation  evaluates its accounts
receivable  and  inventory   levels  through  the   computation  of  days  sales
outstanding and inventory turnover ratio, respectively. The number of days sales
outstanding  as of December 31,  1999,  approximated  the 1998 level.  Inventory
turns, however, decreased during 1999 due to the  increase in  inventory  levels
discussed in the  preceding  paragraph.  The  Corporation's  goal is to increase
inventory turns in 2000.
   Investing  activities for 1999 used cash of $108.6  million  compared to cash
generated of $531.4 million in 1998. The cash generation in 1998,  however,  was
due  principally  to the receipt of $653.6  million of proceeds,  net of selling
expenses paid, from the divested businesses. Excluding those proceeds, investing
activities for 1998 used cash of $122.2  million.  Net cash inflows from hedging
activities in 1999  increased  $27.0 million over 1998  primarily as a result of
the  maturities  of certain  interest  rate swaps that swapped from fixed United
States  dollars to fixed foreign  currencies.  These  increases  were  partially
offset by an increase  in capital  expenditures  during  1999.  The  Corporation
expects  capital  spending  in 2000 to  increase  over  the  1999  level  as the
Corporation addresses capacity constraints that necessitated the working capital
build in 1999 and funds an increasing amount of new production.
   Financing  activities  used cash of $201.6  million in 1999  compared to cash
used of $1,054.3  million in 1998.  This  decrease is cash usage during 1999 was
primarily  the result of a decrease in cash expended for stock  repurchases  and
debt reduction.  During the first quarter of 1999, the Corporation completed the
share repurchase element of the strategic  repositioning  program described more
fully  in Note 2 to the  Consolidated  Financial  Statements.  Additional  share
repurchases were made during 1999, and future share repurchases are anticipated,
in order  to  reduce  the  dilutive  effect  of stock  issuances  under  various
stock-based  employee  benefit  plans.  A net  reduction  in debt during 1999 of
$118.0  million  was in  comparison  to a net  reduction  in debt during 1998 of
$532.9 million with sales proceeds from the divested businesses.
   In addition to  measuring its  cash flow  generation and usage based upon the
operating, investing, and financing classifications included in the Consolidated
Statement of Cash Flows,  the Corporation also measures its free cash flow. Free
cash flow, a measure commonly  employed by credit  providers,  is defined by the
Corporation as cash flow from operating activities, less capital expenditures of
continuing  operations,  plus  proceeds  from the disposal of assets  (excluding
proceeds from business sales). It is the Corporation's  intention when reporting
historical  information  to exclude  changes  in its  accounts  receivable  sale
program, which was discontinued in 1997, from the calculation of free cash flow.
During the year ended  December 31, 1999,  the  Corporation  generated free cash
flow of $241.7 million compared to free cash flow of $240.7 million generated in
1998.
   The  ongoing  costs  of  compliance  with  existing  environmental  laws  and
regulations  have not had,  and are not  expected  to have,  a material  adverse
effect on the Corporation's capital expenditures or financial position.
   While the Corporation  neared completion of the restructuring  element of its
strategic  repositioning  plan by the  end of  1999,  it  remains  committed  to
continuous  productivity  improvement and continues to evaluate opportunities to
reduce fixed costs and eliminate  excess  capacity.  The  Corporation  currently
anticipates   recognizing  an  additional   restructuring  charge,  expected  to
approximate $25 million, in the first half of 2000.
   The Corporation  will continue to have cash  requirements to support seasonal
working capital needs and capital expenditures,  to pay interest, and to service
debt.  For amounts  available  at December  31,  1999,  under the  Corporation's
revolving credit facility and under short-term borrowing facilities,  see Note 8
of  Notes  to  Consolidated  Financial  Statements.  In  order  to meet its cash
requirements,  the Corporation intends to use internally  generated funds and to
borrow  under  its  unsecured  revolving  credit  facility  or under  short-term
borrowing  facilities.  The Corporation  believes that cash generated from these
sources will be adequate to meet its cash requirements over the next 12 months.


ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information required under this Item is contained in Item 7 of this report under
the caption "Hedging  Activities" and in Item 8 of this report in Notes 1 and 10
of Notes to Consolidated  Financial  Statements,  and is incorporated  herein by
reference.


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The  following  consolidated  financial  statements of the  Corporation  and its
subsidiaries are included herein as indicated below:

Consolidated Financial Statements

Consolidated  Statement of Earnings - years ended  December 31, 1999,  1998, and
1997.

Consolidated Balance Sheet - December 31, 1999 and 1998.

Consolidated  Statement of Stockholders' Equity - years ended December 31, 1999,
1998, and 1997.

Consolidated  Statement of Cash Flows - years ended December 31, 1999, 1998, and
1997.

Notes to Consolidated Financial Statements.

Report of Independent Auditors.


<PAGE>
                                       19


                       CONSOLIDATED STATEMENT OF EARNINGS
                 The Black & Decker Corporation and Subsidiaries
                   (Dollars in Millions Except Per Share Data)




<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
Year Ended December 31,                                         1999          1998          1997
-------------------------------------------------------------------------------------------------
<S>                                                         <C>           <C>           <C>
SALES                                                       $4,520.5      $4,559.9      $4,940.5
   Cost of goods sold                                        2,834.4       2,951.0       3,169.2
   Selling, general, and administrative expenses             1,149.8       1,124.9       1,282.0
   Write-off of goodwill                                          --         900.0            --
   Restructuring and exit costs                                   --         164.7            --
   Gain on sale of businesses                                     --         114.5            --
-------------------------------------------------------------------------------------------------
OPERATING INCOME (LOSS)                                        536.3        (466.2)        489.3
   Interest expense (net of interest income of
      $30.5 for 1999, $30.9 for 1998, and $8.1 for 1997)        95.8         114.4         124.6
   Other (income) expense                                        (.8)          7.7          15.2
-------------------------------------------------------------------------------------------------
EARNINGS (LOSS) BEFORE INCOME TAXES                            441.3        (588.3)        349.5
   Income taxes                                                141.0         166.5         122.3
-------------------------------------------------------------------------------------------------
NET EARNINGS (LOSS)                                         $  300.3      $ (754.8)     $  227.2
=================================================================================================

NET EARNINGS (LOSS) PER COMMON SHARE -- BASIC               $   3.45      $  (8.22)     $   2.40
=================================================================================================
NET EARNINGS (LOSS) PER COMMON SHARE --
   ASSUMING DILUTION                                        $   3.40      $  (8.22)     $   2.35
=================================================================================================
<FN>
See Notes to Consolidated Financial Statements
</FN>
</TABLE>

<PAGE>
                                       20


                           CONSOLIDATED BALANCE SHEET
                 The Black & Decker Corporation and Subsidiaries
                              (Millions of Dollars)




--------------------------------------------------------------------------------
December 31,                                               1999            1998
--------------------------------------------------------------------------------
ASSETS
Cash and cash equivalents                              $  147.3        $   87.9
Trade receivables, less allowances of
   $53.3 for 1999 and $44.3 for 1998                      823.2           792.4
Inventories                                               751.0           636.9
Other current assets                                      189.9           234.6
--------------------------------------------------------------------------------
   TOTAL CURRENT ASSETS                                 1,911.4         1,751.8
--------------------------------------------------------------------------------
PROPERTY, PLANT, AND EQUIPMENT                            739.6           727.6
GOODWILL                                                  743.4           768.7
OTHER ASSETS                                              618.3           604.4
--------------------------------------------------------------------------------
                                                       $4,012.7        $3,852.5
================================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term borrowings                                  $  183.2        $  152.5
Current maturities of long-term debt                      213.2            59.2
Trade accounts payable                                    367.3           348.8
Other accrued liabilities                                 809.0           814.2
--------------------------------------------------------------------------------
   TOTAL CURRENT LIABILITIES                            1,572.7         1,374.7
--------------------------------------------------------------------------------
LONG-TERM DEBT                                            847.1         1,148.9
DEFERRED INCOME TAXES                                     243.8           279.9
POSTRETIREMENT BENEFITS                                   246.3           263.5
OTHER LONG-TERM LIABILITIES                               301.7           211.5
STOCKHOLDERS' EQUITY
Common stock (outstanding:
   December 31, 1999 -- 87,190,240 shares;
   December 31, 1998 -- 87,498,424 shares)                 43.6            43.7
Capital in excess of par value                            843.3           871.4
Retained earnings (deficit)                                21.9          (236.6)
Accumulated other comprehensive income                   (107.7)         (104.5)
--------------------------------------------------------------------------------
   TOTAL STOCKHOLDERS' EQUITY                             801.1           574.0
--------------------------------------------------------------------------------
                                                       $4,012.7        $3,852.5
================================================================================
See Notes to Consolidated Financial Statements
<PAGE>
                                       21

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                 The Black & Decker Corporation and Subsidiaries
                   (Dollars in Millions Except Per Share Data)



<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
                                                                                               Accumulated
                                           Outstanding              Capital in     Retained          Other          Total
                                                Common        Par    Excess of     Earnings  Comprehensive  Stockholders'
                                                Shares      Value    Par Value     (Deficit)        Income         Equity
---------------------------------------------------------------------------------------------------------------------------

<S>                                          <C>            <C>       <C>            <C>            <C>          <C>
BALANCE AT DECEMBER 31, 1996                 94,248,807     $47.1     $1,261.7       $380.2         $(56.6)      $1,632.4
Comprehensive income:
   Net earnings                                      --        --           --        227.2             --          227.2
   Foreign currency translation
      adjustments, less effect of
      hedging activities (net of tax)                --        --           --          --           (39.6)         (39.6)
---------------------------------------------------------------------------------------------------------------------------
Comprehensive income                                 --        --           --        227.2          (39.6)         187.6
---------------------------------------------------------------------------------------------------------------------------
Cash dividends on common stock
   ($.48 per share)                                  --        --           --        (45.4)            --          (45.4)
Common stock issued under
   employee benefit plans                       593,737        .3         16.5           --             --           16.8
---------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1997                 94,842,544      47.4      1,278.2        562.0          (96.2)       1,791.4
Comprehensive income (loss):
   Net loss                                          --        --           --       (754.8)            --         (754.8)
   Minimum pension liability
      adjustment (net of tax)                        --        --           --           --           (6.1)          (6.1)
   Foreign currency translation
      adjustments, less effect of
      hedging activities (net of tax)                --        --           --           --          (37.8)         (37.8)
   Write-off of accumulated foreign
      currency translation adjustments
      due to sale of businesses                      --        --           --           --           35.6           35.6
---------------------------------------------------------------------------------------------------------------------------
Comprehensive income (loss)                          --        --           --       (754.8)          (8.3)        (763.1)
---------------------------------------------------------------------------------------------------------------------------
Cash dividends on common stock
   ($.48 per share)                                  --        --           --        (43.8)            --          (43.8)
Purchase and retirement of
   common stock                              (9,025,400)     (4.5)      (459.8)          --             --         (464.3)
Common stock issued under
   employee benefit plans                     1,681,280        .8         53.0           --             --           53.8
---------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1998                 87,498,424      43.7        871.4       (236.6)        (104.5)         574.0
Comprehensive income:
   Net earnings                                      --        --           --        300.3             --          300.3
   Minimum pension liability
      adjustment (net of tax)                        --        --           --           --            1.6            1.6
   Foreign currency translation
      adjustments, less effect of
      hedging activities (net of  tax)               --        --           --           --           (4.8)          (4.8)
---------------------------------------------------------------------------------------------------------------------------
Comprehensive income                                 --        --           --        300.3           (3.2)         297.1
---------------------------------------------------------------------------------------------------------------------------
Cash dividends on common stock
   ($.48 per share)                                  --        --           --        (41.8)            --          (41.8)
Purchase and retirement of common stock
   (net of 57,682 shares issued under
   forward purchase contracts)                 (958,218)      (.4)       (52.9)          --             --          (53.3)
Common stock issued under
   employee benefit plans                       650,034        .3         24.8           --             --           25.1
---------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1999                 87,190,240     $43.6       $843.3        $21.9        $(107.7)        $801.1
===========================================================================================================================
<FN>
See Notes to Consolidated Financial Statements
</FN>
</TABLE>
<PAGE>
                                       22

<TABLE>
<CAPTION>
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                 The Black & Decker Corporation and Subsidiaries
                              (Millions of Dollars)




--------------------------------------------------------------------------------------------------------------------
Year Ended December 31,                                                     1999             1998              1997
--------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>              <C>               <C>
OPERATING ACTIVITIES
Net earnings (loss)                                                    $   300.3        $  (754.8)        $   227.2
Adjustments to reconcile net earnings (loss) to cash flow
   from operating activities:
   Gain on sale of businesses                                                 --           (114.5)               --
   Non-cash charges and credits:
      Depreciation and amortization                                        160.0            155.2             214.2
      Deferred income taxes (benefit)                                       (5.8)            67.5              71.7
      Goodwill write-off                                                      --            900.0                --
      Restructuring charges and exit costs                                    --            164.7                --
      Other                                                                 (8.3)            (1.7)              1.5
   Changes in selected working capital items
      (excluding, for 1998, effects of divested businesses):
      Trade receivables                                                    (57.0)           (24.3)            (85.1)
      Inventories                                                         (136.1)            26.9             (63.7)
      Trade accounts payable                                                21.9             16.9               2.3
   Restructuring spending                                                  (26.7)           (55.6)            (27.4)
   Other assets and liabilities                                            127.2            (14.0)             12.5
   Net decrease in receivables sold                                           --               --            (212.0)
--------------------------------------------------------------------------------------------------------------------
   CASH FLOW FROM OPERATING ACTIVITIES                                     375.5            366.3             141.2
--------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Proceeds from sale of businesses, net of selling expenses                     --            653.6                --
Purchase of businesses                                                      (5.2)              --                --
Proceeds from disposal of assets                                            37.3             20.4              13.4
Capital expenditures                                                      (171.1)          (146.0)           (203.1)
Cash inflow from hedging activities                                        565.9            343.5             384.8
Cash outflow from hedging activities                                      (535.5)          (340.1)           (357.9)
--------------------------------------------------------------------------------------------------------------------
   CASH FLOW FROM INVESTING ACTIVITIES                                    (108.6)           531.4            (162.8)
--------------------------------------------------------------------------------------------------------------------
   CASH FLOW BEFORE FINANCING ACTIVITIES                                   266.9            897.7             (21.6)
FINANCING ACTIVITIES
Net decrease in short-term borrowings                                      (49.9)           (23.2)            (18.4)
Proceeds from long-term debt (including revolving credit facility)       1,091.9            586.6             667.2
Payments on long-term debt (including revolving credit facility)        (1,160.0)        (1,096.3)           (483.9)
Debt issue costs paid                                                         --             (2.9)               --
Redemption of preferred stock of subsidiary                                   --            (41.7)               --
Purchase of common stock                                                   (53.3)          (464.3)               --
Issuance of common stock                                                    11.5             31.3              10.1
Cash dividends                                                             (41.8)           (43.8)            (45.4)
--------------------------------------------------------------------------------------------------------------------
   CASH FLOW FROM FINANCING ACTIVITIES                                    (201.6)        (1,054.3)            129.6
Effect of exchange rate changes on cash                                     (5.9)            (2.3)             (3.0)
--------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                            59.4           (158.9)            105.0
Cash and cash equivalents at beginning of year                              87.9            246.8             141.8
--------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR                               $   147.3        $    87.9         $   246.8
====================================================================================================================
<FN>
See Notes to Consolidated Financial Statements
</FN>
</TABLE>
<PAGE>
                                       23

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Black & Decker Corporation and Subsidiaries


NOTE 1: SUMMARY OF ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION:  The Consolidated  Financial Statements include the
accounts of the Corporation and its subsidiaries. Intercompany transactions have
been eliminated.

RECLASSIFICATIONS:  Certain prior years' amounts in the  Consolidated  Financial
Statements have been reclassified to conform to the presentation used in 1999.

USE OF ESTIMATES:  The  preparation of financial  statements in conformity  with
generally accepted  accounting  principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying  notes. Actual results inevitably will differ from those estimates,
and such  differences  may be  material  to the  financial  statements.

REVENUE  RECOGNITION:  Revenue  from sales of product is  recognized  when title
passes, which generally occurs upon shipment.

FOREIGN CURRENCY  TRANSLATION:  The financial statements of subsidiaries located
outside of the United  States,  except  those  subsidiaries  operating in highly
inflationary  economies,  generally are measured using the local currency as the
functional  currency.  Assets,  including  goodwill,  and  liabilities  of these
subsidiaries  are translated at the rates of exchange at the balance sheet date.
The  resultant  translation   adjustments  are  included  in  accumulated  other
comprehensive  income, a separate component of stockholders'  equity. Income and
expense  items are  translated at average  monthly rates of exchange.  Gains and
losses from foreign currency  transactions of these subsidiaries are included in
net earnings. For subsidiaries operating in highly inflationary economies, gains
and losses  from  balance  sheet  translation  adjustments  are  included in net
earnings.

CASH AND CASH  EQUIVALENTS:  Cash and  cash  equivalents  include  cash on hand,
demand deposits,  and short-term  investments with maturities of three months or
less from the date of  acquisition.

INVENTORIES:  Inventories are stated at the lower of cost or market. The cost of
United States  inventories is based primarily on the last-in,  first-out  (LIFO)
method;  all other  inventories  are  based on the  first-in,  first-out  (FIFO)
method.

PROPERTY AND  DEPRECIATION:  Property,  plant,  and equipment is stated at cost.
Depreciation  is computed  generally on the  straight-line  method for financial
reporting purposes.

GOODWILL AND OTHER INTANGIBLES:  Goodwill and other intangibles are amortized on
the  straight-line  method.  Goodwill is  amortized  principally  over a 40-year
period.
   As more fully described in Note 2, effective January 1, 1998, the Corporation
changed its method for measuring and  recognizing an impairment of goodwill from
an undiscounted  cash flow approach to a discounted cash flow approach.

PRODUCT DEVELOPMENT COSTS: Costs associated with the development of new products
and changes to existing products are charged to operations as incurred.  Product
development  costs were $91.0 million in 1999,  $90.5 million in 1998, and $99.1
million in 1997.

ADVERTISING AND PROMOTION:  All costs  associated with advertising and promoting
products are expensed as incurred.  Advertising and promotion expense, including
expense of consumer rebates, was $223.7 million in 1999, $211.2 million in 1998,
and $248.0 million in 1997.

POSTRETIREMENT  BENEFITS:  Pension plans,  which cover  substantially all of the
Corporation's  employees,  consist primarily of non-contributory defined benefit
plans.  The  defined  benefit  plans are funded in  conformity  with the funding
requirements of applicable government regulations. Generally, benefits are based
on age, years of service,  and the level of compensation  during the final years
of  employment.  Prior  service costs for defined  benefit  plans  generally are
amortized over the estimated remaining service periods of employees.
   Certain   employees   are  covered  by  defined   contribution   plans.   The
Corporation's contributions to these plans are based on a percentage of employee
compensation  or  employee  contributions.  These  plans are funded on a current
basis.
   In addition to pension benefits,  certain postretirement medical, dental, and
life  insurance  benefits  are  provided,  principally  to  most  United  States
employees.    Retirees   in   other   countries   generally   are   covered   by
government-sponsored programs.
   The  Corporation  uses the  corridor  approach  in the  valuation  of defined
benefit plans and other  postretirement  benefits.  The corridor approach defers
all actuarial gains and losses  resulting from variances  between actual results
and economic  estimates or actuarial  assumptions.  For defined  benefit pension
plans,  these unrecognized gains and losses are amortized when the net gains and
losses exceed 10% of the greater of the  market-related  value of plan assets or
the  projected  benefit  obligation  at the  beginning  of the  year.  For other
postretirement  benefits,  amortization  occurs  when the net gains  and  losses
exceed 10% of the accumulated postretirement benefit obligation at the beginning
of the year.  The amount in excess of the corridor is amortized over the average
remaining  service period to retirement date of active plan participants or, for
retired participants, the average remaining life expectancy.

DERIVATIVE  FINANCIAL  INSTRUMENTS:  Derivative  financial  instruments are used
principally in the management of interest rate and foreign currency exposures.
   Amounts  to be paid or  received  under  interest  rate swap  agreements  are
accrued as interest  rates change and are  recognized  over the life of the swap
agreements as an adjustment to interest  expense.  The related amounts due to or
from the  counterparties are included in other accrued  liabilities.  Since they
are  accounted  for as  hedges,  the fair  value of the swap  agreements  is not
recognized in the Consolidated Financial Statements.
   The costs of interest rate cap  agreements  are included in interest  expense
ratably over the lives of the agreements. Payments to be received as a result of
the  cap  agreements  are  accrued  as a  reduction  of  interest  expense.  The
unamortized costs of the cap agreements are included in other assets.
<PAGE>
                                       24


   Gains or losses  resulting from the early  termination of interest rate swaps
or caps are deferred and  amortized as an adjustment to the yield of the related
debt instrument over the remaining period  originally  covered by the terminated
swaps or caps.  Were that related debt  instrument  later to be retired prior to
its scheduled  maturity,  the unamortized  gain or loss resulting from the early
termination  of the  interest  rate swap or cap would be included in the gain or
loss on the extinguishment of debt.
   Gains and losses on hedges of net investments in subsidiaries located outside
of the  United  States  are  reflected  in the  Consolidated  Balance  Sheet  in
accumulated other comprehensive  income, with the related amounts due to or from
the  counterparties  included in other  liabilities  or other assets.  Gains and
losses  resulting from the early  termination of hedges of net  investments  are
reflected in accumulated other comprehensive income at the time of termination.
   Gains and losses on foreign  currency  transaction  hedges are  recognized in
income and  offset  the  foreign  exchange  gains and  losses on the  underlying
transactions.  Deferred  gains on options  that hedge  forecasted  transactions,
generally related to inventory  purchases,  are recognized in cost of sales when
the related inventory is sold or when a hedged purchase is no longer expected to
occur.
   The carrying amounts of foreign currency-related  derivatives with respect to
net investment and commitment  hedges are included in the  Consolidated  Balance
Sheet in other  current  assets  and other  accrued  liabilities.  The  carrying
amounts of foreign  currency-related  derivatives  associated  with  transaction
hedges  are  included  in the  same  balance  sheet  line  item  as  the  hedged
transaction.
   Cash  effects  of the  Corporation's  derivative  financial  instruments  are
included  in the  Consolidated  Statement  of Cash Flows in the periods in which
they  occur.  Except  as noted  below,  the cash  effects  of the  Corporation's
interest rate swaps and caps,  foreign currency  transaction  hedges,  hedges of
foreign  currency firm  commitments,  and hedges of forecasted  transactions are
included in the Consolidated Statement of Cash Flows as cash flow from operating
activities.  The cash  effects  of hedges  of net  investments  in  subsidiaries
located outside of the United States are included in the Consolidated  Statement
of Cash Flows as cash flow from  investing  activities.  The cash effects of the
exchange of  notional  principal  amounts on interest  rate swaps that swap from
fixed United States dollars to fixed or variable foreign currencies are included
in the  Consolidated  Statement  of Cash  Flows  as  cash  flow  from  investing
activities   because  such  amounts  have  been  designated  as  hedges  of  net
investments in subsidiaries located outside of the United States.
   In June 1998, the Financial  Accounting  Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities,  which is required
to be adopted for years  beginning  after June 15, 2000.  Early adoption of SFAS
No.  133 is  permitted  as of the  beginning  of any  fiscal  quarter  after its
issuance. SFAS No. 133 will require the Corporation to recognize all derivatives
on the balance  sheet at fair value.  Derivatives  that do not qualify as hedges
under the new  standard  must be adjusted  to fair value  through  income.  If a
derivative  qualifies as a hedge,  depending on the nature of the hedge, changes
in the fair value of  derivatives  will  either be offset  against the change in
fair  value of the  hedged  assets,  liabilities,  or firm  commitments  through
earnings or  recognized in other  comprehensive  income until the hedged item is
recognized in earnings.  The  ineffective  portion of a  derivative's  change in
value will be immediately recognized in earnings.
   The  Corporation  has not yet  determined  when it will adopt  SFAS No.  133,
although  early adoption is considered  possible due to the new standard's  more
favorable  treatment of certain foreign currency hedges than that afforded under
prior accounting  standards.  The Corporation has not yet determined what effect
SFAS No.  133 will have on its  earnings  and  financial  position.

STOCK-BASED  COMPENSATION:  As described in Note 16, the Corporation has elected
to follow the  accounting  provisions  of  Accounting  Principles  Board Opinion
(APBO)  No.  25,  Accounting  for Stock  Issued to  Employees,  for  stock-based
compensation  and to furnish the pro forma  disclosures  required under SFAS No.
123, Accounting for Stock-Based Compensation.


NOTE 2: STRATEGIC REPOSITIONING

OVERVIEW:  As of December 31, 1999,  the  Corporation  neared  completion of the
comprehensive  strategic  repositioning plan approved by the Corporation's Board
of Directors on January 26, 1998. The plan,  designed to intensify focus on core
operations and improve operating performance, included the following components:
(i)  the  divestiture  of  non-strategic  businesses;  (ii)  the  repurchase  of
approximately 10% of the Corporation's  outstanding common stock over a two-year
period;  and (iii) a restructuring of the  Corporation's  remaining  businesses.
Also on January 26, 1998,  the Board of Directors  elected to authorize a change
in the basis upon which the Corporation evaluates goodwill for impairment.

DIVESTITURES: The Corporation completed the divestiture element of its strategic
repositioning  plan  during  1998  through  the sale of its  household  products
businesses in North  America,  Central  America,  the  Caribbean,  South America
(excluding Brazil), and Australia, recapitalization of its recreational products
business,  and sale of its  glass  container-forming  and  inspection  equipment
business.  The Corporation  elected to retain the cleaning and lighting products
component of the household products businesses.
   In mid-1998, the Corporation completed the sale to Windmere-Durable Holdings,
Inc. of the household  products  businesses for $315.0  million.  As part of the
transaction,  the Corporation retained certain liabilities and agreed to license
the Black & Decker name to Windmere in existing household product categories for
a period of six and  one-half  years on a  royalty-free  basis,  with  extension
options upon request of Windmere and at the  discretion of the  Corporation on a
royalty-bearing basis. At the request of Windmere, additional product categories
may be licensed at the Corporation's option on a royalty-bearing basis.
<PAGE>
                                       25


   On  September  22,  1998,  the  Corporation  completed  the sale of its glass
container-forming and inspection equipment business, Emhart Glass. In connection
with the sale, the Corporation received cash of $178.7 million.
   On September 30, 1998, the Corporation  completed the recapitalization of its
recreational  products  business,  True Temper  Sports.  In connection  with the
transaction,  the  Corporation  received  $177.7  million  in cash and  retained
approximately 6% of preferred and common stock of the recapitalized company, now
known as True  Temper  Corporation,  valued  at  approximately  $4  million.  In
addition,  the  Corporation  received a senior  increasing  rate  discount  note
payable  by True  Temper  Corporation,  in an initial  accreted  amount of $25.0
million.  Because True Temper Corporation is a highly leveraged entity and there
was no active  market for the note,  the  Corporation  fully  reserved the $25.0
million note through December 31, 1999.
   Net proceeds of $653.6 million from these  divestitures  were utilized in the
repurchase  of a portion of the  Corporation's  outstanding  common stock and to
fund the restructuring program described below.

REPURCHASE OF COMMON STOCK:  The second  element of the strategic  repositioning
plan - the planned  repurchase of  approximately  10% of its common stock over a
two-year  period - was completed  during 1999 when the  Corporation  repurchased
610,900  shares  of  common  stock  at  an  aggregate  cost  of  $32.1  million,
supplementing the 9,025,400 shares of common stock repurchased during 1998 at an
aggregate  cost of  $464.3  million.  Net  proceeds  from the  sale of  divested
businesses were used to fund the stock repurchase program.

RESTRUCTURING CHARGE: By the close of 1999, the Corporation neared completion of
the third element of the strategic  repositioning plan - a restructuring program
undertaken to reduce fixed costs.  The Corporation  commenced the  restructuring
program and  recorded a  restructuring  charge of $164.7  million  during  1998.
During  1999,   the   Corporation   recognized   $13.1   million  of  additional
restructuring  and exit costs,  but those additional costs were offset by a gain
realized in 1999 on the sale of a facility,  exited as part of the restructuring
actions taken in 1998, that had a fair value exceeding its net book value at the
time of the 1998 charge and by the  reversal  during  1999 of certain  severance
accruals,  established as part of the 1998 restructuring  charge,  which were no
longer necessary.
   The principal  component of the  restructuring  charge,  as adjusted in 1999,
related to the elimination of  approximately  5,000 positions.  As a result,  an
accrual  of $121.5  million,  principally  associated  with the Power  Tools and
Accessories   segment  in  Europe  and  North  America,   was  included  in  the
restructuring  charge.  Included in that accrual were costs of approximately $30
million  related to the  acceptance  of a voluntary  retirement  plan by certain
employees in the United  States.  Also included in that accrual was $8.1 million
related to severance  actions taken in the divested  businesses and with respect
to the  closure  of a  facility  in  Kuantan,  Malaysia.  The  Kuantan  facility
manufactured  household products predominantly for sale in the United States and
was not included in the assets sold with the household products business.
   To reduce fixed costs,  the Corporation  took actions to rationalize  certain
manufacturing, sales, and administrative operations, resulting in the closure of
a number of facilities.  As a result,  the restructuring  charge, as adjusted in
1999,  also  included  a  $25.3  million  write-down  to fair  value - less,  if
applicable, costs to sell - of certain land, buildings, and equipment.  Included
in that $25.3 million  write-down was $9.0 million related to the closure of the
Kuantan  facility  described  above. The balance of the write-down to fair value
primarily  related  to  long-lived  assets  of the Power  Tools and  Accessories
segment in Europe and North America and is net of gains of $8.9 million and $8.7
million  realized  in 1999 and 1998,  respectively,  on the sales of  facilities
exited as part of the  restructuring  plan that had fair values in excess of net
book values at the time of the  restructuring  charge.  As of December 31, 1999,
all facilities exited as part of the strategic  repositioning plan had been sold
with the exception of the Kuantan  facility.  The carrying  value of the Kuantan
facility at December 31, 1999, was not significant.
   The  remaining  restructuring  charge,  as adjusted in 1999, of $17.9 million
primarily related to the accrual of future expenditures,  principally consisting
of lease and other contractual  obligations  associated with the Power Tools and
Accessories  segment in Europe, for which no future benefit will be realized and
to the settlement of claims in 1999 regarding a divested business.

CHANGE  IN  ACCOUNTING   FOR  GOODWILL:   As  a  consequence  of  the  strategic
repositioning  plan, the  Corporation  elected to change its method of measuring
goodwill impairment from an undiscounted cash flow approach to a discounted cash
flow approach  effective  January 1, 1998. On a periodic basis,  the Corporation
estimates the future  discounted  cash flows of the businesses to which goodwill
relates.  When such  estimate of the future  discounted  cash flows,  net of the
carrying  amount of tangible  net assets,  is less than the  carrying  amount of
goodwill,  the  difference  will be  charged  to  operations.  For  purposes  of
determining the future discounted cash flows of the businesses to which goodwill
relates,  the Corporation,  based upon historical results,  current projections,
and internal  earnings  targets,  determines the projected future operating cash
flows, net of income tax payments, of the individual businesses. These projected
future  cash  flows  are  then  discounted  at  a  rate   corresponding  to  the
Corporation's  estimated cost of capital,  which also is the hurdle rate used by
the Corporation in making investment decisions. Future discounted cash flows for
the recreational products business,  the glass  container-forming and inspection
equipment  business,  and the household  products  businesses in North  America,
Latin America,  and Australia included an estimate of the proceeds from the sale
of  such  businesses,   net  of  associated  selling  expenses  and  taxes.  The
Corporation  believes  that  measurement  of the  value of  goodwill  through  a
discounted  cash  flow  approach  is  preferable  in  that  such  a  measurement
facilitates  the timely  identification  of impairment of the carrying  value of
investments  in businesses and provides a more current - and with respect to the
businesses  sold,  provided a more realistic - valuation  than the  undiscounted
approach.
<PAGE>
                                       26


   In connection with the Corporation's change in accounting policy with respect
to  measurement of goodwill  impairment,  $900.0 million of goodwill was written
off through a charge to operations  during 1998 and  represented a per-share net
loss of $9.80 both on a basic and a diluted  basis for 1998.  That  write-off of
goodwill,  which  related to the Hardware and Home  Improvement  segment and the
Fastening and Assembly Systems segment,  and included a $40.0 million write-down
of goodwill  associated  with one of the divested  businesses,  represented  the
amount  necessary  to  write-down  the  carrying  values of  goodwill  for those
businesses to the Corporation's  best estimate,  as of January 1, 1998, of those
businesses' future discounted cash flows using the methodology  described in the
preceding  paragraph.  This change represented a change in accounting  principle
that is indistinguishable from a change in estimate.


NOTE 3: TRADE RECEIVABLES

CONCENTRATION  OF  CREDIT:  The  Corporation  sells  products  and  services  to
customers in diversified  industries and geographic regions and, therefore,  has
no  significant  concentrations  of credit risk.  The  Corporation  continuously
evaluates the  creditworthiness  of its customers and generally does not require
collateral.

SALE OF RECEIVABLES PROGRAM:  Prior to December 1997, the Corporation maintained
a sale of receivables  program under which  receivables were sold on a revolving
basis.  In December 1997,  the  Corporation  voluntarily  terminated its sale of
receivables program as the program was no longer deemed necessary to support its
liquidity requirements.  The discount on the sale of receivables was included in
other expense.


NOTE 4: INVENTORIES

The  classification  of  inventories  at the end of each year,  in  millions  of
dollars, was as follows:
--------------------------------------------------------------------------------
                                                                1999       1998
--------------------------------------------------------------------------------

FIFO cost
Raw materials and work-in-process                             $171.3     $173.5
Finished products                                              584.5      482.3
--------------------------------------------------------------------------------
                                                               755.8      655.8
Excess of FIFO cost over
   LIFO inventory value                                         (4.8)     (18.9)
--------------------------------------------------------------------------------
                                                              $751.0     $636.9
================================================================================
   The cost of  United  States  inventories  stated  under the LIFO  method  was
approximately 48% and 43% of the value of total inventories at December 31, 1999
and 1998, respectively.


NOTE 5: PROPERTY, PLANT, AND EQUIPMENT

Property,  plant, and equipment at the end of each year, in millions of dollars,
consisted of the following:
--------------------------------------------------------------------------------
                                                                1999       1998
--------------------------------------------------------------------------------

Property, plant, and equipment at cost:
Land and improvements                                       $   54.1   $   60.2
Buildings                                                      264.0      304.3
Machinery and equipment                                      1,241.1    1,209.2
--------------------------------------------------------------------------------
                                                             1,559.2    1,573.7
Less accumulated depreciation                                  819.6      846.1
--------------------------------------------------------------------------------
                                                            $  739.6   $  727.6
================================================================================


NOTE 6: GOODWILL

Goodwill  amortization  was $25.7 million in 1999,  $25.2  million in 1998,  and
$63.3 million in 1997. Goodwill at the end of each year, in millions of dollars,
was as follows:
--------------------------------------------------------------------------------
                                                                1999       1998
--------------------------------------------------------------------------------

Goodwill                                                    $1,301.3   $1,300.9
Less accumulated amortization                                  557.9      532.2
--------------------------------------------------------------------------------
                                                            $  743.4   $  768.7
================================================================================


NOTE 7: OTHER ACCRUED LIABILITIES

Other  accrued  liabilities  at the end of each year,  in  millions  of dollars,
included the following:
--------------------------------------------------------------------------------
                                                                1999       1998
--------------------------------------------------------------------------------

Salaries and wages                                           $  67.2    $  63.6
Employee benefits                                              109.1       93.1
Trade discounts and allowances                                 145.9      114.0
Income taxes, including deferred taxes                          66.7      107.9
Accruals related to restructuring actions
   taken in connection with strategic
   repositioning plan                                           22.4       50.8
All other                                                      397.7      384.8
--------------------------------------------------------------------------------
                                                             $ 809.0    $ 814.2
================================================================================
   All other at December 31, 1999 and 1998,  consisted primarily of accruals for
advertising,  warranty costs, interest,  insurance,  and taxes other than income
taxes.


NOTE 8: SHORT-TERM BORROWINGS

Short-term  borrowings  in the amounts of $183.2  million and $152.5  million at
December 31, 1999 and 1998,  respectively,  consisted  primarily  of  borrowings
under the terms of  uncommitted  lines of credit or other  short-term  borrowing
arrangements  and, at December  31,  1999,  borrowings  under the  Corporation's
unsecured revolving credit facility (the Credit Facility).  The weighted-average
interest  rate on  short-term  borrowings  outstanding  at December 31, 1999 and
1998, was 6.6% and 7.1%, respectively.
<PAGE>
                                       27


   Under the terms of uncommitted lines of credit at December 31, 1999,  certain
subsidiaries  outside of the United States may borrow up to an additional $388.2
million on such terms as may be mutually agreed.  These arrangements do not have
termination  dates  and are  reviewed  periodically.  No  material  compensating
balances are required or maintained.
   The  Corporation  may borrow up to $1.0  billion  under the Credit  Facility,
which consists of two individual facilities.  The amount available for borrowing
under the Credit Facility at December 31, 1999, was $865.9 million.
   Under the Credit Facility, the Corporation has the option of borrowing at the
London Interbank Offered Rate (LIBOR) plus a specified  percentage,  or at other
variable rates set forth therein. The Credit Facility provides that the interest
rate margin over LIBOR, initially set at .15% and .25%,  respectively,  for each
of the two individual  facilities,  will increase or decrease based upon changes
in the  ratings  of the  Corporation's  long-term  senior  unsecured  debt.  The
Corporation  also is able to  borrow  under  the  Credit  Facility  by  means of
competitive  bid rate loans made  through  an  auction  process at  then-current
market  rates.  In  addition  to  interest  payable on the  principal  amount of
indebtedness  outstanding  from time to time  under  the  Credit  Facility,  the
Corporation  is required to pay an annual  facility fee to each bank,  initially
equal to .125% of the amount of each bank's commitment,  whether used or unused.
The facility  fee changes  based on the ratings of the  Corporation's  long-term
senior unsecured debt.
   The  Credit  Facility  includes  various  customary  covenants.  Some  of the
covenants limit the ability of the  Corporation  and its  subsidiaries to pledge
assets or incur liens on assets.  Other  covenants  require the  Corporation  to
maintain a specified  leverage  ratio and to achieve  certain cash flow to fixed
expense  coverage  ratios.  As of December  31,  1999,  the  Corporation  was in
compliance with all terms and conditions of the Credit Facility.


NOTE 9: LONG-TERM DEBT

The  composition  of  long-term  debt at the end of each year,  in  millions  of
dollars, was as follows:
--------------------------------------------------------------------------------
                                                              1999         1998
--------------------------------------------------------------------------------

Medium Term Notes due through 2002                         $  75.6     $  150.0
6.625% notes due 2000                                        208.7        214.4
7.50% notes due 2003                                         309.5        335.7
7.0% notes due 2006                                          154.6        154.6
6.55% notes due 2007                                         150.0        150.0
7.05% notes due 2028                                         150.0        150.0
Revolving credit facility expiring 2001                         --         29.4
Other loans due through 2003                                  11.9         24.0
Less current maturities of long-term debt                   (213.2)       (59.2)
--------------------------------------------------------------------------------
                                                           $ 847.1     $1,148.9
================================================================================
   As of  December  31,  1999,  $75.6  million  aggregate  principal  amount  of
unsecured Medium Term Notes were outstanding. Of that amount, $68.1 million bear
interest at fixed rates ranging from 8.36% to 8.95%,  while the  remainder  bear
interest at variable rates.
   Indebtedness  of subsidiaries  in the aggregate  principal  amounts of $435.4
million and $412.4  million were included in the  Consolidated  Balance Sheet at
December 31, 1999 and 1998,  respectively,  in  short-term  borrowings,  current
maturities of long-term debt, and long-term debt.
   Principal payments on long-term debt obligations due over the next four years
are as follows:  $213.2 million in 2000, $48.2 million in 2001, $34.1 million in
2002,  and  $310.2  million  in 2003.  No  principal  payments  are due in 2004.
Interest  payments  on all  indebtedness  were  $140.1  million in 1999,  $160.8
million in 1998, and $159.3 million in 1997.


NOTE 10: DERIVATIVE FINANCIAL INSTRUMENTS

The  Corporation  is exposed to market  risks  arising  from changes in interest
rates.  With  products  and  services  marketed in over 100  countries  and with
manufacturing  sites in ten countries,  the Corporation also is exposed to risks
arising from changes in foreign exchange rates.

CREDIT  EXPOSURE:  The  Corporation is exposed to  credit-related  losses in the
event of  non-performance  by  counterparties  to certain  derivative  financial
instruments. The Corporation monitors the creditworthiness of the counterparties
and  presently  does  not  expect  default  by any of  the  counterparties.  The
Corporation  does not  obtain  collateral  in  connection  with  its  derivative
financial instruments.
   The credit  exposure  that results from  interest  rate and foreign  exchange
contracts  is the fair value of contracts  with a positive  fair value as of the
reporting date. Some derivatives are not subject to credit  exposures.  The fair
value of all financial instruments is summarized in Note 11.

INTEREST RATE RISK MANAGEMENT:  The Corporation  manages its interest rate risk,
primarily through the use of interest rate swap and cap agreements,  in order to
achieve a cost-effective mix of fixed and variable rate  indebtedness.  It seeks
to issue debt  opportunistically,  whether at fixed or  variable  rates,  at the
lowest possible costs and then, based upon its assessment of the future interest
rate environment,  may convert such debt from fixed to variable or from variable
to fixed interest rates through the use of interest rate derivatives. Similarly,
the  Corporation  may, at times,  seek to limit the  effects of rising  interest
rates on its variable  rate debt through the use of interest  rate caps. It does
not utilize  derivative  financial  instruments that contain leverage  features.
Because the  Corporation's  interest rate derivative  financial  instruments are
designated  as  hedges,   are  effective  in  changing  the  tenor  of  existing
indebtedness  (e.g.,  from fixed to variable rate debt or from variable to fixed
rate debt),  and do not  contain  leverage  features,  they are  afforded  hedge
accounting treatment.
   The amounts  exchanged by the  counterparties  to interest  rate swap and cap
agreements  normally  are based  upon the  notional  amounts  and  other  terms,
generally related to interest rates, of the derivatives.  While notional amounts
of interest rate swaps and caps form part of the basis for the amounts exchanged
by the  counterparties,  the notional amounts are not themselves  exchanged and,
therefore,  do not represent a measure of the  Corporation's  exposure as an end
user of
<PAGE>
                                       28


derivative  financial  instruments.   The  notional  amounts  of  interest  rate
derivatives at the end of each year, in millions of dollars, were as follows:
--------------------------------------------------------------------------------
                                                                1999       1998
--------------------------------------------------------------------------------
Interest rate swaps:
   Fixed to variable rates                                    $450.0     $425.0
   U.S. rates to foreign rates                                    --      250.0
--------------------------------------------------------------------------------
   The Corporation's  portfolio of interest rate swap instruments as of December
31, 1999, consisted of $450.0 million notional amounts of fixed to variable rate
swaps  with a  weighted-average  fixed rate  receipt of 5.96%.  The basis of the
variable rates paid is LIBOR.
   The Corporation's  credit exposure on its interest rate derivatives was $14.2
million as of December 31, 1998. No credit  exposure  existed as of December 31,
1999. Gross deferred gains and losses on the early  termination of interest rate
swaps as of December 31, 1999 and 1998, were not significant.

FOREIGN  CURRENCY  MANAGEMENT:  The  Corporation  enters  into  various  foreign
currency  contracts  in managing its foreign  exchange  risks.  The  contractual
amounts of  foreign  currency  derivative  financial  instruments  (principally,
forward exchange contracts and purchased options) generally are exchanged by the
counterparties.   The  Corporation's   foreign  currency  derivative   financial
instruments  are designated to, and generally are  denominated in the currencies
of, the underlying  exposures.  Because the derivative financial instruments are
effective in managing foreign exchange risks and are appropriately designated to
the underlying exposures, they are afforded hedge accounting treatment.
   To minimize the volatility of reported equity,  the Corporation  hedges, on a
limited basis, a portion of its net investment in  subsidiaries  located outside
of the United  States  through the use of foreign  currency  forward  contracts,
foreign currency swaps, and purchased foreign currency options.
   Through its foreign currency  hedging  activities,  the Corporation  seeks to
minimize  the  risk  that  cash  flows  resulting  from the  sales  of  products
manufactured in a currency different from that of the selling subsidiary will be
affected  by changes in  exchange  rates.  The  Corporation  responds to foreign
exchange  movements through various means,  such as pricing actions,  changes in
cost structure, and changes in hedging strategies.
   The Corporation hedges its foreign currency transaction exposures, as well as
certain  forecasted  transactions,  based on  management's  judgment,  generally
through options and forward exchange  contracts.  Some of the contracts  involve
the  exchange  of two  foreign  currencies  according  to the local needs of the
subsidiaries.  Some  natural  hedges also are used to mitigate  transaction  and
forecasted exposures.
   The following table  summarizes the contractual  amounts of forward  exchange
contracts  as of December 31, 1999 and 1998,  in millions of dollars,  including
details by major currency as of December 31, 1999. Foreign currency amounts were
translated  at  current  rates  as of the  reporting  date.  The  "Buy"  amounts
represent  the United  States  dollar  equivalent  of  commitments  to  purchase
currencies, and the "Sell" amounts represent the United States dollar equivalent
of commitments to sell currencies.
--------------------------------------------------------------------------------
As of December 31, 1999                                        Buy         Sell
--------------------------------------------------------------------------------
United States dollar                                      $  730.1    $  (504.6)
Pound sterling                                               372.9        (82.0)
Deutsche mark                                                 92.1       (174.0)
Dutch guilder                                                 16.9        (82.1)
French franc                                                  22.4       (125.0)
Canadian dollar                                               76.3       (131.7)
Italian lira                                                  24.9        (14.8)
Euro                                                           2.8         (7.6)
Japanese yen                                                   1.4        (51.0)
Other                                                         23.3       (171.5)
--------------------------------------------------------------------------------
Total                                                     $1,363.1    $(1,344.3)
================================================================================
As of December 31, 1998
--------------------------------------------------------------------------------
Total                                                     $1,732.2    $(1,711.6)
================================================================================
   The contractual amounts of purchased options to buy currencies, predominantly
the euro,  pound  sterling,  and United States  dollar,  were $432.5 million and
$343.8  million,  at December 31, 1999 and 1998,  respectively.  The contractual
amounts of purchased options to sell various  currencies were $421.6 million and
$338.5 million at December 31, 1999 and 1998, respectively.
   Credit exposure on foreign  currency  derivatives as of December 31, 1999 and
1998, was $51.3 million and $40.8 million, respectively.
   Deferred  realized  gains  from  option  contracts  on hedges  of  forecasted
transactions  were not significant at December 31, 1999 and 1998.  Substantially
all of the amounts  deferred at December 31, 1999, are expected to be recognized
in earnings during 2000, when the gains or losses on the underlying transactions
also will be recognized.


NOTE 11: FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair  value of a  financial  instrument  represents  the amount at which the
instrument could be exchanged in a current  transaction between willing parties,
other than in a forced sale or  liquidation.  Significant  differences can arise
between the fair value and  carrying  amount of financial  instruments  that are
recognized at historical cost amounts.
   The  following  methods  and  assumptions  were  used by the  Corporation  in
estimating  fair value  disclosures for financial  instruments:

o Cash and cash equivalents,  trade  receivables,  certain other current assets,
short-term  borrowings,  and current  maturities of long-term  debt: The amounts
reported in the Consolidated Balance Sheet approximate fair value.

o Long-term debt:  Publicly traded debt is valued based on quoted market values.
The fair  value of other  long-term  debt is  estimated  based on quoted  market
prices for the same or similar  issues or on the  current  rates  offered to the
Corporation for debt of the same remaining maturities.

o Interest  rate  hedges:  The fair value of interest  rate hedges  reflects the
estimated  amounts that the  Corporation  would  receive or pay to terminate the
contracts at the reporting date.

o Foreign currency  contracts:  The fair value of forward exchange contracts and
options is estimated  using prices  established  by financial  institutions  for
comparable instruments.
<PAGE>
                                       29


   The following table sets forth, in millions of dollars,  the carrying amounts
and fair values of the  Corporation's  financial  instruments,  except for those
noted above for which carrying amounts approximate fair values:

--------------------------------------------------------------------------------
Assets (Liabilities)                                        Carrying       Fair
As of December 31, 1999                                       Amount      Value
--------------------------------------------------------------------------------
Non-derivatives:
   Long-term debt                                            $(847.1)   $(810.5)
--------------------------------------------------------------------------------
Derivatives relating to:
   Debt
     Liabilities                                                  .1      (26.7)
   Foreign currency
     Assets                                                     43.4       51.3
     Liabilities                                               (19.0)     (22.8)
--------------------------------------------------------------------------------

Assets (Liabilities)                                        Carrying       Fair
As of December 31, 1998                                       Amount      Value
--------------------------------------------------------------------------------

Non-derivatives:
   Long-term debt                                          $(1,148.9) $(1,200.2)
--------------------------------------------------------------------------------
Derivatives relating to:
   Debt
     Assets                                                       .5       14.2
   Foreign currency
     Assets                                                     60.1       40.8
     Liabilities                                               (35.2)     (34.9)
--------------------------------------------------------------------------------


NOTE 12: INCOME TAXES

Earnings (loss) before income taxes for each year, in millions of dollars,  were
as follows:
--------------------------------------------------------------------------------
                                                       1999       1998     1997
--------------------------------------------------------------------------------

United States                                        $174.4    $(734.3)  $180.3
Other countries                                       266.9      146.0    169.2
--------------------------------------------------------------------------------
                                                     $441.3    $(588.3)  $349.5
================================================================================
   Significant  components of income taxes (benefits) for each year, in millions
of dollars, were as follows:
--------------------------------------------------------------------------------
                                                       1999       1998     1997
--------------------------------------------------------------------------------

Current:
   United States                                     $128.3    $  55.0  $  32.4
   Other countries                                     18.5       44.0     16.3
   Withholding on remittances
     from other countries                                --         --      1.9
--------------------------------------------------------------------------------
                                                      146.8       99.0     50.6
--------------------------------------------------------------------------------
Deferred:
   United States                                      (17.7)      92.9     92.5
   Other countries                                     11.9      (25.4)   (20.8)
--------------------------------------------------------------------------------
                                                       (5.8)      67.5     71.7
--------------------------------------------------------------------------------
                                                     $141.0     $166.5   $122.3
================================================================================
   Income tax expense  recorded  directly as an adjustment to equity as a result
of hedging activities in 1997 was $14.9 million, and was not significant in 1999
and 1998.  Income tax benefits recorded directly as an adjustment to equity as a
result of employee stock options were $4.9 million and $17.0 million in 1999 and
1998, respectively, and were not significant in 1997.
   Income tax payments  were $97.1 million in 1999,  $95.4 million in 1998,  and
$60.2 million in 1997.
   Deferred  tax  (liabilities)  assets at the end of each year,  in millions of
dollars, were composed of the following:
--------------------------------------------------------------------------------
                                                                1999       1998
--------------------------------------------------------------------------------
Deferred tax liabilities:
   Fixed assets                                             $  (19.9)  $  (35.0)
   Postretirement benefits                                    (224.3)    (227.7)
   Other                                                       (37.0)     (38.7)
--------------------------------------------------------------------------------
Gross deferred tax liabilities                                (281.2)    (301.4)
--------------------------------------------------------------------------------
Deferred tax assets:
   Tax loss carryforwards                                       53.0       46.1
   Tax credit and capital loss
     carryforwards                                              89.6       98.0
   Other                                                       116.2      127.9
--------------------------------------------------------------------------------
Gross deferred tax assets                                      258.8      272.0
--------------------------------------------------------------------------------
Deferred tax asset valuation allowance                         (37.0)     (41.3)
--------------------------------------------------------------------------------
Net deferred tax liabilities                                $  (59.4)  $  (70.7)
================================================================================
   Deferred income taxes are included in the Consolidated Balance Sheet in other
current assets,  other assets,  other accrued  liabilities,  and deferred income
taxes.
   Tax basis  carryforwards  at December  31, 1999,  consisted of net  operating
losses expiring from 2001 to 2007.
   At December  31, 1999,  unremitted  earnings of  subsidiaries  outside of the
United States were approximately  $1.3 billion,  on which no United States taxes
had been  provided.  The  Corporation's  intention is to reinvest these earnings
permanently  or to repatriate  the earnings only when tax effective to do so. It
is not  practicable  to estimate  the amount of  additional  taxes that might be
payable upon repatriation of foreign earnings; however, the Corporation believes
that United States foreign tax credits would largely eliminate any United States
taxes and offset any foreign withholding taxes not previously provided.
   A  reconciliation  of  income  taxes  at the  federal  statutory  rate to the
Corporation's income taxes for each year, in millions of dollars, is as follows:
--------------------------------------------------------------------------------
                                                     1999       1998       1997
--------------------------------------------------------------------------------

Income taxes (benefit) at
   federal statutory rate                          $154.5    $(205.9)    $122.3
Lower effective taxes on
   earnings in other countries                      (42.6)     (19.8)     (14.5)
Amortization and write-off
   of goodwill                                        9.0      386.6       22.0
Other -- net                                         20.1        5.6       (7.5)
--------------------------------------------------------------------------------
Income taxes                                       $141.0     $166.5     $122.3
================================================================================
<PAGE>
                                       30


NOTE 13: POSTRETIREMENT BENEFITS

The following  table sets forth the funded status of the defined benefit pension
and  postretirement  plans, and amounts  recognized in the Consolidated  Balance
Sheet,  in millions of dollars.  Assets of the  defined  benefit  pension  plans
consist  principally of investments in equity securities,  debt securities,  and
cash equivalents.  Defined  postretirement  benefits consist of several unfunded
health care plans that provide certain postretirement medical,  dental, and life
insurance benefits for most United States employees.  The postretirement medical
benefits are contributory  and include certain  cost-sharing  features,  such as
deductibles and co-payments.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                   Pension Benefits           Pension Benefits        Other Postretirement
                                                     Plans in the           Plans outside of the            Benefits
                                                    United States              United States                All Plans
------------------------------------------------------------------------------------------------------------------------------------
(Dollars in Millions)                              1999         1998         1999         1998          1999         1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                                              <C>          <C>          <C>          <C>          <C>          <C>
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year          $845.5       $709.9       $408.2       $324.9       $ 130.0      $ 150.5
Service cost                                       14.8         16.0         11.6          8.4            .7          1.5
Interest cost                                      53.4         51.5         23.3         22.5           8.0         10.4
Plan participants' contributions                     --           --          2.3          2.4           4.2          3.8
Actuarial (gains) losses                          (87.4)        96.8          6.6         82.9          12.4         (1.4)
Foreign currency exchange rate changes               --           --        (17.6)        (4.7)           .1          (.3)
Benefits paid                                     (66.9)       (49.1)       (22.0)       (21.9)        (22.6)       (16.3)
Plan amendments                                      --          4.8          2.3          3.3           --         (12.5)
Divestitures                                         --           --           --         (9.2)          --          (5.7)
Curtailment (gain) loss                              --        (13.5)          --           --           --           --
Settlements                                          --           --          (.5)         (.4)          --           --
Special termination benefits                         .3         29.1           --           --           --           --
------------------------------------------------------------------------------------------------------------------------------------
Benefit obligation at end of year                 759.7        845.5        414.2        408.2         132.8        130.0
------------------------------------------------------------------------------------------------------------------------------------
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year    902.7        942.4        383.3        400.4           --           --
Actual return on plan assets                      160.3         12.9         71.8         19.0           --           --
Expenses                                           (6.7)        (6.1)        (1.1)         (.8)          --           --
Benefits paid                                     (67.0)       (49.1)       (20.9)       (21.9)        (26.8)       (20.1)
Employer contributions                              3.0          2.6          2.7          3.5          22.6         16.3
Contributions by plan participants                   --           --          2.3          2.4           4.2          3.8
Divestitures                                         --           --           --         (9.3)          --           --
Settlements                                          --           --          (.5)         (.4)          --           --
Effects of currency exchange rates                   --           --        (11.2)        (9.6)          --           --
------------------------------------------------------------------------------------------------------------------------------------
Fair value of plan assets at end of year          992.3        902.7        426.4        383.3           --           --
------------------------------------------------------------------------------------------------------------------------------------
Funded status                                     232.6         57.2         12.2        (24.9)       (132.8)      (130.0)
Unrecognized net actuarial (gain) loss            (19.1)       149.2         28.1         69.9         (11.4)       (24.7)
Unrecognized prior service cost                     7.5          7.8         20.8         21.4         (34.3)       (42.7)
Unrecognized net obligation (asset) at date
   of adoption, net of amortization                  .3          (.8)        (4.4)        (6.4)          --           --
------------------------------------------------------------------------------------------------------------------------------------
Prepaid (accrued) benefit cost                   $221.3       $213.4       $ 56.7       $ 60.0       $(178.5)     $(197.4)
====================================================================================================================================
AMOUNTS RECOGNIZED IN THE
   CONSOLIDATED BALANCE SHEET
Prepaid benefit cost                             $251.9       $241.0       $123.8       $131.2       $   --       $   --
Accrued benefit cost                              (42.5)       (42.8)       (67.4)       (71.9)       (178.5)      (197.4)
Intangible asset                                    5.3          6.1           --           --           --           --
Accumulated other comprehensive income              6.6          9.1           .3           .7           --           --
------------------------------------------------------------------------------------------------------------------------------------
Net amount recognized                            $221.3       $213.4       $ 56.7       $ 60.0       $(178.5)     $(197.4)
====================================================================================================================================
</TABLE>
<PAGE>
                                       31


   The total accumulated benefit obligation for unfunded defined benefit pension
plans as of December  31, 1999 and 1998,  was $42.1  million and $42.0  million,
respectively,  for  plans in the  United  States  and  $61.6  million  and $63.0
million,  respectively,  for  plans  outside  of the  United  States.  The total
projected  benefit  obligation for unfunded  defined benefit pension plans as of
December 31, 1999 and 1998, was $50.7 million and $49.6  million,  respectively,
for  plans  in  the  United  States  and  $69.0   million  and  $70.8   million,
respectively, for plans outside of the United States.
   The net periodic  benefit cost related to the defined  benefit  pension plans
included the following components, in millions of dollars:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
                                                          Pension Benefits                       Pension Benefits
                                                     Plans in the United States         Plans outside of the United States
                                                ---------------------------------------------------------------------------
                                                   1999         1998         1997         1999          1998         1997
---------------------------------------------------------------------------------------------------------------------------
<S>                                               <C>         <C>          <C>          <C>           <C>          <C>
Service cost                                      $15.6       $ 16.7       $ 14.8       $ 11.7        $  8.4       $  8.3
Interest cost                                      53.5         51.5         48.6         23.3          22.5         21.7
Expected return on plan assets                    (83.6)       (79.0)       (73.0)       (28.5)        (33.2)       (32.1)
Amortization of the unrecognized
   transition obligation or asset                  (1.1)        (1.1)        (1.1)        (1.9)          2.7          --
Amortization of prior service cost                  1.0           .8           .8          2.2          (2.4)         --
Curtailment (gain) loss                              .6           .9           --           .3           (.3)         1.3
Amortization of net actuarial loss                  9.1          3.8          1.3          3.3           (.3)          .1
Settlement loss                                      --         11.4           --           --           1.4          --
---------------------------------------------------------------------------------------------------------------------------
Net periodic benefit cost                         $(4.9)      $  5.0       $ (8.6)      $ 10.4        $ (1.2)      $  (.7)
===========================================================================================================================
WEIGHTED-AVERAGE ASSUMPTIONS AS OF DECEMBER 31:
Discount rate                                      7.50%        6.50%        7.50%        6.00%         6.00%         7.40%
Expected return on plan assets                     9.75%        9.75%        9.75%        8.00%         9.50%         9.90%
Rate of compensation increase                      5.00%        5.00%        5.00%        3.90%         3.90%         3.90%
---------------------------------------------------------------------------------------------------------------------------
</TABLE>

   The net periodic  benefit cost related to the defined benefit  postretirement
plans included the following components, in millions of dollars:
--------------------------------------------------------------------------------
                                                     1999       1998       1997
--------------------------------------------------------------------------------

Service cost                                        $  .7      $ 1.5      $ 1.2
Interest cost                                         8.0       10.4       10.8
Amortization of
   prior service cost                                (8.3)      (7.9)      (8.5)
Amortization of
   net actuarial gain                                 (.9)       (.7)      (1.7)
--------------------------------------------------------------------------------
Net periodic benefit cost                           $ (.5)     $ 3.3      $ 1.8
================================================================================
Weighted-average discount
   rate as of December 31                            7.25%      6.50%      7.50%
--------------------------------------------------------------------------------
   The health care cost trend rate used to determine the postretirement  benefit
obligation was 8.0% for 2000. This rate decreases  gradually to an ultimate rate
of 5.0% in 2006,  and  remains  at that  level  thereafter.  The trend rate is a
significant factor in determining the amounts reported.  A  one-percentage-point
change in these  assumed  health care cost trend rates would have the  following
effects, in millions of dollars:
--------------------------------------------------------------------------------
One-Percentage-Point                                        Increase   Decrease
--------------------------------------------------------------------------------

Effect on total of service and
   interest cost components                                    $  .4     $  (.3)
Effect on postretirement
   benefit obligation                                            5.9       (4.9)
--------------------------------------------------------------------------------
   Expense for  defined  contribution  plans  amounted  to $8.6  million,  $10.7
million, and $12.0 million in 1999, 1998, and 1997, respectively.

NOTE 14: STOCKHOLDERS' EQUITY

During 1999, the Corporation  executed two agreements (the  "Agreements")  under
which the  Corporation may enter into forward  purchase  contracts on its common
stock. The Agreements provide the Corporation with two purchase alternatives:  a
standard forward purchase  contract and a forward purchase contract subject to a
cap (a "capped forward contract").
   The settlement  methods  generally  available  under the  Agreements,  at the
Corporation's  option,  are net  settlement,  either  in cash or in  shares,  or
physical  settlement.  To the extent that the market price of the  Corporation's
common  stock  on the  settlement  date  is  higher  (lower)  than  the  forward
purchase/strike   price,   the  net  differential  is  received  (paid)  by  the
Corporation  under  the net  settlement  alternatives,  except  in the case of a
capped forward contract under which the net differential  received is limited by
a cap price. In the case of physical settlement under a capped forward contract,
the  Corporation  must,  in addition  to  purchasing  the shares  covered by the
contract at the strike price,  pay to the  counterparty the excess of the market
price at the date of settlement, if any, over the cap price.
   The standard forward contract alternative provides for quarterly  settlements
on a net share basis for differences between the average forward purchase price,
which includes carrying costs through the respective  quarterly settlement date,
and  the  current  market  value  of the  Corporation's  common  stock.  At each
quarterly settlement, the average forward purchase price is reset based upon the
then-current market price of the Corporation's common stock.
   Capped forward  contracts with respect to 500,000 shares of the Corporation's
common stock  settled  during 1999. At each  settlement  date,  the  Corporation
elected net share  settlement,  resulting in a net issuance of 57,682  shares of
its common stock during 1999.
   At December 31, 1999,  standard  forward  purchase  contracts with respect to
261,020 shares of the Corporation's common stock with a weighted-average forward
purchase
<PAGE>
                                       32


price of  $45.80  per  share,  were  outstanding  under  the  Agreements.  These
contracts  mature in  November  2001.  At  December  31,  1999,  capped  forward
contracts under the Agreements were  outstanding  with respect to 650,000 shares
of the Corporation's common stock with a weighted-average strike price of $46.06
per share and a weighted-average  cap price of $52.97 per share; these contracts
settle in the first quarter of 2000.
   As more  fully  described  in Note 2, the  Corporation  completed  the  stock
repurchase  element of its  strategic  repositioning  plan  during 1999 when the
Corporation  repurchased 610,900 shares of its common stock at an aggregate cost
of $32.1 million, supplementing the 9,025,400 shares of common stock repurchased
during 1998 at an aggregate cost of $464.3 million. The aggregate cost of $464.3
million is net of $1.4  million of  premiums  received  in  connection  with the
Corporation's  sale of put options on 800,000 shares of its common stock. No put
options were outstanding as of December 31, 1999.
   The Corporation  repurchased an additional 347,318 shares of its common stock
(net of 57,682 shares issued under forward purchase contracts) during 1999 at an
aggregate cost of $21.2 million.


NOTE 15: EARNINGS PER SHARE

The  computations of basic and diluted  earnings per share for each year were as
follows:
--------------------------------------------------------------------------------
(Amounts in Millions
Except Per Share Data)                               1999       1998       1997
--------------------------------------------------------------------------------

Numerator:
   Earnings (loss)                                 $300.3    $(754.8)    $227.2
================================================================================
Denominator:
   Denominator for basic
     earnings per share --
     weighted-average shares                         87.0       91.8       94.6
   Employee stock options and
     stock issuable under
     employee benefit plans                           1.4         --        1.9
--------------------------------------------------------------------------------
   Denominator for diluted
     earnings per share --
     adjusted weighted-
     average shares and
     assumed conversions                             88.4       91.8       96.5
================================================================================
Basic earnings (loss)
   per share                                        $3.45   $  (8.22)   $  2.40
================================================================================
Diluted earnings (loss)
   per share                                        $3.40   $  (8.22)   $  2.35
================================================================================
   The  following  options to purchase  shares of common stock were  outstanding
during each year, but were not included in the  computation of diluted  earnings
per share  because the effect  would be  anti-dilutive.  For 1999 and 1997,  the
options  indicated below were  anti-dilutive  because the related exercise price
was greater than the average market price of the common shares for the year. For
1998,  the  loss  experienced  by  the  Corporation  caused  all  options  to be
anti-dilutive.
--------------------------------------------------------------------------------
                                                     1999       1998       1997
--------------------------------------------------------------------------------

Number of options (in millions)                       1.0        5.3         .7
Weighted-average exercise price                    $52.54     $33.47     $38.64
--------------------------------------------------------------------------------


NOTE 16: STOCK-BASED COMPENSATION

The Corporation  has elected to follow APBO No. 25,  Accounting for Stock Issued
to Employees,  and related  interpretations  in accounting  for its  stock-based
compensation  and to  provide  the  disclosures  required  under  SFAS No.  123,
Accounting for Stock-Based Compensation.
   APBO No. 25 requires no recognition of  compensation  expense for most of the
stock-based  compensation  arrangements  provided  by the  Corporation,  namely,
broad-based  employee  stock purchase plans and option grants where the exercise
price is equal to the market  value at the date of grant.  However,  APBO No. 25
requires  recognition of compensation  expense for variable award plans over the
vesting periods of such plans, based upon the then-current  market values of the
underlying stock. In contrast, SFAS No. 123 requires recognition of compensation
expense for grants of stock,  stock options,  and other equity  instruments over
the vesting  periods of such  grants,  based on the  estimated  grant-date  fair
values of those grants.
   Under  various stock option  plans,  options to purchase  common stock may be
granted  until 2006.  Options  generally are granted at fair market value at the
date of grant, are exercisable in installments  beginning one year from the date
of grant,  and  expire 10 years  after the date of grant.  The plans  permit the
issuance of either  incentive  stock  options or  non-qualified  stock  options,
which,  for  certain  of  the  plans,  may  be  accompanied  by  stock  or  cash
appreciation rights or limited stock appreciation rights. Additionally,  certain
plans  allow for the  granting  of stock  appreciation  rights on a  stand-alone
basis.
   As  of  December  31,  1999,  6,587,415   non-qualified  stock  options  were
outstanding  under domestic plans.  There were 17,375 stock options  outstanding
under the United Kingdom plan.
   Under all plans,  there were  975,994  shares of common  stock  reserved  for
future grants as of December 31, 1999. Transactions are summarized as follows:
--------------------------------------------------------------------------------
                                                                      Weighted-
                                                                        Average
                                                 Stock Options   Exercise Price
--------------------------------------------------------------------------------

Outstanding at December 31, 1996                     5,652,479           $24.12
Granted                                              1,191,650            37.79
Exercised                                              429,402            19.74
Forfeited                                              241,333            29.74
--------------------------------------------------------------------------------
Outstanding at December 31, 1997                     6,173,394            26.86
Granted                                              1,101,000            53.46
Exercised                                            1,646,389            22.18
Forfeited                                              291,395            32.70
--------------------------------------------------------------------------------
Outstanding at December 31, 1998                     5,336,610            33.47
Granted                                              2,267,350            50.77
Exercised                                              551,352            27.35
Forfeited                                              447,818            41.47
--------------------------------------------------------------------------------
Outstanding at December 31, 1999                     6,604,790           $39.38
================================================================================
Shares exercisable at
   December 31, 1997                                 3,607,991           $20.87
================================================================================
Shares exercisable at
   December 31, 1998                                 2,663,535           $23.64
================================================================================
Shares exercisable at
   December 31, 1999                                 2,876,120           $27.55
================================================================================
<PAGE>
                                       33


   Exercise prices for options  outstanding as of December 31, 1999, ranged from
$11.50 to $61.00. The following table provides certain  information with respect
to stock options outstanding at December 31, 1999:
--------------------------------------------------------------------------------
                                                                      Weighted-
                                                  Weighted-             Average
Range of                     Stock Options          Average           Remaining
Exercise Prices                Outstanding   Exercise Price    Contractual Life
--------------------------------------------------------------------------------

Under $17.25                       822,140           $12.85                 1.1
$17.25-$25.87                      613,899            21.33                 3.2
$25.88-$38.80                    1,437,901            34.52                 7.3
$38.81-$58.21                    3,719,850            50.04                 9.1
Over $58.21                         11,000            61.00                 9.5
--------------------------------------------------------------------------------
                                 6,604,790           $39.38                 7.1
================================================================================
   The  following  table  provides  certain  information  with  respect to stock
options exercisable at December 31, 1999:
--------------------------------------------------------------------------------
                                                                      Weighted-
Range of                                         Stock Options          Average
Exercise Prices                                    Exercisable   Exercise Price
--------------------------------------------------------------------------------

Under $17.25                                           822,140           $12.85
$17.25-$25.87                                          613,899            21.33
$25.88-$38.80                                          912,469            34.03
$38.81-$58.21                                          527,612            46.53
Over $58.21                                                 --               --
--------------------------------------------------------------------------------
                                                     2,876,120           $27.55
================================================================================
   In  electing  to  continue  to  follow  APBO No. 25 for  expense  recognition
purposes,  the  Corporation  is  obliged  to provide  the  expanded  disclosures
required  under SFAS No. 123 for  stock-based  compensation  granted in 1995 and
thereafter, including, if materially different from reported results, disclosure
of pro forma net income and earnings per share had compensation expense relating
to grants  made  after  December  31,  1994 been  measured  under the fair value
recognition provisions of SFAS No. 123.
   The weighted-average  fair values at date of grant for options granted during
1999, 1998, and 1997 were $18.13,  $17.67,  and $11.86,  respectively,  and were
estimated  using the  Black-Scholes  option  valuation  model with the following
weighted-average assumptions:
--------------------------------------------------------------------------------
                                                     1999       1998       1997
--------------------------------------------------------------------------------
Expected life in years                                5.8        5.7        5.7
Interest rate                                        5.75%      4.54%      5.91%
Volatility                                           29.4%      29.0%      24.8%
Dividend yield                                        .95%       .90%      1.28%
--------------------------------------------------------------------------------
   The  Corporation's  pro forma  information  for the years ended  December 31,
1999,  1998,  and 1997,  prepared in accordance  with the provisions of SFAS No.
123, is provided  below.  For  purposes  of pro forma  disclosures,  stock-based
compensation is amortized to expense on a  straight-line  basis over the vesting
period.  The pro forma  effects of applying  SFAS No. 123 are not  indicative of
future amounts  because this statement does not apply to awards granted prior to
1995. Additional stock option awards are anticipated in future years.
--------------------------------------------------------------------------------
(Dollars in Millions
Except Per Share Amounts)                            1999       1998       1997
--------------------------------------------------------------------------------
Pro forma net earnings (loss)                     $ 293.9    $(755.8)   $ 224.3
Pro forma net earnings (loss)
   per common share -- basic                      $  3.38    $ (8.23)   $  2.37
Pro forma net earnings (loss)
   per common share -- assuming dilution          $  3.33    $ (8.23)   $  2.32
--------------------------------------------------------------------------------


NOTE 17: BUSINESS SEGMENTS AND GEOGRAPHIC INFORMATION

The Corporation has elected to organize its businesses  based  principally  upon
products and  services.  In certain  instances  where a business does not have a
local  presence in a  particular  country or  geographic  region,  however,  the
Corporation has assigned responsibility for sales of that business's products to
one of its other businesses with a presence in that country or region.
   The Corporation  operates in three reportable business segments:  Power Tools
and  Accessories,  Hardware and Home  Improvement,  and  Fastening  and Assembly
Systems.  The Power Tools and Accessories  segment has worldwide  responsibility
for the  manufacture  and sale of  consumer  and  professional  power  tools and
accessories,  electric  cleaning and lighting  products,  and electric  lawn and
garden tools, as well as for product service.  In addition,  the Power Tools and
Accessories  segment has  responsibility  for the sale of  plumbing  products to
customers  outside of the United States and Canada and for sales of the retained
portion of the household  products  business.  The Hardware and Home Improvement
segment has worldwide  responsibility  for the  manufacture and sale of security
hardware.  It also has  responsibility  for the manufacture of plumbing products
and for the sale of plumbing  products  to  customers  in the United  States and
Canada. The Fastening and Assembly Systems segment has worldwide  responsibility
for the manufacture and sale of fastening and assembly systems.
   The  Corporation  also operated  several  businesses  that do not  constitute
reportable business segments. These businesses included the manufacture and sale
of glass container-forming and inspection equipment, as well as recreational and
household  products.  As  more  fully  described  in Note 2,  during  1998,  the
Corporation    completed   the   sale   or   recapitalization   of   its   glass
container-forming   and  inspection   equipment  business,   Emhart  Glass;  its
recreational  products business,  True Temper Sports; and its household products
businesses  (excluding  certain  assets  associated  with  cleaning and lighting
products) in North  America,  Central  America,  the  Caribbean,  South  America
(excluding Brazil), and Australia. Because True Temper Sports, Emhart Glass, and
the  divested  household  products  businesses  are not treated
<PAGE>
                                       34


as discontinued  operations under generally accepted accounting principles, they
remain a part of the Corporation's  reported results from continuing operations,
and the results of operations and financial  positions of these  businesses have
been  included in the  consolidated  financial  statements  through the dates of
consummation  of  the  respective   transactions.   Amounts  relating  to  these
businesses  are included in the following  table under the caption "All Others".
The results of the household products businesses included under the caption "All
Others"  are based upon  certain  assumptions  and  allocations.  The  household
products businesses sold during 1998 were jointly operated with the cleaning and
lighting  products  businesses  retained  by  the  Corporation.   Further,   the
Corporation's  divested  household products  businesses in Central America,  the
Caribbean, South America (excluding Brazil), and Australia were operated jointly
with the power tools and accessories businesses. Accordingly, the results of the
household  products  businesses  included in the segment table under the caption
"All Others" were determined using certain  assumptions and allocations that the
Corporation believes are reasonable under the circumstances.

<TABLE>
<CAPTION>
BUSINESS SEGMENTS
(Millions of Dollars)
------------------------------------------------------------------------------------------------------------------------------------
                                          Reportable Business Segments
                                  ----------------------------------------------
                                                                                                          Corporate,
                                                                                                             Adjust-
                                       Power     Hardware   Fastening                          Currency       ments,
                                      Tools &      & Home  & Assembly                  All  Translation     & Elimi-    Consoli-
Year Ended December 31, 1999      Accessories Improvement     Systems      Total    Others  Adjustments      nations       dated
------------------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>           <C>         <C>      <C>         <C>          <C>        <C>         <C>
Sales to unaffiliated customers      $3,209.3      $881.8      $497.7   $4,588.8    $   --       $(68.3)    $     --    $4,520.5
Segment profit (loss)
   (for Consolidated,
   operating income)                    377.3       124.0        84.3      585.6        --         (6.9)       (42.4)      536.3
Depreciation and amortization            87.7        31.1        15.4      134.2        --         (1.8)        27.6       160.0
Income from equity method
   investees                             16.8          --          --       16.8        --           --         (2.1)       14.7
Capital expenditures                    109.1        38.3        26.9      174.3        --         (3.5)          .3       171.1
Segment assets
   (for Consolidated, total assets)   1,836.0       508.2       273.2    2,617.4        --        (59.4)     1,454.7     4,012.7
Investment in equity method
   investees                             26.3          --          .6       26.9        --           .6          2.3        29.8

Year Ended December 31, 1998
------------------------------------------------------------------------------------------------------------------------------------
Sales to unaffiliated customers      $2,946.4      $851.1      $463.0   $4,260.5    $333.6       $(34.2)    $     --    $4,559.9
Segment profit (loss)
   (for Consolidated, operating
   income before restructuring and
   exit costs, write-off of goodwill,
   and gain on sales of businesses)     293.4       125.2        76.6      495.2      16.5         (4.4)       (23.3)      484.0
Depreciation and amortization            88.2        27.1        13.4      128.7        --         (1.1)        27.6       155.2
Income from equity method
   investees                              8.8          --          --        8.8        --          --          (2.9)        5.9
Capital expenditures                     79.1        36.5        16.2      131.8      13.3         (1.1)         2.0       146.0
Segment assets
   (for Consolidated, total assets)   1,631.3       507.8       246.7    2,385.8        --         (4.6)     1,471.3     3,852.5
Investment in equity method
   investees                             22.5          --          .6       23.1        --           .1          2.3        25.5

Year Ended December 31, 1997
------------------------------------------------------------------------------------------------------------------------------------
Sales to unaffiliated customers      $2,936.4      $804.8      $451.3   $4,192.5    $718.1       $ 29.9     $     --    $4,940.5
Segment profit (loss)
   (for Consolidated,
   operating income)                    290.7       121.3        69.7      481.7      61.7         (2.3)       (51.8)      489.3
Depreciation and amortization            87.5        24.7        11.9      124.1      24.4          (.3)        66.0       214.2
Income from equity method
   investees                              6.1          --          --        6.1        --           .3         (1.7)        4.7
Capital expenditures                    113.2        47.3        15.4      175.9      25.3          (.2)         2.1       203.1
Segment assets
   (for Consolidated, total assets)   1,635.4       476.5       248.2    2,360.1     438.6          8.0      2,554.0     5,360.7
Investment in equity method
   investees                             23.1          --          .6       23.7        --           .9          1.0        25.6
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
                                       35


   The Corporation  assesses the performance of its reportable business segments
based upon a number of factors,  including segment profit. In general,  segments
follow the same  accounting  policies as those  described in Note 1, except with
respect to foreign currency  translation and except as further  indicated below.
The financial  statements of a segment's  operating units located outside of the
United States,  except those units operating in highly  inflationary  economies,
are generally measured using the local currency as the functional currency.  For
these units located outside of the United States, segment assets and elements of
segment profit are translated  using budgeted rates of exchange.  Budgeted rates
of exchange are  established  annually and, once  established,  all prior period
segment  data is  restated  to reflect  the  current  year's  budgeted  rates of
exchange.  The  amounts  included  in the  preceding  table  under the  captions
"Reportable  Business Segments",  "All Others", and "Corporate,  Adjustments,  &
Eliminations"  are reflected at the  Corporation's  budgeted  exchange rates for
1999. The amounts  included in the preceding  table under the caption  "Currency
Translation  Adjustments"  represent the difference between consolidated amounts
determined  using those  budgeted rates of exchange and those  determined  based
upon the rates of exchange  applicable  under  accounting  principles  generally
accepted in the United States.
   Segment profit excludes interest income and expense, non-operating income and
expense, goodwill amortization,  adjustments to eliminate intercompany profit in
inventory,  and  income  tax  expense.  In  addition,  segment  profit  excludes
restructuring  and exit costs and, for 1998,  the write-off of goodwill and gain
on sale of  businesses.  For  certain  operations  located  in  Brazil,  Mexico,
Venezuela,  and Turkey,  segment  profit is reduced by net interest  expense and
non-operating  expenses.  In determining  segment profit,  expenses  relating to
pension  and other  postretirement  benefits  are based  solely  upon  estimated
service costs. Corporate expenses are allocated to each reportable segment based
upon budgeted  amounts.  No Corporate  expenses have been  allocated to divested
businesses. While sales and transfers between segments are accounted for at cost
plus a reasonable  profit,  the effects of intersegment  sales are excluded from
the computation of segment profit.  Intercompany profit in inventory is excluded
from  segment  assets and is  recognized  as a reduction of cost of sales by the
selling segment when the related inventory is sold to an unaffiliated  customer.
Because the Corporation compensates the management of its various businesses on,
among other factors, segment profit, the Corporation may elect to record certain
segment-related   expense  items  of  an  unusual  or  non-recurring  nature  in
consolidation  rather than  reflect such items in segment  profit.  In addition,
certain   segment-related  items  of  income  or  expense  may  be  recorded  in
consolidation  in one period and transferred to the various  segments in a later
period.
   Segment assets exclude pension and tax assets, goodwill,  intercompany profit
in inventory, and intercompany receivables.
   Amounts in the preceding  table under the caption  "Corporate,  Adjustments &
Eliminations" on the lines entitled  "Depreciation and  amortization"  represent
depreciation of Corporate property and consolidated goodwill  amortization.  The
reconciliation  of segment profit to consolidated  earnings (loss) before income
taxes for each year, in millions of dollars, is as follows:
--------------------------------------------------------------------------------
                                               1999         1998         1997
--------------------------------------------------------------------------------

Segment profit for total reportable
   business segments                         $585.6      $ 495.2       $481.7
Segment profit for all
   other businesses                              --         16.5         61.7
Items excluded from segment profit:
   Adjustment of budgeted
     foreign exchange rates
     to actual rates                           (6.9)        (4.4)        (2.3)
   Depreciation of Corporate
     property and
     amortization of goodwill                 (27.6)       (27.6)       (66.0)
   Adjustment to businesses'
     postretirement benefit
     expenses booked
     in consolidation                          24.8         24.4         23.8
   Adjustment to eliminate
     net interest and
     non-operating expenses
     from results of certain
     operations in Brazil, Mexico,
     Venezuela, and Turkey                      1.0          5.7          3.6
   Other adjustments booked
     in consolidation directly
     related to reportable
     business segments                        (12.4)       (20.4)       (17.6)
Amounts allocated to businesses in
   arriving at segment profit in
   excess of (less than) Corporate
   center operating expenses, eliminations,
   and other amounts identified above         (28.2)        (5.4)         4.4
--------------------------------------------------------------------------------
Operating income before
   restructuring and exit costs,
   write-off of goodwill, and gain
   on sale of businesses                      536.3        484.0        489.3
Restructuring and exit costs                     --        164.7           --
Write-off of goodwill                            --        900.0           --
Gain on sale of businesses                       --        114.5           --
--------------------------------------------------------------------------------
   Operating income (loss)                    536.3       (466.2)       489.3
Interest expense,
   net of interest income                      95.8        114.4        124.6
Other (income) expense                          (.8)         7.7         15.2
--------------------------------------------------------------------------------
Earnings (loss)
   before income taxes                       $441.3      $(588.3)      $349.5
================================================================================
<PAGE>
                                       36


   The  reconciliation of segment assets to the consolidated total assets at the
end of each year, in millions of dollars, is as follows:
--------------------------------------------------------------------------------
                                               1999         1998         1997
--------------------------------------------------------------------------------

Segment assets for total
   reportable business segments            $2,617.4     $2,385.8     $2,360.1
Segment assets for all
   other businesses                              --           --        438.6
Items excluded from
   segment assets:
   Adjustment of budgeted
     foreign exchange rates
     to actual rates                          (59.4)        (4.6)         8.0
   Goodwill                                   743.4        768.7      1,877.3
   Pension assets                             377.0        348.8        391.6
Other Corporate assets                        334.3        353.8        285.1
--------------------------------------------------------------------------------
                                           $4,012.7     $3,852.5     $5,360.7
================================================================================
   Other Corporate assets principally consist of cash and cash equivalents,  tax
assets,  property,  and other assets.
   Sales to The Home Depot,  a customer of the Power Tools and  Accessories  and
Hardware and Home  Improvement  segments,  accounted for $755.9 million,  $622.3
million and $541.6 million of the Corporation's consolidated sales for the years
ended December 31, 1999, 1998 and 1997, respectively.
   The composition of the Corporation's sales by product group for each year, in
millions of dollars, is set forth below:
--------------------------------------------------------------------------------
                                               1999         1998         1997
--------------------------------------------------------------------------------

Consumer and professional
   power tools and
   product service                         $2,318.6     $2,123.9     $2,070.4
Consumer and professional
   accessories                                357.3        339.8        342.1
Electric lawn and
   garden products                            287.7        283.6        262.1
Electric cleaning and
   lighting products                          134.3         99.0        183.3
Security hardware                             619.2        596.3        573.5
Plumbing products                             260.6        257.0        242.3
Fastening and assembly
   systems                                    498.4        461.0        460.2
Household products                             44.4        197.1        485.4
Glass container-forming
   and inspection equipment                      --        130.3        238.6
Recreational products                            --         71.9         82.6
--------------------------------------------------------------------------------
                                           $4,520.5     $4,559.9     $4,940.5
================================================================================
   The  Corporation  markets its products and services in over 100 countries and
has manufacturing  sites in ten countries.  Other than in the United States, the
Corporation  does not conduct business in any country in which its sales in that
country  exceed 10% of  consolidated  sales.  Sales are  attributed to countries
based on the location of customers.  The composition of the Corporation's  sales
to unaffiliated  customers between those in the United States and those in other
locations for each year, in millions of dollars, is set forth below:
--------------------------------------------------------------------------------
                                               1999         1998         1997
--------------------------------------------------------------------------------

United States                              $2,825.2     $2,703.7     $2,855.7
Canada                                        137.0        137.4        179.4
--------------------------------------------------------------------------------
   North America                            2,962.2      2,841.1      3,035.1
Europe                                      1,255.5      1,364.5      1,378.0
Other                                         302.8        354.3        527.4
--------------------------------------------------------------------------------
                                           $4,520.5     $4,559.9     $4,940.5
================================================================================
   The composition of the Corporation's  property,  plant, and equipment between
those in the United  States and those in other  countries  as of the end of each
year, in millions of dollars, is set forth below:
--------------------------------------------------------------------------------
                                               1999         1998         1997
--------------------------------------------------------------------------------

United States                                $480.8       $469.0       $532.9
United Kingdom                                121.2        118.3        105.1
Other countries                               137.6        140.3        277.1
--------------------------------------------------------------------------------
                                             $739.6       $727.6       $915.1
================================================================================


NOTE 18: OTHER EXPENSE

Other  expense  for 1999 was not  significant.  Other  expense for 1998 and 1997
primarily  included currency losses and, for 1997, the costs associated with the
sale of receivables program.


NOTE 19: LEASES

The  Corporation   leases  certain   service   centers,   offices,   warehouses,
manufacturing  facilities,  and equipment.  Generally,  the leases carry renewal
provisions and require the Corporation to pay maintenance costs. Rental payments
may be adjusted for increases in taxes and insurance  above  specified  amounts.
Rental  expense  for 1999,  1998,  and 1997  amounted  to $84.0  million,  $81.4
million,  and $76.3 million,  respectively.  Capital  leases were  immaterial in
amount.  Future minimum  payments  under  non-cancelable  operating  leases with
initial or remaining  terms of more than one year as of December  31,  1999,  in
millions of dollars, were as follows:

--------------------------------------------------------------------------------
2000                                                               $ 48.9
2001                                                                 38.8
2002                                                                 33.7
2003                                                                 27.8
2004                                                                 24.0
Thereafter                                                           27.1
--------------------------------------------------------------------------------
                                                                   $200.3
================================================================================
<PAGE>
                                       37



NOTE 20: LITIGATION AND CONTINGENT LIABILITIES

The  Corporation  is involved  in various  lawsuits  in the  ordinary  course of
business. These lawsuits primarily involve claims for damages arising out of the
use of the  Corporation's  products  and  allegations  of patent  and  trademark
infringement.  The Corporation also is involved in litigation and administrative
proceedings  relating to employment  matters and  commercial  disputes.  Some of
these  lawsuits  include  claims for punitive as well as  compensatory  damages.
Using  current  product  sales  data  and  historical  trends,  the  Corporation
actuarially  calculates  the  estimate  of  its  current  exposure  for  product
liability.  The Corporation is insured for product  liability claims for amounts
in excess of established  deductibles and accrues for the estimated liability up
to the limits of the deductibles.  The Corporation  accrues for all other claims
and lawsuits on a case-by-case basis.
   The Corporation also is involved in lawsuits and  administrative  proceedings
with respect to claims involving the discharge of hazardous  substances into the
environment.  Certain of these claims assert  damages and liability for remedial
investigations  and cleanup costs with respect to sites at which the Corporation
has been identified as a potentially  responsible  party under federal and state
environmental laws and regulations (off-site).  Other matters involve sites that
the  Corporation  currently owns and operates or has previously  sold (on-site).
For off-site claims,  the Corporation  makes an assessment of the costs involved
based on  environmental  studies,  prior  experience at similar  sites,  and the
experience of other named parties. The Corporation also considers the ability of
other  parties to share costs,  the  percentage  of the  Corporation's  exposure
relative to all other parties,  and the effects of inflation on these  estimated
costs.  For on-site  matters  associated with properties  currently  owned,  the
Corporation  makes an assessment as to whether an investigation  and remediation
would be required under  applicable  federal and state laws. For on-site matters
associated with properties  previously sold, the Corporation considers the terms
of sale as well as applicable  federal and state laws to determine if it has any
remaining  liability.  If  the  Corporation  is  determined  to  have  potential
liability for properties currently owned or previously sold, an estimate is made
of the total costs of  investigation  and  remediation and other potential costs
associated with the site.
   The  Corporation's  estimate  of the costs  associated  with  legal,  product
liability,  and environmental exposures is accrued if, in management's judgment,
the  likelihood  of a loss  is  probable.  These  accrued  liabilities  are  not
discounted.
   Insurance  recoveries for  environmental and certain general liability claims
are not recognized until realized.  In the opinion of the  Corporation,  amounts
accrued for awards or assessments in connection  with these matters are adequate
and, accordingly,  ultimate resolution of these matters will not have a material
effect on the Corporation.
   As  of  December  31,  1999,  the  Corporation  had  no  known  probable  but
inestimable exposures that could have a material effect on the Corporation.



NOTE 21: QUARTERLY RESULTS (UNAUDITED)

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
(Millions of Dollars Except Per Share Data)                             First        Second          Third        Fourth
Year Ended December 31, 1999                                          Quarter       Quarter        Quarter       Quarter
--------------------------------------------------------------------------------------------------------------------------

<S>                                                                  <C>           <C>            <C>           <C>
Sales                                                                $  978.5      $1,084.2       $1,110.6      $1,347.2
Gross margin                                                            350.3         413.0          416.6         506.2
Net earnings                                                             39.2          70.7           75.3         115.1
==========================================================================================================================
Net earnings per common share -- basic                               $    .45      $    .81       $    .87      $   1.32
==========================================================================================================================
Net earnings per common share -- assuming dilution                   $    .44      $    .80       $    .85      $   1.31
==========================================================================================================================

Year Ended December 31, 1998
--------------------------------------------------------------------------------------------------------------------------

Sales                                                                $1,008.3      $1,169.7       $1,107.7      $1,274.2
Gross margin                                                            350.0         397.8          398.7         462.4
Net earnings (loss)                                                    (971.4)         58.4           66.6          91.6
==========================================================================================================================
Net earnings (loss) per common share -- basic                        $ (10.21)     $    .62       $    .73      $   1.05
==========================================================================================================================
Net earnings (loss) per common share -- assuming dilution            $ (10.21)     $    .61       $    .72      $   1.03
==========================================================================================================================
</TABLE>
   Results for the first  quarter of 1998  included a  write-off  of goodwill of
$900.0 million and a restructuring  charge of $140.0 million ($100.0 million net
of tax).  Results  for the  second  quarter  of 1998  included a gain on sale of
businesses of $36.5  million  ($4.2  million net of tax).  Results for the third
quarter of 1998  included a gain on sale of  businesses  of $26.9  million ($9.2
million net of tax) and a  restructuring  charge of $14.2  million ($7.7 million
net of tax).  Results for the fourth  quarter of 1998 included a gain on sale of
businesses of $51.1 million ($3.1 million net of tax) and a restructuring charge
of $10.5 million ($9.6 million net of tax).
   Earnings per common share are computed independently for each of the quarters
presented.  Therefore,  the sum of the quarters may not  necessarily be equal to
the full year earnings per share amounts.
<PAGE>
                                       38



REPORT OF INDEPENDENT AUDITORS
To the Stockholders and Board of Directors
of The Black & Decker Corporation:

We have  audited  the  accompanying  consolidated  balance  sheet of The Black &
Decker  Corporation  and  Subsidiaries as of December 31, 1999 and 1998, and the
related  consolidated  statements of earnings,  stockholders'  equity,  and cash
flows for each of the three years in the period ended  December  31,  1999.  Our
audits also included the  financial  statement  schedule  listed in the Index at
Item 14(a).  These financial  statements and schedule are the  responsibility of
the  Corporation's  management.  Our  responsibility is to express an opinion on
these financial statements and schedule based on our audits.
   We conducted  our audits in  accordance  with  auditing  standards  generally
accepted in the United States.  Those standards require that we plan and perform
the audit to obtain reasonable  assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.  An
audit also includes  assessing the accounting  principles  used and  significant
estimates  made by  management,  as well as  evaluating  the  overall  financial
statement  presentation.  We believe that our audits provide a reasonable  basis
for our opinion.
   In our  opinion,  the  consolidated  financial  statements  referred to above
present fairly, in all material respects, the consolidated financial position of
The Black & Decker  Corporation and  Subsidiaries at December 31, 1999 and 1998,
and the  consolidated  results of their operations and their cash flows for each
of the three years in the period ended  December 31, 1999,  in  conformity  with
accounting  principles  generally  accepted in the United  States.  Also, in our
opinion,  the related financial statement schedule,  when considered in relation
to the  basic  financial  statements  taken as a whole,  presents  fairly in all
material respects the information set forth therein.
   As  discussed in Note 2 to the  financial  statements,  effective  January 1,
1998, the  Corporation  changed its method of accounting for measuring  goodwill
impairment.


/s/ERNST & YOUNG LLP
Baltimore, Maryland
January 27, 2000

<PAGE>
                                       39


ITEM 9. CHANGES IN AND  DISAGREEMENTS  WITH AUDITORS ON ACCOUNTING AND FINANCIAL
DISCLOSURES

Not applicable.

                                    PART III


ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS

Information  required  under this Item with respect to Directors is contained in
the  Corporation's  Proxy Statement for the Annual Meeting of Stockholders to be
held April 25, 2000,  under the captions  "Election of  Directors"  and "Section
16(a) Beneficial  Ownership Reporting  Compliance" and is incorporated herein by
reference.
   Information  required  under this Item with respect to Executive  Officers of
the Corporation is included in Item 1 of Part I of this report.


ITEM 11.  EXECUTIVE COMPENSATION

Information  required  under this Item is contained in the  Corporation's  Proxy
Statement  for the Annual  Meeting of  Stockholders  to be held April 25,  2000,
under the captions  "Board of Directors"  and  "Executive  Compensation"  and is
incorporated herein by reference.


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information  required  under this Item is contained in the  Corporation's  Proxy
Statement  for the Annual  Meeting of  Stockholders  to be held April 25,  2000,
under the captions  "Voting  Securities" and "Security  Ownership of Management"
and is incorporated herein by reference.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information  required  under this Item is contained in the  Corporation's  Proxy
Statement  for the Annual  Meeting of  Stockholders  to be held April 25,  2000,
under  the  caption  "Executive  Compensation"  and is  incorporated  herein  by
reference.

                                     PART IV


ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)  List of Financial Statements, Financial Statement Schedules, and Exhibits

(1)  List of Financial Statements
The following  consolidated  financial statements  of the  Corporation  and  its
subsidiaries are included in Item 8 of Part II:

   Consolidated Statement of Earnings - years ended December 31, 1999, 1998, and
   1997.

   Consolidated Balance Sheet - December 31, 1999 and 1998.

   Consolidated  Statement of  Stockholders'  Equity - years ended  December 31,
   1999, 1998, and 1997.

   Consolidated  Statement of Cash Flows - years ended December 31, 1999,  1998,
   and 1997.

   Notes to Consolidated Financial Statements.

   Report of Independent Auditors.

(2)  List of Financial Statement Schedules
   The  following  financial  statement  schedules  of the  Corporation  and its
subsidiaries are included herein.

Schedule II - Valuation and Qualifying Accounts and Reserves.

   All other schedules for which provision is made in the applicable  accounting
regulations of the Commission are not required under the related instructions or
are inapplicable and, therefore, have been omitted.

(3)  List of Exhibits
The following exhibits are either included in this report or incorporated herein
by reference as indicated below:

Exhibit 2(a)(i)
Amendment No. 5 dated as of April 30, 1999, to the  Transaction  Agreement dated
as of May  10,  1998,  by  and  between  The  Black  &  Decker  Corporation  and
Windmere-Durable  Holdings, Inc., included in the Corporation's Quarterly Report
on Form 10-Q for the  quarter  ended July 4,  1999,  is  incorporated  herein by
reference.
<PAGE>
                                       40


Exhibit 2(a)(ii)
Amendment No. 6 dated as of June 30, 1999, to the Transaction Agreement dated as
of  May  10,  1998,  by  and  between  The  Black  &  Decker   Corporation   and
Windmere-Durable  Holdings, Inc., included in the Corporation's Quarterly Report
on Form 10-Q for the  quarter  ended July 4,  1999,  is  incorporated  herein by
reference.

Exhibit 2(b)(i)
Amendment No. 3 dated as of May 4, 1999, to the  Transaction  Agreement dated as
of July 12,  1998,  by and  between  The Black & Decker  Corporation  and Bucher
Holding AG, included in the Corporation's  Quarterly Report on Form 10-Q for the
quarter ended July 4, 1999, is incorporated herein by reference.

Exhibit 2(b)(ii)
Amendment No. 4 dated as of January 6, 2000, to the Transaction  Agreement dated
as of July 12, 1998,  by and between The Black & Decker  Corporation  and Bucher
Holding AG.

Exhibit 3(a)
Articles  of  Restatement  of the  Charter of the  Corporation  included  in the
Corporation's Quarterly Report on Form 10-Q for the quarter ended June 29, 1997,
are incorporated herein by reference.

Exhibit 3(b)
Bylaws of the Corporation, as amended.

Exhibit 4(a)
Indenture  dated as of March  24,  1993,  by and  between  the  Corporation  and
Security  Trust Company,  National  Association,  included in the  Corporation's
Current  Report on Form 8-K filed  with the  Commission  on March 26,  1993,  is
incorporated herein by reference.

Exhibit 4(b)
Form of 7-1/2% Notes due April 1, 2003,  included in the  Corporation's  Current
Report on Form 8-K filed with the Commission on March 26, 1993, is  incorporated
herein by reference.

Exhibit 4(c)
Form of 6-5/8%  Notes due  November  15,  2000,  included  in the  Corporation's
Current  Report on Form 8-K filed with the  Commission  on November 22, 1993, is
incorporated herein by reference.

Exhibit 4(d)
Form of 7% Notes due  February 1, 2006,  included in the  Corporation's  Current
Report  on  Form  8-K  filed  with  the  Commission  on  January  20,  1994,  is
incorporated herein by reference.

Exhibit 4(e)
Indenture  dated as of September  9, 1994,  by and between the  Corporation  and
Marine Midland Bank, as Trustee, included in the Corporation's Current Report on
Form 8-K filed with the Commission on September 9, 1994, is incorporated  herein
by reference.

Exhibit 4(f)
Credit  Agreement  dated as of April 23, 1996,  among the  Corporation,  Black &
Decker Holdings Inc. and Black & Decker, as Initial  Borrowers,  and the initial
Lenders named therein,  as Initial Lenders,  and Citibank  International plc, as
Facility  Agent,  and  Citibank  International  plc and  Midland  Bank  plc,  as
Co-Arrangers,  included in the  Corporation's  Quarterly Report on Form 10-Q for
the quarter ended March 31, 1996, is incorporated herein by reference.

Exhibit 4(g)
Credit  Agreement  dated as of April 23, 1996,  among the  Corporation,  Black &
Decker  Holdings Inc.,  Black & Decker,  Black & Decker  International  Holdings
B.V.,  Black & Decker G.m.b.H.,  Black & Decker (France) S.A.S.,  Black & Decker
(Nederland)  B.V. and Emhart Glass S.A., as Initial  Borrowers,  and the initial
Lenders named therein, as Initial Lenders,  and Credit Suisse, as Administrative
Agent,  and Citibank,  N.A., as Documentation  Agent, and NationsBank,  N.A., as
Syndication Agent,  included in the Corporation's  Quarterly Report on Form 10-Q
for the quarter ended March 31, 1996, is incorporated herein by reference.

Exhibit 4(h)
Indenture  dated as of June 26,  1998,  by and between  Black & Decker  Holdings
Inc., as Issuer, the Corporation,  as Guarantor,  and The First National Bank of
Chicago, as Trustee, included in the Corporation's Quarterly Report on Form 10-Q
for the quarter ended June 28, 1998, is incorporated herein by reference.

   The Corporation  agrees to furnish a copy of any other documents with respect
to long-term  debt  instruments of the  Corporation  and its  subsidiaries  upon
request.

Exhibit 10(a)
The  Black & Decker  Corporation  Deferred  Compensation  Plan for  Non-Employee
Directors,  as amended,  included in the Corporation's  Quarterly Report on Form
10-Q for the quarter ended October 2, 1994, is incorporated herein by reference.

Exhibit 10(b)
The  Black &  Decker  1986  Stock  Option  Plan,  as  amended,  included  in the
Corporation's  Quarterly  Report on Form 10-Q for the  quarter  ended  March 30,
1997, is incorporated herein by reference.

Exhibit 10(c)
The Black & Decker 1986 U.K. Approved Option Scheme, as amended, included in the
Corporation's Registration Statement on Form S-8 (Reg. No. 33-47651), filed with
the Commission on May 5, 1992, is incorporated herein by reference.

Exhibit 10(d)
The  Black &  Decker  1989  Stock  Option  Plan,  as  amended,  included  in the
Corporation's  Quarterly  Report on Form 10-Q for the  quarter  ended  March 30,
1997, is incorporated herein by reference.
<PAGE>
                                       41


Exhibit 10(e)
The  Black &  Decker  1992  Stock  Option  Plan,  as  amended,  included  in the
Corporation's  Quarterly  Report on Form 10-Q for the  quarter  ended  March 30,
1997, is incorporated herein by reference.

Exhibit 10(f)
The  Black & Decker  1995  Stock  Option  Plan for  Non-Employee  Directors,  as
amended,  included in the Corporation's  Annual Report on Form 10-K for the year
ended December 31, 1998, is incorporated herein by reference.

Exhibit 10(g)
The Black & Decker  Non-Employee  Directors Stock Plan, included as Exhibit A to
the Proxy Statement of the Corporation  dated March 3, 1998, for the 1998 Annual
Meeting of Stockholders of the Corporation, is incorporated herein by reference.

Exhibit 10(h)
The  Black &  Decker  1996  Stock  Option  Plan,  as  amended,  included  in the
Corporation's  Registration  Statement  on Form S-8  (Reg.  No.  333-51155),  is
incorporated herein by reference.

Exhibit 10(i)
The  Black &  Decker  Performance  Equity  Plan,  as  amended,  included  in the
Corporation's  Annual Report on Form 10-K for the year ended  December 31, 1996,
is incorporated herein by reference.

Exhibit 10(j)
The Black & Decker Executive  Annual Incentive Plan,  included in the definitive
Proxy  Statement for the 1996 Annual Meeting of  Stockholders of the Corporation
dated March 1, 1996, is incorporated herein by reference.

Exhibit 10(k)
The  Black  &  Decker  Management   Annual  Incentive  Plan,   included  in  the
Corporation's  Annual Report on Form 10-K for the year ended  December 31, 1995,
is incorporated herein by reference.

Exhibit 10(l)
Amended and Restated Employment Agreement,  dated as of November 1, 1995, by and
between the Corporation and Nolan D.  Archibald,  included in the  Corporation's
Annual Report on Form 10-K for the year ended December 31, 1995, is incorporated
herein by reference.

Exhibit 10(m)
Letter  Agreement,  dated February 1, 1975, by and between the  Corporation  and
Alonzo G. Decker, Jr., included in the Corporation's  Annual Report on Form 10-K
for the year ended December 31, 1990, is incorporated herein by reference.

Exhibit 10(n)(1)
The Black & Decker  Supplemental  Pension  Plan,  as  amended,  included  in the
Corporation's  Annual Report on Form 10-K for the year ended  December 31, 1991,
is incorporated herein by reference.

Exhibit 10(n)(2)
Amendment  to The Black & Decker  Supplemental  Pension Plan dated as of May 21,
1997,  included  in the  Corporation's  Annual  Report on Form 10-K for the year
ended December 31, 1997, is incorporated herein by reference.

Exhibit 10(o)(1)
The  Black &  Decker  Executive  Deferred  Compensation  Plan,  included  in the
Corporation's  Quarterly  Report on Form 10-Q for the quarter  ended  October 3,
1993, is incorporated herein by reference.

Exhibit 10(o)(2)
Amendment to The Black & Decker Executive Deferred Compensation Plan dated as of
July 17, 1996,  included in the Corporation's  Quarterly Report on Form 10-Q for
the quarter ended June 30, 1996, is incorporated herein by reference.

Exhibit 10(p)(1)
The  Black &  Decker  Supplemental  Retirement  Savings  Plan,  included  in the
Corporation's Registration Statement on Form S-8 (Reg. No. 33-65013), filed with
the Commission on December 14, 1995, is incorporated herein by reference.

Exhibit 10(p)(2)
Amendment to The Black & Decker Supplemental Retirement Savings Plan dated as of
April 22, 1997, included in the Corporation's Annual Report on Form 10-K for the
year ended December 31, 1997, is incorporated herein by reference.

Exhibit 10(p)(3)
Amendment No. 2 to The Black & Decker Supplemental Retirement Savings Plan dated
as of July 16, 1998,  included in the  Corporation's  Annual Report on Form 10-K
for the year ended December 31, 1998, is incorporated herein by reference.

Exhibit 10(q)
The Black & Decker Supplemental Executive Retirement Plan, as amended,  included
in the Corporation's  Annual Report on Form 10-K for the year ended December 31,
1998, is incorporated herein by reference.

Exhibit 10(r)
The Black & Decker Executive Life Insurance Program, as amended, included in the
Corporation's Quarterly Report on Form 10-Q for the quarter ended April 4, 1993,
is incorporated herein by reference.

Exhibit 10(s)
The  Black  &  Decker  Executive  Salary  Continuance  Plan,   included  in  the
Corporation's  Quarterly  Report on Form 10-Q for the  quarter  ended  April 12,
1995, is incorporated herein by reference.

Exhibit 10(t)
Description of the Corporation's policy and procedure for relocation of existing
employees (individual transfers), included in the Corporation's Annual Report on
Form 10-K for the year  ended  December  31,  1991,  is  incorporated  herein by
reference.
<PAGE>
                                       42


Exhibit 10(u)
Description  of the  Corporation's  policy and  procedures for relocation of new
employees, included in the Corporation's Annual Report on Form 10-K for the year
ended December 31, 1991, is incorporated herein by reference.

Exhibit 10(v)
Description of certain incidental benefits provided to executive officers of the
Corporation,  included in the  Corporation's  Annual Report on Form 10-K for the
year ended December 31, 1997, is incorporated herein by reference.

Exhibit 10(w)
Form of Amendment and Restatement of Severance Benefits Agreement by and between
the  Corporation  and  approximately  13 of its key  employees,  included in the
Corporation's  Annual Report on Form 10-K for the year ended  December 31, 1996,
is incorporated herein by reference.

Exhibit 10(x)
Amendment and  Restatement  of Severance  Benefits  Agreement,  dated January 1,
1997, by and between the  Corporation  and Nolan D.  Archibald,  included in the
Corporation's  Annual Report on Form 10-K for the year ended  December 31, 1996,
is incorporated herein by reference.

Exhibit 10(y)
Severance  Benefits  Agreement,  dated  April  27,  1999,  by  and  between  the
Corporation and Paul F. McBride,  included in the Corporation's Quarterly Report
on Form 10-Q for the  quarter  ended July 4,  1999,  is  incorporated  herein by
reference.

Exhibit 10(z)
Amendment and  Restatement  of Severance  Benefits  Agreement,  dated January 1,
1997,  by and between the  Corporation  and Charles E.  Fenton,  included in the
Corporation's  Annual Report on Form 10-K for the year ended  December 31, 1996,
is incorporated herein by reference.

Exhibit 10(aa)
Letter  Agreement  dated April 19, 1999, by and between the Corporation and Paul
F. McBride,  included in the Corporation's Quarterly Report on Form 10-Q for the
quarter ended July 4, 1999, is incorporated herein by reference.

Exhibit 10(bb)
Amendment and  Restatement  of Severance  Benefits  Agreement,  dated January 1,
1997,  by and between the  Corporation  and Thomas M.  Schoewe,  included in the
Corporation's  Annual Report on Form 10-K for the year ended  December 31, 1996,
is incorporated herein by reference.

Exhibit 10(cc)(1)
Amendment and  Restatement  of Severance  Benefits  Agreement,  dated January 1,
1997, by and between the Corporation and Paul A. Gustafson.

Exhibit 10(cc)(2)
Special  Deferral  Agreement,  dated  February  7,  2000,  by  and  between  the
Corporation and Paul A. Gustafson.

Exhibit 10(dd)
Distribution  Agreement dated September 9, 1994, by and between the Corporation,
Lehman Brothers Inc., Citicorp  Securities,  Inc., Goldman,  Sachs & Co., Morgan
Stanley & Co.  Incorporated,  NationsBanc  Capital  Markets,  Inc.  and  Salomon
Brothers Inc.,  included in the  Corporation's  Current Report on Form 8-K filed
with the Commission on September 9, 1994, is incorporated herein by reference.

Exhibit 10(ee)(1)
The Black & Decker 1996 Employee Stock Purchase Plan, included in the definitive
Proxy  Statement for the 1996 Annual Meeting of  Stockholders of the Corporation
dated March 1, 1996, is incorporated herein by reference.

Exhibit 10(ee)(2)
Amendment to The Black & Decker 1996 Employee Stock Purchase Plan, as adopted on
February 12, 1997, included in the Corporation's  Annual Report on Form 10-K for
the year ended December 31, 1996, is incorporated herein by reference.

Exhibit 12
Computation of Ratios.

Exhibit 21
List of Subsidiaries.

Exhibit 23
Consent of Independent Auditors.

Exhibit 24
Powers of Attorney.

Exhibit 27
Financial Data Schedule.

Exhibit 99(a)
Amendment  No. 1 dated as of September  29,  1999,  to the  Securities  Purchase
Agreement  dated as of September 30, 1998,  between True Temper  Corporation and
Emhart,  Inc., the Debt Registration  Rights Agreement dated as of September 30,
1998,  among True Temper  Corporation and Emhart,  Inc. and the Escrow Agreement
dated as of September 30, 1998, among True Temper Corporation,  Emhart, Inc. and
Snoga, Inc.

Exhibit 99(b)
Amendment  No.  2 dated as of  October  19,  1999,  to the  Securities  Purchase
Agreement  dated as of September 30, 1998,  between True Temper  Corporation and
Emhart,  Inc., the Debt Registration  Rights Agreement dated as of September 30,
1998,  among True Temper  Corporation and Emhart,  Inc. and the Escrow Agreement
dated as of September 30, 1998, among True Temper Corporation,  Emhart, Inc. and
Snoga, Inc.

   All other items are "not applicable" or "none".
<PAGE>
                                       43


(b)  Reports on Form 8-K
The Corporation  filed the following reports on Form 8-K during the three months
ended December 31, 1999:
   On October 19, 1999, the Corporation  filed a Current Report on Form 8-K with
the Securities and Exchange  Commission.  This Current Report on Form 8-K, filed
pursuant to Item 5 of that Form,  stated that the  Corporation  had reported its
earnings for the three and nine months ended October 3, 1999.
   All other items are "not applicable" or "none".

(c)  Exhibits
   The exhibits required by Item 601 of Regulation S-K are filed herewith.

(d)  Financial  Statement  Schedules  and  Other  Financial  Statements

The  Financial Statement  Schedule  required  by  Regulation  S-X is  filed
herewith.


SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<TABLE>
<CAPTION>
The Black & Decker Corporation and Subsidiaries
(Millions of Dollars)
---------------------------------------------------------------------------------------------------------------------------
                                                             Balance    Additions                      Other
                                                                  at   Charged to                    Changes      Balance
                                                           Beginning    Costs and                        Add       at End
Description                                                of Period     Expenses   Deductions       (Deduct)   of Period
---------------------------------------------------------------------------------------------------------------------------
<S>                                                            <C>          <C>          <C>           <C>          <C>

Year Ended December 31, 1999
Reserve for doubtful accounts and cash discounts               $44.3        $66.3        $55.6 (a)     $(1.7)(b)    $53.3
---------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1998
Reserve for doubtful accounts and cash discounts               $47.8        $66.8        $65.8 (a)     $(4.5)(b)    $44.3
---------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1997
Reserve for doubtful accounts and cash discounts               $44.0        $70.0        $63.8 (a)     $(2.4)(b)    $47.8
---------------------------------------------------------------------------------------------------------------------------
<FN>
(a)  Accounts written off during the year and cash discounts taken by customers.
(b)  Primarily  includes  currency  translation  adjustments  and, for 1998, the
   write-off of $4.3 million of reserves associated with divested businesses.
</FN>
</TABLE>
<PAGE>
                                       44


Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                       THE BLACK & DECKER CORPORATION

Date:  February 14, 2000               By   /s/ NOLAN D. ARCHIBALD
       -----------------                    ----------------------
                                            Nolan D. Archibald
                                            Chairman, President, and
                                            Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below on February 14, 2000, by the  following  persons on behalf
of the registrant and in the capacities indicated.

Signature                           Title                       Date
--------------------------------------------------------------------------------


Principal Executive Officer

/s/ NOLAN D. ARCHIBALD                                         February 14, 2000
----------------------                                         -----------------
Nolan D. Archibald                  Chairman, President, and
                                    Chief Executive Officer


Principal Financial Officer

/s/ MICHAEL D. MANGAN                                          February 14, 2000
---------------------                                          -----------------
Michael D. Mangan                   Senior Vice President and
                                    Chief Financial Officer


Principal Accounting Officer

/s/ STEPHEN F. REEVES                                          February 14, 2000
---------------------                                          -----------------
Stephen F. Reeves                   Vice President - Finance and
                                    Strategic Planning
--------------------------------------------------------------------------------


This report has been signed by the following directors,  constituting a majority
of the Board of Directors, by Nolan D. Archibald, Attorney-in-Fact.

                Nolan D. Archibald                   Alonzo G. Decker, Jr.
                Norman R. Augustine                  Manuel A. Fernandez
                Barbara L. Bowles                    Anthony Luiso
                Malcolm Candlish                     Mark H. Willes

By   /s/ NOLAN D. ARCHIBALD                          Date:  February 14, 2000
     ----------------------                                 -----------------
     Nolan D. Archibald
     Attorney-in-Fact