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, 1995                                        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 executive offices)              (Zip Code)

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

Securities registered pursuant to Section 12(b) of the Act:
                                                Name of each exchange on which
        Title of each class                       registered
Common Stock, par value $.50 per share          New York Stock Exchange
                                                Pacific  Stock Exchange
Preferred Share Purchase Rights                 New York Stock Exchange
                                                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 February 20, 1996 was $2,844,170,036.

The number of shares of Common  Stock  outstanding  as of February  20, 1996 was
87,010,938.

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 1996 Annual Meeting of Stockholders  are incorporated by
reference in Part III of this report.



                                     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 the world's leading producer 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
      household  products business is the North American leader and is among the
      major  global  competitors  in  the  small  electric  household  appliance
      industry.  The Corporation is the worldwide leader in the manufacturing of
      steel golf club  shafts and glass  container-making  equipment  and is the
      largest global supplier of engineered  fastening systems to the markets it
      serves.  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.
           The  Corporation's  unsecured  revolving  credit facility (the Credit
      Facility) provides that the interest rate margin over the London Interbank
      Offered  Rate  (LIBOR)  declines  as  the  Corporation's   leverage  ratio
      improves.  Borrowings  under the Credit Facility were at LIBOR plus .4375%
      at December 31, 1994. Due to  improvements in the  Corporation's  leverage
      ratio,  the borrowing rate under the Credit  Facility  declined by .1125%,
      effective  January 1, 1995,  to LIBOR  plus .325% and  declined  by .075%,
      effective  January 1, 1996,  to LIBOR plus .25%.  The interest rate margin
      over LIBOR, which cannot exceed .4375%, is determined quarterly based upon
      the leverage ratio at that time.
           During 1994, the  Corporation  filed a shelf  registration  statement
      with the Securities and Exchange Commission to issue up to $500 million of
      debt securities, which may consist of debentures, notes or other unsecured
      evidences  of  indebtedness  (the Medium Term  Notes).  During  1994,  the
      Corporation issued $151.8 million aggregate principal amount of Medium
      Term Notes  under this shelf  registration  statement.  During  1995,  the
      Corporation issued an additional $85.0 million aggregate  principal amount
      of Medium  Term  Notes.  For  additional  information  about the shelf
      registration  statement,  see Note 9 of Notes  to  Consolidated  Financial
      Statements, included in Item 8 of Part II of this report.
           During 1995, the Corporation  sold PRC Realty  Systems,  Inc. (RSI) 
      and PRC Environmental Management, Inc. (EMI) for aggregate proceeds of
      approximately $100 million.  On December 13, 1995, the Corporation  
      announced that it had signed a definitive agreement to sell PRC Inc.,  to 
      Litton Industries, Inc., for approximately $425 million.  Together, PRC 
      Inc., RSI and EMI comprised the Corporation's information technology and 
      services (PRC) segment. On February 16, 1996, the Corporation  completed 
      the sale of PRC Inc. For additional information about the discontinued PRC
      segment, see the discussion  under the caption "Discontinued  Operations" 
      and Note 2 of Notes to Consolidated Financial Statements included in Item
      8 of Part II of this report.

(b)   DISCONTINUED OPERATIONS
      On December  13,  1995,  the  Corporation  announced  that it had signed a
      definitive  agreement to sell PRC Inc., the remaining  business in its 
      information technology and services (PRC)segment, for $425.0 million. The 
      sale of PRC Inc. was completed on February 16, 1996. Proceeds from the 
      sale were used to reduce debt. A net gain on the sale of PRC Inc. of 
      approximately $80.0 to $90.0 million will be recognized in the first 
      quarter of 1996. For additional information with respect to the pro forma 
      effects of the consummation of the sale of PRC Inc. on the Corporation's
      financial position as of December 31, 1995, and the pro forma effects of 
      the sales of PRC Inc., RSI, and EMI on the Corporation's earnings from 
      continuing operations for the year then ended, see the unaudited pro forma
      financial information included in Item 14(d) of Part IV of this report.
           The  Corporation  acquired  PRC  through  its  acquisition  of Emhart
      Corporation in April 1989.  The sale of PRC will allow the  Corporation to
      reduce its debt level and concentrate on its more strategic businesses.
           Operating results, net assets, and cash flows of the discontinued PRC
      segment have been reported  separately  from the continuing  operations of
      the Corporation in the Consolidated  Financial Statements included in Item
      8 of Part II of this report.
           Net earnings of the discontinued PRC segment were $38.4 million ($.41
      per share on a fully diluted basis) in 1995, $37.5 million ($.44 per share
      on a fully diluted  basis) in 1994, and $31.1 million ($.37 per share on a
      fully  diluted  basis)  in 1993 on  revenues  of  $800.1  million,  $883.1
      million, and $760.7 million, respectively.  The results of the 
      discontinued PRC segment do not reflect any expense for interest allocated
      by or management fees charged by the Corporation.

(c)   FINANCIAL INFORMATION ABOUT BUSINESS SEGMENTS

      Unless otherwise indicated, the following discussion of the Corporation's
      business segments pertains to the continuing operations of the Corporation
      and excludes any matters in respect of the discontinued PRC segment.

           The Corporation operates in two business segments:  Consumer and Home
      Improvement Products, including consumer and professional power tools and
      accessories, household products, security hardware, outdoor products
      (composed of electric  lawn and garden tools and  recreational  products),
      plumbing  products,  and product  service;  and  Commercial and Industrial
      Products,   including   fastening   systems  and  glass   container-making
      equipment.  See  Note 16 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.
           Revenues from continuing  operations by product group within business
      segments are presented in the following table.

      <TABLE>
             1995 Revenues by Product Group within Business Segments
                              (Millions of Dollars)

      <CAPTION>
                                                              Year Ended
                                                          December 31, 1995
                                                           Amount        %
                                                           ------   ------                                               
<S>                                                        <C>       <C>
           Consumer and Home Improvement Products
             Power Tools and Product Service ............. $1,826       38%
             Household Products ..........................    846       18
             Security Hardware ...........................    527       11
             Accessories .................................    343        7
             Outdoor Products ............................    321        7
             Plumbing Products ...........................    213        5
                                                           ------   ------
             Total Consumer and Home Improvement Products  $4,076       86%
                                                           ------   ------
           Commercial and Industrial Products ............ $  690       14%
                                                           ------   ------
           Total Revenues ................................ $4,766      100%
                                                           ======   ======
      </TABLE>

           There is no single class of product  within the product groups listed
      in the above  table  that  represents  more than 10% of the  Corporation's
      consolidated revenues from continuing operations.

(d)   NARRATIVE DESCRIPTION OF THE BUSINESS

      Unless otherwise indicated, the following discussion of the business of 
      the Corporation pertains to the continuing operations of the  Corporation
      and excludes any matters in respect of the discontinued PRC segment.
      
          The following is a brief description of each of the business segments.

      CONSUMER AND HOME IMPROVEMENT PRODUCTS SEGMENT
      The Consumer and Home Improvement Products segment is composed of consumer
      (home  use)  and  professional  power  tools  and  accessories,  household
      products,  security hardware,  outdoor products (composed of electric lawn
      and  garden  tools and  recreational  products),  plumbing  products,  and
      product  service.  Power tools  include both corded and cordless  electric
      portable  power  tools,  such  as  drills,  screwdrivers,  saws,  sanders,
      grinders,  car care products,  Workmate  workcenters and related products,
      and  bench and  stationary  tools.  Accessories  include  accessories  and
      attachments  for power  tools,  and a variety  of  consumer-use  fastening
      products,  including  gluing,  stapling and riveting  products.  Household
      products  include a variety of both  corded and  cordless  small  electric
      household  appliances,   including  hand-held  vacuums;   irons;  lighting
      products;  food mixers,  processors and choppers;  can openers;  blenders;
      coffee makers; kettles; toasters and toaster ovens; wafflebakers;  knives;
      breadmakers;  and fans.  Security  hardware  includes both residential and
      commercial door hardware, including locksets, high security and electronic
      locks and  locking  devices,  deadbolts,  door  closers,  hinges  and exit
      devices, and master keying systems.  Outdoor products include a variety of
      both corded and cordless electric lawn and garden tools, such as hedge and
      yard trimmers, lawn mowers and edgers,  blower/vacuums,  shredders,  grass
      shears, lawnrakers, and related accessories. Outdoor products also include
      recreational products, which include a variety of steel and composite golf
      club shafts and specialty  tubing.  Plumbing products include a variety of
      conventional and decorative faucets, shower valves, and bath accessories.
           Power tools, household products,  electric lawn and garden tools, and
      related accessories are marketed around the world under the Black & Decker
      name as well as other trademarks and trade names, including DeWALT, Black
      &  Decker  Industry  &  Construction,  Elu,  Proline,  Macho,  TimberWolf,
      Cyclone,   Trimcat,   Kodiak,   Scrugun,   Wildcat,    Guaranteed   Tough,
      Versa-Clutch,   VersaPak,   Workmate,  ShopBox,  Alligator,  Air  Station,
      Dustbuster,  SnakeLight,  Toast-R-Oven, Handy Steamer, HandyChopper, Light
      'N Easy, Groom 'N' Edge, Hedge Hog, Vac 'N' Mulch,  Reflex,  B&D, Piranha,
      Piranha Pro,  Bullet,  Pilot-Point,  Scorpion  Anti-Slip,  Master  Series,
      PowerShot,  and POP.  Security  hardware  products  are  marketed  under a
      variety of trademarks and trade names, including  Black & Decker, Geo,  
      Kwikset,  TITAN, TITAN Commercial  Series,  Lane, NEMEF,  DOM, and Corbin
      Co. Recreational products are marketed  under the  trademarks  and trade 
      names True Temper, Dynamic, Dynamic Gold, Dynalite, EI-70, Comet,  Rocket,
      True  Lite, SensiCore, TT Lite, Release, and others.  Plumbing products 
      are marketed under the trademarks and trade names Price Pfister, The 
      Pfabulous Pfaucet With The Pfunny Name, Genesis, Society Brass Collection,
      Verve, Windsor, Georgetown, Jet Setter, Society Finishes, and others.
           The  Corporation's  product service program supports its power tools,
      electric  lawn and garden  products,  and household  products  businesses.
      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, 1995, there were over 200 such service  
      centers, of which  approximately  one-half  were  located  in the  United
      States. The remainder were located around the world,  primarily in Europe,
      Mexico,  Australia,  Canada,  and Latin  America.  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  and  household
      appliances   are   reconditioned   and  then  re-sold   through   numerous
      company-operated factory outlets and service centers.
           Most of the Corporation's consumer 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.  Consumer
      products sold outside 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  Consumer  and  Home
      Improvement Products segment are sold primarily to retailers, wholesalers,
      distributors,  and jobbers,  although some  reconditioned  power tools and
      household products are sold through  company-operated  service centers and
      factory outlets directly to end users.  Certain security hardware products
      are sold to commercial, institutional, and industrial customers.
           The principal  materials used in the manufacturing of products in the
      Consumer and Home  Improvement  Products  segment are plastics,  aluminum,
      copper,  steel, bronze, zinc, brass,  certain electronic  components,  and
      batteries.  These  materials  are  used in  various  forms.  For  example,
      aluminum or steel may be used in wire, sheet, bar, and strip stock form.
           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,  1995,  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.  China has been granted Most  Favored  Nation (MFN) status  through
      July 3, 1996, and currently there are no significant trade restrictions or
      tariffs  imposed  on  such  products.  The  Corporation  has  investigated
      alternate  sources  of  supply  in case the MFN  status  is not  extended.
      Alternative sources of supply are available, or can be developed, for many
      of these products.  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 MFN 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 Corporation.
           Principal  manufacturing and assembly facilities in the United States
      are located in  Fayetteville  and  Asheboro,  North  Carolina;  Easton and
      Hampstead,  Maryland;  Anaheim and Pacoima,  California;  Denison,  Texas;
      Amory and Olive Branch, Mississippi;  and Bristow, Oklahoma. 
           Principal  facilities  outside  the  United  States  are  located  in
      Buchlberg  and Bruhl,  Germany;  Molteno and Perugia,  Italy;  Spennymoor,
      Meadowfield,  and  Rotherham,  England;  Brockville,   Canada;  Queretaro,
      Mexico; Jurong Town, Singapore;  Kuantan,  Malaysia;  Newcastle,   
      Australia;   and  Apeldoorn,   Netherlands.   For  additional information
      with respect to these and other properties owned or leased by the 
      Corporation, see Item 2, "Properties."
           As previously announced, during 1995, the Corporation closed its 
      manufacturing facilities located in Tarboro, North Carolina, and Delemont,
      Switzerland, and transferred production from those locations to other
      manufacturing facilities of the Corporation.  The Corporation ceased 
      manufactuing at its facility in Santo Andre, Brazil, late in 1995 and will
      begin to manufacture at a new owned facility in Uberaba, Brazil, in early 
      1996.  Administrative offices remain at the Santo Andre site.  These plant
      actions are part of the  Corporation's  continuing  effort to identify
      opportunities to improve its manufacturing cost structure.
           The  Corporation  holds  various  patents and licenses on many of its
      products  and  processes in the  Consumer  and Home  Improvement  Products
      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  revenues in the Consumer
      and Home Improvement  Products segment is derived from the  do-it-yourself
      and home  modernization  markets,  which  generally  are not  seasonal  in
      nature.  However,  sales of household  products and certain consumer 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 are not
      generally  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  leaders in the  manufacturing
      and marketing of portable power tools, small electric household  
      appliances, electric lawn and garden tools, security hardware,  plumbing 
      products, 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.

      COMMERCIAL AND INDUSTRIAL PRODUCTS SEGMENT
      The  Corporation's  fastening  systems business  manufactures an extensive
      line of metal and plastic  fasteners and engineered  fastening systems for
      commercial  applications,   including  blind  riveting  and  stud  welding
      systems,  specialty  screws,  prevailing  torque nuts and assemblies,  and
      insert  systems.  The fastening  systems  products are marketed  under the
      trademarks and trade names Emhart Fastening  Teknologies,  POP,  HeliCoil,
      Parker-Kalon,  Gripco,  Warren, Tucker, NPR, Dodge, POP NUT, WELL-NUT, and
      others.
           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.  Some of these products also are sold through the
      Corporation's Consumer and Home Improvement Products segment.
           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 systems business.
      While the  Corporation  considers those patents,  trademarks,  and license
      rights to be valuable,  the  Corporation is not materially  dependent upon
      such patents or license rights with respect to its operations.
           Principal manufacturing facilities for the fastening systems business
      in the United  States are  located in Danbury  and  Shelton,  Connecticut;
      South Whitley and Montpelier,  Indiana;  Campbellsville  and Hopkinsville,
      Kentucky;  and Mt. Clemens,  Michigan.  Principal  facilities  outside 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  systems  business  consist
      primarily of ferrous and nonferrous metals in the form of wire, bar stock,
      strip and sheet  metals,  and chemical  compounds,  plastics,  and rubber.
      These materials are readily available from a number of suppliers.
           The  Corporation  manufactures  a variety  of  automatic,  high-speed
      machines for the glass container-making  industry,  including machines for
      supplying  molten glass for the forming process and electronic  inspection
      equipment  for  monitoring  quality  levels.  These  machines  are used in
      producing bottles,  jars,  tumblers,  and other glass containers primarily
      for food, beverage,  pharmaceutical, and household products packaging. The
      Corporation also provides  replacement parts and a variety of engineering,
      repairing,  rebuilding,  and other services to the glass  container-making
      industry  throughout  the  world,  and these  activities  generate  nearly
      two-thirds of the sales in this business.  These products and services are
      marketed  principally under the trademarks and trade names Emhart,  Emhart
      Glass, Powers, FlexLine, T-600 Forming Control System,  Verti-Flow Cooling
      System, and Total Inspection Machine.
           The   Corporation   sells  glass   container-making   machinery   and
      replacement  parts primarily through its own sales force directly to glass
      container  manufacturers   throughout  the  world.  The  business  is  not
      dependent  on one or a few  customers,  the  loss of  which  would  have a
      material adverse effect on operating results of the business.
           Some  domestic  manufacturers  and a number of foreign  manufacturers
      compete with the  Corporation in the manufacture and sale of various types
      of glass  container-making  equipment.  However,  the Corporation believes
      that it is the leading supplier and offers the most complete line of glass
      container-making and inspection  machinery,  parts, and service. In recent
      years, the glass  container-making  equipment business has experienced the
      effects of increased  competition  with packaging  applications of plastic
      and other non-glass  containers.  Important competitive factors are price,
      technological and machine performance features,  product reliability,  and
      technical and application  engineering services.  There is little seasonal
      variation in this business.
           The Corporation  owns a number of United States and foreign  patents,
      trademarks,  and license  rights  relating  to the glass  container-making
      business. While the Corporation considers those patents,  trademarks,  and
      license rights to be valuable,  this business is not materially  dependent
      upon such patents or license rights with respect to its operations.
           The principal glass container-making machinery manufacturing facility
      in the  United  States  is  located  in  Windsor,  Connecticut.  Principal
      manufacturing  facilities outside the United States are located in Oerebro
      and Sundsvall,  Sweden.  For additional  information with respect to these
      and  other  properties  owned or leased  by the  Corporation,  see Item 2,
      "Properties."
           The principal raw materials  required for the glass  container-making
      equipment  business are steel,  iron,  copper and copper-based  materials,
      aluminum and refractory materials, and electronic components. Manufactured
      parts are  purchased  from a number of suppliers.  All such  materials and
      components are generally available in adequate quantities.
           During 1992, the  Corporation  commenced a  restructuring  plan which
      included the reorganization of Dynapert, the Corporation's printed circuit
      board  assembly  equipment  business.  The  business  was divided into the
      through-hole and surface-mount machinery product lines. This restructuring
      plan  included the  withdrawal  from the  manufacturing  of  surface-mount
      machinery in Europe which was completed in 1993. The Corporation  sold the
      remaining  through-hole  business in 1993 and the remaining  surface-mount
      business in 1995.

      <TABLE>
      BACKLOG
     The following is a summary of total  backlog by business  segment as of the
     referenced dates      
     <CAPTION>       
     (Millions of Dollars)                                  December 31, 
                                                            1995   1994
                                                            ----   ----
     <S>                                                    <C>    <C>
     Consumer and Home Improvement Products ............... $ 96   $103
     Commercial and Industrial Products ...................  134    126
                                                            ----   ----
              Total Backlog ............................... $230   $229
                                                            ====   ====
 </TABLE>

           None of the backlog at December 31, 1995, or at December 31, 1994,
      included unfunded amounts.

      OTHER INFORMATION
       The Corporation's  product  development  program in the United States for
      the Consumer and Home Improvement Products segment is coordinated from the
      Corporation's  headquarters  in  Towson,  Maryland,  for  power  tools and
      accessories;  from  Shelton,  Connecticut,  for household  products;  from
      Anaheim,  California, for residential security hardware; and from Pacoima,
      California,  for plumbing  products.  Outside the United  States,  product
      development  activities  for power  tools and  accessories  and  household
      products  are  coordinated  from  Slough,  England,  and are carried on at
      facilities in Spennymoor,  England;  Brockville,  Canada;  Civate,  Italy;
      Idstein, Germany; and Croydon, Australia.
           Product  development  activities  for the  Commercial  and Industrial
      Products  segment are currently  carried on 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,  1995,  the  Corporation  employed  approximately
      29,300  persons  in its  continuing  operations  worldwide  (approximately
      34,200 persons,  including the employees of its discontinued PRC segment).
      Approximately  2,100  employees  in  the  United  States  are  covered  by
      collective   bargaining   agreements.   During  1995,  several  collective
      bargaining  agreements  in  the  United  States  were  negotiated  without
      material  disruption  to  operations.  A number  of other  agreements  are
      scheduled  for  negotiation   during  1996.   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.  In
      recent  years,  many state and local  governments  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  is in
      substantial   compliance  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, 1995, the Corporation had been identified as a
      potentially  responsible  party (PRP) in connection with  approximately 27
      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,  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,
      appropriate  liability  accruals have been established by the Corporation.
      As of December 31, 1995, the  Corporation's  aggregate  probable  exposure
      with respect of  environmental  liabilities,  for which accruals have been
      established in the Consolidated  Financial Statements,  was $61.0 million.
      With respect to environmental  liabilities,  unless otherwise noted below,
      the  Corporation  does not believe that its liability  with respect to any
      individual site will exceed $10.0 million.
           Pursuant  to the  terms of the  Corporation's  agreement  to sell the
      Bostik chemical  adhesives  business to Orkem S.A., the Corporation agreed
      to indemnify  Orkem against costs  incurred or claims made with respect to
      environmental matters at Bostik facilities within four years from the date
      of sale to the extent that the  aggregate  costs and claims  exceeded $5.0
      million;  provided,  however,  that the  Corporation's  total liability to
      Orkem for all  environmental  matters  with  respect to Bostik  facilities
      shall not exceed $10.0 million. By letter dated November 22, 1993, Orkem's
      successor in interest ("Total, S.A.") notified the Corporation that within
      the  four-year  period  following  the  closing it had  incurred  costs of
      approximately $5.4 million and demanded payment of the amount in excess of
      $5.0 million.  Total, S.A. also demanded  indemnification  for a number of
      environmental  conditions  identified in its letter,  the cost of which it
      estimated would exceed the $10.0 million  limitation of the  Corporation's
      indemnification  obligation.  The Corporation and Total,  S.A. continue to
      review the  indemnification  claims  and,  as of December  31,  1995,  the
      Corporation had paid $2,225,670 of the claims.
           Emhart  previously  received  a  notice  of  responsibility  from the
      Massachusetts  Department of Environmental Protection for the 90-acre site
      of the former United Shoe  Machinery  business at Beverly,  Massachusetts.
      The  site  has been  classified  a  non-priority  site,  with a waiver  of
      approvals  allowed.  An investigation of contamination has been completed,
      and a remediation plan has been proposed (estimated at $1.0 million) under
      the Massachusetts Contingency Plan.
           In or about 1985, as a consequence of investigations stemming from an
      underground  storage tank leak from a nearby gas station,  the Corporation
      discovered  certain  groundwater  contamination at its facility located in
      Hampstead, Maryland. Upon discovery of the groundwater contamination,  the
      Corporation,  in cooperation with the Department of the Environment of the
      State of Maryland  (MDE),  embarked on a program to remediate  groundwater
      contamination,  including installation of an air stripping system designed
      to remove contaminants from groundwater.  The Corporation,  in cooperation
      with MDE,  conducted  extensive  investigations as to potential sources of
      the groundwater contamination.  Following submission of the results of its
      investigations to MDE, the Corporation  proposed to expand its groundwater
      remediation  system and also proposed to excavate and  remediate  soils in
      the  vicinity  of the plant that  appear to be a source  area for  certain
      contamination.  The  Corporation  has  received  all permits  necessary to
      operate its  expanded  groundwater  treatment  facility  at the  Hampstead
      facility, and the system is fully operational.
           In October 1994,  suit was filed in the United States  District Court
      for the District of Maryland  against the  Corporation  by the owners of a
      farm that is adjacent  to the  Hampstead  facility  (Leister et al. v. The
      Black & Decker  Corporation  (Civil Action No. JFM  94-2809)).  Plaintiffs
      claim that  contamination,  allegedly  emanating  from the  facility,  has
      migrated in groundwater and has adversely affected  plaintiffs'  property.
      Plaintiffs  have alleged  various claims for relief,  including  causes of
      action under the Federal  Resource  Conservation and Recovery Act, CERCLA,
      and the Clean Water Act, as well as various  state tort claims,  including
      claims  for  negligence,  nuisance,  intentional  misrepresentation,   and
      negligent  misrepresentation.  Plaintiffs  seek  various  forms of relief,
      including  compensatory  damages of $20.0 million and punitive  damages of
      $100.0 million.
           The Corporation filed various motions to, among other things, dismiss
      plaintiffs'  claims,  and the Court  granted the  Corporation's  motion to
      dismiss all but one claim. Following that ruling, both the Corporation and
      plaintiffs  filed motions for summary judgment on the remaining claim. The
      Corporation believes that plaintiffs' claims are without merit and intends
      to  defend  vigorously  against  the  allegations  made  in  this  matter.
      Management  is of the opinion that the ultimate  resolution of this matter
      will not have a material adverse effect on the Corporation.
           In October 1992, the Corporation's  Price Pfister subsidiary received
      a 60-day notice of intent to file suit under  California's  Proposition 65
      from the Natural  Resources  Defense Council (NRDC) and the  Environmental
      Law Foundation  (ELF),  alleging  improper  warnings and discharge of lead
      into drinking water in California. On December 15, 1992, Price Pfister and
      numerous other plumbing manufacturers were sued by the State of California
      in the  Superior  Court for the City and County of San  Francisco.  On the
      same day,  a  separate  suit was filed by the NRDC and the ELF.  The suits
      filed  by the  State  of  California  and the  NRDC  and the ELF  included
      substantially  the same  allegations,  namely that lead leaches from brass
      faucets  into tap  water  in  violation  of  California's  lead  discharge
      prohibitions  of Proposition  65, that the  manufacture  and sale of brass
      faucets exposes individuals to lead without a proper "clear and reasonable
      warning,"  and that such  violations  of  Proposition  65 also  constitute
      unfair business  practices under California law. The NRDC and the ELF suit
      also  alleged  breach of warranty  and breach of contract  claims  against
      Price  Pfister  and  the  other  plumbing  manufacturers.   The  State  of
      California and the NRDC and the ELF generally sought the following relief:
      (a) elimination of lead from brass faucets; (b) improved public disclosure
      programs  regarding lead in brass faucets;  (c)  commencement  of a public
      information  campaign  regarding  alleged  health risks  arising from lead
      exposure;   (d)  restitution  to  purchasers  of  faucets;  (e)  statutory
      penalties and punitive  damages in unstated  amounts;  and (f)  attorneys'
      fees and other costs.
           Subsequent  to the  filing of their  complaints,  plaintiffs  filed a
      motion for a preliminary  injunction  seeking to require Price Pfister and
      certain  other  defendants  to  provide  specific  warning  language  in a
      particular manner with faucets at the time of sale. Plaintiff's motion for
      a  preliminary  injunction  was  denied,  and  the  trial  court  accepted
      defendants'  proposed  warning system.  Defendants  filed demurrers to the
      State of  California's  claim that brass  faucets  result in a "prohibited
      discharge" of lead into  drinking  water under  California  law and to the
      standing of the NRDC and the ELF to bring their claims.
           In May 1994, Judge Bea of the California  Superior Court for the City
      and  County  of San  Francisco  issued  an order  rejecting  the  Attorney
      General's  claims  that lead which  leaches  from  faucets  constitutes  a
      prohibited  discharge  of lead into  water or onto or into land where lead
      will pass or is at least  likely to pass into a source of drinking  water.
      Judge  Bea's  order  granted  the  Attorney  General  20 days to amend his
      complaint  to  state  a cause  of  action  under  Proposition  65.  In the
      companion  case  involving  similar  claims by the NRDC and the ELF, Judge
      Cahill of the  California  Superior  Court for the City and  County of San
      Francisco  denied  defendants'  challenges to the standing of the NRDC and
      the ELF to bring these claims and refused to stay the proceedings  pending
      resolution of the claims by the Attorney General.
           Subsequent  to Judge Bea's order  rejecting  the  Attorney  General's
      claims and granting the Attorney General 20 days to amend his complaint to
      state a cause of action under  Proposition 65, the Attorney  General filed
      an appeal of Judge Bea's  order.  Prior to a final ruling on the appeal in
      the case involving the Attorney General's claims, the Corporation  entered
      into a settlement pursuant to which the Corporation agreed to take certain
      actions with respect to the future sale of its products in California  and
      agreed to the payment of specified  amounts to the State of California and
      the attorneys for the NRDC and the ELF.
            In 1988,  J.C.  Rhodes,  a former  subsidiary of Emhart  Industries,
      Inc., was notified by both the EPA and the State of Massachusetts  that it
      was  considered  a PRP with  regard to the  Sullivan's  Ledge  site in New
      Bedford,  Massachusetts.  Emhart and 11 other companies formed a PRP group
      to respond to the EPA's and  Massachusetts'  demands,  and,  in  September
      1990,  executed a Consent Order to perform the remedial action recommended
      by the EPA in its Record of Decision. The remedial action is now underway.
           A second area of the  Sullivan's  Ledge site,  known as Middle Marsh,
      was  investigated  by the EPA,  and a Record  of  Decision  was  issued in
      September 1991. In September 1992,  Emhart,  11 other  companies,  and the
      City of New Bedford,  Massachusetts,  executed a Consent  Order to perform
      the remediation  required in the Middle Marsh section of the site. At this
      time,  Emhart's estimated liability for remediation cost at the Sullivan's
      Ledge site is estimated at $2.0 million.
           The Corporation has been investigating  certain environmental matters
      at its NEMEF  security  hardware  facility in the  Netherlands.  The NEMEF
      facility has been a manufacturing  operation  since 1921.  During building
      construction in 1990, soil and groundwater contamination was discovered on
      the  property.  Investigations  to  understand  the  full  extent  of  the
      contamination  were undertaken at that time, and those  investigations are
      continuing.  The  Corporation is continuing to work with  consultants  and
      local   authorities  to  develop  a  comprehensive   remediation  plan  in
      conjunction with neighboring property owners.
           In the opinion of management, the costs of compliance with respect to
      the matters set forth above and other remedial costs 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.

(e)   FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS
      Reference  is  made  to  Note  16  of  Notes  to  Consolidated   Financial
      Statements,  entitled "Business Segment and Geographic Areas," included in
      Item 8 of Part  II and to the  section  entitled  "Business  Segments"  in
      Management's Discussion and Analysis of Financial Condition and Results of
      Operations included in Item 7 of Part II of this report.

(f)   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 is set forth below.

      Nolan D. Archibald - 52
      Chairman, President, and Chief Executive Officer,
          January 1990 - present;
      President and Chief Executive Officer,
          May 1989 - January 1990.

      Raymond A. DeVita - 59
      Executive Vice President and President -
          Commercial and Industrial Group, 
          May 1989 - present.

      Dennis G. Heiner - 52
      Executive Vice President and President -
          Security Hardware Group,
             January 1992 - present;
      Executive Vice President and President -
          Household Products Group,
             May 1989 - January 1992.

      Don R. Graber - 52
      Group Vice President and President - Household Products,
          July 1994 - present;
      Group Vice President and President - International,
          March 1993 - July 1994;
      Vice President and President - International,
         February 1992 - March 1993;
      President - Black & Decker Canada, September 1988 - February 1992.

      Roger H. Thomas - 53
      Group Vice President and Chairman - Eastern Hemisphere,
          October 1995 - present;
      Group Vice President and President - Eastern Hemisphere,
          April 1994 - October 1995;
      Group Vice President and President - Europe, 
          May 1989 - April 1994.

      Charles E. Fenton - 47
      Vice President and General Counsel,
         May 1989 - present.

      Joseph Galli - 37
      Group Vice President and President - Power Tools,
           October 1995 - present;
      Vice President and President -
          North American Power Tools,
             October 1993 - October 1995;
      President - U.S. Power Tools,
         February 1993 - October 1993;
      Vice President Sales and Marketing - U.S. Power Tools,
         May 1991 - February 1993;
      Vice President Marketing - U.S. Power Tools,
         August 1990 - May 1991.

      Kathleen W. Hyle - 37
      Vice President and Treasurer,
          May 1994 -  present;
      Assistant Treasurer, Domestic,
          December 1992 - May 1994;
      Director, Domestic Finance,
          February 1990 - December 1992.

      Barbara B. Lucas - 50
      Vice President - Public Affairs and
          Corporate Secretary, 
          July 1985 - present.

      Thomas M. Schoewe - 43
      Vice President and Chief Financial Officer,
          October 1993 - present;
      Vice President - Finance,
          January 1990 - October 1993.

      Steven E. Simms - 39
      Group Vice President and President - Accessories,
        October 1995 - present;
      President - North American Accessories,
        April 1993 - October 1995;
      Vice President - European Marketing
          and Product Planning,
             September 1990 - April 1993.

      Leonard A. Strom - 50
      Vice President - Human Resources,
          May 1986 - present.


ITEM 2.  PROPERTIES

      Unless otherwise indicated, the following discussion of the Corporation's 
      properties pertains to the continuing operations of the Corporation and  
      excludes any matters in respect of the discontinued PRC segment.
      
           The Corporation and its subsidiaries operate 47 manufacturing  
      facilities around the world, including 22 located outside the United 
      States in 13 foreign countries.  The major properties associated with each
      business segment are listed in Narrative Description of the Business in 
      Item 1(d) 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; Amory, Mississippi;  
      Shelton, Connecticut; and Towson, Maryland.
           Outside the United States: Rotherham, England, and Kuantan, Malaysia.
           During 1993, the Corporation recorded a charge of $29 million for the
      closure and  reorganization of certain  manufacturing  sites.  These plant
      actions were substantially completed during 1994.  During 1995, the 
      Corporation closed its manufacturing facilities in Tarboro, North 
      Carolina, and Delemont, Switzerland, and transferred production from those
      locations to other manufacturing facilities of the Corporation.  The
      Corporation ceased manufacturing at its facility in Santo Andre, Brazil 
      late in 1995 and will begin to manufacture at a new owned facility in 
      Uberaba, Brazil, in early 1996.  These plant actions are part of the 
      Corporation's continuing effort to identify opportunities to improve its 
      manufacturing cost structure.
           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 Jurong
      Town, Singapore.
           The  Corporation's  average  utilization  rate for its  manufacturing
      facilities  for  1995  was in the  range  of 75% to 85%.  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.  As previously  noted under Item 1 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.
     On or about March 31, 1989,  a purported  class  action  complaint,  titled
Cooperman et al. v. The Black & Decker  Corporation et al., No. 89 Civ 2177 (the
Cooperman  Complaint),  was filed in the United  States  District  Court for the
Southern  District  of New  York  alleging  that  the  Corporation's  settlement
agreement  with Topper  Acquisition  Corp.  and Topper L.P.,  bidders for Emhart
Corporation, and the payments by the Corporation thereunder violated the federal
securities  laws,  particularly  sections  10(b)  and  14(d)  of the  Securities
Exchange Act of 1934, as amended, and the rules and regulations, including rules
10b-13 and 14d-10,  thereunder.  Plaintiffs  initially sought  injunctive relief
prohibiting the Corporation  from  consummating  its tender offer for Emhart and
now seek  rescissory  damages as well as costs,  disbursements,  and  reasonable
attorneys'  and other  fees.  The  Corporation's  request  for leave to move for
summary judgment was denied by the District Court, and the District Court issued
an order  directing  that  discovery be completed by June 1, 1991, and providing
that the Corporation might again apply for leave to move for summary judgment on
or before June 15, 1991. The parties  subsequently have entered into a number of
stipulations  and orders  amending the date for the  completion of discovery and
the date  before  which the  Corporation  may again  apply for leave to move for
summary  judgment.  The  Corporation  believes the claims made in the  Cooperman
Complaint  are  without  merit and  intends  to defend  vigorously  against  the
allegations  made in this  matter.  In the opinion of  management,  the ultimate
resolution of the Cooperman Complaint will not have a material adverse effect on
the Corporation.
     In March 1990,  the  Corporation's  former PRC subsidiary was served by the
Inspector General of the United States Department of Defense with a subpoena for
documents  from  the  period  1986  to  1990  in  connection   with  a  criminal
investigation of bid and proposal cost charging  practices of certain  divisions
of PRC.  Since that date,  PRC has been  served  with two  additional  Inspector
General subpoenas for marketing and proposal-related documents. During 1992, PRC
and some former  employees  also  received  grand jury  subpoenas  issued by the
United States District Court for the Eastern District of Virginia.  During 1993,
PRC received an additional subpoena from the grand jury directing PRC to provide
information  concerning  the  procurement  and  government  property  management
functions of certain divisions of PRC. In January 1996, the United States 
Attorney advised PRC that the criminal investigation has concluded without 
further action and the matter is being transferred to the Civil Division of the 
Department of Justice.
     In  connection  with the  Corporation's  sale of PRC to Litton  Industries,
Inc.,  the  Corporation  agreed to  indemnify  Litton for  various  liabilities,
including   liabilities  relating  to  the  matters  subject  to  the  foregoing
subpoenas.  The  Corporation  cannot  predict  the  eventual  outcome  of  these
investigations,  but,  based  on  currently  available  information,  management
believes that the investigations  will not have a material adverse effect on the
Corporation.
     On June 1, 1994, Masco  Corporation of Indiana ("Masco") filed suit against
the Corporation's  Price Pfister  subsidiary in the United States District Court
for the Eastern  District of Virginia  (Civ.  No.  94-728A).  Masco alleged that
Price  Pfister's  manufacture,  use and sale of its  Genesis  Model 42 Series of
lavatory  faucets  infringed  and induced  infringement  of Masco's U.S.  Design
Patent No. 323,877, was unfair competition  under federal and Virginia law, and
infringed  the trade dress  rights  associated  with  lavatory  faucets of Delta
Faucet  Company,  a division  of Masco.  Masco  sought an  injunction,  profits,
damages (trebled), costs and attorneys' fees.
     Price Pfister filed a counterclaim  for  infringement by Masco of Price
Pfister's rights in U.S. Design Patent Nos. 329,911,  328,335,  and 327,732, for
unfair  competition  and patent misuse under common  statutory law, for abuse of
process,  and for trademark  infringement  under Price Pfister's U.S.  Trademark
Registration No. 1,808,996 and trademark  registrations of several states. Masco
counterclaimed for cancellation of U.S. Trademark Registration No. 1,808,996 and
also instituted a separate  Cancellation  Proceeding in the U.S. Patent and
Trademark Office.
     Following  the filing by Masco and Price  Pfister  of a number of  motions,
trial on the claims and  counterclaims in this matter was held in November 1994.
The trial  resulted  in a verdict  in favor of Masco on  Masco's  design  patent
infringement  claim with damages  being  awarded  against  Price  Pfister in the
amount of $1,374,596.35, plus interest, and Price Pfister  being  enjoined from
continued  infringement  of Masco's rights.  All other claims and  counterclaims
were  dismissed.  Price Pfister filed an appeal of this decision,  but on appeal
the decision of the trial court was upheld.  Price Pfister has paid the judgment
in this matter.
     In the opinion of management,  amounts accrued for awards or assessments in
connection  with the  matters  specified  above  and in Item 1 of Part I of this
report  with  respect  to   environmental   matters  and  other  litigation  and
administrative proceedings to which the Corporation is a party are adequate and,
accordingly,  ultimate  resolution  of these  matters  will not have a  material
adverse effect on the Corporation.
     As of  December  31,  1995,  the  Corporation  had no  known  probable  but
inestimable  exposures for awards and assessments in connection with the matters
specified  above  and in  Item 1 of  Part  I of  this  report  with  respect  to
environmental  matters and other litigation and administrative  proceedings that
could have a material effect on the Corporation.

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

Not applicable.

                                     PART II


ITEM 5.   MARKET FOR THE COMPANY STOCK AND RELATED SECURITY
          HOLDER MATTERS

(a)   MARKET INFORMATION
      The  Corporation's  Common Stock is listed on the New York Stock  Exchange
      and  the  Pacific  Stock  Exchange  and  also  is  traded  on the  London,
      Frankfurt, and Swiss exchanges.
           The following table sets forth, for the periods  indicated,  the high
      and low sales prices of the Common  Stock as reported in the  consolidated
      reporting system for the New York Stock Exchange Composite Transactions:

      <TABLE>
      <CAPTION>
                                                                      
      Quarter                      1995                  1994
      -------               ------------------    ------------------
      <S>                   <C>                   <C>
      January to March ..   $29-5/8 to $22-7/8    $22-3/8 to $19-1/4
      April to June .....   $33     to $27-1/2    $21     to $17
      July to September .   $34-5/8 to $30-1/4    $23-1/8 to $17
      October to December   $38-1/8 to $32-1/8    $25-3/4 to $21-1/8
                                                                      
      </TABLE>

(b)   HOLDERS OF THE CORPORATION'S CAPITAL STOCK
      As of  February  20,  1996, there  were  18,811  holders  of record of the
      Corporation's Common Stock. As of February 20, 1996,  there was one holder
      of record of the Corporation's Series B Cumulative  Convertible  Preferred
      Stock (the Series B Preferred 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, and the
      payment of dividends on the outstanding shares of Series B Preferred 
      Stock. The Credit Facility does not  restrict the  Corporation's  ability 
      to pay regular dividends in the ordinary course of business on the Common 
      Stock or the Series B Preferred Stock.  In the event that dividends on the
      Series B Preferred Stock are in arrears, thereafter and until all accrued 
      but unpaid dividends on the shares of Series B Preferred Stock shall have 
      been paid in full, the  Corporation  may not declare or pay  dividends on,
      make any other distributions on,  or  redeem  or  purchase  or  otherwise 
      acquire for consideration, any shares of Common Stock.

           Quarterly  dividends  per common  share for the most recent two years
      are as follows:

      <TABLE>
      <CAPTION>
             
      Quarter                                1995       1994
      -------                                ----       ----
      <S>                                   <C>        <C>
      January to March                       $.10       $.10
      April to June                           .10        .10
      July to September                       .10        .10
      October to December                     .10        .10
                                             ----       ----
                                             $.40       $.40
                                             ====       ====

      </TABLE>

           In February 1996, the Board of Directors approved a 20% increase in
     the quarterly cash dividend per common share, from $.10 to $.12 per share,
     beginning in March 1996.
           During  each  of the  quarters  in 1995  and  1994,  the  Corporation
      declared a dividend of approximately  $2.9 million on its shares of Series
      B Preferred  Stock.  During the most recent two years,  no other dividends
      were  declared  or paid in  respect  of shares of  preferred  stock of the
      Corporation.

      Common Stock:           150,000,000 authorized, $.50 par value;
                              86,447,588 shares and 84,688,803 shares
                              outstanding as of December 31, 1995 and
                              1994, respectively.

      Preferred Stock:        5,000,000 authorized, without par value;
                              150,000 shares of Series B Cumulative
                              Convertible Preferred Stock outstanding
                              as of December 31, 1995 and 1994.
                              

ITEM 6.   SELECTED FINANCIAL DATA
<TABLE>
FIVE-YEAR SUMMARY
(Millions of Dollars Except Per Share Data)
<CAPTION>
----------------------------------------------------------------------------------------------------------
                                             1995(a)        1994          1993(b)       1992(c)     1991
----------------------------------------------------------------------------------------------------------
<S>                                       <C>           <C>            <C>           <C>         <C>
Revenues                                   $4,766.1      $4,365.2      $4,121.5       $4,045.7    $3,952.6
Earnings (loss) from
  continuing operations                       216.5          89.9          64.1          (95.3)       16.1
Earnings from discontinued
  operations (d)                               38.4          37.5          31.1           22.0        36.9
Extraordinary items                           (30.9)           --            --          (22.7)         --
Cumulative effects of changes
   in accounting principle                       --            --         (29.2)        (237.6)         --
Net earnings (loss)                           224.0         127.4          66.0         (333.6)       53.0
Earnings (loss) per common and
  common equivalent share:
  Primary:
    Continuing operations                      2.33           .93           .63          (1.40)        .21
    Discontinued operations                     .44           .44           .37            .29         .60
    Extraordinary items                        (.35)           --            --           (.30)         --
    Cumulative effects of
      accounting changes                         --            --          (.35)         (3.11)         --
    Net earnings (loss)                        2.42          1.37           .65          (4.52)        .81
  Assuming full dilution:
    Continuing operations                      2.29           .93           .63          (1.40)        .21
    Discontinued operations                     .41           .44           .37            .29         .60
    Extraordinary items                        (.33)           --            --           (.30)         --
    Cumulative effects of
      accounting changes                         --            --          (.35)         (3.11)         --
    Net earnings (loss)                        2.37          1.37           .65          (4.52)        .81
Total assets                                5,545.3       5,264.3       5,166.8        5,295.0     5,456.8
Long-term debt                              1,704.5       1,723.2       2,069.2        2,108.5     2,625.8
Cash dividends per
    common share                                .40           .40           .40            .40         .40
----------------------------------------------------------------------------------------------------------
</TABLE>
(a) 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
    extinguishment of debt, net of income tax benefit of $2.6 million.
(b) Effective January 1, 1993, the Corporation  changed its method of accounting
    for  postemployment   benefits.   In  addition,   earnings  from  continuing
    operations  for 1993 include a  restructuring  credit of $6.3 million before
    tax ($.2 million after tax).
(c) Effective January 1, 1992, the Corporation changed its methods of accounting
    for income taxes and postretirement  benefits other than pensions.  In 1992,
    the  Corporation   recognized  a  $22.7  million   extraordinary  loss  from
    extinguishment of debt. In addition, earnings from continuing operations for
    1992 included a  restructuring  charge of $142.4  million before tax ($134.7
    million after tax).
(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.  For  additional
    information about the discontinued PRC segment, see the discussion under the
    caption  "Discontinued  Operations"  included  in  Item 1 of  Part I of this
    report and Note 2 of Notes to Consolidated  Financial Statements included in
    Item 8 of Part II of this report.


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

OVERVIEW
The Corporation  reported net earnings of $224.0 million or $2.37 per share on a
fully  diluted  basis for the year ended  December  31,  1995,  compared  to net
earnings of $127.4  million or $1.37 per share on a fully diluted basis in 1994.
Excluding  the  effects of a $65.0  million  decrease in income tax expense as a
result of the  Corporation's  reduction  in its  deferred  tax  asset  valuation
allowance in 1995,  earnings from  continuing  operations  increased  from $89.9
million  ($.93 per  share on a fully  diluted  basis) in 1994 to $151.5  million
($1.60 per share on a fully diluted basis) in 1995. This improvement in earnings
from continuing  operations in 1995 over 1994 was a function of strong operating
results,  a lower  effective tax rate, and lower interest  expense.  No interest
expense was allocated by the Corporation to its discontinued operations.
     On December  13,  1995,  the  Corporation  announced  that it had reached a
definitive agreement to sell PRC Inc., the remaining business in its information
technology  and  services  segment.  The  sale of PRC  Inc.  is  expected  to be
completed in the first quarter of 1996.
     During 1995, the  Corporation  generated free cash flow (cash available for
debt  reduction  prior to the effects of cash  proceeds  received  from sales of
businesses,  equity  offerings,  and  sales of  receivables)  of  $34.7  million
compared to free cash flow of $116.1  million in 1994. The decrease in free cash
flow in 1995 from the 1994  level was  primarily  the  result of higher  working
capital  levels  and  capital  expenditures  in  1995  than  in  1994  when  the
Corporation  experienced  particularly  strong  free cash flow from the  initial
effects of more stringent working capital management.
     The combination of strong operating  results and the proceeds received from
sales of  portions  of the  discontinued  information  technology  and  services
segment in 1995  enabled  the  Corporation  to reduce its ratio of debt to total
capitalization from 67% at December 31, 1994, to 62% at December 31, 1995.

DISCONTINUED OPERATIONS
On December 13, 1995, the Corporation  announced that it had signed a definitive
agreement to sell PRC Inc., the remaining business in its information technology
and services segment,  for $425.0 million.  The sale is expected to be completed
in the first  quarter of 1996. A net gain on the sale of PRC Inc.,  estimated at
$80.0 to $90.0 million, will be recognized upon completion of the sale. Proceeds
from the sale of PRC Inc. will be used to reduce debt.
     The Corporation sold PRC Realty Systems,  Inc. (RSI) and PRC  Environmental
Management,  Inc. (EMI) earlier in 1995 for aggregate  proceeds of approximately
$100 million.  Together,  PRC Inc.,  RSI, and EMI  comprised  the  Corporation's
information technology and services (PRC) segment.
     The Corporation  acquired PRC through its acquisition of Emhart Corporation
in April  1989.  The sale of PRC will allow the  Corporation  to reduce its debt
level and concentrate on its more strategic businesses.
     Operating  results,  net  assets,  and cash flows of the  discontinued  PRC
operations  have been  segregated  in the  accompanying  Consolidated  Financial
Statements.  Net earnings of the  discontinued  PRC segment  were $38.4  million
($.41 per share on a fully diluted basis) in 1995, $37.5 million ($.44 per share
on a fully diluted  basis) in 1994, and $31.1 million ($.37 per share on a fully
diluted basis) in 1993 on revenues of $800.1 million,  $883.1 million and $760.7
million, respectively.

CONTINUING OPERATIONS

REVENUES
The  following  chart  sets forth an  analysis  of the  consolidated  changes in
revenues for the years ended December 31, 1995,  December 31, 1994, and December
31, 1993.

ANALYSIS OF CHANGES IN REVENUES OF CONTINUING OPERATIONS
                                             For the Year Ended December 31,
(Dollars in Millions)                           1995       1994        1993
                                             -------    -------     -------
Total revenues ...........................   $ 4,766    $ 4,365     $ 4,122
Unit volume - existing (1) ...............         6%         8%          5%
            - disposed (2) ...............        --%        (3)%        --%
Price ....................................         1%         1%          1%
Currency .................................         2%        --%         (4)%
                                             -------    -------     -------
Change in total revenues .................         9%         6%          2%
                                             =======    =======     =======
In the above chart and throughout the remainder of this discussion, the
following definitions apply: 

(1) Existing - Reflects the change in unit volume for businesses where 
    period-to-period comparability exists.
(2) Disposed - Reflects the change in total revenues from continuing  operations
    for businesses  that were included in prior year results,  but  subsequently
    have been sold.

     Total  revenues for the year ended  December 31, 1995,  were $4.8  billion,
which  represents a 9% increase over 1994  revenues of $4.4 billion.  Despite an
increasingly  difficult  retail  environment  throughout  1995, the  Corporation
achieved 6% growth in existing unit volume in 1995 over the level experienced in
1994.  The 1995 growth in unit volume was  experienced  both in the Consumer and
Home  Improvement   Products  (Consumer)  segment  and  in  the  Commercial  and
Industrial Products (Commercial) segment.
     Total  revenues for the year ended  December 31, 1994,  were $4.4  billion,
which represented a 6% increase over 1993 revenues of $4.1 billion. During 1994,
existing unit volume grew by 8% compared to 5% growth in 1993,  due primarily to
revenue growth in the Consumer segment.


EARNINGS
Operating income from continuing operations as a percentage of revenues was 8.9%
for 1995 compared to 8.1% and 7.3% for 1994 and 1993, respectively.
     Gross  margin as a  percentage  of revenues  in 1995 was 36.7%  compared to
36.6% for 1994 and 35.5% for 1993. Gross margin in 1995 was slightly higher than
the prior year level.  The impact of increased  manufacturing  productivity  and
cost reduction  initiatives during 1995,  however,  was substantially  offset by
rising  commodity costs and by reduced  gross  margin in the European
operations.  Gross margin in 1995 was adversely affected by a softening European
retail environment in the fourth quarter of 1995 and by residual  inefficiencies
in  European  operations  associated  with  the  closure  of  two  manufacturing
facilities  since mid 1994. The improvement in gross margin during 1994 over the
1993 level stemmed from  improvements  in the Consumer  segment,  which resulted
primarily from increased manufacturing productivity,  the implementation of cost
reduction  initiatives,  and the  realization of the leverage  effects of higher
sales volume on fixed and semi-fixed costs.
     Marketing  and  administrative  expenses as a percentage  of revenues  were
27.8% for 1995 compared to 28.5% for 1994 and 28.2% for 1993. The improvement in
1995  compared  to 1994 was the  result of cost  reduction  initiatives  and the
leverage of fixed  and  semi-fixed  costs  over a higher  sales  base.
Marketing and  administrative  expenses as a percentage of revenues increased by
 .3% from 28.2% for 1993 to 28.5% for 1994 as a result of higher  promotion costs
in 1994,  partially  offset by the  effects on 1994  results  of cost  reduction
initiatives  and the leverage of fixed and semi-fixed  costs over a higher sales
base.
     Net interest  expense  (interest  expense less interest  income) was $184.4
million in 1995 compared to $187.9  million in 1994 and $171.8  million in 1993.
Net  interest  expense  for 1995 was below the 1994 level as a result of reduced
borrowing  levels during the year,  partially offset by higher interest rates on
variable  rate debt.  Higher  interest  rates during 1994,  partially  offset by
reduced  borrowing  levels in that year,  caused an  increase  in net  interest
expense in 1994 over the 1993 level.
     Other  expense  for  1995,  1994, and  1993  primarily  included  costs
associated with the sale of receivables programs.
     As more  fully  described  in Note 12 of  Notes to  Consolidated  Financial
Statements,  a full valuation  allowance was provided on net deferred tax assets
in the United States at December 31, 1994, based on the Corporation's history of
taxable  earnings  (losses)  over the past several  years and the  volatility of
comprehensive  taxable  earnings  (losses)  in the United  States due to foreign
exchange contracts. In addition, a full valuation allowance on net tax assets in
certain foreign taxing jurisdictions was provided at December 31, 1994, based on
the history of taxable  earnings  (losses),  the tax carryforward  periods,  and
projected  earnings.  During  1995,  the  Corporation  reversed a portion of the
deferred tax asset valuation allowance based on its projection of future taxable
earnings in the United  States,  including the impact of the pending sale of PRC
Inc. The effect of this reduction in the deferred tax asset valuation  allowance
was to decrease 1995 income tax expense by $65.0  million.  An analysis of taxes
on  earnings  is  included  in  Note  12  of  Notes  to  Consolidated  Financial
Statements.
     Excluding the effects of the $65.0 million income tax benefit that resulted
from the reduction of its deferred tax asset  valuation  allowance in 1995,  the
Corporation's  reported  tax  rate  on  continuing  operations  was  33% in 1995
compared to a rate of 40% in 1994 and 48% in 1993. Contributing to the lower tax
rate for 1995  compared  to 1994 and 1993 were  higher  taxable  earnings in the
United States and a change in mix of operating  income outside the United States
from those  subsidiaries in higher rate tax jurisdictions to subsidiaries
in lower rate tax jurisdictions or subsidiaries that profit from the utilization
of net operating loss carryforwards.

BUSINESS SEGMENTS
The Corporation operates in two business segments: Consumer and Home Improvement
Products,  including  consumer  and  professional  power tools and  accessories,
household  products,  security hardware,  outdoor products (composed of electric
lawn and garden tools and recreational products), plumbing products, and product
service; and Commercial and Industrial Products, including fastening systems and
glass container-making equipment.

REVENUES AND OPERATING INCOME BY BUSINESS SEGMENT
                                                        For the Year Ended 
                                                            December 31,
(Millions of Dollars)                                   1995     1994     1993
                                                      ------   ------   ------
Consumer and Home Improvement Products
Total revenues ...................................... $4,076   $3,774   $3,530
Operating income ....................................    348      294      216
Operating income excluding restructuring
   costs or credits and goodwill amortization .......    400      351      281
Commercial and Industrial Products
Total revenues ......................................    690      591      592
Operating income ....................................     75       53       77
Operating income excluding restructuring
   costs or credits and goodwill amortization .......     92       69       73
Corporate and Eliminations
Operating income ....................................      3        5       10
                                                      ------   ------   ------ 
Total revenues ...................................... $4,766   $4,365   $4,122
Total operating income .............................. $  426   $  352   $  303
Total operating income excluding restruc-
   turing credits and goodwill amortization ......... $  495   $  425   $  364
                                                      ------   ------   ------

CONSUMER AND HOME IMPROVEMENT PRODUCTS
The  following  chart sets forth an analysis  of the change in revenues  for the
year ended  December 31, 1995,  compared to the year ended December 31, 1994, by
geographic area within the Consumer segment.
                                    United                               Total
                                    States      Europe      Other     Consumer
Existing unit volume ..........          7%          4%         4%           5%
Price .........................         --%         --%         4%           1% 
Currency ......................         --%          9%        (5)%          2%
                                     -----       -----      -----        -----
Total Consumer ................          7%         13%         3%           8%
                                     =====       =====      =====        =====

     Total  revenues  in the  Consumer  segment  for 1995 were 8% higher than in
1994,  with existing  unit volume up 5% over the 1994 level.  Unit volume in the
United States  increased by 7% in 1995 over the 1994 level as a result of strong
unit volume growth in the power tools and  accessories  and  household  products
businesses,  partially  offset by unit volume declines in the security  hardware
and plumbing  products  businesses.  The 1995 domestic growth in the power tools
and  accessories  business was the result of continued  strong demand for DeWALT
professional  power tools and  accessories  and the successful  expansion in the
latter  half of  1995  of a line of  consumer  products  that  use the  VersaPak
interchangeable  battery system.  During 1995, the household  products  business
achieved a  double-digit  rate of growth in unit volume  driven by the continued
success of the SnakeLight  flexible  flashlight,  which was  introduced  late in
1994.  The domestic  security  hardware and plumbing  products  businesses  each
experienced  modest  unit volume  declines  from 1994 levels  during  1995.  The
decrease in unit volume of the security  hardware  business was due to inventory
reductions made by its customers in the latter part of 1995.  While the plumbing
products business experienced unit volume growth in the second half of 1995 over
the  corresponding  period in 1994,  that  growth  was not  sufficient  to cover
revenue  shortfalls  experienced  in the first  half of 1995 as a result of poor
weather conditions in the western United States and the resulting soft demand in
professional distribution channels.
     Excluding the substantial  positive  effects of changes in foreign exchange
rates, revenues in the Corporation's  Consumer businesses in Europe increased by
4% in 1995 over the 1994 level  despite a weak fourth  quarter in 1995.  This 4%
increase  was  composed  of  increased  sales of power  tools  and  accessories,
household products, and security hardware,  offset by decreased sales of outdoor
products.  The growth in power tools and  accessories  revenues during 1995 over
the prior year level was attributable to strong sales of professional  products,
partially offset by sales declines in consumer power tools and accessories.  The
increased  household  products  revenues  in 1995  over the 1994  level  was due
primarily to the  introduction of the SnakeLight  flexible  flashlight in Europe
late in 1995.  An  extremely  dry winter and late spring  resulted in  decreased
revenues for outdoor  products in 1995  compared to 1994.  Exclusive of positive
effects  of changes  in  foreign  exchange  rates  during  1995,  some  European
countries achieved results substantially higher than the prior year level, and
other countries, most notably, Germany, the United Kingdom, and France, reported
results essentially equal to or below the prior year level.
     Excluding  the  negative  effects  of changes  in  foreign  exchange  rates
principally due to the Mexican peso  devaluation,  revenues in the Corporation's
Consumer businesses in other geographic regions increased by 8% in 1995 over the
1994 level.  Revenue growth occurred in a number of countries,  including Canada
and, most strongly,  Brazil,  while revenues in other countries were essentially
equal to or below the prior year level.
     Operating  income as a percentage of revenues for the Consumer  segment was
8.6% in 1995  compared  to  7.8% in  1994.  Excluding  the  effect  of  goodwill
amortization,  operating income as a percentage of revenues would have been 9.8%
in 1995  compared to 9.3% in 1994.  The  household  products  business  achieved
strong  improvement in operating  income in 1995 as a result of increased  sales
volume, higher manufacturing productivity,  and actions taken by the business to
either  improve  profitability  or drop certain  lower margin  products from its
product  lines.  Improved  operating  income  levels  in 1995  over  1994 in the
worldwide  power  tools  and  accessories  business  resulted  principally  from
substantial improvements in the domestic power tools and accessories business as
a result of increased sales volume, higher manufacturing  productivity,  and the
impact of cost reduction initiatives,  partially offset by reduced profitability
in the European operations. A softening retail environment in the fourth quarter
of 1995,  expenses  incurred in connection  with the  reorganization  of certain
European operations,  and residual inefficiencies associated with the closure of
two  manufacturing  facilities  since mid 1994  contributed  to  markedly  lower
profitability in the Corporation's Consumer businesses in Europe in 1995 than in
1994. Cost reduction  initiatives and  manufacturing  productivity  improvements
resulted in increased  operating  income as a percentage of revenues during 1995
compared to 1994 in the security hardware business,  despite  year-to-year sales
declines  in its  domestic  operations.  A decline  in  operating  income in the
plumbing  products business in 1995 compared to 1994 resulted from reduced sales
and rising material costs.
     Total  revenues  in the  Consumer  segment  for 1994 were 7% higher than in
1993.  Existing unit volume  increased by 8% for 1994 over the 1993 level.  Unit
volume  in the  United  States  for 1994  rose by 8% over the  1993  level.  The
domestic unit volume increase resulted from double-digit  rates of growth in the
power  tools  and  accessories,   security   hardware,   and  plumbing  products
businesses.  This growth primarily  stemmed from the continued strong demand for
the DeWALT professional power tools and accessories line, expanded  distribution
of  TITAN   locksets,   and  the   introduction  of  the  Genesis  series  of
single-control faucets.  Despite strong demand experienced late in 1994 when the
SnakeLight  flexible  flashlight  and a new  line of  under-the-cabinet  kitchen
appliances  were  introduced in the United States,  unit volume in the household
products business was down slightly in 1994 compared to the prior year level.
     The Corporation's consumer power tools business in Europe achieved moderate
unit volume growth in 1994 over the 1993 level.  All major  European  power tool
markets  achieved unit volume  increases in 1994,  except the United Kingdom and
Germany,  where unit volumes were  essentially  flat  compared to the prior year
levels.  Unit  volume  in the  European  security  hardware  business  was  also
essentially  flat compared to the prior year. Unit volume in the Far East and in
a number of consumer businesses in Latin America,  including those in Brazil and
Mexico, increased substantially in 1994 over the 1993 level.
     Operating income as a percentage of total revenues for the Consumer segment
was 7.8% for 1994  compared to 6.1% for 1993.  Excluding the effects of goodwill
amortization and, for 1993,  restructuring  charges of $13.1 million,  operating
income as a percentage  of total  revenues for the Consumer  segment  would have
been 9.3% for 1994  compared  to 8.0% for 1993.  The  improvement  in  operating
income  levels in 1994 over 1993 in the  worldwide  power tools and  accessories
business as well as in the domestic  security  hardware  and  plumbing  products
businesses was primarily the result of increased manufacturing productivity, the
implementation of cost reduction initiatives, and the effect of leveraging fixed
and  semi-fixed  costs  over a higher  sales  base.  Partially  offsetting  this
improvement  was a decline in the  operating  income level in 1994 over 1993 for
the  household  products  business.  This  decline was  primarily  the result of
increased promotion spending and administrative expenses in 1994, which were not
offset by revenue increases. In addition,  operating income improved during 1994
for the golf club shafts business over the low level  experienced in 1993 due to
shifting consumer  preferences to graphite golf club shafts from steel golf club
shafts.


COMMERCIAL AND INDUSTRIAL PRODUCTS
The  following  chart sets forth an analysis  of the change in revenues  for the
year ended  December 31, 1995,  compared to the year ended December 31, 1994, by
geographic area within the Commercial segment.
                                    United                               Total
                                    States      Europe     Other    Commercial
Existing unit volume .............      (2)%        24%        7%           10%
Price ............................       1%          1%       --%            1%
Currency .........................      --%         13%        7%            6%
                                     -----       -----     -----         -----
Total Commercial .................      (1)%        38%       14%           17%
                                     =====       =====     =====         =====

     Total revenues in the Commercial  segment for 1995 were 17% higher than the
1994 level.  Excluding the  substantial  positive  effects of changes in foreign
exchange rates,  revenues in the Commercial segment were 11% higher in 1995 than
in the preceding year. The fastening systems (Fastening) business achieved solid
unit  volume  growth in 1995 over the prior year level, as softening industrial
sales in the  United  States  and  Europe  were  more than  offset by  increased
automotive sales in those regions. The glass container-making equipment (Glass)
business  experienced  a  double-digit  rate of  growth  in unit  volume in 1995
compared to a weak 1994 despite  declines in volumes in the United  States.  The
backlog of orders in the Glass business at December 31, 1995, was slightly above
the 1994 level, reflecting strong order levels experienced during 1995.
     Operating income as a percentage of revenues for the Commercial segment was
10.8% in 1995  compared  to 8.9% in 1994.  Excluding  the  effects  of  goodwill
amortization, operating income as a percentage of revenues would have been 13.3%
in 1995  compared to 11.6% in 1994.  The  Fastening  and Glass  businesses  each
experienced improvements in operating income percentages.
     Total revenues in the  Commercial  segment for 1994 were  essentially  flat
compared to those of the prior year.  An increase of 4% in existing unit volume,
coupled  with the  positive  effects of pricing and changes in foreign  exchange
rates, were offset by the effects of the sale of the remaining Dynapert business
late in 1993. A  double-digit  rate of increase in unit volume in the  Fastening
business  was  partially  offset  by a volume  decline  in the  Glass  business.
Fastening  business sales improved  during 1994 in the United States and Europe,
primarily as a result of the strengthening of the automotive industry.  Sales in
the Glass business were weak throughout all geographic areas during 1994.
     Operating  income as a  percentage  of total  revenues  for the  Commercial
segment for 1994 was 8.9%  compared to 12.9% for 1993.  Excluding the effects of
goodwill  amortization  and, for 1993,  restructuring  credits of $19.4  million
relating to the gain on the sale of Dynapert's through-hole business,  operating
income as a percentage of total revenues for the  Commercial  segment would have
been 11.6% for 1994 compared to 12.4% for 1993. Operating income improved in the
Fastening  business in 1994 as a result of  increased  sales and cost  reduction
initiatives, but was offset by an operating income decline in the Glass business
due to revenue shortfalls.

FINANCIAL CONDITION
Operating activities of continuing  operations before the sale of receivables 
generated cash of $316.9 million for the year ended December 31, 1995, compared
to $304.4 million for the year ended December 31, 1994.  This increase in cash 
generation during 1995 was primarily the result of increased  profitability,  
partially offset by increased working capital levels.  The major  cause of the  
working capital increase at December 31, 1995, over the prior year level was an
increase in inventories. Despite a weakening retail environment, the Corporation
achieved sales growth of 6%, excluding the positive effects of changes in 
foreign exchange rates, in the fourth quarter of 1995 over the corresponding 
period in 1994. That growth, however, was below the Corporation's expectations, 
and inventory levels at year end were higher than planned. While a portion of 
the inventory increase is required to support new product initiatives and 
manufacturing rationalizations that are underway and should further improve
manufacturing productivity, the Corporation will actively seek to reduce 
inventory levels in 1996.
     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  monitors its free cash flow, a measure
commonly  employed by bond rating agencies and banks.  The  Corporation  defines
free  cash  flow as cash  available  for debt  reduction  (including  short-term
borrowings),  prior to the  effects  of cash  proceeds  received  from  sales of
divested businesses, equity offerings, and sales of receivables. Free cash flow,
a more inclusive  measure of cash flow generation than cash flows from operating
activities included in the Consolidated Statement of Cash Flows, considers items
such as cash used for capital  expenditures  and dividends,  as well as net cash
inflows or outflows from hedging activities.  During the year ended December 31,
1995,  the  Corporation  generated  free cash flow of $34.7 million  compared to
$116.1  million of free cash flow  generated in 1994.  The decrease in free cash
flow in 1995 from the 1994  level was  primarily  the  result of higher  working
capital  levels  and  capital  expenditures  in  1995  than  in  1994  when  the
Corporation  experienced  particularly  strong  free cash flow from the  initial
effects of more stringent working capital management.
     The Corporation  expects to reduce debt by approximately  $400.0 million in
the first quarter of 1996 upon receipt of the proceeds from the sale of PRC Inc.
Had the sale of PRC Inc.  closed  prior to  December  31, 1995 and a net gain of
$80.0 million been recognized upon the sale, the Corporation's  ratio of debt to
total  capitalization  would have  decreased from 62.3% at December 31, 1995, to
approximately 57%.
     The total  amount of  receivables  sold  under  the  Corporation's  sale of
receivables  program at December 31, 1995, was $230.0 million compared to $244.0
million at December 31, 1994.  The sale of  receivables  program  provides for a
seasonal  expansion of the amount of receivables  that may be sold,  from $200.0
million to $275.0 million  during the period from October 1 through  January 31.
The  Corporation's  liquidity  facility,  which supports the sale of receivables
program,  expires in May 1996. The Corporation expects to be able to extend this
facility beyond December 1996.
     Excluding amounts related to discontinued operations,  investing activities
for 1995 used cash of $195.5 million  compared to $205.0 million of cash used in
1994. Capital expenditures of $203.1 million during 1995 exceeded the 1994 level
of $181.5 million.  During 1995,  approximately 91% of the capital  expenditures
were in the Consumer  segment,  primarily in support of new product  initiatives
and productivity enhancements.  The Corporation expects capital spending in 1996
to approximate the 1995 level.
     The  Corporation  actively seeks to identify  opportunities  to improve its
cost structure.  These  opportunities  may involve the closure of  manufacturing
facilities or the reorganization of other operations.
     The  ongoing  costs of  compliance  with  existing  environmental  laws and
regulations  have not had,  nor are they  expected to have,  a material  adverse
effect on the Corporation's capital expenditures or financial position.
     The Corporation has a number of  manufacturing  sites  throughout the world
and sells its products in over 100 countries.  As a result,  the  Corporation is
exposed to  movements in the exchange  rates of various  currencies  against the
United States dollar.  The major foreign currencies in which the Corporation has
foreign  currency risk are the pound  sterling,  deutsche  mark,  Dutch guilder,
Canadian  dollar,  Swedish  krona,  Japanese yen,  French  franc,  Italian lira,
Australian dollar, Mexican peso, and Brazilian real.
     Assets and liabilities of the  Corporation's  subsidiaries  located outside
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 equity  adjustment from
translation,   a  separate  component  of  stockholders'  equity.  During  1995,
translation  adjustments,  recorded in the equity  adjustment  from  translation
component  of  stockholders'  equity,  increased  stockholders'  equity by $44.9
million compared to an increase of $98.7 million in 1994.
     As more  fully  explained  in Note 10 of  Notes to  Consolidated  Financial
Statements,  the  Corporation  historically  has  hedged  a  portion  of its net
investment in foreign  subsidiaries.  During 1995,  the  Corporation  decided to
limit the future  hedging of its net  investment in foreign  subsidiaries.  This
action may increase the  volatility of reported  equity in the future,  but will
result in more predictable cash flows from hedging activities.  During 1994, the
Corporation elected to hedge a portion, generally limited to tangible net worth,
of its foreign  subsidiaries.  Prior to 1994, the  Corporation  operated under a
full hedge policy,  hedging the net assets,  including goodwill,  of its foreign
subsidiaries.
     In  hedging  the  exposure  to  foreign  currency  fluctuations  on its net
investments in subsidiaries  located outside the United States,  the Corporation
has entered into various currency forward  contracts and options.  These hedging
activities  generate  cash  inflows and  outflows  that  offset the  translation
adjustment.  During  1995,  these  activities  netted to a cash  outflow of $4.7
million  compared to a cash outflow of $35.5 million in 1994. The  corresponding
gains  and  losses on these  hedging  activities  were  recorded  in the  equity
adjustment from translation  component of stockholders' equity. Also included in
the equity  adjustment from translation  component were the costs of maintaining
the hedge portfolio of foreign exchange  contracts.  These hedge costs decreased
stockholders'  equity  by $8.7  million  and  $33.0  million  in 1995 and  1994,
respectively.
     As more  fully  described  in Note 10 of  Notes to  Consolidated  Financial
Statements,  the  Corporation  seeks to minimize  through  its foreign  currency
hedging  activities the risk that its United States dollar cash flows  resulting
from  product  sales  outside  the United  States will be affected by changes in
exchange rates. Foreign currency commitment and transaction  exposures generally
are an integral part of the  responsibility  of management of the  Corporation's
individual  operating  units.  These  management  responses to foreign  exchange
movements vary. For example,  pricing actions,  changes in cost structures,  and
changes in hedging  strategies  may all be  effective  responses  to a change in
exchange rates.
     In  late  1994,  the  Mexican  peso  was  severely  devalued.  Because  the
Corporation's  Mexican peso exposure was hedged, this devaluation did not have a
significant  effect on earnings in 1994. While the currency  situation in Mexico
had an  adverse  effect on Mexican  revenues  in 1995,  the effect on  operating
income  was  substantially  offset  by  pricing  actions  and  changes  in  cost
structures and by the lower relative costs of Mexican production during 1995.
     Financing  activities  for 1995  used cash of $127.0  million  compared  to
$210.9 million of cash used in 1994.  During 1995, the Corporation  recognized a
$30.9 million  extraordinary loss, $26.5 million of which was a non-cash charge,
as a result of the early  redemption  of its Emhart  subsidiary's  9.25% sinking
fund  debentures in the  aggregate  principal  amount  of  $150.0 million.  This
extraordinary loss  consisted of the write-off of the associated  debt discount,
plus  premiums and costs associated with the  redemption, net of related  income
tax benefits.
     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 addition,  the  Corporation  may enter into
interest  rate  cap  agreements  in order to limit  the  effects  of  increasing
interest rates on a portion of its variable rate debt.
     In order to meet  its  goal of  fixing  or  limiting  interest  costs,  the
Corporation  maintains a portfolio  of interest  rate hedge  instruments.  These
interest  rate hedges could  change the mix of fixed and  variable  rate debt as
actual interest rates move outside the ranges covered by these instruments.  The
Corporation's variable rate debt to total debt ratio, after taking interest rate
hedges into account,  was 43% at December 31, 1995,  compared to 34% at December
31,  1994,  and 46% at December 31,  1993.  At December  31, 1995,  average debt
maturity was 4.0 years compared to 4.9 years at December 31, 1994, and 4.8 years
at December 31, 1993.
     The Corporation's unsecured revolving credit facility (the Credit Facility)
includes  certain  covenants  that  require the  Corporation  to meet  specified
minimum cash flow coverage and maximum  leverage  (debt to equity) ratios during
the term of the loan, as more fully explained in Note 9 of Notes to Consolidated
Financial  Statements.  The Corporation's  leverage ratio during the life of the
Credit  Facility may not exceed 2.2 at the end of any fiscal  quarter.  The cash
flow  coverage  ratio  calculated  as of the end of each fiscal  quarter must be
greater than 2.5 for any 12-month period.  At December 31, 1995, the Corporation
was well within the limits  specified  for the leverage  and cash flow  coverage
ratios and was in  compliance  with all other  covenants  and  provisions of the
Credit Facility.
     The  Corporation  began the process of  negotiating  a  replacement  to the
Credit Facility  during the first quarter of 1996. The  replacement  facility is
not expected to contain terms more  stringent than those set forth in the Credit
Facility and is expected to expire in the year 2001. The Corporation  expects to
continue  to  meet  the  covenants  imposed  by  the  Credit  Facility  (or  any
replacement facility) over the next 12 months.
     The Corporation will continue to have cash requirements to support seasonal
working capital needs and capital expenditures,  to pay interest, and to service
debt. In order to meet these cash requirements,  the Corporation  intends to use
internally  generated  funds and to borrow  under the Credit  Facility  or under
short-term  borrowing  facilities.  Management believes that cash generated from
these sources will be adequate to meet the Corporation's  cash requirements over
the next 12 months.


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, 1995, 1994, and 1993

     Consolidated Balance Sheet
         - December 31, 1995 and 1994

     Consolidated Statement of Cash Flows - years ended December 31, 1995, 1994,
        and 1993

     Notes to Consolidated Financial Statements

     Report of Independent Auditors


<TABLE>
CONSOLIDATED STATEMENT OF EARNINGS
The Black & Decker Corporation and Subsidiaries
(Dollars in Millions Except Per Share Data)
<CAPTION>
                                                                                            Year Ended December 31,
----------------------------------------------------------------------------------------------------------------------------
                                                                                    1995              1994             1993
----------------------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>               <C>              <C>     
Revenues                                                                        $4,766.1          $4,365.2         $4,121.5
   Cost of goods sold                                                            3,016.7           2,769.7          2,657.4
   Marketing and administrative expenses                                         1,323.3           1,243.6          1,161.4
----------------------------------------------------------------------------------------------------------------------------
Operating Income                                                                   426.1             351.9            302.7
   Interest expense (net of interest income of $8.6
     for 1995, $6.9 for 1994, and $8.2 for 1993)                                   184.4             187.9            171.8
   Other expense                                                                    16.2              15.4              7.4
----------------------------------------------------------------------------------------------------------------------------
Earnings From Continuing Operations Before Income Taxes                            225.5             148.6            123.5
   Income taxes                                                                      9.0              58.7             59.4
----------------------------------------------------------------------------------------------------------------------------
Earnings From Continuing Operations                                                216.5              89.9             64.1
Earnings from discontinued operations (net of income taxes of
   $8.7 for 1995, $4.0 for 1994, and $1.3 for 1993)                                 38.4              37.5             31.1
----------------------------------------------------------------------------------------------------------------------------
Earnings Before Extraordinary Item and Cumulative Effect
   of Change in Accounting Principle                                               254.9             127.4             95.2
Extraordinary loss from early extinguishment of debt
   (net of income tax benefit of $2.6)                                             (30.9)               --               --
Cumulative effect to January 1, 1993, of change in
   accounting principle for postemployment benefits                                   --                --            (29.2)
----------------------------------------------------------------------------------------------------------------------------
Net Earnings                                                                    $  224.0          $  127.4         $   66.0
============================================================================================================================


----------------------------------------------------------------------------------------------------------------------------
Net Earnings Applicable to Common Shares                                        $  212.4          $  115.8         $   54.4
============================================================================================================================
Net Earnings Per Common and Common Equivalent Share:
----------------------------------------------------------------------------------------------------------------------------
Primary:
   Earnings from continuing operations                                          $   2.33          $    .93         $    .63
   Earnings from discontinued operations                                             .44               .44              .37
   Extraordinary loss from early extinguishment of debt                             (.35)               --               --
   Cumulative effect adjustment for postemployment benefits                           --                --             (.35)
----------------------------------------------------------------------------------------------------------------------------
   Primary Earnings Per Share                                                   $   2.42          $   1.37         $    .65
============================================================================================================================
Shares Used in Computing Primary Earnings Per Share
   (in Millions)                                                                    87.9              84.3             83.6
============================================================================================================================
Assuming Full Dilution:
   Earnings from continuing operations                                          $   2.29          $    .93         $    .63
   Earnings from discontinued operations                                             .41               .44              .37
   Extraordinary loss from early extinguishment of debt                             (.33)               --               --
   Cumulative effect adjustment for postemployment benefits                           --                --             (.35)
----------------------------------------------------------------------------------------------------------------------------
   Fully Diluted Earnings Per Share                                             $   2.37          $   1.37         $    .65
============================================================================================================================
Shares Used in Computing Fully Diluted
   Earnings Per Share (in Millions)                                                 94.7              84.3             83.6
============================================================================================================================
</TABLE>

See Notes to Consolidated Financial Statements



<TABLE>
CONSOLIDATED BALANCE SHEET
The Black & Decker Corporation and Subsidiaries
(Millions of Dollars)
<CAPTION>

                                                                                                  December 31,
-------------------------------------------------------------------------------------------------------------------
                                                                                             1995             1994
-------------------------------------------------------------------------------------------------------------------
<S>                                                                                     <C>              <C> 
Assets
Cash and cash equivalents                                                              $    131.6       $    65.0
Trade receivables, less allowances of $43.1 for 1995 and $38.2 for 1994                     651.3           635.1
Inventories                                                                                 855.7           700.5
Net assets of discontinued operations                                                       302.4           333.1
Other current assets                                                                        165.6           110.1
-------------------------------------------------------------------------------------------------------------------
   Total Current Assets                                                                   2,106.6         1,843.8
-------------------------------------------------------------------------------------------------------------------
Property, Plant and Equipment                                                               866.8           822.7
Goodwill                                                                                  2,142.0         2,194.7
Other Assets                                                                                429.9           403.1
-------------------------------------------------------------------------------------------------------------------
                                                                                       $  5,545.3       $ 5,264.3
===================================================================================================================
Liabilities and Stockholders' Equity
Short-term borrowings                                                                  $    599.2       $   549.0
Current maturities of long-term debt                                                         48.0           121.1
Trade accounts payable                                                                      396.7           284.1
Other accrued liabilities                                                                   743.0           757.5
-------------------------------------------------------------------------------------------------------------------
   Total Current Liabilities                                                              1,786.9         1,711.7
-------------------------------------------------------------------------------------------------------------------
Long-Term Debt                                                                            1,704.5         1,723.2
Deferred Income Taxes                                                                        52.8            45.4
Postretirement Benefits                                                                     307.8           328.2
Other Long-Term Liabilities                                                                 270.1           286.4
Stockholders' Equity
Convertible preferred stock (outstanding: December 31, 1995
   and 1994--150,000 shares)                                                                150.0           150.0
Common stock (outstanding: December 31, 1995--86,447,588 shares,
   December 31, 1994--84,688,803 shares)                                                     43.2            42.3
Capital in excess of par value                                                            1,084.5         1,049.1
Retained earnings                                                                           202.6            24.6
Equity adjustment from translation                                                          (57.1)          (96.6)
-------------------------------------------------------------------------------------------------------------------
   Total Stockholders' Equity                                                             1,423.2         1,169.4
-------------------------------------------------------------------------------------------------------------------
                                                                                       $  5,545.3       $ 5,264.3
===================================================================================================================
</TABLE>

See Notes to Consolidated Financial Statements


<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
The Black & Decker Corporation and Subsidiaries
(Millions of Dollars)
<CAPTION>
                                                                                  Year Ended December 31,
---------------------------------------------------------------------------------------------------------------------

                                                                            1995             1994              1993
---------------------------------------------------------------------------------------------------------------------
<S>                                                                     <C>              <C>              <C>  
Operating Activities
Net earnings                                                            $  224.0         $  127.4         $    66.0
Adjustments to reconcile net earnings to cash flow from operating
   activities of continuing operations:
   Non-cash charges and credits:
     Depreciation and amortization                                         206.7            195.4             182.4
     Deferred income taxes                                                 (46.1)             8.9              18.8
     Extraordinary item                                                     26.5               --               --
     Cumulative effect of change in accounting principle                      --               --              29.2
     Other                                                                  19.5              1.9              (6.7)
   Earnings of discontinued operations                                     (38.4)           (37.5)            (31.1)
   Changes in selected working capital items:
     Trade receivables                                                      14.8            (83.5)            (42.0)
     Inventories                                                          (138.7)            31.9             (15.6)
     Trade accounts payable                                                108.1             58.3               9.5
   Other assets and liabilities                                            (59.5)             1.6            (113.3)
   Net (decrease) increase in receivables sold                             (14.0)            26.0               6.5
---------------------------------------------------------------------------------------------------------------------
   Cash flow from operating activities of continuing operations            302.9            330.4             103.7
   Cash flow from operating activities of discontinued operations            1.5             79.3              32.3
---------------------------------------------------------------------------------------------------------------------
   Cash Flow From Operating Activities                                     304.4            409.7             136.0
---------------------------------------------------------------------------------------------------------------------
Investing Activities
Proceeds from partial sale of discontinued operations                       95.5               --                --
Investing activities of discontinued operations                            (12.9)           (15.5)            (18.4)
Proceeds from disposal of assets and businesses                             12.3             12.0             113.4
Capital expenditures                                                      (203.1)          (181.5)           (190.3)
Cash inflow from hedging activities                                        485.6          1,070.4           1,096.6
Cash outflow from hedging activities                                      (490.3)        (1,105.9)         (1,085.1)
---------------------------------------------------------------------------------------------------------------------
   Cash Flow From Investing Activities                                    (112.9)          (220.5)            (83.8)
---------------------------------------------------------------------------------------------------------------------
   Cash Flow Before Financing Activities                                   191.5            189.2              52.2
Financing Activities
Net increase (decrease) in short-term borrowings                            47.2            217.4             (14.1)
Proceeds from long-term debt (including revolving credit facility)         274.0          1,226.7           2,008.3
Payments on long-term debt (including revolving credit facility)          (425.2)        (1,622.8)         (1,989.4)
Issuance of equity interest in a subsidiary                                   --              4.3               4.4
Issuance of common stock                                                    23.0              8.8               6.4
Cash dividends                                                             (46.0)           (45.3)            (45.1)
---------------------------------------------------------------------------------------------------------------------
   Cash Flow From Financing Activities                                    (127.0)          (210.9)            (29.5)
Effect of exchange rate changes on cash                                      2.1              5.4              (7.1)
---------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Cash and Cash Equivalents                            66.6            (16.3)             15.6
Cash and cash equivalents at beginning of year                              65.0             81.3              65.7
---------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year                                $  131.6         $   65.0         $    81.3
=====================================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements




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:  The accompanying Consolidated Financial Statements for 1994 
and 1993 have been reclassified to identify separately the results of 
operations, net assets, and cash flows of the Corporation's discontinued
information technology and services segment (see Note 2). In addition,  certain
prior year's amounts in the Consolidated Financial Statements have been
reclassified to conform to the presentation used in 1995.
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.  
FOREIGN CURRENCY  TRANSLATION:  The  financial  statements of  subsidiaries  
outside the United  States,   except  those  subsidiaries  located  in  highly  
inflationary economies, are generally 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 equity adjustment from  
translation, 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  includes  cash on hand,
demand deposits, and short-term investments with original maturities of three 
months or less.  
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 and on accelerated and straight-line  methods for
tax  reporting  purposes.  
GOODWILL  AND OTHER  INTANGIBLES:  Goodwill and other intangibles are amortized 
on the straight-line method over periods ranging up to 40 years. On a periodic 
basis, the Corporation estimates the future undiscounted cash flows of the 
businesses to which goodwill relates in order to ensure that the carrying value 
of goodwill has not been impaired. 
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 $96.1  million  in 1995,  $89.2  million  in 1994,  and 
$90.6  million  in 1993.
ADVERTISING AND PROMOTION:  All costs  associated with advertising and promoting
products are expensed in the year incurred.  Advertising and promotion  expense,
including  expense  of  consumer  rebates,  was $265.1  million in 1995,  $249.9
million  in 1994,  and  $209.3  million in 1993.  
POSTRETIREMENT  BENEFITS:  The Corporation and its subsidiaries  have pension 
plans covering substantially all of their employees, who are primarily  covered 
by  non-contributory  defined benefit plans. The 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  are  generally amortized over the estimated remaining service periods of 
employees.
     Certain   employees  are  covered  by  defined   contribution   plans.  The
Corporation's  contributions  to the plans are based on a percentage of employee
compensation or employee contributions. The plans are funded on a current basis.
     In  addition  to  pension  benefits,   the  Corporation   provides  certain
postretirement  medical,  dental,  and life insurance  benefits,  principally to
certain  United  States  employees.  Retirees in other  countries  are generally
covered by government-sponsored programs.
     The  Corporation  uses the  corridor  approach in the  valuation of defined
benefits 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 
by the Corporation principally  in the  management  of its  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 payable to,
or  receivable   from,  the   counterparties   are  included  in  other  accrued
liabilities.  The fair value of the swap  agreements  is not  recognized  in the
Consolidated Financial Statements, since they are accounted for as hedges.
     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.
     In the case of an early  termination of an interest rate swap or cap, gains
or losses resulting from the early  termination are deferred and amortized as an
adjustment to the yield of the related debt instrument over the remaining period
originally covered by the terminated swap or cap.
     Gains  and  losses on hedges of net  investments  are not  included  in the
Consolidated  Statement  of  Earnings,  but are  reflected  in the  Consolidated
Balance  Sheet  in  the  equity   adjustment  from   translation   component  of
stockholders'  equity,  with  the  related  amounts  payable  to or due from the
counterparties included in other liabilities or other assets.
     Gains and losses on foreign currency  transaction  hedges are recognized in
income and  offset  the  foreign  exchange  gains and  losses on the  underlying
transactions.  Gains and losses of foreign  currency firm commitment  hedges are
deferred  and  included  in  the  basis  of  the  transactions   underlying  the
commitments.  
STOCK-BASED COMPENSATION: The Financial Accounting Standards Board (FASB) 
recently issued  Statement of Financial  Accounting  Standards (SFAS) No.123,  
"Accounting for Stock-Based  Compensation." This new standard  encourages, but 
does not require,  companies to recognize compensation expense for grants of
stock, stock options,  and other equity instruments based on a fair-value method
of accounting.
     Companies that do not choose to adopt the new expense  recognition rules of
SFAS No. 123 will continue to apply the existing  accounting  rules contained in
Accounting  Principles  Board  Opinion  (APBO) No. 25, but will be  required  to
provide pro forma disclosures of the compensation  expense  determined under the
fair-value  provisions  of SFAS No.  123, if  material.  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
price at the date of grant.
     The  Corporation  is  required  to  adopt  either  the  recognition  or the
disclosure  provisions  of SFAS No.  123 by no later than  January 1, 1997.  The
Corporation expects to continue to follow the accounting  provisions of APBO No.
25 for  stock-based  compensation  and to  furnish  the  pro  forma  disclosures
required under SFAS No. 123, if material.  
IMPAIRMENT OF LONG-LIVED ASSETS: The FASB  recently  issued SFAS No. 121,  
"Accounting  for  Impairment of Long-Lived Assets and for  Long-Lived  Assets to
Be Disposed Of," which the Corporation is required to adopt effective January 1,
1996.  SFAS No. 121 requires that long-lived assets and certain identifiable
intangibles held and used by a company be reviewed for possible impairment  
whenever events or changes in circumstances indicate that the  carrying  amount
of an asset may not be recoverable.  SFAS No. 121 also requires that long-lived 
assets and certain identifiable intangibles held for sale, other than those 
related to discontinued operations, be reported at the lower of carrying amount 
or fair value less cost to sell. The Corporation  does not expect the effect of 
its adoption of SFAS No.121 to be material. 
NET EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE: Primary earnings per common
and common equivalent share are computed by dividing net earnings,  after 
deducting preferred stock dividends, by the weighted average number  of common  
shares outstanding during each year plus, for 1995, the incremental shares  that
would have been outstanding under certain employee benefit plans and upon the 
assumed exercise of dilutive stock options. For 1994 and 1993, these incremental
shares were immaterial and, accordingly, were not considered in the calculation 
of primary earnings per share.
     In 1995,  fully  diluted  earnings  per share are  computed by dividing net
earnings by the weighted average number of common shares outstanding during 1995
plus the  incremental  shares  that would have been  outstanding  under  certain
employee  benefit plans and upon the assumed  exercise of dilutive stock options
and  conversion of the  preferred  shares.  In 1994 and 1993,  conversion of the
preferred  shares  would  have  been  anti-dilutive  and,  therefore,   was  not
considered in the computation of fully diluted earnings per share. Also, in 1994
and 1993, the incremental  shares that would have been outstanding under certain
employee  benefit plans and upon the assumed  exercise of dilutive stock options
were  immaterial  and,  accordingly,  were not considered in the  calculation of
fully diluted earnings per share. As a result,  fully diluted earnings per share
for 1994 and 1993 are not materially different from primary earnings per share.


NOTE 2: DISCONTINUED OPERATIONS
On December 13, 1995, the Corporation  announced that it had signed a definitive
agreement  to sell PRC Inc. for $425.0  million.  The sale of PRC Inc. to Litton
Industries,  Inc.,  is expected to be completed in the first  quarter of 1996. A
net gain on the sale of PRC Inc.,  estimated at $80.0 to $90.0 million,  will be
recognized upon completion of the sale. The Corporation sold PRC Realty Systems,
Inc.  ("RSI") on March 31, 1995,  and sold PRC  Environmental  Management,  Inc.
("EMI") on September 15, 1995,  for proceeds of $60.0 million and $35.5 million,
respectively. The aggregate gain on the sale of RSI and EMI of $2.5 million, net
of  applicable  income  taxes  of $5.5  million,  is  included  in  earnings  of
discontinued operations for 1995. Together, PRC Inc., RSI, and EMI comprised the
Corporation's information technology and services ("PRC") segment.
     Earnings  from the  discontinued  PRC segment  amounted to $38.4 million in
1995, $37.5 million in 1994, and $31.1 million in 1993, net of applicable income
taxes of $8.7 million,  $4.0 million,  and $1.3 million,  respectively,  and are
shown separately in the Consolidated  Statement of Earnings.  The results of the
discontinued operations of PRC do not reflect any expense for interest allocated
by or management fees charged by the Corporation.
     Revenues  of the  discontinued  PRC segment  were  $800.1  million in 1995,
$883.1  million in 1994,  and $760.7  million in 1993.  These  revenues  are not
included in revenues as reported in the Consolidated Statement of Earnings.
     Net assets of the  discontinued  PRC  segment  at the end of each year,  in
millions of dollars, consisted of the following:
                                                                1995       1994
                                                              ------     ------
Cash and cash equivalents ...............................     $  2.8     $   .9
Accounts receivable, net of allowances ...................     251.9      275.8
Inventories ..............................................      13.5       22.5
Current deferred tax benefits ............................      40.0         --
Other current assets .....................................      22.6       23.3
Plant and equipment, net of accumulated depreciation .....      20.0       35.4
Goodwill, net of accumulated amortization ................      40.1       98.3
Other non-current assets .................................      46.0       46.3
Accounts payable .........................................     (97.5)    (121.1)
Accrued expenses and other liabilities ...................     (37.0)     (48.3)
                                                              ------     ------
                                                              $302.4     $333.1
                                                              ======     ======


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: The Corporation's sale of receivables program  
provides for a seasonal  expansion of capacity  from $200.0  million to $275.0 
million during the period from October 1 through January 31.  Receivables under 
this  program  are sold on a  revolving  basis and are not  subject to any
significant recourse provisions.  At December 31, 1995, the Corporation had sold
$230.0 million of receivables  under this program  compared to $244.0 million at
December 31, 1994.  The discount on the sale of receivables is included in other
expense.


NOTE 4: INVENTORIES
The  classification  of inventories at the end of each year, in millions of
dollars, was as follows:
                                                              1995         1994
                                                           -------      -------
FIFO Cost
   Raw materials and work-in-process .................      $231.6       $198.6
   Finished products .................................       665.0        543.1
                                                           -------      -------
                                                             896.6        741.7
Excess of FIFO cost over LIFO inventory value ........       (40.9)       (41.2)
                                                           -------      -------
                                                            $855.7       $700.5
                                                           =======      =======

     The cost of United  States  inventories  stated  under the LIFO  method was
approximately 44% and 50% of the value of total inventories at December 31, 1995
and 1994, 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:
                                                             1995         1994
                                                         --------     --------
Property, plant and equipment at cost:
Land and improvements ............................       $   69.4     $   68.3
Buildings ........................................          360.7        342.6
Machinery and equipment ..........................        1,342.1      1,257.9
                                                         --------     --------
                                                          1,772.2      1,668.8
Less accumulated depreciation ....................          905.4        846.1
                                                         --------     --------
                                                         $  866.8     $  822.7
                                                         ========     ========


NOTE 6: GOODWILL
Goodwill at the end of each year, in millions of dollars, was as follows:
                                                          1995             1994
                                                      --------         --------
Goodwill .....................................        $2,635.0         $2,619.3
Less accumulated amortization ................           493.0            424.6
                                                      --------         --------
                                                      $2,142.0         $2,194.7
                                                      ========         ========


NOTE 7: OTHER ACCRUED LIABILITIES
Other accrued  liabilities at the end of each year, in millions of dollars,
included the following:
                                                        1995               1994
                                                     -------            -------
Salaries and wages .......................            $ 91.8             $ 84.1
Employee benefits ........................              66.2               53.5
All other ................................             585.0              619.9
                                                     -------            -------
                                                      $743.0             $757.5
                                                     =======            =======

     All other at December  31, 1995 and 1994,  primarily  consisted of accruals
for trade discounts and  allowances,  insurance,  warranty  costs,  advertising,
interest, and income and other taxes.


NOTE 8: SHORT-TERM BORROWINGS
Short-term  borrowings at December 31, 1995 and 1994,  included  unsecured money
market loans in the amounts of $206.5 million and $293.3 million,  respectively,
at contracted interest rates based on a margin over the London Interbank Offered
Rate (LIBOR).  These loans are payable on demand with a  one-to-five  day notice
period.  Short-term  borrowings  at December  31, 1995 and 1994,  also  included
$150.0 million and $75.0 million,  respectively,  of competitive  bid rate loans
under the  Corporation's  unsecured  revolving  credit  facility,  as more fully
described in Note 9. Short-term  borrowings in the amounts of $242.7 million and
$180.7 million at December 31, 1995 and 1994, respectively,  primarily consisted
of  borrowings  of  subsidiaries  outside the United  States  under the terms of
uncommitted  lines of credit or other  short-term  borrowing  arrangements.  The
weighted average interest rate on short-term borrowings  outstanding at December
31, 1995 and 1994, was 6.2% and 7.0%, respectively.
     Under  the terms of  uncommitted  lines of credit  at  December  31,  1995,
certain  subsidiaries  outside the United  States may borrow up to an additional
$396.7 million on such terms as may be mutually agreed upon. These  arrangements
do not  have  termination  dates  and are  reviewed  periodically.  No  material
compensating balances are required or maintained.


NOTE 9: LONG-TERM DEBT
The  composition  of long-term debt at the end of each year, in millions of
dollars, was as follows:
                                                            1995          1994
                                                        --------      --------
Revolving credit facility expiring 1997 ............    $  436.8      $  426.2
7.50% notes due 2003 ...............................       500.0         500.0
6.625% notes due 2000 ..............................       250.0         250.0
7.0% notes due 2006 ................................       250.0         250.0
Medium Term Notes due from 1996 through 2002 .......       236.8         151.8
9.25% sinking fund debentures ......................          --         150.0
6.75% deutsche mark bearer bonds ...................          --         111.4
Other loans due through 2009 .......................        78.9          37.6
Less current maturities of long-term debt ..........       (48.0)       (121.1)
Less debt discounts ................................          --         (32.7)
                                                        --------      --------
                                                        $1,704.5      $1,723.2
                                                        ========      ========

     In 1995, the Corporation recognized a $30.9 million extraordinary loss as a
result of the early  redemption  of the 9.25%  sinking  fund  debentures  of its
subsidiary,  Emhart  Corporation.  The extraordinary loss consisted primarily of
the write-off of the associated debt discount plus premiums and costs associated
with the redemption, net of income tax benefits of $2.6 million. The Corporation
financed Emhart's  redemption of the sinking fund debentures  through internally
generated cash and proceeds from the sales of the RSI and EMI businesses  during
1995.
     During 1994, the Corporation filed a shelf registration  statement to issue
up to $500.0 million of debt securities, which may consist of debentures, notes,
or other  unsecured  evidences of  indebtedness  (the Medium Term Notes).  As of
December 31, 1995, $236.8 million aggregate  principal amount of the Medium Term
Notes had been issued under this shelf registration  statement.  Of that amount,
$194.8  million bear interest at fixed rates ranging from 6.93% to 8.95%,  while
the remainder bears interest at variable rates.
     As a result of the issuance of public  debt,  the  Corporation  reduced the
amount of credit  available under its unsecured  revolving  credit facility (the
Credit  Facility)  from $1.7 billion as of December 31, 1994, to $1.4 billion as
of December  31,  1995.  The amount  available  for  borrowing  under the Credit
Facility at December 31, 1995, was $813.2 million.
     Borrowing  options under the Credit  Facility are at LIBOR plus a specified
percentage,  or at other  variable  rates set forth  therein.  The interest rate
margin over LIBOR  declines as the  Corporation's  leverage ratio  improves.  At
December  31,  1994,  borrowings  under the Credit  Facility  were at LIBOR plus
 .4375% (borrowings were at LIBOR plus .50% prior to the renegotiation of pricing
under  the  Credit  Facility  in  October  1994).  Due  to  improvements  in the
Corporation's  leverage  ratio,  the  borrowing  rate under the Credit  Facility
declined by .1125%,  effective January 1, 1995, to LIBOR plus .325% and declined
by .075%, effective January 1, 1996, to LIBOR plus .25%. The Corporation also is
able to borrow by means of competitive bid rate loans under the Credit Facility.
Competitive  bid rate loans are made through an auction  process at then-current
market rates and are  classified  as short-term  borrowings in the  Consolidated
Balance  Sheet.  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 equal to
 .175%  (.25%,  prior to October  1994) of the  amount of the bank's  commitment,
whether used or unused.
     The  Credit  Facility  includes  various  customary  covenants,   including
covenants limiting the ability of the Corporation and its subsidiaries to pledge
assets  or  incur  liens  on  assets,  and  financial  covenants  requiring  the
Corporation to maintain a specified leverage ratio and to achieve certain levels
of cash flow to fixed expense coverage. As of December 31, 1995, the Corporation
was in  compliance  with all terms and  conditions of the Credit  Facility.  The
Corporation  expects to  continue  to meet the  covenants  imposed by the Credit
Facility  over the next 12  months.  Meeting  the cash  flow  coverage  ratio is
dependent upon the level of future  earnings and interest  rates,  each of which
can have a significant impact on the ratio.
     Indebtedness of subsidiaries in the aggregate  principal  amounts of $759.1
million and $773.8  million were included in the  Consolidated  Balance Sheet at
December 31, 1995 and 1994,  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 five
years are as  follows:  $48.0  million in 1996,  $488.4  million in 1997,  $56.7
million in 1998,  $57.0 million in 1999,  and $250.0  million in 2000.  Interest
payments on all  indebtedness  were $209.0  million in 1995,  $184.9  million in
1994, and $165.0 million in 1993.


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 14 countries,  the Corporation  also is exposed to risks
arising from changes in foreign  exchange  rates.  As an end user of  derivative
financial  instruments,  the  Corporation  utilizes  derivatives to manage these
risks  by  creating  offsetting  market  positions.  The  Corporation's  use  of
derivatives  with  respect to interest  rate and foreign  currency  exposures is
discussed below.  
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  represented  by the fair value of contracts  with a positive  fair
value as of the reporting  date, as indicated  below.  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 to variable rate indebtedness.  The 
Corporation seeks to issue debt opportunistically, whether fixed or  variable,  
at the lowest possible cost and then, based upon its assessment of the future  
interest rate environment, may, through the use of interest rate derivatives,  
convert such debt from fixed to variable or from variable to fixed interest 
rates. 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.
     The amounts  exchanged by the  counterparties to interest rate swap and cap
agreements  normally are based upon 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  derivative  financial   instruments.   The  notional  amounts  of  the
Corporation's  interest rate derivatives at the end of each year, in millions of
dollars, were as follows:
                                                           1995            1994
                                                        -------         -------
Interest rate swaps:
   Fixed to variable rates .....................         $700.0          $850.0
   Variable to fixed rates .....................          450.0           750.0
   Rate basis swaps ............................          150.0           200.0
   U.S. rates to foreign rates .................          175.0           175.0
                                                        
Interest rate caps purchased ...................         $150.0          $100.0

     The  Corporation's  portfolio  of  interest  rate  swap  instruments  as of
December 31, 1995, included $700.0 million notional amounts of fixed to variable
rate swaps with a weighted average fixed rate receipt of 6.25%. The basis of the
variable rate swaps paid is LIBOR.  A number of the fixed to variable rate swaps
contain  provisions that permit,  during a portion of the terms of the swap, the
setting of the  variable  rates at either the  beginning or the end of the reset
periods, at the option of the counterparties.  The reset periods generally occur
every three to six months.  The maturities of these swaps, by notional  amounts,
are as follows:  $100.0 million in 1998, $150.0 million in 2000, and the balance
in the years  2001  through  2004.  A total of $300.0  million  of these  swaps,
maturing  in  2003,  contains  provisions  that  permit  the  counterparties  to
terminate the swap, without penalty, beginning in 1998.
     As of December  31,  1995,  the  portfolio  also  included  $450.0  million
notional  amounts of variable to fixed rate swaps with a weighted  average fixed
rate payment of 6.52%.  The basis of the  variable  rate  received is LIBOR.  Of
these swaps to fixed rates, $200.0 million and $250.0 million mature in 1997 and
1998, respectively.
     As of December  31, 1995,  the  portfolio  also  contained  $150.0  million
notional  amounts of rate basis  swaps,  which swap to the higher of a specified
weighted average fixed rate payment of 6.85% or a weighted average variable rate
payment of LIBOR minus 1.49%. The basis of the variable rates received is LIBOR.
Rates  received  under  these rate basis swaps are  generally  reset every three
months.  The  maturities of these swaps,  by notional  amounts,  are as follows:
$50.0  million in 1996,  $50.0  million in 1997,  and $50.0  million in 1998. At
December 31, 1995, payments under these swaps were based on the weighted average
fixed rate payment provisions of the swap agreements.
     The remainder of the interest rate swap  portfolio as of December 31, 1995,
consisted of $175.0 million  notional  amounts of interest rates swaps that swap
from United  States  dollars into  foreign  currencies.  Of that amount,  $150.0
million had been swapped from fixed rate United States  dollars (with a weighted
average  fixed  rate of 6.75%)  into fixed  rate  Japanese  yen (with a weighted
average fixed rate of 4.68%).  Of the $150.0 million  notional  amounts,  $100.0
million  mature  in 1996,  and the  balance  in 1997.  A total of $25.0  million
notional amounts of interest rate swaps, maturing in 1997, had been swapped from
variable rate United States dollars (with the variable rate based on LIBOR) into
fixed rate Swiss francs (with a weighted average fixed rate of 5.17%).
     As of December 31, 1995, the Corporation  also had $150.0 million  notional
amounts  of  interest  rate  caps,   which  have  the  effect  of  limiting  the
Corporation's  exposure to high interest rates. The interest rate caps mature in
1997 and have cap rates of 7.0%. For a total of $100.0 million  notional amounts
of the  interest  rate caps,  the cap rates  increase  from 7.0% to 9.0% for any
period in which LIBOR exceeds 9.0%.
     The  Corporation's  credit exposure on its interest rate  derivatives as of
December 31, 1995 and 1994,  was $3.5 million and $22.2  million,  respectively.
Deferred gains and losses on the early  termination of interest rate swaps as of
December 31, 1995 and 1994, 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 options) are generally exchanged by the 
counterparties.
     In order to limit  the  volatility  of  reported  equity,  the  Corporation
historically has hedged a portion of its net investment in subsidiaries  located
outside the United  States,  where  practicable,  except for those  subsidiaries
located in highly inflationary economies. This has been accomplished through the
use of foreign currency forward contracts, foreign currency swaps, and purchased
foreign  currency  options with little or no intrinsic value at the inception of
the options. During 1995, the Corporation decided to limit the future hedging of
its net  investment  in  foreign  subsidiaries.  This  action may  increase  the
volatility of reported equity in the future but will result in more  predictable
cash flows from hedging  activities.  During 1994,  the  Corporation  elected to
hedge a portion,  generally limited to tangible net worth, of its net investment
in  subsidiaries  outside  the United  States.  Prior to 1994,  the  Corporation
generally operated under a full hedge policy, hedging the net assets,  including
goodwill, of its subsidiaries outside the United States.
     Through its foreign currency hedging  activities,  the Corporation seeks to
minimize the risk that cash flows  resulting from the sales of products  outside
the  United  States  will be  affected  by changes in  exchange  rates.  Foreign
currency  transaction and commitment  exposures generally are the responsibility
of the Corporation's individual operating units to manage as an integral part of
their business.  Management  responds to foreign exchange movements through many
alternative  means,  such as pricing  actions,  changes in cost  structure,  and
changes in hedging strategies.
     The Corporation  hedges its foreign currency  transaction and firm purchase
commitment  exposures,  including firm intercompany  foreign currency purchases,
based on management's  judgment,  generally  through the use of forward exchange
contracts  and  purchased  options  with  little  or no  intrinsic  value at the
inception  of the  options.  Some of the  contracts  involve the exchange of two
foreign  currencies,  according  to the  local  needs of the  subsidiaries.  The
Corporation  utilizes  some  natural  hedges to  mitigate  its  transaction  and
commitment  exposures.  Intercompany  foreign currency purchase  commitments are
considered to be firm when performance under the commitments is probable because
of sufficiently  large  disincentives  to the  Corporation for  non-performance.
Deferred  gains and losses on hedged  intercompany  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 following table summarizes the contractual amounts of the Corporation's
forward  exchange  contracts  as of December  31, 1995 and 1994,  in millions of
dollars,  including  details by major currency as of December 31, 1995.  Foreign
currency  amounts are 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, 1995                                    Buy             Sell
                                                      --------         --------
United States dollar ....................             $  964.8         $ (754.0)
Pound sterling ..........................                375.8           (168.5)
Deutsche mark ...........................                162.4           (312.7)
Swedish krona ...........................                129.7           (137.1)
Japanese yen ............................                 24.2           (178.8)
French franc ............................                 82.0           (131.8)
Canadian dollar .........................                290.8           (254.3)
Italian lira ............................                113.1           (107.3)
Swiss franc .............................                 59.3            (54.8)
Other ...................................                103.7           (222.9)
                                                      --------         --------
Total ...................................             $2,305.8        $(2,322.2)
                                                      ========         ========

As of December 31, 1994
                                                                       
Total .....................................           $2,120.5        $(2,137.1)
                                                      ========         ========

     The contractual amounts of the Corporation's  purchased currency options to
buy  currencies,  predominantly  the United States  dollar,  and to sell various
currencies were $25.1 million and $25.6 million,  respectively,  at December 31,
1995, and $266.7 million and $262.3 million, respectively, at December 31, 1994.
     The Corporation's credit exposure on its foreign currency derivatives as of
December 31, 1995 and 1994, was $28.9 million and $43.2 million, respectively.
     Gross  deferred  realized  gains and losses on  commitment  hedges were not
significant  at  December  31, 1995 and 1994.  Substantially  all of the amounts
deferred at December 31, 1995, are expected to be recognized in earnings  during
1996,  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:  
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.  
LONG-TERM DEBT: Publicly  traded  debt is valued based on quoted  market values.
The amount reported in the Consolidated Balance Sheet for the remaining long-
term debt approximates fair value since such debt was either variable rate debt
or fixed rate debt that had been  recently  issued as of the  reporting  date. 
INTEREST RATE HEDGES: The fair value of interest rate hedges, including interest
rate swaps and caps, reflects the estimated amounts that the  Corporation  would
receive or pay to terminate the contracts at the reporting date,  thereby taking
into account  unrealized  gains and losses of open contracts as of the reporting
date.  
FOREIGN  CURRENCY  CONTRACTS:  The fair values of forward exchange contracts and
options are estimated using prices established by financial institutions for 
comparable instruments.
     The following table sets forth the carrying  amounts and fair values of the
Corporation's  financial  instruments,  except for those  noted  above for which
carrying values approximate fair values, in millions of dollars:

Assets (Liabilities)                               Carrying             Fair
As of December 31, 1995                              Amount            Value
                                                   --------         --------
Non-derivatives:
   Long-term debt ..........................      $(1,704.5)       $(1,779.9)
                                                   --------         --------  
Derivatives relating to:
   Debt
     Assets ................................            2.6              3.5
     Liabilities ...........................            (.5)           (16.4)
   Foreign Currency
     Assets ................................           12.6             28.9
     Liabilities ...........................          (32.6)           (46.3)
                                                   --------         --------  

Assets (Liabilities)                               Carrying             Fair
As of December 31, 1994                              Amount            Value
                                                   --------         --------
Non-derivatives:
   Long-term debt ..........................      $(1,723.2)       $(1,637.3)
                                                   --------         --------  
Derivatives relating to:
   Debt
     Assets ................................             .6             22.2
     Liabilities ...........................           (1.4)          (101.8)
   Foreign Currency
     Assets ................................           38.0             43.2
     Liabilities ...........................          (43.9)           (62.6)
                                                   --------         --------   

     The  carrying  amounts of  debt-related  derivatives  are  included  in the
Consolidated Balance Sheet in other accrued liabilities. The carrying amounts of
foreign  currency-related  derivatives  related 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 related to transaction hedges are included in the same balance sheet
line item as the hedged transaction.

NOTE 12: INCOME TAXES
Earnings (losses) from continuing operations before income taxes,  extraordinary
item, and cumulative effect of change in accounting principle, for each year, in
millions of dollars, were as follows:
                                          1995            1994             1993
                                       -------         -------          -------
United States .................         $ 83.5          $(16.6)          $ 19.9
Other countries ...............          142.0           165.2            103.6
                                       -------         -------          -------
                                        $225.5          $148.6           $123.5
                                       =======         =======          =======

     Significant  components  of  income  taxes  (benefits)  for each  year,  in
millions of dollars, were as follows:
                                               1995          1994          1993
                                            -------       -------       -------
Current:
   United States .....................        $20.2         $ 4.7         $ 7.3
   Other countries ...................         33.5          43.7          32.3
   Withholding on remittances
     from other countries ............          1.4           1.4           1.0
                                            -------       -------       -------
                                               55.1          49.8          40.6
                                            -------       -------       -------
Deferred:
   United States .....................        (50.2)         12.0          20.7
   Other countries ...................          4.1          (3.1)         (1.9)
                                            -------       -------       -------
                                              (46.1)          8.9          18.8
                                            -------       -------       -------
                                              $ 9.0         $58.7         $59.4
                                            =======       =======       =======

     During 1995, 1994 and 1993, the Corporation utilized United States tax loss
carryforwards  and  capital  loss  carryforwards  obtained  in a prior  business
combination.  The  effect of  utilizing  these  carryforwards  was to  recognize
deferred  income tax  expense and to reduce  goodwill by $21.0  million in 1995,
$15.5 million in 1994, and $21.7 million in 1993.
     In  1995,  income  tax  benefits  of  $2.6  million  were  recorded  on the
extraordinary  loss on  extinguishment  of debt. In 1993, no income tax benefits
were recorded on the cumulative effect adjustment for  postemployment  benefits.
The tax  assets  related to this  adjustment  were  predominantly  in the United
States and were offset by a  corresponding  increase in the  deferred  tax asset
valuation  allowance.  Income tax expense recorded  directly as an adjustment to
equity  as a  result  of  hedging  activities  in 1995,  1994,  and 1993 was not
significant.
     Income tax payments were $56.3 million in 1995,  $44.5 million in 1994, and
$92.2  million  in 1993.  Taxes  paid  during  1993  included  $49.0  million of
previously  accrued tax payments  relating to settlement of prior-year tax audit
issues.
     Deferred tax assets  (liabilities)  at the end of each year, in millions of
dollars, were composed of the following:
                                                              1995         1994
                                                           -------      -------
Deferred tax liabilities:
   Fixed assets ......................................     $ (45.8)     $ (54.4)
   Postretirement benefits ...........................       (32.5)       (31.2)
   Other .............................................        (8.8)       (28.1)
                                                           -------      -------
Gross deferred tax liabilities .......................       (87.1)      (113.7)
                                                           -------      -------
Deferred tax assets:
   Bad debt allowance ................................         6.0          4.1
   Inventories .......................................        16.3         17.2
   Postretirement benefits ...........................         7.9         19.2
   Fixed assets ......................................          --          5.7
   Net assets of discontinued operations .............        40.0           --
   Other accruals ....................................        97.8        131.5
   Tax loss carryforwards ............................       115.9        144.3
   Tax credit and capital loss carryforwards .........        58.0         55.1
                                                           -------      -------
Gross deferred tax assets ............................       341.9        377.1
                                                           -------      -------
Deferred tax asset valuation allowance ...............      (187.7)      (301.2)
                                                           -------      -------
Net deferred tax assets (liabilities) ................     $  67.1      $ (37.8)
                                                           =======      =======

     Deferred  income taxes are included in the  Consolidated  Balance  Sheet in
other  current  assets,  net assets of  discontinued  operations,  other accrued
liabilities, and deferred income taxes.
     Net deferred tax assets (prior to the valuation allowance) of $41.0 million
as of  December  31,  1995,  resulted  from a prior  business  combination  and,
accordingly,  will result in a reduction of goodwill if realized  for  financial
reporting purposes.
     At December  31,  1994,  a full  valuation  allowance  was  provided on net
deferred tax assets in the United States based upon the Corporation's history of
taxable  earnings  (losses)  over the past several  years and the  volatility of
comprehensive  taxable  earnings  (losses)  in the United  States due to foreign
exchange contracts. In addition, a full valuation allowance on net tax assets in
certain foreign taxing jurisdictions was provided at December 31, 1994, based on
the history of taxable  earnings  (losses),  the tax carryforward  periods,  and
projected earnings.
     During the year ended December 31, 1995,  the deferred tax asset  valuation
allowance  decreased  by $113.5  million.  Included in the  decrease  was $109.0
million,  which  resulted  from the  Corporation's  reversal of a portion of the
deferred tax asset  valuation  allowance  based on the  projection  of estimable
taxable earnings in the United States,  including the effect of the pending sale
of PRC Inc. The remaining  decrease was due to the  utilization  of domestic tax
loss  carryforwards,  offset  by  increased  tax  losses  generated  by  foreign
operations.
     During the year ended December 31, 1994,  the deferred tax asset  valuation
allowance  decreased by $45.3 million,  primarily due to utilization of tax loss
carryforwards and capital loss carryforwards.
     Tax basis  carryforwards  at December 31, 1995,  consisted of net operating
losses expiring from 1996 to 2011, capital loss carryforwards  expiring in 1996,
and other tax credits expiring from 1998 to 2008.
     At December  31,  1995,  unremitted  earnings of  subsidiaries  outside the
United States were approximately  $1.3 billion,  on which no United States taxes
have 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  tax 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
tax and offset any foreign withholding tax.
     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:
                                                    1995       1994       1993
                                                 -------    -------    -------
Income taxes at federal
   statutory rate ..............................   $78.9      $52.0      $43.2
Lower effective taxes on earnings of
   other countries .............................   (16.5)     (18.7)     (15.0)
Effect of net operating loss carryforwards .....   (19.4)      (2.7)       (.7)
Effect of reduction in deferred tax asset
   valuation  allowance due to projection
   of  estimable  earnings  in the United
   States,  including  the effect of the
   pending sale of PRC Inc. ....................   (65.0)        --         --
Withholding on remittances from other
   countries ...................................     1.4        1.4        1.0
Amortization and write-off of goodwill .........    24.6       24.5       23.7
Other-net ......................................     5.0        2.2        7.2
                                                 -------    -------    -------
Income taxes ...................................   $ 9.0      $58.7      $59.4
                                                 =======    =======    =======


NOTE 13: POSTEMPLOYMENT AND POSTRETIREMENT BENEFITS
Net pension cost (credit) for all domestic  defined  benefit plans  included the
following components for each year, in millions of dollars:
                                                   1995       1994       1993
                                                -------    -------    -------
Service cost ................................   $  11.3      $14.0      $11.8
Interest cost on projected benefit obligation      47.9       45.6       44.0
Actual return on assets .....................    (108.2)     (20.8)     (98.6)
Net amortization and deferral ...............      39.3      (38.2)      33.4
                                                -------    -------    -------
   Net pension cost (credit) ................   $  (9.7)     $  .6      $(9.4)
                                                =======    =======    =======

     The funded status of the domestic  defined benefit plans at the end of each
year, in millions of dollars, was as follows:
                                                               1995        1994
                                                            -------     -------
Actuarial present value of benefit obligations:
     Vested benefit .....................................    $585.2      $492.9
                                                            =======     =======
     Accumulated benefit ................................    $611.5      $505.4
                                                            =======     =======
     Projected benefit ..................................    $653.0      $553.1
Plan assets at fair value ...............................     750.6       686.6
                                                            -------     -------
Plan assets in excess of projected benefit obligation ...      97.6       133.5
Unrecognized net loss ...................................     129.3        79.6
Unrecognized prior service cost .........................       5.6         6.3
Unrecognized net asset at date of adoption net
 of amortization ........................................      (4.2)       (5.3)
                                                            -------     -------
Net pension asset recognized in the Consolidated 
 Balance Sheet...........................................    $228.3      $214.1
                                                            =======     =======
Discount rates ..........................................      7.75%        9.0%
Salary scales ...........................................   5.0-6.0%    5.0-6.0%
Expected return on plan assets ..........................      10.5%       10.5%
                                                                              

     The  Corporation's net pension expense (credit) for defined benefit pension
plans outside the United States was $.8 million in 1995, $(2.0) million in 1994,
and $(.7) million in 1993. The net pension asset  recognized in the Consolidated
Balance Sheet for those plans  outside the United  States where assets  exceeded
accumulated  benefits was $102.0  million and $96.6 million at December 31, 1995
and 1994,  respectively.  Liabilities  of these plans were  discounted  at rates
ranging  from 8.0% to 9.0% in 1995 and from 5.0% to 9.0% in 1994,  and  expected
rates of return on assets of these plans  ranged from 10.0% to 10.5% in 1995 and
from  5.5% to  12.0%  in  1994.  The net  pension  liability  recognized  in the
Consolidated  Balance  Sheet for those  plans  outside the United  States  where
accumulated  benefits  exceeded  assets was $71.7  million and $66.9  million at
December 31, 1995 and 1994,  respectively.  Liabilities  of these  predominantly
unfunded  plans were  discounted  at rates ranging from 4.5% to 9.0% in 1995 and
from 7.0% to 10.0% in 1994.
     Assets of  domestic  plans and plans  outside  the  United  States  consist
principally of  investments  in equity  securities,  debt  securities,  and cash
equivalents.
     The expected  returns on plan assets during 1993 for defined  benefit plans
were  10.5% for plans in the United  States  and 5.5% to 12.0% for funded  plans
outside the United States.
     Expense for defined  contribution  plans  amounted to $11.6  million,  $8.3
million, and $7.1 million in 1995, 1994, and 1993, respectively.
     The Corporation has several unfunded health care plans that provide certain
postretirement  medical,  dental,  and life  insurance  benefits for most United
States employees.  The postretirement  medical and dental plans are contributory
and include certain cost-sharing features, such as deductibles and co-payments.
     Net  periodic   postretirement   benefit  expense  included  the  following
components, in millions of dollars:
                                                     1995       1994      1993
                                                  -------    -------   -------
Service expense ...............................     $ 1.6      $ 1.8     $ 1.7
Interest expense ..............................      14.0       12.9      14.8
Net amortization ..............................      (7.0)      (8.0)     (7.7)
                                                  -------    -------    -------
Net periodic postretirement benefit expense ...     $ 8.6      $ 6.7     $ 8.8
                                                  =======    =======    =======

     The reconciliation of the accumulated  postretirement benefit obligation to
the liability  recognized in the  Consolidated  Balance Sheet at the end of each
year, in millions of dollars, was as follows:
                                                              1995        1994
                                                           -------     -------
Accumulated postretirement benefit obligation:
   Retirees ............................................    $129.0      $133.1
   Fully eligible active participants ..................      15.7        10.7
   Other active participants ...........................      13.5        22.2
                                                           -------     -------
Total ..................................................     158.2       166.0
                                                           -------     -------
Unrecognized prior service cost ........................      59.7        63.5
Unrecognized net loss ..................................      22.3        15.8
                                                           -------     -------
Net postretirement benefit liability recognized in
   the Consolidated Balance Sheet ......................    $240.2      $245.3
                                                           =======     =======

     The  health  care cost  trend  rate used to  determine  the  postretirement
benefit  obligation  was  8.75%  for 1995 and 1996,  decreases  gradually  to an
ultimate rate of 4.75% in 2001, and remains at that level thereafter.  The trend
rate is a significant factor in determining the amounts reported.  The effect of
a 1% annual  increase  in these  assumed  health  care cost  trend  rates  would
increase the  accumulated  postretirement  benefit  obligation by  approximately
$11.8  million.  The effect of a 1% increase on the aggregate of the service and
interest  cost  components  of  net  periodic  postretirement  benefit  cost  is
immaterial.  An  assumed  discount  rate  of  7.75%  was  used  to  measure  the
accumulated  postretirement benefit obligation for 1995 compared to 9.0% used in
1994.
     As of January 1, 1993, the  Corporation  adopted SFAS No. 112,  "Employers'
Accounting  for  Postemployment  Benefits,"  which  addresses the accounting for
certain  benefits  provided  to  former  employees  prior to  retirement.  These
benefits  primarily  relate to disability  and workers'  compensation.  Prior to
January 1, 1993, the Corporation recognized the cost of providing these benefits
principally  on the cash basis.  Since that date, the  Corporation's  policy has
been to accrue these benefits when payment of such benefits is probable and when
sufficient  information exists to make reasonable estimates of the amounts to be
paid.  As a result of the adoption of SFAS No. 112, a $29.2  million  cumulative
effect adjustment was recorded as a reduction of net income during 1993.


NOTE 14: STOCKHOLDERS'EQUITY
(Dollars in Millions Except Per Share Amounts)
<TABLE>
<CAPTION>
                                                                                                             Equity
                              Outstanding              Outstanding              Capital in   Retained    Adjustment
                                Preferred                   Common        $.50   Excess of   Earnings          From
                                   Shares     Amount        Shares   Par Value   Par Value  (Deficit)   Translation
--------------------------------------------------------------------------------------------------------------------
<S>                              <C>         <C>       <C>              <C>      <C>          <C>           <C>    
Balance at December 31, 1992      150,000     $150.0    83,428,106       $41.7    $1,028.6     $ (78.4)      $(67.9)
Net earnings                           --         --            --          --          --        66.0           --
Cash dividends:
   Common ($.40 per share)             --         --            --          --          --       (33.5)          --
   Preferred                           --         --            --          --          --       (11.6)          --
Common stock issued under
   employee benefit plans              --         --       417,088          .2         6.2         --            --
Valuation changes, less net effect
   of hedging activities               --         --            --          --          --         --         (52.4)
--------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1993      150,000      150.0    83,845,194        41.9     1,034.8       (57.5)      (120.3)
Net earnings                           --         --            --          --          --       127.4           --
Cash dividends:
   Common ($.40 per share)             --         --            --          --          --       (33.7)          --
   Preferred                           --         --            --          --          --       (11.6)          --
Common stock issued under
   employee benefit plans              --         --       843,609          .4        14.3          --           --
Valuation changes, less net effect
   of hedging activities               --         --            --          --          --          --         23.7
--------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1994      150,000      150.0    84,688,803        42.3     1,049.1        24.6        (96.6)
Net earnings                           --         --            --          --          --       224.0           --
Cash dividends:
   Common ($.40 per share)             --         --            --          --          --       (34.4)          --
   Preferred                           --         --            --          --          --       (11.6)          --
Common stock issued under
   employee benefit plans              --         --     1,758,785          .9        35.4          --           --
Valuation changes, less net effect
   of hedging activities               --         --            --          --          --          --         39.5
--------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1995      150,000     $150.0    86,447,588       $43.2    $1,084.5      $202.6       $(57.1)
====================================================================================================================
</TABLE>

     The  Corporation  has one  class  of  $.50  par  value  common  stock  with
150,000,000  authorized shares. The Corporation has authorized  5,000,000 shares
of  preferred  stock  without  par value,  of which  1,500,000  shares have been
designated  as Series A Junior  Participating  Preferred  Stock  (Series  A) and
150,000 shares have been designated as Series B Cumulative Convertible Preferred
Stock (Series B).
     Holders of Series B stock are entitled to dividends,  payable quarterly, at
an annual rate of $77.50 per share. In accordance with the terms of the Articles
Supplementary  that set forth the terms and  conditions  of the  Series B stock,
each share of Series B stock now is  convertible  into  42-1/3  shares of common
stock and is  entitled to 42-1/3  votes on matters  submitted  generally  to the
stockholders of the Corporation. The conversion rate and the number of votes per
share  are  subject  to  adjustment  under  certain  circumstances  pursuant  to
anti-dilution  provisions.  The  Corporation  has reserved  6,350,000  shares of
common stock for issuance upon  conversion of the shares of Series B stock.  The
shares of Series B stock are not  redeemable  at the  option of the  Corporation
until  September  2001.  For a 90-day  period  thereafter,  the  Corporation  is
entitled to redeem  all,  but not less than all, of the shares of Series B stock
at a redemption  price equal to the current market price of the shares of common
stock into which the Series B stock is then convertible.  The shares of Series B
stock are not subject to  redemption  at the option of the holders of the shares
under any  circumstances.  The Corporation also has the option,  after September
1996,  to require the  conversion of the shares of Series B stock into shares of
common  stock if the current  market  price of the shares of common  stock is at
least  equal to $39.45  per share  (subject  to  adjustment)  for a period of 20
trading days out of 30 consecutive trading days.
     In connection with the sale of the Series B stock,  the Corporation and the
purchaser of Series B stock entered into a standstill  agreement  that includes,
among other things,  provisions limiting the purchaser's ownership and voting of
shares of the Corporation's  capital stock,  provisions  limiting actions by the
purchaser with respect to the Corporation,  and provisions generally restricting
the  purchaser's  equity  interest to 15%. The standstill  agreement  expires in
September 2001.
     The  Corporation  has a Stockholder  Rights Plan  pursuant to which,  under
certain  conditions,  each  stockholder  has  share  purchase  rights  for  each
outstanding  share of common  stock and Series B stock of the  Corporation.  The
Corporation  has  reserved  1,500,000  shares  of  Series A stock  for  possible
issuance upon exercise of the rights.


NOTE 15: STOCK OPTION AND PURCHASE PLANS
Under  various  stock  option  plans,  options to purchase  common  stock may be
granted  until 2002.  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 issued  simultaneously
with the grant of the stock options.  Additionally,  certain plans allow for the
granting of stock appreciation rights on a stand-alone basis.
     As  of  December  31,  1995,  14,500  incentive  stock  options,  5,387,434
non-qualified  stock  options  without  cash  appreciation  rights,  and 150,000
non-qualified stock options with cash appreciation rights were outstanding under
domestic  plans.  There  were  236,754  stock  options   outstanding  under  the
Corporation's United Kingdom plan.

     Under all plans,  there were 358,564  shares of common  stock  reserved for
future grants as of December 31, 1995. Transactions are summarized as follows:
                                                  Stock Options
                                                    Outstanding    Price Range
                                                  -------------   ------------
December 31, 1994 .......................             6,452,282   $ 9.88-25.25
Granted .................................               736,100    30.13-35.38
Exercised ...............................             1,165,152     9.88-25.25
Cancelled or expired ....................               234,542     9.88-25.25
                                                   ------------   ------------
December 31, 1995 .......................             5,788,688     9.88-35.38
                                                   ------------   ------------

                                                  Stock Options
                                                    Outstanding    Price Range
                                                  -------------   ------------
Shares exercisable at
   December 31, 1995 .....................            3,910,292    $9.88-25.25
                                                   ------------   ------------
Shares exercised during the year
   ended December 31, 1994 ...............              343,702     9.88-21.63
                                                   ------------   ------------
Shares exercised during the year
   ended December 31, 1993 ...............              330,024     9.88-20.88
                                                   ------------   ------------

     Under the 1991 Employees  Stock  Purchase Plan,  employees may subscribe to
purchase shares of the Corporation's  common stock at the lower of 90% of market
value on the date offered or on the date purchased.
     Transactions under this plan are summarized as follows:
                                              Common Shares
                                                 Subscribed             Prices
                                                 ----------             ------
December 31, 1994 .........................         152,880             $19.13
Subscriptions .............................         193,120              25.50
Purchases .................................         135,686              19.13
Cancellations .............................          19,651        19.13-25.50
                                                  ---------        -----------
December 31, 1995 .........................         190,663              25.50
                                                  ---------        -----------
Shares purchased during the year
   ended December 31, 1994 ................         208,529              16.25
                                                  ---------        -----------
Shares purchased during the year
   ended December 31, 1993 ................          87,064              16.75
                                                  ---------        -----------


NOTE 16: BUSINESS SEGMENTS AND GEOGRAPHIC AREAS
The Corporation operates in two business segments: Consumer and Home Improvement
Products,  including  consumer  and  professional  power tools and  accessories,
household  products,  security hardware,  outdoor products (composed of electric
lawn and garden tools and recreational products), plumbing products, and product
service; and Commercial and Industrial Products, including fastening systems and
glass container-making equipment.
     Sales, operating income,  capital expenditures,  and depreciation set forth
in the  following  table  exclude the results of the  discontinued  PRC segment.
Corporate assets included in corporate and  eliminations  were $688.1 million at
December 31, 1995,  $575.4  million at December 31, 1994,  and $567.9 million at
December 31, 1993, and consist  principally of cash and cash equivalents,  other
current  assets,   property,   other  sundry  assets,  and  net  assets  of  the
discontinued PRC segment.  The remainder of corporate and eliminations  includes
certain pension credits and amounts to eliminate  intercompany items,  including
accounts receivable and payable and intercompany profit in inventory.
<TABLE>

Business Segments
(Millions of Dollars)
<CAPTION>
                                                             Consumer &   Commercial &
                                                       Home Improvement     Industrial    Corporate &
1995                                                           Products       Products   Eliminations  Consolidated
--------------------------------------------------------------------------------------------------------------------
<S>                                                            <C>           <C>             <C>          <C>     
Sales to unaffiliated customers                                $4,075.6      $   690.5       $     --      $4,766.1
Operating income                                                  348.5           74.8            2.8         426.1
Operating income excluding goodwill amortization                  399.8           91.9            2.8         494.5
Identifiable assets                                             4,929.2        1,382.8         (766.7)      5,545.3
Capital expenditures                                              184.1           15.7            3.3         203.1
Depreciation                                                      115.9           15.4            4.6         135.9

1994
---------------------------------------------------------------------------------------------------------------------
Sales to unaffiliated customers                                $3,773.8      $   591.4      $      --      $4,365.2
Operating income                                                  293.7           52.6            5.6         351.9
Operating income excluding goodwill amortization                  350.6           68.7            5.6         424.9
Identifiable assets                                             4,686.2        1,390.0         (811.9)      5,264.3
Capital expenditures                                              166.5           12.4            2.6         181.5
Depreciation                                                      101.5           13.9            4.0         119.4

1993
---------------------------------------------------------------------------------------------------------------------
Sales to unaffiliated customers                                $3,529.6     $    591.9       $     --      $4,121.5
Operating income                                                  215.8           76.5           10.4         302.7
Operating income excluding restructuring costs and
   credits and goodwill amortization                              280.8           73.2           10.4         364.4
Identifiable assets                                             4,693.9        1,375.5         (902.6)      5,166.8
Capital expenditures                                              171.7           13.9            4.7         190.3
Depreciation                                                       94.2           13.4            3.7         111.3
---------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>

Geographic Areas
(Millions of Dollars)
                                                   United                                 Corporate &
1995                                               States        Europe          Other   Eliminations  Consolidated
---------------------------------------------------------------------------------------------------------------------
<S>                                              <C>           <C>              <C>          <C>           <C>     
Sales to unaffiliated customers                  $2,551.2      $1,503.6         $711.3       $     --      $4,766.1
Sales and transfers between geographic areas        287.8         165.0          206.0         (658.8)           --
---------------------------------------------------------------------------------------------------------------------
Total sales                                      $2,839.0      $1,668.6         $917.3        $(658.8)     $4,766.1
=====================================================================================================================
Operating income                                 $  300.2      $   96.0         $ 27.1        $   2.8      $  426.1
Identifiable assets                              $3,216.6      $2,488.4         $763.9        $(923.6)     $5,545.3
---------------------------------------------------------------------------------------------------------------------
1994
---------------------------------------------------------------------------------------------------------------------
Sales to unaffiliated customers                  $2,409.3      $1,279.3         $676.6        $    --      $4,365.2
Sales and transfers between geographic areas        234.9         147.6          213.7         (596.2)           --
---------------------------------------------------------------------------------------------------------------------
Total sales                                      $2,644.2      $1,426.9         $890.3        $(596.2)     $4,365.2
=====================================================================================================================
Operating income                                 $  217.0      $  114.6         $ 14.7        $   5.6      $  351.9
Identifiable assets                              $3,200.0      $2,305.9         $670.8        $(912.4)     $5,264.3
---------------------------------------------------------------------------------------------------------------------
1993
---------------------------------------------------------------------------------------------------------------------
Sales to unaffiliated customers                  $2,308.6      $1,200.3         $612.6        $    --      $4,121.5
Sales and transfers between geographic areas        236.5         143.3          208.9         (588.7)           --
---------------------------------------------------------------------------------------------------------------------
Total sales                                      $2,545.1      $1,343.6         $821.5        $(588.7)     $4,121.5
=====================================================================================================================
Operating income                                 $  185.0      $  101.5         $  5.8        $  10.4      $  302.7
Identifiable assets                              $3,166.9      $2,255.0         $622.7        $(877.8)     $5,166.8
---------------------------------------------------------------------------------------------------------------------
</TABLE>

     For 1993,  the  Consumer and Home  Improvement  Products  segment  included
charges of $29.0 million for plant closures and reorganizations offset by a gain
of $15.9 million for the sale of Corbin  Russwin.  The Commercial and Industrial
Products segment included a gain of $19.4 million for the sale of Dynapert.
     In  the  Geographic  Areas  table,  United  States  includes  all  domestic
operations and several intercompany  manufacturing facilities outside the United
States, which manufacture products  predominantly for sale in the United States.
Other includes subsidiaries located in Canada, Latin America, Australia, and the
Far East.
     For 1993, restructuring credits in the amount of $6.3 million were included
in the United States geographic segment.
     Transfers  between  geographic  areas  are  accounted  for at  cost  plus a
reasonable  profit.  Transfers  between  business  segments are not significant.
Identifiable assets are those assets identified with the operations in each area
or segment, including goodwill.

NOTE 17: OTHER EXPENSE
Other expense for 1995,  1994, and 1993 primarily  included the costs associated
with the sale of receivables program.


NOTE 18: 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  charged to earnings from continuing  operations for 1995,  1994,
and  1993  amounted  to  $68.0  million,   $64.9  million,  and  $61.2  million,
respectively.  Capital leases are immaterial in amount and are generally treated
as operating  leases.  Future minimum payments under  non-cancellable  operating
leases with initial or remaining  terms of more than one year as of December 31,
1995, in millions of dollars, were as follows:
                
         1996.........................  $ 42.4
               
         1997.........................    33.3
                
         1998.........................    24.2
                
         1999.........................    16.9

         2000.........................    12.1
                            
         Thereafter...................    37.6
                                        ------
            Total                       $166.5
                                        ======


NOTE 19: 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 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 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.  All  other  claims  and  lawsuits  are  accrued  for 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, an
assessment  is made 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 the  Corporation  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 management, 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,  1995,  the  Corporation  had no  known  probable  but
inestimable exposures that could have a material effect on the Corporation.


NOTE 20: QUARTERLY RESULTS (UNAUDITED)
(Millions of Dollars Except Per Share Data)
<TABLE>
<CAPTION>
Year Ended December 31, 1995                     First Quarter    Second Quarter    Third Quarter    Fourth Quarter
--------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>               <C>              <C>               <C>     
Revenues                                              $1,021.4          $1,135.4         $1,168.9          $1,440.4
   Cost of goods sold                                    642.5             716.2            744.8             913.2
   Marketing and administrative expenses                 298.2             325.7            320.7             378.7
--------------------------------------------------------------------------------------------------------------------
Operating income                                          80.7              93.5            103.4             148.5
   Interest expense (net of interest income)              46.8              47.5             47.7              42.4
   Other expense                                           2.8               3.7              5.9               3.8
--------------------------------------------------------------------------------------------------------------------
Earnings from continuing operations before
   income taxes                                           31.1              42.3             49.8             102.3
   Income taxes (benefit)                                 12.0              14.2             17.5             (34.7)
--------------------------------------------------------------------------------------------------------------------
Earnings from continuing operations                       19.1              28.1             32.3             137.0
Earnings from discontinued operations                      6.6               6.7             11.2              13.9
--------------------------------------------------------------------------------------------------------------------
Earnings before extraordinary item                        25.7              34.8             43.5             150.9
Extraordinary loss from extinguishment of debt              --                --               --             (30.9)
--------------------------------------------------------------------------------------------------------------------
Net earnings                                          $   25.7         $    34.8         $   43.5          $  120.0
--------------------------------------------------------------------------------------------------------------------
Net earnings per common and common equivalent share:
   Primary:
     Earnings from continuing operations              $    .19         $     .29         $    .33          $   1.51
     Earnings from discontinued operations                 .08               .08              .13               .16
     Extraordinary loss                                     --                --               --              (.35)
--------------------------------------------------------------------------------------------------------------------
     Primary earnings per share                       $    .27         $     .37         $    .46          $   1.32
--------------------------------------------------------------------------------------------------------------------
   Assuming full dilution:
     Earnings from continuing operations              $    .19         $     .29         $    .34          $   1.43
     Earnings from discontinued operations                 .08               .08              .12               .15
     Extraordinary loss                                     --                --               --              (.32)
--------------------------------------------------------------------------------------------------------------------
     Fully diluted earnings per share                 $    .27         $     .37         $    .46          $   1.26
--------------------------------------------------------------------------------------------------------------------

Year Ended December 31, 1994
--------------------------------------------------------------------------------------------------------------------
Revenues                                              $  894.4          $1,015.8         $1,096.6          $1,358.4
   Cost of goods sold                                    570.7             644.2            701.8             853.0
   Marketing and administrative expenses                 263.5             295.5            312.3             372.3
--------------------------------------------------------------------------------------------------------------------
Operating income                                          60.2              76.1             82.5             133.1
   Interest expense (net of interest income)              43.9              47.8             45.3              50.9
   Other expense                                           2.1               2.3              2.9               8.1
--------------------------------------------------------------------------------------------------------------------
Earnings from continuing operations before
   income taxes                                           14.2              26.0             34.3              74.1
   Income taxes                                            6.4              10.4             13.6              28.3
--------------------------------------------------------------------------------------------------------------------
Earnings from continuing operations                        7.8              15.6             20.7              45.8
Earnings from discontinued operations                      6.8               7.4              8.6              14.7
--------------------------------------------------------------------------------------------------------------------
Net earnings                                          $   14.6         $    23.0         $   29.3          $   60.5
--------------------------------------------------------------------------------------------------------------------
Net earnings per common and common equivalent share:
   Primary:
     Earnings from continuing operations              $    .06         $     .15         $    .21          $    .51
     Earnings from discontinued operations                 .08               .09              .10               .17
--------------------------------------------------------------------------------------------------------------------
     Primary earnings per share                       $    .14         $     .24         $    .31          $    .68
--------------------------------------------------------------------------------------------------------------------
   Assuming full dilution:
     Earnings from continuing operations              $    .06         $     .15         $    .21          $    .49
     Earnings from discontinued operations                 .08               .09              .10               .16
--------------------------------------------------------------------------------------------------------------------
     Fully diluted earnings per share                 $    .14         $     .24         $    .31          $    .65
--------------------------------------------------------------------------------------------------------------------

</TABLE>

     As described in Note 2, during the fourth quarter of 1995, the  Corporation
agreed to sell the remainder of its PRC segment.  Changes in previously reported
results  are  due  to  the   reclassification   of  amounts  applicable  to  the
discontinued  operations of PRC. The results of the  discontinued  operations do
not reflect any expense for interest  allocated by or management fees charged by
the Corporation.
     The  extraordinary  loss  recognized in the fourth quarter of 1995 resulted
from the early extinguishment of debt. The three-month period ended December 31,
1995, included a tax benefit of $65.0 million ($.73 per share on a primary basis
and $.68 per share on a fully  diluted  basis)  related to the  reduction of the
Corporation's deferred tax asset valuation allowance.
     Earnings per common and common equivalent 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 due to stock
transactions  which  occurred  during 1995 and 1994 and,  with  respect to fully
diluted earnings per share,  whether the assumed  conversion of preferred shares
was dilutive or anti-dilutive during each quarter.


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

We have  audited the  accompanying  consolidated  balance  sheets of The Black &
Decker   Corporation  as  of  December  31,  1995  and  1994,  and  the  related
consolidated  statements  of earnings and cash flows for each of the three years
in the period ended  December 31, 1995.  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  generally  accepted  auditing
standards.  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  at  December  31,  1995  and  1994,  and the
consolidated  results of its operations and its cash flows for each of the three
years in the period ended  December  31,  1995,  in  conformity  with  generally
accepted  accounting  principles.  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 13 to the financial  statements,  effective January 1,
1993,  the  Corporation  changed  its method of  accounting  for  postemployment
benefits.





/s/ERNST & YOUNG LLP
Baltimore, Maryland
January 31, 1996


ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
          FINANCIAL DISCLOSURE

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 23,  1996,  under the  captions  Election of  Directors  and Board of
Directors - Section 16 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 23,  1996,
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 23,  1996,
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 23,  1996,
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,
             1995, 1994, and 1993.

             Consolidated Balance Sheet - December 31, 1995 and 1994.

             Consolidated  Statement  of Cash Flows - years ended  December 31,
             1995, 1994, and 1993.

             Notes to Consolidated Financial Statements.

             Report of Independent Auditors.


        (2)  List of Financial Statement Schedules
             The following financial statement schedule of the Corporation and
             its subsidiaries is 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 No.        Exhibit
              3(a)(1)            Charter  of  the   Corporation,   as   amended,
                                 included in the Corporation's  Quarterly Report
                                 on Form 10-Q for the quarter ended December 25,
                                 1988, is incorporated herein by reference.

              3(a)(2)            Articles  Supplementary of the Corporation,  as
                                 filed with the State  Department of Assessments
                                 and  Taxation  of  the  State  of  Maryland  on
                                 September    5,   1991,    included    in   the
                                 Corporation's  Current Report on Form 8-K dated
                                 September 25, 1991, is  incorporated  herein by
                                 reference.

              3(b)               By-Laws of the Corporation, as amended.

              4(a)               Indenture  dated as of March 24,  1993,  by and
                                 between  The  Black &  Decker  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.

              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.

              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.

              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.

              4(e)(1)            Credit Agreement dated as of November 18, 1992,
                                 among The Black & Decker Corporation,  Black &
                                 Decker  Holdings  Inc.,  Black &  Decker  GmbH,
                                 DOM Sicherheitstechnik  GmbH & Co. KG, Black &
                                 Decker(France) S.A.R.L., the banks listed on 
                                 the signature pages thereto,  Chemical Bank, 
                                 Credit Suisse and The Bank of Nova Scotia,  as
                                 Managing  Agents, and Credit Suisse, as
                                 Administrative Agent, included in the 
                                 Corporation's Annual Report on Form 10-K for 
                                 the year ended December 31, 1992, is 
                                 incorporated herein by reference.

              4(e)(2)            Amendment  No. 1 dated as of October 21,  1994,
                                 to Credit Agreement dated as of November 18,
                                 1992, by and among The Black & Decker 
                                 Corporation, Black & Decker Holdings Inc.,  
                                 Black & Decker GmbH, DOM Sicherheitstechnik  
                                 GmbH & Co. KG, Black & Decker(France) S.A.R.L.,
                                 the banks listed therein, Chemical Bank, Credit
                                 Suisse and The Bank of Nova Scotia, as Managing
                                 Agents, and Credit Suisse, as Administrative 
                                 Agent, included in the Corporation's Quarterly
                                 Report on Form 10-Q for the quarter ended 
                                 October 2, 1994, is incorporated herein by 
                                 reference.

              4(f)               Indenture dated as of September 9, 1994, by and
                                 between  The  Black &  Decker  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.

     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.



              4(g)(1)            Rights  Agreement,  dated as of April 17, 1986,
                                 by  and  between  the  Corporation  and  Morgan
                                 Guaranty Trust Company of New York, included in
                                 the  Corporation's  Current  Report on Form 8-K
                                 dated April 29, 1986, is incorporated herein by
                                 reference.

              4(g)(2)            Amendment  Agreement  to the  Rights  Agreement
                                 dated  as  of  March  31,  1988,   between  the
                                 Corporation  and Morgan  Guaranty Trust Company
                                 of New York as Rights  Agent,  included  in the
                                 Corporation's Quarterly Report on Form 10-Q for
                                 the   quarter   ended   March  27,   1988,   is
                                 incorporated herein by reference.

              4(g)(3)            Second   Amendment   Agreement  to  the  Rights
                                 Agreement dated as of September 6, 1991, by and
                                 between the Corporation and First Chicago Trust
                                 Company of New York as successor  Rights Agent,
                                 included in the Corporation's  Annual Report on
                                 Form 10-K for the year ended December 31, 1991,
                                 is incorporated herein by reference.

              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.


              10(b)              The  Black & Decker 1982 Stock Option Plan, as
                                 amended, included in the Corporation's 
                                 Quarterly Report on Form 10-Q for the quarter 
                                 ended September 29, 1991, is incorporated 
                                 herein by reference.

              10(c)              The  Black & Decker 1986 Stock Option Plan, as
                                 amended, included in the Corporation's 
                                 Quarterly Report on Form 10-Q for the quarter 
                                 ended September 29, 1991, is incorporated 
                                 herein by reference.

              10(d)              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.

              10(e)              The Black & Decker 1989 Stock Option Plan,  as
                                 amended, included in the Corporation's  
                                 Quarterly Report on Form 10-Q for the quarter
                                 ended September 29, 1991, is incorporated
                                 herein by reference.

              10(f)              The Black & Decker 1992 Stock Option Plan, 
                                 included in the Corporation's Registration
                                 Statement on Form S-8 (Reg.No.33-47652), filed 
                                 with the Commission on May 5, 1992, is
                                 incorporated herein by reference.

              10(g)              The Black & Decker  1995 Stock  Option Plan for
                                 Non-Employee   Directors,   included   in   the
                                 definitive  Proxy Statement for the 1995 Annual
                                 Meeting  of  Stockholders  of  the  Corporation
                                 dated March 9, 1995, is incorporated herein by
                                 reference.

              10(h)(1)           The Black & Decker Performance Equity Plan, as 
                                 amended, included in the Corporation's 
                                 Quarterly Report on Form 10-Q for the quarter
                                 ended March 29, 1992, is incorporated herein
                                 by reference.

              10(h)(2)           The Black & Decker  Performance Equity Plan, as
                                 amended subject to approval of the stockholders
                                 of the  Corporation  at the 1996 Annual Meeting
                                 of Stockholders.

              10(i)              Annual   Incentive   Plan,   included   in  the
                                 Corporation's  Annual  Report  on Form 10-K for
                                 the  year   ended   December   31,   1992,  is
                                 incorporated herein by reference.

              10(j)              The Black & Decker Executive Annual Incentive 
                                 Plan subject to the approval of the 
                                 stockholders of the Corporation at the 1996
                                 Annual Meeting of Stockholders.

              10(k)              Amended and Restated  Employment  Agreement, 
                                 dated as of November 1, 1995, by and
                                 between the Corporation and Nolan D. Archibald.

              10(l)              Letter  Agreement,  dated May 31, 1989,  by and
                                 between the  Corporation and Raymond A. DeVita,
                                 included in the Corporation's  Annual Report on
                                 Form 10-K for the year ended December 31, 1991,
                                 is incorporated herein by reference.

              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.

              10(n)              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.

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

              10(p)              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.

              10(q)              The Black & Decker Supplemental Executive 
                                 Retirement Plan, as amended.

              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.

              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.

              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.

              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.

              10(v)              Form of Amendment and Restatement of Severance 
                                 Benefits Agreement by and between the 
                                 Corporation and approximately 17 of its key 
                                 employees.

              10(w)              Amendment   and    Restatement   of   Severance
                                 Benefits Agreement, dated November 20, 1995, by
                                 and between the Corporation and Nolan D. 
                                 Archibald.

              10(x)              Amendment and Restatement of Severance Benefits
                                 Agreement, dated November 21, 1995, by and
                                 between the Corporation and Raymond A. DeVita.

              10(y)              Amendment and Restatement of Severance Benefits
                                 Agreement, dated November 14, 1995, by and 
                                 between the Corporation and Charles E. Fenton.

              10(z)              Amendment and Restatement of Severance Benefits
                                 Agreement,  dated  December  5,  1995,  by  and
                                 between the Corporation and Joseph Galli.

              10(aa)             Amendment and Restatement of Severance Benefits
                                 Agreement, dated November 18, 1995, by and 
                                 between the Corporation and Don R. Graber.

              10(bb)(1)          Agreement  and  Plan of  Merger  dated  as of 
                                 March 19, 1989, included in the Corporation's
                                 Schedule 14D-1 in respect of Emhart  
                                 Corporation filed on March 22, 1989, is 
                                 incorporated herein by reference.

              10(bb)(2)          Amendment Agreement dated as of April 26, 1989,
                                 included in the Corporation's Amendment  No. 5
                                 to Schedule 14D-1 in respect of Emhart  
                                 Corporation filed on April 28, 1989, is 
                                 incorporated herein by reference.

              10(cc)             Letter  Agreement  dated as of August 13, 1991,
                                 by and between the Corporation and Newell Co.,
                                 included in the Corporation's Quarterly Report
                                 on Form 10-Q for the quarter ended June 30, 
                                 1991, is incorporated herein by reference.

              10(dd)             Standstill Agreement dated as of September 24,
                                 1991, between the Corporation and Newell  Co., 
                                 included in the Corporation's Current Report 
                                 on Form 8-K dated September 25, 1991, is
                                 incorporated herein by reference.

              10(ee)             Distribution Agreement dated September 9, 1994,
                                 by and between The Black & Decker  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.

              10(ff)             Stock Purchase Agreement dated as of December 
                                 13, 1995, by and among The Black & Decker 
                                 Corporation, PRC Investments Inc., PRC Inc. and
                                 Litton Industries, Inc.

              11                 Computation of Earnings Per Share.

              12                 Computation of Ratios.

              21                 List of Subsidiaries.

              23                 Consent of Independent Auditors.

              24                 Powers of Attorney.

              27                 Financial Data Schedule.

              All other items are "not applicable" or "none".


(b)      Reports on Form 8-K
         The Corporation filed a Current Report on Form 8-K with the Commission 
         on December 21, 1995.  This Current Report on Form 8-K was filed  
         pursuant to Item 5 of Form 8-K and reported the Corporation's 
         definitive agreement to sell PRC Inc. to Litton Industries, Inc., for
         $425.0 million.

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

         (2)  The following  Unaudited  Pro Forma  Financial  Information 
              contemplated by Article 11 of Regulation S-X, reflecting the 
              Corporation's sales of the businesses comprising its discontinued
              information technology and services segment, is filed herewith:

                   Pro Forma Statement of Earnings (Unaudited) - for the year 
                   ended December 31, 1995

                   Pro Forma Balance Sheet (Unaudited) - as of December 31, 1995

              The Unaudited Pro Forma Financial Information set forth below is 
              being provided in this Annual Report on Form 10-K in lieu of the 
              filing of a separate Current Report on Form 8-K pursuant to Item
              2 thereof.

                  As indicated above in Item 1 of Part I of this Annual Report 
              on Form 10-K, during 1995 the Corporation sold PRC Realty Systems,
              Inc. and PRC Environmental Management, Inc. and entered into an 
              agreement to sell PRC Inc. for $425 million to Litton Industries,
              Inc.  On February 16, 1996, the Corporation completed the sale of 
              PRC Inc. to Litton Industries, Inc.  A copy of the Stock Purchase
              Agreement dated as of December 13, 1995, by and among the 
              Corporation, PRC Investments Inc., PRC Inc., and Litton 
              Industries, Inc. is being filed herewith as Exhibit 10(ff), and is
              incorporated herein by reference.


<TABLE>
           SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
                 THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
                              (Millions of Dollars)

<CAPTION>


                                    Balance          Additions                            Other
                                    At               Charged                              Changes         Balance
                                    Beginning        to Costs                             Add             At End
Description                         of Period        and Expenses       Deductions        (Deduct)        of Period
-----------                         ---------        ------------       ----------        --------        ---------

<S>                                 <C>              <C>                <C>               <C>             <C>
Year Ended December 31, 1995
Reserve for doubtful accounts
     and cash discounts              $38.2             $56.6            $52.9(A)           $1.2(B)         $43.1
                                     =====             =====            =====              ====            =====


Year Ended December 31, 1994
Reserve for doubtful accounts
     and cash discounts              $36.6             $41.8            $41.7(A)           $1.5(B)         $38.2
                                     =====             =====            =====              ====            =====


Year Ended December 31, 1993
Reserve for doubtful accounts
     and cash discounts              $46.7             $30.8            $39.2(A)          $(1.7)(B)        $36.6
                                     =====             =====            =====             ======           =====


 (A) Accounts written off during the year and cash discounts taken by customers.

 (B) Primarily includes currency translation adjustments.

</TABLE>


UNAUDITED PRO FORMA FINANCIAL INFORMATION
The Black & Decker Corporation and Subsidiaries


The  Corporation  completed  the sale of PRC Inc.  on  February  16,  1996.  The
Corporation  sold  Realty  Systems,  Inc.  (RSI)  on  March  31,  1995,  and PRC
Environmental Management,  Inc. (EMI) on September 15, 1995. Together, PRC Inc.,
RSI, and EMI comprised the Corporation's discontinued information technology and
services (PRC) segment.

     The following  unaudited Pro Forma  Consolidated  Statement of Earnings and
Pro Forma  Consolidated  Balance Sheet are based on the historical  Consolidated
Statement  of  Earnings  and  Consolidated  Balance  Sheet  of the  Corporation,
adjusted to reflect  the sales of PRC Inc.  and,  for  purposes of the Pro Forma
Consolidated Statement of Earnings, RSI and EMI.

     The  unaudited  Pro Forma  Consolidated  Statement of Earnings for the year
ended  December 31, 1995,  presents the  Corporation's  results from  continuing
operations prior to the extraordinary  loss on extinguishment of debt,  adjusted
to give effect to the sale of the  discontinued  PRC segment,  assuming that the
sales of PRC Inc.,  RSI, and EMI, and the  reduction of the  Corporation's  debt
with the proceeds therefrom, had taken place on January 1, 1995.

     The unaudited Pro Forma Consolidated Balance Sheet as of December 31, 1995,
presents the Corporation's  financial  position,  adjusted to give effect to the
sale of PRC Inc.,  assuming  that the sale of PRC Inc., and the reduction of the
Corporation's debt with the proceeds therefrom,  had taken place on December 31,
1995.  The proceeds  received from the sales of RSI and EMI, and the  associated
debt  reductions  therefrom,  are  reflected  in  the  Corporation's  historical
Consolidated Balance Sheet as of December 31, 1995.

     The pro forma adjustments are based upon available  information and certain
assumptions that management believes are reasonable under the circumstances. The
following   unaudited  pro  forma  financial   information  should  be  read  in
conjunction with the Corporation's  historical Consolidated Financial Statements
and notes  thereto,  included in Item 8 of Part II of this report.  In addition,
the  following  unaudited  pro  forma  financial  information  is  provided  for
informational  purposes  only,  and is not  necessarily  indicative  of what the
actual results from continuing operations of the Corporation would have been had
the sales of PRC Inc.,  RSI, and EMI and the associated  debt  reductions  taken
place  on  January  1,  1995,  or what  the  actual  financial  position  of the
Corporation  would have been had the sale of PRC Inc.  and the  associated  debt
reduction taken place on December 31, 1995.  Further,  the  unaudited  pro forma
financial  information  does not  purport  to  indicate  the  future  results of
operations or financial position of the Corporation.

<TABLE>

PRO FORMA  CONSOLIDATED  STATEMENT  OF EARNINGS  (Unaudited)  
FOR THE YEAR ENDED DECEMBER 31, 1995 
The Black & Decker  Corporation and  Subsidiaries  
(Dollars in Millions Except Per Share Data)
<CAPTION>

-------------------------------------------------------------------------------------------------------------------------------
                                                                                  Actual (a)       Adjustments     Pro Forma
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>                <C>             <C>
Revenues                                                                        $4,766.1        $     --        $    4,766.1
   Cost of goods sold                                                            3,016.7              --             3,016.7
   Marketing and administrative expenses                                         1,323.3              --             1,323.3
-------------------------------------------------------------------------------------------------------------------------------
Operating Income                                                                   426.1              --               426.1
   Interest expense (net of interest income of $8.6)                               184.4           (27.8) (b)          156.6
   Other expense                                                                    16.2              --                16.2
-------------------------------------------------------------------------------------------------------------------------------
Earnings From Continuing Operations Before Income Taxes                            225.5            27.8               253.3
   Income taxes                                                                      9.0             2.2 (c)            11.2
-------------------------------------------------------------------------------------------------------------------------------
Earnings From Continuing Operations                                               $216.5           $25.6              $242.1
===============================================================================================================================
Earnings from Continuing Operations Applicable to
Common Shares                                                                     $204.9           $25.6              $230.5
===============================================================================================================================
Earnings from Continuing Operations Per Common
and Common Equivalent Share:
-------------------------------------------------------------------------------------------------------------------------------
Primary:
   Earnings from continuing operations                                             $2.33                               $2.62
===============================================================================================================================
Shares Used in Computing Primary Earnings from Continuing
   Operations Per Share (in Millions)                                               87.9                                87.9
===============================================================================================================================
Fully Diluted:
   Earnings from continuing operations                                             $2.29                               $2.56
===============================================================================================================================
Shares Used in Computing Fully Diluted Earnings
   From Continuing Operations Per Share (in Millions)                               94.7                                94.7
===============================================================================================================================
</TABLE>

(a)  The actual  results  shown herein  reflect only those of the  Corporation's
     continuing  operations and exclude the extraordinary loss on extinguishment
     of debt that occurred during 1995. The operating  results of PRC Inc., RSI,
     and EMI  (collectively,  the  discontinued  PRC segment)  are  reflected in
     earnings  from  discontinued  operations  in the  Corporation's  historical
     Consolidated  Statement  of Earnings  included in Item 8 of Part II of this
     report. As a result, no adjustment to earnings from continuing operations
     is necessary to eliminate the operating results of the discontinued PRC 
     segment.

(b)  To reflect the reduction of interest expense due to the following:  (i) the
     Corporation's  assumed  repayment of $405.0 million of variable rate short-
     term  borrowings  with the  proceeds  from the sale of PRC  Inc.;  (ii) the
     Corporation's   assumed   repayment  of  $60.0  million  of  variable  rate
     short-term borrowings with the proceeds from the sale of RSI; and (iii) the
     Corporation's   assumed   repayment  of  $35.5  million  of  variable  rate
     short-term borrowings with the proceeds from the sale of EMI. In all cases,
     an  assumed  interest  rate of  6.25%  was  used,  which  approximates  the
     Corporation's  weighted average interest rate on its domestic variable rate
     short-term  borrowings  during 1995.  The effect on pro forma earnings from
     continuing operations of a 1/8% variance in the assumed interest rate would
     be approximately $.5 million.

(c)  To  reflect  the  income  tax  effect  of  adjustment   (b)  above  at  the
     Corporation's  marginal tax rate for the tax jurisdictions  affected.  That
     marginal tax rate differs  from the  statutory  tax rate as a result of the
     Corporation's   net  operating  loss   carryforwards.   The   Corporation's
     historical  income tax expense of $9.0 million for the year ended  December
     31, 1995, includes a $65.0 million tax benefit ($.74 per share on a primary
     basis and $.69 per share on a fully diluted  basis) due to the reduction of
     its deferred tax asset valuation  allowance,  a portion of which related to
     the anticipated  gain on the sale of PRC Inc. For purposes of the Pro Forma
     Statement  of  Earnings,  no pro forma  adjustment  was made to that  $65.0
     million tax benefit,  since any such  adjustment will not have a continuing
     impact on the Corporation.
<TABLE>

PRO FORMA CONSOLIDATED BALANCE SHEET (Unaudited)
DECEMBER 31, 1995
The Black & Decker Corporation and Subsidiaries
(Millions of Dollars)
<CAPTION>

--------------------------------------------------------------------------------------------------------------------------
                                                                       Actual           Adjustments           Pro Forma
--------------------------------------------------------------------------------------------------------------------------
<S>                                                                  <C>                 <C>                  <C>
Assets
Cash and cash equivalents                                            $  131.6              $425.0  (a)         
                                                                                           (405.0) (b)         $ 151.6
Trade receivables less allowances of $43.1                              651.3                  --                651.3
Inventories                                                             855.7                  --                855.7
Net assets of discontinued operations                                   302.4              (302.4) (c)              --
Other current assets                                                    165.6               (20.0) (d)           145.6
---------------------------------------------------------------------------------------------------------------------------
   Total Current Assets                                               2,106.6              (302.4)             1,804.2
---------------------------------------------------------------------------------------------------------------------------
Property, Plant & Equipment                                             866.8                  --                866.8
Goodwill                                                              2,142.0                  --              2,142.0
Other Assets                                                            429.9                  --                429.9
---------------------------------------------------------------------------------------------------------------------------
                                                                     $5,545.3             $(302.4)            $5,242.9
===========================================================================================================================
Liabilities and Stockholders' Equity
Short-term borrowings                                                $  599.2             $(405.0)(b)         $  194.2
Current maturities of long-term debt                                     48.0                --                   48.0
Trade accounts payable                                                  396.7                --                  396.7
Other accrued liabilities                                               743.0                17.6 (e)            760.6
---------------------------------------------------------------------------------------------------------------------------
   Total Current Liabilities                                          1,786.9              (387.4)             1,399.5
---------------------------------------------------------------------------------------------------------------------------
Long-Term Debt                                                        1,704.5                  --              1,704.5
Deferred Income Taxes                                                    52.8                  --                 52.8
Postretirement Benefits                                                 307.8                  --                307.8
Other Long-Term Liabilities                                             270.1                  --                270.1
Stockholders' Equity
Convertible preferred stock (outstanding: 150,000 shares)               150.0                  --                150.0
Common stock (outstanding: 86,447,588 shares)                            43.2                  --                 43.2
Capital in excess of par value                                        1,084.5                  --              1,084.5
Retained earnings                                                       202.6                85.0 (f)            287.6
Equity adjustment from translation                                      (57.1)                 --                (57.1)
---------------------------------------------------------------------------------------------------------------------------
Total Stockholders' Equity                                            1,423.2                85.0              1,508.2
---------------------------------------------------------------------------------------------------------------------------
                                                                     $5,545.3             $(302.4)            $5,242.9
===========================================================================================================================
</TABLE>

(a)  To reflect the Corporation's receipt of cash proceeds from the sale of PRC
     Inc.

(b)  To reflect  the  Corporation's  reduction  of  short-term  borrowings upon
     receipt of the cash proceeds from the sale of PRC Inc.

(c)  To eliminate the net assets of discontinued operations.

(d)  To reverse the Corporation's deferred tax asset related to the gain on the
     sale of PRC Inc.

(e)  To reflect the accrual of expenses related to the sale of PRC Inc.

(f)  To reflect an estimated  gain on the sale of PRC Inc., net of income taxes,
     in the amount of $85.0 million. The Corporation estimates that its net gain
     on the sale of PRC Inc. will be in the range of $80.0 to $90.0 million.



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 29, 1996             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 29, 1996, 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 29, 1996
----------------------                                        -----------------
Nolan D. Archibald             Chairman, President, and
                               Chief Executive Officer

Principal Financial Officer

/s/ THOMAS M. SCHOEWE                                         February 29, 1996
---------------------                                         -----------------
Thomas M. Schoewe              Vice President and
                               Chief Financial Officer

Principal Accounting Officer

/s/ STEPHEN F. REEVES                                         February 29, 1996
---------------------                                         -----------------
Stephen F. Reeves              Corporate Controller

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                 J. Dean Muncaster
                  Barbara L. Bowles                  Lawrence R. Pugh
                  Malcolm Candlish                   Mark H. Willes
                  Alonzo G. Decker, Jr.              M. Cabell Woodward, Jr.
                  Anthony Luiso



/s/ NOLAN D. ARCHIBALD                               Date:  February 29, 1996
----------------------
Nolan D. Archibald
Attorney-in-Fact