8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)   April 19, 2006



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

Maryland
(State or other jurisdiction
  of incorporation) 1-1553
(Commission File Number) 52-0248090
(IRS Employer
 Identification No.)

701 East Joppa Road, Towson, Maryland
(Address of principal executive offices)   21286
(Zip Code)

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

Not Applicable
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ]
[ ]
[ ]
[ ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act  (17 CFR 240.14d-2(b))
 Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act   (17 CFR 240.13e-4(c))

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ITEM 8.01 OTHER EVENTS.

As more fully described in Note 1 of Notes to Consolidated Financial Statements included in Item 8 of the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2005, the Corporation was required to adopt Statement of Financial Accounting Standards (SFAS) No. 123R, Share-Based Payment, effective January 1, 2006. SFAS No. 123R requires the Corporation to expense share-based payments, including employee stock options, based on their fair value. SFAS No. 123R permits public companies to adopt its requirements using one of two methods. As previously disclosed, the Corporation anticipated adopting SFAS No. 123R under the modified retrospective method. The modified retrospective method permits entities to restate all prior periods presented based on the amounts previously recognized under SFAS No. 123, Accounting for Stock-Based Compensation, for purposes of pro forma disclosures. As permitted by SFAS No. 123, the Corporation previously accounted for share-based payments to employees under Accounting Principles Board Option No. 25, Accounting for Stock Issued to Employees, using the intrinsic value method and, as such, generally recognized no compensation costs for employee stock options.

For informational purposes, the Corporation has included as Exhibit 99.1 to this Current Report on Form 8-K unaudited consolidated statements of earnings for each of the five years in the period ended December 31, 2005, and for each of the quarters in the year ended December 31, 2005, to reflect the adoption of SFAS No. 123R for share-based payments under the modified retrospective method.

As more fully described in Note 18 of Notes to Consolidated Financial Statements included in Item 8 of the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2005 (Note 18), the Corporation assesses the performance of its reportable business segments based upon a number of factors, including segment profit. For segment reporting purposes, elements of segment profit and certain other segment data are translated using budgeted rates of exchange. Budgeted rates of exchange are established annually and, once established, all prior period segment data is restated to reflect the translation of elements of segment profit and certain other segment data at the current year’s budgeted rates of exchange. Amounts included in the first table of Note 18 under the captions “Reportable Business Segments” and “Corporate, Adjustments, & Eliminations” are reflected at the Corporation’s budgeted rates of exchange for 2005. The amounts included in that table under the caption “Currency Translation Adjustments” represent the difference between consolidated amounts determined using the budgeted rates of exchange for 2005 and those determined based upon the rates of exchange applicable under accounting principles generally accepted in the United States.

The Corporation has established budgeted rates of exchange for 2006 and, accordingly, segment data for prior periods has been updated to reflect the translation of elements of segment profit and certain other segment data at the budgeted rates of exchange for 2006. Further, the Corporation’s measure of segment profit includes the allocation of share-based compensation. Accordingly, segment data for prior periods has been restated to reflect such allocation of share-

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based payments in connection with the Corporation’s adoption of SFAS No. 123R under the modified retrospective method.

For informational purposes, the Corporation has included as Exhibit 99.2 to this Current Report on Form 8-K selected unaudited supplemental information about its business segments for 2005, 2004, and 2003 updated to reflect both the translation of elements of segment profit and certain other segment data at the budgeted rates of exchange for 2006 and to reflect the allocation of share-based payments in connection with the Corporation’s adoption of SFAS No. 123R under the modified retrospective method.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

Exhibit 99.1 Unaudited statement of earnings for each of the five years in the period ended December 31, 2005, and for each of the quarters in the year ended December 31, 2005, to reflect the adoption of SFAS No. 123R for share-based payments under the modified retrospective method.

Exhibit 99.2 Selected unaudited supplemental information about the Corporation’s business segments for each of the three years in the period ended December 31, 2005, and for each of the quarters in the years ended December 31, 2005 and 2004.

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THE BLACK & DECKER CORPORATION

S I G N A T U R E S

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

THE BLACK & DECKER CORPORATION


By: /s/ CHRISTINA M. MCMULLEN                  
        Christina M. McMullen
        Vice President and Controller

Date: April 19, 2006

EX-99

Exhibit 99.1

THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(Unaudited)
(Dollars in Millions Except Per Share Amounts)

Year Ended December 31,	2005			2004			2003			2002			2001
SALES	$	6,523.	7	$	5,398.	4	$	4,482.	7	$	4,291.	8	$	4,139.	9
Cost of goods sold		4,206.	6		3,432.	9		2,887.	1		2,805.	6		2,776.	6
Selling, general, and administrative expenses		1,522.	2		1,352.	3		1,160.	9		1,100.	0		1,050.	1
Restructuring and exit costs		–			–			31.	6		46.	6		99.	7
OPERATING INCOME		794.	9		613.	2		403.	1		339.	6		213.	5
Interest expense (net of interest income of
$36.5 for 2005, $35.8 for 2004, $25.5 for
2003, $26.5 for 2002, and $34.7 for 2001)		45.	4		22.	1		35.	2		57.	8		84.	3
Other (income) expense		(51.	6)		2.	8		2.	6		4.	8		8.	2
EARNINGS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES		801.	1		588.	3		365.	3		277.	0		121.	0
Income taxes		268.	9		157.	6		94.	8		67.	0		35.	6
NET EARNINGS FROM CONTINUING OPERATIONS		532.	2		430.	7		270.	5		210.	0		85.	4
DISCONTINUED OPERATIONS (NET OF INCOME TAXES):
Earnings of discontinued operations (net of
income taxes of $.5 for 2005, $1.0 for 2004,
$3.5 for 2003, $.8 for 2002, and $3.0 for 2001)		–			2.	2		5.	8		1.	2		6.	5
(Loss) gain on sale of discontinued operations
(net of impairment charge of $24.4 in 2004)		(.	1)		12.	7		–			–			–
NET (LOSS) EARNINGS FROM DISCONTINUED OPERATIONS		(.	1)		14.	9		5.	8		1.	2		6.	5
NET EARNINGS	$	532.	1	$	445.	6	$	276.	3	$	211.	2	$	91.	9
BASIC EARNINGS PER COMMON SHARE
Continuing operations	$	6.7	2	$	5.4	0	$	3.4	7	$	2.6	2	$	1.0	6
Discontinued operations		–			.1	9		.0	8		.0	1		.0	8
NET EARNINGS PER COMMON SHARE - BASIC	$	6.7	2	$	5.5	9	$	3.5	5	$	2.6	3	$	1.1	4
Shares Used in Computing Basic Earnings Per
Share (in Millions)		79.	2		79.	8		77.	9		80.	4		80.	7
DILUTED EARNINGS PER COMMON SHARE
Continuing operations	$	6.5	4	$	5.3	1	$	3.4	7	$	2.6	1	$	1.0	5
Discontinued operations		–			.1	8		.0	8		.0	1		.0	8
NET EARNINGS PER COMMON SHARE - ASSUMING DILUTION	$	6.5	4	$	5.4	9	$	3.5	5	$	2.6	2	$	1.1	3
Shares Used in Computing Diluted Earnings Per
Share (in Millions)		81.	4		81.	1		77.	9		80.	5		81.	1

THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(Unaudited)
(Dollars in Millions Except Per Share Amounts)

	Three Months Ended
	April 3,   2005			July 3,   2005			October 2,   2005			December 31,   2005
SALES	$	1,519.	3	$	1,698.	8	$	1,575.	6	$	1,730.	0
Cost of goods sold		983.	8		1,099.	3		1,013.	5		1,110.	0
Selling, general, and administrative expenses		377.	2		382.	2		362.	4		400.	4
OPERATING INCOME		158.	3		217.	3		199.	7		219.	6
Interest expense (net of interest income)		9.	2		9.	8		12.	6		13.	8
Other (income) expense		(53.	5)		1.	3		(.	7)		1.	3
EARNINGS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES		202.	6		206.	2		187.	8		204.	5
Income taxes		58.	6		55.	3		50.	3		104.	7
NET EARNINGS FROM CONTINUING OPERATIONS		144.	0		150.	9		137.	5		99.	8
DISCONTINUED OPERATIONS (NET OF INCOME TAXES):
Earnings (loss) of discontinued operations		.	8		–			.	3		(1.	1)
Loss on sale of discontinued operations		–			–			–			(.	1)
NET EARNINGS (LOSS) FROM DISCONTINUED OPERATIONS		.	8		–			.	3		(1.	2)
NET EARNINGS	$	144.	8	$	150.	9	$	137.	8	$	98.	6
BASIC EARNINGS PER COMMON SHARE
Continuing operations	$	1.7	9	$	1.8	9	$	1.7	3	$	1.2	9
Discontinued operations		.0	1		–			.0	1		(.0	2)
NET EARNINGS PER COMMON SHARE - BASIC	$	1.8	0	$	1.8	9	$	1.7	4	$	1.2	7
Shares Used in Computing Basic Earnings Per
Share (in Millions)		80.	5		79.	8		79.	1		77.	4
DILUTED EARNINGS PER COMMON SHARE
Continuing operations	$	1.7	4	$	1.8	4	$	1.6	9	$	1.2	6
Discontinued operations		.0	1		–			.0	1		(.0	2)
NET EARNINGS PER COMMON SHARE - ASSUMING DILUTION	$	1.7	5	$	1.8	4	$	1.7	0	$	1.2	4
Shares Used in Computing Diluted Earnings Per
Share (in Millions)		82.	8		82.	1		81.	3		79.	5

EX-99

EXHIBIT 99.2

THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION ABOUT BUSINESS SEGMENTS (Unaudited)
(Millions of Dollars)

	Reportable Business Segments
Year Ended December 31, 2005	Power     Tools & Accessories			Hardware      & Home Improvement			Fastening  & Assembly     Systems			Total			Currency  Translation  Adjustments			Corporate,   Adjustments, & Eliminations			Consolidated
Sales to unaffiliated customers	$	4,821	.4	$	1,019	.8	$	662	.2	$	6,503	.4	$	20	.3	$	–		$	6,523	.7
Segment profit (loss) (for
Consolidated, operating income)		634	.9		143	.9		94	.6		873	.4		2	.7		(81	.2)		794	.9
Depreciation and amortization		102	.4		25	.6		18	.7		146	.7			.4		3	.5		150	.6
Capital expenditures		80	.7		12	.9		15	.7		109	.3		–			1	.8		111	.1
Year Ended December 31, 2004
Sales to unaffiliated customers	$	3,840	.8	$	970	.2	$	619	.9	$	5,430	.9	$	(32	.5)	$	–		$	5,398	.4
Segment profit (loss) (for
Consolidated, operating income)		488	.4		146	.3		84	.2		718	.9		(5	.0)		(100	.7)		613	.2
Depreciation and amortization		90	.1		27	.1		17	.5		134	.7		(1	.2)		9	.0		142	.5
Capital expenditures		78	.8		25	.9		14	.0		118	.7		(1	.9)		1	.0		117	.8
Year Ended December 31, 2003
Sales to unaffiliated customers	$	3,363	.6	$	722	.2	$	560	.0	$	4,645	.8	$	(163	.1)	$	–		$	4,482	.7
Segment profit (loss)(for
Consolidated, operating
income before restructuring
and exit costs)		366	.0		92	.3		81	.6		539	.9		(13	.7)		(91	.5)		434	.7
Depreciation and amortization		86	.2		24	.4		16	.3		126	.9		(4	.2)		10	.7		133	.4
Capital expenditures		74	.7		17	.1		14	.7		106	.5		(4	.8)			.8		102	.5

        The reconciliation of segment profit to the Corporation’s earnings from continuing operations before income taxes for each of the three years in the period ended December 31, 2005, in millions of dollars, is as follows:

	Year Ended December 31,
	2005			2004			2003
Segment profit for total reportable business segments	$	873	.4	$	718	.9	$	539	.9
Items excluded from segment profit:
Adjustment of budgeted foreign exchange rates to
actual rates		2	.7		(5	.0)		(13	.7)
Depreciation of Corporate property		(1	.0)		(1	.2)		(1	.1)
Adjustment to businesses' postretirement benefit
expenses booked in consolidation		(13	.8)			.8		15	.4
Other adjustments booked in consolidation directly
related to reportable business segments		3	.3		(10	.0)		(15	.0)
Amounts allocated to businesses in arriving at segment
profit in excess of (less than) Corporate center operating
expenses, eliminations, and other amounts identified above		(69	.7)		(90	.3)		(90	.8)
Operating income before restructuring and exit costs		794	.9		613	.2		434	.7
Restructuring and exit costs		–			–			31	.6
Operating income		794	.9		613	.2		403	.1
Interest expense, net of interest income		45	.4		22	.1		35	.2
Other (income) expense		(51	.6)		2	.8		2	.6
Earnings from continuing operations before income taxes	$	801	.1	$	588	.3	$	365	.3

	Reportable Business Segments
Quarter Ended April 3, 2005	Power     Tools & Accessories			Hardware      & Home Improvement			Fastening  & Assembly     Systems			Total			Currency  Translation  Adjustments			Corporate,   Adjustments, & Eliminations			Consolidated
Sales to unaffiliated customers	$	1,090	.3	$	242	.3	$	166	.7	$	1,499	.3	$	20	.0	$	–		$	1,519	.3
Segment profit (loss) (for
Consolidated, operating income)		131	.5		29	.5		24	.0		185	.0		2	.8		(29	.5)		158	.3
Depreciation and amortization		25	.5		6	.3		4	.6		36	.4			.5		1	.8		38	.7
Capital expenditures		18	.3		5	.4		2	.5		26	.2			.2			.2		26	.6
Quarter Ended July 3, 2005
Sales to unaffiliated customers	$	1,241	.4	$	277	.4	$	167	.8	$	1,686	.6	$	12	.2	$	–		$	1,698	.8
Segment profit (loss) (for
Consolidated, operating income)		176	.4		39	.1		22	.3		237	.8		1	.6		(22	.1)		217	.3
Depreciation and amortization		26	.5		5	.9		4	.7		37	.1			.3			.3		37	.7
Capital expenditures		21	.5		3	.2		3	.3		28	.0			.1			.1		28	.2
Quarter Ended October 2, 2005
Sales to unaffiliated customers	$	1,167	.6	$	253	.1	$	160	.3	$	1,581	.0	$	(5	.4)	$	–		$	1,575	.6
Segment profit (loss) (for
Consolidated, operating income)		154	.7		42	.3		20	.7		217	.7		(	.7)		(17	.3)		199	.7
Depreciation and amortization		26	.3		5	.7		4	.7		36	.7		(	.2)			.2		36	.7
Capital expenditures		18	.8		3	.6		3	.6		26	.0		(	.1)			.4		26	.3
Quarter Ended December 31, 2005
Sales to unaffiliated customers	$	1,322	.1	$	247	.0	$	167	.4	$	1,736	.5	$	(6	.5)	$	–		$	1,730	.0
Segment profit (loss) (for
Consolidated, operating income)		172	.3		33	.0		27	.6		232	.9		(1	.0)		(12	.3)		219	.6
Depreciation and amortization		24	.1		7	.7		4	.7		36	.5		(	.2)		1	.2		37	.5
Capital expenditures		22	.1			.7		6	.3		29	.1		(	.2)		1	.1		30	.0
Quarter Ended March 28, 2004
Sales to unaffiliated customers	$	726	.2	$	222	.7	$	146	.3	$	1,095	.2	$	(2	.3)	$	–		$	1,092	.9
Segment profit (loss) (for
Consolidated, operating income)		75	.0		31	.8		19	.5		126	.3		(	.1)		(23	.8)		102	.4
Depreciation and amortization		20	.4		7	.6		4	.4		32	.4		(	.1)		2	.8		35	.1
Capital expenditures		15	.4		2	.9		2	.3		20	.6		(	.1)		(	.1)		20	.4
Quarter Ended June 27, 2004
Sales to unaffiliated customers	$	919	.5	$	238	.5	$	160	.9	$	1,318	.9	$	(21	.3)	$	–		$	1,297	.6
Segment profit (loss) (for
Consolidated, operating income)		127	.7		41	.6		23	.2		192	.5		(3	.3)		(22	.4)		166	.8
Depreciation and amortization		20	.3		7	.6		4	.4		32	.3		(	.4)		2	.2		34	.1
Capital expenditures		17	.4		5	.4		2	.5		25	.3		(	.7)			.7		25	.3
Quarter Ended September 26, 2004
Sales to unaffiliated customers	$	895	.6	$	251	.0	$	150	.4	$	1,297	.0	$	(14	.5)	$	–		$	1,282	.5
Segment profit (loss) (for
Consolidated, operating income)		123	.7		38	.4		18	.4		180	.5		(2	.4)		(23	.7)		154	.4
Depreciation and amortization		21	.4		6	.1		4	.4		31	.9		(	.3)		2	.2		33	.8
Capital expenditures		15	.7		8	.9		3	.9		28	.5		(	.3)			.1		28	.3
Quarter Ended December 31, 2004
Sales to unaffiliated customers	$	1,299	.5	$	258	.0	$	162	.3	$	1,719	.8	$	5	.6	$	–		$	1,725	.4
Segment profit (loss) (for
Consolidated, operating income)		162	.0		34	.5		23	.1		219	.6			.8		(30	.8)		189	.6
Depreciation and amortization		28	.0		5	.8		4	.3		38	.1		(	.4)		1	.8		39	.5
Capital expenditures		30	.3		8	.7		5	.3		44	.3		(	.8)			.3		43	.8

        The reconciliation of segment profit to the Corporation’s earnings from continuing operations before income taxes for each of the quarters in the years ended December 31, 2005 and 2004, in millions of dollars, is as follows:

	Quarter Ended
	April 3, 2005			July 3,     2005			October 2, 2005			December 31,         2005
Segment profit for total reportable business segments	$	185	.0	$	237	.8	$	217	.7	$	232	.9
Items excluded from segment profit:
Adjustment of budgeted foreign exchange rates to
actual rates		2	.8		1	.6		(	.7)		(1	.0)
Depreciation of Corporate property		(	.2)		(	.2)		(	.3)		(	.3)
Adjustment to businesses' postretirement benefit
expenses booked in consolidation		(3	.9)		(3	.8)		(3	.4)		(2	.7)
Other adjustments booked in consolidation directly
related to reportable business segments		(	.8)		(	.8)		6	.1		(1	.2)
Amounts allocated to businesses in arriving at segment
profit in excess of (less than) Corporate center operating
expenses, eliminations, and other amounts identified above		(24	.6)		(17	.3)		(19	.7)		(8	.1)
Operating income		158	.3		217	.3		199	.7		219	.6
Interest expense, net of interest income		9	.2		9	.8		12	.6		13	.8
Other (income) expense		(53	.5)		1	.3		(	.7)		1	.3
Earnings from continuing operations before income taxes	$	202	.6	$	206	.2	$	187	.8	$	204	.5

	Quarter Ended
	March 28, 2004			June 27,     2004			September 26, 2004			December 31,         2004
Segment profit for total reportable business segments	$	126	.3	$	192	.5	$	180	.5	$	219	.6
Items excluded from segment profit:
Adjustment of budgeted foreign exchange rates to
actual rates		(	.1)		(3	.3)		(2	.4)			.8
Depreciation of Corporate property		(	.4)		(	.3)		(	.3)		(	.2)
Adjustment to businesses' postretirement benefit
expenses booked in consolidation			.1			.2			.1			.4
Other adjustments booked in consolidation directly
related to reportable business segments		(2	.1)		(3	.4)		(3	.1)		(1	.4)
Amounts allocated to businesses in arriving at segment
profit in excess of (less than) Corporate center operating
expenses, eliminations, and other amounts identified above		(21	.4)		(18	.9)		(20	.4)		(29	.6)
Operating income		102	.4		166	.8		154	.4		189	.6
Interest expense, net of interest income		5	.2		4	.5		4	.1		8	.3
Other expense			.8			.2		1	.4			.4
Earnings from continuing operations before income taxes	$	96	.4	$	162	.1	$	148	.9	$	180	.9

BASIS OF PRESENTATION:

The Corporation operates in three reportable business segments: Power Tools and Accessories, Hardware and Home Improvement, and Fastening and Assembly Systems. The Power Tools and Accessories segment has worldwide responsibility for the manufacture and sale of consumer and professional power tools and accessories, electric cleaning and lighting products, and lawn and garden tools, as well as for product service. In addition, the Power Tools and Accessories segment has responsibility for the sale of security hardware to customers in Mexico, Central America, the Caribbean, and South America; for the sale of plumbing products to customers outside the United States and Canada; and for sales of household products. On October 2, 2004, the Corporation acquired the Porter-Cable and Delta Tools Group from Pentair, Inc. This acquired business is included in the Power Tools and Accessories segment. The Hardware and Home Improvement segment has worldwide responsibility for the manufacture and sale of security hardware (except for the sale of security hardware in Mexico, Central America, the Caribbean, and South America). On September 30, 2003, the Corporation acquired Baldwin Hardware Corporation and Weiser Lock Corporation. These acquired businesses are included in the Hardware and Home Improvement segment. The Hardware and Home Improvement segment also has responsibility for the manufacture of plumbing products and for the sale of plumbing products to customers in the United States and Canada. The Fastening and Assembly Systems segment has worldwide responsibility for the manufacture and sale of fastening and assembly systems.

        In November 2005, the Corporation sold its DOM security hardware business. In January 2004, the Corporation sold two components of its European security hardware business. These divested businesses are treated as discontinued operations in the Corporation’s consolidated financial statements. Sales, segment profit, depreciation and amortization, and capital expenditures set forth in the preceding tables exclude the results of the discontinued operations.

        The profitability measure employed by the Corporation and its chief operating decision maker for making decisions about allocating resources to segments and assessing segment performance is segment profit (for the Corporation on a consolidated basis, operating income). In general, segments follow the same accounting policies as those described in Note 1 of Notes to Consolidated Financial Statements included in Item 8 of the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2005, except with respect to foreign currency translation and except as further indicated below. The financial statements of a segment’s operating units located outside of the United States, except those units operating in highly inflationary economies, are generally measured using the local currency as the functional currency. For these units located outside of the United States, segment assets and elements of segment profit are translated using budgeted rates of exchange. Budgeted rates of exchange are established annually and, once established, all prior period segment data is restated to reflect the current year’s budgeted rates of exchange. The amounts included in the preceding table under the captions “Reportable Business Segments” and “Corporate, Adjustments, & Eliminations” are reflected at the Corporation’s budgeted rates of exchange for 2006. The amounts included in the preceding table under the caption “Currency Translation Adjustments” represent the difference between consolidated amounts determined using those budgeted rates of exchange and those determined based upon the rates of exchange applicable under accounting principles generally accepted in the United States.

        Segment profit includes the allocation of share-based compensation. Share-based compensation expense is allocated to each reportable segment based upon budgeted amounts. The amounts included in the preceding tables also reflect such allocation of share-based compensation in connection with the Corpration’s adoption of SFAS No. 123R under the modified retrospective method.

        Segment profit excludes interest income and expense, non-operating income and expense, adjustments to eliminate intercompany profit in inventory, and income tax expense. In addition, segment profit excludes restructuring and exit costs. In determining segment profit, expenses relating to pension and other postretirement benefits are based solely upon estimated service costs. Corporate expenses, as well as certain centrally managed expenses, are allocated to each reportable segment based upon budgeted amounts. While sales and transfers between segments are accounted for at cost plus a reasonable profit, the effects of intersegment sales are excluded from the computation of segment profit. Intercompany profit in inventory is excluded from segment assets and is recognized as a reduction of cost of goods sold by the selling segment when the related inventory is sold to an unaffiliated customer. Because the Corporation compensates the management of its various businesses on, among other factors, segment profit, the Corporation may elect to record certain segment-related expense items of an unusual or non-recurring nature in consolidation rather than reflect such items in segment profit. In addition, certain segment-related items of income or expense may be recorded in consolidation in one period and transferred to the various segments in a later period.