Contact: Barbara B. Lucas
Senior Vice President - Public Affairs
410/716-2980
Mark M. Rothleitner
Vice President - Investor Relations
and Treasurer
410/716-3979
FOR IMMEDIATE RELEASE: Thursday, January 25, 2001
SUBJECT: Black & Decker Reports Recurring Earnings Per Share of $0.98 for Fourth
Quarter 2000 and $3.51 for Full Year
TOWSON, MD - The Black & Decker Corporation (NYSE:BDK) today announced that net
earnings for the fourth quarter of 2000 were $52.5 million, or $0.64 per diluted
share, on sales of $1.26 billion. Excluding a $39.1 million non-recurring
restructuring charge ($27.6 million after tax or $0.34 per diluted share), net
earnings were $80.1 million or $0.98 per diluted share. For the fourth quarter
of 1999, net earnings were $115.1 million, or $1.31 per diluted share, on sales
of $1.35 billion.
The decline in sales during the fourth quarter, particularly in North
American Power Tools and Accessories, reflects the substantial slowdown in the
U.S. economy and inventory reduction actions by key retailers. This reduction in
sales, coupled with lower margins in European Power Tools and U.S. Accessories,
resulted in decreased recurring earnings per share.
The majority of the restructuring charge recorded in the quarter
relates to the realignment of manufacturing operations in European Power Tools
and North American Hardware and Home Improvement. The charge also includes costs
associated with reducing overhead expense in Europe and integrating power tools
and accessories operations into brand-based strategic business units for
DEWALT(R) professional products and Black & Decker(R) consumer products. The
restructuring is expected to result in the elimination of approximately 400
positions in Europe and the United States and is expected to generate
approximately $20 million in savings in 2002. Approximately $25 million of the
restructuring charge will be cash, and the remainder will be primarily the
write-down of assets.
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Page Two
For the full-year 2000, the Corporation reported net earnings of $282.0
million or $3.34 per diluted share. Excluding non-recurring items, net earnings
were $296.5 million or $3.51 per diluted share, an $0.11 increase over the $3.40
reported in 1999. The improvement in recurring earnings per share reflects
strong sales growth during the first three quarters of the year, increased cost
savings from Six Sigma programs, the repurchase of approximately 7.5 million
shares during the year, and a lower effective tax rate.
Sales for the full year were $4.56 billion, up 1% from $4.52 billion in
1999. Excluding the effects of foreign currency translation, sales increased 4%
for the year.
The Corporation will hold a conference call today at 10:00 a.m. EST to
discuss its fourth-quarter and full-year results and 2001 outlook. Investors can
listen to the call by visiting www.bdk.com, the Corporation's Internet home
page, and clicking on the icon labeled "Live Webcast." It is recommended that
listeners log-in at least ten minutes prior to the beginning of the call to
assure timely access. A webcast replay of the conference call will be available
on the Corporation's home page through the close of business on February 8,
2001.
Commenting on the results, Nolan D. Archibald, Chairman and Chief
Executive Officer, said, "Black & Decker became a stronger, more balanced
company in 2000. Our powerful brand names, new product innovation, end-user
focus, and unparalleled distribution contributed to record results in the first
nine months and respectable performance for the year despite a dramatic
deceleration in the U.S. economy during the fourth quarter. Weak economic
conditions and currency issues in Europe throughout the year added to the
challenges we faced. Our ability to increase sales under such difficult
conditions shows that Black & Decker is in a stronger competitive position than
ever before.
"We continued to strengthen our market share positions in several
businesses during the year, drive costs down through Six Sigma programs, and
invest in new products both internally and through strategic acquisitions.
Nevertheless, we are taking immediate action to more closely align our business
structure to the weaker economic environment in which we are operating. During
the fourth quarter, for example, we ordered a temporary shutdown of three power
tool plants around the world. Currently, we are in the process of reducing costs
and headcount in our Power Tools and Accessories Group by shifting production
from our power tool plant in the United Kingdom to lower-cost facilities and
integrating Accessories into our existing DEWALT and Black & Decker strategic
business units. We also are rationalizing Hardware and Home Improvement
manufacturing capacity. All of these changes are designed to reduce costs,
leverage resources, and increase productivity.
(more)
Page Three
"Power Tools and Accessories experienced a 3% decline in sales for the
fourth quarter. Excellent performance in the first three quarters of the year,
however, allowed this segment to finish the year with a 5% sales gain. Strong
sales of core products, such as the 14.4-volt cordless FireStorm(R) and
18.0-volt DEWALT drills, along with the new cordless FireStorm 3-in-1
multi-tool, contributed to this improvement. Due primarily to the dramatic
economic slowdown, operating income in Power Tools and Accessories was down
significantly for the quarter and was down 2% for the full year. Operating
margins in Europe were negatively affected by the weak Euro, price competition
in consumer power tools, and incremental costs associated with the new central
distribution center, and in North America by pricing actions taken by our U.S.
Accessories business in anticipation of higher fourth-quarter sales that did not
materialize. Despite the difficulties we faced in the fourth quarter, our
competitive position - particularly in both the professional and the consumer
power tool markets in North America - remains very strong.
"To expand our presence on construction and other job sites, we
acquired Emglo Products, L.P. in mid-December. Emglo is the air compressor brand
of choice for professional contractors in the U.S., and the acquisition marks
our entry into a new product category. Due to the timing of the acquisition,
Emglo, which has annual sales of nearly $38 million, had no meaningful impact on
our 2000 results.
"Sales in the Hardware and Home Improvement segment increased 2% and
operating profit increased 7% for the fourth quarter. Strong sales from new
products, including Price Pfister's Contempra(TM) faucets and the Society Brass
Collection(R) of designer security hardware from Kwikset, helped to promote
growth despite the weak economic environment. For the full year, sales increased
1% and operating profit declined 4%, as excellent improvement in sales and
operating profit at Price Pfister helped to offset lower sales and earnings at
Kwikset related to the de-listing of TITAN(R) locksets by a major retailer early
in the year.
"Sales in Fastening and Assembly Systems were flat for the quarter.
While sales slowed in the U.S. automotive and industrial sectors during the
period, foreign automotive and industrial sectors remained firm. For the full
year, sales increased 4%, reflecting growth outside of the United States in the
automotive sector and in the worldwide industrial sector. Operating profit
declined 8% for the quarter, but rose 4% for the full year.
(more)
Page Four
"Free cash flow for 2000 was lower than anticipated at $155 million, as
year-end inventory was approximately $44 million higher than planned.
Approximately half of the increase was due to the strengthening of the Euro and
the acquisition of Emglo in December, and the remainder to lower-than-expected
sales.
"We purchased an additional 2.3 million shares of our stock during the
quarter, leaving approximately 3.0 million shares remaining under our existing
repurchase authorization.
"Because of the weak economy, we anticipate that sales for the first
quarter of 2001 will be flat or down modestly from the prior-year level, and
diluted earnings per share will be in the $0.40 to $0.45 range. Based on the
expectation of flat to modest sales growth in the second quarter, we are
projecting that diluted earnings per share in the quarter will be flat or will
decline at a mid-single-digit rate. Assuming that the U.S. economy begins to
improve in the second half of 2001 and anticipating substantial sales from new
products during that period, we look forward to sales and earnings growth,
particularly in the fourth quarter. As a result, we expect higher sales for the
full year and an increase in diluted earnings per share in line with the current
consensus estimate. We also expect to convert 70%-80% of net earnings to free
cash flow in 2001.
"With excellent brands, strong customer relationships, and expectations
for the biggest new-product year in DEWALT's history, we are well-positioned to
succeed in the marketplace during this challenging period. We also are taking
decisive action to cut costs and increase our focus on cash while continuing to
invest strategically in growth. We expect to continue to outperform our
competition as we move through a difficult economic period and emerge even
stronger than we are today."
This release includes forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. By their nature, all forward-looking statements involve
risks and uncertainties. For a more detailed discussion of the risks and
uncertainties that may affect Black & Decker's operating and financial results
and its ability to achieve the financial objectives discussed in this press
release, interested parties should review Black & Decker's reports filed with
the Securities and Exchange Commission, including the Current Report on Form
8-K, filed January 25, 2001.
Black & Decker is a leading global manufacturer and marketer of power
tools and accessories, hardware and home improvement products, and
technology-based fastening systems.
* * *
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(Dollars in Millions Except Per Share Amounts)
Three Months Ended
------------------------------
December 31, December 31,
2000 1999
------------- -------------
SALES $ 1,263.6 $ 1,347.2
Cost of goods sold 807.4 841.0
Selling, general, and
administrative expenses 316.2 313.1
Restructuring and exit costs 39.1 -
------------- -------------
OPERATING INCOME 100.9 193.1
Interest expense
(net of interest income) 28.5 24.9
Other income 2.9 0.8
------------- -------------
EARNINGS BEFORE INCOME TAXES 75.3 169.0
Income taxes 22.8 53.9
------------- -------------
NET EARNINGS $ 52.5 $ 115.1
============= =============
NET EARNINGS PER COMMON SHARE
- BASIC $ 0.65 $ 1.32
============= =============
Shares Used in Computing Basic
Earnings Per Share (in Millions) 80.7 86.9
============= =============
NET EARNINGS PER COMMON SHARE
- ASSUMING DILUTION $ 0.64 $ 1.31
============= =============
Shares Used in Computing Diluted
Earnings Per Share (in Millions) 81.5 88.1
============= =============
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(Dollars in Millions Except Per Share Amounts)
Year Ended
------------------------------
December 31, December 31,
2000 1999
------------- -------------
SALES $ 4,560.8 $ 4,520.5
Cost of goods sold 2,889.0 2,834.4
Selling, general, and
administrative expenses 1,149.5 1,149.8
Restructuring and exit costs 39.1 -
Gain on sale of business 20.1 -
------------- -------------
OPERATING INCOME 503.3 536.3
Interest expense
(net of interest income) 104.2 95.8
Other income 5.5 0.8
------------- -------------
EARNINGS BEFORE INCOME TAXES 404.6 441.3
Income taxes 122.6 141.0
------------- -------------
NET EARNINGS $ 282.0 $ 300.3
============= =============
NET EARNINGS PER COMMON SHARE
- BASIC $ 3.37 $ 3.45
============= =============
Shares Used in Computing Basic
Earnings Per Share (in Millions) 83.7 87.0
============= =============
NET EARNINGS PER COMMON SHARE
- ASSUMING DILUTION $ 3.34 $ 3.40
============= =============
Shares Used in Computing Diluted
Earnings Per Share (in Millions) 84.4 88.4
============= =============
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Millions of Dollars)
December 31, December 31,
2000 1999
------------- -------------
ASSETS
Cash and cash equivalents $ 135.0 $ 147.3
Trade receivables 783.1 823.2
Inventories 844.0 751.0
Other current assets 199.9 189.9
------------- -------------
TOTAL CURRENT ASSETS 1,962.0 1,911.4
------------- -------------
PROPERTY, PLANT, AND EQUIPMENT 748.1 739.6
GOODWILL 717.2 743.4
OTHER ASSETS 662.4 618.3
------------- -------------
$ 4,089.7 $ 4,012.7
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term borrowings $ 402.9 $ 183.2
Current maturities of long-term debt 47.7 213.2
Trade accounts payable 367.6 367.3
Other accrued liabilities 814.1 809.0
------------- -------------
TOTAL CURRENT LIABILITIES 1,632.3 1,572.7
------------- -------------
LONG-TERM DEBT 798.5 847.1
DEFERRED INCOME TAXES 221.0 243.8
POSTRETIREMENT BENEFITS 240.6 246.3
OTHER LONG-TERM LIABILITIES 479.8 301.7
COMMON STOCK UNDER EQUITY FORWARDS 25.1 -
STOCKHOLDERS' EQUITY 692.4 801.1
------------- -------------
$ 4,089.7 $ 4,012.7
============= =============
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION ABOUT BUSINESS SEGMENTS (Unaudited)
(Millions of Dollars)
Reportable Business Segments
----------------------------------------------------
Power Hardware Fastening Currency Corporate,
Three Months Ended Tools & & Home & Assembly Translation Adjustments,
December 31, 2000 Accessories Improvement Systems Total Adjustments & Eliminations Consolidated
- ---------------------------------------------------------------------------------------------------------------------------
Sales to unaffiliated
customers $ 967.3 $225.1 $123.5 $1,315.9 $ (52.3) $ - $1,263.6
Segment profit (loss)
(for Consolidated,
operating income
before restructuring
and exit costs) 99.2 37.1 18.9 155.2 (2.4) (12.8) 140.0
Depreciation and
amortization 22.1 8.2 4.2 34.5 (1.0) 6.6 40.1
Capital expenditures 35.1 8.8 8.3 52.2 (1.9) .2 50.5
Three Months Ended
December 31, 1999
- ---------------------------------------------------------------------------------------------------------------------------
Sales to unaffiliated
customers $ 998.3 $219.7 $123.5 $1,341.5 $ 5.7 $ - $1,347.2
Segment profit (loss)
(for Consolidated,
operating income) 151.3 34.6 20.5 206.4 1.0 (14.3) 193.1
Depreciation and
amortization 25.9 5.5 3.7 35.1 .4 6.8 42.3
Capital expenditures 36.5 12.2 10.6 59.3 .3 .1 59.7
Twelve Months Ended
December 31, 2000
- ---------------------------------------------------------------------------------------------------------------------------
Sales to unaffiliated
customers $3,292.9 $863.2 $518.0 $4,674.1 $(113.3) $ - $4,560.8
Segment profit (loss)
(for Consolidated,
operating income
before gain on sale
of business and
restructuring and
exit costs) 361.7 115.5 86.0 563.2 (6.8) (34.1) 522.3
Depreciation and
amortization 87.8 35.0 16.6 139.4 (2.5) 26.5 163.4
Capital expenditures 143.7 31.6 27.4 202.7 (3.3) .8 200.2
Twelve Months Ended
December 31, 1999
- ---------------------------------------------------------------------------------------------------------------------------
Sales to unaffiliated
customers $3,135.4 $857.7 $496.2 $4,489.3 $ 31.2 $ - $4,520.5
Segment profit (loss)
(for Consolidated,
operating income) 369.8 120.7 82.7 573.2 2.9 (39.8) 536.3
Depreciation and
amortization 85.4 30.6 15.3 131.3 1.0 27.7 160.0
Capital expenditures 106.0 37.3 26.6 169.9 .9 .3 171.1
The reconciliation of segment profit to the Corporation's earnings before
income taxes for each period, in millions of dollars, is as follows:
Three Months Ended Year Ended
- ------------------------------------------------------------------------------------------------------------
December 31, December 31, December 31, December 31,
2000 1999 2000 1999
- ------------------------------------------------------------------------------------------------------------
Segment profit for total reportable
business segments $155.2 $206.4 $563.2 $573.2
Items excluded from segment profit:
Adjustment of budgeted foreign
exchange rates to actual rates (2.4) 1.0 (6.8) 2.9
Depreciation of Corporate property
and amortization of goodwill (6.6) (6.8) (26.5) (27.7)
Adjustment to businesses'
postretirement benefit expenses
booked in consolidation 9.2 3.0 36.4 24.8
Adjustment to eliminate net interest
and non-operating expenses from
results of certain operations in
Brazil, Mexico, Venezuela, and Turkey .1 - .4 1.2
Other adjustments booked in consolidation
directly related to reportable business
segments .3 (2.4) (14.4) (12.4)
Amounts allocated to businesses in arriving
at segment profit in excess of (less
than) Corporate center operating expenses,
eliminations, and other amounts
identified above (15.8) (8.1) (30.0) (25.7)
- ------------------------------------------------------------------------------------------------------------
Operating income before gain on sale of
business and restructuring and exit costs 140.0 193.1 522.3 536.3
Gain on sale of business - - 20.1 -
Restructuring and exit costs 39.1 - 39.1 -
- ------------------------------------------------------------------------------------------------------------
Operating income 100.9 193.1 503.3 536.3
Interest expense, net of interest income 28.5 24.9 104.2 95.8
Other income 2.9 .8 5.5 .8
- ------------------------------------------------------------------------------------------------------------
Earnings before income taxes $ 75.3 $169.0 $404.6 $441.3
============================================================================================================
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 electric lawn and
garden tools, as well as for product service. In addition, the Power Tools and
Accessories segment has responsibility for the sale of 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 the retained portion of the household products business. The
Hardware and Home Improvement segment has worldwide responsibility for the
manufacture and sale of security hardware (except for the sale of security
hardware in Mexico, Central America, the Caribbean, and South America). It also
has responsibility for the manufacture of plumbing products and for the sale of
plumbing products to customers in the United States and Canada. The Fastening
and Assembly Systems segment has worldwide responsibility for the manufacture
and sale of fastening and assembly systems.
The Corporation assesses the performance of its reportable business
segments based upon a number of factors, including segment profit. In general,
segments follow the same accounting policies as those described in Note 1 of the
Corporation's Annual Report on Form 10-K for the year ended December 31, 1999,
except with respect to foreign currency translation and except as further
indicated below. The financial statements of a segment's operating units located
outside the United States, except units operating in highly inflationary
economies, are generally measured using the local currency as the functional
currency. For these units located outside 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 updated to reflect the translation of segment
assets and elements of segment profit at the current year's budgeted rates of
exchange. The amounts included in the preceding segment table under the captions
"Reportable Business Segments," and "Corporate, Adjustments, & Eliminations" are
reflected at the Corporation's budgeted rates of exchange for 2000. The amounts
included in the preceding segment table under the caption "Currency Translation
Adjustments" represent the difference between consolidated amounts determined
using the budgeted rates of exchange for 2000 and those determined based upon
the rates of exchange applicable under accounting principles generally accepted
in the United States.
Segment profit excludes interest income and expense, non-operating income
and expense, goodwill amortization, adjustments to eliminate intercompany profit
in inventory, and income tax expense. In addition, segment profit excludes the
gain on sale of business and restructuring and exit costs. For certain
operations located in Brazil, Mexico, Venezuela, and Turkey, segment profit is
reduced by net interest expense and non-operating expenses. In determining
segment profit, expenses relating to pension and other postretirement benefits
are based solely upon estimated service costs. Corporate expenses are allocated
to each 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 sales by the selling segment when the
related inventory is sold to an unaffiliated customer. Because the Corporation
compensates the management of its various businesses on, among other factors,
segment profit, the Corporation may elect to record certain segment-related
expense items of an unusual or nonrecurring 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 Corporation's various segments in a later period.