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: April 24, 2001
Subject:Black & Decker Reports $.40 Earnings Per Share for First Quarter of 2001
Towson, MD - The Black & Decker Corporation (NYSE: BDK) today announced that net
earnings for the first quarter of 2001 were $33.1 million, or $.40 per diluted
share, compared to recurring net earnings of $47.1 million, or $.54 per diluted
share, for the first quarter last year. Reported net earnings of $60.2 million
or $.69 per diluted share for the first quarter of 2000 included a pre-tax gain
of $20.1 million related to the recapitalization of True Temper Sports, which
was sold in 1998.
Sales for the first quarter of 2001 were $979.0 million, compared to
$1.04 billion for the same period last year. Excluding the effects of foreign
currency translation, sales declined 3%, reflecting the continued economic
slowdown in the United States and Europe.
Commenting on the results, Nolan D. Archibald, Chairman and Chief
Executive Officer, said, "Unfavorable economic conditions and reduction of
inventories by retailers continued into the first quarter of 2001 and negatively
affected sales and operating profit versus last year's first quarter.
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Page Two
"Sales in the Power Tools and Accessories segment were down 3% for the
quarter. This decline primarily reflected sluggish retail sales and customer
inventory reductions, especially in our North American business, where sales
declined at a mid-single-digit rate. Despite adverse weather conditions in the
northeastern United States, sales of lawn and garden products were up modestly,
led by a new line of electric lawn mowers and the recently released 14.4-volt
cordless Hedge Hog(R) hedge trimmer.
"In Europe, sales were down slightly, also as a result of weak retail
activity and inventory reduction actions by some customers, but DEWALT sales
continued to grow at a double-digit rate as we near completion of the
professional power tool brand transition from Elu to DEWALT.
"In the rest of the world, Power Tools and Accessories sales were up
significantly, with improvement in substantially all product categories.
"Operating profit for Power Tools and Accessories was down
significantly in the first quarter due to lower sales volume. Gross margin
declined slightly, and selling, general, and administrative expense was modestly
higher. Notwithstanding the weak economy, we continued to outpace our power tool
competition in North America, as our sales growth rate in the quarter remained
higher than the growth rate of the power tool departments at the key home center
chains.
"Sales in the Hardware and Home Improvement segment were flat for the
quarter. Sales of security hardware increased at a mid-single-digit rate on the
strength of the market-leading Kwikset brand name as well as the popular Society
Brass Collection(R) of upscale locksets and handlesets. Society Brass is now
available in a majority of home center stores in North America. Sales of Price
Pfister plumbing products declined at a mid-single-digit rate due to the
economic slowdown and inventory reduction actions by some retailers. Operating
profit for Hardware and Home Improvement declined during the quarter, reflecting
lower gross margin offset in part by lower SG&A spending.
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Page Three
"Sales in the Fastening and Assembly Systems segment were down 7% for
the quarter. Unfavorable economic conditions in the U.S. resulted in decreased
sales in our North American automotive and industrial businesses. This decline
was partially offset by growth in other regions of the world, particularly Asia.
Operating profit declined for the quarter due to lower revenue; however, our
gross margin percentage and SG&A spending each improved slightly.
"A $34 million increase in inventory from the 2000 year-end level
reflected the unfavorable economic environment, with the increase concentrated
in our European Power Tools and Kwikset businesses. We remain focused on supply
chain and inventory management, and, to address the higher inventory level, we
are continuing to slow plant production during the second quarter. While we are
disappointed with the overall level of inventory, our investment is paying off
in terms of service levels, which continued to improve during the quarter. This
improvement served us well in recent line reviews with several key retailers.
"Free cash flow, which is typically negative during the first quarter
because of the seasonal nature of our business, was a use of $112 million versus
a use of $84 million in the first quarter of 2000, primarily reflecting lower
net earnings offset by lower capital expenditures, and higher cash taxes. Our
objective is to convert 70% to 80% of net earnings to cash for the full year,
and we will continue to make adjustments in our operations to achieve this.
"Looking ahead, it appears that the U.S. and European economies will
remain slow, with the potential for only modest improvement late in the year.
Based on this more conservative view of the economy and the more aggressive
actions that we are taking to reduce inventory, we anticipate that our second
quarter sales before foreign exchange will be approximately flat compared to the
same quarter last year and that diluted earnings per share will be in the $.50
to $.60 range. For the full year, we expect sales before foreign exchange to be
up slightly and diluted earnings per share to be $3.10 to $3.25.
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Page Four
"Although our second-half outlook is based on modest economic
improvement, we also anticipate a significant benefit from new products
scheduled to be introduced by each of our businesses during that period. The
introductions are on track and will feature an especially significant new
product offering from DEWALT that we expect to be the largest in its history.
This initiative will include entering the pneumatic fastener market with a range
of nailing products. Although the majority of new products for 2001 will be
launched later this year, many have already been introduced, including two
innovative miter saws and several rotary hammers by DEWALT, a range of Black &
Decker(R) electric lawn mowers, and the entirely new Professional Series faucet
line by Price Pfister.
"Due to the robust new product launch schedule, we expect inventory in
the second and third quarters to be up somewhat versus the first quarter of
2001. By the end of the year, however, we anticipate inventory to be roughly
flat to the 2000 year-end level.
"With our market-leading brands, strong customer relationships,
continuous new product innovation, and an intense focus on improving operations
using Six Sigma practices, we believe we are in an excellent position to
withstand current economic challenges and emerge stronger than ever."
The Corporation will hold a conference call today at 10:00 a.m. EDT to
discuss first-quarter results. Investors can listen to the call by visiting
www.bdk.com, the Corporation's 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 replay of the conference
call will be available on the Corporation's home page through the close of
business on May 8, 2001.
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Page Five
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 April 24, 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 (Unaudited)
(Dollars in Millions Except Per Share Amounts)
Three Months Ended
-------------------------------
April 1, 2001 April 2, 2000
------------- -------------
SALES $ 979.0 $ 1,037.6
Cost of goods sold 636.4 674.6
Selling, general, and
administrative expenses 270.2 271.5
Gain on sale of business - 20.1
------------- -------------
OPERATING INCOME 72.4 111.6
Interest expense
(net of interest income) 22.4 23.8
Other expense 2.7 .4
------------- -------------
EARNINGS BEFORE INCOME TAXES 47.3 87.4
Income taxes 14.2 27.2
------------- -------------
NET EARNINGS $ 33.1 $ 60.2
============= =============
NET EARNINGS PER COMMON SHARE
- BASIC $ .41 $ .70
============= =============
Shares Used in Computing Basic
Earnings Per Share (in Millions) 81.1 86.0
============= =============
NET EARNINGS PER COMMON SHARE
- ASSUMING DILUTION $ .40 $ .69
============= =============
Shares Used in Computing Diluted
Earnings Per Share (in Millions) 81.7 86.9
============= =============
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Millions of Dollars)
April 1, 2001 December 31,
(Unaudited) 2000
-------------- ------------
ASSETS
Cash and cash equivalents $ 149.3 $ 135.0
Trade receivables 754.7 783.1
Inventories 877.8 844.0
Other current assets 194.7 199.9
-------------- ------------
TOTAL CURRENT ASSETS 1,976.5 1,962.0
-------------- ------------
PROPERTY, PLANT, AND EQUIPMENT 745.0 748.1
GOODWILL 711.1 717.2
OTHER ASSETS 693.2 662.4
-------------- ------------
$ 4,125.8 $ 4,089.7
============== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term borrowings $ 556.9 $ 402.9
Current maturities of long-term debt 38.8 47.7
Trade accounts payable 340.7 367.6
Other accrued liabilities 691.7 814.1
-------------- ------------
TOTAL CURRENT LIABILITIES 1,628.1 1,632.3
-------------- ------------
LONG-TERM DEBT 772.9 798.5
DEFERRED INCOME TAXES 219.7 221.0
POSTRETIREMENT BENEFITS 250.4 240.6
OTHER LONG-TERM LIABILITIES 487.7 479.8
COMMON STOCK UNDER EQUITY FORWARDS 25.5 25.1
STOCKHOLDERS' EQUITY 741.5 692.4
-------------- ------------
$ 4,125.8 $ 4,089.7
============== ============
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,
April 1, 2001 Accessories Improvement Systems Total Adjustments & Eliminations Consolidated
- --------------------------------------------------------------------------------------------------------------------------
Sales to unaffiliated
customers $656.4 $ 200.9 $ 123.5 $ 980.8 $ (1.8) $ - $ 979.0
Segment profit (loss)
(for Consolidated,
operating income) 35.0 17.4 19.5 71.9 (.2) .7 72.4
Depreciation and
amortization 23.2 9.9 3.8 36.9 (.1) 6.5 43.3
Capital expenditures 25.9 9.4 3.3 38.6 (.3) .5 38.8
Three Months Ended
April 2, 2000
- --------------------------------------------------------------------------------------------------------------------------
Sales to unaffiliated
customers $679.9 $ 200.5 $ 132.3 $1,012.7 $ 24.9 $ - $1,037.6
Segment profit (loss)
(for Consolidated,
operating income
before gain on sale
of business) 53.2 19.1 22.3 94.6 2.3 (5.4) 91.5
Depreciation and
amortization 21.0 9.8 3.9 34.7 .9 6.7 42.3
Capital expenditures 51.0 7.1 6.9 65.0 1.4 .2 66.6
The reconciliation of segment profit to the Corporation's earnings before
income taxes, in millions of dollars, is as follows:
Three Months Ended
- ------------------------------------------------------------------------------
April 1, April 2,
2001 2000
- ------------------------------------------------------------------------------
Segment profit for total reportable
business segments $71.9 $94.6
Items excluded from segment profit:
Adjustment of budgeted foreign
exchange rates to actual rates (.2) 2.3
Depreciation of Corporate property
and amortization of goodwill (6.5) (6.7)
Adjustment to businesses' post-
retirement benefit expenses booked
in consolidation 11.0 9.5
Adjustment to eliminate net interest
and non-operating expenses from
results of certain operations in
Brazil, Mexico, Venezuela, and Turkey .2 .1
Other adjustments booked in
consolidation directly related to
reportable business segments 4.4 (7.0)
Amounts allocated to businesses in
arriving at segment profit in excess
of (less than) Corporate center
operating expenses, eliminations,
and other amounts identified above (8.4) (1.3)
- ------------------------------------------------------------------------------
Operating income before gain on
sale of business 72.4 91.5
Gain on sale of business - 20.1
- ------------------------------------------------------------------------------
Operating income 72.4 111.6
Interest expense, net of interest
income 22.4 23.8
Other expense 2.7 .4
- ------------------------------------------------------------------------------
Earnings before income taxes $47.3 $87.4
==============================================================================
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,
2000, 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 2001. The amounts included in the preceding
table under the caption "Currency Translation Adjustments" represent the
difference between consolidated amounts determined using those budgeted rates
of exchange and those determined based upon the rates of exchange applicable
under accounting principles generally accepted in the United States.
Segment profit excludes interest income and expense, non-operating income
and expense, goodwill amortization, adjustments to eliminate intercompany
profit in inventory, and income tax expense. In addition, segment profit
excludes restructuring and exit costs and the gain on sale of business. For
certain operations located in Brazil, Mexico, Venezuela, and Turkey, segment
profit is reduced by net interest expense and non-operating expenses. In
determining segment profit, expenses relating to pension and other
postretirement benefits are based solely upon estimated service costs.
Corporate expenses are allocated to each reportable segment based upon
budgeted amounts. While sales and transfers between segments are accounted for
at cost plus a reasonable profit, the effects of intersegment sales are
excluded from the computation of segment profit. Intercompany profit in
inventory is excluded from segment assets and is recognized as a reduction of
cost of sales by the selling segment when the related inventory is sold to an
unaffiliated customer. Because the Corporation compensates the management of
its various businesses on, among other factors, segment profit, the
Corporation may elect to record certain segment-related expense items of an
unusual or non-recurring nature in consolidation rather than reflect such
items in segment profit. In addition, certain segment-related items of income
or expense may be recorded in consolidation in one period and transferred to
the various segments in a later period.