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, April 25, 2002
Subject: Black & Decker Reports $.41 Earnings Per Share for First Quarter of
2002; Generates Free Cash Flow of $43 Million
Towson, MD - The Black & Decker Corporation (NYSE: BDK) today announced that net
earnings for the first quarter of 2002 were $33.0 million, or $.41 per diluted
share, versus net earnings of $33.1 million, or $.40 per diluted share, for the
first quarter last year. For comparative purposes, diluted earnings per share in
the first quarter of 2001 would have been $.48 using the new accounting standard
for goodwill. Sales for the first quarter of 2002 were $951.7 million, compared
to $962.0 million for the same period last year. Excluding the effects of
foreign currency translation, sales increased 1% over the first quarter of 2001.
The Corporation generated free cash flow of $43 million for the first
quarter of 2002, compared to a use of $112 million for the same period last
year. Inventory was $704 million at the end of the quarter, $174 million lower
than at the end of the first quarter last year. Inventory declined $8 million
from the 2001 year-end level, compared to a $34 million increase during the
first quarter of 2001.
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Page Two
Commenting on the results, Nolan D. Archibald, Chairman and Chief
Executive Officer, said, "Strong sales in our DEWALT(R) professional tools and
accessories business enabled us to deliver earnings above the range that we had
projected. Sales of the newly repositioned Kwikset(R) line of locksets also
exceeded expectations. While we continue to experience economic weakness in
certain markets, such as European consumer power tools and industrial fastening
systems, we are somewhat encouraged by signs of economic improvement in the
United States.
"Our on-going focus on inventory management and free cash flow
generation produced benefits during the quarter. Because of the seasonal nature
of our business, inventory usually increases during the first three months of
the year. This quarter, however, we were able to reduce inventory, while
maintaining high service levels, by carefully managing production. Improvement
in working capital management, favorable timing of tax payments and lower
capital spending resulted in a significant increase in free cash flow over the
first quarter of 2001.
"The restructuring plan that we announced in January is on track to
generate over $60 million of cost savings in 2003. In the first quarter, we
closed an accessories plant in the United States and transferred several
products to our facility in Mexico, as planned. Our management team for the new
low-cost plant in the Czech Republic is in place, and the plant should commence
production this summer.
"Sales in the Power Tools and Accessories segment were up 1% for the
quarter. This increase reflected a low double-digit rate of sales growth in the
U.S. professional products business, largely offset by single-digit rates of
decline in U.S. consumer products and in European power tools. The professional
business had sales gains in most major product lines and customer channels, and
benefited from sales of new products launched in the second half of 2001. The
sales decline in the consumer business related primarily to lower sales of lawn
and garden products, in part due to a shift in orders from the first quarter to
the second quarter.
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Page Three
"In Europe, high inventory levels of competitors' products at key
retailers in Germany and the United Kingdom resulted in low reorder rates for
consumer tools. The decline in consumer tool sales was partly offset by sales
growth in professional tools, particularly from new products such as the DEWALT
10-kilo hammer and XRP(TM) drill/drivers. In the rest of the world, Power Tools
and Accessories sales were up slightly, with sales gains in most countries
partly offset by lower sales in Argentina due to the local economic crisis.
"Operating profit for Power Tools and Accessories increased 9% over the
first quarter last year, primarily from improved gross margins and volume
leverage in the U.S. professional products business. Europe slightly increased
its operating profit despite a decline in sales by significantly reducing
selling, general, and administrative expenses. Profits in the U.S. consumer
products business declined from the first quarter last year due to lower sales
as well as selective price incentives to reduce inventory.
"Sales in the Hardware and Home Improvement segment increased 1% over
the first quarter last year. Kwikset sales in North America increased at a
mid-single-digit rate as a result of the successful brand and product
repositioning that was completed at home centers in late 2001. Sales of Price
Pfister plumbing products declined at a low single-digit rate due to declines in
non-home center channels. Operating profit for Hardware and Home Improvement
declined 12% from the first quarter last year, primarily because of lower
production levels at Kwikset plants.
"Sales in the Fastening and Assembly Systems segment were up 3% for the
quarter. Sales in the automotive sector increased, due to the effect of the
acquisition of Bamal Corporation's automotive division in April 2001 and sales
related to a new automotive platform. The industrial sector remained very slow
in North America and Europe, causing sales to decline at a double-digit rate in
that sector from the first quarter last year. Operating profit declined 17%,
reflecting inherently lower margins in the distribution business acquired from
Bamal, as well as unfavorable product mix.
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Page Four
"It appears that some sectors of the U.S. economy are beginning to
recover and that the European economy will remain slow. Therefore, we anticipate
a low single-digit rate of sales growth before foreign exchange in the second
quarter. We anticipate that return on sales will be approximately flat versus
the second quarter last year, and, consequently, that diluted earnings per share
will be in the $.60 to $.65 range. For the full year, we expect sales before
foreign exchange to be up modestly and diluted earnings per share to be in the
$2.80 to $2.90 range. For comparative purposes, recurring diluted earnings per
share in 2001 under the new goodwill accounting standard would have been $.59
and $2.53 for the second quarter and full year, respectively. We expect that
inventory will remain lower than in the comparable quarters in 2001 despite
additional safety stock required to implement our restructuring program. We
remain committed to converting at least 80% of net earnings to free cash flow,
excluding restructuring spending.
"As the economy recovers, our continuous investment in brands, product
development, and end-user relationships will be rewarded. We plan to introduce a
substantial number of innovative products this year and will enjoy a full-year
benefit from new products launched in 2001. We will focus on rapid and precise
execution of our restructuring program to achieve a world-class cost base, and
we intend to maintain progress on inventory management, free cash flow, and
operational improvement through Six Sigma. Momentum on all of these fronts puts
Black & Decker in an excellent position to capitalize on the economic recovery."
The Corporation will hold a conference call today at 10:00 a.m., E.T.,
to discuss first-quarter results and the outlook for the remainder of 2002.
Investors can listen to the call by visiting www.bdk.com, the Corporation's
homepage, 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 homepage through the close of business on May 2, 2002.
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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 25, 2002.
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 Data)
Three Months Ended
---------------------------------
March 31, 2002 April 1, 2001
--------------- --------------
SALES $ 951.7 $ 962.0
Cost of goods sold 644.8 636.4
Selling, general, and
administrative expenses 244.7 253.2
------------- -------------
OPERATING INCOME 62.2 72.4
Interest expense (net of
interest income) 15.8 22.4
Other expense 1.2 2.7
------------- -------------
EARNINGS BEFORE INCOME TAXES 45.2 47.3
Income taxes 12.2 14.2
------------- -------------
NET EARNINGS $ 33.0 $ 33.1
============= =============
NET EARNINGS PER COMMON SHARE
- BASIC $ .41 $ .41
============= =============
Shares Used in Computing Basic
Earnings Per Share (in Millions) 80.1 81.1
============= =============
NET EARNINGS PER COMMON SHARE
- ASSUMING DILUTION $ .41 $ .40
============= =============
Shares Used in Computing Diluted
Earnings Per Share (in Millions) 80.6 81.7
============= =============
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Millions of Dollars)
March 31, December 31,
2002 2001
------------ -------------
ASSETS
Cash and cash equivalents $ 260.2 $ 244.5
Trade receivables 730.7 708.6
Inventories 704.0 712.2
Other current assets 205.4 227.0
------------- -------------
TOTAL CURRENT ASSETS 1,900.3 1,892.3
------------- -------------
PROPERTY, PLANT, AND EQUIPMENT 671.1 687.5
GOODWILL 705.5 710.4
OTHER ASSETS 703.5 724.0
------------- -------------
$ 3,980.4 $ 4,014.2
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term borrowings $ 11.4 $ 12.3
Current maturities of long-term debt 3.8 33.7
Trade accounts payable 341.1 312.7
Other accrued liabilities 664.3 711.9
------------- -------------
TOTAL CURRENT LIABILITIES 1,020.6 1,070.6
------------- -------------
LONG-TERM DEBT 1,180.3 1,191.4
DEFERRED INCOME TAXES 261.9 261.1
POSTRETIREMENT BENEFITS 238.8 238.0
OTHER LONG-TERM LIABILITIES 505.3 502.1
STOCKHOLDERS' EQUITY 773.5 751.0
------------- -------------
$ 3,980.4 $ 4,014.2
============= =============
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION ABOUT BUSINESS SEGMENTS
(Millions of Dollars)
Reportable Business Segments
------------------------------------------------
Power Hardware Fastening Currency Corporate,
Tools & & Home & Assembly Translation Adjustments,
Three Months Ended March 31, 2002 Accessories Improvement Systems Total Adjustments & Eliminations Consolidated
- ------------------------------------------------------------------------------------------------------------------------------------
Sales to unaffiliated customers $639.8 $198.8 $123.0 $961.6 $(9.9) $ - $951.7
Segment profit (loss) (for
Consolidated, operating income) 38.4 15.4 15.8 69.6 (.7) (6.7) 62.2
Depreciation and amortization 21.3 9.2 3.5 34.0 (.1) .3 34.2
Capital expenditures 15.0 3.4 3.6 22.0 (.1) .2 22.1
Three Months Ended April 1, 2001
- ------------------------------------------------------------------------------------------------------------------------------------
Sales to unaffiliated customers $634.5 $197.1 $120.0 $951.6 $10.4 $ - $962.0
Segment profit (loss) (for
Consolidated, operating income) 35.1 17.5 19.0 71.6 .7 .1 72.4
Depreciation and amortization 22.6 10.0 3.6 36.2 .6 6.5 43.3
Capital expenditures 25.3 9.4 3.0 37.7 .6 .5 38.8
The reconciliation of segment profit to the Corporation's earnings before
income taxes, in millions of dollars, is as follows:
Three Months Ended
- --------------------------------------------------------------------------------
March 31, 2002 April 1, 2001
- --------------------------------------------------------------------------------
Segment profit for total reportable
business segments $ 69.6 $71.6
Items excluded from segment profit:
Adjustment of budgeted foreign
exchange rates to actual rates (.7) .7
Depreciation of Corporate property
and, for 2001, amortization of
certain goodwill (.3) (6.5)
Adjustment to businesses' post-
retirement benefit expenses
booked in consolidation 10.3 11.0
Other adjustments booked in
consolidation directly related to
reportable business segments (4.7) 4.6
Amounts allocated to businesses in arriving
at segment profit in excess of (less
than) Corporate center operating
expenses, eliminations, and other
amounts identified above (12.0) (9.0)
- --------------------------------------------------------------------------------
Operating income 62.2 72.4
Interest expense, net of interest income 15.8 22.4
Other expense 1.2 2.7
- --------------------------------------------------------------------------------
Earnings before income taxes $ 45.2 $47.3
================================================================================
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 household products. 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, 2001,
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 segment
tables under the captions "Reportable Business Segments" and "Corporate,
Adjustments, & Eliminations" are reflected at the Corporation's budgeted
exchange rates for 2002. The amounts included in the preceding segment tables
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 (except for the amortization of goodwill
associated with certain acquisitions made by the Power Tools and Accessories and
Fastening and Assembly Systems segments), 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 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.