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 29, 2004
Subject: Black & Decker Reports Earnings Per Share Before Restructuring Charges
of $1.35 for Fourth Quarter 2003 and Record $4.02 for Full Year;
Generates Record $480 Million Free Cash Flow
Towson, MD - The Black & Decker Corporation (NYSE: BDK) today announced that net
earnings for the fourth quarter of 2003 were $99.5 million or $1.27 per diluted
share, versus net earnings of $75.7 million or $0.94 per diluted share for the
fourth quarter of 2002. Excluding restructuring charges in both years, diluted
earnings per share were $1.35 for the quarter, an increase of 29% over $1.05 for
the fourth quarter of 2002.
For the full year 2003, net earnings were a record $3.75 per diluted share,
versus $2.84 in 2002. Excluding restructuring charges in both years, diluted
earnings per share were $4.02 for 2003, an increase of 24% over $3.23 in 2002.
The Corporation also generated a record $480 million of free cash flow, up
from the previous record of $360 million set in 2002. For the third consecutive
year, working capital changes were favorable, and capital expenditures were
lower than depreciation and amortization.
(more)
Page Two
In January 2004, the Corporation completed the sale of two European
security hardware businesses, Corbin and NEMEF. Together with DOM security
hardware, which is currently held for sale, these businesses are reflected as
discontinued operations in the accompanying financial information.
Sales from continuing operations for the fourth quarter of 2003 were $1.34
billion, an 11% increase over $1.20 billion for the same period last year. Sales
increased 2% excluding the effects of foreign currency translation and the
acquisition of Baldwin Hardware Corporation and Weiser Lock Corporation.
Sales from continuing operations for the full year were $4.48 billion, a 4%
increase over $4.29 billion in 2002. Sales for the year decreased 1% excluding
the effects of foreign currency translation and the acquisition.
Inventory of continuing operations was $710 million at the end of 2003, a
$16 million decrease from the 2002 year-end level. Excluding the effects of
foreign currency translation and the acquisition, inventory decreased more than
$80 million.
Commenting on the results, Nolan D. Archibald, Chairman and Chief Executive
Officer, said, "Black & Decker had another outstanding quarter and a record
year. We are very pleased with the strength and consistency of our results. For
the seventh straight quarter, earnings per share grew more than 19%. All three
of our business segments reported higher sales and at least 12% operating
margins for the quarter. Sales of DEWALT(R) professional products and hardware
and home improvement products exceeded our expectations. This growth, which
reflected our strong market positions and an improving U.S. economy, resulted in
earnings above our guidance.
"Free cash flow was also well above our projection, due largely to strong
earnings and lower working capital. Capital expenditures were below
depreciation, but remained sufficient to support an impressive range of new
products. We have now set free cash flow records for two consecutive years and
converted over 100% of earnings to cash for three consecutive years.
(more)
Page Three
"The restructuring program announced in early 2002 generated approximately
$50 million of incremental cost savings in 2003. The final phase is proceeding
as planned, and we continue to expect incremental savings of $45 million in 2004
and $10 million in 2005, which, combined with benefits realized to date, will
total $130 million of annualized savings.
"As announced on October 1, 2003, we completed the acquisition of the
Baldwin Hardware Corporation and Weiser Lock Corporation from Masco Corporation
early in the fourth quarter. We will take a number of actions to eliminate
duplicate costs and excess capacity from the combined security hardware
businesses, including the closures of a Kwikset plant in Oklahoma and the Weiser
administrative and distribution facility in Arizona. Costs associated with the
Kwikset plant closure are reflected in the $10.0 million restructuring charge
recorded in the quarter, and costs associated with the Weiser closure are
reflected as part of the acquisition of that business.
"Sales in the Power Tools and Accessories segment increased slightly for
the quarter, with growth in the U.S., Asia, Australia, and Latin America being
offset by a decline in Europe. For the full year, sales decreased 1%, as
improvement in the second half nearly offset weaker results in the first six
months. Operating profit decreased 1% for both the quarter and full year,
largely due to costs related to lower production levels.
"In the U.S., fourth-quarter sales of DEWALT professional products
increased at a double-digit rate on strong demand from the major distribution
channels. DEWALT continued to meet competitive challenges with new products such
as a corded/cordless utility vacuum, a critically acclaimed thickness planer,
and a belt sander. Sales of consumer products for the quarter decreased at a low
double-digit rate, with continued weakness in cleaning products. For the full
year, increasing momentum in the second half enabled DEWALT to hold sales
roughly flat, and consumer product sales decreased at a low single-digit rate.
(more)
Page Four
"Sales in Europe decreased at a mid-single-digit rate for both the quarter
and the full year, as the weak retail environment continued to challenge our
consumer division. Professional tool sales were roughly flat for the year in a
weak construction market. As a result of restructuring benefits, ongoing cost
reduction efforts, and favorable foreign currency rates, however, our European
operating profit increased significantly for the quarter and the full year
despite the sales decline. The European business is on track to achieve its
target of 10% operating margin in 2004, ahead of schedule.
"The Hardware and Home Improvement segment reported a 42% sales increase
for the quarter and a high single-digit growth rate excluding the acquisition of
Baldwin and Weiser. Driven by expanded product listings at a major retailer,
sales of Price Pfister(R) plumbing products rose more than 20%. Sales in the
Kwikset security hardware business increased at a low single-digit rate,
reflecting successful combination kit promotions partly offset by retailer
inventory reductions. For the full year, sales for the segment increased 9% and
at a low single-digit rate excluding the acquisition. Productivity and
restructuring savings continued to improve the operating margins for Kwikset and
Price Pfister, resulting in dramatic operating profit increases for both the
quarter and the full year.
"Sales in the Fastening and Assembly Systems segment increased 4% for the
quarter, with gains in all geographic regions and in both the automotive and
industrial divisions. Operating profit in this segment increased 5% from the
fourth quarter last year, led by a rebound in the industrial division. For the
full year, sales and operating profit were similar to 2002, representing solid
performance despite lower automotive production and a sluggish industrial
marketplace.
"Looking forward, we plan to build on our success of the last two years.
Assuming a modestly recovering U.S. economy, we are forecasting low single-digit
sales growth for 2004, excluding currency translation and the acquisition, or
mid-to-high single-digit growth including those factors. Continued restructuring
benefits should drive operating margins higher, and, as a result, we anticipate
diluted earnings per share in the ranges of $4.35-to-$4.50 for the full year and
$0.65-to-$0.70 for the first quarter. We also expect to convert at least 90% of
net earnings to free cash flow.
(more)
Page Five
"Once again, Black & Decker delivered solid sales improvement, a strong
operating margin, and outstanding earnings and cash flow. During 2003, we also
completed our largest bolt-on acquisition to date, repurchased two million
shares of stock, and increased our dividend 75%, yet ended the year with lower
net debt than 2002. We continue to leverage our powerful brands, world-class
product development, and industry-leading end-user focus to maintain market
leadership and deliver outstanding financial returns. By combining market
leadership with operating excellence, Black & Decker is benefiting from the
improving economy and is in a strong position to continue delivering outstanding
value to shareholders."
The Corporation will hold a conference call today at 10:00 a.m., E.T., to
discuss 2003 results and the outlook for 2004. Investors can listen to the
conference call by visiting www.bdk.com and clicking on the icon labeled "Live
Webcast." Listeners should log-in at least ten minutes prior to the beginning of
the event to assure timely access. A replay of the call will be available at
www.bdk.com.
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 the "Forward-Looking Statements"
sections in Black & Decker's reports filed with the Securities and Exchange
Commission, including the Annual Report on Form 10-K for the fiscal year ended
December 31, 2002.
This release contains non-GAAP financial measures within the meaning of
Regulation G promulgated by the Securities and Exchange Commission. Included
with this release is a reconciliation of the differences between these non-GAAP
financial measures with the most directly comparable financial measures
calculated in accordance with GAAP.
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, 2003 December 31, 2002
------------------ ------------------
SALES $ 1,337.6 $ 1,204.5
Cost of goods sold 863.6 761.3
Selling, general, and
administrative expenses 325.0 315.7
Restructuring and exit costs 10.0 12.3
------------------ ------------------
OPERATING INCOME 139.0 115.2
Interest expense (net of
interest income) 7.8 13.0
Other expense (income) - (.3)
------------------ ------------------
EARNINGS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 131.2 102.5
Income taxes 35.0 28.2
------------------ ------------------
NET EARNINGS FROM CONTINUING OPERATIONS 96.2 74.3
Earnings from discontinued
operations (net of income taxes) 3.3 1.4
------------------ ------------------
NET EARNINGS $ 99.5 $ 75.7
================== ==================
BASIC EARNINGS PER COMMON SHARE
Continuing operations $ 1.24 $ .92
Discontinued operations .04 .02
------------------ ------------------
NET EARNINGS PER COMMON SHARE
- BASIC $ 1.28 $ .94
================== ==================
Shares Used in Computing Basic
Earnings Per Share (in Millions) 77.8 80.3
================== ==================
DILUTED EARNINGS PER COMMON SHARE
Continuing operations $ 1.23 $ .92
Discontinued operations .04 .02
------------------ ------------------
NET EARNINGS PER COMMON SHARE
- ASSUMING DILUTION $ 1.27 $ .94
================== ==================
Shares Used in Computing Diluted
Earnings Per Share (in Millions) 78.5 80.7
================== ==================
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(Dollars in Millions Except Per Share Amounts)
Year Ended
----------------------------------------
December 31, 2003 December 31, 2002
------------------ ------------------
SALES $ 4,482.7 $ 4,291.8
Cost of goods sold 2,887.1 2,805.6
Selling, general, and
administrative expenses 1,135.3 1,071.6
Restructuring and exit costs 31.6 46.6
------------------ ------------------
OPERATING INCOME 428.7 368.0
Interest expense (net of
interest income) 35.2 57.8
Other expense 2.6 4.8
------------------ ------------------
EARNINGS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 390.9 305.4
Income taxes 103.7 76.9
------------------ ------------------
NET EARNINGS FROM CONTINUING OPERATIONS 287.2 228.5
Earnings of discontinued
operations (net of income taxes) 5.8 1.2
------------------ ------------------
NET EARNINGS $ 293.0 $ 229.7
================== ==================
BASIC EARNINGS PER COMMON SHARE
Continuing operations $ 3.69 $ 2.85
Discontinued operations .07 .01
------------------ ------------------
NET EARNINGS PER COMMON SHARE
- BASIC $ 3.76 $ 2.86
================== ==================
Shares Used in Computing Basic
Earnings Per Share (in Millions) 77.9 80.4
================== ==================
DILUTED EARNINGS PER COMMON SHARE
Continuing operations $ 3.68 $ 2.83
Discontinued operations .07 .01
------------------ ------------------
NET EARNINGS PER COMMON SHARE
- ASSUMING DILUTION $ 3.75 $ 2.84
================== ==================
Shares Used in Computing Diluted
Earnings Per Share (in Millions) 78.2 80.9
================== ==================
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Millions of Dollars)
December 31, 2003 December 31, 2002
------------------ ------------------
ASSETS
Cash and cash equivalents $ 308.2 $ 517.1
Trade receivables 808.6 715.5
Inventories 709.9 725.7
Current assets of
discontinued operations 160.2 38.0
Other current assets 216.1 197.6
------------------ ------------------
TOTAL CURRENT ASSETS 2,203.0 2,193.9
------------------ ------------------
PROPERTY, PLANT, AND EQUIPMENT 660.2 629.6
GOODWILL 771.7 658.4
LONG-TERM ASSETS OF
DISCONTINUED OPERATIONS - 99.7
OTHER ASSETS 587.6 548.9
------------------ ------------------
$ 4,222.5 $ 4,130.5
================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term borrowings $ .1 $ 4.6
Current maturities of long-term debt .4 312.0
Trade accounts payable 379.8 336.2
Current liabilities of
discontinued operations 38.0 18.8
Other accrued liabilities 893.8 781.8
------------------ ------------------
TOTAL CURRENT LIABILITIES 1,312.1 1,453.4
------------------ ------------------
LONG-TERM DEBT 915.6 927.6
DEFERRED INCOME TAXES 179.8 211.3
POSTRETIREMENT BENEFITS 451.9 395.7
LONG-TERM LIABILITIES OF
DISCONTINUED OPERATIONS - 14.4
OTHER LONG-TERM LIABILITIES 516.6 528.5
STOCKHOLDERS' EQUITY 846.5 599.6
------------------ ------------------
$ 4,222.5 $ 4,130.5
================== ==================
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 December 31, 2003 Accessories Improvement Systems Total Adjustments & Eliminations Consolidated
- ------------------------------------------------------------------------------------------------------------------------------------
Sales to unaffiliated customers $ 914.0 $230.1 $134.6 $1,278.7 $ 58.9 $ - $1,337.6
Segment profit (loss) (for Consoli-
dated, operating income
before restructuring and exit costs) 112.8 37.8 20.9 171.5 6.0 (28.5) 149.0
Depreciation and amortization 20.1 6.2 3.6 29.9 1.1 1.7 32.7
Capital expenditures 15.5 3.9 4.0 23.4 1.2 .1 24.7
Three Months Ended December 31, 2002
- ------------------------------------------------------------------------------------------------------------------------------------
Sales to unaffiliated customers $ 911.2 $162.4 $128.8 $1,202.4 $ 2.1 $ - $1,204.5
Segment profit (loss) (for Consoli-
dated, operating income
before restructuring and exit costs) 114.2 18.8 19.9 152.9 (.7) (24.7) 127.5
Depreciation and amortization 20.0 4.8 3.4 28.2 .1 2.2 30.5
Capital expenditures 18.5 1.7 4.9 25.1 .1 .1 25.3
Year Ended December 31, 2003
- ------------------------------------------------------------------------------------------------------------------------------------
Sales to unaffiliated customers $3,114.9 $715.7 $514.2 $4,344.8 $137.9 $ - $4,482.7
Segment profit (loss) (for Consoli-
dated, operating income
before restructuring and exit costs) 350.9 92.8 73.9 517.6 14.3 (71.6) 460.3
Depreciation and amortization 80.5 24.4 15.0 119.9 2.8 10.7 133.4
Capital expenditures 68.2 17.1 13.4 98.7 3.0 .8 102.5
Year Ended December 31, 2002
- ------------------------------------------------------------------------------------------------------------------------------------
Sales to unaffiliated customers $3,156.2 $659.3 $513.3 $4,328.8 $(37.0) $ - $4,291.8
Segment profit (loss) (for Consoli-
dated, operating income
before restructuring and exit costs) 354.7 47.4 74.7 476.8 (3.9) (58.3) 414.6
Depreciation and amortization 80.1 25.5 14.2 119.8 (.7) 3.3 122.4
Capital expenditures 70.8 9.0 13.9 93.7 (.2) .8 94.3
The reconciliation of segment profit to the Corporation's earnings from
continuing operations 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,
2003 2002 2003 2002
- ------------------------------------------------------------------------------------------------------------------------------------
Segment profit for total reportable business segments $171.5 $152.9 $517.6 $476.8
Items excluded from segment profit:
Adjustment of budgeted foreign exchange rates to
actual rates 6.0 (.7) 14.3 (3.9)
Depreciation of Corporate property (.3) (.2) (1.1) (1.3)
Adjustment to businesses' postretirement benefit
expenses booked in consolidation 3.9 9.5 15.4 38.3
Other adjustments booked in consolidation directly
related to reportable business segments (6.0) (4.8) (15.0) (8.4)
Amounts allocated to businesses in arriving at segment
profit in excess of (less than) Corporate center
operating expenses, eliminations, and other
amounts identified above (26.1) (29.2) (70.9) (86.9)
- ------------------------------------------------------------------------------------------------------------------------------------
Operating income before restructuring and exit costs 149.0 127.5 460.3 414.6
Restructuring and exit costs 10.0 12.3 31.6 46.6
- ------------------------------------------------------------------------------------------------------------------------------------
Operating income 139.0 115.2 428.7 368.0
Interest expense, net of interest income 7.8 13.0 35.2 57.8
Other expense (income) - (.3) 2.6 4.8
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings from continuing operations before income taxes $131.2 $102.5 $390.9 $305.4
====================================================================================================================================
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 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). 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. 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.
In January 2004, the Corporation sold two components of its European
security hardware business. The divested businesses and the remaining portion
that is expected to be sold in 2004 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 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
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, 2002,
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 tables
under the captions "Reportable Business Segments" and "Corporate, Adjustments, &
Eliminations" are reflected at the Corporation's budgeted rates of exchange for
2003. The amounts included in the preceding 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, 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.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND REGULATION G DISCLOSURE:
To supplement its consolidated financial statements presented in accordance
with accounting principles generally accepted in the United States (GAAP), the
Corporation provides additional measures of operating results, net earnings, and
earnings per share adjusted to exclude certain costs, expenses, and gains and
losses, as well as to exclude effects of changes in foreign currency exchange
rates and the sales of acquired businesses on sales. The Corporation believes
that these non-GAAP financial measures are appropriate to enhance understanding
of its past performance as well as prospects for its future performance.
This press release contains non-GAAP financial measures within the meaning
of Regulation G promulgated by the Securities and Exchange Commission. A
reconciliation of the differences between these non-GAAP financial measures with
the most directly comparable financial measures calculated in accordance with
GAAP follows.
Net earnings and diluted earnings per share, excluding the effects of
- --------------------------------------------------------------------------------
restructuring charges:
- ----------------------
The calculation of net earnings, excluding restructuring and exit costs,
net of tax, and diluted earnings per share, excluding restructuring and exit
costs, net of tax, and the resultant percentage increases in diluted earnings
per share, excluding restructuring and exit costs, net of tax, of 29% and 24%,
for the quarters and years ended December 31, 2003 and 2002, respectively,
follows (dollars in millions except per share amounts):
Three Months Ended
December 31, December 31,
2003 2002
------------- -------------
Net earnings $ 99.5 $ 75.7
Excluding:
Restructuring and exit costs, net of tax 6.4 9.4
------------- -------------
Net earnings, excluding restructuring
and exit costs $105.9 $ 85.1
============= =============
Net earnings per common share
- assuming dilution $ 1.27 $ .94
Excluding:
Restructuring and exit costs, net of tax,
per common share - assuming dilution .08 .11
------------- -------------
Net earnings, excluding restructuring
and exit costs, per common share
- assuming dilution $ 1.35 $ 1.05
============= =============
Shares used in computing diluted
earnings per share (in millions) 78.5 80.7
============= =============
Year Ended
December 31, December 31,
2003 2002
------------- -------------
Net earnings $293.0 $229.7
Excluding:
Restructuring and exit costs, net of tax 21.7 31.7
------------- -------------
Net earnings, excluding restructuring
and exit costs $314.7 $261.4
============= =============
Net earnings per common share
- assuming dilution $ 3.75 $ 2.84
Excluding:
Restructuring and exit costs, net of tax,
per common share - assuming dilution .27 .39
------------- -------------
Net earnings, excluding restructuring
and exit costs, per common share
- assuming dilution $ 4.02 $ 3.23
============= =============
Shares used in computing diluted
earnings per share (in millions) 78.2 80.9
============= =============
Sales, excluding the effects of foreign currency translation and acquired
- --------------------------------------------------------------------------------
businesses:
- -----------
As more fully described in this press release under the caption
"Supplemental Information About Business Segments--Basis of Presentation",
elements of segment profit, including sales, for units located outside of the
United States are generally measured using the local currency as the functional
currency. For these units, sales 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. Amounts included on the line entitled "Sales
to unaffiliated customers" under the heading "Reportable Business Segments" in
the first table under the caption "Supplemental Information About Business
Segments" are reflected at the Corporation's budgeted rates of exchange for
2003. The reference in this press release to a 2% increase in sales, excluding
the effects of foreign currency translation and acquired businesses, for the
fourth quarter of 2003, compared to the corresponding period in 2002, is
determined as follows (dollars in millions):
Three Months Ended
December 31, December 31,
2003 2002
------------- -------------
Sales $1,337.6 $1,204.5
Currency translation adjustment (58.9) (2.1)
------------- -------------
Sales as translated at budgeted rates
of exchange 1,278.7 1,202.4
Sales of acquired businesses as translated
at budgeted rates of exchange (53.1) -
------------- -------------
Sales excluding foreign currency and the
acquisition of Baldwin and Weiser $1,225.6 $1,202.4
============= =============
The reference in this press release to a 1% decrease in sales, excluding the
effects of foreign currency translation and acquired businesses, for the year
ended December 31, 2003, compared to the year ended December 31, 2002, is
determined as follows (dollars in millions):
Year Ended
December 31, December 31,
2003 2002
------------- -------------
Sales $4,482.7 $4,291.8
Currency translation adjustment (137.9) 37.0
------------- -------------
Sales as translated at budgeted rates
of exchange 4,344.8 4,328.8
Sales of acquired businesses as translated at
budgeted rates of exchange (53.1) -
------------- -------------
Sales excluding foreign currency and the
acquisition of Baldwin and Weiser $4,291.7 $4,328.8
============= =============
Hardware and Home Improvement segment sales, excluding the effects of the
- --------------------------------------------------------------------------------
acquired businesses:
- --------------------
This press release indicates that the Hardware and Home Improvement segment
reported a 42% sales increase for the quarter ended December 31, 2003 as
compared to the corresponding quarter in the prior year, and a high single-digit
sales growth rate excluding the acquisition of Baldwin and Weiser. This press
release also indicates that the Hardware and Home Improvement segment reported a
9% sales increase for the year ended December 31, 2003 as compared to 2002, and
a low single-digit rate of sales growth excluding the acquisition of Baldwin and
Weiser. The determination of the aforementioned growth in sales, excluding the
acquisition of Baldwin and Weiser, is determined by deducting $53.1 million of
sales of the acquired businesses that were recognized for the quarter and year
ended December 31, 2003.
Free cash flow for the years ended December 31, 2003 and 2002:
- --------------------------------------------------------------
The calculation of free cash flow, which is defined by the Corporation as
cash flow from operating activities, less capital expenditures, plus proceeds
from the disposal of assets (excluding proceeds from business sales), for the
years ended December 31, 2003 and 2002, follows (dollars in millions):
Cash flow from operating activities $570.6 $451.6
Capital expenditures (including capital
expenditures of discontinued operations) (105.8) (96.6)
Proceeds from disposals of assets 15.0 4.6
------------ -------------
Free cash flow $479.8 $359.6
============ =============