TOWSON, Md., Jan. 30 /PRNewswire-FirstCall/ -- The Black & Decker
Corporation (NYSE: BDK) today announced that net earnings for the fourth
quarter of 2002, excluding a $12.3 million pre-tax restructuring charge, were
$85.1 million or $1.05 per diluted share. This represents a 31% increase over
recurring diluted earnings per share of $0.80 in the fourth quarter of 2001
using the new accounting standard for goodwill. Including the restructuring
charge ($9.4 million after tax or $0.11 per diluted share), net earnings for
the quarter were $75.7 million or $0.94 per diluted share. For the fourth
quarter of 2001, the Corporation reported a net loss of $13.0 million, or
$0.16 per diluted share, which included a restructuring charge of $0.88 per
diluted share and goodwill amortization of $0.08 per diluted share.
For the full year 2002, the Corporation announced recurring net earnings
of $261.4 million or $3.23 per diluted share. This represents a 28% increase
over recurring diluted earnings per share of $2.53 for the full year 2001
using the new accounting standard for goodwill. Reported net earnings for
2002, including restructuring charges, were $229.7 million or $2.84 per
diluted share versus $108.0 million or $1.33 per diluted share in 2001,
including restructuring charges and goodwill amortization.
Sales for the fourth quarter of 2002 were $1.23 billion, a 3% increase
over $1.19 billion for the same period last year. Sales increased 1%
excluding the effects of foreign currency translation. Sales for the full
year were $4.39 billion, a 3% increase over $4.25 billion in 2001. Sales for
the year increased 2% excluding the effects of foreign currency translation.
The Corporation generated a record $360 million of free cash flow, up from
$257 million in the prior year. Inventory was $749 million at the end of
2002, $38 million lower than at the end of the third quarter and $37 million
above the 2001 year-end level. The increase versus year-end 2001 was caused
by foreign currency translation and planned safety stock related to the
restructuring plan.
The restructuring charge recorded in the fourth quarter is part of the
comprehensive restructuring program that the Corporation announced in January
2002. The primary change in operations associated with this charge is the
closure of a power tool facility in the United States, which is expected to be
completed in late 2003. Including charges in the fourth quarter of 2001 and
the third quarter of 2002, $150.5 million of pre-tax charges have been
recorded to date for this restructuring program. The Corporation expects that
the total restructuring will cost approximately $170 million before taxes and
generate annual savings in excess of $100 million upon completion in 2004.
Commenting on the results, Nolan D. Archibald, Chairman and Chief
Executive Officer, said, "Our progress on the restructuring program, along
with higher manufacturing efficiency, resulted in significant operating margin
improvements in all three of our business segments for the fourth quarter.
Sales increased in most of our businesses, despite weak economic conditions,
and we achieved record sales in our North American Power Tools and Accessories
businesses for the year. Higher operating margins and solid sales enabled us
to deliver earnings significantly higher than in the fourth quarter of 2001
and at the high end of the range that we had projected in October.
"We continued to generate excellent free cash flow in the fourth quarter,
resulting in a record $360 million for the full year, due to higher earnings,
lower capital expenditures, and lower cash taxes. We reduced capital spending
by 28%, but continued to invest capital and to spend 2% of sales on product
development. Working capital declined, as an increase in inventory for
restructuring safety stock was more than offset by an increase in payables and
accruals. We converted 138% of recurring net income to free cash flow in
2002, and our average conversion rate for the past five years is nearly 100%.
We took advantage of our strong cash flow to repurchase two million shares of
our stock from November 2002 through January 2003.
"With one year of restructuring behind us, we are pleased with our
progress. We closed three plants in the U.S., began operations at our new
low-cost plant in the Czech Republic, and transferred a significant amount of
production to low-cost regions. This quarter, we announced that we will close
an additional power tools facility in the U.S., which will keep our cost base
competitive for professional tools. We now expect that the restructuring
program will cost $170 million, slightly lower than our initial estimate, yet
still generate $100 million in annual savings by 2004. The program generated
approximately $25 million of net savings in 2002, as benefits materialized
earlier than we projected. We anticipate incremental savings of approximately
$35 million in 2003 and $40 million or more in 2004.
"Sales in the Power Tools and Accessories segment increased 1% over the
fourth quarter last year, with a slight increase in North American sales
outweighing a slight decrease in Europe. Operating profit for the segment
increased 38% from the fourth quarter last year, with strong improvement in
both the U.S. and Europe. Significant savings have been generated by the
restructuring program as well as favorable manufacturing absorption and Six
Sigma benefits. For the full year, Power Tools and Accessories sales and
operating profit increased 3% and 41%, respectively.
"In the U.S., the success of our outstanding new product array helped
offset a weak fourth-quarter retail sales environment. Sales of consumer
products in the U.S. increased at a low single-digit rate, led by the popular
Bulls Eye(TM) auto-leveling laser line and stud finder, the Navigator(R)
powered hand saw, power tool combination kits, and new cleaning products. In
the U.S. DEWALT(R) professional division, sales were flat, in part due to an
acceleration of orders in the third quarter. For the full year, sales in both
the consumer and professional businesses grew at mid single-digit rates.
"In Europe, sales decreased 1% during the quarter as economic conditions
remained weak. This decrease was mitigated by a strong new-product launch of
professional tools, which enabled our professional business to continue to
grow. Full-year sales in Europe also decreased 1%, but operating profit was
up dramatically, with improvement in both gross margin and selling, general,
and administrative expenses. In the rest of the world, Power Tools and
Accessories sales increased at a double-digit rate for the fourth quarter and
at a mid single-digit rate for the full year.
"Sales in the Hardware and Home Improvement segment were down 5% for the
quarter. Sales of Price Pfister(R) plumbing products decreased significantly
as the result of previously announced shelf space losses. This was partly
offset by a mid single-digit rate of sales growth in the Kwikset(R) security
hardware business, which launched its successful brand and product
repositioning initiative late in the fourth quarter of 2001. Operating profit
for Hardware and Home Improvement increased 19% from the fourth quarter last
year due to gains at Kwikset. For the full year, sales decreased slightly and
operating profit decreased 10% due to lower volumes in the Price Pfister and
European security hardware businesses that more than offset gains at Kwikset.
"Sales in the Fastening and Assembly Systems segment were up 9% for the
quarter, driven by double-digit increases in the North American automotive
sector and in Asia. Sales in the industrial sector increased slightly in
North America, but remained weak in Europe. Operating profit in this segment
increased 32% from the fourth quarter last year because of manufacturing
absorption and lower material costs. For the full year, sales increased 5%,
aided by the Bamal automotive division acquisition in 2001, and operating
profit increased 5%.
"Black & Decker made excellent progress in 2002, both commercially and
operationally. Looking forward, we continue to expect significant benefits
from our restructuring plan, new products, and marketing initiatives.
Further, we will implement our plan to improve sales and profitability at
Price Pfister. We expect, however, that weak economic conditions will also
continue in 2003, and therefore anticipate a low single-digit rate of sales
growth. Restructuring and Six Sigma savings should yield a further increase
in operating margin, resulting in diluted earnings per share of $3.45-to-$3.65
for the full year and $0.40-to-$0.45 for the first quarter. We expect to
eliminate the safety stock related to restructuring in 2003 and thereby
improve year-end inventory turns, and plan to convert at least 80% of net
earnings to free cash flow.
"Black & Decker's strong financial performance in 2002 resulted from
excellent execution of manufacturing and commercial initiatives. Our record
free cash flow demonstrates our commitment to cash generation and also speaks
to the quality of our earnings. We continued to invest in our brands, product
development, and end-user relationships, while implementing our comprehensive
restructuring program. In 2003, we will introduce many innovative products
throughout our businesses, including new DEWALT cordless tools and high-end
faucets. By combining market leadership with operating excellence, Black &
Decker should continue to deliver outstanding value to shareholders."
The Corporation will hold a conference call today at 10:00 a.m., E.T., to
discuss fourth-quarter and full-year results and the outlook for 2003.
Investors can listen to the call by visiting http://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 call to assure timely access. A replay of the
conference call will be available at http://www.bdk.com through the close of business
on February 6, 2003.
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, 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,
2002 2001
------------ ------------
SALES $ 1,231.8 $ 1,194.7
Cost of goods sold 780.0 803.6
Selling, general, and
administrative expenses 322.4 289.1
Restructuring and exit costs 12.3 99.8
------------ ------------
OPERATING INCOME 117.1 2.2
Interest expense (net of
interest income) 13.0 18.8
Other (income) expense (.2) .9
------------ ------------
EARNINGS (LOSS) BEFORE INCOME TAXES 104.3 (17.5)
Income taxes (benefit) 28.6 (4.5)
------------ ------------
NET EARNINGS (LOSS) $ 75.7 $ (13.0)
============ ============
NET EARNINGS (LOSS) PER COMMON
SHARE - BASIC $ .94 $ (.16)
============ ============
Shares Used in Computing Basic
Earnings Per Share (in Millions) 80.3 79.8
============ ============
NET EARNINGS (LOSS) PER COMMON
SHARE - ASSUMING DILUTION $ .94 $ (.16)
============ ============
Shares Used in Computing Diluted
Earnings Per Share (in Millions) 80.7 79.8
============ ============
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(Dollars in Millions Except Per Share Amounts)
Year Ended
-----------------------------
December 31, December 31,
2002 2001
------------- -------------
SALES $ 4,394.0 $ 4,245.6
Cost of goods sold 2,876.1 2,846.6
Selling, general, and
administrative expenses 1,097.1 1,051.4
Restructuring and exit costs 50.7 99.8
------------- -------------
OPERATING INCOME 370.1 247.8
Interest expense (net of
interest income) 57.8 84.3
Other expense 4.9 8.2
------------- -------------
EARNINGS BEFORE INCOME TAXES 307.4 155.3
Income taxes 77.7 47.3
------------- -------------
NET EARNINGS $ 229.7 $ 108.0
============= =============
NET EARNINGS PER COMMON
SHARE - BASIC $ 2.86 $ 1.34
============= =============
Shares Used in Computing Basic
Earnings Per Share (in Millions) 80.4 80.7
============= =============
NET EARNINGS PER COMMON
SHARE - ASSUMING DILUTION $ 2.84 $ 1.33
============= =============
Shares Used in Computing Diluted
Earnings Per Share (in Millions) 80.9 81.1
============= =============
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Millions of Dollars)
December 31, December 31,
2002 2001
------------- -------------
ASSETS
Cash and cash equivalents $ 517.1 $ 244.5
Trade receivables 729.0 708.6
Inventories 748.9 712.2
Other current assets 198.9 227.0
------------- -------------
TOTAL CURRENT ASSETS 2,193.9 1,892.3
------------- -------------
PROPERTY, PLANT, AND EQUIPMENT 655.9 687.5
GOODWILL 729.1 710.4
OTHER ASSETS 551.6 724.0
------------- -------------
$ 4,130.5 $ 4,014.2
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term borrowings $ 4.6 $ 12.3
Current maturities of long-term debt 312.0 33.7
Trade accounts payable 343.2 312.7
Other accrued liabilities 793.6 711.9
------------- -------------
TOTAL CURRENT LIABILITIES 1,453.4 1,070.6
------------- -------------
LONG-TERM DEBT 927.6 1,191.4
DEFERRED INCOME TAXES 211.3 261.1
POSTRETIREMENT BENEFITS 409.0 238.0
OTHER LONG-TERM LIABILITIES 529.6 502.1
STOCKHOLDERS' EQUITY 599.6 751.0
------------- -------------
$ 4,130.5 $ 4,014.2
============= =============
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION ABOUT BUSINESS SEGMENTS
(Millions of Dollars)
Reportable Business Segments
----------------------------------------------
Power Hardware Fastening
Three Months Ended Tools & & Home & Assembly
December 31, 2002 Accessories Improvement Systems Total
--------------------------------------------------------------------------
Sales to unaffiliated
customers $ 898.4 $ 187.0 $ 126.2 $1,211.6
Segment profit (loss) (for
Consolidated, operating
income before restructuring
and exit costs) 114.2 20.4 19.3 153.9
Depreciation and amortization 19.6 6.0 3.3 28.9
Capital expenditures 18.1 2.7 4.7 25.5
Three Months Ended
December 31, 2001
--------------------------------------------------------------------------
Sales to unaffiliated
customers $ 887.4 $ 196.3 $ 116.3 $1,200.0
Segment profit (loss) (for
Consolidated, operating
income before restructuring
and exit costs) 82.5 17.1 14.6 114.2
Depreciation and amortization 20.4 6.9 2.9 30.2
Capital expenditures 20.5 8.2 5.7 34.4
Year Ended
December 31, 2002
--------------------------------------------------------------------------
Sales to unaffiliated
customers $3,108.3 $ 758.0 $ 502.4 $4,368.7
Segment profit (loss) (for
Consolidated, operating
income before restructuring
and exit costs) 352.1 53.0 72.1 477.2
Depreciation and amortization 78.8 30.7 13.8 123.3
Capital expenditures 69.5 11.2 13.6 94.3
Year Ended
December 31, 2001
--------------------------------------------------------------------------
Sales to unaffiliated
customers $3,008.9 $ 766.2 $ 478.4 $4,253.5
Segment profit (loss) (for
Consolidated, operating
income before restructuring
and exit costs) 250.0 59.1 68.4 377.5
Depreciation and amortization 85.2 33.7 14.3 133.2
Capital expenditures 85.1 33.1 15.4 133.6
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION ABOUT BUSINESS SEGMENTS
(Millions of Dollars)
Currency Corporate,
Three Months Ended Translation Adjustments,
December 31, 2002 Adjustments & Eliminations Consolidated
--------------------------------------------------------------------------
Sales to unaffiliated customers $20.2 $ - $1,231.8
Segment profit (loss) (for
Consolidated, operating
income before restructuring
and exit costs) .4 (24.9) 129.4
Depreciation and amortization .8 2.2 31.9
Capital expenditures .8 .1 26.4
Three Months Ended
December 31, 2001
--------------------------------------------------------------------------
Sales to unaffiliated customers $(5.3) $ - $1,194.7
Segment profit (loss) (for
Consolidated, operating
income before restructuring
and exit costs) (.3) (11.9) 102.0
Depreciation and amortization - 6.4 36.6
Capital expenditures (.1) .1 34.4
Year Ended
December 31, 2002
--------------------------------------------------------------------------
Sales to unaffiliated customers $25.3 $ - $4,394.0
Segment profit (loss) (for
Consolidated, operating
income before restructuring
and exit costs) 1.2 (57.6) 420.8
Depreciation and amortization 1.2 3.3 127.8
Capital expenditures 1.5 .8 96.6
Year Ended
December 31, 2001
--------------------------------------------------------------------------
Sales to unaffiliated customers $(7.9) $ - $4,245.6
Segment profit (loss) (for
Consolidated, operating
income before restructuring
and exit costs) .4 (30.3) 347.6
Depreciation and amortization .4 25.8 159.4
Capital expenditures .4 .8 134.8
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
----------------------------------------------------------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2002 2001 2002 2001
----------------------------------------------------------------------
Segment profit for total
reportable business segments $ 153.9 $ 114.2 $ 477.2 $ 377.5
Items excluded from segment
profit:
Adjustment of budgeted
foreign exchange rates to
actual rates .4 (.3) 1.2 .4
Depreciation of Corporate
property and, for 2001,
amortization of certain
goodwill (.2) (6.4) (1.3) (25.8)
Adjustment to businesses'
postretirement benefit
expenses booked in
consolidation 9.3 11.0 37.6 41.3
Other adjustments booked in
consolidation directly
related to reportable
business segments (5.0) 2.3 (8.6) (.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 (29.0) (18.8) (85.3) (45.2)
----------------------------------------------------------------------
Operating income before
restructuring and exit costs 129.4 102.0 420.8 347.6
Restructuring and exit costs 12.3 99.8 50.7 99.8
----------------------------------------------------------------------
Operating income 117.1 2.2 370.1 247.8
Interest expense, net of
interest income 13.0 18.8 57.8 84.3
Other expense (income) (.2) .9 4.9 8.2
----------------------------------------------------------------------
Earnings (loss) before
income taxes $ 104.3 $ (17.5) $ 307.4 $ 155.3
======================================================================
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 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, 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 tables under the captions "Reportable Business Segments" and
"Corporate, Adjustments, & Eliminations" are reflected at the Corporation's
budgeted rates of exchange for 2002. 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, income
tax expense, and, for 2001, 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). 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.
SOURCE Black & Decker Corporation
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CONTACT:
Barbara B. Lucas, Senior Vice President -
Public Affairs, +1-410-716-2980; or Mark M. Rothleitner, Vice
President - Investor Relations and Treasurer, +1-410-716-3979,
both of Black & Decker Corporation
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