TOWSON, Md., April 20 /PRNewswire-FirstCall/ -- The Black & Decker
Corporation (NYSE: BDK) today announced that net earnings from continuing
operations for the first quarter of 2004 were a record $74.3 million or $0.93
per diluted share, a 69% increase over diluted earnings per share of $0.55 in
the first quarter of 2003. Including discontinued operations, which reflect a
net gain on the sale of discontinued operations, diluted earnings per share
were $1.09 for the quarter.
Sales from continuing operations for the first quarter of 2004 were
$1.09 billion, a 16% increase over $0.94 billion for the same period last
year. Sales increased 5% excluding the effects of foreign currency
translation and acquisitions.
Inventory of continuing operations was $790 million at quarter-end,
virtually flat to the first quarter of 2003. Excluding the effects of foreign
currency translation and acquisitions, inventory decreased approximately
$80 million. Free cash flow improved $72 million over the first quarter of
2003 to negative $75 million.
Commenting on the results, Nolan D. Archibald, Chairman and Chief
Executive Officer, said, "Our strong market positions, together with an
improving economy, drove sales growth at a high single-digit rate before
acquisitions in our North American businesses. We are especially pleased with
results in the DEWALT Professional Products division, which answered
competitive challenges with a double-digit rate of sales growth.
"Operating margin increased more than 200 basis points, reflecting the
continued success of our restructuring program and the benefit of sales volume
leverage. As a result, earnings per share grew more than 19% for the eighth
consecutive quarter and exceeded our initial guidance.
"Sales in the Power Tools and Accessories segment increased 3% for the
quarter, with a high single-digit rate of growth in the Americas. Sales in
Europe decreased at a high single-digit rate, due to weak economic conditions
and higher back orders. Segment operating profit increased 25% for the
quarter, led by the North American business.
"In the U.S., sales of DEWALT(R) professional products increased in all
major distribution channels and product categories, resulting in a
double-digit growth rate for the second straight quarter. DEWALT benefited
from new products, such as cordless impact wrenches and reciprocating saws, as
well as a line of laser optical instruments. Sales of Black & Decker consumer
products increased at a low single-digit rate, with strong tool sales partly
offset by unfavorable timing of orders for lawn and garden products. For the
total U.S. power tools and accessories business, sell-through at large
retailers grew at a double-digit rate for the third consecutive quarter.
"Sales in the Hardware and Home Improvement segment increased 14%
excluding the acquisition of Baldwin Hardware Corporation and Weiser Lock
Corporation. Kwikset sales grew at a double-digit rate, driven by demand in
the retail channel. Price Pfister sales rose nearly 20%, due to strong
acceptance of the enhanced product offerings at a major retailer.
Productivity, restructuring savings, and higher sales volume resulted in a
dramatic increase in operating margin over the first quarter of 2003.
Operating profit more than doubled, due to higher margins and the acquisition.
"Sales in the Fastening and Assembly Systems segment increased 4%, led by
a double-digit growth rate in Asia. Outside of Asia, industrial division
sales increased at a mid-single-digit rate, and automotive division sales
increased slightly despite declining automotive production. Operating profit
in this segment decreased 5%, largely due to unfavorable mix and costs
associated with closing a small manufacturing facility. Late in the quarter,
we acquired the MasterFix Group, an industrial fastening company with
operations in Europe and Asia. We expect this business to generate annualized
sales of approximately $20 million.
"Two key operating initiatives - the restructuring program and the
integration of Baldwin and Weiser with our Kwikset security hardware business
- are on track to meet or exceed our financial targets. The restructuring
program, which began in 2002 and is in its final phase, generated
approximately $20 million of savings in the quarter, and we continue to expect
incremental savings of at least $45 million in 2004 and $10 million in 2005.
In addition, we continue to estimate that the security hardware integration
plan will yield $25 million of total annualized savings upon completion. In
2004, the plan is expected to require at least $15 million of
restructuring-related expenses. Savings from the integration, however,
combined with lower restructuring-related expenses, should result in a
$20 million improvement in operating income in 2005 and an additional
$20 million improvement in 2006.
"Looking forward, we remain optimistic about our market positions and
encouraged by the improving North American economy. For both the second
quarter and the full year, we are forecasting a mid-single-digit rate of sales
growth excluding currency translation and acquisitions, or a double-digit
growth rate including those factors. Restructuring benefits and volume
leverage should continue to improve our operating margins, and, therefore, we
anticipate diluted earnings per share from continuing operations in the ranges
of $1.20-to-$1.25 for the second quarter and $4.70-to-$4.85 for the full year.
We continue to expect that we will convert at least 90% of full-year net
earnings to free cash flow.
"Black & Decker delivered excellent results for all key metrics - strong
sales growth, higher operating margin, better free cash flow, and dramatic
earnings improvement. We have a full new-product pipeline for 2004, which we
will support with powerful brands, broad distribution, and industry-leading
end-user focus to maintain market leadership. By combining top market
positions 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., ET, to
discuss first-quarter results and the outlook for the remainder of 2004.
Investors can listen to the conference 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 event to assure timely access. A
replay of the call will be available at http://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, 2003.
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
----------------------------------
March 28, 2004 March 30, 2003
----------------- ---------------
SALES $ 1,092.9 $ 939.2
Cost of goods sold 690.1 603.9
Selling, general, and
administrative expenses 295.1 263.0
Restructuring and exit costs .2
----------------- ---------------
OPERATING INCOME 107.7 72.1
Interest expense (net of interest
income) 5.2 12.1
Other expense .8 1.7
----------------- ---------------
EARNINGS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 101.7 58.3
Income taxes 27.4 15.2
----------------- ---------------
NET EARNINGS FROM CONTINUING
OPERATIONS 74.3 43.1
DISCONTINUED OPERATIONS (NET OF INCOME
TAXES):
Earnings of discontinued operations .6 .3
Gain on sale of discontinued
operations (net of impairment
charge of $24.4) 11.7
----------------- ---------------
NET EARNINGS FROM DISCONTINUED
OPERATIONS 12.3 .3
----------------- ---------------
NET EARNINGS $ 86.6 $ 43.4
================= ===============
BASIC EARNINGS PER COMMON SHARE
Continuing operations $ .94 $ .55
Discontinued operations .16
----------------- ---------------
NET EARNINGS PER COMMON SHARE BASIC $ 1.10 $ .55
================= ===============
Shares Used in Computing Basic
Earnings Per Share (in Millions) 78.4 78.3
================= ===============
DILUTED EARNINGS PER COMMON SHARE
Continuing operations $ .93 $ .55
Discontinued operations .16
----------------- ---------------
NET EARNINGS PER COMMON SHARE
ASSUMING DILUTION $ 1.09 $ .55
================= ===============
Shares Used in Computing Diluted
Earnings Per Share (in Millions) 79.5 78.5
================= ===============
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Millions of Dollars)
March 28, 2004 December 31, 2003
----------------- --------------------
ASSETS
Cash and cash equivalents $ 321.7 $ 308.2
Trade receivables 889.2 808.6
Inventories 789.7 709.9
Current assets of discontinued
operations 68.6 160.2
Other current assets 232.4 216.1
----------------- --------------------
TOTAL CURRENT ASSETS 2,301.6 2,203.0
----------------- --------------------
PROPERTY, PLANT, AND EQUIPMENT 650.7 660.2
GOODWILL 779.9 771.7
OTHER ASSETS 600.0 587.6
----------------- --------------------
$ 4,332.2 $ 4,222.5
================= ====================
LIABILITIES AND STOCKHOLDERS'
EQUITY
Short-term borrowings $ 4.8 $ .1
Current maturities of long-term
debt .4 .4
Trade accounts payable 460.1 379.8
Current liabilities of discontinued
operations 30.2 38.0
Other accrued liabilities 757.9 893.8
----------------- --------------------
TOTAL CURRENT LIABILITIES 1,253.4 1,312.1
----------------- --------------------
LONG-TERM DEBT 922.5 915.6
DEFERRED INCOME TAXES 182.1 179.8
POSTRETIREMENT BENEFITS 465.0 451.9
OTHER LONG-TERM LIABILITIES 515.1 516.6
STOCKHOLDERS' EQUITY 994.1 846.5
----------------- --------------------
$ 4,332.2 $ 4,222.5
================= ====================
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
March 28, 2004 Accessories Improvement Systems Total
--------------------------------------------------------------------------
Sales to unaffiliated
customers $689.6 $220.4 $138.4 $1,048.4
Segment profit (loss)
(for Consolidated,
operating income) 74.1 31.7 18.4 124.2
Depreciation and amortization 19.3 7.6 4.2 31.1
Capital expenditures 14.3 2.9 2.3 19.5
Three Months Ended
March 30, 2003
--------------------------------------------------------------------------
Sales to unaffiliated
customers $666.4 $146.2 $133.2 $945.8
Segment profit (loss)
(for Consolidated,
operating income before
restructuring and exit costs 59.5 13.0 19.3 91.8
Depreciation and amortization 20.1 6.8 3.8 30.7
Capital expenditures 15.2 7.3 3.5 26.0
Currency Corporate,
Three Months Ended Translation Adjustments,
March 28, 2004 Adjustments & Eliminations Consolidated
--------------------------------------------------------------------------
Sales to unaffiliated customers $44.5 $ $1,092.9
Segment profit (loss) (for
Consolidated, operating income) 3.5 (20.0) 107.7
Depreciation and amortization 1.2 2.8 35.1
Capital expenditures .7 .2 20.4
Three Months Ended
March 30, 2003
--------------------------------------------------------------------------
Sales to unaffiliated customers ($6.6) $ $939.2
Segment profit (loss) (for
Consolidated, operating income
before restructuring and exit
costs (.2) (19.3) 72.3
Depreciation and amortization 4.4 35.1
Capital expenditures (.2) .2 26.0
The reconciliation of segment profit to the Corporation's earnings from
continuing operations before income taxes, in millions of dollars, is as
follows:
Three Months Ended
-------------------------------------------------------------------------
March 28, 2004 March 30, 2003
-------------------------------------------------------------------------
Segment profit for total reportable
business segments $124.2 $91.8
Items excluded from segment profit:
Adjustment of budgeted foreign
exchange rates to actual rates 3.5 (.2)
Depreciation of Corporate property (.4) (.3)
Adjustment to businesses'
postretirement benefit expenses booked
in consolidation .1 3.8
Other adjustments booked in
consolidation directly related to
reportable business segments (2.1) (8.8)
Amounts allocated to businesses in
arriving at segment profit in excess of
(less than) Corporate center operating
expenses, eliminations, and other
amounts identified above (17.6) (14.0)
-------------------------------------------------------------------------
Operating income before
restructuring and exit costs 107.7 72.3
Restructuring and exit costs .2
-------------------------------------------------------------------------
Operating income 107.7 72.1
Interest expense, net of interest income 5.2 12.1
Other expense .8 1.7
-------------------------------------------------------------------------
Earnings from continuing
operations before income taxes $101.7 $58.3
=========================================================================
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). 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. The Hardware and Home Improvement segment 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, 2003,
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 2004. 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 of acquired businesses on sales and inventories.
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.
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 2004. The reference in this press release to a
5% increase in sales, excluding the effects of foreign currency translation
and acquired businesses, for the first quarter of 2004, compared to the
corresponding period in 2003, is determined as follows (dollars in millions):
Three Months Ended
March 28, March 30,
2004 2003
--------- ---------
Sales $ 1,092.9 $ 939.2
Currency translation adjustment (44.5) 6.6
--------- ---------
Sales as translated at
budgeted rates of exchange 1,048.4 945.8
Sales of acquired businesses
as translated at budgeted rates of exchange (54.8) -
--------- ---------
Sales excluding foreign currency
and acquired businesses $ 993.6 $ 945.8
========= =========
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 14% sales increase for the quarter ended March 28, 2004 as
compared to the corresponding quarter in the prior year, 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 $54.1 million of sales of the acquired businesses that
were recognized for the quarter ended March 28, 2004.
Inventory, excluding the effects of foreign currency translation and
acquired businesses:
-------------------------------------------------------------------------
The calculation of the $80 million reduction in inventory from continuing
operations, excluding the effects of foreign currency translation and
acquisitions, as of March 28, 2004 as compared to March 30, 2003, follows
(dollars in millions):
March 28, March 30,
2004 2003
--------- ---------
Inventory (continuing operations) $789.7 $788.7
Currency translation adjustment (at
budgeted rates of exchange) (36.7) 5.4
Inventory of acquired businesses as translated
at budgeted rates of exchange (38.4) -
--------- ---------
Inventory excluding foreign currency and
acquired businesses $714.6 $794.1
========= =========
Free cash flow for the quarters ended March 28, 2004 and March 30, 2003:
-------------------------------------------------------------------------
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
quarters ended March 28, 2004 and March 30, 2003, follows (dollars in
millions):
Three Months Ended
March 28, March 30,
2004 2003
--------- ---------
Cash flow from operating activities $(54.8) $(120.4)
Capital expenditures (including capital
expenditures of discontinued operations) (20.7) (26.4)
Proceeds from disposals of assets .7 .2
--------- ---------
Free cash flow $(74.8) $(146.6)
========= =========
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
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