TOWSON, Md., April 28 /PRNewswire-FirstCall/ -- The Black & Decker
Corporation (NYSE: BDK) today announced that net earnings from continuing
operations for the first quarter of 2005 were $147.9 million or $1.79 per
diluted share, versus $74.3 million or $0.93 per diluted share in the first
quarter of 2004. Excluding a favorable $55 million pre-tax insurance
settlement, diluted earnings per share from continuing operations were a
record $1.36, an increase of 46% over the prior year.
Sales from continuing operations increased 39% for the quarter to a record
$1.52 billion. Sales of existing businesses increased 17% in the quarter,
including a positive impact of 2% from foreign currency translation.
Acquisitions had a positive impact of 22% on sales for the quarter.
Free cash flow improved $118 million over the first quarter of 2004 to $43
million, reflecting improved operating profit and the insurance settlement
proceeds. The Corporation repurchased approximately 2.5 million shares of its
common stock during the quarter.
Nolan D. Archibald, Chairman and Chief Executive Officer, commented,
"Black & Decker had another outstanding quarter, driven by especially strong
organic sales growth in the U.S. DEWALT and Price Pfister businesses. Sales
growth in our existing businesses has averaged over 10% during the last four
quarters, and all of our segments grew solidly again this quarter. Operating
margin increased 90 basis points due to sales volume leverage and cost saving
initiatives. As a result, we extended our track record of operating
improvement to twelve straight quarters of 18% or better EPS growth.
"Sales in the Power Tools and Accessories segment increased 50% for the
quarter, including 17% in existing businesses. Sales increased in all regions
and all major product categories. The U.S. DEWALT business combined market
share gains with continued strength in construction markets to generate sales
growth in excess of 30%. DEWALT grew sales impressively in all major
channels, with outstanding sell-through. Sales of industrial cordless
products were particularly strong, building on the success of last year's
high-end XRP(TM) line launch. The U.S. Black & Decker consumer business grew
sales at a mid-single-digit rate, driven by power tools such as drills and
sanders, as well as an increase in the accessories division. European sales
increased at a high single-digit rate, including a modest gain in the consumer
business and a double-digit rate of growth for DEWALT.
"Operating margin improved 160 basis points for the Power Tools and
Accessories segment to 12.2%, with sales volume leverage and productivity
outweighing higher raw material prices and the addition of the lower-margin
Porter-Cable and Delta Tools Group. Both the North American and European
businesses increased operating margins significantly. Incremental earnings
from the acquired business were in line with our expectations, contributing to
a 74% increase in operating profits for the segment.
"Sales in the Hardware and Home Improvement segment increased 9% for the
quarter. Sales of Price Pfister(R) plumbing products increased more than 25%,
reflecting additional listings at a key retailer and continued success at
other retailers. The lockset business grew sales at a low single-digit rate,
led by higher-priced products within the Kwikset(R) line. Operating profit
decreased, primarily due to higher raw material prices and restructuring-
related costs associated with the rationalization of lockset manufacturing.
We continue to expect that this rationalization will improve margins in the
second half of 2005.
"Sales in the Fastening and Assembly Systems segment increased 14% for the
quarter, with the MasterFix acquisition contributing 4% to the increase.
Sales increased in all geographic regions and in both the automotive and
industrial divisions, despite production decreases by key automotive
customers. Operating margin in this segment increased 90 basis points to
14.5%, reflecting higher sales volume and price increases partially offset by
higher raw material costs.
"Looking forward, we expect that our sales will remain strong in the
coming quarters, but growth rates will be affected by tougher comparisons. We
are increasing our sales growth forecast for the remainder of the year to the
mid-single-digit range, excluding currency translation and acquisitions.
Including these factors, we expect a full-year sales growth rate at or above
20%. Operating margin will likely be below 2004 levels until the fourth
quarter due to the impact of the Porter-Cable and Delta Tools Group
acquisition, but should be up modestly for the full year. Based on our
revised sales outlook, a reduction in share count and the new timetable for
expensing stock options, we expect diluted earnings per share from continuing
operations in the ranges of $1.73-to-$1.78 for the second quarter and $6.55-
to-$6.70 for the full year, excluding the impact of the insurance settlement.
We continue to expect that we will convert at least 90% of full-year net
earnings to free cash flow.
"We are very pleased to build on our record performance of 2004 with
another record quarter, and we are confident that our momentum will continue
throughout 2005. We have established a track record of improving our
businesses, and expect to extend our outstanding earnings growth through cost
initiatives and new products. Black & Decker is focused on creating value for
shareholders through compelling bolt-on acquisitions, share repurchases, and a
competitive dividend. Our strategy is working, and we will focus on executing
that strategy to deliver superior returns to our investors."
The Corporation also announced that its Board of Directors declared a
quarterly cash dividend of $0.28 per share of the Corporation's outstanding
common stock payable June 24, 2005, to stockholders of record at the close of
business on June 10, 2005.
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 2005.
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 ensure 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, 2004.
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
------------------------------
April 3, 2005 March 28, 2004
------------- --------------
SALES $ 1,519.3 $ 1,092.9
Cost of goods sold 983.8 690.1
Selling, general, and
administrative expenses 371.2 295.1
------------- -------------
OPERATING INCOME 164.3 107.7
Interest expense (net of interest
income) 9.2 5.2
Other (income) expense (53.5) .8
------------- -------------
EARNINGS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 208.6 101.7
Income taxes 60.7 27.4
------------- -------------
NET EARNINGS FROM CONTINUING
OPERATIONS 147.9 74.3
DISCONTINUED OPERATIONS (NET OF
INCOME TAXES):
Earnings of discontinued operations .8 .6
Gain on sale of discontinued
operations (net of impairment
charge of $24.4) - 11.7
------------- -------------
NET EARNINGS FROM DISCONTINUED
OPERATIONS .8 12.3
------------- -------------
NET EARNINGS $ 148.7 $ 86.6
============= =============
BASIC EARNINGS PER COMMON SHARE
Continuing operations $ 1.84 $ .94
Discontinued operations .01 .16
------------- -------------
NET EARNINGS PER COMMON SHARE - BASIC $ 1.85 $ 1.10
============= =============
Shares Used in Computing Basic
Earnings Per Share (in Millions) 80.5 78.4
============= =============
DILUTED EARNINGS PER COMMON SHARE
Continuing operations $ 1.79 $ .93
Discontinued operations .01 .16
------------- -------------
NET EARNINGS PER COMMON SHARE -
ASSUMING DILUTION $ 1.80 $ 1.09
============= =============
Shares Used in Computing Diluted
Earnings Per Share (in Millions) 82.7 79.5
============= =============
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Millions of Dollars)
April 3, 2005 December 31, 2004
------------- -----------------
ASSETS
Cash and cash equivalents $ 321.4 $ 514.4
Trade receivables 1,090.3 1,046.6
Inventories 1,094.0 981.8
Current assets of discontinued
operations 68.0 70.8
Other current assets 284.4 313.6
------------- -------------
TOTAL CURRENT ASSETS 2,858.1 2,927.2
------------- -------------
PROPERTY, PLANT, AND EQUIPMENT 741.1 754.6
GOODWILL 1,180.0 1,184.0
OTHER ASSETS 662.6 665.0
------------- -------------
$ 5,441.8 $ 5,530.8
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term borrowings $ 2.1 $ 1.1
Current maturities of long-term debt 157.5 .5
Trade accounts payable 571.9 466.9
Current liabilities of discontinued
operations 29.8 29.9
Other current liabilities 1,163.5 1,294.2
------------- -------------
TOTAL CURRENT LIABILITIES 1,924.8 1,792.6
------------- -------------
LONG-TERM DEBT 1,031.5 1,200.6
DEFERRED INCOME TAXES 171.2 171.1
POSTRETIREMENT BENEFITS 422.3 423.4
OTHER LONG-TERM LIABILITIES 390.6 384.4
STOCKHOLDERS' EQUITY 1,501.4 1,558.7
------------- -------------
$ 5,441.8 $ 5,530.8
============= =============
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
April 3, 2005 Accessories Improvement Systems Total
--------------------------------------------------------------------------
Sales to unaffiliated
customers $ 1,078.8 $ 240.6 $ 166.0 $ 1,485.4
Segment profit (loss)
(for Consolidated,
operating income) 132.0 29.5 24.1 185.6
Depreciation and
amortization 25.1 6.3 4.7 36.1
Capital expenditures 17.8 5.4 2.5 25.7
Three Months Ended
March 28, 2004
--------------------------------------------------------------------------
Sales to unaffiliated
customers $ 716.9 $ 221.2 $ 145.8 $ 1,083.9
Segment profit (loss)
(for Consolidated,
operating income) 76.0 31.9 19.8 127.7
Depreciation and
amortization 20.1 7.6 4.4 32.1
Capital expenditures 14.9 2.9 2.3 20.1
Currency Corporate,
Three Months Ended Translation Adjustments,
April 3, 2005 Adjustments & Eliminations Consolidated
--------------------------------------------------------------------------
Sales to unaffiliated customers $ 33.9 $ - $ 1,519.3
Segment profit (loss)
(for Consolidated,
operating income) 4.5 (25.8) 164.3
Depreciation and amortization .8 1.8 38.7
Capital expenditures .7 .2 26.6
Three Months Ended
March 28, 2004
--------------------------------------------------------------------------
Sales to unaffiliated customers $ 9.0 $ - $ 1,092.9
Segment profit (loss)
(for Consolidated,
operating income) 1.3 (21.3) 107.7
Depreciation and amortization .2 2.8 35.1
Capital expenditures .1 .2 20.4
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
--------------------------------------------------------------------------
April 3, 2005 March 28, 2004
--------------------------------------------------------------------------
Segment profit for total reportable
business segments $185.6 $127.7
Items excluded from segment profit:
Adjustment of budgeted foreign
exchange rates to actual rates 4.5 1.3
Depreciation of Corporate property (.2) (.4)
Adjustment to businesses' postretirement
benefit expenses booked in consolidation (3.9) .1
Other adjustments booked in consolidation
directly related to reportable
business segments (.8) (2.1)
Amounts allocated to businesses in
arriving at segment profit in excess of
(less than) Corporate center operating
expenses, eliminations, and other amounts
identified above (20.9) (18.9)
-------------------------------------------------------------------------
Operating income 164.3 107.7
Interest expense, net of interest income 9.2 5.2
Other (income) expense (53.5) .8
-------------------------------------------------------------------------
Earnings from continuing
operations before income taxes $208.6 $101.7
=========================================================================
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 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. On October 2, 2004, the
Corporation acquired the Porter-Cable and Delta Tools Group from Pentair, Inc.
This acquired business is included in the Power Tools and Accessories segment.
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). 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 currently held for sale 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 profitability measure employed by the Corporation and its chief
operating decision maker for making decisions about allocating resources to
segments and assessing segment performance is segment profit (for the
Corporation on a consolidated basis, operating income). 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, 2004, except with
respect to foreign currency translation and except as further indicated below.
The financial statements of a segment's operating units located outside of the
United States, except those units operating in highly inflationary economies,
are generally measured using the local currency as the functional currency.
For these units located outside of the United States, segment assets and
elements of segment profit are translated using budgeted rates of exchange.
Budgeted rates of exchange are established annually and, once established, all
prior period segment data is restated to reflect the current year's budgeted
rates of exchange. The amounts included in the preceding table under the
captions "Reportable Business Segments" and "Corporate, Adjustments, &
Eliminations" are reflected at the Corporation's budgeted rates of exchange
for 2005. The amounts included in the preceding table under the caption
"Currency Translation Adjustments" represent the difference between
consolidated amounts determined using those budgeted rates of exchange and
those determined based upon the rates of exchange applicable under accounting
principles generally accepted in the United States.
Segment profit excludes interest income and expense, non-operating income
and expense, adjustments to eliminate intercompany profit in inventory, and
income tax expense. 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. 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.
Diluted earnings per share from continuing operations, excluding the
insurance settlement:
--------------------------------------------------------------------
The calculation of diluted earnings per share from continuing operations,
excluding a favorable $55 million pre-tax insurance settlement in 2005, for
the three months ended April 3, 2005 and March 28, 2004, follows (dollars in
millions except per share amounts):
Three Months Ended
April 3, March 28,
2005 2004
-------- ---------
Net earnings from continuing operations $ 147.9 $ 74.3
Excluding:
Insurance settlement, net of tax (35.8) -
-------- -------
Net earnings from continuing operations,
excluding the insurance settlement $ 112.1 $ 74.3
======== =======
Diluted earnings per common share from
continuing operations $ 1.79 $ .93
Excluding:
Insurance settlement, net of tax,
per common share - assuming dilution (.43) -
-------- -------
Net earnings from continuing operations,
excluding the insurance settlement,
per common share - assuming dilution $ 1.36 $ .93
======== =======
Shares used in computing diluted earnings
per share (in millions) 82.7 79.5
======== =======
Free cash flow for the three months ended April 3, 2005 and March 28,
2004:
---------------------------------------------------------------------
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
three months ended April 3, 2005 and March 28, 2004, follows (dollars in
millions):
Three Months Ended
April 3, March 28,
2005 2004
-------- ---------
Cash flow from operating activities $ 69.7 $ (54.8)
Capital expenditures (26.7) (20.7)
Proceeds from disposals of assets .3 .7
-------- --------
Free cash flow $ 43.3 $ (74.8)
======== ========
Capital expenditures and proceeds from the disposal of assets include
amounts associated with discontinued operations.
Diluted earnings per share from continuing operations for the full year
2005:
-----------------------------------------------------------------------
This press release includes a forward-looking statement with respect to
management's expectation that the Corporation's diluted earnings per share
from continuing operations would range from $6.55 to $6.70 for the full year,
excluding the impact of the insurance settlement. The aforementioned range
excludes the effect of a favorable $55 million pre-tax ($35.8 million
after-tax) insurance settlement. Management's expectation is that the
Corporation's diluted earnings per share from continuing operations would
range from $6.98 to $7.13 for the full year, including the impact of the
insurance settlement.
SOURCE The 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 The Black & Decker Corporation
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