TOWSON, Md., July 26 /PRNewswire-FirstCall/ -- The Black & Decker
Corporation (NYSE: BDK) today announced that net earnings from continuing
operations for the second quarter of 2005 were $154.0 million or $1.88 per
diluted share, versus $121.8 million or $1.50 per diluted share in the second
quarter of 2004. Diluted earnings per share from continuing operations
increased 25%, marking the thirteenth consecutive quarter of growth at or
above 18%.
Sales from continuing operations increased 31% for the quarter to a record
$1.7 billion. Sales of existing businesses increased 11% in the quarter,
including a positive impact of 3% from foreign currency translation. The
Porter-Cable and Delta Tools Group acquisition contributed 20% to sales for
the quarter.
Free cash flow was $118 million year-to-date, versus $123 million for the
first six months of 2004. The Corporation repurchased approximately 0.5
million shares of its common stock during the quarter.
Nolan D. Archibald, Chairman and Chief Executive Officer, commented,
"Outstanding organic sales and margin growth in the Power Tools and
Accessories segment drove our excellent results this quarter. Sales were also
very strong in the Price Pfister and Kwikset divisions, helping Black & Decker
post 8% organic sales growth after outstanding growth in the second quarter of
2004. This growth, combined with higher operating margin in existing
businesses and a solid contribution from the acquired tools business, enabled
us to exceed expectations and extend our track record of operating
improvement.
"Sales in the Power Tools and Accessories segment increased 35% for the
quarter, including 7% in existing businesses. The U.S. DEWALT business grew
sales at a double-digit rate for the sixth time in the last seven quarters,
reflecting outstanding sell-through of cordless products and other
construction tools. The U.S. Black & Decker consumer business posted a slight
increase in sales, reflecting growth in lawn and garden and home products,
against a very strong quarter last year. Despite economic weakness in the
region, European sales grew for the fifth consecutive quarter, increasing at a
low single-digit rate.
"Operating margin improved for the Power Tools and Accessories segment to
14.4%, with an increase in Europe and sales volume leverage offsetting higher
raw material prices and the addition of the lower-margin acquired business.
Sales and incremental earnings from the acquired business were in line with
our expectations and contributed to a 37% increase in operating profits for
the segment.
"Sales in the Hardware and Home Improvement segment increased 16% for the
quarter. Sales of Price Pfister(R) plumbing products increased more than 30%,
largely due to the continued sell-in of new listings at a key retailer. The
lockset business grew sales at a double-digit rate, led by strong growth in
the Kwikset(R) line. Operating margin increased sequentially to 14.1%, but
decreased from the high level posted in the second quarter of 2004 because of
raw material inflation, integration costs and other non-recurring expenses.
"Sales in the Fastening and Assembly Systems segment increased 4% for the
quarter. Automotive division sales drove the increase, as increased
penetration on automotive platforms and strong equipment orders outweighed
production decreases by key customers. Operating margin in this segment
decreased to 13.4%, reflecting higher raw material costs and unfavorable mix.
"For the second half of 2005, we continue to expect sales growth in the
mid-single-digit range, excluding currency translation and acquisitions.
Including these factors, we expect a full-year sales growth rate above 20%.
In the third quarter, operating margin should be similar to the 2004 level,
and, in the fourth quarter, should increase over the prior-year level as we
pass the first anniversary of the tools acquisition. Due to our better-than-
expected earnings in the second quarter, we expect diluted earnings per share
from continuing operations in the range of $6.70-to-$6.80 for the full year,
excluding the favorable impact of an insurance settlement in the first
quarter. For the third quarter, we expect to extend our string of 18% or
greater EPS growth, with diluted earnings per share from continuing operations
in the range of $1.62-to-$1.67. We continue to expect that we will convert at
least 90% of full-year net earnings to free cash flow.
"Black & Decker had another great quarter, and we remain confident that
our momentum is sustainable. We have established a track record of improving
our businesses and meeting competitive challenges, and expect to extend our
outstanding growth trend. We continue to generate significant free cash flow,
and plan to create additional 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 September 30, 2005, to stockholders of record at the
close of business on September 16, 2005.
The Corporation will hold a conference call today at 10:00 a.m., E.T., to
discuss second-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
-------------------------------
July 3, 2005 June 27, 2004
------------- --------------
SALES $ 1,698.8 $ 1,297.6
Cost of goods sold 1,099.3 810.0
Selling, general, and
administrative expenses 377.4 316.0
------------- --------------
OPERATING INCOME 222.1 171.6
Interest expense (net of interest
income) 9.8 4.5
Other expense 1.3 .2
------------- --------------
EARNINGS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 211.0 166.9
Income taxes 57.0 45.1
------------- --------------
NET EARNINGS FROM CONTINUING
OPERATIONS 154.0 121.8
Earnings (loss) of discontinued
operations (net of income taxes) - (0.2)
------------- --------------
NET EARNINGS $ 154.0 $ 121.6
============= ==============
BASIC EARNINGS PER COMMON SHARE
Continuing operations $ 1.93 $ 1.53
Discontinued operations - -
------------- --------------
NET EARNINGS PER COMMON SHARE - BASIC $ 1.93 $ 1.53
============= ==============
Shares Used in Computing Basic
Earnings Per Share (in Millions) 79.8 79.4
============= ==============
DILUTED EARNINGS PER COMMON SHARE
Continuing operations $ 1.88 $ 1.50
Discontinued operations - -
------------- --------------
NET EARNINGS PER COMMON SHARE -
ASSUMING DILUTION $ 1.88 $ 1.50
============= ==============
Shares Used in Computing Diluted
Earnings Per Share (in Millions) 82.0 80.9
============= ==============
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(Dollars in Millions Except Per Share Amounts)
Six Months Ended
-------------------------------
July 3, 2005 June 27, 2004
------------- --------------
SALES $ 3,218.1 $ 2,390.5
Cost of goods sold 2,083.1 1,500.1
Selling, general, and
administrative expenses 748.6 611.1
------------- --------------
OPERATING INCOME 386.4 279.3
Interest expense (net of interest
income) 19.0 9.7
Other (income) expense (52.2) 1.0
------------- --------------
EARNINGS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 419.6 268.6
Income taxes 117.7 72.5
------------- --------------
NET EARNINGS FROM CONTINUING
OPERATIONS 301.9 196.1
DISCONTINUED OPERATIONS (NET OF
INCOME TAXES):
Earnings of discontinued operations .8 .4
Gain on sale of discontinued
operations (net of impairment
charge of $24.4) - 11.7
------------- --------------
NET EARNINGS FROM DISCONTINUED
OPERATIONS .8 12.1
------------- --------------
NET EARNINGS $ 302.7 $ 208.2
============= ==============
BASIC EARNINGS PER COMMON SHARE
Continuing operations $ 3.77 $ 2.49
Discontinued operations .01 .15
------------- --------------
NET EARNINGS PER COMMON SHARE - BASIC $ 3.78 $ 2.64
============= ==============
Shares Used in Computing Basic
Earnings Per Share (in Millions) 80.1 78.9
============= ==============
DILUTED EARNINGS PER COMMON SHARE
Continuing operations $ 3.67 $ 2.44
Discontinued operations .01 .15
------------- --------------
NET EARNINGS PER COMMON SHARE -
ASSUMING DILUTION $ 3.68 $ 2.59
============= ==============
Shares Used in Computing Diluted
Earnings Per Share (in Millions) 82.3 80.2
============= ==============
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Millions of Dollars)
July 3,2005 December 31,2004
------------- ------------------
ASSETS
Cash and cash equivalents $ 367.1 $ 514.4
Trade receivables 1,214.1 1,046.6
Inventories 1,116.2 981.8
Current assets of discontinued
operations 64.6 70.8
Other current assets 284.4 313.6
------------- ------------------
TOTAL CURRENT ASSETS 3,046.4 2,927.2
------------- ------------------
PROPERTY, PLANT, AND EQUIPMENT 712.2 754.6
GOODWILL 1,167.1 1,184.0
OTHER ASSETS 656.3 665.0
------------- ------------------
$ 5,582.0 $ 5,530.8
============= ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term borrowings $ 4.1 $ 1.1
Current maturities of long-term debt 156.6 .5
Trade accounts payable 571.8 466.9
Current liabilities of discontinued
operations 29.3 29.9
Other current liabilities 1,178.7 1,294.2
------------- ------------------
TOTAL CURRENT LIABILITIES 1,940.5 1,792.6
------------- ------------------
LONG-TERM DEBT 1,044.7 1,200.6
DEFERRED INCOME TAXES 168.3 171.1
POSTRETIREMENT BENEFITS 422.6 423.4
OTHER LONG-TERM LIABILITIES 380.6 384.4
STOCKHOLDERS' EQUITY 1,625.3 1,558.7
------------- ------------------
$ 5,582.0 $ 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
July 3, 2005 Accessories Improvement Systems Total
--------------------------------------------------------------------------
Sales to unaffiliated
customers $ 1,227.5 $ 275.4 $ 167.3 $ 1,670.2
Segment profit (loss)
(for Consolidated,
operating income) 176.3 38.9 22.4 237.6
Depreciation and
amortization 26.2 6.0 4.6 36.8
Capital expenditures 21.2 3.2 3.2 27.6
Three Months Ended
June 27, 2004
--------------------------------------------------------------------------
Sales to unaffiliated
customers $ 908.6 $ 236.9 $ 160.4 $ 1,305.9
Segment profit (loss)
(for Consolidated,
operating income) 128.5 41.8 23.4 193.7
Depreciation and
amortization 20.1 7.6 4.4 32.1
Capital expenditures 17.2 5.4 2.4 25.0
Six Months Ended
July 3, 2005
--------------------------------------------------------------------------
Sales to unaffiliated
customers $ 2,306.3 $ 516.0 $ 333.3 $ 3,155.6
Segment profit (loss)
(for Consolidated,
operating income) 308.3 68.4 46.5 423.2
Depreciation and
amortization 51.3 12.3 9.3 72.9
Capital expenditures 39.0 8.6 5.7 53.3
Six Months Ended
June 27, 2004
--------------------------------------------------------------------------
Sales to unaffiliated
customers $ 1,625.5 $ 458.1 $ 306.2 $ 2,389.8
Segment profit (loss)
(for Consolidated,
operating income) 204.5 73.7 43.2 321.4
Depreciation and
amortization 40.2 15.2 8.8 64.2
Capital expenditures 32.1 8.3 4.7 45.1
Currency Corporate,
Three Months Ended Translation Adjustments,
July 3, 2005 Adjustments & Eliminations Consolidated
--------------------------------------------------------------------------
Sales to unaffiliated customers $ 28.6 $ - $ 1,698.8
Segment profit (loss)
(for Consolidated,
operating income) 4.3 (19.8) 222.1
Depreciation and amortization .7 .2 37.7
Capital expenditures .5 .1 28.2
Three Months Ended
June 27, 2004
--------------------------------------------------------------------------
Sales to unaffiliated customers $ (8.3) $ - $ 1,297.6
Segment profit (loss)
(for Consolidated,
operating income) (1.0) (21.1) 171.6
Depreciation and amortization (.2) 2.2 34.1
Capital expenditures (.1) .4 25.3
Six Months Ended
July 3, 2005
--------------------------------------------------------------------------
Sales to unaffiliated customers $ 62.5 $ - $ 3,218.1
Segment profit (loss)
(for Consolidated,
operating income) 8.8 (45.6) 386.4
Depreciation and amortization 1.5 2.0 76.4
Capital expenditures 1.2 .3 54.8
Six Months Ended
June 27, 2004
--------------------------------------------------------------------------
Sales to unaffiliated customers $ .7 $ - $ 2,390.5
Segment profit (loss)
(for Consolidated,
operating income) .3 (42.4) 279.3
Depreciation and amortization - 5.0 69.2
Capital expenditures - .6 45.7
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 Six Months Ended
------------------------------------------------------------------------
July 3, June 27, July 3, June 27,
2005 2004 2005 2004
------------------------------------------------------------------------
Segment profit for total
reportable business segments $237.6 $193.7 $423.2 $321.4
Items excluded from segment
profit:
Adjustment of budgeted
foreign exchange rates to
actual rates 4.3 (1.0) 8.8 .3
Depreciation of Corporate
property (.2) (.3) (.4) (.7)
Adjustment to businesses'
postretirement benefit
expenses booked in
consolidation (3.8) .2 (7.7) .3
Other adjustments booked in
consolidation directly
related to reportable
business segments (0.8) (3.4) (1.6) (5.5)
Amounts allocated to businesses
in arriving at segment profit
in excess of (less than)
Corporate center operating
expenses, eliminations, and
other amounts identified above (15.0) (17.6) (35.9) (36.5)
------------------------------------------------------------------------
Operating income 222.1 171.6 386.4 279.3
Interest expense, net of
interest income 9.8 4.5 19.0 9.7
Other expense (income) 1.3 .2 (52.2) 1.0
------------------------------------------------------------------------
Earnings from continuing
operations before income
taxes $211.0 $166.9 $419.6 $268.6
========================================================================
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.
Free cash flow for the six months ended July 3, 2005 and June 27, 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
six months ended July 3, 2005 and June 27, 2004, follows (dollars in
millions):
Six Months Ended
July 3, June 27,
2005 2004
--------- ---------
Cash flow from operating activities $ 162.4 $ 154.2
Capital expenditures (55.0) (46.4)
Proceeds from disposals of assets 10.9 15.4
--------- ---------
Free cash flow $ 118.3 $ 123.2
========= =========
Capital expenditures and proceeds from the disposal of assets include
amounts associated with discontinued operations.
Organic sales growth:
---------------------
This press release includes a statement that the Corporation's organic
sales growth was 8% during the three months ended July 3, 2005. Organic sales
growth excludes sales of acquired businesses and the effects of foreign
currency translation, and is determined by deducting the 20% and 3% increases
in sales from acquired businesses and foreign currency translation,
respectively, from the 31% total increase in sales during the three-month
period ended July 3, 2005.
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 $6.70 to $6.80 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 $7.13 to $7.23 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 Black & Decker
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