TOWSON, Md., Oct. 27 /PRNewswire-FirstCall/ -- The Black & Decker
Corporation (NYSE: BDK) today announced that net earnings from continuing
operations for the third quarter of 2005 were a record $140.3 million or $1.73
per diluted share, versus $111.3 million or $1.35 per diluted share in the
third quarter of 2004. Diluted earnings per share from continuing operations
increased 28%, marking the fourteenth consecutive quarter of growth at or
above 18%.
Sales from continuing operations increased 23% for the quarter to a record
$1.58 billion. Sales of existing businesses increased 6%, including a
positive impact of 1% from foreign currency translation. The Porter-Cable and
Delta Tools Group acquisition contributed 17% to sales for the quarter. Free
cash flow was $203 million year-to-date, versus $205 million for the first
nine months of 2004.
Nolan D. Archibald, Chairman and Chief Executive Officer, commented, "All
three of our segments increased sales for the eighth consecutive quarter and
posted double-digit rates of growth in operating profits. Our Power Tools and
Accessories segment again led the way, increasing operating profit by 24%.
Despite facing continued raw material inflation and challenging comparisons to
prior-year results, we extended our track record of outstanding performance.
"Sales in the Power Tools and Accessories segment increased 31% for the
quarter, including 6% from existing businesses. The U.S. Black & Decker
consumer business grew sales at a double-digit rate, reflecting strong orders
for new lasers, screwdrivers and accessory sets. New miter saws, tile cutters
and angle grinders helped the U.S. DEWALT business deliver solid sales growth
for the quarter, as well as a double-digit growth rate for the year-to-date.
European sales were roughly flat, with growth in some regions offset by a
weakening retail environment, particularly in the U.K.
"Operating margin for the Power Tools and Accessories segment was 13.4%,
with existing businesses improving significantly for the seventh straight
quarter. We continued to benefit from growth in our higher-margin North
American business, as well as margin improvement in Europe. As expected, the
acquired business diluted the segment's margin, but its profit contribution
remains on track to generate $0.40 of EPS accretion for the full year.
"Sales in the Hardware and Home Improvement segment increased 1% for the
quarter. Price Pfister grew sales at a double-digit rate, largely because of
increases at a key retailer and in the wholesale channel. Sales in the
lockset business decreased at a low single-digit rate, as strong orders in the
second quarter were followed by cautious inventory management by customers in
the third quarter. Improvements in Kwikset's cost position drove an increase
in operating margin for the segment.
"The Fastening and Assembly Systems segment increased sales 6% for the
quarter, primarily due to growth in its automotive divisions. Pricing
increases and volume leverage outweighed commodity cost pressure, enabling the
segment to improve its operating margin to 13.0%.
"Looking ahead, we expect strong support from our retail partners for new
products, such as the StormStation(TM) and SmartDriver(TM) for consumers and
DEWALT's new line of miter saws, to drive a mid-single-digit rate of sales
growth in the fourth quarter. We also expect our operating margin to
increase, resulting in diluted earnings per share from continuing operations
in the ranges of $1.85-to-$1.90 for the fourth quarter and $6.82-to-$6.87 for
the full year. These ranges exclude both the favorable impact of an insurance
settlement in the first quarter and any incremental tax expense in the fourth
quarter to repatriate foreign earnings under the American Jobs Creation Act.
In addition, we continue to expect that we will convert at least 90% of net
earnings to free cash flow for the full year 2005.
"Black & Decker has consistently improved operations and grown its
businesses, resulting in another great quarter. We plan to continue our
outstanding growth trend, generate significant free cash flow, and use that
cash to create additional value for shareholders. After making two major
acquisitions in 2003 and 2004, this year we have raised our share repurchase
authorization twice, including an increase of five million shares earlier this
month. We have bought back over five million shares this year, and will
continue to pursue both share repurchases and compelling bolt-on acquisitions.
We remain focused on executing our proven strategy to deliver superior returns
to our investors."
The Corporation will hold a conference call today at 10:00 a.m., E.T., to
discuss third-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
--------------------------------------
October 2, 2005 September 26, 2004
---------------- -------------------
SALES $ 1,575.6 $ 1,282.5
Cost of goods sold 1,013.5 809.2
Selling, general, and
administrative expenses 358.1 315.3
---------------- -------------------
OPERATING INCOME 204.0 158.0
Interest expense (net of
interest income) 12.6 4.1
Other (income) expense (.7) 1.4
---------------- -------------------
EARNINGS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 192.1 152.5
Income taxes 51.8 41.2
---------------- -------------------
NET EARNINGS FROM CONTINUING
OPERATIONS 140.3 111.3
DISCONTINUED OPERATIONS (NET OF
INCOME TAXES):
Earnings of
discontinued operations .3 .2
Gain on sale of discontinued
operations - 1.0
---------------- -------------------
NET EARNINGS FROM DISCONTINUED
OPERATIONS .3 1.2
---------------- -------------------
NET EARNINGS $ 140.6 $ 112.5
================ ===================
BASIC EARNINGS PER COMMON SHARE
Continuing operations $ 1.77 $ 1.38
Discontinued operations .01 .02
---------------- -------------------
NET EARNINGS PER
COMMON SHARE - BASIC $ 1.78 $ 1.40
================ ===================
Shares Used in Computing Basic
Earnings Per Share (in Millions) 79.1 80.1
================ ===================
DILUTED EARNINGS PER COMMON SHARE
Continuing operations $ 1.73 $ 1.35
Discontinued operations - .02
---------------- -------------------
NET EARNINGS PER COMMON SHARE -
ASSUMING DILUTION $ 1.73 $ 1.37
================ ===================
Shares Used in Computing Diluted
Earnings Per Share (in Millions) 81.1 82.3
================ ===================
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(Dollars in Millions Except Per Share Amounts)
Nine Months Ended
--------------------------------------
October 2, 2005 September 26, 2004
---------------- -------------------
SALES $ 4,793.7 $ 3,673.0
Cost of goods sold 3,096.6 2,309.3
Selling, general, and
administrative expenses 1,106.7 926.4
---------------- -------------------
OPERATING INCOME 590.4 437.3
Interest expense (net of
interest income) 31.6 13.8
Other (income) expense (52.9) 2.4
---------------- -------------------
EARNINGS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 611.7 421.1
Income taxes 169.5 113.7
---------------- -------------------
NET EARNINGS FROM CONTINUING
OPERATIONS 442.2 307.4
DISCONTINUED OPERATIONS (NET OF
INCOME TAXES):
Earnings of
discontinued operations 1.1 .6
Gain on sale of discontinued
operations (net of impairment
charge of $24.4 in 2004) - 12.7
---------------- -------------------
NET EARNINGS FROM DISCONTINUED
OPERATIONS 1.1 13.3
---------------- -------------------
NET EARNINGS $ 443.3 $ 320.7
================ ===================
BASIC EARNINGS PER COMMON SHARE
Continuing operations $ 5.54 $ 3.88
Discontinued operations .02 .16
---------------- -------------------
NET EARNINGS PER
COMMON SHARE - BASIC $ 5.56 $ 4.04
================ ===================
Shares Used in Computing Basic
Earnings Per Share (in Millions) 79.8 79.3
================ ===================
DILUTED EARNINGS PER COMMON SHARE
Continuing operations $ 5.40 $ 3.80
Discontinued operations .01 .16
---------------- -------------------
NET EARNINGS PER COMMON SHARE -
ASSUMING DILUTION $ 5.41 $ 3.96
================ ===================
Shares Used in Computing Diluted
Earnings Per Share (in Millions) 81.9 80.9
================ ===================
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Millions of Dollars)
October 2, 2005 December 31, 2004
---------------- ------------------
ASSETS
Cash and cash equivalents $ 285.5 $ 514.4
Trade receivables 1,230.0 1,046.6
Inventories 1,238.4 981.8
Current assets of discontinued
operations 61.9 70.8
Other current assets 270.7 313.6
---------------- ------------------
TOTAL CURRENT ASSETS 3,086.5 2,927.2
---------------- ------------------
PROPERTY, PLANT, AND EQUIPMENT 689.6 754.6
GOODWILL 1,158.7 1,184.0
OTHER ASSETS 693.7 665.0
---------------- ------------------
$ 5,628.5 $ 5,530.8
================ ==================
LIABILITIES AND
STOCKHOLDERS' EQUITY
Short-term borrowings $ 1.9 $ 1.1
Current maturities
of long-term debt 155.9 .5
Trade accounts payable 624.5 466.9
Current liabilities of
discontinued operations 29.4 29.9
Other current liabilities 1,210.4 1,294.2
---------------- ------------------
TOTAL CURRENT LIABILITIES 2,022.1 1,792.6
---------------- ------------------
LONG-TERM DEBT 1,035.3 1,200.6
DEFERRED INCOME TAXES 175.3 171.1
POSTRETIREMENT BENEFITS 435.4 423.4
OTHER LONG-TERM LIABILITIES 395.3 384.4
STOCKHOLDERS' EQUITY 1,565.1 1,558.7
---------------- ------------------
$ 5,628.5 $ 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
October 2, 2005 Accessories Improvement Systems Total
--------------------------------------------------------------------------
Sales to unaffiliated
customers $ 1,154.7 $ 251.4 $ 159.5 $ 1,565.6
Segment profit (loss)
(for Consolidated,
operating income) 154.6 42.3 20.8 217.7
Depreciation and
amortization 25.9 5.6 4.7 36.2
Capital expenditures 18.5 3.6 3.7 25.8
Three Months Ended
September 26, 2004
--------------------------------------------------------------------------
Sales to unaffiliated
customers $ 884.8 $ 249.2 $ 149.9 $ 1,283.9
Segment profit (loss)
(for Consolidated,
operating income) 124.7 38.2 18.7 181.6
Depreciation and
amortization 21.2 6.1 4.3 31.6
Capital expenditures 15.4 8.9 3.9 28.2
Nine Months Ended
October 2, 2005
--------------------------------------------------------------------------
Sales to unaffiliated
customers $ 3,461.0 $ 767.4 $ 492.8 $ 4,721.2
Segment profit (loss)
(for Consolidated,
operating income) 462.9 110.7 67.3 640.9
Depreciation and
amortization 77.2 17.9 14.0 109.1
Capital expenditures 57.5 12.2 9.4 79.1
Nine Months Ended
September 26, 2004
--------------------------------------------------------------------------
Sales to unaffiliated
customers $ 2,510.3 $ 707.3 $ 456.1 $ 3,673.7
Segment profit (loss)
(for Consolidated,
operating income) 329.2 111.9 61.9 503.0
Depreciation and
amortization 61.4 21.3 13.1 95.8
Capital expenditures 47.5 17.2 8.6 73.3
Currency Corporate,
Three Months Ended Translation Adjustments,
October 2, 2005 Adjustments & Eliminations Consolidated
--------------------------------------------------------------------------
Sales to unaffiliated customers $ 10.0 $ - $ 1,575.6
Segment profit (loss)
(for Consolidated,
operating income) 1.8 (15.5) 204.0
Depreciation and amortization .2 .3 36.7
Capital expenditures .1 .4 26.3
Three Months Ended
September 26, 2004
--------------------------------------------------------------------------
Sales to unaffiliated customers $ (1.4) $ - $ 1,282.5
Segment profit (loss)
(for Consolidated,
operating income) (.1) (23.5) 158.0
Depreciation and amortization - 2.2 33.8
Capital expenditures - .1 28.3
Nine Months Ended
October 2, 2005
--------------------------------------------------------------------------
Sales to unaffiliated customers $ 72.5 $ - $ 4,793.7
Segment profit (loss)
(for Consolidated,
operating income) 10.6 (61.1) 590.4
Depreciation and amortization 1.7 2.3 113.1
Capital expenditures 1.3 .7 81.1
Nine Months Ended
September 26, 2004
--------------------------------------------------------------------------
Sales to unaffiliated customers $ (.7) $ - $ 3,673.0
Segment profit (loss)
(for Consolidated,
operating income) .2 (65.9) 437.3
Depreciation and amortization - 7.2 103.0
Capital expenditures - .7 74.0
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 Nine Months Ended
--------------------------------------------------------------------------
Oct. 2, Sept. 26, Oct. 2, Sept. 26,
2005 2004 2005 2004
--------------------------------------------------------------------------
Segment profit for total
reportable business segments $217.7 $181.6 $640.9 $503.0
Items excluded from segment profit:
Adjustment of budgeted foreign
exchange rates to actual rates 1.8 (.1) 10.6 .2
Depreciation of Corporate property (.3) (.3) (.7) (1.0)
Adjustment to businesses'
postretirement benefit
expenses booked in consolidation (3.4) .1 (11.1) .4
Other adjustments booked in
consolidation directly related
to reportable business segments 6.1 (3.1) 4.5 (8.6)
Amounts allocated to businesses in
arriving at segment profit in excess
of (less than) Corporate center
operating expenses, eliminations,
and other amounts identified above (17.9) (20.2) (53.8) (56.7)
--------------------------------------------------------------------------
Operating income 204.0 158.0 590.4 437.3
Interest expense, net of interest
income 12.6 4.1 31.6 13.8
Other (income) expense (.7) 1.4 (52.9) 2.4
--------------------------------------------------------------------------
Earnings from continuing
operations before income taxes $192.1 $152.5 $611.7 $421.1
==========================================================================
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 nine months ended October 2, 2005 and September 26,
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
nine months ended October 2, 2005 and September 26, 2004, follows (dollars in
millions):
Nine Months Ended
October 2, September 26,
2005 2004
------ ------
Cash flow from operating activities $272.3 $264.3
Capital expenditures (81.4) (75.2)
Proceeds from disposals of assets 11.9 16.1
------ ------
Free cash flow $202.8 $205.2
====== ======
Capital expenditures and proceeds from the disposal of assets include
amounts associated with discontinued operations.
Diluted earnings per share from continuing operations for the fourth
quarter and 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 $1.85 to $1.90 for the fourth
quarter and $6.82 to $6.87 for the full year. The aforementioned ranges
exclude the effect of any incremental tax expense to repatriate foreign
earnings under the American Jobs Creation Act of 2004 which could be up to
$56 million. The aforementioned range for the full year also excludes the
effect of a favorable $55 million pre-tax ($35.8 million after-tax) insurance
settlement that occurred in the first quarter of 2005.
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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