TOWSON, Md., Dec. 14 /PRNewswire-FirstCall/ -- The Black & Decker
Corporation (NYSE: BDK) today announced that it is revising its earnings
guidance for the fourth quarter and full year 2007 due to three separate
developments.
The Corporation expects to recall certain DEWALT(R) XRP(TM) cordless
drills manufactured during the past 18 months and incur a pre-tax charge of
approximately $25 million in the fourth quarter of 2007. This amount
includes estimates of the costs to repair products returned by end-users
and the impact of sales returns from distribution channels, but excludes
any potential recovery from a component supplier. No injuries have been
reported as a result of this issue.
In addition, business conditions in North America have been worse than
the Corporation had anticipated. As a result of this change and the
anticipated recall, the Corporation now expects to report a low
single-digit rate of sales decrease, excluding positive foreign currency
translation, in the fourth quarter of 2007. The Corporation's previous
guidance was for modest organic sales growth. The change in the operating
environment is expected to have a significant negative impact on operating
income, compared to previous guidance.
Finally, the Corporation and the United States government have reached
a settlement agreement on outstanding income tax litigation. As previously
disclosed, if the IRS had prevailed in this case, it would have resulted in
a cash outflow by the Corporation of approximately $180 million. The
Corporation expects to make cash payments of approximately $50 million
during 2008 related to this settlement. The Corporation also expects that
the tax settlement will increase net earnings by approximately $150
million.
As a result of these developments, the Corporation expects to report
net earnings per diluted share of approximately $3.39 for the fourth
quarter of 2007 and $8.27 for the full year. Excluding the favorable effect
of the tax settlement, it expects diluted EPS of approximately $1.03 for
the fourth quarter and $6.00 for the full year. The Corporation will
provide further details, as well as guidance for 2008, when it announces
its fourth-quarter results in January.
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 "Risk
Factors" 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, 2006.
This release contains non-GAAP financial measures within the meaning of
Regulation G promulgated by the Securities and Exchange Commission. This
press release includes a forward-looking statement with respect to the
Corporation's expectation that its diluted earnings per share would be
approximately $1.03 for the fourth quarter and $6.00 for the full year,
excluding the effect of the tax settlement. These per share amounts are
based on the Corporation's estimate of net earnings per diluted share of
approximately $3.39 for the fourth quarter of 2007 and $8.27 for the full
year, less the approximate effect of the tax settlement of $2.36 per
diluted share for the fourth quarter and $2.27 per diluted share for the
full year.
Black & Decker is a leading global manufacturer and marketer of power
tools and accessories, hardware and home improvement products, and
technology- based fastening systems.
SOURCE The Black & Decker Corporation
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CONTACT:
Mark M. Rothleitner, Vice President, Investor
Relations and Treasurer, +1-410-716-3979, or Roger A. Young, Vice
President, Investor and Media Relations, +1-410-716-3979, both of
The Black & Decker Corporation
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