UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 16, 1998
----------------------------
THE BLACK & DECKER CORPORATION
(Exact name of registrant as specified in its charter)
Maryland 1-1553 52-0248090
(State of Incorporation) (Commission File Number) (I.R.S. Employer
Identification Number)
Towson, Maryland 21286
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 410-716-3900
Not Applicable
(Former name or former address, if changed since last report)
<PAGE>
2
ITEM 5. OTHER EVENTS
On July 16, 1998, the Corporation reported its earnings for the three and six
months ended June 28, 1998. Attached to this Current Report on Form 8-K as
Exhibit 99 is a copy of the Corporation's related press release dated July 16,
1998.
FORWARD LOOKING STATEMENTS
This Current Report on Form 8-K includes statements that constitute "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 and that are
intended to come within the safe harbor protection provided by those sections.
By their nature, all forward looking statements involve risks and uncertainties.
Actual results may differ materially from those contemplated by the forward
looking statements for a number of reasons, including but not limited to: market
acceptance of the new products introduced in 1997 and 1998 and scheduled for
introduction in 1998; the level of sales generated from these new products
relative to expectations, based on the existing investments in productive
capacity and commitments of the Corporation to fund advertising and product
promotions in connection with the introduction of these new products; the
ability of the Corporation and its suppliers to meet scheduled timetables of new
product introductions; unforeseen competitive pressure or other difficulty in
maintaining mutually beneficial relationships with key distributors or
penetrating new channels of distribution; adverse changes in currency exchange
rates or raw material commodity prices, both in absolute terms and relative to
competitors' risk profiles; delays in or unanticipated inefficiencies resulting
from manufacturing and administrative reorganization actions in progress or
contemplated by the strategic repositioning described in the Corporation's
Annual Report on Form 10-K for the year ended December 31, 1997, and updated in
Corporation's Quarterly Report on Form 10-Q for the quarter ended March 29,
1998; and the continuation of modest economic growth in the United States and
Europe and gradual improvement in the economic environment in Asia.
In addition to the foregoing, the Corporation's ability to realize the
anticipated benefits during 1998 and in the future of the restructuring actions
undertaken in 1998 is dependent upon current market conditions, as well as the
timing and effectiveness of the relocation or consolidation of production and
administrative processes. The ability to realize the benefits inherent in the
balance of the restructuring actions is dependent on the selection and
implementation of economically viable projects in addition to the restructuring
actions taken to date. The ability to achieve certain sales and profitability
targets and cash flow projections also is dependent upon the Corporation's
ability to identify appropriate selected acquisitions that are complementary to
the repositioned business units at acquisition prices that are consistent with
these objectives.
<PAGE>
3
There can be no assurance that the Corporation will consummate the
sales of the household products business in Brazil and the glass
container-forming and inspection equipment business and complete the
recapitalization of the recreational products business. Further, the
Corporation's ability to realize aggregate proceeds from the sales of the
household products business (excluding certain assets associated with the
Corporation's cleaning and lighting products) in North America and Latin
America, excluding Brazil, and the glass container-forming and inspection
business and from the recapitalization of the recreational products business of
$711 million on a gross basis or approximately $550 million on a net basis, is
dependent upon, with respect to the sale of the glass container-forming and
inspection equipment business and with respect to the recapitalization of the
recreational products business, the Corporation's receipt of regulatory and
other necessary approvals and the satisfaction of customary closing conditions.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Exhibit 99 Press Release of the Corporation dated July 16, 1998.
<PAGE>
4
THE BLACK & DECKER CORPORATION
S I G N A T U R E S
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE BLACK & DECKER CORPORATION
By /s/ THOMAS M. SCHOEWE
Thomas M. Schoewe
Senior Vice President and
Chief Financial Officer
Contact: Barbara B. Lucas
Senior Vice President - Public Affairs
410/716-2980
F. Robert Hunter
Vice President - Investor Relations
410/716-3979
FOR IMMEDIATE RELEASE: Thursday, July 16, 1998
SUBJECT: Black & Decker Reports Earnings Growth in Second Quarter;
Declares Quarterly Dividend
TOWSON, MD - The Black & Decker Corporation (NYSE:BDK) announced today that
sales for the second quarter of 1998 decreased 1% to $1.17 billion from $1.18
billion in the same period last year. Excluding the effects of foreign currency
translation, sales increased 1%, and sales of core operations (Power Tools and
Accessories, Security Hardware, Plumbing Products, and Fastening and Assembly
Systems) increased 4%. For the first six months of 1998, sales declined 1% to
$2.18 billion from $2.20 billion last year. Excluding foreign exchange
translation, sales for the period increased 2%, and sales of core businesses
increased 5%.
Excluding a non-recurring gain on sale of businesses of $4.2 million,
net of taxes, or $.04 per share, net earnings were $54.2 million or $.57 per
diluted share for the second quarter of 1998, compared to $45.5 million or $.47
per diluted share for the same period last year. Including the non-recurring
gain, net earnings were $58.4 million or $.61 per diluted share for the second
quarter of 1998. Net earnings for the second quarter of 1998 were reduced by
after-tax restructuring-related costs totaling $15.5 million or $.16 per diluted
share.
(more)
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Page Two
For the first six months of 1998, the Corporation reported a net loss,
related to a write-off of goodwill and a restructuring charge in the first
quarter, of $913.0 million or $9.65 per share. Because results for the first six
months were a loss, the calculation of reported net earnings per share on a
diluted basis excludes stock options, which, if included, would be
anti-dilutive, and would decrease the per-share loss. For comparative purposes,
however, the dilutive effects of these options should be considered when
evaluating the Corporation's performance. Excluding non-recurring items
consisting of the goodwill write-off, after-tax restructuring charge, and
after-tax gain on sale of businesses, net earnings for the first six months
would have been $82.8 million or $.86 per share on this diluted basis, a 15%
increase over the net earnings of $71.8 million or $.75 per share reported last
year. This adjusted net earnings number for 1998 includes $19.3 million ($.20
per share) of after-tax restructuring-related expenses.
The Corporation also announced that its Board of Directors declared a
quarterly cash dividend of $.12 per share on the Corporation's outstanding
common stock payable on September 25, 1998, to stockholders of record at the
close of business on September 11, 1998.
Commenting on the results, Nolan D. Archibald, Chairman and Chief
Executive Officer, said, "Our strategic repositioning activities, as well as
solid performance in our core businesses, resulted in a 21% increase over last
year in second-quarter earnings per share, excluding the non-recurring gain
associated with our current divestiture activities. Sales in our core businesses
rose 4% excluding foreign exchange currency effects, as new products continued
to generate support among retailers and consumers. Sales in North American Power
Tools, Security Hardware, and Plumbing Products were particularly strong, while
Fastening and Assembly Systems posted a solid increase. This core growth,
however, was largely offset by sales declines, compared to the same period last
year, in Household Products, the majority of which we sold at the end of June,
and Emhart Glass, the sale of which is scheduled to close in October.
(more)
<PAGE>
Page Three
"We completed the sale of our Household Products business on June 26,
and, since then, have entered into an agreement to recapitalize True Temper
Sports and signed a contract to sell Emhart Glass. These three transactions,
which will yield gross cash proceeds of $711 million and net proceeds of
approximately $550 million, will complete our divestiture program, enabling us
to focus exclusively on our core operations.
"We continued to execute our share repurchase program during the
quarter, and have purchased a total of nearly three million shares through June.
"The restructuring component of our strategic repositioning program
also remains on track as we streamline the global manufacturing network in Power
Tools and Accessories and substantially reconfigure how that business operates
in Europe. We also are in the process of integrating cleaning and lighting
product lines, which we chose not to sell with the rest of our Household
Products business, into North American consumer power tool operations.
Restructuring-related charges during the quarter reflected costs associated with
discontinuing some products, as well as costs associated with our plant closures
and European business reorganization.
"The progress that we have made in reducing and leveraging our cost
structure is reflected in an improvement in return on sales for the quarter of
nearly two percentage points, from 10.2% last year to 12.1%, excluding goodwill
amortization, non-recurring items, and restructuring-related expenses.
"With continued progress in the second quarter, free cash flow improved
$85 million for the first six months, compared to the same period last year,
reflecting improved working capital management."
(more)
<PAGE>
Page Four
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 Black & Decker's reports filed with
the Securities and Exchange Commission, including the Current Report on Form
8-K, filed July 16, 1998.
Black & Decker is a leading global manufacturer and marketer of power
tools, hardware, and building products used in and around the home and for
commercial applications.
* * *
<PAGE>
<TABLE>
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS (Unaudited)
(Dollars in Millions Except Per Share Amounts)
<CAPTION>
Three Months Ended
---------------------------------
June 28, 1998 June 29, 1997
--------------- --------------
<S> <C> <C>
SALES $ 1,169.7 $ 1,182.2
Cost of goods sold 771.9 761.8
Selling, general, and administrative expenses 285.5 316.1
Gain on sale of businesses 36.5 -
--------------- --------------
OPERATING INCOME 148.8 104.3
Interest expense (net of interest income) 29.8 30.6
Other expense 2.7 3.6
--------------- --------------
EARNINGS BEFORE INCOME TAXES 116.3 70.1
Income taxes 57.9 24.6
--------------- --------------
NET EARNINGS $ 58.4 $ 45.5
=============== ==============
NET EARNINGS PER COMMON SHARE - BASIC $ 0.62 $ 0.48
=============== ==============
Shares Used in Computing Basic Earnings Per Share (in Millions) 94.1 94.5
=============== ==============
NET EARNINGS PER COMMON SHARE - ASSUMING DILUTION $ 0.61 $ 0.47
=============== ==============
Shares Used in Computing Diluted Earnings Per Share (in Millions) 95.8 96.1
=============== ==============
</TABLE>
<PAGE>
<TABLE>
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS (Unaudited)
(Dollars in Millions Except Per Share Amounts)
<CAPTION>
Six Months Ended
---------------------------------
June 28, 1998 June 29, 1997
--------------- --------------
<S> <C> <C>
SALES $ 2,178.0 $ 2,197.2
Cost of goods sold 1,430.2 1,412.3
Selling, general, and administrative expenses 565.4 607.3
Write-off of goodwill 900.0 -
Restructuring and exit costs 140.0 -
Gain on sale of businesses 36.5 -
--------------- --------------
OPERATING INCOME (LOSS) (821.1) 177.6
Interest expense (net of interest income) 58.2 61.2
Other expense 2.4 5.9
--------------- --------------
EARNINGS (LOSS) BEFORE INCOME TAXES (881.7) 110.5
Income taxes 31.3 38.7
--------------- --------------
NET EARNINGS (LOSS) $ (913.0) $ 71.8
=============== ==============
NET EARNINGS (LOSS) PER COMMON SHARE - BASIC $ (9.65) $ 0.76
=============== ==============
Shares Used in Computing Basic Earnings Per Share (in Millions) 94.6 94.4
=============== ==============
NET EARNINGS (LOSS) PER COMMON SHARE - ASSUMING DILUTION $ (9.65) $ 0.75
=============== ==============
Shares Used in Computing Diluted Earnings Per Share (in Millions) 94.6 96.1
=============== ==============
</TABLE>
<PAGE>
<TABLE>
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (Unaudited)
(Millions of Dollars)
<CAPTION>
June 28, 1998 June 29, 1997
--------------- --------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 204.1 $ 126.3
Trade receivables 815.7 719.6
Inventories 765.0 898.1
Other current assets 205.1 180.7
--------------- --------------
TOTAL CURRENT ASSETS 1,989.9 1,924.7
--------------- --------------
PROPERTY, PLANT, AND EQUIPMENT 781.3 878.6
GOODWILL 935.7 1,929.3
OTHER ASSETS 510.7 518.7
--------------- --------------
$ 4,217.6 $ 5,251.3
=============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term borrowings $ 89.1 $ 100.1
Current maturities of long-term debt 60.6 49.7
Trade accounts payable 355.3 400.4
Other accrued liabilities 822.3 724.8
--------------- --------------
TOTAL CURRENT LIABILITIES 1,327.3 1,275.0
--------------- --------------
LONG-TERM DEBT 1,658.1 1,796.9
DEFERRED INCOME TAXES 55.6 77.9
POSTRETIREMENT BENEFITS 283.0 305.0
OTHER LONG-TERM LIABILITIES 192.3 142.4
STOCKHOLDERS' EQUITY 701.3 1,654.1
--------------- --------------
$ 4,217.6 $ 5,251.3
=============== ==============
SUPPLEMENTAL FINANCIAL INFORMATION (Unaudited)
(Millions of Dollars)
June 28, 1998 June 29, 1997
--------------- --------------
Balance of receivables sold under sale of receivables program $ - $ 136.0
=============== ==============
Six Months Ended
---------------------------------
June 28, 1998 June 29, 1997
--------------- --------------
Depreciation and amortization $ 81.6 $ 110.5
=============== ==============
Capital expenditures $ 59.8 $ 85.0
=============== ==============
</TABLE>
<PAGE>
<TABLE>
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
THREE MONTHS ENDED JUNE 28, 1998
ANALYSIS OF CHANGES IN SALES
(in millions of dollars)
<CAPTION>
United
Consumer States Europe Other Total
- -------- --------- -------- -------- ---------
<S> <C> <C> <C> <C>
Total Sales $ 610.7 $ 279.0 $ 123.3 $ 1,013.0
--------- -------- -------- ---------
Unit Volume 6 % 6 % (12)% 3 %
Price (1)% - % (1)% (1)%
Currency - % (4)% (5)% (2)%
--------- -------- -------- ---------
5 % 2 % (18)% - %
--------- -------- -------- ---------
Commercial
- ----------
Total Sales $ 71.6 $ 63.1 $ 22.0 $ 156.7
--------- -------- -------- ---------
Unit Volume (5)% (1)% (27)% (8)%
Price (1)% 1 % (1)% - %
Currency - % (3)% (5)% (2)%
--------- -------- -------- ---------
(6)% (3)% (33)% (10)%
--------- -------- -------- ---------
Consolidated
- ------------
Total Sales $ 682.3 $ 342.1 $ 145.3 $ 1,169.7
========= ======== ======== =========
Unit Volume 4 % 5 % (15)% 2 %
Price (1)% - % (1)% (1)%
Currency - % (4)% (5)% (2)%
--------- -------- -------- ---------
3 % 1 % (21)% (1)%
========= ======== ======== =========
</TABLE>
<PAGE>
<TABLE>
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
SIX MONTHS ENDED JUNE 28, 1998
ANALYSIS OF CHANGES IN SALES
(in millions of dollars)
<CAPTION>
United
Consumer States Europe Other Total
- -------- --------- -------- -------- ---------
<S> <C> <C> <C> <C>
Total Sales $ 1,094.1 $ 544.6 $ 221.7 $ 1,860.4
--------- -------- -------- ---------
Unit Volume 6 % 6 % (8)% 4 %
Price (1)% - % (2)% (1)%
Currency - % (6)% (5)% (2)%
--------- -------- -------- ---------
5 % - % (15)% 1 %
--------- -------- -------- ---------
Commercial
- ----------
Total Sales $ 142.6 $ 130.3 $ 44.7 $ 317.6
--------- -------- -------- ---------
Unit Volume (9)% 6 % (21)% (5)%
Price - % - % (1)% - %
Currency - % (5)% (4)% (3)%
--------- -------- -------- ---------
(9)% 1 % (26)% (8)%
--------- -------- -------- ---------
Consolidated
- ------------
Total Sales $ 1,236.7 $ 674.9 $ 266.4 $ 2,178.0
========= ======== ======== =========
Unit Volume 4 % 6 % (11)% 3 %
Price (1)% - % (1)% (1)%
Currency - % (6)% (5)% (3)%
--------- -------- -------- ---------
3 % - % (17)% (1)%
========= ======== ======== =========
</TABLE>
<PAGE>
<TABLE>
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL EARNINGS INFORMATION (Unaudited)
THREE MONTHS ENDED JUNE 28, 1998
(Dollars in Millions Except Per Share Amounts)
<CAPTION>
Less: Less:
Non-Recurring Restructuring-
As Reported Items Related Costs As Adjusted
----------- ------------- ------------- -----------
<S> <C> <C> <C> <C>
SALES $1,169.7 $1,169.7
Cost of goods sold 771.9 $(20.0) 751.9
Selling, general, and administrative expenses 285.5 (2.8) 282.7
Gain on sale of businesses 36.5 $ (36.5) - -
----------- ------------- ------------- -----------
OPERATING INCOME 148.8 (36.5) 22.8 135.1
Interest and other expenses 32.5 - - 32.5
----------- ------------- ------------- -----------
EARNINGS BEFORE INCOME TAXES 116.3 (36.5) 22.8 102.6
Income taxes 57.9 (32.3)(A) 7.3 32.9
----------- ------------- ------------- -----------
NET EARNINGS $ 58.4 $ (4.2) $ 15.5 $ 69.7
=========== ============= ============= ===========
Shares Used in Computing Diluted Earnings
Per Share (in Millions) 95.8 95.8 95.8 95.8
=========== ============= ============= ===========
NET EARNINGS PER COMMON
SHARE - ASSUMING DILUTION $ 0.61 $ (0.04) $ 0.16 $ 0.73
=========== ============= ============= ===========
<FN>
- ------------------------------------------------
(A) Adjustment represents tax effect of gain on sale of businesses.
</FN>
</TABLE>
<PAGE>
<TABLE>
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL EARNINGS INFORMATION (Unaudited)
SIX MONTHS ENDED JUNE 28, 1998
(Dollars in Millions Except Per Share Amounts)
<CAPTION>
Less: Less:
Non-Recurring Restructuring-
As Reported Items Related Costs As Adjusted
----------- ------------- ------------- -----------
<S> <C> <C> <C> <C>
SALES $2,178.0 $2,178.0
Cost of goods sold 1,430.2 $(22.7) 1,407.5
Selling, general, and administrative expenses 565.4 (5.7) 559.7
Write-off of goodwill 900.0 $(900.0) - -
Restructuring and exit costs 140.0 (140.0) - -
Gain on sale of businesses 36.5 (36.5) - -
----------- ------------- ------------- -----------
OPERATING INCOME (LOSS) (821.1) 1,003.5 28.4 210.8
Interest and other expenses 60.6 - - 60.6
----------- ------------- ------------- -----------
EARNINGS (LOSS) BEFORE INCOME TAXES (881.7) 1,003.5 28.4 150.2
Income taxes 31.3 7.7(A) 9.1 48.1
----------- ------------- ------------- -----------
NET EARNINGS (LOSS) $ (913.0) $ 995.8 $ 19.3 $ 102.1
=========== ============= ============= ===========
Shares Used in Computing Diluted Earnings
Per Share (in Millions) (B) 94.6 96.4 96.4
=========== ============= ===========
NET EARNINGS (LOSS) PER COMMON
SHARE - ASSUMING DILUTION $ (9.65) $ 0.20 $ 1.06
=========== ============= ===========
<FN>
- -----------------------------------------------
(A) Adjustment represents net tax effect of gain on sale of businesses and
restructuring and exit costs.
(B) Option conversion is anti-dilutive due to the loss for the six months.
Excluding the goodwill write-off, restructuring charge, gain on sale of
businesses, and restructuring related costs, results for the six months
would have been positive. Accordingly, 1.8 million shares have been added
to the diluted share count on an "as adjusted" basis.
</FN>
</TABLE>
