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) April 15, 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)
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2
ITEM 5. OTHER EVENTS
On April 15, 1998, the Corporation reported its earnings for the quarter ended
March 29,1998. Attached to this Current Report on Form 8-K as Exhibit 99 is a
copy of the Corporation's related press release dated April 15, 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 risk 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
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
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
the press release dated April 15, 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.
There can be no assurance that the Corporation will consummate the
sales of the recreational products business, the glass container-forming and
inspection equipment business, and the household products business in North
America and Latin America. Further, the Corporation's ability to realize the
aggregate net proceeds from the sales of such businesses in excess of $500
million is dependent upon market conditions at the time of these sales.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Exhibit 99 Press Release of the Corporation dated April 15, 1998.
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3
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: Wednesday, April 15, 1998
SUBJECT: Black & Decker Reports First Quarter Results
TOWSON, MD - The Black & Decker Corporation (NYSE:BDK) announced today its first
quarter 1998 results. Highlights are:
o Recorded charges for goodwill write-down, restructuring, and
restructuring-related costs pursuant to previously announced
strategic repositioning plan. Excluding these items, earnings per
share up 22% on a comparable basis.
o Reported sales down 1% compared to first quarter 1997. Excluding
foreign currency effects, sales up 2% and sales of core
businesses up 5%.
o Restructuring on track.
o Divestitures on track.
o Share repurchase program underway.
o Free cash flow $75 million better than first quarter 1997.
As a result of the charges noted above, the Corporation reported a net
loss for the quarter of $971.4 million or $10.21 per share on both a basic and
diluted basis. This net loss included charges of $900 million ($9.46 per share)
for the write-off of goodwill and $100 million on an after-tax basis ($1.05 per
share) for restructuring.
(more)
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Page Two
Because the first quarter's results were a loss, the calculation of
reported earnings per share on a diluted basis excludes stock options, since the
inclusion of stock options would be anti-dilutive, i.e., would decrease the
per-share loss. For comparative purposes, however, the dilutive effect of these
options should be considered when evaluating the Corporation's performance
excluding the goodwill write-off and restructuring charge.
If the dilutive effect of options were considered, net earnings
excluding the goodwill write-off and after-tax restructuring charge would have
been $28.6 million ($.29 per share on this diluted basis). This adjusted net
earnings number also includes $3.8 million of after-tax, restructuring-related
costs. Excluding the goodwill write-off, restructuring charge, and
restructuring-related costs, net earnings would have been $32.4 million ($.33
per share on the diluted basis described above) for the first quarter of 1998,
compared to $26.3 million (or $.27 per share on a diluted basis) reported in the
first quarter of 1997.
Sales for the first quarter of 1998 declined by 1% to $1.01 billion
from $1.02 billion in the same period last year. Excluding the effects of
foreign currency translation, however, sales increased by 2%.
Commenting on the results, Nolan D. Archibald, Chairman and Chief
Executive Officer, said, "We indicated in January that we had begun a
multi-faceted strategic repositioning of Black & Decker that includes several
divestitures, a share repurchase program, and a comprehensive restructuring of
our businesses. That cost reduction and process improvement program accounted
for a pre-tax restructuring charge of $140 million as well as $5.6 million in
operating costs directly related to the restructuring initiative during the
quarter. Because of some favorability in both foreign exchange translation and
the anticipated costs of various restructuring actions since our January
estimates, we now believe that the total pre-tax charge related to the
multi-year program will be closer to $225 million than the $250 million that we
had originally expected. We remain committed to achieving at least $100 million
of annual earnings benefit when the program is completed at the end of 1999.
(more)
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Page Three
"During the quarter, we began the process of shutting down power tool
facilities in Singapore, Canada, and Italy under our restructuring program, and
expect to sell our plant in Brazil as we divest the Household Products business.
As we close plants and transfer production, we will make every effort to ensure
that appropriate levels of customer service are maintained.
"Our adoption of a discounted cash flow method for valuing goodwill,
which we also announced in January, led to a write-off of $900 million in
goodwill in the first quarter. Although this had a dramatic effect on our
reported results, the charge was entirely non-cash and reduces goodwill to
nearly 50% of its 1997 year-end level.
"Excluding the goodwill write-off, restructuring charge, and
restructuring-related expenses, earnings per share increased by 22% over last
year's first quarter. This improvement reflected approximately 5% aggregate
sales growth, excluding foreign exchange effects, in our core businesses which
consist of worldwide Power Tools and Accessories, Security Hardware, Plumbing
Products, and Fastening and Assembly Systems. This sales growth was driven by
continued success of new products, particularly in North American Power Tools.
"Free cash flow improved by $75 million compared to the same period
last year as a result of continued emphasis on working capital management.
"Our divestiture program progressed on track during the quarter, and we
continue to be optimistic about generating aggregate net proceeds in excess of
$500 million. With this in mind, we commenced our share repurchase program
during the quarter, buying approximately 700,000 shares at an average price of
just under $50 per share. This repurchase substantially offset the number of
shares issued during the quarter in connection with various benefit plans,
option exercises, and incentive awards."
(more)
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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 April 15, 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>
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS (Unaudited)
(Dollars in Millions Except Per Share Amounts)
Three Months Ended
---------------------------------
March 29, 1998 March 30, 1997
-------------- --------------
SALES $ 1,008.3 $ 1,015.0
Cost of goods sold 658.3 650.5
Selling, general, and
administrative expenses 279.9 291.2
Write-off of goodwill 900.0 -
Restructuring charge 140.0 -
-------------- --------------
OPERATING INCOME (LOSS) (969.9) 73.3
Interest expense (net of interest income) 28.4 30.6
Other income (expense) 0.3 (2.3)
-------------- --------------
EARNINGS (LOSS) BEFORE INCOME TAXES (998.0) 40.4
Income taxes (benefit) (26.6) 14.1
-------------- --------------
NET EARNINGS (LOSS) $ (971.4) $ 26.3
============== ==============
NET EARNINGS (LOSS) PER COMMON SHARE - BASIC $ (10.21) $ 0.28
============== ==============
Shares Used in Computing Basic Earnings
Per Share (in Millions) 95.1 94.4
============== ==============
NET EARNINGS (LOSS) PER COMMON SHARE -
ASSUMING DILUTION $ (10.21) $ .27
============== ==============
Shares Used in Computing Diluted
Earnings Per Share (in Millions) 95.1 96.0
============== ==============
<PAGE>
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (Unaudited)
(Millions of Dollars)
March 29, 1998 March 30, 1997
--------------- ---------------
ASSETS
Cash and cash equivalents $ 98.8 $ 119.6
Trade receivables 831.6 655.7
Inventories 827.4 842.4
Other current assets 187.9 186.4
--------------- ---------------
TOTAL CURRENT ASSETS 1,945.7 1,804.1
--------------- ---------------
PROPERTY, PLANT, AND EQUIPMENT 877.3 875.5
GOODWILL 959.2 1,940.8
OTHER ASSETS 491.7 506.4
--------------- ---------------
$ 4,273.9 $ 5,126.8
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term borrowings $ 74.7 $ 147.4
Current maturities of long-term debt 164.6 52.1
Trade accounts payable 411.6 333.5
Other accrued liabilities 714.4 800.4
--------------- ---------------
TOTAL CURRENT LIABILITIES 1,365.3 1,333.4
--------------- ---------------
LONG-TERM DEBT 1,570.6 1,652.0
DEFERRED INCOME TAXES 58.3 77.1
POSTRETIREMENT BENEFITS 303.5 304.4
OTHER LONG-TERM LIABILITIES 204.0 151.5
STOCKHOLDERS' EQUITY 772.2 1,608.4
--------------- ---------------
$ 4,273.9 $ 5,126.8
=============== ===============
SUPPLEMENTAL FINANCIAL INFORMATION
(Millions of Dollars)
March 29, 1998 March 30, 1997
--------------- ---------------
Balance of receivables sold under
sale of receivables program $ - $ 153.0
=============== ===============
Three Months Ended
-----------------------------------
March 29, 1998 March 30, 1997
--------------- ---------------
Depreciation and amortization $ 43.8 $ 54.7
=============== ===============
Capital expenditures $ 32.2 $ 40.2
=============== ===============
<PAGE>
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
THREE MONTHS ENDED MARCH 29, 1998
ANALYSIS OF CHANGES IN SALES
(Millions of Dollars)
United
Consumer States Europe Other Total
Total Sales $ 483.4 $ 265.6 $ 98.4 $ 847.4
------- ------- ------ -------
Unit Volume 7 % 7 % (5)% 5 %
Price (2)% (1)% (1)% (1)%
Currency - % (7)% (6)% (3)%
--- --- ---- ---
5 % (1)% (12)% 1 %
--- --- ---- ---
Commercial
Total Sales $ 71.0 $ 67.2 $ 22.7 $ 160.9
------ ------ ------ -------
Unit Volume (12)% 13 % (13)% (3)%
Price - % - % (1)% - %
Currency - % (7)% (4)% (3)%
---- --- ---- ---
(12)% 6 % (18)% (6)%
---- --- ---- ---
Consolidated
Total Sales $ 554.4 $ 332.8 $ 121.1 $ 1,008.3
======= ======= ======= =========
Unit Volume 4 % 8 % (7)% 3 %
Price (2)% (1)% (1)% (1)%
Currency - % (7)% (5)% (3)%
--- --- ---- ---
2 % - % (13)% (1)%
=== === ==== ===
<PAGE>
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL EARNINGS INFORMATION (Unaudited)
THREE MONTHS ENDED MARCH 29, 1998
(Dollars in Millions Except Per Share Amounts)
<TABLE>
<CAPTION>
Less: Less:
Non-Recurring Restructuring
As Reported Items Related Costs As Adjusted
<S> <C> <C> <C> <C>
SALES $ 1,008.3 $ 1,008.3
Cost of goods sold 658.3 $ (2.7) 655.6
Selling, general, and administrative expenses 279.9 (2.9) 277.0
Write-off of goodwill 900.0 $ (900.0) -- --
Restructuring charge 140.0 (140.0) -- --
--------- --------- --------- ---------
OPERATING INCOME (LOSS) (969.9) 1,040.0 5.6 75.7
Interest and other expense 28.1 -- -- 28.1
--------- --------- --------- ---------
EARNINGS (LOSS) BEFORE INCOME TAXES (998.0) 1,040.0 5.6 47.6
Income taxes (benefit) (26.6) 40.0 (A) 1.8 15.2
--------- --------- --------- ---------
NET EARNINGS (LOSS) $ (971.4) $ 1,000.0 $ 3.8 $ 32.4
========= ========= ========= =========
Shares Used in Computing Diluted Earnings
Per Share (in Millions) (B) 95.1 96.9 96.9
========= ========= =========
NET EARNINGS (LOSS) PER COMMON
SHARE - ASSUMING DILUTION $ (10.21) $ 0.04 $ 0.33
========= ========= =========
<FN>
- ------------------------
(A) Adjustment represents tax effect on restructuring charge.
(B) Option conversion is anti-dilutive due to the loss reported in the quarter.
Excluding the goodwill write-off, restructuring charge, and
restructuring-related costs, results for the quarter would have been
positive. Accordingly, 1.8 million shares have been added to the diluted
share count on an "as adjusted" basis.
</FN>
</TABLE>
