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) October 14, 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>
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ITEM 5. OTHER EVENTS
On October 14, 1998, the Corporation reported its earnings for the three and
nine months ended September 27, 1998. Attached to this Current Report on Form
8-K as Exhibit 99 is a copy of the Corporation's related press release dated
October 14, 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 June 28, 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>
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Exhibit 99 Press Release of the Corporation dated October 14, 1998.
<PAGE>
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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/STEPHEN F. REEVES
---------------------------
Stephen F. Reeves
Vice President and Controller
Contact: Barbara B. Lucas
Senior Vice President - Public Affairs
410/716-2980
F. Robert Hunter, III
Vice President - Investor Relations
410/716-3979
FOR IMMEDIATE RELEASE: Wednesday, October 14, 1998
SUBJECT: Black & Decker Reports Earnings Improvement in Third Quarter
TOWSON, MD - The Black & Decker Corporation (NYSE:BDK) announced today
that net earnings for the third quarter of 1998 were $66.6 million or 72 cents
per diluted share compared to $58.4 million or 60 cents per diluted share for
the same period of 1997. Excluding non-recurring items consisting of a $7.7
million after-tax charge (8 cents per diluted share) for restructuring under a
two-year restructuring program announced in January 1998 and a $9.2 million
after-tax gain (10 cents per diluted share) on the sale of businesses, net
earnings were $65.1 million or 70 cents per diluted share, an increase of 17%
over diluted earnings per share for the same period last year. Net earnings for
the third quarter included after-tax restructuring-related costs of $4.3 million
or 5 cents per diluted share. Excluding non-recurring items and
restructuring-related costs, earnings per diluted share increased 25% for the
quarter compared to the same period last year.
Sales for third quarter of 1998 decreased 10% to $1.11 billion from
$1.22 billion in the same period last year. The decline related substantially to
non-core businesses. Excluding the effects of foreign currency translation,
sales for the quarter increased 3% in core operations, which consist of Power
Tools and Accessories (excluding cleaning and lighting products), Security
Hardware, Plumbing Products, and Fastening Systems.
(more)
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Page Two
For the first nine months of 1998, the Corporation reported a net loss,
related to a write-off of goodwill and a significant restructuring charge in the
first quarter, of $846.4 million or $9.06 per share. Because results for the
first nine 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 charges, and
after-tax gains on the sale of businesses, net earnings for the first nine
months of 1998 would have been $147.9 million or $1.55 per share on this diluted
basis compared to $130.2 million or $1.35 per diluted share reported for the
same period last year. This represents a 15% increase in earnings per share. The
adjusted net earnings amount for 1998 includes after-tax restructuring-related
costs of $23.6 million or 25 cents per share. Excluding non-recurring items and
restructuring-related costs, earnings per diluted share increased 33% for the
first nine months compared to the same period last year.
For the first nine months of 1998, sales declined 4% to $3.29 billion
from $3.42 billion in the same period last year. Excluding the effects of
foreign currency translation, sales for the nine-month period increased 4% in
core operations.
The Corporation also announced that, through the end of the third
quarter, it had repurchased approximately 8.1 million of its outstanding shares
of common stock. In January 1998, the Corporation's Board of Directors
authorized the repurchase over a two-year period of up to 10% of
then-outstanding shares, or approximately 9.5 million shares.
Nolan D. Archibald, Chairman and Chief Executive Officer, commented,
"Our earnings improvement for the quarter and year-to-date reflect a combination
of solid operating performance in most core businesses and benefits from our
strategic repositioning program.
(more)
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Page Three
"Restructuring is a key element of that program. During the quarter, we
continued to phase out certain manufacturing facilities, sold the Singapore
plant that we closed recently, and made substantial progress in streamlining the
Power Tools and Accessories business in Europe. We also completed a U.S.-based
voluntary retirement program in which more than 550 employees participated.
"Having closed on the sale of Emhart Glass late in the third quarter
and the recapitalization of True Temper Sports at the beginning of the fourth
quarter, our divestiture program has been successfully completed. Net
consideration of approximately $550 million exceeded our original estimate. Cash
proceeds have been used in share repurchase and debt reduction programs.
"In terms of business operations during the quarter, sales in North
American Power Tools increased significantly on the strength of the DEWALT
professional tool business and new products. European Power Tools also had solid
sales growth. Despite weak economic conditions in Latin America and Asia,
profitability in worldwide Power Tools and Accessories rose at a double-digit
rate.
"Security Hardware reported a healthy sales gain compared to the same
period in 1997, and Plumbing Products sales fell slightly short of the level
reported in a strong quarter last year. Operating income in both of these
businesses was lower than last year.
"While sales in Fastening Systems declined due to the recent General
Motors strike and the slowdown in the Asian automotive industry, this business
posted a solid increase in operating income.
"Through the first nine months of 1998, free cash flow was a use of $50
million, which represents an improvement of $116 million compared to the same
period last year and reflects improved working capital management.
(more)
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Page Four
"The combined effect of the sale of Household Products operations in
June and weakness in the glass machinery business that was sold at the end of
the quarter accounted for virtually all of our sales decline in the quarter.
While the exclusion of all three divested businesses will have a substantial
effect on sales and earnings comparisons in the fourth quarter, we believe that
our remaining core businesses will perform well during this important season.
"In summary, we are pleased with our rate of progress in strategically
repositioning Black & Decker. Global restructuring is on track to deliver $100
million of annualized savings; we have completed the divestiture of
non-strategic and under-performing businesses for higher-than-expected proceeds;
and we are well ahead of schedule in our share repurchase program."
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 October 14, 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
--------------------------------------
September 27, 1998 September 28, 1997
------------------ ------------------
SALES $ 1,107.7 $ 1,224.9
Cost of goods sold 709.0 788.9
Selling, general, and
administrative expenses 270.1 309.3
Restructuring and exit costs 14.2 -
Gain on sale of businesses 26.9 -
------------------ ------------------
OPERATING INCOME 141.3 126.7
Interest expense
(net of interest income) 29.1 32.7
Other expense 3.8 4.2
------------------ ------------------
EARNINGS BEFORE INCOME TAXES 108.4 89.8
Income taxes 41.8 31.4
------------------ ------------------
NET EARNINGS $ 66.6 $ 58.4
================== ==================
NET EARNINGS PER COMMON
SHARE - BASIC $ 0.73 $ 0.62
================== ==================
Shares Used in Computing Basic
Earnings Per Share (in Millions) 90.9 94.8
================== ==================
NET EARNINGS PER COMMON
SHARE - ASSUMING DILUTION $ 0.72 $ 0.60
================== ==================
Shares Used in Computing Diluted
Earnings Per Share (in Millions) 92.6 96.9
================== ==================
<PAGE>
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS (Unaudited)
(Dollars in Millions Except Per Share Amounts)
Nine Months Ended
--------------------------------------
September 27, 1998 September 28, 1997
------------------ ------------------
SALES $ 3,285.7 $ 3,422.1
Cost of goods sold 2,139.2 2,201.2
Selling, general, and
administrative expenses 835.5 916.6
Write-off of goodwill 900.0 -
Restructuring and exit costs 154.2 -
Gain on sale of businesses 63.4 -
------------------ ------------------
OPERATING INCOME (LOSS) (679.8) 304.3
Interest expense
(net of interest income) 87.3 93.9
Other expense 6.2 10.1
------------------ ------------------
EARNINGS (LOSS) BEFORE INCOME TAXES (773.3) 200.3
Income taxes 73.1 70.1
------------------ ------------------
NET EARNINGS (LOSS) $ (846.4) $ 130.2
================== ==================
NET EARNINGS (LOSS) PER COMMON
SHARE - BASIC $ (9.06) $ 1.38
================== ==================
Shares Used in Computing Basic
Earnings Per Share (in Millions) 93.4 94.5
================== ==================
NET EARNINGS (LOSS) PER COMMON
SHARE - ASSUMING DILUTION $ (9.06) $ 1.35
================== ==================
Shares Used in Computing Diluted
Earnings Per Share (in Millions) 93.4 96.4
================== ==================
<PAGE>
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (Unaudited)
(Millions of Dollars)
September 27, 1998 September 28, 1997
------------------ ------------------
ASSETS
Cash and cash equivalents $ 143.3 $ 187.3
Trade receivables 815.8 856.5
Inventories 749.3 924.1
Other current assets 180.0 120.3
------------------ ------------------
TOTAL CURRENT ASSETS 1,888.4 2,088.2
------------------ ------------------
PROPERTY, PLANT, AND EQUIPMENT 740.9 875.2
GOODWILL 839.4 1,880.6
OTHER ASSETS 489.4 529.0
------------------ ------------------
$ 3,958.1 $ 5,373.0
================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term borrowings $ 61.0 $ 122.8
Current maturities of long-term debt 60.4 40.1
Trade accounts payable 366.7 398.1
Other accrued liabilities 776.7 664.7
------------------ ------------------
TOTAL CURRENT LIABILITIES 1,264.8 1,225.7
------------------ ------------------
LONG-TERM DEBT 1,671.3 1,879.1
DEFERRED INCOME TAXES 55.0 80.4
POSTRETIREMENT BENEFITS 265.5 300.6
OTHER LONG-TERM LIABILITIES 183.8 193.8
STOCKHOLDERS' EQUITY 517.7 1,693.4
------------------ ------------------
$ 3,958.1 $ 5,373.0
================== ==================
SUPPLEMENTAL FINANCIAL INFORMATION (Unaudited)
(Millions of Dollars)
September 27, 1998 September 28, 1997
------------------ ------------------
Balance of receivables sold under
sale of receivables program $ - $ 78.0
================== ==================
Nine Months Ended
---------------------------------------
September 27, 1998 September 28, 1997
------------------ ------------------
Depreciation and amortization $ 122.3 $ 163.1
================== ==================
Capital expenditures $ 92.4 $ 132.2
================== ==================
<PAGE>
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
THREE MONTHS ENDED SEPTEMBER 27,1998
ANALYSIS OF CHANGES IN SALES
(in millions of dollars)
United
Core Consumer States Europe Other Total
- ------------- -------- -------- ------- --------
Total Sales $ 579.8 $ 257.7 $ 88.5 $ 926.0
-------- -------- ------- --------
Unit Volume 8 % 5 % (9)% 6 %
Price (1)% - % (1)% (1)%
Currency - % 1 % (8)% (1)%
-------- -------- ------- --------
7 % 6 % (18)% 4 %
-------- -------- ------- --------
Core Commercial
- ---------------
Total Sales $ 51.5 $ 39.0 $ 15.7 $ 106.2
-------- -------- ------- --------
Unit Volume (7)% 17 % (12)% (1)%
Price (2)% - % (2)% (2)%
Currency - % 2 % (14)% (2)%
-------- -------- ------- --------
(9)% 19 % (28)% (5)%
-------- -------- ------- --------
Household Products Business in North America, Australia and Latin America
("HPG"), Emhart Glass, and True Temper Sports
Total Sales $ 43.3 $ 26.6 $ 5.6 $ 75.5
-------- -------- ------- --------
Consolidated
- ------------
Total Sales $ 674.6 $ 323.3 $ 109.8 $1,107.7
======== ======== ======= ========
Core Businesses:
Unit Volume 6 % 6 % (6)% 4 %
Price (1)% - % (1)% (1)%
Currency - % 1 % (7)% (1)%
-------- -------- ------- --------
5 % 7 % (14)% 2 %
-------- -------- ------- --------
HPG, Emhart Glass, and
True Temper Sports (13)% (3)% (26)% (12)%
-------- -------- ------- --------
Total Change (8)% 4 % (40)% (10)%
======== ======== ======= ========
<PAGE>
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
NINE MONTHS ENDED SEPTEMBER 27,1998
ANALYSIS OF CHANGES IN SALES
(in millions of dollars)
United
Core Consumer States Europe Other Total
- ------------- -------- -------- ------- --------
Total Sales $1,536.9 $ 802.3 $ 254.3 $2,593.5
-------- -------- ------- --------
Unit Volume 9 % 6 % (9)% 6 %
Price (1)% - % (1)% (1)%
Currency - % (4)% (7)% (2)%
-------- -------- ------- --------
8 % 2 % (17)% 3 %
-------- -------- ------- --------
Core Commercial
- ---------------
Total Sales $ 173.4 $ 116.2 $ 50.9 $ 340.5
-------- -------- ------- --------
Unit Volume - % 14 % (9)% 3 %
Price (1)% - % (1)% (1)%
Currency - % (4)% (9)% (3)%
-------- -------- ------- --------
(1)% 10 % (19)% (1)%
-------- -------- ------- --------
Household Products Business in North America, Australia and Latin America
("HPG"), Emhart Glass, and True Temper Sports
Total Sales $ 201.0 $ 79.7 $ 71.0 $ 351.7
-------- -------- ------- --------
Consolidated
- ------------
Total Sales $1,911.3 $ 998.2 $ 376.2 $3,285.7
======== ======== ======= ========
Core Businesses:
Unit Volume 7 % 6 % (7)% 5 %
Price (1)% - % (1)% (1)%
Currency - % (3)% (5)% (2)%
-------- -------- ------- --------
6 % 3 % (13)% 2 %
-------- -------- ------- --------
HPG, Emhart Glass, and
True Temper Sports (7)% (1)% (13)% (6)%
-------- -------- ------- --------
Total Change (1)% 2 % (26)% (4)%
======== ======== ======= ========
<PAGE>
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL EARNINGS INFORMATION (Unaudited)
THREE MONTHS ENDED SEPTEMBER 27, 1998
(Dollars in Millions Except Per Share Amounts)
Less: Less:
Non- Restructuring-
As Recurring Related As
Reported Items Costs Adjusted
-------- -------- ---------- --------
SALES $1,107.7 $1,107.7
Cost of goods sold 709.0 $ (3.8) 705.2
Selling, general, and
administrative expenses 270.1 (2.5) 267.6
Restructuring and exit costs 14.2 $ (14.2) - -
Gain on sale of businesses 26.9 (26.9) - -
-------- -------- ---------- --------
OPERATING INCOME 141.3 (12.7) 6.3 134.9
Interest and other expenses 32.9 - - 32.9
-------- -------- ---------- --------
EARNINGS BEFORE INCOME TAXES 108.4 (12.7) 6.3 102.0
Income taxes 41.8 (11.2)(A) 2.0 32.6
-------- -------- ---------- --------
NET EARNINGS $ 66.6 $ (1.5) $ 4.3 $ 69.4
======== ======== ========== ========
Shares Used in Computing
Diluted Earnings Per
Share (in Millions) 92.6 92.6 92.6 92.6
======== ======== ========== ========
NET EARNINGS PER COMMON
SHARE - ASSUMING DILUTION $ 0.72 $ (0.02) $ 0.05 $ 0.75
======== ======== ========== ========
- -------------------------------------------------
(A) Adjustment represents net tax effect of gain on sale of businesses and
restructuring and exit costs.
<PAGE>
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL EARNINGS INFORMATION (Unaudited)
NINE MONTHS ENDED SEPTEMBER 27, 1998
(Dollars in Millions Except Per Share Amounts)
Less: Less:
Non- Restructuring-
As Recurring Related As
Reported Items Costs Adjusted
-------- -------- ---------- --------
SALES $3,285.7 $3,285.7
Cost of goods sold 2,139.2 $ (26.5) 2,112.7
Selling, general, and
administrative expenses 835.5 (8.2) 827.3
Write-off of goodwill 900.0 $ (900.0) - -
Restructuring and exit costs 154.2 (154.2) - -
Gain on sale of businesses 63.4 (63.4) - -
-------- -------- ---------- --------
OPERATING INCOME (LOSS) (679.8) 990.8 34.7 345.7
Interest and other expenses 93.5 - - 93.5
-------- -------- ---------- --------
EARNINGS (LOSS) BEFORE
INCOME TAXES (773.3) 990.8 34.7 252.2
Income taxes 73.1 (3.5)(A) 11.1 80.7
-------- -------- ---------- --------
NET EARNINGS (LOSS) $ (846.4) $ 994.3 $ 23.6 $ 171.5
======== ======== ========== ========
Shares Used in Computing
Diluted Earnings Per
Share (in Millions) (B) 93.4 95.1 95.1
======== ========== ========
NET EARNINGS (LOSS) PER COMMON
SHARE - ASSUMING DILUTION $ (9.06) $ 0.25 $ 1.80
======== ========== ========
- -------------------------------------
(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 reported for the
nine months. Excluding the goodwill write-off, restructuring charge,
gain on sale of businesses, and restructuring-related costs, results
for the nine months would have been positive. Accordingly, 1.7 million
shares have been added to the diluted share count on an "as adjusted"
basis.
