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 21, 1999
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)
701 East Joppa Road, 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>
ITEM 5. OTHER EVENTS
On July 21, 1999, the Corporation reported its earnings for the three and six
months ended July 4, 1999. Attached to this Current Report on Form 8-K as
Exhibit 99 is a copy of the Corporation's related press release dated July 21,
1999.
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 1998 and 1999 and
scheduled for introduction in the balance of 1999; 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,
1998, as updated in the Corporation's Quarterly Report on Form 10-Q for the
quarter ended April 4, 1999; the degree of working capital investment required
to meet customer service levels; gradual improvement in the economic environment
in Asia and Latin America; and economic growth in North America which more than
offsets economic softness in Europe.
In addition to the foregoing, the Corporation's ability to realize the
anticipated benefits of the restructuring actions undertaken in 1998 and 1999 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 acquisitions that are complementary to the
Corporation's existing businesses at acquisition prices that are consistent with
these objectives.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Exhibit 99 Press Release of the Corporation dated July 21, 1999.
<PAGE>
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
Vice President-Investor Relations
(410) 716-3979
FOR IMMEDIATE RELEASE: Wednesday, July 21, 1999
SUBJECT: Black & Decker Reports Record Core Sales and Earnings in Second Quarter
TOWSON, MD - The Black & Decker Corporation (NYSE:BDK) announced today that
sales of retained businesses in the second quarter of 1999 were 7% higher,
excluding the effects of foreign currency translation, than in the same period
of 1998. Due to business divestitures and the effects of foreign currency
translation, however, total sales declined to $1.08 billion from $1.17 billion
last year. For the first six months of 1999, sales of retained businesses
increased 9%, excluding the effects of foreign currency translation, over the
same period of 1998. Total sales, however, declined 5% for the first half of the
year due to divestitures and foreign currency effects.
Net earnings for the second quarter of 1999 were a record $70.7 million
or 80 cents per diluted share compared to $54.2 million or 57 cents per diluted
share, excluding a non-recurring gain on sale of businesses of $4.2 million (4
cents per share), in the same quarter of 1998. The 40% improvement in earnings
per share resulted from lower restructuring-related costs, lower average
outstanding shares of the Corporation's stock due to a stock repurchase program,
and operating improvements.
For the first six months of 1999, net earnings were a record $109.9
million or $1.24 per diluted share. In the same period last year, the
Corporation reported a net loss of $913.0 million or $9.65 per share. Excluding
non-recurring items consisting of a $900 million write-off of goodwill, a $100
million after-tax restructuring charge, and a $4.2 million after-tax gain on
sale of businesses and including the dilutive effect of options for the first
six months of 1998, net earnings would have been $82.8 million or 86 cents per
diluted share for the period. Therefore, comparable earnings per share for the
first six months of 1999 improved 44% due to lower restructuring-related costs,
operating improvements, and lower average outstanding shares.
(more)
<PAGE>
Page 2
Commenting on the results, Nolan D. Archibald, Chairman and Chief
Executive Officer, said, "Black & Decker is having a very solid year. Sales and
earnings for both the first and second quarters were well ahead of comparable
1998 results. A steady flow of innovative new products, intense end-user focus,
strong customer partnerships, productivity gains, and lower
restructuring-related costs coupled with restructuring benefits continue to
drive our success.
"Power Tools and Accessories reported impressive increases of 7% in
sales and 30% in profit for the second quarter. These results were powered by
double-digit rates of sales growth in both professional and consumer tools in
North America and also reflected benefits from restructuring and improved
manufacturing performance. Our cordless power tool business remains particularly
strong, and we expect to maintain our leadership position in this high-growth
category with the introduction of a 24-volt line of DEWALT(R) tools later this
year. Power tool sales were slightly higher than last year in Europe, where
strong growth in Scandinavia was largely offset by negative comparisons in
Eastern Europe and Germany.
"Sales in Building Products (security hardware and plumbing products)
were approximately the same as in the second quarter last year, although sales
were up 6% year-to-date. While Kwikset posted sales growth during the quarter,
Price Pfister experienced a decline compared to a relatively strong period last
year. Consistent with our objective of increasing Price Pfister's return on
assets, however, this business is focused on improved profitability rather than
sales growth. Second-quarter profit for Building Products declined 9%. As we
continue to execute our restructuring plan to lower manufacturing costs and
improve manufacturing efficiency, particularly at Kwikset, we expect increased
profitability in this segment later this year.
"Fastening and Assembly Systems had another excellent quarter, with
sales up 9% and profit up 7%. This highly profitable business continues to
benefit from successful new products, healthy automotive industries in North
America and Europe, and aggressive productivity improvement.
"Year-to-date free cash flow was a use of $98 million. The increase
from a use of $50 million last year was primarily due to a planned build-up in
power tool inventory to ensure adequate customer service levels during this
period of strong sales growth and to support the launch of new products in North
America over the next several months.
(more)
<PAGE>
Page 3
"Based on our current outlook for continued strength in the North
American economy, as well as for additional benefits from restructuring and our
Six Sigma initiative, we remain optimistic about achieving further gains in
sales and profitability during the remainder of the year. We also expect to
continue to invest in long-term growth initiatives such as the hiring of
additional engineers and end-user marketing specialists to expand our capacity
to develop and promote successful new products."
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 21, 1999.
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
---------------------------------
July 4, 1999 June 28, 1998
-------------- ---------------
SALES $ 1,084.2 $ 1,169.7
Cost of goods sold 671.2 771.9
Selling, general, and
administrative expenses 285.9 285.5
Gain on sale of businesses - 36.5
-------------- ---------------
OPERATING INCOME 127.1 148.8
Interest expense (net
of interest income) 22.5 29.8
Other expense .7 2.7
-------------- ---------------
EARNINGS BEFORE INCOME TAXES 103.9 116.3
Income taxes 33.2 57.9
-------------- ---------------
NET EARNINGS $ 70.7 $ 58.4
============== ===============
NET EARNINGS PER COMMON
SHARE - BASIC $ .81 $ .62
============== ===============
Shares Used in Computing Basic
Earnings Per Share (in Millions) 87.0 94.1
============== ===============
NET EARNINGS PER COMMON
SHARE - ASSUMING DILUTION $ .80 $ .61
============== ===============
Shares Used in Computing Diluted
Earnings Per Share (in Millions) 88.4 95.8
============== ===============
<PAGE>
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS (Unaudited)
(Dollars in Millions Except Per Share Amounts)
Six Months Ended
---------------------------------
July 4, 1999 June 28, 1998
-------------- ---------------
SALES $ 2,062.7 $ 2,178.0
Cost of goods sold 1,299.4 1,430.2
Selling, general, and
administrative expenses 557.8 565.4
Write-off of goodwill - 900.0
Restructuring and exit costs - 140.0
Gain on sale of businesses - 36.5
-------------- ---------------
OPERATING INCOME (LOSS) 205.5 (821.1)
Interest expense (net
of interest income) 44.7 58.2
Other (income) expense (.8) 2.4
-------------- ---------------
EARNINGS (LOSS) BEFORE INCOME TAXES 161.6 (881.7)
Income taxes 51.7 31.3
-------------- ---------------
NET EARNINGS (LOSS) $ 109.9 $ (913.0)
============== ===============
NET EARNINGS (LOSS) PER COMMON
SHARE - BASIC $ 1.26 $ (9.65)
============== ===============
Shares Used in Computing Basic
Earnings Per Share (in Millions) 87.1 94.6
============== ===============
NET EARNINGS (LOSS) PER COMMON
SHARE - ASSUMING DILUTION $ 1.24 $ (9.65)
============== ===============
Shares Used in Computing Diluted
Earnings Per Share (in Millions) 88.5 94.6
============== ===============
<PAGE>
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Millions of Dollars)
July 4, 1999 December
(Unaudited) 31, 1998
------------- -------------
ASSETS
Cash and cash equivalents $ 134.7 $ 87.9
Trade receivables 797.1 792.4
Inventories 806.5 636.9
Other current assets 200.8 234.6
------------- -------------
TOTAL CURRENT ASSETS 1,939.1 1,751.8
------------- -------------
PROPERTY, PLANT, AND EQUIPMENT 701.4 727.6
GOODWILL 742.1 768.7
OTHER ASSETS 629.5 604.4
------------- -------------
$ 4,012.1 $ 3,852.5
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term borrowings $ 421.9 $ 152.5
Current maturities of long-term debt 58.7 59.2
Trade accounts payable 399.0 348.8
Other accrued liabilities 687.5 814.2
------------- -------------
TOTAL CURRENT LIABILITIES 1,567.1 1,374.7
------------- -------------
LONG-TERM DEBT 1,058.7 1,148.9
DEFERRED INCOME TAXES 276.8 279.9
POSTRETIREMENT BENEFITS 261.4 263.5
OTHER LONG-TERM LIABILITIES 231.6 211.5
STOCKHOLDERS' EQUITY 616.5 574.0
------------- -------------
$ 4,012.1 $ 3,852.5
============= =============
<PAGE>
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION ABOUT BUSINESS SEGMENTS (Unaudited)
(Millions of Dollars)
Reportable Business Segments
-----------------------------------------
Power Fasten-
Tools ing &
& Acces- Building Assembly
Three Months Ended July 4, 1999 sories Products Systems Total
- --------------------------------------------------------------------------
Sales to unaffiliated customers $ 761.3 $ 215.1 $ 128.0 $1,104.4
Segment profit (loss) (for
Consolidated, operating
income) 86.7 28.8 22.4 137.9
Depreciation and amortization 21.0 8.6 3.8 33.4
Capital expenditures 23.3 9.6 5.5 38.4
Three Months Ended June 28, 1998
- --------------------------------------------------------------------------
Sales to unaffiliated customers $ 712.7 $ 214.7 $ 117.6 $1,045.0
Segment profit (loss) (for
Consolidated, operating
income before gain on sale
of businesses) 66.5 31.8 20.9 119.2
Depreciation and amortization 21.7 6.5 3.6 31.8
Capital expenditures 13.0 4.3 4.1 21.4
Six Months Ended July 4, 1999
- --------------------------------------------------------------------------
Sales to unaffiliated customers $1,404.3 $ 429.9 $ 254.4 $2,088.6
Segment profit (loss) (for
Consolidated, operating
income) 126.3 54.8 43.6 224.7
Depreciation and amortization 42.3 17.4 7.7 67.4
Capital expenditures 43.4 16.8 8.6 68.8
Six Months Ended June 28, 1998
- --------------------------------------------------------------------------
Sales to unaffiliated customers $1,294.3 $ 404.3 $ 235.9 $1,934.5
Segment profit (loss) (for
Consolidated, operating
income before restructuring
and exit costs, write-off of
goodwill, and gain on sale
of businesses) 98.4 56.6 40.1 195.1
Depreciation and amortization 44.5 12.6 6.8 63.9
Capital expenditures 30.5 13.6 6.1 50.2
<PAGE>
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION ABOUT BUSINESS SEGMENTS (Unaudited)
(Millions of Dollars)
Corporate,
Adjust-
Currency ments,
All Translation & Elimi- Consoli-
Three Months Ended July 4, 1999 Others Adjustments nations dated
- --------------------------------------------------------------------------
Sales to unaffiliated customers $ -- $ (20.2) $ -- $1,084.2
Segment profit (loss) (for
Consolidated, operating
income) -- (2.2) (8.6) 127.1
Depreciation and amortization -- (.5) 6.8 39.7
Capital expenditures -- (.6) .1 37.9
Three Months Ended June 28, 1998
- --------------------------------------------------------------------------
Sales to unaffiliated customers $135.8 $ (11.1) $ -- $1,169.7
Segment profit (loss) (for
Consolidated, operating
income before gain on sale
of businesses) 8.1 (1.6) (13.4) 112.3
Depreciation and amortization -- (.3) 6.3 37.8
Capital expenditures 6.4 (.3) .1 27.6
Six Months Ended July 4, 1999
- --------------------------------------------------------------------------
Sales to unaffiliated customers $ -- $ (25.9) $ -- $2,062.7
Segment profit (loss) (for
Consolidated, operating
income) -- (2.7) (16.5) 205.5
Depreciation and amortization -- (.8) 14.0 80.6
Capital expenditures -- (1.1) .2 67.9
Six Months Ended June 28, 1998
- --------------------------------------------------------------------------
Sales to unaffiliated customers $266.0 $ (22.5) $ -- $2,178.0
Segment profit (loss) (for
Consolidated, operating
income before restructuring
and exit costs, write-off of
goodwill, and gain on sale
of businesses) 12.2 (3.4) (21.5) 182.4
Depreciation and amortization -- (.7) 13.4 76.6
Capital expenditures 9.9 (.6) .3 59.8
<PAGE>
The reconciliation of segment profit to the Corporation's earnings (loss)
before income taxes for each period, in millions of dollars, is as follows:
Three Months Ended
- --------------------------------------------------------------------------
July 4, June 28,
1999 1998
- --------------------------------------------------------------------------
Segment profit for total reportable business segments $137.9 $119.2
Segment profit for all other businesses -- 8.1
Items excluded from segment profit:
Adjustment of budgeted foreign exchange rates to
actual rates (2.2) (1.6)
Depreciation of Corporate property and amortization
of goodwill (6.8) (6.3)
Adjustment to businesses' postretirement benefit
expenses booked in consolidation 8.4 8.2
Adjustment to eliminate net interest and
non-operating expenses from results of certain
operations in Brazil, Mexico, Venezuela, and
Turkey .6 1.1
Other adjustments booked in consolidation directly
related to reportable business segments .1 (17.6)
Amounts allocated to businesses in arriving at segment
profit in excess of (less than) Corporate center
operating expenses, eliminations, and other amounts
identified above (10.9) 1.2
- --------------------------------------------------------------------------
Operating income before restructuring and exit costs,
write-off of goodwill, and gain on sale of businesses 127.1 112.3
Restructuring and exit costs -- --
Write-off of goodwill -- --
Gain on sale of businesses -- 36.5
- --------------------------------------------------------------------------
Operating income (loss) 127.1 148.8
Interest expense, net of interest income 22.5 29.8
Other (income) expense .7 2.7
- --------------------------------------------------------------------------
Earnings (loss) before taxes $103.9 $116.3
==========================================================================
Six Months Ended
- --------------------------------------------------------------------------
July 4, June 28,
1999 1998
- --------------------------------------------------------------------------
Segment profit for total reportable business segments $224.7 $ 195.1
Segment profit for all other businesses -- 12.2
Items excluded from segment profit:
Adjustment of budgeted foreign exchange rates to
actual rates (2.7) (3.4)
Depreciation of Corporate property and amortization
of goodwill (14.0) (13.4)
Adjustment to businesses' postretirement benefit
expenses booked in consolidation 16.6 16.5
Adjustment to eliminate net interest and
non-operating expenses from results of certain
operations in Brazil, Mexico, Venezuela, and
Turkey 1.1 2.6
Other adjustments booked in consolidation directly
related to reportable business segments (3.6) (19.0)
Amounts allocated to businesses in arriving at segment
profit in excess of (less than) Corporate center
operating expenses, eliminations, and other amounts
identified above (16.6) (8.2)
- --------------------------------------------------------------------------
Operating income before restructuring and exit costs,
write-off of goodwill, and gain on sale of businesses 205.5 182.4
Restructuring and exit costs -- 140.0
Write-off of goodwill -- 900.0
Gain on sale of businesses -- 36.5
- --------------------------------------------------------------------------
Operating income (loss) 205.5 (821.1)
Interest expense, net of interest income 44.7 58.2
Other (income) expense (.8) 2.4
- --------------------------------------------------------------------------
Earnings (loss) before taxes $161.6 $(881.7)
==========================================================================
Basis of Presentation:
The Corporation operates in three reportable business segments: Power
Tools and Accessories, Building Products, 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,
cleaning and lighting products, and electric lawn and garden tools, as well as
for product service. In addition, the Power Tools and Accessories segment has
responsibility for the sale of plumbing products to customers outside North
America and for sales of the retained household products business. The
Building Products segment has worldwide responsibility for the manufacture and
sale of security hardware and for the manufacture of plumbing products as well
as responsibility for the sale of plumbing products to customers in North
America. The Fastening and Assembly Systems segment has worldwide
responsibility for the manufacture and sale of fastening and assembly systems.
The Corporation also operated several businesses that do not constitute
reportable business segments. These businesses included the manufacture and
sale of glass container-forming and inspection equipment, as well as
recreational and household products. In 1998, the Corporation completed the
sale or recapitalization of its glass container-forming and inspection
equipment business, Emhart Glass; its recreational products business, True
Temper Sports; and its household products business (excluding certain assets
associated with the Corporation's cleaning and lighting products) in North
America, Latin America (excluding Brazil), and Australia. Because True Temper
Sports, Emhart Glass, and the household products business in North America,
Latin America (excluding Brazil), and Australia are not treated as
discontinued operations under generally accepted accounting principles, they
remain a part of the Corporation's reported results from continuing
operations, and the results of operations and financial positions of these
businesses have been included in the consolidated financial statements through
the dates of consummation of the respective transactions. Amounts relating to
these businesses are included in the segment table above under the caption
"All Others." The results of the household products business included under
the caption "All Others" are based upon certain assumptions and allocations.
The household products businesses sold during 1998 were jointly operated with
the cleaning and lighting products businesses retained by the Corporation.
Further, the Corporation's divested household products businesses in Australia
and Latin America (excluding Brazil) were operated jointly with the
Corporation's power tools and accessories businesses. Accordingly, the results
of the household products businesses included in the segment table under the
caption "All Others" were determined using certain assumptions and allocations
that the Corporation believes are reasonable under the circumstances.
The Corporation assesses the performance of its reportable business
segments based upon a number of factors, including segment profit. In general,
segments follow the same accounting policies as those described in Note 1 of
the Corporation's Annual Report on Form 10-K for the year ended December 31,
1998, except with respect to foreign currency translation and except as
further indicated below. The financial statements of a segment's operating
units located outside the United States, except those units operating in
highly inflationary economies, are measured using the local currency as the
functional currency. For these units located outside 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
newly established budgeted rates of exchange. The amounts included in the
segment table above under the captions "Reportable Business Segments," "All
Others," and "Corporate, Adjustments, & Eliminations" are reflected at the
Corporation's current budgeted exchange rates. The amounts included in the
segment table above under the caption "Currency Translation Adjustments"
represent the difference between consolidated amounts determined using
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, goodwill amortization, adjustments to eliminate intercompany
profit in inventory, and income tax expense. In addition, segment profit
excludes restructuring and exit costs and, for 1998, the write-off of goodwill
and gain on sale of businesses. For certain operations located in Brazil,
Mexico, Venezuela, and Turkey, segment profit is reduced by net interest
expense and non-operating expenses. In determining segment profit, expenses
relating to pension and other postretirement benefits are based solely upon
estimated service costs. Corporate expenses are allocated to each segment
based upon budgeted amounts. No corporate expenses have been allocated to
divested businesses. 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 sales 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 nonrecurring 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
Corporation's various segments in a later period.
