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 21, 1999
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THE BLACK & DECKER CORPORATION
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(Exact name of registrant as specified in its charter)
Maryland 1-1553 52-0248090
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(State of Incorporation) (Commission File Number) (I.R.S. Employer
Identification Number)
Towson, Maryland 21286
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 410-716-3900
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Not Applicable
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
On April 21, 1999, the Corporation reported its earnings for the three months
ended April 4, 1999. In addition, the Corporation announced that Paul F. McBride
had been hired as executive vice president of the Corporation and president of
its worldwide Power Tools and Accessories segment, replacing Joseph Galli who
has resigned to pursue other interests. The Corporation further announced the
promotions within the North American operations of its Power Tools and
Accessories segment of James J. Roberts, Edward J. Scanlon, and John W. Schiech.
Attached to this Current Report on Form 8-K as Exhibit 99 is a copy of the
Corporation's related press release dated April 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 scheduled for introduction
in 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; 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 1999 and 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 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 April 21, 1999.
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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
Vice President-Investor Relations
(410) 716-3979
FOR IMMEDIATE RELEASE: Wednesday, April 21, 1999
SUBJECT: Black & Decker Reports Double-Digit Rate of Sales Growth in Retained
Businesses and Strong Earnings Performance in First Quarter; Hires New
Power Tools and Accessories President; Promotes Roberts, Scanlon,
and Schiech
TOWSON, MD - The Black & Decker Corporation (NYSE:BDK) announced today that
sales of retained businesses were 11% higher in the first quarter of 1999 than
in the same period last year. Due to business divestitures, however, total sales
declined to $979 million from $1,008 million last year.
Net earnings for the first quarter of 1999 were $39.2 million or $.44
per diluted share. In the same period last year, the Corporation reported a net
loss of $971.4 million or $10.21 per share. Excluding non-recurring items
consisting of a $900 million goodwill write-off and a $100 million after-tax
restructuring charge, and including the dilutive effect of options for that
period, net earnings would have been $28.6 million or $.29 per share for the
first quarter of 1998.
The Corporation also announced that Paul F. McBride, 43, has been hired
as executive vice president of the Corporation and president of its nearly $3
billion worldwide Power Tools and Accessories Group. Mr. McBride joins Black &
Decker following a 21-year career at The General Electric Company where he
served most recently as president of the global silicone products business. Mr.
McBride succeeds Joseph Galli, who has resigned to pursue other interests.
(more)
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Page Two
Other management changes in the Power Tools and Accessories Group
include the promotion of James J. Roberts to president of U.S. Accessories,
Edward J. Scanlon to president of The Home Depot Division, and John W. Schiech
to president of DEWALT Professional Power Tools, North America. Each had
formerly been vice president and general manager of his respective business.
Commenting on the results, Nolan D. Archibald, Chairman and Chief
Executive Officer, said, "With core sales up 11% and earnings per share up 52%
excluding non-recurring items, this was the strongest first quarter that Black &
Decker has experienced in several years. While we had the benefit of a few extra
days in this year's first quarter and less inventory in retail stores at the end
of the holiday season, we were very encouraged by the underlying solid trends
during the first three months of the year.
"The sustained success of DEWALT(R) professional power tools in North
America was the primary force driving the 11% sales growth that we achieved in
our Power Tools and Accessories segment, although sales of both accessories and
consumer tools in North America increased at double-digit rates. European sales
in this segment were down slightly, primarily as a result of slower consumer
tool sales in Germany and Eastern Europe. Segment operating income increased 24%
over last year, as gross margin improved due to restructuring benefits and sales
growth in higher-margin products.
"The Building Products segment, consisting of security hardware and
plumbing products, posted 13% sales growth. This growth was led by strong
performance in the Kwikset lock and door hardware business in North America.
Segment operating income for Building Products increased 5%, and we expect
manufacturing process improvements and favorable commodity price comparisons to
have a positive effect on profitability as the year progresses. While sales of
plumbing products at Price Pfister were slightly higher than last year,
operating income rose substantially as a result of productivity and cost
reduction initiatives.
(more)
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Page Three
"Strong results with automotive customers in North America and Europe
contributed to a 7% increase in sales in the Fastening and Assembly Systems
segment. Segment operating income increased 10% over the same period last year,
as this business continued to benefit from customer acceptance of new product
offerings.
"For the first three months, free cash flow was a use of $41 million,
essentially the same as in the first quarter of 1998. While we project higher
capital spending this year, we believe that we have the capacity to achieve our
free cash flow target of approximately $150 million for the full year. We are
pleased that our overall financial and operating progress recently earned us a
credit-rating upgrade to BBB by Standard & Poor's Rating Services.
"We continue to execute our restructuring program and are beginning to
see positive financial and operating results. The process of reorganizing our
European Power Tools and Accessories unit, however, by streamlining our business
structure, centralizing finance and support services, installing advanced
supply-chain management systems, and consolidating distribution is proceeding
somewhat slower than initially planned. This project is a high priority in 1999,
and its success will be important in meeting our goal of $100 million in annual
cost savings from restructuring.
"As we move farther into 1999, our outlook is cautiously optimistic.
While the first quarter's rate of growth is not sustainable, we will be
launching a significant number of exciting new products during the year, and we
anticipate continued market strength in North America more than offsetting
softness in Europe."
(more)
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Page Four
Commenting on the management change, Mr. Archibald said, "We are
delighted to welcome Paul McBride to our management team. His credentials are
impressive. He has spent 21 years at General Electric in a variety of sales,
marketing, and general management positions in the housewares and audio business
and in the automotive division of GE Plastics. Prior to his most recent
assignment heading GE's global silicone products business, he served as
president of GE Plastics - Asia/Pacific, country manager and national executive
for all of GE's operations in Mexico, and general manager of the Cycolac and
automotive divisions of GE Plastics. His international operating experience will
be particularly helpful as our Power Tools and Accessories Group pursues sales
growth and improved profitability outside of North America. We also believe he
has the potential to assume a more significant role in the management of the
Corporation.
"All of us at Black & Decker are grateful to Joe Galli for the
significant contributions that he has made to our Power Tools and Accessories
business. Joe has expressed an interest in advancing his management career to a
higher level, and we have agreed that it makes sense for him to pursue this goal
outside of Black & Decker. While Joe will be missed, he leaves behind strong and
seasoned managers who have done an excellent job of building their businesses
over the past several years. In recognition of the remarkable results achieved
by our North American Power Tools and Accessories unit, we have promoted John
Schiech, a 19-year veteran of Black & Decker, to president of DEWALT
Professional Power Tools, North America. John's engineering background,
extensive experience in global product development both in the U.S. and in
Europe, and success in driving continued growth in DEWALT since he began
managing that business in 1995, make him exceptionally well-suited to lead our
professional tool business in North America. Ed Scanlon, who has been with Black
& Decker for nearly 18 years in sales leadership positions and has been
instrumental across all of our product lines in developing a strong partnership
with our largest customer, has been promoted to president of The Home Depot
Division. We also have promoted Jim Roberts, an 18-year employee who has headed
U.S. Accessories since 1996, to president of that business. Jim held key
positions in consumer power tools and led our professional power tools unit in
Europe before moving to the accessories business. These individuals and their
respective teams have achieved outstanding results, and we look forward to their
continued success."
(more)
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Page Five
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 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.
* * *
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THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS (Unaudited)
(Dollars in Millions Except Per Share Amounts)
Three Months Ended
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April 4, 1999 March 29, 1998
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SALES $ 978.5 $ 1,008.3
Cost of goods sold 628.2 658.3
Selling, general, and
administrative expenses 271.9 279.9
Write-off of goodwill -- 900.0
Restructuring and exit costs -- 140.0
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OPERATING INCOME (LOSS) 78.4 (969.9)
Interest expense
(net of interest income) 22.2 28.4
Other income 1.5 .3
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EARNINGS (LOSS) BEFORE INCOME TAXES 57.7 (998.0)
Income taxes (benefit) 18.5 (26.6)
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NET EARNINGS (LOSS) $ 39.2 $ (971.4)
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NET EARNINGS (LOSS) PER COMMON
SHARE - BASIC $ .45 $ (10.21)
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Shares Used in Computing Basic
Earnings Per Share (in Millions) 87.3 95.1
================ ================
NET EARNINGS (LOSS) PER COMMON
SHARE - ASSUMING DILUTION $ .44 $ (10.21)
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Shares Used in Computing Diluted
Earnings Per Share (in Millions) 88.6 95.1
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THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Millions of Dollars)
April 4, 1999
(Unaudited) December 31, 1998
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ASSETS
Cash and cash equivalents $ 130.2 $ 87.9
Trade receivables 763.8 792.4
Inventories 700.7 636.9
Other current assets 197.0 234.6
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TOTAL CURRENT ASSETS 1,791.7 1,751.8
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PROPERTY, PLANT, AND EQUIPMENT 706.2 727.6
GOODWILL 758.3 768.7
OTHER ASSETS 620.9 604.4
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$ 3,877.1 $ 3,852.5
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LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term borrowings $ 102.1 $ 152.5
Current maturities of long-term debt 88.2 59.2
Trade accounts payable 400.4 348.8
Other accrued liabilities 702.0 814.2
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TOTAL CURRENT LIABILITIES 1,292.7 1,374.7
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LONG-TERM DEBT 1,282.1 1,148.9
DEFERRED INCOME TAXES 277.3 279.9
POSTRETIREMENT BENEFITS 262.8 263.5
OTHER LONG-TERM LIABILITIES 205.4 211.5
STOCKHOLDERS' EQUITY 556.8 574.0
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$ 3,877.1 $ 3,852.5
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THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION ABOUT BUSINESS SEGMENTS (Unaudited)
(Millions of Dollars)
Reportable Business Segments
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Power Fastening
Tools &
& Building Assembly
Quarter Ended April 4, 1999 Accessories Products Systems Total
- ------------------------------------------------------------------------------
Sales to unaffiliated customers $ 643.0 $ 214.8 $ 126.4 $ 984.2
Segment profit (loss) (for
Consolidated, operating
income before restructuring
and exit costs and write-off
of goodwill) 39.6 26.0 21.2 86.8
Depreciation and amortization 21.3 8.8 3.9 34.0
Capital expenditures 20.1 7.2 3.1 30.4
Quarter Ended March 29, 1998
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Sales to unaffiliated customers $ 581.6 $ 189.6 $ 118.3 $ 889.5
Segment profit (loss) (for
Consolidated, operating
income before restructuring
and exit costs and write-off
of goodwill) 31.9 24.8 19.2 75.9
Depreciation and amortization 22.8 6.1 3.2 32.1
Capital expenditures 17.5 9.3 2.0 28.8
<PAGE>
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION ABOUT BUSINESS SEGMENTS (Unaudited)
(Millions of Dollars)
Corporate,
Currency Adjustments,
All Translation & Consoli
Quarter Ended April 4, 1999 Others Adjustments Eliminations -dated
- ------------------------------------------------------------------------------
Sales to unaffiliated customers $ -- $ (5.7) $ -- $ 978.5
Segment profit (loss) (for
Consolidated, operating
income before restructuring
and exit costs and write-off
of goodwill) -- (.5) (7.9) 78.4
Depreciation and amortization -- (.3) 7.2 40.9
Capital expenditures -- (.5) .1 30.0
Quarter Ended March 29, 1998
- ------------------------------------------------------------------------------
Sales to unaffiliated customers $130.2 $ (11.4) $ -- $1,008.3
Segment profit (loss) (for
Consolidated, operating
income before restructuring
and exit costs and write-off
of goodwill) 4.1 (1.8) (8.1) 70.1
Depreciation and amortization -- (.4) 7.1 38.8
Capital expenditures 3.5 (.3) .2 32.2
<PAGE>
The reconciliation of segment profit to the Corporation's earnings (loss)
before income taxes for each quarter, in millions of dollars, is as follows:
Quarter Ended
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April 4, March 28,
1999 1998
- ------------------------------------------------------------------------------
Segment profit for total reportable business segments $ 86.8 $ 75.9
Segment profit for all other businesses -- 4.1
Items excluded from segment profit:
Adjustment of budgeted foreign exchange rates
to actual rates (.5) (1.8)
Depreciation of Corporate property and amortization
of goodwill (7.2) (7.1)
Adjustment to businesses' postretirement benefit
expenses booked in consolidation 8.2 8.3
Adjustment to eliminate net interest and non-operating
expenses from results of certain operations in Brazil,
Mexico, Venezuela, and Turkey .5 1.5
Other adjustments booked in consolidation directly
related to reportable business segments (3.7) (1.4)
Amounts allocated to businesses in arriving at segment
profit in excess of (less than) Corporate center operating
expenses, eliminations, and other amounts identified above (5.7) (9.4)
- ------------------------------------------------------------------------------
Operating income before restructuring and exit costs and
write-off of goodwill 78.4 70.1
Restructuring and exit costs -- 140.0
Write-off of goodwill -- 900.0
- ------------------------------------------------------------------------------
Operating income (loss) 78.4 (969.9)
Interest expense, net of interest income 22.2 28.4
Other income 1.5 .3
- ------------------------------------------------------------------------------
Earnings (loss) before taxes $ 57.7 $(998.0)
==============================================================================
<PAGE>
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. During 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, and Australia are not treated as discontinued operations under
generally accepted accounting principles, they remained 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
Notes to Consolidated Financial Statements included in 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 Other", 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. 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.
