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) January 27, 2000
-------------------------------
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 January 27, 2000, the Corporation reported its earnings for the three and
twelve months ended December 31, 1999. Attached to this Current Report on Form
8-K as Exhibit 99 is a copy of the Corporation's related press release dated
January 27, 2000.
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 1999 and 2000; 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 October 3, 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.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Exhibit 99 Press Release of the Corporation dated January 27, 2000.
<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-Finance and Strategic Planning
Principal Accounting Officer
Contact: Barbara B. Lucas
Senior Vice President - Public Affairs
410/716-2980
Mark M. Rothleitner
Vice President - Investor Relations
and Treasurer
410/716-3979
FOR IMMEDIATE RELEASE: Thursday, January 27, 2000
SUBJECT: Black & Decker Reports Record Fourth-Quarter and Full-Year Results
for 1999; Fourth-Quarter Sales Up 8%, Excluding Foreign Exchange;
Earnings Per Share Up 19% for Quarter and 29% for Full Year,
Excluding Non-Recurring Items
TOWSON, MD - The Black & Decker Corporation (NYSE:BDK) today
announced that net earnings for the fourth quarter of 1999 were $115.1 million
or $1.31 per diluted share. Excluding non-recurring items, earnings per share
increased 19% over the same period of 1998. Net earnings for the fourth
quarter of 1998 were $98.1 million or $1.10 per diluted share, excluding
non-recurring items consisting of a $9.6 million after-tax restructuring
charge ($0.11 per diluted share) and a $3.1 million after-tax gain on the sale
of a business ($0.04 per diluted share).
(more)
<PAGE>
Page Two
For the full year 1999, the Corporation earned a record $300.3
million or $3.40 per diluted share, an increase in earnings per share of 29%
over 1998, excluding non-recurring items. In 1998, the Corporation reported a
net loss, related to a write-off of goodwill and restructuring charges, of
$754.8 million or $8.22 per share. Excluding the impact of the write-off of
goodwill, restructuring charges, and gains on the sales of businesses, net
earnings for 1998 would have been $246.0 million or $2.63 per share on a
diluted basis. The rise in earnings resulted from higher sales as well as
lower restructuring-related expense and operating and productivity
improvements. Because results for 1998 were a loss, the calculation of
reported net earnings per share on a dilutive basis excludes stock options,
which, if included, would decrease the per-share loss. For comparative
purposes, however, the dilutive effect of these options has been considered
for the evaluation of the Corporation's performance excluding non-recurring
items.
Sales for the fourth quarter of 1999 rose to $1.35 billion from $1.27
billion for the same period of 1998. Sales increased 8% excluding the effects
of foreign currency translation. For the full year 1999, sales from retained
businesses increased 9% excluding currency effects. Sales from retained
businesses for both the fourth quarter and the full year represent records for
the Corporation. On a reported basis, sales were $4.52 billion in 1999 versus
$4.56 billion in 1998, down 1% due to divested businesses and currency
effects.
Commenting on the results, Nolan D. Archibald, Chairman and Chief
Executive Officer, said, "We are extremely pleased with Black & Decker's
performance this past year, which resulted in record earnings and clearly
indicates that the strategic repositioning we undertook in 1998 has been
successful. Sales grew above our targeted range for the quarter and the full
year, led by the excellent results from our Power Tools and Accessories group.
We are also very pleased that our full-year return on sales, excluding
non-recurring items in 1998, grew by more than one percentage point to nearly
12%, reflecting the benefits of our restructuring and Six Sigma programs. This
margin improvement contributed to an earnings-per-share increase that
surpassed our 15% goal. At $242 million for the year, free cash flow also
exceeded our $200 million target and represented an 80% conversion of net
earnings into cash.
(more)
<PAGE>
Page Three
"Power Tools and Accessories had excellent results, with an 11%
sales increase and a 27% increase in operating profit for the fourth quarter,
and growth of 9% in sales and 29% in operating profit for the year.
Introductions of innovative products such as the DEWALT(R) jobsite battery
charger/radio, 24-volt cordless tool system, and 18-volt combination tool
kits, as well as the Black & Decker(R)-brand Pivot Driver(TM) cordless
screwdriver, expanded line of FireStorm(TM) high-performance cordless tools,
and new line of corded tools for consumers, supported by our excellent
relationships with customers, enabled this business to continue to improve
sales. The most substantial sales increases were primarily in North America,
but Europe and other international regions also began to generate modest sales
growth in the fourth quarter. In addition, the group's focus on Six Sigma and
other productivity improvements had a significant impact on its earnings for
the quarter and the full year.
"Sales in the Hardware and Home Improvement segment rose 4% for the
year, led by 6% growth at Kwikset. Sales were down 2% for the quarter as a
result of lower-than-anticipated Kwikset sales that reflected customer
inventory actions taken late in the period and, to a lesser degree,
competitive pressures. Operating profit was down slightly for the quarter and
the year, as significantly improved profits at Price Pfister were offset by
lower earnings at Kwikset. In 2000, we expect to continue to execute our
manufacturing restructuring plans at Kwikset to improve our cost structure.
"Fastening and Assembly Systems had another excellent quarter and
year. Sales were up 4% for the quarter and 7% for the full year, with
significant growth in specialty fastening systems. Operating profit was up an
impressive 11% for the quarter and 10% for the year, as productivity
initiatives continued in this business.
(more)
<PAGE>
Page Four
"Entering 2000, our Power Tools and Accessories group has excellent
momentum for continued sales and earnings growth, both in the United States
and abroad, resulting from new products and our Six Sigma and other
productivity programs. We expect Hardware and Home Improvement to have modest
growth as we continue to address manufacturing and mix issues at Kwikset.
Fastening and Assembly Systems anticipates growth in sales and operating
profit based on its innovative products and continuous focus on productivity
and Six Sigma. As a result, the Corporation is well positioned to achieve 15%
earnings-per-share growth in 2000."
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 January 27, 2000.
Black & Decker is a leading global manufacturer and marketer of power
tools, hardware, and home improvement products used in and around the home and
for commercial applications.
* * *
<PAGE>
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(Dollars in Millions Except Per Share Amounts)
Three Months Ended
----------------------------------------
December 31, December 31,
1999 1998
---------------- ------------------
SALES $ 1,347.2 $ 1,274.2
Cost of goods sold 841.0 811.8
Selling, general, and
administrative expenses 313.1 289.4
Restructuring and exit costs - 10.5
Gain on sale of businesses - 51.1
---------------- ------------------
OPERATING INCOME 193.1 213.6
Interest expense
(net of interest income) 24.9 27.1
Other (income) expense (0.8) 1.5
---------------- ------------------
EARNINGS BEFORE INCOME TAXES 169.0 185.0
Income taxes 53.9 93.4
---------------- ------------------
NET EARNINGS $ 115.1 $ 91.6
================ ==================
NET EARNINGS PER COMMON SHARE - BASIC $ 1.32 $ 1.05
================ ==================
Shares Used in Computing Basic
Earnings Per Share (in Millions) 86.9 87.3
================ ==================
NET EARNINGS PER COMMON SHARE -
ASSUMING DILUTION $ 1.31 $ 1.03
================ ==================
Shares Used in Computing Diluted
Earnings Per Share (in Millions) 88.1 88.9
================ ==================
<PAGE>
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(Dollars in Millions Except Per Share Amounts)
Year Ended
----------------------------------------
December 31, December 31,
1999 1998
---------------- ------------------
SALES $ 4,520.5 $ 4,559.9
Cost of goods sold 2,834.4 2,951.0
Selling, general, and
administrative expenses 1,149.8 1,124.9
Write-off of goodwill - 900.0
Restructuring and exit costs - 164.7
Gain on sale of businesses - 114.5
---------------- ------------------
OPERATING INCOME (LOSS) 536.3 (466.2)
Interest expense
(net of interest income) 95.8 114.4
Other (income) expense (0.8) 7.7
---------------- ------------------
EARNINGS (LOSS) BEFORE INCOME TAX 441.3 (588.3)
Income taxes 141.0 166.5
---------------- ------------------
NET EARNINGS (LOSS) $ 300.3 $ (754.8)
================ ==================
NET EARNINGS (LOSS) PER COMMON
SHARE - BASIC $ 3.45 $ (8.22)
================ ==================
Shares Used in Computing Basic
Earnings Per Share (in Millions) 87.0 91.8
================ ==================
NET EARNINGS (LOSS) PER COMMON
SHARE - ASSUMING DILUTION $ 3.40 $ (8.22)
================ ==================
Shares Used in Computing Diluted
Earnings Per Share (in Millions) 88.4 91.8
================ ==================
<PAGE>
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Millions of Dollars)
December 31, December 31,
1999 1998
---------------- -----------------
ASSETS
Cash and cash equivalents $ 147.3 $ 87.9
Trade receivables 823.2 792.4
Inventories 751.0 636.9
Other current assets 189.9 234.6
---------------- -----------------
TOTAL CURRENT ASSETS 1,911.4 1,751.8
---------------- -----------------
PROPERTY, PLANT, AND EQUIPMENT 739.6 727.6
GOODWILL 743.4 768.7
OTHER ASSETS 618.3 604.4
---------------- -----------------
$ 4,012.7 $ 3,852.5
================ =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term borrowings $ 183.2 $ 152.5
Current maturities of long-term debt 213.2 59.2
Trade accounts payable 367.3 348.8
Other accrued liabilities 809.0 814.2
---------------- -----------------
TOTAL CURRENT LIABILITIES 1,572.7 1,374.7
---------------- -----------------
LONG-TERM DEBT 847.1 1,148.9
DEFERRED INCOME TAXES 243.8 279.9
POSTRETIREMENT BENEFITS 246.3 263.5
OTHER LONG-TERM LIABILITIES 301.7 211.5
STOCKHOLDERS' EQUITY 801.1 574.0
---------------- -----------------
$ 4,012.7 $ 3,852.5
================ =================
<PAGE>
<TABLE>
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION ABOUT BUSINESS SEGMENTS (Unaudited)
(Millions of Dollars)
<CAPTION>
Reportable Business Segments
----------------------------------------------- Corporate,
Adjust-
Power Hardware Fastening Currency ments,
Three Months Ended Tools & & Home & Assembly All Translation & Elimi- Consoli-
December 31, 1999 Accessories Improvement Systems Total Others Adjustments nations dated
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales to unaffiliated customers $1,019.7 $225.6 $123.6 $1,368.9 $ -- $(21.7) $ -- $1,347.2
Segment profit (loss) (for
Consolidated, operating
income) 154.0 35.3 20.8 210.1 -- (1.9) (15.1) 193.1
Depreciation and amortization 26.6 5.6 3.8 36.0 -- (.4) 6.7 42.3
Capital expenditures 37.7 12.6 10.6 60.9 -- (1.3) .1 59.7
Three Months Ended
December 31, 1998
- -------------------------------------------------------------------------------------------------------------------------------
Sales to unaffiliated customers $ 922.3 $230.6 $118.8 $1,271.7 $ -- $ 2.5 $ -- $1,274.2
Segment profit (loss) (for
Consolidated, operating
income before restructuring
and exit costs, and gain on
sale of businesses) 121.4 36.6 18.8 176.8 -- .1 (3.9) 173.0
Depreciation and amortization 22.9 7.4 3.2 33.5 -- -- 7.2 40.7
Capital expenditures 33.1 13.3 5.4 51.8 .2 -- 1.6 53.6
Year Ended December 31, 1999
- -------------------------------------------------------------------------------------------------------------------------------
Sales to unaffiliated customers $3,209.3 $881.8 $497.7 $4,588.8 $ -- $(68.3) $ -- $4,520.5
Segment profit (loss) (for
Consolidated, operating
income) 377.3 124.0 84.3 585.6 -- (6.9) (42.4) 536.3
Depreciation and amortization 87.7 31.1 15.4 134.2 -- (1.8) 27.6 160.0
Capital expenditures 109.1 38.3 26.9 174.3 -- (3.5) .3 171.1
Year Ended December 31, 1998
- -------------------------------------------------------------------------------------------------------------------------------
Sales to unaffiliated customers $2,946.4 $851.1 $463.0 $4,260.5 $333.6 $(34.2) $ -- $4,559.9
Segment profit (loss) (for
Consolidated, operating
income before restructuring
and exit costs, write-off of
goodwill, and gain on sale
of businesses) 293.4 125.2 76.6 495.2 16.5 (4.4) (23.3) 484.0
Depreciation and amortization 88.2 27.1 13.4 128.7 -- (1.1) 27.6 155.2
Capital expenditures 79.1 36.5 16.2 131.8 13.3 (1.1) 2.0 146.0
</TABLE>
<PAGE>
<TABLE>
The reconciliation of segment profit to the Corporation's earnings (loss)
before income taxes for each period, in millions of dollars, is as follows:
<CAPTION>
Three Months Ended Year Ended
- ------------------------------------------------------------------------------------------------------------------------
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Segment profit for total reportable business segments $210.1 $176.8 $585.6 $ 495.2
Segment profit for all other businesses -- -- -- 16.5
Items excluded from segment profit:
Adjustment of budgeted foreign exchange rates to
actual rates (1.9) .1 (6.9) (4.4)
Depreciation of Corporate property and amortization
of goodwill (6.7) (7.2) (27.6) (27.6)
Adjustment to businesses' postretirement benefit
expenses booked in consolidation 3.0 (.3) 24.8 24.4
Adjustment to eliminate net interest and non-
operating expenses from results of certain
operations in Brazil, Mexico, Venezuela, and
Turkey (.2) 1.5 1.0 5.7
Other adjustments booked in consolidation directly
related to reportable business segments (2.4) (1.7) (12.4) (20.4)
Amounts allocated to businesses in arriving at segment
profit in excess of (less than) Corporate center
operating expenses, eliminations, and other amounts
identified above (8.8) 3.8 (28.2) (5.4)
- ------------------------------------------------------------------------------------------------------------------------
Operating income before restructuring and exit costs,
write-off of goodwill, and gain on sale of
businesses 193.1 173.0 536.3 484.0
Restructuring and exit costs -- 10.5 -- 164.7
Write-off of goodwill -- -- -- 900.0
Gain on sale of businesses -- 51.1 -- 114.5
- ------------------------------------------------------------------------------------------------------------------------
Operating income (loss) 193.1 213.6 536.3 (466.2)
Interest expense, net of interest income 24.9 27.1 95.8 114.4
Other (income) expense (.8) 1.5 (.8) 7.7
- ------------------------------------------------------------------------------------------------------------------------
Earnings (loss) before income taxes $169.0 $185.0 $441.3 $(588.3)
========================================================================================================================
</TABLE>
Basis of Presentation:
The Corporation operates in three reportable business segments: Power
Tools and Accessories, Hardware and Home Improvement (formerly "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, electric 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 the
United States and Canada and for sales of the retained household products
business. The Hardware and Home Improvement 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 the United States and Canada. 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 divested household products businesses 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
current year's 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 budgeted rates of exchange for 1999. The amounts included in the
segment table above under the caption "Currency Translation Adjustments"
represent the difference between consolidated amounts determined using those
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.
