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: Monday, July 24, 2000
SUBJECT: Black & Decker Reports Record Earnings Per Share of $.97, up 21%,
For Second Quarter; Increases Share Repurchase Authorization;
Declares Quarterly Dividend
TOWSON, MD - The Black & Decker Corporation (NYSE:BDK) today announced net
earnings of $83 million and earnings per diluted share of $.97 for the three
months ended July 2, 2000, setting new second-quarter records. Earnings per
diluted share increased 21% over the same period last year, reflecting improved
operating performance, a lower tax rate, and lower average outstanding shares of
the Corporation's stock due to a stock repurchase program. For the second
quarter of 1999, net earnings were $70.7 million or $.80 per diluted share.
For the first six months of 2000, net earnings were $143.2 million or
$1.66 per diluted share. In the comparable period of 1999, net earnings were
$109.9 million or $1.24 per diluted share. Results for the first six months of
2000 included a pre-tax gain, recognized in the first quarter, of $20.1 million
($13.1 million net of tax or $.15 per diluted share) related to the
recapitalization of True Temper Sports. Excluding this non-recurring gain, net
earnings for the first half of 2000 were $130.1 million or $1.51 per diluted
share, representing a 22% increase in earnings per diluted share.
Sales increased 4% to $1.13 billion for the second quarter of 2000 and
rose 5% to $2.16 billion for the first six months of the year. Excluding the
effects of foreign currency translation, sales increased 7% for the second
quarter and 8% for the first six months of 2000.
(more)
<PAGE>
Page Two
The Corporation also reported that it repurchased an additional 1.65
million shares of its common stock in the second quarter, and that its Board of
Directors increased the Corporation's share repurchase authorization by two
million shares, bringing the total remaining repurchase authorization to
approximately 3.2 million shares.
In addition, the Corporation announced that its Board of Directors
declared a quarterly cash dividend of $.12 per share of the Corporation's
outstanding common stock payable September 29, 2000, to stockholders of record
at the close of business on September 15, 2000.
Commenting on the results, Nolan D. Archibald, Chairman and Chief
Executive Officer, said, "We are very pleased with Black & Decker's continued
growth in sales and earnings in the second quarter. Power Tools and Accessories
once again led the way, with worldwide sales up 8% and operating profit up a
solid 22%. North American operations experienced broad-based growth across all
business units. Sales of professional tools remained strong. New lawn and garden
products, such as blower vacs and string trimmers, and the launch of the global
Dustbuster(R) cordless vacuum contributed to growth in the consumer tools unit.
In Europe, power tool sales were up slightly, as strong professional tool
results were offset by sluggish sales of consumer products. Operating margin for
the Power Tools and Accessories Group improved 1.5 percentage points to 12.9%.
Operating margins increased in the United States, Latin America and Asia as a
result of Six Sigma benefits and expense leverage, while the European margin
weakened due to competitive pricing and higher costs.
"During the quarter, we completed the acquisition of Momentum Laser,
Inc. Based in Santa Clara, California, Momentum Laser is a leading supplier of
construction lasers sold through home centers, hardware stores, and industrial
distributors. The acquisition, which positions our DEWALT business well in a
growing niche segment of the professional tool market, provides us with
state-of-the-art laser technology and an excellent product line on which to
build. Although the acquisition is small, we expect the effect on earnings to be
positive in the first full year.
(more)
<PAGE>
Page Three
"Sales in Hardware and Home Improvement were up in the quarter as solid
sales growth at Price Pfister helped to compensate for flat sales at Kwikset.
This segment's operating margin declined somewhat versus the second quarter last
year, despite continued improvement at Price Pfister. This decline, however, was
less than in the first quarter, reflecting benefits from higher volumes and
positive sales mix from new products.
"Fastening and Assembly Systems achieved a 5% increase in operating
profit on sales growth of 3% in the quarter, and operating margin improved to
17.5%. These results reflect strong sales gains in Asia, as well as solid growth
in the North American industrial business.
"Despite weakness in both the economic environment and currency in
Europe and slight slowing in the North American economy, we remain on track to
achieve our sales growth target of 4% to 7% (excluding the effects of foreign
currency translation) and to exceed our EPS growth target of 15% for the full
year. We expect to benefit in the second half of the year from new product
launches and strong market positions in key distribution channels, as well as
from our Six Sigma and supply chain programs."
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 24, 2000.
Black & Decker is a leading global manufacturer and marketer of power
tools, hardware and home improvement products, and technology-based fastening
systems.
* * *
<PAGE>
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS (Unaudited)
(Dollars in Millions Except Per Share Amounts)
Three Months Ended
----------------------
July 2, July 4,
2000 1999
--------- ---------
SALES $ 1,126.4 $ 1,084.2
Cost of goods sold 699.7 671.2
Selling, general, and
administrative expenses 284.1 285.9
--------- ---------
OPERATING INCOME 142.6 127.1
Interest expense
(net of interest income) 25.4 22.5
Other income (expense) 1.4 (.7)
--------- ---------
EARNINGS BEFORE INCOME TAXES 118.6 103.9
Income taxes 35.6 33.2
--------- ---------
NET EARNINGS $ 83.0 $ 70.7
========= =========
NET EARNINGS PER COMMON SHARE
- BASIC $ .98 $ .81
========= =========
Shares Used in Computing Basic
Earnings Per Share (in Millions) 84.7 87.0
========= =========
NET EARNINGS PER COMMON SHARE
- ASSUMING DILUTION $ .97 $ .80
========= =========
Shares Used in Computing Diluted
Earnings Per Share (in Millions) 85.3 88.4
========= =========
<PAGE>
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS (Unaudited)
(Dollars in Millions Except Per Share Amounts)
Six Months Ended
-----------------------
July 2, July 4,
2000 1999
--------- ----------
SALES $ 2,164.0 $ 2,062.7
Cost of goods sold 1,374.3 1,299.4
Selling, general, and
administrative expenses 555.6 557.8
Gain on sale of business 20.1 -
--------- ---------
OPERATING INCOME 254.2 205.5
Interest expense
(net of interest income) 49.2 44.7
Other income 1.0 .8
--------- ---------
EARNINGS BEFORE INCOME TAXES 206.0 161.6
Income taxes 62.8 51.7
--------- ---------
NET EARNINGS $ 143.2 $ 109.9
========= =========
NET EARNINGS PER COMMON SHARE
- BASIC $ 1.68 $ 1.26
========= =========
Shares Used in Computing Basic
Earnings Per Share (in Millions) 85.4 87.1
========= =========
NET EARNINGS PER COMMON SHARE
- ASSUMING DILUTION $ 1.66 $ 1.24
========= =========
Shares Used in Computing Diluted
Earnings Per Share (in Millions) 86.1 88.5
========= =========
<PAGE>
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Millions of Dollars)
July 2,
2000 December 31,
(Unaudited) 1999
------------ ------------
ASSETS
Cash and cash equivalents $ 127.8 $ 147.3
Trade receivables 788.8 823.2
Inventories 818.1 751.0
Other current assets 188.0 189.9
------------ ------------
TOTAL CURRENT ASSETS 1,922.7 1,911.4
------------ ------------
PROPERTY, PLANT, AND EQUIPMENT 740.0 739.6
GOODWILL 721.2 743.4
OTHER ASSETS 612.5 618.3
------------ ------------
$ 3,996.4 $ 4,012.7
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term borrowings $ 337.8 $ 183.2
Current maturities of long-term debt 249.0 213.2
Trade accounts payable 382.5 367.3
Other accrued liabilities 704.1 809.0
------------ ------------
TOTAL CURRENT LIABILITIES 1,673.4 1,572.7
------------ ------------
LONG-TERM DEBT 806.9 847.1
DEFERRED INCOME TAXES 241.7 243.8
POSTRETIREMENT BENEFITS 243.0 246.3
OTHER LONG-TERM LIABILITIES 299.7 301.7
STOCKHOLDERS' EQUITY 731.7 801.1
------------ ------------
$ 3,996.4 $ 4,012.7
============ ============
<PAGE>
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION ABOUT BUSINESS SEGMENTS (Unaudited)
(Millions of Dollars)
<TABLE>
<CAPTION>
Reportable Business Segments
--------------------------------------------------
Power Hardware Fastening Currency Corporate,
Tools & & Home & Assembly Translation Adjustments,
Three Months Ended July 2, 2000 Accessories Improvement Systems Total Adjustment & Eliminations Consolidated
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sales to unaffiliated customers $ 802.8 $215.7 $131.4 $1,149.9 $(23.5) $ - $1,126.4
Segment profit (loss) (for
Consolidated, operating income) 103.5 27.6 23.0 154.1 (1.2) (10.3) 142.6
Depreciation and amortization 21.7 9.1 4.3 35.1 (.6) 6.6 41.1
Capital expenditures 24.4 7.8 6.4 38.6 (.5) .3 38.4
Three Months Ended July 4, 1999
------------------------------------------------------------------------------------------------------------------------------------
Sales to unaffiliated customers $ 742.2 $209.1 $127.3 $1,078.6 $ 5.6 $ - $1,084.2
Segment profit (loss) (for
Consolidated, operating income) 84.8 28.0 21.8 134.6 .3 (7.8) 127.1
Depreciation and amortization 20.5 8.4 3.8 32.7 .2 6.8 39.7
Capital expenditures 22.9 9.4 5.5 37.8 - .1 37.9
Six Months Ended July 2, 2000
------------------------------------------------------------------------------------------------------------------------------------
Sales to unaffiliated customers $1,508.8 $420.5 $267.7 $2,197.0 $(33.0) $ - $2,164.0
Segment profit (loss) (for Consoli-
dated, operating income before
gain on sale of business) 158.9 47.2 46.4 252.5 (2.4) (16.0) 234.1
Depreciation and amortization 43.4 19.1 8.3 70.8 (.7) 13.3 83.4
Capital expenditures 76.6 15.1 13.4 105.1 (.6) .5 105.0
Six Months Ended July 4, 1999
------------------------------------------------------------------------------------------------------------------------------------
Sales to unaffiliated customers $1,367.8 $417.9 $253.3 $2,039.0 $ 23.7 $ - $2,062.7
Segment profit (loss) (for
Consolidated, operating income) 123.2 53.0 42.7 218.9 1.9 (15.3) 205.5
Depreciation and amortization 41.2 17.1 7.7 66.0 .6 14.0 80.6
Capital expenditures 42.2 16.4 8.6 67.2 .5 .2 67.9
</TABLE>
<PAGE>
The reconciliation of segment profit to the Corporation's earnings before
income taxes for each period, in millions of dollars, is as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------------------------------------------------------------------------------
July 2, July 4, July 2, July 4,
2000 1999 2000 1999
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Segment profit for total reportable
business segments $154.1 $134.6 $252.5 $218.9
Items excluded from segment profit:
Adjustment of budgeted foreign
exchange rates to actual rates (1.2) .3 (2.4) 1.9
Depreciation of Corporate property
and amortization of goodwill (6.6) (6.8) (13.3) (14.0)
Adjustment to businesses'
postretirement benefit expenses
booked in consolidation 8.7 8.4 18.2 16.6
Adjustment to eliminate net interest and
non-operating expenses from results
of certain operations in Brazil,
Mexico, Venezuela, and Turkey .1 .6 .2 1.1
Other adjustments booked in consolidation
directly related to reportable
business segments (5.7) .1 (12.7) (3.6)
Amounts allocated to businesses in arriving
at segment profit in excess of
(less than) Corporate center operating
expenses, eliminations, and other
amounts identified above (6.8) (10.1) (8.4) (15.4)
------------------------------------------------------------------------------------------------
Operating income before gain on sale
of business 142.6 127.1 234.1 205.5
Gain on sale of business - - 20.1 -
------------------------------------------------------------------------------------------------
Operating Income 142.6 127.1 254.2 205.5
Interest expense, net of interest income 25.4 22.5 49.2 44.7
Other income (expense) 1.4 (.7) 1.0 .8
-------------------------------------------------------------------------------------------------
Earnings before income taxes $118.6 $103.9 $206.0 $161.6
=================================================================================================
</TABLE>
Basis of Presentation:
The Corporation operates in three reportable business segments: Power Tools
and Accessories, Hardware and Home Improvement, 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 security hardware to
customers in Mexico, Central America, the Caribbean, and South America; for the
sale of plumbing products to customers outside the United States and Canada; and
for sales of the retained portion of the household products business. The
Hardware and Home Improvement segment has worldwide responsibility for the
manufacture and sale of security hardware (except for the sale of security
hardware in Mexico, Central America, the Caribbean, and South America). It also
has responsibility for the manufacture of plumbing products and 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.
<PAGE>
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, 1999,
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 units operating in highly inflationary
economies, are generally 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 updated to reflect the translation of segment
assets and elements of segment profit at the current year's budgeted rates of
exchange. The amounts included in the preceding segment table under the captions
"Reportable Business Segments," and "Corporate, Adjustments, & Eliminations" are
reflected at the Corporation's budgeted rates of exchange for 2000. The amounts
included in the preceding segment table under the caption "Currency Translation
Adjustments" represent the difference between consolidated amounts determined
using the budgeted rates of exchange for 2000 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 the
gain on sale of business. 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. 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.
