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: Wednesday, October 18, 2000
SUBJECT: Black & Decker Reports Record Third Quarter; Earnings Per Share Up 21%
to $1.03
TOWSON, MD - The Black & Decker Corporation (NYSE:BDK) today announced net
earnings of $86.3 million and earnings per diluted share of $1.03 for the three
months ended October 1, 2000, setting new third-quarter records. Earnings per
diluted share increased 21% over the same period last year. For the third
quarter of 1999, net earnings were $75.3 million, or $.85 per diluted share.
For the first nine months of 2000, net earnings were $229.5 million, or
$2.69 per diluted share. These results included a pre-tax gain of $20.1 million
($13.1 million net of tax, or $0.15 per diluted share), realized in the first
quarter of 2000, related to the recapitalization of True Temper Sports.
Excluding this non-recurring gain, net earnings for the first nine months of
2000 were $216.4 million, or $2.54 per diluted share, an increase in earnings
per share of 22%. Net earnings in the comparable period of 1999 were $185.2
million, or $2.09 per diluted share.
Sales increased 2% to a record level for retained businesses of $1.13
billion for the third quarter of 2000, or 5% excluding foreign currency effects.
For the first nine months of 2000, sales increased 4% to $3.30 billion, or 7%
excluding foreign currency effects.
The Corporation also reported that it repurchased an additional 1.1
million shares of its common stock in the third quarter of 2000.
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<PAGE>
Page Two
Commenting on the results, Nolan D. Archibald, Chairman and Chief
Executive Officer, said, "We are pleased with Black & Decker's performance in
the third quarter. Despite several negative external factors, including some
slowing of the U.S. economy and fuel strikes in Europe during September, we
achieved sales growth within our targeted range of 4% to 7%, excluding foreign
currency effects, and significantly exceeded our goal of 15% EPS growth.
"Power Tools and Accessories worldwide sales grew 6%, led by our North
American operations. In North America, our professional tools business continued
to benefit from strong sales of cordless and corded products, including new
products launched during the quarter, while the consumer tools and lawn and
garden products business in North America grew at a double-digit rate. Sales in
Europe were flat, with higher sales in professional tools offsetting declines in
the consumer business. Operating income for Power Tools and Accessories
increased 9% over the same quarter last year, and operating margins improved 0.3
percentage points to 12.7% as a result of continued leverage of selling,
general, and administrative expenses.
"Hardware and Home Improvement sales were down 1%, and operating margin
declined 0.7 percentage points in the third quarter versus the same period of
1999. Solid improvement in sales and profitability at Price Pfister was offset
by weaker results at Kwikset, where sales of TITAN-brand products were lower due
to actions taken by a key retailer earlier this year. We expect to see
improvement at Kwikset in the fourth quarter as sales of The Society Brass
Collection(TM) and other new products begin to have a more significant impact on
results.
"Fastening and Assembly Systems sales and operating income each
increased 6% in the quarter, reflecting sales growth in most areas of the
business. Operating margin remained at a very solid 16.3%.
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<PAGE>
Page Three
"Based on our results to date, the innovative new products that we are
currently introducing, and the strength of our relationships with key customers,
we are confident that we can achieve sales growth for the fourth quarter in our
targeted range of 4% to 7%, excluding foreign currency effects. We also expect
approximately 15% growth in recurring earnings per share for the quarter, in
line with the current consensus. In addition, we believe we can achieve our
objective of converting 70% to 80% of our full-year earnings to free cash flow.
This will be made possible in part by reducing inventories, which we
traditionally build during the third quarter, so that we close the year with
approximately the same inventory level as at the end of 1999.
"Looking forward to 2001, we are optimistic about our ability to
generate sales growth in the 4% to 7% range, excluding currency effects, and to
increase earnings per share approximately 15%. Our company has a strong record
in terms of consistently launching a large number of successful new products
each year, and we will raise the bar in 2001. DEWALT continues to gain momentum
worldwide, and, next year, will generate higher sales from new products than at
any other time in its history. Our Black & Decker consumer tool and lawn and
garden products business in North America also is performing extremely well.
Prospects are positive for both the DEWALT and Black & Decker brands as they
continue to outpace their competition in the marketplace. Our Emhart fastening
business, which has been our most consistent performer, remains very strong with
commanding technological and market leadership. Kwikset is positioned for a
solid improvement, and Price Pfister is very healthy after achieving a
remarkable turnaround over the past eighteen months. We also will recognize
incremental earnings benefits in 2001 from our many Six Sigma initiatives, and,
with continued focus on making our supply chain more efficient, we remain
committed to converting 70% to 80% of our net earnings to free cash flow."
This release includes forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. By their nature, all forward-looking statements involve
risks and uncertainties. For a more detailed discussion of the risks and
uncertainties that may affect Black & Decker's operating and financial results
and its ability to achieve the financial objectives discussed in this press
release, interested parties should review Black & Decker's reports filed with
the Securities and Exchange Commission, including the Current Report on Form
8-K, filed October 18, 2000.
(more)
<PAGE>
Page Four
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 (Unaudited)
(Dollars in Millions Except Per Share Amounts)
Three Months Ended
---------------------------
October 1, October 3,
2000 1999
------------ ------------
SALES $ 1,133.2 $ 1,110.6
Cost of goods sold 707.3 694.0
Selling, general, and
administrative expenses 277.7 278.9
------------ ------------
OPERATING INCOME 148.2 137.7
Interest expense
(net of interest income) 26.5 26.2
Other income (expense) 1.6 (0.8)
------------ ------------
EARNINGS BEFORE INCOME TAXES 123.3 110.7
Income taxes 37.0 35.4
------------ ------------
NET EARNINGS $ 86.3 $ 75.3
============ ============
NET EARNINGS PER COMMON SHARE
- BASIC $ 1.04 $ 0.87
============ ============
Shares Used in Computing Basic
Earnings Per Share (in Millions) 83.2 87.0
============ ============
NET EARNINGS PER COMMON SHARE
- ASSUMING DILUTION $ 1.03 $ 0.85
============ ============
Shares Used in Computing Diluted
Earnings Per Share (in Millions) 83.8 88.3
============ ============
<PAGE>
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS (Unaudited)
(Dollars in Millions Except Per Share Amounts)
Nine Months Ended
---------------------------
October 1, October 3,
2000 1999
------------ ------------
SALES $ 3,297.2 $ 3,173.3
Cost of goods sold 2,081.6 1,993.4
Selling, general, and
administrative expenses 833.3 836.7
Gain on sale of business 20.1 -
------------ ------------
OPERATING INCOME 402.4 343.2
Interest expense
(net of interest income) 75.7 70.9
Other income 2.6 -
------------ ------------
EARNINGS BEFORE INCOME TAXES 329.3 272.3
Income taxes 99.8 87.1
------------ ------------
NET EARNINGS $ 229.5 $ 185.2
============ ============
NET EARNINGS PER COMMON SHARE
- BASIC $ 2.71 $ 2.13
============ ============
Shares Used in Computing Basic
Earnings Per Share (in Millions) 84.6 87.1
============ ============
NET EARNINGS PER COMMON SHARE
- ASSUMING DILUTION $ 2.69 $ 2.09
============ ============
Shares Used in Computing Diluted
Earnings Per Share (in Millions) 85.3 88.4
============ ============
<PAGE>
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Millions of Dollars)
October 1,
2000 December 31,
(Unaudited) 1999
------------- --------------
ASSETS
Cash and cash equivalents $ 138.2 $ 147.3
Trade receivables 859.9 823.2
Inventories 906.6 751.0
Other current assets 243.2 189.9
------------- --------------
TOTAL CURRENT ASSETS 2,147.9 1,911.4
------------- --------------
PROPERTY, PLANT, AND EQUIPMENT 749.0 739.6
GOODWILL 711.1 743.4
OTHER ASSETS 624.2 618.3
------------- --------------
$ 4,232.2 $ 4,012.7
============= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term borrowings $ 428.3 $ 183.2
Current maturities of long-term debt 249.0 213.2
Trade accounts payable 436.6 367.3
Other accrued liabilities 757.9 809.0
------------- --------------
TOTAL CURRENT LIABILITIES 1,871.8 1,572.7
------------- --------------
LONG-TERM DEBT 806.0 847.1
DEFERRED INCOME TAXES 241.5 243.8
POSTRETIREMENT BENEFITS 240.4 246.3
OTHER LONG-TERM LIABILITIES 303.5 301.7
STOCKHOLDERS' EQUITY 769.0 801.1
------------- --------------
$ 4,232.2 $ 4,012.7
============= ==============
<PAGE>
<TABLE>
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION ABOUT BUSINESS SEGMENTS (Unaudited)
(Millions of Dollars)
<CAPTION>
Reportable Business Segments
-------------------------------------------------
Power Hardware Fastening Currency Corporate,
Tools & & Home & Assembly Translation Adjustments,
Three Months Ended October 1, 2000 Accessories Improvement Systems Total Adjustments & Eliminations Consolidated
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sales to unaffiliated customers $ 816.8 $217.6 $126.8 $1,161.2 $(28.0) $ - $1,133.2
Segment profit (loss) (for
Consolidated, operating income) 103.6 31.2 20.7 155.5 (2.0) (5.3) 148.2
Depreciation and amortization 22.3 7.7 4.1 34.1 (.8) 6.6 39.9
Capital expenditures 32.0 7.7 5.7 45.4 (.8) .1 44.7
Three Months Ended October 3, 1999
------------------------------------------------------------------------------------------------------------------------------------
Sales to unaffiliated customers $ 769.3 $220.1 $119.4 $1,108.8 $ 1.8 $ - $1,110.6
Segment profit (loss) (for
Consolidated, operating income) 95.3 33.1 19.5 147.9 - (10.2) 137.7
Depreciation and amortization 18.3 8.0 3.9 30.2 - 6.9 37.1
Capital expenditures 27.3 8.7 7.4 43.4 .1 - 43.5
Nine Months Ended October 1, 2000
------------------------------------------------------------------------------------------------------------------------------------
Sales to unaffiliated customers $2,325.6 $638.1 $394.5 $3,358.2 $(61.0) $ - $3,297.2
Segment profit (loss) (for Consoli-
dated, operating income before
gain on sale of business) 262.5 78.4 67.1 408.0 (4.4) (21.3) 382.3
Depreciation and amortization 65.7 26.8 12.4 104.9 (1.5) 19.9 123.3
Capital expenditures 108.6 22.8 19.1 150.5 (1.4) .6 149.7
Nine Months Ended October 3, 1999
------------------------------------------------------------------------------------------------------------------------------------
Sales to unaffiliated customers $2,137.1 $638.0 $372.7 $3,147.8 $ 25.5 $ - $3,173.3
Segment profit (loss) (for
Consolidated, operating income) 218.5 86.1 62.2 366.8 1.9 (25.5) 343.2
Depreciation and amortization 59.5 25.1 11.6 96.2 .6 20.9 117.7
Capital expenditures 69.5 25.1 16.0 110.6 .6 .2 111.4
</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 Nine Months Ended
----------------------------------------------------------------------------------------------------
October 1, October 3, October 1, October 3,
2000 1999 2000 1999
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Segment profit for total reportable
business segments $155.5 $147.9 $408.0 $366.8
Items excluded from segment profit:
Adjustment of budgeted foreign
exchange rates to actual rates (2.0) - (4.4) 1.9
Depreciation of Corporate property
and amortization of goodwill (6.6) (6.9) (19.9) (20.9)
Adjustment to businesses'
postretirement benefit expenses
booked in consolidation 9.0 5.2 27.2 21.8
Adjustment to eliminate net interest
and non-operating expenses from
results of certain operations in
Brazil, Mexico, Venezuela, and Turkey .1 .1 .3 1.2
Other adjustments booked in consolidation
directly related to reportable
business segments (2.0) (6.4) (14.7) (10.0)
Amounts allocated to businesses in arriving
at segment profit in excess of (less than)
Corporate center operating expenses,
eliminations, and other amounts
identified above (5.8) (2.2) (14.2) (17.6)
----------------------------------------------------------------------------------------------------
Operating income before gain on sale
of business 148.2 137.7 382.3 343.2
Gain on sale of business - - 20.1 -
----------------------------------------------------------------------------------------------------
Operating income 148.2 137.7 402.4 343.2
Interest expense, net of interest income 26.5 26.2 75.7 70.9
Other income (expense) 1.6 (.8) 2.6 -
----------------------------------------------------------------------------------------------------
Earnings before income taxes $123.3 $110.7 $329.3 $272.3
====================================================================================================
</TABLE>
<PAGE>
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.
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.
