0000012355-01-500021.txt : 20011029 0000012355-01-500021.hdr.sgml : 20011029 ACCESSION NUMBER: 0000012355-01-500021 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20011023 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20011023 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BLACK & DECKER CORP CENTRAL INDEX KEY: 0000012355 STANDARD INDUSTRIAL CLASSIFICATION: METALWORKING MACHINERY & EQUIPMENT [3540] IRS NUMBER: 520248090 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 333-03593 FILM NUMBER: 1763884 BUSINESS ADDRESS: STREET 1: 701 E JOPPA RD CITY: TOWSON STATE: MD ZIP: 21286 BUSINESS PHONE: 4107163900 MAIL ADDRESS: STREET 1: 701 EAST JOPPA ROAD STREET 2: MAIL STOP TW 290 CITY: TOWSON STATE: MD ZIP: 21286 FORMER COMPANY: FORMER CONFORMED NAME: BLACK & DECKER MANUFACTURING CO DATE OF NAME CHANGE: 19850206 8-K 1 form8k10232001a.txt FORM 8K DATED 10/23/2001 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) October 23, 2001 ------------------------------- 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) ITEM 5. OTHER EVENTS On October 23, 2001, the Corporation reported its earnings for the three and nine months ended September 30, 2001. Attached to this Current Report on Form 8-K as Exhibit 99 is a copy of the Corporation's related press release dated October 23, 2001. FORWARD-LOOKING STATEMENTS This Current Report on Form 8-K contains "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 that are intended to come within the safe harbor protection provided by those statutes. By their nature, all forward-looking statements involve risks and uncertainties, and actual results may differ materially from those contemplated by the forward-looking statements. Several factors that could materially affect the Corporation's actual results are identified in Item 1(f) of Part I of the Corporation's Annual Report on Form 10-K for the year ended December 31, 2000. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS Exhibit 99 Press Release of the Corporation dated October 23, 2001. 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/ CHRISTINA M. MCMULLEN ------------------------------------- Christina M. McMullen Vice President and Controller Date: October 23, 2001 EX-99 3 form8k10232001b.txt PRESS RELEASE DATED 10/23/2001 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: Tuesday, October 23, 2001 Subject: Black & Decker Reports $.57 Earnings Per Share for Third Quarter of 2001 Towson, MD - The Black & Decker Corporation (NYSE:BDK) today announced that net earnings for the third quarter of 2001 were $46.2 million, or $.57 per diluted share. The Corporation reported net earnings of $86.3 million, or $1.03 per diluted share, for the third quarter last year. Sales for the third quarter of 2001 were $1.06 billion, down 6% from the $1.13 billion reported by the Corporation for the same period last year. Sales declined 4% excluding the effects of foreign currency translation. Commenting on the results, Nolan D. Archibald, Chairman and Chief Executive Officer, said, "The difficult economic conditions that we experienced during the first half of 2001 continued through the third quarter. Despite weaker-than-expected sales, earnings were within the range that we had projected. (more) Page Two "Sales in the worldwide Power Tools and Accessories segment, excluding foreign currency translation, declined 3% in the quarter compared to the same period last year, with declines in both North America and Europe. In North America, higher sales of professional products were more than offset by lower sales of consumer products. The sales gains in our professional business were driven by new products, including the next-generation DEWALT(R) XRP(TM) drill/drivers, pneumatic-powered finish nailers, and the hand-carry air compressor. Initial sales also were encouraging for two new gas-powered generators that DEWALT launched ahead of schedule in the third quarter. This new professional product category is the fourth that we have entered this year. In our North American consumer business, sales were lower primarily due to a change in shipping terms to a major customer. The majority of new consumer products are being introduced during the fourth quarter. "In Europe, where economic conditions remained sluggish, especially in Germany, a decline in consumer tool sales was partially offset by some improvement in sales of professional tools. Our consumer business continued to be negatively affected by excess retail inventory of opening-price-point power tools imported from Asia, while our professional business continued to benefit from the successful transition to the DEWALT brand throughout Europe. "In the rest of the world, sales of power tools and accessories increased at a single-digit rate, with solid increases in Mexico and Brazil. Margins improved as favorable product mix more than offset negative currency effects. "Operating profit for Power Tools and Accessories declined from the same period last year primarily due to lower sales and lower gross margin, the effects of which were only partially offset by expense reductions. Lower gross margin reflected production cutbacks to manage inventory as well as a reduced level of volume-related productivity improvement. In Europe, margins also were affected by price pressures from Asian imports and the weak euro currency. (more) Page Three "Sales in the Hardware and Home Improvement segment declined 11% in the third quarter largely because of the weak economic environment in North America and inventory correction actions by retailers. Our security hardware business experienced a slowing of orders for its existing products as retailers prepared for Kwikset's major brand and product repositioning, which is being rolled out in the fourth quarter. In our Price Pfister plumbing business, the weak economic environment also had the effect of shifting consumer buying preferences toward lower-price-point competitive products. Operating profit in this segment for the quarter declined from last year's level due to lower sales, actions to manage inventory, and price pressures in the plumbing products business. "Sales in the Fastening and Assembly Systems segment declined slightly in the quarter. Higher sales in the automotive sector were more than offset by continued weak sales in the industrial sector. Automotive sales were higher due to the acquisition of the automotive division of Bamal Corporation in North America and sales growth in Europe and Asia. A decline in operating profit for the quarter reflected pricing pressure and sales of lower-margin products. "Inventory declined $28 million from the third quarter last year and increased $79 million from the second quarter this year. The increase was concentrated in our North American consumer power tools business in preparation for our seasonally significant fourth quarter and also reflected a change in shipping terms to a major customer. Compared to last year, our supply chain initiatives generated a significant inventory reduction in Power Tools and Accessories, offset in part by higher Kwikset inventory in preparation for the brand-repositioning rollout. "Free cash flow was $76 million during the quarter versus a use of $32 million for the same quarter last year. The improvement was due to better working capital management and lower capital expenditures, offset in part by lower net earnings. Through the first nine months of 2001, free cash flow was $8 million versus a use of $52 million for the same period in 2000. We also purchased 1.1 million shares of our common stock during the last thirty days, some of which settled during the third quarter. (more) Page Four "Looking ahead, we expect the world economies to remain weak, and it is the general consensus of economists that there will be negative U.S. growth in the fourth quarter. Based on this outlook, we expect fourth quarter sales excluding foreign currency translation to be approximately flat to the fourth quarter of 2000 and diluted earnings per share to be in the $.70-to-$.80 range. "In light of the effects of weak economic conditions on our profitability, we have been taking a number of measures during the year to cut costs. Through a general hiring freeze and attrition, as well as consolidation in the Hardware and Home Improvement group, we have achieved a 4% reduction in total headcount since the end of 2000. We also are generating positive results from a company-wide program to reduce and improve the effectiveness of indirect spending, and we are carefully monitoring the amount and timing of discretionary expenses. "Challenging economic conditions have become even more difficult, however, and prospects of economic recovery more distant since the tragic events that occurred in September. Therefore, we are intensifying our focus on structural cost reductions that will improve profitability despite sluggish sales. We continue to project that our year-end inventory level will be at or below $800 million due to improved supply chain management and lower production levels. We are on track to reduce capital spending for 2001 by at least $35 million compared to last year and continue to expect to convert at least 70% to 80% of net earnings to free cash flow for the year. "Despite the challenges that we face, Black & Decker's competitive advantages, including our brands, new product development expertise, and customer relationships, remain strong. Our continued focus on operational improvement through Six Sigma, along with aggressive cash management and a strong balance sheet, position us to weather the economic downturn and capitalize on the future economic recovery." (more) Page Five The Corporation will hold a conference call today at 10:00 a.m., EDT, to discuss third-quarter results. Investors can listen to the call by visiting www.bdk.com, the Corporation's homepage, and clicking on the icon labeled "Live Webcast." It is recommended that listeners log-in at least ten minutes prior to the beginning of the call to assure timely access. A replay of the conference call will be available on the Corporation's homepage through the close of business on October 30, 2001. 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 23, 2001. Black & Decker is a leading global manufacturer and marketer of power tools and accessories, hardware and home improvement products, and technology-based fastening systems. * * * THE BLACK & DECKER CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF EARNINGS (Unaudited) (Dollars in Millions Except Per Share Amounts) Three Months Ended ----------------------------- September 30, October 1, 2001 2000 -------------- ----------- SALES $ 1,063.0 $ 1,133.2 Cost of goods sold 696.4 707.3 Selling, general, and administrative expenses 277.6 277.7 -------------- ----------- OPERATING INCOME 89.0 148.2 Interest expense (net of interest income) 20.4 26.5 Other expense (income) 2.7 (1.6) -------------- ----------- EARNINGS BEFORE INCOME TAXES 65.9 123.3 Income taxes 19.7 37.0 -------------- ----------- NET EARNINGS $ 46.2 $ 86.3 ============== =========== NET EARNINGS PER COMMON SHARE - BASIC $ .57 $ 1.04 ============== =========== Shares Used in Computing Basic Earnings Per Share (in Millions) 80.8 83.2 ============== =========== NET EARNINGS PER COMMON SHARE - ASSUMING DILUTION $ .57 $ 1.03 ============== =========== Shares Used in Computing Diluted Earnings Per Share (in Millions) 81.0 83.8 ============== =========== THE BLACK & DECKER CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF EARNINGS (Unaudited) (Dollars in Millions Except Per Share Amounts) Nine Months Ended ----------------------------- September 30, October 1, 2001 2000 ----------------------------- SALES $ 3,112.4 $ 3,297.2 Cost of goods sold 2,043.0 2,081.6 Selling, general, and administrative expenses 823.8 833.3 Gain on sale of business - 20.1 -------------- ----------- OPERATING INCOME 245.6 402.4 Interest expense (net of interest income) 65.5 75.7 Other expense (income) 7.3 (2.6) -------------- ----------- EARNINGS BEFORE INCOME TAXES 172.8 329.3 Income taxes 51.8 99.8 -------------- ----------- NET EARNINGS $ 121.0 $ 229.5 ============== =========== NET EARNINGS PER COMMON SHARE - BASIC $ 1.49 $ 2.71 ============== =========== Shares Used in Computing Basic Earnings Per Share (in Millions) 81.0 84.6 ============== =========== NET EARNINGS PER COMMON SHARE - ASSUMING DILUTION $ 1.49 $ 2.69 ============== =========== Shares Used in Computing Diluted Earnings Per Share (in Millions) 81.4 85.3 ============== =========== THE BLACK & DECKER CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (Millions of Dollars) September 30, 2001 December 31, (Unaudited) 2000 -------------- ------------- ASSETS Cash and cash equivalents $ 139.3 $ 135.0 Trade receivables 830.7 783.1 Inventories 878.7 844.0 Other current assets 201.9 199.9 -------------- ------------- TOTAL CURRENT ASSETS 2,050.6 1,962.0 -------------- ------------- PROPERTY, PLANT, AND EQUIPMENT 727.4 748.1 GOODWILL 720.6 717.2 OTHER ASSETS 776.0 662.4 -------------- ------------- $ 4,274.6 $ 4,089.7 ============== ============= LIABILITIES AND STOCKHOLDERS' EQUITY Short-term borrowings $ 118.9 $ 402.9 Current maturities of long-term debt 41.2 47.7 Trade accounts payable 420.7 367.6 Other accrued liabilities 745.1 814.1 -------------- ------------- TOTAL CURRENT LIABILITIES 1,325.9 1,632.3 -------------- ------------- LONG-TERM DEBT 1,209.5 798.5 DEFERRED INCOME TAXES 218.7 221.0 POSTRETIREMENT BENEFITS 266.1 240.6 OTHER LONG-TERM LIABILITIES 484.5 479.8 COMMON STOCK UNDER EQUITY FORWARDS - 25.1 STOCKHOLDERS' EQUITY 769.9 692.4 -------------- ------------- $ 4,274.6 $ 4,089.7 ============== ============= THE BLACK & DECKER CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION ABOUT BUSINESS SEGMENTS (Unaudited) (Millions of Dollars)
Reportable Business Segments -------------------------------------------------- Power Hardware Fastening Currency Corporate, Three Months Ended Tools & & Home & Assembly Translation Adjustments, September 30, 2001 Accessories Improvement Systems Total Adjustments & Eliminations Consolidated ---------------------------------------------------------------------------------------------------------------------------- Sales to unaffiliated customers $770.1 $190.8 $121.5 $1,082.4 $ (19.4) $ - $1,063.0 Segment profit (loss) (for Consolidated, operating income) 78.5 16.0 14.8 109.3 (1.2) (19.1) 89.0 Depreciation and amortization 20.2 8.1 4.1 32.4 (.3) 6.3 38.4 Capital expenditures 20.6 7.2 3.8 31.6 (.6) - 31.0 Three Months Ended October 1, 2000 ---------------------------------------------------------------------------------------------------------------------------- Sales to unaffiliated customers $792.6 $213.8 $123.1 $1,129.5 $ 3.7 $ - $1,133.2 Segment profit (loss) (for Consolidated, operating income) 101.3 30.8 19.6 151.7 .1 (3.6) 148.2 Depreciation and amortization 21.7 7.5 4.1 33.3 .1 6.5 39.9 Capital expenditures 31.3 7.6 5.5 44.4 .2 .1 44.7 Nine Months Ended September 30, 2001 ---------------------------------------------------------------------------------------------------------------------------- Sales to unaffiliated customers $2,199.6 $583.2 $372.6 $3,155.4 $(43.0) $ - $3,112.4 Segment profit (loss) (for Consolidated, operating income) 168.5 41.9 54.9 265.3 (2.9) (16.8) 245.6 Depreciation and amortization 66.2 26.8 11.8 104.8 (1.4) 19.4 122.8 Capital expenditures 66.1 24.8 10.0 100.9 (1.2) .7 100.4 Nine Months Ended October 1, 2000 ---------------------------------------------------------------------------------------------------------------------------- Sales to unaffiliated customers $2,248.1 $625.8 $382.9 $3,256.8 $ 40.4 $ - $3,297.2 Segment profit (loss) (for Consolidated, operating income before gain on sale of business) 255.1 77.0 64.0 396.1 3.6 (17.4) 382.3 Depreciation and amortization 63.8 26.2 12.2 102.2 1.3 19.8 123.3 Capital expenditures 106.5 22.4 18.5 147.4 1.7 .6 149.7
The reconciliation of segment profit to the Corporation's earnings before income taxes for each period, in millions of dollars, is as follows:
Three Months Ended Nine Months Ended ---------------------------------------------------------------------------------------------------- September 30, October 1, September 30, October 1, 2001 2000 2001 2000 ---------------------------------------------------------------------------------------------------- Segment profit for total reportable business segments $109.3 $151.7 $265.3 $396.1 Items excluded from segment profit: Adjustment of budgeted foreign exchange rates to actual rates (1.2) .1 (2.9) 3.6 Depreciation of Corporate property and amortization of certain goodwill (6.3) (6.5) (19.4) (19.8) Adjustment to businesses' post- retirement benefit expenses booked in consolidation 9.4 9.0 30.3 27.2 Adjustment to eliminate net interest and non-operating expenses from results of certain operations in Brazil, Venezuela, and Turkey .2 .2 .6 .4 Other adjustments booked in consolidation directly related to reportable business segments (8.3) (2.0) (3.3) (14.7) Amounts allocated to businesses in arriving at segment profit in excess of (less than) Corporate center operating expenses, eliminations, and other amounts identified above (14.1) (4.3) (25.0) (10.5) ---------------------------------------------------------------------------------------------------- Operating income before gain on sale of business 89.0 148.2 245.6 382.3 Gain on sale of business - - - 20.1 ---------------------------------------------------------------------------------------------------- Operating income 89.0 148.2 245.6 402.4 Interest expense, net of interest income 20.4 26.5 65.5 75.7 Other expense (income) 2.7 (1.6) 7.3 (2.6) ---------------------------------------------------------------------------------------------------- Earnings before income taxes $ 65.9 $123.3 $172.8 $329.3 ====================================================================================================
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, 2000, except with respect to foreign currency translation and except as further indicated below. The financial statements of a segment's operating units located outside of the United States, except those units operating in highly inflationary economies, are generally measured using the local currency as the functional currency. For these units located outside of the United States, segment assets and elements of segment profit are translated using budgeted exchange rates. Budgeted exchange rates are established annually and, once established, all prior period segment data is restated to reflect the current year's budgeted exchange rates. The amounts included in the preceding table under the captions "Reportable Business Segments" and "Corporate, Adjustments, & Eliminations" are reflected at the Corporation's budgeted exchange rates for 2001. The amounts included in the preceding table under the caption "Currency Translation Adjustments" represent the difference between consolidated amounts determined using those budgeted exchange rates and those determined based upon the exchange rates applicable under accounting principles generally accepted in the United States. Segment profit excludes interest income and expense, non-operating income and expense, goodwill amortization (except for amortization of goodwill associated with certain small acquisitions made by the Power Tools and Accessories and Fastening and Assembly Systems segments), 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, 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, as well as certain centrally managed expenses, are allocated to each reportable 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 non-recurring 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 various segments in a later period.