TOWSON, Md., July 24 /PRNewswire-FirstCall/ -- The Black & Decker
Corporation (NYSE: BDK) today announced that net earnings for the second
quarter of 2009 were $38.3 million or $.63 per diluted share, versus $96.7
million or $1.56 per diluted share for the second quarter of 2008. Sales
decreased 27% for the quarter to $1.2 billion, including a negative 5% impact
from foreign currency translation. Net cash generation was $234 million for
the second quarter and $111 million year-to-date.
Nolan D. Archibald, Chairman and Chief Executive Officer, commented, "As
we expected, demand in our end-markets remained extremely weak in the second
quarter. We continued to actively reduce our cost base, and posted a better
operating margin than we had projected. The success of this effort, combined
with a favorable insurance settlement, enabled us to report higher EPS than we
forecasted. We also reduced inventory 28% year-on-year, driving impressive
cash generation and improving our liquidity and balance sheet.
"Sales in the Power Tools and Accessories segment decreased 21% for the
quarter. In the U.S. Industrial Products Group, severe declines in both
residential and non-residential construction activity resulted in nearly a 30%
sales decrease. Sales increased at a high single-digit rate in the U.S.
Consumer Products Group, as strong shipments of lawn and garden products and
the new Porter-Cable line outweighed decreases in other categories. Our
European sales decreased approximately 30%, similar to the first-quarter
trend, with a particularly sharp decline in Eastern Europe. Sales also
declined in other parts of the world, reflecting the ongoing economic and
construction slowdown worldwide. The segment's operating margin decreased to
6.5%, as aggressive cost control actions and favorable price did not fully
offset the impact of lower volume.
"Sales in the Hardware and Home Improvement segment decreased 21% for the
quarter. The U.S. lockset business experienced a double-digit rate of
decrease, as weakness in the residential construction channel and at higher
price points overshadowed solid results for Kwikset products at retail.
Sales in the U.S. Price Pfister business decreased more than 30% against a
relatively strong quarter in 2008, with declines across all channels. The
segment's operating margin increased to 11.6%, due to restructuring and
productivity initiatives, as well as lower commodity prices.
"Sales decreased 32% for the quarter in the Fastening and Assembly Systems
segment, with similar declines in the automotive and industrial divisions.
The automotive industry remained depressed, especially in the U.S., and our
results were consistent with global production rates. Industrial distributors
continued to de-stock during the quarter, exacerbating a weak demand
environment, particularly outside North America. The segment's operating
margin decreased to 5.8% due to the sales decline.
"Despite lower earnings, our net cash generation of $111 million
year-to-date was $46 million better than the same period in 2008. We reduced
inventory $307 million year-on-year, and $183 million since the end of the
first quarter. We now expect net cash generation in excess of $200 million
for the full year, significantly higher than projected net earnings. This
will enhance our already strong liquidity and improve our debt metrics as
well.
"Looking ahead, we expect a sales decline in the third quarter similar to
the first half, as most of our end markets will likely remain weak. We
anticipate a narrower sales decline in the fourth quarter, due to some
stabilization in the automotive industry and an easier comparison. For the
full year, we expect a sales decline of approximately 24%, including 3 points
of unfavorable currency. We expect to continue controlling costs in response
to lower volumes, so our operating margin guidance remains approximately 5%
for the year. Considering both our second-quarter outperformance and the
second-half sales outlook, we now expect diluted EPS in the range of
$1.65-to-$2.00 for the full year, excluding the first-quarter restructuring
charge. For the third quarter, we expect diluted EPS in the range of
$.35-to-$.45.
"Black & Decker's outstanding team of associates is taking the right steps
to get us through this downturn and position the company for growth. We are
taking the tough, but necessary, actions to control costs, reduce production
levels and restructure businesses. At the same time, we are excited about new
product opportunities over the next several quarters in outdoor, cordless, and
holiday offerings. These innovative offerings will take advantage of the
Black & Decker and DEWALT brands, two of the strongest global names in
consumer and industrial products. We are confident that Black & Decker will
remain solidly profitable and generate significant cash throughout the global
recession, and ultimately deliver outstanding long-term returns to our
stockholders."
The Corporation also announced that its Board of Directors declared a
quarterly cash dividend of $.12 per share of the Corporation's outstanding
common stock payable September 25, 2009, to stockholders of record at the
close of business on September 11, 2009.
The Corporation will hold a conference call today at 10:00 a.m., E.T., to
discuss second-quarter results and the outlook for the remainder of 2009.
Investors can listen to the conference call by visiting http://www.bdk.com and
clicking on the icon labeled "Live Webcast." Listeners should log-in at least
ten minutes prior to the beginning of the event to ensure timely access. A
replay of the call will be available at http://www.bdk.com.
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 the "Risk Factors" sections in Black
& Decker's reports filed with the Securities and Exchange Commission,
including the Annual Report on Form 10-K for the fiscal year ended December
31, 2008.
This release contains non-GAAP financial measures within the meaning of
Regulation G promulgated by the Securities and Exchange Commission. Included
with this release is a reconciliation of the differences between these
non-GAAP financial measures with the most directly comparable financial
measures calculated in accordance with GAAP.
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
----------------------------------
(Dollars in Millions Except Per Share Amounts)
Three Months Ended
----------------------------
June 28, 2009 June 29, 2008
------------- -------------
SALES $ 1,191.4 $ 1,641.7
Cost of goods sold 819.2 1,104.5
Selling, general, and administrative
expenses 301.3 399.5
------------- -------------
OPERATING INCOME 70.9 137.7
Interest expense (net of
interest income) 22.9 14.8
Other (income) expense (5.0) .4
------------- -------------
EARNINGS BEFORE INCOME TAXES 53.0 122.5
Income taxes 14.7 25.8
------------- -------------
NET EARNINGS $ 38.3 $ 96.7
============= =============
NET EARNINGS PER COMMON SHARE -
BASIC $ .63 $ 1.58
============= =============
Shares Used in Computing Basic
Earnings Per Share (in Millions) 59.5 60.1
============= =============
NET EARNINGS PER COMMON SHARE -
ASSUMING DILUTION $ .63 $ 1.56
============= =============
Shares Used in Computing Diluted
Earnings Per Share (in Millions) 59.5 61.1
============= =============
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
-----------------------------------------------
CONSOLIDATED STATEMENT OF EARNINGS
-----------------------------------
(Dollars in Millions Except Per Share Amounts)
Six Months Ended
----------------------------
June 28, 2009 June 29, 2008
------------- -------------
SALES $ 2,265.1 $ 3,137.5
Cost of goods sold 1,552.1 2,082.8
Selling, general, and administrative
expenses 604.3 794.1
Restructuring and exit costs 11.9 18.3
------------- -------------
OPERATING INCOME 96.8 242.3
Interest expense (net of
interest income) 38.8 31.3
Other (income) expense (4.0) .4
------------- -------------
EARNINGS BEFORE INCOME TAXES 62.0 210.6
Income taxes 18.8 46.5
------------- -------------
NET EARNINGS $ 43.2 $ 164.1
============= =============
NET EARNINGS PER COMMON SHARE -
BASIC $ .71 $ 2.68
============= =============
Shares Used in Computing Basic
Earnings Per Share (in Millions) 59.4 60.3
============= =============
NET EARNINGS PER COMMON SHARE -
ASSUMING DILUTION $ .71 $ 2.64
============= =============
Shares Used in Computing Diluted
Earnings Per Share (in Millions) 59.4 61.3
============= =============
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
-----------------------------------------------
CONSOLIDATED BALANCE SHEET
--------------------------
(Dollars in Millions)
June 28, 2009 December 31, 2008
----------------- -----------------
ASSETS
Cash and cash equivalents $ 564.0 $ 277.8
Trade receivables 929.6 924.6
Inventories 799.3 1,024.2
Other current assets 275.0 377.0
----------------- -----------------
TOTAL CURRENT ASSETS 2,567.9 2,603.6
----------------- -----------------
PROPERTY, PLANT, AND EQUIPMENT 503.1 527.9
GOODWILL 1,222.7 1,223.2
OTHER ASSETS 818.6 828.6
----------------- -----------------
$ 5,112.3 $ 5,183.3
================= =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term borrowings $ .5 $ 83.3
Current maturities of
long-term debt - .1
Trade accounts payable 333.6 453.1
Other current liabilities 739.0 947.4
----------------- -----------------
TOTAL CURRENT LIABILITIES 1,073.1 1,483.9
----------------- -----------------
LONG-TERM DEBT 1,720.9 1,444.7
POSTRETIREMENT BENEFITS 676.9 669.4
OTHER LONG-TERM LIABILITIES 475.6 460.5
STOCKHOLDERS' EQUITY 1,165.8 1,124.8
----------------- -----------------
$ 5,112.3 $ 5,183.3
================= =================
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
-----------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------------------
(Dollars in Millions)
Six Months Ended
----------------------------
June 28, 2009 June 29, 2008
------------- -------------
OPERATING ACTIVITIES
Net earnings $ 43.2 $ 164.1
Adjustments to reconcile net earnings
to cash flow from operating activities:
Non-cash charges and credits:
Depreciation and amortization 63.1 71.9
Stock-based compensation 15.2 13.2
Amortization of actuarial
losses and prior year
service costs 5.9 7.1
Restructuring and exit costs 11.9 18.3
Other (1.4) 1.3
Changes in selected working
capital items (net of effects
of businesses acquired):
Trade receivables 8.0 (113.1)
Inventories 233.2 58.7
Trade accounts payable (118.6) 26.8
Other current liabilities (130.8) (61.3)
Restructuring spending (26.1) (10.2)
Other assets and liabilities (154.8) (78.5)
------------- -------------
CASH FLOW FROM OPERATING ACTIVITIES (51.2) 98.3
------------- -------------
INVESTING ACTIVITIES
Capital expenditures (34.5) (53.8)
Proceeds from disposal of assets 3.0 1.6
Cash outflow associated with purchase
of previously acquired business (1.4) -
Cash inflow from hedging activities 193.9 40.3
Cash outflow from hedging activities - (21.0)
------------- -------------
CASH FLOW FROM INVESTING ACTIVITIES 161.0 (32.9)
------------- -------------
FINANCING ACTIVITIES
Net decrease in short-term borrowings (83.8) (20.6)
Proceeds from issuance of long-term
debt (net of debt issue costs of
$2.7 and $.3, respectively) 343.1 224.7
Payment on long-term debt (50.1) (.1)
Purchase of common stock (2.2) (193.4)
Issuance of common stock 0.1 2.3
Cash dividends (32.6) (51.1)
------------- -------------
CASH FLOW FROM FINANCING ACTIVITIES 174.5 (38.2)
Effect of exchange rate changes on
cash 1.9 5.7
------------- -------------
INCREASE IN CASH AND CASH EQUIVALENTS 286.2 32.9
Cash and cash equivalents at
beginning of period 277.8 254.7
------------- -------------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 564.0 $ 287.6
============= =============
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
-----------------------------------------------
SUPPLEMENTAL INFORMATION ABOUT BUSINESS SEGMENTS
------------------------------------------------
(Dollars in Millions)
Three Months Ended
----------------------------
June 28, 2009 June 29, 2008
------------- -------------
Sales to Unaffiliated Customers:
Power Tools and Accessories $ 888.8 $ 1,127.2
Hardware and Home Improvement 190.8 240.3
Fastening and Assembly Systems 124.8 183.8
------------- -------------
Total Reportable Business Segments 1,204.4 1,551.3
Currency Translation Adjustments (13.0) 90.4
------------- -------------
Consolidated $ 1,191.4 $ 1,641.7
============= =============
Segment Profit (Loss) - for Consolidated,
Operating Income:
Power Tools and Accessories $ 57.7 $ 89.4
Hardware and Home Improvement 22.1 22.2
Fastening and Assembly Systems 7.3 29.8
------------- -------------
Total Reportable Business Segments 87.1 141.4
Currency Translation Adjustments 1.3 11.8
Corporate, Adjustments, and Eliminations (17.5) (15.5)
------------- -------------
Consolidated $ 70.9 $ 137.7
============= =============
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
-----------------------------------------------
SUPPLEMENTAL INFORMATION ABOUT BUSINESS SEGMENTS
------------------------------------------------
(Dollars in Millions)
Six Months Ended
----------------------------
June 28, 2009 June 29, 2008
------------- -------------
Sales to Unaffiliated Customers:
Power Tools and Accessories $ 1,692.2 $ 2,165.4
Hardware and Home Improvement 361.8 451.4
Fastening and Assembly Systems 248.9 371.0
------------- -------------
Total Reportable Business Segments 2,302.9 2,987.8
Currency Translation Adjustments (37.8) 149.7
------------- -------------
Consolidated $ 2,265.1 $ 3,137.5
============= =============
Segment Profit (Loss) - for Consolidated,
Operating Income before Restructuring
and Exit Costs:
Power Tools and Accessories $ 88.7 $ 175.5
Hardware and Home Improvement 29.0 37.8
Fastening and Assembly Systems 9.7 59.3
------------- -------------
Total Reportable Business Segments 127.4 272.6
Currency Translation Adjustments 3.4 19.8
Corporate, Adjustments, and Eliminations (22.1) (31.8)
------------- -------------
Consolidated $ 108.7 $ 260.6
============= =============
BASIS OF PRESENTATION:
Business Segments:
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 industrial power
tools and accessories, lawn and garden products, and electric cleaning,
automotive, lighting, and household products, 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; and for the sale of plumbing products to
customers outside the United States and Canada. 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). The Hardware and Home
Improvement segment 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 profitability measure employed by the Corporation and its chief
operating decision maker for making decisions about allocating resources to
segments and assessing segment performance is segment profit (for the
Corporation on a consolidated basis, operating income before restructuring and
exit costs). In general, segments follow the same accounting policies as those
described in Note 1 of Notes to Consolidated Financial Statements included in
Item 8 of the Corporation's Annual Report on Form 10-K for the year ended
December 31, 2008, 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 sales 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 preceding table for the Corporation's business segments and on the line
entitled "Corporate, Adjustments, and Eliminations" are reflected at the
Corporation's budgeted rates of exchange for 2009. The amounts included in the
preceding table on the line entitled "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, adjustments to eliminate intercompany profit in inventory, and
income tax expense. In addition, segment profit excludes restructuring and
exit costs. 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, including
expenses related to share-based compensation, 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 goods sold 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.
Adoption of New Accounting Standard for FASB Staff Position No. EITF
03-6-1:
As more fully described in Note 1 of Notes to Consolidated Financial
Statements included in Item 8 of the Corporation's Annual Report on Form 10-K
for the year ended December 31, 2008, the Corporation was required to adopt
FASB Staff Position (FSP) No. EITF 03-6-1, Determining Whether Instruments
Granted in Share-Based Payments Transactions are Participating Securities (FSP
EITF 03-6-1), effective January 1, 2009. FSP EITF 03-6-1 clarifies whether
instruments granted in share-based payment transactions should be included in
the computation of earnings per share using the two-class method prior to
vesting and requires that all prior-period EPS data presented be adjusted
retrospectively.
The Corporation adopted FSP EITF 03-6-1 effective January 1, 2009.
Accordingly, basic and diluted earnings per share for the three and six months
ended June 29, 2008, have been adjusted to reflect the adoption of FSP EITF
03-6-1.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND REGULATION G DISCLOSURE:
To supplement its consolidated financial statements presented in
accordance with accounting principles generally accepted in the United States
(GAAP), the Corporation provides additional measures of operating results, net
earnings, and earnings per share adjusted to exclude certain costs, expenses,
and gains and losses. Also, in addition to measuring its cash flow based upon
operating, investing and financing activities classifications established
under GAAP, the Corporation also measures its net cash generation. The
Corporation believes that these non-GAAP financial measures are appropriate to
enhance understanding of its past performance as well as prospects for its
future performance.
This press release contains non-GAAP financial measures within the meaning
of Regulation G promulgated by the Securities and Exchange Commission. A
reconciliation of the differences between these non-GAAP financial measures
with the most directly comparable financial measures calculated in accordance
with GAAP follows.
Net Cash Generation:
The calculation of net cash generation, which is defined by the
Corporation as free cash flow (defined as cash flow from operating activities,
less capital expenditures, plus proceeds from the disposal of assets) and cash
flows from net investment hedging activities for the three months ended June
28, 2009, and six months ended June 28, 2009 and June 29, 2008, is as follows
(dollars in millions):
Three Months Six Months Ended
Ended ----------------------------
June 28, 2009 June 28, 2009 June 29, 2008
------------- ------------- -------------
Cash flow from operating
activities $218.6 $(51.2) $98.3
Capital expenditures (14.7) (34.5) (53.8)
Proceeds from disposals of
assets 2.1 3.0 1.6
------ ------ ------
Free cash flow 206.0 (82.7) 46.1
Cash inflow from net
investment hedging
activities 28.1 193.9 40.3
Cash outflow from net
investment hedging
activities - - (21.0)
------ ------ ------
Net cash generation $234.1 $111.2 $65.4
====== ====== ======
Diluted earnings per share, excluding the restructuring charge, for the
full year 2009:
This press release includes a forward-looking statement with respect to
management's expectation that the Corporation's diluted earnings per share
would range from $1.65 to $2.00 for the full year, excluding the impact of the
first-quarter restructuring charge of $11.9 million pre-tax ($8.4 million
after-tax), or $.14 per share. Management's expectation is that the
Corporation's diluted earnings per share would range from $1.51 to $1.86 for
the full year, including the impact of the first-quarter restructuring charge.
SOURCE The Black & Decker Corporation
CONTACT: Mark M. Rothleitner, Vice President, Investor Relations and
Treasurer, or Roger A. Young, Vice President, Investor and Media Relations,
both of The Black & Decker Corporation, +1-410-716-3979
Web Site: http://www.bdk.com
