THE BLACK & DECKER CORPORATION 
By "Sales in the Power Tools and Accessories segment decreased 23% for the quarter. In the U.S. Industrial Products Group, sales decreased approximately 30% due to lower construction activity and retailer inventory reductions. Sales decreased at a mid single-digit rate in the U.S. Consumer Products Group, primarily due to significant orders for lawn and garden products shipped in late 2008 rather than early 2009. Our European sales decreased nearly 30%, much worse than we anticipated. Economic conditions in the region deteriorated rapidly, especially in
"Sales in the Hardware and Home Improvement segment decreased 19% for the quarter. In the U.S. lockset business, sales decreased more than 20%, reflecting declines in residential construction and in retail sales for higher-priced products. Sales in the U.S. Price Pfister business decreased at a double-digit rate, due to both the housing downturn and weaker demand at retail. The segment's operating margin decreased to 4.0%, primarily due to lower volume.
"In the Fastening and Assembly Systems segment, sales decreased 34% for the quarter. Sales to the global automotive industry fell nearly 40%, slightly less than the decline in automotive production. Sales were also down sharply in the industrial business, as global manufacturing slowed significantly. The segment's operating margin decreased to 1.9% due to the sharp sales decline.
"Our management team is focused on cash flow and liquidity, and we continue to be well-positioned. Including cash flows from net investment hedging activities, net cash generation was negative
"Looking ahead, we expect that the weak demand we saw in the first quarter will continue. We anticipate that sales will decline in the second quarter at a rate similar to the first quarter, including approximately 7 percentage points of unfavorable foreign currency translation. For the full year, we expect a sales decline of approximately 20%, including 5 points of unfavorable currency. As a result of additional cost reductions, including restructuring savings and salary decreases, we continue to expect operating margins around 5% for the year. Primarily due to the recent debt issuance, interest expense will be approximately
"While today's economic environment is the most challenging in decades, I believe Black & Decker's leading brands and world-class innovation will lead us through the recession. We are strengthening our position in the cordless market with next-generation DEWALT(R) XRP(TM) tools, and our new Porter-Cable(R) offering for the tradesman and home workshop is quickly gaining traction. Our management team is effectively balancing cost control, cash flow and growth initiatives, which should keep us profitable in the short-term and lead to continued success in the long-term. We appreciate all of the efforts and sacrifices made by our associates to build a great future for Black & Decker."
The Corporation will hold a conference call today at
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
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
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CONSOLIDATED STATEMENT OF EARNINGS
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(Dollars in Millions Except Per Share Amounts)
Three Months Ended
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March 29, 2009 March 30, 2008
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SALES $ 1,073.7 $ 1,495.8
Cost of goods sold 732.9 978.3
Selling, general, and administrative
expenses 303.0 394.6
Restructuring and exit costs 11.9 18.3
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OPERATING INCOME 25.9 104.6
Interest expense (net of interest income) 15.9 16.5
Other expense 1.0 -
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EARNINGS BEFORE INCOME TAXES 9.0 88.1
Income taxes 4.1 20.7
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NET EARNINGS $ 4.9 $ 67.4
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NET EARNINGS PER COMMON SHARE - BASIC $ .08 $ 1.10
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Shares Used in Computing Basic Earnings
Per Share (in Millions) 59.4 60.5
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NET EARNINGS PER COMMON SHARE -
ASSUMING DILUTION $ .08 $ 1.08
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Shares Used in Computing Diluted
Earnings Per Share (in Millions) 59.4 61.4
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THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
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CONSOLIDATED BALANCE SHEET
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(Dollars in Millions)
March 29, 2009 December 31, 2008
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ASSETS
Cash and cash equivalents $ 325.0 $ 277.8
Trade receivables 906.4 924.6
Inventories 982.5 1,024.2
Other current assets 288.5 377.0
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TOTAL CURRENT ASSETS 2,502.4 2,603.6
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PROPERTY, PLANT, AND EQUIPMENT 507.4 527.9
GOODWILL 1,214.0 1,223.2
OTHER ASSETS 825.3 828.6
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$ 5,049.1 $ 5,183.3
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LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term borrowings $ 286.2 $ 83.3
Current maturities of
long-term debt .1 .1
Trade accounts payable 377.5 453.1
Other current liabilities 768.0 947.4
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TOTAL CURRENT LIABILITIES 1,431.8 1,483.9
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LONG-TERM DEBT 1,437.7 1,444.7
POSTRETIREMENT BENEFITS 660.2 669.4
OTHER LONG-TERM LIABILITIES 458.1 460.5
STOCKHOLDERS' EQUITY 1,061.3 1,124.8
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$ 5,049.1 $ 5,183.3
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THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
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CONSOLIDATED STATEMENT OF CASH FLOWS
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(Dollars in Millions)
Three Months Ended
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March 29, 2009 March 30, 2008
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OPERATING ACTIVITIES
Net earnings $ 4.9 $ 67.4
Adjustments to reconcile net earnings
to cash flow from operating activities:
Non-cash charges and credits:
Depreciation and amortization 31.0 33.7
Stock-based compensation 7.6 6.8
Amortization of actuarial losses and
prior year service costs 3.0 3.6
Restructuring and exit costs 11.9 18.3
Other .1 .7
Changes in selected working capital items
(net of effects of businesses acquired):
Trade receivables (2.3) (73.9)
Inventories 15.0 (36.4)
Trade accounts payable (69.8) 45.8
Other current liabilities (107.3) (88.9)
Restructuring spending (15.1) (3.4)
Other assets and liabilities (148.8) (60.6)
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CASH FLOW FROM OPERATING ACTIVITIES (269.8) (86.9)
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INVESTING ACTIVITIES
Capital expenditures (19.8) (25.0)
Proceeds from disposal of assets .9 .8
Cash outflow associated with purchase
of previously acquired business (1.1) -
Cash inflow from hedging activities 165.8 40.3
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CASH FLOW FROM INVESTING ACTIVITIES 145.8 16.1
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FINANCING ACTIVITIES
Net increase in short-term borrowings 203.0 126.9
Proceeds from issuance of long-term debt
(net of debt issue costs of $.2) - 99.8
Purchase of common stock - (133.6)
Issuance of common stock - .9
Cash dividends (25.3) (25.6)
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CASH FLOW FROM FINANCING ACTIVITIES 177.7 68.4
Effect of exchange rate changes on cash (6.5) 3.1
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INCREASE IN CASH AND CASH EQUIVALENTS 47.2 .7
Cash and cash equivalents at beginning
of period 277.8 254.7
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CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 325.0 $ 255.4
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THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
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SUPPLEMENTAL INFORMATION ABOUT BUSINESS SEGMENTS
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(Dollars in Millions)
Three Months Ended
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March 29, 2009 March 30, 2008
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Sales to Unaffiliated Customers:
Power Tools and Accessories $ 803.4 $ 1,038.2
Hardware and Home Improvement 171.0 211.1
Fastening and Assembly Systems 124.1 187.2
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Total Reportable Business Segments 1,098.5 1,436.5
Currency Translation Adjustments (24.8) 59.3
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Consolidated $ 1,073.7 $ 1,495.8
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Segment Profit (Loss) - for Consolidated,
Operating Income before Restructuring
and Exit Costs:
Power Tools and Accessories $ 31.0 $ 86.1
Hardware and Home Improvement 6.9 15.6
Fastening and Assembly Systems 2.4 29.5
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Total Reportable Business Segments 40.3 131.2
Currency Translation Adjustments 2.1 8.0
Corporate, Adjustments, and Eliminations (4.6) (16.3)
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Consolidated $ 37.8 $ 122.9
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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
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
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
The Corporation adopted FSP EITF 03-6-1 effective
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
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.
Diluted earnings per share, excluding restructuring charges:
The calculation of diluted earnings per share for the three months ended
Three Months Ended
March 29, 2009 March 30, 2008
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Net earnings $ 4.9 $ 67.4
Excluding:
Restructuring charges, net of tax 8.4 12.2
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Net earnings, excluding restructuring
charges $ 13.3 $ 79.6
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Net earnings available to common
stockholders, excluding restructuring
charges $ 13.1 $ 78.6
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Diluted earnings per common share $ .08 $ 1.08
Excluding:
Restructuring charges, net of tax,
per common share - assuming dilution .14 .20
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Net earnings, excluding restructuring
charges per common share -
assuming dilution $ .22 $ 1.28
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Shares used in computing diluted
earnings per share (in millions) 59.4 61.4
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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
Three Months Ended
March 29, 2009 March 30, 2008
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Cash flow from operating activities $ (269.8) $ (86.9)
Capital expenditures (19.8) (25.0)
Proceeds from disposals of assets .9 .8
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Free cash flow (288.7) (111.1)
Cash inflow from net investment
hedging activities 165.8 40.3
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Net cash generation $ (122.9) $ (70.8)
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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
SOURCE The Black & Decker Corporation
