B&D profits in line with predictions

October 22, 1992|By Ross Hetrick | Ross Hetrick,Staff Writer

Black & Decker Corp. announced yesterday third-quarter earnings in line with expectations but said it expects a large loss for the year after it records a one-time non-cash charge for an accounting change in the fourth quarter.

The Towson-based power-tool and appliance company also said its information services subsidiary, PRC, received a nine-year contract yesterday from the federal government with a potential value of $2.5 billion.

For the past three months, Black & Decker said it earned $12.1 million, or 11 cents a share, on sales of $1.2 billion.

The report came as little surprise to the stock market because the company announced Sept. 23 that it expected earnings to be near the $12 million level reported in the second quarter. Analysts had previously expected third-quarter income to be between $20 million and $22 million.

Yesterday, Black & Decker's stock moved up 87.5 cents, to $17.75.

Black & Decker said economic deterioration in Europe, which hurt thecompany's consumer business, was to blame for its reduced earnings.

The company also said it will take a $240 million one-time non-cash charge in the fourth quarter to bring it into compliance with a new accounting standard that changes how companies record health-care retirement benefits for current employees.

The charge, which involves no cash expenditure, would result in a large loss for the year. But like other companies, Black & Decker decided it was better to take the charge at once than to spread it over 20 years, which is permitted.

"It's out of the way," said Michael L. Mead, vice president for research at Legg Mason Wood Walker Inc.

Because it is a non-cash item and is being required of all companies, the charge will be essentially ignored by analysts, Mr. Mead said.

Three months ended 9/27/92

. .. ..... .....Revenue...... ......... Net................ Share

92............1,185,700,000...........12,100,000.........0.11 91............1,097,300,000............9,800,000. ........0.16

% change.................+8.1................+23.5.........-31.3

Nine months ended 9/27/92

...... . ......Revenue. ........... Net.................. Share

92...........3,385,100,000........33,200,000...........0.32 91...........3,291,400,000........21,100,000...........0.34 % change........ .......+2.8....... . ...+57.3......... ..-5.9

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