Black & Decker's record year leads to dividend boost Payout increase is company's first in nearly 12 years

February 08, 1996|By Ted Shelsby | Ted Shelsby,SUN STAFF

Black & Decker Corp. posted record earnings for the fourth quarter and for all of 1995 yesterday and celebrated by boosting its dividend by 20 percent -- its first payout increase in nearly 12 years.

Benefiting from strong consumer sales, the Towson-based power tool manufacturer posted fourth-quarter earnings of $85.9 million, or 90 cents a share, excluding nonrecurring tax credits and charges related to the early extinguishment of debt. That compared with net income of $60.5 million, or 65 cents a share, in the comparable quarter of 1994.

Total revenues for the fourth quarter increased 6 percent, to $1.44 billion, from $1.36 billion in the fourth quarter of 1994.

For 1995, Black & Decker earned $189.9 million, or $2.01 a share, on revenues of $4.77 billion, compared with net income of $127.4 million, or $1.37 a share, on revenues of $4.37 billion in 1994.

Including both nonrecurring credits and charges and the results of discontinued operations, net earnings were $120.0 million, or $1.26 a share, for the fourth quarter.

On the same basis, net earnings for the year were $224.0 million or $2.37 a share, compared with $127.4 million, or $1.37 a share, for 1994.

The record performance didn't take analysts by surprise.

"They were on target," said Michael L. Mead, an analyst for Legg Mason Inc., a Baltimore brokerage.

"They were about what we expected," said Susan Gallagher, an analyst with Nat-West Securities in New York.

Nolan D. Archibald, Black & Decker's chairman and chief executive officer, said the company's strong performance "was the result of continued focus on meeting the needs of our customers and end users, reducing costs and improving our operating profitability."

"The performance of the company's consumer business was good," Ms. Gallagher said. "It was very good considering the retail environment in the U.S.

"The consumer business -- the SnakeLight, power tools and household appliances -- posted growth of 7 percent last year. If you take out the items it discontinued early last year, including some lines of irons, consumer product sales grew by 10 percent. Clearly, Black & Decker had the right products in the right markets at the right price."

Mr. Mead singled out the SnakeLight as a significant factor in Black & Decker's strong fourth quarter.

"It sold like great guns," he said. "For the second year in a row, it was one of their best selling items."

Directors approved a 20 percent increase in the quarterly cash dividend from 10 cents to 12 cents per share.

It marked the first increase in the dividend since the second quarter of 1984, when the payment was increased from 13 cents a share to 16 cents.

Two years later, during a period of financial difficulty, the company cut the quarterly payment to 10 cents.

Payment at the new rate will be March 29 to stockholders of record at the close of business March 15.

"We continue to be optimistic about the outlook for Black & Decker," Ms. Gallagher said

She said the company has established a manufacturing plant in Singapore and will introduce its successful DeWalt line of power tools in the Asian Pacific region later this year.

Ms. Gallagher said Black & Decker's European operations "were weak in the quarter because of the sluggish European economy, particularly Germany, which is a big market for them."

Mr. Archibald pointed out improvements in the balance sheet last year, as the company's debt to total capitalization declined 5 points, to 62 percent.

The company used the proceeds from its sale last year of PRC Realty Systems Inc., which provides multiple listing services for more than 200 real estate boards nationwide, and PRC Environmental Management Inc., to reduce its debt by $110 million. The debt was cut approximately $35 million more from cash flow operations.

Black & Decker's stock closed yesterday at $34.25, unchanged, on the New York Stock Exchange.

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