Black & Decker reports 22% drop in quarterly earnings

Company cites merger expenses, says it sees improvement

February 04, 2010|By Andrea K. Walker | andrea.walker@baltsun.com

Power tool maker Black & Decker Corp. reported a 22 percent quarterly earnings loss Wednesday because of expenses related to its $4.5 billion acquisition by Stanley Works.

But the Towson-based company said that it has started to see some improvement as the economy in some of its markets has begun to recover.

Earnings for the fourth quarter ended Dec. 31 were $33.9 million, or 55 cents per share, compared to $43.7 million, or 72 cents per share, for the same period a year ago.

The earnings reflect $58.8 million in expenses related to the deal with Stanley Works - which is expected to close in the first half of the year - and a $20.8 million pretax restructuring charge in 2008. The Stanley-related expenses included employee costs related to the change in control and legal and advisory fees.

Earnings would have been $1.24 per share without those expenses.

Shareholders from both companies will vote on the transaction in special meetings to be held March 12.

Stanley Works announced the executive organizational schedule for the new company, to be called Stanley Black & Decker, during its earnings call last week. It is still unclear how many Black & Decker employees could lose their jobs after the merger is completed. There are about 250 workers who work in corporate and other jobs at the main campus in Towson.

Black & Decker sales for the fourth quarter fell 6 percent to $1.3 billion.

Despite the losses, the company said the earnings before merger expenses were better than expected - a sign that the economy may be picking up. The company had expected earnings per share in the range of 68 cents to 78 cents.

The company said it hopes to take advantage of the improving economy in the coming year with new products in areas such as lawn and garden. But company officials said they are remaining cautious because some sectors, including commercial construction in the United States, are still struggling. Black & Decker expects a mid-single digit sales increase in the fourth quarter.

"Our strategy of continuing to invest in new product development through the downturn has positioned us well to capitalize in the marketplace when commercial construction rebounds," said Nolan D. Archibald, Black & Decker chairman and chief executive officer.

Black & Decker shares increased $2.54, or 3.69 percent, to close at $71.29 on the New York Stock Exchange Wednesday.

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