- The Washington Times - Monday, February 4, 2002

Shares of Black & Decker Corp., of Towson, Md., held steady last week even after the company announced heavy fourth-quarter losses and plans to restructure.
The biggest U.S. maker of power tools said it lost $13 million, or 16 cents a share in the fourth quarter, compared to net earnings of $52.5 million during the like quarter of 2000. Shares of Black & Decker closed at $40.89 Friday on the New York Stock Exchange.
The fourth-quarter loss which marked four consecutive quarters of profit decline for the company led Black & Decker to announce a massive restructuring plan that will include cutting 2,400 jobs and the closing of several manufacturing plants. The changes are likely to take place this year, with benefits appearing in 2003 and 2004, say analysts, who categorized the restructuring plan as a necessary evil given the current recession.
"I can't keep track of the number of jobs that have been lost," from the manufacturing sector, says Janney Montgomery Scott analyst Jim Lucas, who tracks most big-name manufacturing and industrial firms. He rates Black & Decker a "hold."
But the lost jobs may not be the biggest part of the restructuring plan. Analysts say Black & Decker may emerge superficially as a totally different company, as it works to cut manufacturing capacity by 25 percent.
"Our restructuring plan is an aggressive step to reduce structural costs and improve our competitive position throughout our business," Black & Decker's Chairman and Chief Executive Officer Nolan Archibald says.
The restructuring plan will include transferring many operations, particularly from the Power Tools and Home Improvement businesses, from facilities in the United States and England to Mexico, China and Central Europe. The move could produce intertesting price battles between Black & Decker and manufacturers based in those countries, some analysts say.
Black & Decker was hurt in 2001 by slow sales and high inventories. The company said lower-priced products imported from China took a bite out of market share, particularly in Europe. The recession has also led many retailers to be cautious about ordering Black & Decker products, and the company was forced to run its plants below capacity.
Inventories managed to drop $167 million from the third to fourth quarters, ending the year at $712 million to meet Mr. Archibald's goal of getting inventories under $800 million.
Analysts say the company should try to continue to cut inventory because of the high cost of insuring it.
The restructuring plan will likely not benefit the company for a couple of years, and it may take several charges associated with it in the early part of 2002. The restructuring is expected to cost $199 million, Black & Decker says. The company hopes to save $100 million a year after the changes, but analysts say investors shouldn't be too excited about Black & Decker's prospects for this year. The company says profits will be between 30 and 35 cents per share for the first quarter of 2002.

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