-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, N+iebseaLiPZWS1oSQZStur2w/4QbY/y1ZIsdo3aCXqAF05Nlu60/uNsBdEhY9Dl dLh+R8sEvAdM8rNCf58ELw== 0000093556-95-000015.txt : 19951019 0000093556-95-000015.hdr.sgml : 19951019 ACCESSION NUMBER: 0000093556-95-000015 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19951018 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19951018 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: STANLEY WORKS CENTRAL INDEX KEY: 0000093556 STANDARD INDUSTRIAL CLASSIFICATION: CUTLERY, HANDTOOLS & GENERAL HARDWARE [3420] IRS NUMBER: 060548860 STATE OF INCORPORATION: CT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 002-52002 FILM NUMBER: 95581364 BUSINESS ADDRESS: STREET 1: 1000 STANLEY DR STREET 2: P O BOX 7000 CITY: NEW BRITAIN STATE: CT ZIP: 06053 BUSINESS PHONE: 2032255111 MAIL ADDRESS: STREET 1: 1000 STANLEY DR CITY: NEW BRITAIN STATE: CT ZIP: 06053 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): Oct. 18, 1995 The Stanley Works (Exact name of registrant as specified in charter) Connecticut 1-5224 06-058860 (State or other (Commission (IRS Employer jurisdiction of File Number) Identification No.) incorporation) 1000 Stanley Drive, New Britain, Connecticut 06053 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code:(203) 225-5111 Not Applicable (Former name or former address, if changed since last report) Page 1 of 13 pages Exhibit Index is located on Page 4 Item 5. Other Events. 1. On October 18, 1995, the Registrant issued a press release. Attached as Exhibit (20)(i) is a copy of the Registrant's press release. This Exhibit is incorporated herein by reference. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (c) (20)(i) Press release dated October 18, 1995 announcing Stanley s third quarter operating results including restructuring charges. Page 2 of 13 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized THE STANLEY WORKS Date: October 18, 1995 By: Stephen S. Weddle Name: Stephen S. Weddle Title: Vice President, General Counsel and Secretary Page 3 of 13 EXHIBIT INDEX Current Report on Form 8-K Dated October 18, 1995 Exhibit No. Page (20)(i) 5 Page 4 of 13 Exhibit (20)(i) FOR IMMEDIATE RELEASE October 18, 1995 STANLEY THIRD QUARTER OPERATING RESULTS INCLUDE RESTRUCTURING CHARGES New Britain, Connecticut (NYSE:SWK) ... The Stanley Works today reported third quarter operating profits together with charges related to the initial phase of recently announced restructuring plans which resulted in a net loss for the quarter. Richard H. Ayers, Chairman and Chief Executive Officer stated, "We believe Stanley shareholders will be pleased with these actions to establish a more cost-effective base upon which to grow future sales and profits. Our ability to return superior value over the long run is dependent on taking these aggressive actions." Commenting on quarterly sales Mr. Ayers continued, "The abrupt downturn in the U.S. consumer and construction markets experienced last quarter continued to dampen sales growth and profitability in the third quarter. Net sales of $656 million were 4% higher than the prior year's quarter. Volume growth contributed 2% as a result of strength in our European markets and our engineered tool category in the U.S., both of which offset the lackluster sales activity in U.S. consumer markets. Price increases added 2% to sales." Gross margins were 31.7% compared with 32.7% reported in the third quarter last year. Margins continued to be affected by costs associated with the closure and integration of manufacturing facilities at our Mechanics Tools division. In addition, our efforts to control inventories resulted in the underabsorption of factory overheads. To a lesser extent, margins were also affected by the competitive pricing environment in U.S. markets. Operating expenses were 22.6% up from 22.1% last year. Included in third quarter operating expenses were approximately $2.6 million of charges for strategic consulting work related to the company's planning and implementation of restructuring activities. Other-net was $3.7 million compared with $9.1 million last year. The prior year included charges associated with divestiture activity in the quarter as well as higher foreign currency transaction losses and environmental expenses. Restructuring charges of $41.5 million, or $.71 per share, were also reported as part of third quarter operating results. Included in these charges were $30.4 million for the closure of manufacturing and distribution operations which will ultimately Page 5 of 13 result in a workforce reduction of about 450 people. Also included were approximately $11.1 million in charges to reduce the book value of assets associated with underperforming businesses. Tax expense of $8.6 million reflected the non-deductibility of costs included in the restructuring charge. Excluding these items, the effective tax rate was approximately 38% compared with 37.5% in the prior year. As a result of the restructuring charges, a net loss for the quarter of $1.7 million, or $.04 per share, was reported compared with net earnings of $32.2 million, or $.72 per share, in the third quarter 1994. Net sales for the first nine months of 1995 were $2.0 billion, up 6% over prior year sales of $1.8 billion. Net earnings for the nine month period, including restructuring charges, were $58.5 million, or $1.32 per share, compared with $91.5 million, or $2.04 per share, in the prior year period. Net sales for the Tools segment in the third quarter were up 4% over the prior year. Volume and price contributed equally to the increase. Operating margins, excluding charges related to restructuring, were 10.8% in the current quarter, compared with margins of 11.5% reported in the prior year. Operating margins would have been similar to last year without the effects of Mechanics Tools manufacturing integration costs. Net sales in the Hardware segment increased by 2%, almost entirely the result of price increases. Operating margins declined from 9.7% to 6.4%, excluding the effects of restructuring, and reflected weakness in the Canadian and European home decor markets as well as continued weakness in the U.S. hardware market. Additionally, unrecovered cost increases experienced in certain raw materials, especially corrugated packaging, depressed margins. Net sales in the Specialty Hardware segment increased 2%, with price and volume each adding 1%. Operating margins were 9.5%, without restructuring related charges, comparable to 9.2% reported in the prior year. Within our geographic regions, net sales in the U.S. increased by 4%. Volume contributed 3% and price added 1%. Excluding restructuring charges, operating margins declined to 10.7% from 11.9% in the prior year. European markets continued to be strong with net sales increasing 15%, with 7% from volume growth. Price increases added 2% to sales, currency added 5% and the net effect of recent acquisitions added 1%. European operating margins, excluding restructuring charges, were 10.1%, improved from prior year margins of 8.7%. Net sales in Other Areas declined 10%, entirely from volume, due to weakness in Canadian, Mexican and Page 6 of 13 Australian markets. Operating margins, as a result, decreased to 6.2% from 8.6%. Mr. Ayers stated, "While we would like to be encouraged by the recent rebound in U.S. housing starts and sales of existing homes, consumer activity at retail remains weak compared with last year. We continue to see internal growth from our European businesses coupled with positive translation from stronger European currencies. However, significant weakness remains in our Canadian, Mexican and Australian markets with no appreciable improvement in sight. These trends may continue for the next three to six months. We recognized these developments in the second quarter and have been taking the actions necessary to reduce costs and control inventories." He concluded, "Internally, we will continue to focus on our restructuring plans in the fourth quarter and beyond. As previously announced, a charge for a salaried workforce reduction of approximately 350 employees together with additional restructuring charges will be included in the fourth quarter. We believe the actions we have taken and will take in the future will provide us with long-term growth and enhanced value for our shareholders." CONTACT: Patricia McLean Manager, Corporate Communications (203) 827-3833 Page 7 of 13 THE STANLEY WORKS AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (Millions of Dollars) THIRD QUARTER NINE MONTHS 1995 1994 1995 1994 Net Sales $ 655.7 $ 632.6 $ 1,954.5 $ 1,847.1 Costs and Expenses Cost of sales 448.0 425.7 1,329.2 1,238.7 Selling, general and administrative 148.0 139.5 443.9 412.7 Interest - net 7.6 6.9 23.2 22.1 Other - net 3.7 9.1 12.7 26.9 Restructuring 41.5 - 41.5 - ------- ------- -------- -------- 648.8 581.2 1,850.5 1,700.4 ------- ------- -------- -------- Earnings Before Income Taxes 6.9 51.4 104.0 146.7 Income Taxes 8.6 19.2 45.5 55.2 ------- ------- -------- -------- Net Earnings (Loss) $ (1.7)$ 32.2 $ 58.5 $ 91.5 ======= ======= ======== ======== Net Earnings (Loss) Per Share of Common Stock $ (0.04)$ 0.72 $ 1.32 $ 2.04 ======= ======= ======== ======== Dividends per share $ 0.36 $ 0.35 $ 1.06 $ 1.03 Average shares outstanding 44,290 44,838 44,359 44,810 (in thousands) See notes to consolidated financial statements. Page 8 of 13 THE STANLEY WORKS AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Millions of Dollars) September 30 October 1 1995 1994 ASSETS Cash and cash equivalents $ 48.5 $ 38.8 Accounts receivable 453.4 439.0 Inventories 391.1 370.7 Other current assets 35.6 33.9 ------- ------- Total current assets 928.6 882.4 Property, plant and equipment 543.0 561.8 Goodwill and other intangibles 145.8 168.0 Other assets 83.8 86.2 ------- ------- $ 1,701.2 $ 1,698.4 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Short-term borrowings $ 112.6 $ 103.4 Accounts payable 98.9 102.0 Accrued expenses 202.9 217.7 ------- ------- Total current liabilities 414.4 423.1 Long-term debt 396.3 386.4 Other long-term liabilities 140.8 146.6 Shareholders' equity 749.7 742.3 ------- ------- $ 1,701.2 $ 1,698.4 ======= ======= See notes to consolidated financial statements. Page 9 of 13 THE STANLEY WORKS AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Millions of Dollars) THIRD QUARTER NINE MONTHS 1995 1994 1995 1994 Operating Activities Net Earnings (Loss) $ (1.7)$ 32.2 $ 58.5 $ 91.5 Depreciation and amortization 21.0 19.7 63.7 62.5 Restructuring charges 41.5 - 41.5 - Other non-cash items 0.5 7.0 13.6 23.5 Changes in operating assets and liabilities (10.8) (39.1) (101.5) (124.1) ------ ------ ------ ------ Net cash provided by operating activities 50.5 19.8 75.8 53.4 Investing Activities Capital expenditures (17.5) (17.5) (44.7) (48.6) Proceeds from sales of assets .3 1.0 .6 7.4 Business acquisitions (2.3) - (3.3) (5.1) Other (3.3) (1.9) (12.8) (4.9) ------ ------ ------ ------ Net cash used by investing activities (22.8) (18.4) (60.2) (51.2) Financing Activities Payments on long-term debt (81.9) (1.2) (83.5) (1.9) Proceeds from long-term borrowings 84.2 - 84.2 - Net short-term borrowings (24.2) 17.1 18.3 51.6 Proceeds from issuance of common stock 1.8 2.9 2.7 3.5 Purchase of common stock for treasury (2.3) (1.2) (12.5) (2.0) Cash dividends on common stock (0.7) (15.7) (46.3) (60.8) ------ ------ ------ ------ Net cash provided (used) by financing activities (23.1) 1.9 (37.1) (9.6) Effect of Exchange Rate Changes on Cash (0.9) 1.7 0.7 2.5 ------ ------ ------ ------ Increase (decrease) in Cash and Cash Equivalents 3.7 5.0 (20.8) (4.9) Cash and Cash Equivalents, Beginning of Period 44.8 33.8 69.3 43.7 ------ ------ ------ ------ Cash and Cash Equivalents, End of Third Quarter $ 48.5 $ 38.8 $ 48.5 $ 38.8 ====== ====== ====== ====== See notes to consolidated financial statements. Page 10 of 13 THE STANLEY WORKS AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Millions of Dollars) NINE MONTHS 1995 1994 Balance at beginning of year $ 744.2 $ 680.9 Net earnings 58.5 91.5 Currency translation adjustment (9.4) 6.1 Cash dividends declared (46.6) (46.2) Net common stock activity (4.0) 3.7 ESOP debt 7.0 6.3 -------- ------- Balance at end of third quarter $ 749.7 $ 742.3 ======== ======= See notes to consolidated financial statements. Page 11 of 13 THE STANLEY WORKS AND SUBSIDIARIES BUSINESS SEGMENT INFORMATION (Millions of Dollars) THIRD QUARTER NINE MONTHS 1995 1994 1995 1994 INDUSTRY SEGMENTS Net Sales Tools Consumer $ 181.9 $ 177.5 $ 538.7 $ 519.3 Industrial 131.4 129.4 415.5 389.4 Engineered 170.9 158.2 510.3 472.7 -------- -------- -------- -------- Total Tools 484.2 465.1 1,464.5 1,381.4 Hardware 81.1 79.3 247.5 235.6 Specialty Hardware 90.4 88.2 242.5 230.1 -------- -------- -------- -------- Consolidated $ 655.7 $ 632.6 $ 1,954.5 $ 1,847.1 ======== ======== ======== ======== Operating Profit Tools $ 20.7 $ 53.6 $ 131.6 $ 161.3 Hardware (0.9) 7.7 15.3 27.4 Specialty Hardware 7.7 8.1 13.8 15.4 -------- -------- -------- -------- Total 27.5 69.4 160.7 204.1 Net corporate expenses (11.8) (10.6) (29.7) (32.3) Interest expense (8.8) (7.4) (27.0) (25.1) -------- -------- -------- -------- Earnings before income taxes $ 6.9 $ 51.4 $ 104.0 $ 146.7 ======== ======== ======== ======== GEOGRAPHIC AREAS Net Sales United States $ 472.6 $ 452.9 $ 1,393.2 $ 1,330.4 Europe 100.3 87.4 312.6 261.8 Other Areas 82.8 92.3 248.7 254.9 -------- -------- -------- -------- Consolidated $ 655.7 $ 632.6 $ 1,954.5 $ 1,847.1 ======== ======== ======== ======== Operating Profit United States $ 19.1 $ 53.9 $ 116.3 $ 156.1 Europe 3.3 7.6 27.4 25.3 Other Areas 5.1 7.9 17.0 22.7 -------- -------- -------- -------- Total $ 27.5 $ 69.4 $ 160.7 $ 204.1 ======== ======== ======== ======== See notes to consolidated financial statements. Page 12 of 13 THE STANLEY WORKS AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS During the third quarter 1995, restructuring and other related charges totaling $44.1 million were incurred as part of the initial phase of the company's plan to aggressively reduce its cost structure and asset base. These charges reflected the decision to exit several small, underperforming businesses, such as shoe repair and generic fasteners; to close manufacturing operations related to other non-performing product lines; and to close three distribution centers as part of a plan to consolidate order and distribution management and facilities for North American consumer products. $30.4 million of the charge is related to the write-down of facilities and equipment, inventories and other assets and the accrual of related severance costs associated with these plans. In addition, a strategic reassessment based on revised operating plans was completed for several other small businesses resulting in an $11.1 million write-off of goodwill. Also included in the third quarter operating expenses were $2.6 million of charges for consulting work for planning and implementation of restructuring activities. Restructuring related charges of $31.5 million, $6.1 million and $.9 million were included in the Tools, Hardware and Specialty Hardware segments, respectively. Page 13 of 13 -----END PRIVACY-ENHANCED MESSAGE-----