-----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, GZjyxlTnJBq1fQ2GP36XUhd39Cr6foWv+hs54zg9VKcNdS+87TF0y5lcf46BCMCM vDgsugYS1jvT2qu9tadW3w== 0000093556-97-000013.txt : 19970721 0000093556-97-000013.hdr.sgml : 19970721 ACCESSION NUMBER: 0000093556-97-000013 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19970718 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970718 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: 001-05224 FILM NUMBER: 97642445 BUSINESS ADDRESS: STREET 1: 1000 STANLEY DR STREET 2: P O BOX 7000 CITY: NEW BRITAIN STATE: CT ZIP: 06053 BUSINESS PHONE: 8062255111 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): July 18, 1997 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:(860) 225-5111 Not Applicable (Former name or former address, if changed since last report) Exhibit Index is located on Page 4 Page 1 of 17 Item 5. Other Events. 1. On July 18, 1997, the Registrant issued four press releases. Attached as Exhibits 20(i-iv) are copies of the Registrant's press releases. Attached as Exhibit 20(v) are cautionary statements relating to the disclosure in Item 5, paragraph 2 below and the press release filed as Exhibit 20 (ii) hereto. All of these Exhibits are incorporated herein by reference. 2. At a meeting with industry analysts on July 18, 1997, the company specified some long range objectives. These are to grow net sales at about 6-8%, double the annual industry growth rate; to grow net income at a percentage rate in the low to mid teens (even through a mild recession such as the one experienced in 1991-1992); to have operating margin at a percentage in the mid teens; to have operating cash flow approximate earnings; to increase the dividend per share to half the long term growth rate of earnings per share; to reduce the debt to capital ratio (to position the company for acquisitions); and to have average return on equity be at a percentage in the low to mid 20's. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (c) 20(i) Press release dated July 18, 1997 announcing 8.1% increase in dividend payment. 20(ii) Press release dated July 18, 1997 announcing second quarter earnings. 20(iii) Press release dated July 18, 1997 announcing production and workforce changes in Central Connecticut. 20(iv) Press release dated July 17, 1997 announcing the closing of a manufacturing facility in Georgetown, Ohio. 20(v) Cautionary statements relating to forward looking statements included in Item 5, paragraph 2 and Exhibit 20(ii). Page 2 of 17 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: July 18, 1997 By: Stephen S. Weddle Name: Stephen S. Weddle Title: Vice President, General Counsel and Secretary Page 3 of 17 EXHIBIT INDEX Current Report on Form 8-K Dated July 18, 1997 Exhibit No. Page 20(i) 5 20(ii) 6 20(iii) 15 20(iv) 16 20(v) 17 Page 4 of 17 EX-20.1 2 FOR IMMEDIATE RELEASE Exhibit (20)(i) July 18, 1997 THE STANLEY WORKS ANNOUNCES 8.1% INCREASE IN DIVIDEND PAYMENT ... 30TH CONSECUTIVE YEAR OF DIVIDEND INCREASES New Britain, Connecticut (NYSE: SWK ) ... The Board of Directors of The Stanley Works today announced a third quarter dividend of $.20 per share on the company's common stock, an increase of 8.1% over the second quarter dividend of $.185 per share. The dividend is payable on Tuesday, September 30, 1997 to shareholders of record at the close of business on Monday, September 8, 1997. John M. Trani, Chairman and Chief Executive Officer, stated: "This marks the 30th consecutive year in which we are able to increase the annual dividend payment to our shareholders. We are proud that 1997 dividend payments will extend our records for the longest consecutive annual and quarterly dividend payments of any industrial company on the New York Stock Exchange." The New York Stock Exchange recognized these achievements by inviting Mr. Trani to join NYSE Chairman Richard A. Grasso for the ringing of the opening bell for trading this morning. The Stanley Works is a worldwide producer of tools, hardware and specialty hardware for consumer, home improvement, industrial and professional use. Media: Video footage of Mr. Trani at the NYSE - - plus b-roll - - will be fed from 2:30 - 2:45pm ET and can be accessed through Galaxy C4, Transponder 10; NR Loop #102362 and Waterfront #1630. Photos will be provided to Associated Press, New York City. Contact: Gerard J. Gould Director, Investor Relations and Communications Tel.: (860) 827-3833 The Stanley Works corporate press releases are available through PR Newswire's Company News On-Call service. By FAX: dial 1-800-758-5804, ext. 874363 or on the internet at: http://www.prnewswire.com or http://www.StanleyWorks.com. Page 5 of 17 EX-20.2 3 FOR IMMEDIATE RELEASE Exhibit (20)(ii) July 18, 1997 THE STANLEY WORKS REPORTS SECOND QUARTER 1997 EARNINGS AND ANNOUNCES NEW PROGRAMS FOR LONG-TERM GROWTH New Britain, Connecticut (NYSE: SWK ) ... The Stanley Works today announced a significant increase in normalized or core earnings for the second quarter ended June 28, 1997. Excluding restructuring and other charges discussed below, normalized or core net income in the second 1997 quarter was $50 million, or $.56 per share, a 15% increase over prior year core earnings of $43 million, or $.49 per share. Excluding prior year sales from recently divested businesses and product lines, net sales from ongoing businesses increased 4% compared with the second quarter of 1996. Gross margins reported for the second quarter, on a core basis, were 34.9% of sales compared with 33.7% in the prior year's quarter. Volume increases and the positive effects of previously announced restructuring initiatives, including strong contributions from company-wide procurement efforts, accounted for most of the improvement in gross margin. Reported net sales for the quarter were $674 million, a decrease of less than 1% from sales of $677 million in the same quarter of 1996. Ongoing businesses experienced unit volume growth of 6% with particular strength in fastening systems and consumer tools. Business and product line divestitures decreased sales by $32 million, or 5%, from prior year levels. Price declines and effects of foreign currency decreased sales by a combined 2%. North American unit volume growth was 5%, while European volume increased a very strong 11%. The European volume gains were somewhat offset by a 1% price decline and a 4% negative currency impact. A significant restructuring charge, described below, accounted for a reported net loss of $65 million, or $.72 per share, as compared with the prior year's net income of $33 million, or $.37 per share. In addition to the restructuring charge, the company also recorded $24 million, or $.16 per share, of restructuring- related transition costs and a non-recurring charge. The transition costs represent moving, start-up and duplicative facility costs for facility closures and consolidations incurred in connection with initiatives announced in 1995. A one-time non-cash charge was also recorded in connection with stock options issued to the company's new chief executive officer. Page 6 of 17 Second quarter consolidated core segment operating profit margin improved to 14.7% of sales from 12.9% in the prior year. The attached table, "Business Segment Information", provides clarification of reported results for the second quarters of 1997 and 1996, and their respective year-to-date periods, reconciling them with normalized core results. Core results exclude restructuring charges, restructuring-related transition costs and a charge related to stock options granted to the company's new chairman and chief executive officer. The Tools, Hardware and Specialty Hardware segment comments that follow are based on normalized core results. In the Tools segment overall, second quarter unit volume sales increased 7% over last year. Consumer tools unit growth was 10% with particular strength in North America. Industrial tools increased 3%, primarily reflecting improved storage systems results in the U.S. Engineered tools increased 7% in unit volume, reflecting continued strong sales of fastening tools and fasteners in the U. S. and Europe. Core operating profits in the Tools segment for the quarter increased to 16.0% of sales, from 13.3% a year ago. This improvement resulted from higher sales volume, savings from cross-divisional purchasing efforts, other restructuring initiatives and performance improvements in the mechanics tools operations. The Hardware segment saw 1% unit growth in the quarter, with continued strong demand for Home Decor products in the U.S., Canadian and European markets. Demand in the U. S. consumer market for traditional hardware products declined from robust levels seen in recent quarters. Core operating profits decreased to 14.2% of sales, from 16.0% in the prior year. This decline resulted from inclusion in 1996 of a gain realized upon resolution of a legal matter. The Specialty Hardware segment experienced 3% unit growth in the second quarter. Core operating results decreased to a 5.6% profit on sales, from a 7.7% operating profit last year. This decrease was principally due to a 2% price decline resulting from the continuation of an extremely competitive pricing environment. The company continues to maintain its strategic decision to defend its market share. John M. Trani, Chairman and Chief Executive Officer, commented on the quarter's results: "Our second quarter core net profit improvement of 15%, as well as our 1.2 percentage point gross margin and 1.8 percentage point segment operating profit gains, indicate that our cost structure continues to become leaner. This provides us the platform from which to embark upon the growth programs we are announcing today." Page 7 of 17 Mr. Trani continued with an announcement of a resource reallocation intended to grow the enterprise: "Today we are announcing initiatives designed to deliver profitable sales growth on a sustained basis. New products are the lifeblood of a manufacturing company. Increased expenditures will be made on new product development and expansion into a number of near- neighbor or related products. Considerably greater resources will be allocated to brand development, including advertising, so that our customers think of Stanley first and are always informed about our new products. To support this thrust, we have established a corporate marketing and brand development function, whose focus will be the nurturing and leveraging of the Stanley brand." Funding for these initiatives will come from streamlining manufacturing, sales, distribution and administrative operations. Manufacturing and distribution facility locations will decrease from 123 to 70. Additional savings will come from the company's previously announced reorganization of its operations into a product management structure, and the centralization of manufacturing, engineering, sales and service, finance, human resource and information technology. Overall, these actions will change the composition of the company s workforce and will reduce net employment levels by 4,500 people. Recognizing the impact that these changes have on Stanley people, the company has provided increased benefits. Mr. Trani noted: "It is always difficult to reduce employment. We are extremely sensitive to the needs of our people. Notification periods will exceed required lengths; severance packages have been enhanced and are generous; and benefits will be provided to the fullest extent possible." In total, restructuring charges of $240 million, including $140 million of cash costs and $100 million non-cash costs, plus restructuring-related transition costs of $100 million, are anticipated in connection with these actions. The restructuring charges will be recorded entirely in 1997, with $137 million having been taken in the second quarter and the remainder to follow in the third quarter. The $100 million of non-cash restructuring charges relate to write-offs of non-productive assets including goodwill and capitalized software. The restructuring-related transition costs will be incurred throughout the remainder of 1997 and 1998. The Stanley Works is a worldwide producer of tools, hardware and specialty hardware for consumer, home improvement, industrial and professional use. Page 8 of 17 Contact: Gerard J. Gould Director, Investor Relations and Communications Tel.: (860) 827-3833 This press release contains forward looking statements as to the company's ability to complete the reallocation of its resources in order to achieve sustained, profitable growth. Cautionary statements accompanying these forward looking statements are set forth, along with this news release, in a Form 8-K filed with the Securities and Exchange Commission today. The Stanley Works corporate press releases are available through PR Newswire's "Company News On-Call" service. By FAX: dial 1-800-758-5804, ext. 874363 or on the internet at: http://www.prnewswire.com or http://www.StanleyWorks.com. Page 9 of 17 THE STANLEY WORKS AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited, Millions of Dollars Except Per Share Amounts) Second Quarter Six Months 1997 1996 1997 1996 Net Sales $ 673.6 $ 677.2 $ 1,320.2 $ 1,312.5 Costs and Expenses Cost of sales 446.1 453.0 877.5 882.3 Selling, general and administrative 153.8 153.1 307.0 302.1 Interest - net 4.4 5.4 8.7 11.9 Other - net 13.6 4.4 17.2 7.9 Restructuring 137.2 3.8 132.6 3.8 755.1 619.7 1,343.0 1,208.0 Earnings (Loss) before income taxes (81.5) 57.5 (22.8) 104.5 Income Taxes (17.0) 24.9 5.0 42.3 Net Earnings (Loss) $ (64.5) $ 32.6 $ (27.8) $ 62.2 Net Earnings (Loss) Per Share of Common Stock $ (0.72) $ 0.37 $ (0.31) $ 0.70 Dividends per share $ 0.185 $ 0.18 $ 0.37 $ 0.36 Average shares outstanding (in thousands) 88,987 88,825 88,878 88,830 Page 10 of 17 THE STANLEY WORKS AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited, Millions of Dollars) June 28, June 29, 1997 1996 ASSETS Cash and cash equivalents $ 107.6 $ 79.5 Accounts receivable 457.1 454.2 Inventories 323.4 344.4 Other current assets 52.8 42.3 Total current assets 940.9 920.4 Property, plant and equipment 508.3 556.0 Goodwill and other intangibles 73.6 121.0 Deferred income taxes 47.6 - Other assets 96.4 71.2 $ 1,666.8 $ 1,668.6 LIABILITIES AND SHAREHOLDERS' EQUITY Short-term borrowings $ 76.4 $ 47.2 Accounts payable 114.6 119.6 Accrued expenses 299.2 204.6 Total current liabilities 490.2 371.4 Long-term debt 295.8 373.3 Other long-term liablities 164.1 158.2 Shareholders' equity 716.7 765.7 $ 1,666.8 $ 1,668.6 Page 11 of 17 THE STANLEY WORKS AND SUBSIDIARIES PRICE/VOLUME INFORMATION (Unaudited, Millions of Dollars) NET SALES Second Quarter Unit ACQ/ 1997 Price Volume DVT Currency 1996 INDUSTRY SEGMENTS Tools Consumer $ 188.2 - 10% (3)% (2)% $ 179.7 Industrial 141.6 2% 3% (3)% - 138.5 Engineered 186.4 (1)% 7% - (1)% 177.3 Total Tools 516.2 - 7% (2)% (1)% 495.5 Hardware 86.2 (3)% 1% - - 87.9 Specialty Hardware 71.2 (2)% 3% (25)% - 93.8 Consolidated $ 673.6 (1)% 6% (5)% (1)% $ 677.2 GEOGRAPHIC AREAS United States $ 479.7 (1)% 4% (6)% - $ 493.2 Europe 106.3 (1)% 11% (1)% (4)% 101.0 Other Areas 87.6 1% 11% (5)% (2)% 83.0 Consolidated $ 673.6 (1)% 6% (5)% (1)% $ 677.2 Year to Date Unit ACQ/ 1997 Price Volume DVT Currency 1996 INDUSTRY SEGMENTS Tools Consumer $ 366.2 - 8% (4)% (1)% $ 356.5 Industrial 274.2 2% - (2)% - 274.8 Engineered 358.5 (1)% 7% - (1)% 341.3 Total Tools 998.9 - 6% (2)% (1)% 972.6 Hardware 179.3 (1)% 6% - - 171.1 Specialty Hardware 142.0 (2)% 6% (20)% - 168.8 Consolidated $ 1,320.2 - 6% (4)% (1)% $ 1,312.5 GEOGRAPHIC AREAS United States $ 935.5 (1)% 5% (5)% - $ 942.7 Europe 214.1 (1)% 7% - (4)% 209.1 Other Areas 170.6 1% 9% (3)% (1)% 160.7 Consolidated $ 1,320.2 - 6% (4)% (1)% $ 1,312.5 Page 12 of 17 THE STANLEY WORKS AND SUBSIDIARIES BUSINESS SEGMENT INFORMATION (Unaudited, Millions of Dollars) OPERATING PROFIT Second Quarter 1997 Related Core Restrg Transition Profit Reported Charges Costs* Core Margin INDUSTRY SEGMENTS Tools $ (38.3) $ 110.7 $ 10.4 $ 82.8 16.0% Hardware 2.6 7.5 2.1 12.2 14.2% Specialty Hardware (9.8) 13.7 - 3.9 5.6% Total (45.5) 131.9 12.5 98.9 14.7% Net corporate expenses (29.6) 5.3 11.0 (13.3) Interest expense (6.4) - - (6.4) Earnings(loss)before income taxes $ (81.5) $ 137.2 $ 23.5 $ 79.2 GEOGRAPHIC AREAS United States $ (19.1) $ 87.6 $ 8.5 $ 77.0 16.1% Europe (12.0) 24.1 2.4 14.5 13.6% Other Areas (14.4) 20.2 1.6 7.4 8.4% Total $ (45.5) $ 131.9 $ 12.5 $ 98.9 14.7% Second Quarter 1996 Related Core Restrg Transition Profit Reported Charges Costs Core Margin INDUSTRY SEGMENTS Tools $ 58.8 $ 0.7 $ 6.3 $ 65.8 13.3% Hardware 12.7 - 1.4 14.1 16.0% Specialty Hardware 6.7 - 0.5 7.2 7.7% Total 78.2 0.7 8.2 87.1 12.9% Net corporate expenses (13.7) 3.1 - (10.6) Interest expense (7.0) - - (7.0) Earnings before income taxes $ 57.5 $ 3.8 $ 8.2 $ 69.5 GEOGRAPHIC AREAS United States $ 63.4 $ 0.1 $ 7.5 $ 71.0 14.4% Europe 9.3 - 0.4 9.7 9.6% Other Areas 5.5 0.6 0.3 6.4 7.7% Total $ 78.2 $ 0.7 $ 8.2 $ 87.1 12.9% * Includes stock option charge. Page 13 of 17 THE STANLEY WORKS AND SUBSIDIARIES BUSINESS SEGMENT INFORMATION (Unaudited, Millions of Dollars) OPERATING PROFIT Year to Date 1997 Related Core Restrg Transition Profit Reported Chgs Costs* Core Margin INDUSTRY SEGMENTS Tools $ 17.7 $ 111.8 $ 18.0 $ 147.5 14.8% Hardware 14.4 7.9 4.0 26.3 14.7% Specialty Hardware (7.5) 14.3 0.2 7.0 4.9% Total 24.6 134.0 22.2 180.8 13.7% Net corporate expenses (35.4) (1.4) 11.1 (25.7) Interest expense (12.0) - - (12.0) Earnings(loss)before income taxes $ (22.8) $ 132.6 $ 33.3 $ 143.1 GEOGRAPHIC AREAS United States $ 34.1 $ 88.8 $ 16.1 $ 139.0 14.9% Europe (0.7) 24.5 3.5 27.3 12.8% Other Areas (8.8) 20.7 2.6 14.5 8.5% Total $ 24.6 $ 134.0 $ 22.2 $ 180.8 13.7% Year to Date 1996 Related Core Restrg Transition Profit Reported Chgs Costs Core Margin INDUSTRY SEGMENTS Tools $ 110.7 $ 0.7 $ 10.5 $ 121.9 12.5% Hardware 22.3 - 2.2 24.5 14.3% Specialty Hardware 9.0 - 1.0 10.0 5.9% Total 142.0 0.7 13.7 156.4 11.9% Net corporate expenses (22.9) 3.1 1.3 (18.5) Interest expense (14.6) - - (14.6) Earnings before income taxes $ 104.5 $ 3.8 $ 15.0 $ 123.3 GEOGRAPHIC AREAS United States $ 108.8 $ 0.1 $ 11.9 $ 120.8 12.8% Europe 20.9 - 1.0 21.9 10.5% Other Areas 12.3 0.6 0.8 13.7 8.5% Total $ 142.0 $ 0.7 $ 13.7 $ 156.4 11.9% * Includes stock option charge. Page 14 of 17 EX-20.3 4 FOR IMMEDIATE RELEASE Exhibit (20)(iii) July 18, 1997 STANLEY ANNOUNCES PRODUCTION AND WORKFORCE CHANGES IN CENTRAL CONNECTICUT New Britain, Connecticut (NYSE: SWK ) ... In reference to today's earlier company-wide announcement of programs for growth, The Stanley Works provided information concerning its central Connecticut employment levels. In an April, 1997 announcement, the company indicated it would transfer certain production to Richmond, Virginia impacting 150 manufacturing positions in Central Connecticut. Stanley's Central Connecticut employment stood at about 2,100 before that announcement. Today the company announced it will eliminate an additional 110 manufacturing positions and add approximately 120 salaried positions, over the next twelve months. The company announced further transfers of Stanley Hardware packaging operations from New Britain and intentions to outsource several products. Additionally, the company announced the formation of a hardware manufacturing joint venture with Zhongshan Xiaolan Industrial Company ( Xiaolan ) of Zhongshan City, Guangdong, China. Stanley Hardware has been purchasing product from this company for the past year and will now have a majority ownership interest in it. Current plans are to transfer production of some its residential hinge line to Xiaolan over the next year. Xiaolan has three factories which manufacture this type of product and was selected for its capabilities in the areas of quality, reliability and low-cost. Finally, the company will centralize many of its administrative functions, such as finance and customer service, and will invest in additional engineering and marketing positions. These actions are expected to add approximately 120 salaried positions in Central Connecticut. Commenting on these initiatives, John M. Trani, Chairman and Chief Executive Officer stated: "To grow, we must be competitive. That starts by becoming the low-cost producer. In the case of our Central Connecticut operations, this necessitates product transfers to lower-cost locations and resulting workforce reductions. For our administration, it means the consolidation of efforts into Central Connecticut. This is a painful process, and we are extremely sensitive to the needs of our people. Notification periods, severance packages and benefits will all be provided to the fullest extent possible. Benefits have been increased substantially from prior policies." The Stanley Works is a worldwide producer of tools, hardware and specialty hardware for consumer, home improvement, industrial and professional use. Contact: Anthony J. Herrling Stanley Corporate Communications Tel.: (800) 300-4679 Page 15 of 17 EX-20.4 5 Exhibit (20)(iv) Contact: Tony Herrling Corporate Communications The Stanley Works 1-800-300-4679 The Stanley Works Annouces Closure of Plant in Georgetown, OH New Britain, CT, July 17, 1997 -- The Stanley Works (NYSE:SWK) confirmed that it has decided to close its manufacturing facility in Georgetown, Ohio where its Mechanics Tools division employs 175 people. Company spokesperson Gerry Gould said, "We are currently reviewing whether it makes the most economic sense for certain manufacturing operations to continue production, or rather to combine these operations into existing Stanley facilities and outsource product where it makes sense to do so. In the case of this Stanley Mechanics Tool facility, we believe that we can optimize both Stanley's overall focus on its core competencies and economic efficiencies by transferring production to our facilities in Allentown, PA and Kannapolis, NC." The Stanley Works recently announced plans to reorganize into eight distinct Product Groups. The reorganization will divide the functions of product development, resource allocation and growth responsibilities along product lines, while marketing efforts, as well as sales and customer services, will be combined into one corporate division. "We must continue to focus on building the Stanley brand, continued Mr. Gould. Our goal is to ensure that our customers, employees and shareholders are getting the greatest value from our investments in The Stanley Works." The Stanley Works is a leading manufacturer of tools and hardware for the professional and consumer markets, and is headquartered in New Britain, Connecticut. The Stanley Works operates over 100 facilities and employs 19,000 people worldwide. Page 16 of 17 EX-20.5 6 Exhibit (20) (v) CAUTIONARY STATEMENTS Under the Private Securities Litigation Reform Act of 1995 Certain risks and uncertainties are inherent in the company's ability to achieve the sustained profitable growth outlined in the earnings press release issued today and in Item 5 of the Current Report on Form 8-K to which this exhibit is attached. The company's ability to achieve this expected growth is dependent on several factors. These factors include the ability to develop new products that will be successful in the marketplace; to expand into near neighbor or related products; to position Stanley(R) as a Great Brand in the marketplace; and to position the company as a low cost producer. These initiatives are in turn dependent on several factors. These include the company's ability to generate the necessary cost savings to fund these initiatives from a reallocation of resources, including the simplification of the organization, the change in the composition of the workforce and the standardization of the operating mechanisms. The success of the reallocation is dependent upon the ability of the company's employees, with the help of outside consultants, to develop and execute comprehensive plans to provide for smooth transitions for all elements of the reallocation; the ability to retain existing employees throughout the transition; the successful recruitment and training of new employees for the positions that relate to the growth initiatives; the need to respond to significant changes in product demand during the transition; and unforeseen events. The company's ability to achieve the expected cost savings is also dependent on the reallocation generating internal efficiencies, and on the ability of the organization to withstand external factors during the period of transition. These include pricing pressures; the continued consolidation of customers in consumer channels; increasing global competition; changes in trade, monetary and fiscal policies and laws; inflation and currency exchange fluctuations; and recessionary or expansive trends in the economies of the world in which the company operates. The achievement of near neighbor and related product growth and the ability of the company to become a low cost producer will depend upon the ability to successfully identify, negotiate, consummate and integrate into operations joint ventures and/or strategic alliances. Page 17 of 17 -----END PRIVACY-ENHANCED MESSAGE-----