-----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, PASNXrE1ecta+h1kYpNFNj0vKG4d/nC+pK37Kix/IBwV2jjW1cwIlXrVj/DgDh+c 1kW3may/thg6/UEVwMxRHw== 0000093556-98-000002.txt : 19980130 0000093556-98-000002.hdr.sgml : 19980130 ACCESSION NUMBER: 0000093556-98-000002 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980129 ITEM INFORMATION: FILED AS OF DATE: 19980129 SROS: NYSE 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: SEC FILE NUMBER: 001-05224 FILM NUMBER: 98516068 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): January 29, 1998 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 13 Pages Item 5. Other Events. 1. On January 29, 1998, The Stanley Works elected Craig A. Douglas to the office of Treasurer. Stanley also issued a press release announcing higher 4th quarter earnings; growth and restructuring initiatives on track. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (c) 20(i) Press release dated January 29, 1998 announcing 4th quarter and year end results. (c) 20(ii) Cautionary statements relating to forward looking statements included in Exhibit 20(i). Page 2 of 13 Pages 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: January 29, 1998 By: Stephen S. Weddle Name: Stephen S. Weddle Title: Vice President, General Counsel and Secretary Page 3 of 13 Pages EXHIBIT INDEX Current Report on Form 8-K Dated January 29, 1998 Exhibit No. Page 20(i) 5 20(ii) 13 Page 4 of 13 Pages FOR IMMEDIATE RELEASE Exhibit (20)(i) THE STANLEY WORKS ANNOUNCES HIGHER 4TH QUARTER EARNINGS; GROWTH AND RESTRUCTURING INITIATIVES ON TRACK New Britain, Connecticut, January 29, 1998: The Stanley Works (NYSE: "SWK") announced that "core" earnings increased by 16% in its fourth quarter and 15% in its fiscal year ended January 3, 1998. Core results exclude restructuring charges, restructuring-related transition costs and certain other non-recurring costs. Fourth quarter core net income increased to $50 million, or $.55 per share, from prior year fourth quarter core earnings of $43 million, or $.48 per share. The company improved core operating margins to 12.4% from 11.3% last year. The improvement was driven by higher volume, improved productivity and reduced material costs, partially offset by weaker prices and a stronger dollar. Fourth quarter net sales were up 2% to $699 million from $685 million in the same period last year, including the negative effects of pricing, currency translation and net divestiture activities. Unit sales volume from ongoing businesses was up 8.5%. This increase was led by strong performances in industrial and consumer mechanics tools, fastening systems, entry doors, automated access doors and mirrored closet doors in North America. Hand tool and consumer mechanics tool sales volumes in Latin America were also strong. A fourteenth week in the fiscal quarter provided 2-3% of the unit sales volume increase. "Again this quarter, our people delivered on shareholder expectations while staying on track with our major initiatives," said John M. Trani, Chairman and Chief Executive Officer. "We are particularly encouraged by the results in sales and manufacturing in a year when we completely re-aligned both organizations. Our 1.1 point improvement in core operating margin shows progress toward establishing the lower cost structure we need to invest for growth. With a solid level of orders at year-end, our company is well-positioned for a solid 1998. The current range of 1998 analyst estimates is $2.35 to $2.45 core earnings per share, which is consistent with our expectations." For the full year 1997, core earnings increased to $188 million, or $2.11 per share, up 15% from 1996 core earnings of $163 million, or $1.83 per share. Net sales were $2,670 million, essentially unchanged from 1996. Volume from ongoing businesses was up 6%, with strength in mechanics tools, fastening systems and door products. Page 5 of 13 Pages Core segment operating profits improved to 13.8%, up from 12.2% in 1996. The Tools segment delivered the strongest operating profit improvement, rising to 15.2% from 13.4% last year, despite an increasingly competitive pricing environment for fastening systems. Hardware operating profits declined to 13.2% from 13.7% last year due to operational problems experienced in implementing new distribution systems. Specialty Hardware operating profit improved to 4.9% from 4.2% in 1996. Reported fourth quarter net income was $27 million, or $.30 per share, compared with the prior year's net loss of $3 million, or $.03 per share. These amounts reflect $30 million, or $.21 per share, of restructuring-related transition costs incurred in the fourth quarter this year and $41 million, or $.36 per share, of restructuring charges and $18 million, or $.15 per share, of restructuring-related transition costs incurred in last year's fourth quarter. The restructuring-related costs represent consulting, moving, start-up and duplicative facility costs, as well as certain non-recurring CEO recruitment costs. As previously announced, the company expects to incur approximately $100 million of restructuring-related transition costs related to the growth initiatives announced in 1997 through mid- 1999 period. For the full year, reported results were a net loss of $42 million, or $.47 per share, compared with net income of $97 million, or $1.09 per share in 1996. The full year 1997 includes restructuring charges of $238 million, or $2.00 per share, and restructuring-related transition and other costs of $82 million, or $.58 per share. The attached table, "Business Segment Information", provides clarification of reported results for the fourth quarters of 1997 and 1996, and the related full years, reconciling them with normalized core results. The Stanley Works, an S&P 500 company, is a worldwide supplier of tools, hardware and doors for professional, industrial and consumer use. Investors Gerard J. Gould Media Vance N. Meyer Contact: Director, Investor Relations Contact: (860)827-3871 office (860) 827-3833 office (203)929-9502 home This press release contains forward looking statements as to the company's earnings performance and 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. Page 6 of 13 Pages 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 7 of 13 Pages THE STANLEY WORKS AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, Millions of Dollars Except Per Share Amounts) Fourth Quarter Twelve Months 1997 1996 1997 1996 Net Sales $ 698.8 $ 685.4 $ 2,669.5 $ 2,670.8 Costs and Expenses Cost of sales 469.3 464.8 1,783.4 1,795.5 Selling, general and administrative 172.5 154.7 627.7 608.5 Interest - net 3.7 5.4 16.6 22.5 Other - net 2.7 8.9 21.9 22.3 Restructuring and asset asset write-offs - 40.9 238.5 47.8 648.2 674.7 2,688.1 2,496.6 Earnings (Loss) before income taxes 50.6 10.7 (18.6) 174.2 Income Taxes 24.1 13.7 23.3 77.3 Net Earnings (Loss) $ 26.5 $ (3.0) $ (41.9) $ 96.9 Net Earnings (Loss) Per Share of Common Stock Basic $ 0.30 $ (0.03) $ (0.47) $ 1.09 Diluted $ 0.29 $ (0.03) $ (0.47) $ 1.08 Dividends per share $ 0.20 $ 0.185 $ 0.77 $ 0.73 Average shares outstanding (in thousands) Basic 89,517 89,124 89,470 89,152 Diluted 90,534 89,789 90,472 89,804 Page 8 of 13 Pages THE STANLEY WORKS AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited, Millions of Dollars) January 3,1998 December 28, 1997 1996 ASSETS Cash and cash equivalents $ 152.2 $ 84.0 Accounts receivable 472.5 446.3 Inventories 301.2 338.1 Other current assets 79.4 42.5 Total current assets 1,005.3 910.9 Property, plant and equipment 513.2 570.4 Goodwill and other intangibles 104.1 98.9 Deferred income taxes 36.1 - Other assets 100.0 79.4 $ 1,758.7 $ 1,659.6 LIABILITIES AND SHAREHOLDERS' EQUITY Short-term borrowings $ 130.8 $ 20.0 Accounts payable 155.5 130.8 Accrued expenses 236.7 203.9 Accrued restructuring 99.7 26.9 Total current liabilities 622.7 381.6 Long-term debt 283.7 342.6 Other long-term liabilities 244.5 155.3 Shareholders' equity 607.8 780.1 $ 1,758.7 $ 1,659.6 Page 9 of 13 Pages THE STANLEY WORKS AND SUBSIDIARIES PRICE/VOLUME INFORMATION (Unaudited, Millions of Dollars) NET SALES Fourth Quarter Unit ACQ/ 1997 Price Volume DVT Currency 1996 INDUSTRY SEGMENTS Tools Consumer $ 199.9 (1)% 5% (1)% (4)% $ 202.9 Industrial 148.0 - 9% - - 135.2 Engineered 186.9 (2)% 10% 3% (2)% 171.8 Total Tools 534.8 (1)% 7% 1% (2)% 509.9 Hardware 87.4 (5)% 9% - (1)% 85.0 Specialty Hardware 76.6 - 13% (27)% (1)% 90.5 Consolidated $ 698.8 (1)% 8% (3)% (2)% $ 685.4 GEOGRAPHIC AREAS United States $ 500.6 (2)% 9% (5)% - $ 490.5 Europe 111.7 - 6% 5% (7)% 107.6 Other Areas 86.5 2% 11% (7)% (7)% 87.3 Consolidated $ 698.8 (1)% 8% (3)% (2)% $ 685.4 Year to Date Unit ACQ/ 1997 Price Volume DVT Currency 1996 INDUSTRY SEGMENTS Tools Consumer $ 754.0 - 6% (3)% (3)% $ 751.1 Industrial 552.2 1% 3% (1)% - 538.7 Engineered 717.4 (1)% 7% 1% (2)% 686.4 Total Tools 2,023.6 - 5% (1)% (2)% 1,976.2 Hardware 352.2 (2)% 6% - - 340.4 Specialty Hardware 293.7 (1)% 7% (23%) - 354.2 Consolidated $2,669.5 (1)% 6% (4)% (1)% $ 2,670.8 GEOGRAPHIC AREAS United States $1,900.6 (1)% 5% (5)% - $ 1,911.5 Europe 423.6 (1)% 6% 1% (6)% 421.8 Other Areas 345.3 1% 9% (5)% (3)% 337.5 Consolidated $2,669.5 (1)% 6% (4)% (1)% $ 2,670.8 Page 10 of 13 Pages THE STANLEY WORKS AND SUBSIDIARIES BUSINESS SEGMENT INFORMATION (Unaudited, Millions of Dollars) OPERATING PROFIT Fourth Quarter 1997 Related Core Restrg Transition Profit Reported Charges Costs Core Margin INDUSTRY SEGMENTS Tools $ 59.1 $ - $ 20.3 $ 79.4 14.8% Hardware 5.3 - 5.1 10.4 11.9% Specialty Hardware 1.4 - 1.9 3.3 4.3% Total 65.8 - 27.3 93.1 13.3% Net corporate - expenses (8.9) - 2.3 (6.6) Interest expense (6.3) - - (6.3) Earnings before income taxes $ 50.6 $ - $ 29.6 $ 80.2 GEOGRAPHIC AREAS United States $ 47.4 $ - $ 23.4 $ 70.8 14.1% Europe 9.6 - 2.0 11.6 10.4% Other Areas 8.8 - 1.9 10.7 12.4% Total $ 65.8 $ - $ 27.3 $ 93.1 13.3% Fourth Quarter 1996 Related Core Restrg Transition Profit Reported Charges Costs* Core Margin INDUSTRY SEGMENTS Tools $ 29.2 $ 40.2 $ 7.8 $ 77.2 15.1% Hardware 10.5 - 1.2 11.7 13.8% Specialty Hardware (4.6) 0.3 0.8 (3.5) (3.9%) Total 35.1 40.5 9.8 85.4 12.5% Net corporate expenses (17.3) 0.4 8.3 (8.6) Interest expense (7.1) - - (7.1) Earnings before income taxes $ 10.7 $ 40.9 $ 18.1 $ 69.7 GEOGRAPHIC AREAS United States $ 44.4 $ 15.5 $ 8.8 $ 68.7 14.0% Europe (6.3) 15.3 1.1 10.1 9.4% Other Areas (3.0) 9.7 (0.1) 6.6 7.6% Total $ 35.1 $ 40.5 $ 9.8 $ 85.4 12.5% *1996 includes CEO recruitment costs. Page 11 of 13 Pages THE STANLEY WORKS AND SUBSIDIARIES BUSINESS SEGMENT INFORMATION (Unaudited, Millions of Dollars) OPERATING PROFIT Year to Date 1997 Related Core Restrg Transition Profit Reported Charges Costs Core Margin INDUSTRY SEGMENTS Tools $ 61.1 $ 194.8 $ 51.9 $ 307.8 15.2% Hardware 16.4 17.8 12.4 46.6 13.2% Specialty Hardware (12.3) 23.5 3.3 14.5 4.9% Total 65.2 236.1 67.6 368.9 13.8% Net corporate expenses (59.1) 2.4 14.0 (42.7) Interest expense (24.7) - - (24.7) Earnings(loss)before income taxes $ (18.6) $ 238.5 $ 81.6 $ 301.5 GEOGRAPHIC AREAS United States $ 83.1 $ 145.6 $ 53.4 $ 282.1 14.8% Europe (18.5) 61.8 7.6 50.9 12.0% Other Areas 0.6 28.7 6.6 35.9 10.4% Total $ 65.2 $ 236.1 $ 67.6 $ 368.9 13.8% Year to Date 1996 Related Core Restrg Transition Profit Reported Charges Costs* Core Margin INDUSTRY SEGMENTS Tools $ 196.6 $ 44.6 $ 24.1 $ 265.3 13.4% Hardware 42.4 - 4.4 46.8 13.7% Specialty Hardware 12.2 0.3 2.3 14.8 4.2% Total 251.2 44.9 30.8 326.9 12.2% Net corporate expenses (48.9) 2.9 9.7 (36.3) Interest expense (28.1) - - (28.1) Earnings before income taxes $ 174.2 $ 47.8 $ 40.5 $ 262.5 GEOGRAPHIC AREAS United States $ 212.5 $ 17.2 $ 26.2 $ 255.9 13.4% Europe 24.8 17.1 2.5 44.4 10.5% Other Areas 13.9 10.6 2.1 26.6 7.9% Total $ 251.2 $ 44.9 $ 30.8 $ 326.9 12.2% *1997 includes stock option charge and 1996 includes CEO recruitment costs. Page 12 of 13 Pages Exhibit (20) (ii) 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 core earnings per share performance currently estimated by management and the lower cost structure, which will enable reinvestment for growth. These include the ability of the company 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 itself as a low cost producer. Each of these initiatives is in turn dependent on several factors. These include the company's ability to generate the cost savings necessary to fund these initiatives from a reallocation of resources, including the simplification of its organization, changes in the composition of its workforce and the standardization of its operating mechanisms. The success of this 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; 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 and other changes in the competitive environment; the continued consolidation of customers in consumer channels; increasing global competition; changes in trade, monetary and fiscal policies and laws; inflation; currency exchange fluctuations and the impact of dollar/foreign currency exchange rates on the competitiveness of products; 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 13 of 13 Pages -----END PRIVACY-ENHANCED MESSAGE-----