-----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, M5foh8Pnz2n+1LogHjo2J0bjspyr7XQs8bDgzeZFmwxqvQ2IwBJei9LpbQxHPm58 rECKkvfxZPlBr+i/6bGQAA== /in/edgar/work/0000093556-00-000016/0000093556-00-000016.txt : 20001019 0000093556-00-000016.hdr.sgml : 20001019 ACCESSION NUMBER: 0000093556-00-000016 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20001018 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20001018 FILER: COMPANY DATA: COMPANY CONFORMED NAME: STANLEY WORKS CENTRAL INDEX KEY: 0000093556 STANDARD INDUSTRIAL CLASSIFICATION: [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: 742086 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 0001.txt 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): October 18, 2000 The Stanley Works (Exact name of registrant as specified in charter) Connecticut 1-5224 06-0548860 (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 October 18, 2000, the Registrant issued a press release announcing third quarter earnings and fourth quarter dividend. Attached as Exhibit 20 (i) is a copy of the Registrant's press release. Item 7. Financial Statements and Exhibits. (c) 20(i) Press release dated October 18, 2000 announcing third quarter results and fourth quarter dividend. 20(ii)Cautionary statements relating to forward looking statements included in Exhibit 20(i) and made today in a conference call with industry analysts, shareowners and other participants. 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: October 18, 2000 By: Bruce H. Beatt Name: Bruce H. Beatt Title: Vice President, General Counsel and Secretary Page 3 of 13 Pages EXHIBIT INDEX Current Report on Form 8-K Dated October 18, 2000 Exhibit No. Page 20(i) 5 20(ii) 12 Page 4 of 13 Pages FOR IMMEDIATE RELEASE Exhibit 20(i) STANLEY REPORTS 3RD QUARTER EPS UP 12%, EXCLUSIVE OF PRIOR YEAR NON-RECURRING GAIN. FREE CASH FLOW AT $34 MILLION New Britain, Connecticut, October 18, 2000: The Stanley Works (NYSE: "SWK") announced today that third quarter net income was $49 million, or $.56 per diluted share, versus $45 million, or $.50 per diluted share, in the same quarter last year, exclusive of one-time benefits in the third quarter of 1999. This equaled Wall Street analysts' consensus estimates of $.56 per diluted share. Operating margin was 12.1% compared with 11.3% in the third quarter of 1999. Reported results in the prior reporting period included a one-time gain of $9 million pre-tax, or $.06 per diluted share, resulting principally from the liquidation of a cross-currency financial instrument. Including such income, the company reported net income of $50 million, or $.56 per diluted share, in the third quarter of 1999. Net sales were $684 million, a 1% decline from last year. A weak Euro accounted for a 2% decrease and lower pricing for 1%, partially offset by 2% higher unit volumes. Despite recent share gains, the company's unit volume growth is currently being constrained by slower economic growth and the effect of inventory corrections in certain product lines at major U.S. retailers. John M. Trani, Chairman and Chief Executive Officer, commented: "The U.S. economic environment is clearly slowing. Despite that and a weaker Euro, we were able to deliver earnings growth and strong cash flow due to ongoing cost management. For the fifth consecutive quarter, our operations team made progress in lowering our manufacturing cost base. In addition, sequential and year-over-year improvements in SG&A expenses were achieved, both in terms of absolute dollars and percent to sales. Margins are continuing to expand to record levels, and our lower fixed cost structure will deliver operating leverage when growth resumes. "With regard to growth, our fill rates to large retail customers have improved steadily. Coupled with another array of new products highlighted at the recent Hardware Show, where Stanley was named 'Innovator of the Year' and this summer's successful customer line reviews, recent Page 5 of 13 Pages commitments for our new products clearly indicate that we are winning market share. This bodes well for revenue expansion as soon as normal demand patterns resume." Gross margins were 35.8%, exceeding 1999 gross margins of 35.4%, as productivity improvements from a variety of programs more than offset continued commodity cost increases and pricing pressures. In this regard, the company has already achieved the level of employment reductions planned for the year 2000. Selling, general and administrative expenses were $162 million, or 23.7% of sales, versus 24.1% in the third quarter of 1999 and down $6 million from their second quarter 2000 level. The company was able to fund increases in sales and marketing initiatives, while achieving an overall SG&A expense decline of $5 million from third quarter 1999 levels. Third quarter net interest expense was $7 million, consistent with 1999. Other income / expense was a $2 million expense, compared with income of $6 million in 1999, as prior-year results included the aforementioned one-time gain. The company generated strong third quarter cash from operations of $73 million. This represents 150% of net income and led to the generation of $34 million free cash flow (cash from operations less capital expenditures and dividends). Inventories declined $11 million in the quarter as production rates were successfully rebalanced in consideration of lower demand. Accounts receivable increased $13 million due to normal third-quarter seasonality. However, the company improved collections of delinquent accounts during the quarter. Further strong cash generation is anticipated in the fourth quarter. Mr. Trani added: "Our cash flow performance again reflects a high quality of earnings as well as our inherent cash-generating ability. As a result, Stanley continues to have flexibility to pursue organic growth initiatives and other options to enhance shareowner value." During the quarter, the company repurchased 1.0 million shares, bringing its year-to-date total to 4.3 million shares. Tools segment sales of $531 million were up 1% over the third quarter of 1999. An increase of 3% from unit volume, primarily in the Americas, was offset by declines in Europe. Tools segment operating profit was 12.9% compared with 12.8% in the same period last year as productivity gains somewhat exceeded unfavorable currency and pricing. Page 6 of 13 Pages Doors segment sales declined 8% to $154 million, from decreases in unit volume of U.S. hardware, residential entry doors and home decor products. These decreases resulted primarily from lower sales to large retail and OEM customers, largely as a result of lower market demand. Doors segment operating profit increased to 9.2% of sales versus 6.5% in the same period last year from productivity gains. The Hardware business continues to shift its production cost base into lower cost locations. Along with greatly improved fill rates, this bodes well for continued margin expansion. The company also announced today that its Board of Directors approved a fourth quarter regular dividend of $.23 per share on the company's common stock. The dividend is payable on Tuesday, December 26, 2000 to shareholders of record at the close of business on Friday, November 24, 2000. The Stanley Works, an S&P 500 company, is a worldwide supplier of tools, door systems and related hardware for professional, industrial and consumer use. Investors Gerard J. Gould Media Vance N. Meyer Contact: VP, Investor Relations Contact: Director, Communication & Public Affairs (860) 827-3833 office (860) 827-3871 office (860) 658-2718 home (203) 795-0581 home ggould@stanleyworks.com vmeyer@stanleyworks.com This press release contains forward-looking statements. 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 on the company's Internet web site at http://www.stanleyworks.com. Alternatively, they are available through PR Newswire's "Company News On-Call" service by FAX at 800-758-5804, ext. 874363. Page 7 of 13 Pages THE STANLEY WORKS AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, Millions of Dollars Except Per Share Amounts) Third Quarter Nine Months 2000 1999 2000 1999 Net Sales $ 684.4 $ 692.0 $ 2,082.6 $ 2,061.2 Costs and Expenses Cost of sales 439.4 446.9 1,324.5 1,353.4 Selling, general and administrative 162.2 166.9 502.2 522.2 Interest - net 7.2 7.0 20.9 21.9 Other - net 1.8 (6.2) 11.5 0.8 610.6 614.6 1,859.1 1,898.3 Earnings before income taxes 73.8 77.4 223.5 162.9 Income Taxes 25.1 27.1 76.0 57.0 Net Earnings $ 48.7 $ 50.3 $ 147.5 $ 105.9 Net Earnings Per Share of Common Stock Basic $ 0.56 $ 0.56 $ 1.68 $ 1.18 Diluted $ 0.56 $ 0.56 $ 1.68 $ 1.18 Dividends per share $ 0.23 $ 0.22 $ 0.67 $ 0.65 Average shares outstanding (in thousands) Basic 86,532 89,687 87,721 89,532 Diluted 86,677 89,949 87,927 89,805 Page 8 of 13 Pages THE STANLEY WORKS AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited, Millions of Dollars) September 30 October 2 2000 1999 ASSETS Cash and cash equivalents $ 93.3 $ 131.5 Accounts receivable 576.7 576.0 Inventories 388.6 367.1 Other current assets 72.9 74.8 Total current assets 1,131.5 1,149.4 Property, plant and equipment 505.3 495.9 Goodwill and other intangibles 174.9 187.6 Other assets 111.8 129.0 $ 1,923.5 $ 1,961.9 LIABILITIES AND SHAREOWNERS' EQUITY Short-term borrowings $ 293.5 $ 222.9 Accounts payable 222.4 203.7 Accrued expenses 288.4 309.0 Total current liabilities 804.3 735.6 Long-term debt 243.3 299.2 Other long-term liabilities 175.1 213.5 Shareowners' equity 700.8 713.6 $ 1,923.5 $ 1,961.9 Page 9 of 13 Pages THE STANLEY WORKS AND SUBSIDIARIES SUMMARY OF CASH FLOW ACTIVITY (Unaudited, Millions of Dollars) Third Quarter Nine Months 2000 1999 2000 1999 Operating Activities Net earnings $ 48.7 $ 50.3 $ 147.5 $ 105.9 Depreciation and amortization 20.3 20.9 64.4 66.2 Other non-cash items 2.8 (4.0) 9.9 9.8 Changes in working capital (16.7) (13.2) (80.1) (47.2) Changes in other operating assets and liabilities 17.5 38.4 (21.2) 17.9 Net cash provided by operating activities 72.6 92.4 120.5 152.6 Investing and Financing Activities Capital and software expenditures (19.3) (31.1) (48.1) (81.8) Proceeds from sales of assets 6.5 22.1 10.0 37.0 Net borrowing activity 4.3 (30.3) 107.9 (30.7) Net stock transactions (30.9) (2.5) (107.1) (6.4) Proceeds from swap termination - 13.9 - 13.9 Cash dividends on common stock (19.8) (19.6) (58.5) (57.9) Other (3.1) 1.8 (19.4) (5.3) Net cash used by financing and investing activities (62.3) (45.7) (115.2) (131.2) Increase in Cash and and Cash Equivalents 10.3 46.7 5.3 21.4 Cash and Cash Equivalents, Beginning of Period 83.0 84.8 88.0 110.1 Cash and Cash Equivalents, End of Third Quarter $ 93.3 $ 131.5 $ 93.3 $ 131.5 Page 10 of 13 Pages THE STANLEY WORKS AND SUBSIDIARIES BUSINESS SEGMENT INFORMATION (Unaudited, Millions of Dollars) Third Quarter Nine Months 2000 1999 2000 1999 INDUSTRY SEGMENTS Net Sales Tools $ 530.6 $ 525.5 $ 1,621.8 $ 1,584.1 Doors 153.8 166.5 460.8 477.1 Consolidated $ 684.4 $ 692.0 $ 2,082.6 $ 2,061.2 Operating Profit Tools $ 68.7 $ 67.3 $ 219.2 $ 207.9 Doors 14.1 10.9 36.7 32.6 82.8 78.2 255.9 240.5 Restructuring-related transition and other non-recurring costs - - - (54.9) Interest-net (7.2) (7.0) (20.9) (21.9) Other-net (1.8) 6.2 (11.5) ( 0.8) Earnings Before Income Taxes $ 73.8 $ 77.4 $ 223.5 $ 162.9 Page 11 of 13 Pages Exhibit 20(ii) CAUTIONARY STATEMENTS Under the Private Securities Litigation Reform Act of 1995 The statements in the company's press release attached to this Current Report on Form 8-K and made today in a conference call with industry analysts, shareowners and other participants regarding the company's ability (1) to achieve earnings growth this year in the high single or low double digit range, consistent with the guidance provided by the company in February, (2) to improve productivity (by approximately $80 million this year) and lower the overall cost structure, (3) to increase market share and generate sales this year at levels consistent with those achieved in 1999, (4) to reduce selling, general and administrative expenses as a percentage of sales, and (5) to drive working capital and efficiency and continue to generate cash are forward looking and inherently subject to risk and uncertainty. The company's ability to improve its productivity and to lower the cost structure is dependent on the success of various initiatives that are underway or that are being developed to improve manufacturing operations and to implement related control systems. The success of these initiatives is dependent on the company's ability to increase the efficiency of its routine business processes, to develop and implement process control systems, to mitigate the effects of any material cost inflation, to develop and execute comprehensive plans for facility consolidations, the availability of vendors to perform outsourced functions, the successful recruitment and training of new employees, the resolution of any labor issues related to closing facilities, the need to respond to significant changes in product demand while any facility consolidation is in process and other unforeseen events. In addition, the Company's ability to leverage the benefits of gross margin improvements is dependent upon achieving the targeted level of selling, general and administrative expenses. The company's ability to increase market share and generate sales this year at levels consistent with those achieved in 1999 is dependent upon a number of factors, including: (i) the ability to recruit and retain a sales force comprised of employees and manufacturers representatives, (ii) the success of the "War in the Store" initiatives to increase retail sell through and stimulate demand for the company's products, (iii) the ability of the sales force to adapt to changes made in the sales organization and achieve adequate customer coverage, (iv) the ability of the company to fulfill increased demand for its products, (v) the absence of increased pricing pressures from customers and competitors and the ability to defend market share in the face of price competition, (vi) the ability to improve the cost structure in order to fund new product and brand development and (vii) the acceptance of the company's new products in the marketplace as well as the ability to satisfy demand for these products. Page 12 of 13 Pages The company's ability to reduce selling, general and administrative expenses as a percentage of sales is dependent upon the success of various process improvement activities, the continued success of changes to the sales organization and the reduction of transaction costs. The company's ability to drive working capital efficiency and continue to generate cash are dependent on achieving its earnings growth targets and the continued success of improvements in processes to manage inventory and receivables levels. The company's ability to achieve the objectives discussed above will also be affected by the current slowdown in the economy and other external factors. These include pricing pressure and other changes within competitive markets, the continued consolidation of customers in consumer channels, increasing competition, changes in trade, monetary and fiscal policies and laws, inflation, currency exchange fluctuations, 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. Page 13 of 13 Pages -----END PRIVACY-ENHANCED MESSAGE-----