-----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, AEudiacdvi+vB8mWhmNG0fX5Q6Sl6S8VOdEJuWlAYraNJZIF5daChXm1I9R2/uDa 8sYmAXSw9KKO6kLdzg1u2Q== /in/edgar/work/0000093556-00-000017/0000093556-00-000017.txt : 20001115 0000093556-00-000017.hdr.sgml : 20001115 ACCESSION NUMBER: 0000093556-00-000017 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 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: 10-Q SEC ACT: SEC FILE NUMBER: 001-05224 FILM NUMBER: 767592 BUSINESS ADDRESS: STREET 1: 1000 STANLEY DR STREET 2: P O BOX 7000 CITY: NEW BRITAIN STATE: CT ZIP: 06053 BUSINESS PHONE: 8602255111 MAIL ADDRESS: STREET 1: 1000 STANLEY DR CITY: NEW BRITAIN STATE: CT ZIP: 06053 10-Q 1 0001.txt SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2000. or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from [ ] to [ ] Commission file number 1-5224 The Stanley Works (Exact name of registrant as specified in its charter) CONNECTICUT 06-0548860 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 1000 Stanley Drive New Britain, Connecticut 06053 (Address of principal executive offices) (Zip Code) (860) 225-5111 (Registrant's telephone number) Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: shares of the company's Common Stock ($2.50 par value) were outstanding 85,961,360 as of November 10, 2000. PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS 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 ======= ======= ========= ========= See notes to consolidated financial statements. -1- THE STANLEY WORKS AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited, Millions of Dollars)
September 30 January 1 2000 2000 -------- -------- ASSETS Current Assets Cash and cash equivalents $ 93.3 $ 88.0 Accounts and notes receivable 576.7 546.1 Inventories 388.6 381.2 Other current assets 72.9 75.7 -------- -------- Total Current Assets 1,131.5 1,091.0 Property, plant and equipment 1,226.4 1,208.0 Less: accumulated depreciation (721.1) (687.4) -------- -------- 505.3 520.6 Goodwill and other intangibles 174.9 185.2 Other assets 111.8 93.8 -------- -------- $ 1,923.5 $ 1,890.6 ======== ======== LIABILITIES AND SHAREOWNERS' EQUITY Current Liabilities Short-term borrowings $ 287.6 $ 145.3 Current maturities of long-term debt 5.9 11.7 Accounts payable 222.4 225.0 Accrued expenses 288.4 311.0 -------- -------- Total Current Liabilities 804.3 693.0 Long-Term Debt 243.3 290.0 Other Liabilities 175.1 172.2 Shareowners' Equity Common stock 230.9 230.9 Retained earnings 984.8 926.9 Accumulated other comprehensive loss (123.2) (99.2) ESOP debt (198.9) (202.2) -------- -------- 893.6 856.4 Less: cost of common stock in treasury 192.8 121.0 -------- -------- Total Shareowners' Equity 700.8 735.4 -------- -------- $ 1,923.5 $ 1,890.6 ======== ========
See notes to consolidated financial statements. -2- THE STANLEY WORKS AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (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 Activities Capital expenditures (17.8) (17.9) (45.2) (58.4) Capitalized software (1.5) (13.2) (2.9) (23.4) Proceeds from sales of assets 6.5 22.1 10.0 37.0 Other (3.9) 2.5 (15.3) (1.6) ------ ------ ------ ------ Net cash used by investing activities (16.7) (6.5) (53.4) (46.4) Financing Activities Payments on long-term borrowings - - (32.6) (156.0) Proceeds from long-term borrowings - 0.4 - 121.3 Net short-term borrowings 4.3 (30.7) 140.5 4.0 Proceeds from issuance of common stock 1.4 2.3 4.6 7.3 Proceeds from swap termination - 13.9 - 13.9 Purchase of common stock for treasury (32.3) (4.8) (111.7) (13.7) Cash dividends on common stock (19.8) (19.6) (58.5) (57.9) ------ ------ ------ ------ Net cash used by financing activities (46.4) (38.5) (57.7) (81.1) Effect of Exchange Rate Changes on Cash 0.8 (0.7) (4.1) (3.7) ------ ------ ------ ------ Increase in Cash 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 ====== ====== ====== ======
See notes to consolidated financial statements. -3- THE STANLEY WORKS AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREOWNERS' EQUITY (Unaudited, Millions of Dollars) Accumulated Other Compre- hensive Total Common Retained Income ESOP Treasury Shareowners' Stock Earnings (Loss) Debt Stock Equity --------------------------------------------------------- Balance Jan 1, 2000 $230.9 $926.9 $(99.2) $(202.2) $(121.0) $735.4 Comprehensive income: Net earnings 147.5 Foreign currency translation (24.0) Total comprehensive income 123.5 Cash dividends declared (58.5) (58.5) Net common stock activity (33.4) (71.8) (105.2) Tax benefit related to stock options 0.3 0.3 ESOP debt 3.3 3.3 ESOP tax benefit 2.0 2.0 --------------------------------------------------------- Balance Sep 30, 2000 $230.9 $984.8 $(123.2) $(198.9) $(192.8) $700.8 ========================================================= Accumulated Other Compre- hensive Total Common Retained Income ESOP Treasury Shareowners' Stock Earnings (Loss) Debt Stock Equity --------------------------------------------------------- Balance Jan 2, 1999 $230.9 $867.2 $(84.6) $(213.2) $(130.9) $669.4 Comprehensive income: Net earnings 105.9 Foreign currency translation (13.0) Total comprehensive income 92.9 Cash dividends declared (57.8) (57.8) Net common stock activity (25.5) 23.8 (1.7) Tax benefit related to stock options 0.6 0.6 ESOP debt 8.2 8.2 ESOP tax benefit 2.0 2.0 --------------------------------------------------------- Balance Oct 2, 1999 $230.9 $892.4 $(97.6) $(205.0) $(107.1) $713.6 =========================================================
See notes to consolidated financial statements. -4- 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 ======= ======= ========= ========== GEOGRAPHIC NET SALES United States $ 497.6 $ 496.4 $ 1,505.8 $ 1,466.5 Other Americas 51.7 51.3 154.8 150.5 Europe 108.1 119.0 345.1 372.7 Asia 27.0 25.3 76.9 71.5 ------- ------- --------- ---------- Consolidated $ 684.4 $ 692.0 $ 2,082.6 $ 2,061.2 ======= ======= ========= ==========
See notes to consolidated financial statements. -5- THE STANLEY WORKS AND SUBSIDIARIES NOTES TO (Unaudited) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2000 NOTE A - Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations for the interim periods have been included. For further information, refer to the consolidated financial statements and footnotes included in the company's Annual Report on Form 10-K for the year ended January 1, 2000. NOTE B - Earnings Per Share Computation The following table reconciles the weighted average shares outstanding used to calculate basic and diluted earnings per share. Third Quarter Nine Months 2000 1999 2000 1999 ---------- ---------- ---------- ---------- Net earnings - basic and diluted $ 48.7 $ 50.3 $147.5 $105.9 ========== ========== ========== ========== Basic earnings per share - weighted average shares 86,531,911 89,686,916 87,721,165 89,531,833 Dilutive effect of employee stock options 145,386 262,205 205,838 273,108 ---------- ---------- ----------- ---------- Diluted earnings per share - weighted average shares 86,677,297 89,949,121 87,927,003 89,804,941 ========== ========== =========== ========== NOTE C - Inventories The components of inventories at the end of the third quarter of 2000 and at year-end 1999, in millions of dollars, are as follows:
September 30 January 1 2000 2000 ------ ------ Finished products $ 278.8 $ 269.0 Work in process 51.4 48.3 Raw materials 58.4 63.9 ------ ------ $ 388.6 $ 381.2 ====== ======
-6- NOTE D - Cash Flow Information Interest paid during the third quarters of 2000 and 1999 amounted to $7.9 million and $7.1 million, respectively. Interest paid for the nine months of 2000 and 1999 amounted to $29.3 million and $24.5 million, respectively. Income taxes paid during the third quarter of 2000 were $5.7 million. Income taxes refunded net of payments made for the third quarter of 1999 were $4.7 million. Income taxes paid (net of refund received in 1999) for the nine months of 2000 and 1999 were $50.3 million and $16.3 million, respectively. NOTE E - Royalty Revenues The company enters into arrangements licensing its brand name on specifically approved products. The licensee pays the company royalties as products are sold, subject to annual minimum guaranteed amounts. For those arrangements where the company has continuing involvement with the licensee, royalty revenues are recognized over the term of the agreement. For certain agreements, where the company has no further continuing involvement with the licensee, the company recognizes the guaranteed minimum royalties at the time the arrangement becomes effective and all applicable products have been approved. NOTE F - Other-net Other income in the third quarter of 1999 included non-recurring currency related gains of $9.2 million, $0.6 per share, comprised of a gain of $11.4 million realized upon the termination of a cross-currency financial instrument partially offset by other currency related items of $2.2 million. NOTE G - Recent Accounting Pronouncements Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities", as amended by SFAS Nos. 137 and 138 establishes standards for recognition and measurement of derivatives and hedging activities. The adoption of the statement is required for the company in the first quarter of fiscal year 2001. The company does not believe the SFAS will have a material financial statement impact. -7- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Net sales were $684 million, a decrease of 1% from $692 million in the same quarter last year. The decrease was driven by a 2% reduction from the effect of foreign currency translation and a 1% reduction in sales from unfavorable pricing pressures. The reduction in sales from foreign currency translation was primarily due to weaker European currencies during the quarter. Net sales were $2,083 million for the first nine months of 2000, a 1% increase over the same period last year. The increase was caused by an overall unit volume increase of 3% which was offset partially by a 1% reduction in sales from the effect of foreign currency translation and a 1% reduction in sales from unfavorable pricing pressures. Financial results for the first six months of 1999 included transition expenses related to the company's restructuring initiatives. These costs were classified as period operating expenses within cost of sales or selling, general and administrative expense. They included the costs of moving production equipment, operating duplicate facilities while transferring production or distribution, consulting costs incurred in planning and implementing changes, and other types of costs that have been incurred to facilitate restructuring. Management judgment was used to determine which costs should be classified as transition costs based on whether the costs were unusual in nature, were incurred only because of restructuring initiatives and were expected to cease when the transition activities ended. In addition, the company incurred costs to remediate its computer and related systems so that these systems would function properly with regard to date issues related to Y2K. Because the presence of restructuring charges, restructuring-related transition costs and non-recurring Y2K remediation costs obscured the underlying trends within the company's business, the company also provided information on its results for the first nine months of 1999 excluding these identifiable costs. These pro forma or "core" results were the basis of business segment information. The narrative regarding results of operations has also been expanded to provide information as to the effects of these items on each financial statement category. Effective in the third quarter 1999, these costs were no longer disclosed separately as they were significantly lower than amounts previously incurred. The company reported gross profit of $245 million, or 35.8% of net sales in the third quarter compared to 35.4% of net sales 1999. This increase was attributed to productivity improvements from a variety of programs which were partially offset by continued commodity cost increases and pricing pressures. The company reported gross profit of $758 million, or 36.4% of net sales for the first nine months of 2000 compared to 34.3% of net sales in 1999. Included in the cost of sales in 1999 for the nine month period were $20 million of restructuring-related transition costs, primarily for plant rationalization activities. Core gross profits were 35.3% of net sales during that nine month period. This improvement in gross profits is attributable to a combination of improved cost controls in operations, the benefits of the company's 1997 restructuring, higher unit volumes and continued progress on purchased material costs despite inflationary pressures. -8- Selling, general and administrative expenses were $162 million, or 23.7% of net sales, in the third quarter of 2000, as compared with $167 million, or 24.1% of net sales in the third quarter of 1999. The decrease of $5 million in 2000 from the 1999 selling, general and administrative expenses is primarily the result of decreased information management infrastructure costs and reducing distribution and administration costs. These decreases were partially offset by higher compensation costs for the MacDirect program and increased sales and marketing expenses in certain channels. Selling, general and administrative expenses were $502 million, or 24.1% of net sales, in the nine month period of 2000, as compared with $522 million, or 25.3% of net sales for the same period in 1999. Restructuring-related transition and other non-recurring costs were $35 million in 1999. These expenses resulted from spending on system conversions for the Y2K remediation project and certain consulting costs incurred for structural reorganization and administrative efficiency solutions. On a core basis, selling, general and administrative expenses were $487 million in 1999. The $15 million increase in 2000 compared with core selling, general and administrative expenses in 1999 is primarily the result of higher compensation costs for the MacDirect program and increased sales and marketing expenses in certain channels. Net interest expense for the third quarter and first nine months of 2000 were relatively flat to the comparable periods in 1999. Other-net of $2 million expense in the third quarter of 2000 and $12 million expense for the nine month period of 2000 compared to income of $6 million and expense of $1 million, respectively, for the same periods in 1999. The reduction in the 1999 expense is primarily attributed to a gain realized during the third quarter of 1999 upon the termination of a cross-currency financial instrument. The company's income tax rate was 34% in the third quarter and for the first nine months of 2000. In the comparable 1999 periods, the company's income tax rate was 35%. This income tax rate decrease reflects the continued effect of changes implemented which benefit the company's tax structure. Net earnings for the third quarter were $49 million, or $.56 per diluted share, compared with the prior year's net income of $50 million, or $.56 per diluted share. Net earnings for the first nine months of 2000 were $148 million, or $1.68 per diluted share, compared with net income of $106 million, or $1.18 per diluted share in the prior year. Net earnings on a core basis, would have been $142 million, or $1.58 per diluted share in the first nine months of 1999. Business Segment Results The Tools segment includes carpenters, mechanics, pneumatic and hydraulic tools as well as tool sets. The Doors segment includes commercial and residential doors, both automatic and manual, as well as closet doors and systems, home decor and door and consumer hardware. The company assesses the performance of its business segments using core operating profit, which excludes restructuring charges, restructuring-related transition and other non-recurring costs for the first six months of 1999. Segment eliminations are also excluded. -9- As reflected in the table, "Business Segment Information", Tools sales in the third quarter of 2000 increased to $531 million, or 1% over the third quarter of 1999. Tools sales for the nine month period of 2000 increased 2% compared to the same period of 1999. The Tools segment core operating profit was 12.9% of net sales for the third quarter and 13.5% for the first nine months of 2000, compared with 12.8% and 13.1% of net sales, respectively, in the same periods last year. These improvements are attributable to improved cost controls in operations, the benefits of the company's restructuring initiatives, and higher unit volumes. Doors segment sales decreased to $154 million, 8% below 1999's third quarter, due to unit volume decreases in the U.S. hardware, residential entry doors and home decor products. These decreases are primarily the result of lower market demand from the Company's large retail and OEM customers. The Doors segment core operating profit increased to 9.2% of net sales in the third quarter and 8.0% for the first six months of 2000, compared with 6.5% and 6.8% of net sales, respectively, in the same periods last year. The improvements in operating margins are due to productivity gains. Restructuring Restructuring reserves as of the beginning of 2000 were $58 million. These reserves consisted of $42 million related to severance, $10 million related to asset write-downs, and $6 million related to other exit costs. In the first nine months of 2000, severance of $20 million, asset write-downs of $7 million, and payments for other exit costs of $1 million reduced these reserves to $30 million. FINANCIAL CONDITION Liquidity and Sources of Capital In the third quarter of 2000, the company generated operating cash flow of $73 million. Accounts receivable increased $26 million during the third quarter of 2000, which is comparable to the prior year increase, as a result of normal seasonal monthly sales patterns. Inventories decreased $5 million during the third quarter of 2000, as production rates were successfully rebalanced in consideration of lower demand. In the third quarter of 2000, the company repurchased approximately 1 million of its common shares. Cash flow from operations was utilized to fund these repurchases. For the first nine months of 2000, the company has repurchased approximately 4.3 million of it common shares. Short-term borrowings were utilized to fund the repurchases prior to the third quarter along with working capital needs driven by the accounts receivable and inventory increases since the beginning of the year. On October 18, 2000, the Company entered into an unsecured extendible commercial notes facility with a maximum authorized amount of $50 million at any time outstanding. Under this facility, notes will be issued by the Company from time to time in a series of transactions exempt from registration under the Securities Act of 1933, as amended, pursuant to Section 4(2) thereof. The legal final maturity date for any such note issued by the Company is the 390th day following the date of issuance; however, the Company may, in its sole discretion, optionally redeem any such note on any day established by the Company at issuance that is not more than 90 days following the date of issuance of such note. This facility was entered into by the Company to provide an additional source of liquidity for general corporate purposes. -10- PART II OTHER INFORMATION Item 2. - Changes in Securities and Use of Proceeds (c) Recent Sales of Unregistered Securities (1) During the third fiscal quarter of 2000, 3,412 shares of the Company's common stock shares were issued to certain participants under the Company's German Savings Related Share Plan (the "Savings Plan"). Under the Savings Plan, shares are issued to employees who elect at the end of the five year savings period or upon termination of employment to receive the accumulated savings in the form of shares of the Company's stock rather than cash. (a)Participation in the Savings Plan is offered to all employees of the Company's subsidiaries in Germany. (b)The total dollar value of the shares issued during the quarter was $54,194.16. Under the Savings Plan: 3,412 shares were issued at $15.8834 per share with an aggregate value of $54,194.16.(a)(a) (c) Neither the options nor the underlying shares have been registered in reliance on an exemption from registration found in several no-action letters issued by the Division of Corporation Finance of the Securities and Exchange Commission. Registration is not required because the Company is a reporting company under the Securities Exchange Act of 1934, its shares are actively traded, the number of shares issuable under the Savings Plans is small relative to the number of shares outstanding, all eligible employees are entitled to participate, the shares are being issued in connection with the employees' compensation, not in lieu of it and there is no negotiation between the Company and the employee regarding the grant. (d) Under the Savings Plans, employees are given the right to buy a specified number of shares with the proceeds of a "Save-as-You-Earn" savings contract. Under the savings contract, the employee authorizes 60 monthly deductions from his or her paycheck At the end of the five year period, the employee may elect to (i) use all or a part of the accumulated savings to buy all or some of the shares under the employee's options, (ii) leave the accumulated savings with the financial institution that has custody of the funds for an additional two years or (iii) take a cash distribution of the accumulated savings. The option to purchase shares will lapse at the end of the five year period if not exercised at that time. -11- Item 6. - Exhibits and Reports on Form 8-K (a) Exhibits (1) See Exhibit Index on page 14. (b) Reports on Form 8-K. (1) Company filed a Current Report on Form 8-K, dated July 11, 2000, which announced the election of John G. Breen and John D. Opie to the Company's Board of Directors. (2) Company filed a Current Report on Form 8-K, dated July 13, 2000, announcing the resignation of William Y. O'Connor from the Company's Board of Directors. (3) Company filed a Current Report on Form 8-K, dated July 19, 2000, in respect of the Company's press release announcing second quarter results. (4) Company filed a Current Report on Form 8-K, dated September 29, 2000, announcing the resignation of Stef G.H. Kranendijk, President, Stanley Europe; the election of Bruce H. Beatt by the Company's Board of Directors as VP, General Counsel and Secretary as of October 9, 2000; and the Company's executive officers, as defined under Section 16 of the Act, as of October 9, 2000. -12- 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: November 14, 2000 By: /s/ James M. Loree ------------------ James M. Loree Vice President, Finance and Chief Financial Officer -13- EXHIBIT INDEX EXHIBIT LIST (3) By-Laws (10) Amended and Restated Credit Agreement, dated October 21, 1998, as amended and restated as of October 18, 2000, among The Stanley Works, each lender that is a signatory thereto and Citibank, N.A. (12) Computation of Ratio of Earnings to Fixed Charges (27) Financial Data Schedule -14- Exhibit 12 THE STANLEY WORKS AND SUBSIDIARIES COMPUTATION OF EARNINGS TO FIXED CHARGES (In Millions of Dollars) THIRD QUARTER NINE MONTHS 2000 1999 2000 1999 ------ ------ ------ ------ Earnings before income taxes $73.8 $77.4 $223.5 $162.9 Add: Interest expense 9.5 8.2 26.3 25.5 Portion of rents representative of interest factor 3.5 3.8 10.7 11.3 Amortization of expense on long- term debt 0.1 0.1 0.2 0.2 ------ ------ ------ ------ Income as adjusted $86.9 $89.5 $260.7 $199.9 ====== ====== ====== ====== Fixed charges: Interest expense $9.5 $8.2 $26.3 $25.5 Portion of rents representative of interest factor 3.5 3.8 10.7 11.3 Amortization of expense on long- term debt - 0.1 0.2 0.2 ------ ------ ------ ------ Fixed charges $13.1 $12.1 $37.2 $37.0 ====== ====== ====== ====== Ratio of earnings to fixed charges 6.63 7.40 7.01 5.40 ====== ====== ====== ======
-15- EX-3 2 0002.txt As amended September 20, 2000 THE STANLEY WORKS BYLAWS ARTICLE I SHAREHOLDERS' MEETINGS 1. Annual Meeting. The Annual Meeting of the shareholders shall be held at such time in the month of February, March or April in each year and at such place within or without the State of Connecticut as the Board of Directors may determine. Notice thereof shall be mailed to each shareholder to his or her last known post office address not less than ten days nor more than sixty days before such Meeting. 2. Special Meetings. Special Meetings of the shareholders shall be called by the Chairman, or the President or Secretary, or by the Chairman, or the President or Secretary upon the written request of the holders of not less than 35% of the voting power of all shares entitled to vote on any issue proposed to be considered at such Meeting by mailing a notice thereof to each shareholder to his or her last known post office address not less than twenty-five days nor more than fifty days before such Meeting. 3. Quorum. At any Meeting of shareholders the holders of not less than a majority of the shares outstanding and entitled to vote present in person or by proxy shall constitute a quorum. The Directors may establish a record date for voting or other purposes in accordance with law. 4. Business to be Conducted at Annual Meeting. No business may be transacted at an Annual Meeting of shareholders (including any adjournment thereof), other than business that is either (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (b) otherwise properly brought before the Annual Meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (c) otherwise properly brought before the Annual Meeting by any shareholder (i) who is a shareholder of record on the date of the giving of the notice provided for in this Section 4 and on the record date for the determination of shareholders entitled to vote at such Annual Meeting and (ii) who complies with the notice procedures set forth in this Section 4. In addition to any other applicable requirements, for business to be properly brought before an Annual Meeting by a shareholder, such shareholder must have given timely notice thereof in proper written form to the Secretary. To be timely, a shareholder's notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Corporation not less than sixty (60) days nor more than ninety (90) days prior to the anniversary of the date on which the immediately preceding Annual Meeting of shareholders was convened; provided, however, that in the event that the Annual Meeting is called for a date that is not within thirty (30) days before or after such anniversary date, notice by the shareholder in order to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which such notice of the date of the Annual Meeting was mailed or such public disclosure of the date of the Annual Meeting was made, whichever first occurs. To be in proper written form, a shareholder's notice to the Secretary must set forth as to each matter such shareholder proposes to bring before the Annual Meeting (i) a brief description of the business desired to be brought before the Annual Meeting and the reasons for conducting such business at the Annual Meeting, (ii) the name and record address of such shareholder, (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such shareholder, (iv) a description of all arrangements or understandings between such shareholder and any other person or persons (including their names) in connection with the proposal of such business by such shareholder and any material interest of such shareholder in such business and (v) a representation that such shareholder intends to appear in person or by proxy at the Annual Meeting to bring such business before the meeting. No business shall be conducted at the Annual Meeting of shareholders except business brought before the Annual Meeting in accordance with the procedures set forth in this Section 4, provided, however, that, once business has been properly brought before the Annual Meeting in accordance with such procedures, nothing in this Section 4 shall be deemed to preclude discussion by any shareholder of any such business. If the Chairman of an Annual Meeting determines that business was not properly brought before the Annual Meeting in accordance with the foregoing procedures, the Chairman shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted. ARTICLE II NOMINATIONS OF DIRECTOR CANDIDATES 1. Eligibility to Make Nominations. Nominations of candidates for election as directors of the Corporation at any meeting of shareholders called for election of directors (an "Election Meeting") may be made by the Board of Directors or by any shareholder entitled to vote at such Election Meeting. 2. Procedure for Nominations by the Board of Directors. Nominations made by the Board of Directors shall be made at a meeting of the Board of Directors, or by written consent of directors in lieu of a meeting, not less than 30 days prior to the date of the Election Meeting, and such nominations shall be reflected in the minute books for the Corporation as of the date made. At the request of the Secretary of the Corporation each proposed nominee shall provide the Corporation with such information concerning himself or herself as is required, under the rules of the Securities and Exchange Commission, to be included in the Corporation's proxy statement soliciting proxies for his or her election as a director. 3. Procedure for Nominations by Shareholders. Not less than 30 days prior to the date of the Election Meeting, any shareholder who intends to make a nomination at the Election Meeting shall deliver a notice to the Secretary of the Corporation setting forth (i) the name, age, business address and residence address of each nominee proposed in such notice, (ii) the principal occupation or employment of each such nominee, (iii) the number of shares of capital stock of the Corporation which are beneficially owned by each such nominee and (iv) such other information concerning each such nominee as would be required, under the rules of the Securities and Exchange Commission, in a proxy statement soliciting proxies for the election of such nominees. 4. Substitution of Nominees. In the event that a person is validly designated as a nominee in accordance with section 2 or 3 hereof and shall thereafter become unable or unwilling to stand for election to the Board of Directors, a substitute nominee may be designated as follows: (a) by those named as proxies in proxies solicited on behalf of the Board of Directors if the person was designated as nominee in accordance with section 2 hereof (b) by the shareholder who proposed such nominee if the person was designated as a nominee in accordance with section 3 hereof. 5. Determination of Compliance with Procedure. If the chairman of the Election Meeting determines that a nomination was not in accordance with the foregoing procedures, such nomination shall be void. ARTICLE III DIRECTORS AND COMMITTEES 1. Directors. The business, property and affairs of this Corporation shall be managed by or under the direction of the Board of Directors consisting of not less than eight nor more than eighteen Directors, the exact number to be determined by the Board of Directors from time to time. All Directors shall be shareholders of record. The Directors shall be divided into three classes designated Class I, Class II and Class III. Such classes shall be as nearly equal in number as the total number of Directors constituting the entire Board of Directors permits. One class shall be chosen annually at the Annual Meeting of shareholders and the members of such class shall hold office until their successors be elected and qualified. The Directors may increase the prescribed number of Directors by the concurring vote of a majority of the prescribed number of Directors. Any increase or decrease in the prescribed number of Directors shall be so apportioned among the classes of Directors as to make all the classes as nearly equal in number as possible. No reduction of the number of Directors shall remove or shorten the term of any Director in office. A majority of the number of Directors prescribed shall constitute a quorum for the transaction of business. 2. Meetings. The Chairman or the President or any Vice Chairman may and upon written application of any three Directors shall call a meeting of the Board of Directors to be held at such time and place as may be determined by the person calling said meeting and shall cause notice thereof to be given. Unless waived in writing, three days verbal or written (mail) notice shall be required provided, however, that if in the judgment of any two officers an emergency exists, a meeting may be called forthwith by telephone or telegram or verbal notice and such notice shall be deemed sufficient notice notwithstanding that some of the Directors may not have actual notice. The Annual Meeting of the Directors for the election of officers shall be held without notice, immediately after the Annual Meeting of shareholders. Regular meetings of the Directors shall be held at least on a quarterly basis. 3. Written Consent. If all the Directors, or all members of a committee of the Board of Directors, as the case may be, severally or collectively consent in writing to any action taken or to be taken by the Corporation, and the number of such Directors or members constitutes a quorum for such action, such action shall be a valid corporate action as though it had been authorized at a meeting of the Board of Directors or committee, as the case may be. The Secretary shall file such consents with the minutes of the Board of Directors or of the committee, as the case may be. 4. Participation by Telephone. A Director may participate in a meeting of the Board of Directors or of a committee by any means of communication by which all Directors participating in the meeting may simultaneously hear one another during the meeting, and participation in a meeting pursuant to this subsection shall constitute presence in person at such meeting. 5. Vacancies. In case any vacancy or vacancies shall exist in the Board of Directors at any time the remaining members of the Board by majority action may fill the vacancy or vacancies. The term of a Director elected to fill a vacancy expires at the next shareholders meeting at which Directors are elected. 6. Committees. The Board of Directors may from time to time appoint from its membership such committees as it may deem necessary or desirable for the best interests of the Corporation and may delegate to any committee all needful authority to the extent permitted by law. The meetings of all committees are open to all directors. Each committee shall fix its own rules as to procedure and calling of meetings. It shall appoint a Secretary, who need not be a member of the committee. Such Secretary shall call meetings of the committee on the request of the Chair of the committee or any two members and shall keep permanent record of all of its proceedings. A majority of the members of any committee shall constitute a quorum. 7. Executive Committee. The Directors shall appoint an Executive Committee consisting of the Chairman, if any, the President and at least three other Directors, but in no event shall the Committee consist of less than five members. The Board of Directors may at any time decrease (subject to the provisions of the preceding paragraph) or increase the size of said Committee, may change the membership thereof and may fill vacancies therein. During intervals between meetings of the Board of Directors, the Executive Committee shall possess and may exercise all the powers of the Board of Directors in the management of the business and affairs of the Corporation, but the Committee shall have no power to declare dividends or do other things specially reserved by law to the Directors. The Executive Committee shall have power to appoint such subcommittees as it may deem necessary to report and make recommendations to the Executive Committee. Any action taken by the Executive Committee shall be subject to change, alteration and revision by the Board of Directors, provided that no rights or acts of others shall be affected by any such alteration or revision. 8. Finance and Pension Committee. A Finance and Pension Committee consisting of at least three Directors shall be appointed by the Board of Directors. The Committee shall advise and assist the Chief Financial Officer and the Treasurer in major matters concerning the finances of the Corporation and in matters of major policy decisions in the purchase and sale of securities. In performance of this the Committee shall regularly review the financial condition of the Corporation so as to counsel these officers and the Board on the total financial resources, strength and capabilities of the Corporation. In this connection, the Committee shall analyze and advise on fundamental corporate changes in capital structure (both debt and equity); review the capital structure of the Corporation and make recommendations with respect to management proposals concerning financing, purchases of treasury stock, investments, and dividend actions; review periodically the Corporation's risk management program and its adequacy to safeguard the Corporation against extraordinary liabilities or losses; and advise and assist in matters such as short-term investments, credit liabilities, financings, and hedges of foreign currency exposures. The Committee shall oversee the Corporation's administration of its pension plans and of the pension plans of its subsidiaries. The Committee shall be responsible for setting (subject to the approval of the Board of Directors) the retirement policies of the Corporation and its subsidiaries; for amending pension plans, savings and retirement plans, stock ownership plans or any similar plans or related trust agreements; and for approving actuarial assumptions and investment policies for the Corporation's pension plans. It shall report at least annually to the Board of Directors. The Committee may delegate any or all of these functions to such employees as it, in its judgment, deems appropriate. Specifically, the Committee shall approve retaining or terminating the services of actuaries, lawyers, accountants or other professionals for the plans; shall approve annually the amount of the contributions to be made by the Corporation to the respective plans; and shall approve appointing and terminating trustees and investment managers and determine the allocation of the assets of the plans among one or more trustees or investment managers. 9. Audit Committee. An Audit Committee consisting of at least three Directors shall be appointed by the Board of Directors. Except as permitted by the independence requirements of the New York Stock Exchange, none of the Audit Committee members shall be officers or employees of the Corporation or any of its affiliates. Audit Committee members shall have no relationship to the Corporation that may interfere with the exercise of their independence from management and the Corporation. Each member of the Audit Committee shall be financially literate and at least one member shall have accounting or related financial management expertise, as such qualifications are interpreted by the Corporation's Board of Directors in its business judgment. The Committee shall nominate the public accounting firm to conduct the annual audit and shall review fees for audit and tax work and approve in advance management consulting services which management may propose be provided by the Corporation's public accounting firm. With respect to such management consulting services, consideration shall be given to the effect that performing such services might have on audit independence. The Committee shall review with the auditors the scope and timing of their audit examination, with particular emphasis on those areas which either the Committee or the auditors believe warrant special attention. The Committee is authorized to have the auditors perform such supplemental reviews or audits as it deems desirable. The Committee shall review the audited financial statements and the auditors' report thereon, including consideration of all significant disclosures required by the Securities and Exchange Commission, and any proposed changes in accounting principles or practices which have a significant impact on amounts reported for the current year (or will have in the future) and shall discuss with the auditors any significant problems encountered in the completion of the audit. The Committee shall review with management and the independent auditors the qualitative judgments about the appropriateness, not just the acceptability, of accounting principles and financial disclosure practices used or proposed to be adopted including the degree of aggressiveness or conservatism of the accounting principles and underlying estimates including significant liabilities and reserves associated with those liabilities. The Committee shall review the auditors' recommendations regarding internal control and their comments, if any, relating to conflicts of interest, questionable payments or other similar matters, and monitor with management the consideration given and/or the corrective action taken with respect to these comments and recommendations. The Committee shall review management's evaluation of the Corporation's system of internal accounting controls, including the independence, scope and results of the internal audit function, and monitor the effectiveness of the system with management, independent auditors and internal audit management. The Committee shall review with management and independent auditors and consider the impact on the Corporation of significant recent or pending statements by the Financial Accounting Standards Board, the Securities and Exchange Commission, the Auditing Standards Executive Committee of the American Institute of Certified Public Accountants and similar authoritative bodies. The Committee shall review environmental liabilities and the reserves associated with those liabilities. In carrying out all of the foregoing responsibilities, the Committee shall have direct and open access to Management, public accountants and internal audit management (each of which shall have direct and open access to the Committee); shall submit Committee reports, recommendations, and minutes of meetings to the Board of Directors; and shall provide opportunities to the other members of the Board to have full and open access to the independent auditors. 10. Compensation and Organization Committee. A Compensation and Organization Committee consisting of at least three Directors, none of whom shall be employees of the Corporation or any of its subsidiaries, shall be appointed by the Board of Directors. The Committee shall review and approve major organization and compensation structure changes as recommended by Management. Although the Board, itself, will review the performance of the chief executive officer and fix his or her salary, the Committee shall approve the performance and determine the salaries of the other executive officers of the Corporation and of other senior executives whose base salary exceeds an amount fixed by the Board of Directors; shall determine the compensation of all executive officers and such senior executives under the Corporation's senior executive compensation plans; shall administer all of the Corporation's senior executive compensation plans; and shall assure that there is a succession plan in place. 11. Committee on Board Affairs and Public Policy. A Committee on Board Affairs and Public Policy consisting of at least three directors, none of whom shall be employees of the Corporation or any of its subsidiaries shall be appointed by the Board of Directors. The Committee shall consider and make recommendations to the Board of Directors as to Board of Director membership with respect to names generated by the Committee itself or submitted by shareholders. The Committee shall consider and make recommendations to the Board of Directors with respect to Board of Director committee membership and chair assignments. (These will normally be acted upon by the Board of Directors at its Annual Meeting held immediately after the Annual Meeting of shareholders.) The Committee shall consider and make recommendations to the Board of Directors with respect to the number of members of the Board of Directors. (The Charter and Bylaws provide for not less than nine nor more than eighteen as may be determined by the Board). Annually, the Committee shall consider and recommend to the Board of Directors the persons whom the Committee proposes that the Board of Directors nominate for election as directors at the Annual Meeting of shareholders. The Committee shall consider and make recommendations to the Board of Directors with respect to remuneration of directors. The Committee shall provide guidance to the Management on major issues in areas of corporate social responsibility, including environmental issues and public affairs. The Committee shall review and approve policy guidelines to be used by Management in making charitable contributions and shall annually review all charitable contributions made by the Corporation during the previous twelve months and recommend to the Board the level of contributions to be set for the ensuing year. 12. In the absence of any one or more members from a meeting of any of the committees provided for in these Bylaws, the Chairman, or the President, may in his or her discretion invite any member or members of the Board (otherwise qualified to serve) to attend such meeting. Temporary members thus appointed to attend for absentees shall act as regular members and shall have the right to vote. 13. Powers of All Committees. The powers of all committees are at all times subject to the control of the Directors, and any member of any committee may be removed at any time at the pleasure of the Board. ARTICLE IV OFFICERS 1. Election of Officers. The Board of Directors shall have power to elect from its own members or otherwise a Chairman, a President, one or more Vice Chairmen and Vice Presidents, a Secretary, a Treasurer, one or more Assistant Treasurers and Assistant Secretaries, and such other officers, agents and employees as it may deem expedient, and to define the duties and authority of all officers, employees and agents and to delegate to them such lawful powers as may be deemed advisable. The officers shall respectively perform all acts and duties required of such officers by law, by the Charter and Bylaws of this Corporation, or by the Board of Directors. 2. Chairman of the Board. If the Directors have elected a Chairman, the Chairman shall preside at all meetings of the Board except that in the Chairman's absence the Directors present shall designate a person to preside. The Chairman shall have such additional duties as the Board of Directors or the Executive Committee may assign. 3. President. The President shall be elected by the Directors and shall have such duties as the Board of Directors or the Executive Committee may assign. 4. Chief Executive Officer. One of the officers shall be appointed Chief Executive Officer of the Corporation by the Board of Directors. Subject to the Board of Directors and the Executive Committee, the Chief Executive Officer shall have general supervision and control of the policies, business and affairs of the Corporation. 5. Vice Chairmen. Each Vice Chairman shall have such powers and perform such duties as may be conferred upon him or her or determined by the Chief Executive Officer. 6. Vice Presidents. Each Vice President shall have such powers and perform such duties as may be conferred upon him or her or determined by the Chief Executive Officer. 7. Treasurer. The Treasurer shall have the oversight and control of the funds of the Corporation and shall have the power and authority to make and endorse notes, drafts and checks and other obligations necessary for the transaction of the business of the Corporation except as herein otherwise provided. 8. Controller. The Controller shall have the oversight and control of the accounting records of the Corporation and shall prepare such accounting reports and recommendations as shall be appropriate for the operation of the Corporation. 9. Secretary. It shall be the duty of the Secretary to make and keep records of the votes, doings and proceedings of all meetings of the shareholders and Board of Directors of the Corporation, and of its Committees, and to authenticate records of the Corporation. 10. Assistant Treasurers. The Assistant Treasurers shall have such duties as the Treasurer shall determine. 11. Assistant Secretaries. The Assistant Secretaries shall have such duties as the Secretary shall determine. 12. Powers of All Officers. The powers of all officers are at all times subject to the control of the Directors, and any officer may be removed at any time at the pleasure of the Board. ARTICLE V INDEMNIFICATION To the extent properly permitted by law the Board of Directors shall provide for the indemnification and reimbursement of, and advances of expenses to, any person made a party to any action, suit or proceeding by reason of the fact that he or she, or a person whose legal representative or successor he or she is, (a) is or was a Director, officer, employee or agent of the Corporation, or (b) served at the Corporation's request as a director, officer, employee or agent of another corporation, for expenses, including attorney's fees, and such amount of any judgment, money decree, fine, penalty or settlement for which he or she may have become liable as the Board of Directors deems reasonable, actually incurred by him or her in connection with the defense or reasonable settlement of any such action, suit or proceeding or any appeal therein. This provision of indemnification shall be in addition to any other right or remedy which such person may have. The Corporation shall have the right to intervene in and defend all such actions, suits or proceedings brought against any such person. ARTICLE VI CORPORATE SEAL The corporate seal shall be in the custody of the Secretary and either the Secretary or any other officer shall have the power to affix the same for the Corporation. ARTICLE VII STOCK CERTIFICATES 1. Signatures. Certificates of stock shall be signed by the Chairman, the President or a Vice President and by the Secretary or the Treasurer (except that where any such certificate is signed by a transfer agent or transfer clerk and by the registrar, the signatures of any such Chairman, President, Vice President, Secretary or Treasurer may be facsimiles, engraved or printed) and shall be sealed with the seal of the corporation (or shall bear a facsimile of such seal). 2. Lost Certificates. No certificate for shares of stock in the Corporation shall be issued in place of any certificate alleged to have been lost, stolen or destroyed except upon production of such evidence of such loss, theft or destruction as the Board of Directors in its discretion may require and upon delivery to the Corporation of a bond of indemnity in form and, unless such requirement is waived by Resolution of the Board, with one or more sureties, satisfactory to the Board in at least double the value of the stock represented by said Certificate. ARTICLE VIII FISCAL YEAR The Corporation's fiscal year shall close on the Saturday nearest December 31st of each year. ARTICLE IX INDEPENDENT AUDIT The Board of Directors shall provide for a yearly independent audit, the form and scope of which shall be determined by the Board from time to time. ARTICLE X AMENDMENTS The Board of Directors of the Corporation may adopt, amend or repeal the Bylaws of the Corporation, subject, however, to the power of the shareholders to adopt, amend or repeal the same, provided that any notice of a meeting of shareholders or of the Board of Directors at which Bylaws are to be adopted, amended or repealed, shall include notice of such proposed action. ARTICLE XI ACQUISITIONS OF STOCK (a) Except as set forth in subsection (b) hereof, the Corporation shall not acquire any of its voting equity securities (as defined below) at a price per share above the market price per share (as defined below) of such securities on the date of such acquisition from any person actually known by the Corporation to be the beneficial owner (as determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended, or any successor rule or regulation) of more than three percent of the Corporation's voting equity securities who has been the beneficial owner of the Corporation's voting equity securities for less than two years prior to the date of the Corporation's acquisition thereof, unless such acquisition (i) has been approved by a vote of a majority of the shares entitled to vote, excluding shares owned by any beneficial owner any of whose shares are proposed to be acquired pursuant to the proposed acquisition that is the subject of such vote or (ii) is pursuant to an offer made on the same terms to all holders of securities of such class. The determination of the Board of Directors shall be conclusive in determining the price paid per share for acquired voting equity securities if the Corporation acquires such securities for consideration other than cash. (b) This provision shall not restrict the Corporation from: (i) acquiring shares in the open market in transactions in which there has been no prior arrangement with, or solicitation of (other than a solicitation publicly made to all holders), any selling holder of voting equity securities or in which all shareholders desiring to sell their shares have an equal chance to sell their shares; (ii) offering to acquire shares of shareholders owning less than 100 shares of any class of voting equity securities; (iii) acquiring shares pursuant to the terms of a stock option or similar plan that has been approved by a vote of a majority of the Corporation's common shares represented at a meeting of shareholders and entitled to vote thereon; (iv) acquiring shares from, or on behalf of, any employee benefit plan maintained by the Corporation or any subsidiary or any trustee of, or fiduciary with respect to, any such plan when acting in such capacity; or (v) acquiring shares pursuant to a statutory appraisal right or otherwise as required by law. (c) Market price per share on a particular day means the highest sale price on that day or during the period of five trading days immediately preceding that day of a share of such voting equity security on the Composite Tape for New York Stock Exchange-Listed Stocks, or if such voting equity security is not quoted on the Composite Tape on the New York Stock Exchange or listed on such Exchange, on the principal United States securities exchange registered under the Securities Exchange Act of 1934 on which such voting equity security is listed, or, if such voting equity security is not listed on any such exchange, the highest sales price or, if sales price is not reported, the highest closing bid quotation with respect to a share of such voting equity security on that day or during the period of five trading days immediately preceding that day on the National Association of Securities Dealers, Inc. Automated Quotations System or any system then in use, or if no such quotations are available, the fair market value on the date in question of a share of such voting equity security as determined by a majority of the Board of Directors. (d) Voting equity securities of the Corporation means equity securities issued from time to time by the Corporation which by their terms are entitled to be voted generally in the election of the directors of the Corporation. (e) The Board of Directors shall have the power to interpret the terms and provisions of, and make any determinations with respect to, this Article XI, which interpretations and determinations shall be conclusive. EX-10 3 0003.txt Exhibit (10) CONFORMED COPY --------------------------------------------------------------------------- SECOND AMENDED AND RESTATED CREDIT AGREEMENT Dated as of October 21, 1998 Amended and Restated as of October 18, 2000 among THE STANLEY WORKS as Borrower THE LENDERS REFERRED TO HEREIN, as Lenders and CITIBANK, N.A. as Agent SALOMON SMITH BARNEY INC. Arranger --------------------------------------------------------------------------- SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of October 21, 1998, amended and restated as of October 18, 2000, among THE STANLEY WORKS (the "Borrower"); each of the lenders that is a signatory hereto (the "Lenders"); and CITIBANK, N.A., as Agent for the Lenders (together with its successors in such capacity, the "Agent"). The Borrower, certain Lenders (the "Existing Lenders") and the Agent are parties to a Credit Agreement dated as of October 21, 1998 (as amended by the Amendment and Restatement dated as of October 20, 1999 and as otherwise amended, supplemented, modified, or amended and restated prior to the date hereof, the "Existing Credit Agreement"), providing, subject to the terms and conditions thereof, for extensions of credit (by the making of loans) by the Existing Lenders to the Borrower in an aggregate principal amount not exceeding $250,000,000 at any one time outstanding. Each Lender identified under the caption "New Lenders" on the signature pages hereto (collectively, the "New Lenders") wishes to become a "Lender" party to the Existing Credit Agreement; each Lender identified under the caption "Retiring Lender" on the signature pages hereto (collectively, the "Retiring Lenders") wishes to cease being a "Lender" party to the Existing Credit Agreement; and the Borrower, the Lenders other than the Retiring Lenders and the Agent wish to extend the maturity of the Existing Credit Agreement to October 17, 2001, decrease the aggregate amount of the Committed Advances thereunder to $200,000,000, and to amend and restate the Existing Credit Agreement in certain other respects; and accordingly, the parties hereto hereby agree to amend the Existing Credit Agreement as set forth herein and to restate the Existing Credit Agreement as so amended (as so amended and restated, the "Second Amended and Restated Credit Agreement"): Section 1. Definitions. Terms used but not otherwise defined herein have the meanings given them in the Existing Credit Agreement. Section 2. Amendments. Effective on the Effective Date (as defined below), (i) the Existing Credit Agreement is hereby amended as set forth below, and (ii) the Existing Credit Agreement is restated to read in its entirety as set forth in the Existing Credit Agreement, which is hereby incorporated herein by reference, as amended as set forth below: A. References in the Existing Credit Agreement to "this Agreement" and words of similar import (including indirect references) shall be deemed to be references to the Existing Credit Agreement as amended and restated hereby. - 3 - B. The definition of "Termination Date" in Section 1.01 of the Existing Credit Agreement is amended to read in its entirety as set forth below: ""Termination Date" means the earlier of (a) October 17, 2001 or (b) the date of termination in whole of the Commitments pursuant to Section 2.01(b) or 6.01." C. Schedule I of the Existing Credit Agreement is amended to read in its entirety as set forth in Schedule I hereto and the aggregate amount of the Commitments shall, from and after the Effective Date, be $200,000,000. Section 3. Representations and Warranties. The Borrower represents and warrants to the Lenders as of the Effective Date that (i) the representations and warranties set forth in Section 4.01 of the Existing Credit Agreement are true and correct on and as of the Effective Date as though made on and as of the Effective Date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date) and as if each reference in said Section 4.01 to "this Agreement" included reference to the Second Amended and Restated Credit Agreement and as if each reference in said Section 4.01 to "December 30, 1995" were instead a reference to "January 1, 2000" and (ii) no event has occurred and is continuing that constitutes a Default or Event of Default (and the parties agree that breach of any of the representations and warranties in this Section 3 shall constitute an Event of Default under Section 6.01(b) of the Second Amended and Restated Credit Agreement). Section 4. Conditions to Effectiveness. The amendment and restatement set forth in Section 2 hereof shall become effective on the date (the "Effective Date") on which the Agent shall notify the Borrower that the following conditions precedent have been satisfied (and the Agent shall promptly notify the Lenders of the occurrence of the Effective Date): (a) Documents. The Agent shall have received the following documents (with sufficient copies for each Lender), each of which shall be satisfactory to the Agent in form and substance: (1) Execution by All Parties. Counterparts of this Second Amendment and Restatement, duly executed and delivered by the Borrower, the Agent and the Lenders. (2) Authority and Approvals. Certified copies of the resolutions of the Board of Directors of the Borrower (or equivalent documents) authorizing and approving this Second Amendment and Restatement and the Notes, authorizing Borrowings under the Second Amended and Restated Credit Agreement in an aggregate principal amount up to but not exceeding $200,000,000 at any one time outstanding, and certified copies of all documents evidencing other necessary action (corporate, partnership or otherwise) and governmental - 3 - approvals, if any, with respect to this Second Amendment and Restatement of the Notes. (3) Secretary's or Assistant Secretary's Certificate. A certificate of the Secretary or an Assistant Secretary of the Borrower, dated the Effective Date, certifying the names and true signatures of the officers of the Borrower authorized to execute and deliver this Second Amendment and Restatement and the Notes and the other documents to be delivered hereunder. (4) Opinion of Borrower's Counsel. A favorable opinion of counsel to the Borrower, in substantially the form of Exhibit A hereto, and as to such other matters as the Agent or any Lender acting through the Agent may reasonably request. (5) Closing Certificate. A certificate of a senior financial officer of the Borrower, dated the Effective Date, certifying the representations and warranties set forth in Section 3 hereof are true on such date as if made on or as of such date. (b) Approvals. The Agent shall have received evidence satisfactory to it of receipt of all third party consents and approvals necessary in connection with this Second Amendment and Restatement (without the imposition of any conditions except those that are acceptable to the Lenders) and that the same remain in effect. (c) Fees and Expenses. The Agent shall have received evidence satisfactory to it that (i) the Borrower shall have paid in full all accrued fees, expenses and interest due and payable to the Agent and the Lenders under the Existing Credit Agreement, (ii) the Borrower shall have paid all accrued fees and expenses of the Agent (including the reasonable fees and expenses of counsel to the Agent) in connection with this Second Amendment and Restatement and (iii) the Borrower shall have paid to the Agent for account of the Lenders such up-front fees in connection with the execution of this Second Amendment and Restatement as the Borrower and the Agent shall have agreed upon. Section 5. Pro Rata Adjustments. The Borrower shall, on the Effective Date (but only if any Advances are outstanding on said date), borrow Advances from certain of the Lenders and/or (notwithstanding (i) the second sentence of Section 2.07(a) of the Second Amended and Restated Credit Agreement requiring that prepayments be made in accordance with said Section 2.07(a) - 4 - and (ii) Section 2.09(a) of the Second Amended and Restated Credit Agreement requiring that payments be made ratably in accordance with the principal amounts of the Advances held by the Lenders) prepay Advances (together with all accrued and unpaid interest thereon) such that, after giving effect thereto, the Advances (including, without limitation, the principal amounts and Interest Periods thereof) shall be held by the Lenders ratably in accordance with their respectiveCommitments (after giving effect to this Second Amendment and Restatement). Section 6. New Lenders; Retiring Lenders. (a) On the Effective Date, each New Lender shall be deemed to be, and shall have all of the rights and obligations of, a "Lender" for all purposes of the Second Amended and Restated Credit Agreement. The initial Applicable Lending Office and initial address for notices under the Second Amended and Restated Credit Agreement for each New Lender is specified in the administrative questionnaire heretofore returned by such Lender to the Agent. (b) On the Effective Date, each Retiring Lender shall, subject to the payment to such Retiring Lender of all Advances and other amounts due and payable to such Retiring Lender under the Existing Credit Agreement (including, without limitation, all accrued interest and fees and any amounts payable to such Retiring Lender under Section 8.04(b) of the Existing Credit Agreement), cease to have any of the rights and obligations of a "Lender" under the Second Amended and Restated Credit Agreement, provided however that the obligations of each Retiring Lender under Section 7.05 of the Second Amended and Restated Credit Agreement shall continue with respect to events or circumstances occurring on or before the Effective Date. Section 7. Miscellaneous. Except as herein provided, the Existing Credit Agreement shall remain unchanged and in full force and effect. This Second Amendment and Restatement may be executed in any number of counterparts, all of which taken together shall constitute one and the same agreement and any of the parties hereto may execute this Second Amendment and Restatement by signing any such counterpart. This Second Amendment and Restatement shall be governed by, and construed in accordance with, the law of the State of New York. - 5 - IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment and Restatement be duly executed and delivered as of the day and year first above written. BORROWER THE STANLEY WORKS By /s/ C.A. Douglas ---------------- Name: C.A. Douglas Title: Treasurer AGENT CITIBANK, N.A. By /s/ Carolyn A. Kee ------------------ Name: Carolyn A. Kee Title: Vice President - 6 - LENDERS CITIBANK, N.A. By /s/ Carolyn A. Kee ------------------ Name: Carolyn A. Kee Title: Vice President WACHOVIA BANK, N.A. By /s/ Henry H. Hagan ------------------ Name: Henry H. Hagan Title: Senior Vice President BNP PARIBAS, as successor in interest to Banque, Nationale de Paris By /s/ Amaud Collin du Bocage -------------------------- Name: Amaud Collin du Bocage Title: Managing Director By /s/ Nanette Baudon Name: Nanette Baudon Title: Vice President BARCLAYS BANK PLC By /s/ Terance Bullock ------------------- Name: Terance Bullock Title: Vice President - 7 - FLEET NATIONAL BANK By /s/ Jeffrey C. Lynch -------------------- Name: Jeffrey C. Lynch Title: Managing Director MORGAN GUARANTY TRUST COMPANY OF NEW YORK By /s/ Robert Bottamedi -------------------- Name: Robert Bottamedi Title: Vice President MELLON BANK, N.A. By /s/ Alexandra M. Dulchinos -------------------------- Name: Alexandra M. Dulchinos Title: Assistant Vice President THE NORTHERN TRUST COMPANY By /s/ Jaron Grimm --------------- Name: Jaron Grimm Title: Vice President - 8 - DEUTSCHE BANK AG, New York and/or Cayman Islands Branches By /s/ Barbara Anne Hoeltz ----------------------- Name: Barbara Anne Hoeltz Title: Vice President By /s/ Chris Howe -------------- Name: Chris Howe Title: Director NEW LENDERS NONE RETIRING LENDERS ROYAL BANK OF CANADA By /s/ Don S. Bryson ----------------- Name: Don S. Bryson Title: Senior Manager SCHEDULE I Lenders and Commitments Lenders Commitment CITIBANK, N.A. $34,000,000 FLEET NATIONAL BANK $27,000,000 MELLON BANK, N.A. $27,000,000 MORGAN GUARANTY TRUST COMPANY OF NEW YORK $27,000,000 WACHOVIA BANK, N.A. $27,000,000 BNP PARIBAS $22,000,000 BARCLAYS BANK PLC $16,000,000 DEUTSCHE BANK AG, NEW YORK AND/OR CAYMAN ISLANDS BRANCHES $10,000,000 THE NORTHERN TRUST COMPANY $10,000,000 Second Amended and Restated Credit Agreement EXHIBIT A [FORM OF OPINION OF GENERAL COUNSEL] October 18, 2000 To each of the Lenders parties to the Second Amended and Restated Credit Agreement referred to below and to Citibank, N.A., as Agent for said Lenders Ladies and Gentlemen: I am the General Counsel of The Stanley Works, a Connecticut corporation (the "Borrower"), and have acted as counsel to the Borrower in connection with the Second Amendment and Restatement dated as of October 18, 2000 (the "Second Amendment and Restatement") to the Credit Agreement dated as of October 21, 1998 (as amended by the Amendment and Restatement dated as of October 20, 1999 and the Second Amendment and Restatement, the "Second Amended and Restated Credit Agreement"), among the Borrower, certain Lenders parties thereto (the "Lenders"), and Citibank, N.A., as Agent for said Lenders. This opinion is being delivered to you pursuant to Section 4(a)(4) of the Second Amendment and Restatement. Capitalized terms used herein and not otherwise defined herein shall have the meanings set forth in the Second Amendment and Restatement. In rendering the opinions set forth herein, I have examined and relied on originals or copies of the following: (a) a counterpart executed by the Borrower of the Second Amendment and Restatement; (b) copies of the Certificate of Incorporation and Bylaws of the Borrower; (c) a certified copy of certain resolution of the Board of Directors of the Borrower: (d) certificates from public officials in the State of Connecticut as to the good standing of the Borrower in the State of Connecticut; and (e) such other documents as I have deemed necessary or appropriate as a basis for the opinions set forth below. In my examination, I have assumed the genuineness of all signatures, the legal capacity of all natural persons, the authenticity of all documents submitted to me as originals, the conformity to original documents of all documents submitted to me as certified or photostatic copies, and the authenticity of the originals of such copies. As to any facts material to this opinion which I did not independently establish or verify, I have relied upon written statements and certificates of the Borrower and its officers and other representatives and of public officials. Unless otherwise indicated, references in this opinion to the "Loan Documents" shall mean the Second Amendment and Restatement and the Second Amended and Restated Credit Agreement. In addition, references to (i) "Applicable Laws" shall mean the laws and regulations of the States of Connecticut and New York and the United States of America (including, without limitation, Regulations U and X of the Board of Governors of the Federal Reserve System) which are applicable to the transactions contemplated by the Loan Documents; (ii) the term "Governmental Authorities" means any Connecticut, New York and federal executive, legislative, judicial, administrative or regulatory body; (iii) the term "Applicable Contracts" shall mean the agreements and instruments set forth in the index of exhibits to the Borrower's Annual Report on Form 10K for the year ended January 1, 2000 filed with the Securities and Exchange Commission and (iv) the term "Governmental Approval" means any consent, approval, license, authorization or validation of, or filing, recording or registration with, any Governmental Authority pursuant to any Applicable Law. I am admitted to the bar in the States of Connecticut and New York. This opinion is limited to the laws of the State of Connecticut, the State of New York and the United States of America to the extent specified herein. In rendering this opinion, I have assumed, with your consent, that: (a) the execution, delivery or performance by the Borrower of the Loan Documents does not and will not conflict with, contravene, violate or constitute a default under any rule, law or regulation to which the Borrower is subject (other than applicable laws, orders and decrees as to which I express my opinion in paragraph 5 herein) or any agreement or instrument to which the Borrower or the Borrower's property is subject (except and to the extent that I express my opinion in paragraph 5 herein); (b) and no authorization, consent or other approval of, notice to or filing with any court, governmental authority or regulatory body (other than Governmental Approvals as to which I express my opinion in paragraph 6 herein) is required to authorize or is required in connection with the execution, delivery or performance by the Borrower of any Loan Document or the transactions contemplated thereby. My opinions are also subject to the following assumptions and qualifications: (a) each Loan Document constitutes the valid and binding obligation of the Lenders and is enforceable against the Lenders in accordance with its terms; and (b) I express no opinion as to the effect opinions herein state of (i) the compliance or noncompliance of the Lenders with any state, federal or other laws or regulations applicable to the Lenders or (ii) the legal or regulatory status or the nature of the business of the Lenders. Based upon the foregoing and such investigations that I have deemed necessary, and subject to the limitations, qualifications, exceptions and assumptions set forth herein, I am of the opinion that: 1. The Borrower has been duly incorporated, is validly existing and in good standing under the laws of the State of Connecticut. 2. The Borrower has the corporate power and corporate authority to execute, deliver and perform all of its obligations under the Loan Documents. 3. The execution and delivery of each Loan Document has been duly authorized by all requisite corporate action on the part of the Borrower. 4. Each Loan Document has been duly executed and delivered by the Borrower, constitutes a valid and binding obligation of the Borrower and is enforceable against the Borrower in accordance with its terms, subject to the following qualifications: (i) enforcement may be limited by applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other similar laws affecting creditors' rights generally and by general principles of equity (regardless of whether enforcement is sought in equity or at law); (ii) I express no opinion as to the enforceability of any rights to indemnification provided for in the Loan Documents which may violate the public policy underlying any law, rule or regulation (including any federal or state securities law, rule or regulation); and (iii) I express no opinion as to the enforceability of Section 8.05 of the Second Amended and Restated Credit Agreement insofar as this provision purports to authorize a Person who has purchased a participation in Advances under the Second Amended and Restated Credit Agreement to set off, appropriate or apply any deposit or property or indebtedness of the Borrower against any obligation of the Borrower. 5. Neither the execution, delivery or performance by the Borrower of the Loan Documents nor the compliance by the Borrower with the terms and provisions thereof will conflict with, contravene, violate or constitute a default under (i) any provision of any Applicable Contract or, to the best of my knowledge, after due investigation, any other agreement or instrument to which the Borrower or the Borrower's property is subject, (ii) any provision of any Applicable Law, (iii) to the best of my knowledge, after due investigation, any judicial or administrative order or decree of any Governmental Authority or (iv) its Certificate of Incorporation and Bylaws. As used in this paragraph, "due investigation" means solely that, as to agreements and instruments, I have interviewed the officers of the Borrower responsible for its financing activities, and, as to orders and decrees, I have interviewed the lawyers under my supervision. 6. Based on my review of Applicable Laws, but without my having made any special investigation concerning any other law, rule or regulation, no Governmental Approval which has not been obtained or taken and is not in full force and effect, is required to authorize or is required in connection with the execution, delivery or performance of the Loan Documents by the Borrower. This opinion is being furnished only to you and is solely for your benefit in connection with the transactions contemplated by the Loan Documents and is not to be used, circulated, quoted, relied upon or otherwise referred to for any other purpose without my prior written consent. Very truly yours, EX-27 4 0004.txt
5 This schedule contains summary financial information extracted from The Stanley Works and Subsidiaries Consolidated Balance Sheets and Statements of Operations and is qualified in its entirety by reference to such financial statements. 1,000 9-MOS DEC-30-2000 SEP-30-2000 93,300 0 576,700 0 388,600 1,131,500 1,226,400 721,100 1,923,500 804,300 243,300 0 0 230,900 470,000 1,923,500 2,082,600 2,082,600 1,324,500 1,324,500 0 0 20,900 223,400 76,000 147,500 0 0 0 147,500 1.68 1.68
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