10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q

    Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 27, 2003.

     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 incorporation or organization)				(I.R.S. Employer 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 No

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes No

81,053,776 shares of the registrant's common stock were outstanding as of November 1, 2003.

PART I — FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 27, 2003 AND SEPTEMBER 28, 2002

(Unaudited, Millions of Dollars, Except Per Share Amounts)

				Third Quarter								Year to Date
				2003				2002				2003				2002
Net sales				$	715.7			$	665.5			$	2,081.6			$	1,931.3
Costs and expenses:
Cost of sales					476.3				455.6				1,392.7				1,282.9
Selling, general and administrative					146.1				132.0				464.1				400.6
Provision for doubtful accounts					1.9				1.4				30.0				2.8
Interest expense					8.7				5.6				25.8				19.6
Interest income					(1.4	)			(0.8	)			(3.8	)			(2.5	)
Other, net					14.5				(0.5	)			32.8				(19.4	)
Restructuring charges and asset impairments					10.8				—				35.8				—
					656.9				593.3				1,977.4				1,684.0
Earnings before income taxes					58.8				72.2				104.2				247.3
Income taxes					17.1				17.5				30.9				80.4
Net earnings				$	41.7			$	54.7			$	73.3			$	166.9
Net earnings per share of common stock:
Basic				$	0.51			$	0.63			$	0.86			$	1.94
Diluted				$	0.51			$	0.62			$	0.86			$	1.90
Dividends per share				$	0.26			$	0.26			$	0.77			$	0.74
Average shares outstanding (in thousands):
Basic					81,475				86,582				84,930				85,991
Diluted					82,126				88,041				85,482				87,985

See notes to condensed consolidated financial statements.

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THE STANLEY WORKS AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 27, 2003 AND DECEMBER 28, 2002

(Millions of Dollars)

				Unaudited
				2003				2002
ASSETS
Current assets:
Cash and cash equivalents				$	169.6			$	121.7
Accounts and notes receivable					552.0				548.0
Inventories					427.7				414.7
Other current assets					105.9				106.0
Total current assets					1,255.2				1,190.4
Property, plant and equipment					1,313.5				1,318.7
Less: accumulated depreciation					866.3				823.9
					447.2				494.8
Goodwill					429.6				347.9
Other intangible assets					199.3				197.0
Other assets					138.8				188.1
Total assets				$	2,470.1			$	2,418.2
LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities:
Short-term borrowings				$	132.3			$	140.1
Current maturities of long-term debt					71.4				9.5
Accounts payable					258.7				260.3
Accrued expenses					314.8				271.0
Total current liabilities					777.2				680.9
Long-term debt					622.7				564.3
Other liabilities					262.2				189.2
Commitments and contingencies (Note J)
Shareowners' equity:
Common stock, par value $2.50 per share					230.9				230.9
Retained earnings					1,192.0				1,244.6
Accumulated other comprehensive loss					(109.0	)			(123.4	)
ESOP debt					(175.6	)			(180.8	)
					1,138.3				1,171.3
Less: cost of common stock in treasury					330.3				187.5
Total shareowners' equity					808.0				983.8
Total liabilities and shareowners' equity				$	2,470.1			$	2,418.2

See notes to condensed consolidated financial statements.

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THE STANLEY WORKS AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE AND NINE MONTHS ENDED SEPTEMBER 27, 2003 AND SEPTEMBER 28, 2002

(Unaudited, Millions of Dollars)

				Third Quarter								Year to Date
				2003				2002				2003				2002
Operating activities:
Net earnings				$	41.7			$	54.7			$	73.3			$	166.9
Depreciation and amortization					21.0				15.8				65.5				48.5
Restructuring charges and asset impairments					10.8				—				35.8				—
Changes in working capital					23.6				(31.8	)			(22.5	)			(24.9	)
Changes in other assets and liabilities					53.7				65.2				114.5				17.9
Cash provided by operating activities					150.8				103.9				266.6				208.4
Investing activities:
Capital expenditures					(12.4	)			(10.7	)			(27.7	)			(41.9	)
Business acquisitions and asset disposals					(4.4	)			(31.2	)			(16.7	)			(21.9	)
Other investing activities					3.4				—				1.4				(5.3	)
Cash used in investing activities					(13.4	)			(41.9	)			(43.0	)			(69.1	)
Financing activities:
Net short-term borrowings					(76.2	)			(36.3	)			(8.2	)			(62.3	)
Cash dividends on common stock					(21.0	)			(21.9	)			(65.0	)			(62.8	)
Equity hedge settlement					—				—				(101.0	)			—
Other financing activities					(0.7	)			(6.4	)			1.0				5.5
Cash used in financing activities					(97.9	)			(64.6	)			(173.2	)			(119.6	)
Effect of exchange rate changes on cash					2.4				(4.4	)			(2.5	)			(2.3	)
Change in cash and cash equivalents					41.9				(7.0	)			47.9				17.4
Cash and cash equivalents, beginning of period					127.7				139.6				121.7				115.2
Cash and cash equivalents, end of period				$	169.6			$	132.6			$	169.6			$	132.6

See notes to condensed consolidated financial statements.

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THE STANLEY WORKS AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
THREE AND NINE MONTHS ENDED SEPTEMBER 27, 2003 AND SEPTEMBER 28, 2002

(Unaudited, Millions of Dollars)

				Third Quarter								Year to Date
				2003				2002				2003				2002
INDUSTRY SEGMENTS
Net sales:
Tools				$	487.1			$	497.0			$	1,435.2			$	1,471.5
Doors					228.6				168.5				646.4				459.8
Consolidated				$	715.7			$	665.5			$	2,081.6			$	1,931.3
Segment operating profit:
Tools				$	55.3			$	51.5			$	106.3			$	178.9
Doors					36.1				25.0				88.5				66.1
Total segment operating profit					91.4				76.5				194.8				245.0
Interest, net					7.3				4.8				22.0				17.1
Other, net					14.5				(0.5	)			32.8				(19.4	)
Restructuring charges and asset impairments					10.8				—				35.8				—
Earnings before income taxes				$	58.8			$	72.2			$	104.2			$	247.3

See notes to condensed consolidated financial statements.

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THE STANLEY WORKS AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 27, 2003

A.    Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (hereafter referred to as "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 and are of a normal, recurring nature. For further information, refer to the consolidated financial statements and footnotes included in The Stanley Works and Subsidiaries' (collectively, the "Company") Form 10-K for the year ended December 28, 2002.

B.    Stock-based Compensation

The Company accounts for its stock-based compensation plans using the intrinsic value method under Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees." Accordingly, no compensation cost is recognized for stock-based compensation unless the quoted market price of the stock at the grant date is in excess of the amount the employee must pay to acquire the stock.

If compensation cost for the Company's stock-based compensation plans had been determined based on the fair value at the grant dates consistent with the method prescribed by Statement of Financial Accounting Standard No. 123, "Accounting for Stock-Based Compensation," net earnings and earnings per share for the three and nine months ended September 27, 2003 and September 28, 2002 would have been the pro forma amounts that follow (in millions, except per share amounts):

				Third Quarter								Year to Date
				2003				2002				2003				2002
Net income, as reported				$	41.7			$	54.7			$	73.3			$	166.9
Tax benefit on actual option exercises included in reported net income					—				(0.5	)			(0.1	)			(3.1	)
Stock-based employee compensation expense determined under fair value method, net of related tax effects					(1.9	)			(1.4	)			(5.9	)			(4.2	)
Pro forma net income, fair value method				$	39.8			$	52.8			$	67.3			$	159.6
Earnings per share:
Basic, as reported				$	0.51			$	0.63			$	0.86			$	1.94
Basic, pro forma				$	0.49			$	0.61			$	0.79			$	1.86
Diluted, as reported				$	0.51			$	0.62			$	0.86			$	1.90
Diluted, pro forma				$	0.48			$	0.60			$	0.79			$	1.81

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C.    Earnings Per Share

The following table reconciles the weighted average shares outstanding used to calculate basic and diluted earnings per share for the three and nine months ended September 27, 2003 and September 28, 2002 (in millions, except shares):

				Third Quarter								Year to Date
				2003				2002				2003				2002
Net earnings – basic and diluted				$	41.7			$	54.7			$	73.3			$	166.9
Basic earnings per share – weighted average shares					81,475,258				86,582,123				84,930,178				85,990,692
Dilutive effect of stock options and awards					650,862				1,458,677				551,440				1,994,515
Diluted earnings per share – weighted average shares					82,126,120				88,040,800				85,481,618				87,985,207

D.    Comprehensive Income

Comprehensive income for the three and nine months ended September 27, 2003 and September 28, 2002 is as follows (in millions):

				Third Quarter								Year to Date
				2003				2002				2003				2002
Net earnings				$	41.7			$	54.7			$	73.3			$	166.9
Other comprehensive income (loss), net of tax					3.1				(7.8	)			14.4				5.8
Comprehensive income				$	44.8			$	46.9			$	87.7			$	172.7

Other comprehensive income is primarily the impact of foreign currency translation.

E.    Inventories

The components of inventories at September 27, 2003 and December 28, 2002 are as follows (in millions):

				2003				2002
Finished products				$	329.4			$	324.0
Work in process					46.6				44.9
Raw materials					51.7				45.8
Total inventories				$	427.7			$	414.7

F.    Acquisitions and Goodwill

The purchase accounting for Best and the other small 2002 acquisitions was completed during the third quarter. Purchase accounting for three small acquisitions in 2003 is preliminary, mainly with respect to intangibles valuations.

The results of operations of the acquired companies have been included in the consolidated financial statements from the date of purchase and the acquisitions were accounted for using the purchase method of accounting. Pro forma amounts are not presented because the impact on the Company's results is not material.

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The changes in the carrying amount of goodwill by segment are as follows (in millions):

				Tools				Doors				Total
Balance December 28, 2002				$	209.0			$	138.9			$	347.9
Goodwill acquired during the year					9.3				3.8				13.1
Purchase accounting adjustments					1.7				63.2				64.9
Foreign currency translation and other					3.4				0.3				3.7
Balance September 27, 2003				$	223.4			$	206.2			$	429.6

The increase in goodwill related to purchase accounting adjustments for the 2002 acquisitions was primarily for deferred taxes and asset impairments.

G.    Debt and Other Financing Arrangements

In the second quarter 2003, the Company repurchased 3.9 million shares of common stock and agreed to settle the remainder of its equity hedge through the repurchase of 4.1 million shares over the next four years. The 3.9 million share repurchase was made with $100 million of cash and increased commercial paper borrowings while the 4.1 million share repurchase involved $113 million of term debt.

The Company entered into two interest rate swap arrangements in March, 2003. These interest rate swaps are fixed to floating rate arrangements with the floating rate based on the 3 month LIBOR rate. These swaps are fair value hedges for a portion of the $150 million five year and $200 million ten year notes issued in November of 2002. The notional values of the hedges are $75 million and $100 million with termination dates of November 2007 and November 2012 respectively.

The Company entered into two additional interest rate swap arrangements in June and October, 2003 with notional values of $60 million each. These interest rate swaps are floating to fixed rate arrangements with a forward start date of March 1, 2004. These swaps will be terminated upon the issuance of $120 million of long term debt in March 2004. The purpose of this $120 million issuance in March 2004 will be to refinance the debt maturing at that time. Pursuant to the company's ability and intent to do this debt refinancing, $120 million of 10 year debt which matures in March 2004 has been classified $100 million as long-term debt and $20 million as current maturities of long-term debt.

H.    Restructuring Charges and Asset Impairments

The Company recorded $21.9 million and $10.8 million in restructuring and asset impairment charges in the second and third quarters of 2003, respectively, for the Operation 15 initiative. Of these charges, $1.1 million related to the Doors segment, $26.1 million related to the Tools segment and the remaining $5.5 million related to centralized corporate functions. These charges consisted of $5.1 million of asset impairments and $5.0 million of other exit costs related to the exit of the Company's Mac Direct retail channel, $10.2 million for severance and related benefits for Operation 15 initiative headcount reductions, $10.4 million of asset impairments and $2.0 million of other exist costs pertaining to other Operation 15 initiatives. The $15.5 million of asset impairments generally relates to assets designated as held for use which are idle as a result of the Operation 15 initiatives and accordingly their book value has been written off. The second and third quarter charges for headcount reductions will result in a net employment reduction of approximately 800 manufacturing, selling and administrative people. The Company anticipates utilizing the remaining reserves by the end of 2004.

The Company recorded $3.1 million of restructuring reserves in the first quarter of 2003 for new initiatives, mainly in the Tools segment, pertaining to the further reduction of its cost structure, primarily for severance-related obligations. These actions have resulted in a net employment reduction of approximately 150 manufacturing, selling and administrative people. The remaining reserve is expected to be utilized by the end of 2003.

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At December 28, 2002, the restructuring and asset impairment reserve balance was $8.7 million, which the Company expects to be fully expended by the end of 2003. An analysis of the Company's restructuring reserves for the period December 28, 2002 to September 27, 2003 is as follows (in millions):

				12/28/2002				Additions				Usage				9/27/03
Operation 15
Severance				$	—			$	10.2			$	(6.3	)		$	3.9
Asset impairments					—				15.5				(15.5	)			—
Other					—				7.0				(5.7	)			1.3
Q1 2003
Severance				$	—			$	3.1			$	(3.0	)		$	0.1
Asset impairments					—				—				—				—
Other					—				—				—				—
Pre 2003
Severance					5.4				—				(4.9	)			0.5
Asset impairments					—				—				—				—
Other					3.3				—				(0.6	)			2.7
				$	8.7			$	35.8			$	(36.0	)		$	8.5

J.    Commitments and Contingencies

The Company is involved in various legal proceedings relating to environmental issues, employment, product liability and workers' compensation claims and other matters. The Company periodically reviews the status of these proceedings with both inside and outside counsel, as well as an actuary for risk insurance. Management believes that the ultimate disposition of these matters will not have a material adverse effect on operations or financial condition taken as a whole.

The Company's policy is to accrue environmental investigatory and remediation costs for identified sites when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. As of September 27, 2003, the Company had reserves of $15.3 million, primarily for remediation activities associated with Company-owned properties as well as for Superfund sites.

In September, 2003 the Company made a $30 million contractual commitment to purchase certain assets, as well as marketing, sourcing and manufacturing cooperation, subject to regulatory approval. In the event regulators deny approval, the Company has no obligation. Based on the terms of the contract it is expected cash will be disbursed primarily in the first quarter of 2004.

K.    Guarantees

The Company's financial guarantees at September 27, 2003 are as follows (in millions):

				Term				Maximum Potential Payment				Liability Carrying Amount
Guarantees on the residual values of leased properties				Up to 6 years				$	31.6			$	—
Standby letters of credit				Generally 1 year					23.6				—
Guarantee on the external Employee Stock Ownership Plan borrowings				Through 2009					14.0				14.0
Commercial customer financing arrangements				Up to 5 years					1.3				—
Guarantees on leases for divested business which are subleased				Up to 50 months					1.0				0.3
Government guarantees on employees				3 years from date of hire					0.1				—
								$	71.6			$	14.3

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The Company has sold various businesses and properties over many years and provided standard indemnification to the purchasers with respect to any unknown liabilities, such as environmental, which may arise in the future that are attributable to the time of Stanley's ownership. There are no material identified exposures associated with these general indemnifications.

The Company provides product and service warranties which vary across its businesses. The types of warranties offered generally range from one year to limited lifetime, while certain products carry no warranty. Further, the Company incurs discretionary costs to service its products in connection with product performance issues. Historical warranty and service claim experience forms the basis for warranty obligations recognized. Adjustments are recorded to the warranty liability as new information becomes available.

The changes in the carrying amount of product and service warranties for the nine months ended September 27, 2003 are as follows (in millions):

Balance December 28, 2002				$	6.3
Warranties and guarantees issued					12.8
Warranty payments					(12.1	)
Adjustments to provision					0.5
Balance September 27, 2003				$	7.5

L.    New Accounting Standards

On April 30, 2003, the FASB issued Statement of Financial Accounting Standards (SFAS) No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities." The Statement amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS No. 133 "Accounting for Derivative Instruments and Hedging Activities." This Statement is effective for contracts entered into or modified after June 30, 2003, for hedging relationships designated after June 30, 2003, and to certain preexisting contracts. The Company adopted SFAS No. 149 on a prospective basis in the third quarter. SFAS No. 149 did not have a material impact on the Company's preexisting contracts

On May 15, 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." This Statement establishes standards for classifying and measuring as liabilities certain financial instruments that embody obligations of the issuer and have characteristics of both liabilities and equity. This Statement was required to be applied immediately to instruments entered into or modified after May 31, 2003 and to all other instruments that exist as of the beginning of the first interim financial reporting period beginning after June 15, 2003. The Company had $213 million notional value Stanley common stock forward contracts (equity hedges) which were implemented in previous years in an effort to offset the diluted share count from changes in the stock price. When the stock price rose, the Company would benefit from the hedge by offsetting the impact of the diluted share count from in-the-money stock options. These hedges, however, had an opposite result with a declining stock price. As a risk mitigation initiative and in conjunction with the new accounting rules under SFAS No. 150, the Company restructured the $213 million equity hedge contracts. On April 14, 2003, $100 million of stock was purchased from the equity hedge counterparties which decreased shares then outstanding by 3.9 million. These transactions were completed using a combination of borrowings under existing lines of credit and available cash. No open market purchase of shares occurred. The remaining $113 million in forward contracts were modified to full physical settlement contracts with a fixed notional principal of $113 million and 4.1 million of underlying shares. These contracts are being settled over four years in equal installments and do not contain the same dilution protection (or risk) as the former contracts. As a result of adopting SFAS No. 150, the $113 million notional principal balance is recognized as a liability on the balance sheet and the 4.1 million underlying shares are excluded from the amount of shares used to calculate basic and diluted earnings per share.

In January 2003, FASB Interpretation No. (FIN) 46 "Consolidation of Variable Interest Entities" was issued. This interpretation addresses consolidation of variable interest entities which have equity

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investment at risk insufficient to permit the entity to finance its activities without additional subordinated financial support form other parties or entities with equity investors lacking certain essential characteristics of controlling financial interest. This interpretation is effective immediately for variable interests created or obtained after January 31, 2003. In October 2003, the FASB deferred the implementation of FIN 46. For interests acquired prior to February 1, 2003, this interpretation applies to the Company in the fourth quarter of 2003. The Company is in the process of evaluating recent amendments of FIN 46 and does not expect a material impact to the financials.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Net sales were $716 million in the third quarter of 2003 as compared to $666 million in the third quarter of 2002, representing an increase of 8%. Acquisitions, primarily Best Access, contributed $76 million, or an 11% increase, of net sales. Organic sales declined primarily due to volume decreases of 5%, partially offset by favorable foreign currency translation of 2%, which reflects decreases in the Mac Tools retail (Mac Direct) sales and the carryover impact of the lost region of a major customer within the entry doors business that occurred in the fourth quarter of 2002. Year to date net sales in 2003 were $2,082 million as compared to $1,931 million in 2002. Acquisitions contributed $224 million, or a 12% increase, of net sales. Organic sales declined as a result of volume decreases of 6%, favorable foreign currency translation which increased sales by 3%, and the same factors discussed previously pertaining to the third quarter results, as well as industrial and consumer channel customers inventory corrections in the first half of 2003.

In the third quarter of 2003, the Company recorded $17 million (14 cents per fully diluted share) of pre-tax restructuring costs, impairment charges, and other exit costs related to the previously announced April 9, 2003 restructuring plans ("Operation 15"). In the second quarter of 2003 certain one-time expenses totaling $8 million related to the retirement of the Company's CEO were recorded in addition to Operation 15 related charges. A summary of the pre-tax charges recorded in 2003 is as follows:

				First Quarter				Second Quarter				Third Quarter				YTD
April 9th Restructuring
Mac Direct exit:
Inventory losses				$	4			$	3			$	—			$	7
Receivable losses					10				11				—				21
Other Mac					—				14				6				20
Other					—				12				11				23
Total					14				40				17				71
Other severance					3				—				—				3
CEO retirement					—				8				—				8
Total				$	17			$	48			$	17			$	82

These charges were classified within the 2003 consolidated statement of operations as follows: (i) Cost of sales — $7 million; (ii) SG&A and Provision for doubtful accounts — $30 million; (iii) Other, net — $9 million; and (iv) Restructuring and asset impairment charges — $36 million. The tax benefit of these charges was $26 million.

The Company reported gross profit of $239 million, or 33.4% of net sales, in the third quarter of 2003, compared to $210 million, or 31.5% of net sales, in 2002. Excluding the favorable impact of acquisitions, gross profit was relatively flat as compared with the third quarter of 2002. Year to date gross profit in 2003 was $689 million, or 33.1% of net sales, compared to $648 million, or 33.6% of net sales through the comparable period in 2002. Excluding the favorable impact of acquisitions, gross profit declined $67 million as compared with the nine months ended September 2002 due to reduced organic sales volume mentioned previously, inventory losses related to the exit of Mac Direct, the absence of retirement plan income, and price erosion in the first half of 2003.

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Selling, general and administrative expenses (SG&A), inclusive of the provision for doubtful accounts, were $148 million, or 20.7% of net sales in the third quarter of 2003, compared to $133 million, or 20.0% of net sales, in the prior year. The increase was primarily attributed to $18 million of incremental expenses related to acquisitions. Year to date SG&A was $494 million, or 23.7% of net sales, compared to $403 million, or 20.9% of net sales. The increase relates to $58 million of incremental expenses from acquisitions, $21 million of receivable losses associated with the Mac Direct exit, $8 million of costs related to the retirement of the Company's CEO, the absence of retirement plan income, and negative impact from foreign currency translation.

Net interest expense in the third quarter was $7 million, an increase of $2 million over the third quarter of 2002. Year to date interest expense was $22 million in 2003, an increase of $5 million over the same period in 2002. The increase was from higher borrowings primarily for acquisitions, partially offset by lower interest rates.

Other, net represented $14 million of expense, an increase of $15 million over income of $1 million in the third quarter of 2002. This increased expense in other, net is primarily the result of a $6 million loss on the sale of the Mac Tools distributor receivable portfolio, $3 million of income from an environmental settlement with an insurance carrier in 2002, a $1 million gain from the sale of real estate in 2002, and increased intangible amortization expense of $3 million in 2003 associated with acquisitions, primarily Best Access. Other, net year to date was $33 million expense, an increase of $52 million from income of $19 million for year to date 2002. This increase in other, net is due to the $18 million gain recorded in 2002 for the Company's settlement of it's U.S. defined benefit pension plan, $9 million of higher losses in 2003 related to the Company's Mac Advantage financing program, and the same factors discussed previously pertaining to the third quarter. In this regard, the intangible amortization expense increased $9 million over the comparable 2002 period.

The Company's effective income tax rate was 29.1% in the third quarter this year compared to 24.2% in the prior year's quarter. For the year to date periods, the income tax rate for 2003 was 29.7% and the rate for 2002 was 32.5%. The third quarters of 2003 and 2002 reflect favorable foreign tax developments that reduced income taxes by $2 million and $6 million, respectively. The year to date 2002 effective tax rate also includes the impact of the tax expense related to the settlement of the defined benefit plan which increased the effective tax rate. The remaining decline in the 2003 tax rate relates to refunds of prior year tax assessments.

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, and associated services, as well as closet doors and systems, home decor, door locking systems, commercial and consumer hardware.

Tools segment sales of $487 million in the third quarter of 2003 represented a 2% decrease from $497 million in the third quarter of 2002. On a year to date basis, Tools segment net sales in 2003 were $1,435 million, a 2% decrease from $1,472 million in 2002. These declines were driven by lower Mac Direct sales due to the exit strategy and inventory reductions at several large consumer channel customers in the first half of 2003. Operating profit was $55 million, or 11.4% of net sales, for the third quarter of 2003, compared to $52 million, or 10.4% of net sales, in 2002. Year to date operating profit in 2003 was $106 million, or 7.4% of net sales, compared to $179 million, or 12.2% of net sales in 2002. The year to date decline in operating profit is primarily attributable to lower sales volume and higher receivable and inventory losses as a result of the Mac Direct exit, costs related to the retirement of the Company's CEO, the absence of retirement plan income, and price erosion in the first half of 2003.

Doors segment sales were $229 million in the third quarter of 2003, an increase of 36% from $169 million in the third quarter of 2002. Operating profit of $36 million represented 15.8% of net sales in the third quarter of 2003, as compared with 14.8% of net sales in the same period last year. These increases are due to sales and operating profit from acquired companies of $73 million and $16 million, respectively, partially offset by the carryover impact of the lost region of a major customer within the entry doors business. On a year to date basis, Doors segment sales were $646 million, an increase of 41% from $460

12

million in 2002. Operating profit of $89 million represents 13.7% of year to date net sales in 2003, as compared with 14.4% of net sales in the same period last year. These sales and operating profit increases are also from acquired companies equal to $213 million and $45 million, respectively, partially offset by the lost region in entry doors mentioned previously.

Restructuring, Asset Impairment and Other Charges

The Company recorded $21.9 million and $10.8 million in restructuring and asset impairment charges in the second and third quarters of 2003, respectively, for the Operation 15 initiative. Of these charges, $1.1 million related to the Doors segment, $26.1 million related to the Tools segment and the remaining $5.5 million related to centralized corporate functions. These charges consisted of $5.1 million of asset impairments and $5.0 million of other exit costs related to the exit of the Company's Mac Direct retail channel, $10.2 million for severance and related benefits for Operation 15 initiative headcount reductions, $10.4 million of asset impairments and $2.0 million of other exist costs pertaining to other Operation 15 initiatives. The $15.5 million of asset impairments generally relates to assets designated as held for use which are idle as a result of the Operation 15 initiatives and accordingly their book value has been written off. The second and third quarter charges for headcount reductions will result in a net employment reduction of approximately 800 manufacturing, selling and administrative people. The Company anticipates utilizing the remaining reserves by the end of 2004.

The Company recorded $3.1 million of restructuring reserves in the first quarter of 2003 for new initiatives, mainly in the Tools segment, pertaining to the further reduction of its cost structure, primarily for severance-related obligations. These actions have resulted in a net employment reduction of approximately 150 manufacturing, selling and administrative people. The remaining reserve is expected to be utilized by the end of 2003.

An analysis of the Company's restructuring reserves for the period December 28, 2002 to September 27, 2003 is as follows (in millions):

				12/28/02				Additions				Usage				9/27/03
Operation 15
Severance				$	—			$	10.2			$	(6.3	)		$	3.9
Asset impairments					—				15.5				(15.5	)			—
Other					—				7.0				(5.7	)			1.3
Q1 2003
Severance				$	—				3.1				(3.0	)			0.1
Asset impairments					—				—				—				—
Other					—				—				—				—
Pre 2003
Severance					5.4				—				(4.9	)			0.5
Asset impairments					—				—				—				—
Other					3.3				—				(0.6	)			2.7
				$	8.7			$	35.8			$	(36.0	)		$	8.5

The exit of Mac Direct has resulted in the liquidation of certain assets such as inventories, accounts receivable, trucks and other items. The aggregate net book value of these assets and certain lease obligations was approximately $85 million at the commencement of this Operation 15 initiative. Management continues to formulate plans to maximize the economic value associated with these items. In the first three quarters of 2003, the Company recognized $21 million in receivable losses, $7 million in inventory losses and $20 million of other costs ($11 million related to trucks and other items and $9 million related to the Mac financing portfolios) associated with the Mac Direct exit. The Company believes that additional impairments and exit costs are possible, however the amounts cannot be determined at this time, as they depend on future events and actions which have not been finalized.

In the second quarter of 2003, the Company recognized $8 million in charges related to compensation payable to its Chairman and Chief Executive Officer, John Trani, who announced his retirement effective

13

December 31, 2003. These retirement expenses were comprised of salary continuation and pension as specified in an employment contract entered into in 2000.

FINANCIAL CONDITION

Liquidity and Sources of Capital

Operating cash flow of $151 million in the third quarter of 2003 increased $47 million from the prior year's third quarter due to improved 2003 working capital (inventory, accounts receivable, and accounts payable) performance and timing of income tax disbursements, partially offset by the absence of the third quarter 2002 $69 million cash inflow from the Company's settlement of it's U.S. defined benefit pension plan.

The Company had $213 million notional value Stanley common stock forward contracts (equity hedge) which were implemented in previous years in an effort to offset the diluted share count from changes in the stock price. When the stock price rose, the Company would benefit from the hedge by offsetting the impact of the diluted share count from in-the-money stock options. These hedges, however, had an opposite result with a declining stock price. As a risk mitigation initiative and in conjunction with the new accounting rules under SFAS No. 150, the Company restructured the $213 million equity hedge contracts. On April 14, 2003, $100 million of stock was purchased from the equity hedge counterparties which decreased shares then outstanding by 3.9 million. These transactions were completed using a combination of borrowings under existing lines of credit and available cash. No open market purchase of shares occurred. The remaining $113 million in forward contracts were modified to full physical settlement contracts with a fixed notional principal of $113 million and 4.1 million of underlying shares. These contracts are being settled over four years in equal installments and do not contain the same dilution protection (or risk) as the former contracts. SFAS No. 150, issued in May 2003, requires that the notional principal balance be recognized as a liability on the balance sheet and the underlying shares of 4.1 million be excluded from the amount of shares used to calculate basic and diluted earnings per share.

ITEM 4.    CONTROLS AND PROCEDURES

As of the end of the quarter ended September 27, 2003, under the supervision and with the participation of management, including the Company's Chief Executive Officer and Chairman and its Chief Financial Officer, the Company has evaluated the effectiveness of the design and operation of its disclosure controls and procedures pursuant to Rule 13a-15(e) of the Securities Exchange Act of 1934. Based upon that evaluation, the Company's Chief Executive Officer and Chairman and its Chief Financial Officer have concluded that the Company's disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in its periodic Securities Exchange Commission filings. There have been no significant changes in the Company's internal controls or in other factors that could significantly affect internal controls subsequent to the date of their evaluation.

14

PART 2 – OTHER INFORMATION

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

(a)    Exhibits

Exhibit No.:				Description:
4 (ii)				Certificate of Designated Officers establishing Terms of 3-1/2% Series A Senior Notes due 2007, 4-9/10% Series A Senior Notes due 2012, 3-1/2% Series B Senior Notes due 2007 and 4-9/10% Series B Senior Notes due 2012
10 (iii) (A)				Stock Option Plan for Non Employee Directors, as amended October 15, 2003.
31 (i)				Certification by CEO pursuant to Rule 13a-14(a)
31 (ii)				Certification by CFO pursuant to Rule 13a-14(a)
32 (i)				Certification by CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32 (ii)				Certification by CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b)    Reports on Form 8-K

(i) The Company filed a current report on Form 8-K dated July 22, 2003 with respect to the Company's press release reporting results for the second quarter of 2003.

CAUTIONARY STATEMENT

This report on Form 10-Q contains statements which, to the extent they are not statements of historical or present fact, constitute "forward-looking statements" under the securities laws including, but not limited to the amount and timing of charges that will be incurred in connection with the Company's previously announced restructuring plans. From time to time, oral or written forward-looking statements may also be included in other materials released to the public. These forward-looking statements are intended to provide management's current expectations or plans for the future operating and financial performance of the Corporation, based on assumptions currently believed to be valid. Forward-looking statements may be identified by the use of words such as "believe," "expect," "plans," "anticipate" and other words of similar meaning in connection with a discussion of future operating or financial performance.

These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances, including but not limited to (a) the success of the company's efforts to decentralize its operations functions, primarily into its Tools and Access Solutions business groups; (b) the success of the company's efforts to reduce its workforce and close certain facilities, including the resolution of any labor issues and the predictability of severance payments related to such activities, the need to respond to significant changes in product demand while any facility consolidation is in process and other unforeseen events; (c) the success of the company's efforts to restructure its Mac Tools organization in order to return it to profitability, including, without limitation, the company's ability to liquidate certain Mac Tools assets at a satisfactory price; (d) the company's ability to issue long term debt in March 2004 on terms acceptable to the Company; and (e) the satisfaction of the contingencies necessary to implement the terms of a contract to purchase certain assets, as well as marketing, sourcing and manufacturing cooperation. Actual results may also differ materially from these expectations due to changes in global political, economic, business, competitive, market and regulatory factors.

15

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 7, 2003

By: /s/ James M. Loree
James M. Loree
Executive Vice President, Finance
and Chief Financial Officer

16

EX-4.(II)

EXHIBIT 4(ii)

THE STANLEY WORKS

OFFICER'S CERTIFICATE

Craig Douglas, the Vice President and Treasurer of The Stanley Works, a Connecticut corporation (the "Company"), pursuant to the authority granted in the Board Resolutions of the Company adopted on October 16, 2002, and Sections 1.2, 2.1, 3.1, and 3.3 of the Indenture defined herein, each do hereby certify to JPMorgan Chase Bank, as Trustee (the "Trustee"), under the Indenture (the "Indenture"), dated as of November 1, 2002, between the Company and the Trustee that:

1. All capitalized terms used in this certificate which are not defined herein shall have the meanings set forth in the Indenture.

2. The Securities of the first series to be issued under the Indenture shall be designated "3½% Series A Senior Notes due 2007" (the "2007 Notes"). The Securities of the second series to be issued under the Indenture shall be designated "4 9/10% Series A Senior Notes due 2012" (the "2012 Notes"; and, together with the 2007 Notes, the "Initial Notes"). The Securities of the third series to be issued under the Indenture shall be designated "3½% Series B Senior Notes due 2007" the ("2007 Exchange Notes"). The Securities of the fourth series to be issued under the Indenture shall be designated "4 9/10% Series B Senior Notes due 2012" (the "2012 Exchange Notes"; and, together with the 2007 Exchange Notes, the "Exchange Notes"). The Initial Notes and the Exchange Notes are collectively referred to herein as the "Notes."

3. The 2007 Notes and the 2007 Exchange Notes shall mature and the principal thereof shall be due and payable together with all accrued and unpaid interest thereon on November 1, 2007. The 2012 Notes and the 2012 Exchange Notes shall mature and the principal thereof shall be due and payable together with all accrued and unpaid interest thereon on November 1, 2012.

4. The 2007 Notes and the 2007 Exchange Notes shall bear interest as provided in the form thereof set forth in Exhibit A hereto. The 2012 Notes and the 2012 Exchange Notes shall bear interest as provided in the form thereof set forth in Exhibit B hereto. For the purposes of Section 3.10 of the Indenture, a period from and including the 1st of one month to but not including the 1st of the next month will be considered a full month with respect to each series of Notes.

5. The interest and principal of each series of Notes shall be payable in United States dollars.

6. The aggregate principal amount of 2007 Notes and 2012 Notes which may be authenticated and delivered under the Indenture is initially limited to $150,000,000 and $200,000,000, respectively, except for Notes of each series authenticated and delivered upon registration of, transfer of, or in exchange for, or in lieu of, other Notes of the same series pursuant to Sections 3.4, 3.5, 3.6, 9.5 or 11.7 of the Indenture or upon surrender in part of any Note of such series for exchange for other Notes pursuant to its terms, or pursuant to or as contemplated by the terms of such Notes; provided that pursuant to Section 3.1 of the Indenture and consistent with the terms of the Indenture and the Notes, each series of Notes may be reopened and additional Notes of such series may be issued and additional terms relating to each series of Notes may be established. The Notes of each series are to be authenticated and delivered as follows. There shall initially be authenticated and delivered $150,000,000 aggregate principal amount of 2007 Notes and $200,000,000 aggregate principal amount of 2012 Notes which shall be originally issued on November 1, 2002 pursuant to the Indenture. The certificates for the 2007 Notes shall be in substantially the form attached hereto as Exhibit A and the certificates for the 2012 Notes shall be in substantially the form attached hereto as Exhibit B. The certificates for the Initial Notes shall initially bear legends (the "Securities Act Legends") indicating that they have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), and restricting transfers thereof. There shall be issuable, upon surrender of and in exchange for Initial Notes pursuant to an exchange offer applicable to each series of Initial Notes (an "Exchange Offer") effected by the Company pursuant to the Registration Rights Agreement dated as of November 1, 2002 (the "Registration Rights Agreement") between

1

the Company and Merrill Lynch, Pierce, Fenner & Smith, Incorporated, Salomon Smith Barney, Inc., BNP Paribas Securities Corp. and Fleet Securities, Inc., the Exchange Notes which shall have substantially identical terms to the Initial Notes, except that the Exchange Notes will not contain terms with respect to transfer restrictions and will not provide for any increase in the interest rate on such Exchange Notes for failure of the Company to comply with the Registration Rights Agreement. Except as described in the immediately preceding sentence, the certificates for the 2007 Exchange Notes shall be in substantially the form attached hereto as Exhibit A and the certificates for the 2012 Exchange Notes shall be in substantially the form attached hereto as Exhibit B. The Exchange Notes shall be issued only upon surrender of and in exchange for a like aggregate principal amount of Initial Notes pursuant to the applicable Exchange Offer. Any Initial Notes surrendered in exchange for Exchange Notes shall be cancelled. For all purposes under the Indenture, the 2007 Notes and the 2007 Exchange Notes, when issued, shall be treated as a single class, and shall vote and consent as a single series, and the 2012 Notes and the 2012 Exchange Notes, when issued, shall be treated as a single class, and shall vote and consent as a single series.

7. The Exchange Notes shall only be issuable upon surrender of and in exchange for the Initial Notes pursuant to the applicable Exchange Offer and without the payment of additional consideration.

8. The principal of and premium, if any, and each installment of interest on the Notes of each series shall be payable at the office or agency of the Company in The City of New York provided, however, that payment of interest may be made at the option of the Company by check mailed to the address of the persons entitled thereto or by wire transfer to an account designated by the person entitled thereto; and provided further that so long as the Notes are registered in the name of The Depository Trust Company ("DTC") or its nominee, as discussed below, all payments of principal, premium, if any, and interest in respect of the Notes shall be made in immediately available funds. Notices and demands to or upon the Company in respect of the Notes of each series and the Indenture may be served at the office or agency of the Company in The City of New York. The Corporate Trust Office of the Trustee initially shall be the agency of the Company for such payment and service of notices and demands, and the Company hereby appoints JPMorgan Chase Bank as its agent for all such purposes; provided, however, that the Company reserves the right to change, by one or more Officer's Certificates, any such office or agency and such agent. The registration and registration of transfers and exchanges in respect of the Notes of each series may be effected at the Corporate Trust Office of the Trustee in The City of New York. The Trustee initially shall be the Security Registrar and the Paying Agent for the Notes.

9. Notwithstanding any contrary provisions in the Indenture or the Notes, the provisions of Exhibit C attached hereto with respect to the form of the Notes and the transfer and exchange of the Notes shall apply, as applicable, to each series of Notes.

10. The 2007 Notes shall be redeemable at the option of the Company prior to the Stated Maturity of the principal thereof as provided in the form thereof set forth in Exhibit A hereto. The 2012 Notes shall be redeemable at the option of the Company prior to the Stated Maturity of the principal thereof as provided in the form thereof set forth in Exhibit B hereto.

11. Initially the Notes of each series shall be issued in global form ("Global Notes") registered in the name of Cede & Co. as nominee for DTC, the initial Depositary for such Notes.

12. The Notes shall be issued in minimum denominations of $1,000 and integral multiples thereof.

13. Sections 4.2 (including, without limitation, Sections 4.2(2) and 4.2(3)), 4.3, 10.5 and 10.6 (without limitation to any of the other covenants contained in Article 10 of the Indenture) of the Indenture shall apply to the Notes.

14. No service charge shall be made for the registration of transfer or exchange of the Notes; provided, however, that the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with the exchange or transfer.

2

15. The Notes of each series shall be entitled to the rights and benefits conferred by the Registration Rights Agreement.

16. The 2007 Notes shall have such other terms and provisions as are provided in the form thereof set forth in Exhibit A hereto, and shall be issued substantially in such form. The 2012 Notes shall have such other terms and provisions as are provided in the form thereof set forth in Exhibit B hereto, and shall be issued substantially in such form.

17. The undersigned has read all of the covenants and conditions contained in the Indenture, and the definitions in the Indenture relating thereto, relating to the issuance, authentication and delivery of the Notes and in respect of compliance with which this certificate is made.

18. The statements contained in this certificate are based upon the familiarity of the undersigned with the Indenture, the documents accompanying this certificate, and upon discussions by the undersigned with officers and employees of the Company familiar with the matters set forth herein.

19. In the opinion of the undersigned, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenants and conditions have been complied with.

20. In the opinion of the undersigned, such conditions and covenants have been complied with.

[Signature Page Follows]

3

IN WITNESS WHEREOF, the undersigned has executed this Officer's Certificate this 1st day of November, 2002.

/s/                                                                                 
Craig Douglas
Vice President and Treasurer

4

EXHIBIT A

[THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE ACT) OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THE SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (C) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE ACT, (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE ACT (IF AVAILABLE) OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (1) PURSUANT TO CLAUSES (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM AND (2) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE ACT.] *

[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO.), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS, IN WHOLE BUT NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST COMPANY OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE BOARD RESOLUTIONS SET FORTH IN AN OFFICER'S CERTIFICATE ESTABLISHING THE TERMS OF THIS NOTE.] **

* Include only for the 2007 Notes.

** Include only for Global Notes.

A-1

No. R-				CUSIP No.				[854616 AG 4]*
								[U85424 AA 4]**
								[854616 AH 2]***
				ISIN No.				[US854616AG40]*
								[USU85424AA42]**
								[US854616AH23]***

[FORM OF FACE OF SECURITY]

THE STANLEY WORKS

3½% SERIES A SENIOR NOTE DUE 2007

THE STANLEY WORKS, a corporation duly organized and existing under the laws of the State of Connecticut (herein referred to as the "Company", which terms includes any successor Person under the Indenture), for value received, hereby promises to pay to CEDE & CO., or its registered assigns, the principal sum of                             Dollars on November 1, 2007 (the "Stated Maturity"), and to pay interest on said principal sum semi-annually in arrears on May 1 and November 1 of each year commencing May 1, 2003 (each an "Interest Payment Date") at the rate of 3½% per annum, until the principal hereof is paid or made available for payment. Interest on the Securities of this series will accrue from November 1, 2002 ("the Issue Date"), to the first Interest Payment Date, and thereafter will accrue from the last Interest Payment Date to which interest has been paid or duly provided for. In the event that any Interest Payment Date, the date of Stated Maturity or any Redemption Date (as defined herein) is not a Business Day, then payment of interest, principal, premium, if any, or Redemption Price (as defined herein) payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of such delay) with the same force and effect as if made on the Interest Payment Date, the date of Stated Maturity or Redemption Date, as the case may be. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the April 15 or October 15, as the case may be (the "Regular Record Date"), immediately preceding the relevant Interest Payment Date, provided, however, that interest payable at Maturity will be paid to the Person to whom principal is paid. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Company, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture referred to on the reverse hereof.

The principal of and premium, if any, and each installment of interest [and any additional interest]**** on this Security will be made upon presentation at the office or agency of the Company in The City of New York provided that the payment of interest may be made at the option of the Company by check mailed to the address of the persons entitled thereto or by wire transfer to an account designated by the person entitled thereto; and provided further that so long as the Securities of this series are registered in the name of The Depository Trust Company or its nominee all payments of principal, premium, if any, and interest in respect of this Security will be made in immediately available funds.

* Include only for the 2007 Notes issued pursuant to Rule 144A.

** Include only for the 2007 Notes issued pursuant to Regulation S.

*** Include only for the 2007 Exchange Notes.

**** Include only for the 2007 Notes.

A-2

Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Any capitalized term which is used herein and not otherwise defined shall have the meaning ascribed to such term in the Indenture.

Unless the certificate of authentication hereon has been executed by the Trustee referred to below by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed in its name by the Vice President of the Company.

THE STANLEY WORKS

By:

Vice President

A-3

[FORM OF CERTIFICATE OF AUTHENTICATION]

CERTIFICATE OF AUTHENTICATION

This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.

Dated: November 1, 2002

JPMORGAN CHASE BANK, as Trustee

By:

Authorized Signatory

A-4

[FORM OF REVERSE OF SECURITY]

This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), of the series designated ["3½% Series A Senior Notes due 2007"]["3½% Series B Senior Notes due 2007"], all issued and to be issued under the Indenture, dated as of November 1, 2002 (herein, together with any amendments thereto, called the "Indenture", which term shall have the meaning assigned to it in such instrument), between the Company and JPMorgan Chase Bank, as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), and reference is hereby made to the Indenture, including the Board Resolutions and Officer's Certificate filed with the Trustee on November 1, 2002, creating such series for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered.

Optional Redemption

The Securities of this series shall be redeemable at the option of the Company prior to the Stated Maturity, in whole or in part, at any time. The Company shall give notice of its intent to redeem such Securities of this series at least 30 days but no more than 60 days prior to the date of redemption (the "Redemption Date"). If the Company redeems all or any part of this series pursuant to the provisions of this paragraph, it shall pay a redemption price (the "Redemption Price") equal to the greater of (i) 100% of the principal amount of such Securities and (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon (exclusive of interest accrued to the Redemption Date) discounted to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 15 basis points (the "Make-Whole Amount"), plus, in each case, accrued interest thereon to the Redemption Date.

Unless the Company defaults in payment of the Redemption Price, on and after the Redemption Date interest will cease to accrue on the notes or portion thereof called for redemption.

"Treasury Rate" means, with respect to any Redemption Date, the rate per annum equal to the semi-annual equivalent yield to maturity or interpolated (on a day count basis) of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date.

"Comparable Treasury Issue" means the United States Treasury security or securities selected by an Independent Investment Banker as having an actual or interpolated maturity comparable to the remaining term of the notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of a comparable maturity to the remaining term of such notes.

"Independent Investment Banker" means one of the Reference Treasury Dealers appointed by the Company.

"Comparable Treasury Price" means, with respect to any Redemption Date, (i) the average of the Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest such Reference Treasury Dealer Quotation or (ii) if the Company obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations.

"Reference Treasury Dealer" means each of Merrill Lynch, Pierce, Fenner & Smith Incorporated and Salomon Smith Barney Inc. or their affiliates which are primary United States government securities dealers, and their respective successors, and three other firms which are primary United States government securities dealers that the Company selects; provided, however, that if any of the foregoing shall cease to be a primary United States government securities dealer in The City of New York (a "Primary Treasury Dealer"), the Company shall substitute therefor another Primary Treasury Dealer.

"Reference Treasury Dealer Quotation" means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, as determined by the Company, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Company by such Reference Treasury Dealer at 3:30 p.m. New York time on the third business day preceding such Redemption Date.

A-5

[Additional Interest

The Holder of this Security is entitled to the benefits of the Registration Rights Agreement, dated November 1, 2002, among the Company and the Purchasers named therein (the "Registration Rights Agreement"). In the event that either (a) the Exchange Offer Registration Statement (as such term is defined in the Registration Rights Agreement) is not filed with the SEC (as such term is defined in the Registration Rights Agreement) on or prior to the 180^th day following the Issue Date, (b) the Exchange Offer Registration Statement is not declared effective on or prior to the 270^th day following the Issue Date or (c) the Exchange Offer (as such term is defined in the Registration Rights Agreement) is not consummated or a Shelf Registration Statement (as such term is defined in the Registration Rights Agreement) with respect to the Securities is not declared effective on or prior to the 300^th day following the Issue Date, the interest rate borne by the Securities shall be increased by 0.25% per annum with respect to the first 90-day period (or portion thereof) following such 180^th day in the case of clause (a) above, such 270^th day in the case of clause (b) above and such 300^th day in the case of clause (c) above. The additional interest payable as described in the immediately preceding sentence will increase by an additional 0.25% per year for each subsequent 90-day period (or portion thereof), up to a maximum amount of 0.50% per year. Upon (i) the filing of the Exchange Offer Registration Statement after the 180^th day described in clause (a) above, (ii) the effectiveness of the Exchange Offer Registration Statement after the 270^th day described in clause (b) above or (iii) the consummation of the Exchange Offer or the effectiveness of the Shelf Registration Statement, after the 300^th day period described in clause (c) above, the interest rate on the Securities from the date of such filing, effectiveness or consummation, as the case may be, will be reduced to the original interest rate set forth on the face of this Security.]*

General Provisions

The Indenture contains provisions for defeasance of the entire Indebtedness of this Security upon compliance with certain conditions set forth in the Indenture.

If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof by supplemental indenture and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture by the Company (when authorized by or pursuant to a Company's Board Resolution) and the Trustee with the consent of the Holders of a majority in principal amount of the Securities at the time Outstanding of each series to be affected. The Indenture contains provisions permitting the Holders of a majority in aggregate principal amount of the Securities of all series then Outstanding to waive compliance by the Company with certain provisions of the Indenture. The Indenture also contains provisions permitting the Holders of a majority in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor on in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

As provided in and subject to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Securities of this series, the Holders of not less than 25% in aggregate principal amount of the Securities of such series at the time Outstanding in respect of which an Event of Default shall have occurred and be continuing, shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee and offered the Trustee indemnity reasonably satisfactory to the Trustee, the Trustee for

* Include only for the 2007 Notes.

A-6

60 days after receipt of such notice, request and offer of indemnity shall have failed to institute any such proceeding, and no direction inconsistent with such written request shall have been given to the Trustee during such 60-day period by the Holders of a majority in aggregate principal amount of the Securities of such series at the time Outstanding in respect of which an Event of Default shall have occurred and be continuing. The foregoing shall not apply to any suit instituted by the Holder of this Security for the enforcement of any payment of principal hereof, any premium, or interest [or additional interest] * hereon and any Additional Amounts on or after the respective due dates expressed herein.

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed.

The Securities of this series are issuable only in registered form without coupons in denominations of $1,000 and in integral multiples thereof.

As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor and of authorized denominations, as requested by the Holder surrendering the same. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the absolute owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

This Security shall be governed by and construed in accordance with the laws of the State of New York.

All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture and in the Officer's Certificate establishing the terms of the Securities of this series.

* Include only for the 2007 Notes.

A-7

[FORM OF TRANSFER NOTICE]*

FOR VALUE RECEIVED the undersigned registered holder hereby sell(s), assign(s) and transfer(s) unto

Insert Taxpayer Identification No.

(Please print or typewrite name and address including zip code of assignee)

the within Security and all rights thereunder, hereby irrevocably constituting and appointing attorney to transfer such Security on the books of the Company with full power of substitution in the premises.

[THE FOLLOWING PROVISION TO BE INCLUDED ON ALL CERTIFICATES]

In connection with any transfer of this Security occurring prior to the date which is the earlier of the date of an effective Registration Statement or November 1, 2004 the undersigned confirms that without utilizing any general solicitation or general advertising that:

[Check One]

[    ] (a) this Security is being transferred in compliance with the exemption from registration under the Securities Act of 1933, as amended, provided by Rule 144A or Regulation S thereunder.

or

[    ] (b) this Security is being transferred other than in accordance with (a) above and documents are being furnished which comply with the conditions of transfer set forth in this Security and the Indenture.

If none of the foregoing boxes is checked, the Trustee or other Registrar shall not be obligated to register this Security in the name of any Person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein, in Section 3.5 of the Indenture and as set forth in the Officer's Certificate establishing this series of Securities shall have been satisfied.

Date:

NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within-mentioned instrument in every particular, without alteration or any change whatsoever.

Signature Guarantee:

* Include only for the 2007 Notes.

A-8

TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.

The undersigned represents and warrants that it is purchasing this Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is either (i) a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, as amended (the "Securities Act") or (ii) not a "U.S. Person" within the meaning of Regulation S under the Securities Act and is acquiring this Security in an "Offshore Transaction" within the meaning of Regulation S under the Securities Act, and is aware that the sale to it is being made in reliance on Rule 144A or Regulation S, as the case may be, and acknowledges that it has received in connection with transfer pursuant to Rule 144A such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A or Regulation S.

Date:

NOTICE: To be executed by an
executive officer

Signature:

A-9

EXHIBIT B

[THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE ACT) OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THE SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (C) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE ACT, (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE ACT (IF AVAILABLE) OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (1) PURSUANT TO CLAUSES (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM AND (2) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE ACT.]*

[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO.), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS, IN WHOLE BUT NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST COMPANY OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE BOARD RESOLUTIONS SET FORTH IN AN OFFICER'S CERTIFICATE ESTABLISHING THE TERMS OF THIS NOTE.]**

* Include only for the 2012 Notes.

** Include only for Global Notes.

B-1

No. R-				CUSIP No.				[854616 AJ 8]*
								[U85424 AB 2]**
								[854616 AK 5]***
				ISIN No.				[US854616AJ88]*
								[USU85424AB25]**
								[US854616AK51]***

[FORM OF FACE OF SECURITY]

THE STANLEY WORKS

4 9/10% SERIES A SENIOR NOTE DUE 2012

THE STANLEY WORKS, a corporation duly organized and existing under the laws of the State of Connecticut (herein referred to as the "Company", which terms includes any successor Person under the Indenture), for value received, hereby promises to pay to CEDE & CO., or its registered assigns, the principal sum of          Dollars on November 1, 2012 (the "Stated Maturity"), and to pay interest on said principal sum semi-annually in arrears on May 1 and November 1 of each year commencing May 1, 2003 (each an "Interest Payment Date") at the rate of 4 9/10% per annum, until the principal hereof is paid or made available for payment. Interest on the Securities of this series will accrue from November 1, 2002 ("the Issue Date"), to the first Interest Payment Date, and thereafter will accrue from the last Interest Payment Date to which interest has been paid or duly provided for. In the event that any Interest Payment Date, the date of Stated Maturity or any Redemption Date (as defined herein) is not a Business Day, then payment of interest, principal, premium, if any, or Redemption Price (as defined herein) payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of such delay) with the same force and effect as if made on the Interest Payment Date, the date of Stated Maturity or Redemption Date, as the case may be. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the April 15 or October 15, as the case may be (the "Regular Record Date"), immediately preceding the relevant Interest Payment Date, provided, however, that interest payable at Maturity will be paid to the Person to whom principal is paid. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Company, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture referred to on the reverse hereof.

The principal of and premium, if any, and each installment of interest [and any additional interest]**** on this Security will be made upon presentation at the office or agency of the Company in The City of New York provided that the payment of interest may be made at the option of the Company by check mailed to the address of the persons entitled thereto or by wire transfer to an account designated by the person entitled thereto; and provided further that so long as the Securities of this series are registered in the name of The Depository Trust Company or its nominee all payments of principal, premium, if any, and interest in respect of this Security will be made in immediately available funds.

* Include only for the 2012 Notes issued pursuant to Rule 144A.

** Include only for the 2012 Notes issued pursuant to Regulation S.

*** Include only for the 2012 Exchange Notes.

**** Include only for the 2012 Notes.

B-2

Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Any capitalized term which is used herein and not otherwise defined shall have the meaning ascribed to such term in the Indenture.

Unless the certificate of authentication hereon has been executed by the Trustee referred to below by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed in its name by the Vice President of the Company.

THE STANLEY WORKS

By:

Vice President

B-3

[FORM OF CERTIFICATE OF AUTHENTICATION]

CERTIFICATE OF AUTHENTICATION

This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.

Dated: November 1, 2002

JPMORGAN CHASE BANK, as Trustee

By:

Authorized Signatory

B-4

[FORM OF REVERSE OF SECURITY]

This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), of the series designated ["4 9/10% Series A Senior Notes due 2012"]["4 9/10% Series B Senior Notes due 2012"], all issued and to be issued under the Indenture, dated as of November 1, 2002 (herein, together with any amendments thereto, called the "Indenture", which term shall have the meaning assigned to it in such instrument), between the Company and JPMorgan Chase Bank, as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), and reference is hereby made to the Indenture, including the Board Resolutions and Officer's Certificate filed with the Trustee on November 1, 2002, creating such series for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered.

Optional Redemption

The Securities of this series shall be redeemable at the option of the Company prior to the Stated Maturity, in whole or in part, at any time. The Company shall give notice of its intent to redeem such Securities of this series at least 30 days but no more than 60 days prior to the date of redemption (the "Redemption Date"). If the Company redeems all or any part of this series pursuant to the provisions of this paragraph, it shall pay a redemption price (the "Redemption Price") equal to the greater of (i) 100% of the principal amount of such Securities and (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon (exclusive of interest accrued to the Redemption Date) discounted to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 20 basis points (the "Make-Whole Amount"), plus, in each case, accrued interest thereon to the Redemption Date.

Unless the Company defaults in payment of the Redemption Price, on and after the Redemption Date interest will cease to accrue on the notes or portion thereof called for redemption.

"Treasury Rate" means, with respect to any Redemption Date, the rate per annum equal to the semi-annual equivalent yield to maturity or interpolated (on a day count basis) of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date.

"Comparable Treasury Issue" means the United States Treasury security or securities selected by an Independent Investment Banker as having an actual or interpolated maturity comparable to the remaining term of the notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of a comparable maturity to the remaining term of such notes.

"Independent Investment Banker" means one of the Reference Treasury Dealers appointed by the Company.

"Comparable Treasury Price" means, with respect to any Redemption Date, (i) the average of the Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest such Reference Treasury Dealer Quotation or (ii) if the Company obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations.

"Reference Treasury Dealer" means each of Merrill Lynch, Pierce, Fenner & Smith Incorporated and Salomon Smith Barney Inc. or their affiliates which are primary United States government securities dealers, and their respective successors, and three other firms which are primary United States government securities dealers that the Company selects; provided, however, that if any of the foregoing shall cease to be a primary United States government securities dealer in The City of New York (a "Primary Treasury Dealer"), the Company shall substitute therefor another Primary Treasury Dealer.

"Reference Treasury Dealer Quotation" means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, as determined by the Company, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Company by such Reference Treasury Dealer at 3:30 p.m. New York time on the third business day preceding such Redemption Date.

B-5

[Additional Interest

The Holder of this Security is entitled to the benefits of the Registration Rights Agreement, dated November 1, 2002, among the Company and the Purchasers named therein (the "Registration Rights Agreement"). In the event that either (a) the Exchange Offer Registration Statement (as such term is defined in the Registration Rights Agreement) is not filed with the SEC (as such term is defined in the Registration Rights Agreement) on or prior to the 180^th day following the Issue Date, (b) the Exchange Offer Registration Statement is not declared effective on or prior to the 270^th day following the Issue Date or (c) the Exchange Offer (as such term is defined in the Registration Rights Agreement) is not consummated or a Shelf Registration Statement (as such term is defined in the Registration Rights Agreement) with respect to the Securities is not declared effective on or prior to the 300^th day following the Issue Date, the interest rate borne by the Securities shall be increased by 0.25% per annum with respect to the first 90-day period (or portion thereof) following such 180^th day in the case of clause (a) above, such 270^th day in the case of clause (b) above and such 300^th day in the case of clause (c) above. The additional interest payable as described in the immediately preceding sentence will increase by an additional 0.25% per year for each subsequent 90-day period (or portion thereof), up to a maximum amount of 0.50% per year. Upon (i) the filing of the Exchange Offer Registration Statement after the 180^th day described in clause (a) above, (ii) the effectiveness of the Exchange Offer Registration Statement after the 270^th day described in clause (b) above or (iii) the consummation of the Exchange Offer or the effectiveness of the Shelf Registration Statement, after the 300^th day period described in clause (c) above, the interest rate on the Securities from the date of such filing, effectiveness or consummation, as the case may be, will be reduced to the original interest rate set forth on the face of this Security.]*

General Provisions

The Indenture contains provisions for defeasance of the entire Indebtedness of this Security upon compliance with certain conditions set forth in the Indenture.

If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof by supplemental indenture and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture by the Company (when authorized by or pursuant to a Company's Board Resolution) and the Trustee with the consent of the Holders of a majority in principal amount of the Securities at the time Outstanding of each series to be affected. The Indenture contains provisions permitting the Holders of a majority in aggregate principal amount of the Securities of all series then Outstanding to waive compliance by the Company with certain provisions of the Indenture. The Indenture also contains provisions permitting the Holders of a majority in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor on in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

As provided in and subject to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Securities of this series, the Holders of not less than 25% in aggregate principal amount of the Securities of such series at the time Outstanding in respect of which an Event of Default shall have occurred and be continuing, shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee and offered the Trustee indemnity reasonably satisfactory to the Trustee, the Trustee for

* Include only for the 2012 Notes.

B-6

60 days after receipt of such notice, request and offer of indemnity shall have failed to institute any such proceeding, and no direction inconsistent with such written request shall have been given to the Trustee during such 60-day period by the Holders of a majority in aggregate principal amount of the Securities of such series at the time Outstanding in respect of which an Event of Default shall have occurred and be continuing. The foregoing shall not apply to any suit instituted by the Holder of this Security for the enforcement of any payment of principal hereof, any premium, or interest [or additional interest] * hereon and any Additional Amounts on or after the respective due dates expressed herein.

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed.

The Securities of this series are issuable only in registered form without coupons in denominations of $1,000 and in integral multiples thereof.

As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor and of authorized denominations, as requested by the Holder surrendering the same. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the absolute owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

This Security shall be governed by and construed in accordance with the laws of the State of New York.

All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture and in the Officer's Certificate establishing the terms of the Securities of this series.

* Include only for the 2012 Notes.

B-7

[FORM OF TRANSFER NOTICE]*

FOR VALUE RECEIVED the undersigned registered holder hereby sell(s), assign(s) and transfer(s) unto

Insert Taxpayer Identification No.

(Please print or typewrite name and address including zip code of assignee)

the within Security and all rights thereunder, hereby irrevocably constituting and appointing attorney to transfer such Security on the books of the Company with full power of substitution in the premises.

[THE FOLLOWING PROVISION TO BE INCLUDED ON ALL CERTIFICATES]

In connection with any transfer of this Security occurring prior to the date which is the earlier of the date of an effective Registration Statement or November 1, 2004 the undersigned confirms that without utilizing any general solicitation or general advertising that:

[Check One]

[         ](a) this Security is being transferred in compliance with the exemption from registration under the Securities Act of 1933, as amended, provided by Rule 144A or Regulation S thereunder.

or

[         ](b) this Security is being transferred other than in accordance with (a) above and documents are being furnished which comply with the conditions of transfer set forth in this Security and the Indenture.

If none of the foregoing boxes is checked, the Trustee or other Registrar shall not be obligated to register this Security in the name of any Person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein, in Section 3.5 of the Indenture and as set forth in the Officer's Certificate establishing this series of Securities shall have been satisfied.

Date:

NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within-mentioned instrument in every particular, without alteration or any change whatsoever.

Signature Guarantee:

* Include only for the 2012 Notes.

B-8

TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.

The undersigned represents and warrants that it is purchasing this Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is either (i) a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, as amended (the "Securities Act") or (ii) not a "U.S. Person" within the meaning of Regulation S under the Securities Act and is acquiring this Security in an "Offshore Transaction" within the meaning of Regulation S under the Securities Act, and is aware that the sale to it is being made in reliance on Rule 144A or Regulation S, as the case may be, and acknowledges that it has received in connection with transfer pursuant to Rule 144A such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A or Regulation S.

Dated:

NOTICE:        To be executed by an executive officer

Signature:

B-9

EXHIBIT C

All capitalized terms used and not defined in this Exhibit C shall have the meaning ascribed to such term in the Note Officer's Certificate.

Section 1.01.    Forms and Denominations.    The Notes shall be Registered Securities.

(a)    Global Notes.    (i) Notes offered and sold in reliance on Rule 144A as provided in the Purchase Agreement shall be issued initially in the form of one or more US Global Notes in definitive fully registered form without interest coupons, deposited on behalf of the subscribers for the Notes represented thereby with JPMorgan Chase Bank, at its Corporate Trust Office, as custodian for the Depositary, and registered in the name of DTC or a nominee thereof, duly executed by the Company and authenticated by the Trustee as provided in the Indenture. The aggregate principal amount of the US Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary as hereinafter provided.

Notes offered and sold in offshore transactions in reliance on Regulation S as provided in the Purchase Agreement shall be issued initially in the form of one or more Regulation S Global Notes in definitive fully registered form without interest coupons, deposited on behalf of the subscribers for the Notes represented thereby with JPMorgan Chase Bank, at its Corporate Trust Office, as custodian for the Depositary, and registered in the name of DTC or a nominee thereof, duly executed by the Company and authenticated by the Trustee as provided in the Indenture. The aggregate principal amount of the Regulation S Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary as hereinafter provided.

Each Global Note shall represent such of the Outstanding Notes as shall be specified therein and each shall provide that it shall represent the aggregate principal amount of Outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of Outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions.

Any adjustment of the aggregate principal amount of a Global Note to reflect the amount of any increase or decrease in the principal amount of Outstanding Notes represented thereby shall be made by the Trustee in accordance with instructions given by the Holder thereof as required by Section 1.02 hereof and shall be made on the records of the Trustee and the Depositary.

(b)    Book-Entry Provisions.    This Section 1.01(b) shall apply only to Global Notes.

The Company shall execute and the Trustee shall, in accordance with this Section 1.01(b) and Section 2.2 of the Indenture, authenticate and deliver initially one or more Global Notes that (a) shall be registered in the name of the Depositary or its nominee, (b) shall be delivered by the Trustee to the Depositary or pursuant to the Depositary's instructions and (c) shall bear legends substantially to the following effect:

"UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO.), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS, IN WHOLE BUT NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST COMPANY OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE

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WITH THE RESTRICTIONS SET FORTH IN THE BOARD RESOLUTION ESTABLISHING THE TERMS OF THIS NOTE."

(c)    Certificated Notes.    Except as otherwise set forth in the Indenture, owners of beneficial interests in Global Notes will not be entitled to receive physical delivery of Certificated Notes. All Certificated Notes shall be issuable in denominations of $1,000 principal amount and any integral multiple of $1,000 in excess thereof.

(d)    Restrictive Legends.    Unless and until (i) an Initial Note is sold under an effective Registration Statement (as defined in the Registration Rights Agreement) or (ii) an Initial Note is exchanged for an Exchange Note in connection with an effective Registration Statement, in each case pursuant to the Registration Rights Agreement, each Global Note and Certificated Note shall bear the following legend on the face thereof:

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE ACT) OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THE SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (C) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE ACT, (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE ACT (IF AVAILABLE) OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (1) PURSUANT TO CLAUSES (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM AND (2) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE ACT.

Section 1.02.    Transfer and Exchange.

(a)    Global Notes.    Members of, or participants in, the Depositary ("Agent Members") shall have no rights under the Indenture with respect to any Global Note held on their behalf by the Depositary, or the Trustee as its custodian, and the Depositary may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of such Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or shall impair, as between the Depositary and its Agent Members, the operation of customary practices governing the exercise of the rights of a holder of any Security.

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Transfers of a Global Note shall be limited to transfers of such Global Note in whole, but not in part, to the Depositary, its successors or their respective nominees. Interests of beneficial owners in the Global Note may be transferred in accordance with the rules and procedures of the Depositary and the provisions of this Exhibit C. Beneficial interests in a Global Note shall only be exchanged for Certificated Notes in accordance with the provisions of Section 3.5 of the Indenture. Nothing in this Section 1.02(a) shall prohibit or render ineffective any transfer of a beneficial interest in a Global Note effected in accordance with the procedures set forth in this Exhibit C.

In connection with the transfer of an entire Global Note to beneficial owners as provided in this Section, the Global Note shall be deemed to be surrendered to the Trustee for cancellation, and the Company shall execute, and the Trustee shall authenticate and deliver, to each beneficial owner identified by the Depositary in exchange for its beneficial interest in the Global Note, an equal aggregate principal amount of Certificated Notes of authorized denominations.

The Holder of a Global Note may grant proxies and otherwise authorize any person, including Agent Members and persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under the Indenture or the Notes.

(b)    Special Transfer Provisions.    (i) Unless and until (A) an Initial Note is sold under an effective Registration Statement, or (B) an Initial Note is exchanged for an Exchange Note in connection with an effective Registration Statement, in each case pursuant to the Registration Rights Agreement, the following provisions shall apply:

(i)    The Registrar shall register the transfer if such transfer is being made by a proposed transferor who has checked the box provided for on the form of Initial Note stating, or has otherwise advised the Company and the Registrar in writing, that the sale has been made in compliance with the conditions to transfer set forth in the Private Placement Legend.

(ii)    During the Restricted Period, beneficial interests in the Regulation S Global Note may only be sold, pledged or transferred to a transferee who takes delivery of such interests through the US Global Note, and vice versa, in accordance with the provisions of this Exhibit C and in accordance with the Private Placement Legend. Prior to the expiration of the Restricted Period, transfers by an owner of a beneficial interest in the Regulation S Global Note to a transferee who takes delivery of such interest through the US Global Note, and vice versa, shall be made only upon receipt by the Trustee of a written certification from the transferor of the beneficial interest in the form provided on the reverse of the Note to the effect that such transfer is being made in accordance with the Private Placement Legend. Such written certification shall no longer be required after the expiration of the Restricted Period in the case of a transfer of beneficial interests in the Regulation S Global Note to a transferee who takes delivery of such interest through the US Global Note. Upon the expiration of the Restricted Period, beneficial ownership interests in the Regulation S Global Note shall be transferable in accordance with applicable law and the other terms of the Indenture.

(c)    Private Placement Legend.    Upon the transfer, exchange or replacement of Notes not bearing the Private Placement Legend, the Registrar shall deliver Notes that do not bear the Private Placement Legend. Upon the transfer, exchange or replacement of Notes bearing the Private Placement Legend, the Registrar shall deliver only Notes that bear the Private Placement Legend unless there is delivered to the Registrar an Opinion of Counsel reasonably satisfactory to the Company and the Trustee to the effect that neither such legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act.

Section 1.03.    Certain Definitions.    Capitalized terms used and not otherwise defined herein have the meaning ascribed to such terms in the Indenture or in the Note Officers' Certificate.

"Agent Members" has the meaning specified in Section 1.02(a).

"Certificated Notes" means Notes that are in the form of the Note attached to the Note Officers' Certificate as Exhibit A or Exhibit B, as the case may be, that do not bear the legend contained in Section 1.01(b) hereof and that are authenticated and delivered in an authorized denomination of $1,000 principal amount or in any denomination in excess thereof which is an integral multiple of $1,000.

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"Depositary" means, with respect to the Notes issuable in whole or in part in global form, DTC and any nominee thereof until a successor shall have been appointed and become such pursuant to the applicable provisions of the Indenture, and thereafter "Depositary" shall mean or include such successor and any nominee thereof.

"Global Note" means a Note issued in global form and deposited with or on behalf of the Depositary.

"Note Officers' Certificate" means the Officers' Certificate pursuant to Sections 2.1 and 3.1 of the Indenture setting forth the form and terms of the Notes established to pursuant to the Board Resolution creating each series of Notes.

"Private Placement Legend" means the legend to be set forth on the face of each Note pursuant to and as set forth in Section 1.01(d) hereof.

"Registration Statement" means a registration statement as defined in the Registration Rights Agreement.

"Regulation S" means Regulation S under the Securities Act.

"Regulation S Global Note" means a permanent Global Note in the form of the Note attached to the Note Officer's Certificate as Exhibit A or Exhibit B, and that is deposited with and registered in the name of the Depositary, representing Notes sold in reliance on Regulation S.

"Restricted Period" means, with respect to any Notes, the period of 40 consecutive days beginning on and including the later of (i) the day on which such Notes are first offered to persons other than distributors (as defined in Regulation S under the Securities Act) in reliance on Regulation S and (ii) the date on which the closing of the offering thereof occurs.

"Rule 144A" means Rule 144A under the Securities Act (or any successor provision), as it may be amended from time to time.

"US Global Note" means a permanent Global Note in the form of the Note attached to the Note Officer's Certificate as Exhibit A or Exhibit B, and that is deposited with or with a custodian on behalf of and registered in the name of the Depositary or its nominee, representing Notes sold in reliance on Rule 144A under the Securities Act.

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EX-10.(III)(A)

EXHIBIT 10(iii)(A)

Adopted—September 28, 1994
Amended—March 1, 1995
Approved by shareholders—April 19, 1995
Amended—December 18, 1996
Amended—January 25, 2001
Amended—October 15, 2003

THE STANLEY WORKS
    
STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS

1. Purpose.

The purpose of The Stanley Works Stock Option Plan for Non-Employee Directors (the "Plan") is to promote the interests of The Stanley Works (the "Company") and its shareholders by encouraging Non-Employee Directors of the Company to have a direct and personal stake in the performance of the Company's Common Stock.

2. Definitions.

Unless the context clearly indicates otherwise, the following terms have the meanings set forth below. Whenever applicable, the masculine pronoun shall include the feminine pronoun and the singular shall include the plural.

"Biennial Option" or "Biennial Option Grant" means an Option granted to a Non-Employee Director in accordance with Section 7(a)(i) of the Plan.

"Board of Directors" or "Board" means the Board of Directors of the Company.

"Business Day" shall mean any day except Saturday, Sunday or a legal holiday in the State of Connecticut.

"Code" means the Internal Revenue Code of 1986, as amended, now in effect or as amended from time to time and any successor provisions thereto.

"Common Stock" means the common stock, par value $2.50 per share, of the Company.

"Fair Market Value" of a share of Common Stock on any particular date means the mean average of the high and the low price of a share of the Common Stock as quoted on the New York Stock Exchange Composite Tape on the date as of which fair market value is to be determined or, if there is no trading of Common Stock on such date, such mean average of the high and the low price on the next preceding date on which there was such trading.

"Grant Date", as used with respect to a particular Option, means the date on which such Option is granted pursuant to Section 7(a) of the Plan.

"Grantee" means the Non-Employee Director to whom an Option is granted pursuant to the Plan.

"Immediate Family Members shall mean the spouse, children and grandchildren of a Grantee.

"Initial Option" or "Initial Option Grant" means the Option granted to a Non-Employee Director who is first elected or appointed to the Board after September 30, 1994 and prior to December 18, 1996 in accordance with Section 7(a)(ii) of the Plan.

"Option" means an Initial Option or Biennial Option granted pursuant to the Plan to purchase shares of Common Stock which shall be a non-qualified stock option not intended to qualify as an incentive stock option under Section 422 of the Code.

"Non-Employee Director" shall mean a member of the Board of Directors who is not an employee of the Company or any Subsidiary.

"Plan" means The Stanley Works Stock Option Plan for Non-Employee Directors as set forth herein and as amended from time to time.

"Subsidiary" shall mean a "subsidiary corporation" of the Company as defined in Section 425(f) of the Code.

"1934 Act" means the Securities Exchange Act of 1934, as amended, now in effect or as amended from time to time and any successor provisions thereto.

3. Administration.

The Plan shall be administered by the Board, which shall have full power and authority, subject to the provisions of the Plan, to supervise administration of the Plan and interpret the provisions of the Plan and any Options granted hereunder. Any decision by the Board shall be final and binding on all parties. No member of the Board shall be liable for any determination, decision or action made in good faith with respect to the Plan or any Option under the Plan.

4. Eligibility.

The persons eligible to receive Options under the Plan are the Non-Employee Directors.

5. Effective Date and Term of the Plan.

The Plan shall become effective upon its adoption by the Board of Directors, provided, that no Option granted pursuant to the Plan will vest or shall be exercised prior to the approval of the Plan by the Company's shareholders within twelve (12) months of its adoption by the Board. Unless previously terminated by the Board, the term during which awards may be granted under the Plan shall expire on the tenth anniversary of the adoption of the Plan by the Board of Directors.

6. Shares Subject to the Plan.

The shares of Common Stock that may be delivered upon the exercise of Options under the Plan shall be shares of the Company's authorized Common Stock and may be unissued shares or reacquired shares, as the Board of Directors may from time to time determine. Subject to adjustment as provided in Section 13 hereof, the aggregate number of shares to be delivered under the Plan shall not exceed 200,000 shares. If any shares are subject to an Option which for any reason expires or terminates during the term of the Plan prior to the issuance of such shares, the shares subject to but not delivered under such Option shall be available for issuance under the Plan. If, on any Grant Date, the aggregate number of shares of Common Stock subject to Option grants on that date exceeds the remaining number of shares reserved for issuance under the Plan, the number of Option shares awarded to each Non-Employee Director to whom an Option shall be granted on such date shall be reduced pro rata so that the aggregate number of Option shares awarded to such Non-Employee Directors equals the number of reserved shares of Common Stock remaining under the Plan.

7. Options.

(a) Grant of Options.

(i)    The 1994 and 1996 Option Grants.    On September 30, 1994 and August 1, 1996, each Non-Employee Director on that date shall automatically be granted an Option, upon the terms and conditions specified in the Plan, to purchase 1,000 shares of Common Stock.

(ii)    Initial Option Grants to Newly-Elected Non-Employee Directors.    Any person who is elected as a Non-Employee Director for the first time after September 30, 1994 and prior to December 18, 1996 shall automatically be granted an Initial Option, upon the terms and conditions specified in the Plan, immediately following the first Annual Meeting of the Company's Shareholders at which such person is first elected a Non-Employee Director by the Shareholders. The number of shares of Common Stock subject to such Initial Option shall equal the number of shares of Common Stock such Non-Employee Director would have received under option grants under the Plan if such Non-Employee Director had been a Non-Employee Director at all times between September 1, 1994 and the date of such person's election as a Non-Employee Director.

(iii)    Discretionary Option Grants.    On and after December 18, 1996, Non-Employee Directors may be granted Options, upon the terms and conditions specified in the Plan, to purchase shares of Common Stock in amounts as may be determined by the Board of Directors.

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(b)    Terms of Options.    Each Option granted under the Plan shall have the following terms and conditions:

(i) Price. The exercise price per share of each Option shall equal the greater of one hundred percent (100%) of the Fair Market Value of a share of Common Stock on the Grant Date or the par value per share of the Common Stock on the date of exercise of such option.

(ii) Term. The term of each Option shall be for a period of ten (10) years from the Grant Date unless terminated earlier in accordance with Section 12 of the Plan.

(iii) Time of Vesting and Exercise. An Option shall vest on its Grant Date and, unless the Non-Employee Director to whom said option has been granted is removed from office for cause, it shall be exercisable in full on or after its Grant Date.

(iv) Option Agreement. Each Option shall be evidenced by an Option Agreement substantially in the form attached to this Plan as Appendix A.

8. Exercise of Options.

(a)    Each Option granted shall be exercisable in whole or in part at any time, or from time to time, during the Option term as specified in the Plan, provided that the election to exercise an Option shall be made in accordance with applicable Federal laws and regulations. Each Option may be exercised by delivery of a written notice to the Company stating the number of shares to be exercised and accompanied by the payment of the Option exercise price therefor in accordance with this Section. The Grantee shall furnish the Company, prior to the delivery of any shares upon the exercise of an Option, with such other documents and representations as the Company may require, to assure compliance with applicable laws and regulations.

(b)    No Option may at any time be exercised with respect to a fractional share. In the event that shares are issued pursuant to the exercise of an Option, no fractional shares shall be issued and cash equal to the Fair Market Value of such fractional share on the date of the delivery of the exercise notice shall be given in lieu of such fractional shares.

(c)    No shares shall be delivered pursuant to the exercise of any Option, in whole or in part, until qualified for delivery under such securities laws and regulations as the Committee may deem to be applicable thereto and until payment in full of the Option price is received by the Company in cash, by check or in shares of Common Stock as provided in Section 9 hereof. Neither the holder of an Option nor such holder's transferee, legal representative, legatee, or distributee shall be or be deemed to be a holder of any shares subject to such Option unless and until a certificate or certificates therefor is issued in his or her name or a person designated by him or her.

9. Stock as Form of Exercise Payment.

A Grantee who owns shares of Common Stock may elect to use the previously acquired shares, valued at the Fair Market Value on the last Business Day preceding the date of delivery of such shares, to pay all or part of the exercise price of an Option, provided, however, that such form of payment shall not be permitted unless at least one hundred shares of such previously acquired shares are required and delivered for such purpose and the shares delivered have been held by the Grantee for at least six months.

10.    Withholding Taxes for Awards.    Each Grantee exercising an Option as a condition to such exercise shall pay to the Company the amount, if any, required to be withheld from distributions resulting from such exercise under applicable Federal and State income tax laws ("Withholding Taxes"). Such Withholding Taxes shall be payable as of the date income from the award is includable in the Grantee's gross income for Federal income tax purposes (the "Tax Date"). The Grantee may satisfy this requirement by remitting to the Company in cash or by check the amount of such Withholding Taxes or a number of previously owned shares of Common Stock having an aggregate Fair Market Value as of the last Business Day preceding the Tax Date equal to the amount of such Withholding Taxes. For the purposes of this Section 10, the exercise of an Option by a transferee of such Option pursuant to Section 11(b) hereof, shall be deemed to be an exercise of the Option by the Grantee.

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11. Transfer of Awards.

(a)    Options granted under the Plan may not be transferred except (i) by will or the laws of descent and distribution (ii) pursuant to a qualified domestic relations order, as defined in the Code, or (iii) pursuant to the provisions of Subsection (b) below, and, except as provided in Subsection (b) below, during the Grantee's lifetime, may be exercised only by said Grantee or by said Grantee's guardian or legal representative.

(b)    A Grantee may transfer all or a portion of the Options granted to the Grantee to (i) an Immediate Family Member or Immediate Family Members, (ii) a trust or trusts for the exclusive benefit of an Immediate Family Member or Immediate Family Members, or (iii) a partnership or partnerships in which an Immediate Family Member or Immediate Family Members is the only partner or are the only partners, provided that (y) there shall be no consideration for such transfer, and (z) subsequent transfers of transferred Options shall be prohibited except those in accordance with subsection (a) above. Following a transfer, any such transferred Options shall continue to be subject to the same terms and conditions as were applicable immediately prior to transfer, provided that for the purposes of Sections 9 and 15, hereof, the term "Grantee" shall be deemed to refer to the transferee. The events of termination of director status in Section 12 hereof shall continue to be applied with respect to the original Grantee, following which the Options shall be exercisable by the transferee only to the extent, and for the periods specified in Section 12. Neither the Board, the Company nor any agent, employee or representative thereof shall be under any duty under the Plan or otherwise to notify any transferee, pursuant to the terms of either subsection (a) above or this subsection (b), of any event which might have an impact on the value or exercisability of a transferred Option.

12. Termination of Director Status.

Upon the termination of a Grantee's service as a member of the Board of Directors for any reason other than cause, the Grantee may exercise an Option to the full extent of the number of the shares of Common Stock remaining under such Option until the expiration of its original term. Upon the termination of Board membership of any such Grantee for cause, all Options held by such Grantee (and any and all rights thereunder) shall be forfeited.

13. Changes in Common Stock.

In the event of a merger, consolidation, reorganization, recapitalization, stock dividend, stock split, or other changes in corporate structure or capitalization affecting the Common Stock, such appropriate adjustment shall be made in the number, kind, option price, etc., of shares subject to Options granted under the Plan, including appropriate adjustment in the maximum number of shares referred to in Section 6 of the Plan, as may be determined by the Board.

14. Legal Restrictions.

The Company will not be obligated to issue shares of Common Stock or make any payment if counsel to the Company determines that such issuance or payment would violate any law or regulation of any governmental authority or any agreement between the Company and any national securities exchange on which the Common Stock is listed. In connection with any stock issuance or transfer, the person acquiring the shares shall, if requested by the Company, give assurances satisfactory to counsel to the Company regarding such matters as the Company may deem desirable to assure compliance with all legal requirements. The Company shall in no event be obliged to take any action in order to cause the exercise of any award under the Plan.

15. No Rights as Shareholders.

No Grantee and no beneficiary or other person claiming through a Grantee shall have any interest in any shares of Common Stock allocated for the purposes of the Plan or subject to any award until such shares of Common Stock shall have been transferred to the Grantee or such person. Furthermore, the existence of awards under the Plan shall not affect: the right or power of the Company or its stockholders to make adjustments, recapitalizations, reorganizations or other changes in the Company's capital structure; the dissolution or liquidation of the Company, or the sale or transfer of any part of its assets or business; or any other corporate act, whether of a similar character or otherwise.

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16. Board Membership.

Nothing in the Plan or in any Option shall confer upon any Grantee any right to continue as a director of the Company or interfere in any way with the right of the Company's shareholders to remove a director at any time.

17. Choice of Law.

The validity, interpretation and administration of the Plan and of any rules, regulations, determinations or decisions made thereunder, and the rights of any and all persons having or claiming to have any interest therein or thereunder, shall be determined exclusively in accordance with the laws of the State of Connecticut.

18. Amendment and Discontinuance.

Subject to the limitation that the provisions of the Plan shall not be amended more than once every six months other than to comport with changes in the Code or regulations thereunder, the Board of Directors may alter, suspend, or discontinue the Plan, but may not, without the approval of a majority of the holders of the Common Stock, make any alteration or amendment thereof which operates (a) to increase the total number of shares which may be granted under the Plan, (b) to extend the term of the Plan or the option periods provided in the Plan, (c) to decrease the option price provided in the Plan, or otherwise materially increase the benefits accruing to Grantees through awards under the Plan, or (d) to modify the eligibility requirements for participation in the Plan.

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APPENDIX A

STOCK OPTION AGREEMENT
UNDER
THE STANLEY WORKS STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS

Pursuant to Section 7 of The Stanley Works Stock Option Plan for Non-Employee Directors (the "Plan"), The Stanley Works (the "Company"), this          day of                           , 200  , hereby grants to                                                       ("Director") a non-qualified stock option to purchase an aggregate of [Three Thousand (3,000) shares (in the case of a 1994 or 1996 Option)] [                         shares (in the case of an Initial Option)] [                 shares (in the case of a discretionary Option)] of the Common Stock of the Company at $           per share, on the terms and conditions hereinafter set forth and set forth in the Plan. This option will expire at the Company's close of business on                             , 200  , unless sooner terminated in accordance with the terms of the Plan.

1.    The Company hereby grants to Director a non-qualified stock option (the "Option") to purchase on or before the expiration date indicated above, at the purchase price stated above, the number of shares of the Company's Common Stock set forth above. No option granted under the Plan shall be exercised or will vest unless and until the Plan is approved by the Company's shareholders.

2.    The term of this Option shall commence on the date of this Agreement and shall terminate, unless sooner terminated by the terms of the Plan, at the close of business on the day preceding the tenth anniversary of the date of this Agreement as set forth above, if the Company is open for business on such day, or the close of the Company's business on the next preceding day that the Company is open for business. This Option shall vest on the Grant Date of this Option set forth above. This Option may be exercised in whole or in part in accordance with the terms of the Plan during the term of the Option, unless sooner terminated by the terms of the Plan.

3.    This Option may be exercised, in whole or in part, by written notification delivered in person or by mail to the Secretary of the Company at its world headquarters at 1000 Stanley Drive, New Britain, Connecticut. Such notification shall specify the number of shares with respect to which the Option is being exercised and shall be accompanied by payment for such shares. The Secretary of the Company will provide Director with a form of exercise notice upon request. The Option may not be exercised with respect to a fractional share. Payment is to be made by check payable to the order of the Company or by one of the alternative methods of payment described in the Plan. No shares shall be sold or delivered hereunder until full payment for such shares has been made and all checks delivered in payment therefor have been collected. Director shall not have any rights of a shareholder with respect to any Common Stock received upon exercise of the Option until certificates for such Common Stock have been actually issued to Director in accordance with the terms hereof.

4.    The Company shall not be required to issue or deliver any certificate or certificates for shares of its Common Stock purchased upon the exercise of any part of this Option prior to (i) the admission of such shares to listing on any stock exchange on which the Common Stock may then be listed, (ii) the completion of any registration or other qualification of such shares under any applicable law, rule or regulation, (iii) the obtaining of any consent or approval or other clearance from any governmental agency which the Company determines to be necessary or advisable, and (iv) the payment to the Company, upon its demand, of any amount requested by the Company for the purpose of satisfying its liability, if any, to withhold federal, state or local income or earnings tax or any other applicable tax or assessment (plus interest or penalties thereon, if any, caused by a delay in making such payment) incurred by reason of the exercise of this Option or the transfer of such shares thereupon. The Option shall be exercised and shares of the Company's Common Stock issued only upon compliance with the Securities Act of 1933, as amended (the "Act"), and any other applicable securities laws, and Director agrees to comply with any requirements imposed by the Committee.

5.    This Option is not transferrable by Director otherwise than (a) by will or by the laws of descent and distribution (b) pursuant to a qualified domestic relations order, as defined in the Code, or (c)

pursuant to the immediately following sentence and is exercisable, except as provided in the immediately following sentence, during Director's life, only by Director or by Director's guardian or legal representative. The Director may transfer all or a portion of this Option to (i) an Immediate Family Member or Immediate Family Members, (ii) a trust or trusts for the exclusive benefit of such Immediate Family Member or Immediate Family Members, or (iii) a partnership or partnerships in which such Immediate Family Member or Immediate Family Members is the only partner or are the only partners, all in accordance with and subject to the provisions of Section 11 of the Plan. Any attempted assignment, transfer, pledge, hypothecation or other disposition of the Option contrary to the provisions hereof shall be null and void. This Option does not confer upon Director any right with respect to continuation of Director's service as a director of the Company or any of its subsidiaries, and will not interfere in any way with the right of the Company's shareholders or the shareholders of any of its subsidiaries to terminate Director's service as a director.

6.    Upon the termination of Director's service as a member of the Board of Directors, the Director or his or her transferee may exercise this Option, except as otherwise provided in Sections 11 and 12 of the Plan.

7.    This Option shall be irrevocable during the Option period and its validity and construction shall be governed by the laws of the State of Connecticut. The terms and conditions herein set forth are subject in all respects to the terms and conditions of the Plan, which shall be controlling. You agree to execute such other agreements, documents or assignments as may be necessary or desirable to effect the purposes of this Agreement.

8.    The grant of this Option shall be binding and effective only if this Agreement is executed by or on behalf of the Company and by you and a signed copy is returned to the Company.

9.    All capitalized terms used in this Agreement which are not defined herein shall have the meaning given to them in the Plan unless the context clearly requires otherwise.

THE STANLEY WORKS
    
    
By   ____________________________________
    
Its   ____________________________________
    

I hereby acknowledge receipt of the Stock Option (the "Option") granted on the date shown above, which has been issued to me under the terms and conditions of The Stanley Works Stock Option Plan for Non-Employee Directors. I agree to conform to all of the terms and conditions of the Option and the Plan.

Date:                                                  Your Signature:                                                             

2

EX-31.(I)

EXHIBIT 31 (i)

CERTIFICATIONS

I, John M. Trani, certify that:

1. I have reviewed this report on Form 10-Q of The Stanley Works and subsidiaries;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weakness in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 7, 2003

/s/ John M. Trani
John M. Trani
Chairman and Chief Executive Officer

EX-31.(II)

EXHIBIT 31 (ii)

CERTIFICATIONS

I, James M. Loree, certify that:

1. I have reviewed this report on Form 10-Q of The Stanley Works and subsidiaries;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 7, 2003				/s/ James M. Loree
				James M. Loree Executive Vice President, Finance and Chief Financial Officer

EX-32.(I)

EXHIBIT 32 (i)

THE STANLEY WORKS

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of The Stanley Works (the "Company") on Form 10-Q for the period ending September 27, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, John M. Trani, Chairman and Chief Executive Officer, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ John M. Trani
John M. Trani
Chairman and Chief Executive Officer
November 7, 2003

EX-32.(II)

EXHIBIT 32 (ii)

THE STANLEY WORKS

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of The Stanley Works (the "Company") on Form 10-Q for the period ending September 27, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, James M. Loree, Executive Vice President and Chief Financial Officer, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ James M. Loree
James M. Loree
Executive Vice President and Chief Financial Officer
November 7, 2003