-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FECmkKvvIc0b/30ln3LySOp1c6P5yVtv4zTmL/K6LPiYvAVwnrt45MyFV1stcN86 ojhLW3DbY0yLsU3ECVKu5g== 0000950172-02-000360.txt : 20020414 0000950172-02-000360.hdr.sgml : 20020414 ACCESSION NUMBER: 0000950172-02-000360 CONFORMED SUBMISSION TYPE: 425 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20020221 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: STANLEY WORKS CENTRAL INDEX KEY: 0000093556 STANDARD INDUSTRIAL CLASSIFICATION: CUTLERY, HANDTOOLS & GENERAL HARDWARE [3420] IRS NUMBER: 060548860 STATE OF INCORPORATION: CT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 425 SEC ACT: 1934 Act SEC FILE NUMBER: 001-05224 FILM NUMBER: 02555423 BUSINESS ADDRESS: STREET 1: 1000 STANLEY DR STREET 2: P O BOX 7000 CITY: NEW BRITAIN STATE: CT ZIP: 06053 BUSINESS PHONE: 8602255111 MAIL ADDRESS: STREET 1: 1000 STANLEY DR CITY: NEW BRITAIN STATE: CT ZIP: 06053 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: STANLEY WORKS CENTRAL INDEX KEY: 0000093556 STANDARD INDUSTRIAL CLASSIFICATION: CUTLERY, HANDTOOLS & GENERAL HARDWARE [3420] IRS NUMBER: 060548860 STATE OF INCORPORATION: CT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 425 BUSINESS ADDRESS: STREET 1: 1000 STANLEY DR STREET 2: P O BOX 7000 CITY: NEW BRITAIN STATE: CT ZIP: 06053 BUSINESS PHONE: 8602255111 MAIL ADDRESS: STREET 1: 1000 STANLEY DR CITY: NEW BRITAIN STATE: CT ZIP: 06053 425 1 bermuda.txt RULE 425 Filer: The Stanley Works Pursuant to Rule 425 under the Securities Act of 1933 and deemed filed pursuant to Rule 14a-12(b) under Securities Exchange Act of 1934 Subject Company: The Stanley Works Commission File No.: 1-5224 Registration Statement No.: 333-82382 Bermuda Reincorporation Transaction February, 2002 Institutional Investor / Sell-side Analyst Individual Shareowner Overview --------------------------------------------------------------------------- | | | Proposed Reincorporation Transaction | | | - ---------------------------------------------------------------------------- >> Change In Legal Domicile ... From Connecticut to Bermuda. >> Conversion of All Shares...From SWK to SWK Ltd. >> No accounting / operating impacts. >> Ownership and voting rights substantially unchanged. >> Corporate headquarters location, business operations, customer / supplier relationships, etc. all remain unchanged. --------------- | WHY DO THIS ? | --------------- --------------------------------------------------------------------------- | | | Compelling Long-Term Benefits | | | - ---------------------------------------------------------------------------- >> Alignment of corporate structure with increasingly international operations. >> Facilitate expansion of international business. >> Sustained generation of higher levels of Free Cash Flow ... flexibility to fund enhancers of shareowner value >> Potential for higher debt capacity & better ratings, based on FCF increase >> Improvement of worldwide effective tax rate. --------------------------------------------------------------------------- | PROVIDES MUCH OF THE FLEXIBILITY | | NEEDED TO GROW INTERNATIONALLY | ---------------------------------------------------------------------------- --------------------------------------------------------------------------- | Increasingly International Operations | | | --------------------------------------------------------------------------- >> 28% of revenues outside U.S. >> 30% of fixed assets outside U.S. >> 40% of manufacturing facilities outside U.S. >> 48% of workforce outside U.S. >> 2 of 3 recent acquisitions outside U.S. --------------------------------------------------------------------------- | ENABLES EFFECTIVE IMPLEMENTATION | | OF WORLDWIDE BUSINESS STRATEGY | --------------------------------------------------------------------------- --------------------------------------------------------------------------- | Flexibility To Fund Items Enhancing | | Shareowner Value | --------------------------------------------------------------------------- >> Acquisitions, especially international / industrial. >> Debt repayment. >> Share repurchase program. >> Dividend increases. >> Expansion into new product markets. >> New product development. --------------------------------------------------------------------------- | ABILITY TO FUND EACH IS ENHANCED | | | --------------------------------------------------------------------------- --------------------------------------------------------------------------- | Timing And Process | | | --------------------------------------------------------------------------- >> KEY CUSTOMER CONSENTS X GRAINGER X HOME DEPOT X LOWES X WAL*MART X >> S&P 500 INDEX - PRELIM. INDICATION X >> I.S.S. POSITIVE RECOMMENDATION - PRELIM. INDICATION X __________________ >> 2/3 VOTE OF ALL O/S SHARES ---------------------> |Expected April'02 | PROXY ITEM; ANNUAL MTG. VOTE |__________________|_ >> TRANSACTION IMPLEMENTATION >> BENEFIT REALIZATION, _________________ i.e. 23% - 25% TAX RATE ---------------------> | Expected Q2'02 | |_________________| --------------------------------------------------------------------------- | Summary | | | --------------------------------------------------------------------------- >> Shareowner Rights Substantially Unchanged; Recreated Stanley Connecticut in Bermuda >> Anti-Takeover Devices - Poison Pill, Etc. -- Replicated >> Potential Expansion Of Market Cap: $440MM+ (11.5%) >> The Reward: One Additional Year's Free Cash Flow Every Five Years --------------------------------------------------------------------------- | A CLEAR PLUS TO SHAREOWNER VALUE...BUT YOUR VOTE IS NEEDED! | | | --------------------------------------------------------------------------- --------------------------------------------------------------------------- | Substantial Short-Term Benefits... | | | --------------------------------------------------------------------------- 2002 2003 ---- ---- Current 1st Call consensus $2.70 $3.00 Shares outstanding 87.8MM 87.8MM ------ ------ After-tax earnings $237MM $264MM Current tax rate 32% 32% ------ ------ Pre-tax earnings $349MM $387MM New tax rate @ 2Q02 28% 24% ------ ------ New after-tax earnings $252MM $294MM Shares outstanding 87.8MM 87.8MM ------ ------ $2.87 $3.35 INCREMENTAL / BENEFITS - ---------------------- Free Cash Flow $ 15MM $ 30MM E.P.S. $.17 $.35 E.P.S. X Current '03 Multiple + $5.00 --------------------------------------------------------------------------- | Summary of Benefits | | | --------------------------------------------------------------------------- >> Expected effective tax rate reduction: 32% to 24%. >> Resulting cash tax savings: $30MM / yr. ($.35 EPS / yr.) = NPV $100MM +. >> Added flexibility to apply free cash flow to dividends, acquisitions, share repurchases & debt repayment. >> Significantly improves after-tax returns on prospective acquisitions. >> Potential market cap expansion of $440MM+ (11.5%). --------------------------------------------------------------------------- | THE REWARD: ONE ADDITIONAL YEAR'S | | FREE CASH FLOW EVERY FIVE YEARS | --------------------------------------------------------------------------- --------------------------------------------------------------------------- | Benefits Substantially Outweigh Costs | | | --------------------------------------------------------------------------- SWK COSTS SHAREOWNER COSTS --------- ---------------- >> Legal >> No incremental tax >> Proxy solicitation >> Public relations >> Acceleration of inherent >> SEC filings capital gains tax >> Tax consulting >> Administration >> Approx. 60% of SWK >> Investment banker shares in non-taxable holdings ------------ | $3 - 5MM | ------------ --------------------------------------------------------------------------- | Shareowner Rights Maintained As In CT | | | --------------------------------------------------------------------------- SWK Bermuda provisions replicate current SWK provisions: |X| Directors staggered in 3-year terms. |X| Directors removed only for cause; shareowner vote. |X| Director vacancies filled only by remaining directors; not by shareowners. |X| Current 10% poison pill will be "substantially replicated" in Bermuda / Stanley Ltd. |X| Dividend rights substantially similar. |X| Repurchases of shares in the open market permitted. |X| Shareowner proposals permitted with proper notice. |X| Special meeting requests permitted (threshold 10% in Bermuda -------------------------------------------------------------------------- | ANTI-TAKEOVER MECHANISMS - POISON | | PILL, ETC. - REPLICATED | --------------------------------------------------------------------------- --------------------------------------------------------------------------- | Summary | | | --------------------------------------------------------------------------- >> Only real change is in legal domicile / no ops impacts. >> Enhanced ability to compete / acquire...levels the playing field vs. foreign competitors. >> Compelling benefits: |X| $30MM annual free-cash flow / $.35 EPS added EPS (32% -> 24% tax rate). >> Negligible downside: minimal transaction costs; no changes to shareowner rights / anti-takeover -------------------------------------------------------------------------- | A CLEAR PLUS TO SHAREOWNER VALUE | | ...BUT YOUR VOTE IS NEEDED! | --------------------------------------------------------------------------- This foregoing does not constitute an offer of any securities for sale, or an offer or invitation to purchase any securities. A registration statement on form S-4 will be filed with the Securities and Exchange Commission ("SEC") today, containing a form of proxy statement / prospectus with respect to the re-incorporation, providing details of the transaction. This registration statement will be available at the SEC's web site, www.sec.gov. When finalized, these documents will be available at the SEC's web site and Stanley's web site, www.stanleyworks.com. Investors should read these documents before making a decision concerning the transaction. The Stanley Works, its officers and directors may be deemed to be participants in the solicitation of proxies from shareowners in favor of the re-incorporation. Information about the directors and executive officers and ownership of stock is set forth in the aforementioned form S-4. -----END PRIVACY-ENHANCED MESSAGE-----