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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 31, 1994
The Stanley Works
(Exact name of registrant as specified in charter)
Connecticut 1-5224 06-058860
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
1000 Stanley Drive, New Britain, Connecticut 06053
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(203) 225-5111
Not Applicable
(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events.
1. On January 31, 1994, the Registrant issued a press
release.
Attached as Exhibit (21)(i) is a copy of the Registrant's
press release. This Exhibit is incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(21)(i) Press release dated January 31, 1994 reporting on
Stanley's 1993 year end results.
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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
By: \s\Stephen S. Weddle
Name: Stephen S. Weddle
Title: Vice President, General
Counsel and Secretary
Date: February 2, 1994
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Exhibit (21)(i)
FOR IMMEDIATE RELEASE January 31, 1994
STANLEY REPORTS 1993 SALES UP 3.5%; EARNINGS UP 4% BEFORE ACCOUNTING
CHANGE AND LITIGATION CHARGE
New Britain, CT . . . "The Stanley Works achieved record sales of $2.3
billion in 1993, representing an increase of 3.5% over last year,"
reported Richard H. Ayers, Chairman and Chief Executive Officer. "Net
earnings, excluding the effects of a change in an accounting principle and
fourth quarter legal settlements, were up 4% from the previous year."
Mr. Ayers noted, "We are encouraged that our 1993 sales growth was driven
primarily by unit volume increases. Minor price increases and the effects
of acquisitions were almost entirely offset by a 3% negative effect of
currency. Improving economic conditions, particularly in the U.S., and
our continued focus on developing new products and markets, helped foster
this solid growth in our core businesses."
Excluding the effects of an accounting change, earnings were $93 million,
$2.06 per share, compared with $98 million, $2.15 per share, reported in
1992. We experienced a significant negative currency impact from the
translation of foreign results into U.S. dollars and transaction costs in
purchasing product, principally from Japan. Earnings also included a $.21
per share charge in the fourth quarter related to the settlement of 132
lawsuits involving a subsidiary, Mac Tools, Inc.
During recent discussions with lawyers representing former distributors
concerning cases filed against Mac Tools, Inc., 66 threatened claims were
revealed. A decision was made to settle 132 filed and threatened
lawsuits, leaving four outstanding filed cases against Mac Tools. A
fourth quarter charge of $15 million was recognized to reflect these
settlements and the accrual of reserves to cover outstanding claims.
Mac Tools has retained law firms who had previously represented settling
claimants to advise Mac in its relationships with its distributors.
Mr. Ayers commented, "Mac Tools has been a successful business for over 50
years based on a company commitment to help its independent tool
distributors succeed. This settlement removes a degree of uncertainty in
our balance sheet and eliminates a significant distraction, enabling Mac
and its employees to concentrate fully on the continued success of both
its distributors and the company."
Net earnings for 1993 also reflected a one-time after-tax charge of $8.5
million, $.19 per share, for the adoption of Financial Accounting Standard
No. 112, "Employers' Accounting for Postemployment Benefits". The new
standard, which must be adopted by all publicly traded companies no later
than the first quarter 1994, requires us to accrue postemployment benefits
as they are earned by the employee for services rendered rather than as
they are paid. The charge, which reduced net earnings to $84 million,
$1.87 per share, will be applied retroactively by restating the first
quarter 1993.
-more-
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Gross margins realized in 1993 of 31.7% were down from 33.2% in 1992.
Much of the decline is associated with the transition of previously
foreign-sourced fastening tools to U. S. in-house manufacture together
with high raw material costs and the related expenses of manufacturing
process changes in our Door Systems business.
Operating expenses were 22.5% of sales in 1993 compared with 24.0% in
1992. The improvement reflects continued efforts to reduce costs,
increased operating efficiencies, and the absence of certain non-recurring
expenses. Interest-Net was similar to the prior year. Other- Net
expense for 1993 included a $.21 per share charge for Mac Tools'
distributor litigation issues. It also included a gain on the sale of a
non-operating asset of $.39 per share which was substantially offset by
additional charges for contingency reserves related to product liability,
restructuring activities and environmental clean-up. The effective tax
rate was 37.4%, down slightly from 37.9% in 1992.
Net sales in the United States were up 8%, reflecting unit volume gains of
6% and a 2% gain from acquisitions. This was the strongest internal
growth realized since 1988. There were no effective price increases in
the U.S. in 1993.
During 1993, weak economic conditions continued in Europe where our
operations experienced an overall decline in sales of 10%. Foreign
currency had a negative impact of 11% and unit volume was 3% negative.
The combination of small price increases and acquisitions added 4%.
Net sales in Other Areas decreased 2% principally due to the negative
effects of currency and sales weakness in Canada. Sales in the Far East
and Latin America continue to exceed growth rates experienced by the
company overall.
Tools sales were 4% higher than 1992. Unit volume gains of 4% were
primarily the result of stronger internal growth in our industrial and
engineered tools categories. Acquisitions and divestitures resulted in a
2% increase in sales. The net result of price increases in some tool
categories and decreases in others resulted in an overall 1% increase in
sales for the year. The negative effect of currency of approximately 3%
offset price and acquisition gains. Operating profits of $158 million
were down 8% from 1992 and reflected dealer litigation and plant closing
expenses of a subsidiary, Mac Tools, Inc. As a result, operating margins
were 9.3% for 1993, compared with 10.5% in 1992.
Hardware sales increased 1% over 1992, as the negative effects of currency
partially offset unit volume growth of 3%. Operating profits increased
29% to $33 million and operating margins improved to 11.0% from 8.6% in
the prior year. The improvement in margins is principally due to
operating efficiencies and the integration of recent acquisitions.
Specialty Hardware sales for 1993 were 4% higher than 1992. Virtually all
of the increase was generated by internal growth, as the effects of modest
price increases were offset by the negative effect of currency. Operating
profits were negatively impacted by abnormally high raw material costs and
the expenses of related manufacturing process adjustments at our Door
Systems division.<PAGE>
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Net sales for the fourth quarter 1993 were $578 million which were 2%
below 1992 sales of $593 million. Inherent in the sales decline is the
difference between fiscal 1993 with 52 weeks and fiscal 1992, which
contained 53 weeks, with the extra week occuring in the fourth quarter.
Net earnings for the fourth quarter 1993 were $18 million, $.39 per share,
compared with $26 million, $.58 per share, in the fourth quarter 1992.
Net earnings for the quarter included a $15 million, $.21 per share,
charge for Mac Tools' distributor litigation issues. Gross margins of
31.2% reflected a slight improvement over the third quarter 1993; however,
it was lower than 1992 margins of 32.4%. Operating expenses were 22.1% of
sales compared with 23.3% in the fourth quarter 1992.
Mr. Ayers stated, "We believe there are several reasons to be optimistic
about 1994: rising consumer confidence, low interest rates, the general
affordability of homes in the U.S., growth in housing starts and existing
home sales, and sustained growth in U.S. factory activity. Our company--
wide emphasis on customer service and product innovation, together with
our continuing commitment to increasing manufacturing efficiencies through
technology and process improvements, have already positioned us in the
market with high quality, innovative products at reasonable prices.
"While the economies of Europe will probably continue to be weak, they
have stabilized. The high growth markets of Asia and Latin America
provide brighter prospects and we have been growing continuously from a
modest base in both regions, paced by our understanding of the markets,
the business environments and the cultures. We have had significant
manufacturing in Latin America for several years and continue to increase
our manufacturing presence in Asia, with new facilities in Malaysia,
Indonesia and Thailand.
"Many of our large U.S. and European customers are beginning to expand
into Latin America and Asia. Our local manufacturing, worldwide brand
strength, broad product mix and our existing strong relationships with
these customers, give us a significant competitive advantage in servicing
their needs."
Mr. Ayers concluded, "We have achieved significant reductions in the costs
of our operations over the past few years. At the same time, we have been
making the investments in new product development, technology and global
expansion that will accelerate growth for our business units and provide
profitable growth for our company."
##########
CONTACT: Patricia McLean
Manager, Corporate Communications
(203) 827-3833
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<TABLE>
THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Millions of Dollars)
<CAPTION>
FOURTH QUARTER TWELVE MONTHS
1993 1992 1993 1992
<S> <C> <C> <C> <C>
Net Sales $ 578.2 $ 592.6 $ 2,273.1 $ 2,195.6
Costs and Expenses
Cost of sales 398.0 400.8 1,553.0 1,466.0
Selling, general and
administrative 127.6 137.8 512.3 526.7
Interest - net 5.0 7.0 25.2 26.5
Other - net 23.2 3.2 34.6 18.3
------- ------- -------- --------
553.8 548.8 2,125.1 2,037.5
------- ------- -------- --------
Earnings Before Income Taxes
and Cumulative Effect of
Accounting Change 24.4 43.8 148.0 158.1
Income Taxes 6.8 17.4 55.4 60.0
------- ------- -------- --------
Earnings Before Cumulative
Effect of Accounting Change 17.6 26.4 92.6 98.1
Cumulative Effect of Accounting
Change for Postemployment
Benefits (8.5)
------- ------- -------- --------
Net Earnings $ 17.6 $ 26.4 $ 84.1 $ 98.1
======= ======= ======== ========
Earnings Per Share of
Common Stock:
Before Cumulative Effect
of Accounting Change $ 0.39 $ 0.58 $ 2.06 $ 2.15
Cumulative Effect of
Accounting Change (0.19)
------- ------- -------- --------
Net Earnings Per Share of
Common Stock $ 0.39 $ 0.58 $ 1.87 $ 2.15
======= ======= ======== ========
Dividends per share $ 0.34 $ 0.33 $ 1.34 $ 1.28
Average shares outstanding 44,688 45,441 44,935 45,703
(in thousands)
<FN>
See notes to consolidated financial statements.
</TABLE>
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<TABLE>
THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Millions of Dollars)
<CAPTION>
January 1 January 2
1994 1993
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 43.7 $ 81.1
Accounts receivable 371.2 354.9
Inventories 308.1 302.0
Other current assets 35.6 40.7
------- -------
Total current assets 758.6 778.7
Property, plant and equipment - net 566.5 566.6
Goodwill and other intangibles 171.5 175.3
Investments and other assets 80.3 87.0
------- -------
$ 1,576.9 $ 1,607.6
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable $ 52.1 $ 28.6
Accounts payable 103.3 114.0
Accrued expenses 201.7 187.3
------- -------
Total current liabilities 357.1 329.9
Long-term debt 377.2 438.0
Other long-term liabilities 161.7 143.4
Shareholders' equity 680.9 696.3
------- -------
$ 1,576.9 $ 1,607.6
======= =======
<FN>
See notes to consolidated financial statements.
</TABLE>
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<TABLE>
THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions of Dollars)
<CAPTION>
FOURTH QUARTER TWELVE MONTHS
1993 1992 1993 1992
Cash Provided By Operations
<S> <C> <C> <C> <C>
Net Earnings $ 17.6 $ 26.4 $ 84.1$ 98.1
Depreciation and amortization 21.6 15.8 80.7 78.5
Provision for postemployment benefits 13.6
Net gain on sale of non-operating asset (25.8) (29.0) (25.8)
Other non-cash items (5.8) 8.4 9.4 16.0
Changes in operating assets
and liabilities 50.2 44.4 (12.3) 18.2
------ ------ ------ ------
Net cash provided by
operating activities 83.6 69.2 146.5 185.0
Investing Activities
Capital expenditures (25.2) (19.5) (69.7) (65.1)
Proceeds from sales of assets 1.8 4.0 6.6 8.2
Proceeds from sale of non-operating asset 35.2 38.9 35.2
Business acquisitions (3.5) (13.3)(105.8)
Other (9.2) (4.0) (13.2) (10.6)
------ ------ ------ ------
Net cash provided (used) by
investing activities (32.6) 12.2 (50.7)(138.1)
Financing Activities
Payments on long-term debt (0.9) (46.3) (133.8) (69.8)
Proceeds of long-term borrowings 0.1 105.1 78.5 120.2
Net short-term bank financing (45.0) (67.6) 22.3 5.1
Proceeds from issuance of common stock 0.6 0.8 4.6 3.6
Purchase of common stock for treasury (2.7) (42.3) (25.0)
Cash dividends on common stock (0.6) (15.0) (60.5) (57.5)
------ ------ ------ ------
Net cash (used) by
financing activities (45.8) (25.7) (131.2) (23.4)
Effect of Exchange Rate Changes on Cash (0.5) (1.6) (2.0) (0.7)
------ ------ ------ ------
Increase (decrease) in Cash and
Cash Equivalents 4.7 54.1 (37.4) 22.8
Cash and Cash Equivalents,
Beginning of Period 39.0 27.0 81.1 58.3
------ ------ ------ ------
Cash and Cash Equivalents,
End of Fourth Quarter $ 43.7 $ 81.1 $ 43.7 $ 81.1
<FN> ===== ====== ====== ======
See notes to consolidated financial statements.
</TABLE>
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<TABLE>
THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS' EQUITY
(Millions of Dollars)
<CAPTION>
TWELVE MONTHS
1993 1992
<S> <C> <C>
Balance at beginning of year $ 696.3 $ 698.3
Net earnings 84.1 98.1
Currency translation adjustment (15.2) (33.4)
Cash dividends declared (60.1) (58.5)
Net purchase of Common Stock (31.5) (15.5)
ESOP debt 7.3 7.3
-------- -------
Balance at end of year $ 680.9 $ 696.3
======== =======
<FN>
See notes to consolidated financial statements.
</TABLE>
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<TABLE>
THE STANLEY WORKS AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(Millions of Dollars)
<CAPTION>
FOURTH QUARTER TWELVE MONTHS
1993 1992 1993 1992
INDUSTRY SEGMENTS
Net Sales
Tools
<S> <C> <C> <C> <C>
Consumer $ 189.3 $ 201.7 $ 726.0 $ 723.0
Industrial 104.3 99.1 411.1 377.7
Engineered 140.8 138.5 568.5 540.0
-------- -------- -------- --------
Total Tools 434.4 439.3 1,705.6 1,640.7
Hardware 72.0 74.6 299.4 297.2
Specialty Hardware 71.8 78.7 268.1 257.7
-------- -------- -------- --------
Consolidated $ 578.2 $ 592.6 $ 2,273.1 $ 2,195.6
======== ======== ======== ========
Operating Profit
Tools $ 30.5 $ 38.8 $ 158.1 $ 171.7
Hardware 8.6 6.3 32.9 25.6
Specialty Hardware 3.8 6.2 13.2 18.3
-------- -------- -------- --------
Total 42.9 51.3 204.2 215.6
Net corporate expenses (10.4) 1.2 (24.0) (24.5)
Interest expense (8.1) (8.7) (32.2) (33.0)
-------- -------- -------- --------
Earnings before
income taxes $ 24.4 $ 43.8 $ 148.0 $ 158.1
======== ======== ======== ========
GEOGRAPHIC AREAS
Net Sales
United States $ 431.2 $ 431.5 $ 1,680.0 $ 1,561.5
Europe 76.7 89.5 317.3 354.0
Other Areas 70.3 71.6 275.8 280.1
-------- -------- -------- --------
Consolidated $ 578.2 $ 592.6 $ 2,273.1 $ 2,195.6
======== ======== ======== ========
Operating Profit
United States $ 34.4 $ 34.9 $ 153.5 $ 148.8
Europe 4.2 9.7 27.4 38.5
Other Areas 4.7 5.7 23.7 27.3
Eliminations (0.4) 1.0 (0.4) 1.0
-------- -------- -------- --------
Total $ 42.9 $ 51.3 $ 204.2 $ 215.6
======== ======== ======== ========
<FN>
See notes to consolidated financial statements.
</TABLE>
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THE STANLEY WORKS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fourth quarter of 1993, Other-net includes a charge of
$15.0 million ($.21 per share) related to the settlement of 132
lawsuits involving a subsidiary, Mac Tools, Inc. The fourth
quarter of 1992 includes a gain of $25.8 million ($.35 per share)
from the sale of a portion of the company's investment in Max Co.,
Ltd., expenses of $14.1 million ($.21 per share) related to
planned closings of certain company-owned stores and reduction of
the goodwill of the company's Taylor Rental operation, and expense
of $7.8 ($.11 per share) for reserves for litigation pending at
the company's Mac Tools business.
In the consolidated statement of earnings for 1993, Other-net for
the twelve months includes a gain of $29.0 million ($.39 per
share) from the sale of the company's investment in Max Co., Ltd.
Also included in Other-net were additional charges for a fine
levied by U.S. District Court in Missouri for $5.0 million ($.07
per share) and contingency reserves of $23.3 million ($.32 per
share) related to product liability litigation, restructuring
activities and environmental clean-up.
The company adopted "Statement of Financial Accounting Standards
No. 112" in 1993. The new standard requires the company to accrue
postemployment benefits as they are earned by the employee for
services rendered rather than as they are paid. The cumulative
effect of this accounting change, as of January 3, 1993, reduced
1993 net earnings by $8.5 million ($13.6 million less related
income taxes of $5.1 million) or $.19 per share.
Certain amounts in the consolidated statements of earnings were
reclassified to conform to the 1993 presentation.
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