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): Oct. 19, 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)
Item 5. Other Events.
1. On Oct. 19, 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 Oct. 19, 1994 reporting on
Stanley's third quarter sales and earnings.
<PAGE>
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: Oct. 20, 1994
<PAGE>
Exhibit (21)(i)
FOR IMMEDIATE RELEASE October 19, 1994
STANLEY REPORTS RECORD RESULTS FOR THIRD QUARTER
New Britain, Connecticut...The Stanley Works today announced record
third quarter sales and earnings. Sales of $633 million in the third
quarter were 10% higher than the prior year. Net earnings were $32.2
million, or $.72 per share, representing a 29% increase over the same
quarter in 1993.
Richard H. Ayers, Chairman and Chief Executive Officer stated, "The 10%
increase in third quarter sales was driven primarily by internal growth
of 9% spread across all businesses. Small price increases and net
acquisition and divestiture activity represented a 1% increase in sales
from the prior year. Currency had a positive but minor impact on
sales."
Mr. Ayers added, "Our operating results continue to benefit from
increased sales volume generated by our worldwide growth initiatives and
favorable economic conditions. While all business segments realized
solid volume increases, the most notable improvements were in the
Specialty Hardware and Engineered Tools businesses."
Gross margins improved to 32.7% from 31.1% in the prior year, largely
the result of manufacturing efficiencies realized from increased volume,
especially in our Mechanics Tools business, and the successful
transition of previously foreign-sourced fastening tools to U.S.
in-house manufacture. Operating expenses were 22.1% of sales compared
with 21.9% in the previous year. Operating efficiencies achieved
through higher sales volume were offset by the costs of company
initiatives for long-term growth.
-- more --
(page 2)
Interest-net expenses of $6.9 million were essentially unchanged from
last year despite higher interest rates in 1994. Other-net expenses of
$9.1 million included additional reserves established for environmental
remediation as well as the effects of divestiture activities in the
quarter. Other-net expenses of $3.6 million in the prior year included
a $5.0 million pre-tax gain from the sale of a non-operating asset which
was substantially offset by reserves established for the closing of a
manufacturing facility at our wholly-owned subsidiary, Mac Tools, Inc.
The effective tax rate for the quarter was 37.5% compared with 41.7%
last year. The higher effective rate last year reflected the cumulative
effect of 1993 federal tax rate changes on the quarter.
Net sales for the first nine months of 1994 were $1.8 billion, an
increase of 9% over the $1.7 billion reported in the same period last
year. Net earnings for the period were $91.5 million, or $2.04 per
share, up 22% from net earnings of $75.0 million, or $1.67 per share
last year, before the effect of a change in accounting principle.
Net sales in the U.S. increased 8% for the quarter. The increase
resulted from strong internal growth of 9%, a 1% price increase, and
divestiture activity, which decreased sales by 2% from the prior year.
Net sales in Europe increased 13% from last year. Unit volume gains
generated a 4% increase in sales and the incremental effect of an
acquisition added 3%. The recent strengthening in European currencies
increased sales by 6% in the quarter. Price increases continued to have
little impact on sales.
-- more --
(page 3)
Net sales in Other Areas increased 15% for the quarter. In
ternal growth of 8% resulted from strengthening in our Canadian
businesses and our continuing growth in the Far East. Price increases,
when offset by the negative effects of currency, added 3% to sales. The
net incremental effect of acquisitions increased sales by 4%. Operating
profits of $7.9 million, or 8.6% of sales, were reduced from last year
as a result of increased expenses associated with our growth initiatives
throughout the Pacific Rim.
Net sales for the Tools segment increased 8% from the prior year.
Internal growth of 7% was the primary contributor. While all businesses
experienced solid unit volume gains, these gains were most notable in
our Fastening Systems business. Price increases for the segment
resulted in a 2% sales increase with currency having a negligible
impact. The net effect of acquisitions and divestitures decreased sales
by 1%. Operating profits increased 35% to $53.6 million and resulted in
operating margins of 11.5% compared with 9.3% in the prior year. The
improvement in operating profits is the result of increased sales
volume, operating efficiencies, and the successful transition of
previously foreign-sourced fastening products to in-house manufacture.
In addition, the third quarter last year included one-time charges
related to the closing of a Mac Tools, Inc. manufacturing facility.
Net sales for the Hardware segment increased 7% from the prior year,
reflecting internal growth of 6% plus price increases and currency
effects of 1%. Operating profits increased 26% to $7.7 million.
Operating margins improved to 9.7% from 8.3% last year.
Net sales for the Specialty Hardware segment increased 21% from the
prior year, exclusively from internal growth. Operating profit of $8.1
million was 17% higher than last year. Operating margins of 9.2% were
slightly below last year's margins of 9.4%, the result of growth
initiatives, primarily in Europe, of our Access Technologies business.
-- more --
(page 4)
Commenting on the quarter and outlook for the year, Mr. Ayers stated:
"We are pleased with our strong sales and earnings results for the
quarter and the first nine months of 1994. We are also pleased that
these results are in keeping with our expectations for both the quarter
and the year thus far."
Mr. Ayers continued, "We attribute this strong performance to a
combination of factors. First, is our company-wide focus on profitable
growth, including geographic expansion and strategic investments in new
products and new markets. Second, is our long-term strategy to ensure
that the underlying structure of our company remains modern and
efficient, reflecting the appropriate use of technology to provide a
sound base from which we can continue to grow. Finally, 1994 has
provided improved economic conditions for our businesses worldwide.
Based on these factors, we believe The Stanley Works will achieve the
significant full year sales and earnings growth that we had predicted at
the start of 1994."
##############
CONTACT: Patricia McLean
Manager Corp. Communications
(203) 827-3833
<PAGE>
-5-
<TABLE>
THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Millions of Dollars)
<CAPTION>
THIRD QUARTER NINE MONTHS
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Net Sales $ 632.6 $ 576.3 $ 1,847.1 $ 1,694.9
Costs and Expenses
Cost of sales 425.7 396.8 1,238.7 1,155.0
Selling, general and
administrative 139.5 126.1 412.7 384.7
Interest - net 6.9 6.9 22.1 20.2
Other - net 9.1 3.6 26.9 11.4
------- ------- -------- --------
581.2 533.4 1,700.4 1,571.3
------- ------- -------- --------
Earnings Before Income Taxes
and Cumulative Effect of
Accounting Change 51.4 42.9 146.7 123.6
Income Taxes 19.2 17.9 55.2 48.6
------- ------- -------- --------
Earnings Before Cumulative
Effect of Accounting Change 32.2 25.0 91.5 75.0
Cumulative Effect of Accounting
Change for Postemployment
Benefits (8.5)
------- ------- -------- --------
Net Earnings $ 32.2 $ 25.0 $ 91.5 $ 66.5
======= ======= ======== ========
Net Earnings Per Share of
Common Stock:
Before Cumulative Effect of
Accounting Change $ 0.72 $ 0.56 $ 2.04 $ 1.67
Cumulative Effect of
Accounting Change (0.19)
------- ------- -------- --------
Net Earnings Per Share of
Common Stock $ 0.72 $ 0.56 $ 2.04 $ 1.48
======= ======= ======== ========
Dividends per share $ 0.35 $ 0.34 $ 1.03 $ 1.00
Average shares outstanding 44,838 44,754 44,810 45,007
(in thousands)
<FN>
See notes to consolidated financial statements.
</TABLE>
-6-
<TABLE>
THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Millions of Dollars)
<CAPTION>
October 1 October 2
1994 1993
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 38.8 $ 39.0
Accounts receivable 439.0 388.5
Inventories 370.7 317.9
Other current assets 33.9 29.5
------- -------
Total current assets 882.4 774.9
Property, plant and equipment - net 561.8 561.4
Goodwill and other intangibles 168.0 175.6
Other assets 86.2 73.8
------- -------
$ 1,698.4 $ 1,585.7
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable $ 103.4 $ 97.3
Accounts payable 102.0 89.0
Accrued expenses 217.7 190.2
------- -------
Total current liabilities 423.1 376.5
Long-term debt 386.4 385.7
Other long-term liabilities 146.6 150.1
Shareholders' equity 742.3 673.4
------- -------
$ 1,698.4 $ 1,585.7
======= =======
<FN>
See notes to consolidated financial statements.
</TABLE>
-7-
<TABLE>
THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions of Dollars)
<CAPTION>
THIRD QUARTER NINE MONTHS
1994 1993 1994 1993
Operating Activities
<S> <C> <C> <C> <C>
Net Earnings $ 32.2 $ 25.0 $ 91.5 $ 66.5
Depreciation and amortization 19.7 19.3 62.5 59.1
Provision for postemployment benefits - - - 13.6
Net gain on sale of non-operating asset - (5.0) - (29.0)
Other non-cash items 7.0 9.9 23.5 15.2
Changes in operating assets
and liabilities (39.1) 8.1 (124.1) (62.5)
------ ------ ------ ------
Net cash provided by
operating activities 19.8 57.3 53.4 62.9
Investing Activities
Capital expenditures (17.5) (18.3) (48.6) (44.5)
Proceeds from sales of assets 1.0 2.8 7.4 4.8
Proceeds from sale of non-operating asset - 6.0 - 38.9
Business acquisitions - (12.4) (5.1) (13.3)
Other (1.9) (1.3) (4.9) (4.0)
------ ------ ------ ------
Net cash used by
investing activities (18.4) (23.2) (51.2) (18.1)
Financing Activities
Payments on long-term debt (1.2) (65.9) (1.9) (132.9)
Proceeds of long-term borrowings - 78.4 - 78.4
Net short-term bank financing 17.1 2.6 51.6 67.3
Proceeds from issuance of common stock 2.9 3.4 3.5 4.0
Purchase of common stock for treasury (1.2) (15.8) (2.0) (42.3)
Cash dividends on common stock (15.7) (15.2) (60.8) (59.9)
------ ------ ------ ------
Net cash provided (used) by
financing activities 1.9 (12.5) (9.6) (85.4)
Effect of Exchange Rate Changes on Cash 1.7 (1.1) 2.5 (1.5)
------ ------ ------ ------
Increase (decrease) in Cash and
Cash Equivalents 5.0 20.5 (4.9) (42.1)
Cash and Cash Equivalents,
Beginning of Period 33.8 18.5 43.7 81.1
------ ------ ------ ------
Cash and Cash Equivalents,
End of Third Quarter $ 38.8 $ 39.0 $ 38.8 $ 39.0
<FN> ===== ===== ===== =====
See notes to consolidated financial statements.
</TABLE>
-8-
<TABLE>
THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS' EQUITY
(Millions of Dollars)
<CAPTION>
NINE MONTHS
1994 1993
<S> <C> <C>
Balance at beginning of year $ 680.9 $ 696.3
Net earnings 91.5 66.5
Currency translation adjustment 6.1 (16.8)
Cash dividends declared (46.2) (44.9)
Net issuance of Common Stock 3.7 (33.0)
ESOP debt 6.3 5.3
-------- -------
Balance at end of third quarter $ 742.3 $ 673.4
======== =======
<FN>
See notes to consolidated financial statements.
</TABLE>
<PAGE>
-9-
<TABLE>
THE STANLEY WORKS AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(Millions of Dollars)
<CAPTION>
THIRD QUARTER NINE MONTHS
1994 1993 1994 1993
INDUSTRY SEGMENTS
Net Sales
Tools
<S> <C> <C> <C> <C>
Consumer $ 177.5 $ 172.8 $ 519.3 $ 499.6
Industrial 129.4 116.0 389.4 343.9
Engineered 158.2 140.5 472.7 427.7
-------- -------- -------- --------
Total Tools 465.1 429.3 1,381.4 1,271.2
Hardware 79.3 73.9 235.6 227.4
Specialty Hardware 88.2 73.1 230.1 196.3
-------- -------- -------- --------
Consolidated $ 632.6 $ 576.3 $ 1,847.1 $ 1,694.9
======== ======== ======== ========
Operating Profit
Tools $ 53.6 $ 39.8 $ 161.3 $ 127.6
Hardware 7.7 6.1 27.4 24.3
Specialty Hardware 8.1 6.9 15.4 9.4
-------- -------- -------- --------
Total 69.4 52.8 204.1 161.3
Net corporate expenses (10.6) (2.0) (32.3) (13.6)
Interest expense (7.4) (7.9) (25.1) (24.1)
-------- -------- -------- --------
Earnings before
income taxes $ 51.4 $ 42.9 $ 146.7 $ 123.6
======== ======== ======== ========
GEOGRAPHIC AREAS
Net Sales
United States $ 452.9 $ 418.9 $ 1,330.4 $ 1,225.2
Europe 87.4 77.4 261.8 240.6
Other Areas 92.3 80.0 254.9 229.1
-------- -------- -------- --------
Consolidated $ 632.6 $ 576.3 $ 1,847.1 $ 1,694.9
======== ======== ======== ========
Operating Profit
United States $ 53.9 $ 37.3 $ 156.1 $ 114.6
Europe 7.6 6.4 25.3 23.2
Other Areas 7.9 9.1 22.7 23.5
-------- -------- -------- --------
Total $ 69.4 $ 52.8 $ 204.1 $ 161.3
======== ======== ======== ========
<FN>
See notes to consolidated financial statements.
</TABLE>
-10-
THE STANLEY WORKS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the third quarter of 1993, Other-net includes a gain
of $5.0 million ($.06 per share) from the sale of the company's
investment in Max Co., Ltd. which was substantially offset by
reserves established for the closing of a manufacturing facility
of our wholly owned subsidiary, Mac Tools, Inc.
In the consolidated statement of earnings for nine months
of 1993, Other-net includes a gain of $29.0 million ($.39 per
share) from the sale of the company's investment in Max Co.,
Ltd. and charges for a fine levied by the U.S. District Court in
Missouri for $5.0 million ($.07 per share). Also included in Other-net
were additional charges for contingency reserves of $15.7 million ($.21
per share) related to product liability litigation, restructuring
activities and environmental clean-up.
Certain 1993 amounts in the Business Segment Information
were reclassified to conform to the 1994 presentation.
