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): April 19, 1995
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 April 19, 1995, 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 April 19, 1995
reporting on Stanley's first quarter sales and
earnings.
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: April 20, 1995 By: \s\Stephen S. Weddle
Name: Stephen S. Weddle
Title: Vice President,
General Counsel
and Secretary
Exhibit (21)(i)
APRIL 19, 1995
STANLEY REPORTS RECORD 1ST QUARTER SALES AND EARNINGS
New Britain, Connecticut...The Stanley Works today announced first quarter
sales of $643 million which were 10% higher than the $586 million reported
last year. Net earnings were $29 million compared with $26 million last
year. Earnings per share of $.65 represented a 14% increase over earnings
per share of $.57 reported for the first quarter 1994.
Richard H. Ayers, Chairman and Chief Executive Officer stated, "We are
pleased to report that 1995 has begun with a continuation of the strong
internal growth that we experienced last year. These volume gains, which
are spread across all businesses, added 9% to sales during the quarter.
This pattern reflects both the strength and diversity in the geographic
markets and industries we serve as well as our aggressive initiatives to
increase sales. Price increases also contributed a modest 1% to our sales
total."
Mr. Ayers continued, "While our sales performance in this quarter achieved
our targeted goal we are not as satisfied with our earnings improvement.
However, we recognize that our commitment to the long-term growth of our
company necessitates that we sacrifice some short-term profitability increases
in order to accomplish strategic manufacturing rationalization as well as to
invest in marketing and sales efforts to enhance future revenues."
Gross margins reported for the first quarter 1995 were 32.0%, compared with
32.7% reported in the same quarter last year. Much of the decline in margin
was attributable to costs incurred in connection with closing a manufacturing
plant and integrating production into existing facilities of the Mechanics
Tools division. While these expenses are expected to continue into the second
quarter, it is anticipated that the project will ultimately generate an overall
positive contribution to earnings and the division's future competitive cost
structure will be significantly enhanced. Operating expenses were 22.9% of
sales compared with 22.8% in the prior year. Efficiencies realized from the
increased sales volume were more than offset by planned expenditures targeted
at geographic and new market expansion.
-2-
Interest-net expense for the first quarter was 1.2% of sales, or $7 million,
compared with 1.3% in the prior year. Other-net expenses were $5 million, or
.7% of sales, compared with $9 million, or 1.5% of sales last year. Other-net
in the prior year included some small non-recurring charges as well as higher
foreign currency transaction losses.
Net sales in the United States for the first quarter increased 8%. Consistent
with prior year trends, internal growth of 9% accounted for substantially all
of the sales gain. Price increases contributed 1% to sales; however, this
increase was more than offset by a 2% decline in sales due to divestiture
activity. Operating margins of 10.3% reflected costs associated with the
Mechanics Tools plant rationalization.
Europe continued the performance improvements begun last year with sales
increasing 22% in the first quarter. Internal volume gains contributed 9% and
price increases contributed 2%. The translation of strengthening European
currencies increased sales by 11%. Operating margins improved to 11.5% from
11.0% in the prior year. Operating margin improvement would have improved
further if not for the continuing impact of operating inefficiencies at our
Acmetrack facility in France.
Net sales in Other Areas increased 5% over the prior year, reflecting internal
growth of 6% realized across most regions. The net effect of price increases
and currency translation decreased sales by 1%. Operating profits were $5.0
million compared with $5.9 million in the prior year.
Net sales for the Tools segment increased 10% for the quarter, primarily the
result of volume gains of 8% realized across all businesses. Price increases
added 2% to sales, however, this increase was partially offset by a 1% decrease
due to divestiture activity. The effect of foreign currency translation
increased sales by 1%. Operating profits of $53 million were 10% higher than
the prior year and operating margins of 11.0% were unchanged.
Net sales for the Hardware segment increased 9% with 8% contributed by internal
growth, primarily in the U.S. Foreign currency translation added 1%. Operating
margins of 10.0% declined from 11.5% reported in the first quarter last year.
While improvements in operating margins were realized over the fourth quarter
1994, the operational issues being addressed in our Acmetrack business in France
continue to depress profits. Margins were also somewhat negatively impacted by
a delay in seating U.S. price increases in certain product lines; however, these
increases are now in place and should be reflected in operating profits later
in the year.
-3-
Specialty Hardware sales increased 13% over the previous year. Internal volume
increases in this segment continued to be substantial, with gains of 14% in the
first quarter. The net effect of discounting and price changes decreased sales
by 1%. Operating profits, which are generally lower in the first quarter for
this segment, were 3.5% compared with 4.7% in the prior year. The decrease in
margins reflects the timing of sales and marketing expenditures targeted at
increasing sales volume in the doors business.
Commenting on the quarter and outlook for the year, Mr. Ayers stated: "We are
pleased that we were able to achieve our targeted sales growth in the first
quarter. This increased volume was realized through aggressive competitive
efforts which provided good growth for our businesses despite weakness in the
U.S. at the retail level and a decline in new housing activity. Our actions
are continuing to produce positive incoming business activity, backlogs remain
at high levels and we expect to produce solid sales results in the second
quarter."
Mr. Ayers concluded, "We will continue with our efforts to improve our
operations and business systems and to invest in developing new markets. While
these expenditures may well impact quarterly comparisons our expectations are
for solid improvement and a record year in 1995."
Contact: Patricia McLean
Manager, Corporate Communications
(203) 827-3833
-4-
THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Millions of Dollars)
FIRST QUARTER
1995 1994
Net Sales $ 643.3 $ 585.7
Costs and Expenses
Cost of sales 437.6 394.4
Selling, general and
administrative 147.3 133.8
Interest - net 7.5 7.4
Other - net 4.6 8.8
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597.0 544.4
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Earnings Before Income Taxes 46.3 41.3
Income Taxes 17.6 15.7
------- -------
Net Earnings $ 28.7 $ 25.6
======= =======
Net Earnings Per Share of
Common Stock $ 0.65 $ 0.57
======= =======
Dividends per share $ 0.35 $ 0.34
Average shares outstanding 44,414 44,771
(in thousands)
-5-
THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Millions of Dollars)
April 1 April 2
1995 1994
ASSETS
Cash and cash equivalents $ 40.5 $ 36.5
Accounts receivable 428.7 389.6
Inventories 406.6 327.5
Other current assets 38.2 35.5
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Total current assets 914.0 789.1
Property, plant and equipment 559.9 561.0
Goodwill and other intangibles 163.5 169.0
Other assets 91.0 77.6
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$ 1,728.4 $ 1,596.7
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term borrowings $ 124.4 $ 89.1
Accounts payable 106.2 94.2
Accrued expenses 194.1 178.0
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Total current liabilities 424.7 361.3
Long-term debt 406.2 380.1
Other long-term liabilities 147.6 161.0
Shareholders' equity 749.9 694.3
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$ 1,728.4 $ 1,596.7
======= =======
-6-
THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions of Dollars)
FIRST QUARTER
1995 1994
Operating Activities
Net Earnings $ 28.7 $ 25.6
Depreciation and amortization 21.9 21.2
Other non-cash items 6.2 5.3
Changes in operating assets
and liabilities (62.7) (58.0)
------ ------
Net cash used by
operating activities (5.9) (5.9)
Investing Activities
Capital expenditures (13.0) (13.2)
Proceeds from sales of assets 0.3 1.6
Other (5.1) (0.3)
------ ------
Net cash used by
investing activities (17.8) (11.9)
Financing Activities
Payments on long-term debt (0.3) (0.5)
Net short-term borrowings 29.1 38.2
Proceeds from issuance of common stock 0.5 0.3
Purchase of common stock for treasury (6.4)
Cash dividends on common stock (30.0) (29.9)
------ ------
Net cash provided (used) by
financing activities (7.1) 8.1
Effect of Exchange Rate Changes on Cash 2.0 2.5
------ ------
Decrease in Cash and Cash Equivalents (28.8) (7.2)
Cash and Cash Equivalents,
Beginning of Period 69.3 43.7
------ ------
Cash and Cash Equivalents,
End of First Quarter $ 40.5 $ 36.5
===== =====
-7-
THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES
IN SHAREHOLDERS' EQUITY
(Millions of Dollars)
THREE MONTHS
1995 1994
Balance at beginning of year $ 744.2 $ 680.9
Net earnings 28.7 25.6
Currency translation adjustment (7.3) (1.7)
Cash dividends declared (15.6) (15.2)
Net common stock activity (2.3) 2.6
ESOP debt 2.2 2.1
-------- --------
Balance at end of first quarter $ 749.9 $ 694.3
======== ========
-8-
THE STANLEY WORKS AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(Millions of Dollars)
FIRST QUARTER
1995 1994
INDUSTRY SEGMENTS
Net Sales
Tools
Consumer $ 173.5 $ 162.6
Industrial 143.8 130.5
Engineered 166.5 148.6
-------- --------
Total Tools 483.8 441.7
Hardware 84.7 77.6
Specialty Hardware 74.8 66.4
-------- --------
Consolidated $ 643.3 $ 585.7
======== ========
Operating Profit
Tools $ 53.0 $ 48.4
Hardware 8.5 8.9
Specialty Hardware 2.6 3.1
-------- --------
Total 64.1 60.4
Net corporate expenses (8.9) (11.0)
Interest expense (8.9) (8.1)
-------- --------
Earnings before
income taxes $ 46.3 $ 41.3
======== ========
GEOGRAPHIC AREAS
Net Sales
United States $ 454.6 $ 420.2
Europe 107.8 88.4
Other Areas 80.9 77.1
-------- --------
Consolidated $ 643.3 $ 585.7
======== ========
Operating Profit
United States $ 46.7 $ 44.8
Europe 12.4 9.7
Other Areas 5.0 5.9
-------- --------
Total $ 64.1 $ 60.4
======== ========
