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, 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 January 31, 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 January 31, 1995
reporting on Stanley's 1994 year end
results.
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: January 31, 1995 By: Stephen S. Weddle
Name: Stephen S. Weddle
Title: Vice President,
General Counsel
and Secretary
Exhibit (21)(i)
FOR IMMEDIATE RELEASE January 31, 1995
STANLEY REPORTS RECORD SALES AND EARNINGS FOR 1994
New Britain, Connecticut... "In 1994, Stanley achieved new highs
in sales, earnings, earnings per share and return on
shareholders' equity," reported Richard H. Ayers, Chairman and
Chief Executive Officer of The Stanley Works.
Sales of $2.5 billion were 10% higher than the prior year. Net
earnings of $125 million, or $2.80 per share, represented a 35%
increase over 1993 before the effect of a change in accounting
principle, and a 23% increase after excluding the effects of
fourth quarter legal settlements from 1993 results. Return on
shareholders' equity was 17.6% compared with 13.5% last year.
Mr. Ayers continued, "All of our businesses moved into 1994 with
a strong focus on long-term growth and specific initiatives for
achieving that growth. We are particularly pleased that our
sales improvement came primarily from internal efforts spread
across all segments of our company. The continuing success of
our worldwide initiatives combined with improved economic
conditions in many of our markets produced this steady, year-
long improvement. Net sales were increased 9% by this internal
volume growth. Price increases added 1% to sales. Both currency
and the net incremental effect of acquisitions and divestitures
had a negligible impact on sales."
Gross margins improved to 32.9% from 31.7% in 1993, primarily the
result of manufacturing efficiencies realized from increased
volume, process improvements and cost reduction efforts,
especially in connection with the successful transition of
previously foreign-sourced fastening tools to U.S. in-house
manufacture.
Operating expenses were 22.3% of sales compared with 22.5% in the
previous year. Operating efficiencies achieved through higher
sales volume more than offset the costs of company initiatives
for long-term growth. Interest-net of $29 million was 1.2% of
net sales compared with 1.1% in the prior year. Other-net
expense for 1994 of $36 million included reserves established for
plant consolidation and divestiture activities and environmental
remediation. Other-net expense of $35 million in 1993 included a
gain on the sale of a non-operating asset that was offset by
additional charges for contingency reserves related to product
liability, restructuring activities, environmental clean-up and
legal settlements. The effective tax rate was 37.9% up slightly
from 37.4% in 1993.
(page 2)
Net sales in the United States were up 10% over the prior year,
the result of internal growth. Volume increases were particularly
strong in our Industrial and Engineered Tools categories as well
as the Specialty Hardware segment. Price increases contributed
1% to sales but were offset by divestiture activity.
Net sales in Europe increased 13% over 1993. This increase
included internal volume growth of 7% with the strongest year-to-
year comparison occuring in the fourth quarter. The incremental
effect of acquisitions added 4% to sales and the strengthening of
European currencies provided a 2% increase. Operating profits
grew 16% despite the negative impact of operating inefficiencies
in our Acmetrack facility in France.
Net sales in Other areas increased 12% over the prior year,
reflecting internal growth of 8% realized generally across all
regions. The incremental effect of acquisitions added 3% to
sales. Price increases, although substantially offset by the
negative effects of currency, increased sales by 1%. Despite
the strong sales performance, operating profits declined $2.2
million, or 8% for the year, the result of investments made to
expand our presence in Asia.
Tools sales for the year were 10% higher than 1993. The sales
gain was driven primarily by internal volume growth of 9%.
Growth in this segment was most dramatic in the industrial and
engineered tools categories, with the consumer businesses
achieving more modest growth. Price increases added 1% with
currency having a negligible impact. Operating profits increased
37% to $217 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.
Hardware sales for the year increased 4% over 1993, reflecting
internal growth of 3% and price increases of 1%. Operating
profits of $33 million were substantially unchanged from the
prior year, which resulted in slightly lower operating margins.
The decrease in margins, especially in the fourth quarter, was
due to operating inefficiencies in our Acmetrack facility in
France.
Specialty Hardware sales for 1994 increased 18%. Virtually all
of the increase was from internal growth with the effect of
modest price increases being largely offset by the negative
effects of currency. Operating profits were up 82% over last
year. Operating margins improved to 7.6% compared with 4.9% last
year as a result of efficiencies obtained from increased volume
and the successful implementation of process improvements at our
Door Systems business.
(page 3)
Net sales for the fourth quarter 1994 of $664 million were 15%
higher than fourth quarter 1993 sales of $578 million.
Consistent with the full year, this sales increase was
substantially the result of internal growth.
Net earnings in the fourth quarter 1994 were $34 million, or $.76
per share, compared with $18 million, or $.39 per share last
year. Net earnings for 1993 included a $15 million, or $.21 per
share, charge for legal settlements. Gross margins increased to
32.9% compared with 31.2% in the prior year. Operating expenses
were 22.3% of sales compared with 22.1% of sales in the prior
year.
Mr. Ayers stated, "We are excited about the implications that
these strong results have for 1995. The steady internal growth
being achieved throughout our company is the product of on-going
initiatives to develop new products, strengthen our position with
key customers and expand into new geographic areas. We are
optimistic that these initiatives will continue to produce growth
in 1995 and beyond.
"Despite uncertainties regarding interest rates and raw material
costs, consumer confidence is high, the U.S. economy is strong,
many foreign markets important to Stanley are experiencing
improving activity and inflation appears to be staying under
control. These factors suggest generally healthy market
conditions well into 1995 and our diverse product lines and our
worldwide presence should help lessen the impact of uncertainty
in any one economy. Our position is further strengthened by our
solid financial position and our commitment to maintaining highly
productive and efficient operations."
Mr. Ayers concluded, "On balance, we expect that 1995 will be
another good year for Stanley. The momentum developed in 1994
for the long-term, worldwide growth of all our businesses should
continue to produce strong results for The Stanley Works."
#################
CONTACT: Patricia McLean
Manager, Corp. Communications
(203) 827-3833
-4-
<TABLE>
THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Millions of Dollars)
<CAPTION>
FOURTH QUARTER TWELVE MONTHS
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Net Sales $ 663.8 $ 578.2 $ 2,510.9 $ 2,273.1
Costs and Expenses
Cost of sales 445.3 398.0 1,684.0 1,553.0
Selling, general and
administrative 147.7 127.6 560.4 512.3
Interest - net 6.9 5.0 29.0 25.2
Other - net 8.8 23.2 35.7 34.6
------- ------- -------- --------
608.7 553.8 2,309.1 2,125.1
------- ------- -------- --------
Earnings Before Income Taxes
and Cumulative Effect of
Accounting Change 55.1 24.4 201.8 148.0
Income Taxes 21.3 6.8 76.5 55.4
------- ------- -------- --------
Earnings Before Cumulative
Effect of Accounting Change 33.8 17.6 125.3 92.6
Cumulative Effect of Accounting
Change for Postemployment
Benefits (8.5)
------- ------- -------- --------
Net Earnings $ 33.8 $ 17.6 $ 125.3 $ 84.1
======= ======= ======== ========
Earnings Per Share of
Common Stock:
Before Cumulative Effect of
Accounting Change $ 0.76 $ 0.39 $ 2.80 $ 2.06
Cumulative Effect of
Accounting Change (0.19)
------- ------- -------- --------
Net Earnings Per Share of
Common Stock $ 0.76 $ 0.39 $ 2.80 $ 1.87
======= ======= ======== ========
Dividends per share $ 0.35 $ 0.34 $ 1.38 $ 1.34
Average shares outstanding 44,691 44,688 44,775 44,935
(in thousands)
<FN>
See notes to consolidated financial statements.
</TABLE>
<TABLE>
-5-
THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Millions of Dollars)
<CAPTION>
December 31 January 1
1994 1994
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 69.3 $ 43.7
Accounts receivable 410.3 371.2
Inventories 369.2 308.1
Other current assets 39.7 35.6
------- -------
Total current assets 888.5 758.6
Property, plant and equipment - net 559.8 566.5
Goodwill and other intangibles 164.6 171.5
Other assets 88.2 80.3
------- -------
$ 1,701.1 $ 1,576.9
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable $ 93.7 $ 52.1
Accounts payable 125.3 103.3
Accrued expenses 202.5 201.7
------- -------
Total current liabilities 421.5 357.1
Long-term debt 387.1 377.2
Other long-term liabilities 148.3 161.7
Shareholders' equity 744.2 680.9
------- -------
$ 1,701.1 $ 1,576.9
======= =======
<FN>
See notes to consolidated financial statements.
</TABLE>
<TABLE>
-6-
THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions of Dollars)
<CAPTION>
FOURTH QUARTER TWELVE MONTHS
1994 1993 1994 1993
Operating Activities
<S> <C> <C> <C> <C>
Net Earnings $ 33.8 $ 17.6 $ 125.3 $ 84.1
Depreciation and amortization 19.3 21.6 81.8 80.7
Provision for postemployment benefits 13.6
Net gain on sale of non-operating asset (29.0)
Other non-cash items (5.2) (5.8) 18.3 9.4
Changes in operating assets
and liabilities 27.2 50.2 (96.9) (12.3)
------ ------ ------ ------
Net cash provided by
operating activities 75.1 83.6 128.5 146.5
Investing Activities
Capital expenditures (17.8) (25.2) (66.4) (69.7)
Proceeds from sales of assets 3.6 1.8 11.0 6.6
Proceeds from sale of non-operating asset 38.9
Business acquisitions (5.1) (13.3)
Other (4.8) (9.2) (9.7) (13.2)
------ ------ ------ ------
Net cash used by
investing activities (19.0) (32.6) (70.2) (50.7)
Financing Activities
Payments on long-term debt (1.0) (0.9) (2.9) (133.8)
Proceeds of long-term borrowings 0.1 78.5
Net short-term bank financing (10.7) (45.0) 40.9 22.3
Proceeds from issuance of common stock 0.7 0.6 4.2 4.6
Purchase of common stock for treasury (14.3) (16.3) (42.3)
Cash dividends on common stock (0.7) (0.6) (61.5) (60.5)
------ ------ ------ ------
Net cash used by
financing activities (26.0) (45.8) (35.6) (131.2)
Effect of Exchange Rate Changes on Cash 0.4 (0.5) 2.9 (2.0)
------ ------ ------ ------
Increase (decrease) in Cash and
Cash Equivalents 30.5 4.7 25.6 (37.4)
Cash and Cash Equivalents,
Beginning of Period 38.8 39.0 43.7 81.1
------ ------ ------ ------
Cash and Cash Equivalents,
End of Fourth Quarter $ 69.3 $ 43.7 $ 69.3 $ 43.7
====== ====== ====== ======
<FN>
See notes to consolidated financial statements.
</TABLE>
<TABLE>
-7-
THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS' EQUITY
(Millions of Dollars)
<CAPTION>
TWELVE MONTHS
1994 1993
<S> <C> <C>
Balance at beginning of year $ 680.9 $ 696.3
Net earnings 125.3 84.1
Currency translation adjustment 0.4 (15.2)
Cash dividends declared (61.9) (60.1)
Net purchase of Common Stock (8.3) (31.5)
ESOP debt 7.8 7.3
-------- -----
Balance at end of year $ 744.2 $ 680.9
======== =====
<FN>
See notes to consolidated financial statements.
</TABLE>
<TABLE>
-8-
THE STANLEY WORKS AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(Millions of Dollars)
<CAPTION>
FOURTH QUARTER TWELVE MONTHS
1994 1993 1994 1993
INDUSTRY SEGMENTS
Net Sales
Tools
<S> <C> <C> <C> <C>
Consumer $ 196.7 $ 177.2 $ 716.0 $ 676.8
Industrial 135.0 116.4 524.4 460.3
Engineered 170.8 140.8 643.5 568.5
-------- -------- -------- --------
Total Tools 502.5 434.4 1,883.9 1,705.6
Hardware 75.5 72.0 311.1 299.4
Specialty Hardware 85.8 71.8 315.9 268.1
-------- -------- -------- --------
Consolidated $ 663.8 $ 578.2 $ 2,510.9 $ 2,273.1
======== ======== ======== ========
Operating Profit
Tools $ 55.7 $ 30.5 $ 217.0 $ 158.1
Hardware 5.9 8.6 33.3 32.9
Specialty Hardware 8.6 3.8 24.0 13.2
-------- -------- -------- --------
Total 70.2 42.9 274.3 204.2
Net corporate expenses (6.5) (10.4) (38.8) (24.0)
Interest expense (8.6) (8.1) (33.7) (32.2)
-------- -------- -------- --------
Earnings before
income taxes $ 55.1 $ 24.4 $ 201.8 $ 148.0
======== ======== ======== ========
GEOGRAPHIC AREAS
Net Sales
United States $ 478.2 $ 424.3 $ 1,808.6 $ 1,649.5
Europe 95.8 76.7 357.6 317.3
Other Areas 89.8 77.2 344.7 306.3
-------- -------- -------- --------
Consolidated $ 663.8 $ 578.2 $ 2,510.9 $ 2,273.1
======== ======== ======== ========
Operating Profit
United States $ 59.3 $ 33.4 $ 215.4 $ 148.0
Europe 6.6 4.2 31.9 27.4
Other Areas 4.3 5.7 27.0 29.2
Eliminations (0.4) (0.4)
-------- -------- -------- --------
Total $ 70.2 $ 42.9 $ 274.3 $ 204.2
======== ======== ======== ========
<FN>
See notes to consolidated financial statements.
</TABLE>
-9-
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.
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 1993 amounts in the Business Segment Information
were reclassified to conform to the 1994 presentation.
