UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 28, 1996
or
[ ] Transition Report Pursuant to Section 13 of 15(d) of
the Securities Exchange Act of 1934
For the transition period from
[ ] to [ ]
Commission file number 1-5224
I.R.S. Employer Identification Number 06-0548860
THE STANLEY WORKS
(a Connecticut Corporation)
1000 Stanley Drive
New Britain, Connecticut 06053
Telephone: (860) 225-5111
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months, and (2) has been subject to such
filing requirements for the past 90 days. Yes [ X ] No [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: shares of the
company's Common Stock ($2.50 par value) were outstanding 88,892,891
as of November 1, 1996.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited, Millions of Dollars Except Per Share Amounts)
Third Quarter Nine Months
1996 1995 1996 1995
-------- -------- -------- --------
Net Sales $ 672.9 $ 655.7 $ 1,985.4 $ 1,954.5
Costs and Expenses
Cost of sales 448.4 448.0 1,330.7 1,329.2
Selling, general and
administrative 151.7 148.0 453.8 443.9
Interest - net 5.2 7.6 17.1 23.2
Other - net 5.5 3.7 13.4 12.7
Restructuring 3.1 41.5 6.9 41.5
-------- -------- -------- --------
613.9 648.8 1,821.9 1,850.5
-------- -------- -------- --------
Earnings before
income taxes 59.0 6.9 163.5 104.0
Income Taxes 21.3 8.6 63.6 45.5
-------- -------- -------- --------
Net Earnings (Loss) $ 37.7 $ (1.7) $ 99.9 $ 58.5
======== ======== ======== ========
Net Earnings (Loss)
Per Share of
Common Stock $ 0.42 $ (0.02) $ 1.12 $ 0.66
======== ======== ======== ========
Dividends per share $ 0.185 $ 0.18 $ 0.545 $ 0.53
======== ======== ======== ========
Average shares outstanding
(in thousands) 88,847 88,579 88,832 88,718
======== ======== ======== ========
See notes to consolidated financial statements.
-1-
THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited, Millions of Dollars)
September 28, December 30,
1996 1995
-------- --------
ASSETS
Current Assets
Cash and cash equivalents $ 85.0 $ 75.4
Accounts receivable 473.8 438.7
Inventories 342.4 349.1
Other current assets 39.8 51.9
-------- --------
Total Current Assets 941.0 915.1
Property, plant and equipment 1,158.3 1,140.7
Less: accumulated depreciation (632.2) (608.6)
-------- --------
526.1 532.1
Goodwill and other intangibles 112.1 131.8
Other assets 110.4 91.0
-------- --------
$ 1,689.6 $ 1,670.0
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term borrowings $ 15.8 $ 77.2
Current maturities of long-term debt 14.1 14.1
Accounts payable 128.6 112.7
Accrued expenses 238.8 183.7
-------- --------
Total Current Liabilities 397.3 387.7
Long-term debt 350.6 391.1
Deferred income taxes 12.6 16.4
Other liabilities 141.4 140.2
Shareholders' Equity
Common stock 230.9 115.4
Capital in excess of par value - 68.4
Retained earnings 940.0 937.6
Foreign currency translation adjustment (60.6) (70.6)
ESOP debt (237.2) (244.3)
-------- --------
873.1 806.5
Less: cost of common stock in treasury 85.4 71.9
-------- --------
Total Shareholders' Equity 787.7 734.6
-------- --------
$ 1,689.6 $ 1,670.0
======== ========
See notes to consolidated financial statements.
-2-
THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, Millions of Dollars)
THIRD QUARTER NINE MONTHS
1996 1995 1996 1995
------ ------ ------ ------
Operating Activities
Net earnings (loss) $ 37.7 $ (1.7) $ 99.9 $58.5
Depreciation and amortization 20.0 21.0 58.8 63.7
Restructuring 3.1 41.5 6.9 41.5
Other non-cash items 0.2 0.5 17.5 13.6
Changes in operating assets
and liabilities (8.6) (10.8) 5.2 (101.5)
------ ------ ------ ------
Net cash provided by
operating activities 52.4 50.5 188.3 75.8
Investing Activities
Capital expenditures (19.9) (17.5) (51.0) (44.7)
Capitalized software (5.7) (4.6) (16.5) (13.7)
Proceeds from sales of businesses 18.9 - 34.1 -
Other 0.3 (0.7) (2.4) (1.8)
------ ------ ------ ------
Net cash used by
investing activities (6.4) (22.8) (35.8) (60.2)
Financing Activities
Payments on long-term debt (19.3) (81.9) (25.8) (83.5)
Proceeds from long-term borrowings - 84.2 - 84.2
Net short-term borrowings (17.6) (24.2) (56.6) 18.3
Proceeds from issuance of common stock 4.8 1.8 31.9 2.7
Purchase of common stock for treasury (9.0) (2.3) (56.0) (12.5)
Cash dividends on common stock - (0.7) (34.7) (46.3)
------ ------ ------ ------
Net cash used by
financing activities (41.1) (23.1) (141.2) (37.1)
Effect of Exchange Rate Changes on Cash 0.6 (0.9) (1.7) 0.7
------ ------ ------ ------
Increase (decrease) in Cash and
Cash Equivalents 5.5 3.7 9.6 (20.8)
Cash and Cash Equivalents,
Beginning of Period 79.5 44.8 75.4 69.3
------ ------ ------ ------
Cash and Cash Equivalents,
End of Third Quarter $ 85.0 $ 48.5 $ 85.0 $ 48.5
====== ====== ====== ======
See notes to consolidated financial statements.
-3-
THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS' EQUITY
(Unaudited, Millions of Dollars)
NINE MONTHS
1996 1995
-------- -------
Balance at beginning of year $ 734.6 $ 744.2
Net earnings 99.9 58.5
Currency translation adjustment 10.0 (9.4)
Cash dividends declared (48.7) (46.6)
Net common stock activity, including tax benefit (15.2) (4.0)
ESOP debt 7.1 7.0
-------- -------
Balance at end of third quarter $ 787.7 $ 749.7
======== =======
See notes to consolidated financial statements.
-4-
THE STANLEY WORKS AND SUBSIDIARIES
NOTES TO (Unaudited) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 28, 1996
NOTE A - Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial statements and with the instructions to Form 10-Q and Article 10 of
Regulation S-X and do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of both normal and
recurring items) considered necessary for a fair presentation of the results of
operations for the interim periods have been included. For further information,
refer to the consolidated financial statements and footnotes included in the
company's Annual Report on Form 10-K for the year ended December 30, 1995.
NOTE B - Common Stock Split
On April 17, 1996, the shareholders approved an increase in the number of
authorized common shares from 110,000,000 to 200,000,000. On that date,
the Board of Directors declared a two-for-one common stock split to be effected
by the distribution of one additional share for each share outstanding. Such
distribution was made on June 3, 1996 to shareholders of record as of May 13,
1996. Accordingly, the stock split has been recognized by reclassifying $115.5
million, the par value of the additional shares resulting from the split, from
capital in excess of par value and retained earnings to common stock. All
shares outstanding and per share amounts have been restated to reflect the stock
split.
NOTE C - Computation of Earnings Per Share
Earnings per share are based upon the weighted average number of common
shares outstanding. The exercise of outstanding stock options would not result
in a material dilution of earnings per share. (See Exhibit 11)
NOTE D - Inventories
The components of inventories at the end of the third quarter of 1996
and at year-end 1995, in millions of dollars, is as follows:
September 28 December 30
1996 1995
------ ------
Finished products $ 221.7 $ 224.1
Work in process 65.1 63.1
Raw materials 53.3 59.4
Supplies 2.3 2.5
------ ------
$ 342.4 $ 349.1
====== ======
-5-
NOTE E - Cash Flow Information
Interest paid during the third quarter of 1996 and 1995 amounted to $4.4 million
and $10.8 million, respectively. Interest paid for the nine months of 1996 and
1995 amounted to $18.6 million and $24.7 million, respectively.
Income taxes paid during the third quarter of 1996 and 1995 were $12.7
million and $20.0 million, respectively. Income taxes paid for the nine months
of 1996 and 1995 were $42.2 million and $62.1 million, respectively.
NOTE F - Restructuring
Restructuring charges for the nine months of 1996 amounted to $7 million. The
charge includes approximately $6 million in gains from recent divestitures,
offset by the charges for the reorganization of certain operations and the
write-off of assets associated with the product segments that have been sold.
During the first nine months of 1996, the company made severance and other exit
cost payments of $11 million under the previously disclosed restructuring
program. At September 28, 1996, the reserve balance for the company's
restructuring activities was $13 million.
-6-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
The attached table, "Price/Volume Information" provides detail of the changes
in net sales by business segment and geographic region. In addition, the
attached tables, "Business Segment Information", provide clarification of
reported operating results for the third quarter and nine month periods of 1996
and 1995, reconciling them with normalized "core" results. Core results
exclude restructuring charges and restructuring-related transition costs
associated with the company's announced "4x4" restructuring program.
Restructuring-related transition costs represent consulting, plant and
equipment relocation, duplicate facility costs and other operational expenses
that in management's judgment are being incurred directly as a result of
restructuring activity and will cease upon completion of the related 4x4
initiative. This supplemental "core" information forms the basis for some of
the following commentary.
Consolidated net sales for the third quarter 1996 were $673 million, an
increase of 3% over sales of $656 million in the prior year. Ongoing
businesses experienced unit volume growth of 4% with particular strength in the
engineered tools, consumer tools and hardware markets. Business and product
line divestitures diminished sales by $13 million in the quarter. Unit volume
gains were also realized in all geographic areas. Consolidated net sales for
the nine month period were $1,985 million, up 2% from 1995 sales of $1,955
million. Year to date sales growth was dampened by the first quarter 1996,
which experienced a 1% decrease from the prior year due to weak retail markets.
Gross margin improved in the third quarter to 33.4% of sales from 31.7% in the
prior year and in the nine months to 33.0% from 32.0% for the prior year.
Increased volume and the positive effects of "4x4", including strong
contributions from the company's commodity purchasing teams, accounted for most
of the improvement in gross margin, more than offsetting the
restructuring-related transition costs incurred during the quarter. Core gross
margin improved to 33.4% for the nine month period from 32.0% for the same
period in the prior year.
Operating expenses were 22.6% of sales for both the third quarter of 1996 and
1995 and were 22.9% for the nine month period as compared with 22.7% in the
prior year period. Both the quarter and the nine month period in 1996
reflected incrementally more restructuring-related transition costs than the
prior year periods. On a core basis, S,G&A as a percent of sales for the
quarter decreased to 22.0% from 22.2% in the prior year and for the nine-month
period decreased to 22.2% from 22.6% in the prior year period. These
improvements reflected the benefits of the restructuring initiatives
implemented to date and other cost reduction efforts.
Total restructuring-related transition costs incurred were $7 million, or $.05
per share, for the third quarter, and $22 million, or $.16 per share, for the
nine month period, compared with $3 million, or $.02 per share, for the same
periods in the prior year. These costs in 1996 included the transition costs
associated with moving and closing facilities and the consulting and duplicate
facility costs related to the implementation of the company's Perfect Customer
Service ("PCS") program. The PCS initiative involves the centralization of
customer service and distribution for the company's consumer markets in North
America.
-7-
Interest expense, net was significantly reduced from the prior year quarter and
nine month period due to much lower average borrowings.
A net restructuring charge of $3 million was recorded in the third quarter,
reflecting severance, lease termination and other costs associated with the
reorganization of several smaller operations offset by gains from the
divestiture of non-strategic business units. These divestitures included a
tax-advantaged sale of a product segment which resulted in the $3 million
restructuring charge having only a $.01 per share after-tax effect.
Core segment operating profit margin, exclusive of restructuring charges and
restructuring-related transition costs, improved to 12.6% for the quarter from
10.1% in the prior year. Profitability improved due to volume and the benefits
of the 4x4 restructuring initiatives.
In the Tools segment, unit volume sales for the quarter increased 4% over last
year. Consumer tools were up 5% with strength in all geographic areas.
Engineered tools increased 6%, reflecting strong sales volume of fastening
tools and fasteners in North America and Canada. Industrial tools unit volume
decreased 1%, reflecting continued low volume in the U.S. storage systems
business. Core operating profits for the quarter increased to 13.4% of sales,
from 10.8% in the prior year. This improvement resulted from increased volume,
purchasing savings and other 4x4 restructuring initiatives, especially in the
Fastening Systems division. These profitability improvements were also
reflected in the margin improvement for the nine month period along with the
absence of prior year manufacturing integration costs at the Mechanics Tools
division; however, for the nine-month period, these improvements were somewhat
offset by lower volumes and lower absorption of factory overhead due to an
aggressive inventory reduction program in the first quarter of this year.
The Hardware segment experienced 4% unit growth in the third quarter, with
exceptionally strong demand in the U.S. consumer markets. Core operating
profits increased to 12.6% of sales, from 6.4% in the prior year. This
improvement results from increased volume, production levels which favorably
absorbed factory overhead costs and the positive effects of purchasing and
other 4x4 restructuring initiatives.
The Specialty Hardware segment experienced 7% unit growth, with continued
strong U.S. home center demand for door products. Core operating profits
declined to 8.7% of sales, from 9.5% in the prior year. A 3% price decline in
this segment, attributable to a competitive pricing environment in the U.S.
commercial market for automated door products, offset the effects of increased
volume and improvement from 4x4 restructuring initiatives.
Liquidity and Sources of Capital
Cash flow from operations for the nine month period of $188 million was
significantly higher than operating cash flow of $76 million in the prior year
period. The increase was due to higher profitability as well as aggressive
reductions in working capital. Of the $112 million additional cash generated,
approximately half was contributed from lower net working capital.
The company utilized the additional operating cash flow generated along with
the proceeds from divestitures in the period to pay down debt. The company's
total debt to total capital ratio was reduced to 32.6% as of September 28,
1996.
-8-
As of September 28, 1996, the reserve balance for the restructuring initiatives
previously announced was $13 million. Severance and other exit cost cash
payments made during the nine month period aggregated $11 million.
The company anticipates that its operating cash flow and borrowing capacity
will enable it to fund its growth and restructuring initiatives, capital
expenditures and dividends. The restructuring activities the company has
implemented to date as well as future restructuring initiatives are not
expected to have a material adverse effect on liquidity. Capital expenditures
for the year will probably be less than $100 million.
Forward-Looking Statements
The plant closings, product and business divestitures , and other programs
associated with the company's 4x4 restructuring program are progressing as
planned. The process of divesting of non-strategic product segments is
expected to be completed by the end of the current year. Initiatives
currently being pursued as a part of the company's restructuring program will
result in future restructuring charges and restructuring-related transition
costs as these various initiatives are implemented. Due to the complexity of
these initiatives and their various stages of planning, the company is
currently unable to accurately predict the associated future charges and costs;
however, the company anticipates that potential restructuring charges will be
material and may approximate the amounts recorded previously. In addition, the
restructuring-related transition costs, which include plant and equipment
relocation, employee training and start-up inefficiencies, may also be material
and may significantly exceed the costs recognized to-date as more initiatives
associated with 4x4 are announced and implemented.
The company's operating results for the third quarter demonstrate that the 4x4
restructuring program to-date has resulted in a lower cost structure as was
intended. The company is more sharply focused on achieving the full potential
of all its businesses. Improved cost structures and efficient production
capabilities are critical to the achievement of the profitable growth goals of
the company.
Certain risks and uncertainties, however, are inherent in the achievement of
the two 4x4 goals: restructuring cost and asset bases and growing sales. The
company's ability to successfully implement all of its restructuring
initiatives, including the relocation of multiple manufacturing operations and
the consolidation of North American consumer order management and
distribution, is dependent on such factors as the ability of its employees with
the help of outside consultants to develop and execute comprehensive plans to
provide for smooth transitions, the successful recruitment and training of new
employees, the existence and resolution of any labor issues related to closing
facilities, the need to respond to significant changes in product demand
during the transition and unforeseen events. In addition, the company's
ability to sustain the profitability improvements that have been attributable
to the restructuring initiatives is dependent on the extent of pricing pressure
within the company's markets, the continued consolidation of customers in
consumer channels, increasing global competition, changes in trade, monetary
and fiscal policies and laws, inflation and currency exchange fluctuations, as
well as recessionary or expansive trends in the economies of the world in which
the company operates.
In order to achieve the $4 billion of net sales targeted by the company's 4x4
program, the company must be able to identify, successfully negotiate and
consumate acquisition, joint venture or strategic alliance agreements that will
-9-
generate significant levels of added revenue. In addition, internal growth
will be dependent on the acceptance of the company's products within new or
developing markets and the continued development of new products.
Earlier this year, the company's Chief Executive Officer , Richard H. Ayers
announced his intention to retire. The Board of Directors is actively pursuing
the recruitment of a candidate with the complementary skills to achieve the
company's objectives. Such a change in management presents risks that the
transition will adversely affect the company's operations, although Mr. Ayers
has indicated his commitment to ensuring a seamless change in leadership and
has indicated that his retirement timing will accommodate the transition needs.
.
-10-
THE STANLEY WORKS AND SUBSIDIARIES
PRICE/VOLUME INFORMATION
(Unaudited, Millions of Dollars)
NET SALES
Third Quarter
-----------------------------------------------------
Unit ACQ/ Curr-
1996 Price Volume DVT ency 1995
-----------------------------------------------------
INDUSTRY SEGMENTS
Tools
Consumer $ 187.5 - 5% (2)% - $ 181.9
Industrial 132.9 3% (1)% (1)% - 131.4
Engineered 173.3 - 6% (4)% - 170.9
-------- --------
Total Tools 493.7 1% 4% (3)% - 484.2
Hardware 84.3 - 4% - - 81.1
Specialty Hardware 94.9 (3)% 7% 1% - 90.4
-------- --------
Consolidated $ 672.9 1% 4% (2)% - $ 655.7
======== ========
GEOGRAPHIC AREAS
United States $ 478.3 - 4% (3)% - $ 472.6
Europe 105.1 1% 5% 1% (2)% 100.3
Other Areas 89.5 1% 8% - (1)% 82.8
-------- --------
Consolidated $ 672.9 1% 4% (2)% - $ 655.7
======== ========
Year to Date
-----------------------------------------------------
Unit ACQ/ Curr-
1996 Price Volume DVT ency 1995
-----------------------------------------------------
INDUSTRY SEGMENTS
Tools
Consumer $ 535.9 1% - (1)% (1)% $ 538.7
Industrial 415.8 2% (2)% - - 415.5
Engineered 514.6 - 5% (4)% - 510.3
-------- --------
Total Tools 1,466.3 1% 2% (2)% (1)% 1,464.5
Hardware 255.4 1% 2% - - 247.5
Specialty Hardware 263.7 (1)% 9% 1% - 242.5
-------- --------
Consolidated $ 1,985.4 1% 2% (1)% - $ 1,954.5
======== ========
GEOGRAPHIC AREAS
United States $ 1,421.0 1% 3% (2)% - $ 1,393.2
Europe 314.2 1% 1% 1% (2)% 312.6
Other Areas 250.2 1% - - - 248.7
-------- --------
Consolidated $ 1,985.4 1% 2% (1)% - $ 1,954.5
======== ========
See notes to consolidated financial statements.
-11-
THE STANLEY WORKS AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(Unaudited, Millions of Dollars)
OPERATING PROFIT
Third Quarter 1996
-------------------------------------------------
Related Core
Restrg Transition Profit
Reported Chgs Costs Core Margin
-------------------------------------------------
INDUSTRY SEGMENTS
Tools $ 56.7 $ 3.7 $ 5.8 $ 66.2 13.4%
Hardware 9.6 - 1.0 10.6 12.6%
Specialty Hardware 7.8 - 0.5 8.3 8.7%
------ ------ ------ ------
Total 74.1 3.7 7.3 85.1 12.6%
Net corporate
expenses (8.7) (0.6) 0.1 (9.2)
Interest expense (6.4) - - (6.4)
------ ------ ------ ------
Earnings before
income taxes $ 59.0 $ 3.1 $ 7.4 $ 69.5
====== ====== ====== ======
GEOGRAPHIC AREAS
United States $ 59.3 $ 1.6 $ 5.5 $ 66.4 13.9%
Europe 10.2 1.8 0.4 12.4 11.8%
Other Areas 4.6 0.3 1.4 6.3 7.0%
------ ------ ------ ------
Total $ 74.1 $ 3.7 $ 7.3 $ 85.1 12.6%
====== ====== ====== ======
Third Quarter 1995
-------------------------------------------------
Related Core
Restrg Transition Profit
Reported Chgs Costs Core Margin
-------------------------------------------------
INDUSTRY SEGMENTS
Tools $ 20.7 $ 30.6 $ 0.9 $ 52.2 10.8%
Hardware (0.9) 5.8 0.3 5.2 6.4%
Specialty Hardware 7.7 0.6 0.3 8.6 9.5%
------ ------ ------ ------
Total 27.5 37.0 1.5 66.0 10.1%
Net corporate
expenses (11.8) 4.5 1.1 (6.2)
Interest expense (8.8) - - (8.8)
------ ------ ------ ------
Earnings before
income taxes $ 6.9 $ 41.5 $ 2.6 $ 51.0
====== ====== ====== ======
GEOGRAPHIC AREAS
United States $ 19.1 $ 30.2 $ 1.5 $ 50.8 10.7%
Europe 3.3 6.8 - 10.1 10.1%
Other Areas 5.1 - - 5.1 6.2%
------ ------ ------ ------
Total $ 27.5 $ 37.0 $ 1.5 $ 66.0 10.1%
====== ====== ====== ======
See notes to consolidated financial statements.
-12-
THE STANLEY WORKS AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(Unaudited, Millions of Dollars)
OPERATING PROFIT
Year to Date 1996
-------------------------------------------------
Related Core
Restrg Transition Profit
Reported Chgs Costs Core Margin
-------------------------------------------------
INDUSTRY SEGMENTS
Tools $ 167.4 $ 4.4 $ 16.3 $ 188.1 12.8%
Hardware 31.9 - 3.2 35.1 13.7%
Specialty Hardware 16.8 - 1.5 18.3 6.9%
------ ------ ------ ------
Total 216.1 4.4 21.0 241.5 12.2%
Net corporate
expenses (31.6) 2.5 1.4 (27.7)
Interest expense (21.0) - - (21.0)
------ ------ ------ ------
Earnings before
income taxes $ 163.5 $ 6.9 $ 22.4 $ 192.8
====== ====== ====== ======
GEOGRAPHIC AREAS
United States $ 168.1 $ 1.7 $ 17.4 $ 187.2 13.2%
Europe 31.1 1.8 1.4 34.3 10.9%
Other Areas 16.9 0.9 2.2 20.0 8.0%
------ ------ ------ ------
Total $ 216.1 $ 4.4 $ 21.0 $ 241.5 12.2%
====== ====== ====== ======
Year to Date 1995
-------------------------------------------------
Related Core
Restrg Transition Profit
Reported Chgs Costs Core Margin
-------------------------------------------------
INDUSTRY SEGMENTS
Tools $ 131.6 $ 30.6 $ 0.9 $ 163.1 11.1%
Hardware 15.3 5.8 0.3 21.4 8.6%
Specialty Hardware 13.8 0.6 0.3 14.7 6.1%
------ ------ ------ ------
Total 160.7 37.0 1.5 199.2 10.2%
Net corporate
expenses (29.7) 4.5 1.1 (24.1)
Interest expense (27.0) - - (27.0)
------ ------ ------ ------
Earnings before
income taxes $ 104.0 $ 41.5 $ 2.6 $ 148.1
====== ====== ====== ======
GEOGRAPHIC AREAS
United States $ 116.3 $ 30.2 $ 1.5 $ 148.0 10.6%
Europe 27.4 6.8 - 34.2 10.9%
Other Areas 17.0 - - 17.0 6.8%
------ ------ ------ ------
Total $ 160.7 $ 37.0 $ 1.5 $ 199.2 10.2%
====== ====== ====== ======
See notes to consolidated financial statements.
-13-
PART II - OTHER INFORMATION
Item 6. - Exhibits and Reports on Form 8-K
(a) Exhibits
(1) See Exhibit Index on page 15
(b) Reports on Form 8-K.
(1) Registrant filed a Current Report on Form 8-K, dated July 17,
1996, in respect of the Registrant's press release announcing
second quarter results.
Signatures
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: November 12, 1996 By: Richard Huck
Richard Huck
Vice President, Finance
and Chief Financial Officer
Date: November 12, 1996 By: Theresa F. Yerkes
Theresa F. Yerkes
Vice President and
Controller (Chief Accounting
Officer)
-14-
EXHIBIT INDEX
(11) Statement re computation of earnings per share
(12) Statement re computation of ratio of earnings to fixed charges
(27) Financial Data Schedule
-15-
THE STANLEY WORKS AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(dollars and shares in thousands
except per share amounts)
THIRD QUARTER ENDED NINE MONTHS ENDED
SEPT 28 SEPT 30 SEPT 28 SEPT 30
1996 1995 1996 1995
Earnings per common share:
Weighted average shares outstanding 88,847 88,579 88,832 88,718
====== ====== ====== ======
Net earnings (loss) $37,677 ($1,713) $99,867 $58,473
====== ======= ======= =======
Per share amounts $0.42 ($0.02) $1.12 $0.66
====== ======= ======= =======
PRIMARY:
Weighted average shares outstanding 88,847 88,579 88,832 88,718
Dilutive common stock equivalents -
based on the treasury stock method
using average market price 1,296 1,052 1,327 988
------ ------ ------ ------
90,143 89,631 90,159 89,706
====== ====== ====== ======
Per share amounts $0.42 ($0.02) $1.11 $0.65
====== ====== ====== ======
FULLY DILUTED:
Weighted average shares outstanding 88,847 88,579 88,832 88,718
Dilutive common stock equivalents -
based on the treasury stock method
using the quarter end market price
if higher than average market price 1,296 1,176 1,348 1,030
------ ------ ------ ------
90,143 89,755 90,180 89,748
====== ====== ====== ======
Per share amounts $0.42 ($0.02) $1.11 $0.65
====== ====== ====== ======
Note: This calculation is submitted in accordance with Regulation S-K
item 601(b)(11) although not required by footnote 2 to paragraph 14
of APB Opinion No. 15 because it results in dilution of less than 3%.
The weighted average number of shares for prior periods have been
restated to give retroactive effect to the two-for-one stock split
declared on April 17, 1996.
THE STANLEY WORKS AND SUBSIDIARIES
COMPUTATION OF EARNINGS TO FIXED CHARGES
(in Millions of Dollars)
THIRD QUARTER NINE MONTHS
1996 1995 1996 1995
Earnings before income taxes $59.0 $6.9 $163.5 $104.0
Add:
Portion of rents representative of
interest factor 3.3 3.2 10.0 9.8
Interest expense 6.3 8.5 20.6 26.5
Amortization on expense on
long-term debt 0.1 0.1 0.2 0.2
Amortization of capitalized interest 0.2 0.2
----- ----- ----- -----
Income as adjusted $68.7 $18.7 $194.5 $140.7
===== ===== ===== =====
Fixed charges:
Interest expense $6.3 $8.5 $20.6 $26.5
Amortization on expense on
long-term debt 0.1 0.1 0.2 0.2
Capitalized Interest 0.1 0.2
Portion of rents representative of
interest factor 3.3 3.2 10.0 9.8
----- ----- ----- -----
Fixed charges $9.8 $11.8 $31.0 $36.5
===== ===== ===== =====
Ratio of earnings to fixed charges 7.01 1.58 6.27 3.85
===== ===== ===== =====
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from The
Stanley Works and Subsidiaries Consolidated Balance Sheets and Statements
of Earnings and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-END> SEP-28-1996
<CASH> 85,000
<SECURITIES> 0
<RECEIVABLES> 473,800
<ALLOWANCES> 0
<INVENTORY> 342,400
<CURRENT-ASSETS> 941,000
<PP&E> 1,158,300
<DEPRECIATION> 632,200
<TOTAL-ASSETS> 1,689,600
<CURRENT-LIABILITIES> 397,300
<BONDS> 350,600
0
0
<COMMON> 230,900
<OTHER-SE> 556,800
<TOTAL-LIABILITY-AND-EQUITY> 1,689,600
<SALES> 1,985,400
<TOTAL-REVENUES> 1,985,400
<CGS> 1,330,700
<TOTAL-COSTS> 1,330,700
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,100
<INCOME-PRETAX> 163,500
<INCOME-TAX> 63,600
<INCOME-CONTINUING> 99,900
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 99,900
<EPS-PRIMARY> 1.12
<EPS-DILUTED> 0
<FN>
<F1>On April 17, 1996, the company declared a two-for-one stock split. Prior
period Financial Data Schedules have not been restated.
</FN>
</TABLE>
