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): July 17, 1996
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:(860) 225-5111
Not Applicable
(Former name or former address, if changed since last report)
Page 1 of 11 pages
Exhibit Index is located on Page 4
Item 5. Other Events.
1. On July 17, 1996, the Registrant issued a
press release.
Attached as Exhibit (20)(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.
(c) 20(i) Press release dated July 17, 1996
reporting on Stanley s second quarter
sales and earnings.
Page 2 of 11 pages
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: July 18, 1996 By: Stephen S. Weddle
Name: Stephen S. Weddle
Title: Vice President, General
Counsel and Secretary
Page 3 of 11 pages
EXHIBIT INDEX
Current Report on Form 8-K
Dated July 17, 1996
Exhibit No. Page
(20)(i) 5
Page 4 of 11 pages
FOR IMMEDIATE RELEASE
July 17, 1996
STANLEY REPORTS SECOND QUARTER GAINS IN CORE EARNINGS FROM
RESTRUCTURING
New Britain, Connecticut (NYSE:SWK) ... The Stanley Works today
announced significant increases in core earnings on a modest
sales increase. Richard H. Ayers, Chairman and Chief Executive
Officer, commented, "The second quarter improvement in our core
earnings continues to reflect benefits realized from the
restructuring initiatives we have been implementing. The sales
increase reflected strengthening in U.S. consumer channels
partially offset by the effects of divestitures and weakness in
other markets."
Net sales for the second quarter were $677 million, up 3% from
prior year sales of $656 million. Net earnings were reported at
$33 million, or $.37 per share, and were reduced by $.12 per
share related to the company's restructuring program. Gains from
recent divestitures were offset by charges for the
writedown of assets associated with the company's active marketing of
non-strategic product segments and resulted in a net
restructuring charge of $4 million (pre-tax), or $.06 per share.
The company also incurred $8 million (pre-tax), or $.06 per
share, for consulting and transition costs related to its various
restructuring activities. Excluding these restructuring charges
and restructuring-related transition costs, net income would have
been $43 million, or $.49 per share, a 37% increase over the
prior year earnings of $31 million, or $.36 per share.
Mr. Ayers commented, "Initiatives announced last year as part of
our "4x4" restructuring program are now being implemented. While
we are incurring some short-term transition costs related to
these programs, the planned reductions in our cost structure are
beginning to be realized. Our progress to-date is very much on
target. We are especially pleased with the success of our
cross-divisional procurement teams."
Gross margins reported for the second quarter were 33.1% of sales
compared with 32.3% in the prior year quarter. The positive
effects of our purchasing and other restructuring initiatives
contributed to the improvement in margins. In addition, prior
year margins had been adversely affected by manufacturing
integration costs at our Mechanics Tools division. Operating
expenses were 22.6% of sales and included $4 million of
consulting and other restructuring- related transition costs.
Page 5 of 11 pages
Excluding these charges, operating expenses would have been 22.0%
of sales compared with 22.7% in the prior year. The improvement
in operating expense ratios reflects aggressive cost containment
efforts as well as the benefits accruing from restructuring.
Net sales in the Tools segment were virtually flat compared with
last year and included a 2% reduction due to divestitures.
Consumer sales, down 4% from last year, reflected weak non-U.S.
markets. Industrial sales were slightly higher than the prior
year despite reduced volumes in our storage systems business.
Engineered tool sales were strongly influenced by gains in U.S.
fastening tools and fasteners. Operating profits for the Tools
segment included $7 million of restructuring charges and
restructuring-related transition costs. Operating profit
margins, excluding these charges, would have been 13.3% of sales
compared with 11.7% in the prior year.
The Hardware segment experienced strong growth in the second quarter
due to the strengthening of U.S. consumer markets. Operating profits,
excluding $1 million of restructuring-related transition costs,
would have been $14 million, or 16.0% of sales, as compared with
$8 million, or 9.4% of sales in the prior year. In addition to
restructuring benefits, second quarter margins were enhanced by
increased factory utilization on higher volume and the resolution
of a legal matter.
Sales gains in the Specialty Hardware segment reflected
significant growth in the U.S. home center channel for our door
products. The recent strategic assessment of our door-related
product lines has resulted in an increased focus on growing the
entry door business. Operating profits, excluding
restructuring-related transition costs, would have been $7
million, or 7.7% of sales, compared with 4.5% in the prior year
and reflected lower manufacturing costs.
Consolidated operating profit margins, excluding restructuring
charges and restructuring-related transition costs, were
significantly improved to 12.9% from 10.5% in the prior year
period.
Geographically, the largest sales gains were in the U.S. due to
strengthening in retail channels. Europe and Other Areas, with
the exception of Canada, continued to produce weak sales results.
Operating profits, excluding restructuring charges and
restructuring-related transition costs, would have been $71
million in the U.S., $10 million in Europe, and $6 million in
Other Areas.
Mr. Ayers commented on the quarter, "Our second quarter operating
results clearly benefited from our restructuring efforts and
stronger U.S. retail markets. While market conditions are less
Page 6 of 11 pages
predictable, we believe that the structural changes resulting
from our restructuring initiatives will have a sustainable impact
on our future profitability. The strategic evaluation of all of
our business units and product segments has left us sharply
focused on achieving the full potential of our most important
businesses. As a result, we have recently begun actions to
divest the following product segments determined to be
non-strategic: Garage-related products, office products, U.S.
manufactured paint applicators, mail order safety products and
drywall tape products. We expect the sale of these product
segments to be completed by the end of the year."
Mr. Ayers commented further, "Our remaining businesses are
pursuing plans and initiatives to position themselves
competitively for future growth. As we prepare to implement
these plans, additional restructuring charges will be reported.
In addition, we have begun to direct our efforts toward achieving
the growth goals established as part of the 4x4 program. With
our strong balance sheet and our focus on reducing working
capital and improving cash flow, we are well positioned
financially to fund the acquisitions and other business ventures
that will help realize these goals."
Contact: Richard Huck
Vice President, Finance
and Chief Financial Officer
Tel: (203)-827-3803
The Stanley Works corporate press releases are available through
PR Newswire's "Company News On-Call" service. BY FAX: Dial
1-800-758-5804, ext. 874363. FOR INTERNET ACCESS:
http://www.prnewswire.com.
Page 7 of 11 pages
THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited, Millions of Dollars Except Per Share Amounts)
Second Quarter Six Months
1996 1995 1996 1995
-------- -------- -------- --------
Net Sales $ 677.2 $ 655.5 $ 1,312.5 $ 1,298.8
Costs and Expenses
Cost of sales 453.0 443.6 882.3 881.2
Selling, general and
administrative 153.1 148.6 302.1 295.9
Interest - net 5.4 8.1 11.9 15.6
Other - net 4.4 4.4 7.9 9.0
Restructuring 3.8 - 3.8 -
-------- -------- -------- --------
619.7 604.7 1,208.0 1,201.7
-------- -------- -------- --------
Earnings before
income taxes 57.5 50.8 104.5 97.1
Income Taxes 24.9 19.3 42.3 36.9
-------- -------- -------- --------
Net Earnings $ 32.6 $ 31.5 $ 62.2 $ 60.2
======== ======== ======== ========
Net Earnings Per Share
of Common Stock $ 0.37 $ 0.36 $ 0.70 $ 0.68
======== ======== ======== ========
Dividends per share $ 0.18 $ 0.175 $ 0.36 $ 0.35
======== ======== ======== ========
Average shares outstanding
(in thousands) 88,825 88,732 88,830 88,775
======== ======== ======== ========
Page 8 of 11 pages
THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited, Millions of Dollars)
June 29, July 1,
1996 1995
-------- --------
ASSETS
Cash and cash equivalents $ 79.5 $ 44.8
Accounts receivable 454.2 436.6
Inventories 344.4 415.6
Other current assets 42.3 35.4
-------- --------
Total current assets 920.4 932.4
Property, plant and equipment 523.9 557.0
Goodwill and other intangibles 121.0 160.8
Other assets 103.3 86.9
-------- --------
$ 1,668.6 $ 1,737.1
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term borrowings $ 47.2 $ 137.9
Accounts payable 119.6 98.5
Accrued expenses 204.6 184.8
-------- --------
Total current liabilities 371.4 421.2
Long-term debt 373.3 396.3
Other long-term liabilities 158.2 152.7
Shareholders' equity 765.7 766.9
-------- --------
$ 1,668.6 $ 1,737.1
======== ========
Page 9 of 11 pages
THE STANLEY WORKS AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(Unaudited, Millions of Dollars)
Second Quarter
----------------------------------------------------
Unit ACQ/ Curr-
1996 Price Volume DVT ency 1995
----------------------------------------------------
INDUSTRY SEGMENTS
NET SALES
Tools
Consumer $ 175.7 1% (2)% (1)% (2)% $ 183.3
Industrial 142.5 3% - - (1)% 140.3
Engineered 177.3 - 7% (4)% - 172.9
-------- --------
Total Tools 495.5 1% 2% (2)% (1)% 496.5
Hardware 87.9 1% 7% - - 81.7
Specialty Hardware 93.8 (2)% 22% 1% - 77.3
-------- --------
Consolidated $ 677.2 1% 4% (1)% (1)% $ 655.5
======== ========
OPERATING PROFIT
Tools $ 58.8 $ 57.9
Hardware 12.7 7.7
Specialty Hardware 6.7 3.5
-------- --------
Total 78.2 69.1
Net corporate
expenses (13.7) (9.0)
Interest expense (7.0) (9.3)
-------- --------
Earnings before
income taxes $ 57.5 $ 50.8
======== ========
GEOGRAPHIC AREAS
NET SALES
United States $ 493.2 1% 7% (2)% - $ 466.0
Europe 101.0 1% - 1% (5)% 104.5
Other Areas 83.0 1% (2)% - (1)% 85.0
-------- --------
Consolidated $ 677.2 1% 4% (1)% (1)% $ 655.5
======== ========
OPERATING PROFIT
United States $ 63.4 $ 50.5
Europe 9.3 11.7
Other Areas 5.5 6.9
-------- --------
Total $ 78.2 $ 69.1
======== ========
Page 10 of 11 pages
THE STANLEY WORKS AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(Unaudited, Millions of Dollars)
Year to Date
----------------------------------------------------
Unit ACQ/ Curr-
1996 Price Volume DVT ency 1995
----------------------------------------------------
INDUSTRY SEGMENTS
NET SALES
Tools
Consumer $ 348.4 1% (2)% - (1)% $ 356.8
Industrial 282.9 3% (3)% - - 284.1
Engineered 341.3 - 5% (4)% - 339.4
-------- --------
Total Tools 972.6 1% - (1)% (1)% 980.3
Hardware 171.1 2% 1% - - 166.4
Specialty Hardware 168.8 (1)% 10% 2% - 152.1
-------- --------
Consolidated $ 1,312.5 1% 2% (1)% (1)% $ 1,298.8
======== ========
OPERATING PROFIT
Tools $ 110.7 $ 110.9
Hardware 22.3 16.2
Specialty Hardware 9.0 6.1
-------- --------
Total 142.0 133.2
Net corporate
expenses (22.9) (17.9)
Interest expense (14.6) (18.2)
-------- --------
Earnings before
income taxes $ 104.5 $ 97.1
======== ========
GEOGRAPHIC AREAS
NET SALES
United States $ 942.7 1% 3% (2)% - $ 920.6
Europe 209.1 1% (2)% 1% (2)% 212.3
Other Areas 160.7 1% (3)% - (1)% 165.9
-------- --------
Consolidated $ 1,312.5 1% 2% (1)% (1)% $ 1,298.8
======== ========
OPERATING PROFIT
United States $ 108.8 $ 97.2
Europe 20.9 24.1
Other Areas 12.3 11.9
-------- --------
Total $ 142.0 $ 133.2
======== ========
Page 11 of 11 pages
