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):October 16, 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 12 pages
Exhibit Index is located on Page 4
Item 5. Other Events.
1. On October 16, 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 October 16, 1996 reporting on
Stanley's third quarter sales and earnings.
Page 2 of 12 pages<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
Date: October 16, 1996 By: Stephen S. Weddle
Name: Stephen S. Weddle
Title: Vice President, General
Counsel and Secretary
Page 3 of 12 pages
EXHIBIT INDEX
Current Report on Form 8-K
Dated October 16, 1996
Exhibit No. Page
(20)(i) 5
Page 4 of 12 pages
FOR IMMEDIATE RELEASE
Exhibit (20)(i)
October 16, 1996
THE STANLEY WORKS REPORTS THIRD QUARTER EARNINGS
New Britain, Connecticut (NYSE: SWK) ... The Stanley Works today
announced a significant increase in earnings for its third quarter ended
September 28, 1996. Net sales for the quarter were $673 million, an
increase of 3% over sales of $656 million in the third quarter of 1995.
Commenting on the sales volume, Richard H. Ayers, Chairman and Chief
Executive Officer, stated: "Our 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 our sales by $13 million this quarter. Unit
volume gains were also realized in all geographic areas."
Reported net earnings were $38 million, or $.42 per share, compared with
the prior year's third quarter net loss of $2 million, or $.02 per share.
Exclusive of restructuring charges and restructuring-related transition
costs recorded in both periods, "core" net income was $42 million, or
$.48 per share, a 34% increase over the prior year's third quarter core
earnings of $32 million, or $.35 per share.
Gross margin reported for the third quarter was 33.4% of sales compared
with 31.7% in the prior year's third quarter. Increased volume and the
positive effects of 4X4 restructuring initiatives, including strong
contributions from the company's commodity purchasing teams, accounted
for most of the improvement in gross margin. Operating expenses were
22.6% of sales in the third quarters of both 1996 and 1995. Excluding
restructuring-related transition costs recorded in both third quarters,
operating expenses decreased to 22.0% of sales from 22.2% in the prior
year. Interest expense, net of interest income, decreased to 0.8% of
sales from 1.2% in the prior year, on lower average borrowings.
A net restructuring charge of $3.1 million was recorded in the third
quarter, reflecting the reorganization of certain 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 $3.1 million pre-tax restructuring charge having only a
$.01 per share after-tax effect. Restructuring-related transition costs
of $7.4
Page 5 of 12 pages
million (pre-tax), or $.05 per share after-tax, were incurred in the
third quarter in connection with the implementation of the company's
Perfect Customer Service program and other restructuring activities.
Consolidated segment operating profit margin, exclusive of restructuring
charges and restructuring-related transition costs, improved to 12.6%
from 10.1% in the prior year's third quarter. Mr. Ayers continued: "We
are seeing improvements in our profitability attributable to increased
volume and as a direct result of our 4X4 restructuring initiatives. I am
pleased with the progress toward positioning our company's cost structure
for future growth. We have begun to invest some of these savings in
activities that are expected to generate profitable internal sales
growth. As we have indicated previously, the company will continue to
incur additional restructuring charges and higher levels of
restructuring-related transition costs as we continue to implement our
4X4 restructuring initiatives over the next year."
The attached table, "Business Segment Information", provides
clarification of reported results for the third quarters of 1996 and
1995, reconciling them with normalized "core" results. Core results
exclude restructuring charges and restructuring-related transition costs
and serve as the basis of the Tools, Hardware and Specialty Hardware
segment comments which follow.
In the Tools segment overall, unit volume sales 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 our
U.S. storage systems business. Core operating profits increased to 13.4%
of sales, from 10.8% in the prior year. This improvement results from
increased volume, purchasing savings and other 4X4 restructuring
initiatives, especially in our Fastening Systems division.
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
Page 6 of 12 pages
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.
Mr. Ayers commented on the quarter and general business conditions:
"Stronger retail markets provided us with moderate sales growth in the
third quarter. Our operating results demonstrate that 4X4 restructuring
efforts are streamlining our cost structure as they were intended to do.
We are ever more sharply focused on achieving the full potential of all
our businesses and have made considerable progress toward the divestiture
of non-strategic product segments. We expect the divestiture process to
be completed by the end of the current year."
Continuing, Mr. Ayers stated: "Our business units have made great
strides in positioning themselves competitively. Their improved cost
structures and efficient production capabilities are important to the
achievement of profitable growth. Our future growth will come from
leveraging these improvements in the marketplace, from acquisitions and
from other business ventures. We are well-positioned to identify,
finance and manage the growth we seek."
Contact: Gerard J. Gould
Director, Investor Relations and Communications
Tel.: (860) 827-3833
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 or on the internet at: http://www.prnewswire.com or http
://www.StanleyWorks.com.
Page 7 of 12 pages
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 $ 37.7 $ (1.7) $ 99.9 $ 58.5
======== ======== ======== ========
Net Earnings 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
======== ======== ======== ========
Page 8 of 12 pages
THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited, Millions of Dollars)
Sept 28, Sept 30,
1996 1995
-------- --------
ASSETS
Cash and cash equivalents $ 85.0 $ 48.5
Accounts receivable 473.8 453.4
Inventories 342.4 391.1
Other current assets 39.8 35.6
-------- --------
Total current assets 941.0 928.6
Property, plant and equipment 526.1 543.0
Goodwill and other intangibles 112.1 145.8
Other assets 110.4 83.8
-------- --------
$ 1,689.6 $ 1,701.2
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term borrowings $ 29.9 $ 112.6
Accounts payable 128.6 98.9
Accrued expenses 238.8 202.9
-------- --------
Total current liabilities 397.3 414.4
Long-term debt 350.6 396.3
Other long-term liabilities 154.0 140.8
Shareholders' equity 787.7 749.7
-------- --------
$ 1,689.6 $ 1,701.2
======== ========
Page 9 of 12 pages
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
======== ========
Page 10 of 12 pages
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%
====== ====== ====== ======
Page 11 of 12 pages
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%
====== ====== ====== ======
Page 12 of 12 pages
