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 15, 1997
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)
Exhibit Index is located on Page 4
Page 1 of 14
Item 5. Other Events.
1. On October 15, 1997, the Registrant issued a
press release announcing the hiring of a new Vice President,
Marketing and Brand Development. Attached as Exhibit (20) (i) is
a copy of the Registrant's press release.
2. On October 15, 1997, the Registrant issued a
press release announcing third quarter earnings. Attached as
Exhibit (20) (ii) is a copy of the Registrant's press release.
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits.
(c) 20(i) Press release dated October 15, 1997
announcing hiring of new Vice President,
Marketing and Brand Development.
20(ii) Press release dated October 15, 1997
announcing Stanley's third quarter
results.
20(iii) Cautionary statements relating to
forward looking statements included in
Exhibit 20(ii).
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<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 15, 1997 By: Stephen S. Weddle
Name: Stephen S. Weddle
Title: Vice President, General
Counsel and Secretary
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EXHIBIT INDEX
Current Report on Form 8-K
Dated October 15, 1997
Exhibit No. Page
20(i) 5
20(ii) 7
20(iii) 14
Page 4 of 14
<PAGE>
FOR IMMEDIATE RELEASE Exhibit (20)(i)
October 15, 1997
THE STANLEY WORKS ANNOUNCES HIRING OF KENNETH O. LEWIS AS
VICE PRESIDENT, MARKETING AND BRAND DEVELOPMENT
New Britain, Connecticut, October 15, 1997 ... The Stanley Works
(NYSE: "SWK") today announced that it has filled its senior
marketing position, naming Kenneth O. Lewis, 44 years old, Vice
President, Marketing and Brand Development.
Mr. Lewis most recently was Executive Vice President, Strategic
Alliances, Marvel Entertainment Group. Previously, he was
employed from 1986 through 1996 by The Walt Disney Company, with
responsibilities for development of strategically-based marketing
plans for corporate sponsors. His many accomplishments included
the successful leveraging of the Disney brand into corporate
partnership programs with Delta Air Lines, American Express,
McDonald's, Coca-Cola, Major League Baseball, Sears and others.
Under his direction, the Disney Participant Management Team
evolved dramatically, with a focus on brand building and equity-
driven marketing activity that enhanced brand exposure and
measurably drove sustained, profitable revenue growth.
From 1981 through 1985, Mr. Lewis was Advertising and Promotions
Manager with Six Flags Corporation, responsible for all
advertising, promotion and special events for the Six Flags Over
Georgia theme park. Earlier in his career, Mr. Lewis spent three
years with Cohn & Wolfe Public Relations, with responsibilities
that included the sales and public relations program for the
Coca-Cola Olympic Program for the 1980 Lake Placid Winter Games.
From 1977 - 1979, Mr. Lewis was Regional Marketing Director of
Ringling Bros. and Barnum & Bailey Combined Shows, with
responsibilities including sales, marketing and promotions and
publicity for the Ringling Bros. Circus and The Ice Follies in
key markets.
Commenting on the hiring of Mr. Lewis, John M. Trani, Chairman
and Chief Executive Officer, stated: "Ken has an impressive
record of developing and leveraging great brands. He brings
unique insight to Stanley and has a marvelous breadth of creative
accomplishment. His objective is to make the Stanley brand
ubiquitous and leverage the power of the brand across categories.
We're excited that a talent like Ken will be joining our team."
The Stanley Works, an S&P 500 component company, is a worldwide
producer of tools, hardware and door systems for professional,
industrial and consumer use.
Page 5 of 14
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 6 of 14
FOR IMMEDIATE RELEASE Exhibit (20)(ii)
October 15, 1997
THE STANLEY WORKS REPORTS THIRD QUARTER EARNINGS
New Britain, Connecticut, October 15, 1997... The Stanley Works
(NYSE: "SWK"), announced increased "core" earnings for its third
quarter ended September 27, 1997. Exclusive of restructuring and
other charges, normalized or "core" net income in the third
quarter was $49 million, or $.55 per share, a 15% increase over
prior year core earnings of $42 million, or $.48 per share. Net
sales were $651 million, 3% less than the $673 million in the
third quarter last year. Volume from ongoing businesses was up
4% with strength noted in consumer mechanics tools, fastening
systems and hydraulic tools in the U.S., as well as mirrored
closet door products in the Americas.
Overall operating margin on a core basis increased to 13.0%
versus 11.9% last year. Continued positive effects of 1995
restructuring initiatives, including strong contributions from
cross-divisional purchasing efforts, accounted for most of the
improvement, particularly in the Tools segment where operating
margin was 16.5% versus 13.4% last year. Hardware operating
margin was 11.6% versus 12.6% last year, reflecting operational
difficulties experienced in implementing new distribution
systems. Specialty Hardware operating margins were lower than in
1997 and an extremely competitive business environment continues;
however, such margins have averaged 5.2% for the first nine
months of 1997, exceeding 1996's full year average of 4.2% and,
importantly, have shown improvement each quarter.
John M. Trani, Chairman and Chief Executive Officer, commented:
"The strength in the third quarter of 1996 provided a tough
measurement for comparison in 1997. In July, we announced major
growth initiatives, commenced a comprehensive restructuring of
our company's operations and completed a re-alignment of our
consumer sales force in the Americas.
"Despite inevitable hiccups associated with changing the Americas
sales force and difficulties in implementing new distribution
systems, our people delivered shareholder expectations. Our high
levels of orders since mid-September and resulting strong backlog
position us for an excellent finish to the year. Our earnings
growth, as well as continued improvement in operating margin
rates, indicate progress toward a leaner cost structure. This
will enable us to leverage the benefits of the growth programs we
announced early in the third quarter."
Mr. Trani added: "Executing these growth initiatives is
underway. The collective spirit of our people is high,
Page 7 of 14
especially as they begin to see the enormity of the growth
opportunities presented. During the third quarter new senior
management in engineering & technology, industrial design and
human resources joined our team to help lead our drive for
sustained profitable growth."
Actual reported results were a net loss of $41 million, or $.46
per share in the third quarter, compared with the prior year's
net income of $38 million, or $.42 per share. Restructuring
charges and restructuring-related transition costs accounted for
the reported loss. Restructuring charges of $106 million were
taken in the third quarter in connection with actions announced
on July 18, 1997. These charges are in addition to the $137
million recorded in the second quarter. The company also
recorded $19 million, or $.14 per share, of restructuring-related
transition costs in the third quarter, comprised of $15 million
related to initiatives announced in 1995 and $4 million related
to growth initiatives announced in July 1997. Such costs
represent moving, start-up and duplicative facility costs. As
previously announced, implementation of the 1997 growth
initiatives will require that approximately $100 million of such
restructuring-related transition costs be incurred through mid-
1999.
The attached table, "Business Segment Information", provides
clarification of reported results for the third quarters of 1997
and 1996, and the related nine-month periods, reconciling them
with normalized core results. Core results exclude restructuring
charges, restructuring-related transition costs and, in the 1997
year-to-date period, a non-cash charge related to stock options
granted to the company's new chairman and chief executive
officer.
The Stanley Works, an S&P 500 component company, is a worldwide
producer of tools, hardware and door systems for professional,
industrial and consumer use.
Contact: Gerard J. Gould
Director, Investor Relations and Communications
Tel.: (860) 827-3833
This press release contains forward looking statements as to future sales
volumes and as to the company's ability to complete the reallocation of its
resources in order to achieve sustained, profitable growth.
Cautionary statements accompanying these forward looking statements are set
forth, along with this news release, in a Form 8-K filed with the Securities
and Exchange Commission today.
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 8 of 14
<PAGE>
THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited, Millions of Dollars Except Per Share Amounts)
Third Quarter Nine Months
1997 1996 1997 1996
Net Sales $ 650.5 $ 672.9 $ 1,970.7 $ 1,985.4
Costs and Expenses
Cost of sales 436.6 448.4 1,314.1 1,330.7
Selling, general and
administrative 148.2 151.7 455.2 453.8
Interest - net 4.2 5.2 12.9 17.1
Other - net 2.0 5.5 19.2 13.4
Restructuring 105.9 3.1 238.5 6.9
696.9 613.9 2,039.9 1,821.9
Earnings (Loss) before
income taxes (46.4) 59.0 (69.2) 163.5
Income Taxes (5.8) 21.3 (0.8) 63.6
Net Earnings (Loss) $ (40.6) $ 37.7 $ (68.4) $ 99.9
Net Earnings (Loss) Per
Share of Common Stock $ (0.46) $ 0.42 $ (0.77) $ 1.12
Dividends per share $ 0.20 $ 0.185 $ 0.57 $ 0.545
Average shares outstanding
(in thousands) 89,031 88,847 88,911 88,832
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<PAGE>
THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited, Millions of Dollars)
Sept 28, Sept 28,
1997 1996
ASSETS
Cash and cash equivalents $ 146.7 $ 85.0
Accounts receivable 483.2 473.8
Inventories 307.7 342.4
Other current assets 80.6 39.8
Total current assets 1,018.2 941.0
Property, plant and equipment 503.2 562.6
Goodwill and other intangibles 72.7 112.1
Deferred income taxes 36.8 -
Other assets 105.7 74.0
$ 1,736.6 $ 1,689.6
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term borrowings $ 98.6 $ 29.9
Accounts payable 124.7 128.6
Accrued expenses 233.6 226.0
Accrued restructuring 118.8 12.8
Total current liabilities 575.7 397.3
Long-term debt 288.9 350.6
Other long-term liabilities 231.9 154.0
Shareholders' equity 640.1 787.7
$ 1,736.6 $ 1,689.6
Page 10 of 14
<PAGE>
THE STANLEY WORKS AND SUBSIDIARIES
PRICE/VOLUME INFORMATION
(Unaudited, Millions of Dollars)
NET SALES
Third Quarter
Unit ACQ/
1997 Price Volume DVT Currency 1996
INDUSTRY SEGMENTS
Tools
Consumer $ 187.9 - 4% (3)% (3)% $ 191.7
Industrial 130.0 - 3% (2)% - 128.7
Engineered 172.0 (2)% 4% (1)% (2)% 173.3
Total Tools 489.9 (1)% 4% (2)% (2)% 493.7
Hardware 85.5 (1)% 3% - (1)% 84.3
Specialty Hardware 75.1 - 4% (25)% - 94.9
Consolidated $ 650.5 (1)% 4% (5)% (1)% $ 672.9
GEOGRAPHIC AREAS
United States $ 464.5 (1)% 4% (6)% - $ 478.3
Europe 97.8 - 3% (1)% (9)% 105.1
Other Areas 88.2 1% 7% (6)% (3)% 89.5
Consolidated $ 650.5 (1)% 4% (5)% (1)% $ 672.9
Year to Date
Unit ACQ/
1997 Price Volume DVT Currency 1996
INDUSTRY SEGMENTS
Tools
Consumer $ 554.1 - 7% (4)% (2)% $ 548.2
Industrial 404.2 1% 1% (2)% - 403.5
Engineered 530.5 (1)% 6% - (2)% 514.6
Total Tools 1,488.8 - 5% (2)% (1)% 1,466.3
Hardware 264.8 (1)% 6% - (1)% 255.4
Specialty Hardware 217.1 (1)% 5% (22)% - 263.7
Consolidated $ 1,970.7 (1)% 5% (4)% (1)% $ 1,985.4
GEOGRAPHIC AREAS
United States $ 1,400.0 (1)% 4% (5)% - $ 1,421.0
Europe 311.9 (1)% 6% - (6)% 314.2
Other Areas 258.8 1% 8% (4)% (1)% 250.2
Consolidated $ 1,970.7 (1)% 5% (4)% (1)% $ 1,985.4
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<PAGE>
THE STANLEY WORKS AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(Unaudited, Millions of Dollars)
OPERATING PROFIT
Third Quarter 1997
Related Core
Restrg Transition Profit
Reported Charges Costs* Core Margin
INDUSTRY SEGMENTS
Tools $ (15.7) $ 83.0 $ 13.6 $ 80.9 16.5%
Hardware (3.3) 9.9 3.3 9.9 11.6%
Specialty Hardware (6.2) 9.2 1.2 4.2 5.6%
Total (25.2) 102.1 18.1 95.0 14.6%
Net corporate
expenses (14.8) 3.8 0.6 (10.4)
Interest expense (6.4) - - (6.4)
Earnings(loss)before
income taxes $ (46.4) $ 105.9 $ 18.7 $ 78.2
GEOGRAPHIC AREAS
United States $ 1.5 $ 56.8 $ 13.9 $ 72.2 15.5%
Europe (27.4) 37.3 2.1 12.0 12.3%
Other Areas 0.7 8.0 2.1 10.8 12.2%
Total $ (25.2) $ 102.1 $ 18.1 $ 95.0 14.6%
Third Quarter 1996
Related Core
Restrg Transition Profit
Reported Charges 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%
* Includes stock option charge.
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<PAGE>
THE STANLEY WORKS AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(Unaudited, Millions of Dollars)
OPERATING PROFIT
Year to Date 1997
Related Core
Restrg Transition Profit
Reported Chgs Costs* Core Margin
INDUSTRY SEGMENTS
Tools $ 2.0 $ 194.8 $ 31.6 $ 228.4 15.3%
Hardware 11.1 17.8 7.3 36.2 13.7%
Specialty Hardware (13.7) 23.5 1.4 11.2 5.2%
Total (0.6) 236.1 40.3 275.8 14.0%
Net corporate
expenses (50.2) 2.4 11.7 (36.1)
Interest expense (18.4) - - (18.4)
Earnings(loss)before
income taxes $ (69.2) $ 238.5 $ 52.0 $ 221.3
GEOGRAPHIC AREAS
United States $ 35.7 $ 145.6 $ 30.0 $ 211.3 15.1%
Europe (28.1) 61.8 5.6 39.3 12.6%
Other Areas (8.2) 28.7 4.7 25.2 9.7%
Total $ (0.6) $ 236.1 $ 40.3 $ 275.8 14.0%
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%
* Includes stock option charge.
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<PAGE>
Exhibit (20) (iii)
CAUTIONARY STATEMENTS
Under the Private Securities Litigation Reform Act of 1995
Certain risks and uncertainties are inherent in the company's
ability to achieve the sustained profitable growth outlined in
the earnings press release issued today and in Item 5 of the
Current Report on Form 8-K to which this exhibit is attached.
The company's ability to achieve this expected growth is
dependent on several factors. These factors include the ability
to develop new products that will be successful in the
marketplace; to expand into "near neighbor" or related products;
to position Stanley(R) as a "Great Brand" in the marketplace; and
to position the company as a low cost producer.
These initiatives are in turn dependent on several factors.
These include the company's ability to generate the necessary
cost savings to fund these initiatives from a reallocation of
resources, including the simplification of its organization,
changes in the composition of its workforce and the
standardization of its operating mechanisms. The success of this
reallocation is dependent upon the ability of the company's
employees, with the help of outside consultants, to develop and
execute comprehensive plans to provide for smooth transitions for
all elements of the reallocation; the ability to retain existing
employees throughout the transition; the successful recruitment
and training of new employees for the positions that relate to
the growth initiatives; the need to respond to significant
changes in product demand during the transition; and unforeseen
events. The company's ability to achieve the expected cost
savings is also dependent on the reallocation generating internal
efficiencies, and on the ability of the organization to withstand
external factors during the period of transition. These include
pricing pressures; 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; and recessionary or expansive
trends in the economies of the world in which the company
operates. The achievement of near neighbor and related product
growth and the ability of the company to become a low cost
producer will depend upon the ability to successfully identify,
negotiate, consummate and integrate into operations joint
ventures and/or strategic alliances.
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