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 23, 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
Item 5. Other Events.
1. On January 23, 1997, 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 January 23, 1997
announcing Stanley s 1996 year end
results.
20(ii) Cautionary statements relating to forward
looking statements included in Exhibit 20
(i).
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 23, 1997 By: Stephen S. Weddle
Name: Stephen S. Weddle
Title: Vice President, General
Counsel and Secretary
EXHIBIT INDEX
Current Report on Form 8-K
Dated January 23, 1997
Exhibit No. Page
20(i) 5
20 (ii) 14
FOR IMMEDIATE RELEASE Exhibit (20)(i)
January 23, 1997
THE STANLEY WORKS REPORTS 1996 RESULTS
New Britain, CT (NYSE: "SWK") ... The Stanley Works today
announced a significant increase in earnings for its year ended
December 28, 1996. Reported 1996 net income was $97 million, or
$1.09 per share, compared with the prior year's net income of $59
million, or $.67 per share.
Exclusive of restructuring and other charges discussed below,
normalized or "core" net income in 1996 was $163 million, or
$1.83 per share, a 26% increase over prior year core earnings of
$129 million, or $1.45 per share. Gross margin reported for the
year, on a core basis, was 33.4% of sales compared with 32.0% in
the prior year. Increased volume, the absence of the effects of
integration costs associated with the closing of a Mechanics
Tools facility in 1995 and the positive effects of restructuring
initiatives, including strong contributions from cross-divisional
purchasing efforts, accounted for most of the improvement in
gross margins.
John M. Trani, the company's new Chairman and Chief Executive
Officer, commented on the year's results: "Our company seeks to
realize sustained, profitable growth. I am encouraged that, as
evidenced by profitability improvements realized in 1996, the
competitive positioning of our cost structure has clearly begun.
This is the necessary foundation upon which we will achieve our
growth goals."
Net sales for the year were $2,671 million, an increase of 2%
over sales of $2,624 million in 1995. Ongoing businesses
experienced unit volume growth of 3% with particular strength in
the engineered tools and hardware markets. Business and product
line divestitures, net of the effects of prior year acquisitions,
diminished 1996 sales by $38 million. Unit volume gains were
realized in all geographic areas.
Core operating expenses for the year improved to 22.1% of sales
compared with 22.4% in 1995 and increased slightly to 21.8% of
sales in the fourth quarter from 21.7% in the fourth quarter of
1995. Interest expense, net of interest income, decreased to
0.8% of sales in 1996 from 1.2% in the prior year, on lower
average borrowings. Similarly, fourth quarter net interest
expense decreased to 0.8% of sales in 1996 from 1.1% of sales in
1995, on lower average borrowings.
Core earnings for the fourth quarter, exclusive of restructuring
and other charges, were $43 million, or $.48 per share, a 16%
increase over the prior year's fourth quarter core earnings of
$37 million, or $.42 per share. Core gross margin improved to
33.1% of sales, compared with 31.9% in the fourth quarter of
1995. This improvement was due to increased volume and the
positive effects of restructuring initiatives.
Fourth quarter net sales of $685 million represented a 2%
increase over sales of $670 million in the fourth quarter of
1995. Sales volume increases of 5% in the quarter were offset by
net divestiture decreases of 2% and pricing decreases of 1%. The
engineered tools and hardware markets were notably strong. In
Europe, sales unit volume increased 9% over the fourth quarter of
1995.
During 1996, restructuring charges and restructuring-related
transition costs incurred in connection with restructuring
initiatives totaled $48 million, or $.43 per share and $33
million, or $.23 per share, respectively. Also, charges of $7
million, or $.08 per share after-tax, were incurred for elements
of the company's employment contract with Mr. Trani. Of these
1996 charges, $59 million, or $.51 per share, were recorded in
the fourth quarter.
The company indicated that the restructuring charges recorded in
the fourth quarter were for costs associated with the next series
of initiatives identified under the restructuring process. Such
costs were primarily related to transfers of production among
existing manufacturing facilities, plant closures and resulting
workforce reductions in the consumer and engineered tool business
operations. Restructuring-related transition costs incurred in
the fourth quarter were related to the implementation of the
company's Perfect Customer Service program and other
restructuring activities.
Consolidated 1996 segment operating profit margin, exclusive of
restructuring charges and restructuring-related transition costs,
improved to 12.2% of sales from 10.4% in the prior year. The
attached table, "Business Segment Information", provides
clarification of reported results for the year and fourth
quarter, 1996 and 1995, reconciling them with normalized core
results. Core results exclude restructuring charges,
restructuring-related transition costs, and costs associated with
the recruitment of the company's new CEO. The Tools, Hardware
and Specialty Hardware segment comments that follow are based on
these normalized "core" results.
In the Tools segment overall, fourth quarter unit volume sales
increased 4% over last year. Consumer tools unit growth was 3%.
Engineered tools increased 7% in unit volume, reflecting strong
sales of fastening tools and fasteners. Industrial tools
increased 2%. Core operating profits in the Tools segment for
the fourth quarter increased to 15.1% of sales, from 12.2% in the
comparable period last year. This improvement results from
increased volume, the absence of integration costs associated
with the closing of a Mechanics Tools facility in 1995, savings
from cross-divisional purchasing efforts and other restructuring
initiatives, especially in the Fastening Systems division.
The Hardware segment experienced 12% unit growth in the fourth
quarter, with exceptionally strong demand in consumer markets.
Core operating profits increased to 13.8% of sales, from 8.2% in
the prior year. This improvement results from increased volume,
production levels that favorably absorbed factory overhead costs
and positive effects of cross-divisional purchasing and other
restructuring initiatives.
The Specialty Hardware segment experienced 6% unit growth in the
fourth quarter, from continued strong home center demand for door
products and increases in unit volumes of automated-door
products. Core operating results, however, declined to a 3.9%
loss on sales, from a 6.2% operating profit in the fourth quarter
of 1995. This operating loss included a 3% price decline
attributable to an extremely competitive pricing environment in
the U.S. commercial market for automated door products. It also
reflects the company's strategic decisions to defend its market
share in such an environment and to incur additional costs to do
so. While this business situation has been present all year,
adjustments were recorded in the fourth quarter which reflected
the full extent of its impact on profitability. These factors
offset the profits realized from entry door products and
improvements from restructuring initiatives.
The company indicated that considerable progress was made in 1996
in efforts to divest non-strategic business units. Sales have
been completed for the company's Marco Paper, Creative Rivet,
American Brush, Direct Safety and Graphic Arts businesses. The
company has also entered into an agreement to sell its
Garage-Related Products business and expects to close during the
first quarter of 1997.
The Stanley Works is a worldwide producer of tools, hardware and
specialty hardware for consumer, home improvement, industrial and
professional use.
############
Contact: Gerard J. Gould
Director, Investor Relations and Communications
Tel.: (860) 827-3833
This press release contains forward-looking statements as to the
company's ability to complete the competitive positioning of its
cost structure and 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.
THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited, Millions of Dollars Except Per Share Amounts)
Fourth Quarter Twelve Months
1996 1995 1996 1995
-------- -------- -------- --------
Net Sales $ 685.4 $ 669.8 $ 2,670.8 $ 2,624.3
Costs and Expenses
Cost of sales 464.8 460.5 1,795.5 1,789.7
Selling, general and
administrative 154.7 147.8 608.5 591.7
Interest - net 5.4 7.1 22.5 30.3
Other - net 8.9 1.6 22.3 14.3
Restructuring and
asset writeoffs 40.9 44.0 47.8 85.5
-------- -------- -------- --------
674.7 661.0 2,496.6 2,511.5
-------- -------- -------- --------
Earnings before
income taxes 10.7 8.8 174.2 112.8
Income Taxes 13.7 8.2 77.3 53.7
-------- -------- -------- --------
Net Earnings (Loss) $ (3.0) $ 0.6 $ 96.9 $ 59.1
======== ======== ======== ========
Net Earnings (Loss) Per Share
of Common Stock $ (.03) $ 0.01 $ 1.09 $ 0.67
======== ======== ======== ========
Dividends per share $ .185 $ 0.18 $ .73 $ 0.71
======== ======== ======== ========
Average shares outstanding
(in thousands) 88,803 88,694 88,824 88,719
======== ======== ======== ========
THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited, Millions of Dollars)
December 28 December 30
1996 1995
-------- --------
ASSETS
Cash and cash equivalents $ 84.0 $ 75.4
Accounts receivable 446.3 438.7
Inventories 338.1 349.1
Other current assets 42.5 51.9
-------- --------
Total current assets 910.9 915.1
Property, plant and equipment 527.8 532.1
Goodwill and other intangibles 98.9 131.8
Other assets 122.0 91.0
-------- --------
$ 1,659.6 $ 1,670.0
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term borrowings $ 20.0 $ 91.3
Accounts payable 130.8 112.7
Accrued expenses 230.8 183.7
-------- --------
Total current liabilities 381.6 387.7
Long-term debt 342.6 391.1
Other long-term liabilities 155.3 156.6
Shareholders' equity 780.1 734.6
-------- --------
$ 1,659.6 $ 1,670.0
======== ========
THE STANLEY WORKS AND SUBSIDIARIES
PRICE/VOLUME INFORMATION
(Unaudited, Millions of Dollars)
NET SALES
Fourth Quarter
-----------------------------------------------------
Unit ACQ / Curr -
1996 Price Volume DVT ency 1995
-----------------------------------------------------
INDUSTRY SEGMENTS
Tools
Consumer $ 198.4 (1)% 3% (3)% - $ 200.2
Industrial 139.7 2% 2% (2)% - 136.8
Engineered 171.8 (1)% 7% (4)% - 168.0
-------- --------
Total Tools 509.9 - 4% (3)% - 505.0
Hardware 85.0 (1)% 12% - - 76.7
Specialty Hardware 90.5 (3)% 6% - - 88.1
-------- --------
Consolidated $ 685.4 (1)% 5% (2)% - $ 669.8
======== ========
GEOGRAPHIC AREAS
United States $ 490.5 (1)% 4% (3)% - $ 491.7
Europe 107.6 - 9% - (2)% 100.8
Other Areas 87.3 1% 11% - 1% 77.3
-------- --------
Consolidated $ 685.4 (1)% 5% (2)% - $ 669.8
======== ========
Year to Date
-----------------------------------------------------
Unit ACQ / Curr -
1996 Price Volume DVT ency 1995
-----------------------------------------------------
INDUSTRY SEGMENTS
Tools
Consumer $ 734.3 - 1% (1)% (1)% $ 738.9
Industrial 555.5 3% (1)% (1)% - 552.3
Engineered 686.4 - 5% (4)% - 678.3
-------- --------
Total Tools 1,976.2 1% 2% (2)% (1)% 1,969.5
Hardware 340.4 1% 4% - - 324.2
Specialty Hardware 354.2 (2)% 8% 1% - 330.6
-------- --------
Consolidated $ 2,670.8 - 3% (1)% - $ 2,624.3
======== ========
GEOGRAPHIC AREAS
United States $ 1,911.5 - 3% (2)% - $ 1,884.9
Europe 421.8 1% 2% 1% (2)% 413.4
Other Areas 337.5 1% 3% - - 326.0
-------- --------
Consolidated $ 2,670.8 - 3% (1)% - $ 2,624.3
======== ========
THE STANLEY WORKS AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(Unaudited, Millions of Dollars)
OPERATING PROFIT
Fourth Quarter 1996
-------------------------------------------------
Restrg Related Core
& Other Transition Profit
Reported Charges* Costs Core Margin
-------------------------------------------------
INDUSTRY SEGMENTS
Tools $ 29.2 $ 40.2 $ 7.8 $ 77.2 15.1%
Hardware 10.5 - 1.2 11.7 13.8%
Specialty Hardware (4.6) 0.3 0.8 (3.5) -3.9%
------ ------ ------ ------
Total 35.1 40.5 9.8 85.4 12.5%
Net corporate
expenses (17.3) 8.0 0.7 (8.6)
Interest expense (7.1) (7.1)
------ ------ ------ ------
Earnings before
income taxes $ 10.7 $ 48.5 $ 10.5 $ 69.7
====== ====== ====== ======
GEOGRAPHIC AREAS
United States $ 44.4 $ 15.5 $ 8.8 $ 68.7 14.0%
Europe (6.3) 15.3 1.1 10.1 9.4%
Other Areas (3.0) 9.7 (0.1) 6.6 7.6%
------ ------ ------ ------
Total $ 35.1 $ 40.5 $ 9.8 $ 85.4 12.5%
====== ====== ====== ======
Fourth Quarter 1995
-------------------------------------------------
Related Core
Restrg Transition Profit
Reported Chgs Costs Core Margin
-------------------------------------------------
INDUSTRY SEGMENTS
Tools $ 23.3 $ 33.6 $ 4.9 $ 61.8 12.2%
Hardware (1.9) 7.8 0.4 6.3 8.2%
Specialty Hardware 4.0 1.4 0.1 5.5 6.2%
------ ------ ------ ------
Total 25.4 42.8 5.4 73.6 11.0%
Net corporate
expenses (7.9) 1.2 1.5 (5.2)
Interest expense (8.7) - - (8.7)
------ ------ ------ ------
Earnings before
income taxes $ 8.8 $ 44.0 $ 6.9 $ 59.7
====== ====== ====== ======
GEOGRAPHIC AREAS
United States $ 30.6 $ 25.0 $ 5.3 $ 60.9 12.4%
Europe (0.6) 9.5 0.1 9.0 8.9%
Other Areas (4.6) 8.3 - 3.7 4.8%
------ ------ ------ ------
Total $ 25.4 $ 42.8 $ 5.4 $ 73.6 11.0%
====== ====== ====== ======
* Includes CEO recruitment costs.
THE STANLEY WORKS AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(Unaudited, Millions of Dollars)
OPERATING PROFIT
Year to Date 1996
-------------------------------------------------
Restrg Related Core
& Other Transition Profit
Reported Chgs* Costs Core Margin
-------------------------------------------------
INDUSTRY SEGMENTS
Tools $ 196.6 $ 44.6 $ 24.1 $ 265.3 13.4%
Hardware 42.4 - 4.4 46.8 13.7%
Specialty Hardware 12.2 0.3 2.3 14.8 4.2%
------ ------ ------ ------
Total 251.2 44.9 30.8 326.9 12.2%
Net corporate
expenses (48.9) 10.5 2.1 (36.3)
Interest expense (28.1) (28.1)
------ ------ ------ ------
Earnings before
income taxes $ 174.2 $ 55.4 $ 32.9 $ 262.5
====== ====== ====== ======
GEOGRAPHIC AREAS
United States $ 212.5 $ 17.2 $ 26.2 $ 255.9 13.4%
Europe 24.8 17.1 2.5 44.4 10.5%
Other Areas 13.9 10.6 2.1 26.6 7.9%
------ ------ ------ ------
Total $ 251.2 $ 44.9 $ 30.8 $ 326.9 12.2%
====== ====== ====== ======
Year to Date 1995
-------------------------------------------------
Related Core
Restrg Transition Profit
Reported Chgs Costs Core Margin
-------------------------------------------------
INDUSTRY SEGMENTS
Tools $ 154.9 $ 64.2 $ 5.8 $ 224.9 11.4%
Hardware 13.4 13.6 0.7 27.7 8.5%
Specialty Hardware 17.8 2.0 0.4 20.2 6.1%
------ ------ ------ ------
Total 186.1 79.8 6.9 272.8 10.4%
Net corporate
expenses (37.6) 5.7 2.6 (29.3)
Interest expense (35.7) - - (35.7)
------ ------ ------ ------
Earnings before
income taxes $ 112.8 $ 85.5 $ 9.5 $ 207.8
====== ====== ====== ======
GEOGRAPHIC AREAS
United States $ 146.9 $ 55.2 $ 6.8 $ 208.9 11.1%
Europe 26.8 16.3 0.1 43.2 10.4%
Other Areas 12.4 8.3 - 20.7 6.3%
------ ------ ------ ------
Total $ 186.1 $ 79.8 $ 6.9 $ 272.8 10.4%
====== ====== ====== ======
* Includes CEO recruitment costs.
Exhibit (20)(ii)
CAUTIONARY STATEMENTS
Under
the Private Securities Litigation Reform Act of 1995
Certain risks and uncertainties are inherent in the company s abilities to
complete the competitive positioning of its cost structure through its
restructuring initiatives and to achieve sustained, profitable growth.
The company s ability to successfully implement all of its restructuring
initiatives, including the relocation and consolidation of multiple
manufacturing operations and the success of the Perfect Customer Service
Program, 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.
The company's ability to generate sustained, profitable growth will be
dependent on its ability to competitively position its cost structure, to gain
acceptance of the company s products within new or developing markets and to
continue the development of successful new products. This growth may also
include externally-generated growth, the achievement of which will depend upon
the ability to successfully identify, negotiate, consummate and integrate into
operations acquisitions, joint ventures and/or strategic alliances. The
company's new chief executive officer has indicated that the company will not
make acquisitions simply to satisfy targets.
