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 18, 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 17
Item 5. Other Events.
1. On July 18, 1997, the Registrant issued four press
releases.
Attached as Exhibits 20(i-iv) are copies of the Registrant's
press releases. Attached as Exhibit 20(v) are cautionary
statements relating to the disclosure in Item 5, paragraph 2
below and the press release filed as Exhibit 20 (ii) hereto. All
of these Exhibits are incorporated herein by reference.
2. At a meeting with industry analysts on July
18, 1997, the company specified some long range objectives.
These are to grow net sales at about 6-8%, double the annual
industry growth rate; to grow net income at a percentage rate in
the low to mid teens (even through a mild recession such as the
one experienced in 1991-1992); to have operating margin at a
percentage in the mid teens; to have operating cash flow
approximate earnings; to increase the dividend per share to half
the long term growth rate of earnings per share; to reduce the
debt to capital ratio (to position the company for acquisitions);
and to have average return on equity be at a percentage in the
low to mid 20's.
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits.
(c) 20(i) Press release dated July 18, 1997
announcing 8.1% increase in dividend
payment.
20(ii) Press release dated July 18, 1997
announcing second quarter earnings.
20(iii) Press release dated July 18, 1997
announcing production and workforce
changes in Central Connecticut.
20(iv) Press release dated July 17, 1997
announcing the closing of a
manufacturing facility in Georgetown,
Ohio.
20(v) Cautionary statements relating to
forward looking statements included in
Item 5, paragraph 2 and Exhibit 20(ii).
Page 2 of 17
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, 1997 By: Stephen S. Weddle
Name: Stephen S. Weddle
Title: Vice President, General
Counsel and Secretary
Page 3 of 17
EXHIBIT INDEX
Current Report on Form 8-K
Dated July 18, 1997
Exhibit No. Page
20(i) 5
20(ii) 6
20(iii) 15
20(iv) 16
20(v) 17
Page 4 of 17
FOR IMMEDIATE RELEASE Exhibit (20)(i)
July 18, 1997
THE STANLEY WORKS ANNOUNCES 8.1% INCREASE IN DIVIDEND
PAYMENT ... 30TH CONSECUTIVE YEAR OF DIVIDEND INCREASES
New Britain, Connecticut (NYSE: SWK ) ... The Board of
Directors of The Stanley Works today announced a third quarter
dividend of $.20 per share on the company's common stock, an
increase of 8.1% over the second quarter dividend of $.185 per
share. The dividend is payable on Tuesday, September 30, 1997 to
shareholders of record at the close of business on Monday,
September 8, 1997.
John M. Trani, Chairman and Chief Executive Officer, stated:
"This marks the 30th consecutive year in which we are able to
increase the annual dividend payment to our shareholders. We are
proud that 1997 dividend payments will extend our records for the
longest consecutive annual and quarterly dividend payments of any
industrial company on the New York Stock Exchange." The New York
Stock Exchange recognized these achievements by inviting Mr.
Trani to join NYSE Chairman Richard A. Grasso for the ringing of
the opening bell for trading this morning.
The Stanley Works is a worldwide producer of tools, hardware and
specialty hardware for consumer, home improvement, industrial and
professional use.
Media: Video footage of Mr. Trani at the NYSE - - plus b-roll - -
will be fed from 2:30 - 2:45pm ET and can be accessed through
Galaxy C4, Transponder 10; NR Loop #102362 and Waterfront
#1630. Photos will be provided to Associated Press, New York
City.
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 5 of 17
FOR IMMEDIATE RELEASE Exhibit (20)(ii)
July 18, 1997
THE STANLEY WORKS REPORTS SECOND QUARTER 1997 EARNINGS AND
ANNOUNCES NEW PROGRAMS FOR LONG-TERM GROWTH
New Britain, Connecticut (NYSE: SWK ) ... The Stanley Works
today announced a significant increase in normalized or core
earnings for the second quarter ended June 28, 1997. Excluding
restructuring and other charges discussed below, normalized or
core net income in the second 1997 quarter was $50 million, or
$.56 per share, a 15% increase over prior year core earnings of $43
million, or $.49 per share. Excluding prior year sales from
recently divested businesses and product lines, net sales from
ongoing businesses increased 4% compared with the second quarter of
1996. Gross margins reported for the second quarter, on a core
basis, were 34.9% of sales compared with 33.7% in the prior year's
quarter. Volume increases and the positive effects of previously
announced restructuring initiatives, including strong contributions
from company-wide procurement efforts, accounted for most of the
improvement in gross margin.
Reported net sales for the quarter were $674 million, a decrease of
less than 1% from sales of $677 million in the same quarter of
1996. Ongoing businesses experienced unit volume growth of 6% with
particular strength in fastening systems and consumer tools.
Business and product line divestitures decreased sales by $32
million, or 5%, from prior year levels. Price declines and effects
of foreign currency decreased sales by a combined 2%. North
American unit volume growth was 5%, while European volume increased
a very strong 11%. The European volume gains were somewhat offset
by a 1% price decline and a 4% negative currency impact.
A significant restructuring charge, described below, accounted
for a reported net loss of $65 million, or $.72 per share, as
compared with the prior year's net income of $33 million, or $.37
per share. In addition to the restructuring charge, the company
also recorded $24 million, or $.16 per share, of restructuring-
related transition costs and a non-recurring charge. The
transition costs represent moving, start-up and duplicative
facility costs for facility closures and consolidations incurred
in connection with initiatives announced in 1995. A one-time
non-cash charge was also recorded in connection with stock
options issued to the company's new chief executive officer.
Page 6 of 17
Second quarter consolidated core segment operating profit
margin improved to 14.7% of sales from 12.9% in the prior year.
The attached table, "Business Segment Information", provides
clarification of reported results for the second quarters of 1997
and 1996, and their respective year-to-date periods, reconciling
them with normalized core results. Core results exclude
restructuring charges, restructuring-related transition costs and
a charge related to stock options granted to the company's new
chairman and chief executive officer. The Tools, Hardware and
Specialty Hardware segment comments that follow are based on
normalized core results.
In the Tools segment overall, second quarter unit volume sales
increased 7% over last year. Consumer tools unit growth was 10%
with particular strength in North America. Industrial tools
increased 3%, primarily reflecting improved storage systems
results in the U.S. Engineered tools increased 7% in unit
volume, reflecting continued strong sales of fastening tools and
fasteners in the U. S. and Europe. Core operating profits in the
Tools segment for the quarter increased to 16.0% of sales, from
13.3% a year ago. This improvement resulted from higher sales
volume, savings from cross-divisional purchasing efforts, other
restructuring initiatives and performance improvements in the
mechanics tools operations.
The Hardware segment saw 1% unit growth in the quarter, with
continued strong demand for Home Decor products in the U.S.,
Canadian and European markets. Demand in the U. S. consumer
market for traditional hardware products declined from robust
levels seen in recent quarters. Core operating profits decreased
to 14.2% of sales, from 16.0% in the prior year. This decline
resulted from inclusion in 1996 of a gain realized upon
resolution of a legal matter.
The Specialty Hardware segment experienced 3% unit growth in the
second quarter. Core operating results decreased to a 5.6%
profit on sales, from a 7.7% operating profit last year. This
decrease was principally due to a 2% price decline resulting from
the continuation of an extremely competitive pricing environment.
The company continues to maintain its strategic decision to
defend its market share.
John M. Trani, Chairman and Chief Executive Officer, commented on
the quarter's results: "Our second quarter core net profit
improvement of 15%, as well as our 1.2 percentage point gross
margin and 1.8 percentage point segment operating profit gains,
indicate that our cost structure continues to become leaner.
This provides us the platform from which to embark upon the
growth programs we are announcing today."
Page 7 of 17
Mr. Trani continued with an announcement of a resource
reallocation intended to grow the enterprise: "Today we are
announcing initiatives designed to deliver profitable sales
growth on a sustained basis. New products are the lifeblood of a
manufacturing company. Increased expenditures will be made on
new product development and expansion into a number of near-
neighbor or related products. Considerably greater resources
will be allocated to brand development, including advertising, so
that our customers think of Stanley first and are always
informed about our new products. To support this thrust, we have
established a corporate marketing and brand development function,
whose focus will be the nurturing and leveraging of the Stanley
brand."
Funding for these initiatives will come from streamlining
manufacturing, sales, distribution and administrative operations.
Manufacturing and distribution facility locations will decrease
from 123 to 70. Additional savings will come from the company's
previously announced reorganization of its operations into a
product management structure, and the centralization of
manufacturing, engineering, sales and service, finance, human
resource and information technology. Overall, these actions will
change the composition of the company s workforce and will reduce
net employment levels by 4,500 people.
Recognizing the impact that these changes have on Stanley people,
the company has provided increased benefits. Mr. Trani noted:
"It is always difficult to reduce employment. We are extremely
sensitive to the needs of our people. Notification periods will
exceed required lengths; severance packages have been enhanced
and are generous; and benefits will be provided to the fullest
extent possible."
In total, restructuring charges of $240 million, including $140
million of cash costs and $100 million non-cash costs, plus
restructuring-related transition costs of $100 million, are
anticipated in connection with these actions. The restructuring
charges will be recorded entirely in 1997, with $137 million
having been taken in the second quarter and the remainder to
follow in the third quarter. The $100 million of non-cash
restructuring charges relate to write-offs of non-productive
assets including goodwill and capitalized software. The
restructuring-related transition costs will be incurred
throughout the remainder of 1997 and 1998.
The Stanley Works is a worldwide producer of tools, hardware and
specialty hardware for consumer, home improvement, industrial and
professional use.
Page 8 of 17
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 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 9 of 17
THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited, Millions of Dollars Except Per Share Amounts)
Second Quarter Six Months
1997 1996 1997 1996
Net Sales $ 673.6 $ 677.2 $ 1,320.2 $ 1,312.5
Costs and Expenses
Cost of sales 446.1 453.0 877.5 882.3
Selling, general and
administrative 153.8 153.1 307.0 302.1
Interest - net 4.4 5.4 8.7 11.9
Other - net 13.6 4.4 17.2 7.9
Restructuring 137.2 3.8 132.6 3.8
755.1 619.7 1,343.0 1,208.0
Earnings (Loss) before
income taxes (81.5) 57.5 (22.8) 104.5
Income Taxes (17.0) 24.9 5.0 42.3
Net Earnings (Loss) $ (64.5) $ 32.6 $ (27.8) $ 62.2
Net Earnings (Loss) Per
Share of Common Stock $ (0.72) $ 0.37 $ (0.31) $ 0.70
Dividends per share $ 0.185 $ 0.18 $ 0.37 $ 0.36
Average shares outstanding
(in thousands) 88,987 88,825 88,878 88,830
Page 10 of 17
THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited, Millions of Dollars)
June 28, June 29,
1997 1996
ASSETS
Cash and cash equivalents $ 107.6 $ 79.5
Accounts receivable 457.1 454.2
Inventories 323.4 344.4
Other current assets 52.8 42.3
Total current assets 940.9 920.4
Property, plant and equipment 508.3 556.0
Goodwill and other intangibles 73.6 121.0
Deferred income taxes 47.6 -
Other assets 96.4 71.2
$ 1,666.8 $ 1,668.6
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term borrowings $ 76.4 $ 47.2
Accounts payable 114.6 119.6
Accrued expenses 299.2 204.6
Total current liabilities 490.2 371.4
Long-term debt 295.8 373.3
Other long-term liablities 164.1 158.2
Shareholders' equity 716.7 765.7
$ 1,666.8 $ 1,668.6
Page 11 of 17
THE STANLEY WORKS AND SUBSIDIARIES
PRICE/VOLUME INFORMATION
(Unaudited, Millions of Dollars)
NET SALES
Second Quarter
Unit ACQ/
1997 Price Volume DVT Currency 1996
INDUSTRY SEGMENTS
Tools
Consumer $ 188.2 - 10% (3)% (2)% $ 179.7
Industrial 141.6 2% 3% (3)% - 138.5
Engineered 186.4 (1)% 7% - (1)% 177.3
Total Tools 516.2 - 7% (2)% (1)% 495.5
Hardware 86.2 (3)% 1% - - 87.9
Specialty Hardware 71.2 (2)% 3% (25)% - 93.8
Consolidated $ 673.6 (1)% 6% (5)% (1)% $ 677.2
GEOGRAPHIC AREAS
United States $ 479.7 (1)% 4% (6)% - $ 493.2
Europe 106.3 (1)% 11% (1)% (4)% 101.0
Other Areas 87.6 1% 11% (5)% (2)% 83.0
Consolidated $ 673.6 (1)% 6% (5)% (1)% $ 677.2
Year to Date
Unit ACQ/
1997 Price Volume DVT Currency 1996
INDUSTRY SEGMENTS
Tools
Consumer $ 366.2 - 8% (4)% (1)% $ 356.5
Industrial 274.2 2% - (2)% - 274.8
Engineered 358.5 (1)% 7% - (1)% 341.3
Total Tools 998.9 - 6% (2)% (1)% 972.6
Hardware 179.3 (1)% 6% - - 171.1
Specialty Hardware 142.0 (2)% 6% (20)% - 168.8
Consolidated $ 1,320.2 - 6% (4)% (1)% $ 1,312.5
GEOGRAPHIC AREAS
United States $ 935.5 (1)% 5% (5)% - $ 942.7
Europe 214.1 (1)% 7% - (4)% 209.1
Other Areas 170.6 1% 9% (3)% (1)% 160.7
Consolidated $ 1,320.2 - 6% (4)% (1)% $ 1,312.5
Page 12 of 17
THE STANLEY WORKS AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(Unaudited, Millions of Dollars)
OPERATING PROFIT
Second Quarter 1997
Related Core
Restrg Transition Profit
Reported Charges Costs* Core Margin
INDUSTRY SEGMENTS
Tools $ (38.3) $ 110.7 $ 10.4 $ 82.8 16.0%
Hardware 2.6 7.5 2.1 12.2 14.2%
Specialty Hardware (9.8) 13.7 - 3.9 5.6%
Total (45.5) 131.9 12.5 98.9 14.7%
Net corporate
expenses (29.6) 5.3 11.0 (13.3)
Interest expense (6.4) - - (6.4)
Earnings(loss)before
income taxes $ (81.5) $ 137.2 $ 23.5 $ 79.2
GEOGRAPHIC AREAS
United States $ (19.1) $ 87.6 $ 8.5 $ 77.0 16.1%
Europe (12.0) 24.1 2.4 14.5 13.6%
Other Areas (14.4) 20.2 1.6 7.4 8.4%
Total $ (45.5) $ 131.9 $ 12.5 $ 98.9 14.7%
Second Quarter 1996
Related Core
Restrg Transition Profit
Reported Charges Costs Core Margin
INDUSTRY SEGMENTS
Tools $ 58.8 $ 0.7 $ 6.3 $ 65.8 13.3%
Hardware 12.7 - 1.4 14.1 16.0%
Specialty Hardware 6.7 - 0.5 7.2 7.7%
Total 78.2 0.7 8.2 87.1 12.9%
Net corporate
expenses (13.7) 3.1 - (10.6)
Interest expense (7.0) - - (7.0)
Earnings before
income taxes $ 57.5 $ 3.8 $ 8.2 $ 69.5
GEOGRAPHIC AREAS
United States $ 63.4 $ 0.1 $ 7.5 $ 71.0 14.4%
Europe 9.3 - 0.4 9.7 9.6%
Other Areas 5.5 0.6 0.3 6.4 7.7%
Total $ 78.2 $ 0.7 $ 8.2 $ 87.1 12.9%
* Includes stock option charge.
Page 13 of 17
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 $ 17.7 $ 111.8 $ 18.0 $ 147.5 14.8%
Hardware 14.4 7.9 4.0 26.3 14.7%
Specialty Hardware (7.5) 14.3 0.2 7.0 4.9%
Total 24.6 134.0 22.2 180.8 13.7%
Net corporate
expenses (35.4) (1.4) 11.1 (25.7)
Interest expense (12.0) - - (12.0)
Earnings(loss)before
income taxes $ (22.8) $ 132.6 $ 33.3 $ 143.1
GEOGRAPHIC AREAS
United States $ 34.1 $ 88.8 $ 16.1 $ 139.0 14.9%
Europe (0.7) 24.5 3.5 27.3 12.8%
Other Areas (8.8) 20.7 2.6 14.5 8.5%
Total $ 24.6 $ 134.0 $ 22.2 $ 180.8 13.7%
Year to Date 1996
Related Core
Restrg Transition Profit
Reported Chgs Costs Core Margin
INDUSTRY SEGMENTS
Tools $ 110.7 $ 0.7 $ 10.5 $ 121.9 12.5%
Hardware 22.3 - 2.2 24.5 14.3%
Specialty Hardware 9.0 - 1.0 10.0 5.9%
Total 142.0 0.7 13.7 156.4 11.9%
Net corporate
expenses (22.9) 3.1 1.3 (18.5)
Interest expense (14.6) - - (14.6)
Earnings before
income taxes $ 104.5 $ 3.8 $ 15.0 $ 123.3
GEOGRAPHIC AREAS
United States $ 108.8 $ 0.1 $ 11.9 $ 120.8 12.8%
Europe 20.9 - 1.0 21.9 10.5%
Other Areas 12.3 0.6 0.8 13.7 8.5%
Total $ 142.0 $ 0.7 $ 13.7 $ 156.4 11.9%
* Includes stock option charge.
Page 14 of 17
FOR IMMEDIATE RELEASE Exhibit (20)(iii)
July 18, 1997
STANLEY ANNOUNCES PRODUCTION AND WORKFORCE CHANGES IN
CENTRAL CONNECTICUT
New Britain, Connecticut (NYSE: SWK ) ... In reference to
today's earlier company-wide announcement of programs for growth,
The Stanley Works provided information concerning its central
Connecticut employment levels. In an April, 1997 announcement,
the company indicated it would transfer certain production to
Richmond, Virginia impacting 150 manufacturing positions in
Central Connecticut. Stanley's Central Connecticut employment
stood at about 2,100 before that announcement. Today the company
announced it will eliminate an additional 110 manufacturing
positions and add approximately 120 salaried positions, over the
next twelve months.
The company announced further transfers of Stanley Hardware
packaging operations from New Britain and intentions to outsource
several products. Additionally, the company announced the
formation of a hardware manufacturing joint venture with
Zhongshan Xiaolan Industrial Company ( Xiaolan ) of Zhongshan
City, Guangdong, China. Stanley Hardware has been purchasing
product from this company for the past year and will now have a
majority ownership interest in it. Current plans are to transfer
production of some its residential hinge line to Xiaolan over the
next year. Xiaolan has three factories which manufacture this
type of product and was selected for its capabilities in the
areas of quality, reliability and low-cost.
Finally, the company will centralize many of its administrative
functions, such as finance and customer service, and will invest
in additional engineering and marketing positions. These actions
are expected to add approximately 120 salaried positions in
Central Connecticut.
Commenting on these initiatives, John M. Trani, Chairman and
Chief Executive Officer stated: "To grow, we must be
competitive. That starts by becoming the low-cost producer. In
the case of our Central Connecticut operations, this necessitates
product transfers to lower-cost locations and resulting workforce
reductions. For our administration, it means the consolidation
of efforts into Central Connecticut. This is a painful process,
and we are extremely sensitive to the needs of our people.
Notification periods, severance packages and benefits will all be
provided to the fullest extent possible. Benefits have been
increased substantially from prior policies."
The Stanley Works is a worldwide producer of tools, hardware and
specialty hardware for consumer, home improvement, industrial and
professional use.
Contact: Anthony J. Herrling
Stanley Corporate Communications
Tel.: (800) 300-4679
Page 15 of 17
Exhibit (20)(iv)
Contact: Tony Herrling
Corporate Communications
The Stanley Works
1-800-300-4679
The Stanley Works Annouces Closure of Plant in Georgetown, OH
New Britain, CT, July 17, 1997 -- The Stanley Works (NYSE:SWK)
confirmed that it has decided to close its manufacturing facility
in Georgetown, Ohio where its Mechanics Tools division employs
175 people.
Company spokesperson Gerry Gould said, "We are currently
reviewing whether it makes the most economic sense for certain
manufacturing operations to continue production, or rather to
combine these operations into existing Stanley facilities and
outsource product where it makes sense to do so. In the case of
this Stanley Mechanics Tool facility, we believe that we can
optimize both Stanley's overall focus on its core competencies
and economic efficiencies by transferring production to our
facilities in Allentown, PA and Kannapolis, NC."
The Stanley Works recently announced plans to reorganize into
eight distinct Product Groups. The reorganization will divide
the functions of product development, resource allocation and
growth responsibilities along product lines, while marketing
efforts, as well as sales and customer services, will be combined
into one corporate division.
"We must continue to focus on building the Stanley brand,
continued Mr. Gould. Our goal is to ensure that our customers,
employees and shareholders are getting the greatest value from
our investments in The Stanley Works."
The Stanley Works is a leading manufacturer of tools and hardware
for the professional and consumer markets, and is headquartered
in New Britain, Connecticut. The Stanley Works operates over 100
facilities and employs 19,000 people worldwide.
Page 16 of 17
Exhibit (20) (v)
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 the organization, the
change in the composition of the workforce and the
standardization of the operating mechanisms. The success of the
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.
Page 17 of 17
