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): April 22, 1998
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 April 22, 1998, the Registrant issued a
press release announcing first quarter earnings. Attached as
Exhibit (20)(i) 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 April 22, 1998
announcing Stanley's first quarter
results.
20(ii) Cautionary statements relating to
forward looking statements included in
Exhibit 20(i).
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: April 22, 1998 By: Theresa F. Yerkes
Name: Theresa F. Yerkes
Title: Vice President and
Controller
Page 3 of 11 Pages
EXHIBIT INDEX
Current Report on Form 8-K
Dated April 22, 1998
Exhibit No. Page
20(i) 5
20 (ii) 11
Page 4 of 11 Pages<PAGE>
FOR IMMEDIATE RELEASE Exhibit (20) (i)
THE STANLEY WORKS CORE EARNINGS UP 16% IN 1ST QUARTER
New Britain, Connecticut, April 22, 1998: The Stanley Works (NYSE:
"SWK") announced that "core" earnings increased by 16% in its
first quarter ended April 4, 1998. Core results exclude
restructuring charges, restructuring-related transition costs and
certain other non-recurring costs.
First quarter core net income increased to $47 million, or $.51 per
diluted share, from prior-year first quarter core earnings of $40
million, or $.44 per diluted share. Core operating margin improved
to 12.2% from 11.1%, driven by higher volume, better productivity
and reduced material costs, partially offset by weaker prices and
a stronger dollar.
Reported earnings were $36 million, or $.40 per diluted share,
compared with the prior year's net income of $37 million, or $.41
per diluted share. These amounts reflect $16 million, or $.11 per
share, of restructuring-related transition and other costs incurred
in the first quarter this year and $5 million, or $.03 per share,
of restructuring charges and restructuring-related transition costs
incurred in last year's first quarter.
First quarter net sales were up 4% to $672 million from $647
million in the same period last year, including the negative
effects of pricing and currency translation. Unit sales volume
from ongoing businesses was up 6%. This increase was led by the
MacTools and storage systems components of the mechanics tools
business, fastening systems and mirrored closet doors in North
America. Hand tool sales volumes in Europe were also strong.
Core gross margins were up significantly to 35.9%, from 34.1% in
1997, as higher volume and procurement savings impacted the
consumer tools, mechanics tools and MacTools margins positively.
As expected, this benefit was somewhat offset by selling, general
and administrative expenses which, on a core basis, increased to
23.6% from 23.0% of sales. Inherent in the MacDirect initiative
are higher gross margins and selling costs. Further, in its early
stages, the company's reallocation of resources brings about a
positive effect on gross margins, but increases marketing,
advertising and product development spending. Management is
gauging the latter to achievement of restructuring savings.
Page 5 of 11 Pages
"Our people delivered shareholder expectations while undergoing
fundamental changes in virtually every aspect of our business,"
said John M. Trani, Chairman and Chief Executive Officer. "We are
particularly encouraged by this quarter's sales growth in our
mechanics tools business. Our traditional Mac distributors and new
MacDirect associates combined to deliver double-digit sales growth.
Our 1.1 percentage point improvement in core operating margin shows
continued progress toward establishing the lower cost structure
necessary to invest for growth."
Core segment operating margin was 13.8% versus 12.7% in 1997. The
Tools segment delivered strong operating profit improvement, rising
to 14.6% from 13.4% last year, despite continuation of a
competitive pricing environment for fastening systems. Hardware
operating profits increased to 16.4% from 15.1% last year, while
Specialty Hardware operating profit declined to 3.3% from 4.4% in
1997 primarily due to the sale of the European access technologies
business.
Restructuring-related transition costs represent consulting,
moving, start-up and duplicative facility costs. Other costs
excluded from "core" results include year-2000 systems compliance
costs. As previously announced, the company expects to incur
approximately $100 million of such restructuring-related transition
and other costs through mid-1999. The attached table, "Business
Segment Information", provides clarification of reported results
for the first quarters of 1998 and 1997, reconciling them with
normalized core results.
The Stanley Works, an S&P 500 company, is a worldwide supplier of
tools, hardware and door systems for professional, industrial and
consumer use.
Investors Gerard J. Gould Media Vance N. Meyer
Contact: Director, Investor Relations Contact: Director, Communication
(860) 827-3833 office & Public Affairs
(860) 658-2718 home (860) 827-3871 office
(203) 929-9502 home
This press release contains forward looking statements as to expected levels of
restructuring-related transition and other costs related to the growth
initiatives announced in 1997. 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 6 of 11 Pages
THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, Millions of Dollars Except Per Share Amounts)
First Quarter
1998 1997
Net Sales $ 671.9 $ 646.6
Costs and Expenses
Cost of sales 435.0 431.4
Selling, general and
administrative 171.1 153.2
Interest - net 4.8 4.3
Other - net 2.8 3.6
Restructuring and
asset write-offs - (4.6)
613.7 587.9
Earnings Before
Income Taxes 58.2 58.7
Income Taxes 21.8 22.0
Net Earnings $ 36.4 $ 36.7
Net Earnings Per Share
of Common Stock
Basic $ 0.41 $ 0.41
Diluted $ 0.40 $ 0.41
Dividends Per Share $ 0.20 $ 0.185
Average Shares Outstanding
(in thousands)
Basic 89,483 89,347
Diluted 90,520 90,138
Page 7 of 11 Pages
THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited, Millions of Dollars)
April 4 March 29
1998 1997
ASSETS
Cash and cash equivalents $ 93.2 $ 76.4
Accounts receivable 491.1 453.3
Inventories 331.2 329.2
Other current assets 88.3 40.3
Total current assets 1,003.8 899.2
Property, plant and equipment 501.6 561.6
Goodwill and other intangibles 102.1 95.9
Deferred income taxes 36.7 -
Other assets 99.9 76.8
$ 1,744.1 $ 1,633.5
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term borrowings $ 124.0 $ 53.7
Accounts payable 159.1 111.2
Accrued expenses 229.9 193.1
Accrued restructuring 89.6 29.0
Total current liabilities 602.6 387.0
Long-term debt 275.3 298.9
Other long-term liabilities 239.1 155.7
Shareholders' equity 627.1 791.9
$ 1,744.1 $ 1,633.5
Page 8 of 11 Pages
THE STANLEY WORKS AND SUBSIDIARIES
PRICE/VOLUME INFORMATION
(Unaudited, Millions of Dollars)
NET SALES
First Quarter
Unit ACQ/
1998 Price Volume DVT Currency 1997
INDUSTRY SEGMENTS
Tools
Consumer $ 176.6 1 % 3% (1)% (4)% $ 178.0
Industrial 147.5 (1)% 12% - - 132.6
Engineered 188.4 (2)% 7% 6 % (2)% 172.1
Total Tools 512.5 (1)% 7% 2 % (2)% 482.7
Hardware 96.3 (3)% 7% - (1)% 93.1
Specialty Hardware 63.1 2 % 1% (13)% (1)% 70.8
Consolidated $ 671.9 (1)% 6% - % (1)% $ 646.6
GEOGRAPHIC AREAS
United States $ 475.7 (1)% 7% (2)% - $ 455.8
Europe 119.9 1 % 7% 8 % (5)% 107.8
Other Areas 76.3 1 % - (2)% (7)% 83.0
Consolidated $ 671.9 (1)% 6% - (1)% $ 646.6
Page 9 of 11 Pages
THE STANLEY WORKS AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(Unaudited, Millions of Dollars)
OPERATING PROFIT
First Quarter 1998
Related Core
Restrg Transition Profit
Reported Charges Costs Core Margin
INDUSTRY SEGMENTS
Tools $ 62.9 $ - $ 12.0 $ 74.9 14.6%
Hardware 13.7 - 2.1 15.8 16.4%
Specialty Hardware (0.1) - 2.2 2.1 3.3%
Total 76.5 - 16.3 92.8 13.8%
Net corporate -
expenses (11.5) - - (11.5)
Interest expense (6.8) - - (6.8)
Earnings before
income taxes $ 58.2 $ - $ 16.3 $ 74.5
GEOGRAPHIC AREAS
United States $ 55.2 $ - $ 14.3 $ 69.5 14.6%
Europe 13.4 - 1.3 14.7 12.3%
Other Areas 7.9 - 0.7 8.6 11.3%
Total $ 76.5 $ - $ 16.3 $ 92.8 13.8%
First Quarter 1997
Restrg Related Core
& Other Transition Profit
Reported Charges Costs Core Margin
INDUSTRY SEGMENTS
Tools $ 56.0 $ 1.1 $ 7.6 $ 64.7 13.4%
Hardware 11.8 0.4 1.9 14.1 15.1%
Specialty Hardware 2.3 0.6 0.2 3.1 4.4%
Total 70.1 2.1 9.7 81.9 12.7%
Net corporate
expenses (5.8) (6.7) 0.1 (12.4)
Interest expense (5.6) - - (5.6)
Earnings before
income taxes $ 58.7 $ (4.6) $ 9.8 $ 63.9
GEOGRAPHIC AREAS
United States $ 53.2 $ 1.2 $ 7.6 $ 62.0 13.6%
Europe 11.3 0.4 1.1 12.8 11.9%
Other Areas 5.6 0.5 1.0 7.1 8.6%
Total $ 70.1 $ 2.1 $ 9.7 $ 81.9 12.7%
Page 10 of 11 Pages
Exhibit (20) (ii)
CAUTIONARY STATEMENTS
Under the Private Securities Litigation Reform Act of 1995
Certain risks and uncertainties are inherent in the current
estimation of the level of restructuring-related transition costs
and other non-recurring costs that are expected to be incurred
through mid-1999.
The level of such costs actually incurred will depend on the
ability of the company to manufacture products that meet customer
requirements for on-time delivery, quality and value and the
ability to develop and execute comprehensive plans for the
facility consolidations; the ability of the organization to
complete the transition to a product management structure without
losing focus on the business; the availability of vendors to
perform the non-core functions; the successful recruitment and
training of new employees; the resolution of any labor issues
related to closing facilities; the need to respond to significant
changes in product demand during the transition; the complexity
and ultimate extent of year-200 compliance efforts and unforeseen
events. The level of restructuring-related transition costs and
other non-recurring costs actually incurred will also be affected
by pricing pressure within the company's markets and other
changes in its competitive markets, the continued consolidation
of customers in consumer channels, increasing global competition,
changes in trade, monetary and fiscal policies and laws,
inflation, currency exchange fluctuations, the impact of currency
exchange rates on the competitiveness of the company's products
and recessionary or expansive trends in the economies in which
the company operates.
Page 11 of 11 Pages
