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 15, 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 9 Pages
Exhibit Index is located on Page 4
Item 5. Other Events.
1. On July 15, 1998, the Registrant issued a
press release announcing second quarter earnings. Attached as
Exhibit (20)(i) is a copy of the Registrant's press release.
2. On July 15, 1998, the Board of Directors of
the Registrant authorized the repurchase of up to four million
shares of the Registrant's Common Stock in order to satisfy the
demand for shares under the Registrant's various stock purchase
and stock option plans and avoid the dilution that would
otherwise be caused by transactions under these plans.
Management anticipates that these purchases will take place over
the next few years.
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits.
(c) 20(i) Press release dated June 15, 1998
discussing expected second quarter
results.
Page 2 of 9 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: July 15, 1998 By: Stephen S. Weddle
Name: Stephen S. Weddle
Title: Vice President,
General Counsel and
Secretary
Page 3 of 9 Pages
EXHIBIT INDEX
Current Report on Form 8-K
Dated July 15, 1998
Exhibit No. Page
20(i) 5
Page 4 of 9 Pages
FOR IMMEDIATE RELEASE Exhibit (20) (i)
THE STANLEY WORKS CORE EARNINGS UP 6% IN 2ND QUARTER;
ANNOUNCES 7.5% INCREASE IN DIVIDEND PAYMENT
New Britain, Connecticut, July 15, 1998: The Stanley Works
(NYSE: "SWK") announced that "core" earnings increased by
6% in its second quarter ended July 4, 1998. Core results
exclude restructuring charges, restructuring-related
transition costs and certain other non-recurring costs.
Second quarter core net income increased to $52.4 million,
or $.58 per diluted share, from prior-year second quarter
core earnings of $49.5 million, or $.55 per diluted share.
Core operating margin improved to 13.5% from 12.9%, driven
by higher volume, better productivity and reduced material
costs, partially offset by weaker prices and a stronger
dollar.
The company's actual reported earnings were $42.2 million,
or $.47 per diluted share, compared with the prior year's
second quarter net loss of $64.5 million, or $.72 per
diluted share. These amounts reflect $16.3 million, or
$.11 per share, of restructuring-related transition and
other costs incurred in the second quarter this year.
Included in 1997's second quarter earnings were $137.2
million, or $1.11 per share, of restructuring charges and
$23.6 million, or $.16 per share, of restructuring-related
transition and other non-recurring costs incurred.
Second quarter net sales were up 3% to $692 million from
$674 million in the same period last year, including the
negative effects of pricing and currency translation. Unit
sales volume from ongoing businesses was up 3%. This
increase was led by the Mac Tools(r) and U. S. consumer
tools components of the mechanics tools business and
fastening systems in North America. Mac Tools had
double-digit percentage sales growth again this quarter.
"This was the eleventh consecutive quarter in which core
earnings per share grew, the last six while we have been
undergoing fundamental changes in virtually every aspect of
our business," said John M. Trani, Chairman and Chief
Executive Officer. "The quarter began with very weak volume
growth due to slowing of our European markets and management
of inventories to lower levels by our larger customers.
Toward the latter part of May, sales volumes returned to
previous levels and incoming orders were strong. Our
improvement in core operating margin shows continued
progress toward establishing the lower cost structure
necessary to continue our investments for growth."
Page 5 of 9 Pages
Core gross margins were up to 35.5%, from 34.9% in 1997, as
higher unit volume and cost reduction efforts impacted the
consumer tools, entry doors, mechanics tools and Mac
Tools(r) margins positively. In addition, as expected, the
Mac Direct(tm) venture, provided higher gross margin that
was somewhat offset by selling, general and administrative
expenses which were 22.1% of sales, the same as in last
year's second quarter. While the reallocation of resources
continues to have a positive effect on gross margins, there
is greater spending on brand and product development.
Management continues to gauge the latter to achievement of
restructuring savings.
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 during the
two-year period from mid-1997 through mid-1999.
The company also announced today that its Board of Directors
approved a third quarter dividend of $.215 per share on the
company's common stock, an increase of 7.5% over the second
quarter dividend of $.20 per share. The dividend is payable
on Tuesday, September 29, 1998 to shareholders of record at
the close of business on Tuesday, September 8, 1998.
Mr. Trani stated: "We are proud that 1998 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. This marks the 31st consecutive
year in which we are able to increase the annual dividend
payment to our shareholders."
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
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 9 Pages
THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, Millions of Dollars Except Per Share Amounts)
Second Quarter Six Months
1998 1997 1998 1997
Net Sales $ 691.8 $ 673.6 $ 1,363.7 $ 1,320.2
Costs and Expenses
Cost of sales 448.9 446.1 883.9 877.5
Selling, general and
administrative 166.1 153.8 337.2 307.0
Interest - net 5.2 4.4 10.0 8.7
Other - net 4.1 13.6 6.9 17.2
Restructuring and
asset write-offs - 137.2 - 132.6
624.3 755.1 1,238.0 1,343.0
Earnings (Loss) before
income taxes 67.5 (81.5) 125.7 (22.8)
Income Taxes 25.3 (17.0) 47.1 5.0
Net Earnings (Loss) $ 42.2 $ (64.5) $ 78.6 $ (27.8)
Net Earnings (Loss) Per
Share of Common Stock
Basic $ 0.47 $ (.72) $ 0.88 $ (0.31)
Diluted $ 0.47 $ (.72) $ 0.87 $ (0.31)
Dividends per share $ 0.20 $ 0.185 $ 0.40 $ 0.37
Average shares outstanding
(in thousands)
Basic 89,405 89,525 89,442 89,443
Diluted 90,442 89,525 90,464 89,443
Page 7 of 9 Pages
THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited, Millions of Dollars)
July 4 June 28
1998 1997
ASSETS
Cash and cash equivalents $ 77.4 $ 107.6
Accounts receivable 502.9 457.1
Inventories 372.0 323.4
Other current assets 87.4 52.8
Total current assets 1,039.7 940.9
Property, plant and equipment 487.6 508.3
Goodwill and other intangibles 104.1 73.6
Deferred income taxes 37.2 47.6
Other assets 97.4 96.4
$ 1,766.0 $ 1,666.8
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term borrowings $ 132.8 $ 76.4
Accounts payable 172.7 114.6
Accrued expenses 224.3 213.6
Accrued restructuring 77.7 85.6
Total current liabilities 607.5 490.2
Long-term debt 272.0 295.8
Other long-term liabilities 240.6 164.1
Shareholders' equity 645.9 716.7
$ 1,766.0 $ 1,666.8
Page 8 of 9 Pages
THE STANLEY WORKS AND SUBSIDIARIES
PRICE/VOLUME INFORMATION
(Unaudited, Millions of Dollars)
NET SALES
Second Quarter
Unit ACQ/
1998 Price Volume DVT Currency 1997
INDUSTRY SEGMENTS
Tools
Consumer $ 183.7 1% 1% - (3)% $ 184.5
Industrial 151.1 - 4% - - 145.3
Engineered 197.9 (2)% 4% 5% (1)% 186.4
Total Tools 532.7 - 3% 2% (2)% 516.2
Hardware 86.3 (1)% 2% - (1)% 86.2
Specialty Hardware 72.8 2% 7% (6)% (1)% 71.2
Consolidated $ 691.8 - 3% 1% (1)% $ 673.6
GEOGRAPHIC AREAS
United States $ 502.7 - 5% - - $ 479.7
Europe 109.6 - (1)% 6% (2)% 106.3
Other Areas 79.5 1% (2)% - (8)% 87.6
Consolidated $ 691.8 - 3% 1% (1)% $ 673.6
Year to Date
Unit ACQ/
1998 Price Volume DVT Currency 1997
INDUSTRY SEGMENTS
Tools
Consumer $ 356.7 1% 2% - (4)% $ 358.9
Industrial 302.2 - 7% - - 281.5
Engineered 386.3 (2)% 5% 6% (1)% 358.5
Total Tools 1,045.2 - 5% 2% (2)% 998.9
Hardware 182.6 (2)% 5% - (1)% 179.3
Specialty Hardware 135.9 2% 4% (9)% (1)% 142.0
Consolidated $ 1,363.7 - 5% - (2)% $ 1,320.2
GEOGRAPHIC AREAS
United States $ 978.4 (1)% 7% (1)% - $ 935.5
Europe 229.5 1% 3% 7% (4)% 214.1
Other Areas 155.8 1% (1)% (1)% (8)% 170.6
Consolidated $ 1,363.7 - 5% - (2)% $ 1,320.2
Page 9 of 9 Pages
