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 19, 2000
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The Stanley Works
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(Exact name of registrant as specified in charter)
Connecticut 1-5224 06-0548860
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
1000 Stanley Drive, New Britain, Connecticut 06053
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(860) 225-5111
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Not Applicable
(Former name or former address, if changed since last report)
Exhibit Index is located on Page 4
Page 1 of 13 Pages
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Item 5. Other Events.
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1. On April 19, 2000, the Registrant announced
first quarter 2000 results. Attached as Exhibit (20)(i) is a
copy of the Registrant's press release.
Item 7. Financial Statements and Exhibits.
---------------------------------
(c) 20(i) Press Release dated April 19, 2000
announcing first quarter 2000 results.
20(ii) Cautionary statements relating to
forward looking statements included in
Exhibit 20(i) and made today at the
Registrant's Annual Meeting of
Shareowners.
Page 2 of 13 Pages
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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 19, 2000 By: Stephen S. Weddle
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Name: Stephen S. Weddle
Title: Vice President, General
Counsel and Secretary
Page 3 of 13 Pages
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EXHIBIT INDEX
Current Report on Form 8-K
Dated April 19, 2000
Exhibit No. Page
20 (i) 5
20 (ii) 12
Page 4 of 13 Pages
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Exhibit 20 (i)
FOR IMMEDIATE RELEASE
STANLEY REPORTS 13% FIRST QUARTER EARNINGS PER SHARE GROWTH
First Double-Digit Percentage EPS Gain Since First Quarter
Of 1998
New Britain, Connecticut, April 19, 2000: The Stanley Works (NYSE: "SWK")
announced that first quarter net income was $48 million, or $.54 per diluted
share, exceeding the $.51 First Call consensus of Wall Street analyst estimates.
In the first quarter last year, the company had "core" earnings of $43 million,
or $.48 per diluted share. Operating margin was 12.3%, versus "core" operating
margin of 11.6% in the first quarter of 1999.
Core results in 1999 excluded restructuring charges, restructuring-related
transition costs and certain other non- recurring costs. In mid-1999, these
costs were eliminated, and the additional disclosure of "core" earnings ceased.
Inclusive of such costs, the company earned $30 million, or $.34 per diluted
share, in the first quarter of 1999.
Net sales were $695 million, 2% higher than last year, on strength across
consumer and industrial tool channels in the Americas. Unit volume increased 3%,
offset by a 1% decline from foreign currency translation. Pricing had virtually
no net impact on sales. On a segment basis, sales increased 3% in Tools and
decreased 4% in Doors.
John M. Trani, Chairman and Chief Executive Officer, commented: "With continuing
solid fill rates, a steady stream of new products and our 'War in the Store'
in-store merchandising initiatives, we are beginning to see better results.
Sales volume was up over 10% in consumer hand tools and consumer mechanics tools
in the Americas. In addition, our Mac(R) tools, industrial mechanics tools and
Stanley(R) vehicle-assembly air tools had another solid revenue quarter.
Page 5 of 13 Pages
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"Lingering effects of the Hechinger liquidation upon our hardware business, soft
early-quarter demand for doors in the Americas following high fourth-quarter
program-driven demand, and weakness of European currencies offset much of the
aforementioned gains. Doors volume returned to a normal level by the end of the
quarter, but the other two issues will have similar but lessening impact in the
second quarter."
Gross margin improved 220 basis points to 37.0% compared with first-quarter 1999
"core" gross margin of 34.8%, despite commodity cost pressures. Benefits
continue to be realized from the combination of improved cost controls in
operations, 1997-1999 restructuring efforts, higher volumes and continued
progress on purchased material cost despite inflationary pressures.
Selling, general and administrative expenses of $172 million were 24.7% of sales
or 150 basis points above the 23.2% in the first quarter of 1999. As expected,
such expenses approximated the percentage of sales incurred in the fourth
quarter of 1999. These costs as a percentage of sales should begin to decline in
the second quarter.
The company's income tax rate was 34%, versus 36% in the first quarter last year
and 35% for the year 1999, reflecting the continued benefit of structural
changes. The company expects the 34% rate to be sustainable.
Accounts receivable increased $38 million from year-end due to normal seasonal
monthly sales patterns. Inventories increased $10 million as they traditionally
do in the first quarter as the company prepares for its peak selling season.
Tools sales increased 3.5% over the first quarter of 1999 to $544 million.
Operating margin was 13.6%, compared with 12.7% "core" operating margin in the
same period last year. Doors segment sales decreased 4.2% versus last year's
first quarter to $152 million. The Doors segment core operating margin decreased
to 7.5% of sales, compared with 8.1% last year, largely due to lower volume and
a continuing shift in the mix of product to lower-margin retail channels.
Mr. Trani expressed cautious optimism: "As expected, productivity was the story
of our first 2000 quarter. For the third consecutive quarter our operations team
made progress in lowering our cost base. After the second quarter, Hechinger's
and currency comparisons should become less problematic. These conditions bode
well for performance in the remainder of the year. We are on track to achieve
our financial objectives for 2000: low double-digit percentage earnings growth
and over $250 million of cash flow from operations."
Page 6 of 13 Pages
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Reflecting its confidence in the near-term outlook, the company repurchased two
million of its common shares during the quarter. The company plans to continue
its share repurchase program from time to time.
The Stanley Works, an S&P 500 company, is a worldwide supplier of tools, door
systems and related hardware for professional, industrial and consumer use.
Investors Gerard J. Gould Media Vance N. Meyer
Contact: Director, Investor Relations Contact: Director, Communication &
- ------- --------- Public Affairs
(860) 827-3833 office (860) 827-3871 office
(860) 658-2718 home (203) 795-0581 home
[email protected]
This press release contains forward-looking statements as to the company's
ability to sustain a 34% income tax rate, to reduce selling, general and
administrative expenses as a percentage of sales beginning in the second
quarter, and to deliver low double-digit percentage earnings growth and over
$250 million in cash flow from operations in the full year 2000. 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 on the company's
Internet web site at www.stanleyworks.com. Alternatively, they are available
through PR Newswire's "Company News On-Call" service by FAX at 800-758-5804,
ext. 874363.
Page 7 of 13 Pages
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THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, Millions of Dollars Except Per Share Amounts)
First Quarter
2000 1999
Net Sales $ 695.4 $ 683.7
Costs and Expenses
Cost of sales 438.0 451.4
Selling, general and
administrative 171.9 173.1
Interest - net 6.5 7.2
Other - net 6.0 4.6
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622.4 636.3
______ ______
Earnings Before
Income Taxes 73.0 47.4
Income Taxes 24.8 17.1
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Net Earnings $ 48.2 $ 30.3
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Net Earnings Per Share
Common Stock
Basic $ 0.54 $ 0.34
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Diluted $ 0.54 $ 0.34
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Dividends Per Share $ 0.22 $ 0.215
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Average Shares Outstanding
(in thousands)
Basic 88,936 89,446
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Diluted 89,158 89,642
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Page 8 of 13 Pages
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THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited, Millions of Dollars)
April 1 April 3
2000 1999
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ASSETS
Cash and cash equivalents $ 128.9 $ 80.5
Accounts receivable 584.4 552.9
Inventories 390.8 367.6
Other current assets 75.5 84.5
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Total current assets 1,179.6 1,085.5
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Property, plant and equipment 522.2 487.2
Goodwill and other intangibles 181.6 191.2
Other assets 84.3 137.5
_________ _________
$ 1,967.7 $ 1,901.4
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LIABILITIES AND SHAREOWNERS' EQUITY
Short-term borrowings $ 290.3 $ 260.5
Accounts payable 223.2 166.6
Accrued expenses 295.4 284.7
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Total current liabilities 808.9 711.8
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Long-term debt 277.4 306.7
Other long-term liabilities 167.1 209.2
Shareowners' equity 714.3 673.7
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$ 1,967.7 $ 1,901.4
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Page 9 of 13 Pages
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THE STANLEY WORKS AND SUBSIDIARIES
SUMMARY OF CASH FLOW ACTIVITY
(Unaudited, Millions of Dollars)
First Quarter
2000 1999
Operating Activities
Net earnings $ 48.2 $ 30.3
Depreciation and amortization 23.7 24.1
Other non-cash items 7.2 4.4
Changes in working capital (61.6) (41.2)
Changes in other operating
Assets and liabilities (20.0) (13.1)
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Net cash provided (used) by
operating activities (2.5) 4.5
Investing and Financing Activities
Capital and software expenditures (16.0) (25.0)
Proceeds from sales of assets 0.7 5.4
Net borrowing activity 127.9 9.4
Net stock transactions (44.0) (0.6)
Cash dividends on common stock (19.5) (19.1)
Other (5.7) (4.2)
Net cash provided (used) by
investing and financing _______ ______
activities 43.4 (34.1)
Increase (Decrease) in Cash and
and Cash Equivalents 40.9 (29.6)
Cash and Cash Equivalents,
Beginning of Period 88.0 110.1
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Cash and Cash Equivalents,
End of First Quarter $ 128.9 $ 80.5
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Page 10 of 13 Pages
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THE STANLEY WORKS AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(Unaudited, Millions of Dollars)
First Quarter
2000 1999
INDUSTRY SEGMENTS
Net Sales
Tools $ 543.7 $ 525.4
Doors 151.7 158.3
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Consolidated $ 695.4 $ 683.7
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Operating Profit
Tools $ 74.1 $ 66.5
Doors 11.4 12.9
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85.5 79.4
Restructuring-related
transition and other
non-recurring costs - (20.2)
Interest-net (6.5) (7.2)
Other-net (6.0) (4.6)
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Earnings before
income taxes $ 73.0 $ 47.4
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Page 11 of 13 Pages
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Exhibit (20) (ii)
CAUTIONARY STATEMENTS
Under the Private Securities Litigation Reform Act of 1995
The statements in the company's press release attached to this Current Report on
Form 8-K and made today at the Annual Meeting of Shareowners regarding the
company's ability (1) to reduce selling, general and administrative expenses as
a percentage of sales beginning in the second quarter, (2)to lower the product
cost base by $80 million this year, (3) to deliver low double- digit percentage
earnings growth and over $250 million in cash flow from operations in the full
year 2000 and (4) to sustain the current effective income tax rate are forward
looking and inherently subject to risk and uncertainty.
The company's ability to reduce selling, general and administrative expenses as
a percentage of sales beginning in the second quarter is dependent upon various
process improvement activities, the successful implementation of changes to the
sales organization and the reduction of transaction costs.
The company's ability to lower its product cost by $80 million this year is
dependent on the success of various initiatives that are underway or that are
being developed to improve manufacturing operations and to implement related
control systems. The success of these initiatives is dependent on the company's
ability to increase the efficiency of its routine business processes, to develop
and implement process control systems, to mitigate the effects of any material
cost inflation, to develop and execute comprehensive plans for facility
consolidations, the availability of vendors to perform outsourced 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 while any facility consolidation is in process and
other unforeseen events.
The company's ability to achieve low double-digit percentage earnings growth is
dependent upon all of the factors discussed in this Cautionary Statement. Its
ability to generate $250 million of cash flow from operations in 2000 is
dependent on achieving the earnings growth target and the continued success of
improvements in processes to manage inventory and receivables levels.
The company's ability to sustain the current effective income tax rate is
dependent upon its ability to complete an ongoing legal restructuring and the
absence of any unforeseen changes in applicable tax laws or regulations.
Page 12 of 13 Pages
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The company's ability to achieve the objectives discussed above will also be
affected by external factors. These external factors include pricing pressure
and other changes within competitive markets, the continued consolidation of
customers in consumer channels, increasing competition, changes in trade,
monetary and fiscal policies and laws, inflation, currency exchange
fluctuations, the impact of dollar/foreign currency exchange rates on the
competitiveness of products and recessionary or expansive trends in the
economies of the world in which the company operates.
Page 13 of 13 Pages
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