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): February 11, 2000
The Stanley Works
(Exact name of registrant as specified in charter)
Connecticut 1-5224 06-0548860
(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 6 Pages
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Item 5. Other Events.
1. At a meeting held today with security analysts, the company
issued some earnings guidance for the first quarter of 2000 as well as the full
year. For the full year, the company expects earnings per share to increase by a
low double digit percentage based on the following assumptions:
(i) net sales to increase three to four percent (assuming no
acquisitions and pricing continuing to be unfavorable at
historical rates),
(ii) manufacturing costs to be reduced by $80 million (net of materials
costs increases) driven by continuous improvement initiatives, procurement
savings and restructuring projects, including the closing of 3-5 plants and a
related reduction in force,
(iii) inflation in other variable costs (primarily labor and
overhead) to continue at historical levels,
(iv) selling, general and administrative expenses as a percentage of sales
flat to 1999 (excluding 1999's restructuring related transition costs and
special charges) and
(v) operating cash flow of $250-300 million to be generated by earnings
growth and a working capital decrease of between $50 -100 million (assuming no
further debt repayment, share repurchase program or acquisitions or other
strategic invesments).
For the first quarter of 2000, the company expects earnings per share to
increase by a mid to high single digit percentage based on the following
assumptions:
(i) net sales to increase 2% compared with the first quarter
of 1999,
(ii) selling, general and administrative expenses as a percentage of
sales to be flat compared with expenses (excluding special charges) in the
fourth quarter of 1999 and
(iii) the pro rata impact of the full year productivity and inflation
effects discussed above.
Attached as Exhibit 20(i) is a copy of the cautionary statements.
Item 7. Financial Statements and Exhibits.
(c) 20(i) Cautionary statements relating to
forward looking statements included in Item 5.
Page 2 of 6 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: February 11, 2000 By: Stephen S. Weddle
Name: Stephen S. Weddle
Title: Vice President, General
Counsel and Secretary
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EXHIBIT INDEX
Current Report on Form 8-K
Dated February 11, 2000
Exhibit No. Page
20 (i) 5
Page 4 of 6 Pages
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Exhibit 20 (i)
CAUTIONARY STATEMENTS
Under the Private Securities Litigation Reform Act of 1995
The statements made by the company at a meeting of security analysts held today
and outlined in Item 5 regarding expected earnings per share growth and the
assumptions underlying that growth are forward looking and inherently subject to
risk and uncertainty. The company's ability to achieve the earnings growth is
dependent upon, among other things, the factors discussed below.
The company's ability to achieve sales growth is dependent upon a number of
factors, including: (1) the ability to recruit and retain a sales force
comprised of employees and manufacturers reps, (2) the success of the company's
sales and marketing programs to increase retail sell through and stimulate
demand for the company's products, (3) the ability of the sales force to adapt
to changes made in the sales organization and achieve adequate customer
coverage, (4) the ability of the company to fulfill increased demand for its
products, (5) the absence of pricing pressures from customers and competitors
and (6) the acceptance of the company's new products in the marketplace as well
as the ability to satisfy demand for these products.
The company's ability to lower its manufacturing costs 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 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 the expected levels of selling, general and
administrative expense is dependent upon the successful implementation of
changes to the sales organization, the recruitment and retention of
manufacturers sales representatives and the reduction of transaction costs.
The company's ability to achieve the expected level of operating cash flow and
working capital reduction is dependent on the continued success of the
improvements in manufacturing operations in eliminating the inefficiencies and
customer service issues that have plagued the company over the last year and a
half as well as the company's ability to control operating expenses.
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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.
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