-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, QcbYHr61tKBQepuhn+ky/LmDFMTsASHud9RN3uosvbG6tNPDPuFdhK73lt9vzNaC uFV0NRSl5FvFsZdDqTHCHA== 0000093556-95-000005.txt : 19950516 0000093556-95-000005.hdr.sgml : 19950516 ACCESSION NUMBER: 0000093556-95-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19950401 FILED AS OF DATE: 19950515 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: STANLEY WORKS CENTRAL INDEX KEY: 0000093556 STANDARD INDUSTRIAL CLASSIFICATION: CUTLERY, HANDTOOLS & GENERAL HARDWARE [3420] IRS NUMBER: 060548860 STATE OF INCORPORATION: CT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 002-52002 FILM NUMBER: 95539237 BUSINESS ADDRESS: STREET 1: 1000 STANLEY DR STREET 2: P O BOX 7000 CITY: NEW BRITAIN STATE: CT ZIP: 06053 BUSINESS PHONE: 2032255111 10-Q 1 QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended April 1, 1995 or [ ] Transition Report Pursuant to Section 13 of 15(d) of the Securities Exchange Act of 1934 For the transition period from [ ] to [ ] Commission file number 1-5224 I.R.S. Employer Identification Number 06-0548860 THE STANLEY WORKS (a Connecticut Corporation) 1000 Stanley Drive New Britain, Connecticut 06053 Telephone: (203) 225-5111 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: shares of the company's Common Stock ($2.50 par value) were outstanding 44,358,931 as of May 5, 1995. PART 1 - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS THE STANLEY WORKS AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (Millions of Dollars)
FIRST QUARTER 1995 1994 Net Sales $ 643.3 $ 585.7 Costs and Expenses Cost of sales 437.6 394.4 Selling, general and administrative 147.3 133.8 Interest - net 7.5 7.4 Other - net 4.6 8.8 ------- ------- 597.0 544.4 ------- ------- Earnings Before Income Taxes 46.3 41.3 Income Taxes 17.6 15.7 ------- ------- Net Earnings $ 28.7 $ 25.6 ======= ======= Net Earnings Per Share of Common Stock $ 0.65 $ 0.57 ======= ======= Dividends per share $ 0.35 $ 0.34 Average shares outstanding 44,414 44,771 (in thousands) See notes to consolidated financial statements.
-1- THE STANLEY WORKS AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Millions of Dollars)
April 1 Dec 31 1995 1994 ASSETS Current Assets Cash and cash equivalents $ 40.5 $ 69.3 Accounts and notes receivable 428.7 410.3 Inventories 406.6 369.2 Other current assets 38.2 39.7 ------ ------ Total Current Assets 914.0 888.5 Property, Plant and Equipment 1,148.4 1,128.6 Less: accumulated depreciation (588.5) (568.8) ------- ------- 559.9 559.8 Goodwill and Other Intangibles 163.5 164.6 Other Assets 91.0 88.2 ------- ------- $ 1,728.4 $ 1,701.1 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Short-term borrowings $ 113.4 $ 82.8 Current maturities of long-term debt 11.0 10.9 Accounts payable 106.2 125.3 Accrued expenses 194.1 202.5 ------- ------- Total Current Liabilities 424.7 421.5 Long-Term Debt 406.2 387.1 Deferred Income Taxes 14.4 14.4 Other Liabilities 133.2 133.9 Shareholders' Equity Common Stock 115.4 115.4 Capital in excess of par value 69.5 70.1 Retained earnings 951.8 937.8 Foreign currency translation adjustment (63.6) (56.3) ESOP Debt (251.5) (253.7) ------- ------- 821.6 813.3 Less: cost of common stock in treasury 71.7 69.1 ------- ------- Total Shareholders' Equity 749.9 744.2 ------- ------- $ 1,728.4 $ 1,701.1 ======= ======= See notes to consolidated financial statements. -2-
THE STANLEY WORKS AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Millions of Dollars)
FIRST QUARTER 1995 1994 Operating Activities Net Earnings $ 28.7 $ 25.6 Depreciation and amortization 21.9 21.2 Other non-cash items 6.2 5.3 Changes in operating assets and liabilities (62.7) (58.0) ------ ------ Net cash used by operating activities (5.9) (5.9) Investing Activities Capital expenditures (13.0) (13.2) Proceeds from sales of assets 0.3 1.6 Other (5.1) (0.3) ------ ------ Net cash used by investing activities (17.8) (11.9) Financing Activities Payments on long-term debt (0.3) (0.5) Net short-term borrowings 29.1 38.2 Proceeds from issuance of common stock 0.5 0.3 Purchase of common stock for treasury (6.4) Cash dividends on common stock (30.0) (29.9) ------ ------ Net cash provided (used) by financing activities (7.1) 8.1 Effect of Exchange Rate Changes on Cash 2.0 2.5 ------ ------ Decrease in Cash and Cash Equivalents (28.8) (7.2) Cash and Cash Equivalents, Beginning of Period 69.3 43.7 ------ ------ Cash and Cash Equivalents, End of First Quarter $ 40.5 $ 36.5 ===== ===== See notes to consolidated financial statements. -3-
THE STANLEY WORKS AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (Millions of Dollars)
THREE MONTHS 1995 1994 Balance at beginning of year $ 744.2 $ 680.9 Net earnings 28.7 25.6 Currency translation adjustment (7.3) (1.7) Cash dividends declared (15.6) (15.2) Net common stock activity (2.3) 2.6 ESOP debt 2.2 2.1 -------- -------- Balance at end of first quarter $ 749.9 $ 694.3 ======== ======== See notes to consolidated financial statements. -4-
THE STANLEY WORKS AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS April 1, 1995 NOTE A - Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of only normal recurring items) considered necessary for a fair presentation of the results of operations for the interim periods have been included. For further information, refer to the consolidated financial statements and footnotes included in the company's annual report on Form 10-K for the year ended December 31, 1994. NOTE B - Computation of Earnings Per Share Earnings per share are based upon the weighted average number of common shares outstanding. The exercise of outstanding stock subscriptions and options would not result in a material dilution of earnings per share. (See Exhibit 11) NOTE C - Inventories The classification of inventories at the end of the first quarter of 1995 and at year-end 1994, in millions of dollars, is as follows: April 1 December 31 1995 1994 ------ ------ Finished products $ 262.1 $ 238.6 Work in process 77.1 68.4 Raw materials 64.1 59.4 Supplies 3.3 2.8 ------ ------ $ 406.6 $ 369.2 ====== ====== -5- NOTE D - Cash Flow Information Interest paid during the first quarter of 1995 and 1994 amounted to $4.4 million and $8.2 million, respectively. Income taxes paid during the first quarter of 1995 and 1994 were $9.6 million and $10.4 million, respectively. -6- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations First quarter sales of $643 million were 10% higher than the $586 million reported last year. Net earnings were $29 million compared with $26 million last year. Earnings per share of $.65 represented a 14% increase over earnings per share of $.57 reported for the first quarter 1994. The company is pleased to report that 1995 has begun with a continuation of the strong internal growth that it experienced last year. These volume gains, which are spread across all businesses, added 9% to sales during the quarter. This pattern reflects both the strength and diversity in the geographic markets and industries the company serves as well as its aggressive initiatives to increase sales. Price increases also contributed a modest 1% to the sales total. While sales performance in this quarter achieved the targeted goal, the company is not as satisfied with its earnings improvement. However, the company recognizes that its commitment to long-term growth necessitates sacrificing some short-term profitability increases in order to accomplish strategic manufacturing rationalization as well as to invest in marketing and sales efforts to enhance future revenues. Gross margins reported for the first quarter 1995 were 32.0%, compared with 32.7% reported in the same quarter last year. Much of the decline in margin was attributable to costs incurred in connection with closing a manufacturing plant and integrating production into existing facilities of the Mechanics Tools division. While these expenses are expected to continue into the second quarter, it is anticipated that the project will ultimately generate an overall positive contribution to earnings and the division's future competitive cost structure will be significantly enhanced. Operating expenses were 22.9% of sales compared with 22.8% in the prior year. Efficiencies realized from the increased sales volume were more than offset by planned expenditures targeted at geographic and new market expansion. Interest-net expense for the first quarter was 1.2% of sales, or $7 million, compared with 1.3% in the prior year. Other-net expenses were $5 million, or .7% of sales, compared with $9 million, or 1.5% of sales last year. Other-net in the prior year included some small non-recurring charges as well as higher foreign currency transaction losses. Net sales in the United States for the first quarter increased 8%. Consistent with prior year trends, internal growth of 9% accounted for substantially all of the sales gain. Price increases contributed 1% to sales; however, this increase was more than offset by a 2% decline in sales due to divestiture activity. Operating margins of 10.3% reflected costs associated with the Mechanics Tools plant rationalization. -7- Europe continued the performance improvements begun last year with sales increasing 22% in the first quarter. Internal volume gains contributed 9% and price increases contributed 2%. The translation of strengthening European currencies increased sales by 11%. Operating margins improved to 11.5% from 11.0% in the prior year. Operating margin improvement would have improved further if not for the continuing impact of operating inefficiencies at the Acmetrack facility in France. Net sales in Other Areas increased 5% over the prior year, reflecting internal growth of 6% realized across most regions. The net effect of price increases and currency translation decreased sales by 1%. Operating profits were $5.0 million compared with $5.9 million in the prior year. Net sales for the Tools segment increased 10% for the quarter, primarily the result of volume gains of 8% realized across all businesses. Price increases added 2% to sales, however, this increase was partially offset by a 1% decrease due to divestiture activity. The effect of foreign currency translation increased sales by 1%. Operating profits of $53 million were 10% higher than the prior year and operating margins of 11.0% were unchanged. Net sales for the Hardware segment increased 9% with 8% contributed by internal growth, primarily in the U.S. Foreign currency translation added 1%. Operating margins of 10.0% declined from 11.5% reported in the first quarter last year. While improvements in operating margins were realized over the fourth quarter 1994, the operational issues being addressed in the Acmetrack business in France continue to depress profits. Margins were also somewhat negatively impacted by a delay in seating U.S. price increases in certain product lines; however, these increases are now in place and should be reflected in operating profits later in the year. Specialty Hardware sales increased 13% over the previous year. Internal volume increases in this segment continued to be substantial, with gains of 14% in the first quarter. The net effect of discounting and price changes decreased sales by 1%. Operating profits, which are generally lower in the first quarter for this segment, were 3.5% compared with 4.7% in the prior year. The decrease in margins reflects the timing of sales and marketing expenditures targeted at increasing sales volume in the doors business. The company is pleased that it achieved its targeted sales growth in the first quarter. This increased volume was realized through aggressive competitive efforts which provided good growth for the businesses despite weakness in the U.S. at the retail level and a decline in new housing activity. The company's actions are continuing to produce positive incoming business activity, backlogs remain at high levels and the company expects to produce solid sales results in the second quarter. The company will continue with its efforts to improve operations and business systems and to invest in developing new markets. While these expenditures may well impact quarterly comparisons, the company's expectations are for solid improvement and a record year in 1995. -8- Liquidity and Sources of Capital During the first quarter, the company experienced a $28.8 million decrease in its cash position. Operating cash flow in the first quarter is typically lower than subsequent quarters. The company continues to have adequate operating cash flow and borrowing capacity to fund continued internal sales growth, capital expenditures, dividends and take advantage of acquisition opportunities as they arise. Capital expenditures for the year are forecast at approximately $80 million. -9- THE STANLEY WORKS AND SUBSIDIARIES BUSINESS SEGMENT INFORMATION (Millions of Dollars)
FIRST QUARTER 1995 1994 INDUSTRY SEGMENTS Net Sales Tools Consumer $ 173.5 $ 162.6 Industrial 143.8 130.5 Engineered 166.5 148.6 -------- -------- Total Tools 483.8 441.7 Hardware 84.7 77.6 Specialty Hardware 74.8 66.4 -------- -------- Consolidated $ 643.3 $ 585.7 ======== ======== Operating Profit Tools $ 53.0 $ 48.4 Hardware 8.5 8.9 Specialty Hardware 2.6 3.1 -------- -------- Total 64.1 60.4 Net corporate expenses (8.9) (11.0) Interest expense (8.9) (8.1) -------- -------- Earnings before income taxes $ 46.3 $ 41.3 ======== ======== GEOGRAPHIC AREAS Net Sales United States $ 454.6 $ 420.2 Europe 107.8 88.4 Other Areas 80.9 77.1 -------- -------- Consolidated $ 643.3 $ 585.7 ======== ======== Operating Profit United States $ 46.7 $ 44.8 Europe 12.4 9.7 Other Areas 5.0 5.9 -------- -------- Total $ 64.1 $ 60.4 ======== ======== See notes to consolidated financial statements. -10-
PART II - OTHER INFORMATION Item 6. - Exhibits and Reports on Form 8-K (a) Exhibits - See Exhibit Index on page 12 (b) Reports on Form 8-K. Registrant filed a Current Report on Form 8-K, dated January 31, 1995, in respect of the Registrant's press release announcing 1994 year-end results. Signatures 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: May 15, 1995 By: Richard Huck Richard Huck Vice President, Finance and Chief Financial Officer Date: May 15, 1995 By: Theresa F. Yerkes Theresa F. Yerkes Vice President and Controller (Chief Accounting Officer) -11- EXHIBIT INDEX (11) Statement re computation of earnings per share (12) Statement re computation of ratio of earnings to fixed charges (27) Financial Data Schedule -12- EX-11 2 Exhibit 11 THE STANLEY WORKS AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE (dollars and shares in thousands except per share amounts)
FIRST QUARTER ENDED APRIL 1 APRIL 2 1995 1994 Earnings per common share: Weighted average shares outstanding 44,414 44,771 ====== ====== Net earnings $28,736 $25,593 ====== ====== Per share amounts $0.65 $0.57 ====== ====== PRIMARY: Weighted average shares outstanding 44,414 44,771 Dilutive common stock equivalents - based on the treasury stock method using average market price 480 646 ------ ------ 44,894 45,417 ====== ====== Per share amounts $0.64 $0.56 ====== ====== FULLY DILUTED: Weighted average shares outstanding 44,414 44,771 Dilutive common stock equivalents - based on the treasury stock method using the quarter end market price if higher than average market price 480 646 ------ ------ 44,894 45,417 ====== ====== Per share amounts $0.64 $0.56 ====== ====== Note: This calculation is submitted in accordance with Regulation S-K item 601(b)(11) although not required by footnote 2 to paragraph 14 of APB Opinion No. 15 because it results in dilution of less than 3%.
EX-12 3 Exhibit 12 THE STANLEY WORKS AND SUBSIDIARIES COMPUTATION OF EARNINGS TO FIXED CHARGES (in Millions of Dollars)
FIRST QUARTER 1995 1994 Earnings before income taxes $46.3 $41.3 Add: Portion of rents representative of interest factor 3.3 2.9 Interest expense 8.8 8.0 Amortization of capitalized interest 0.1 0.1 ----- ----- Income as adjusted $58.5 $52.3 ===== ===== Fixed charges: Interest expense $8.8 $8.0 Portion of rents representative of interest factor 3.3 2.9 ----- ----- Fixed charges $12.1 $10.9 ===== ===== Ratio of earnings to fixed charges 4.83 4.80 ===== =====
EX-27 4
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE STANLEY WORKS AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AND STATMENTS OF EARNINGS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATMENTS. 1,000 3-MOS DEC-30-1995 APR-01-1995 40,500 0 428,700 0 406,600 914,000 1,148,400 588,500 1,728,400 424,700 406,200 115,400 0 0 634,500 1,728,400 643,300 643,300 437,600 437,600 0 0 7,500 46,300 17,600 0 0 0 0 28,700 .65 0
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