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): December 8, 2003
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The Stanley Works
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(Exact name of registrant as specified in charter)
Connecticut 1-5244 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
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(Former name or former address, if changed since last report)
Exhibit Index is located on Page 4
Page 1 of 11 Pages
Item 7. Financial Statements and Exhibits
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(c) 20(i) Press Release dated December 8, 2003 regarding agreement
for sale of residential entry door business.
(c) 20(ii) Press Release dated December 8, 2003 regarding fourth
quarter revenue growth and updated 2003 earnings guidance.
(c) 20(iii) Cautionary Statements relating to forward looking
statements included in Exhibit 20(i) and 20(ii).
Item 9. Regulation FD Disclosure
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In press releases attached to this Form 8-K, the company (i)
announced an agreement to sell its residential entry door
business, and (ii) provided information regarding fourth quarter
revenue growth and updated 2003 earnings guidance.
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: December 8, 2003 By: /s/ Bruce H. Beatt
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Name: Bruce H. Beatt
Title: Vice President, General
Counsel and Secretary
Page 3 of 11 Pages
EXHIBIT INDEX
Current Report on Form 8-K
Dated December 8, 2003
Exhibit No. Page No.
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20(i) 5
20(ii) 7
20(iii) 10
Page 4 of 11 Pages
Exhibit 20(i)
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FOR IMMEDIATE RELEASE
THE STANLEY WORKS ANNOUNCES THE SALE OF $180 MILLION RESIDENTIAL ENTRY DOORS
BUSINESS TO MASONITE INTERNATIONAL CORPORATION
New Britain, Connecticut, December 8, 2003 ... The Stanley Works (NYSE: SWK)
announced today that it has entered into a definitive agreement to sell its
residential entry door business, headquartered in Charlotte, NC, to Masonite
International Corporation (TSE, NYSE: MHM) for $160 million in cash. Goldman,
Sachs & Co. advised the company on this transaction.
John M. Trani, Chairman and Chief Executive Officer, commented: "Our Tools
and Security Solutions groups are our growth vehicles. On the other hand, our
residential entry door business generates solid returns on capital and cash
flow, but does not fit our long-term strategy. Masonite is a leader in the
residential doors industry. Our entry doors business can now be part of its
growth, and our customers will continue to experience excellent service. This is
a real win-win for both companies."
The transaction will generate an after-tax gain and net proceeds of $95 million,
which will be utilized for acquisitions in its growth vehicles in the upcoming
months.
The company expects the following annual impacts of this transaction:
* Doors Segment sales will decline by approximately $180 million (U.S. $, U.S.
GAAP basis).
* Earnings are expected to be lower by about 14 cents per fully diluted share.
Page 5 of 11 Pages
Mr. Trani added: "This transaction and our strong cash flows enable
expansion of our two growth platforms - the Tools Group and Security Solutions.
In May we indicated that these groups would generate 56 percent of our company's
revenues; this transaction will bring that to over 60 percent. We expect to
complete acquisitions in the near future that will strengthen our portfolio of
businesses and replace the earnings of the entry door business."
Closing for this transaction is subject to certain governmental approvals,
third-party consents and customary conditions, and is expected to occur in the
first quarter of 2004.
The Stanley Works, an S&P 500 company, is a worldwide supplier of tools,
hardware and door systems for professional, industrial and consumer use.
Contact: Gerry Gould
Vice President, Investor Relations
(860) 827-3833
ggould@stanleyworks.com
This press release contains forward-looking statements. 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 under Financial
News in the Investor Relations section of the company's corporate web site at
www.stanleyworks.com.
Page 6 of 11 Pages
Exhibit 20(ii)
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FOR IMMEDIATE RELEASE
STANLEY WORKS REPORTS STRONGER THAN EXPECTED 4TH QUARTER REVENUE GROWTH;
UPDATES EARNINGS GUIDANCE
New Britain, Connecticut, December 8, 2003 ... The Stanley Works (NYSE: SWK)
announced today that sales growth exceeded expectations in the first two months
of the quarter, and fourth quarter sales are now expected to increase by a
mid-teens percentage over the prior year. Current order rates are consistent
with these sales trends.
The company's previous guidance issued in its October 22 press release was
for a sales increase of approximately 7 percent. However, October-November sales
increased 19 percent over the same two months of 2002 and, aside from Best
Access Systems, sales increased approximately 10 percent in the two-month
period. As a result, the company now expects fourth quarter sales to increase by
a mid-teens percentage.
The more favorable outlook arises from (1) strong demand from home center
and mass merchant customers, (2) improving industrial tool demand associated
with better economic conditions and (3) un-forecasted successes in residential
entry doors and Mac Tools. Europe continues to benefit from currency
translations, although their sales in local currency are essentially flat with
the prior year.
Page 7 of 11 Pages
The company noted that it had accelerated certain projects from Operation
15, and that fourth quarter charges from this program were now expected to
approximate 18-22 cents per share. This is solely a timing change, and the
company noted that the Operation 15 charges would be completed by the end of the
first quarter of 2004, one quarter earlier than previously expected. Charges
totaling approximately $105 million continue to be within the range previously
communicated. The company expects to meet or exceed its previously stated
objective of $100 million of annualized savings.
With the improved sales outlook and the accelerated cost reduction
initiatives, the company expects earnings per fully diluted share to approximate
46-53 cents in the quarter, up 84-112 percent over last year. Additionally, on a
basis aside from the charges related to the Operation 15 actions, earnings per
share are expected to be 68-71 cents versus the previously guided 61-64 cents,
up 62-69 percent over 42 cents last year on a comparable basis. These earnings
expectations are exclusive of the effects, if any, of the contemplated
disposition of the company's residential entry door business announced earlier
today.
Reconciliation to GAAP Earnings:
Excluding
GAAP Basis Charges (a) Charges
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4th Quarter 2003
Fully Diluted EPS $.46 - $.53 $.22 - $.18 $.68 - $.71
(a) Reflects restructuring costs, impairment charges and other exit costs
including those associated with the Mac Direct exit.
The company reiterated its projection that free cash flow (before
dividends) would be at least $100 million in the quarter and at least $340
million for 2003, far surpassing the record free cash flow of $233 million in
2002.
Page 8 of 11 Pages
John M. Trani, Chairman and Chief Executive Officer commented: "Fourth
quarter sales are benefiting from numerous organic growth initiatives as well as
a better economy. Should the strong sales environment persist throughout
December, fourth quarter earnings per share, aside from the charges related to
the Operation 15 actions, also have the potential to be a record."
Mr. Trani added: "While excited about these developments, we have a
cautious optimism for 2004, projecting 2-3 percent organic growth excluding any
potential acquisitions or divestitures that might occur. Most importantly,
changes in our portfolio over time, enabled by strong cash flows and improving
positions in favored markets, should enable greater sales predictability. That
should manifest itself as 2004 unfolds." The company expects to report full
fourth quarter results during the last week of January 2004.
Expected results within this press release for the fourth quarter 2003 are
supplemented with related amounts that exclude restructuring costs, impairment
charges and other exit costs. Management believes these supplemental financial
measures provide useful information by removing the effect of variances in
reported results that are not indicative of fundamental changes in the company's
earnings capacity. Reconciliation of such supplemental amounts to comparable
GAAP-based earnings estimates are provided within the text above.
Contact: Gerry Gould
Vice President - Investor Relations
(860) 827-3833
ggould@stanleyworks.com
The Stanley Works, an S&P 500 company, is a worldwide supplier of tools,
hardware and door systems for professional, industrial and consumer use. More
information about The Stanley Works can be found, including corporate press
releases, in the Investor Relations section of the company's corporate web site
at www.stanleyworks.com.
This press release contains forward-looking statements. 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.
Page 9 of 11 Pages
Exhibit 20(iii)
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CAUTIONARY STATEMENTS
Under the Private Securities Litigation Reform Act of 1995
Statements in the company's press releases attached to this Current Report
on Form 8-K regarding the company's ability to (i) consummate the sale of its
residential entry door business (the "Sale"); (ii) generate after tax gain and
net proceeds of approximately $95 million related to the Sale; (iii) complete
additional acquisitions; (iv) increase sales in the fourth quarter of 2003 by a
mid teens percentage over the same period in 2002; (v) deliver fourth quarter
2003 earnings in the range of $.46 - .53 cents per fully diluted share; (vi)
deliver fourth quarter 2003 earnings (aside from pre-tax restructuring costs,
asset impairment charges and other exit costs ("Costs") of $.18 - .22 cents per
fully diluted share) at the upper end of $.68 - .71 cents per fully diluted
share; and (vii) generate free cash flow (before dividends) in 2003 of
approximately $340 million are forward looking and inherently subject to risk
and uncertainty.
The company's ability to deliver the results as described above (the
"Results") is based on current expectations and involves inherent risks and
uncertainties, including factors listed below and other factors that could
delay, divert, or change any of them, and could cause actual outcomes and
results to differ materially from current expectations.
The company's ability to deliver the Results is dependent upon (i) the
satisfaction of customary conditions and the receipt of necessary third-party
consents and government approvals regarding the Sale; (ii) the success of the
company's initiative to increase operating margins and generate benefits of
approximately $100 million annually for the calendar year 2003; (iii) the
success of the company's efforts to decentralize its operations functions,
primarily in its Tools and Access Solutions business groups; (iv) the success of
the company's efforts to reduce its workforce and close certain facilities,
including the resolution of any labor issues related to such activities, the
need to respond to significant changes in product demand while any facility
consolidation is in process and other unforeseen events; (v) the success of the
company's efforts to restructure its Mac Tools organization in order to return
it to profitability, including, without limitation, the company's ability to
liquidate certain Mac Tools assets at a satisfactory price; (vi) continued
improvements in productivity and cost reductions; (vii) the continued
improvement in the payment terms under which the company buys and sells goods,
materials and products; (viii) the company's ability to identify and engage a
successor CEO on a timely basis; (ix) identification of additional acquisition
candidates and negotiation, closing and integration of said acquisition
candidates; and (x) the recovery of sales volume attributable to the Sale.
The company's ability to deliver the Results is also dependent upon (i) the
continued success of the company's marketing and sales efforts, including the
company's ability to recruit and retain an adequate sales force; (ii) the
continued success of The Home Depot and Wal-Mart sales initiatives as well as
other programs to stimulate demand for company products; (iii) the success of
recruiting programs and other efforts to maintain or expand overall Mac Tools
truck count versus prior years; (iv) the ability of the sales force to adapt to
changes made in the sales organization and achieve adequate customer coverage;
(v) the ability of the company to fulfill demand for its products; and (vi) the
absence of increased pricing pressures from customers and competitors and the
ability to defend market share in the face of price competition.
Page 10 of 11 Pages
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, inventory management pressures on the company's
customers, increasing competition, changes in trade, monetary, tax and fiscal
policies and laws, inflation, currency exchange fluctuations, the impact of
dollar/foreign currency exchange and interest rates on the competitiveness of
products and the company's debt program, the strength of the U.S. Economy and
the impact of events that cause or may cause disruption in the company's
distribution and sales networks such as war, terrorist activities, political
unrest and recessionary or expansive trends in the economies of the world in
which the company operates.
The company undertakes no obligation to publicly update or revise any
forward-looking statements to reflect events or circumstances that may arise
after the date hereof.
Page 11 of 11 Pages