February
11, 2010
Integration
Update—Transcript of interview with Tony Milando and Brett
Bontrager
Tim: It is my pleasure
to introduce Tony Milando and Brett Bontrager, who are co-leading the
integration of Stanley and Black & Decker and who have agreed to answer a
few questions from employees here today. Tony I am going to start
with you and ask you if you wouldn’t mind filling us in on the 2010 management
meeting, which, for the first time, included leaders from Black &
Decker.
Tony: Yeah, we had a
great meeting in Florida about two weeks ago. We heard from all the leaders from
both Stanley and Black & Decker. We talked about each others’
businesses, learned more about each others’ businesses and that there was a
tremendous amount of opportunity. As we know from the original premise of
the merger, we found there was not a lot of overlap between our businesses and
we really see there is a lot of opportunity to bring our two businesses
together.
Brett: We also had
an opportunity to talk about the Stanley Fulfillment Systems and share some of
our success stories at Stanley with our new Black & Decker
friends. We talked about complexity reduction and all the tenets of
SFS which will help us with the integration going forward.
Tony: We also did a
cultural survey that many of you participated in. Well over 800
employees were sent the survey. I think we got about an 85% response rate
on that and what it told us was what we thought initially. Our
cultures aren’t very dissimilar. In fact, they are more similar than
they are dissimilar. Things like our proud heritage, our innovative
spirit, our values around employees, were all very similar as we saw the results
of that survey come forward.
Tim: As you know,
we laid out the high level org structure of the combined company last
week. We’ve gotten similar questions from employees from both
companies. One being, “Can you tell us what this really
means or why this structure is laid out the way it is?” And can you
follow that up with, “What are the next steps?”
Tony: Well, this is
really the first step in us operating as one company. We laid out the
structure in a way that mirrors our end users and our end markets. We’ve
really done this collectively to put in place the right organization structure
that has at its helm, the leaders of industry that is going to be an
organization that hopefully we’re going to be proud of as we move
forward.
Brett: Let us talk
through the structure for a minute:
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At
an extremely high level, the company will be broken into three big
buckets: CDIY, Security and
Industrial.
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At
CDIY will be all the product groups associated with that end market,
including both Consumer and Professional Power Tools & Accessories.
The business will be headquartered in Towson,
Maryland.
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The
Security Segment is comprised of two platforms – Mechanical Security,
which includes Access Doors, Mechanical Access and Residential hardware.
Under this platform Stanley’s Hardware business will combine with Black
& Decker’s Hardware and Home Improvement business The Mechanical
Access Solutions platform will continue to be based out of Indianapolis,
IN.
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Convergent,
or Electronic Security Solutions is our security monitoring and systems
integration business, which delivers leading edge security and security
monitoring solutions to some of the world’s largest customers. This
segment is globally diversified, is one of the world’s largest security
monitoring companies, with a security monitoring and call centers in the
U.S., France, and soon to be in the UK and operates under different brands
such as Stanley Security solutions, and Sonitrol, which delivers audio
verification technology that gives our security business a distinct
competitive advantage. The CSS business will continue to be based out of
Noblesville, IN.
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Both
CSS and MAS fall under the Security
Segment.
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Industrial
& Automotive Repair consists of several businesses that are serving
the industrial production and automotive assembly and repair markets. This
includes well known industry brands like Mac Tools in the U.S. and Facom
in Europe, as well as powerful brands with customers in government,
aviation, military, and
transportation.
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IAR
falls under the Industrial segment, and is joined by Engineered Fastening
Systems, a new growth platform formed by the combination of Emhart
Teknologies and the Stanley Assembly Technologies
business.
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And
Infrastructure Solutions, which consists largely of Stanley’s hydraulic
tools and shears business, completes the Industrial Segment of the
combined company.
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We
promise, what seems complicated today will become clear as we go
forward. And, we will communicate often to make sure we have an
appropriate level of transparency with our organization plans going
forward. I also want to thank everyone for their help putting the
structure together as it has taken efforts from a lot of people and I think we
have put a strong organization together for the future.
Tim: Tony, I will ask
you to follow up on the second question that a lot of employees have been asking
and that is, “What are the next steps in defining the next level of the
organization?”
Tony: Well, as you
know and as we have previously communicated, we have a full slate of business
leaders running integration teams both from Black & Decker and Stanley. In
addition to looking at how we optimize our processes as we bring these two
companies together, they have been hard at work developing the organizational
structure. Now with the overall business structure, the day one
structure we talked about earlier coming together and being announced last week,
we are now in a position to develop the detailed structure underneath that, and
also be in a position to talk more about that and announce that after we close
the transaction.
Tim: That brings me
to the last question that is on our employees minds. Brett, can you
define where we are in the integration process and the hurdles we have gone
through and what we need to do in order to make sure the transaction
closes?
Brett: Sure, we’ve
come a long way in the integration since the announcement back in November.
We’ve put the teams together, we’ve had three large workouts to this point and
we’ve done a nice job of identifying what is going to be necessary to stabilize
the companies as we move forward. We’ve done a lot of work
communicating. We’ve put a lot of efforts together to make sure we protect
the core because one of our primary goals as we go forward is to make sure that
the core businesses, both for Black and Decker and Stanley, remain very
strong. So, February is a very busy month because we want to put the
final integration plans together and get approval from our steering committee
and we hope to have that accomplished by March 10th.
Tony: The
regulatory process is moving along. We’ve cleared Hart Scott Redino,
we filed in Europe and a shareholder vote is scheduled for March 12th.
Brett: When you
look at what is taking place right now, the integration is coming along
nicely. The transaction is moving nicely and we are paying particular
close attention to setting up the company for future growth. There is
a lot of opportunities by bringing the two great companies together in the near
term and that has been talked about a lot. I want to give you
assurance from all of us that there is a lot of focus being put on long-term
growth strategies and how we put the company in the best light to be a growth
company going into the next 10 to 20 years.
Thank
you.
CAUTIONARY
STATEMENTS
Under
the Private Securities Litigation Reform Act of 1995
Statements
in this document that are not historical, including but not limited to those
regarding the consummation of the proposed transaction between Stanley and
Black & Decker and the realization of synergies in connection
therewith, are “forward looking statements” and, as such, are subject to risk
and uncertainty.
Stanley’s
and Black & Decker’s ability to deliver the results as described above
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. In addition to the risks, uncertainties
and other factors discussed in this document, the risks, uncertainties and other
factors that could cause or contribute to actual results differing materially
from those expressed or implied in the forward looking statements include,
without limitation, those set forth in the “Risk Factors” section, the “Legal
Proceedings” section, the “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” section and other sections of Stanley’s and
Black & Decker’s Annual Reports on Form 10-K and any material changes
thereto set forth in any subsequent Quarterly Reports on Form 10-Q, those
contained in Stanley’s and Black & Decker’s other filings with the
Securities and Exchange Commission, and those set forth below.
These
factors include but are not limited to the risk that regulatory and stockholder
approvals of the transaction are not obtained on the proposed terms and
schedule; the future business operations of Stanley or Black & Decker
will not be successful; the risk that the proposed transaction between Stanley
and Black & Decker will not be consummated; the risk that Stanley and
Black & Decker will not realize any or all of the anticipated benefits
from the transaction; the risk that cost synergy, customer retention and revenue
expansion goals for the transaction will not be met and that disruptions from
the transaction will harm relationships with customers, employees and suppliers;
the risk that unexpected costs will be incurred; the outcome of litigation
(including with respect to the transaction) and regulatory proceedings to which
Stanley or Black & Decker may be a party; pricing pressure and other
changes within competitive markets; the continued consolidation of customers
particularly in consumer channels; inventory management pressures on Stanley’s
and Black & Decker’s customers; the impact the tightened credit markets
may have on Stanley or Black & Decker or customers or suppliers; the
extent to which Stanley or Black & Decker has to write off accounts
receivable or assets or experiences supply chain disruptions in connection with
bankruptcy filings by customers or suppliers; increasing competition; changes in
laws, regulations and policies that affect Stanley or Black & Decker,
including but not limited to trade, monetary, tax and fiscal policies and laws;
the timing and extent of any inflation or deflation in 2009 and beyond; currency
exchange fluctuations; the impact of dollar/foreign currency exchange and
interest rates on the competitiveness of products and Stanley’s and
Black & Decker’s debt programs; the strength of the U.S. and European
economies; the extent to which world-wide markets associated with homebuilding
and remodeling continue to deteriorate; the impact of events that cause or may
cause disruption in Stanley’s or Black & Decker’s manufacturing,
distribution and sales networks such as war, terrorist activities, and political
unrest; and recessionary or expansive trends in the economies of the world in
which Stanley or Black & Decker operates, including but not limited to
the extent and duration of the current recession in the US economy.
Neither
Stanley nor Black & Decker undertake any obligation to publicly update
or revise any forward-looking statements to reflect events or circumstances that
may arise after the date hereof.
Additional
Information
In
connection with the proposed transaction, Stanley has filed with the Securities
and Exchange Commission (the “SEC”) a Registration Statement on Form S-4 (File
No. 333-163509) that includes a joint proxy statement of Stanley and Black &
Decker that also constitutes a prospectus of Stanley. Investors and security holders are
urged to read the joint proxy statement/prospectus and any other relevant
documents filed with the SEC because they contain important information.
Investors and security holders may obtain a free copy of the joint proxy
statement/prospectus and other documents that Stanley and Black & Decker
file with the SEC at the SEC’s website at www.sec.gov and
Stanley’s website related to the transaction at www.stanleyblackanddecker.com.
In addition, these documents may be obtained from Stanley or Black & Decker
free of charge by directing a request to Investor Relations, The Stanley Works,
1000 Stanley Drive, New Britain, CT 06053, or to Investor Relations, The Black
& Decker Corporation, 701 E. Joppa Road, Towson, MD 21286,
respectively.
Certain
Information Regarding Participants
Stanley,
Black & Decker and certain of their respective directors and executive
officers may be deemed to be participants in the proposed transaction under the
rules of the SEC. Investors and security holders may obtain
information regarding the names, affiliations and interests of Stanley’s
directors and executive officers in Stanley’s Annual Report on Form 10-K for the
year ended January 3, 2009, which was filed with the SEC on February 26, 2009,
its proxy statement for its 2009 Annual Meeting, which was filed with the SEC on
March 20, 2009, and the joint proxy statement/prospectus related to the proposed
transaction, which was filed with the SEC on February 2,
2010. Investors and security holders may obtain information regarding
the names, affiliations and interests of Black & Decker’s directors and
executive officers in Black & Decker’s Annual Report on Form 10-K for the
year ended December 31, 2008, which was filed with the SEC on February 17, 2009,
its proxy statement for its 2009 Annual Meeting, which was filed with the SEC on
March 16, 2009, and the joint proxy statement/prospectus related to the proposed
transaction, which was filed with the SEC on February 2, 2010. These
documents can be obtained free of charge from the sources listed
above.
Contacts:
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The
Stanley Works
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Black
& Decker
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Kate
White
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Roger
Young
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(860)
827-3833
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(410)
716-3979
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kwhite@stanleyworks.com
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roger.young@bdk.com
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