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STANLEY SALES UP; EARNINGS REDUCED BY LIABILITY AND LEGAL COSTS

STANLEY SALES UP; EARNINGS REDUCED BY LIABILITY AND LEGAL COSTS
 NEW BRITAIN, Conn., Oct. 14 /PRNewswire/ -- The Stanley Works (NYSE: SWK) today announced a third quarter sales increase of 10 percent and reductions in net earnings and earnings per share from prior year levels. Richard H. Ayers, chairman and chief executive officer, noted: "Sales increases were entirely the result of acquisitions over the past 12 months. Unit volume declines of about 3 percent resulted from the previously reported lost sales volume of mechanics tools to a major retail customer and unexpected weakness in sales of consumer and industrial tools during the last four weeks of the quarter."
 Net earnings for the quarter were $25.4 million, down 11 percent from $28.4 million in the year earlier quarter. Earnings per share were $.56, down from the $.64 reported for the third quarter 1991 which included approximately $.04 per share gain from the sale of assets. Net earnings and earnings per share were restated in all quarters of 1991 to reflect the adoption of Financial Accounting Standards No. 109, "Accounting for Income Taxes."
 Operating improvements by many business units were offset by under- utilization of mechanics tools capacity which affected earnings per share negatively $.05. Earnings per share were also affected negatively about $.08 by product liability reserves and legal costs.
 Gross margins of 33.4 percent for the quarter were down slightly from a year ago. Operating expenses were 23.9 percent for the quarter, up from 22.6 percent a year ago as a result of the higher product liability reserves and legal expenses. Interest-net expenses were 1.3 percent of sales, comparable to the third quarter last year. Other-net expenses were higher than those reported in third quarter 1991 which included a gain on the sale of an asset. The effective tax rate for the quarter was 37.8 percent, down from 38.7 percent last year.
 Net sales for the nine months of 1992 were $1,619 million, up 12 percent from the $1,450 million reported for the same period last year. Net earnings for the period were $71.7 million, $1.57 per share compared with $70.1 million, $1.64 per share last year (prior to an accounting change for postretirement benefits).
 Geographic Areas -- Net sales in the United States were up 10 percent for the quarter. The positive effect of acquisitions was partially offset by a decline in unit volume.
 Net sales in Europe were up 13 percent. Unit volume declines were more than offset by price increases and positive effects of currency.
 Net sales in Other Areas increased 9 percent, principally the result of acquisitions. Unit volume gains and nominal price increases were largely offset by the negative effects of currency.
 Segments -- Tools sales increased 8 percent for the quarter with our recently acquired tool businesses providing most of the gain. The positive effect of minor price changes and favorable currency translation were offset by core unit volume declines in the mechanics tools and industrial storage system businesses. Operating profits for the third quarter were $46.1 million compared with $47.8 million last year. Operating margins were 11.1 percent, down from the 12.5 percent reported for the quarter a year ago.
 Hardware sales increased 24 percent, principally reflecting the acquisition of Monarch Mirror Door Company. Operating profits for the quarter were $5.2 million compared with $6.3 million for the third quarter last year. Operating margins also declined due to acquisition- related costs and challenging market conditions.
 Specialty Hardware sales increased 6 percent largely on unit volume growth in the United States. Operating profits increased to $6.6 million, from $5.7 million in third quarter 1991, and operating margins improved to 9.7 percent from 8.9 percent in the third quarter last year.
 Outlook -- Mr. Ayers concluded: "We believe the 'recovery' in the U.S. has stalled and we do not expect any significant improvements in world markets over the next few months. Overall weakness in sales may continue during the fourth quarter. We are reacting to these uncertain market conditions with further cost controls, initiatives to serve our customers more effectively and new market developments."
 THE STANLEY WORKS AND SUBSIDIARIES
 Consolidated Statements of Earnings
 (Millions of Dollars)
 Third Quarter Nine Months
 1992 1991 1992 1991
 Net sales $ 555.9 $ 506.1 $1,618.9 $1,449.7
 Costs and expenses
 Cost of sales 370.0 336.3 1,077.1 958.9
 Selling, general and
 administrative 132.7 114.2 389.7 343.7
 Interest - net 7.2 6.4 19.0 18.8
 Other - net 5.1 2.9 18.8 14.7
 Total 515.0 459.8 1,504.6 1,336.1
 Earnings before income taxes
 and cumulative effect of
 accounting change 40.9 46.3 114.3 113.6
 Income taxes 15.5 17.9 42.6 43.5
 Earnings before cumulative
 effect of accounting change 25.4 28.4 71.7 70.1
 Cumulative effect of accounting
 change for postretirement
 benefits -- -- -- (12.5)
 Net earnings $ 25.4 $ 28.4 $ 71.7 $ 57.6
 Net earnings per share of
 common stock :
 Before cumulative effect of
 accounting change $ .56 $ .64 $ 1.57 $ 1.64
 Cumulative effect of
 accounting change -- -- -- (.29)
 Net earnings per share of
 common stock $ .56 $ .64 $ 1.57 $ 1.35
 Dividends per share $ .33 $ .31 $ .95 $ .91
 Average shares outstanding 45,671 45,296 45,784 42,669
 (in thousands)
 NOTE: See notes to consolidated financial statements.
 THE STANLEY WORKS AND SUBSIDIARIES
 Consolidated Balance Sheets
 (Millions of Dollars)
 September 26 September 28
 1992 1991
 Assets:
 Cash and cash equivalents $ 27.0 $ 39.0
 Accounts receivable 380.9 368.3
 Inventories 321.1 288.4
 Other current assets 32.4 22.9
 Total current assets 761.4 718.6
 Property, plant and equipment - net 573.5 535.9
 Goodwill, patents and other intangibles 184.8 114.9
 Long-term notes receivable
 and other assets 94.0 104.0
 Total $1,613.7 $1,473.4
 LIABILITIES AND SHAREHOLDERS' EQUITY
 Notes payable $ 93.9 $ 23.5
 Accounts payable and accrued expenses 282.9 232.9
 Accrued income taxes (1.9) 19.6
 Total current liabilities 374.9 276.0
 Long-term debt 393.5 388.4
 Other long-term liabilities 146.3 139.2
 Shareholders' equity 699.0 669.8
 Total $1,613.7 $1,473.4
 NOTE: See notes to consolidated financial statements.
 THE STANLEY WORKS AND SUBSIDIARIES
 Consolidated Statements of Cash Flows
 (Millions of Dollars)
 Third Quarter Nine Months
 1992 1991 1992 1991
 Operating Activities:
 Net Earnings $ 25.4 $ 28.4 $ 71.7 $ 57.6
 Depreciation and amortization 24.5 22.5 62.7 60.4
 Provision for postretirement benefits -- -- -- 20.6
 Other non-cash items 4.7 0.5 7.6 0.8
 Changes in operating assets
 and liabilities (14.6) (20.3) (26.2) (26.7)
 Net cash provided by
 operating activities 40.0 31.1 115.8 112.7
 Investing Activities:
 Capital expenditures (21.8) (19.1) (45.6) (50.3)
 Proceeds from sales of assets 0.8 4.7 4.2 6.7
 Proceeds from long-term notes receivable 0.6 0.3
 Business acquisitions (16.5) -- (102.3) (30.3)
 Proceeds from sale of businesses 2.9
 Other 2.8 (4.2) (6.6) (7.2)
 Net cash (used) by
 investing activities (34.7) (18.0) (150.3) (77.9)
 Financing Activities:
 Payments on long-term debt (19.9) (180.4) (23.5) (242.1)
 Proceeds from long-term borrowings 1.0 -- 15.1 240.2
 Loan to ESOP (180.0)
 Net short-term bank financing 18.0 0.5 72.7 (0.2)
 Proceeds from issuance of common stock 2.4 3.6 2.8 184.3
 Purchase of common stock
 for treasury (18.1) (7.2) (22.3) (34.9)
 Cash dividends on common stock (14.2) (14.0) (42.5) (52.3)
 Net cash provided (used) by
 financing activities (30.8) (197.5) 2.3 (85.0)
 Effect of exchange rate
 changes on cash 0.9 1.5 0.9 (5.5)
 Decrease in cash and
 cash equivalents (24.6) (182.9) (31.3) (55.7)
 Cash and cash equivalents,
 beginning of period 51.6 221.9 58.3 94.7
 Cash and cash equivalents,
 end of third quarter $ 27.0 $ 39.0 $ 27.0 $ 39.0
 NOTE: See notes to consolidated financial statements.
 THE STANLEY WORKS AND SUBSIDIARIES
 Consolidated Statements of Changes
 in Shareholders' Equity
 (Millions of Dollars)
 Nine Months
 1992 1991
 Balance at beginning of year $ 698.4 $ 679.3
 Net earnings 71.7 57.6
 Currency translation adjustment (17.6) (3.7)
 Cash dividends declared (43.6) (39.9)
 Net issuance of common stock (14.8) 152.1
 ESOP debt 4.9 (175.6)
 Balance at end of third quarter $ 699.0 $ 669.8
 NOTE: See notes to consolidated financial statements.
 THE STANLEY WORKS AND SUBSIDIARIES
 Business Segment Information
 (Millions of Dollars)
 Third Quarter Nine Months
 1992 1991 1992 1991
 Industry Segments
 Net sales
 Tools
 Consumer $ 190.3 $ 165.8 $ 528.7 $ 463.4
 Industrial 86.6 91.2 281.4 274.6
 Engineered 138.2 126.6 402.8 374.6
 Total tools 415.1 383.6 1,212.9 1,112.6
 Hardware 72.7 58.6 225.2 169.7
 Specialty hardware 68.1 63.9 180.8 167.4
 Consolidated $ 555.9 $ 506.1 $ 1,618.9 $ 1,449.7
 Operating profit
 Tools $ 46.1 $ 47.8 $ 132.9 $ 127.6
 Hardware 5.2 6.3 19.3 18.1
 Specialty hardware 6.6 5.7 12.1 11.1
 Total 57.9 59.8 164.3 156.8
 Net corporate expenses (8.4) (3.1) (25.7) (14.3)
 Interest expense (8.6) (10.4) (24.3) (28.9)
 Earnings before
 income taxes $ 40.9 $ 46.3 $ 114.3 $ 113.6
 Geographic areas
 Net sales
 United States $ 393.6 $ 359.5 $ 1,140.6 $ 1,018.6
 Europe 88.1 78.3 267.7 238.1
 Other areas 74.2 68.3 210.6 193.0
 Consolidated $ 555.9 $ 506.1 $ 1,618.9 $ 1,449.7
 Operating profit
 United States $ 39.2 $ 41.1 $ 113.9 $ 101.2
 Europe 9.7 9.6 28.8 29.4
 Other areas 9.0 9.1 21.6 26.2
 Total $ 57.9 $ 59.8 $ 164.3 $ 156.8
 NOTE: See notes to consolidated financial statements.
 THE STANLEY WORKS AND SUBSIDIARIES
 Notes to Consolidated Financial Statements
 In the first quarter of 1992, the company adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes". This standard requires an asset and liability approach for financial accounting and reporting for income taxes. Financial statements for fiscal years 1991, 1990, 1989 and 1988 have been retroactively restated for the effects of adopting this new standard. The cumulative effect of this accounting change, reflected as an adjustment to opening 1991 and 1992 retained earnings, is not material to the consolidated financial position.
 This change did not have a material effect on restated 1991 net earnings.
 Opening 1992 retained earnings has been restated to reflect the acquisition
of LaBounty Manufacturing, Inc. The transaction, which is accounted for as a pooling of interests, was effected through the exchange of 642,940 shares of common stock of the company for all the issued and outstanding shares of LaBounty. Periods prior to 1992 were not restated due to the immaterial effect of the pooled company on the consolidated financial statements.
 Beginning in 1992, business segment sales and operating profits are being reported by three major categories: Tools, Hardware and Specialty Hardware. Sales for Tools are further divided into Consumer, Industrial and Engineered Tools for clarification.
 -0- 10/14/92
 /CONTACT: Ronald F. Gilrain, vice president-public affairs of The Stanley Works, 203-827-3882/
 (SWK) CO: The Stanley Works ST: Connecticut IN: MAC SU: ERN


TM -- NY009 -- 9677 10/14/92 08:17 EDT
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Date:Oct 14, 1992
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