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STANLEY SALES AND EARNINGS AFFECTED BY ECONOMY, TRENDS IMPROVE

 STANLEY SALES AND EARNINGS AFFECTED BY ECONOMY, TRENDS IMPROVE
 NEW BRITAIN, Conn. /PRNewswire/ -- "Although trends improved during the year, sales were down slightly for the full year. Earnings and earnings per share were also down from 1990 levels on reduced operating profits and a one-time charge for retiree health benefits," reported Richard H. Ayers, chairman and chief executive officer of The Stanley Works.
 Net sales for the year were $1.962 billion, down slightly from 1990 sales of $1.977 billion. The improved sales comparisons in the third and fourth quarters almost offset the weak sales activity in the first two quarters. Unit sales volume declines and the negative effect of currency in the year have been largely offset by price.
 Net earnings for 1991, excluding the effects of a charge resulting from an accounting change, were $95 million, $2.31 a share, compared with $107 million, $2.53 a share last year. The one-time charge to earnings of $12.5 million, $.29 a share, is the result of adopting the new accounting standard (FAS 106) for retiree health benefits, and reduces net earnings to $82.6 million, $2.02 a share. First quarter 1991 has been restated to reflect this charge. Ayers said: "We have elected to take the relatively modest charge recognizing identified employee and retiree responsibilities immediately, rather than defer to later years."
 The decline in gross margins to 34.1 percent from 34.6 percent in 1990 reflects the unabsorbed overhead resulting from lower operating levels to reduce inventories. In addition, LIFO inventory gains in 1991 were $1.8 million, $.02 a share, compared with LIFO gains of $7.2 million, $.11 a share, in 1990.
 Selling, general, and administrative expenses were virtually unchanged from 1991. Interest-net and Other-net expenses were also similar to last year.
 The effective tax rate for 1991 was 39.2 percent, up from 38.0 percent in 1990. The increase resulted from somewhat higher tax rates for our international businesses.
 Net sales in the United States for 1991 were down 2.1 percent. Recessionary conditions throughout most of the year limited volume growth as well as price increases in our served markets. Operating profits in the United States for 1991 were down 6.6 percent, as a result of weaker performance by the Industrial and Professional business segment.
 Markets in Europe were soft in 1991 and sales were particularly weak in the United Kingdom. Sales, however, increased 6.8 percent as a result of volume gains from acquisitions. Price increases were virtually offset by negative currency effects. European profits declined slightly on reduced earnings from tool and fastening systems operations.
 Net sales in other areas were down 2.1 percent as weak economic conditions prevailed for most of the year in Canada and Australia, more than offsetting positive growth in the Far East. Operating profits in Other Areas were flat but contained strong performance by our Asian tool operations.
 Home Improvement and Consumer sales in 1991 increased 2.5 percent while operating profits improved 6.6 percent. Operating profit as a percent of sales increased to 11.7 percent from 11.2 percent last year. Tools, home automation and housing and construction-related product lines in the United States experienced a continuing improvement from a very weak first quarter. This more than offset weak sales and profit performance in building and home improvement business in Canada, the United Kingdom and Australia.
 Industrial and professional sales decreased 4.0 percent in 1991 and operating profits declined to $95 million from $116 million last year. Operating profit, as a percent of sales, was 10.1 percent compared with 11.8 percent in 1990. The sharp decline in industrial-related activity in the United States which began in late 1990, and in particular the auto-related sector, had a significant impact on our Mac Tools business. Lower plant activity of this business, along with its increased bad debt reserves, depressed profits for the year.
 Net Sales for the fourth quarter were $513 million, up 2 percent compared with $501 million last year. Net earnings were $25 million, $.61 a share, compared with $26 million, $.63 a share, reported in fourth quarter 1990. The pick-up in volume, along with the effects of cost cutting, helped to improve gross margins and operating profits for the quarter. Operating expenses were 23.1 percent, down from 23.6 percent last year. Operating profits for the quarter increased 8.8 percent.
 Ayers reported: "We made a number of particularly appropriate acquisitions in 1991 including:
 -- Nirva - a closet system and mirror door business in France
 -- Mosley-Stone - the leading U.K. business specializing in paint preparation and paint application tools
 -- J. B. Supplies - a drapery hardware distribution business serving the North Central part of the United States
 -- Monarch Mirror Door Co. - the leading U.S. supplier of mirrored closet doors for home construction and remodeling
 -- Sidchrome - a leading Australian manufacturer of mechanics tools
 I am pleased at the marvelous fit these businesses provide, both strategically and geographically. All these businesses will add to the strength and acceptance of the Stanley name."
 Outlook
 Ayers noted: "Early in 1991, we felt that the first quarter could well be the worst for our businesses in coping with recessionary conditions in many areas of the world. In retrospect, this has proven to be the case. Although business conditions have flattened out in most of our served markets in the United States, Canada, and Europe, I don't believe we have yet seen a significant upturn in the economy.
 "We believe that the recent interest rate drop in the United States should provide some stimulus to housing and related economic activity. We will continue to concentrate on improving our manufacturing capabilities, gaining market share and seeking appropriate and beneficial acquisitions. We are convinced that we have a solid and realistic plan for earnings growth to significantly benefit Stanley shareholders as the economy improves."
 THE STANLEY WORKS AND SUBSIDIARIES
 Consolidated Statements of Earnings
 (Millions of Dollars)
 FOURTH QUARTER TWELVE MONTHS
 1991 1990 1991 1990
 Net Sales $ 512.5 $ 501.4 $1,962.2 $1,976.7
 Costs and Expenses
 Cost of sales 334.9 331.1 1,293.8 1,292.3
 Selling, general and
 administrative 118.7 118.3 462.4 463.0
 Interest - net 6.6 7.2 25.4 25.4
 Other - net 9.4 5.4 24.1 24.0
 Total 469.6 462.0 1,805.7 1,804.7
 Earnings Before Income Taxes
 and Cumulative Effect of
 Accounting Change 42.9 39.4 156.5 172.0
 Income Taxes 17.7 13.6 61.4 65.4
 Earnings Before Cumulative
 Effect of Accounting Change 25.2 25.8 95.1 106.6
 Cumulative Effect of Accounting
 Change for Post-retirement
 Benefits -- -- (12.5) --
 Net Earnings 25.2 $25.8 $82.6 $106.6
 Net Earnings Per Share of Common Stock :
 Before Cumulative Effect of
 Accounting Change $.61 $.63 $2.31 $2.53
 Cumulative Effect of
 Accounting Change (.29)
 Net Earnings Per Share of
 Common Stock $.61 $.63 $2.02 $2.53
 Dividends per share $.31 $.30 $1.22 $1.14
 Average shares outstanding
 (in thousands) 45,261 41,598 43,266 42,192
 THE STANLEY WORKS AND SUBSIDIARIES
 Consolidated Balance Sheets
 (Millions of Dollars)
 12/28/91 12/29/90
 ASSETS
 Cash and cash equivalents $58.3 $94.7
 Accounts receivable 352.6 330.6
 Inventories 299.6 291.8
 Other current assets 33.4 27.1
 Total current assets 743.9 744.2
 Property, plant and equipment - net 561.7 538.3
 Goodwill, patents and other intangibles 137.9 104.3
 Long-term notes receivable
 and other assets 104.4 107.0
 Total $1,547.9 $1,493.8
 LIABILITIES AND STOCKHOLDERS' EQUITY
 Notes payable $18.3 $30.0
 Accounts payable and accrued expenses 290.1 246.3
 Accrued income taxes 0.5 6.1
 Total current liabilities 308.9 282.4
 Long-term debt 396.7 398.1
 Other long-term liabilities 136.8 116.8
 Stockholders' equity 705.5 696.5
 Total $1,547.9 $1,493.8
 THE STANLEY WORKS AND SUBSIDIARIES
 Consolidated Statements of Cash Flows
 (Millions of Dollars)
 FOURTH QUARTER TWELVE MONTHS
 1991 1990 1991 1990
 Operating Activities:
 Net Earnings $25.2 $25.8 $ 82.6 $ 106.6
 Depreciation and amortization 14.5 17.0 74.9 74.3
 Provision for post-retirement benefits 20.6
 Other non-cash items 0.4 8.5 1.4 0.5
 Changes in operating assets
 and liabilities 27.2 30.1 0.5 26.6
 Net cash provided by
 operating activities 67.3 81.4 180.0 208.0
 Financing Activities:
 Payments on long-term debt (14.2) (9.6) (256.3) (11.7)
 Proceeds from long-term borrowings 0.1 0.2 240.3 0.2
 Loan to ESOP (180.0)
 Net short-term bank financing (2.4) 3.1 (2.6) 5.3
 Proceeds from issuance of Common Stock 0.3 0.4 184.6 3.3
 Purchase of Common Stock for treasury (2.3) (21.2) (37.2) (64.8)
 Cash dividends on Common Stock (52.3) (35.5)
 Net cash (used) by
 financing activities (18.5) (27.1) (103.5) (103.2)
 Investing Activities:
 Capital expenditures (10.8) (25.6) (61.1) (78.2)
 Proceeds from sales of assets 5.1 2.0 11.8 5.3
 Proceeds from long-term
 notes receivable (0.5) 0.2 (0.2) 7.1
 Business acquisitions (24.4) (3.3) (54.7) (15.2)
 Proceeds from sale of businesses 2.9 21.9
 Other (0.6) (1.6) (7.8) (5.8)
 Net cash (used) by
 investing activities (31.2) (28.3) (109.1) (64.9)
 Effect of exchange rate changes on cash 1.7 (1.2) (3.8) (0.6)
 Increase (decrease) in cash and
 cash equivalents 19.3 24.8 (36.4) 39.3
 Cash and cash equivalents,
 beginning of period 39.0 69.9 94.7 55.4
 Cash and cash equivalents,
 end of year $ 58.3 $ 94.7 $ 58.3 $ 94.7
 Consolidated Statements of Changes
 in Stockholders' Equity
 (Millions of dollars)
 TWELVE MONTHS
 1991 1990
 Balance at beginning of year $ 696.5 $ 674.1
 Net earnings 82.6 106.6
 Currency translation adjustment 14.4
 Cash dividends declared (53.8) (48.0)
 Net issuance of Common Stock 148.6 (59.3)
 Unamortized ESOP Debt (173.2) 5.6
 ESOP Tax Benefit 4.8 3.1
 Balance at end of year $ 705.5 $ 696.5
 Business Segment Information
 (Millions of dollars)
 FOURTH QUARTER TWELVE MONTHS
 1991 1990 1991 1990
 INDUSTRY SEGMENTS
 Net Sales
 Home Improvement &
 Consumer $ 275.6 $ 261.7 $ 1,023.2 $ 998.6
 Industrial &
 Professional 236.9 239.7 939.0 978.1
 Consolidated $ 512.5 $ 501.4 $ 1,962.2 $ 1,976.7
 Operating Profit
 Home Improvement &
 Consumer $ 33.1 $ 26.7 $ 119.7 $ 112.3
 Industrial &
 Professional 24.9 26.6 95.1 115.8
 Total 58.0 53.3 214.8 228.1
 Net corporate expenses (6.4) (3.6) (20.7) (19.8)
 Interest expense (8.7) (10.3) (37.6) (36.3)
 Earnings before
 income taxes and
 cumulative effect of
 accounting change $ 42.9 $ 39.4 $ 156.5 $ 172.0
 GEOGRAPHIC AREAS
 Net Sales
 United States $ 356.3 $ 354.2 $ 1,374.9 $ 1,404.8
 Europe 90.2 85.0 328.3 307.4
 Other Areas 66.0 62.2 259.0 264.5
 Consolidated $ 512.5 $ 501.4 $ 1,962.2 $ 1,976.7
 Operating Profit
 United States $ 44.1 $ 37.9 $ 145.3 $ 155.6
 Europe 13.4 12.2 42.8 43.6
 Other Areas 2.7 3.4 28.9 29.1
 Eliminations (2.2) (0.2) (2.2) (0.2)
 Total $ 58.0 $ 53.3 $ 214.8 $ 228.1
 Notes to Consolidated Financial Statements:
 The company adopted "Statement of Financial Accounting Standards No. 106," in 1991. This accounting rule requires companies to recognize the estimated future cost of providing non-pension post- retirement benefits on an accrual basis over the employees' service period.
 These benefits have previously been recognized as expense when paid.
 The first quarter of 1991 has been restated to reflect the cumulative effect of this accounting change.
 The company borrowed $180 million during the second quarter of 1991 and loaned the proceeds to The Stanley Works employee stock ownership plans (ESOP) which used the funds to purchase approximately 5 million shares of the company's common stock. The note due from the ESOP appears as a reduction in stockholders' equity. The company repaid the $180 million of long-term debt during the third quarter of 1991.
 The consolidated earnings per share for the fourth quarter and 12 months of 1991 include the income tax benefits relating to dividends paid on ESOP shares. These benefits ($.05 and $.11 per share, respectively) are credited directly to stockholders' equity and are not included in net earnings.
 In the consolidated statement of earnings for 1990, cost of sales includes a gain of $7.2 million ($.11 per share) due to reductions in LIFO inventories. Other-net includes a first quarter gain of $9.6 million ($.14 per share) from the sale of the company's drapery hardware business in Europe, offset by expenses of $7.1 million ($.10 per share) for contingent liability reserves.
 The financial statements are condensed and unaudited.
 -0- 1/28/92
 /CONTACT: Ronald F. Gilrain of Stanley Works, 203-827-3882/
 (SWK) CO: The Stanley Works ST: Connecticut IN: SU: ERN


SK -- NY065 -- 4301 01/28/92 13:55 EST
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Date:Jan 28, 1992
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