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STANLEY SALES UP; EPS FLAT ON HIGHER TAXES

 NEW BRITAIN, Conn., Oct. 20 /PRNewswire/ -- The Stanley Works announced today third quarter sales of $576 million, an increase of 5 percent over the prior year. Earnings per share were $.56, the same as third quarter 1992, the result of slightly lower net earnings and fewer shares out-standing.
 Net earnings for the third quarter of $25.0 million were 2 percent below the $25.4 reported in 1992. Both net earnings and earnings per share reported for the third quarter would have been approximately 7 percent higher except for the impact of higher tax rates in the U.S.
 Richard H. Ayers, Chairman and Chief Executive Officer, noted, "Throughout this extended period of economic weakness, we have kept our focus on improving market share and finding new markets for our businesses. Thus, we are encouraged by the 8 percent internal sales growth for the quarter. Most of this growth was in the U.S.; however, internal growth was also positive in Europe and most of our other markets. Acquisitions and minor price increases in foreign markets added 1 percent to sales while the currency effects of a stronger dollar reduced sales by 4 percent."
 Mr. Ayers continued, "While we are very pleased that unit volume increases reflect solid growth in our core businesses, earnings were impacted negatively by the combined effects of lower gross margins and a higher effective tax rate due to recently enacted federal tax changes."
 Gross margins for the quarter were 31.1 percent, down from 33.5 percent reported in the third quarter last year. A significant portion of the decline is associated with our Fastening Systems and Door Systems businesses. Start-up costs, as well as adverse foreign currency effects, were incurred in the transition of previously foreign-- sourced fastening tools to in-house manufacturing in the United States. In addition, our Doors business continued to incur high raw material costs and the related costs of manufacturing process changes responding to this higher cost structure. In both cases, progress to reduce these costs was somewhat slower than we had anticipated.
 Operating expenses were 21.9 percent of sales in the quarter, compared with
24.0 percent for third quarter 1992. This improvement reflects our continuing efforts to increase operating efficiencies and the absence of certain non-recurring expenses.
 Interest-net expenses for the quarter were 1.2 percent of sales, slightly lower than the 1.4 percent reported in 1992. Other-net expenses for the period included a $5.0 million pretax gain ($.06 per share) from the sale of a non-operating asset which was substantially offset by reserves established for the closing of a manufacturing facility of our wholly owned subsidiary, Mac Tools, Inc.
 Net sales for the first nine months of 1993 were $1,695 million, an increase of 6 percent over the $1,603 million reported during the comparable period in 1992. Net earnings for the period were $75.0 million, up 5 percent compared with $71.7 million reported last year. Per share earnings were $1.67 for nine months of 1993 compared with $1.57 in 1992. GEOGRAPHIC AREAS
 Net sales in the U.S. were up 9 percent for the third quarter reflecting strong internal growth of 10 percent, which was offset by overall minor price decreases. We are particularly encouraged by the growth in our industrial
tools category. Our Mac, Hydraulic and Air


Tools businesses experienced unit volume gains in excess of 20 percent.
 Net sales in Europe for the quarter were 11 percent below the same period in 1992 as the stronger dollar negatively impacted sales by 19 percent. Partially offsetting the negative currency effect were unit volume growth of 3 percent and a 5 percent contribution from recent acquisitions. The unit volume growth in existing product lines was the first quarterly improvement we have experienced in Europe this year.
 Net sales in Other Areas decreased 1 percent as the negative effects of currency offset internal growth and price increases.


SEGMENTS
 Tools sales increased 4 percent for the quarter primarily as a result of stronger internal growth in our industrial and engineered tools categories. Modest growth was experienced in our consumer tool markets. The negative effect of currency was most significant in the tools segment, reducing sales by 5 percent. Operating profits of $40 million were 14 percent lower than 1992 and included one-time charges related to the closing of a Mac Tools manufacturing facility and the costs of converting foreign- sourced fastening tools to in-house manufacture. Operating margins of 9.3 percent for the quarter compare with 11.2 percent for the same quarter last year.
 Hardware sales increased 3 percent for the quarter compared with the same period a year ago, reflecting unit volume growth of 6 percent which was partially offset by negative currency effects. Operating profits increased 17 percent, primarily due to efficiencies realized from inte- grating recent acquisitions.
 Specialty Hardware sales for the third quarter 1993 were 9 percent higher than third quarter 1992. This increase was virtually all internal growth, as the effects of modest price increases were offset by the negative effect of currency. Operating profits for the period were up 5 percent over the corresponding quarter last year; however, they continue to reflect the high cost of raw materials and costs of related manufacturing process adjustments.


DEVELOPMENTS
 On July 30, Stanley acquired Friess & Co., KG, a well-known German manufacturer and marketer of paint rollers and brushes. Friess products are sold throughout Europe. This acquisition represents an important strategic addition to our Mosley-Stone line of paint preparation and application products manufactured in the U.K. It will significantly strengthen our competitive position for decorator products in continental Europe.
 We were saddened by the death of Robert G. Widham on September 29, 1993. Bob was Group Vice President Consumer/Home Improvement Products when he retired in March 1993, due to illness. His distin- guished 36-year career with Stanley included extensive international service and the leadership of several Stanley businesses. Bob's enthusiasm and creativity helped build our company into a strong, well-managed global organi-zation. He is missed as a friend and valued colleague.


OUTLOOK
 Unit volume increases in our core businesses during the quarter have been encouraging. We attribute this improvement to a combination of effective new product development and aggressive strategies to improve market share and develop new markets during these tough times. We are optimistic about the continued success of these strategies.
 As sales improve, we are focused on enhancing profits as well. We are working hard to continue the steady improvements we have been achieving in our operating expense ratio. The majority of non-- recurring manufacturing expenses and restructuring and consolidation costs are behind us for the year.
 We are trying to strike a balance between our strategies for margin improvement with our goals for steady growth in the marketplace. We believe this approach will build the consistent long-term earnings performance shareholders have come to expect from Stanley.
 THE STANLEY WORKS AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF EARNINGS
 (Millions of Dollars)
 THIRD QUARTER NINE MONTHS
 1993 1992 1993 1992
 Net Sales $ 576.3 $ 550.4 $ 1,694.9 $ 1,603.0
 Costs and Expenses
 Cost of sales 396.8 365.8 1,155.0 1,065.2
 Selling, general and
 administrative 126.1 132.3 384.7 388.9
 Interest - net 6.9 7.5 20.2 19.5
 Other - net 3.6 3.9 11.4 15.1
 ------- ------- -------- --------
 533.4 509.5 1,571.3 1,488.7
 ------- ------- -------- --------
 Earnings Before Income Taxes 42.9 40.9 123.6 114.3
 Income Taxes 17.9 15.5 48.6 42.6
 ------- ------- -------- --------
 Net Earnings $ 25.0 $ 25.4 $ 75.0 $ 71.7
 ======= ======= ======== ========
 Net Earnings Per Share of
 Common Stock $ 0.56 $ 0.56 $ 1.67 $ 1.57
 ======= ======= ======== ========
 Dividends per share $ 0.34 $ 0.33 $ 1.00 $ 0.95
 Average shares outstanding 44,754 45,671 45,007 45,784
 (in thousands)


See notes to consolidated financial statements.
 THE STANLEY WORKS AND SUBSIDIARIES
 CONSOLIDATED BALANCE SHEETS
 (Millions of Dollars)
 October 2 September 26
 1993 1992
 ASSETS
 Cash and cash equivalents $ 39.0 $ 27.0
 Accounts receivable 388.5 380.9
 Inventories 317.9 321.1
 Other current assets 29.5 32.4
 ------- -------
 Total current assets 774.9 761.4
 Property, plant and equipment - net 561.4 573.5
 Goodwill and other intangibles 175.6 184.8
 Long-term notes receivable and other assets 73.8 94.0
 ------- -------
 $ 1,585.7 $ 1,613.7
 ======= =======
 LIABILITIES AND SHAREHOLDERS' EQUITY
 Notes payable $ 97.3 $ 93.9
 Accounts payable and accrued expenses 278.2 282.9
 Accrued income taxes 1.0 (1.9)
 ------- -------
 Total current liabilities 376.5 374.9
 Long-term debt 385.7 393.5
 Other long-term liabilities 141.6 146.3
 Shareholders' equity 681.9 699.0
 ------- -------
 $ 1,585.7 $ 1,613.7
 ======= =======
 See notes to consolidated financial statements.
 THE STANLEY WORKS AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Millions of Dollars)
 THIRD QUARTER NINE MONTHS
 1993 1992 1993 1992
 Cash Provided By Operations
 Net Earnings $ 25.0 $ 25.4 $ 75.0 $ 71.7
 Depreciation and amortization 19.3 24.5 59.1 62.7
 Net gain on sale of non-operating asset (5.0) (29.0)
 Other non-cash items 9.9 4.7 20.3 7.6
 Changes in operating assets
 and liabilities 8.1 (14.6) (62.5) (26.2)
 ------ ------ ------ ------
 Net cash provided by
 operating activities 57.3 40.0 62.9 115.8
 Investing Activities
 Capital expenditures (18.3) (21.8) (44.5) (45.6)
 Proceeds from sales of assets 2.8 0.8 4.8 4.2
 Proceeds from sale of non-operating asset6.0 38.9
 Business acquisitions (12.4) (16.5) (13.3)(102.3)
 Other (1.3) 2.8 (4.0) (6.6)
 ------ ------ ------ ------
 Net cash (used) by
 investing activities (23.2) (34.7) (18.1)(150.3)
 Financing Activities
 Payments on long-term debt (65.9) (19.9) (132.9) (23.5)
 Proceeds of long-term borrowings 78.4 1.0 78.4 15.1
 Net short-term bank financing 2.6 18.0 67.3 72.7
 Proceeds from issuance of common stock 3.4 2.4 4.0 2.8
 Purchase of common stock for treasury (15.8) (18.1) (42.3) (22.3)
 Cash dividends on common stock (15.2) (14.2) (59.9) (42.5)
 ------ ------ ------ ------
 Net cash provided (used) by
 financing activities (12.5) (30.8) (85.4) 2.3
 Effect of Exchange Rate Changes on Cash (1.1) 0.9 (1.5) 0.9
 ------ ------ ------ ------
 Increase (decrease) in Cash and
 Cash Equivalents 20.5 (24.6) (42.1) (31.3)
 Cash and Cash Equivalents,
 Beginning of Period 18.5 51.6 81.1 58.3
 ------ ------ ------ ------
 Cash and Cash Equivalents,
 End of Third Quarter $ 39.0 $ 27.0 $ 39.0 $ 27.0
 ===== ===== ===== =====
 See notes to consolidated financial statements.
 THE STANLEY WORKS AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CHANGES
 IN SHAREHOLDERS' EQUITY
 (Millions of Dollars)
 NINE MONTHS
 1993 1992
 Balance at beginning of year $ 696.3 $ 698.3
 Net earnings 75.0 71.7
 Currency translation adjustment (16.8) (17.6)
 Cash dividends declared (44.9) (43.6)
 Net issuance of Common Stock (33.0) (14.7)
 ESOP debt 5.3 4.9
 -------- -----
 Balance at end of third quarter $ 681.9 $ 699.0
 ======== =====
 See notes to consolidated financial statements.
 THE STANLEY WORKS AND SUBSIDIARIES
 BUSINESS SEGMENT INFORMATION
 (Millions of Dollars)
 THIRD QUARTER NINE MONTHS
 1993 1992 1993 1992
 INDUSTRY SEGMENTS
 Net Sales
 Tools
 Consumer $ 184.8 $ 187.6 $ 536.7 $ 521.3
 Industrial 104.0 85.8 306.8 278.6
 Engineered 140.5 137.8 427.7 401.5
 -------- -------- -------- --------
 Total Tools 429.3 411.2 1,271.2 1,201.4
 Hardware 73.9 71.8 227.4 222.6
 Specialty Hardware 73.1 67.4 196.3 179.0
 -------- -------- -------- --------
 Consolidated $ 576.3 $ 550.4 $ 1,694.9 $ 1,603.0
 ======== ======== ======== ========
 Operating Profit
 Tools $ 39.8 $ 46.1 $ 127.6 $ 132.9
 Hardware 6.1 5.2 24.3 19.3
 Specialty Hardware 6.9 6.6 9.4 12.1
 -------- -------- -------- --------
 Total 52.8 57.9 161.3 164.3
 Net corporate expenses (2.0) (8.4) (13.6) (25.7)
 Interest expense (7.9) (8.6) (24.1) (24.3)
 -------- -------- -------- --------
 Earnings before
 income taxes $ 42.9 $ 40.9 $ 123.6 $ 114.3
 ======== ======== ======== ========


GEOGRAPHIC AREAS
 Net Sales
 United States $ 426.3 $ 390.0 $ 1,248.8 $ 1,130.0
 Europe 77.4 87.0 240.6 264.5
 Other Areas 72.6 73.4 205.5 208.5
 -------- -------- -------- --------
 Consolidated $ 576.3 $ 550.4 $ 1,694.9 $ 1,603.0
 ======== ======== ======== ========
 Operating Profit
 United States $ 38.9 $ 39.2 $ 119.1 $ 113.9
 Europe 6.4 9.7 23.2 28.8
 Other Areas 7.5 9.0 19.0 21.6
 -------- -------- -------- --------
 Total $ 52.8 $ 57.9 $ 161.3 $ 164.3
 ======== ======== ======== ========


See notes to consolidated financial statements.
 THE STANLEY WORKS AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 For the third quarter of 1993, Other-net includes a gain
 of $5.0 million ($.06 per share) from the sale of the
 company's investment in Max Co., Ltd. which was
 substantially offset by reserves established for the
 closing of a manufacturing facility of our wholly owned
 subsidiary, Mac Tools, Inc.
 In the consolidated statement of earnings for 1993, Other-
 net for the nine months includes a gain of $29.0 million
 ($.39 per share) from the sale of the company's investment
 in Max Co., Ltd. Also included in Other-net were additional
 first quarter charges for a fine levied by U.S. District Court in
 Missouri for $5.0 million ($.07 per share) and contingency
 reserves of $15.7 million ($.21 per share) related to product
 liability litigation, restructuring activities and environmental
 clean-up.
 Certain 1992 amounts in the consolidated statements of
 earnings were reclassified to conform to the 1993
 presentation.
 -0- 10/20/93
 /CONTACT: Patricia McLean, Manager, Corporate Communications, 203-827-3833/
 (SWK)


CO: The Stanley Works ST: Connecticut IN: HOU SU: ERN

DH -- NY012 -- 4368 10/20/93 08:23 EDT
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