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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- ---- SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 30, 1995
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- ---- SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
COMMISSION FILE 1-5224
THE STANLEY WORKS
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CONNECTICUT 06-0548860
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
1000 STANLEY DRIVE
NEW BRITAIN, CONNECTICUT 06053
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(860) 225-5111
(REGISTRANT'S TELEPHONE NUMBER)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- -------------------
Common Stock--Par Value $2.50 Per Share New York Stock Exchange
Pacific Stock Exchange
9% Notes due 1998
7 3/8% Notes Due December 15, 2002
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
---- ----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K / /.
The aggregate market value of Common Stock, par value $2.50 per share, held by
non-affiliates (based upon the closing sale price on the New York Stock
Exchange) on March 20, 1996 was approximately $ 2.45 billion. As of March 20,
1996, there were 44,214,043 shares of Common Stock, par value $2.50 per share,
outstanding.
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DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to shareholders for the year ended December 30,
1995 are incorporated by reference into Parts I and II.
Portions of the definitive Proxy Statement dated March 6, 1996, filed with the
Commission pursuant to Regulation 14A, are incorporated by reference into Part
III.
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FORM 10-K
Part I
Item 1. Business
1(a) Introduction. (i) General. The Stanley Works ("Stanley" or the
"Company") was founded in 1843 by Frederick T. Stanley and incorporated in 1852.
Stanley is a worldwide manufacturer and marketer of tools, hardware and
specialty hardware offering a wide range of products for home improvement,
consumer, industrial and professional use. Stanley(R) is a brand recognized
around the world for quality and value.
In 1995, Stanley had net sales of $2.6 billion and employed
approximately 19,000 people worldwide. The Company's principal executive office
is located at 1000 Stanley Drive, New Britain, Connecticut 06053 and its
telephone number is (860) 225-5111.
(ii) Strategic Restructuring. In July 1995, the Company announced a
multi-year restructuring program involving a fundamental review of the Company's
business units, product lines and how the Company operates, and established
goals for both restructuring and growth. The restructuring goal includes the
reduction of $150 million from the Company's cost structure (half of which is
targeted for reinvestment in the business) as well as a $250 million reduction
in working capital and other assets by the year 1997. The growth goal is to
achieve net sales of $4 billion in 1999.
The Company has developed several key strategies to meet these goals.
The Company is currently evaluating all of its businesses and product lines to
determine their full potential. The Company intends to eliminate businesses,
product categories and product lines that are not performing. There is now
greater corporate involvement in setting and achieving operational goals and the
Company has made the sharing of resources a top priority company-wide. In order
to meet the goal for profitable growth, the Company is focusing on maintaining
and strengthening relationships with its key customers and is looking to
increase sales to international markets with a target of 40% of sales and
profits coming from these markets. Lastly, the Company has recognized that it
needs to fill key positions with the most talented people from both inside and
outside the Company.
1(b) Industry Segment Information. Financial information regarding the
Company's industry segments is incorporated herein by reference from page 17 of
the Company's Annual Report to shareholders for the year ended December 30,
1995.
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1(c) Narrative Description of Business. The Company's operations are
classified into three industry segments: Tools, Hardware and Specialty Hardware.
Tools. The Tools segment manufactures and markets consumer, industrial and
engineered tools. Consumer tools includes hand tools such as measuring
instruments, planes, hammers, knives and blades, wrenches, sockets,
screwdrivers, saws, chisels, boring tools, masonry, tile and drywall tools,
paint preparation and paint application tools. Industrial tools includes
industrial and mechanics hand tools, including STANLEY-PROTO(R) industrial tools
and MAC(R) mechanics tools, and high-density industrial storage and retrieval
systems. Engineered tools includes STANLEY-BOSTITCH(R) fastening tools and
fasteners used for commercial, industrial, construction, packaging and consumer
use; hydraulic tools (these are hand-held hydraulic tools used by contractors,
utilities, railroads and public works as well as mounted demolition hammers and
compactors designed to work on skid steer loaders, mini-excavators, backhoes and
large excavators); and air tools (these are high performance, precision assembly
tools, controllers and systems for tightening threaded fasteners used chiefly by
vehicle manufacturers).
Hardware. The hardware segment manufactures and markets hardware products
ranging from hinges, hasps, shelf brackets, bolts, latches to a line of closet
organizing systems and mirrored closet doors, door hardware and wall mirrors.
Specialty Hardware. The specialty hardware segment manufactures and markets
residential insulated steel and reinforced fiberglass entrance door systems,
sectional roll up steel garage doors, automatic doors, remote control garage
door openers and electronic controls.
Competition. The Company competes on the basis of its reputation for product
quality, its well-known brands, its commitment to customer service and strong
customer relationships, the breadth of its product lines and its emphasis on
product innovation, and its manufacturing efficiencies. The Company is also
striving to find new customers both within the markets that it currently serves
and in new markets around the world.
The Company encounters active competition in all of its businesses from both
larger and smaller companies that offer the same or similar products and
services or that produce different products appropriate for the same uses. In
1995, the Company invested approximately $87 million in facilities, new
equipment, technology and software in order to achieve operational excellence in
manufacturing, new product innovation and enhanced customer service.
In the Company's consumer hand tool and consumer hardware
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businesses, a small number of competitors produce a range of products somewhat
comparable to the Company's, but the majority of its competitors compete only
with respect to one or more individual products within a particular line. The
Company believes that it is the largest manufacturer of consumer hand tools in
the world and that it offers the broadest line of such products. The Company
believes that its market position in the U.S. and Canada for consumer hardware
is comparable to or greater than that of its major competitors and that it
offers the broadest line of hinges and home hardware, which represents the most
important part of its hardware product sales.
In the Company's industrial tool business in the U.S., the Company believes
that it is a leading manufacturer of high-density industrial storage cabinets.
In the Company's engineered tool business in the U.S., the Company believes that
it is the leader in the manufacture and sale of pneumatic fastening tools and
related fasteners to professional contractors and to the furniture and pallet
industries as well as the leading manufacturer of hand-held and mounted
hydraulic tools.
In the Company's non-consumer hardware business in the U.S., the Company
believes that it is a leading manufacturer of residential hardware products,
mirrored closet doors and hardware for sliding, folding and pocket doors; and a
leading supplier of closet rods, supports, brackets and wall mirrors.
In the Company's specialty hardware business, the Company believes that it
is a leader in the U.S. with respect to the manufacture and sale of insulated
steel residential entrance doors and power-operated sliding and swinging doors.
Customers. A substantial portion of the Company's products are sold through
home centers and mass merchant distribution channels in the U.S. A consolidation
of retailers in these channels is occurring. These customers constitute a
growing percent of the Company's sales and are important to the Company's
operating results. While this consolidation and the geographic expansion of
these large retailers provide the Company with opportunities for growth, the
increasing size and importance of individual customers creates a certain degree
of exposure to potential volume loss. The loss of certain of the larger home
centers as customers would have a material adverse effect on each of the
Company's business segments until either such customers are replaced or the
Company makes the necessary adjustments to compensate for the loss of business.
The Company believes that the actions being taken in connection with one of the
five key initiatives of the Company's Restructuring Program, the initiative to
enhance customer relationships will help to preserve and strengthen these
relationships. These actions include: developing special partnership teams,
coordinating the Company's customer support systems to provide a wide variety of
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services from one source in the Company and improving logistics by consolidating
order fulfillment and distribution centers of the Company's consumer products
and centralizing credit services.
Raw Materials. The Company's products are manufactured primarily of steel
and other metals, although some are of wood or plastic. The raw materials
required are available from a number of sources at competitive prices and the
Company has relationships of long standing with many of its suppliers. The
Company has experienced no difficulties in obtaining supplies in recent periods.
Backlog. At February 3, 1996, the Company had approximately $137 million in
unfilled orders compared with $155 million in unfilled orders at February 4,
1995. All these orders are reasonably expected to be filled within the current
fiscal year. Most customers place orders for immediate shipment and as a result,
the Company produces primarily for inventory, rather than to fill specific
orders.
Patents and Trademarks. No segment of the Company's business is dependent,
to any significant degree, on patents, licenses, franchises or concessions and
the loss of such patents, licenses, franchises or concessions would not have a
material adverse effect on any segment. The Company owns numerous patents, none
of which are material to the Company's operations as a whole. These patents
expire from time to time over the next 17 years. The Company holds licenses,
franchises and concessions, none of which individually or in the aggregate is
material to the Company's operations as a whole. These licenses, franchises and
concessions vary in duration from one to 17 years.
The Company has numerous trademarks that are utilized in its businesses
worldwide. The STANLEY(R) and STANLEY (in a notched rectangle)(R) trademarks are
material to all three business segments. These well-known trademarks enjoy a
reputation for quality and value and are among the world's most trusted brand
names. In addition, in the Tools segment, the Bostitch(R), Powerlock(R), Tape
Rule Case Design (Powerlock)(R), LaBounty(R), MAC Tools(R), Proto(R), Jensen(R),
Goldblatt(R) and Vidmar(R) trademarks are material to the business.
Environmental Regulations. The Company is subject to various
environmental laws and regulations in the U.S. and foreign
countries where it has operations. Future laws and regulations
are expected to be increasingly stringent and will likely
increase the Company's expenditures related to environmental
matters.
The Company is involved with remedial and other environmental compliance
activities at some of its current and former sites. Additionally, the Company,
together with many
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other parties, has been named as a potentially responsible party ("PRP") in a
number of administrative proceedings for the remediation of various waste sites,
including nine Superfund sites. Current laws potentially impose joint and
several liability upon each PRP. In assessing its potential liability at these
sites, the Company has considered the following: the solvency of the other
PRP's, whether responsibility is being disputed, the terms of existing
agreements, experience at similar sites, and the fact that its volumetric
contribution at these sites is relatively small.
The Company's policy is to accrue environmental investigatory and
remediation costs for identified sites when it is probable that a liability has
been incurred and the amount of loss can be reasonably estimated. The amount of
liability recorded is based on an evaluation of currently available facts with
respect to each individual site and includes such factors as existing
technology, presently enacted laws and regulations, and prior experience in
remediation of contaminated sites. The liabilities recorded do not take into
account any claims for recoveries from insurance or third parties. As of
December 30, 1995, the Company had reserves of $24 million, primarily for
remediation activities associated with company-owned properties as well as for
Superfund sites.
The amount recorded for identified contingent liabilities is based on
estimates. Amounts recorded are reviewed periodically and adjusted to reflect
additional technical and legal information that becomes available. Actual costs
to be incurred in future periods may vary from the estimates, given the inherent
uncertainties in evaluating environmental exposures. Subject to the imprecision
in estimating future environmental costs, the Company does not expect that any
sum it may have to pay in connection with environmental matters in excess of the
amounts recorded will have a materially adverse effect on its financial
position, results of operations or liquidity.
Power-generating Subsidiary. Under the General Statutes of Connecticut, the
Company is deemed to be a "holding company" that controls an electric company as
a result of its being the sole shareholder of Farmington River Power Co., a
power-generating subsidiary of the Company since 1916. Under such statute, no
organization or person may take any action to acquire control of such a holding
company without the prior approval of the Connecticut Department of Public
Utility Control.
Employees. During 1995, the Company had approximately 19,000
employees, approximately 13,000 of whom were employed in the U.S.
Of these U.S. employees, approximately 21% are covered by
collective bargaining agreements with approximately 11 labor
unions. The majority of the Company's hourly- and weekly-paid
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employees outside the U.S. are covered by collective bargaining
agreements. The Company's labor agreements in the U.S. expire in
1996, 1997 and 1998. There have been no significant
interruptions or curtailments of the Company's operations in
recent years due to labor disputes. The Company believes that
its relationship with its employees is good.
1(d) Financial information about foreign and domestic operations and export
sales. Geographic area information on page 17 of the Annual Report to
shareholders for the year ended December 30, 1995 is incorporated herein by
reference.
Item 2. Properties.
As of December 30, 1995, Registrant and its subsidiaries owned or leased
facilities for manufacturing, distribution and sales offices in 29 states and 34
foreign countries. The Registrant believes that its facilities are suitable and
adequate for its business. The Registrant utilizes approximately 13,400,000
square feet of floor space in its business, of which approximately 3,600,000
square feet of floor space is leased.
A summary of material locations (over 50,000 square feet) that are owned by
the Registrant and its subsidiaries are:
Tools
Phoenix, Arizona; Visalia, California; Clinton and New Britain, Connecticut;
Atlanta, Georgia; Shelbyville, Indiana; Kansas City, Kansas; Worcester,
Massachusetts; Two Harbors, Minnesota; Hamlet and Sanford, North Carolina;
Claremont, New Hampshire; Columbus, Georgetown, Sabina and Washington Court
House, Ohio; Allentown, Royersford and York, Pennsylvania; East Greenwich, Rhode
Island; Cheraw, South Carolina; Pulaski and Shelbyville, Tennessee; Dallas and
Wichita Falls, Texas; Pittsfield and Shaftsbury, Vermont; Hedelberg West,
Ingleburn and Moonah, Australia; Sao Paulo, Brazil; Smiths Falls and Toronto,
Canada; Pecky, Czech Republic; Ecclesfield, Hellaby, Manchester and Sheffield,
England; Besancon Cedex and Maxonchamp, France; Wieseth, Germany; Surabaya,
Indonesia; Puebla, Mexico; Taichung Hsien, Taiwan; and Amphur Bangpakong,
Thailand.
Hardware
Chatsworth and San Dimas, California; New Britain, Connecticut; Richmond,
Virginia; Brampton and New Hamburg, Canada; Sheffield, England; and Marquette,
France.
Specialty Hardware
Farmington, Connecticut; Birmingham, Novi and Troy, Michigan;
and Covington, Ohio.
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A summary of material locations (over 50,000 square feet) that are leased by
the Registrant and its subsidiaries are:
Tools
Costa Mesa and Rancho Cucamonga, California; Covington, Georgia; Charlotte,
North Carolina; Cleveland and Columbus, Ohio; Milwaukie, Oregon; Carrollton,
Texas; Burlington and Mississauga, Canada; Northampton, England; and Saverne,
France.
Hardware
Lenexa, Kansas; Tupelo, Mississippi; and Oakville, Ontario.
Specialty Hardware
Rancho Cucamonga, California; Orlando, Florida; Winchester,
Virginia; Langley and Montreal, Canada.
Item 3. Legal Proceedings.
In the normal course of business, the Company is involved in various
lawsuits and claims, including product liability and distributor claims. The
Company does not expect that the resolution of these matters will have a
material adverse effect on the Company's consolidated financial position,
results of operations or liquidity.
In March 1993, the U.S. Environmental Protection Agency issued a Notice
of Violation and Reporting Requirement to the Company's wholly-owned subsidiary
Stanley-Bostitch, Inc. alleging violation of Air Pollution Control Regulation
No. 15 and source specific requirements of the Rhode Island state implementation
plan and the Clean Air Act at the Stanley-Bostitch facility in East Greenwich,
Rhode Island. In November 1993, the U.S. Environmental Protection Agency issued
a Notice of Violation and Draft Administrative Order to Stanley-Bostitch
alleging violation of Air Pollution Control Regulation No. 9 of the Rhode Island
state implementation plan and the Clean Air Act at the Stanley Bostitch facility
in East Greenwich, Rhode Island. The violations have been corrected and these
matters were settled for $225,000 on January 12, 1996.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted during the fourth quarter of the Registrant's last
fiscal year to a vote of security holders.
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Executive Officers. The following is a list of the executive officers
of the Registrant:
Elected
Name, Age, Birth date Office to Office
- --------------------- ------ ---------
R.H. Ayers (53) Chairman, President and Chief Executive 4/19/89
(10/12/42) Officer. Joined Stanley in 1972;
1985 Chief Operating Officer and
President; 1987 President and Chief
Executive Officer.
B.W. Bennett(52) Vice President, Human Resources. Joined 7/1/92
(6/4/43) Stanley in 1984 as Taylor Rental Train-
ing Manager; 1990 Director, Organi-
zation Development; 1991 Vice President,
Human Resources, Stanley Access
Technologies.
J.B. Gustafson (52) Vice President, Information Systems. 1/1/90
(5/10/43) Joined Stanley in 1977; 1986 Director
of Information Systems.
R. Huck (51) Vice President, Finance and Chief 7/1/93
(2/22/45) Financial Officer. Joined Stanley
in 1970; 1987 Controller, Stanley Tools;
1990 Vice President and Controller.
R.A. Hunter (49) President and Chief Operating Officer. 7/1/93
(12/15/46) Joined Stanley in 1974; 1987 Vice
President, Finance and Chief Financial
Officer.
T.E. Mahoney (54) Vice President, Marketing Development 6/5/95
(3/20/42) and President and General Manager of
Stanley Customer Support Division.
Joined Stanley in 1965; 1988 President
and General Manager, National Hand Tools
business unit; 1992 President and General
Manager, Stanley Hardware.
P.W. Russo (42) Vice President, Strategy and Development. 9/18/95
(5/22/53) Joined Stanley in 1995; 1991 Co-Chairman
and Co-Chief Executive Officer, SV Corp.
(formerly Smith Valve Corp.); 1988
Co-founder and Managing Director,
Cornerstone Partners Limited.
S.S. Weddle (57) Vice President, General Counsel 1/1/88
(11/9/38) and Secretary. Joined Stanley in 1978.
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T. F. Yerkes (40) Vice President and Controller. Joined 7/1/93
(9/9/55) Stanley in 1989 from Ernst & Young,
certified public accountants; 1989
Director of Consolidations and
Accounting Services; 1990 Director
of Accounting and Financial Reporting.
Executive officers serve at the pleasure of the Board of Directors. Unless
otherwise indicated, each officer has had the same position with the Registrant
for five years.
Part II
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters. Registrant incorporates by reference the line item
"Shareholders of record at end of year" from pages 18 and 19 and the material
captioned "Investor Information" on page 37 of its Annual Report to shareholders
for the year ended December 30, 1995.
Item 6. Selected Financial Data. Registrant incorporates by reference
pages 18 and 19 of its Annual Report to shareholders for the year ended December
30, 1995.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations. Registrant incorporates by reference pages 20 through 23
of its Annual Report to shareholders for the year ended December 30, 1995.
Item 8. Financial Statements and Supplementary Data. The consolidated
financial statements and report of independent auditors included on pages 24 to
36 and page 16, respectively, of the Annual Report to shareholders for the year
ended December 30, 1995 are incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure. None.
Part III
Item 10. Directors and Executive Officers of the Registrant. Registrant
incorporates by reference pages 2 through 6 of its definitive Proxy Statement,
dated March 6, 1996.
Item 11. Executive Compensation. Registrant incorporates by reference
the last paragraph of "Information Concerning Directors Continuing in Office" on
page 6 and the material captioned "Executive Compensation" on pages 8 through 15
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of its definitive Proxy Statement, dated March 6, 1996.
Item 12. Security Ownership of Certain Beneficial Owners and
Management. Registrant incorporates by reference the material captioned
"Security Ownership" on pages 6 and 7 of its definitive Proxy Statement, dated
March 6, 1996.
Item 13. Certain Relationships and Related Transactions. None.
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PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K.
14(a) Index to documents filed as part of this report:
1. and 2. Financial Statements and Financial Statement Schedules.
The response to this portion of Item 14 is submitted as a separate section of
this report (see page F-1).
3. Exhibits
See Exhibit Index on page E-1.
14(b) The following reports on Form 8-K were filed during the last
quarter of the period covered by this report:
Date of Report Items Reported
-------------- --------------
October 5, 1995 Press release, dated October 5,
1995, announcing the Company's
plans to close a manufacturing
plant. Press Release, dated
October 9, 1995 announcing the
Company's initial phase of
restructuring.
October 18, 1995 Press release dated October
18, 1995 announcing third
quarter results.
14(c) See Exhibit Index on page E-1.
14(d) The response to this portion of Item 14 is submitted as a separate
section of this report (see page F-1).
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
By Richard H. Ayers
----------------------------
Richard H. Ayers, Chairman
and Chief Executive Officer
February 28, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on February 28, 1996 by the following persons on
behalf of the Registrant and in the capacities indicated.
Richard H. Ayers Eileen S. Kraus
- ----------------------------- ------------------------------
Richard H. Ayers, Chairman, Eileen S. Kraus, Director
Chief Executive Officer and
Director
Richard Huck George A. Lorch
- ----------------------------- ------------------------------
Richard Huck, Vice President, George A. Lorch, Director
Finance and Chief Financial
Officer
Theresa F. Yerkes Walter J. McNerney
- ----------------------------- ------------------------------
Theresa F. Yerkes, Vice President Walter J. McNerney, Director
and Controller (Chief Accounting
Officer)
Stillman B. Brown Gertrude G. Michelson
- ----------------------------- ------------------------------
Stillman B. Brown, Director Gertrude G. Michelson, Director
Edgar R. Fiedler John S. Scott
- ----------------------------- ------------------------------
Edgar R. Fiedler, Director John S. Scott, Director
Mannie L. Jackson Walter W. Williams
- ----------------------------- ------------------------------
Mannie L. Jackson, Director Walter W. Williams, Director
James G. Kaiser
- -----------------------------
James G. Kaiser, Director
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FORM 10-K--ITEM 14(a) (1) and (2)
THE STANLEY WORKS AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statements and report of independent
auditors of The Stanley Works and subsidiaries, included in the Annual Report of
the Registrant to its shareholders for the fiscal year ended December 30, 1995,
are incorporated by reference in Item 8:
Report of Independent Auditors
Consolidated Statements of Earnings--fiscal years ended December 30, 1995,
December 31, 1994 and January 1, 1994.
Consolidated Balance Sheets--December 30, 1995 and December 31, 1994.
Consolidated Statements of Cash Flows--fiscal years ended December 30, 1995,
December 31, 1994 and January 1, 1994.
Consolidated Statements of Changes in Shareholders' Equity--fiscal years
ended December 30, 1995, December 31, 1994 and January 1, 1994.
Notes to Consolidated Financial Statements.
The following consolidated financial statement schedule of The Stanley Works
and subsidiaries is included in Item 14(d):
F-4 Schedule -- II--Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.
F-1
16
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of The Stanley Works of our report dated January 31, 1996, included in the 1995
Annual Report to Shareholders of The Stanley Works.
Our audits also included the consolidated financial statement schedule of The
Stanley Works listed in Item 14(a). This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
We also consent to the incorporation by reference in the following registration
statements of our report dated January 31, 1996, with respect to the
consolidated financial statements incorporated herein by reference, and our
report included in the preceding paragraph with respect to the consolidated
financial statement schedule included in this Annual Report (Form 10-K) of The
Stanley Works.
Registration Statement (Form S-8 No. 2-93025)
Registration Statement (Form S-8 No. 2-96778)
Registration Statement (Form S-8 No. 2-97283)
Registration Statement (Form S-8 No. 33-16669)
Registration Statement (Form S-3 No. 33-12853)
Registration Statement (Form S-3 No. 33-19930)
Registration Statement (Form S-8 No. 33-39553)
Registration Statement (Form S-8 No. 33-41612)
Registration Statement (Form S-3 No. 33-46212)
Registration Statement (Form S-3 No. 33-47889)
Registration Statement (Form S-8 No. 33-55663)
Registration Statement (Form S-8 No. 33-62565)
Registration Statement (Form S-8 No. 33-62567)
Registration Statement (Form S-8 No. 33-62575)
ERNST & YOUNG LLP
Hartford, Connecticut
March 22, 1996
F-2
17
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the following registration
statements pertaining to The Stanley Works 401(k) Savings Plan of our report
dated March 22, 1996, with respect to the financial statements and schedules of
The Stanley Works 401(k) Savings Plan for the year ended December 31, 1995
included as Exhibit 99(i) to this Annual Report (Form 10-K) for the fiscal year
ended December 30, 1995.
Registration Statement (Form S-8 No. 2-97283)
Registration Statement (Form S-8 No. 33-41612)
Registration Statement (Form S-8 no. 33-55663)
ERNST & YOUNG LLP
Hartford, Connecticut
March 22, 1996
F-3
18
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
THE STANLEY WORKS AND SUBSIDIARIES
Fiscal years ended December 30, 1995, December 31, 1994, and January 1, 1994 (In
Millions of Dollars)
- ---------------------------------------------------------------------------------------------------------
COL. A | COL. B | COL. C | COL. D | COL. E
- --------------------------------------|----------|----------------------------------|----------|-------
| | Additions | |
|Balance at|----------------------------------| |Balance
Description |Beginning | (1) | (2) |Deductions|at End
|Of Period |Charged to Costs|Charged to Other |-Describe |of Period
| | and Expenses |Accounts-Describe| |
- --------------------------------------------------------------------------------------------------------
Fiscal year ended December 30, 1995
Reserves and allowances deducted
from asset accounts:
Allowance for doubtful accounts:
Current $20.9 $9.7 $0.3 (B) $12.8 (A) $18.2
0.1 (C)
Noncurrent 0.5 0.3 0.8
Fiscal year ended December 31, 1994
Reserves and allowances deducted
from asset accounts:
Allowance for doubtful accounts:
Current $24.8 $8.2 $(0.1)(B) $12.0 (A) $20.9
Noncurrent 0.0 0.5 (B) 0.5
Fiscal year ended January 1, 1994
Reserves and allowances deducted
from asset accounts:
Allowance for doubtful accounts:
Current $22.9 $12.7 $6.0 (B) $18.4 (A) $24.8
1.6 (C)
Noncurrent 0.0 0.0
Notes: (A) Represents doubtful accounts charged off, less recoveries of
accounts previously charged off.
(B) Represents net transfers from other accounts and foreign currency
translation adjustments.
(C) Represents opening balances related to acquired companies.
F-4
19
EXHIBIT LIST
(3) (i) Restated Certificate of Incorporation
(incorporated by reference to Exhibit (3)(i) to
Quarterly Report on Form 10-Q for quarter ended
July 1, 1995)
(ii) By-laws (incorporated by reference to Exhibit
(3)(i) to Annual Report on Form 10-K for the
year ended December 31, 1994)
(4) (i) Indenture defining the rights of holders of 7-3/8%
Notes Due December 15, 2002 and 9% Notes due 1998
(incorporated by reference to Exhibit 4(a) to
Registration Statement No. 33-4344 filed March
27, 1986)
(ii) First Supplemental Indenture, dated as of June 15, 1992 between
the Company and Shawmut Bank Connecticut, National Association
(formerly known as The Connecticut National Bank) (incorporated
by reference to Exhibit (4)(c) to Registration Statement No.
33-46212 filed July 21, 1992)
(a) Certificate of Designated Officers establishing Terms
of 9% Notes (incorporated by reference to Exhibit
(4)(i)(c) to Annual Report on Form 10-K for year
ended January 2, 1988)
(b) Certificate of Designated Officers establishing Terms
of 7-3/8% Notes Due December 15, 2002 (incorporated
by reference to Exhibit (4)(ii) to Current Report on
Form 8-K dated December 7, 1992)
(iii) Rights Agreement, dated January 31, 1996 (incorporated by
reference to Exhibit (4)(i) to Current Report on Form 8-K dated
January 31, 1996)
(iv) Facility A (364 Day) Credit Agreement, dated as of October
25, 1995, with the banks named therein and Citibank, N.A.
as agent
(v) Facility B (Five Year) Credit Agreement, dated as of
October 25, 1995, with the banks named therein and
Citibank, N.A. as agent
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20
(10) (i) Executive Agreements (incorporated by reference
to Exhibit 10(i) to Annual Report on Form 10-K
for year ended January 3, 1987)*
(ii) Deferred Compensation Plan for Non-Employee Directors as amended
January 31, 1996 (incorporated by reference to Exhibit 10(i) to
Current Report on Form 8-K dated January 31, 1996)*
(iii) 1988 Long-Term Stock Incentive Plan (incorporated by reference
to Exhibit 10(v) to Annual Report on Form 10-K for year ended
December 31, 1988)*
(iv) Management Incentive Compensation Plan effective
January 1, 1996*
(v) Deferred Compensation Plan for Participants in
Stanley's Management Incentive Plan effective
January 1, 1996*
(vi) Restated Supplemental Retirement and Savings Plan
for Salaried Employees of The Stanley Works
effective as of January 1, 1996*
(vii) Term Loan Agreement dated as of May 13, 1988
between the Savings and Retirement Trust for
Salaried Employees and Wachovia Bank and Trust
Company N.A. and related Guaranty dated as of May
13, 1988 from The Stanley Works to Wachovia Bank
and Trust Company, N.A. (incorporated by
reference to Exhibit 10(x) to Annual Report on
Form 10-K for year ended December 31, 1988)
(viii) Loan and Guarantee Agreement dated as of June 6,
1989 among The Stanley Works Savings Trust for
Hourly Paid Employees, The Stanley Works and
Wachovia Bank and Trust Company, N.A.,
Massachusetts Mutual Life Insurance Company and
The Lincoln National Life Insurance Company
(incorporated by reference to Exhibit 10(i) to
Quarterly Report on Form 10-Q for quarter ended
July 1, 1989)
(a) First Amendment to Loan and Guarantee Agreement dated as of
February , 1993 (incorporated by reference to Exhibit
10(viii)(a) to Annual Report on Form 10-K for year ended
December 31, 1994)
(ix) Loan and Guarantee Agreement dated as of June 6,
* Management contract or compensation plan or arrangement
E-2-
21
1989 among The Stanley Works Savings and Retirement Trust, The
Stanley Works and Wachovia Bank and Trust Company, N.A.,
Massachusetts Mutual Life Insurance Company, The Lincoln
National Life Insurance Company, First Penn Pacific Life
Insurance Company, Security-Connecticut Life Insurance Company-
Universal Life, Lincoln National Life Reinsurance Company and
American States Life Insurance Company-Universal Life
(incorporated by reference to Exhibit (10)(ii) to Quarterly
Report on Form 10-Q for quarter ended July 1, 1989)
(a) First Amendment to Loan and Guarantee Agreement dated as of
February , 1993 (incorporated by reference to Exhibit 10(ix)(a)
to Annual Report on Form 10-K for year ended December 31, 1994)
(x) Assignment and Assumption Agreement and Second
Amendment to Loan and Guarantee Agreements, dated
as of September 30, 1994, among The Stanley Works
Savings Trust for Hourly Paid Employees, The
Stanley Works Savings and Retirement Trust, The
Stanley Works and the Financial Institutions
named in Schedules I and II thereto (incorporated by
reference to Exhibit 10(x) to Annual Report on Form 10-K
for year ended December 31, 1994)
(xi) Receivables Purchase Agreement dated as of
December 1, 1993, among THE STANLEY WORKS, MAC
TOOLS, INC., STANLEY BOSTITCH, INC., the
PURCHASERS listed on the signature pages thereof,
and WACHOVIA BANK OF GEORGIA, NATIONAL
ASSOCIATION, as Agent (incorporated by reference
to Exhibit (10) (xii) to Annual Report on Form
10-K for year ended January 1, 1994)
(a) First Amendment to Receivables Purchase Agreement,
dated as of December 20, 1995, among The Stanley Works,
Stanley Mechanics Tools, Inc. (formerly known as Mac
Tools, Inc.), Stanley-Bostitch, Inc. and the Purchasers
listed on the signature pages thereof and Wachovia
Bank of Georgia, N.A. as Agent
(xii)(a) The Stanley Works Non-Employee Directors' Benefit Trust
Agreement dated December 27, 1989 and amended as of January 1,
1991 by and between The Stanley Works and Connecticut National
Bank (incorporated by reference to Exhibit (10)(xvii)(a) to
Annual Report on Form 10-K for year ended December 29, 1990)
(b) The Stanley Works Employees' Benefit Trust
Agreement dated December 27, 1989 and amended as
E-3-
22
of January 1, 1991 by and between The Stanley Works and
Connecticut National Bank (incorporated by reference to Exhibit
(10)(xvii)(b) to Annual Report on Form 10-K for year ended
December 29, 1990)
(xiii) Restated and Amended 1990 Stock Option Plan (incorporated by
reference to Exhibit 10(xiii) to the Annual Report on Form 10-K
for the year ended December 31, 1994)*
(xiv) Term Note, dated as of June 7, 1991, by State
Street Bank and Trust Company, as Trustee for the
Savings Plan for Salaried Employees of The
Stanley Works, to Stanley Works Funding
Corporation (incorporated by reference to Exhibit (10)(xxi) to
Current Report on Form 8-K dated June 7, 1991)
(xv) Term Note, dated as of June 7, 1991, by State Street Bank and Trust
Company, as Trustee for the Savings Plan for Hourly Paid Employees of
The Stanley Works, to Stanley Works Funding Corporation (incorporated
by reference to Exhibit (10)(xxii) to Current Report on Form 8-K
dated June 7, 1991)
(xvi) Master Leasing Agreement, dated September 1, 1992 between BLC
Corporation and The Stanley Works (incorporated by reference to
Exhibit (10)(i) to Quarterly Report on Form 10-Q for quarter ended
September 26, 1992)
(xvii) The Stanley Works Stock Option Plan for Nonemployee Directors
(incorporated by reference to Exhibit 10(xvii) to the Annual Report
on Form 10-K for the year ended December 31, 1994)*
(11) Statement re computation of per share earnings
(12) Statement re computation of ratio of earnings to
fixed charges
(13) Annual Report to shareholders for year ended
December 30, 1995
(21) Subsidiaries of Registrant
(23) Consents of Independent Auditors (at page F-2 and
F-3
* Management contract or compensation plan or arrangement
E-4-
23
(27) Financial Data Schedule
(99) (i) Financial Statements and report of independent auditors for the
year ended December 31, 1995, of The Stanley Works 401(k) Savings
Plan
(ii) Policy on Confidential Proxy Voting and Independent Tabulation and
Inspection of Elections as adopted by The Board of Directors
October 23, 1991 (incorporated by reference to Exhibit (28)(i) to
Quarterly Report on Form 10-Q for quarter ended September 28, 1991)
E-5-