SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 26, 2004
The Stanley Works
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(Exact name of registrant as specified in charter)
Connecticut 1-5244 06-0548860
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) No.)
1000 Stanley Drive, New Britain, Connecticut 06053
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (860) 225-5111
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Not Applicable
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(Former name or former address, if changed since last report)
Exhibit Index is located on Page 4
Page 1 of 19
Item 7. Financial Statements and Exhibits.
----------------------------------
(c) 99.1 Press Release dated April 26, 2004 announcing first quarter
2004 results and providing second quarter and full year 2004
guidance furnished pursuant to Item 12 hereof.
Item 12. In a press release attached to this Form 8-K, the company reported
its results for the first quarter of 2004, provided guidance for the
second quarter and full year 2004 and elaborated on certain other
activities.
Page 2 of 19
SIGNATURE
Pursuant to the requirements 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
Date: April 26, 2004 By: /s/ Bruce H. Beatt
-------------- -------------------------------
Name: Bruce H. Beatt
Title: Vice President, General
Counsel and Secretary
Page 3 of 19
EXHIBIT INDEX
Current Report on Form 8-K
Dated April 26, 2004
Exhibit No. Page
----------- ----
99.1 5
Page 4 of 19
Exhibit 99.1
------------
FOR IMMEDIATE RELEASE
Stanley Reports Record 1st Quarter Revenue and Earnings Per Share
Revenue Up 23 percent; Continuing Operations' EPS Totals 70 cents
New Britain, Connecticut, April 26, 2004 ... The Stanley Works (NYSE: SWK)
announced that first quarter 2004 net income from continuing operations was $59
million (70 cents per fully-diluted share), surpassing the company's estimates
of 63-67 cents per fully-diluted share provided on March 16, as strong organic
sales growth continued throughout March. These results compare with earnings of
$19 million (22 cents per fully-diluted share) in the first quarter of 2003;
such prior year results included pre-tax restructuring costs, impairment charges
and other exit costs totaling $17 million pre-tax, or 13 cents per fully diluted
share. Aside from these costs, prior year earnings per fully diluted share were
35 cents.
Net sales from continuing operations were $779 million, up 23 percent over last
year. Excluding the effects of recent acquisitions (CST / Berger, Blick plc and
Frisco Bay Industries) sales increased 16 percent. Strong demand continued from
home center and mass merchant customers; industrial tool demand benefited from
notably improved economic conditions; Security Solutions revenues increased
sharply on service-related share gains primarily at national accounts; and both
Europe and Asia benefited from currency translations. As a result, double-digit
percentage organic sales growth was achieved in nine of thirteen business units,
including hand tools, consumer and industrial mechanics tools, fastening systems
and Security Solutions.
John F. Lundgren, Chairman and Chief Executive Officer, stated: "Our team
delivered a solid start to 2004 by executing our strategy and serving our
customers well, at a time when economic conditions are improving. The company is
generating double-digit percentage organic growth and supplementing it with
accretive acquisitions. The successful sale of our residential entry door
business and our strong free cash flow should enable us to achieve our
short-term de-leveraging objectives, while positioning us to capitalize on
further growth opportunities over the longer term."
Gross profit from continuing operations was $279 million, or 35.9 percent of
sales, versus $213 million in the prior year. First quarter 2003 included $4
million of impairment charges and other exit costs related to the termination of
the Mac Direct distribution model. Aside from such costs, gross margin was 34.3
percent last year. Thus an improvement of 160bps was realized, attributable to
the carryover benefit of 2003 restructuring programs, volume leverage, the
inclusion of higher-margin acquired businesses and favorable pricing and product
mix. These benefits were partially offset by higher steel costs and other
inflation.
Selling, general and administrative ("SG&A") expenses from continuing operations
were $173 million (22.2 percent of sales). Aside from $10 million of costs
Page 5 of 19
relating primarily to the exiting of Mac Direct, prior year SG&A expenses were
$158 million, or 24.9 percent of sales. Businesses acquired in 2004 accounted
for virtually all of the $15 million increase in SG&A expenses and the remainder
of the business portfolio held SG&A spending levels constant despite the 16
percent organic sales increase; thus an improvement of 270bps was realized.
Operating income was $107 million versus $59 million last year and operating
margins were 13.7 percent versus 9.4 percent last year, excluding prior year
impairment charges and other exit costs referred to above.
Other-net expenses of $14 million, versus $7 million last year, increased
principally due to $2 million of legal settlements, $2 million of incremental
amortization of acquired intangibles and $1 million asset write-off.
On March 2, the company completed the sale of its residential entry door
business to Masonite International Corporation (NYSE: MHM) for $162 million.
Included in the first quarter results is the resulting after-tax gain from
discontinued operations of $95 million, or $1.14 per fully diluted share.
The company also announced today that it has changed its segment reporting to
align with recent changes in its portfolio of businesses. The company will
report the following three segments: Consumer Products, Industrial Tools and
Security Solutions. Realignment schedules reflecting sales and operating income
for the four quarters of and full year 2003, identifiable assets at the end of
2003 and a listing of business units included in each segment are included as
page 11 of this release and can be found in the Investor Relations section of
the company's web site at www.stanleyworks.com.
In the first quarter of 2004, Consumer Products sales increased 21 percent to
$306 million, due to the aforementioned strength in home center and mass
merchant channels in the U.S. and favorable currency impacts in Europe.
Operating margin was 15.7 percent versus 12.6 percent last year, due primarily
to favorable price, mix and operating leverage from higher sales volumes.
Industrial Tools sales increased 16 percent to $316 million. Excluding
CST/Berger, acquired in the first quarter, Industrial Tools organic sales
increased 11 percent to $303 million. Notably improved economic conditions in a
number of the business units - including fastening systems, industrial mechanics
tools and tool storage - brought about the improvement. Mac Tools revenues were
essentially flat, a strong performance as traditional distributor additions and
higher route average sales offset the anticipated decline from last year's Mac
Direct exit. Exclusive of $14 million of impairment charges and exit costs
incurred in the prior year, first quarter Industrial Tools operating margin was
9.5 percent vs. 4.1 percent in 2003, due to higher volume and carryover benefits
of prior year restructuring.
Security Solutions sales increased 46 percent to $157 million. Excluding Blick
plc and Frisco Bay Industries, acquired in the first quarter, Security Solutions
Page 6 of 19
organic sales increased 15 percent to $124 million, on exceptional strength in
the supply and service of automatic commercial door systems in Access
Technologies. Operating margin increased to 18.4 percent versus 15.3 percent
last year, due to higher sales volumes and the impacts of including
higher-margin acquired businesses.
Operating cash flows were $52 million in both the first quarters of 2004 and
2003, as working capital levels were closely managed during this period of
strong sales volume growth. Free cash flows before dividends (cash from
operations less capital expenditures) were $44 million in the first quarters of
both years, reflecting the cash flow from operations and continued effective
management of capital expenditures.
Management also updated earnings estimates for 2004, projecting total sales
growth of approximately 20 percent and organic sales growth, aside from the
effects of acquisition and divestiture activity, of approximately 10-12 percent
in the second quarter of 2004. For the full year 2004, total sales growth of
approximately 17 percent, including organic sales growth of approximately 10
percent, are projected.
The company experienced a significant impact from broadly-publicized and
unprecedented levels of commodity price inflation (particularly steel) in the
first quarter and is actively pursuing price increases across all channels. Such
efforts are gaining acceptance, but with traditional timing impacts. Steel cost
increases will have a more substantial impact in the second quarter and beyond,
while offsetting price increases will phase in over the second and subsequent
quarters.
Based on these sales and material cost inflation outlooks, the company expects
second quarter 2004 earnings from continuing operations to approximate 63-67
cents per fully diluted share, versus 11 cents earned last year, and up 30-40
percent over 48 cents per share earned last year from continuing operations on a
basis excluding charges.
Full year 2004 earnings from continuing operations are expected to approximate
$2.75-$2.85 per fully diluted share versus $1.14 earned last year, and up 30-35
percent over $2.10 per share earned from continuing operations last year on a
basis excluding charges. The company expects full year 2004 free cash flow to
approximate $250 - $300 million.
The company has scheduled a conference call with investors for 11am EDT this
morning to discuss the information in this release. The call is accessible by
telephone at (800) 267-8424 and via the Internet at www.stanleyworks.com by
selecting "Investor Relations". A replay will also be available two hours after
the call and can be accessed at 800-642-1687 by entering the conference
identification number 4970276.
Prior-year reported earnings within this release were supplemented with related
amounts and percentages that excluded restructuring costs, impairment charges
and other exit costs. Management believes these supplemental financial measures
provide useful information by removing the effect of variances in reported
Page 7 of 19
results that, at that time, were not indicative of fundamental changes in the
company's earnings capacity. A full reconciliation with reported amounts is
included on page 10.
The Stanley Works, an S&P 500 company, is a worldwide supplier of consumer
products, industrial tools and security solutions for professional, industrial
and consumer use. More information about The Stanley Works can be found at
http://www.stanleyworks.com.
Contact: Gerry Gould, V. P. - Investor Relations
(860) 827-3833 or ggould@stanleyworks.com
The Stanley Works corporate press releases are available on the company's
Internet web site at http://www.stanleyworks.com.
CAUTIONARY STATEMENTS
Under the Private Securities Litigation Reform Act of 1995
Statements in the company's press releases attached to this Current Report on
Form 8-K regarding the company's ability to (i) achieve its short-term
de-leveraging objectives and position itself to capitalize on further growth
opportunities over the longer term; (ii) achieve total sales growth of
approximately 20 percent and organic sales growth, aside from the effects of
acquisition and divestiture activity, of approximately 10-12 percent in the
second quarter of 2004; (iii) achieve full year 2004 total sales growth of
approximately 17 percent, including organic sales growth of approximately 10
percent; (iv) pursue and achieve price increases across all channels; (v)
achieve second quarter 2004 earnings from continuing operations of approximately
63-67 cents per fully diluted share; (vi) achieve full year 2004 earnings from
continuing operations of approximately $2.75-$2.85 per fully diluted share; and
(vii) achieve full year 2004 free cash flow of approximately $250 to $300
million are forward looking and inherently subject to risk and uncertainty.
The company's ability to deliver the results as described above (the "Results")
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.
The company's ability to deliver the Results is dependent upon (i) the success
of the company in integrating its recently completed acquisitions; (ii) the
success of the company's efforts to raise prices in order to, among other
things, offset the impact of steel and other commodity and material price
inflation; (iii) the success of the company's efforts to reduce its workforce
and close certain facilities, including the resolution of any labor issues
related to such activities, the need to respond to significant changes in
product demand while any facility consolidation is in process and other
Page 8 of 19
unforeseen events; (iv) continued improvements in productivity and cost
reductions; (v) the continued improvement in the payment terms under which the
company buys and sells goods, materials and products; (vi) continued access to
capital markets and (vii) the recovery of sales volume attributable to the
company's sale of its residential entry doors business.
The company's ability to deliver the Results is also dependent upon (i) the
continued success of the company's marketing and sales efforts, including the
company's ability to recruit and retain an adequate sales force; (ii) the
continued success of The Home Depot and Wal-Mart sales initiatives as well as
other programs to stimulate demand for company products; (iii) the success of
recruiting programs and other efforts to maintain or expand overall Mac Tools
truck count versus prior years; (iv) the ability of the sales force to adapt to
changes made in the sales organization and achieve adequate customer coverage;
(v) the ability of the company to fulfill increasing demand for its products;
(vi) the ability to continue successfully managing and defending claims and
litigation; and (vii) the absence of increased pricing pressures from customers
and competitors and the ability to defend market share in the face of price
competition.
The company's ability to achieve the Results will also be affected by external
factors. These external factors will also include pricing pressure and other
changes within competitive markets, the continued consolidation of customers in
consumer channels, inventory management pressures on the company's customers,
increasing competition, changes in trade, monetary, tax and fiscal policies and
laws, changes in steel and other commodities and materials, inflation, currency
exchange fluctuations, the impact of dollar/foreign currency exchange and
interest rates on the competitiveness of products and the company's debt
program, the strength of the U.S. Economy and the impact of events that cause or
may cause disruption in the company's distribution and sales networks such as
war, terrorist activities, political unrest and recessionary or expansive trends
in the economies of the world in which the company operates.
The company undertakes no obligation to publicly update or revise any
forward-looking statements to reflect events or circumstances that may arise
after the date hereof.
Page 9 of 19
THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, Millions of Dollars Except Per Share Amounts)
First Quarter
-----------------------
2004 2003
--------- ---------
NET SALES $ 778.6 $ 632.2
COSTS AND EXPENSES
Cost of sales 499.2 418.8
Selling, general and administrative 172.5 167.8
Interest - net 8.0 7.8
Other - net 14.1 7.4
Restructuring charges - 3.1
--------- ---------
693.8 604.9
EARNINGS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 84.8 27.3
Income taxes 26.3 8.3
--------- ---------
NET EARNINGS FROM CONTINUING OPERATIONS 58.5 19.0
Earnings from discontinued operations (including
gain on disposal of $147.2 million) before
income taxes 142.6 0.2
Income taxes on discontinued operations 47.6 -
--------- ---------
NET EARNINGS FROM DISCONTINUED OPERATIONS 95.0 0.2
--------- ---------
NET EARNINGS $ 153.5 $ 19.2
========= =========
BASIC EARNINGS PER SHARE OF COMMON STOCK
Continuing operations $ 0.72 $ 0.22
Discontinued operations 1.16 $ -
--------- ---------
TOTAL basic earnings per share of common stock $ 1.88 $ 0.22
DILUTED EARNINGS PER SHARE OF COMMON STOCK
Continuing operations $ 0.70 $ 0.22
Discontinued Operations 1.14 -
--------- ---------
TOTAL diluted earnings per share of common stock $ 1.84 $ 0.22
DIVIDENDS PER SHARE $ 0.26 $ 0.26
========= =========
AVERAGE SHARES OUTSTANDING (in thousands)
Basic 81,628 87,815
========= =========
Diluted 83,392 88,478
========= =========
Page 10 of 19
THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited, Millions of Dollars)
April 3, 2004 January 3, 2004
------------- ---------------
ASSETS
Cash and cash equivalents $ 192.5 $ 204.4
Accounts receivable 572.9 482.4
Inventories 397.7 377.1
Other current assets 107.1 98.9
Assets held for sale 5.0 37.9
--------- ---------
TOTAL current assets 1,275.2 1,200.7
--------- ---------
Property, plant and equipment 421.5 413.3
Goodwill and other intangibles 876.2 643.3
Other assets 205.3 166.5
--------- ---------
$ 2,778.2 $ 2,423.8
========= =========
LIABILITIES AND SHAREOWNERS' EQUITY
Short-term borrowings $ 240.1 $ 157.7
Accounts payable 281.3 240.2
Accrued expenses 418.8 326.4
Liabilities held for sale - 29.2
--------- ---------
TOTAL current liabilities 940.2 753.5
--------- ---------
Long-term debt 547.3 534.5
Other long-term liabilities 286.6 277.2
Shareowners' equity 1,004.1 858.6
--------- ---------
$ 2,778.2 $ 2,423.8
========= =========
Page 11 of 19
THE STANLEY WORKS AND SUBSIDIARIES
SUMMARY OF CASH FLOW ACTIVITY
(Unaudited, Millions of Dollars)
First Quarter
----------------
2004 2003
------ ------
OPERATING ACTIVITIES
Net earnings $153.5 $ 19.2
Depreciation and amortization 23.0 22.6
Restructuring charge - 3.1
Changes in working capital (15.9) (20.5)
Other (108.5) 27.3
------ ------
Net cash provided by operating activities 52.1 51.7
INVESTING AND FINANCING ACTIVITIES
Capital and software expenditures (8.2) (7.5)
Proceeds from sale of business 161.9 -
Business acquisitions, net (250.1) (16.4)
Cash dividends on common stock (21.2) (22.2)
Other 53.6 28.7
------ ------
Net cash used in investing activities (64.0) (17.4)
Increase (Decrease) in Cash and Cash Equivalents (11.9) 34.3
Cash and Cash Equivalents, Beginning of Period 204.4 121.7
------ ------
Cash and Cash Equivalents, End of Period $192.5 $156.0
====== ======
Free Cash Flow Computation
Operating cash flow $ 52.1 $ 51.7
Less: capital and software expenditures (8.2) (7.5)
------ ------
Free cash flow from operations (before dividends) $ 43.9 $ 44.2
====== ======
Free cash flow is defined as cash flow from operations less capital investments;
the company believes this is an important measure of its liquidity, as well as
its ability to fund future growth and to provide a return to the shareowners.
Page 12 of 19
THE STANLEY WORKS AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(Unaudited, Millions of Dollars)
First Quarter
---------------------------
2004 2003
--------- ---------
BUSINESS SEGMENTS
Net Sales
Consumer products $ 306.0 $ 253.2
Industrial tools 316.0 271.5
Security Solutions 156.6 107.5
--------- ---------
Consolidated $ 778.6 $ 632.2
========= =========
Operating Profit (Loss)
Consumer products $ 48.0 $ 31.8
Industrial tools 30.1 (2.7)
Security Solutions 28.8 16.5
--------- ---------
Consolidated $ 106.9 $ 45.6
========= =========
Assets April 3, 2004 January 3, 2004
-------------- ------------- ---------------
Consumer products $ 804.3 $ 792.5
Industrial tools 879.0 814.5
Security Solutions 877.6 554.4
Discontinued operations - 33.0
Corporate assets 217.3 229.4
--------- ---------
Consolidated $ 2,778.2 $ 2,423.8
========= =========
Page 13 of 19
THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND BUSINESS SEGMENT INFORMATION
RECONCILIATION TO GAAP EARNINGS
FIRST QUARTER 2004 vs. 2003
(Unaudited, Millions of Dollars Except Per Share Amounts)
2004
---------------------------------------------------------
Pro-forma Excludes
Charges, Includes
Discontinued Discontinued
Operations Operations Charges Reported
------------------ ------------ -------- --------
Net sales $ 804.6 $ 26.0 $ - $ 778.6
Cost of sales 520.9 21.7 - 499.2
-------- -------- -------- --------
Gross Margin 283.7 4.3 - 279.4
35.3% 35.9%
Selling, general and
administrative 176.8 4.3 - 172.5
-------- -------- -------- --------
22.0% 22.2%
Subtotal 106.9 - - 106.9
13.3% 13.7%
Interest, net 8.1 0.1 - 8.0
Other, net (128.6) (142.7) - 14.1
Restructuring and asset
impairment charges - - - -
-------- -------- -------- --------
Earnings from continuing operations
before income taxes 227.4 142.6 - 84.8
Income taxes 73.9 47.6 - 26.3
-------- -------- -------- --------
32.5% 31.0%
Net earnings from
continuing operations $ 153.5 $ 95.0 $ - $ 58.5
Earnings from
discontinued operations - (142.6) - 142.6
Income taxes on
discontinued operations - (47.6) - 47.6
-------- -------- -------- --------
Net earnings from
discontinued operations - (95.0) - 95.0
Net earnings $ 153.5 $ - $ - $ 153.5
======== ======== ======== ========
Page 14 of 19
Average shares
outstanding (diluted,
in thousands) 83,392 83,392 83,392 83,392
Earnings per share
(diluted) $ 1.84 $ - $ - $ 1.84
======== ======== ======== ========
BUSINESS SEGMENTS
Net Sales
Consumer $ 332.0 $ 26.0 $ - $ 306.0
Industrial 316.0 - - 316.0
Security Solutions 156.6 - - 156.6
-------- -------- -------- --------
Consolidated $ 804.6 $ 26.0 $ - $ 778.6
======== ======== ======== ========
Subtotal
Consumer $ 48.0 $ - $ - $ 48.0
Industrial 30.1 - - 30.1
Security Solutions 28.8 - - 28.8
-------- -------- -------- --------
Consolidated $ 106.9 $ - $ - $ 106.9
-------- -------- -------- --------
Interest, net 8.1 0.1 - 8.0
Other, net (128.6) (142.7) - 14.1
Restructuring and asset
impairment charges - - - -
-------- -------- -------- --------
Net earnings from
continuing operations
before income taxes $ 227.4 $ 142.6 $ - $ 84.8
========= ======== ======== ========
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THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND BUSINESS SEGMENT INFORMATION
RECONCILIATION TO GAAP EARNINGS
FIRST QUARTER 2004 vs. 2003
(Unaudited, Millions of Dollars Except Per Share Amounts)
2003
---------------------------------------------------------
Pro-forma Excludes
Charges, Includes
Discontinued Discontinued
Operations Operations Charges Reported
------------------ ------------ -------- --------
Net sales $ 666.2 $ 34.0 $ - $ 632.2
Cost of sales 444.1 28.9 3.6 418.8
-------- -------- -------- --------
Gross Margin 222.1 5.1 (3.6) 213.4
33.3% 33.8%
Selling, general and
administrative 162.2 4.6 10.2 167.8
-------- -------- -------- --------
24.3% 26.5%
Subtotal 59.9 0.5 (13.8) 45.6
9.0% 7.2%
Interest, net 7.9 0.1 - 7.8
Other, net 7.6 0.2 - 7.4
Restructuring and asset
impairment charges - - 3.1 3.1
-------- -------- -------- --------
Earnings from continuing operations
before income taxes 44.4 0.2 (16.9) 27.3
Income taxes 13.5 - (5.2) 8.3
-------- -------- -------- --------
30.4% 30.4%
Net earnings from continuing
operations $ 30.9 $ 0.2 $ (11.7) $ 19.0
Earnings from
discontinued operations - (0.2) - 0.2
Income taxes on
discontinued operations - - - -
-------- -------- -------- --------
Net earnings from discontinued
Operations - (0.2) - 0.2
Net earnings $ 30.9 $ - $ (11.7) $ 19.2
======== ======== ======== ========
Page 16 of 19
Average shares
outstanding (diluted,
in thousands) 88,478 88,478 88,478 88,478
Earnings per share
(diluted) $ 0.35 $ - $ (0.13) $ 0.22
======== ======== ======== ========
BUSINESS SEGMENTS
Net Sales
Consumer $ 287.2 $ 34.0 $ - $ 253.2
Industrial 271.5 - - 271.5
Security Solutions 107.5 - - 107.5
-------- -------- -------- --------
Consolidated $ 666.2 $ 34.0 $ - $ 632.2
======== ======== ======== ========
Subtotal
Consumer $ 32.3 $ 0.5 $ - $ 31.8
Industrial 11.1 - (13.8) (2.7)
Security Solutions 16.5 - - 16.5
-------- -------- -------- --------
Consolidated $ 59.9 $ 0.5 $ (13.8) $ 45.6
-------- -------- --------- --------
Interest, net 7.9 0.1 - 7.8
Other, net 7.6 0.2 - 7.4
Restructuring and asset
impairment charges - - 3.1 3.1
-------- -------- -------- --------
Net earnings from
continuing operations
before income taxes $ 44.4 $ 0.2 $ (16.9) $ 27.3
========= ======== ======== ========
(a) Changes in previously reported amounts are due to reclassifications related
to the discontinued operations of the entry door business.
Page 17 of 19
THE STANLEY WORKS AND SUBSIDIARIES
BUSINESS SEGMENT TRENDS
(Unaudited, Millions of Dollars)
Reported Operating Profit
Net Operating Charges Excluding Charges
Sales Profit (a) $ %
--------- --------- --------- --------- ---------
First Quarter 2003
------------------
Consumer products $ 253.2 $ 31.8 $ - $ 31.8 12.6%
Industrial tools 271.5 (2.7) 13.8 11.1 4.1
Security Solutions 107.5 16.5 - 16.5 15.3
--------- --------- --------- --------- ---------
Consolidated $ 632.2 $ 45.6 $ 13.8 $ 59.4 9.4%
========= ========= ========= ========= =========
Second Quarter 2003
-------------------
Consumer products $ 259.7 $ 27.6 $ 3.5 $ 31.1 12.0%
Industrial tools 276.4 1.7 18.3 20.0 7.2
Security Solutions 116.5 22.1 1.2 23.3 20.0
--------- --------- --------- --------- ---------
Consolidated $ 652.6 $ 51.4 $ 23.0 $ 74.4 11.4%
========= ========= ========= ========= =========
Third Quarter 2003
------------------
Consumer products $ 278.5 $ 39.3 $ - $ 39.3 14.1%
Industrial tools 264.4 18.7 0.4 19.1 7.2
Security Solutions 122.7 25.9 - 25.9 21.1
--------- --------- --------- --------- ---------
Consolidated $ 665.6 $ 83.9 $ 0.4 $ 84.3 12.7%
========= ========= ========= ========= =========
Fourth Quarter 2003
-------------------
Consumer products $ 315.4 $ 46.6 $ 0.1 $ 46.7 14.8%
Industrial tools 285.3 7.2 19.4 26.6 9.3
Security Solutions 127.0 20.3 0.1 20.4 16.1
--------- --------- --------- --------- ---------
Consolidated $ 727.7 $ 74.1 $ 19.6 $ 93.7 12.9%
========= ========= ========= ========= =========
Page 18 of 19
Full Year 2003
------------------
Consumer products $ 1,106.8 $ 145.3 $ 3.6 $ 148.9 13.5%
Industrial tools 1,097.6 24.9 51.9 76.8 7.0
Security Solutions 473.7 84.8 1.3 86.1 18.2
--------- --------- --------- --------- ---------
Consolidated $ 2,678.1 $ 255.0 $ 56.8 $ 311.8 11.6%
========= ========= ========= ========= =========
First Quarter 2004
------------------
Consumer products $ 306.0 $ 48.0 $ - $ 48.0 15.7%
Industrial tools 316.0 30.1 - 30.1 9.5
Security Solutions 156.6 28.8 - 28.8 18.4
--------- --------- --------- --------- ---------
Consolidated $ 778.6 $ 106.9 $ - $ 106.9 13.7%
========= ========= ========= ========= =========
In the first quarter of 2004 the company changed its segments to align with
recent changes in its portfolio of businesses. The Consumer Products segment
includes the hand tools, consumer mechanics tools and storage, hardware and home
decor businesses. Industrial Tools is comprised of Mac Tools, the Proto
mechanics tools business, fastening systems, storage systems (Vidmar), specialty
tools, assembly technologies, hydraulic tools and CST Berger. The Security
Solutions segment includes newly acquired Blick and Frisco Bay, along with Best
Access and access technologies.
(a) The company incurred charges in 2003 pertaining to the exit of the Mac
Direct retail channel, closure of a U.S. distribution facility and other exit
activities, as well as compensation and benefit costs associated with the former
CEO's retirement.
Page 19 of 19