Also Plans To Prune Several Small, Non-strategic Product Lines During The
Remainder Of 2008
NEW BRITAIN, Conn., June 11 /PRNewswire-FirstCall/ -- The Stanley Works
(NYSE: SWK) today announced that it has entered into an agreement to sell
its CST/berger laser leveling and measuring business, based in West
Lafayette, IN, to Robert Bosch Tool Corporation for $205 million. This
operation had 2007 revenues of $80 million (excluding certain European
sales of approximately $10 million), primarily in North American
construction-related markets. The transaction, which has been approved by
the Boards of Directors of Stanley and Bosch, is subject to regulatory
approvals and other customary conditions, and is expected to close during
the next several months at which time the company expects to realize a
pre-tax book gain totaling $138 million. Net after-tax cash proceeds from
the sale are expected to approximate $155 million.
In a separate transaction, the company also announced that it has
entered into an agreement to purchase 100% of the shares of Sonitrol
Corporation from an ownership group comprised of Carlyle Venture Partners,
Wachovia Capital Partners and Spire Capital Partners as well as selected
members of Sonitrol management for $275 million cash (approximately 10x
EBITDA). Sonitrol, headquartered in Berwyn, PA, provides security
monitoring services, access control and fire detection systems to
commercial customers in North America via two monitoring centers and a
national multi-channel distribution network. Sonitrol, the 8th largest
electronic security company in the U.S., brings a strong brand,
unparalleled capabilities in audio-verified monitoring and a substantial
national account base to Stanley's Convergent Security Solutions platform.
Sonitrol, with revenue totaling approximately $110 million will report into
Stanley's Convergent Security Solutions business which had 2007 revenues
approaching $600 million. The Boards of Directors of Stanley and Sonitrol
have approved the transaction, which is subject to regulatory approvals and
other customary conditions. The acquisition is expected to close during the
third quarter of 2008.
John F. Lundgren, Chairman and Chief Executive Officer, commented:
"These two transactions are important steps toward advancing our growth
strategy and repositioning the company to be less dependent on construction
and DIY markets. We continue to be strongly committed to shifting the
company's portfolio into higher-growth, higher-return areas such as
electronic security. The addition of Sonitrol, with its iconic brand and
strong franchisee and direct sales network, expands the scale of our
existing North American monitoring operation, increases our recurring
revenue and adds breadth and depth to our electronic security product
offering."
Exit of Several Small, Non-Strategic Product Lines
In addition to the two transactions announced today, the company is
developing plans to exit several small, non-strategic product lines during
the remainder of the year with associated revenues of approximately $60
million. Assuming that these exits are accomplished through discontinuation
or sale at various times throughout the year, their results will be
reclassified to discontinued operations for the current and all prior
periods in accordance with generally accepted accounting principles as
events transpire. Details of these exits will be communicated as necessary
after plans are finalized and/or transactions occur.
Financial Impact Of Announced Transactions And Portfolio Pruning Plans
The estimated effect of these transactions on the company's revenues
and its previously communicated 2008 diluted earnings per share from
continuing operations guidance is summarized below:
Item Annual Revenue EPS
Sale of CST/berger down $80 million '08 and annualized: down $0.11
Purchase of Sonitrol up $110 million (1) '08: down $0.02, '09: up $0.04
then up by approximately $0.05
each year thereafter
Other portfolio down $60 million '08 and annualized: nominally
actions accretive (2)
(1) 2008 impact of approximately $55 million.
(2) In addition, the company expects to record pre-tax restructuring and
related asset impairment and severance charges ranging from $10
million -- $20 million relating to these actions which will be
reclassified to discontinued operations by the end of 2008.
John F. Lundgren, Chairman and Chief Executive Officer, continued: "The
portfolio transformation which we embarked upon several years ago is a key
element of our overall strategy and includes both acquisitions and the
occasional disposition of businesses or product lines that are inconsistent
with our intended direction. As the portfolio reshaping has progressed, the
company has become stronger and more capable of delivering sustainable
earnings and cash flow growth. Today's announcement reinforces our firm
conviction to continue with this strategy. Challenging economic periods
like these often present opportunities. Our acquisition pipeline is robust
and our ability to create value by allocating capital to acquisitive growth
and/or share repurchase is strong. We continue to operate the company
within the boundaries of our upper-tier credit ratings, a strategy which
has served us well over the years and will continue to do so."
Additional Information About Sonitrol
Sonitrol, a market leading independent U.S. commercial security
company, had 2007 revenues of approximately $110 million. Sonitrol is well
positioned for growth given its integrated suite of security solutions, its
established brand and respected reputation and its national multi-channel
distribution network. Sonitrol, an industry leader in apprehension rates,
maintains one of the lowest false dispatch rates in the market, and is a
leader in verified audio monitoring services.
Recurring monthly revenues ("RMR") from commercial monitoring
activities represents an important element of Sonitrol's annual revenues;
additional revenues are generated from security system and equipment
installation, repair services, proprietary equipment sales and royalty fees
generated from Sonitrol's franchisees. A one-time installation fee
(including the cost of equipment) is billed at the commencement of customer
security contracts. Additionally, monthly monitoring fees are charged over
the life of contracts, for which a typical initial length is five years,
and service fees are generated from repairs that are not covered by
warranty. Additional information on Sonitrol can be found at
http://www.sonitrol.com.
Additional Information About The Stanley Works
The Stanley Works, an S&P 500 company with 2007 revenues of $4.5
billion, is a diversified worldwide supplier of tools and engineered
solutions for professional, industrial, construction and do-it-yourself
use, and access security solutions for commercial applications. For over
165 years, the Stanley(R) brand has been synonymous with quality, reliable
products. Its well-known tool and storage brands include Stanley(R) as well
as FatMax(R), Facom(R), Bostitch(R), Jensen(R), Mac(R), Proto(R), La
Bounty(R), Vidmar(R), and InnerSpace(R). Security Solutions brands include
Stanley(R), Best(R), National(R), HSM(R), Blick(R) and Frisco Bay(R). The
company employs approximately 20,000 associates. Additional information
about The Stanley Works can be found at http://www.stanleyworks.com.
The Stanley Works corporate press releases are available in the
Investor Relations section of the company's Internet web site at
http://www.stanleyworks.com.
CAUTIONARY STATEMENT Under the Private Securities Litigation Reform Act
of 1995
Statements in this press release, including but not limited to those
regarding the Company's ability to: (i) close the sale of CST/berger during
the next several months and realize after-tax cash proceeds of
approximately $155 million; (ii) close the acquisition of Sonitrol during
the third quarter of 2008; (iii) increase the Company's annual revenue by
$110 million as a result of the Sonitrol transaction (approximately $55
million in 2008); (iv) limit the impact of the Sonitrol acquisition on the
Company's earnings to a decline of $.02 per diluted share in 2008; (v)
generate earnings per diluted share attributable to the Sonitrol
acquisition of $.04 in 2009 and further increase such earnings by
approximately $.05 per year thereafter; (vi) limit the impact of plans to
exit several small, non-strategic product lines during 2008 to a reduction
in 2008 revenue from continuing operations of $60 million; (vii) generate
nominally accretive earnings per diluted share from continuing operations
in 2008 and on an annualized basis thereafter from the exit of several
product lines in 2008; and (viii) limit pre-tax restructuring and related
asset impairment and severance charges associated with the product line
exits to $10 - $20 million are "forward looking statements" and 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. In addition to the
risks, uncertainties and other factors discussed in this press release, the
risks, uncertainties and other factors that could cause or contribute to
actual results differing materially from those expressed or implied in the
forward looking statements include, without limitation, those set forth
under Item 1A Risk Factors of the Company's Annual Report on Form 10-K and
any material changes thereto set forth in any subsequent Quarterly Reports
on Form 10-Q, those contained in the Company's other filings with the
Securities and Exchange Commission, and those set forth below.
The Company's ability to deliver the Results is dependent upon: (i) the
receipt of required regulatory approvals and satisfaction of other
conditions to closing for both the Sonitrol and CST/berger transactions
within anticipated time frames; (ii) the ultimate allocation of the
purchase price for the CST/berger business among The Stanley Works and
certain of its European subsidiaries; (iii) the Company's ability to
successfully integrate the Sonitrol acquisition while limiting associated
costs; (iv) the success of the Company's effort to build a growth platform
and market leadership in Convergent Security Solutions; (v) the Company's
success at identifying and developing new markets for Convergent Security
Solutions products, including Sonitrol products; (vi) the success of the
Company's efforts to generate sales growth in existing markets for
Convergent Security Solutions products, including Sonitrol products; (vii)
the continued acceptance of technologies used in the Company's Convergent
Security Solutions products, including Sonitrol products; (viii) the
Company's ability to gain acceptance of certain new Sonitrol products; (ix)
the Company's ability to successfully manage existing Sonitrol franchisee
relationships; (x) the Company's ability to sell or, if appropriate,
discontinue the product lines referenced above during 2008; (xi) the
Company's ability to minimize costs associated with any sale or
discontinuance of a product line, including any severance, restructuring,
legal or other costs; (xii) the proceeds realized with respect to any
product line disposals; (xiii) the extent of any asset impairment with
respect to the product lines mentioned; (xiv) the Company's ability to
obtain favorable settlement of routine tax audits; (xv) the ability of the
Company to generate earnings sufficient to realize future income tax
benefits during periods when temporary differences become deductible; (xvi)
the continued ability of the Company to access credit markets under
satisfactory terms; (xvii) the Company's ability to negotiate satisfactory
payment terms under which the Company buys and sells goods, services,
materials and products; (xviii) the ability of the Company's employees to
adapt to changes made within the organization and to meet or exceed
expectations; (xix) the ability to continue successfully managing and
defending claims and litigation; (xx) the absence or mitigation of
increased pricing pressures from customers and competitors and the ability
to defend market share in the face of price competition; and (xxi) the
Company's ability to continue improvements in working capital, including
inventory reductions and payment terms.
The Company's ability to achieve the Results will also be affected by
external factors. These external factors include pricing pressure and other
changes within competitive markets, increasing competition, changes in
trade, monetary, tax and fiscal policies and laws, 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 manufacturing, 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.
SOURCE The Stanley Works
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Related links:
http://www.StanleyWorks.com
http://www.sonitrol.com
http://www.prnewswire.com/comp/874363.html /
CONTACT:
Greg Waybright, Interim VP, Investor
Relations of The Stanley Works, +1-860-827-3544,
gwaybright@stanleyworks.com
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