Filer: The Stanley Works Ltd.
Pursuant to Rule 425 under
the Securities Act of 1933
and Rule 14a-6 under Securities Exchange Act of 1934
Subject Company: The Stanley Works
Commission File No.: 1-5224
Registration Statement No.: 333-82382
Slide #1
Question & Answer Session
Facilitator:
Certified Financial Planner
[Stanley Logo graphic]
Slide #2
Straight Talk About the Bermuda Reincorporation
Tax Planning Agenda:
o Q and A session to cover tax-related information for shareholders.
o Basic financial planning scenarios if you own SWK stock.
Where to Submit Additional Questions:
o Phone: 1-860-827-3553
o E-mail at ggould@stanleyworks.com
o Proxy Information, MacKenzie Partners, Inc. at 1-800-322-2885
Slide #3
Straight Talk About the Bermuda Reincorporation
Question
Why do I have to pay tax?
Answer
The IRS requires the tax when SWK shares are exchanged for SWK, LTD. Shares
(Toll Tax). Your shares are treated as though you sold your shares of SWK stock
as of the effective date of the reincorporation transaction.
Frequently Asked Questions
Slide #4
Straight Talk About the Bermuda Reincorporation
Question
I don't understand how to figure my capital gains tax.
Answer
A capital gain is the profit created by owning something that's now worth more
than its cost. In other words it is profit from the sale of a capital asset,
such as stock received upon exercise of options. Capital gains may be
short-term (held 12 months or less) or long-term (held more than 12 months).
Frequently Asked Questions
Slide #5
Straight Talk About the Bermuda Reincorporation
Question
Will the company provide tax information to shareholders?
Answer
Yes. Shareholders will receive a 1099 form no later than January 31, 2003 for
shares you privately own or have purchased through the ESPP. No 1099 form will
be sent for shares you hold in a 401(k), IRA or other pension fund account.
Frequently Asked Questions
Slide #6
Straight Talk About the Bermuda Reincorporation
Question
Will 401(k), IRA or other pension plan shares be taxed?
Answer
No.
Frequently Asked Questions
Slide #7
Straight Talk About the Bermuda Reincorporation
Question
Will shares in the ESPP (Employee Stock Purchase Plan) be taxed?
Answer
Yes.
o Shares purchased within 12 months of the reincorporation
will be taxed at the ordinary income rate.
o Shares purchased more than 12 months prior to the
reincorporation will be taxed at the long-term capital
gain rate of 20%.
Frequently Asked Questions
Slide #8
Straight Talk About the Bermuda Reincorporation
Question
Will privately held stock be taxed?
Answer
Yes. The amount of tax will depend upon the net value of the stock and the
effective tax rate:
o A short-term capital gain (shares held 1 year or less); or
o A long-term capital gain (shares held more than 1 year)
Frequently Asked Questions
Slide #9
Straight Talk About the Bermuda Reincorporation
Question
If the reincorporation goes through and the restriction on the SPP is lifted,
how can I use my shares to help offset my capital gains tax?
Answer
You can sell shares to pay for your tax liability that results from this
transaction. In simple terms, you or your tax advisor should calculate the tax
due as a result of the reincorporation. You can then sell the amount of shares
that provide you with the requisite level of cash to pay this tax liability.
Frequently Asked Questions
Slide #10
Straight Talk About the Bermuda Reincorporation
Question
How do I determine the cost basis of my stock?
Answer
Your initial cost for stock you buy is your cost basis. In other words, it is
the amount you paid to buy the stock after consideration for any stock splits
and stock dividends. Cost basis includes two items:
o The amount paid for the stock; and
o The commission paid on the purchase if bought through
a broker.
Frequently Asked Questions
Slide #11
Straight Talk About the Bermuda Reincorporation
Question
How do I determine my basis on additional shares received as a result of a
non-taxable stock dividend or split?
Answer
When you receive additional shares as a result of a non-taxable stock dividend
or split, your total basis in your stock remains the same -- now divided over
a larger number of shares.
Frequently Asked Questions
Slide #12
Straight Talk About the Bermuda Reincorporation
Question
What is the tax basis after the reincorporation?
Answer
The tax basis will be the fair market value on the effective date of the
reincorporation.
Frequently Asked Questions
Slide #13
Straight Talk About the Bermuda Reincorporation
Question
Will my stock options be impacted?
Answer
There is no tax until they are exercised. When exercised, you are taxed and
then will receive shares of SWK, Ltd.
Frequently Asked Questions
Slide #14
Straight Talk About the Bermuda Reincorporation
Question
What happens to Stanley stock certificates I possess at the time of the
reincorporation?
Answer
New certificates for Stanley Works, Ltd. will be issued to replace the old
certificates of SWK, and the old SWK certificates will be voided.
Frequently Asked Questions
Slide #15
Straight Talk About the Bermuda Reincorporation
Question
What should I do if I have a personal change like name, address, etc.?
Answer
EquiServe, as exchange agent, will deliver transmittal forms to stockholders
which will accommodate name or address changes. Contact EquiServe at
1-800-543-6757.
Frequently Asked Questions
Slide #16
Straight Talk About the Bermuda Reincorporation
Question
How can Stanley shareholders obtain a proxy statement and ballot
if one has not arrived?
Answer
o For shareholders who have the physical stock certificates:
Call EquiServe at 1-800-543-6757.
o Shares in a broker account: Contact your broker.
o If your broker is no longer in business: Whoever has taken over your
account will send out the proxy statement and ballot.
o Shareholders with an online broker: Contact the customer service
number and ask for the proxy department.
o For Employee Stock Purchase Plan Shares (ESPP):
Call EquiServe at 1-800-543-6757.
o For 401(k) Plan shares: Contact MacKenzie Partners for a duplicate
proxy card at 1-800-322-2885.
Frequently Asked Questions
Slide #17
Straight Talk About the Bermuda Reincorporation
Where to Submit Additional Questions:
o Phone: 1-860-827-3553
o E-mail: ggould@stanleyworks.com
o Proxy Information: MacKenzie Partners, Inc.
at 1-800-322-2885
Frequently Asked Questions