STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, Millions of Dollars Except Per Share Amounts)
|
| | | | | | | |
| | FIRST QUARTER |
| | 2014 | | 2013 |
| NET SALES | $ | 2,640.8 |
| | $ | 2,476.5 |
|
| COSTS AND EXPENSES | | | |
| Cost of sales | 1,680.5 |
| | 1,567.9 |
|
| Gross margin | 960.3 |
|
| 908.6 |
|
| % of Net Sales | 36.4 | % | | 36.7 | % |
| Selling, general and administrative | 647.7 |
| | 664.7 |
|
| % of Net Sales | 24.5 | % | | 26.8 | % |
| Operating margin | 312.6 |
| | 243.9 |
|
| % of Net sales | 11.8 | % | | 9.8 | % |
| Other - net | 61.6 |
| | 70.8 |
|
| Restructuring (credits) charges | (3.7 | ) | | 42.9 |
|
| Income from operations | 254.7 |
| | 130.2 |
|
| Interest - net | 40.9 |
| | 36.7 |
|
| EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 213.8 |
| | 93.5 |
|
| Income taxes on continuing operations | 46.8 |
| | 8.8 |
|
| NET EARNINGS FROM CONTINUING OPERATIONS | 167.0 |
| | 84.7 |
|
| Less: net earnings (loss) attributable to non-controlling interests | 0.2 |
| | (0.4 | ) |
| NET EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO COMMON SHAREOWNERS | 166.8 |
| | 85.1 |
|
| NET LOSS FROM DISCONTINUED OPERATIONS | (4.9 | ) | | (4.0 | ) |
| NET EARNINGS ATTRIBUTABLE TO COMMON SHAREOWNERS | $ | 161.9 |
| | $ | 81.1 |
|
| | | | |
| BASIC EARNINGS (LOSS) PER SHARE OF COMMON STOCK | | | |
| Continuing operations | $ | 1.07 |
| | $ | 0.55 |
|
| Discontinued operations | (0.03 | ) | | (0.03 | ) |
| Total basic earnings per share of common stock | $ | 1.04 |
| | $ | 0.52 |
|
| DILUTED EARNINGS (LOSS) PER SHARE OF COMMON STOCK | | | |
| Continuing operations | $ | 1.05 |
| | $ | 0.53 |
|
| Discontinued operations | (0.03 | ) | | (0.02 | ) |
| Total diluted earnings per share of common stock | $ | 1.02 |
| | $ | 0.51 |
|
| DIVIDENDS PER SHARE | $ | 0.50 |
| | $ | 0.49 |
|
| AVERAGE SHARES OUTSTANDING (in thousands) | | | |
| Basic | 155,905 |
| | 155,552 |
|
| Diluted | 158,951 |
| | 158,994 |
|
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, Millions of Dollars)
|
| | | | | | | | |
| | | March 29, 2014 | | December 28, 2013 |
| ASSETS | | | | |
| Cash and cash equivalents | | $ | 432.6 |
| | $ | 496.2 |
|
| Accounts and notes receivable, net | | 1,795.8 |
| | 1,633.0 |
|
| Inventories, net | | 1,663.1 |
| | 1,485.2 |
|
| Assets held for sale | | 4.6 |
| | 10.1 |
|
| Other current assets | | 375.1 |
| | 344.2 |
|
| Total current assets | | 4,271.2 |
| | 3,968.7 |
|
| Property, plant and equipment, net | | 1,482.4 |
| | 1,485.3 |
|
| Goodwill and other intangibles, net | | 10,618.9 |
| | 10,632.9 |
|
| Other assets | | 460.4 |
| | 448.2 |
|
| Total assets | | $ | 16,832.9 |
| | $ | 16,535.1 |
|
| LIABILITIES AND SHAREOWNERS’ EQUITY | | | | |
| Short-term borrowings | | $ | 683.5 |
| | $ | 402.6 |
|
| Accounts payable | | 1,581.8 |
| | 1,575.9 |
|
| Accrued expenses | | 1,185.6 |
| | 1,236.2 |
|
| Liabilities held for sale | | 4.9 |
| | 6.3 |
|
| Total current liabilities | | 3,455.8 |
| | 3,221.0 |
|
| Long-term debt | | 3,831.1 |
| | 3,799.4 |
|
| Other long-term liabilities | | 2,566.7 |
| | 2,634.2 |
|
| Stanley Black & Decker, Inc. shareowners’ equity | | 6,897.8 |
| | 6,799.2 |
|
| Non-controlling interests’ equity | | 81.5 |
| | 81.3 |
|
| Total liabilities and equity | | $ | 16,832.9 |
| | $ | 16,535.1 |
|
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
SUMMARY OF CASH FLOW ACTIVITY
(Unaudited, Millions of Dollars)
|
| | | | | | | | | |
| | | | FIRST QUARTER |
| | | | 2014 | | 2013 |
| | OPERATING ACTIVITIES | | | | |
| | Net earnings from continuing operations | | $ | 167.0 |
| | $ | 84.7 |
|
| | Net loss from discontinued operations | | (4.9 | ) | | (4.0 | ) |
| | Depreciation and amortization | | 110.4 |
| | 105.8 |
|
| | Changes in working capital1 | | (330.3 | ) | | (195.0 | ) |
| | Other | | (94.2 | ) | | (139.0 | ) |
| | Net cash used in operating activities | | (152.0 | ) | | (147.5 | ) |
| | INVESTING AND FINANCING ACTIVITIES | | | | |
| | Capital and software expenditures | | (57.8 | ) | | (76.6 | ) |
| | Acquisitions, net of cash acquired | | (3.2 | ) | | (853.9 | ) |
| | Proceeds from issuances of common stock | | 13.2 |
| | 83.2 |
|
| | Net short-term borrowings | | 282.3 |
| | 1,330.5 |
|
| | Cash dividends on common stock | | (80.7 | ) | | (79.1 | ) |
| | Purchases of common stock for treasury | | (19.4 | ) | | (21.1 | ) |
| | Payment on forward stock purchase contract | | — |
| | (350.0 | ) |
| | Other | | (46.0 | ) | | (44.0 | ) |
| | Net cash provided by (used in) investing and financing activities | | 88.4 |
| | (11.0 | ) |
| | Decrease in Cash and Cash Equivalents | | (63.6 | ) | | (158.5 | ) |
| | Cash and Cash Equivalents, Beginning of Period | | 496.2 |
| | 716.0 |
|
| | Cash and Cash Equivalents, End of Period | | $ | 432.6 |
| | $ | 557.5 |
|
| | | | | | |
| | Free Cash Flow Computation2 | | | | |
| | Operating cash outflow | | $ | (152.0 | ) | | $ | (147.5 | ) |
| | Less: capital and software expenditures | | (57.8 | ) | | $ | (76.6 | ) |
| | Free cash outflow (before dividends) | | $ | (209.8 | ) | | $ | (224.1 | ) |
| | Merger & Acquisition-related charges and payments4 | | 51.8 |
| | $ | 94.5 |
|
| | Free cash outflow, normalized (before dividends)3 | | $ | (158.0 | ) | | $ | (129.6 | ) |
| | | | | | |
1 | The change in working capital is comprised of accounts receivable, inventory, accounts payable and deferred revenue. |
2,3 | Free cash flow is defined as cash flow from operations less capital and software expenditures. Management considers free cash flow an important measure of its liquidity, as well as its ability to fund future growth and to provide a return to the shareowners. Free cash flow does not include deductions for mandatory debt service, other borrowing activity, discretionary dividends on the Company’s common stock and business acquisitions, among other items. Normalized free cash flow, as reconciled above, are considered meaningful pro forma metrics to aid the understanding of the Company's cash flow performance aside from the material impact of merger and acquisition-related activities. |
4 | Merger & Acquisition-related charges and payments relate primarily to the Black & Decker merger and Niscayah and Infastech acquisitions, including facility closure-related charges, employee-related charges and integration costs. |
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(Unaudited, Millions of Dollars)
|
| | | | | | | | |
| | | FIRST QUARTER |
| | | 2014 | | 2013 |
| NET SALES | | | | |
| Construction & DIY | | $ | 1,216.1 |
| | $ | 1,150.5 |
|
| Industrial | | 852.0 |
| | 733.9 |
|
| Security | | 572.7 |
| | 592.1 |
|
| Total | | $ | 2,640.8 |
| | $ | 2,476.5 |
|
| SEGMENT PROFIT | | | | |
| Construction & DIY | | $ | 169.2 |
| | $ | 166.1 |
|
| Industrial | | 130.3 |
| | 89.4 |
|
| Security | | 49.6 |
| | 57.4 |
|
| Segment Profit | | 349.1 |
| | 312.9 |
|
| Corporate Overhead | | (36.5 | ) | | (69.0 | ) |
| Total | | $ | 312.6 |
| | $ | 243.9 |
|
| Segment Profit as a Percentage of Net Sales | | | | |
| Construction & DIY | | 13.9 | % | | 14.4 | % |
| Industrial | | 15.3 | % | | 12.2 | % |
| Security | | 8.7 | % | | 9.7 | % |
| Segment Profit | | 13.2 | % | | 12.6 | % |
| Corporate Overhead | | (1.4 | )% | | (2.8 | )% |
| Total | | 11.8 | % | | 9.8 | % |
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP EARNINGS FINANCIAL MEASURES TO CORRESPONDING
NON-GAAP FINANCIAL MEASURES
(Unaudited, Millions of Dollars Except Per Share Amounts)
|
| | | | | | | | | | | | |
| | | FIRST QUARTER 2014 |
| | | Reported | | Merger &
Acquisition-
Related Charges1 | | Normalized3 |
| Gross margin | | $ | 960.3 |
| | $ | 1.1 |
| | $ | 961.4 |
|
| % of Net Sales | | 36.4 | % | | | | 36.4 | % |
| Selling, general and administrative | | 647.7 |
| | (6.3 | ) | | 641.4 |
|
| % of Net Sales | | 24.5 | % | | | | 24.3 | % |
| Operating margin | | 312.6 |
| | 7.4 |
| | 320.0 |
|
| % of Net Sales | | 11.8 | % | | | | 12.1 | % |
| Earnings from continuing operations before income taxes | | 213.8 |
| | 3.9 |
| | 217.7 |
|
| Income taxes on continuing operations | | 46.8 |
| | 1.4 |
| | 48.2 |
|
| Net earnings from continuing operations | | 166.8 |
| | 2.5 |
| | 169.3 |
|
| Diluted earnings per share of common stock | | $ | 1.05 |
| | $ | 0.02 |
| | $ | 1.07 |
|
1 Merger and acquisition-related charges relate primarily to the Niscayah and Infastech acquisitions, including employee-related charges and
integration costs.
|
| | | | | | | | | | | | |
| | | FIRST QUARTER 2013 |
| | | Reported | | Merger &
Acquisition-
Related Charges2 | | Normalized3 |
| Gross margin | | $ | 908.6 |
| | $ | 13.3 |
| | $ | 921.9 |
|
| % of Net Sales | | 36.7 | % | | | | 37.2 | % |
| Selling, general and administrative | | 664.7 |
| | (34.3 | ) | | 630.4 |
|
| % of Net Sales | | 26.8 | % | | | | 25.5 | % |
| Operating margin | | 243.9 |
| | 47.6 |
| | 291.5 |
|
| % of Net Sales | | 9.8 | % | | | | 11.8 | % |
| Earnings from continuing operations before income taxes | | 93.5 |
| | 106.1 |
| | 199.6 |
|
| Income taxes on continuing operations | | 8.8 |
| | 25.0 |
| | 33.8 |
|
| Net earnings from continuing operations | | 85.1 |
| | 81.1 |
| | 166.2 |
|
| Diluted earnings per share of common stock | | $ | 0.53 |
| | $ | 0.51 |
| | $ | 1.04 |
|
2 Merger and acquisition-related charges relate primarily to the Black & Decker merger and Niscayah and Infastech acquisitions, including
facility closure-related charges, employee-related charges and integration costs.
3 The normalized 2014 and 2013 information, as reconciled to GAAP above, is considered relevant to aid analysis of the Company’s margin
and earnings results aside from the material impact of the merger & acquisition-related charges.
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP SEGMENT PROFIT FINANCIAL MEASURES TO CORRESPONDING
NON-GAAP FINANCIAL MEASURES
(Unaudited, Millions of Dollars)
|
| | | | | | | | | | | | | |
| | | | FIRST QUARTER 2014 |
| | | | Reported | | Merger & Acquisition- Related Charges1 | | Normalized3 |
| | SEGMENT PROFIT | | | | | | |
| | Construction & DIY | | $ | 169.2 |
| | $ | 0.4 |
| | $ | 169.6 |
|
| | Industrial | | 130.3 |
| | 2.2 |
| | 132.5 |
|
| | Security | | 49.6 |
| | 2.3 |
| | 51.9 |
|
| | Segment Profit | | 349.1 |
| | 4.9 |
| | 354.0 |
|
| | Corporate Overhead | | (36.5 | ) | | 2.5 |
| | (34.0 | ) |
| | Total | | $ | 312.6 |
| | $ | 7.4 |
| | $ | 320.0 |
|
| | Segment Profit as a Percentage of Net Sales | | | | | | |
| | Construction & DIY | | 13.9 | % | | | | 13.9 | % |
| | Industrial | | 15.3 | % | | | | 15.6 | % |
| | Security | | 8.7 | % | | | | 9.1 | % |
| | Segment Profit | | 13.2 | % | | | | 13.4 | % |
| | Corporate Overhead | | (1.4 | )% | | | | (1.3 | )% |
| | Total | | 11.8 | % | | | | 12.1 | % |
| | | | | | | | |
1 | Merger and acquisition-related charges relate primarily to the Niscayah and Infastech acquisitions, including employee-related charges and integration costs. |
| | | | | | | | |
| | | | |
| | | | FIRST QUARTER 2013 |
| | | | Reported | | Merger & Acquisition- Related Charges2 | | Normalized3 |
| | SEGMENT PROFIT | | | | | | |
| | Construction & DIY | | $ | 166.1 |
| | $ | 3.3 |
| | $ | 169.4 |
|
| | Industrial | | 89.4 |
| | 12.4 |
| | 101.8 |
|
| | Security | | 57.4 |
| | 6.4 |
| | 63.8 |
|
| | Segment Profit | | 312.9 |
| | 22.1 |
| | 335.0 |
|
| | Corporate Overhead | | (69.0 | ) | | 25.5 |
| | (43.5 | ) |
| | Total | | $ | 243.9 |
| | $ | 47.6 |
| | $ | 291.5 |
|
| | Segment Profit as a Percentage of Net Sales | | | | | | |
| | Construction & DIY | | 14.4 | % | | | | 14.7 | % |
| | Industrial | | 12.2 | % | | | | 13.9 | % |
| | Security | | 9.7 | % | | | | 10.8 | % |
| | Segment Profit | | 12.6 | % | | | | 13.5 | % |
| | Corporate Overhead | | (2.8 | )% | | | | (1.8 | )% |
| | Total | | 9.8 | % | | | | 11.8 | % |
| | | | | | | | |
2 | Merger and acquisition-related charges relate primarily to the Black & Decker merger and Niscayah and Infastech acquisitions, including facility closure-related charges, employee-related charges and integration costs. |
3 | The normalized 2014 and 2013 business segment information, as reconciled to GAAP above, is considered relevant to aid analysis of the Company's segment profit results aside from the material impact of the merger and acquisition-related charges. |
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP SEGMENT PROFIT FINANCIAL MEASURES, AS ADJUSTED, TO CORRESPONDING NON-GAAP FINANCIAL MEASURES, AS ADJUSTED (Unaudited, Millions of Dollars) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | FIRST QUARTER 2013 | | SECOND QUARTER 2013 | | THIRD QUARTER 2013 | | FOURTH QUARTER 2013 | | YEAR TO DATE 2013 |
| | | GAAP1 | Merger & Acquisition-Related Charges2 | Normalized3 | | GAAP1 | Merger & Acquisition-Related Charges2 | Normalized3 | | GAAP1 | Merger & Acquisition-Related Charges2 | Normalized3 | | GAAP1 | Merger & Acquisition-Related Charges2 | Normalized3 | | GAAP1 | Merger & Acquisition-Related Charges2 | Normalized3 |
| | NET SALES | | | | | | | | | | | | | | | | | | | |
| | Construction & DIY | $ | 1,150.5 |
| $ | — |
| $ | 1,150.5 |
| | $ | 1,394.0 |
| $ | — |
| $ | 1,394.0 |
| | $ | 1,333.0 |
| $ | — |
| $ | 1,333.0 |
| | $ | 1,398.5 |
| $ | — |
| $ | 1,398.5 |
| | $ | 5,276.0 |
| $ | — |
| $ | 5,276.0 |
|
| | Industrial | 733.9 |
| — |
| 733.9 |
| | 861.5 |
| — |
| 861.5 |
| | 825.9 |
| — |
| 825.9 |
| | 881.3 |
| — |
| 881.3 |
| | 3,302.6 |
| — |
| 3,302.6 |
|
| | Security | 592.1 |
| — |
| 592.1 |
| | 603.9 |
| — |
| 603.9 |
| | 600.4 |
| — |
| 600.4 |
| | 626.2 |
| — |
| 626.2 |
| | 2,422.6 |
| — |
| 2,422.6 |
|
| | Total | $ | 2,476.5 |
| $ | — |
| $ | 2,476.5 |
| | $ | 2,859.4 |
| $ | — |
| $ | 2,859.4 |
| | $ | 2,759.3 |
| $ | — |
| $ | 2,759.3 |
| | $ | 2,906.0 |
| $ | — |
| $ | 2,906.0 |
| | $ | 11,001.2 |
| $ | — |
| $ | 11,001.2 |
|
| | | | | | | | | | | | | | | | | | | | | |
| | SEGMENT PROFIT | | | | | | | | | | | | | | | | | | |
| | Construction & DIY | $ | 166.1 |
| $ | 3.3 |
| $ | 169.4 |
| | $ | 210.1 |
| $ | 2.8 |
| $ | 212.9 |
| | $ | 198.5 |
| $ | 3.1 |
| $ | 201.6 |
| | $ | 202.8 |
| $ | 3.8 |
| $ | 206.6 |
| | $ | 777.5 |
| $ | 13.0 |
| $ | 790.5 |
|
| | Industrial | 89.4 |
| 12.4 |
| 101.8 |
| | 117.6 |
| 6.1 |
| 123.7 |
| | 114.6 |
| 2.3 |
| 116.9 |
| | 135.1 |
| 4.0 |
| 139.1 |
| | 456.7 |
| 24.8 |
| 481.5 |
|
| | Security | 57.4 |
| 6.4 |
| 63.8 |
| | 54.7 |
| 8.8 |
| 63.5 |
| | 61.4 |
| 11.9 |
| 73.3 |
| | 64.5 |
| 11.6 |
| 76.1 |
| | 238.0 |
| 38.7 |
| 276.7 |
|
| | Segment Profit | $ | 312.9 |
| $ | 22.1 |
| $ | 335.0 |
| | $ | 382.4 |
| $ | 17.7 |
| $ | 400.1 |
| | $ | 374.5 |
| $ | 17.3 |
| $ | 391.8 |
| | $ | 402.4 |
| $ | 19.4 |
| $ | 421.8 |
| | $ | 1,472.2 |
| $ | 76.5 |
| $ | 1,548.7 |
|
| | Corporate Overhead | (69.0 | ) | 25.5 |
| (43.5 | ) | | (53.7 | ) | 14.2 |
| (39.5 | ) | | (56.4 | ) | 19.9 |
| (36.5 | ) | | (74.8 | ) | 29.7 |
| (45.1 | ) | | (253.9 | ) | 89.3 |
| (164.6 | ) |
| | Total | $ | 243.9 |
| $ | 47.6 |
| $ | 291.5 |
| | $ | 328.7 |
| $ | 31.9 |
| $ | 360.6 |
| | $ | 318.1 |
| $ | 37.2 |
| $ | 355.3 |
| | $ | 327.6 |
| $ | 49.1 |
| $ | 376.7 |
| | $ | 1,218.3 |
| $ | 165.8 |
| $ | 1,384.1 |
|
| | | | | | | | | | | | | | | | | | | | | |
| | Segment Profit as a Percentage of Net Sales | | | | | | | | | | | | | | | | | |
| | Construction & DIY | 14.4 | % | | 14.7 | % | | 15.1 | % | | 15.3 | % | | 14.9 | % | | 15.1 | % | | 14.5 | % | | 14.8 | % | | 14.7 | % | | 15.0 | % |
| | Industrial | 12.2 | % | | 13.9 | % | | 13.7 | % | | 14.4 | % | | 13.9 | % | | 14.2 | % | | 15.3 | % | | 15.8 | % | | 13.8 | % | | 14.6 | % |
| | Security | 9.7 | % | | 10.8 | % | | 9.1 | % | | 10.5 | % | | 10.2 | % | | 12.2 | % | | 10.3 | % | | 12.2 | % | | 9.8 | % | | 11.4 | % |
| | Segment Profit | 12.6 | % | | 13.5 | % | | 13.4 | % | | 14.0 | % | | 13.6 | % | | 14.2 | % | | 13.8 | % | | 14.5 | % | | 13.4 | % | | 14.1 | % |
| | Corporate Overhead | (2.8 | )% | | (1.8 | )% | | (1.9 | )% | | (1.4 | )% | | (2.0 | )% | | (1.3 | )% | | (2.6 | )% | | (1.6 | )% | | (2.3 | )% | | (1.5 | )% |
| | Total | 9.8 | % | | 11.8 | % | | 11.5 | % | | 12.6 | % | | 11.5 | % | | 12.9 | % | | 11.3 | % | | 13.0 | % | | 11.1 | % | | 12.6 | % |
| | | | | | | | | | | | | | | | | | | | | |
| | 1 | Reported, as adjusted for the recast of segment net sales and profit between the Construction and Do-it Yourself (“CDIY”) and Industrial segments to align reporting with the current management of the Company's operations in the emerging markets to be more comparable with the current year presentation. There is no impact to the consolidated financial statements of the Company as a result of this segment realignment. | |
| |
| | | | |
| | 2 | Merger and acquisition-related charges, as reported, relate primarily to the Black & Decker merger and Niscayah and Infastech acquisitions, including facility closure-related charges, employee-related charges and integration costs. | |
| | | | |
| | 3 | The normalized 2013 business segment information adjusted for the previously mentioned realignment of certain segment net sales and segment profit from the CDIY segment to the Industrial segment, as reconciled to GAAP as adjusted above, is considered relevant to aid analysis of the Company’s segment profit results aside from the material impact of the merger and acquisition-related charges. | |
