THE STANLEY WORKS AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, Millions of Dollars Except Per Share Amounts)
SECOND QUARTER
YEAR TO DATE
2005
2004
2005
2004
NET SALES
$
824.0
$
753.9
$
1,630.3
$
1,488.7
COSTS AND EXPENSES
Cost of sales
521.8
480.8
1,039.2
947.7
Selling, general and administrative
189.1
171.3
374.3
338.0
Interest-net
8.1
8.4
15.7
16.3
Other-net
12.0
10.5
21.5
24.4
Restructuring charges
1.6
—
1.6
—
732.6
671.0
1,452.3
1,326.4
EARNINGS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES
91.4
82.9
178.0
162.3
Income taxes
25.4
24.1
45.3
48.5
NET EARNINGS FROM CONTINUING OPERATIONS
$
66.0
$
58.8
$
132.7
$
113.8
Earnings from discontinued operations (including gain
on disposal of $142.7 million in 2004) before income taxes
0.2
3.6
0.1
151.5
Income taxes on discontinued operations
0.3
1.0
0.3
50.4
NET EARNINGS (LOSS) FROM DISCONTINUED OPERATIONS
(0.1
)
2.6
(0.2
)
101.1
NET EARNINGS
$
65.9
$
61.4
$
132.5
$
214.9
BASIC EARNINGS PER SHARE OF COMMON STOCK
Continuing operations
$
0.79
$
0.72
$
1.60
$
1.39
Discontinued operations
—
0.03
—
1.24
Total basic earnings per share of common stock
$
0.79
$
0.75
$
1.60
$
2.63
DILUTED EARNINGS PER SHARE OF COMMON STOCK
Continuing operations
$
0.78
$
0.70
$
1.56
$
1.36
Discontinued operations
—
0.03
—
1.21
Total diluted earnings per share of common stock
$
0.78
$
0.73
$
1.56
$
2.57
DIVIDENDS PER SHARE
$
0.28
$
0.26
$
0.56
$
0.52
AVERAGE SHARES OUTSTANDING (in thousands)
Basic
83,020
81,940
82,919
81,777
Diluted
84,983
84,112
85,076
83,763
1
-Page 8-
THE STANLEY WORKS AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited, Millions of Dollars)
JULY 2, 2005
JANUARY 1, 2005
ASSETS
Cash and cash equivalents
$
325.6
$
250.0
Accounts receivable
622.3
582.0
Inventories
443.0
413.4
Other current assets
75.7
82.2
Assets held for sale
0.7
44.3
Total current assets
1,467.3
1,371.9
Property, plant and equipment
394.6
398.9
Goodwill and other intangibles
989.3
928.2
Other assets
152.4
151.6
Total assets
$
3,003.6
$
2,850.6
LIABILITIES AND SHAREOWNERS’ EQUITY
Short-term borrowings
$
246.2
$
102.5
Accounts payable
308.4
300.4
Accrued expenses
378.2
415.9
Total current liabilities
932.8
818.8
Long-term debt
468.1
481.8
Other long-term liabilities
310.2
328.7
Shareowners’ equity
1,292.5
1,221.3
Total liabilities and equity
$
3,003.6
$
2,850.6
2
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THE STANLEY WORKS AND SUBSIDIARIES SUMMARY OF CASH FLOW ACTIVITY (Unaudited, Millions of Dollars)
SECOND QUARTER
YEAR TO DATE
2005
2004
2005
2004
OPERATING ACTIVITIES
Net earnings
$
65.9
$
61.4
$
132.5
$
214.9
Depreciation and amortization
23.9
22.7
47.3
47.1
Reclassify taxes paid (proceeds) from sale of businesses
to investing activities
8.1
21.9
18.7
(140.0
)
Changes in working capital
(4.2
)
2.9
(68.8
)
(13.0
)
Other
(16.6
)
(18.0
)
8.0
34.0
Net cash provided by operating activities
77.1
90.9
137.7
143.0
INVESTING AND FINANCING ACTIVITIES
Capital and software expenditures
(16.5
)
(12.9
)
(27.0
)
(21.1
)
Proceeds (taxes paid) from sale of business
(8.1
)
(21.9
)
(18.7
)
140.0
Business acquisitions and asset disposals
(46.4
)
(4.2
)
(106.1
)
(254.3
)
Cash dividends on common stock
(23.2
)
(21.2
)
(46.4
)
(42.4
)
Other
32.2
12.5
136.1
66.1
Net cash used in investing and financing activities
(62.0
)
(47.7
)
(62.1
)
(111.7
)
Increase in Cash and Cash Equivalents
15.1
43.2
75.6
31.3
Cash and Cash Equivalents, Beginning of Period
310.5
192.5
250.0
204.4
Cash and Cash Equivalents, End of Period
$
325.6
$
235.7
$
325.6
$
235.7
Free Cash Flow Computation
Operating cash flow
$
77.1
$
90.9
$
137.7
$
143.0
Less: capital and software expenditures
(16.5
)
(12.9
)
(27.0
)
(21.1
)
Free cash flow (before dividends)
$
60.6
$
78.0
$
110.7
$
121.9
Free cash flow is defined as cash flow from operations less capital expenditures; 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.
The change in working capital is comprised of accounts receivable, inventory and accounts payable.
3
-Page 10-
THE STANLEY WORKS AND SUBSIDIARIES BUSINESS SEGMENT INFORMATION (Unaudited, Millions of Dollars)
SECOND QUARTER
YEAR TO DATE
2005
2004
2005
2004
NET SALES
Consumer Products
$
266.9
$
257.7
$
530.3
$
520.0
Industrial Tools
348.2
321.4
697.5
637.4
Security Solutions
208.9
174.8
402.5
331.3
Total
$
824.0
$
753.9
$
1,630.3
$
1,488.7
OPERATING PROFIT
Consumer Products
$
42.6
$
39.4
$
84.4
$
84.4
Industrial Tools
38.0
35.5
74.7
64.1
Security Solutions
32.5
26.9
57.7
54.5
Total
$
113.1
$
101.8
$
216.8
$
203.0
4
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