THE STANLEY WORKS AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, Millions of Dollars Except Per Share Amounts)
FOURTH QUARTER
YEAR TO DATE
2005
2004
2005
2004
NET SALES
$
839.4
$
790.9
$
3,285.3
$
2,997.4
COSTS AND EXPENSES
Cost of sales
550.1
500.0
2,104.0
1,893.8
Selling, general and administrative
184.9
182.4
736.8
691.3
Interest-net
9.9
9.7
33.8
34.4
Other-net
13.8
12.2
47.9
46.0
Restructuring charges
0.7
7.7
4.6
7.7
759.4
712.0
2,927.1
2,673.2
EARNINGS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES
80.0
78.9
358.2
324.2
Income taxes
15.8
14.5
86.5
87.3
NET EARNINGS FROM CONTINUING OPERATIONS
$
64.2
$
64.4
$
271.7
$
236.9
Earnings (loss) from discontinued operations (including
gain on disposal of $38.5 million fourth quarter and
$180.7 million year to date 2004) before income taxes
(3.8
)
42.6
(1.2
)
200.8
Income taxes on discontinued operations
0.2
18.9
0.9
70.8
NET EARNINGS (LOSS) FROM DISCONTINUED OPERATIONS
(4.0
)
23.7
(2.1
)
130.0
NET EARNINGS
$
60.2
$
88.1
$
269.6
$
366.9
BASIC EARNINGS PER SHARE OF COMMON STOCK
Continuing operations
$
0.76
$
0.78
$
3.26
$
2.89
Discontinued operations
(0.05
)
0.29
(0.03
)
1.58
Total basic earnings per share of common stock
$
0.72
$
1.07
$
3.23
$
4.47
DILUTED EARNINGS PER SHARE OF COMMON STOCK
Continuing operations
$
0.75
$
0.76
$
3.18
$
2.81
Discontinued operations
(0.05
)
0.28
(0.02
)
1.54
Total diluted earnings per share of common stock
$
0.70
$
1.04
$
3.16
$
4.36
DIVIDENDS PER SHARE
$
0.29
$
0.28
$
1.14
$
1.08
AVERAGE SHARES OUTSTANDING (in thousands)
Basic
83,915
82,487
83,347
82,058
Diluted
85,856
85,020
85,406
84,244
1
-Page 9-
THE STANLEY WORKS AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited, Millions of Dollars)
December 31, 2005
January 1, 2005
ASSETS
Cash and cash equivalents
$
657.8
$
250.0
Accounts and notes receivable
609.6
575.4
Inventories
460.7
407.3
Other current assets
75.6
82.3
Assets held for sale
13.3
59.9
Total current assets
1,817.0
1,374.9
Property, plant and equipment
467.1
396.2
Goodwill and other intangibles
1,060.4
928.0
Other assets
191.0
168.5
Total assets
$
3,535.5
$
2,867.6
LIABILITIES AND SHAREOWNERS’ EQUITY
Short-term borrowings
$
170.2
$
102.5
Accounts payable
327.7
297.9
Accrued expenses
395.0
416.9
Liabilities held for sale
3.1
3.7
Total current liabilities
896.0
821.0
Long-term debt
895.3
481.8
Other long-term liabilities
309.4
328.2
Shareowners’ equity
1,434.8
1,236.6
Total liabilities and equity
$
3,535.5
$
2,867.6
2
-Page 10-
THE STANLEY WORKS AND SUBSIDIARIES SUMMARY OF CASH FLOW ACTIVITY (Unaudited, Millions of Dollars)
FOURTH QUARTER
YEAR TO DATE
2005
2004
2005
2004
OPERATING ACTIVITIES
Net earnings
$
60.2
$
88.1
$
269.6
$
366.9
Depreciation and amortization
25.8
24.7
96.5
95.0
Changes in working capital
90.1
40.0
(23.9
)
(7.0
)
Other
(26.1
)
(23.2
)
20.1
(83.4
)
Net cash provided by operating activities
150.0
129.6
362.3
371.5
INVESTING AND FINANCING ACTIVITIES
Capital and software expenditures
(24.4
)
(18.4
)
(68.4
)
(54.8
)
Proceeds (taxes paid) from sale of business
—
75.4
(20.6
)
204.9
Business acquisitions and asset disposals
(174.5
)
(40.7
)
(282.9
)
(298.2
)
Cash dividends on common stock
(24.3
)
(24.0
)
(94.9
)
(89.4
)
Other
392.9
(128.2
)
512.3
(88.4
)
Net cash provided by( used in) investing and financing activities
169.7
(135.9
)
45.5
(325.9
)
Increase (decrease) in Cash and Cash Equivalents
319.7
(6.3
)
407.8
45.6
Cash and Cash Equivalents, Beginning of Period
338.1
256.3
250.0
204.4
Cash and Cash Equivalents, End of Period
$
657.8
$
250.0
$
657.8
$
250.0
Free Cash Flow Computation
Operating Cash Flow
$
150.0
$
129.6
$
362.3
$
371.5
Less: capital and software expenditures
(24.4
)
(18.4
)
(68.4
)
(54.8
)
Free Cash Flow (before dividends)
$
125.6
$
111.2
$
293.9
$
316.7
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 11-
THE STANLEY WORKS AND SUBSIDIARIES BUSINESS SEGMENT INFORMATION (Unaudited, Millions of Dollars)
FOURTH QUARTER
YEAR TO DATE
2005
2004
2005
2004
NET SALES
Consumer Products
$
289.5
$
288.6
$
1,097.8
$
1,042.7
Industrial Tools
339.4
331.6
1,369.5
1,292.5
Security Solutions
210.5
170.7
818.0
662.2
Total
$
839.4
$
790.9
$
3,285.3
$
2,997.4
OPERATING PROFIT
Consumer Products
$
45.2
$
48.0
$
185.2
$
171.4
Industrial Tools
30.9
35.1
135.5
133.1
Security Solutions
28.3
25.4
123.8
107.8
Total
$
104.4
$
108.5
$
444.5
$
412.3
4
-Page 12-
THE STANLEY WORKS AND SUBSIDIARIES 2006 SALES GROWTH (Unaudited, Millions of Dollars)
2006 Earnings Outlook:
Total Year
Split By Quarter
Sales Growth:
2006
Q1
Q2
Q3
Q4
Consumer Products
2-3
%
(1-2
%)
4-6
%
2-4
%
3-4
%
Industrial Tools
1-2
%
(0-1
%)
2-3
%
2-3
%
1-2
%
Security Solutions
3-4
%
2-3
%
4-5
%
4-5
%
2-3
%
Core Organic:
2-4
%
~1
%
~4
%
~4
%
~3
%
Facom Tools
$
450M
27
%
25
%
22
%
26
%
National Hardware
$
185M
24
%
27
%
25
%
24
%
06 Acquisitions
$
100M
0
%
0
%
50
%
50
%
+24% -26
%
5
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