THE STANLEY WORKS AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, Millions of Dollars Except Per Share Amounts)
SECOND QUARTER
YEAR TO DATE
2006
2005
2006
2005
NET SALES
$
1,017.9
$
814.7
$
1,986.6
$
1,611.0
COSTS AND EXPENSES
Cost of sales
641.2
514.0
1,278.0
1,023.3
Selling, general and administrative
244.6
188.4
483.4
372.8
Interest-net
17.4
8.2
33.0
15.8
Other-net
10.9
12.0
30.2
21.5
Restructuring charges
1.8
1.6
9.1
1.6
915.9
724.2
1,833.7
1,435.0
EARNINGS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES
102.0
90.5
152.9
176.0
Income taxes
27.0
25.2
39.4
44.9
NET EARNINGS FROM CONTINUING OPERATIONS
75.0
65.3
113.5
131.1
Earnings (loss) from discontinued operations (including loss
on disposal of $1.5 million in 2006) before income taxes
(0.5
)
1.3
(1.5
)
2.2
Income taxes (tax benefit) on discontinued operations
(0.2
)
0.7
(0.4
)
0.8
NET EARNINGS (LOSS) FROM DISCONTINUED OPERATIONS
(0.3
)
0.6
(1.1
)
1.4
NET EARNINGS
$
74.7
$
65.9
$
112.4
$
132.5
BASIC EARNINGS PER SHARE OF COMMON STOCK
Continuing operations
$
0.92
$
0.79
$
1.38
$
1.58
Discontinued operations
—
0.01
(0.01
)
0.02
Total basic earnings per share of common stock
$
0.92
$
0.79
$
1.37
$
1.60
DILUTED EARNINGS PER SHARE OF COMMON STOCK
Continuing operations
$
0.90
$
0.77
$
1.35
$
1.54
Discontinued operations
—
0.01
(0.01
)
0.02
Total diluted earnings per share of common stock
$
0.90
$
0.78
$
1.34
$
1.56
DIVIDENDS PER SHARE
$
0.29
$
0.28
$
0.58
$
0.56
AVERAGE SHARES OUTSTANDING (in thousands)
Basic
81,132
83,020
82,114
82,919
Diluted
82,978
84,983
83,991
85,076
1
-Page 7-
THE STANLEY WORKS AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited, Millions of Dollars)
July 1, 2006
December 31, 2005
ASSETS
Cash and cash equivalents
$
207.1
$
657.8
Accounts and notes receivable
751.2
609.6
Inventories
571.6
460.7
Other current assets
80.5
84.2
Assets held for sale
2.9
13.3
Total current assets
1,613.3
1,825.6
Property, plant and equipment
493.5
467.1
Goodwill and other intangibles
1,517.1
1,060.4
Other assets
221.4
192.0
Total assets
$
3,845.3
$
3,545.1
LIABILITIES AND SHAREOWNERS’ EQUITY
Short-term borrowings
$
345.1
$
170.2
Accounts payable
420.1
327.7
Accrued expenses
433.9
374.3
Liabilities held for sale
—
3.1
Total current liabilities
1,199.1
875.3
Long-term debt
821.0
895.3
Other long-term liabilities
418.2
329.6
Shareowners’ equity
1,407.0
1,444.9
Total liabilities and equity
$
3,845.3
$
3,545.1
2
-Page 8-
THE STANLEY WORKS AND SUBSIDIARIES SUMMARY OF CASH FLOW ACTIVITY (Unaudited, Millions of Dollars)
SECOND QUARTER
YEAR TO DATE
2006
2005
2006
2005
OPERATING ACTIVITIES
Net earnings
$
74.7
$
65.9
$
112.4
$
132.5
Depreciation and amortization
31.0
23.9
61.3
47.3
Changes in working capital
(8.1
)
(4.2
)
1.5
(25.4
)
Other
19.7
(8.5
)
27.3
(16.7
)
Net cash provided by operating activities
117.3
77.1
202.5
137.7
INVESTING AND FINANCING ACTIVITIES
Capital and software expenditures
(24.1
)
(16.5
)
(38.6
)
(27.0
)
Proceeds (taxes paid) from sale of business
—
(8.1
)
0.9
(18.7
)
Business acquisitions and asset disposals
(25.2
)
(46.4
)
(515.8
)
(106.1
)
Cash dividends on common stock
(23.5
)
(23.2
)
(47.3
)
(46.4
)
Other
(42.3
)
32.2
(52.4
)
136.1
�� Net cash used in investing and financing activities
(115.1
)
(62.0
)
(653.2
)
(62.1
)
Increase(decrease) in Cash and Cash Equivalents
2.2
15.1
(450.7
)
75.6
Cash and Cash Equivalents, Beginning of Period
204.9
310.5
657.8
250.0
Cash and Cash Equivalents, End of Period
$
207.1
$
325.6
$
207.1
$
325.6
Free Cash Flow Computation
Operating Cash Flow
$
117.3
$
77.1
$
202.5
$
137.7
Less: capital and software expenditures
(24.1
)
(16.5
)
(38.6
)
(27.0
)
Free Cash Flow (before dividends)
$
93.2
$
60.6
$
163.9
$
110.7
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 9-
THE STANLEY WORKS AND SUBSIDIARIES BUSINESS SEGMENT INFORMATION (Unaudited, Millions of Dollars)
SECOND QUARTER
YEAR TO DATE
2006
2005
2006
2005
NET SALES
Consumer Products
$
331.7
$
261.3
$
641.5
$
518.5
Industrial Tools
462.6
348.1
913.6
697.4
Security Solutions
223.6
205.3
431.5
395.1
Total
$
1,017.9
$
814.7
$
1,986.6
$
1,611.0
OPERATING PROFIT
Consumer Products
$
50.7
$
42.0
$
88.0
$
83.0
Industrial Tools
45.3
38.0
74.0
74.8
Security Solutions
36.1
32.3
63.2
57.1
Total
$
132.1
$
112.3
$
225.2
$
214.9
4
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