THE STANLEY WORKS AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, Millions of Dollars Except Per Share Amounts)
FOURTH QUARTER
YEAR TO DATE
2006
2005
2006
2005
NET SALES
$
1,019.3
$
839.4
$
4,018.6
$
3,285.3
COSTS AND EXPENSES
Cost of sales
647.2
550.1
2,560.1
2,104.0
Selling, general and administrative
239.9
184.9
955.2
736.8
Interest-net
15.4
9.9
64.9
33.8
Other-net
11.9
13.8
57.5
47.9
Restructuring charges
3.8
0.7
13.8
4.6
918.2
759.4
3,651.5
2,927.1
EARNINGS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES
101.1
80.0
367.1
358.2
Income taxes
14.1
15.8
76.4
86.5
NET EARNINGS FROM CONTINUING OPERATIONS
87.0
64.2
290.7
271.7
Loss from discontinued operations (including loss
on disposal of $1.5 million in 2006) before income taxes
(0.5
)
(3.8
)
(1.5
)
(1.2
)
Income taxes (tax benefit) on discontinued operations
(0.1
)
0.2
(0.3
)
0.9
NET LOSS FROM DISCONTINUED OPERATIONS
(0.4
)
(4.0
)
(1.2
)
(2.1
)
NET EARNINGS
$
86.6
$
60.2
$
289.5
$
269.6
BASIC EARNINGS PER SHARE OF COMMON STOCK
Continuing operations
$
1.06
$
0.76
$
3.55
$
3.26
Discontinued operations
(0.01
)
(0.05
)
(0.01
)
(0.03
)
Total basic earnings per share of common stock
$
1.06
$
0.72
$
3.54
$
3.23
DILUTED EARNINGS PER SHARE OF COMMON STOCK
Continuing operations
$
1.04
$
0.75
$
3.47
$
3.18
Discontinued operations
(0.01
)
(0.05
)
(0.01
)
(0.02
)
Total diluted earnings per share of common stock
$
1.03
$
0.70
$
3.46
$
3.16
DIVIDENDS PER SHARE
$
0.30
$
0.29
$
1.18
$
1.14
AVERAGE SHARES OUTSTANDING (in thousands)
Basic
81,796
83,915
81,866
83,347
Diluted
83,691
85,856
83,704
85,406
AGM
$
372.1
$
289.3
$
1,458.5
$
1,181.3
% of Net Sales
36.5
%
34.5
%
36.3
%
36.0
%
SG&A % of Net Sales
23.5
%
22.0
%
23.8
%
22.4
%
1
-Page 8-
THE STANLEY WORKS AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited, Millions of Dollars)
December 30, 2006
December 31, 2005
ASSETS
Cash and cash equivalents
$
176.6
$
657.8
Accounts and notes receivable
749.6
609.6
Inventories
598.9
460.7
Other current assets
81.1
84.2
Assets held for sale
28.4
13.3
Total current assets
1,634.6
1,825.6
Property, plant and equipment
555.2
467.1
Goodwill and other intangibles
1,629.5
1,060.4
Other assets
131.0
192.0
Total assets
$
3,950.3
$
3,545.1
LIABILITIES AND SHAREOWNERS’ EQUITY
Short-term borrowings
$
320.0
$
170.2
Accounts payable
445.2
327.7
Accrued expenses
486.9
374.3
Liabilities held for sale
—
3.1
Total current liabilities
1,252.1
875.3
Long-term debt
679.2
895.3
Other long-term liabilities
472.3
329.6
Shareowners’ equity
1,546.7
1,444.9
Total liabilities and equity
$
3,950.3
$
3,545.1
2
-Page 9-
THE STANLEY WORKS AND SUBSIDIARIES SUMMARY OF CASH FLOW ACTIVITY (Unaudited, Millions of Dollars)
FOURTH QUARTER
YEAR TO DATE
2006
2005
2006
2005
OPERATING ACTIVITIES
Net earnings
$
86.6
$
60.2
$
289.5
$
269.6
Depreciation and amortization
29.9
25.8
121.2
96.5
Changes in working capital
55.2
82.6
28.7
1.2
Other
(52.4
)
(18.6
)
(0.3
)
(5.0
)
Net cash provided by operating activities
119.3
150.0
439.1
362.3
INVESTING AND FINANCING ACTIVITIES
Capital and software expenditures
(20.7
)
(24.4
)
(80.5
)
(68.4
)
Proceeds (taxes paid) from sale of business
—
—
0.9
(20.6
)
Business acquisitions and asset disposals
0.3
(174.5
)
(539.9
)
(282.9
)
Cash dividends on common stock
(24.5
)
(24.3
)
(96.1
)
(94.9
)
Other
(139.1
)
392.9
(204.7
)
512.3
Net cash used in investing and financing activities
(184.0
)
169.7
(920.3
)
45.5
Increase(Decrease) in Cash and Cash Equivalents
(64.7
)
319.7
(481.2
)
407.8
Cash and Cash Equivalents, Beginning of Period
241.3
338.1
657.8
250.0
Cash and Cash Equivalents, End of Period
$
176.6
$
657.8
$
176.6
$
657.8
Free Cash Flow Computation
Operating Cash Flow
$
119.3
$
150.0
$
439.1
$
362.3
Less: capital and software expenditures
(20.7
)
(24.4
)
(80.5
)
(68.4
)
Free Cash Flow (before dividends)
$
98.6
$
125.6
$
358.6
$
293.9
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)
FOURTH QUARTER
YEAR TO DATE
2006
2005
2006
2005
NET SALES
Consumer Products
$
339.1
$
289.5
$
1,328.5
$
1,097.8
Industrial Tools
456.5
339.4
1,802.9
1,369.5
Security Solutions
223.7
210.5
887.2
818.0
Total
$
1,019.3
$
839.4
$
4,018.6
$
3,285.3
OPERATING PROFIT
Consumer Products
$
58.3
$
45.2
$
210.3
$
185.2
Industrial Tools
43.5
30.9
159.1
135.5
Security Solutions
30.4
28.3
133.9
123.8
Total
$
132.2
$
104.4
$
503.3
$
444.5
OPERATING PROFIT % OF NET SALES
Consumer Products
17.2
%
15.6
%
15.8
%
16.9
%
Industrial Tools
9.5
%
9.1
%
8.8
%
9.9
%
Security Solutions
13.6
%
13.4
%
15.1
%
15.1
%
Total
13.0
%
12.4
%
12.5
%
13.5
%
4
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