THE STANLEY WORKS AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, Millions of Dollars, Except Per Share Amounts)
FOURTH QUARTER
YEAR TO DATE
2007
2006
2007
2006
NET SALES
$
1,167.4
$
1,019.3
$
4,483.8
$
4,018.6
COSTS AND EXPENSES
Cost of sales
733.7
647.2
2,791.6
2,560.1
Gross Margin
433.7
372.1
1,692.2
1,458.5
% to Net Sales
37.2
%
36.5
%
37.7
%
36.3
%
Selling, general and administrative
274.7
239.9
1,058.4
955.2
% to Net Sales
23.5
%
23.5
%
23.6
%
23.8
%
Operating Margin
159.0
132.2
633.8
503.3
% to Net Sales
13.6
%
13.0
%
14.1
%
12.5
%
Other-net
19.8
11.9
89.7
57.5
Restructuring charges
2.3
3.8
12.8
13.8
Income from Operations
136.9
116.5
531.3
432.0
Interest-net
19.6
15.4
80.2
64.9
EARNINGS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES
117.3
101.1
451.1
367.1
Income taxes
25.0
14.1
114.5
76.4
NET EARNINGS FROM CONTINUING OPERATIONS
$
92.3
$
87.0
$
336.6
$
290.7
Loss from discontinued operations (including loss
on disposal of $1.5 million in 2006) before income taxes
—
(0.5
)
—
(1.5
)
Income tax benefit on discontinued operations
—
(0.1
)
—
(0.3
)
NET LOSS FROM DISCONTINUED OPERATIONS
—
(0.4
)
—
(1.2
)
NET EARNINGS
$
92.3
$
86.6
$
336.6
$
289.5
BASIC EARNINGS (LOSS) PER SHARE OF COMMON STOCK
Continuing operations
$
1.13
$
1.06
$
4.09
$
3.55
Discontinued operations
—
(0.01
)
—
(0.01
)
Total basic earnings per share of common stock
$
1.13
$
1.06
$
4.09
$
3.54
DILUTED EARNINGS (LOSS) PER SHARE OF COMMON STOCK
Continuing operations
$
1.11
$
1.04
$
4.00
$
3.47
Discontinued operations
—
(0.01
)
—
(0.01
)
Total diluted earnings per share of common stock
$
1.11
$
1.03
$
4.00
$
3.46
DIVIDENDS PER SHARE
$
0.31
$
0.30
$
1.22
$
1.18
AVERAGE SHARES OUTSTANDING (in thousands)
Basic
81,556
81,796
82,313
81,866
Diluted
83,089
83,691
84,046
83,704
1
-Page 8-
THE STANLEY WORKS AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Millions of Dollars)
December 29, 2007
December 30, 2006
ASSETS
Cash and cash equivalents
$
240.4
$
176.6
Accounts and notes receivable
848.4
749.6
Inventories
567.3
598.9
Other current assets
88.0
85.2
Assets held for sale
24.3
28.2
Total current assets
1,768.4
1,638.5
Property, plant and equipment
569.3
559.4
Goodwill and other intangibles
2,252.6
1,621.5
Other assets
189.6
116.0
Total assets
$
4,779.9
$
3,935.4
LIABILITIES AND SHAREOWNERS’ EQUITY
Short-term borrowings
$
292.8
$
320.0
Accounts payable
508.6
445.2
Accrued expenses
476.1
485.9
Total current liabilities
1,277.5
1,251.1
Long-term debt
1,212.1
679.2
Other long-term liabilities
561.8
453.1
Shareowners’ equity
1,728.5
1,552.0
Total liabilities and equity
$
4,779.9
$
3,935.4
2
-Page 9-
THE STANLEY WORKS AND SUBSIDIARIES SUMMARY OF CASH FLOW ACTIVITY (Unaudited, Millions of Dollars)
FOURTH QUARTER
YEAR TO DATE
2007
2006
2007
2006
OPERATING ACTIVITIES
Net earnings
$
92.3
$
86.6
$
336.6
$
289.5
Depreciation and amortization
42.1
29.9
162.2
121.2
Changes in working capital
106.1
55.2
51.7
28.7
Other
(22.6
)
(52.4
)
(6.4
)
(0.3
)
Net cash provided by operating activities
217.9
119.3
544.1
439.1
INVESTING AND FINANCING ACTIVITIES
Capital and software expenditures
(31.9
)
(20.7
)
(86.9
)
(80.5
)
Business acquisitions and asset disposals
(5.8
)
0.3
(624.9
)
(539.9
)
Proceeds from long-term borrowings
0.1
—
529.9
—
Cash dividends on common stock
(24.9
)
(24.5
)
(99.8
)
(96.1
)
Other
(195.6
)
(139.1
)
(198.6
)
(203.8
)
Net cash used in investing and financing activities
(258.1
)
(184.0
)
(480.3
)
(920.3
)
Increase(Decrease) in Cash and Cash Equivalents
(40.2
)
(64.7
)
63.8
(481.2
)
Cash and Cash Equivalents, Beginning of Period
280.6
241.3
176.6
657.8
Cash and Cash Equivalents, End of Period
$
240.4
$
176.6
$
240.4
$
176.6
Free Cash Flow Computation
Operating cash flow
$
217.9
$
119.3
$
544.1
$
439.1
Less: capital and software expenditures
(31.9
)
(20.7
)
(86.9
)
(80.5
)
Free cash flow (before dividends)
$
186.0
$
98.6
$
457.2
$
358.6
Free cash flow is defined as cash flow from operations less capital and capitalized software expenditures. The company believes this is an important measure of its liquidity, of its ability to fund future growth and to provide a return to the shareowners. Free cash flow does not reflect, among other things, deductions for mandatory debt service, other borrowing activity, discretionary dividends on the Company’s common stock and acquisitions.
The change in working capital is comprised of current 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
2007
2006
2007
2006
NET SALES
Construction & DIY
$
458.8
$
437.1
$
1,795.0
$
1,723.9
Industrial
340.4
296.3
1,255.9
1,137.7
Security
368.2
285.9
1,432.9
1,157.0
Total
$
1,167.4
$
1,019.3
$
4,483.8
$
4,018.6
SEGMENT PROFIT
Construction & DIY
$
62.8
$
68.0
$
270.0
$
271.1
Industrial
50.6
38.6
184.0
124.0
Security
60.0
41.8
242.1
171.5
Segment Profit
173.4
148.4
696.1
566.6
Corporate Overhead
(14.4
)
(16.2
)
(62.3
)
(63.3
)
Total
$
159.0
$
132.2
$
633.8
$
503.3
Segment Profit as a Percentage of Net Sales
Construction & DIY
13.7
%
15.6
%
15.0
%
15.7
%
Industrial
14.9
%
13.0
%
14.7
%
10.9
%
Security
16.3
%
14.6
%
16.9
%
14.8
%
Segment Profit
14.8
%
14.6
%
15.5
%
14.1
%
Corporate Overhead
-1.2
%
-1.6
%
-1.4
%
-1.6
%
Total
13.6
%
13.0
%
14.1
%
12.5
%
4
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