Stanley Black & Decker (SWK) 8-K Stanley Works Reports 1Q 2008 Results

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THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, Millions of Dollars Except Per Share Amounts)

	FIRST QUARTER
	2008			2007
NET SALES	$	1,096.9		$	1,062.1
COSTS AND EXPENSES
Cost of sales		681.9			666.8
Gross Margin		415.0			395.3
% to Net Sales		37.8	%		37.2	%
Selling, general and administrative		279.5			259.0
% to Net Sales		25.5	%		24.4	%
Operating Margin		135.5			136.3
% to Net Sales		12.4	%		12.8	%
Other-net		20.7			19.9
Restructuring charges		3.3			4.0
Income from Operations		111.5			112.4
Interest-net		18.4			20.2
EARNINGS BEFORE INCOME TAXES		93.1			92.2
Income taxes		25.1			24.6
NET EARNINGS	$	68.0		$	67.6
BASIC EARNINGS PER SHARE OF COMMON STOCK	$	0.86		$	0.82
DILUTED EARNINGS PER SHARE OF COMMON STOCK	$	0.85		$	0.80
DIVIDENDS PER SHARE	$	0.31		$	0.30
AVERAGE SHARES OUTSTANDING (in thousands)
Basic		79,025			82,851
Diluted		80,274			84,774

Operating margin is defined as sales less cost of sales less SG&A. Management uses operating margin and its percentage of net sales as key measures to assess the performance of the Company as a whole, as well as the related measures at the segment level.

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THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Millions of Dollars)

	March 29, 2008		December 29, 2007
ASSETS
Cash and cash equivalents	$	324.8	$	240.4
Accounts and notes receivable		891.0		848.4
Inventories		591.6		567.3
Other current assets		91.8		88.0
Assets held for sale		—		24.3
��      Total current assets		1,899.2		1,768.4
Property, plant and equipment		579.5		569.3
Goodwill and other intangibles		2,274.8		2,252.6
Other assets		201.2		189.6
Total assets	$	4,954.7	$	4,779.9
LIABILITIES AND SHAREOWNERS’ EQUITY
Short-term borrowings	$	417.9	$	292.8
Accounts payable		532.0		508.6
Accrued expenses		479.6		476.1
Total current liabilities		1,429.5		1,277.5
Long-term debt		1,204.0		1,212.1
Other long-term liabilities		604.6		561.8
Shareowners’ equity		1,716.6		1,728.5
Total liabilities and equity	$	4,954.7	$	4,779.9

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THE STANLEY WORKS AND SUBSIDIARIES
SUMMARY OF CASH FLOW ACTIVITY
(Unaudited, Millions of Dollars)

	FIRST QUARTER
	2008			2007
OPERATING ACTIVITIES
Net earnings	$	68.0		$	67.6
Depreciation and amortization		40.8			37.2
Changes in working capital		(8.1	)		(18.7	)
Other		7.0			7.7
Net cash provided by operating activities		107.7			93.8
INVESTING AND FINANCING ACTIVITIES
Capital and software expenditures		(25.1	)		(26.2	)
Business acquisitions and asset disposals		(0.5	)		(541.4	)
Proceeds from long-term borrowings		—			529.7
Cash dividends on common stock		(24.3	)		(24.9	)
Other		26.6			3.2
Net cash used in investing and financing activities		(23.3	)		(59.6	)
Increase in Cash and Cash Equivalents		84.4			34.2
Cash and Cash Equivalents, Beginning of Period		240.4			176.6
Cash and Cash Equivalents, End of Period	$	324.8		$	210.8
Free Cash Flow Computation
Operating Cash Flow	$	107.7		$	93.8
Less: capital and software expenditures		(25.1	)		(26.2	)
Free Cash Flow (before dividends)	$	82.6		$	67.6

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 as well as 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 accounts receivable, inventory and accounts payable.

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THE STANLEY WORKS AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(Unaudited, Millions of Dollars)

	FIRST QUARTER
	2008			2007
NET SALES
Construction & DIY	$	423.2		$	423.7
��   Industrial		335.7			310.7
Security		338.0			327.7
Total	$	1,096.9		$	1,062.1
SEGMENT PROFIT
Construction & DIY	$	50.8		$	62.5
Industrial		49.1			45.5
Security		53.3			45.7
Segment Profit		153.2			153.7
Corporate Overhead		(17.7	)		(17.4	)
Total	$	135.5		$	136.3
Segment Profit as a Percentage of Net Sales
Construction & DIY		12.0	%		14.8	%
Industrial		14.6	%		14.6	%
Security		15.8	%		13.9	%
Segment Profit		14.0	%		14.4	%
Corporate Overhead		-1.6	%		-1.6	%
Total		12.4	%		12.8	%

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