THE STANLEY WORKS AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, Millions of Dollars Except Per Share Amounts)
SECOND QUARTER
YEAR TO DATE
2009
2008
2009
2008
NET SALES
$
919.2
$
1,151.7
$
1,832.2
$
2,222.7
COSTS AND EXPENSES
Cost of sales
552.6
710.1
1,104.5
1,375.2
Gross margin
366.6
441.6
727.7
847.5
% to Net sales
39.9
%
38.3
%
39.7
%
38.1
%
Selling, general and administrative
255.3
282.9
508.0
557.5
% to Net sales
27.8
%
24.6
%
27.7
%
25.1
%
Operating margin
111.3
158.7
219.7
290.0
% to Net sales
12.1
%
13.8
%
12.0
%
13.0
%
Other-net
(12.6
)
20.5
17.7
40.6
Restructuring charges
9.9
17.0
19.0
20.2
Income from operations
114.0
121.2
183.0
229.2
Interest-net
15.3
20.3
31.6
41.2
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
98.7
100.9
151.4
188.0
Income taxes
26.7
26.3
40.4
49.1
NET EARNINGS FROM CONTINUING OPERATIONS
72.0
74.6
111.0
138.9
Less: net earnings attributable to noncontrolling interests
1.2
0.4
1.9
0.6
NET EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO COMMON SHAREOWNERS
70.8
74.2
109.1
138.3
Net (loss) earnings from discontinued operations before income taxes
(2.4
)
4.7
(3.5
)
8.5
Income taxes (benefit) on discontinued operations
(1.1
)
0.8
(1.6
)
2.2
NET (LOSS) EARNINGS FROM DISCONTINUED OPERATIONS
(1.3
)
3.9
(1.9
)
6.3
NET EARNINGS ATTRIBUTABLE TO THE STANLEY WORKS
$
69.5
$
78.1
$
107.2
$
144.6
BASIC EARNINGS PER SHARE OF COMMON STOCK
Continuing operations
$
0.89
$
0.94
$
1.38
$
1.75
Discontinued operations
(0.02
)
0.05
(0.02
)
0.08
Total basic earnings per share of common stock
$
0.88
$
0.99
$
1.35
$
1.83
DILUTED EARNINGS PER SHARE OF COMMON STOCK
Continuing operations
$
0.89
$
0.93
$
1.37
$
1.73
Discontinued operations
(0.02
)
0.05
(0.02
)
0.08
Total diluted earnings per share of common stock
$
0.87
$
0.98
$
1.35
$
1.80
DIVIDENDS PER SHARE
$
0.32
$
0.31
$
0.64
$
0.62
AVERAGE SHARES OUTSTANDING (in thousands)
Basic
79,326,750
78,650,453
79,219,771
78,878,373
Diluted
79,744,209
79,827,022
79,590,637
80,096,411
1
-Page 8-
THE STANLEY WORKS AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Millions of Dollars)
(Unaudited)
July 4, 2009
January 3, 2009
ASSETS
Cash and cash equivalents
$
156.3
$
211.6
Accounts and notes receivable
654.9
677.7
Inventories
466.5
514.7
Other current assets
98.2
94.0
Total current assets
1,375.9
1,498.0
Property, plant and equipment
573.9
579.8
Goodwill and other intangibles
2,600.7
2,596.1
Other assets
199.2
192.7
Total assets
$
4,749.7
$
4,866.6
LIABILITIES AND SHAREOWNERS’ EQUITY
Short-term borrowings
$
271.4
$
227.7
Accounts payable
370.7
461.5
Accrued expenses
476.2
504.0
Total current liabilities
1,118.3
1,193.2
Long-term debt
1,276.9
1,383.8
Other long-term liabilities
534.6
564.8
The Stanley Works’ shareowners’ equity
1,795.7
1,706.3
Noncontrolling interests equity
24.2
18.5
Total liabilities and equity
$
4,749.7
$
4,866.6
2
-Page 9-
THE STANLEY WORKS AND SUBSIDIARIES SUMMARY OF CASH FLOW ACTIVITY (Unaudited, Millions of Dollars)
SECOND QUARTER
YEAR TO DATE
2009
2008
2009
2008
OPERATING ACTIVITIES
Net earnings
$
69.5
$
78.1
$
107.2
$
144.6
Depreciation and amortization
48.9
40.5
96.9
81.3
Changes in working capital
29.7
(24.6
)
(15.6
)
(32.7
)
Other
(80.0
)
(10.5
)
(116.8
)
(2.0
)
Net cash provided by operating activities
68.1
83.5
71.7
191.2
INVESTING AND FINANCING ACTIVITIES
Capital and software expenditures
(25.1
)
(28.5
)
(46.8
)
(53.6
)
Business acquisitions and asset disposals
0.3
(26.5
)
(5.7
)
(27.0
)
Cash dividends on common stock
(25.3
)
(24.3
)
(50.6
)
(48.6
)
Other
10.3
55.2
(23.9
)
81.8
Net cash used in investing and financing activities
(39.8
)
(24.1
)
(127.0
)
(47.4
)
Increase (Decrease) in Cash and Cash Equivalents
28.3
59.4
(55.3
)
143.8
Cash and Cash Equivalents, Beginning of Period
128.0
324.8
211.6
240.4
Cash and Cash Equivalents, End of Period
$
156.3
$
384.2
$
156.3
$
384.2
Free Cash Flow Computation
Operating cash flow
$
68.1
$
83.5
$
71.7
$
191.2
Less: capital and software expenditures
(25.1
)
(28.5
)
(46.8
)
(53.6
)
Free cash flow (before dividends)
$
43.0
$
55.0
$
24.9
$
137.6
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)
SECOND QUARTER
YEAR TO DATE
2009
2008
2009
2008
NET SALES
Security
$
390.6
$
361.7
$
764.3
$
694.2
Industrial
204.4
338.2
440.4
670.9
Construction & DIY
324.2
451.8
627.5
857.6
Total
$
919.2
$
1,151.7
$
1,832.2
$
2,222.7
SEGMENT PROFIT
Security
$
74.4
$
65.9
$
145.0
$
119.2
Industrial
19.3
44.1
43.8
92.8
Construction & DIY
36.5
65.8
65.3
112.9
Segment Profit
130.2
175.8
254.1
324.9
Corporate Overhead
(18.9
)
(17.1
)
(34.4
)
(34.9
)
Total
$
111.3
$
158.7
$
219.7
$
290.0
Segment Profit as a Percentage of Net Sales
Security
19.0
%
18.2
%
19.0
%
17.2
%
Industrial
9.4
%
13.0
%
9.9
%
13.8
%
Construction & DIY
11.3
%
14.6
%
10.4
%
13.2
%
Segment Profit
14.2
%
15.3
%
13.9
%
14.6
%
Corporate Overhead
-2.1
%
-1.5
%
-1.9
%
-1.6
%
Total
12.1
%
13.8
%
12.0
%
13.0
%
4
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