Stanley Black & Decker (SWK) 8-K The Stanley Works Reports 2Q 2009 Results

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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

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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

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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.

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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	%

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