THE STANLEY WORKS AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, Millions of Dollars Except Per Share Amounts)
FOURTH QUARTER
YEAR TO DATE
2009
2008
2009
2008
NET SALES
$
969.4
$
1,085.9
$
3,737.1
$
4,426.2
COSTS AND EXPENSES
Cost of sales
575.2
693.4
2,228.8
2,754.8
Gross margin
394.2
392.5
1,508.3
1,671.4
% to Net sales
40.7
%
36.1
%
40.4
%
37.8
%
Selling, general and administrative
269.0
275.3
1,028.4
1,107.6
% to Net sales
27.7
%
25.4
%
27.5
%
25.0
%
Operating margin
125.2
117.2
479.9
563.8
% to Net sales
12.9
%
10.8
%
12.8
%
12.7
%
Other-net
44.0
33.7
95.3
102.2
Restructuring and asset impairments
15.1
60.5
40.7
85.5
Income from operations
66.1
23.0
343.9
376.1
Interest-net
14.0
20.9
60.6
82.9
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
52.1
2.1
283.3
293.2
Income taxes (benefit)
(2.3
)
(2.0
)
55.8
72.5
NET EARNINGS FROM CONTINUING OPERATIONS
54.4
4.1
227.5
220.7
Less: net earnings (loss) attributable to noncontrolling interests
(0.2
)
0.5
2.0
1.7
NET EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO COMMON SHAREOWNERS
54.6
3.6
225.5
219.0
Net (loss) earnings from discontinued operations before income taxes
—
(5.8
)
(5.8
)
132.8
Income taxes (benefit) on discontinued operations
(0.8
)
(1.5
)
(3.3
)
44.9
NET EARNINGS (LOSS) FROM DISCONTINUED OPERATIONS
0.8
(4.3
)
(2.5
)
87.9
NET EARNINGS (LOSS) ATTRIBUTABLE TO THE STANLEY WORKS
$
55.4
$
(0.7
)
$
223.0
$
306.9
BASIC EARNINGS PER SHARE OF COMMON STOCK
Continuing operations
$
0.67
$
0.05
$
2.82
$
2.77
Discontinued operations
0.01
(0.06
)
(0.03
)
1.11
Total basic earnings (loss) per share of common stock
$
0.69
$
(0.01
)
$
2.79
$
3.88
DILUTED EARNINGS PER SHARE OF COMMON STOCK
Continuing operations
$
0.67
$
0.05
$
2.80
$
2.74
Discontinued operations
0.01
(0.06
)
(0.03
)
1.10
Total diluted earnings (loss) per share of common stock
$
0.68
$
(0.01
)
$
2.77
$
3.84
DIVIDENDS PER SHARE
$
0.33
$
0.32
$
1.30
$
1.26
AVERAGE SHARES OUTSTANDING (in thousands)
Basic
80,626
78,985
79,788
78,897
Diluted
81,663
79,525
80,396
79,874
1
-Page 11-
THE STANLEY WORKS AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Millions of Dollars)
(Unaudited)
January 2, 2010
January 3, 2009
ASSETS
Cash and cash equivalents
$
400.7
$
211.6
Accounts and notes receivable
532.0
677.7
Inventories
366.2
514.7
Other current assets
117.2
94.0
Total current assets
1,416.1
1,498.0
Property, plant and equipment
575.9
579.8
Goodwill and other intangibles
2,594.8
2,596.1
Other assets
186.0
192.7
Total assets
$
4,772.8
$
4,866.6
LIABILITIES AND SHAREOWNERS’ EQUITY
Short-term borrowings
$
298.4
$
227.7
Accounts payable
410.1
461.5
Accrued expenses
483.1
504.0
Total current liabilities
1,191.6
1,193.2
Long-term debt
1,084.7
1,383.8
Other long-term liabilities
486.4
564.8
The Stanley Works’ shareowners’ equity
1,984.8
1,706.3
Noncontrolling interests equity
25.3
18.5
Total liabilities and equity
$
4,772.8
$
4,866.6
2
-Page 12-
THE STANLEY WORKS AND SUBSIDIARIES SUMMARY OF CASH FLOW ACTIVITY (Unaudited, Millions of Dollars)
FOURTH QUARTER
YEAR TO DATE
2009
2008
2009
2008
OPERATING ACTIVITIES
Net earnings (loss)
$
55.4
$
(0.7
)
$
223.0
$
306.9
Depreciation and amortization
51.3
54.5
200.1
183.0
Pretax (gain) loss from sale of businesses
(0.8
)
(40.6
)
1.6
(126.5
)
Income taxes paid on CST/berger divestiture
—
(11.8
)
—
(46.0
)
Changes in working capital
209.2
127.4
226.0
122.7
Other
(23.7
)
64.9
(111.3
)
76.5
Net cash provided by operating activities
291.4
193.7
539.4
516.6
INVESTING AND FINANCING ACTIVITIES
Capital and software expenditures
(28.2
)
(58.9
)
(93.4
)
(140.8
)
Net proceeds from sales of businesses
0.1
4.6
—
204.6
Business acquisitions and asset disposals
(1.8
)
(207.5
)
(21.8
)
(570.7
)
Proceeds from long-term borrowings
—
249.5
—
249.7
Cash dividends on common stock
(26.7
)
(25.2
)
(103.6
)
(99.0
)
Other
(41.5
)
(243.9
)
(131.5
)
(189.2
)
Net cash used in investing and financing activities
(98.1
)
(281.4
)
(350.3
)
(545.4
)
Increase (Decrease) in Cash and Cash Equivalents
193.3
(87.7
)
189.1
(28.8
)
Cash and Cash Equivalents, Beginning of Period
207.4
299.3
211.6
240.4
Cash and Cash Equivalents, End of Period
$
400.7
$
211.6
$
400.7
$
211.6
Free Cash Flow Computation
Operating cash flow
$
291.4
$
193.7
$
539.4
$
516.6
Less: capital and software expenditures
(28.2
)
(58.9
)
(93.4
)
(140.8
)
Add: Income taxes paid on CST/berger divestiture
—
11.8
—
46.0
Free Cash Flow (before dividends)
$
263.2
$
146.6
$
446.0
$
421.8
Free cash flow is defined as cash flow from operations less capital and capitalized software expenditures. Management considers free cash flow an important indicator of its liquidity, as well as its ability to fund future growth and to provide a return to the shareowners. In 2008, free cash flow also excludes the income taxes paid on the CST/berger divestiture due to the fact the taxes are non-recurring and the directly related gross cash proceeds are classified in investing cash flows. Free cash flow does not include deductions for mandatory debt service, other borrowing activity, discretionary dividends on the Company’s common stock and business acquisitions, among other items.
The change in working capital is comprised of current accounts receivable, inventory and accounts payable.
3
-Page 13-
THE STANLEY WORKS AND SUBSIDIARIES BUSINESS SEGMENT INFORMATION (Unaudited, Millions of Dollars)
FOURTH QUARTER
YEAR TO DATE
2009
2008
2009
2008
NET SALES
Security
$
393.2
$
410.2
$
1,560.2
$
1,497.2
Industrial
235.9
304.5
881.6
1,273.5
Construction & DIY
340.3
371.2
1,295.3
1,655.5
Total
$
969.4
$
1,085.9
$
3,737.1
$
4,426.2
SEGMENT PROFIT
Security
$
78.3
$
75.3
$
307.0
$
268.7
Industrial
26.7
31.2
89.3
164.2
Construction & DIY
40.4
23.6
154.1
190.7
Segment Profit
145.4
130.1
550.4
623.6
Corporate Overhead
(20.2
)
(12.9
)
(70.5
)
(59.8
)
Total
$
125.2
$
117.2
$
479.9
$
563.8
Segment Profit as a Percentage of Net Sales
Security
19.9
%
18.4
%
19.7
%
17.9
%
Industrial
11.3
%
10.2
%
10.1
%
12.9
%
Construction & DIY
11.9
%
6.4
%
11.9
%
11.5
%
Segment Profit
15.0
%
12.0
%
14.7
%
14.1
%
Corporate Overhead
-2.1
%
-1.2
%
-1.9
%
-1.4
%
Total
12.9
%
10.8
%
12.8
%
12.7
%
4
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