STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, Millions of Dollars Except Per Share Amounts)
SECOND QUARTER
GAAP 2010
One Time Charges1
Normalized 20102
2009
NET SALES
$
2,365.6
$
2,365.6
$
919.2
COSTS AND EXPENSES
Cost of sales
1,596.6
(123.7
)
1,472.9
552.6
Gross margin
769.0
123.7
892.7
366.6
% to Net sales
32.5
%
37.7
%
39.9
%
Selling, general and administrative
584.2
(15.7
)
568.5
255.3
% to Net sales
24.7
%
24.0
%
27.8
%
Operating margin
184.8
139.4
324.2
111.3
% to Net sales
7.8
%
13.7
%
12.1
%
Other-net
65.1
(11.6
)
53.5
(12.6
)
Restructuring charges and asset impairments
85.8
(78.4
)
7.4
9.9
Income from operations
33.9
229.4
263.3
114.0
Interest-net
24.6
—
24.6
15.3
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
9.3
229.4
238.7
98.7
Income taxes (benefit)
(37.0
)
(69.1
)
32.1
26.7
NET EARNINGS FROM CONTINUING OPERATIONS
46.3
160.3
206.6
72.0
Less: net earnings attributable to non-controlling interests
0.5
—
0.5
1.2
NET EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO COMMON SHAREOWNERS
45.8
160.3
206.1
70.8
Loss from discontinued operations before income taxes
—
—
—
(2.4
)
Income tax benefit on discontinued operations
—
—
—
(1.1
)
NET LOSS FROM DISCONTINUED OPERATIONS
—
—
—
(1.3
)
NET EARNINGS ATTRIBUTABLE TO COMMON SHAREOWNERS
$
45.8
$
160.3
$
206.1
$
69.5
BASIC (LOSS) EARNINGS PER SHARE OF COMMON STOCK
Continuing operations
$
0.28
$
0.98
$
1.26
$
0.89
Discontinued operations
—
—
—
(0.02
)
Total basic earnings per share of common stock
$
0.28
$
0.98
$
1.26
$
0.88
DILUTED (LOSS) EARNINGS PER SHARE OF COMMON STOCK
Continuing operations
$
0.28
$
0.97
$
1.24
$
0.89
Discontinued operations
—
—
—
(0.02
)
Total diluted earnings per share of common stock
$
0.28
$
0.97
$
1.24
$
0.87
DIVIDENDS PER SHARE
$
0.33
$
0.32
AVERAGE SHARES OUTSTANDING (in thousands)
Basic
162,847
162,847
162,847
79,327
Diluted
166,084
166,084
166,084
79,744
1One-time charges relate primarily to the Black & Decker merger, including inventory step-up, facility closure related charges, certain executive compensation and severance costs, transaction and integration costs.
2The normalized 2010 statement of operations, as reconciled to GAAP above, is considered relevant to aid analysis of the company’s margin and earnings results aside from the material impact of the one-time charges associated with the Black & Decker merger.
1
-Page 11-
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, Millions of Dollars Except Per Share Amounts)
YEAR TO DATE
GAAP 2010
One Time Charges1
Normalized 20102
2009
NET SALES
$
3,627.6
$
3,627.6
$
1,832.2
COSTS AND EXPENSES
Cost of sales
2,402.7
(165.3
)
2,237.4
1,104.5
Gross margin
1,224.9
165.3
1,390.2
727.7
% to Net sales
33.8
%
38.3
%
39.7
%
Selling, general and administrative
966.7
(64.7
)
902.0
508.0
% to Net sales
26.6
%
24.9
%
27.7
%
Operating margin
258.2
230.0
488.2
219.7
% to Net sales
7.1
%
13.5
%
12.0
%
Other-net
130.0
(43.6
)
86.4
17.7
Restructuring charges and asset impairments
183.2
(168.6
)
14.6
19.0
(Loss) Income from operations
(55.0
)
442.2
387.2
183.0
Interest-net
42.7
—
42.7
31.6
(LOSS) EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
(97.7
)
442.2
344.5
151.4
Income taxes (benefit)
(35.5
)
(103.2
)
67.7
40.4
NET (LOSS) EARNINGS FROM CONTINUING OPERATIONS
(62.2
)
339.0
276.8
111.0
Less: net earnings attributable to non-controlling interests
0.6
—
0.6
1.9
NET (LOSS) EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO COMMON SHAREOWNERS
(62.8
)
339.0
276.2
109.1
Loss from discontinued operations before income taxes
—
—
—
(3.5
)
Income tax benefit on discontinued operations
—
—
—
(1.6
)
NET LOSS FROM DISCONTINUED OPERATIONS
—
—
—
(1.9
)
NET (LOSS) EARNINGS ATTRIBUTABLE TO COMMON SHAREOWNERS
$
(62.8
)
$
339.0
$
276.2
$
107.2
BASIC (LOSS) EARNINGS PER SHARE OF COMMON STOCK
Continuing operations
$
(0.49
)
$
2.62
$
2.13
$
1.38
Discontinued operations
—
—
—
(0.02
)
Total basic (loss) earnings per share of common stock
$
(0.49
)
$
2.62
$
2.13
$
1.35
DILUTED (LOSS) EARNINGS PER SHARE OF COMMON STOCK
Continuing operations
$
(0.49
)
$
2.57
$
2.10
$
1.37
Discontinued operations
—
—
—
(0.02
)
Total diluted (loss) earnings per share of common stock
$
(0.49
)
$
2.57
$
2.10
$
1.35
DIVIDENDS PER SHARE
$
0.66
$
0.64
AVERAGE SHARES OUTSTANDING (in thousands)
Basic
129,163
129,163
129,163
79,220
Diluted
129,163
131,658
131,658
79,591
1One-time charges relate primarily to the Black & Decker merger, including inventory step-up, facility closure related charges, certain executive compensation and severance costs, transaction and integration costs.
2The normalized 2010 statement of operations, as reconciled to GAAP above, is considered relevant to aid analysis of the company’s margin and earnings results aside from the material impact of the one-time charges associated with the Black & Decker merger.
2
-Page 12-
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited, Millions of Dollars)
July 3, 2010
January 2, 2010
ASSETS
Cash and cash equivalents
$
1,598.4
$
400.7
Accounts and notes receivable
1,550.0
532.0
Inventories
1,295.2
366.2
Other current assets
428.8
113.0
Total current assets
4,872.4
1,411.9
Property, plant and equipment, net
1,067.0
575.9
Goodwill and other intangibles, net
7,711.2
2,594.8
Other assets
345.0
186.5
Total assets
$
13,995.6
$
4,769.1
LIABILITIES AND SHAREOWNERS’ EQUITY
Short-term borrowings
$
771.3
$
298.4
Accounts payable
979.5
410.1
Accrued expenses
1,323.9
483.5
Total current liabilities
3,074.7
1,192.0
Long-term debt
2,318.7
1,084.7
Other long-term liabilities
1,967.7
480.9
Stanley Black & Decker, Inc. shareowners’ equity
6,609.2
1,986.1
Non-controlling interests equity
25.3
25.4
Total liabilities and equity
$
13,995.6
$
4,769.1
3
-Page 13-
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES SUMMARY OF CASH FLOW ACTIVITY (Unaudited, Millions of Dollars)
SECOND QUARTER
One-Time
Charges and
GAAP 2010
Payments1
Normalized 20102
2009
OPERATING ACTIVITIES
Net earnings
$
45.8
$
160.3
$
206.1
$
69.5
Depreciation and amortization
92.7
92.7
48.9
Changes in working capital
(20.0
)
(20.0
)
29.7
Other
102.5
(133.1
)
(30.6
)
(80.0
)
Net cash provided by operating activities
221.0
27.2
248.2
68.1
INVESTING AND FINANCING ACTIVITIES
Capital and software expenditures
(35.1
)
—
(35.1
)
(25.1
)
Business acquisitions and asset disposals
(10.9
)
—
(10.9
)
0.3
Cash dividends on common stock
(54.6
)
—
(54.6
)
(25.3
)
Other
(27.4
)
—
(27.4
)
10.3
Net cash (used in) investing and financing activities
(128.0
)
—
(128.0
)
(39.8
)
Increase in Cash and Cash Equivalents
93.0
27.2
120.2
28.3
Cash and Cash Equivalents, Beginning of Period
1,505.4
—
1,505.4
128.0
Cash and Cash Equivalents, End of Period
$
1,598.4
$
27.2
$
1,625.6
$
156.3
Free Cash Flow Computation3
Operating Cash Inflow
$
221.0
$
248.2
$
68.1
Less: capital and software expenditures
(35.1
)
(35.1
)
(25.1
)
Free Cash Inflow (before dividends)
$
185.9
$
213.1
$
43.0
1One-time charges and payments relate primarily to the Black & Decker merger, including inventory step-up (non-cash), facility closure related charges, certain executive compensation and severance costs, transaction and integration costs.
2¸ 3Free cash flow is defined as cash flow from operations less capital and software expenditures. Management considers free cash flow 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 include deductions for mandatory debt service, other borrowing activity, discretionary dividends on the Company’s common stock and business acquisitions, among other items. Normalized cash flow and free cash flow, as reconciled above, are considered meaningful pro forma metrics to aid the understanding of the company’s cash flow performance aside from the material impact of Black & Decker merger-related payments and charges.
The change in working capital is comprised of accounts receivable, inventory and accounts payable.
4
-Page 14-
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES SUMMARY OF CASH FLOW ACTIVITY (Unaudited, Millions of Dollars)
YEAR TO DATE
One-Time
Charges and
GAAP 2010
Payments1
Normalized 20102
2009
OPERATING ACTIVITIES
Net (loss) earnings
$
(62.8
)
$
339.0
$
276.2
$
107.2
Depreciation and amortization
152.4
152.4
96.9
Changes in working capital
(110.4
)
(110.4
)
(15.6
)
Other
209.1
(219.8
)
(10.7
)
(116.8
)
Net cash provided by operating activities
188.3
119.2
307.5
71.7
INVESTING AND FINANCING ACTIVITIES
Capital and software expenditures
(57.2
)
—
(57.2
)
(46.8
)
Business acquisitions and asset disposals
(18.1
)
—
(18.1
)
(5.7
)
Cash acquired from Black & Decker
949.4
—
949.4
—
Cash dividends on common stock
(88.9
)
—
(88.9
)
(50.6
)
Other
224.2
—
224.2
(23.9
)
Net cash provided by (used in) investing and financing activities
1,009.4
—
1,009.4
(127.0
)
Increase (decrease)in Cash and Cash Equivalents
1,197.7
119.2
1,316.9
(55.3
)
Cash and Cash Equivalents, Beginning of Period
400.7
—
400.7
211.6
Cash and Cash Equivalents, End of Period
$
1,598.4
$
119.2
$
1,717.6
$
156.3
Free Cash Flow Computation3
Operating Cash Inflow
$
188.3
$
307.5
$
71.7
Less: capital and software expenditures
(57.2
)
(57.2
)
(46.8
)
Free Cash Inflow (before dividends)
$
131.1
$
250.3
$
24.9
1One-time charges and payments relate primarily to the Black & Decker merger, including inventory step-up (non-cash), facility closure related charges, certain executive compensation and severance costs, transaction and integration costs.
2¸ 3Free cash flow is defined as cash flow from operations less capital and software expenditures. Management considers free cash flow 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 include deductions for mandatory debt service, other borrowing activity, discretionary dividends on the Company’s common stock and business acquisitions, among other items. Normalized cash flow and free cash flow, as reconciled above, are considered meaningful pro forma metrics to aid the understanding of the company’s cash flow performance aside from the material impact of Black & Decker merger-related payments and charges.
The change in working capital is comprised of accounts receivable, inventory and accounts payable.
5
-Page 15-
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES BUSINESS SEGMENT INFORMATION (Unaudited, Millions of Dollars)
SECOND QUARTER
GAAP 2010
One-Time Charges1
Normalized 20102
2009
NET SALES
Construction & DIY
$
1,322.3
$
1,322.3
$
324.2
Security
571.4
571.4
390.6
Industrial
471.9
471.9
204.4
Total
$
2,365.6
$
2,365.6
$
919.2
SEGMENT PROFIT
Construction & DIY
$
118.1
$
88.4
$
206.5
$
36.5
Security
67.7
21.7
89.4
74.4
Industrial
51.8
13.6
65.4
19.3
Segment Profit
237.6
123.7
361.3
130.2
Corporate Overhead
(52.8
)
15.7
(37.1
)
(18.9
)
Total
$
184.8
$
139.4
$
324.2
$
111.3
Segment Profit as a Percentage of Net Sales
Construction & DIY
8.9
%
15.6
%
11.3
%
Security
11.8
%
15.6
%
19.0
%
Industrial
11.0
%
13.9
%
9.4
%
Segment Profit
10.0
%
15.3
%
14.2
%
Corporate Overhead
-2.2
%
-1.6
%
-2.1
%
Total
7.8
%
13.7
%
12.1
%
1One-time charges relate primarily to the Black & Decker merger, including inventory step-up, facility closure related charges, certain executive compensation and severance costs, and integration costs.
2 The normalized 2010 business segment information, as reconciled to GAAP above, is considered relevant to aid analysis of the company’s segment profit results aside from the material impact of the one-time charges associated with the Black & Decker merger.
6
-Page 16-
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES BUSINESS SEGMENT INFORMATION (Unaudited, Millions of Dollars)
YEAR TO DATE
GAAP 2010
One-Time Charges1
Normalized 20102
2009
NET SALES
Construction & DIY
$
1,883.7
$
1,883.7
$
627.5
Security
985.3
985.3
764.3
Industrial
758.6
758.6
440.4
Total
$
3,627.6
$
3,627.6
$
1,832.2
SEGMENT PROFIT
Construction & DIY
$
169.6
$
120.3
$
289.9
$
65.3
Security
131.8
27.0
158.8
145.0
Industrial
85.1
18.0
103.1
43.8
Segment Profit
386.5
165.3
551.8
254.1
Corporate Overhead
(128.3
)
64.7
(63.6
)
(34.4
)
Total
$
258.2
$
230.0
$
488.2
$
219.7
Segment Profit as a Percentage of Net Sales
Construction & DIY
9.0
%
15.4
%
10.4
%
Security
13.4
%
16.1
%
19.0
%
Industrial
11.2
%
13.6
%
9.9
%
Segment Profit
10.7
%
15.2
%
13.9
%
Corporate Overhead
-3.5
%
-1.8
%
-1.9
%
Total
7.1
%
13.5
%
12.0
%
1One-time charges relate primarily to the Black & Decker merger, including inventory step-up, facility closure related charges, certain executive compensation and severance costs, and integration costs.
2 The normalized 2010 business segment information, as reconciled to GAAP above, is considered relevant to aid analysis of the company’s segment profit results aside from the material impact of the one-time charges associated with the Black & Decker merger.
7
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