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STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, Millions of Dollars Except Per Share Amounts)
| THIRD QUARTER | ||||||||||||||||
| GAAP 2010 | One Time Charges1 | Normalized 20102 | 2009 | |||||||||||||
NET SALES | $ | 2,369.1 | $ | 2,369.1 | $ | 935.5 | ||||||||||
COSTS AND EXPENSES | ||||||||||||||||
| Cost of sales | 1,514.8 | (19.9 | ) | 1,494.9 | 549.1 | |||||||||||
Gross margin | 854.3 | 19.9 | 874.2 | 386.4 | ||||||||||||
% to Net sales | 36.1 | % | 36.9 | % | 41.3 | % | ||||||||||
| Selling, general and administrative | 582.6 | (8.0 | ) | 574.6 | 251.4 | |||||||||||
% to Net sales | 24.6 | % | 24.3 | % | 26.9 | % | ||||||||||
Operating margin | 271.7 | 27.9 | 299.6 | 135.0 | ||||||||||||
% to Net sales | 11.5 | % | 12.6 | % | 14.4 | % | ||||||||||
| Other-net | 52.3 | (8.1 | ) | 44.2 | 33.6 | |||||||||||
| Restructuring charges and asset impairments | 24.8 | (21.5 | ) | 3.3 | 6.6 | |||||||||||
Income from operations | 194.6 | 57.5 | 252.1 | 94.8 | ||||||||||||
| Interest-net | 26.7 | — | 26.7 | 15.0 | ||||||||||||
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 167.9 | 57.5 | 225.4 | 79.8 | ||||||||||||
| Income taxes | 44.8 | 16.1 | 60.9 | 17.7 | ||||||||||||
NET EARNINGS FROM CONTINUING OPERATIONS | 123.1 | 41.4 | 164.5 | 62.1 | ||||||||||||
| Less: net earnings (loss) attributable to non-controlling interests | (0.1 | ) | — | (0.1 | ) | 0.3 | ||||||||||
NET EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO COMMON SHAREOWNERS | 123.2 | 41.4 | 164.6 | 61.8 | ||||||||||||
| Loss from discontinued operations before income taxes | — | — | — | (2.3 | ) | |||||||||||
| Income tax benefit on discontinued operations | — | — | — | (0.9 | ) | |||||||||||
NET LOSS FROM DISCONTINUED OPERATIONS | — | — | — | (1.4 | ) | |||||||||||
NET EARNINGS ATTRIBUTABLE TO COMMON SHAREOWNERS | $ | 123.2 | $ | 41.4 | $ | 164.6 | $ | 60.4 | ||||||||
BASIC (LOSS) EARNINGS PER SHARE OF COMMON STOCK | ||||||||||||||||
| Continuing operations | $ | 0.74 | $ | 0.25 | $ | 0.99 | $ | 0.77 | ||||||||
| Discontinued operations | — | — | — | (0.02 | ) | |||||||||||
| Total basic earnings per share of common stock | $ | 0.74 | $ | 0.25 | $ | 0.99 | $ | 0.75 | ||||||||
DILUTED (LOSS) EARNINGS PER SHARE OF COMMON STOCK | ||||||||||||||||
| Continuing operations | $ | 0.73 | $ | 0.24 | $ | 0.97 | $ | 0.77 | ||||||||
| Discontinued operations | — | — | — | (0.02 | ) | |||||||||||
| Total diluted earnings per share of common stock | $ | 0.73 | $ | 0.24 | $ | 0.97 | $ | 0.75 | ||||||||
DIVIDENDS PER SHARE | $ | 0.34 | $ | 0.33 | ||||||||||||
AVERAGE SHARES OUTSTANDING (in thousands) | ||||||||||||||||
| Basic | 165,793 | 165,793 | 165,793 | 79,966 | ||||||||||||
| Diluted | 168,889 | 168,889 | 168,889 | 80,565 | ||||||||||||
1One-time charges relate primarily to the Black & Decker merger, including inventory step-up, facility closure related charges, severance costs, 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
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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 | $ | 5,996.7 | $ | 5,996.7 | $ | 2,767.7 | ||||||||||
COSTS AND EXPENSES | ||||||||||||||||
| Cost of sales | 3,917.5 | (185.2 | ) | 3,732.3 | 1,653.6 | |||||||||||
Gross margin | 2,079.2 | 185.2 | 2,264.4 | 1,114.1 | ||||||||||||
% to Net sales | 34.7 | % | 37.8 | % | 40.3 | % | ||||||||||
| Selling, general and administrative | 1,549.3 | (72.7 | ) | 1,476.6 | 759.4 | |||||||||||
% to Net sales | 25.8 | % | 24.6 | % | 27.4 | % | ||||||||||
Operating margin | 529.9 | 257.9 | 787.8 | 354.7 | ||||||||||||
% to Net sales | 8.8 | % | 13.1 | % | 12.8 | % | ||||||||||
| Other-net | 182.3 | (51.7 | ) | 130.6 | 51.3 | |||||||||||
| Restructuring charges and asset impairments | 208.0 | (190.1 | ) | 17.9 | 25.6 | |||||||||||
Income from operations | 139.6 | 499.7 | 639.3 | 277.8 | ||||||||||||
| Interest-net | 69.4 | — | 69.4 | 46.6 | ||||||||||||
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 70.2 | 499.7 | 569.9 | 231.2 | ||||||||||||
| Income taxes | 9.3 | 119.3 | 128.6 | 58.1 | ||||||||||||
NET EARNINGS FROM CONTINUING OPERATIONS | 60.9 | 380.4 | 441.3 | 173.1 | ||||||||||||
| Less: net earnings attributable to non-controlling interests | 0.5 | — | 0.5 | 2.2 | ||||||||||||
NET EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO COMMON SHAREOWNERS | 60.4 | 380.4 | 440.8 | 170.9 | ||||||||||||
| Loss from discontinued operations before income taxes | — | — | — | (5.8 | ) | |||||||||||
| Income tax benefit on discontinued operations | — | — | — | (2.5 | ) | |||||||||||
NET LOSS FROM DISCONTINUED OPERATIONS | — | — | — | (3.3 | ) | |||||||||||
NET EARNINGS ATTRIBUTABLE TO COMMON SHAREOWNERS | $ | 60.4 | $ | 380.4 | $ | 440.8 | $ | 167.6 | ||||||||
BASIC (LOSS) EARNINGS PER SHARE OF COMMON STOCK | ||||||||||||||||
| Continuing operations | $ | 0.43 | $ | 2.69 | $ | 3.12 | $ | 2.15 | ||||||||
| Discontinued operations | — | — | — | (0.04 | ) | |||||||||||
| Total basic earnings per share of common stock | $ | 0.43 | $ | 2.69 | $ | 3.12 | $ | 2.11 | ||||||||
DILUTED (LOSS) EARNINGS PER SHARE OF COMMON STOCK | ||||||||||||||||
| Continuing operations | $ | 0.42 | $ | 2.65 | $ | 3.07 | $ | 2.14 | ||||||||
| Discontinued operations | — | — | — | (0.04 | ) | |||||||||||
| Total diluted earnings per share of common stock | $ | 0.42 | $ | 2.65 | $ | 3.07 | $ | 2.10 | ||||||||
DIVIDENDS PER SHARE | $ | 1.00 | $ | 0.97 | ||||||||||||
AVERAGE SHARES OUTSTANDING (in thousands) | ||||||||||||||||
| Basic | 141,071 | 141,071 | 141,071 | 79,499 | ||||||||||||
| Diluted | 143,766 | 143,766 | 143,766 | 79,951 | ||||||||||||
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
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STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited, Millions of Dollars)
| October 2, 2010 | January 2, 2010 | |||||||
ASSETS | ||||||||
| Cash and cash equivalents | $ | 1,635.9 | $ | 400.7 | ||||
| Accounts and notes receivable | 1,699.4 | 532.0 | ||||||
| Inventories | 1,396.8 | 366.2 | ||||||
| Other current assets | 370.2 | 113.0 | ||||||
Total current assets | 5,102.3 | 1,411.9 | ||||||
| Property, plant and equipment, net | 1,141.8 | 575.9 | ||||||
Goodwill and other intangibles, net | 8,255.5 | 2,594.8 | ||||||
| Other assets | 373.1 | 186.5 | ||||||
Total assets | $ | 14,872.7 | $ | 4,769.1 | ||||
LIABILITIES AND SHAREOWNERS’ EQUITY | ||||||||
| Short-term borrowings | $ | 727.5 | $ | 298.4 | ||||
| Accounts payable | 1,014.4 | 410.1 | ||||||
| Accrued expenses | 1,415.2 | 483.5 | ||||||
Total current liabilities | 3,157.1 | 1,192.0 | ||||||
| Long-term debt | 2,719.2 | 1,084.7 | ||||||
| Other long-term liabilities | 2,058.8 | 480.9 | ||||||
| Stanley Black & Decker, Inc. shareowners’ equity | 6,909.2 | 1,986.1 | ||||||
| Non-controlling interests equity | 28.4 | 25.4 | ||||||
Total liabilities and equity | $ | 14,872.7 | $ | 4,769.1 | ||||
3
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STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
SUMMARY OF CASH FLOW ACTIVITY
(Unaudited, Millions of Dollars)
| THIRD QUARTER | ||||||||||||||||||||
| One-Time | ||||||||||||||||||||
| Charges and | ||||||||||||||||||||
| GAAP 2010 | Payments1 | Normalized 20102 | 2009 | |||||||||||||||||
OPERATING ACTIVITIES | ||||||||||||||||||||
| Net earnings | $ | 123.2 | $ | 41.4 | $ | 164.6 | $ | 60.4 | ||||||||||||
| Depreciation and amortization | 86.4 | — | 86.4 | 51.9 | ||||||||||||||||
| Changes in working capital | (72.8 | ) | — | (72.8 | ) | 32.4 | ||||||||||||||
| Other | 62.3 | 39.3 | 101.6 | 31.6 | ||||||||||||||||
Net cash provided by operating activities | 199.1 | 80.7 | 279.8 | 176.3 | ||||||||||||||||
INVESTING AND FINANCING ACTIVITIES | ||||||||||||||||||||
| Capital and software expenditures | (45.9 | ) | — | (45.9 | ) | (18.4 | ) | |||||||||||||
| Business acquisitions and asset disposals | (460.6 | ) | — | (460.6 | ) | (14.3 | ) | |||||||||||||
| Proceeds from long-term borrowings | 396.3 | — | 396.3 | — | ||||||||||||||||
| Cash dividends on common stock | (56.3 | ) | — | (56.3 | ) | (26.3 | ) | |||||||||||||
| Other | 4.9 | — | 4.9 | (66.2 | ) | |||||||||||||||
Net cash used in investing and financing activities | (161.6 | ) | — | (161.6 | ) | (125.2 | ) | |||||||||||||
Increase in Cash and Cash Equivalents | 37.5 | 80.7 | 118.2 | 51.1 | ||||||||||||||||
Cash and Cash Equivalents, Beginning of Period | 1,598.4 | — | 1,598.4 | 156.3 | ||||||||||||||||
Cash and Cash Equivalents, End of Period | $ | 1,635.9 | $ | 80.7 | $ | 1,716.6 | $ | 207.4 | ||||||||||||
Free Cash Flow Computation3 | ||||||||||||||||||||
| Operating Cash Inflow | $ | 199.1 | $ | 279.8 | $ | 176.3 | ||||||||||||||
| Less: capital and software expenditures | (45.9 | ) | (45.9 | ) | (18.4 | ) | ||||||||||||||
| Free Cash Inflow (before dividends) | $ | 153.2 | $ | 233.9 | $ | 157.9 | ||||||||||||||
1One-time charges and payments relate primarily to the Black & Decker merger, including inventory step-up (non-cash), facility closure related charges, severance costs, 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
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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 earnings | $ | 60.4 | $ | 380.4 | $ | 440.8 | $ | 167.6 | ||||||||||||
| Depreciation and amortization | 238.8 | — | 238.8 | 148.8 | ||||||||||||||||
| Changes in working capital | (183.2 | ) | — | (183.2 | ) | 16.8 | ||||||||||||||
| Other | 271.4 | (180.5 | ) | 90.9 | (85.2 | ) | ||||||||||||||
Net cash provided by operating activities | 387.4 | 199.9 | 587.3 | 248.0 | ||||||||||||||||
INVESTING AND FINANCING ACTIVITIES | ||||||||||||||||||||
| Capital and software expenditures | (103.1 | ) | — | (103.1 | ) | (65.2 | ) | |||||||||||||
| Business acquisitions and asset disposals | (478.7 | ) | — | (478.7 | ) | (20.0 | ) | |||||||||||||
| Proceeds from long-term borrowings | 396.3 | — | 396.3 | — | ||||||||||||||||
| Cash acquired from Black & Decker | 949.4 | — | 949.4 | — | ||||||||||||||||
| Cash dividends on common stock | (145.2 | ) | — | (145.2 | ) | (76.9 | ) | |||||||||||||
| Other | 229.1 | — | 229.1 | (90.1 | ) | |||||||||||||||
Net cash provided by (used in) investing and financing activities | 847.8 | — | 847.8 | (252.2 | ) | |||||||||||||||
Increase (decrease)in Cash and Cash Equivalents | 1,235.2 | 199.9 | 1,435.1 | (4.2 | ) | |||||||||||||||
Cash and Cash Equivalents, Beginning of Period | 400.7 | — | 400.7 | 211.6 | ||||||||||||||||
Cash and Cash Equivalents, End of Period | $ | 1,635.9 | $ | 199.9 | $ | 1,835.8 | $ | 207.4 | ||||||||||||
Free Cash Flow Computation3 | ||||||||||||||||||||
| Operating Cash Inflow | $ | 387.4 | $ | 587.3 | $ | 248.0 | ||||||||||||||
| Less: capital and software expenditures | (103.1 | ) | (103.1 | ) | (65.2 | ) | ||||||||||||||
| Free Cash Inflow (before dividends) | $ | 284.3 | $ | 484.2 | $ | 182.8 | ||||||||||||||
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
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STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(Unaudited, Millions of Dollars)
| THIRD QUARTER | ||||||||||||||||||
| GAAP 2010 | One-Time Charges1 | Normalized 20102 | 2009 | |||||||||||||||
NET SALES | ||||||||||||||||||
| Construction & DIY | $ | 1,289.3 | $ | 1,289.3 | $ | 327.5 | ||||||||||||
| Security | 563.1 | 563.1 | 402.7 | |||||||||||||||
| Industrial | 516.7 | 516.7 | 205.3 | |||||||||||||||
Total | $ | 2,369.1 | $ | 2,369.1 | $ | 935.5 | ||||||||||||
SEGMENT PROFIT | ||||||||||||||||||
| Construction & DIY | $ | 164.0 | $ | 5.8 | $ | 169.8 | $ | 48.4 | ||||||||||
| Security | 87.2 | 9.8 | 97.0 | 83.7 | ||||||||||||||
| Industrial | 75.5 | 4.8 | 80.3 | 18.8 | ||||||||||||||
Segment Profit | 326.7 | 20.4 | 347.1 | 150.9 | ||||||||||||||
| Corporate Overhead | (55.0 | ) | 7.5 | (47.5 | ) | (15.9 | ) | |||||||||||
Total | $ | 271.7 | $ | 27.9 | $ | 299.6 | $ | 135.0 | ||||||||||
Segment Profit as a Percentage of Net Sales | ||||||||||||||||||
| Construction & DIY | 12.7 | % | 13.2 | % | 14.8 | % | ||||||||||||
| Security | 15.5 | % | 17.2 | % | 20.8 | % | ||||||||||||
| Industrial | 14.6 | % | 15.5 | % | 9.2 | % | ||||||||||||
Segment Profit | 13.8 | % | 14.7 | % | 16.1 | % | ||||||||||||
| Corporate Overhead | -2.3 | % | -2.0 | % | -1.7 | % | ||||||||||||
Total | 11.5 | % | 12.6 | % | 14.4 | % | ||||||||||||
1One-time charges relate primarily to the Black & Decker merger, including inventory step-up, facility closure related charges, 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
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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 | $ | 3,173.0 | $ | 3,173.0 | $ | 955.0 | ||||||||||||
| Security | 1,548.4 | 1,548.4 | 1,167.0 | |||||||||||||||
| Industrial | 1,275.3 | 1,275.3 | 645.7 | |||||||||||||||
Total | $ | 5,996.7 | $ | 5,996.7 | $ | 2,767.7 | ||||||||||||
SEGMENT PROFIT | ||||||||||||||||||
| Construction & DIY | $ | 333.6 | $ | 126.1 | $ | 459.7 | $ | 113.7 | ||||||||||
| Security | 219.0 | 36.8 | 255.8 | 228.7 | ||||||||||||||
| Industrial | 160.6 | 22.8 | 183.4 | 62.6 | ||||||||||||||
Segment Profit | 713.2 | 185.7 | 898.9 | 405.0 | ||||||||||||||
| Corporate Overhead | (183.3 | ) | 72.2 | (111.1 | ) | (50.3 | ) | |||||||||||
Total | $ | 529.9 | $ | 257.9 | $ | 787.8 | $ | 354.7 | ||||||||||
Segment Profit as a Percentage of Net Sales | ||||||||||||||||||
| Construction & DIY | 10.5 | % | 14.5 | % | 11.9 | % | ||||||||||||
| Security | 14.1 | % | 16.5 | % | 19.6 | % | ||||||||||||
| Industrial | 12.6 | % | 14.4 | % | 9.7 | % | ||||||||||||
Segment Profit | 11.9 | % | 15.0 | % | 14.6 | % | ||||||||||||
| Corporate Overhead | -3.1 | % | -1.9 | % | -1.8 | % | ||||||||||||
Total | 8.8 | % | 13.1 | % | 12.8 | % | ||||||||||||
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