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
-Page 9-
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
-Page 10-
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
-Page 11-
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
-Page 12-
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
-Page 13-
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
-Page 14-
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
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