EX-99.2 3 exhibit992financials1.htm FINANCIAL STATEMENTS AND SUPPORTING SCHEDULES CONTAINED IN PRESS RELEASE Exhibit 99.2 Financials (1)
Exhibit 99.2

STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, Millions of Dollars Except Per Share Amounts)
 
 
FIRST QUARTER
 
2014
 
2013
NET SALES
$
2,640.8

 
$
2,476.5

COSTS AND EXPENSES
 
 
 
Cost of sales
1,680.5

 
1,567.9

Gross margin
960.3


908.6

% of Net Sales
36.4
%
 
36.7
%
Selling, general and administrative
647.7

 
664.7

% of Net Sales
24.5
%
 
26.8
%
Operating margin
312.6

 
243.9

% of Net sales
11.8
%
 
9.8
%
Other - net
61.6

 
70.8

Restructuring (credits) charges
(3.7
)
 
42.9

Income from operations
254.7

 
130.2

Interest - net
40.9

 
36.7

EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
213.8

 
93.5

Income taxes on continuing operations
46.8

 
8.8

NET EARNINGS FROM CONTINUING OPERATIONS
167.0

 
84.7

Less: net earnings (loss) attributable to non-controlling interests
0.2

 
(0.4
)
NET EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO COMMON SHAREOWNERS
166.8

 
85.1

NET LOSS FROM DISCONTINUED OPERATIONS
(4.9
)
 
(4.0
)
NET EARNINGS ATTRIBUTABLE TO COMMON SHAREOWNERS
$
161.9

 
$
81.1

 
 
 
 
BASIC EARNINGS (LOSS) PER SHARE OF COMMON STOCK
 
 
 
Continuing operations
$
1.07

 
$
0.55

Discontinued operations
(0.03
)
 
(0.03
)
Total basic earnings per share of common stock
$
1.04

 
$
0.52

DILUTED EARNINGS (LOSS) PER SHARE OF COMMON STOCK
 
 
 
Continuing operations
$
1.05

 
$
0.53

Discontinued operations
(0.03
)
 
(0.02
)
Total diluted earnings per share of common stock
$
1.02

 
$
0.51

DIVIDENDS PER SHARE
$
0.50

 
$
0.49

AVERAGE SHARES OUTSTANDING (in thousands)
 
 
 
Basic
155,905

 
155,552

Diluted
158,951

 
158,994

 

 


8
Exhibit 99.2

STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, Millions of Dollars)
 
 
 
March 29, 2014
 
December 28, 2013
ASSETS
 
 
 
 
Cash and cash equivalents
 
$
432.6

 
$
496.2

Accounts and notes receivable, net
 
1,795.8

 
1,633.0

Inventories, net
 
1,663.1

 
1,485.2

Assets held for sale
 
4.6

 
10.1

Other current assets
 
375.1

 
344.2

Total current assets
 
4,271.2

 
3,968.7

Property, plant and equipment, net
 
1,482.4

 
1,485.3

Goodwill and other intangibles, net
 
10,618.9

 
10,632.9

Other assets
 
460.4

 
448.2

Total assets
 
$
16,832.9

 
$
16,535.1

LIABILITIES AND SHAREOWNERS’ EQUITY
 
 
 
 
Short-term borrowings
 
$
683.5

 
$
402.6

Accounts payable
 
1,581.8

 
1,575.9

Accrued expenses
 
1,185.6

 
1,236.2

Liabilities held for sale
 
4.9

 
6.3

Total current liabilities
 
3,455.8

 
3,221.0

Long-term debt
 
3,831.1

 
3,799.4

Other long-term liabilities
 
2,566.7

 
2,634.2

Stanley Black & Decker, Inc. shareowners’ equity
 
6,897.8

 
6,799.2

Non-controlling interests’ equity
 
81.5

 
81.3

Total liabilities and equity
 
$
16,832.9

 
$
16,535.1



9
Exhibit 99.2

STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
SUMMARY OF CASH FLOW ACTIVITY
(Unaudited, Millions of Dollars)
 
 
 
 
FIRST QUARTER
 
 
 
2014
 
2013
 
OPERATING ACTIVITIES
 
 
 
 
 
Net earnings from continuing operations
 
$
167.0

 
$
84.7

 
Net loss from discontinued operations
 
(4.9
)
 
(4.0
)
 
Depreciation and amortization
 
110.4

 
105.8

 
Changes in working capital1
 
(330.3
)
 
(195.0
)
 
Other
 
(94.2
)
 
(139.0
)
 
Net cash used in operating activities
 
(152.0
)
 
(147.5
)
 
INVESTING AND FINANCING ACTIVITIES
 
 
 
 
 
Capital and software expenditures
 
(57.8
)
 
(76.6
)
 
Acquisitions, net of cash acquired
 
(3.2
)
 
(853.9
)
 
Proceeds from issuances of common stock
 
13.2

 
83.2

 
Net short-term borrowings
 
282.3

 
1,330.5

 
Cash dividends on common stock
 
(80.7
)
 
(79.1
)
 
Purchases of common stock for treasury
 
(19.4
)
 
(21.1
)
 
Payment on forward stock purchase contract
 
—

 
(350.0
)
 
Other
 
(46.0
)
 
(44.0
)
 
Net cash provided by (used in) investing and financing activities
 
88.4

 
(11.0
)
 
Decrease in Cash and Cash Equivalents
 
(63.6
)
 
(158.5
)
 
Cash and Cash Equivalents, Beginning of Period
 
496.2

 
716.0

 
Cash and Cash Equivalents, End of Period
 
$
432.6

 
$
557.5

 
 
 
 
 
 
 
Free Cash Flow Computation2
 
 
 
 
 
Operating cash outflow
 
$
(152.0
)
 
$
(147.5
)
 
Less: capital and software expenditures
 
(57.8
)
 
$
(76.6
)
 
Free cash outflow (before dividends)
 
$
(209.8
)
 
$
(224.1
)
 
Merger & Acquisition-related charges and payments4
 
51.8

 
$
94.5

 
Free cash outflow, normalized (before dividends)3
 
$
(158.0
)
 
$
(129.6
)
 
 
 
 
 
 
1 
The change in working capital is comprised of accounts receivable, inventory, accounts payable and deferred revenue.
2,3 
Free 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 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 merger and acquisition-related activities.
4 
Merger & Acquisition-related charges and payments relate primarily to the Black & Decker merger and Niscayah and Infastech acquisitions, including facility closure-related charges, employee-related charges and integration costs.




10
Exhibit 99.2

STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(Unaudited, Millions of Dollars)
 
 
 
FIRST QUARTER
 
 
2014
 
2013
NET SALES
 
 
 
 
Construction & DIY
 
$
1,216.1

 
$
1,150.5

Industrial
 
852.0

 
733.9

Security
 
572.7

 
592.1

Total
 
$
2,640.8

 
$
2,476.5

SEGMENT PROFIT
 
 
 
 
Construction & DIY
 
$
169.2

 
$
166.1

Industrial
 
130.3

 
89.4

Security
 
49.6

 
57.4

Segment Profit
 
349.1

 
312.9

Corporate Overhead
 
(36.5
)
 
(69.0
)
Total
 
$
312.6

 
$
243.9

Segment Profit as a Percentage of Net Sales
 
 
 
 
Construction & DIY
 
13.9
 %
 
14.4
 %
Industrial
 
15.3
 %
 
12.2
 %
Security
 
8.7
 %
 
9.7
 %
Segment Profit
 
13.2
 %
 
12.6
 %
Corporate Overhead
 
(1.4
)%
 
(2.8
)%
Total
 
11.8
 %
 
9.8
 %


11
Exhibit 99.2

STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP EARNINGS FINANCIAL MEASURES TO CORRESPONDING
NON-GAAP FINANCIAL MEASURES
(Unaudited, Millions of Dollars Except Per Share Amounts)
 
 
 
FIRST QUARTER 2014
 
 
Reported
 
Merger &
Acquisition-
Related Charges1
 
Normalized3
Gross margin
 
$
960.3

 
$
1.1

 
$
961.4

% of Net Sales
 
36.4
%
 
 
 
36.4
%
Selling, general and administrative
 
647.7

 
(6.3
)
 
641.4

% of Net Sales
 
24.5
%
 
 
 
24.3
%
Operating margin
 
312.6

 
7.4

 
320.0

% of Net Sales
 
11.8
%
 
 
 
12.1
%
Earnings from continuing operations before income taxes
 
213.8

 
3.9

 
217.7

Income taxes on continuing operations
 
46.8

 
1.4

 
48.2

Net earnings from continuing operations
 
166.8

 
2.5

 
169.3

Diluted earnings per share of common stock
 
$
1.05

 
$
0.02

 
$
1.07

 
1 Merger and acquisition-related charges relate primarily to the Niscayah and Infastech acquisitions, including employee-related charges and
integration costs.
 
 
FIRST QUARTER 2013
 
 
Reported
 
Merger &
Acquisition-
Related Charges2
 
Normalized3
Gross margin
 
$
908.6

 
$
13.3

 
$
921.9

% of Net Sales
 
36.7
%
 
 
 
37.2
%
Selling, general and administrative
 
664.7

 
(34.3
)
 
630.4

% of Net Sales
 
26.8
%
 
 
 
25.5
%
Operating margin
 
243.9

 
47.6

 
291.5

% of Net Sales
 
9.8
%
 
 
 
11.8
%
Earnings from continuing operations before income taxes
 
93.5

 
106.1

 
199.6

Income taxes on continuing operations
 
8.8

 
25.0

 
33.8

Net earnings from continuing operations
 
85.1

 
81.1

 
166.2

Diluted earnings per share of common stock
 
$
0.53

 
$
0.51

 
$
1.04


2 Merger and acquisition-related charges relate primarily to the Black & Decker merger and Niscayah and Infastech acquisitions, including
facility closure-related charges, employee-related charges and integration costs.

 3 The normalized 2014 and 2013 information, 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 merger & acquisition-related charges.


12
Exhibit 99.2

STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP SEGMENT PROFIT FINANCIAL MEASURES TO CORRESPONDING
NON-GAAP FINANCIAL MEASURES
(Unaudited, Millions of Dollars)
 
 
 
 
FIRST QUARTER 2014
 
 
 
Reported
 
Merger &
Acquisition-
Related
Charges1
 
Normalized3
 
SEGMENT PROFIT
 
 
 
 
 
 
 
Construction & DIY
 
$
169.2

 
$
0.4

 
$
169.6

 
Industrial
 
130.3

 
2.2

 
132.5

 
Security
 
49.6

 
2.3

 
51.9

 
Segment Profit
 
349.1

 
4.9

 
354.0

 
Corporate Overhead
 
(36.5
)
 
2.5

 
(34.0
)
 
Total
 
$
312.6

 
$
7.4

 
$
320.0

 
Segment Profit as a Percentage of Net Sales
 
 
 
 
 
 
 
Construction & DIY
 
13.9
 %
 
 
 
13.9
 %
 
Industrial
 
15.3
 %
 
 
 
15.6
 %
 
Security
 
8.7
 %
 
 
 
9.1
 %
 
Segment Profit
 
13.2
 %
 
 
 
13.4
 %
 
Corporate Overhead
 
(1.4
)%
 
 
 
(1.3
)%
 
Total
 
11.8
 %
 
 
 
12.1
 %
 
 
 
 
 
 
 
 
1 
Merger and acquisition-related charges relate primarily to the Niscayah and Infastech acquisitions, including employee-related charges and integration costs.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FIRST QUARTER 2013
 
 
 
Reported
 
Merger &
Acquisition-
Related
Charges2
 
Normalized3
 
SEGMENT PROFIT
 
 
 
 
 
 
 
Construction & DIY
 
$
166.1

 
$
3.3

 
$
169.4

 
Industrial
 
89.4

 
12.4

 
101.8

 
Security
 
57.4

 
6.4

 
63.8

 
Segment Profit
 
312.9

 
22.1

 
335.0

 
Corporate Overhead
 
(69.0
)
 
25.5

 
(43.5
)
 
Total
 
$
243.9

 
$
47.6

 
$
291.5

 
Segment Profit as a Percentage of Net Sales
 
 
 
 
 
 
 
Construction & DIY
 
14.4
 %
 
 
 
14.7
 %
 
Industrial
 
12.2
 %
 
 
 
13.9
 %
 
Security
 
9.7
 %
 
 
 
10.8
 %
 
Segment Profit
 
12.6
 %
 
 
 
13.5
 %
 
Corporate Overhead
 
(2.8
)%
 
 
 
(1.8
)%
 
Total
 
9.8
 %
 
 
 
11.8
 %
 
 
 
 
 
 
 
 
2 
Merger and acquisition-related charges relate primarily to the Black & Decker merger and Niscayah and Infastech acquisitions, including facility closure-related charges, employee-related charges and integration costs.
3 
The normalized 2014 and 2013 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 merger and acquisition-related charges.



13
Exhibit 99.2

STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP SEGMENT PROFIT FINANCIAL MEASURES, AS ADJUSTED, TO CORRESPONDING
NON-GAAP FINANCIAL MEASURES, AS ADJUSTED
(Unaudited, Millions of Dollars)
 
 
FIRST QUARTER 2013
 
SECOND QUARTER 2013
 
THIRD QUARTER 2013
 
FOURTH QUARTER 2013
 
YEAR TO DATE 2013
 
 
GAAP1
Merger & Acquisition-Related Charges2
Normalized3
 
GAAP1
Merger & Acquisition-Related Charges2
Normalized3
 
GAAP1
Merger & Acquisition-Related Charges2
Normalized3
 
GAAP1
Merger & Acquisition-Related Charges2
Normalized3
 
GAAP1
Merger & Acquisition-Related Charges2
Normalized3
 
NET SALES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Construction & DIY
$
1,150.5

$
—

$
1,150.5

 
$
1,394.0

$
—

$
1,394.0

 
$
1,333.0

$
—

$
1,333.0

 
$
1,398.5

$
—

$
1,398.5

 
$
5,276.0

$
—

$
5,276.0

 
Industrial
733.9

—

733.9

 
861.5

—

861.5

 
825.9

—

825.9

 
881.3

—

881.3

 
3,302.6

—

3,302.6

 
Security
592.1

—

592.1

 
603.9

—

603.9

 
600.4

—

600.4

 
626.2

—

626.2

 
2,422.6

—

2,422.6

 
    Total
$
2,476.5

$
—

$
2,476.5

 
$
2,859.4

$
—

$
2,859.4

 
$
2,759.3

$
—

$
2,759.3

 
$
2,906.0

$
—

$
2,906.0

 
$
11,001.2

$
—

$
11,001.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SEGMENT PROFIT
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Construction & DIY
$
166.1

$
3.3

$
169.4

 
$
210.1

$
2.8

$
212.9

 
$
198.5

$
3.1

$
201.6

 
$
202.8

$
3.8

$
206.6

 
$
777.5

$
13.0

$
790.5

 
Industrial
89.4

12.4

101.8

 
117.6

6.1

123.7

 
114.6

2.3

116.9

 
135.1

4.0

139.1

 
456.7

24.8

481.5

 
Security
57.4

6.4

63.8

 
54.7

8.8

63.5

 
61.4

11.9

73.3

 
64.5

11.6

76.1

 
238.0

38.7

276.7

 
Segment Profit
$
312.9

$
22.1

$
335.0

 
$
382.4

$
17.7

$
400.1

 
$
374.5

$
17.3

$
391.8

 
$
402.4

$
19.4

$
421.8

 
$
1,472.2

$
76.5

$
1,548.7

 
Corporate Overhead
(69.0
)
25.5

(43.5
)
 
(53.7
)
14.2

(39.5
)
 
(56.4
)
19.9

(36.5
)
 
(74.8
)
29.7

(45.1
)
 
(253.9
)
89.3

(164.6
)
 
    Total
$
243.9

$
47.6

$
291.5

 
$
328.7

$
31.9

$
360.6

 
$
318.1

$
37.2

$
355.3

 
$
327.6

$
49.1

$
376.7

 
$
1,218.3

$
165.8

$
1,384.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment Profit as a Percentage of Net Sales
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Construction & DIY
14.4
 %
 
14.7
 %
 
15.1
 %
 
15.3
 %
 
14.9
 %
 
15.1
 %
 
14.5
 %
 
14.8
 %
 
14.7
 %
 
15.0
 %
 
Industrial
12.2
 %
 
13.9
 %
 
13.7
 %
 
14.4
 %
 
13.9
 %
 
14.2
 %
 
15.3
 %
 
15.8
 %
 
13.8
 %
 
14.6
 %
 
Security
9.7
 %
 
10.8
 %
 
9.1
 %
 
10.5
 %
 
10.2
 %
 
12.2
 %
 
10.3
 %
 
12.2
 %
 
9.8
 %
 
11.4
 %
 
Segment Profit
12.6
 %
 
13.5
 %
 
13.4
 %
 
14.0
 %
 
13.6
 %
 
14.2
 %
 
13.8
 %
 
14.5
 %
 
13.4
 %
 
14.1
 %
 
Corporate Overhead
(2.8
)%
 
(1.8
)%
 
(1.9
)%
 
(1.4
)%
 
(2.0
)%
 
(1.3
)%
 
(2.6
)%
 
(1.6
)%
 
(2.3
)%
 
(1.5
)%
 
    Total
9.8
 %
 
11.8
 %
 
11.5
 %
 
12.6
 %
 
11.5
 %
 
12.9
 %
 
11.3
 %
 
13.0
 %
 
11.1
 %
 
12.6
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1
Reported, as adjusted for the recast of segment net sales and profit between the Construction and Do-it Yourself (“CDIY”) and Industrial segments to align reporting with the current management of the Company's operations in the emerging markets to be more comparable with the current year presentation. There is no impact to the consolidated financial statements of the Company as a result of this segment realignment.
 
 
 
 
 
 
 
2
Merger and acquisition-related charges, as reported, relate primarily to the Black & Decker merger and Niscayah and Infastech acquisitions, including facility closure-related charges, employee-related charges and integration costs.
 
 
 
 
 
 
3
The normalized 2013 business segment information adjusted for the previously mentioned realignment of certain segment net sales and segment profit from the CDIY segment to the Industrial segment, as reconciled to GAAP as adjusted above, is considered relevant to aid analysis of the Company’s segment profit results aside from the material impact of the merger and acquisition-related charges.
 

14