EX-99.2 3 exhibit992financialsq32014.htm FINANCIAL STATEMENTS AND SUPPORTING SCHEDULES CONTAINED IN PRESS RELEASE Exhibit 99.2 Financials Q3 2014
Exhibit 99.2

STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, Millions of Dollars Except Per Share Amounts)
 
 
Third Quarter
 
Year-to-Date
 
2014
 
2013
 
2014
 
2013
NET SALES
$
2,902.2

 
$
2,758.3

 
$
8,427.2

 
$
8,091.7

COSTS AND EXPENSES
 
 
 
 
 
 
 
Cost of sales
1,852.1

 
1,770.7

 
5,363.6

 
5,189.9

Gross margin
1,050.1


987.6

 
3,063.6

 
2,901.8

% of Net Sales
36.2
%
 
35.8
%
 
36.4
%
 
35.9
%
Selling, general and administrative
650.2

 
669.6

 
1,960.8

 
2,011.5

% of Net Sales
22.4
%
 
24.3
%
 
23.3
%
 
24.9
%
Operating margin
399.9

 
318.0

 
1,102.8

 
890.3

% of Net sales
13.8
%
 
11.5
%
 
13.1
%
 
11.0
%
Other - net
61.8

 
66.6

 
182.0

 
208.8

Restructuring (credits) charges
(0.2
)
 
28.5

 
(5.6
)
 
40.6

Income from operations
338.3

 
222.9

 
926.4

 
640.9

Interest - net
40.4

 
36.1

 
121.6

 
109.1

EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
297.9

 
186.8

 
804.8

 
531.8

Income taxes on continuing operations
56.8

 
17.3

 
177.3

 
80.3

NET EARNINGS FROM CONTINUING OPERATIONS
241.1

 
169.5

 
627.5

 
451.5

Less: net (loss) earnings attributable to non-controlling interests
(0.3
)
 
(0.3
)
 
0.8

 
(0.9
)
NET EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO COMMON SHAREOWNERS
241.4

 
169.8

 
626.7

 
452.4

NET LOSS FROM DISCONTINUED OPERATIONS
(4.7
)
 
(3.8
)
 
(11.6
)
 
(18.2
)
NET EARNINGS ATTRIBUTABLE TO COMMON SHAREOWNERS
$
236.7

 
$
166.0

 
$
615.1

 
$
434.2

 
 
 
 
 
 
 
 
BASIC EARNINGS (LOSS) PER SHARE OF COMMON STOCK
 
 
 
 
 
 
 
Continuing operations
$
1.54

 
$
1.10

 
$
4.01

 
$
2.91

Discontinued operations
(0.03
)
 
(0.02
)
 
(0.07
)
 
(0.12
)
Total basic earnings per share of common stock
$
1.51

 
$
1.07

 
$
3.94

 
$
2.80

DILUTED EARNINGS (LOSS) PER SHARE OF COMMON STOCK
 
 
 
 
 
 
 
Continuing operations
$
1.50

 
$
1.07

 
$
3.92

 
$
2.85

Discontinued operations
(0.03
)
 
(0.02
)
 
(0.07
)
 
(0.11
)
Total diluted earnings per share of common stock
$
1.47

 
$
1.04

 
$
3.85

 
$
2.74

DIVIDENDS PER SHARE
$
0.52

 
$
0.50

 
$
1.52

 
$
1.48

AVERAGE SHARES OUTSTANDING (in thousands)
 
 
 
 
 
 
 
Basic
156,628

 
155,043

 
156,278

 
155,140

Diluted
160,582

 
158,925

 
159,755

 
158,717

 

 


8
Exhibit 99.2

STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, Millions of Dollars)
 
 
 
September 27, 2014
 
December 28, 2013
ASSETS
 
 
 
 
Cash and cash equivalents
 
$
486.8

 
$
496.2

Accounts and notes receivable, net
 
1,861.1

 
1,633.0

Inventories, net
 
1,758.0

 
1,485.2

Assets held for sale
 
4.7

 
10.1

Other current assets
 
341.5

 
344.2

Total current assets
 
4,452.1

 
3,968.7

Property, plant and equipment, net
 
1,448.1

 
1,485.3

Goodwill and other intangibles, net
 
10,355.9

 
10,632.9

Other assets
 
477.7

 
448.2

Total assets
 
$
16,733.8

 
$
16,535.1

LIABILITIES AND SHAREOWNERS’ EQUITY
 
 
 
 
Short-term borrowings
 
$
432.7

 
$
402.6

Accounts payable
 
1,713.5

 
1,575.9

Accrued expenses
 
1,236.4

 
1,236.2

Liabilities held for sale
 
4.7

 
6.3

Total current liabilities
 
3,387.3

 
3,221.0

Long-term debt
 
3,856.8

 
3,799.4

Other long-term liabilities
 
2,445.7

 
2,634.2

Stanley Black & Decker, Inc. shareowners’ equity
 
6,960.8

 
6,799.2

Non-controlling interests’ equity
 
83.2

 
81.3

Total liabilities and equity
 
$
16,733.8

 
$
16,535.1



9
Exhibit 99.2

STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
SUMMARY OF CASH FLOW ACTIVITY
(Unaudited, Millions of Dollars)
 
 
 
 
Third Quarter
 
Year-to-Date
 
 
 
2014
 
2013
 
2014
 
2013
 
OPERATING ACTIVITIES
 
 
 
 
 
 
 
 
 
Net earnings from continuing operations
 
$
241.1

 
$
169.5

 
$
627.5

 
$
451.5

 
Net loss from discontinued operations
 
(4.7
)
 
(3.8
)
 
(11.6
)
 
(18.2
)
 
Depreciation and amortization
 
112.6

 
108.8

 
337.4

 
322.7

 
Changes in working capital1
 
(168.6
)
 
(244.2
)
 
(443.0
)
 
(371.6
)
 
Other
 
68.7

 
69.3

 
24.0

 
(248.1
)
 
Net cash provided by operating activities
 
249.1

 
99.6

 
534.3

 
136.3

 
INVESTING AND FINANCING ACTIVITIES
 
 
 
 
 
 
 
 
 
Capital and software expenditures
 
(60.2
)
 
(88.7
)
 
(179.4
)
 
(245.3
)
 
Proceeds from sale of business / assets
 
5.8

 
1.0

 
12.8

 
96.5

 
Acquisitions, net of cash acquired
 
—

 
(16.7
)
 
(3.2
)
 
(926.6
)
 
Proceeds from issuances of common stock
 
23.4

 
32.3

 
51.0

 
138.7

 
Net short-term (repayments) borrowings
 
(48.8
)
 
(70.9
)
 
33.8

 
1,199.5

 
Net investment hedge settlements
 
(29.2
)
 
5.3

 
(65.0
)
 
7.0

 
Cash dividends on common stock
 
(81.4
)
 
(77.5
)
 
(240.5
)
 
(235.0
)
 
Purchases of common stock for treasury
 
(1.3
)
 
(7.8
)
 
(20.7
)
 
(32.6
)
 
Payment on forward share purchase contract
 
—

 
—

 
—

 
(350.0
)
 
Other
 
(86.3
)
 
30.8

 
(132.5
)
 
(35.4
)
 
Net cash used in investing and financing activities
 
(278.0
)
 
(192.2
)
 
(543.7
)
 
(383.2
)
 
Decrease in Cash and Cash Equivalents
 
(28.9
)
 
(92.6
)
 
(9.4
)
 
(246.9
)
 
Cash and Cash Equivalents, Beginning of Period
 
515.7

 
561.7

 
496.2

 
716.0

 
Cash and Cash Equivalents, End of Period
 
$
486.8

 
$
469.1

 
$
486.8

 
$
469.1

 
 
 
 
 
 
 
 
 
 
 
Free Cash Flow Computation2
 
 
 
 
 
 
 
 
 
Operating cash inflow
 
$
249.1

 
$
99.6

 
$
534.3

 
$
136.3

 
Less: capital and software expenditures
 
(60.2
)
 
(88.7
)
 
(179.4
)
 
(245.3
)
 
Free cash inflow (outflow) (before dividends)
 
$
188.9

 
$
10.9

 
$
354.9

 
$
(109.0
)
 
Merger & Acquisition-related charges and payments4
 
29.5

 
65.6

 
116.1

 
282.3

 
Free cash inflow, normalized (before dividends)3
 
$
218.4

 
$
76.5

 
$
471.0

 
$
173.3

 
 
 
 
 
 
 
 
 
 
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, is considered a meaningful pro forma metric 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)
 
 
 
Third Quarter
 
Year-to-Date
 
 
2014
 
2013
 
2014
 
2013
NET SALES
 
 
 
 
 
 
 
 
Construction & DIY
 
$
1,453.5

 
$
1,332.0

 
$
4,062.9

 
$
3,874.0

Industrial
 
866.2

 
825.9

 
2,607.4

 
2,421.3

Security
 
582.5

 
600.4

 
1,756.9

 
1,796.4

Total
 
$
2,902.2

 
$
2,758.3

 
$
8,427.2

 
$
8,091.7

SEGMENT PROFIT
 
 
 
 
 
 
 
 
Construction & DIY
 
$
239.7

 
$
198.4

 
$
627.0

 
$
574.3

Industrial
 
136.2

 
114.6

 
416.8

 
321.6

Security
 
63.9

 
61.4

 
180.5

 
173.5

Segment Profit
 
439.8

 
374.4

 
1,224.3

 
1,069.4

Corporate Overhead
 
(39.9
)
 
(56.4
)
 
(121.5
)
 
(179.1
)
Total
 
$
399.9

 
$
318.0

 
$
1,102.8

 
$
890.3

Segment Profit as a Percentage of Net Sales
 
 
 
 
 


 


Construction & DIY
 
16.5
 %
 
14.9
 %
 
15.4
 %
 
14.8
 %
Industrial
 
15.7
 %
 
13.9
 %
 
16.0
 %
 
13.3
 %
Security
 
11.0
 %
 
10.2
 %
 
10.3
 %
 
9.7
 %
Segment Profit
 
15.2
 %
 
13.6
 %
 
14.5
 %
 
13.2
 %
Corporate Overhead
 
(1.4
)%
 
(2.0
)%
 
(1.4
)%
 
(2.2
)%
Total
 
13.8
 %
 
11.5
 %
 
13.1
 %
 
11.0
 %


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)
 
 
 
 
Third Quarter 2014
 
 
 
Reported
 
Merger &
Acquisition-
Related Charges1
 
Normalized3
 
Gross margin
 
$
1,050.1

 
$
0.1

 
$
1,050.2

 
% of Net Sales
 
36.2
%
 
 
 
36.2
%
 
Selling, general and administrative
 
650.2

 
(8.1
)
 
642.1

 
% of Net Sales
 
22.4
%
 
 
 
22.1
%
 
Operating margin
 
399.9

 
8.2

 
408.1

 
% of Net Sales
 
13.8
%
 
 
 
14.1
%
 
Earnings from continuing operations before income taxes
 
297.9

 
8.4

 
306.3

 
Income taxes on continuing operations
 
56.8

 
0.7

 
57.5

 
Net earnings from continuing operations
 
241.4

 
7.7

 
249.1

 
Diluted earnings per share of common stock
 
$
1.50

 
$
0.05

 
$
1.55

 
 
 
 
 
 
 
 
1  
Merger and acquisition-related charges relate primarily to integration and consulting costs.
 

 
 
 
Third Quarter 2013
 
 
 
Reported
 
Merger &
Acquisition-
Related and Other Charges2
 
Normalized3
 
Gross margin
 
$
987.6

 
$
5.3

 
$
992.9

 
% of Net Sales
 
35.8
%
 
 
 
36.0
%
 
Selling, general and administrative
 
669.6

 
(31.9
)
 
637.7

 
% of Net Sales
 
24.3
%
 
 
 
23.1
%
 
Operating margin
 
318.0

 
37.2

 
355.2

 
% of Net Sales
 
11.5
%
 
 
 
12.9
%
 
Earnings from continuing operations before income taxes
 
186.8

 
67.2

 
254.0

 
Income taxes on continuing operations
 
17.3

 
16.0

 
33.3

 
Net earnings from continuing operations
 
169.8

 
51.3

 
221.1

 
Diluted earnings per share of common stock
 
$
1.07

 
$
0.32

 
$
1.39

 
 
 
 
 
 
 
 
2  
Merger and acquisition-related and other 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 and other charges.


12
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)
 
 
 
 
Year-to-Date 2014
 
 
 
Reported
 
Merger &
Acquisition-
Related Charges1
 
Normalized3
 
Gross margin
 
$
3,063.6

 
$
1.5

 
$
3,065.1

 
% of Net Sales
 
36.4
%
 
 
 
36.4
%
 
Selling, general and administrative
 
1,960.8

 
(19.7
)
 
1,941.1

 
% of Net Sales
 
23.3
%
 
 
 
23.0
%
 
Operating margin
 
1,102.8

 
21.2

 
1,124.0

 
% of Net Sales
 
13.1
%
 
 
 
13.3
%
 
Earnings from continuing operations before income taxes
 
804.8

 
16.4

 
821.2

 
Income taxes on continuing operations
 
177.3

 
(3.2
)
 
174.1

 
Net earnings from continuing operations
 
626.7

 
19.6

 
646.3

 
Diluted earnings per share of common stock
 
$
3.92

 
$
0.13

 
$
4.05

 
 
 
 
 
 
 
 
1  
Merger and acquisition-related charges relate primarily to integration and consulting costs, as well as employee-related matters.
 

 
 
 
Year-to-Date 2013
 
 
 
Reported
 
Merger &
Acquisition-
Related and Other Charges2
 
Normalized3
 
Gross margin
 
$
2,901.8

 
$
26.4

 
$
2,928.2

 
% of Net Sales
 
35.9
%
 
 
 
36.2
%
 
Selling, general and administrative
 
2,011.5

 
(90.3
)
 
1,921.2

 
% of Net Sales
 
24.9
%
 
 
 
23.7
%
 
Operating margin
 
890.3

 
116.7

 
1,007.0

 
% of Net Sales
 
11.0
%
 
 
 
12.4
%
 
Earnings from continuing operations before income taxes
 
531.8

 
178.6

 
710.4

 
Income taxes on continuing operations
 
80.3

 
50.0

 
130.3

 
Net earnings from continuing operations
 
452.4

 
128.6

 
581.0

 
Diluted earnings per share of common stock
 
$
2.85

 
$
0.81

 
$
3.66

 
 
 
 
 
 
 
 
2  
Merger and acquisition-related and other charges relate primarily to the Black & Decker merger and Niscayah and Infastech acquisitions, including facility closure-related charges, employee-related charges and integration costs, as well as a restructuring reversal due to the termination of a previously approved restructuring action.
 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 and other charges.


13
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)
 
 
 
 
Third Quarter 2014
 
 
 
Reported
 
Merger &
Acquisition-
Related
Charges1
 
Normalized3
 
SEGMENT PROFIT
 
 
 
 
 
 
 
Construction & DIY
 
$
239.7

 
$
0.1

 
$
239.8

 
Industrial
 
136.2

 
1.2

 
137.4

 
Security
 
63.9

 
0.3

 
64.2

 
Segment Profit
 
439.8

 
1.6

 
441.4

 
Corporate Overhead
 
(39.9
)
 
6.6

 
(33.3
)
 
Total
 
$
399.9

 
$
8.2

 
$
408.1

 
Segment Profit as a Percentage of Net Sales
 
 
 
 
 
 
 
Construction & DIY
 
16.5
 %
 
 
 
16.5
 %
 
Industrial
 
15.7
 %
 
 
 
15.9
 %
 
Security
 
11.0
 %
 
 
 
11.0
 %
 
Segment Profit
 
15.2
 %
 
 
 
15.2
 %
 
Corporate Overhead
 
(1.4
)%
 
 
 
(1.1
)%
 
Total
 
13.8
 %
 
 
 
14.1
 %
 
 
 
 
 
 
 
 
1 
Merger and acquisition-related charges relate primarily to integration and consulting costs.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Third Quarter 2013
 
 
 
Reported
 
Merger &
Acquisition-
Related
Charges2
 
Normalized3
 
SEGMENT PROFIT
 
 
 
 
 
 
 
Construction & DIY
 
$
198.4

 
$
3.1

 
$
201.5

 
Industrial
 
114.6

 
2.3

 
116.9

 
Security
 
61.4

 
11.9

 
73.3

 
Segment Profit
 
374.4

 
17.3

 
391.7

 
Corporate Overhead
 
(56.4
)
 
19.9

 
(36.5
)
 
Total
 
$
318.0

 
$
37.2

 
$
355.2

 
Segment Profit as a Percentage of Net Sales
 
 
 
 
 
 
 
Construction & DIY
 
14.9
 %
 
 
 
15.1
 %
 
Industrial
 
13.9
 %
 
 
 
14.2
 %
 
Security
 
10.2
 %
 
 
 
12.2
 %
 
Segment Profit
 
13.6
 %
 
 
 
14.2
 %
 
Corporate Overhead
 
(2.0
)%
 
 
 
(1.3
)%
 
Total
 
11.5
 %
 
 
 
12.9
 %
 
 
 
 
 
 
 
 
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.



14
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)
 
 
 
 
Year-to-Date 2014
 
 
 
Reported
 
Merger &
Acquisition-
Related
Charges1
 
Normalized3
 
SEGMENT PROFIT
 
 
 
 
 
 
 
Construction & DIY
 
$
627.0

 
$
0.7

 
$
627.7

 
Industrial
 
416.8

 
4.6

 
421.4

 
Security
 
180.5

 
3.8

 
184.3

 
Segment Profit
 
1,224.3

 
9.1

 
1,233.4

 
Corporate Overhead
 
(121.5
)
 
12.1

 
(109.4
)
 
Total
 
$
1,102.8

 
$
21.2

 
$
1,124.0

 
Segment Profit as a Percentage of Net Sales
 

 
 
 
 
 
Construction & DIY
 
15.4
 %
 
 
 
15.4
 %
 
Industrial
 
16.0
 %
 
 
 
16.2
 %
 
Security
 
10.3
 %
 
 
 
10.5
 %
 
Segment Profit
 
14.5
 %
 
 
 
14.6
 %
 
Corporate Overhead
 
(1.4
)%
 
 
 
(1.3
)%
 
Total
 
13.1
 %
 
 
 
13.3
 %
 
 
 
 
 
 
 
 
1 
Merger and acquisition-related charges relate primarily to integration and consulting costs, as well as employee-related matters.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year-to-Date 2013
 
 
 
Reported
 
Merger &
Acquisition-
Related
Charges2
 
Normalized3
 
SEGMENT PROFIT
 
 
 
 
 
 
 
Construction & DIY
 
$
574.3

 
$
9.2

 
$
583.5

 
Industrial
 
321.6

 
20.8

 
342.4

 
Security
 
173.5

 
27.1

 
200.6

 
Segment Profit
 
1,069.4

 
57.1

 
1,126.5

 
Corporate Overhead
 
(179.1
)
 
59.6

 
(119.5
)
 
Total
 
$
890.3

 
$
116.7

 
$
1,007.0

 
Segment Profit as a Percentage of Net Sales
 

 
 
 
 
 
Construction & DIY
 
14.8
 %
 
 
 
15.1
 %
 
Industrial
 
13.3
 %
 
 
 
14.1
 %
 
Security
 
9.7
 %
 
 
 
11.2
 %
 
Segment Profit
 
13.2
 %
 
 
 
13.9
 %
 
Corporate Overhead
 
(2.2
)%
 
 
 
(1.5
)%
 
Total
 
11.0
 %
 
 
 
12.4
 %
 
 
 
 
 
 
 
 
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.



15