EX-99.2 3 exhibit992financialsq32017.htm FINANCIAL STATEMENTS AND SUPPORTING SCHEDULES CONTAINED IN PRESS RELEASE Exhibit
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
 
2017
 
2016
 
2017
 
2016
NET SALES
$
3,298.6

 
$
2,882.0

 
$
9,333.7

 
$
8,486.5

COSTS AND EXPENSES
 
 
 
 
 
 
 
Cost of sales
2,046.5

 
1,797.9

 
5,804.1

 
5,295.9

Gross margin
1,252.1


1,084.1

 
3,529.6

 
3,190.6

% of Net Sales
38.0
%
 
37.6
%
 
37.8
%
 
37.6
%
Selling, general and administrative
763.4

 
645.4

 
2,186.8

 
1,940.1

% of Net Sales
23.1
%
 
22.4
%
 
23.4
%
 
22.9
%
Operating margin
488.7

 
438.7

 
1,342.8

 
1,250.5

% of Net sales
14.8
%
 
15.2
%
 
14.4
%
 
14.7
%
Other - net
65.5

 
56.8

 
232.0

 
150.6

Loss (gain) on sales of businesses
3.2

 
—

 
(265.1
)
 
—

Pension settlement
—

 
—

 
12.8

 
—

Restructuring charges
19.1

 
9.1

 
42.9

 
27.3

Income from operations
400.9

 
372.8

 
1,320.2

 
1,072.6

Interest - net
46.9

 
45.1

 
135.9

 
128.8

EARNINGS BEFORE INCOME TAXES
354.0

 
327.7

 
1,184.3

 
943.8

Income taxes
79.8

 
78.7

 
239.8

 
234.7

NET EARNINGS
274.2

 
249.0

 
944.5

 
709.1

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

 
0.1

 
—

 
(0.7
)
NET EARNINGS ATTRIBUTABLE TO COMMON SHAREOWNERS
$
274.2

 
$
248.9

 
$
944.5

 
$
709.8

 
 
 
 
 
 
 
 
EARNINGS PER SHARE OF COMMON STOCK
 
 
 
 
 
 
 
Basic
$
1.83

 
$
1.71

 
$
6.32

 
$
4.88

Diluted
$
1.80

 
$
1.68

 
$
6.21

 
$
4.81

DIVIDENDS PER SHARE
$
0.63

 
$
0.58

 
$
1.79

 
$
1.68

WEIGHTED-AVERAGE SHARES OUTSTANDING (in thousands)
 
 
 
 
 
 
 
Basic
149,689

 
145,410

 
149,464

 
145,547

Diluted
152,622

 
147,975

 
152,106

 
147,717

 

 


8
Exhibit 99.2

STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, Millions of Dollars)
 
 
 
September 30, 2017
 
December 31, 2016
ASSETS
 
 
 
 
Cash and cash equivalents
 
$
483.3

 
$
1,131.8

Accounts and notes receivable, net
 
2,009.8

 
1,302.8

Inventories, net
 
2,247.4

 
1,478.0

Assets held for sale
 
—

 
523.4

Other current assets
 
288.2

 
352.5

Total current assets
 
5,028.7

 
4,788.5

Property, plant and equipment, net
 
1,677.3

 
1,451.2

Goodwill and other intangibles, net
 
12,240.8

 
8,993.5

Other assets
 
826.4

 
401.7

Total assets
 
$
19,773.2

 
$
15,634.9

LIABILITIES AND SHAREOWNERS’ EQUITY
 
 
 
 
Short-term borrowings
 
$
585.7

 
$
12.1

Accounts payable
 
2,091.6

 
1,640.4

Accrued expenses
 
1,324.9

 
1,101.5

Liabilities held for sale
 
—

 
53.5

Total current liabilities
 
4,002.2

 
2,807.5

Long-term debt
 
3,818.0

 
3,815.3

Other long-term liabilities
 
3,934.2

 
2,638.5

Stanley Black & Decker, Inc. shareowners’ equity
 
8,015.7

 
6,367.0

Non-controlling interests’ equity
 
3.1

 
6.6

Total liabilities and shareowners' equity
 
$
19,773.2

 
$
15,634.9



9
Exhibit 99.2

STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
SUMMARY OF CASH FLOW ACTIVITY
(Unaudited, Millions of Dollars)
 
 
 
 
Third Quarter
 
Year-to-Date
 
 
 
2017
 
2016
 
2017
 
2016
 
OPERATING ACTIVITIES
 
 
 
 
 
 
 
 
 
Net earnings from continuing operations
 
$
274.2

 
$
249.0

 
$
944.5

 
$
709.1

 
Depreciation and amortization
 
120.7

 
103.1

 
338.0

 
305.2

 
Pre-tax loss (gain) on sales of businesses
 
3.2

 
—

 
(265.1
)
 
—

 
Changes in working capital1
 
(214.9
)
 
(182.9
)
 
(784.2
)
 
(393.3
)
 
Other
 
173.7

 
77.5

 
234.6

 
29.0

 
Net cash provided by operating activities
 
356.9

 
246.7

 
467.8

 
650.0

 
INVESTING AND FINANCING ACTIVITIES
 
 
 
 
 
 
 
 
 
Capital and software expenditures
 
(91.0
)
 
(78.1
)
 
(277.9
)
 
(221.7
)
 
Premium paid on equity option
 
—

 
—

 
(25.1
)
 
—

 
Proceeds from issuances of common stock
 
14.6

 
19.1

 
47.5

 
51.3

 
Proceeds from issuance of preferred stock
 
—

 
—

 
727.5

 
—

 
Proceeds from sale of businesses, net of cash sold
 
—

 
—

 
745.3

 
—

 
Business acquisitions, net of cash acquired
 
(152.0
)
 
(38.3
)
 
(2,582.1
)
 
(59.3
)
 
Net short-term (repayments) borrowings
 
(64.4
)
 
(255.9
)
 
499.2

 
92.4

 
Net investment hedge settlements
 
(27.9
)
 
57.8

 
(31.6
)
 
63.3

 
Cash dividends on common stock
 
(94.7
)
 
(84.5
)
 
(267.9
)
 
(243.9
)
 
Purchases of common stock for treasury
 
(0.6
)
 
(0.6
)
 
(16.2
)
 
(362.7
)
 
Effect of exchange rate changes on cash
 
22.3

 
(7.4
)
 
81.5

 
(22.8
)
 
Other
 
(19.4
)
 
(6.2
)
 
(16.5
)
 
8.8

 
Net cash used in investing and financing activities
 
(413.1
)
 
(394.1
)
 
(1,116.3
)
 
(694.6
)
 
Decrease in Cash and Cash Equivalents
 
(56.2
)
 
(147.4
)
 
(648.5
)
 
(44.6
)
 
Cash and Cash Equivalents, Beginning of Period
 
539.5

 
568.2

 
1,131.8

 
465.4

 
Cash and Cash Equivalents, End of Period
 
$
483.3

 
$
420.8

 
$
483.3

 
$
420.8

 
 
 
 
 
 
 
 
 
 
 
Free Cash Flow Computation2
 
 
 
 
 
 
 
 
 
Operating cash flow
 
$
356.9

 
$
246.7

 
$
467.8

 
$
650.0

 
Less: capital and software expenditures
 
(91.0
)
 
(78.1
)
 
(277.9
)
 
(221.7
)
 
Free cash flow (before dividends)
 
$
265.9

 
$
168.6

 
$
189.9

 
$
428.3

 
 
 
 
 
 
 
 
 
 
1 
Working capital is comprised of accounts receivable, inventory, accounts payable and deferred revenue.
2 
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.
 
 




10
Exhibit 99.2

STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(Unaudited, Millions of Dollars)
 
 
 
Third Quarter
 
Year-to-Date
 
 
2017
 
2016
 
2017
 
2016
NET SALES
 
 
 
 
 
 
 
 
Tools & Storage
 
$
2,318.2

 
$
1,896.9

 
$
6,432.2

 
$
5,535.4

Industrial
 
503.6

 
462.4

 
1,472.5

 
1,386.5

Security
 
476.8

 
522.7

 
1,429.0

 
1,564.6

Total
 
$
3,298.6

 
$
2,882.0

 
$
9,333.7

 
$
8,486.5

SEGMENT PROFIT
 
 
 
 
 
 
 
 
Tools & Storage
 
$
396.6

 
$
330.0

 
$
1,058.2

 
$
954.5

Industrial
 
93.8

 
80.4

 
276.5

 
235.2

Security
 
54.0

 
71.4

 
156.8

 
199.3

Segment Profit
 
544.4

 
481.8

 
1,491.5

 
1,389.0

Corporate Overhead
 
(55.7
)
 
(43.1
)
 
(148.7
)
 
(138.5
)
Total
 
$
488.7

 
$
438.7

 
$
1,342.8

 
$
1,250.5

Segment Profit as a Percentage of Net Sales
 
 
 
 
 


 


Tools & Storage
 
17.1
 %
 
17.4
 %
 
16.5
 %
 
17.2
 %
Industrial
 
18.6
 %
 
17.4
 %
 
18.8
 %
 
17.0
 %
Security
 
11.3
 %
 
13.7
 %
 
11.0
 %
 
12.7
 %
Segment Profit
 
16.5
 %
 
16.7
 %
 
16.0
 %
 
16.4
 %
Corporate Overhead
 
(1.7
)%
 
(1.5
)%
 
(1.6
)%
 
(1.6
)%
Total
 
14.8
 %
 
15.2
 %
 
14.4
 %
 
14.7
 %


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 2017
 
 
 
 
 
Reported
 
Acquisition-
Related Charges & Other1
 
Normalized2
 
THIRD QUARTER 2016
 
Gross margin
 
$
1,252.1

 
$
9.6

 
$
1,261.7

 
$
1,084.1

 
% of Net Sales
 
38.0
%
 
 
 
38.2
%
 
37.6
%
 
Selling, general and administrative
 
763.4

 
(7.4
)
 
756.0

 
645.4

 
% of Net Sales
 
23.1
%
 
 
 
22.9
%
 
22.4
%
 
Operating margin
 
488.7

 
17.0

 
505.7

 
438.7

 
% of Net Sales
 
14.8
%
 
 
 
15.3
%
 
15.2
%
 
Earnings before income taxes
 
354.0

 
33.3

 
387.3

 
327.7

 
Income taxes
 
79.8

 
9.3

 
89.1

 
78.7

 
Net earnings
 
274.2

 
24.0

 
298.2

 
248.9

 
Diluted earnings per share of common stock
 
$
1.80

 
$
0.15

 
$
1.95

 
$
1.68

 
 
 
 
 
 
 
 
 
 
 
 
 
Year-to-Date 2017
 
 
 
 
 
Reported
 
Acquisition-
Related Charges & Other1
 
Normalized2
 
YEAR-TO-DATE 2016
 
Gross margin
 
$
3,529.6

 
$
42.5

 
$
3,572.1

 
$
3,190.6

 
% of Net Sales
 
37.8
%
 
 
 
38.3
%
 
37.6
%
 
Selling, general and administrative
 
2,186.8

 
(26.8
)
 
2,160.0

 
1,940.1

 
% of Net Sales
 
23.4
%
 
 
 
23.1
%
 
22.9
%
 
Operating margin
 
1,342.8

 
69.3

 
1,412.1

 
1,250.5

 
% of Net Sales
 
14.4
%
 
 
 
15.1
%
 
14.7
%
 
Earnings before income taxes
 
1,184.3

 
(134.9
)
 
1,049.4

 
943.8

 
Income taxes
 
239.8

 
8.8

 
248.6

 
234.7

 
Net earnings
 
944.5

 
(143.7
)
 
800.8

 
709.8

 
Diluted earnings per share of common stock
 
$
6.21

 
$
(0.95
)
 
$
5.26

 
$
4.81

 
 
 
 
 
 
 
 
 
 
1 
Acquisition-related charges and other relates primarily to inventory step-up, integration and consulting costs and gain or losses on sales of businesses.
2 
The normalized 2017 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 acquisition-related charges and gain or losses on sales of businesses.
 



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)
 
 
 
 
Third Quarter 2017
 
 
 
 
 
Reported
 
Acquisition-
Related
Charges1
 
Normalized2
 
THIRD QUARTER 2016
 
SEGMENT PROFIT
 
 
 
 
 
 
 
 
 
Tools & Storage
 
$
396.6

 
$
16.8

 
$
413.4

 
$
330.0

 
Industrial
 
93.8

 
—

 
93.8

 
80.4

 
Security
 
54.0

 
—

 
54.0

 
71.4

 
Segment Profit
 
544.4

 
16.8

 
561.2

 
481.8

 
Corporate Overhead
 
(55.7
)
 
0.2

 
(55.5
)
 
(43.1
)
 
Total
 
$
488.7

 
$
17.0

 
$
505.7

 
$
438.7

 
Segment Profit as a Percentage of Net Sales
 
 
 
 
 
 
 
 
 
Tools & Storage
 
17.1
 %
 
 
 
17.8
 %
 
17.4
 %
 
Industrial
 
18.6
 %
 
 
 
18.6
 %
 
17.4
 %
 
Security
 
11.3
 %
 
 
 
11.3
 %
 
13.7
 %
 
Segment Profit
 
16.5
 %
 
 
 
17.0
 %
 
16.7
 %
 
Corporate Overhead
 
(1.7
)%
 
 
 
(1.7
)%
 
(1.5
)%
 
Total
 
14.8
 %
 
 
 
15.3
 %
 
15.2
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
Year-to-Date 2017
 
 
 
 
 
Reported
 
Acquisition-
Related
Charges1
 
Normalized2
 
YEAR-TO-DATE 2016
 
SEGMENT PROFIT
 
 
 
 
 
 
 
 
 
Tools & Storage
 
$
1,058.2

 
$
68.2

 
$
1,126.4

 
$
954.5

 
Industrial
 
276.5

 
—

 
276.5

 
235.2

 
Security
 
156.8

 
0.9

 
157.7

 
199.3

 
Segment Profit
 
1,491.5

 
69.1

 
1,560.6

 
1,389.0

 
Corporate Overhead
 
(148.7
)
 
0.2

 
(148.5
)
 
(138.5
)
 
Total
 
$
1,342.8

 
$
69.3

 
$
1,412.1

 
$
1,250.5

 
Segment Profit as a Percentage of Net Sales
 

 
 
 
 
 
 
 
Tools & Storage
 
16.5
 %
 
 
 
17.5
 %
 
17.2
 %
 
Industrial
 
18.8
 %
 
 
 
18.8
 %
 
17.0
 %
 
Security
 
11.0
 %
 
 
 
11.0
 %
 
12.7
 %
 
Segment Profit
 
16.0
 %
 
 
 
16.7
 %
 
16.4
 %
 
Corporate Overhead
 
(1.6
)%
 
 
 
(1.6
)%
 
(1.6
)%
 
Total
 
14.4
 %
 
 
 
15.1
 %
 
14.7
 %
 
 
 
 
 
 
 
 
 
 
1 
Acquisition-related charges relate primarily to inventory step-up, integration and consulting costs.
2 
The normalized 2017 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 acquisition-related charges.



13