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THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, Millions of Dollars Except Per Share Amounts)

	FIRST QUARTER
	2006			2005
NET SALES	$	968.7		$	796.3
COSTS AND EXPENSES
Cost of sales		636.8			509.3
Selling, general and administrative		238.8			184.4
Interest-net		15.6			7.6
Other-net		19.3			9.5
Restructuring charges		7.3			—
		917.8			710.8
EARNINGS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES		50.9			85.5
Income taxes		12.4			19.7
NET EARNINGS FROM CONTINUING OPERATIONS	$	38.5		$	65.8
Earnings (loss) from discontinued operations (including loss
on disposal of $1.5 million in 2006) before income taxes		(1.0	)		0.9
Income taxes (benefit) on discontinued operations		(0.2	)		0.1
NET EARNINGS (LOSS) FROM DISCONTINUED OPERATIONS		(0.8	)		0.8
NET EARNINGS	$	37.7		$	66.6
BASIC EARNINGS (LOSS) PER SHARE OF COMMON STOCK
Continuing operations	$	0.46		$	0.79
Discontinued operations		(0.01	)		0.01
Total basic earnings per share of common stock	$	0.46		$	0.80
DILUTED EARNINGS (LOSS) PER SHARE OF COMMON STOCK
Continuing operations	$	0.45		$	0.77
Discontinued operations		(0.01	)		0.01
Total diluted earnings per share of common stock	$	0.45		$	0.78
DIVIDENDS PER SHARE	$	0.29		$	0.28
AVERAGE SHARES OUTSTANDING (in thousands)
Basic		82,892			82,822
Diluted		84,804			85,156

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THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited, Millions of Dollars)

	April 1, 2006		December 31, 2005
ASSETS
Cash and cash equivalents	$	204.9	$	657.8
Accounts and notes receivable		782.4		609.6
Inventories		548.5		460.7
Other current assets		90.5		84.2
Assets held for sale		3.4		13.3
Total current assets		1,629.7		1,825.6
Property, plant and equipment		491.4		467.1
Goodwill and other intangibles		1,482.0		1,060.4
Other assets		184.5		192.0
Total assets	$	3,787.6	$	3,545.1
LIABILITIES AND SHAREOWNERS’ EQUITY
Short-term borrowings	$	400.7	$	170.2
Accounts payable		411.0		327.7
Accrued expenses		464.5		374.3
Liabilities held for sale		—		3.1
Total current liabilities		1,276.2		875.3
Long-term debt		821.3		895.3
Other long-term liabilities		363.1		329.6
Shareowners’ equity		1,327.0		1,444.9
Total liabilities and equity	$	3,787.6	$	3,545.1

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THE STANLEY WORKS AND SUBSIDIARIES
SUMMARY OF CASH FLOW ACTIVITY
(Unaudited, Millions of Dollars)

	FIRST QUARTER
	2006			2005
OPERATING ACTIVITIES
Net earnings	$	37.7		$	66.6
Depreciation and amortization		30.3			23.4
Changes in working capital		9.6			(21.2	)
Other		7.6			(8.2	)
Net cash provided by operating activities		85.2			60.6
INVESTING AND FINANCING ACTIVITIES
Capital and software expenditures		(14.5	)		(10.5	)
Proceeds (taxes paid) from sale of business		0.9			(10.6	)
Business acquisitions and asset disposals		(490.6	)		(59.7	)
Cash dividends on common stock		(23.8	)		(23.2	)
Other		(10.1	)		103.9
Net cash used in investing and financing activities		(538.1	)		(0.1	)
Increase(decrease) in Cash and Cash Equivalents		(452.9	)		60.5
Cash and Cash Equivalents, Beginning of Period		657.8			250.0
Cash and Cash Equivalents, End of Period	$	204.9		$	310.5
Free Cash Flow Computation
Operating Cash Flow	$	85.2		$	60.6
Less: capital and software expenditures		(14.5	)		(10.5	)
Free Cash Flow (before dividends)	$	70.7		$	50.1

Free cash flow is defined as cash flow from operations less capital expenditures; the company believes this is an important measure of its liquidity, as well as its ability to fund future growth and to provide a return to the shareowners.

The change in working capital is comprised of accounts receivable, inventory and accounts payable.

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THE STANLEY WORKS AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(Unaudited, Millions of Dollars)

	FIRST QUARTER
	2006		2005
NET SALES
Consumer Products	$	309.8	$	257.2
Industrial Tools		451.0		349.3
Security Solutions		207.9		189.8
Total	$	968.7	$	796.3
OPERATING PROFIT
Consumer Products	$	37.3	$	41.0
Industrial Tools		28.7		36.8
Security Solutions		27.1		24.8
Total	$	93.1	$	102.6