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stanleyimagea04.jpg
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from [            ] to [            ]

Commission File Number 001-05224
STANLEY BLACK & DECKER, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CT 06-0548860
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)
 (I.R.S. EMPLOYER
IDENTIFICATION NUMBER)
1000 STANLEY DRIVE
NEW BRITAIN, CT 06053
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE)

REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE 860 225-5111
Securities registered pursuant to Section 12(b) of the Act:
Title Of Each ClassTrading SymbolName Of Each Exchange On Which Registered
Common Stock$2.50 Par Value per ShareSWKNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes     No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filerþ  Accelerated Filer¨
Non-Accelerated Filer¨  Smaller Reporting Company
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes No
153,311,412 shares of the registrant’s common stock were outstanding as of October 24, 2023.



TABLE OF CONTENTS
 


Table of Contents
PART I — FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND OCTOBER 1, 2022
(Unaudited, Millions of Dollars, Except Per Share Amounts)
 
 Third QuarterYear-to-Date
 2023202220232022
Net Sales$3,953.9 $4,119.6 $12,044.6 $12,960.6 
Costs and Expenses
Cost of sales$2,893.3 $3,101.5 $9,216.4 $9,430.0 
Selling, general and administrative791.8 799.0 2,449.2 2,597.6 
Provision for credit losses2.5 0.8 7.5 15.2 
Other, net94.0 69.1 224.3 210.2 
Loss on sales of businesses 8.6 7.6 8.4 
Asset impairment charges124.0  124.0 168.4 
Restructuring charges10.9 68.6 27.6 140.8 
Interest income(50.2)(15.4)(135.2)(24.7)
Interest expense144.6 91.7 420.1 224.6 
$4,010.9 $4,123.9 $12,341.5 $12,770.5 
(Loss) earnings from continuing operations before income taxes(57.0)(4.3)(296.9)190.1 
Income taxes on continuing operations(61.7)(40.9)(291.3)(80.8)
Net earnings (loss) from continuing operations4.7 36.6 (5.6)270.9 
Less: Net earnings attributable to non-controlling interests   0.2 
Net Earnings (Loss) from Continuing Operations Attributable to Common Shareowners$4.7 $36.6 $(5.6)$270.7 
Add: Contract adjustment payments accretion 0.3  1.0 
Net Earnings (Loss) from Continuing Operations Attributable to Common Shareowners - Diluted$4.7 $36.9 $(5.6)$271.7 
Earnings (loss) from discontinued operations before income taxes (including 2023 pre-tax loss on Security sale of $0.8 million and 2022 pre-tax gain on Security sale of $1,220.0 million)
 1,204.9 (0.8)1,233.5 
Income taxes on discontinued operations (including 2023 income taxes of $0.3 million for loss on Security sale and 2022 income taxes of $390.7 million for gain on Security sale)
 396.9 (0.3)396.7 
Net earnings (loss) from discontinued operations$ $808.0 $(0.5)$836.8 
Net Earnings (Loss) Attributable to Common Shareowners - Diluted$4.7 $844.9 $(6.1)$1,108.5 
Net Earnings (Loss) Attributable to Stanley Black & Decker, Inc.$4.7 $844.6 $(6.1)$1,107.5 
Total Comprehensive (Loss) Income Attributable to Common Shareowners$(107.1)$569.3 $(94.2)$526.8 
Basic earnings (loss) per share of common stock:
Continuing operations$0.03 $0.25 $(0.04)$1.82 
Discontinued operations$ $5.60 $ $5.64 
Total basic earnings (loss) per share of common stock$0.03 $5.85 $(0.04)$7.46 
Diluted earnings (loss) per share of common stock:
Continuing operations$0.03 $0.24 $(0.04)$1.72 
Discontinued operations$ $5.26 $ $5.30 
Total diluted earnings (loss) per share of common stock$0.03 $5.50 $(0.04)$7.02 
See Notes to Unaudited Condensed Consolidated Financial Statements.
3

Table of Contents
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2023 AND DECEMBER 31, 2022
(Unaudited, Millions of Dollars, Except Share and Per Share Amounts) 
September 30,
2023
December 31,
2022
ASSETS
Current Assets
Cash and cash equivalents$347.8 $395.6 
Accounts and notes receivable, net1,623.3 1,231.0 
Inventories, net4,977.7 5,861.1 
Prepaid expenses391.2 441.4 
Other current assets39.1 45.6 
Total Current Assets7,379.1 7,974.7 
Property, plant and equipment, net2,200.7 2,353.1 
Goodwill8,467.4 8,502.7 
Intangibles, net4,201.7 4,474.8 
Other assets1,848.2 1,658.0 
Total Assets$24,097.1 $24,963.3 
LIABILITIES AND SHAREOWNERS' EQUITY
Current Liabilities
Short-term borrowings$1,500.2 $2,102.9 
Current maturities of long-term debt1.1 1.2 
Accounts payable2,252.6 2,344.4 
Accrued expenses1,909.4 2,120.7 
Total Current Liabilities5,663.3 6,569.2 
Long-term debt6,099.2 5,352.9 
Deferred taxes464.8 709.2 
Post-retirement benefits332.9 353.9 
Other liabilities2,207.5 2,263.9 
Commitments and Contingencies (Notes P and Q)
Shareowners’ Equity
Stanley Black & Decker, Inc. Shareowners’ Equity
Common stock, par value $2.50 per share:
Authorized 300,000,000 shares in 2023 and 2022
Issued 176,902,738 shares in 2023 and 2022
442.3 442.3 
Retained earnings8,966.4 9,333.3 
Additional paid in capital5,083.1 5,055.6 
Accumulated other comprehensive loss(2,207.6)(2,119.5)
12,284.2 12,711.7 
Less: cost of common stock in treasury (23,592,954 shares in 2023 and 23,919,208 shares in 2022)
(2,956.9)(2,999.6)
Stanley Black & Decker, Inc. Shareowners’ Equity9,327.3 9,712.1 
Non-controlling interests2.1 2.1 
Total Shareowners’ Equity9,329.4 9,714.2 
Total Liabilities and Shareowners’ Equity$24,097.1 $24,963.3 
See Notes to Unaudited Condensed Consolidated Financial Statements.
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STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND OCTOBER 1, 2022
(Unaudited, Millions of Dollars)
 
Third QuarterYear-to-Date
 2023202220232022
OPERATING ACTIVITIES
Net earnings (loss) from continuing operations$4.7 $36.6 $(5.6)$270.9 
Net earnings (loss) from discontinued operations 808.0 (0.5)836.8 
Adjustments to reconcile net earnings (loss) to cash provided by (used in) operating activities:
Depreciation and amortization of property, plant and equipment103.0 88.4 332.0 272.3 
Amortization of intangibles48.1 49.6 144.7 152.8 
Loss on sales of businesses 8.6 7.6 8.4 
(Gain) loss on sale of discontinued operations (1,220.0)0.8 (1,220.0)
Asset impairment charges124.0  124.0 168.4 
Stock-based compensation expense18.7 14.2 65.5 70.8 
Changes in working capital155.6 (393.3)253.3 (2,297.4)
Changes in other assets and liabilities(10.2)182.3 (499.8)(373.6)
Cash provided by (used in) operating activities443.9 (425.6)422.0 (2,110.6)
INVESTING ACTIVITIES
Capital and software expenditures(79.9)(114.4)(216.4)(399.9)
Proceeds from sales of assets3.6 24.7 13.1 39.9 
Proceeds from sales of businesses, net of cash sold 4,146.9 (5.7)4,147.1 
Business acquisitions, net of cash acquired (26.5) (72.1)
Purchases of investments(0.1)(2.9)(1.7)(12.2)
Acquisition of assets (14.4) (15.2)
   Net investment hedge settlements 1.7  10.6 
Other (0.2)3.9 (1.0)
Cash (used in) provided by investing activities(76.4)4,014.9 (206.8)3,697.2 
FINANCING ACTIVITIES
Proceeds from debt issuances, net of fees(0.6) 745.3 992.6 
Stock purchase contract fees (9.9) (29.5)
Credit facility borrowings   2,500.0 
Credit facility repayments (2,500.0) (2,500.0)
Net short-term commercial paper (repayments) borrowings (266.4)(763.4)(594.3)328.0 
Proceeds from issuances of common stock4.4 3.4 11.5 23.0 
Purchases of common stock for treasury(1.2)(4.6)(6.8)(2,318.7)
Craftsman contingent consideration (11.4)(18.0)(32.5)
Termination of interest rate swaps   22.7 
Cash dividends on common stock(121.3)(115.5)(360.8)(345.8)
Other(2.6)(3.2)(16.2)(10.8)
Cash used in financing activities(387.7)(3,404.6)(239.3)(1,371.0)
Effect of exchange rate changes on cash, cash equivalents and restricted cash(23.6)(78.2)(28.7)(95.8)
Change in cash, cash equivalents and restricted cash(43.8)106.5 (52.8)119.8 
Cash, cash equivalents and restricted cash, beginning of period395.9 308.1 404.9 294.8 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD$352.1 $414.6 $352.1 $414.6 
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The following table provides a reconciliation of the cash, cash equivalents and restricted cash balances as of September 30, 2023 and December 31, 2022, as shown above:
September 30, 2023December 31, 2022
Cash and cash equivalents$347.8 $395.6 
Restricted cash included in Other current assets4.3 9.3 
Cash, cash equivalents and restricted cash$352.1 $404.9 
See Notes to Unaudited Condensed Consolidated Financial Statements.
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STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREOWNERS' EQUITY
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND OCTOBER 1, 2022
(Unaudited, Millions of Dollars, Except Share and Per Share Amounts)


Preferred
Stock
Common
Stock
Additional
Paid In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Treasury
Stock
Non-
Controlling
Interests
Shareowners’
Equity
Balance December 31, 2022$ $442.3 $5,055.6 $9,333.3 $(2,119.5)$(2,999.6)$2.1 $9,714.2 
Net loss— — — (187.8)— — — (187.8)
Other comprehensive income— — — — 52.8 — — 52.8 
Cash dividends declared — $0.80 per common share
— — — (119.8)— — — (119.8)
Issuance of common stock (202,552 shares)
— — (21.5)— — 24.6 — 3.1 
Repurchase of common stock (58,377 shares)
— — — — — (4.8)— (4.8)
Stock-based compensation related— — 34.7 — — — — 34.7 
Balance April 1, 2023$ $442.3 $5,068.8 $9,025.7 $(2,066.7)$(2,979.8)$2.1 $9,492.4 
Net earnings— — — 177.0 — — — 177.0 
Other comprehensive loss— — — — (29.1)— — (29.1)
Cash dividends declared — $0.80 per common share
— — — (119.7)— — — (119.7)
Issuance of common stock (99,627 shares)
— — (8.1)— — 12.1 — 4.0 
Repurchase of common stock (9,996 shares)
— — — — — (0.8)— (0.8)
Stock-based compensation related— — 12.1 — — — — 12.1 
Balance July 1, 2023$ $442.3 $5,072.8 $9,083.0 $(2,095.8)$(2,968.5)$2.1 $9,535.9 
Net earnings— — — 4.7 — — — 4.7 
Other comprehensive loss— — — — (111.8)— — (111.8)
Cash dividends declared — $0.81 per common share
— — — (121.3)— — — (121.3)
Issuance of common stock (104,624 shares)
— — (8.4)— — 12.8 — 4.4 
Repurchase of common stock (12,176 shares)
— — — — — (1.2)— (1.2)
Stock-based compensation related— — 18.7 — — — — 18.7 
Balance September 30, 2023$ $442.3 $5,083.1 $8,966.4 $(2,207.6)$(2,956.9)$2.1 $9,329.4 
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Preferred
Stock
Common
Stock
Additional
Paid In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Treasury
Stock
Non-
Controlling
Interests
Shareowners’
Equity
Balance January 1, 2022$620.3 $442.3 $4,999.2 $8,742.4 $(1,845.6)$(1,368.1)$1.9 $11,592.4 
Net earnings— — — 175.3 — — 0.1 175.4 
Other comprehensive loss— — — — (27.7)— — (27.7)
Cash dividends declared — $0.79 per common share
— — — (116.3)— — — (116.3)
Issuance of common stock (338,897 shares)
— — (24.0)— — 37.7 — 13.7 
Repurchase of common stock (12,729,825 shares)
— — (300.0)— — (2,013.0)— (2,313.0)
Stock-based compensation related— — 30.3 — — — — 30.3 
Balance April 2, 2022$620.3 $442.3 $4,705.5 $8,801.4 $(1,873.3)$(3,343.4)$2.0 $9,354.8 
Net earnings— — — 87.6 — — 0.1 87.7 
Other comprehensive loss— — — — (277.7)— — (277.7)
Cash dividends declared — $0.79 per common share
— — — (114.0)— — — (114.0)
Issuance of common stock (83,264 shares)
— — (4.4)— — 10.3 — 5.9 
Repurchase of common stock (3,219,632 shares)
— — 299.9 — — (301.0)— (1.1)
Stock-based compensation related— — 26.3 — — — — 26.3 
Balance July 2, 2022$620.3 $442.3 $5,027.3 $8,775.0 $(2,151.0)$(3,634.1)$2.1 $9,081.9 
Net earnings— — — 844.6 — — — 844.6 
Other comprehensive loss— — — — (275.3)— — (275.3)
Cash dividends declared — $0.80 per common share
— — — (115.5)— — — (115.5)
Issuance of common stock (186,290 shares)
— — (18.1)— — 21.5 — 3.4 
Repurchase of common stock (50,617 shares)
— — — — — (4.6)— (4.6)
Stock-based compensation related— — 14.2 — — — — 14.2 
Balance October 1, 2022$620.3 $442.3 $5,023.4 $9,504.1 $(2,426.3)$(3,617.2)$2.1 $9,548.7 
See Notes to Unaudited Condensed Consolidated Financial Statements.

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STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023

A.    SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (hereinafter referred to as “generally accepted accounting principles”) for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations for the interim periods have been included and are of a normal, recurring nature. Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for a full fiscal year. For further information, refer to the consolidated financial statements and footnotes included in Stanley Black & Decker, Inc.’s (the “Company”) Form 10-K for the year ended December 31, 2022, and subsequent related filings with the Securities and Exchange Commission ("SEC").

On August 19, 2022, the Company completed the sale of its Oil & Gas business. This divestiture did not qualify for discontinued operations, and therefore, the 2022 results of the Oil & Gas business were included in the Company's continuing operations through the date of sale.

On July 22, 2022, the Company completed the sale of its Convergent Security Solutions ("CSS") business comprised of the commercial electronic security and healthcare businesses. On July 5, 2022, the Company completed the sale of its Mechanical Access Solutions ("MAS") business, the automatic doors business. The CSS and MAS divestitures represented a single plan to exit the Security segment and were considered a strategic shift that had a major effect on the Company’s operations and financial results. As a result, the 2022 operating results of CSS and MAS through their respective dates of sale were reported as discontinued operations in the consolidated financial statements.

The divestitures above are part of the Company's strategic commitment to simplify and streamline its portfolio to focus on the core Tools & Outdoor and Industrial businesses. Refer to Note R, Divestitures, for further discussion of these transactions.

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements. While management believes that the estimates and assumptions used in the preparation of the financial statements are appropriate, actual results could differ from these estimates. Certain amounts reported in previous years have been reclassified to conform to the 2023 presentation.

B.    NEW ACCOUNTING STANDARDS

NEW ACCOUNTING STANDARDS ADOPTED — In September 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations. The new standard requires that a buyer in a supplier finance program disclose sufficient information about the key terms of the program, the amount of outstanding confirmed obligations at period end, where the obligations are presented in the balance sheet, and a rollforward of the obligations during the annual period. The ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023. Early adoption is permitted. The amendments in this update should be applied retrospectively to all periods in which a balance sheet is presented, except for the rollforward requirement, which is applied prospectively. The Company adopted this standard in the first quarter of 2023, with the exception of the amendment on rollforward information. Refer to Note Q, Commitments and Guarantees, for further discussion.

In March 2022, the FASB issued ASU 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging—Portfolio Layer Method. The new standard expands and clarifies the use of the portfolio layer method for fair value hedges of interest rate risk. The new standard allows non-prepayable financial assets to also be included in a closed portfolio which is hedged using the portfolio layer method. The ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The new guidance on hedging multiple layers in a closed portfolio should be applied prospectively and the guidance on the accounting for fair value basis adjustments should be applied on a modified retrospective basis. The Company adopted this standard in the first quarter of 2023 and it did not have a material impact on its consolidated financial statements.
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RECENTLY ISSUED ACCOUNTING STANDARDS NOT YET ADOPTED — In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The new standard clarifies that a contractual restriction on the sale of an equity security should not be considered in measuring the fair value of the security. The new standard also requires certain disclosures related to equity securities with contractual sale restrictions. The ASU is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The standard should be applied prospectively. The Company is currently evaluating this guidance, but does not expect it to have a material impact on its consolidated financial statements.

C.    EARNINGS PER SHARE

The following table reconciles net earnings (loss) attributable to common shareowners and the weighted-average shares outstanding used to calculate basic and diluted earnings (loss) per share for the three and nine months ended September 30, 2023 and October 1, 2022:
Third QuarterYear-to-Date
2023202220232022
Numerator (in millions):
Net Earnings (Loss) from Continuing Operations Attributable to Common Shareowners$4.7 $36.6 $(5.6)$270.7 
Add: Contract adjustment payments accretion 0.3  1.0 
Net Earnings (Loss) from Continuing Operations Attributable to Common Shareowners - Diluted$4.7 $36.9 $(5.6)$271.7 
Net earnings (loss) from discontinued operations 808.0 (0.5)836.8 
Net Earnings (Loss) Attributable to Common Shareowners - Diluted$4.7 $844.9 $(6.1)$1,108.5 

Third QuarterYear-to-Date
2023202220232022
Denominator (in thousands):
Basic weighted-average shares outstanding149,799 144,379 149,687 148,384 
Dilutive effect of stock contracts and awards746 9,221  9,582 
Diluted weighted-average shares outstanding150,545 153,600 149,687 157,966 

Third QuarterYear-to-Date
2023202220232022
Earnings (loss) per share of common stock:
Basic earnings (loss) per share of common stock:
Continuing operations$0.03 $0.25 $(0.04)$1.82 
Discontinued operations$ $5.60 $ $5.64 
Total basic earnings (loss) per share of common stock$0.03 $5.85 $(0.04)$7.46 
Diluted earnings (loss) per share of common stock:
Continuing operations$0.03 $0.24 $(0.04)$1.72 
Discontinued operations$ $5.26 $ $5.30 
Total dilutive earnings (loss) per share of common stock$0.03 $5.50 $(0.04)$7.02 

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The following weighted-average stock options were not included in the computation of weighted-average diluted shares outstanding because the effect would be anti-dilutive (in thousands):
Third QuarterYear-to-Date
2023202220232022
Number of stock options5,048 4,627 5,547 3,780 
In November 2019, the Company issued 7,500,000 Equity Units with a total notional value of $750.0 million ("2019 Equity Units"). Each unit had a stated amount of $100 and initially consisted of a three-year forward stock purchase contract (“2022 Purchase Contracts”) for the purchase of a variable number of shares of common stock, on November 15, 2022, for a price of $100, and a 10% beneficial ownership interest in one share of 0% Series D Cumulative Perpetual Convertible Preferred Stock, without par, with a liquidation preference of $1,000 per share (“Series D Preferred Stock”). The shares associated with the forward stock purchase contracts component of the 2019 Equity Units were reflected in diluted earnings per share for both the three and nine months ended October 1, 2022 using the if-converted method. Upon the adoption of ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40), in the first quarter of 2022, the common shares that would be required to settle the applicable conversion value of the Series D Preferred Stock were included in the denominator of diluted earnings per share using the if-converted method through the date of redemption as discussed below. In accordance with the standard, the Company increased weighted-average shares outstanding used to calculate diluted earnings per share for both the three and nine months ended October 1, 2022 by 4.1 million shares.
In November 2022, the Company generated cash proceeds of $750 million from the successful remarketing of the Series D Preferred Stock (the "Remarketed Series D Preferred Stock"). Upon completion of the remarketing, the holders of the 2019 Equity Units received 4,723,500 common shares and the Company issued 750,000 shares of Remarketed Series D Preferred Stock. Holders of the Remarketed Series D Preferred Stock were entitled to receive cumulative dividends, if declared by the Board of Directors, at an initial fixed rate equal to 7.5% per annum of the $1,000 per share liquidation preference (equivalent to $75.00 per annum per share). On November 15, 2022, the Company informed holders that it would redeem all outstanding shares of the Remarketed Series D Preferred Stock on December 22, 2022 at $1,007.71 per share in cash, which was equal to 100% of the liquidation preference of a share of Remarketed Series D Preferred Stock, plus accumulated and unpaid dividends to, but excluding December 22, 2022. In December 2022, the Company redeemed the Remarketed Series D Preferred Stock, paying $750 million in cash.
Refer to Note I, Equity Arrangements, for further discussion.

D.    ACCOUNTS AND NOTES RECEIVABLE, NET
(Millions of Dollars)September 30, 2023December 31, 2022
Trade accounts receivable$1,515.5 $1,142.0 
Trade notes receivable96.4 100.1 
Other accounts receivable99.8 95.5 
Gross accounts and notes receivable$1,711.7 $1,337.6 
Allowance for credit losses(88.4)(106.6)
Accounts and notes receivable, net$1,623.3 $1,231.0 
Trade receivables are dispersed among a large number of retailers, distributors and industrial accounts in many countries. Adequate reserves have been established to cover anticipated credit losses.

The changes in the allowance for credit losses for the three and nine months ended September 30, 2023 and October 1, 2022 are as follows:
Third QuarterYear-to-Date
(Millions of Dollars)2023202220232022
Beginning balance$88.0 $102.2 $106.6 $95.9 
Charged to costs and expenses2.50.87.515.2
Other, including recoveries and deductions (a)(2.1)5.0(25.7)(3.1)
Balance end of period$88.4 $108.0 $88.4 $108.0 
(a) Amounts represent charge-offs less recoveries, the impacts of foreign currency translation, and net transfers to/from other accounts.
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The Company's payment terms are generally consistent with the industries in which their businesses operate and typically range from 30-90 days globally. The Company does not adjust the promised amount of consideration for the effects of a significant financing component when the period between transfer of the product and receipt of payment is less than one year. Any significant financing components for contracts greater than one year are included in revenue over time.

The Company has an accounts receivable sale program. According to the terms, the Company sells certain of its trade accounts receivables at fair value to a wholly owned, consolidated, bankruptcy-remote special purpose subsidiary (“BRS"). The BRS, in turn, can sell such receivables to a third-party financial institution (“Purchaser”) for cash. The Purchaser’s maximum cash investment in the receivables at any time is $110.0 million. The purpose of the program is to provide liquidity to the Company. These transfers qualify as sales under Accounting Standards Codification ("ASC") 860, Transfers and Servicing, and receivables are derecognized from the Company’s consolidated balance sheet when the BRS sells those receivables to the Purchaser. The Company has no retained interests in the transferred receivables, other than collection and administrative responsibilities. At September 30, 2023, the Company did not record a servicing asset or liability related to its retained responsibility based on its assessment of the servicing fee, market values for similar transactions and its cost of servicing the receivables sold.

At September 30, 2023 and December 31, 2022, net receivables of approximately $89.5 million and $110.0 million, respectively, were derecognized. Proceeds from transfers of receivables to the Purchaser totaled $123.2 million and $300.0 million for the three and nine months ended September 30, 2023, respectively, and payments to the Purchaser totaled $130.2 million and $320.5 million, respectively. Proceeds from transfers of receivables to the Purchaser totaled $107.7 million and $322.3 million for the three and nine months ended October 1, 2022, respectively, and payments to the Purchaser totaled $128.2 million and $332.8 million, respectively. The program resulted in a pre-tax loss of $1.8 million and $4.5 million for the three and nine months ended September 30, 2023, respectively, which included service fees of $0.2 million and $0.6 million, respectively. The program resulted in a pre-tax loss of $1.2 million and $2.5 million for the three and nine months ended October 1, 2022, respectively, which included service fees of $0.3 million and $0.7 million, respectively. All cash flows under the program are reported as a component of changes in working capital within operating activities in the Condensed Consolidated Statements of Cash Flows since all the cash from the Purchaser is received upon the initial sale of the receivable.

As of September 30, 2023 and December 31, 2022, the Company's deferred revenue totaled $125.7 million and $122.9 million, respectively, of which $38.8 million and $29.6 million, respectively, was classified as current. Revenue recognized for the nine months ended September 30, 2023 and October 1, 2022 that was previously deferred as of December 31, 2022 and January 1, 2022 totaled $17.6 million and $19.2 million, respectively.


E.    INVENTORIES, NET
(Millions of Dollars)September 30, 2023December 31, 2022
Finished products$3,013.8 $3,460.8 
Work in process273.6 338.7 
Raw materials1,690.3 2,061.6 
Total$4,977.7 $5,861.1 
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F.    GOODWILL
Changes in the carrying amount of goodwill by segment are as follows:
(Millions of Dollars)Tools & OutdoorIndustrialTotal
Balance December 31, 2022$5,939.7 $2,563.0 $8,502.7 
Foreign currency translation & other(23.2)(12.1)(35.3)
Balance September 30, 2023$5,916.5 $2,550.9 $8,467.4 
In the third quarter of 2023, the Company performed its annual goodwill impairment testing and determined that the fair values of each of its reporting units exceeded their respective carrying amounts. The Company's Industrial segment is comprised of the Engineered Fastening and Infrastructure reporting units. For the Engineered Fastening reporting unit, which included approximately $2.017 billion of goodwill as of September 30, 2023, the Company determined that the fair value, estimated using a discounted cash flow valuation model, exceeded its carrying amount by 16%. The key assumptions applied to the cash flow projections for the Engineered Fastening reporting unit included a 10.0% discount rate, near-term revenue growth rates over the next six years, which represented a compound annual growth rate of approximately 5%, and a 3% perpetual growth rate. For the Infrastructure reporting unit, which included approximately $534 million of goodwill as of September 30, 2023, the Company determined that the fair value, estimated using a discounted cash flow valuation model, exceeded its carrying amount by 13%. The key assumptions applied to the cash flow projections for the Infrastructure reporting unit included a 10.5% discount rate, near-term revenue growth rates over the next six years, which represented a compound annual growth rate of approximately 5%, and a 3% perpetual growth rate. The assumptions for the Engineered Fastening and Infrastructure reporting units contemplated business, market and overall economic conditions. Management continues to be confident in the long-term viability and success of both reporting units, particularly given their market positions, growth prospects, such as automotive electrification and the aerospace market recovery, and geographies served. The fair value for the Tools & Outdoor reporting unit, which was estimated using a discounted cash flow valuation model, exceeded its respective carrying amount by 44%.

G.    LONG-TERM DEBT AND FINANCING ARRANGEMENTS
September 30, 2023December 31, 2022
(Millions of Dollars)Interest RateNotional ValueUnamortized Discount
Unamortized Gain/(Loss) Terminated Swaps 1
Purchase Accounting FV AdjustmentDeferred Financing FeesCarrying Value
Carrying Value
Notes payable due 20252.30%$500.0 $(0.3)$ $ $(1.2)$498.5 $497.7 
Notes payable due 20263.40%500.0 (0.2)  (1.1)498.7 498.3 
Notes payable due 20266.27%350.0    (1.5)348.5  
Notes payable due 20263.42%25.0   1.1  26.1 26.4 
Notes payable due 20261.84%26.4   1.0  27.4 28.0 
Notes payable due 20286.00%400.0 (0.4)  (2.2)397.4  
Notes payable due 20287.05%150.0  5.2 5.0  160.2 161.8 
Notes payable due 20284.25%500.0 (0.2)  (2.2)497.6 497.2 
Notes payable due 20283.52%50.0   3.4 (0.1)53.3 53.7 
Notes payable due 20302.30%750.0 (1.6)  (3.4)745.0 744.5 
Notes payable due 20323.00%500.0 (0.8)  (3.0)496.2 495.9 
Notes payable due 20405.20%400.0 (0.2)(25.0) (2.3)372.5 371.3 
Notes payable due 20484.85%500.0 (0.5)  (4.6)494.9 494.8 
Notes payable due 20502.75%750.0 (1.8)  (7.6)740.6 740.3 
Notes payable due 2060 (junior subordinated)4.00%750.0    (8.7)741.3 741.2 
Other, payable in varying amounts 2024 through 2027
4.10%-4.31%
2.1     2.1 3.0 
Total Long-term debt, including current maturities$6,153.5 $(6.0)$(19.8)$10.5 $(37.9)$6,100.3 $5,354.1 
Less: Current maturities of long-term debt(1.1)(1.2)
Long-term debt$6,099.2 $5,352.9 
1Unamortized gain/(loss) associated with interest rate swaps are more fully discussed in Note H, Financial Instruments.
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In March 2023, the Company issued $350.0 million of senior unsecured term notes maturing March 6, 2026 ("2026 Term Notes") and $400.0 million of senior unsecured term notes maturing March 6, 2028 (“2028 Term Notes”). The 2026 Term Notes accrue interest at a fixed rate of 6.272% per annum and the 2028 Term Notes at a fixed rate of 6.0% per annum, with interest payable semi-annually in arrears, and both notes rank equally in right of payment with all of the Company's existing and future unsecured, unsubordinated debt. The Company received total net proceeds from this offering of $745.3 million, net of $4.7 million of underwriting expenses and other fees associated with the transaction. The Company used the net proceeds from the offering for general corporate purposes, including repayment of indebtedness under the commercial paper program.

In February 2022, the Company issued $500.0 million of senior unsecured term notes maturing February 24, 2025 ("2025 Term Notes") and $500.0 million of senior unsecured term notes maturing May 15, 2032 (“2032 Term Notes”). The 2025 Term Notes accrue interest at a fixed rate of 2.3% per annum and the 2032 Term Notes at a fixed rate of 3.0% per annum, with interest payable semi-annually in arrears, and both notes rank equally in right of payment with all of the Company's existing and future unsecured unsubordinated debt. The Company received total net proceeds from this offering of $992.6 million, net of $7.4 million of underwriting expenses and other fees associated with the transaction in the first quarter of 2022. The Company used the net proceeds from the offering for general corporate purposes, including repayment of indebtedness under the commercial paper program.

The Company has a $3.5 billion commercial paper program which includes Euro denominated borrowings in addition to U.S. Dollars. As of September 30, 2023, the Company had commercial paper borrowings outstanding of $1.5 billion of which $553.0 million in Euro denominated commercial paper was designated as a net investment hedge. Refer to Note H, Financial Instruments, for further discussion. As of December 31, 2022, the Company had $2.1 billion of borrowings outstanding, which did not include any Euro denominated commercial paper.

The Company has a five-year $2.5 billion committed credit facility (the “5-Year Credit Agreement”). Borrowings under the 5-Year Credit Agreement may be made in U.S. Dollars, Euros or Pounds Sterling. A sub-limit amount of $814.3 million is designated for swing line advances which may be drawn in Euros pursuant to the terms of the 5-Year Credit Agreement. Borrowings bear interest at a floating rate plus an applicable margin dependent upon the denomination of the borrowing and specific terms of the 5-Year Credit Agreement. The Company must repay all advances under the 5-Year Credit Agreement by the earlier of September 8, 2026 or upon termination. The 5-Year Credit Agreement is designated to be a liquidity back-stop for the Company's $3.5 billion U.S. Dollar and Euro commercial paper program. As of September 30, 2023 and December 31, 2022, the Company had not drawn on its five-year committed credit facility.

In September 2023, the Company terminated its $1.5 billion syndicated 364-Day Credit Agreement (the "Syndicated 364-Day Credit Agreement") dated September 2022, as amended. There were no outstanding borrowings under the Syndicated 364-Day Credit Agreement upon termination and as of December 31, 2022. Contemporaneously, the Company entered into a new $1.5 billion syndicated 364-Day Credit Agreement (the "2023 Syndicated 364-Day Credit Agreement") which is a revolving credit loan. The borrowings under the 2023 Syndicated 364-Day Credit Agreement may be made in U.S. Dollars or Euros and bear interest at a floating rate plus an applicable margin dependent upon the denomination of the borrowing and pursuant to the terms of the 2023 Syndicated 364-Day Credit Agreement. The Company must repay all advances under the 2023 Syndicated 364-Day Credit Agreement by the earlier of September 4, 2024 or upon termination. The Company may, however, convert all advances outstanding upon termination into a term loan that shall be repaid in full no later than the first anniversary of the termination date provided that the Company, among other things, pays a fee to the administrative agent for the account of each lender. The 2023 Syndicated 364-Day Credit Agreement serves as part of the liquidity back-stop for the Company’s $3.5 billion U.S. Dollar and Euro commercial paper program. As of September 30, 2023, the Company had not drawn on its 2023 Syndicated 364-Day Credit Agreement.

In September 2023, the Company terminated its $0.5 billion revolving credit loan (the "Club 364-Day Credit Agreement") dated September 2022, as amended. There were no outstanding borrowings under the Club 364-Day Credit Agreement upon termination and as of December 31, 2022.

The Company has an interest coverage covenant that must be maintained to permit continued access to its committed credit facilities described above. The interest coverage ratio tested for covenant compliance compares adjusted Earnings Before Interest, Taxes, Depreciation and Amortization to adjusted Interest Expense ("Adjusted EBITDA"/"Adjusted Interest Expense"). In February 2023, the Company entered into an amendment to its 5-Year Credit Agreement to: (a) amend the definition of Adjusted EBITDA to allow for additional adjustment addbacks, not to exceed $500 million in the aggregate, for amounts incurred during each four fiscal quarter period beginning with the period ending in the third quarter of 2023 through the period ending in the second quarter of 2024, and (b) amend the minimum interest coverage ratio from 3.5 times to not less
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than 1.5 to 1.0 times computed quarterly, on a rolling twelve months (last twelve months) basis, for the period from and including the third quarter of 2023 through the second quarter of 2024. The minimum interest coverage ratio will revert back to 3.5 times for periods after the second quarter of 2024. The amended provisions described above also apply to the 2023 Syndicated 364-Day Credit Agreement.


H.    FINANCIAL INSTRUMENTS

The Company is exposed to market risk from changes in foreign currency exchange rates, interest rates, stock prices and commodity prices. As part of the Company’s risk management program, a variety of financial instruments such as interest rate swaps, currency swaps, purchased currency options, foreign exchange contracts and commodity contracts may be used to mitigate interest rate exposure, foreign currency exposure and commodity price exposure.

If the Company elects to do so and if the instrument meets the criteria specified in ASC 815, Derivatives and Hedging, management designates its derivative instruments as cash flow hedges, fair value hedges or net investment hedges. Generally, commodity price exposures are not hedged with derivative financial instruments and instead are actively managed through customer pricing initiatives, procurement-driven cost reduction initiatives and other productivity improvement projects. Financial instruments are not utilized for speculative purposes.

A summary of the fair values of the Company’s derivatives recorded in the Condensed Consolidated Balance Sheets at September 30, 2023 and December 31, 2022 is as follows: 
(Millions of Dollars)Balance Sheet
Classification
September 30, 2023December 31, 2022Balance Sheet
Classification
September 30, 2023December 31, 2022
Derivatives designated as hedging instruments:
Foreign Exchange Contracts Cash FlowOther current assets$7.4 $4.5 Accrued expenses$0.1 $4.2 
LT other assets0.9  LT other liabilities  
Non-derivative designated as hedging instrument:
Net Investment Hedge$ $ Short-term borrowings$553.0 $ 
Total designated as hedging instruments$8.3 $4.5 $553.1 $4.2 
Derivatives not designated as hedging instruments:
Foreign Exchange ContractsOther current assets$13.1 $7.7 Accrued expenses$10.3 $11.9 
Total