EX-99.1 3 exhibit2.htm EX-99.1 EX-99.1

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

                                 
    SECOND QUARTER   YEAR TO DATE
    2005   2004   2005   2004
NET SALES
   $ 824.0     $ 753.9     $ 1,630.3     $ 1,488.7  
COSTS AND EXPENSES
                                
Cost of sales
     521.8       480.8       1,039.2       947.7  
Selling, general and administrative
     189.1       171.3       374.3       338.0  
Interest-net
     8.1       8.4       15.7       16.3  
Other-net
     12.0       10.5       21.5       24.4  
Restructuring charges
     1.6       —       1.6       —  
 
                                
 
     732.6       671.0       1,452.3       1,326.4  
 
                                
EARNINGS FROM CONTINUING OPERATIONS
                                
BEFORE INCOME TAXES
     91.4       82.9       178.0       162.3  
Income taxes
     25.4       24.1       45.3       48.5  
 
                                
NET EARNINGS FROM CONTINUING OPERATIONS
   $ 66.0     $ 58.8     $ 132.7     $ 113.8  
 
                                
Earnings from discontinued operations (including gain
                                
on disposal of $142.7 million in 2004) before income taxes
     0.2       3.6       0.1       151.5  
Income taxes on discontinued operations
     0.3       1.0       0.3       50.4  
 
                                
NET EARNINGS (LOSS) FROM DISCONTINUED OPERATIONS
     (0.1 )     2.6       (0.2 )     101.1  
NET EARNINGS
   $ 65.9     $ 61.4     $ 132.5     $ 214.9  
 
                                
BASIC EARNINGS PER SHARE OF COMMON STOCK
                                
Continuing operations
   $ 0.79     $ 0.72     $ 1.60     $ 1.39  
Discontinued operations
     —       0.03       —       1.24  
 
                                
Total basic earnings per share of common stock
   $ 0.79     $ 0.75     $ 1.60     $ 2.63  
 
                                
DILUTED EARNINGS PER SHARE OF COMMON STOCK
                                
Continuing operations
   $ 0.78     $ 0.70     $ 1.56     $ 1.36  
Discontinued operations
     —       0.03       —       1.21  
 
                                
Total diluted earnings per share of common stock
   $ 0.78     $ 0.73     $ 1.56     $ 2.57  
 
                                
DIVIDENDS PER SHARE
   $ 0.28     $ 0.26     $ 0.56     $ 0.52  
 
                                
AVERAGE SHARES OUTSTANDING (in thousands)
                                
Basic
     83,020       81,940       82,919       81,777  
 
                                
Diluted
     84,983       84,112       85,076       83,763  
 
                                

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

                 
    JULY 2, 2005   JANUARY 1, 2005
ASSETS
                
Cash and cash equivalents
   $ 325.6     $ 250.0  
Accounts receivable
     622.3       582.0  
Inventories
     443.0       413.4  
Other current assets
     75.7       82.2  
Assets held for sale
     0.7       44.3  
 
                
Total current assets
     1,467.3       1,371.9  
 
                
Property, plant and equipment
     394.6       398.9  
Goodwill and other intangibles
     989.3       928.2  
Other assets
     152.4       151.6  
 
                
Total assets
   $ 3,003.6     $ 2,850.6  
 
                
LIABILITIES AND SHAREOWNERS’ EQUITY
                
Short-term borrowings
   $ 246.2     $ 102.5  
Accounts payable
     308.4       300.4  
Accrued expenses
     378.2       415.9  
 
                
Total current liabilities
     932.8       818.8  
 
                
Long-term debt
     468.1       481.8  
Other long-term liabilities
     310.2       328.7  
Shareowners’ equity
     1,292.5       1,221.3  
 
                
Total liabilities and equity
   $ 3,003.6     $ 2,850.6  
 
                

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

                                 
    SECOND QUARTER   YEAR TO DATE
    2005   2004   2005   2004
OPERATING ACTIVITIES
                                
Net earnings
   $ 65.9     $ 61.4     $ 132.5     $ 214.9  
Depreciation and amortization
     23.9       22.7       47.3       47.1  
Reclassify taxes paid (proceeds) from sale of businesses
                                
to investing activities
     8.1       21.9       18.7       (140.0 )
Changes in working capital
     (4.2 )     2.9       (68.8 )     (13.0 )
Other
     (16.6 )     (18.0 )     8.0       34.0  
 
                                
Net cash provided by operating activities
     77.1       90.9       137.7       143.0  
INVESTING AND FINANCING ACTIVITIES
                                
Capital and software expenditures
     (16.5 )     (12.9 )     (27.0 )     (21.1 )
Proceeds (taxes paid) from sale of business
     (8.1 )     (21.9 )     (18.7 )     140.0  
Business acquisitions and asset disposals
     (46.4 )     (4.2 )     (106.1 )     (254.3 )
Cash dividends on common stock
     (23.2 )     (21.2 )     (46.4 )     (42.4 )
Other
     32.2       12.5       136.1       66.1  
 
                                
Net cash used in investing and financing activities
     (62.0 )     (47.7 )     (62.1 )     (111.7 )
Increase in Cash and Cash Equivalents
     15.1       43.2       75.6       31.3  
Cash and Cash Equivalents, Beginning of Period
     310.5       192.5       250.0       204.4  
 
                                
Cash and Cash Equivalents, End of Period
   $ 325.6     $ 235.7     $ 325.6     $ 235.7  
 
                                
Free Cash Flow Computation
                                
Operating cash flow
   $ 77.1     $ 90.9     $ 137.7     $ 143.0  
Less: capital and software expenditures
     (16.5 )     (12.9 )     (27.0 )     (21.1 )
 
                                
Free cash flow (before dividends)
   $ 60.6     $ 78.0     $ 110.7     $ 121.9  
 
                                

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)

                                 
    SECOND QUARTER   YEAR TO DATE
    2005   2004   2005   2004
NET SALES
                                
Consumer Products
   $ 266.9     $ 257.7     $ 530.3     $ 520.0  
Industrial Tools
     348.2       321.4       697.5       637.4  
Security Solutions
     208.9       174.8       402.5       331.3  
 
                                
Total
   $ 824.0     $ 753.9     $ 1,630.3     $ 1,488.7  
 
                                
OPERATING PROFIT
                                
Consumer Products
   $ 42.6     $ 39.4     $ 84.4     $ 84.4  
Industrial Tools
     38.0       35.5       74.7       64.1  
Security Solutions
     32.5       26.9       57.7       54.5  
 
                                
Total
   $ 113.1     $ 101.8     $ 216.8     $ 203.0  
 
                                

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