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)

                                 
    THIRD QUARTER   YEAR TO DATE
    2009   2008   2009   2008
 
                                
NET SALES
   $ 935.5     $ 1,117.6     $ 2,767.7     $ 3,340.3  
 
                                
COSTS AND EXPENSES 
                                
      Cost of sales
     549.1       686.2       1,653.6       2,061.4  
             Gross margin
     386.4       431.4       1,114.1       1,278.9  
             % to Net sales
   41.3 %   38.6 %   40.3 %   38.3 %
 
                                
      Selling, general and administrative
     251.4       274.8       759.4       832.3  
             % to Net sales
   26.9 %   24.6 %   27.4 %   24.9 %
 
                                
             Operating margin
     135.0       156.6       354.7       446.6  
             % to Net sales
   14.4 %   14.0 %   12.8 %   13.4 %
 
                                
      Other-net
     33.6       27.9       51.3       68.5  
      Restructuring charges
     6.6       4.8       25.6       25.0  
 
                                
             Income from operations
     94.8       123.9       277.8       353.1  
 
                                
      Interest-net
     15.0       20.8       46.6       62.0  
 
                                
 
                                
 
                                
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
     79.8       103.1       231.2       291.1  
 
                                
      Income taxes
     17.7       25.4       58.1       74.5  
 
                                
NET EARNINGS FROM CONTINUING OPERATIONS
     62.1       77.7       173.1       216.6  
 
                                
      Less: net earnings attributable to noncontrolling interests
     0.3       0.6       2.2       1.2  
 
                                
NET EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO COMMON SHAREOWNERS
     61.8       77.1       170.9       215.4  
 
                                
      Net (loss) earnings from discontinued operations before income taxes (including a $128.1 gain on divestiture in the third quarter 2008 and $129.7 year-to-date 2008)
     (2.3 )     130.1       (5.8 )     138.6  
      Income taxes (benefit) on discontinued operations
     (0.9 )     44.2       (2.5 )     46.4  
 
                                
NET (LOSS) EARNINGS FROM DISCONTINUED OPERATIONS
     (1.4 )     85.9       (3.3 )     92.2  
 
                                
NET EARNINGS ATTRIBUTABLE TO THE STANLEY WORKS
   $ 60.4     $ 163.0     $ 167.6     $ 307.6  
 
                                
 
                                
BASIC EARNINGS PER SHARE OF COMMON STOCK
                                
      Continuing operations
   $ 0.77     $ 0.98     $ 2.15     $ 2.72  
      Discontinued operations
     (0.02 )     1.09       (0.04 )     1.17  
 
                                
          Total basic earnings per share of common stock
   $ 0.75     $ 2.06     $ 2.11     $ 3.89  
 
                                
 
                                
DILUTED EARNINGS PER SHARE OF COMMON STOCK
                                
      Continuing operations
   $ 0.77     $ 0.97     $ 2.14     $ 2.69  
      Discontinued operations
     (0.02 )     1.08       (0.04 )     1.15  
 
                                
          Total diluted earnings per share of common stock
   $ 0.75     $ 2.04     $ 2.10     $ 3.84  
 
                                
 
                                
DIVIDENDS PER SHARE
   $ 0.33     $ 0.32     $ 0.97     $ 0.94  
 
                                
 
                                
AVERAGE SHARES OUTSTANDING (in thousands)
                                
      Basic
     79,966       78,808       79,499       78,867  
 
                                
 
                                
      Diluted
     80,565       79,846       79,951       80,025  
 
                                
 
                                

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

                 
    (Unaudited)    
    October 3, 2009   January 3, 2009
ASSETS
 
 
           Cash and cash equivalents
  $ 207.4     $ 211.6  
           Accounts and notes receivable
    650.5       677.7  
           Inventories
    437.5       514.7  
           Other current assets
    109.7       94.0  
 
                
                  Total current assets
    1,405.1       1,498.0  
 
                
           Property, plant and equipment
    572.2       579.8  
           Goodwill and other intangibles
    2,628.0       2,596.1  
           Other assets
    197.4       192.7  
 
                
                  Total assets
  $ 4,802.7     $ 4,866.6  
 
                
 
 
 
 
 
 
LIABILITIES AND SHAREOWNERS’ EQUITY
               
           Short-term borrowings
  $ 363.5     $ 227.7  
           Accounts payable
    372.2       461.5  
           Accrued expenses
    502.9       504.0  
 
                
                  Total current liabilities
    1,238.6       1,193.2  
 
                
           Long-term debt
    1,086.6       1,383.8  
           Other long-term liabilities
    542.4       564.8  
           The Stanley Works’ shareowners’ equity
    1,910.6       1,706.3  
           Noncontrolling interests equity
    24.5       18.5  
 
                
                  Total liabilities and equity
  $ 4,802.7     $ 4,866.6  
 
                

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

                                         
    THIRD QUARTER           YEAR TO DATE
    2009   2008           2009   2008
OPERATING ACTIVITIES
                                        
 
                                        
           Net earnings
   $ 60.4     $ 163.0             $ 167.6     $ 307.6  
           Depreciation and amortization
     51.9       47.2               148.8       128.5  
           Changes in working capital
     32.4       28.0               16.8       (4.7 )
           Net (gain) loss on sale of business
     3.3       (84.3 )             3.3       (85.9 )
           Other
     28.3       (22.2 )             (88.5 )     (22.6 )
 
                                        
           Net cash provided by operating activities
     176.3       131.7               248.0       322.9  
 
                                        
INVESTING AND FINANCING ACTIVITIES
                                        
 
                                        
           Capital and software expenditures
     (18.4 )     (28.3 )             (65.2 )     (81.9 )
           Proceeds (payments) on sale of business
     (1.0 )     196.7               (0.1 )     200.0  
           Business acquisitions and asset disposals
     (14.3 )     (336.2 )             (20.0 )     (363.2 )
           Cash dividends on common stock
     (26.3 )     (25.2 )             (76.9 )     (73.8 )
           Other
     (65.2 )     (23.6 )             (90.0 )     54.9  
 
                                        
           Net cash used in investing and financing activities
     (125.2 )     (216.6 )             (252.2 )     (264.0 )
 
                                        
Increase (Decrease) in Cash and Cash Equivalents
     51.1       (84.9 )             (4.2 )     58.9  
 
                                        
Cash and Cash Equivalents, Beginning of Period
     156.3       384.2               211.6       240.4  
 
                                        
 
                                        
Cash and Cash Equivalents, End of Period
   $ 207.4     $ 299.3             $ 207.4     $ 299.3  
 
                                        
 
                                        
 
                                        
Free Cash Flow Computation
                                        
 
                                        
Operating cash flow
   $ 176.3     $ 131.7             $ 248.0     $ 322.9  
Less: capital and software expenditures
     (18.4 )     (28.3 )             (65.2 )     (81.9 )
 
                                        
Free cash flow (before dividends)
   $ 157.9     $ 103.4             $ 182.8     $ 241.0  
 
                                        

Free cash flow is defined as cash flow from operations less capital and capitalized software expenditures. The Company believes this is an important measure of its liquidity, of its ability to fund future growth and to provide a return to the shareowners. Free cash flow does not reflect, among other things, deductions for mandatory debt service, other borrowing activity, discretionary dividends on the Company’s common stock and acquisitions.

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

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

                                     
    THIRD QUARTER       YEAR TO DATE
    2009   2008       2009   2008
NET SALES
 
 
 
 
 
           Security
  $ 402.7     $ 392.8         $ 1,167.0     $ 1,087.0  
           Industrial
    205.3       298.1           645.7       969.0  
           Construction & DIY
    327.5       426.7           955.0       1,284.3  
 
                                    
              Total
  $ 935.5     $ 1,117.6         $ 2,767.7     $ 3,340.3  
 
                                    
 
                     
 
 
                     
 
SEGMENT PROFIT
                     
 
           Security
  $ 83.7     $ 74.2         $ 228.7     $ 193.4  
           Industrial
    18.8       40.2           62.6       133.0  
           Construction & DIY
    48.4       54.2           113.7       167.1  
 
                                    
              Segment Profit
    150.9       168.6           405.0       493.5  
           Corporate Overhead
    (15.9 )     (12.0 )         (50.3 )     (46.9 )
 
                                    
              Total
  $ 135.0     $ 156.6         $ 354.7     $ 446.6  
 
                                    
 
 
 
 
 
 
 
 
 
 
 
 
Segment Profit as a Percentage of Net Sales
 
 
 
 
 
           Security
    20.8 %     18.9 %         19.6 %     17.8 %
           Industrial
    9.2 %     13.5 %         9.7 %     13.7 %
           Construction & DIY
    14.8 %     12.7 %         11.9 %     13.0 %
 
                                    
              Segment Profit
    16.1 %     15.1 %         14.6 %     14.8 %
           Corporate Overhead
    -1.7 %     -1.1 %         -1.8 %     -1.4 %
 
                                    
              Total
    14.4 %     14.0 %         12.8 %     13.4 %
 
                                    

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