Stanley Black & Decker Reports 2Q 2013 Results

  Stanley Black & Decker Reports 2Q 2013 Results

Business Wire

NEW BRITAIN, Conn. -- July 26, 2013

Stanley Black & Decker (NYSE: SWK) today announced second quarter 2013
financial results.

  *2Q’13 Revenues Increased 12% To $2.9 Billion
  *Organic Growth Accelerated To 5% As Company Growth Initiatives Gained
    Traction
  *2Q’13 Diluted GAAP EPS, Including Charges, Was $1.23; Excluding Charges,
    2Q’13 Diluted EPS Was $1.21
  *2013 FY Guidance Reiterated: GAAP EPS Of $4.46 - $4.71; Excluding Charges,
    EPS Of $5.40 - $5.65 And Free Cash Flow Of Approximately $1 Billion

2Q’13 Key Points:

  *Net sales for the period were $2.9 billion, up 12% vs. the prior year,
    attributable to volume (+6%) and acquisitions (+7%), partially offset by
    price (-1%). Currency had a neutral impact on the quarter’s results
    although foreign exchange headwinds mounted late in the quarter.
  *The gross margin rate for the quarter was 35.1%. Excluding charges, the
    gross margin rate was 35.4%, down 100 basis points versus prior year, as
    the favorable impact of volume and  cost synergies was offset by Security
    margins and higher promotional activity in CDIY.
  *SG&A expenses were 23.8% of sales. Excluding charges, SG&A expenses were
    22.9% of sales, compared to a 2Q’12 level of 23.1%, reflecting volume
    leverage partially offset by investments in the organic growth
    initiatives.
  *Operating margin was 11.3% of sales. Excluding charges, operating margin
    was 12.4% of sales, down 90 basis points from the 2Q’12 operating margin
    of 13.3%.
  *The tax rate was 21.5%. Excluding charges, the tax rate was 24.6%,
    consistent with expectations for the quarter.
  *Diluted GAAP EPS, including charges, was $1.23. Excluding charges, 2Q’13
    diluted EPS was $1.21.
  *Working capital turns for the quarter were 7.1, up 0.3 turns from 2Q’12.
    For the quarter, free cash flow was $96 million. Excluding charges and
    payments, free cash flow totaled $218 million.

Stanley Black & Decker’s Chairman and CEO, John F. Lundgren, commented,
“During the quarter we achieved strong organic growth particularly within CDIY
and Industrial, bolstered by excellent growth across the emerging markets. We
are also encouraged by positive second quarter Security order trends
experienced in both North America and Europe which bode well for our second
half Security performance. As a result of these factors, we anticipate a
stronger second half organic growth performance for the overall Company
accompanied by rebounding margin rates and are therefore able to reiterate our
full year EPS guidance despite significant second half currency headwinds.”

2Q’13 Segment Results

           
($ in M)    2Q' 13 Segment Results
                                           Profit         Profit   Profit Rate
           Sales   Profit  Charges^1                Rate   
                                           Ex-Charges^1            Ex-Charges^1
                                                       
CDIY        $1,446  $215.7  $2.9       $218.6        14.9%   15.1%
                                                       
Industrial  $813    $111.1  $6.1       $117.2        13.7%   14.4%
                                                       
Security    $611    $52.1   $8.8       $60.9         8.5%    10.0%
^1 M&A charges primarily pertaining to synergy attainment & facility closures


  *In the CDIY segment, net sales increased 9% vs. 2Q’12 as a result of
    volume (+8%) and acquisitions (+3%), partially offset by price (-2%).
    Currency was relatively flat. As expected, the first quarter headwinds
    relating to the North America outdoor market and a softer Latin America
    market dissipated in the second quarter. Strong organic volumes were
    achieved in North America, primarily driven by promotions, new product
    introductions, and a strengthening residential construction market, as
    well as within the emerging markets. Europe volumes were relatively flat
    despite persistent unfavorable economic conditions. Based on the
    performance in the first half of 2013, management continues to believe
    that the CDIY segment remains solidly on track for mid-single digit
    organic growth for the full year. Excluding charges, overall segment
    profit was 15.1%, down slightly from the 2Q’12 rate of 15.6% as
    investments in organic growth initiatives and higher promotions offset
    productivity and synergies.
  *Net sales in the Industrial segment rose 28%. Unit volumes increased
    approximately 8%, currency was down 1% and acquisitions added 21%. Pricing
    was flat. Engineered Fastening (EF) organic volume grew 9% as a result of
    strong automotive growth and emerging market activity. European EF
    revenues increased 16% organically as gains in automotive more than offset
    softness in the industrial business. Global automotive organic revenues
    were up 15%, significantly outpacing global light vehicle production,
    which was up only slightly vs. 2Q’12. The integration of Infastech
    continues to progress smoothly and as previously stated is expected to
    yield $0.20 of accretion on a full year basis in 2013. Organic sales for
    Industrial and Automotive Repair (IAR) increased 4% as a result of volume
    increases in North America and the emerging markets. In North America,
    volume growth was driven by the MRO vending growth initiative as well as
    strength within Mac Tools mobile distribution, which more than offset the
    impact of spending cuts on IAR’s US Government business. Oil & Gas was up
    organically an impressive 43% on growing North American onshore strength
    and the impact of offshore growth initiatives.

    Overall Industrial segment profit excluding charges increased sequentially
    to 14.4% vs. the 14.1% 1Q’13 rate due primarily to volume but was slightly
    below the 2Q’12 rate of 14.9% due to investments in organic growth
    initiatives and the impact of Infastech’s below line average margins.
  *Net sales in Security increased 2% versus 2Q’12 due to 2% from
    acquisitions and 1% from currency, partially offset by a 1% decline in
    volume. Price was relatively flat. The CSS North America business
    continued to show modest organic growth (up 1%) for the quarter. Similar
    to the prior quarter, CSS Europe declined 5% organically. Both North
    America and Europe exited the quarter with positive order momentum and
    growth in backlog, with orders in the North America business up high
    single digits and in Europe up low double digits vs. 2Q’12.

    Mechanical Access organic sales were up 4% with growth in both the
    commercial mechanical lock business and the automatic door business,
    reflecting continued early success with the distributor business model
    shift and increased installation activity in the retail channel,
    respectively.

    Security segment profit rate, excluding charges was 10.0%, consistent with
    the 1Q’13 rate and 310 basis points lower than the 2Q’12 rate. The year
    over year decline resulted from field technician costs required to install
    and service the growing second half North American backlog, investments in
    organic growth initiatives, volume deleveraging in Europe and temporary
    negative rate pressure in the commercial lock business due to the business
    model shift.

    Inherent within our April full year guidance, operating margins within
    Security were planned to be lower than historical levels in the first half
    of 2013. Based on the increased synergies relating to the Niscayah
    acquisition communicated in April and the anticipated volume increases
    driven by organic growth investments, we expect that Security’s segment
    profit rate will increase to mid-teens levels in the second half of the
    year.

President and Chief Operating Officer, James M. Loree, commented, “Our CDIY
business continues to perform admirably due to a confluence of positive
factors including favorable U.S. market conditions, share gains derived from
new product introductions and revenue synergies, strong supply chain execution
driven by SFS and growing penetration of emerging markets in connection with
our organic growth initiative.

He continued, “However, the new news this quarter is the emergence of solid
organic growth in Industrial and a growing order book in Security. This is
directly attributable to accelerated realization of benefits from our
Company-wide organic growth initiative as well as increased market penetration
in Engineered Fastening. As we progress into the second half we believe that
top line momentum will continue to grow and margin rates will increase as the
dilutive effect of the growth investments recedes and volume leverage is
realized.”

2013 Outlook Remains Unchanged

The Company continues to expect full year 2013 EPS to be in the range of $5.40
- $5.65 and free cash flow of approximately $1 billion, excluding charges /
payments.

The following assumptions, which are neutral, changed from the guidance we
provided in January and reiterated in April (all other assumptions remain
unchanged from our prior guidance):

  *Organic net sales are now expected to increase an additional two points to
    4-5% (vs. the prior 2-3% increase) from 2012. This change drives $0.20 of
    EPS accretion (range of $0.20 - $0.35) vs. the prior guidance range.

       *The core business is now expected to grow 2-3% (vs. the prior 1-2%)
         generating $0.30 - $0.45 of EPS accretion.
       *The organic growth initiatives are now expected to yield 2 points of
         revenue growth but will be approximately $0.10 dilutive to EPS for
         the full year (vs. prior guidance of $0.15 dilution).

  *Offsetting this favorable change is an estimated $0.20 EPS headwind for
    the 2H of ’13 associated with currency.

Including all charges, the Company expects GAAP EPS to approximate $4.46 to
$4.71 in 2013. For the full year of 2013 the Company estimates one-time
pre-tax charges to be approximately $200 million.

Donald Allan Jr., Senior Vice President and CFO commented, “We had a number of
bright spots during the quarter, including strong organic growth demonstrated
by many of our businesses, which positions us well to exceed our 2013 organic
growth targets, as well as solid working capital performance. Maintaining a
disciplined focus on our organic growth initiatives, continuing the solid
execution within our CDIY and Industrial businesses, combined with the steps
taken and planned to reposition our Security business for higher margin growth
gives us confidence that we will be able to achieve our previously
communicated 2013 guidance. These actions, along with our commitment to
allocate capital in ways that provide excellent returns for our shareholders
and our proven capabilities of eliminating waste and streamlining our
operations via the Stanley Fulfillment System, are the key building blocks to
enable us to attain our long-term financial goals and 2016/2017 vision.”

Merger And Acquisition (M&A) One-Time Charges and Credits

Total one-time net charges in 2Q’13 related to M&A were $5.3 million. Gross
margin includes $7.9 million of these one-time charges, primarily related to
amortization of inventory step-up adjustments for the Infastech acquisition,
and SG&A includes $24.1 million in one-time charges, primarily for
integration-related administration costs and consulting fees, as well as
employee-related matters. $17.8 million of these costs that impact the
Company’s operating margin are included in segment results, with the remainder
in corporate overhead. One-time charges of $4.0 million are included in Other,
net, primarily related to deal costs. Lastly, a net restructuring credit of
$30.7 million includes charges of $13.6 million associated with the severance
of employees, more than offset by a reversal of $44.3 million due to the
termination of a previously approved restructuring action.

The company will host a conference call with investors today, Friday, July 26,
at 8:00am ET. A slide presentation which will accompany the call will be
available at www.stanleyblackanddecker.com and will remain available after the
call.

You can also access the slides via the Stanley Black & Decker Investor
Relations iPad & iPhone app from the Apple App Store by searching for “SWK
Investor Relations”.

The call will be accessible by telephone at (800) 447-0521, from outside the
U.S. at +1 (847) 413-3238, and via the Internet at
www.stanleyblackanddecker.com. To participate, please register on the web site
at least fifteen minutes prior to the call and download and install any
necessary audio software. Please use the conference identification number
3522-2277. A replay will also be available two hours after the call and can be
accessed at (888) 843-7419 or +1 (630) 652-3042 using the passcode 3522-2277#.
The replay will also be available as a podcast within 24 hours and can be
accessed on our website and via iTunes.

Stanley Black & Decker, an S&P 500 company, is a diversified global provider
of hand tools, power tools and related accessories, mechanical access
solutions and electronic security solutions, healthcare solutions, engineered
fastening systems, and more. Learn more at www.stanleyblackanddecker.com.

These results reflect the Company’s continuing operations. The Company sold
its Hardware & Home Improvement business (HHI), including the residential
portion of Tong Lung in December of 2012. The sale of this business occurred
in a First and Second Closing. The First closing, which excluded the
residential portion of Tong Lung, occurred on December 17, 2012. The Second
closing in which the residential portion of Tong Lung was sold occurred on
April 8, 2013. The operating results of the residential portion of Tong Lung
have been reported as discontinued operations for Q2 2013 while the operating
results of HHI have been reported as discontinued operations for Q2 2012.
Total sales reported as discontinued operations relating to these businesses
were $2.1 million and $247.2 million for Q2 2013 and Q2 2012, respectively.

Organic sales growth is defined as total sales growth less the sales of
companies acquired in the past twelve months and any foreign currency impacts.
Operating marginis defined as sales less cost of sales and selling, general
and administrative expenses. Management uses operating margin and its
percentage of net sales as key measures to assess the performance of the
Company as a whole, as well as the related measuresat the segment level. Free
cash flow is defined as cash flow from operations less capital and software
expenditures. Management considers free cash flow an important indicator 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. The
normalized statement of operations, cash flows and business segment
information, as reconciled to GAAP on pages 13-18 for 2013 and 2012, is
considered relevant to aid analysis of the Company’s operating performance,
earnings results and cash flows aside from the material impact of the one-time
charges and payments associated with the Black & Decker merger, the Niscayah
and Infastech acquisitions and other smaller acquisitions of the Company.
Normalized cash flow and free cash flow, as reconciled from the associated
GAAP measures on pages 15-16 for 2013 and 2012 are considered meaningful pro
forma metrics to aid the understanding of the company’s cash flow performance
aside from the material impact of the M&A-related payments and charges.

                            CAUTIONARY STATEMENTS

          Under the Private Securities Litigation Reform Act of 1995

Statements in this press release that are not historical, including but not
limited to those regarding the Company’s ability to: (i) achieve full year
2013 diluted EPS of $5.40-5.65, excluding M&A charges and GAAP EPS of $4.46 –
$4.71; (ii) generate approximately $1.0 billion in free cash flow for 2013,
excluding charges and payments; and (iii) achieve its 2016/2017 vision
(collectively, the “Results”); are “forward looking statements” and subject to
risk and uncertainty.

The Company’s ability to deliver the Results as described above is based on
current expectations and involves inherent risks and uncertainties, including
factors listed below and other factors that could delay, divert, or change any
of them, and could cause actual outcomes and results to differ materially from
current expectations. In addition to the risks, uncertainties and other
factors discussed in this press release, the risks, uncertainties and other
factors that could cause or contribute to actual results differing materially
from those expressed or implied in the forward looking statements include,
without limitation, those set forth under Item 1A Risk Factors of the
Company’s Annual Report on Form 10-K and any material changes thereto set
forth in any subsequent Quarterly Reports on Form 10-Q, or those contained in
the Company’s other filings with the Securities and Exchange Commission, and
those set forth below.

The Company’s ability to deliver the Results is dependent, or based, upon: (i)
the Company’s ability to achieve $50 million of synergies in 2013 from Black &
Decker merger and another $50 million from the acquisition of Niscayah; (ii)
the Company’s ability to execute its integration plans and achieve synergies
from the Infastech acquisition sufficient to generate $.20 of EPS accretion in
2013; (iii) the Company’s ability to generate organic net sales increases of
4-5% in 2013; (iv) the Company’s ability to generate segment profit for the
Security business in the mid-teens levels for the second half of the year; (v)
the Company’s ability to identify and execute upon acquisitions and sales
opportunities to increase its CDIY, IAR and Security businesses in the
emerging markets while minimizing associated costs; (vi) the Company’s ability
to achieve a tax rate at the lower end of 23-24% in 2013; (vii) the Company’s
ability to limit interest expense to approximately $145 million and other-net
to approximately $250 million in 2013; (viii) the Company’s ability to
minimize tax liabilities associated with the HHI divestiture; (ix) successful
integration of acquisitions completed in 2012 and early 2013, and any
additional acquisitions completed during the year, as well as integration of
existing businesses; (x) the continued acceptance of technologies used in the
Company’s products and services; (xi) the Company’s ability to manage existing
Sonitrol franchisee and Mac Tools relationships; (xii) the Company’s ability
to minimize costs associated with any sale or discontinuance of a business or
product line, including any severance, restructuring, legal or other costs;
(xiii) the proceeds realized with respect to any business or product line
disposals; (xiv) the extent of any asset impairments with respect to any
businesses or product lines that are sold or discontinued; (xv) the success of
the Company’s efforts to manage freight costs, steel and other commodity costs
as well as capital expenditures; (xvi) the Company’s ability to sustain or
increase prices in order to, among other things, offset or mitigate the impact
of steel, freight, energy, non-ferrous commodity and other commodity costs and
any inflation increases; (xvii) the Company’s ability to generate free cash
flow and maintain a strong debt to capital ratio; (xviii) the Company’s
ability to identify and effectively execute productivity improvements and cost
reductions, while minimizing any associated restructuring charges; (xix) the
Company’s ability to obtain favorable settlement of routine tax audits; (xx)
the ability of the Company to generate earnings sufficient to realize future
income tax benefits during periods when temporary differences become
deductible; (xxi) the continued ability of the Company to access credit
markets under satisfactory terms; (xxii) the Company’s ability to negotiate
satisfactory payment terms under which the Company buys and sells goods,
services, materials and products; and (xxiii) the Company’s ability to
successfully develop, market and achieve sales from new products and services.

The Company’s ability to deliver the Results is also dependent upon: (i) the
success of the Company’s marketing and sales efforts, including the ability to
develop and market new and innovative products in both existing and new
markets; (ii) the ability of the Company to maintain or improve production
rates in the Company’s manufacturing facilities, respond to significant
changes in product demand and fulfill demand for new and existing products;
(iii) the Company’s ability to continue improvements in working capital
through effective management of accounts receivable and inventory levels; (iv)
the ability to continue successfully managing and defending claims and
litigation; (v) the success of the Company’s efforts to mitigate any cost
increases generated by, for example, increases in the cost of energy or
significant Chinese Renminbi or other currency appreciation; (vi) the
geographic distribution of the Company’s earnings; (vii) the commitment to and
success of the Stanley Fulfillment System; and (viii) successful
implementation with expected results of cost reduction programs.

The Company’s ability to achieve the Results will also be affected by external
factors. These external factors include: challenging global macroeconomic
environment; the continued economic growth of emerging markets, particularly
Latin America; pricing pressure and other changes within competitive markets;
the continued consolidation of customers particularly in consumer channels;
inventory management pressures on the Company’s customers; the impact the
tightened credit markets may have on the Company or its customers or
suppliers; the extent to which the Company has to write off accounts
receivable or assets or experiences supply chain disruptions in connection
with bankruptcy filings by customers or suppliers; increasing competition;
changes in laws, regulations and policies that affect the Company, including,
but not limited to trade, monetary, tax and fiscal policies and laws; the
timing and extent of any inflation or deflation; currency exchange
fluctuations; the impact of dollar/foreign currency exchange and interest
rates on the competitiveness of products and the Company’s debt program; the
strength of the U.S. and European economies; the extent to which world-wide
markets associated with homebuilding and remodeling stabilize and rebound; the
impact of events that cause or may cause disruption in the Company’s supply,
manufacturing, distribution and sales networks such as war, terrorist
activities, and political unrest; and recessionary or expansive trends in the
economies of the world in which the Company operates. The Company undertakes
no obligation to publicly update or revise any forward-looking statements to
reflect events or circumstances that may arise after the date hereof.

                                                              
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, Millions of Dollars Except Per Share Amounts)
                                                                   
                                                                   
                         SECOND QUARTER              YEAR TO DATE
                          2013        2012        2013        2012    
                                                                   
NET SALES                $ 2,869.3     $ 2,567.0     $ 5,356.5     $ 4,993.1
                                                                   
COSTS AND EXPENSES
Cost of sales             1,861.8     1,636.7     3,438.1     3,150.8 
Gross margin               1,007.5       930.3         1,918.4       1,842.3
% of Net Sales             35.1    %     36.2    %     35.8    %     36.9    %
                                                                   
Selling, general and       682.3         626.2         1,352.2       1,263.5
administrative
% of Net sales             23.8    %     24.4    %     25.2    %     25.3    %
                                                                   
Operating margin           325.2         304.1         566.2         578.8
% of Net sales             11.3    %     11.8    %     10.6    %     11.6    %
                                                                   
Other - net                71.7          82.5          142.7         150.4
Restructuring             (30.7   )    24.4        12.2        64.4    
(credits) charges
Income from operations     284.2         197.2         411.3         364.0
                                                                   
Interest - net            36.4        32.4        73.1        63.8    
                                                                   
EARNINGS FROM
CONTINUING OPERATIONS      247.8         164.8         338.2         300.2
BEFORE INCOME TAXES
Income taxes on           53.2        38.6        62.0        68.4    
continuing operations
NET EARNINGS FROM         194.6       126.2       276.2       231.8   
CONTINUING OPERATIONS
                                                                   
Less: net loss
attributable to           (0.3    )    (0.3    )    (0.7    )    (1.0    )
non-controlling
interests
                                                                   
NET EARNINGS FROM
CONTINUING OPERATIONS      194.9         126.5         276.9         232.8
ATTRIBUTABLE TO COMMON
SHAREOWNERS
                                                                   
NET (LOSS) EARNINGS
FROM DISCONTINUED         (7.8    )    28.3        (8.7    )    43.8    
OPERATIONS
                                                                   
NET EARNINGS
ATTRIBUTABLE TO COMMON   $ 187.1      $ 154.8      $ 268.2      $ 276.6   
SHAREOWNERS
                                                                   
                                                                   
BASIC EARNINGS (LOSS)
PER SHARE OF COMMON
STOCK
Continuing operations    $ 1.26        $ 0.77        $ 1.78        $ 1.42
Discontinued              (0.05   )    0.17        (0.06   )    0.27    
operations
Total basic earnings
per share of common      $ 1.21       $ 0.94       $ 1.73       $ 1.68    
stock
                                                                   
DILUTED EARNINGS
(LOSS) PER SHARE OF
COMMON STOCK
Continuing operations    $ 1.23        $ 0.75        $ 1.75        $ 1.38
Discontinued              (0.05   )    0.17        (0.05   )    0.26    
operations
Total diluted earnings
per share of common      $ 1.18       $ 0.92       $ 1.69       $ 1.64    
stock
                                                                   
DIVIDENDS PER SHARE      $ 0.49       $ 0.41       $ 0.98       $ 0.82    
                                                                   
AVERAGE SHARES
OUTSTANDING (in
thousands)
Basic                     155,064     164,082     155,137     164,162 
Diluted                   158,351     167,921     158,483     168,158 
                                                                   


STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, Millions of Dollars)
                                                              
                                                     June 29,     December 29,
                                                      2013         2012
                                                                  
ASSETS
  Cash and cash equivalents                          $ 561.7      $  716.0
  Accounts and notes receivable, net                   1,794.3       1,537.6
  Inventories, net                                     1,475.8       1,316.0
  Assets held for sale                                 -             135.2
  Other current assets                                425.1        394.1
  Total current assets                                4,256.9      4,098.9
  Property, plant and equipment, net                   1,398.0       1,333.6
  Goodwill and other intangibles, net                  10,613.3      9,955.5
  Other assets                                        434.7        456.0
  Total assets                                       $ 16,702.9   $  15,844.0
                                                                  
                                                                  
LIABILITIES AND SHAREOWNERS' EQUITY
  Short-term borrowings                              $ 1,289.5    $  11.5
  Accounts payable                                     1,558.7       1,349.7
  Accrued expenses                                     1,083.5       1,681.5
  Liabilities held for sale                           -            30.9
  Total current liabilities                           3,931.7      3,073.6
  Long-term debt                                       3,428.9       3,526.5
  Other long-term liabilities                          2,587.8       2,516.8
  Stanley Black & Decker, Inc. shareowners' equity     6,675.9       6,667.1
  Non-controlling interests' equity                   78.6         60.0
  Total liabilities and equity                       $ 16,702.9   $  15,844.0
                                                                     


STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
SUMMARY OF CASH FLOW ACTIVITY
(Unaudited, Millions of Dollars)
                                                             
                          SECOND QUARTER              YEAR TO DATE
                                                                    
                            2013        2012       2013        2012   
     OPERATING
     ACTIVITIES
        Net earnings
        from              $  194.6       $ 126.2      $ 276.2       $ 231.8
        continuing
        operations
        Net (loss)
        earnings from        (7.8    )     28.3         (8.7    )     43.8
        discontinued
        operations
        Depreciation
        and                  108.1         109.0        213.9         224.8
        amortization
        Changes in
        working              67.6          40.2         (127.4  )     (112.0 )
        capital^1
        Other               (178.3  )    (4.5   )    (317.3  )    (121.5 )
        Net cash
        provided by          184.2         299.2        36.7          266.9
        operating
        activities
                                                                    
                                                                    
     INVESTING AND
     FINANCING
     ACTIVITIES
        Capital and
        software             (88.4   )     (109.0 )     (167.9  )     (170.5 )
        expenditures
        Proceeds from
        sale of              94.5          4.4          95.5          6.3
        business /
        assets
        Acquisitions,
        net of cash          (56.0   )     (474.0 )     (909.9  )     (588.7 )
        acquired
        Proceeds from
        issuances of         23.2          10.9         106.4         75.5
        common stock
        Net short-term
        (repayments)         (60.1   )     592.1        1,270.4       788.9
        borrowings
        Cash dividends
        on common            (78.4   )     (68.9  )     (157.5  )     (138.8 )
        stock
        Payments on          (0.5    )     (320.8 )     (1.1    )     (321.1 )
        long-term debt
        Purchases of
        common stock         (3.7    )     (206.9 )     (24.8   )     (217.8 )
        for treasury
        Payment on
        forward stock        -             -            (350.0  )     -
        purchase
        contract
        Other               (10.6   )    (32.8  )    (52.1   )    (29.8  )
        Net cash used
        in investing         (180.0  )     (605.0 )     (191.0  )     (596.0 )
        and financing
        activities
                                                                    
     Increase
     (Decrease) in           4.2           (305.8 )     (154.3  )     (329.1 )
     Cash and Cash
     Equivalents
                                                                    
     Cash and Cash
     Equivalents,           557.5       883.6      716.0       906.9  
     Beginning of
     Period
                                                                    
     Cash and Cash
     Equivalents, End     $  561.7      $ 577.8     $ 561.7      $ 577.8  
     of Period
                                                                    
                                                                    
^1   The change in working capital is comprised of accounts receivable,
     inventory, accounts payable and deferred revenue.
     


STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(Unaudited, Millions of Dollars)
                                                            
                                                                  
                     SECOND QUARTER                YEAR TO DATE
                                                                  
                      2013         2012         2013         2012    
NET SALES
                                                                  
   Construction &    $ 1,445.8      $ 1,331.3      $ 2,638.2      $ 2,503.3
   DIY
   Industrial          812.8          634.7          1,508.2        1,296.7
   Security           610.7        601.0        1,210.1      1,193.1 
   Total             $ 2,869.3     $ 2,567.0     $ 5,356.5     $ 4,993.1 
                                                                  
                                                                  
SEGMENT PROFIT
   Construction &    $ 215.7        $ 196.9        $ 384.9        $ 345.3
   DIY
   Industrial          111.1          93.6           196.6          216.5
   Security           52.1         70.1         107.4        139.9   
   Segment Profit      378.9          360.6          688.9          701.7
   Corporate          (53.7   )     (56.5   )     (122.7  )     (122.9  )
   Overhead
   Total             $ 325.2       $ 304.1       $ 566.2       $ 578.8   
                                                                  
                                                                  
Segment Profit as
a Percentage of
Net Sales
   Construction &      14.9    %      14.8    %      14.6    %      13.8    %
   DIY
   Industrial          13.7    %      14.7    %      13.0    %      16.7    %
   Security           8.5     %     11.7    %     8.9     %     11.7    %
   Segment Profit      13.2    %      14.0    %      12.9    %      14.1    %
   Corporate          (1.9    %)    (2.2    %)    (2.3    %)    (2.5    %)
   Overhead
   Total              11.3    %     11.8    %     10.6    %     11.6    %
                                                                            


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)
                                                          
                             SECOND QUARTER 2013
                                                Merger &
                                                Acquisition-
                             Reported           Related and     Normalized^3
                                                Other
                                                Charges^1
                                                                
     Gross margin            $   1,007.5        $  7.9          $  1,015.4
     % of Net Sales              35.1     %                        35.4     %
                                                                
     Selling, general            682.3             (24.1  )        658.2
     and administrative
     % of Net Sales              23.8     %                        22.9     %
                                                                
     Operating margin            325.2             32.0            357.2
     % of Net Sales              11.3     %                        12.4     %
                                                                
     Earnings from
     continuing                  247.8             5.3             253.1
     operations before
     income taxes
                                                                
     Income taxes on
     continuing                  53.2              9.1             62.3
     operations
                                                                
     Net earnings from
     continuing                  194.9             (3.8   )        191.1
     operations
                                                                
     Diluted earnings
     per share of common     $   1.23           $  (0.02  )     $  1.21
     stock
                                                                
                                                                
     Merger and acquisition-related and other charges relate primarily to the
     Black & Decker merger and Niscayah and Infastech acquisitions, including
^1   facility closure-related charges, employee-related charges and
     integration costs, as well as a restructuring reversal due to the
     termination of a previously approved restructuring action.
                                                                
                             SECOND QUARTER 2012
                                                Merger &
                             Reported           Acquisition-    Normalized^3
                                                Related
                                                Charges^2
                                                                
     Gross margin            $   930.3          $  4.3          $  934.6
     % of Net Sales              36.2     %                        36.4     %
                                                                
     Selling, general            626.2             (33.6  )        592.6
     and administrative
     % of Net Sales              24.4     %                        23.1     %
                                                                
     Operating margin            304.1             37.9            342.0
     % of Net Sales              11.8     %                        13.3     %
                                                                
     Earnings from
     continuing                  164.8             73.9            238.7
     operations before
     income taxes
                                                                
     Income taxes on
     continuing                  38.6              11.3            49.9
     operations
                                                                
     Net earnings from
     continuing                  126.5             62.8            189.3
     operations
                                                                
     Diluted earnings
     per share of common     $   0.75           $  0.37         $  1.13
     stock
                                                                
                                                                
     Merger and acquisition-related charges relate primarily to the Black &
^2   Decker merger and Niscayah acquisition, including facility
     closure-related charges, employee-related charges and integration costs.
     
     The normalized 2013 and 2012 information, as reconciled to GAAP above, is
^3   considered relevant to aid analysis of the Company’s margin and earnings
     results aside from the material impact of the merger &
     acquisition-related and other charges.
     


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)
                                                          
                             YEAR TO DATE 2013
                                                Merger &
                                                Acquisition-
                             Reported           Related and     Normalized^3
                                                Other
                                                Charges^1
                                                                
     Gross margin            $   1,918.4        $  21.2         $  1,939.6
     % of Net Sales              35.8     %                        36.2     %
                                                                
     Selling, general            1,352.2           (58.4  )        1,293.8
     and administrative
     % of Net Sales              25.2     %                        24.2     %
                                                                
     Operating margin            566.2             79.6            645.8
     % of Net Sales              10.6     %                        12.1     %
                                                                
     Earnings from
     continuing                  338.2             111.4           449.6
     operations before
     income taxes
                                                                
     Income taxes on
     continuing                  62.0              34.1            96.1
     operations
                                                                
     Net earnings from
     continuing                  276.9             77.3            354.2
     operations
                                                                
     Diluted earnings
     per share of common     $   1.75           $  0.49         $  2.24
     stock
                                                                
                                                                
     Merger and acquisition-related and other charges relate primarily to the
     Black & Decker merger and Niscayah and Infastech acquisitions, including
^1   facility closure-related charges, employee-related charges and
     integration costs, as well as a restructuring reversal due to the
     termination of a previously approved restructuring action.
                                                                
                             YEAR TO DATE 2012
                                                Merger &
                             Reported           Acquisition-    Normalized^3
                                                Related
                                                Charges^2
                                                                
     Gross margin            $   1,842.3        $  6.6          $  1,848.9
     % of Net Sales              36.9     %                        37.0     %
                                                                
     Selling, general            1,263.5           (61.0  )        1,202.5
     and administrative
     % of Net Sales              25.3     %                        24.1     %
                                                                
     Operating margin            578.8             67.6            646.4
     % of Net Sales              11.6     %                        12.9     %
                                                                
     Earnings from
     continuing                  300.2             153.7           453.9
     operations before
     income taxes
                                                                
     Income taxes on
     continuing                  68.4              32.0            100.4
     operations
                                                                
     Net earnings from
     continuing                  232.8             121.7           354.5
     operations
                                                                
     Diluted earnings
     per share of common     $   1.38           $  0.73         $  2.11
     stock
                                                                
                                                                
     Merger and acquisition-related charges relate primarily to the Black &
^2   Decker merger and Niscayah acquisition, including facility
     closure-related charges, employee-related charges and integration costs.
     
     The normalized 2013 and 2012 information, as reconciled to GAAP above, is
^3   considered relevant to aid analysis of the Company’s margin and earnings
     results aside from the material impact of the merger &
     acquisition-related and other charges.
     

STANLEY BLACK & DECKER INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP CASH FLOW FINANCIAL MEASURES TO CORRESPONDING
NON-GAAP FINANCIAL MEASURES
(Unaudited, Millions of Dollars)
                                                           
                             SECOND QUARTER 2013
                                                 Merger &
                                                 Acquisition-
                             Reported            Related         Normalized^4
                                                 Charges and
                                                 Payments^1
                                                                 
      Free Cash Flow
      Computation^3
      Net cash provided
      by operating           $   184.2           87.5            $   271.7
      activities
      Less: capital and
      software                  (88.4    )      34.6               (53.8  )
      expenditures
      Free Cash Inflow       $   95.8                           $   217.9  
      (before dividends)
                                                                 
      Merger and acquisition-related charges and payments relate primarily to
^1    the Black & Decker merger and Niscayah and Infastech acquisitions,
      including facility closure-related charges, employee-related charges and
      integration costs.
                                                                 
                                                                 
                             SECOND QUARTER 2012
                                                 Merger &
                                                 Acquisition-
                             Reported            Related         Normalized^4
                                                 Charges and
                                                 Payments^2
                                                                 
      Free Cash Flow
      Computation^3
      Net cash provided
      by operating           $   299.2           67.2            $   366.4
      activities
      Less: capital and
      software                  (109.0   )      45.2               (63.8  )
      expenditures
      Free Cash Inflow       $   190.2                          $   302.6  
      (before dividends)
                                                                 
                                                                 
      Merger and acquisition-related charges and payments relate primarily to
^2    the Black & Decker merger and Niscayah acquisition, including facility
      closure-related charges, employee-related charges and integration costs.
                                                                 
      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
[3,   include deductions for mandatory debt service, other borrowing activity,
4]    discretionary dividends on the Company’s common stock and business
      acquisitions, among other items. Normalized cash flow and free cash
      flow, as reconciled above, are considered meaningful pro forma metrics
      to aid the understanding of the Company's cash flow performance aside
      from the material impact of merger and acquisition-related activities.


STANLEY BLACK & DECKER INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP CASH FLOW FINANCIAL MEASURES TO CORRESPONDING
NON-GAAP FINANCIAL MEASURES
(Unaudited, Millions of Dollars)
                                                           
                             YEAR TO DATE 2013
                                                 Merger &
                                                 Acquisition-
                             Reported            Related         Normalized^4
                                                 Charges and
                                                 Payments^1
                                                                 
        Free Cash Flow
        Computation^3
        Net cash
        provided by          $   36.7            170.9           $  207.6
        operating
        activities
        Less: capital
        and software            (167.9   )      45.7              (122.2  )
        expenditures
        Free Cash
        (Outflow) Inflow     $   (131.2   )                      $  85.4    
        (before
        dividends)
                                                                 
        Merger and acquisition-related charges and payments relate primarily
^1      to the Black & Decker merger and Niscayah and Infastech acquisitions,
        including facility closure-related charges, employee-related charges
        and integration costs.
                                                                 
                                                                 
                             YEAR TO DATE 2012
                                                 Merger &
                                                 Acquisition-
                             Reported            Related         Normalized^4
                                                 Charges and
                                                 Payments^2
                                                                 
        Free Cash Flow
        Computation^3
        Net cash
        provided by          $   266.9           128.7           $  395.6
        operating
        activities
        Less: capital
        and software            (170.5   )      68.8              (101.7  )
        expenditures
        Free Cash Inflow
        (before              $   96.4                           $  293.9   
        dividends)
                                                                 
                                                                 
        Merger and acquisition-related charges and payments relate primarily
^2      to the Black & Decker merger and Niscayah acquisition, including
        facility closure-related charges, employee-related charges and
        integration costs.
                                                                 
        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
^3, 4   borrowing activity, discretionary dividends on the Company’s common
        stock and business acquisitions, among other items. Normalized cash
        flow and free cash flow, as reconciled above, are considered
        meaningful pro forma metrics to aid the understanding of the Company's
        cash flow performance aside from the material impact of merger and
        acquisition-related activities.
        


STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP SEGMENT PROFIT FINANCIAL MEASURES TO CORRESPONDING
NON-GAAP FINANCIAL MEASURES
(Unaudited, Millions of Dollars)
                                                          
                                                                 
                               SECOND QUARTER 2013
                                                                 
                                                 Merger &
                               Reported          Acquisition-    Normalized^3
                                                 Related
                                                 Charges^1
     SEGMENT PROFIT
                                                                 
          Construction &       $   215.7         $    2.9        $  218.6
          DIY
          Industrial               111.1              6.1           117.2
          Security                52.1             8.8          60.9   
          Segment Profit           378.9              17.8          396.7
          Corporate               (53.7  )          14.2         (39.5  )
          Overhead
          Total                $   325.2        $    32.0       $  357.2  
                                                                 
                                                                 
     Segment Profit as a
     Percentage of Net
     Sales
          Construction &           14.9   %                         15.1   %
          DIY
          Industrial               13.7   %                         14.4   %
          Security                8.5    %                        10.0   %
          Segment Profit           13.2   %                         13.8   %
          Corporate               (1.9   %)                       (1.4   %)
          Overhead
          Total                   11.3   %                        12.4   %
                                                                 
                                                                 
     Merger and acquisition-related charges relate primarily to the Black &
^1   Decker merger and Niscayah and Infastech acquisitions, including facility
     closure-related charges, employee-related charges and integration costs.
                               SECOND QUARTER 2012
                                                                 
                                                 Merger &
                               Reported          Acquisition-    Normalized^3
                                                 Related
                                                 Charges^2
     SEGMENT PROFIT
                                                                 
          Construction &       $   196.9         $    10.5       $  207.4
          DIY
          Industrial               93.6               1.0           94.6
          Security                70.1             8.7          78.8   
          Segment Profit           360.6              20.2          380.8
          Corporate               (56.5  )          17.7         (38.8  )
          Overhead
          Total                $   304.1        $    37.9       $  342.0  
                                                                 
                                                                 
     Segment Profit as a
     Percentage of Net
     Sales
          Construction &           14.8   %                         15.6   %
          DIY
          Industrial               14.7   %                         14.9   %
          Security                11.7   %                        13.1   %
          Segment Profit           14.0   %                         14.8   %
          Corporate               (2.2   %)                       (1.5   %)
          Overhead
          Total                   11.8   %                        13.3   %
                                                                 
     Merger and acquisition-related charges relate primarily to the Black &
^2   Decker merger and Niscayah acquisition, including facility
     closure-related charges, employee-related charges and integration costs.
     
     The normalized 2013 and 2012 business segment information, as reconciled
^3   to GAAP above, is considered relevant to aid analysis of the Company’s
     segment profit results aside from the material impact of the merger and
     acquisition-related charges.
     


STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP SEGMENT PROFIT FINANCIAL MEASURES TO CORRESPONDING
NON-GAAP FINANCIAL MEASURES
(Unaudited, Millions of Dollars)
                                                          
                                                                 
                             YEAR TO DATE 2013
                                                                 
                                                 Merger &
                             Reported            Acquisition-    Normalized^3
                                                 Related
                                                 Charges^1
     SEGMENT PROFIT
                                                                 
         Construction &      $   384.9           $    6.2        $  391.1
         DIY
         Industrial              196.6                18.5          215.1
         Security               107.4              15.2         122.6  
         Segment Profit          688.9                39.9          728.8
         Corporate              (122.7   )          39.7         (83.0  )
         Overhead
         Total               $   566.2          $    79.6       $  645.8  
                                                                 
                                                                 
     Segment Profit as a
     Percentage of Net
     Sales
         Construction &          14.6     %                         14.8   %
         DIY
         Industrial              13.0     %                         14.3   %
         Security               8.9      %                        10.1   %
         Segment Profit          12.9     %                         13.6   %
         Corporate              (2.3     %)                       (1.5   %)
         Overhead
         Total                  10.6     %                        12.1   %
                                                                 
                                                                 
     Merger and acquisition-related charges relate primarily to the Black &
^1   Decker merger and Niscayah and Infastech acquisitions, including facility
     closure-related charges, employee-related charges and integration costs.
                             YEAR TO DATE 2012
                                                                 
                                                 Merger &
                             Reported            Acquisition-    Normalized^3
                                                 Related
                                                 Charges^2
     SEGMENT PROFIT
                                                                 
         Construction &      $   345.3           $    13.8       $  359.1
         DIY
         Industrial              216.5                3.0           219.5
         Security               139.9              15.6         155.5  
         Segment Profit          701.7                32.4          734.1
         Corporate              (122.9   )          35.2         (87.7  )
         Overhead
         Total               $   578.8          $    67.6       $  646.4  
                                                                 
                                                                 
     Segment Profit as a
     Percentage of Net
     Sales
         Construction &          13.8     %                         14.3   %
         DIY
         Industrial              16.7     %                         16.9   %
         Security               11.7     %                        13.0   %
         Segment Profit          14.1     %                         14.7   %
         Corporate              (2.5     %)                       (1.8   %)
         Overhead
         Total                  11.6     %                        12.9   %
                                                                 
     Merger and acquisition-related charges relate primarily to the Black &
^2   Decker merger and Niscayah acquisition, including facility
     closure-related charges, employee-related charges and integration costs.
     
     The normalized 2013 and 2012 business segment information, as reconciled
^3   to GAAP above, is considered relevant to aid analysis of the Company’s
     segment profit results aside from the material impact of the merger and
     acquisition-related charges.

Contact:

Stanley Black & Decker
Greg Waybright, 860-827-3833
Vice President, Investor & Government Relations
greg.waybright@sbdinc.com
 
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