Stanley Black & Decker Reports 4Q and Full Year 2013 Results

  Stanley Black & Decker Reports 4Q and Full Year 2013 Results

Business Wire

NEW BRITAIN, Conn. -- January 24, 2014

Stanley Black & Decker (NYSE: SWK) today announced fourth quarter and full
year 2013 financial results.

  *4Q’13 Revenues Increased 9% To $2.9 Billion; Organic Growth Reached 4% As
    Organic Growth Initiatives Contributed 2 Points
  *4Q’13 Diluted GAAP EPS Was $0.41; Excluding Charges, 4Q’13 Diluted EPS Was
    $1.32
  *Full Year Revenues Increased 8% To $11.0 Billion; Organic Growth Was 3%
  *Full Year Diluted GAAP EPS Was $3.26; Excluding Charges, Full Year Diluted
    EPS Was $4.98
  *Full Year 2013 Free Cash Flow Of $502 Million; $854 Million Excluding
    Charges & Payments; Working Capital Turns Reached 8.0

4Q’13 Key Points:

  *Net sales were $2.9 billion, up 9% versus prior year, attributable to
    volume (+4%) and acquisitions (+6%), partially offset by currency (-1%);
    price was flat for the quarter.
  *The gross margin rate for the quarter was 35.5%. Excluding charges, the
    gross margin rate was 35.6%, down slightly from the prior year rate of
    36.0%, as the favorable impact of volume, productivity and  cost synergies
    was more than offset by emerging market currency pressures and lower
    Security margins.
  *SG&A expenses were 24.2% of sales. Excluding charges, SG&A expenses were
    22.6% of sales, relatively unchanged from the 4Q’12 level of 22.5%.

  *Operating margin was 11.3% of sales. Excluding charges, operating margin
    was 13.0% of sales, down 50 basis points from prior year.
  *The tax rate was a benefit of 20.6%. Excluding charges, the rate was
    22.1%, in line with expectations.

  *Working capital turns for the quarter were 8.0, up 0.4 turns from 4Q’12.
    Free cash flow was $698 million, excluding $69 million of charges and
    payments.

Stanley Black & Decker’s Chairman and CEO, John F. Lundgren, commented,
“During 2013 we made significant progress driving organic growth throughout
the organization and the fourth quarter was no exception as the momentum
continued from our organic growth initiatives. CDIY and Industrial delivered
strong top and bottom line growth in spite of FX headwinds and on-going
challenging global market conditions. The Security segment’s margin recovery
is underway with notable improvement in North America and actions to improve
Europe’s margins in place.

“As we move into 2014 it is important to note that our long-term strategy and
financial objectives remain intact. We are, however, focused on executing
previously announced operating and capital allocation actions to boost returns
in the near term. These actions demonstrate our commitment to drive
sustainable improvements to the Company’s cash flow return on investment and
drive shareholder value.”

4Q’13 Segment Results

($ in M)    4Q' 13 Segment Results
                                           Profit               Profit Rate
            Sales   Profit  Charges^1             Profit 
                                           Ex-         Rate     Ex-
                                           Charges^1            Charges^1
                                                          
CDIY         $1,456   $209.2   $3.8        $213.0      14.4%    14.6%
                                                          
Industrial   $824     $128.7   $4.0        $132.7      15.6%    16.1%
                                                          
Security     $626     $64.5    $11.6       $76.1       10.3%    12.2%

^1 M&A charges primarily pertaining to synergy attainment & facility closures

  *CDIY segment net sales increased 6% vs. 4Q’12 as a result of volume (+7%)
    and acquisitions (+1%), partially offset by price (-1%) and currency
    (-1%). Solid organic growth was experienced in all regions led by emerging
    markets and Europe. European volumes were strong, up 7% with growth in
    nearly all key countries driven by customer share gains and new product
    introductions. Emerging markets also grew 8% in the face of difficult
    market dynamics within certain regions, particularly Latin America.
    Similar to the prior quarter, solid organic volumes were achieved in North
    America, up 5%, primarily due to new product introductions, retail
    promotions and continued strength in the residential construction market.
    Excluding charges, overall segment profit was 14.6% up 10 bps from the
    4Q’12 rate of 14.5% as volume and productivity offset investments in
    organic growth initiatives and currency.
  *Industrial segment net sales rose 27%. Unit volumes increased
    approximately 8%, currency was down 1% and acquisitions added 20%. Pricing
    was flat for the quarter. Organic sales for Industrial and Automotive
    Repair (IAR) increased a robust 5% primarily as a result of volume
    increases in North America and Europe. Consistent with prior quarters,
    volume growth in North America continued to be driven by the MRO vending
    organic growth initiative and strength within Mac Tools mobile
    distribution, as well as new product introductions, which more than offset
    the impact of budgetary cuts on IAR’s US Government business. European
    growth was driven primarily by the timing of promotional events.
    Engineered Fastening posted record fourth quarter revenues for its legacy
    Emhart business. Organic growth was 5% driven by the global automotive
    revenues which once again outpaced global light vehicle production. In
    addition, Infastech continues to progress as planned and is on track to
    deliver financial commitments. Oil & Gas posted another strong quarter of
    impressive organic growth (+39%) driven primarily by a continued rebound
    by North America onshore operations combined with another strong offshore
    growth performance.

Overall Industrial segment profit excluding charges was 16.1%, consistent with
the 4Q’12 rate, as the impact of volume and productivity was offset by organic
growth investments and currency.

  *As expected, net sales in Security decreased 2% versus 4Q’12 due to volume
    (-4%) partially offset by price (+1%) and currency (+1%). Organic growth
    within the CSS North America business was relatively flat. CSS Europe
    declined 8% organically due primarily to continued softness in certain
    regions, most notably France and Southern Europe. While CSS Europe order
    rates remain strong in the low double digits, the conversion of backlog in
    the quarter did not overcome the attrition rates that remained consistent
    with the third quarter.

Mechanical Access organic sales were down slightly driven by declines within
the commercial mechanical lock business due to the year over year impact of
the distributor model transition, partially offset by growth within the
automatic door business due to successful door conversion wins, new product
introductions and emerging market growth.

Security segment profit rate excluding charges was 12.2%, consistent with the
3Q’13 rate. During the quarter, the North America profit rate improved
sequentially as a result of CSS operational field productivity. This
improvement was offset by continued attrition and field inefficiencies in the
Security Europe business. The 400 basis point year over year decline was
attributable to the confluence of issues which have been previously
communicated. The fourth quarter should represent the last quarter with steep
year over year margin rate declines as the fixes take hold and the issues
anniversary.

President and Chief Operating Officer, James M. Loree, commented, “We remain
encouraged by the strong results of CDIY and our Industrial businesses, which
have leveraged the growth investments made to date. Growth in these businesses
within the developed markets of North America and Europe was exceptional.
Organic growth achieved within the emerging markets in the quarter and for the
full year was also noteworthy given difficult and volatile regional market
conditions and related currency pressures which continue to mount particularly
within Latin America. As for Security, we continue to execute the actions we
previously communicated to improve revenues and operating margins in both
North America and Europe.

“As we look forward in 2014, we have strong momentum in about 80% of the
portfolio. In Security, the remaining 20%, we have taken cost and other
actions to effect a turnaround. We have already seen benefits in Security
North America and Europe will gradually improve throughout the year.”

Reiteration Of 2014 Outlook

Donald Allan Jr., Senior Vice President and CFO commented, “As previously
communicated in mid-December our adjusted 2014 EPS will be in the range of
$5.30 to $5.50. On a GAAP basis EPS is estimated to be in the range of $5.18
to $5.38 as M&A charges will shrink dramatically in 2014 resulting in
convergence of GAAP and adjusted income. We also believe that our 2014 organic
growth will approximate 4% including the benefits from our organic growth
initiatives. Our 2014 outlook assumes that we will improve Security margins by
approximately 150 basis points and that we experience no further significant
degradation in currencies beyond current rates. Free cash flow will
approximate $675 million inclusive of approximately $250 million of one-time
payments primarily relating to restructuring actions.

“In addition to continuing to drive organic growth and improving security
margins, enhancing our operating leverage is a key priority for 2014. The
financial drag from the growth investments made in 2013 is mostly behind us
and we will tightly manage SG&A expenses. We also remain committed to our
capital allocation plan which provides for a strong and growing dividend as
well as the return of $1.5 billion to $2.0 billion of capital to stakeholders
over the next two years through debt deleveraging and repurchasing up to $1
billion in stock. The combined impact of these actions is expected to have a
significant favorable impact on the Company’s cash flow return on investment
over the next couple of years.”

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

4Q’13: Total one-time charges in 4Q’13 related to M&A charges and cost
containment actions, as well as the charges related to the extinguishment of
debt were $214.9 million. Gross margin includes $3.1 million of these one-time
charges, primarily for integration-related matters, and SG&A includes $46.0
million in one-time charges, primarily for integration-related administration
costs and consulting fees, as well as employee-related matters. $19.4 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
$30.3 million are included in Other, net, primarily related to the
extinguishment of debt and deal costs. Lastly, one-time charges of $135.5
million are included in restructuring charges, the majority of which represent
Niscayah-related restructuring charges and cost containment actions associated
with the severance of employees.

2013: Total one-time charges in 2013 related to M&A charges and cost
containment actions, as well as the charges related to the extinguishment of
debt were $393.5 million. Gross margin includes $29.5 million of these
one-time charges, primarily for integration-related matters, and SG&A includes
$136.3 million in one-time charges, primarily for integration-related
administration costs and consulting fees, as well as employee-related matters.
$76.5 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 $51.6 million are included in Other, net, primarily
related to the extinguishment of debt and deal costs. Lastly, one-time charges
of $176.1 million are included in restructuring charges, the majority of which
represent Niscayah-related restructuring charges and cost containment actions
associated with the severance of employees.

The company will host a conference call with investors today, Friday, January
24, 2014, 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 within the US at (800) 708-4540, from
outside the U.S. at +1 (847) 619-6397, 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
3640-8064. 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 3640-8064#.

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 HHI have been reported as discontinued
operations in 2012. The operating results of the residential portion of Tong
Lung have been reported as discontinued operations for 2012 and through the
date of sale in 2013. In addition, in 3Q’13 the Company classified two small
businesses as discontinued operations. The operating results of those
businesses have been reported as discontinued operations for all periods
presented. Total sales reported as discontinued operations were $38.4 million
in 2013 and $973.2 million in 2012.

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 margin is 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 measures at 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 statements of operations, cash flows and business segment
information, as reconciled to GAAP on pages 13-18 for 2013 and 2012, are
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 and related analyst presentation that are not
historical, including but not limited to those regarding the Company’s ability
to: (i) achieve full year 2014 diluted EPS of $5.30 - $5.50 ($5.18 - $5.38 on
a GAAP basis) and 1Q 2014 EPS excluding charges and payments of $0.95-$0.98;
(ii) deliver organic growth of approximately 4% in 2014; (iii) generate
approximately $675 million of free cash flow for 2014 which includes
approximately $250 million of one-time payments; (iv) return $1.5 billion to
$2.0 billion of capital to stakeholders over the next two years through debt
deleveraging and the repurchase of up to $1 billion in stock (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 execute its integration plans and achieve synergies
primarily from the Infastech acquisition sufficient to generate $0.10 of EPS
accretion in 2014; (ii) the Company’s ability to generate organic net sales
increases of approximately 4% in 2014; (iii) the Company’s ability to continue
to identify and execute upon sales opportunities to increase its CDIY, IAR and
Security businesses in the emerging markets while minimizing associated costs;
(iv) the Company’s ability to achieve a tax rate of approximately 21-22% in
2014; (v) the Company’s ability to limit the increase in interest and other
expense to approximately $0.10-$0.15 of EPS in 2014; (vi) the Company’s
ability to improve margins in the Security business by at least 150 basis
points in 2014; (vii) the Company’s ability to generate approximately $0.20 of
EPS accretion in 2014 through cost reductions in its CDIY and Industrial
segments and its corporate functions; (viii) the Company’s ability to limit
one-time charges primarily associated with the Infastech acquisition to $25
million in 2014; (ix) the Company’s ability to minimize tax liabilities
associated with the HHI divestiture; (x) successful integration of
acquisitions completed in 2012 and 2013, and any additional acquisitions
completed during the year, as well as integration of existing businesses; (xi)
the continued acceptance of technologies used in the Company’s products and
services; (xii) the Company’s ability to manage existing Sonitrol franchisee
and Mac Tools relationships; (xiii) 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; (xiv) the
proceeds realized with respect to any business or product line disposals; (xv)
the extent of any asset impairments with respect to any businesses or product
lines that are sold or discontinued; (xvi) the success of the Company’s
efforts to manage freight costs, steel and other commodity costs as well as
capital expenditures; (xvii) 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; (xviii) the Company’s ability to generate free cash
flow and maintain a strong debt to capital ratio; (xix) the Company’s ability
to identify and effectively execute productivity improvements and cost
reductions, while minimizing any associated restructuring charges; (xx) the
Company’s ability to obtain favorable settlement of tax audits; (xxi) the
ability of the Company to generate earnings sufficient to realize future
income tax benefits during periods when temporary differences become
deductible; (xxii) the continued ability of the Company to access credit
markets under satisfactory terms; (xxiii) the Company’s ability to negotiate
satisfactory payment terms under which the Company buys and sells goods,
services, materials and products; (xxiv) the Company’s ability to successfully
develop, market and achieve sales from new products and services; and (xxv)
the availability of cash to repurchase shares when conditions are right.

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)
                                                                  
                                                                  
                       FOURTH QUARTER              YEAR TO DATE
                        2013        2012        2013         2012     
                                                                  
NET SALES              $ 2,906.0     $ 2,659.5     $ 11,001.2     $ 10,147.9
                                                                  
COSTS AND EXPENSES
Cost of sales           1,875.3     1,713.4     7,068.3      6,452.4  
Gross margin             1,030.7       946.1         3,932.9        3,695.5
% of Net Sales           35.5    %     35.6    %     35.7     %     36.4     %
                                                                  
Selling, general and     703.1         636.6         2,714.6        2,499.9
administrative
% of Net sales           24.2    %     23.9    %     24.7     %     24.6     %
                                                                  
Operating margin         327.6         309.5         1,218.3        1,195.6
% of Net sales           11.3    %     11.6    %     11.1     %     11.8     %
                                                                  
Other - net              99.2          83.0          308.0          345.3
Restructuring           135.5       57.4        176.1        174.0    
charges
Income from              92.9          169.1         734.2          676.3
operations
                                                                  
Interest - net          38.5        36.1        147.6        134.1    
                                                                  
EARNINGS FROM
CONTINUING               54.4          133.0         586.6          542.2
OPERATIONS BEFORE
INCOME TAXES
Income tax (benefit)
expense on              (11.2   )    (4.7    )    69.3         78.2     
continuing
operations
NET EARNINGS FROM
CONTINUING              65.6        137.7       517.3        464.0    
OPERATIONS
                                                                  
Less: net (loss)
earnings
attributable to         (0.1    )    0.4         (1.0     )    (0.8     )
non-controlling
interests
                                                                  
NET EARNINGS FROM CONTINUING
OPERATIONS ATTRIBUTABLE
TO COMMON               65.7        137.3       518.3        464.8    
SHAREOWNERS
                                                                  
(Loss) earnings from
discontinued             (9.0    )     390.8         (42.0    )     488.8
operations before
income taxes
Income tax expense
(benefit) on            0.6         36.0        (14.0    )    69.8     
discontinued
operations
NET (LOSS) EARNINGS
FROM DISCONTINUED       (9.6    )    354.8       (28.0    )    419.0    
OPERATIONS
                                                                  
NET EARNINGS
ATTRIBUTABLE TO        $ 56.1       $ 492.1      $ 490.3       $ 883.8    
COMMON SHAREOWNERS
                                                                  
                                                                  
BASIC EARNINGS
(LOSS) PER SHARE OF
COMMON STOCK
Continuing             $ 0.42        $ 0.85        $ 3.34         $ 2.85
operations
Discontinued            (0.06   )    2.20        (0.18    )    2.57     
operations
Total basic earnings
per share of common    $ 0.36       $ 3.05       $ 3.16        $ 5.41     
stock
                                                                  
DILUTED EARNINGS (LOSS) PER SHARE
OF COMMON STOCK
Continuing             $ 0.41        $ 0.83        $ 3.26         $ 2.79
operations
Discontinued            (0.06   )    2.16        (0.18    )    2.51     
operations
Total diluted
earnings per share     $ 0.35       $ 2.99       $ 3.09        $ 5.30     
of common stock
                                                                  
DIVIDENDS PER SHARE    $ 0.50       $ 0.49       $ 1.98        $ 1.80     
                                                                  
AVERAGE SHARES
OUTSTANDING (in
thousands)
Basic                   155,512     161,212     155,237      163,067  
Diluted                 159,200     164,553     158,776      166,701  
                                                                             

                                                              
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, Millions of Dollars)
                                                                  
                                                   December 28,   December 29,
                                                   2013           2012
                                                                  
ASSETS
Cash and cash equivalents                          $  496.2       $  716.0
Accounts and notes receivable, net                    1,633.0        1,525.8
Inventories, net                                      1,485.8        1,304.6
Assets held for sale                                  10.1           171.7
Other current assets                                 338.0         393.2
Total current assets                                 3,963.1       4,111.3
Property, plant and equipment, net                    1,485.3        1,329.9
Goodwill and other intangibles, net                   10,632.9       9,947.0
Other assets                                         454.4         455.8
Total assets                                       $  16,535.7    $  15,844.0
                                                                  
                                                                  
LIABILITIES AND SHAREOWNERS' EQUITY
Short-term borrowings                              $  402.6       $  11.5
Accounts payable                                      1,575.9        1,345.9
Accrued expenses                                      1,245.4        1,680.0
Liabilities held for sale                            6.3           37.3
Total current liabilities                            3,230.2       3,074.7
Long-term debt                                        3,799.4        3,526.5
Other long-term liabilities                           2,643.3        2,515.7
Stanley Black & Decker, Inc. shareowners'             6,781.5        6,667.1
equity
Non-controlling interests' equity                    81.3          60.0
Total liabilities and equity                       $  16,535.7    $  15,844.0
                                                                     

                                                           
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
SUMMARY OF CASH FLOW ACTIVITY
(Unaudited, Millions of Dollars)
                                                                   
                        FOURTH QUARTER              YEAR TO DATE
                                                                   
                        2013         2012           2013           2012
     OPERATING
     ACTIVITIES
     Net earnings
     from               $ 65.6       $ 137.7        $ 517.3        $ 464.0
     continuing
     operations
     Net (loss)
     earnings from        (9.6   )     354.8          (28.0    )     419.0
     discontinued
     operations
     Net gains on         -            (358.9   )     (4.7     )     (358.9   )
     HHI sale
     Depreciation
     and                  118.6        114.7          441.3          445.3
     amortization
     Changes in
     working              384.0        338.5          12.4           52.5
     capital^1
     Other               173.1      (38.7    )    (70.3    )    (55.7    )
     Net cash
     provided by          731.7        548.1          868.0          966.2
     operating
     activities
                                                                   
                                                                   
     INVESTING AND
     FINANCING
     ACTIVITIES
     Capital and
     software             (103.5 )     (126.5   )     (365.6   )     (386.0   )
     expenditures
     Acquisitions,
     net of cash          (7.3   )     (12.2    )     (933.9   )     (707.3   )
     acquired
     Proceeds from
     sale of              1.0          1,261.6        97.5           1,270.2
     business /
     assets
     Proceeds from
     long-term            726.7        794.1          726.7          1,523.5
     borrowings
     Premium paid
     on debt              (42.8  )     -              (42.8    )     (91.0    )
     extinguishment
     Proceeds from
     issuances of         15.9         23.5           154.6          126.4
     common stock
     Net short-term
     (repayments)         (810.8 )     (1,335.4 )     388.7          (19.1    )
     borrowings
     Cash dividends
     on common            (77.7  )     (82.7    )     (312.7   )     (304.0   )
     stock
     Payments on          (300.5 )     (200.3   )     (302.2   )     (1,422.3 )
     long-term debt
     Purchases of
     common stock         (6.6   )     (856.0   )     (39.2    )     (1,073.8 )
     for treasury
     Premium paid
     for equity           (83.2  )     (29.5    )     (83.2    )     (29.5    )
     option
     Payment on
     forward stock        -            -              (350.0   )     -
     purchase
     contract
     Other               (15.8  )    (38.2    )    (25.7    )    (44.2    )
     Net cash used
     in investing         (704.6 )     (601.6   )     (1,087.8 )     (1,157.1 )
     and financing
     activities
                                                                   
     Increase
     (Decrease) in        27.1         (53.5    )     (219.8   )     (190.9   )
     Cash and Cash
     Equivalents
                                                                   
     Cash and Cash
     Equivalents,        469.1      769.5        716.0        906.9    
     Beginning of
     Period
                                                                   
     Cash and Cash
     Equivalents,       $ 496.2     $ 716.0       $ 496.2       $ 716.0    
     End 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)
                                                                 
                                                                 
                   FOURTH QUARTER                YEAR TO DATE
                                                                 
                   2013           2012           2013            2012
                                                              
NET SALES
                                                                 
Construction &     $ 1,455.4      $ 1,370.8      $ 5,481.1       $ 5,189.9
DIY
Industrial           824.4          648.7          3,097.5         2,557.8
Security            626.2        640.0        2,422.6       2,400.2  
Total              $ 2,906.0     $ 2,659.5     $ 11,001.2     $ 10,147.9 
                                                                 
                                                                 
SEGMENT PROFIT
Construction &     $ 209.2        $ 188.7        $ 798.0         $ 720.9
DIY
Industrial           128.7          100.1          436.2           414.3
Security            64.5         88.3         238.0         312.7    
Segment Profit       402.4          377.1          1,472.2         1,447.9
Corporate           (74.8   )     (67.6   )     (253.9   )     (252.3   )
Overhead
Total              $ 327.6       $ 309.5       $ 1,218.3      $ 1,195.6  
                                                                 
                                                                 
Segment Profit as a Percentage of Net Sales
Construction &       14.4    %      13.8    %      14.6     %      13.9     %
DIY
Industrial           15.6    %      15.4    %      14.1     %      16.2     %
Security            10.3    %     13.8    %     9.8      %     13.0     %
Segment Profit       13.8    %      14.2    %      13.4     %      14.3     %
Corporate           (2.6    %)    (2.5    %)    (2.3     %)    (2.5     %)
Overhead
Total               11.3    %     11.6    %     11.1     %     11.8     %
                                                                            


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)
                                                           
                             FOURTH QUARTER 2013
                                               Merger &
                                               Acquisition-
                             Reported          Related and      Normalized^2
                                               Other
                                               Charges^1
                                                                
     Gross margin            $  1,030.7        $  3.1           $  1,033.8
     % of Net Sales             35.5     %                         35.6     %
                                                                
     Selling, general           703.1             (46.0  )         657.1
     and administrative
     % of Net Sales             24.2     %                         22.6     %
                                                                
     Operating margin           327.6             49.1             376.7
     % of Net Sales             11.3     %                         13.0     %
                                                                
     Earnings from
     continuing                 54.4              214.9            269.3
     operations before
     income taxes
                                                                
     Income tax
     (benefit) expense          (11.2    )        70.8             59.6
     on continuing
     operations
                                                                
     Net earnings from
     continuing                 65.7              144.1            209.8
     operations
                                                                
     Diluted earnings
     per share of common     $  0.41           $  0.91          $  1.32
     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 cost containment charges. Other charges
     relate to the loss on extinguishment of debt.
     The normalized 2013 information, as reconciled to GAAP above, is
     considered relevant to aid analysis of the Company’s margin and earnings
(2 ) results aside from the material impact of the merger &
     acquisition-related charges as well as charges associated with the loss
     on extinguishment of debt.
                                                                
                             FOURTH QUARTER 2012
                                               Merger &
                             Reported          Acquisition-     Normalized^4
                                               Related
                                               Charges^3
                                                                
     Gross margin            $  946.1          $  11.3          $  957.4
     % of Net Sales             35.6     %                         36.0     %
                                                                
     Selling, general           636.6             (38.5  )         598.1
     and administrative
     % of Net Sales             23.9     %                         22.5     %
                                                                
     Operating margin           309.5             49.8             359.3
     % of Net Sales             11.6     %                         13.5     %
                                                                
     Earnings from
     continuing                 133.0             131.4            264.4
     operations before
     income taxes
                                                                
     Income taxes
     (benefit) on               (4.7     )        36.4             31.7
     continuing
     operations
                                                                
     Net earnings from
     continuing                 137.3             95.0             232.3
     operations
                                                                
     Diluted earnings
     per share of common     $  0.83           $  0.58          $  1.41
     stock
                                                                
                                                                
     Merger and acquisition-related charges relate primarily to the Black &
(3 ) Decker merger and Niscayah acquisition, including facility
     closure-related charges, employee-related charges and integration costs.
     The normalized 2012 information, as reconciled to GAAP above, is
(4 ) considered relevant to aid analysis of the Company’s margin and earnings
     results aside from the material impact of the merger &
     acquisition-related 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           $  3,932.9           29.5           $  3,962.4
     % of Net Sales            35.7     %                          36.0     %
                                                                
     Selling, general and      2,714.6           (136.3  )         2,578.3
     administrative
     % of Net Sales            24.7     %                          23.4     %
                                                                
     Operating margin          1,218.3           165.8             1,384.1
     % of Net Sales            11.1     %                          12.6     %
                                                                
     Earnings from
     continuing operations     586.6             393.5             980.1
     before income taxes
                                                                
     Income taxes on           69.3              120.8             190.1
     continuing operations
                                                                
     Net earnings from         518.3             272.7             791.0
     continuing operations
                                                                
     Diluted earnings per   $  3.26           $  1.72           $  4.98
     share of common 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 cost containment charges. Other charges
     relate to the loss on extinguishment of debt.
                                                                
                            YEAR TO DATE 2012
                                              Merger &
                                              Acquisition-
                            Reported          Related and       Normalized^3
                                              Other
                                              Charges^2
                                                                
     Gross margin           $  3,695.5           29.6           $  3,725.1
     % of Net Sales            36.4     %                          36.7     %
                                                                
     Selling, general and      2,499.9           (138.4  )         2,361.5
     administrative
     % of Net Sales            24.6     %                          23.3     %
                                                                
     Operating margin          1,195.6           168.0             1,363.6
     % of Net Sales            11.8     %                          13.4     %
                                                                
     Earnings from
     continuing operations     542.2             442.2             984.4
     before income taxes
                                                                
     Income taxes on           78.2              113.0             191.2
     continuing operations
                                                                
     Net earnings from         464.8             329.2             794.0
     continuing operations
                                                                
     Diluted earnings per   $  2.79           $  1.97           $  4.76
     share of common stock
                                                                
                                                                
     Merger and acquisition-related charges relate primarily to the Black &
     Decker merger and Niscayah acquisition, including facility
(2 ) closure-related charges, employee-related charges, integration costs, as
     well as cost containment charges. Other charges relate to the loss on
     extinguishment of debt.
     The normalized 2013 and 2012 information, as reconciled to GAAP above, is
     considered relevant to aid analysis of the Company’s margin and earnings
(3 ) results aside from the material impact of the merger &
     acquisition-related charges as well as charges associated with the loss
     on extinguishment of debt.


                                                              
STANLEY BLACK & DECKER INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP CASH FLOW FINANCIAL MEASURES TO CORRESPONDING
NON-GAAP FINANCIAL MEASURES
(Unaudited, Millions of Dollars)
                      
                                FOURTH QUARTER 2013
                                                 Merger &
                                                Acquisition-
                                Reported         Related         Normalized^4
                                                 Charges and
                                                 Payments^1
                                                                 
        Free Cash Flow
        Computation^3
        Net cash provided by    $  731.7         56.3            $   788.0
        operating activities
        Less: capital and         (103.5  )     13.1               (90.4  )
        software expenditures
        Free Cash Inflow        $  628.2                        $   697.6  
        (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, as well as cost containment charges.
                                                                 
                                                                 
                                FOURTH QUARTER 2012
                                                 Merger &
                                                 Acquisition-
                                Reported         Related         Normalized^4
                                                 Charges and
                                                 Payments^2
                                                                 
        Free Cash Flow
        Computation^3
        Net cash provided by    $  548.1         144.3           $   692.4
        operating activities
        Less: capital and         (126.5  )     30.4               (96.1  )
        software expenditures
        Free Cash Inflow        $  421.6                        $   596.3  
        (before 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,
        integration costs, as well as cost containment charges.
                                                                 
        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 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   $  868.0         280.0           $  1,148.0
        operating activities
        Less: capital and        (365.6  )     71.7              (293.9   )
        software expenditures
        Free Cash Inflow       $  502.4                        $  854.1    
        (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, as well as cost containment charges.
                                                                
                                                                
                               YEAR TO DATE 2012
                                                Merger &
                                                Acquisition-
                               Reported         Related         Normalized^4
                                                Charges and
                                                Payments^2
                                                                
        Free Cash Flow
        Computation^3
        Net cash provided by   $  966.2         356.5           $  1,322.7
        operating activities
        Less: capital and        (386.0  )     122.4             (263.6   )
        software expenditures
        Free Cash Inflow       $  580.2                        $  1,059.1  
        (before 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,
        integration costs, as well as cost containment charges.
                                                                
        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)
                                                                 
                                                                 
                                FOURTH QUARTER 2013
                                                                 
                                                 Merger &
                                Reported         Acquisition-    Normalized^3
                                                 Related
                                                 Charges^1
     SEGMENT PROFIT
                                                                 
     Construction & DIY         $  209.2         $    3.8        $  213.0
     Industrial                    128.7              4.0           132.7
     Security                     64.5             11.6         76.1   
     Segment Profit                402.4              19.4          421.8
     Corporate Overhead           (74.8  )          29.7         (45.1  )
     Total                      $  327.6        $    49.1       $  376.7  
                                                                 
                                                                 
     Segment Profit as a Percentage of Net
     Sales
     Construction & DIY            14.4   %                         14.6   %
     Industrial                    15.6   %                         16.1   %
     Security                     10.3   %                        12.2   %
     Segment Profit                13.8   %                         14.5   %
     Corporate Overhead           (2.6   %)                       (1.6   %)
     Total                        11.3   %                        13.0   %
     
     
     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.
                                FOURTH QUARTER 2012
                                                                 
                                                 Merger &
                                Reported         Acquisition-    Normalized^3
                                                 Related
                                                 Charges^2
     SEGMENT PROFIT
                                                                 
     Construction & DIY         $  188.7         $    10.7       $  199.4
     Industrial                    100.1              4.3           104.4
     Security                     88.3             15.4         103.7  
     Segment Profit                377.1              30.4          407.5
     Corporate Overhead           (67.6  )          19.4         (48.2  )
     Total                      $  309.5        $    49.8       $  359.3  
                                                                 
                                                                 
     Segment Profit as a Percentage of Net
     Sales
     Construction & DIY            13.8   %                         14.5   %
     Industrial                    15.4   %                         16.1   %
     Security                     13.8   %                        16.2   %
     Segment Profit                14.2   %                         15.3   %
     Corporate Overhead           (2.5   %)                       (1.8   %)
     Total                        11.6   %                        13.5   %
     
     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 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 &          $  798.0           $    13.0       $  811.0
     DIY
     Industrial                 436.2                24.8          461.0
     Security                  238.0              38.7         276.7    
     Segment Profit             1,472.2              76.5          1,548.7
     Corporate                 (253.9   )          89.3         (164.6   )
     Overhead
     Total                   $  1,218.3        $    165.8      $  1,384.1  
                                                                
                                                                
     Segment Profit as a Percentage of Net
     Sales
     Construction &             14.6     %                         14.8     %
     DIY
     Industrial                 14.1     %                         14.9     %
     Security                  9.8      %                        11.4     %
     Segment Profit             13.4     %                         14.1     %
     Corporate                 (2.3     %)                       (1.5     %)
     Overhead
     Total                     11.1     %                        12.6     %
                                                                
                                                                
     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 &          $  720.9           $    41.7       $  762.6
     DIY
     Industrial                 414.3                7.9           422.2
     Security                  312.7              41.3         354.0    
     Segment Profit             1,447.9              90.9          1,538.8
     Corporate                 (252.3   )          77.1         (175.2   )
     Overhead
     Total                   $  1,195.6        $    168.0      $  1,363.6  
                                                                
                                                                
     Segment Profit as a Percentage of Net
     Sales
     Construction &             13.9     %                         14.7     %
     DIY
     Industrial                 16.2     %                         16.5     %
     Security                  13.0     %                        14.7     %
     Segment Profit             14.3     %                         15.2     %
     Corporate                 (2.5     %)                       (1.7     %)
     Overhead
     Total                     11.8     %                        13.4     %
                                                                
     Merger and acquisition-related charges relate primarily to the Black &
(2 ) Decker merger and Niscayah acquisition, including facility
     closure-related charges, employee-related charges, 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 charges.

Contact:

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