Stanley Black & Decker Reports 1Q 2014 Results

  Stanley Black & Decker Reports 1Q 2014 Results

Business Wire

NEW BRITAIN, Conn. -- April 24, 2014

Stanley Black & Decker (NYSE: SWK) today announced first quarter 2014
financial results.

  *1Q’14 Revenues Up 7% To $2.6 Billion; Organic Growth Reached 4%
  *Operating Margin Expanded 200 Basis Points; Excluding Charges Operating
    Margin Expanded 30 Basis Points To 12.1%
  *1Q’14 Diluted GAAP EPS Was $1.05; Excluding Charges, 1Q’14 Diluted EPS Was
    $1.07
  *Increasing Low End Of 2014 FY EPS Guidance Range To:

       *$5.23 To $5.38 On A GAAP Basis (From $5.18 to $5.38)
       *$5.35 To $5.50, Excluding Charges (From $5.30 To $5.50)

1Q’14 Key Points:

  *Net sales for the period were $2.6 billion, up 7% versus the prior year,
    attributable to volume (+4%) and acquisitions (+4%), partially offset by
    currency (-1%). Price was relatively flat for the quarter.
  *The gross margin rate for the quarter was 36.4%. Excluding charges the
    gross margin rate was also 36.4%, down from the prior year rate of 37.2%,
    as favorable volume and productivity were more than offset by unfavorable
    currency of $25 million and Security margins.
  *SG&A expenses were 24.5% of sales. Excluding charges, SG&A expenses were
    24.3% of sales, compared to a 1Q’13 level of 25.5%, reflecting the impacts
    of volume and cost actions implemented in 4Q’13 to improve operating
    leverage.

  *Operating margin was 11.8% of sales. Excluding charges, operating margin
    was 12.1% of sales, up 30 basis points from the 1Q’13 operating margin of
    11.8%.
  *The tax rate was 21.9%. Excluding charges, the tax rate was 22.1%, 520
    basis points higher than the 1Q’13 rate which was favorably impacted by
    the acceleration of certain tax credits and the positive impact of U.S.
    tax legislation enacted in January 2013.

  *Working capital turns for the quarter were 5.9, up 0.1 turns from 1Q’13.
    Free cash flow, which was relatively consistent with the prior year, was
    an outflow of $210 million, including $52 million of one-time payments.

Stanley Black & Decker’s Chairman and CEO, John F. Lundgren, commented, “Our
focus throughout 2014 remains on executing our growth plans and capital
allocation actions to enhance profitability and operating leverage while we
drive long-term sustainable improvements to the Company’s cash flow return on
investment.”

“Our performance in the first quarter of 2014 reflected the benefits of the
organic growth investments we made in 2013 and the cost actions we announced
late last year. During the quarter we achieved solid organic growth in our
CDIY and Industrial segments despite a very challenging external environment
impacted by continued emerging markets volatility and to a lesser extent North
America weather. Within Security, we are seeing traction with the actions we
are taking to improve performance and continue to believe that we will see
margin improvement in the second half of 2014.”

1Q’14 Segment Results

($ in M)      1Q' 14 Segment Results
                                                           Profit             Profit       Profit Rate
             Sales     Profit    Charges^1                    Rate     
                                                           Ex-Charges^1                    Ex-Charges^1
                                                                   
CDIY          $1,216    $169.2    $0.4         $169.6          13.9%     13.9%
                                                                   
Industrial    $852      $130.3    $2.2         $132.5          15.3%     15.6%
                                                                   
Security      $573      $49.6     $2.3         $51.9           8.7%      9.1%

^1 M&A charges primarily pertaining to synergy attainment

  *In CDIY, net sales increased 6% versus 1Q’13 as a result of volume (+7%)
    and acquisitions (+1%), partially offset by currency (-2%). Price was down
    1% for the quarter. Solid organic growth was achieved in all regions,
    leveraging our focus on innovation, emerging markets, and brand
    development. Europe posted strong organic growth of 11%, driven by
    continued share gains from successful new product introductions across key
    regions and an expanding retail footprint in certain markets. Emerging
    markets organic growth was up 7% against continued challenging economic
    and political environments with particularly strong growth in Brazil and
    Argentina. Despite some pressure from weather, North American organic
    growth was up 5%, due in part to our recent “Built In The USA” initiative.
    Excluding charges, overall segment profit was 13.9%, lower than the 1Q’13
    rate of 14.7% as expected, given significant currency pressures in Canada
    and the emerging markets amounting to $20 million, and carryover
    investments in organic growth initiatives which offset volume,
    productivity and SG&A cost reductions.
  *Net sales in the Industrial segment rose 16% versus 1Q’13 as a result of
    volume (+5%) and acquisitions (+12%), partially offset by currency (-1%).
    Pricing was relatively flat for the quarter. Engineered Fastening posted
    6% organic growth driven by strong global automotive revenues,
    particularly in Europe and Asia, which resulted in growth at nearly two
    times the rate of light vehicle production. The Infastech integration
    crossed the one-year mark at the end of February and remains on-plan to
    achieve both earnings and cost synergy targets. Organic sales for the
    Industrial and Automotive Repair (IAR) business were up 5% as a result of
    higher volumes in IAR’s European business, and strength within the North
    American Mac Tools mobile distribution and the MRO vending operations. Oil
    & Gas organic growth was up 11% due primarily to North American onshore
    and global offshore operations. Although Oil & Gas organic growth
    continues to be strong, the pace of growth has slowed versus recent
    quarters as expected, and will continue to do so over the next two to
    three quarters due to a temporary lull in major onshore pipeline projects.

Overall Industrial segment profit excluding charges was 15.6%, up 170 basis
points from the 1Q’13 rate of 13.9% reflecting favorable volume, productivity
gains, cost synergies and cost actions, partially offset by currency and
organic growth investments.

  *Net sales in Security decreased 3% versus 1Q’13 due to volume (-5%),
    partially offset by pricing (+1%) and currency (+1%). Organic growth
    within Security’s North America and Emerging Market businesses was down 1%
    as performance of a number of North America-based operations were
    adversely impacted by severe weather conditions, particularly in January
    and February. Security Europe declined 7% organically due primarily to
    lower installation and recurring revenues in various regions, most notably
    Spain and France. Although the organic volume decline in Security Europe
    was greater than expected, orders and backlog continue to build and
    importantly, recurring revenue attrition levels were slightly below 15% in
    the first quarter, reflecting an improvement both sequentially and versus
    the prior year’s first quarter.

Security segment profit rate excluding charges was 9.1%, down 170 basis points
from the 1Q’13 rate of 10.8% and 310 basis points lower than the 4Q’13 rate.
The sequential decline in the rate relates primarily to the seasonality of the
Security segment’s business which historically reports a lower operating
margin in the first quarter of each year. The year over year decline in the
rate is due primarily to installation field inefficiencies and lower volumes
in the Security Europe business, as margins within Security North America were
up 40 basis points versus prior year.

President and Chief Operating Officer, James M. Loree, commented, “Our CDIY
and Industrial businesses continue to demonstrate exceptional performance,
having achieved strong organic growth driven by an improved European
landscape, healthy automotive demand and our organic growth investments which
positioned us for share gain in the quarter. Not only did we achieve
impressive top-line results, but the operating margin performance of these
businesses was also noteworthy as we mitigated $25 million of currency
headwinds with our sharp focus on costs.

“As for Security, we are diligently executing revenue and margin improvement
actions to improve performance within this segment. The North American
improvements are taking hold and, as expected, the business is positioned to
trend towards our long-term margin expectations. The revenue and operating
improvements in Europe mirror the successful business model we have
established in North America, and while we are gaining traction by adopting
the more centralized business model in Europe, reorienting this organization
is not a quick transition. We are encouraged by the order growth and attrition
reduction in the European business, as well as the progress on key process
fixes. We must now translate these accomplishments into improved financial
results and expect to see positive operating margin growth from Security in
the second half of 2014. We have the right team in place and are focused on
the right issues to deliver a turn-around in this business.”

Revising Of 2014 Outlook

Donald Allan Jr., Senior Vice President and CFO commented, “We are raising the
low end of our previously communicated 2014 EPS outlook to $5.35 to $5.50 on
an adjusted basis or $5.23 to $5.38 on a GAAP basis, as we expect stronger
full year results within our Industrial businesses and indirect cost savings
across the Company to more than offset the impact of a slower improvement
trajectory for our Security Europe operation. We also continue to believe that
our 2014 organic growth will be 4%, and that our free cash flow will
approximate $675 million inclusive of approximately $250 million of one-time
payments primarily relating to 2013 restructuring actions. As planned, for the
second quarter we would expect organic growth to modestly decelerate given the
tougher comparables in CDIY and Industrial with EPS for the first half of 2014
approximating 45% of estimated full year earnings consistent with the prior
two years.

“In addition to continuing to drive organic growth and improving Security
margins, enhancing our operating leverage is a key priority for 2014. We
demonstrated this in certain businesses in the first quarter and to ensure we
continue to accomplish this across the Company, we are focused on effectively
executing our cost reduction actions, sharpening our focus on indirect
expenses and taking price to protect margins. We remain committed to our
capital allocation plan which provides for a strong and growing dividend as
well as the return of approximately $1 billion of capital to shareholders
through 2015. These initiatives combined with modest debt deleveraging are
expected to improve capital returns to value accretive levels for our Company
and improve our cash flow return on investment by 250 basis points through
2015.”

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

Total one-time charges in 1Q’14 of $3.9 million (net of a $3.7 million
restructuring credit) primarily relate to integration and employee-related
matters. Gross margin includes $1.1 million of these one-time charges while
SG&A includes $6.3 million. $4.9 million of these costs that impact the
Company’s operating margin are included in segment results, with the remainder
in corporate overhead. Also included in one-time charges are $0.2 million in
Other, net.

The company will host a conference call with investors today, Thursday, April
24, 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) 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
3698-5582. 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 3698-5582#.
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. In 3Q’13, the
Company classified two small businesses within the Security and Industrial
segments as held for sale based on management's intention to sell these
businesses. The business within the Industrial segment was sold in February
2014. The operating results of these businesses have been reported as
discontinued operations for 1Q’14 and 1Q’13. In addition, 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 1Q’13. Total sales reported as
discontinued operations were $7.7 million and $32.9 million for 1Q’14 and
1Q’13, respectively.

The Company recast 2013 segment net sales and profit between the CDIY and
Industrial segments to align reporting with the current management of the
Company’s operations in the emerging markets to be comparable with the current
year presentation. There is no impact to the consolidated financial statements
of the Company as a result of this segment realignment. The recast results for
the quarterly and year-to-date periods of 2013 are shown on page 14.

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 and business segment information, as
reconciled to GAAP on pages 12 and 13 for 2014 and 2013, are considered
relevant to aid analysis of the Company’s operating performance and earnings
results 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 free
cash flow, as reconciled from the associated GAAP measures on page 10 for 2014
and 2013 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
2014 diluted EPS of $5.35 - $5.50 ($5.23 - $5.38 on a GAAP basis), with first
half earnings approximating 45% of estimated full year earnings; (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 billion of capital to shareholders
through 2015 ; and (v) improve our cash flow return on investment by 250 basis
points through 2015 (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 (versus the prior year) in
the second half of 2014; (vii) the Company’s ability to generate 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) successful integration of acquisitions completed in 2012 and 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 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;
(xxiii) the Company’s ability to successfully develop, market and achieve
sales from new products and services; and (xxiv) 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)
                                                                   
                                                                   
                                                   FIRST QUARTER
                                                   2014            2013
                                                                   
NET SALES                                          $ 2,640.8       $ 2,476.5
                                                                   
COSTS AND EXPENSES
Cost of sales                                       1,680.5       1,567.9 
Gross margin                                         960.3           908.6
% of Net Sales                                       36.4    %       36.7    %
                                                                   
Selling, general and administrative                  647.7           664.7
% of Net sales                                       24.5    %       26.8    %
                                                                   
Operating margin                                     312.6           243.9
% of Net sales                                       11.8    %       9.8     %
                                                                   
Other - net                                          61.6            70.8
Restructuring (credits) charges                     (3.7    )      42.9    
Income from operations                               254.7           130.2
                                                                   
Interest - net                                      40.9          36.7    
                                                                   
EARNINGS FROM CONTINUING OPERATIONS BEFORE           213.8           93.5
INCOME TAXES
Income taxes on continuing operations               46.8          8.8     
NET EARNINGS FROM CONTINUING OPERATIONS             167.0         84.7    
                                                                   
Less: net earnings (loss) attributable to           0.2           (0.4    )
non-controlling interests
                                                                   
NET EARNINGS FROM CONTINUING OPERATIONS             166.8         85.1    
ATTRIBUTABLE TO COMMON SHAREOWNERS
                                                                   
NET LOSS FROM DISCONTINUED OPERATIONS               (4.9    )      (4.0    )
                                                                   
NET EARNINGS ATTRIBUTABLE TO COMMON                $ 161.9        $ 81.1    
SHAREOWNERS
                                                                   
                                                                   
BASIC EARNINGS (LOSS) PER SHARE OF COMMON
STOCK
Continuing operations                              $ 1.07          $ 0.55
Discontinued operations                             (0.03   )      (0.03   )
Total basic earnings per share of common           $ 1.04         $ 0.52    
stock
                                                                   
DILUTED EARNINGS (LOSS) PER SHARE OF COMMON
STOCK
Continuing operations                              $ 1.05          $ 0.53
Discontinued operations                             (0.03   )      (0.02   )
Total diluted earnings per share of common         $ 1.02         $ 0.51    
stock
                                                                   
DIVIDENDS PER SHARE                                $ 0.50         $ 0.49    
                                                                   
AVERAGE SHARES OUTSTANDING (in thousands)
Basic                                               155,905       155,552 
Diluted                                             158,951       158,994 
                                                                             

                                                            
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, Millions of Dollars)
                                                                  
                                                   March 29,      December 28,
                                                   2014         2013
                                                                  
ASSETS
Cash and cash equivalents                          $ 432.6        $  496.2
Accounts and notes receivable, net                   1,795.8         1,633.0
Inventories, net                                     1,663.1         1,485.2
Assets held for sale                                 4.6             10.1
Other current assets                                375.1          344.2
Total current assets                                4,271.2        3,968.7
Property, plant and equipment, net                   1,482.4         1,485.3
Goodwill and other intangibles, net                  10,618.9        10,632.9
Other assets                                        460.4          448.2
Total assets                                       $ 16,832.9     $  16,535.1
                                                                  
                                                                  
LIABILITIES AND SHAREOWNERS' EQUITY
Short-term borrowings                              $ 683.5        $  402.6
Accounts payable                                     1,581.8         1,575.9
Accrued expenses                                     1,185.6         1,236.2
Liabilities held for sale                           4.9            6.3
Total current liabilities                           3,455.8        3,221.0
Long-term debt                                       3,831.1         3,799.4
Other long-term liabilities                          2,566.7         2,634.2
Stanley Black & Decker, Inc. shareowners'            6,897.8         6,799.2
equity
Non-controlling interests' equity                   81.5           81.3
Total liabilities and equity                       $ 16,832.9     $  16,535.1
                                                                  

                                                             
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
SUMMARY OF CASH FLOW ACTIVITY
(Unaudited, Millions of Dollars)
                                                                   
                                                    FIRST QUARTER
                                                                   
                                                    2014           2013
OPERATING ACTIVITIES
Net earnings from continuing operations             $ 167.0        $ 84.7
Net loss from discontinued operations                 (4.9   )       (4.0    )
Depreciation and amortization                         110.4          105.8
Changes in working capital^1                          (330.3 )       (195.0  )
Other                                                (94.2  )      (139.0  )
Net cash used in operating activities                 (152.0 )       (147.5  )
                                                                   
                                                                   
INVESTING AND FINANCING ACTIVITIES
Capital and software expenditures                     (57.8  )       (76.6   )
Acquisitions, net of cash acquired                    (3.2   )       (853.9  )
Proceeds from issuances of common stock               13.2           83.2
Net short-term borrowings                             282.3          1,330.5
Cash dividends on common stock                        (80.7  )       (79.1   )
Purchases of common stock for treasury                (19.4  )       (21.1   )
Payment on forward stock purchase contract            -              (350.0  )
Other                                                (46.0  )      (44.0   )
Net cash provided by (used in) investing and          88.4           (11.0   )
financing activities
                                                                   
Decrease in Cash and Cash Equivalents                 (63.6  )       (158.5  )
                                                                   
Cash and Cash Equivalents, Beginning of              496.2        716.0   
Period
                                                                   
Cash and Cash Equivalents, End of Period            $ 432.6       $ 557.5   
                                                                   
                                                                   
Free Cash Flow Computation^2
Operating cash outflow                              $ (152.0 )     $ (147.5  )
Less: capital and software expenditures              (57.8  )      (76.6   )
Free cash outflow (before dividends)                $ (209.8 )     $ (224.1  )
Merger & Acquisition-related charges and             51.8         94.5    
payments^4
Free cash outflow, normalized (before               $ (158.0 )     $ (129.6  )
dividends)^3
                                                                   

^1The change in working capital is comprised of accounts receivable,
inventory, accounts payable and deferred revenue.

^2,3Free 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 borrowing activity, discretionary
dividends on the Company’s common stock and business acquisitions, among other
items. Normalized 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.

^4Merger & Acquisition-related charges and payments relate primarily to the
Black & Decker merger and Niscayah and Infastech acquisitions, including
facility closure-related charges, employee-related charges and integration
costs.

                                                            
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(Unaudited, Millions of Dollars)
                                                                  
                                                                  
                                                 FIRST QUARTER
                                                                  
                                                 2014             2013
NET SALES
Construction & DIY                               $ 1,216.1        $ 1,150.5
Industrial                                         852.0            733.9
Security                                          572.7          592.1   
Total                                            $ 2,640.8       $ 2,476.5 
                                                                  
                                                                  
SEGMENT PROFIT
Construction & DIY                               $ 169.2          $ 166.1
Industrial                                         130.3            89.4
Security                                          49.6           57.4    
Segment Profit                                     349.1            312.9
Corporate Overhead                                (36.5   )       (69.0   )
Total                                            $ 312.6         $ 243.9   
                                                                  
                                                                  
Segment Profit as a Percentage of Net
Sales
Construction & DIY                                 13.9    %        14.4    %
Industrial                                         15.3    %        12.2    %
Security                                          8.7     %       9.7     %
Segment Profit                                     13.2    %        12.6    %
Corporate Overhead                                (1.4    %)      (2.8    %)
Total                                             11.8    %       9.8     %
                                                                  

                                                          
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)
                                                                  
                                   FIRST QUARTER 2014
                                                 Merger &
                                                 Acquisition-
                                                 Related
                                   Reported      Charges^1       Normalized^2
                                                                  
Gross margin                       $ 960.3       $   1.1          $  961.4
% of Net Sales                       36.4  %                         36.4   %
                                                                  
Selling, general and                 647.7           (6.3  )         641.4
administrative
% of Net Sales                       24.5  %                         24.3   %
                                                                  
Operating margin                     312.6           7.4             320.0
% of Net Sales                       11.8  %                         12.1   %
                                                                  
Earnings from continuing
operations before income             213.8           3.9             217.7
taxes
                                                                  
Income taxes on continuing           46.8            1.4             48.2
operations
                                                                  
Net earnings from continuing         166.8           2.5             169.3
operations
                                                                  
Diluted earnings per share         $ 1.05        $   0.02         $  1.07
of common stock
                                                                  

^1Merger and acquisition-related charges relate primarily to the Niscayah and
Infastech acquisitions, including employee-related charges and integration
costs.

                                                          
                                  FIRST QUARTER 2013
                                                 Merger &
                                                 Acquisition-
                                                 Related
                                   Reported      Charges^1       Normalized^2
                                                                  
Gross margin                       $ 908.6       $  13.3          $  921.9
% of Net Sales                       36.7  %                         37.2   %
                                                                  
Selling, general and                 664.7          (34.3  )         630.4
administrative
% of Net Sales                       26.8  %                         25.5   %
                                                                  
Operating margin                     243.9          47.6             291.5
% of Net Sales                       9.8   %                         11.8   %
                                                                  
Earnings from continuing
operations before income             93.5           106.1            199.6
taxes
                                                                  
Income taxes on continuing           8.8            25.0             33.8
operations
                                                                  
Net earnings from continuing         85.1           81.1             166.2
operations
                                                                  
Diluted earnings per share         $ 0.53        $  0.51          $  1.04
of common stock
                                                                  

^1Merger and acquisition-related charges relate primarily to the Black &
Decker merger and Niscayah and Infastech acquisitions, including facility
closure-related charges, employee-related charges and integration costs.

^2The normalized 2014 and 2013 information, as reconciled to GAAP above, is
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)
                                                                  
                                  FIRST QUARTER 2014
                                                 Merger &
                                                 Acquisition-
                                                 Related
                                  Reported       Charges^1        Normalized^3
SEGMENT PROFIT
                                                                  
Construction & DIY                $ 169.2        $     0.4        $  169.6
Industrial                          130.3              2.2           132.5
Security                           49.6             2.3          51.9   
Segment Profit                      349.1              4.9           354.0
Corporate Overhead                 (36.5 )           2.5          (34.0  )
Total                             $ 312.6       $     7.4        $  320.0  
                                                                  
                                                                  
Segment Profit as a
Percentage of Net Sales
Construction & DIY                  13.9  %                          13.9   %
Industrial                          15.3  %                          15.6   %
Security                           8.7   %                         9.1    %
Segment Profit                      13.2  %                          13.4   %
Corporate Overhead                 (1.4  %)                        (1.3   %)
Total                              11.8  %                         12.1   %
                                                                  

^1Merger and acquisition-related charges relate primarily to the Niscayah and
Infastech acquisitions, including employee-related charges and integration
costs.

                                                          
                                  FIRST QUARTER 2013
                                                 Merger &
                                                 Acquisition-
                                                 Related
                                  Reported       Charges^2        Normalized^3
SEGMENT PROFIT
                                                                  
Construction & DIY                $ 166.1        $     3.3        $  169.4
Industrial                          89.4               12.4          101.8
Security                           57.4             6.4          63.8   
Segment Profit                      312.9              22.1          335.0
Corporate Overhead                 (69.0 )           25.5         (43.5  )
Total                             $ 243.9       $     47.6       $  291.5  
                                                                  
                                                                  
Segment Profit as a
Percentage of Net Sales
Construction & DIY                  14.4  %                          14.7   %
Industrial                          12.2  %                          13.9   %
Security                           9.7   %                         10.8   %
Segment Profit                      12.6  %                          13.5   %
Corporate Overhead                 (2.8  %)                        (1.8   %)
Total                              9.8   %                         11.8   %
                                                                  

^2Merger and acquisition-related charges relate primarily to the Black &
Decker merger and Niscayah and Infastech acquisitions, including facility
closure-related charges, employee-related charges and integration costs.

^3The normalized 2014 and 2013 business segment information, as reconciled 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, AS ADJUSTED, TO CORRESPONDING
NON-GAAP FINANCIAL MEASURES, AS ADJUSTED
(Unaudited, Millions of Dollars)
                                                                                                                                                                                                                                              
                                                                                                                                                                                                                                              
                   FIRST QUARTER 2013                             SECOND QUARTER 2013                            THIRD QUARTER 2013                             FOURTH QUARTER 2013                            YEAR TO DATE 2013
                                                                                                                                                                                                                                              
                                  Merger &                                       Merger &                                       Merger &                                       Merger &                                        Merger &
                                  Acquisition-                                   Acquisition-                                   Acquisition-                                   Acquisition-                                    Acquisition-
                                  Related                                        Related                                        Related                                        Related                                         Related
                   GAAP^1         Charges^2      Normalized^3     GAAP^1         Charges^2      Normalized^3     GAAP^1         Charges^2      Normalized^3     GAAP^1         Charges^2      Normalized^3     GAAP^1          Charges^2      Normalized^3
                                                                                                                                                                                                                                              
NET SALES
                                                                                                                                                                                                                                              
Construction       $ 1,150.5      $     -        $ 1,150.5        $ 1,394.0      $     -        $ 1,394.0        $ 1,333.0      $     -        $ 1,333.0        $ 1,398.5      $     -        $ 1,398.5        $ 5,276.0       $    -         $ 5,276.0
& DIY
Industrial           733.9              -          733.9            861.5              -          861.5            825.9              -          825.9            881.3              -          881.3            3,302.6            -           3,302.6
Security            592.1            -         592.1          603.9            -         603.9          600.4            -         600.4          626.2            -         626.2          2,422.6          -          2,422.6  
Total              $ 2,476.5      $     -        $ 2,476.5        $ 2,859.4      $     -        $ 2,859.4        $ 2,759.3      $     -        $ 2,759.3        $ 2,906.0      $     -        $ 2,906.0        $ 11,001.2      $    -         $ 11,001.2
                                                                                                                                                                                                                                              
SEGMENT
PROFIT
                                                                                                                                                                                                                                              
Construction       $ 166.1        $     3.3      $ 169.4          $ 210.1        $     2.8      $ 212.9          $ 198.5        $     3.1      $ 201.6          $ 202.8        $     3.8      $ 206.6          $ 777.5         $    13.0      $ 790.5
& DIY
Industrial           89.4               12.4       101.8            117.6              6.1        123.7            114.6              2.3        116.9            135.1              4.0        139.1            456.7              24.8        481.5
Security            57.4             6.4       63.8           54.7             8.8       63.5           61.4             11.9      73.3           64.5             11.6      76.1           238.0            38.7       276.7    
Segment            $ 312.9        $     22.1     $ 335.0          $ 382.4        $     17.7     $ 400.1          $ 374.5        $     17.3     $ 391.8          $ 402.4        $     19.4     $ 421.8          $ 1,472.2       $    76.5      $ 1,548.7
Profit
Corporate           (69.0   )         25.5      (43.5   )       (53.7   )         14.2      (39.5   )       (56.4   )         19.9      (36.5   )       (74.8   )         29.7      (45.1   )       (253.9   )        89.3       (164.6   )
Overhead
Total              $ 243.9        $     47.6     $ 291.5          $ 328.7        $     31.9     $ 360.6          $ 318.1        $     37.2     $ 355.3          $ 327.6        $     49.1     $ 376.7          $ 1,218.3       $    165.8     $ 1,384.1
                                                                                                                                                                                                                                              
Segment Profit as a Percentage of Net Sales
Construction         14.4    %                     14.7    %        15.1    %                     15.3    %        14.9    %                     15.1    %        14.5    %                     14.8    %        14.7     %                     15.0     %
& DIY
Industrial           12.2    %                     13.9    %        13.7    %                     14.4    %        13.9    %                     14.2    %        15.3    %                     15.8    %        13.8     %                     14.6     %
Security            9.7     %                    10.8    %       9.1     %                    10.5    %       10.2    %                    12.2    %       10.3    %                    12.2    %       9.8      %                    11.4     %
Segment              12.6    %                     13.5    %        13.4    %                     14.0    %        13.6    %                     14.2    %        13.8    %                     14.5    %        13.4     %                     14.1     %
Profit
Corporate           (2.8    %)                   (1.8    %)      (1.9    %)                   (1.4    %)      (2.0    %)                   (1.3    %)      (2.6    %)                   (1.6    %)      (2.3     %)                   (1.5     %)
Overhead
Total               9.8     %                    11.8    %       11.5    %                    12.6    %       11.5    %                    12.9    %       11.3    %                    13.0    %       11.1     %                    12.6     %
                                                                                                                                                                                                                                              

^1Reported, as adjusted for the recast of segment net sales and profit between
the Construction and Do-it Yourself (“CDIY”) and Industrial segments to align
reporting with the current management of the Company's operations in the
emerging markets to be more comparable with the current year presentation.
There is no impact to the consolidated financial statements of the Company as
a result of this segment realignment.

^2Merger and acquisition-related charges, as reported, relate primarily to the
Black & Decker merger and Niscayah and Infastech acquisitions, including
facility closure-related charges, employee-related charges and integration
costs.

^3The normalized 2013 business segment information adjusted for the previously
mentioned realignment of certain segment net sales and segment profit from the
CDIY segment to the Industrial segment, as reconciled to GAAP as adjusted
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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