Stanley Black & Decker Reports 2Q 2014 Results

  Stanley Black & Decker Reports 2Q 2014 Results

Business Wire

NEW BRITAIN, Conn. -- July 25, 2014

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

  *2Q’14 Revenues Up 1% To $2.9 Billion
  *Gross Margin Expanded 130 Basis Points; Excluding Charges Gross Margin
    Expanded 100 Basis Points To 36.5%
  *Operating Margin Expanded 200 Basis Points To 13.5%; Excluding Charges
    Operating Margin Expanded 110 Basis Points To 13.7%
  *2Q’14 Diluted GAAP EPS Was $1.37; Excluding Charges, 2Q’14 Diluted EPS Was
    $1.43
  *Increasing 2014 FY EPS Guidance Range To:

       *$5.38 To $5.48 On A GAAP Basis (From $5.23 To $5.38)
       *$5.50 To $5.60, Excluding Charges (From $5.35 To $5.50)

2Q’14 Key Points:

  *Net sales for the period were $2.9 billion, up 1% versus the prior year,
    primarily attributable to price (+1%) as volume, acquisitions and currency
    were all relatively flat for the quarter. Organic growth was negatively
    impacted by unusually weak emerging markets due to economic and political
    circumstances as well as a delayed and shortened CDIY North American
    outdoor product season. These factors muted organic growth by two points.
  *The gross margin rate for the quarter was 36.5%. Excluding charges the
    gross margin rate was also 36.5%, up 100 basis points from the prior year
    rate of 35.5%, as price, productivity and cost actions more than offset
    significant unfavorable currency.
  *SG&A expenses were 23.0% of sales. Excluding charges, SG&A expenses were
    22.8% of sales, compared to a 2Q’13 level of 22.9%.

  *Operating margin rate was 13.5%. Excluding charges, operating margin rate
    was 13.7%, up 110 basis points from 2Q’13, as actions taken in 4Q’13 to
    improve profitability and generate operating leverage more than offset
    unfavorable currency of $20 million which was in line with expectations.
  *The tax rate was 25.1%. Excluding charges, the tax rate was 23.0%, 170
    basis points lower than the 2Q’13 rate of 24.7% due primarily to a higher
    level of earnings in lower-taxed foreign jurisdictions.
  *Working capital turns for the quarter were 6.7, down 0.4 turns from 2Q’13.
    Free cash flow for the quarter inclusive of $35 million of one-time
    payments was $376 million, a $272 million increase over 2Q’13.

Stanley Black & Decker’s Chairman and CEO, John F. Lundgren, commented, “Our
focus is on executing our 2014 operating priorities and our strong second
quarter and first half results demonstrate the benefits of initiatives to
drive margin expansion and operating leverage through pricing and cost
management across the organization. What makes the results even more notable
is that we overcame significant headwinds relating to currency, the impact of
cold weather on our North American CDIY outdoor product business and a
continued volatile environment in the emerging markets. Given our encouraging
performance thus far, and our visibility into the remainder of the year, we
have the confidence to increase our EPS guidance for 2014.

“Our focus for the balance of 2014 remains on continuing to deliver improved
operating performance including both organic growth and margin expansion as
well as achieving our previously communicated capital allocation objectives.
This will position us well to drive long-term sustainable improvements to the
Company’s cash flow return on investment.”

2Q’14 Segment Results

            
($ in M)     2Q' 14 Segment Results
                                                   Profit           Profit     Profit Rate
            Sales    Profit   Charges^1                  Rate    
                                                   Ex-Charges^1                Ex-Charges^1
                                                             
CDIY         $1,395   $218.2   $0.2        $218.4         15.6%    15.7%
                                                             
Industrial   $889     $150.3   $1.2        $151.5         16.9%    17.0%
                                                             
Security     $602     $67.0    $1.2        $68.2          11.1%    11.3%
                                                                    

^1 See Merger And Acquisition (M&A) One-Time Charges On Page 5

  *In CDIY, net sales were flat versus 2Q’13 as the aggregate impact of
    volume, price and acquisitions (+1%) was offset by currency (-1%). Organic
    growth for the quarter was up slightly as growth in Europe offset a slow
    start to the North American outdoor product season caused by abnormally
    cold weather conditions. Europe was up 7% organically for the quarter,
    driven by continued share gains from successful new product introductions
    across key regions and the benefits of an expanding retail footprint.
    Emerging markets organic growth was up 1%, impacted by economic and
    political factors in markets including but not limited to Venezuela,
    Russia, Turkey and Brazil. Organic growth in North America was down 2% due
    to the outdoor product business offsetting continuing solid momentum in
    other categories. Excluding charges, overall segment profit rate was a
    post-merger record 15.7%, up from the 2Q’13 rate of 15.3%, as price,
    productivity and cost management more than offset continuing currency
    pressures.
  *Net sales in the Industrial segment rose 3% versus 2Q’13 as a result of
    volume (+2%) and acquisitions (+1%). Pricing was up slightly and currency
    was relatively flat for the quarter. Engineered Fastening posted 2%
    organic growth driven by strong global automotive revenues partially
    offset by weaker electronic volume. Organic sales for the Industrial and
    Automotive Repair (“IAR”) business were up 2% primarily as a result of new
    product introductions and strength within Mac Tools industrial
    distribution and Advanced Industrial Solutions, partially offset by weak
    emerging markets. Infrastructure organic growth was up 5% due to solid Oil
    & Gas activity coupled with improving demand for hydraulic tools.
  *Overall Industrial segment profit rate excluding charges was 17.0%, up 260
    basis points from the 2Q’13 rate of 14.4% reflecting favorable volume
    leverage, productivity gains, and cost control, partially offset by
    currency. Infastech remains on-plan to achieve both earnings and cost
    synergy targets, which helped drive record operating margin in Engineered
    Fastening for the quarter.
  *Net sales in Security were relatively flat versus 2Q’13 as lower volume
    (-2%) was offset by pricing (+1%) and currency (+1%). Organic growth
    within North America and emerging markets (“NA & EM”) increased 2% due
    primarily to performance within the commercial electronics and automatic
    doors businesses. Europe declined 6% organically due to lower installation
    and recurring revenues most notably in Southern Europe. Within Europe,
    recurring revenue attrition levels continued to show steady improvement as
    attrition fell within our targeted range of 10%-12%, reflecting a
    significant improvement both sequentially and versus the prior year’s
    second quarter.

Security segment profit rate excluding charges was 11.3%, up 80 basis points
from the 2Q’13 rate of 10.5% and 220 basis points higher than the 1Q’14 rate.
The year over year increase in the rate relates primarily to improved
operating performance within North America. The sequential increase in the
rate relates to increased volume and improved operating performance across NA
& EM and Europe, which were up 180 and 240 basis points, respectively.

President and Chief Operating Officer, James M. Loree, commented, “We posted a
respectable quarter with strong cash flow and margin expansion amidst
unusually challenging economic and geopolitical conditions especially in the
emerging markets. While this year’s truncated outdoor product season also took
its toll on CDIY’s second quarter growth, the second half organic growth
outlook remains robust which will undoubtedly drive operating leverage given
our well tuned cost structure. Our Industrial results were again strong as all
key businesses delivered sales and margin growth. As we look to the emerging
markets we believe we are positioned to generate above market growth for the
remainder of the year and into 2015, leveraging recent investments in the
regions as well as our mid-price point product launches which are currently
underway.

“As for Security, we are now beginning to see the margin improvement actions
translate into financial results which contributed to the sequential
improvement in operating margin versus the first quarter. Europe’s performance
in the quarter combined with continued favorable momentum in North America
gives us further confidence in our ability to drive year over year operating
margin growth from Security in the second half of 2014.”

Increasing 2014 Outlook

Donald Allan Jr., Senior Vice President and CFO commented, “We are raising the
range of our previously communicated 2014 EPS outlook to $5.50 to $5.60 on an
adjusted basis or $5.38 to $5.48 on a GAAP basis. We anticipate a stronger
full year financial performance within certain of our businesses, most notably
the Industrial segment, and further Company-wide cost savings to more than
offset slightly lower full year organic sales growth due to the weather impact
on the CDIY outdoor product season and slower underlying emerging markets
growth. This revised guidance is consistent with our EPS profile in recent
years whereby approximately 45% of annual EPS typically falls within the first
half of the year. We have strong conviction that our 2014 free cash flow will
be at least $675 million inclusive of approximately $250 million of one-time
payments primarily relating to 2013 restructuring actions.

“Enhancing our operating leverage, continuing to drive organic growth and
improving Security margins, particularly within Europe, remain our key
operational priorities for this year. To ensure we continue to accomplish
these important objectives, we are steadfastly focused on supporting our
organic growth initiatives, executing our cost reduction actions, maintaining
a sharp focus on indirect expenses and improving price where practicable to
protect margins. We also remain committed to our capital allocation plan of
returning up to $1 billion of capital to shareholders through 2015 as well as
a strong and growing dividend. Taken together, these actions along with modest
debt deleveraging are expected to increase 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 2Q’14 of $4.1 million (net of a $1.7 million
restructuring credit) primarily relate to integration and employee-related
matters. Gross margin includes $0.3 million of these one-time charges while
SG&A includes $5.3 million. $2.6 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, Friday, July 25,
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
3758-1285. 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 3758-1285#.
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 the business within the Industrial segment,
including the loss on sale, have been reported as discontinued operations for
2Q’13, while the operating results of the business within the Security segment
have been reported as discontinued operations for 2Q’14 and 2Q’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 2013
through the date of the sale. Total sales reported as discontinued operations
were $8.0 million and $13.1 million for 2Q’14 and 2Q’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.

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 to 15 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 is considered a meaningful pro forma metric 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 $5.50 - $5.60 ($5.38 - $5.48 on a GAAP basis); (ii)
generate at least $675 million of free cash flow for 2014 which includes
approximately $250 million of one-time payments; (iii) return up to $1 billion
of capital to shareholders through 2015; and (iv) 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 3-4% 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% in 2014; (v) the Company’s ability to improve margins in the
Security business (versus the prior year) in the second half of 2014; (vi) the
Company’s ability to generate EPS accretion in 2014 through cost reductions in
its CDIY and Industrial segments and its corporate functions; (vii) the
Company’s ability to limit one-time charges primarily associated with the
Infastech acquisition to $25 million in 2014; (viii) successful integration of
acquisitions completed in 2012 and 2013, and any additional acquisitions
completed during the year, as well as integration of existing businesses; (ix)
the continued acceptance of technologies used in the Company’s products and
services; (x) the Company’s ability to manage existing Sonitrol franchisee and
Mac Tools relationships; (xi) 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; (xii) the
proceeds realized with respect to any business or product line disposals;
(xiii) the extent of any asset impairments with respect to any businesses or
product lines that are sold or discontinued; (xiv) the success of the
Company’s efforts to manage freight costs, steel and other commodity costs as
well as capital expenditures; (xv) 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; (xvi) the Company’s ability to generate free cash
flow and maintain a strong debt to capital ratio; (xvii) the Company’s ability
to identify and effectively execute productivity improvements and cost
reductions, while minimizing any associated restructuring charges; (xviii) the
Company’s ability to obtain favorable settlement of tax audits; (xix) the
ability of the Company to generate earnings sufficient to realize future
income tax benefits during periods when temporary differences become
deductible; (xx) the continued ability of the Company to access credit markets
under satisfactory terms; (xxi) the Company’s ability to negotiate
satisfactory payment terms under which the Company buys and sells goods,
services, materials and products; (xxii) the Company’s ability to successfully
develop, market and achieve sales from new products and services; and (xxiii)
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)
                                                                                  
                                                                                  
                            SECOND QUARTER                      YEAR TO DATE
                             2014            2013            2014            2013    
                                                                                  
  NET SALES                 $ 2,885.5         $ 2,858.2         $ 5,525.0         $ 5,333.4
                                                                                  
  COSTS AND
  EXPENSES
    Cost of sales            1,832.2         1,852.5         3,511.5         3,419.2 
    Gross margin              1,053.3           1,005.7           2,013.5           1,914.2
    % of Net Sales            36.5    %         35.2    %         36.4    %         35.9    %
                                                                                  
    Selling,
    general and               662.9             677.2             1,310.6           1,341.9
    administrative
    % of Net Sales            23.0    %         23.7    %         23.7    %         25.2    %
                                                                                  
    Operating                 390.4             328.5             702.9             572.3
    margin
    % of Net Sales            13.5    %         11.5    %         12.7    %         10.7    %
                                                                                  
    Other - net               58.7              71.4              120.2             142.3
    Restructuring
    (credits)                (1.7    )        (30.9   )        (5.4    )        12.0    
    charges
    Income from               333.4             288.0             588.1             418.0
    operations
                                                                                  
    Interest - net           40.3            36.3            81.2            73.0    
                                                                                  
  EARNINGS FROM
  CONTINUING                  293.1             251.7             506.9             345.0
  OPERATIONS BEFORE
  INCOME TAXES
    Income taxes on
    continuing               73.7            54.4            120.5           63.1    
    operations
  NET EARNINGS FROM
  CONTINUING                 219.4           197.3           386.4           281.9   
  OPERATIONS
                                                                                  
    Less: net
    earnings (loss)
    attributable to          0.9             (0.3    )        1.1             (0.7    )
    non-controlling
    interests
                                                                                  
  NET EARNINGS FROM
  CONTINUING
  OPERATIONS
  ATTRIBUTABLE
    TO COMMON                218.5           197.6           385.3           282.6   
    SHAREOWNERS
                                                                                  
  NET LOSS FROM
  DISCONTINUED               (2.0    )        (10.5   )        (6.9    )        (14.4   )
  OPERATIONS
                                                                                  
  NET EARNINGS
  ATTRIBUTABLE TO           $ 216.5          $ 187.1          $ 378.4          $ 268.2   
  COMMON
  SHAREOWNERS
                                                                                  
                                                                                  
  BASIC EARNINGS
  (LOSS) PER SHARE
  OF COMMON STOCK
    Continuing              $ 1.40            $ 1.27            $ 2.47            $ 1.82
    operations
    Discontinued             (0.01   )        (0.07   )        (0.04   )        (0.09   )
    operations
    Total basic
    earnings per            $ 1.38           $ 1.21           $ 2.42           $ 1.73    
    share of common
    stock
                                                                                  
  DILUTED EARNINGS
  (LOSS) PER SHARE
  OF COMMON STOCK
    Continuing              $ 1.37            $ 1.25            $ 2.42            $ 1.78
    operations
    Discontinued             (0.01   )        (0.07   )        (0.04   )        (0.09   )
    operations
    Total diluted
    earnings per            $ 1.36           $ 1.18           $ 2.37           $ 1.69    
    share of common
    stock
                                                                                  
  DIVIDENDS PER             $ 0.50           $ 0.49           $ 1.00           $ 0.98    
  SHARE
                                                                                  
  AVERAGE SHARES
  OUTSTANDING (in
  thousands)
    Basic                    156,316         155,064         156,097         155,137 
    Diluted                  159,666         158,351         159,354         158,483 
                                                                                            

                                                        
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, Millions of Dollars)
                                                                  
                                               June 28,           December 28,
                                               2014           2013
                                                                  
ASSETS
  Cash and cash equivalents                    $ 515.7            $  496.2
  Accounts and notes receivable, net             1,788.8             1,633.0
  Inventories, net                               1,721.7             1,485.2
  Assets held for sale                           5.0                 10.1
  Other current assets                          369.4              344.2
  Total current assets                          4,400.6            3,968.7
  Property, plant and equipment, net             1,483.7             1,485.3
  Goodwill and other intangibles, net            10,589.6            10,632.9
  Other assets                                  484.9              448.2
  Total assets                                 $ 16,958.8         $  16,535.1
                                                                  
                                                                  
LIABILITIES AND SHAREOWNERS' EQUITY
  Short-term borrowings                        $ 484.0            $  402.6
  Accounts payable                               1,701.2             1,575.9
  Accrued expenses                               1,196.9             1,236.2
  Liabilities held for sale                     4.9                6.3
  Total current liabilities                     3,387.0            3,221.0
  Long-term debt                                 3,849.3             3,799.4
  Other long-term liabilities                    2,585.2             2,634.2
  Stanley Black & Decker, Inc.                   7,054.9             6,799.2
  shareowners' equity
  Non-controlling interests' equity             82.4               81.3
  Total liabilities and equity                 $ 16,958.8         $  16,535.1
                                                                     

                                                                 
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
SUMMARY OF CASH FLOW ACTIVITY
(Unaudited, Millions of Dollars)
                                                                                 
                              SECOND QUARTER                    YEAR TO DATE
                                                                                 
                               2014           2013           2014           2013    
  OPERATING
  ACTIVITIES
     Net earnings
     from continuing          $ 219.4          $ 197.3          $ 386.4          $ 281.9
     operations
     Net loss from
     discontinued               (2.0   )         (10.5  )         (6.9   )         (14.4   )
     operations
     Depreciation and           114.4            108.1            224.8            213.9
     amortization
     Changes in
     working                    55.9             67.6             (274.4 )         (127.4  )
     capital^1
     Other                     49.5           (178.3 )        (44.7  )        (317.3  )
     Net cash
     provided by                437.2            184.2            285.2            36.7
     operating
     activities
                                                                                 
                                                                                 
  INVESTING AND
  FINANCING
  ACTIVITIES
     Capital and
     software                   (61.4  )         (80.0  )         (119.2 )         (156.6  )
     expenditures
     Proceeds from
     sale of business           1.0              94.5             7.0              95.5
     / assets
     Acquisitions,
     net of cash                -                (56.0  )         (3.2   )         (909.9  )
     acquired
     Proceeds from
     issuances of               14.4             23.2             27.6             106.4
     common stock
     Net short-term
     (repayments)               (199.7 )         (60.1  )         82.6             1,270.4
     borrowings
     Cash dividends             (78.4  )         (78.4  )         (159.1 )         (157.5  )
     on common stock
     Purchases of
     common stock for           -                (3.7   )         (19.4  )         (24.8   )
     treasury
     Payment on
     forward share              -                -                -                (350.0  )
     purchase
     contract
     Other                     (30.0  )        (19.5  )        (82.0  )        (64.5   )
     Net cash used in
     investing and              (354.1 )         (180.0 )         (265.7 )         (191.0  )
     financing
     activities
                                                                                 
  Increase (Decrease)
  in Cash and Cash              83.1             4.2              19.5             (154.3  )
  Equivalents
                                                                                 
  Cash and Cash
  Equivalents,                 432.6          557.5          496.2          716.0   
  Beginning of Period
                                                                                 
  Cash and Cash
  Equivalents, End of         $ 515.7         $ 561.7         $ 515.7         $ 561.7   
  Period
                                                                                 
                                                                                 
  Free Cash Flow
  Computation^2
  Operating cash              $ 437.2          $ 184.2          $ 285.2          $ 36.7
  inflow
  Less: capital and
  software                     (61.4  )        (80.0  )        (119.2 )        (156.6  )
  expenditures
  Free cash inflow
  (outflow) (before           $ 375.8          $ 104.2          $ 166.0          $ (119.9  )
  dividends)
  Merger &
  Acquisition-related          34.8           122.1          86.6           216.6   
  charges and
  payments^4
  Free cash inflow,
  normalized (before          $ 410.6         $ 226.3         $ 252.6         $ 96.7    
  dividends)^3

^1     The change in working capital is comprised of accounts receivable,
         inventory, accounts payable and deferred revenue.
         
         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
^2,3     borrowing activity, discretionary dividends on the Company’s common
         stock and business acquisitions, among other items. Normalized free
         cash flow, as reconciled above, is considered a meaningful pro forma
         metric to aid the understanding of the Company's cash flow
         performance aside from the material impact of merger and
         acquisition-related activities.
         
         Merger & Acquisition-related charges and payments relate primarily to
^4       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)
                                                                                  
                                                                                  
                         SECOND QUARTER                        YEAR TO DATE
                                                                                  
                          2014             2013             2014             2013    
                                                                                  
  NET SALES
    Construction         $ 1,394.6          $ 1,392.8          $ 2,609.4          $ 2,542.0
    & DIY
    Industrial             889.2              861.5              1,741.2            1,595.4
    Security              601.7            603.9            1,174.4          1,196.0 
    Total                $ 2,885.5         $ 2,858.2         $ 5,525.0         $ 5,333.4 
                                                                                  
                                                                                  
  SEGMENT PROFIT
    Construction         $ 218.2            $ 209.9            $ 387.3            $ 375.9
    & DIY
    Industrial             150.3              117.6              280.6              207.0
    Security              67.0             54.7             116.6            112.1   
    Segment                435.5              382.2              784.5              695.0
    Profit
    Corporate             (45.1   )         (53.7   )         (81.6   )         (122.7  )
    Overhead
    Total                $ 390.4           $ 328.5           $ 702.9           $ 572.3   
                                                                                  
                                                                                  
  Segment Profit
  as a
  Percentage of
  Net Sales
    Construction           15.6    %          15.1    %          14.8    %          14.8    %
    & DIY
    Industrial             16.9    %          13.7    %          16.1    %          13.0    %
    Security              11.1    %         9.1     %         9.9     %         9.4     %
    Segment                15.1    %          13.4    %          14.2    %          13.0    %
    Profit
    Corporate             (1.6    %)        (1.9    %)        (1.5    %)        (2.3    %)
    Overhead
    Total                 13.5    %         11.5    %         12.7    %         10.7    %
                                                                                            

                                                        
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP EARNINGS FINANCIAL MEASURES TO CORRESPONDING
NON-GAAP FINANCIAL MEASURES
(Unaudited, Millions of Dollars Except Per Share Amounts)
                                                                     
                                SECOND QUARTER 2014
                                                  Merger &
                                Reported          Acquisition-       Normalized^3
                                                  Related
                                                  Charges^1
                                                                     
       Gross margin             $ 1,053.3         $  0.3             $  1,053.6
       % of Net Sales             36.5    %                             36.5    %
                                                                     
       Selling,
       general and                662.9              (5.3   )        $  657.6
       administrative
       % of Net Sales             23.0    %                             22.8    %
                                                                     
       Operating                  390.4              5.6                396.0
       margin
       % of Net Sales             13.5    %                             13.7    %
                                                                     
       Earnings from
       continuing
       operations                 293.1              4.1                297.2
       before income
       taxes
                                                                     
       Income taxes
       on continuing              73.7               (5.3   )           68.4
       operations
                                                                     
       Net earnings
       from                       218.5              9.4                227.9
       continuing
       operations
                                                                     
       Diluted
       earnings per             $ 1.37            $  0.06            $  1.43
       share of
       common stock
                                                                     
                                                                     
^(1)  Merger and acquisition-related charges relate primarily to integration and
       employee-related matters.
                                                                     
                                SECOND QUARTER 2013
                                                  Merger &
                                                  Acquisition-
                                Reported          Related and        Normalized^3
                                                  Other
                                                  Charges^2
                                                                     
       Gross margin             $ 1,005.7         $  7.9             $  1,013.6
       % of Net Sales             35.2    %                             35.5    %
                                                                     
       Selling,
       general and                677.2              (24.0  )           653.2
       administrative
       % of Net Sales             23.7    %                             22.9    %
                                                                     
       Operating                  328.5              31.9               360.4
       margin
       % of Net Sales             11.5    %                             12.6    %
                                                                     
       Earnings from
       continuing
       operations                 251.7              5.3                257.0
       before income
       taxes
                                                                     
       Income taxes
       on continuing              54.4               9.1                63.5
       operations
                                                                     
       Net earnings
       from                       197.6              (3.8   )           193.8
       continuing
       operations
                                                                     
       Diluted
       earnings per             $ 1.25            $  (0.03  )        $  1.22
       share of
       common stock
      

   Merger and acquisition-related and other charges relate primarily to the
   Black & Decker merger and Niscayah and Infastech acquisitions, including
^2 facility closure-related charges, employee-related charges and integration
   costs, as well as a restructuring reversal due to the termination of a
   previously approved restructuring action.
   The normalized 2014 and 2013 information, as reconciled to GAAP above, is
^3 considered relevant to aid analysis of the Company’s margin and earnings
   results aside from the material impact of the merger & acquisition-related
   and other charges.

                                                           
                                                                      
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP EARNINGS FINANCIAL MEASURES TO CORRESPONDING
NON-GAAP FINANCIAL MEASURES
(Unaudited, Millions of Dollars Except Per Share Amounts)
                                                                      
                                 YEAR TO DATE 2014
                                                   Merger &
                                 Reported          Acquisition-      Normalized^3
                                                   Related
                                                   Charges^1
                                                                      
       Gross margin              $ 2,013.5         $  1.4             $  2,014.9
       % of Net Sales              36.4    %                             36.5    %
                                                                      
       Selling, general            1,310.6            (11.6  )           1,299.0
       and administrative
       % of Net Sales              23.7    %                             23.5    %
                                                                      
       Operating margin            702.9              13.0               715.9
       % of Net Sales              12.7    %                             13.0    %
                                                                      
       Earnings from
       continuing                  506.9              8.0                514.9
       operations before
       income taxes
                                                                      
       Income taxes on
       continuing                  120.5              (3.9   )           116.6
       operations
                                                                      
       Net earnings from
       continuing                  385.3              11.9               397.2
       operations
                                                                      
       Diluted earnings
       per share of common       $ 2.42            $  0.07            $  2.49
       stock
                                                                      
                                                                      
       Merger and
       acquisition-related
       charges relate
^(1)  primarily to
       integration and
       employee-related
       matters.
                                                                      
                                 YEAR TO DATE 2013
                                                   Merger &
                                                   Acquisition-
                                 Reported          Related and       Normalized^3
                                                   Other
                                                   Charges^2
                                                                      
       Gross margin              $ 1,914.2         $  21.2            $  1,935.4
       % of Net Sales              35.9    %                             36.3    %
                                                                      
       Selling, general            1,341.9            (58.3  )           1,283.6
       and administrative
       % of Net Sales              25.2    %                             24.1    %
                                                                      
       Operating margin            572.3              79.5               651.8
       % of Net Sales              10.7    %                             12.2    %
                                                                      
       Earnings from
       continuing                  345.0              111.4              456.4
       operations before
       income taxes
                                                                      
       Income taxes on
       continuing                  63.1               34.1               97.2
       operations
                                                                      
       Net earnings from
       continuing                  282.6              77.3               359.9
       operations
                                                                      
       Diluted earnings
       per share of common       $ 1.78            $  0.49            $  2.27
       stock

       Merger and acquisition-related and other charges relate primarily to
       the Black & Decker merger and Niscayah and Infastech acquisitions,
^2   including facility closure-related charges, employee-related charges
       and integration costs, as well as a restructuring reversal due to the
       termination of a previously approved restructuring action.
       The normalized 2014 and 2013 information, as reconciled to GAAP above,
^3     is considered relevant to aid analysis of the Company’s margin and
       earnings results aside from the material impact of the merger &
       acquisition-related and other charges.

                                                      
                                                                  
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP SEGMENT PROFIT FINANCIAL MEASURES TO CORRESPONDING
NON-GAAP FINANCIAL MEASURES
(Unaudited, Millions of Dollars)
                                                                  
                              SECOND QUARTER 2014
                                               Merger &
                                               Acquisition-
                              Reported         Related            Normalized^3
                                               Charges^1

                                               
       SEGMENT PROFIT
                                                                  
          Construction        $ 218.2          $    0.2           $  218.4
          & DIY
          Industrial            150.3               1.2              151.5
          Security             67.0              1.2             68.2   
          Segment               435.5               2.6              438.1
          Profit
          Corporate            (45.1 )            3.0             (42.1  )
          Overhead
          Total               $ 390.4         $    5.6           $  396.0  
                                                                  
                                                                  
       Segment Profit
       as a Percentage
       of Net Sales
          Construction          15.6  %                              15.7   %
          & DIY
          Industrial            16.9  %                              17.0   %
          Security             11.1  %                             11.3   %
          Segment               15.1  %                              15.2   %
          Profit
          Corporate            (1.6  %)                            (1.5   %)
          Overhead
          Total                13.5  %                             13.7   %
                                                                  
                                                                  
^(1)  Merger and acquisition-related charges relate primarily to integration
       and employee-related matters.
                                                                  
                              SECOND QUARTER 2013
                                               Merger &
                              Reported         Acquisition-       Normalized^3
                                               Related
                                               Charges^2
       SEGMENT PROFIT
                                                                  
          Construction        $ 209.9          $    2.8           $  212.7
          & DIY
          Industrial            117.6               6.1              123.7
          Security             54.7              8.8             63.5   
          Segment               382.2               17.7             399.9
          Profit
          Corporate            (53.7 )            14.2            (39.5  )
          Overhead
          Total               $ 328.5         $    31.9          $  360.4  
                                                                  
                                                                  
       Segment Profit
       as a Percentage
       of Net Sales
          Construction          15.1  %                              15.3   %
          & DIY
          Industrial            13.7  %                              14.4   %
          Security             9.1   %                             10.5   %
          Segment               13.4  %                              14.0   %
          Profit
          Corporate            (1.9  %)                            (1.4   %)
          Overhead
          Total                11.5  %                             12.6   %

       Merger and acquisition-related charges relate primarily to the Black &
^2   Decker merger and Niscayah and Infastech acquisitions, including
       facility closure-related charges, employee-related charges and
       integration costs.
       The normalized 2014 and 2013 business segment information, as
^3     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 TO CORRESPONDING
NON-GAAP FINANCIAL MEASURES
(Unaudited, Millions of Dollars)
                                                                  
                             YEAR TO DATE 2014
                                               Merger &
                             Reported          Acquisition-       Normalized^3
                                               Related
                                               Charges^1
       SEGMENT PROFIT
                                                                  
         Construction        $ 387.3           $    0.6           $  387.9
         & DIY
         Industrial            280.6                3.4              284.0
         Security             116.6              3.5             120.1  
         Segment               784.5                7.5              792.0
         Profit
         Corporate            (81.6  )            5.5             (76.1  )
         Overhead
         Total               $ 702.9          $    13.0          $  715.9  
                                                                  
                                                                  
       Segment Profit
       as a Percentage
       of Net Sales
         Construction          14.8   %                              14.9   %
         & DIY
         Industrial            16.1   %                              16.3   %
         Security             9.9    %                             10.2   %
         Segment               14.2   %                              14.3   %
         Profit
         Corporate            (1.5   %)                            (1.4   %)
         Overhead
         Total                12.7   %                             13.0   %
                                                                  
                                                                  
^(1)  Merger and acquisition-related charges relate primarily to integration
       and employee-related matters.
                                                                  
                             YEAR TO DATE 2013
                                               Merger &
                             Reported          Acquisition-       Normalized^3
                                               Related
                                               Charges^2
       SEGMENT PROFIT
                                                                  
         Construction        $ 375.9           $    6.1           $  382.0
         & DIY
         Industrial            207.0                18.5             225.5
         Security             112.1              15.2            127.3  
         Segment               695.0                39.8             734.8
         Profit
         Corporate            (122.7 )            39.7            (83.0  )
         Overhead
         Total               $ 572.3          $    79.5          $  651.8  
                                                                  
                                                                  
       Segment Profit
       as a Percentage
       of Net Sales
         Construction          14.8   %                              15.0   %
         & DIY
         Industrial            13.0   %                              14.1   %
         Security             9.4    %                             10.6   %
         Segment               13.0   %                              13.8   %
         Profit
         Corporate            (2.3   %)                            (1.6   %)
         Overhead
         Total                10.7   %                             12.2   %

       Merger and acquisition-related charges relate primarily to the Black &
^2   Decker merger and Niscayah and Infastech acquisitions, including
       facility closure-related charges, employee-related charges and
       integration costs.
       The normalized 2014 and 2013 business segment information, as
^3     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.

Contact:

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