Black & Decker 2011 Annual Report Download - page 30

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During 2011, the Company recognized an income tax benefit attributable to the settlement of certain tax contingencies of $73
million, or $0.43 per diluted share.
(b) The Company’s consolidated financial statements include Black & Decker’s results of operations and cash flows from
March 13, 2010. The Company’s 2010 results include $538 million (pre-tax) of merger and acquisition-related charges incurred
in connection with the Merger. Such charges include amortization of inventory step-up, facility closure-related charges, certain
executive compensation and severance costs, transaction and integration costs, partially offset by pension curtailment gains. As
a result of these charges, Net earnings attributable to common shareowners were reduced by $421 million, Diluted earnings per
share were reduced by $2.80, Cost of sales as a % of Net sales was 230 basis points higher, Selling, general & administrative as
a % of Net sales was 100 basis points higher, Other-net as a % of Net sales was 50 basis points higher, Earnings before income
taxes as a % of Net sales was 640 basis points lower, Net earnings attributable to common shareowners as a % of Net sales was
500 basis points lower, Income tax rate — continuing operations ratio was 620 basis points lower and the Return on average
equity-continuing operations ratio was 935 basis points lower.
In the second quarter of 2010, the Company recognized an income tax benefit attributable to the settlement of certain tax
contingencies of $36 million, or $0.21 per diluted share.
(c) Amounts in 2011 reflect a $18.8 million, or $0.11 per diluted share, loss on the sale of three businesses. Refer to Note T,
Discontinued Operations of the Notes to the Consolidated Financial Statements in Item 8, for further information. Amounts in
2008 reflect an $84 million, or $1.05 per diluted share, after-tax gain recorded in discontinued operations for the sale of the
CST/berger laser measuring business.
(d) In the second quarter of 2009, the Company recognized a $0.34 per diluted share gain on debt extinguishment from the
repurchase of $103.0 million of junior subordinated debt securities. In the fourth quarter of 2009, the Company incurred $18
million in after tax charges, or $0.22 per diluted share, related to transaction and integration planning costs associated with the
Merger.
(e) SG&A is inclusive of the Provision for Doubtful Accounts.
(f) In 2008, the Company recognized $61 million, or $0.54 per diluted share, of pre-tax restructuring and asset impairment charges
from continuing operations pertaining to cost actions taken in response to weak economic conditions.
(g) Stanley Black & Decker, Inc’s Shareowners’ Equity was reduced by $14 million in fiscal 2007 for the adoption of Financial
Accounting Standards Board (“FASB”) Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an
Interpretation of Statement of Financial Accounting Standards (“SFAS”) No. 109,” codified in FASB Accounting Standards
Codification (“ASC”) 740 “Income Taxes”.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The financial and business analysis below provides information which the Company believes is relevant to an assessment and
understanding of its consolidated financial position, results of operations and cash flows. This financial and business analysis should
be read in conjunction with the consolidated financial statements and related notes. All references to “Notes” in this Item 7 refer to the
Notes to Consolidated Financial Statements included in Item 8 of this Annual Report.
The following discussion and certain other sections of this Annual Report on Form 10-K contain statements reflecting the Company’s
views about its future performance that constitute “forward-looking statements” under the Private Securities Litigation Reform Act of
1995. These forward-looking statements are based on current expectations, estimates, forecasts and projections about the industry and
markets in which the Company operates and management’s beliefs and assumptions. Any statements contained herein (including
without limitation statements to the effect that Stanley Black & Decker, Inc. or its management “believes”, “expects”, “anticipates”,
“plans” and similar expressions) that are not statements of historical fact should be considered forward-looking statements. These
statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to
predict. There are a number of important factors that could cause actual results to differ materially from those indicated by such
forward-looking statements. These factors include, without limitation, those set forth, or incorporated by reference, below under the
heading “Cautionary Statements”. The Company does not intend to update publicly any forward-looking statements whether as a
result of new information, future events or otherwise.
Strategic Objectives
The Company has maintained a consistent strategic framework over time:
• Maintaining portfolio transition momentum by continuing diversification toward higher growth, higher profit businesses,
increasing relative weighting of emerging markets and opportunistically consolidating the tool industry;
• Being selective and operating in markets where brand is meaningful, the value proposition is definable and sustainable
through innovation and global cost leadership is achievable;
• Pursuing growth on multiple fronts through building existing growth platforms such as security (both electronic and
mechanical) and engineered fastening and growing the more nascent stage infrastructure and healthcare platforms;