Black & Decker 2011 Annual Report Download

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Where We Go From Here
 Annual Report
yearinreview.stanleyblackanddecker.com

Table of contents

  • Page 1
    Where We Go From Here 2011 Annual Report yearinreview.stanleyblackanddecker.com

  • Page 2
    ... page count for this year's Annual Report, a tradition we started in 2009. Visit www.yearinreview.stanleyblackanddecker.com to view videos and pictures that bring exciting aspects of the Stanley Black & Decker story to life, to explore our financials, and to read about our businesses, our brands and...

  • Page 3
    Stanley Black and Decker 2011 Annual Report 01 Letter to Shareholders 2011 was a notable year for our Company. It was a year during which we drove change, growth and value in virtually every business and region where we compete, despite very little help from our external markets, particularly ...

  • Page 4
    ... our stated goals, but also through the opinions of our employees. In 2011, we conducted a global employee opinion survey in which our approximately 40,000 associates were able to anonymously submit their views on 60 questions. The feedback Stanley Black & Decker: The Next Chapter Almost two years...

  • Page 5
    ... solutions include video surveillance, access control, intrusion alarms and fire alarm systems, and its offerings include design and installation services, maintenance and repair, and monitoring systems. The acquisition expands and complements Stanley Black & Decker's existing security product...

  • Page 6
    ...products and services to our customers. Our success in this was key to the organic growth we drove throughout the year, particularly in certain markets that were flat or retracting. For example, our professional power tool and accessories business grew 13%, due to the successful launch of the DeWALT...

  • Page 7
    Stanley Black and Decker 2011 Annual Report 05 GLoBaL PReSenCe mID-DeCaDe GoaLS Asia 5% R.O.W. 16% Latin America 8% Canada 6% Australia 2% $15B 15% In Revenue Return on Capital Employed U.S. 52% Europe 27% >15% 10 Operating Margin Working Capital Turns >20% Revenue in Emerging Markets ...

  • Page 8
    ... value the Company, due to current high levels of non-cash expenses related to recent acquisitions. In 2011 and 2010, EBITDA excludes merger and acquisition-related charges of $256 million and $538 million, respectively, primarily associated with the Black & Decker merger and Niscayah acquisition...

  • Page 9
    ... the Black & Decker Corporation have been excluded from all prior years. new York Stock exchange Certification ANNUAL CEO CERTIFICATION (SECTION 303A.12(A)) As the Chief Executive Officer of Stanley Black & Decker, and as required by Section 303A.12(a) of the New York Stock Exchange Listed Company...

  • Page 10
    ... Senior Vice President & Group Executive, Stanley Security Solutions Jeff Hung-tse Chen Vice President & President, Asia Hubert W. Davis, Jr. Senior Vice President & Chief Information Officer/SFS Craig a. Douglas Vice President & Treasurer massimo Grassi President, Stanley Security Solutions Europe...

  • Page 11
    ... 1 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2011 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to_____ 2 STANLEY BLACK & DECKER, INC...

  • Page 12
    (This page intentionally left blank.)

  • Page 13
    ... DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE...CONTROLS AND PROCEDURES...OTHER INFORMATION...PART III DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT...EXECUTIVE COMPENSATION...SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS...

  • Page 14
    (This page intentionally left blank.)

  • Page 15
    ... name to Stanley Black & Decker Inc. ("the Company"). The Company is a diversified global provider of power and hand tools, mechanical access solutions (i.e. automatic doors, commercial and residential locking systems), electronic security and monitoring systems and products and services for various...

  • Page 16
    .... The consumer power tool business sells corded and cordless power tools sold under the Black & Decker brand, lawn and garden products and home products. Lawn and garden products include hedge trimmers, string trimmers, lawn mowers, edgers, and related accessories. Home products include hand held...

  • Page 17
    ... mechanical security, engineered fastening, infrastructure and healthcare solutions) are made in future years, the proportion of sales to these valued U.S. and international home center and mass merchant customers is expected to continue to decrease to pre-Merger levels. Working Capital The Company...

  • Page 18
    ... or uncertainties actually occur or develop, the Company's business, financial condition, results of operations and future growth prospects could change. Under these circumstances, the trading prices of the Company's securities could decline, and you could lose all or part of your investment in the...

  • Page 19
    ... market share and profits. Customer consolidation could have a material adverse effect on the Company's business. A significant portion of the Company's products are sold through home centers and mass merchant distribution channels in the U.S. and Europe. A consolidation of retailers in both North...

  • Page 20
    ...impact the Company's performance and prospects for future growth. The Company's competitive advantage is due in part to its ability to develop and introduce new products in a timely manner at favorable margins. The uncertainties associated with developing and introducing new products, such as market...

  • Page 21
    ...'s suppliers' failure to comply with customs regulations or similar laws, could harm the Company's business. The Company's operations are also subject to the effects of international trade agreements and regulations such as the North American Free Trade Agreement, and the activities and regulations...

  • Page 22
    ...could be negatively impacted by inflationary or deflationary economic conditions which could affect the ability to obtain raw materials, component parts, freight, energy, labor and sourced finished goods in a timely and costeffective manner. The Company's products are manufactured using both ferrous...

  • Page 23
    ... and global liquidity potentially impacting the Company's ability to access the credit markets and to raise capital. The Company is exposed to market risk from changes in foreign currency exchange rates which could negatively impact profitability. The Company manufactures and sells its products in...

  • Page 24
    ... of Stanley and Black & Decker in a manner that permits the combined company to achieve the cost savings anticipated to result from the Merger; the inability to implement information technology system changes to get the combined businesses on common platforms; complexities associated with managing...

  • Page 25
    ... out of the ordinary routine conduct of its business, including, from time to time, actual or threatened litigation relating to such items as commercial transactions, product liability, workers compensation, the Company's distributors and franchisees, intellectual property claims and regulatory...

  • Page 26
    ... Company's products if those products are found not to be in compliance with applicable standards or regulations. A recall could increase costs and adversely impact the Company's reputation. The Company is exposed to credit risk on its accounts receivable. The Company's outstanding trade receivables...

  • Page 27
    ... of December 31, 2011, the Company and its subsidiaries owned or leased significant facilities used for manufacturing, distribution and sales offices in 18 states and 18 foreign countries. The Company leases its corporate headquarters in New Britain, Connecticut. The Company has 91 other facilities...

  • Page 28
    The following table provides information about the Company's purchases of equity securities that are registered by the Company pursuant to Section 12 of the Exchange Act for the three months ended December 31, 2011: Total Number Of Shares Purchased As Part Of A Publicly Announced Plan or Program ...

  • Page 29
    ... ...Stanley Black & Decker, Inc.'s Shareowners' Equity ...Ratios: Current ratio ...Total debt to total capital ...Income tax rate - continuing operations ...Return on average equity - continuing operations ...Common stock data: Dividends per share ...Equity per share at year-end...Market price per...

  • Page 30
    ... actions taken in response to weak economic conditions. 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...

  • Page 31
    ...% in sales to the Company's two largest customers. As acquisitions in the various growth platforms (electronic and mechanical security, engineered fastening, infrastructure and healthcare solutions) are made in future years, the proportion of sales to these valued U.S. and international home center...

  • Page 32
    ... part of the Company's Industrial segment, with the two smaller businesses being part of the Company's Security segment. Net sales associated with these businesses were $61 million, $66 million, and $54 million in 2011, 2010 and 2009, respectively. These businesses were sold as the related product...

  • Page 33
    ... both in the existing business and future acquisitions in working capital turns, cycle times, complexity reduction and customer service levels. Certain Items Impacting Earnings Merger and Acquisition-Related Charges Impacting 2011, 2010 and 2009 Earnings Throughout MD&A, the Company has provided...

  • Page 34
    ... America), 3% in Europe and 6% in Asia. Excluding the engineered fastening business in Japan and China, where it has experienced the continued effects of the first quarter 2011 Japanese earthquake and tsunami, organic sales in Asia were up 25% as compared to full year 2010. On a pro forma basis, net...

  • Page 35
    ...with strong new product performance, particularly the 12-volt lithium ion power tools. Gross Profit: The Company reported gross profit of $3.794 billion, or 36.6% of net sales, in 2011, compared to $2.935 billion, or 35.2% of net sales, in 2010. The inclusion of a full year of Black & Decker as well...

  • Page 36
    ... The Company's reportable segments are aggregations of businesses that have similar products, services and end markets, among other factors. The Company utilizes segment profit (which is defined as net sales minus cost of sales and SG&A aside from corporate overhead expense), and segment profit as...

  • Page 37
    ... and cordless electric power tools and equipment including drills, impact wrenches and drivers, grinders, saws, routers and sanders. The consumer power tool business sells corded and cordless power tools, lawn and garden products and home products. The hand tools, fasteners & storage business sells...

  • Page 38
    ...in North America and Europe, as well as expansion into new automotive platforms and growth within the commercial aerospace market. The Industrial and Automotive Repair business achieved 11% organic growth due to market demand, new products, strong hand tool sales within the North American industrial...

  • Page 39
    ... Europe, reduced sales by 2% while price provided a 1% increase in sales. Sales unit volume gains were 25% primarily attributable to customer supply chain restocking, which subsided in the third quarter, market share gains, and strong end user demand fueled by higher global production levels and new...

  • Page 40
    ... to be utilized in 2012. Pre-2011 Actions: For the year ended January 1, 2011 the Company initiated restructuring activities associated with the Merger and acquisition of Stanley Solutions de Sécurité ("SSDS"). Charges recognized in 2011 associated with these prior year initiatives amounted to...

  • Page 41
    ... relates to assets sold in the normal course of business. Net financial instrument investing outflows were $39 million in 2011 compared with inflows of $45 million in 2010, pertaining to net investment hedge activity and $30 million of interest rate swap terminations in 2010 following the Merger...

  • Page 42
    ... grade rating levels could adversely affect the Company's cost of funds, liquidity and access to capital markets, but would not have an adverse effect on the Company's ability to access committed credit facilities. In March 2011, the Company entered into a new four year $1.2 billion committed credit...

  • Page 43
    ..., and sourced products. Future cash flows on derivative instruments reflect the fair value as of December 31, 2011. The ultimate cash flows on these instruments will differ, perhaps significantly, based on applicable market interest and foreign currency rates at their maturity. The Company is...

  • Page 44
    ... businesses, particularly brass, nickel, resin, aluminum, copper, zinc, steel, and energy used in the production of finished goods. Generally, commodity price exposures are not hedged with derivative financial instruments, but instead are actively managed through customer product and service pricing...

  • Page 45
    ...released, among other factors. The Company's net ESOP activity resulted in expense of $28.4 million in 2011, expense of $3.4 million in 2010 and income of $8.0 million in 2009. The ESOP expense increased in 2011 compared to 2010 due to the merger of Black & Decker U.S. defined contribution plan into...

  • Page 46
    ... percentages, historic returns, and expected future returns. For 2011 net periodic benefit cost the Company's expected rate of return assumption was 7.0% for both United States and international plans. The Company will use a 6.25% expected rate of return assumption for 2012 net periodic benefit cost...

  • Page 47
    ... certain international jurisdictions. The Company recognized $32 million of defined benefit plan expense in 2011, which may fluctuate in future years depending upon various factors including future discount rates and actual returns on plan assets. ENVIRONMENTAL - The Company incurs costs related to...

  • Page 48
    ... on an annualized basis) in cost synergies by the end of 2012 in connection with the integration of Black & Decker which will help fuel future profit growth and facilitate global cost leadership; (vi) achieve $300 million to $400 million in revenue synergies by 2013 resulting from the Merger, which...

  • Page 49
    ...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...

  • Page 50
    ... of Stanley Black & Decker's total assets and net assets, respectively, as of December 31, 2011 and $303 million and $6 million of revenue and net income, respectively, for the year then ended. Management has assessed the effectiveness of the Company's internal control over financial reporting as...

  • Page 51
    ... Senior Vice President, Business Transformation (2006); Vice President, Chief Information Officer (June 2000); Chief Information Officer and e-commerce Leader (2000). Vice President & Treasurer since January 2002. President, Stanley Security Solutions Europe. President, Industrial & Automotive Tools...

  • Page 52
    ... information set forth under the section entitled "Executive Compensation" of the Company's definitive proxy statement, which will be filed pursuant to Regulation 14A under the Exchange Act within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K. ITEM 12. SECURITY...

  • Page 53
    ... the information set forth under the section entitled "Board of Directors - Related Party Transactions" of the Company's definitive proxy statement, which will be filed pursuant to Regulation 14A under the Exchange Act within 120 days after the end of the fiscal year covered by this Annual Report on...

  • Page 54
    ... of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. STANLEY BLACK & DECKER, INC. By: /s/ John F. Lundgren John F. Lundgren, President and Chief Executive Officer Date: February 23, 2012 Pursuant to...

  • Page 55
    * Marianne M. Parrs * Robert L. Ryan *By: /s/ Bruce H. Beatt Bruce H. Beatt (As Attorney-in-Fact) Director Director February 23, 2012 February 23, 2012 43

  • Page 56
    ... of Independent Registered Public Accounting Firm - Financial Statement Opinion (page 47). Report of Independent Registered Public Accounting Firm - Internal Control Opinion (page 48). Consolidated Statements of Operations - fiscal years ended December 31, 2011, January 1, 2011 and January 2, 2010...

  • Page 57
    ... and Qualifying Accounts Stanley Black & Decker, Inc. and Subsidiaries Fiscal years ended December 31, 2011, January 1, 2011, and January 2, 2010 (Millions of Dollars) ADDITIONS Beginning Balance Charged to Costs and Expenses Charged To Other Accounts(b)(c) (a) Deductions Ending Balance Allowance...

  • Page 58
    ... $303 million and $6 million of revenue and net income, respectively, for the year then ended. Management has assessed the effectiveness of Stanley Black & Decker Inc.'s internal control over financial reporting as of December 31, 2011, with the exception of the aforementioned Niscayah acquisition...

  • Page 59
    ... in all material respects the information set forth therein. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of December 31, 2011, based on criteria established in...

  • Page 60
    ... of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of the Company as of December 31, 2011 and January 1, 2011, and the related consolidated statements of operations, changes in shareowners' equity, and cash flows for each of the three fiscal years in...

  • Page 61
    ... Fiscal years ended December 31, 2011, January 1, 2011, and January 2, 2010 (In Millions of Dollars, except per share amounts) 2011 2010 2009 Net Sales ...$ Costs and Expenses Cost of sales ...$ Selling, general and administrative ...Provision for doubtful accounts ...Other-net ...Restructuring...

  • Page 62
    ...) 2011 2010 Assets Current Assets Cash and cash equivalents ...$ Accounts and notes receivable, net ...Inventories, net...Prepaid expenses ...Other current assets ...Total Current Assets ...Property, Plant and Equipment, net ...Goodwill ...Customer Relationships, net ...Trade Names, net ...Other...

  • Page 63
    ...sales of assets ...Business acquisitions, net of cash acquired ...Proceeds from sales of businesses ...Cash acquired from Black & Decker ...Undesignated interest rate swap terminations ...Proceeds from net investment hedge settlements ...Payments on net investment hedge settlements ...Net cash (used...

  • Page 64
    ... businesses Other, stock-based compensation related ...Tax benefit related to stock options exercised ESOP and related tax benefit ...Balance January 1, 2011...Comprehensive income: Net earnings ...Currency translation adjustment and other .. Cash flow hedge, net of tax ...Change in pension, net...

  • Page 65
    ... accounts and transactions. The Company's fiscal year ends on the Saturday nearest to December 31. There were 52 weeks in the fiscal years 2011, 2010, and 2009. On March 12, 2010 a wholly owned subsidiary of The Stanley Works was merged with and into The Black & Decker Corporation ("Black & Decker...

  • Page 66
    ... were recorded during 2011, 2010, or 2009. FINANCIAL INSTRUMENTS - Derivative financial instruments are employed to manage risks, including foreign currency, interest rate exposures and commodity prices and are not used for trading or speculative purposes. The Company recognizes all derivative...

  • Page 67
    ... products to the point that they are allocable to be sold to customers and costs to perform services pertaining to service revenues (e.g. installation of security systems, automatic doors, and security monitoring costs). Cost of sales is primarily comprised of inbound freight, direct materials...

  • Page 68
    ... equals net earnings attributable to Stanley Black & Decker, Inc., less earnings allocated to restricted stock units with non-forfeitable dividend rights, divided by weighted-average shares outstanding during the year. Diluted earnings per share include the impact of common stock equivalents using...

  • Page 69
    ..., and as such the carrying value of the receivable recorded approximates fair value. Delinquencies and credit losses on receivables sold were $0.8 million for the year ended December 31, 2011 and less than $0.2 million for the year ended January 1, 2011. Cash inflows related to the deferred purchase...

  • Page 70
    ... services, maintenance and repair, and monitoring systems. The acquisition expands and complements the Company's existing security product offerings and further diversifies the Company's operations and international presence. The weighted average useful life assigned to the trade names was 5 years...

  • Page 71
    ... made during 2011. MERGER The Merger occurred on March 12, 2010 and the total fair value of consideration transferred as part of the Merger was $4,656.5 million, inclusive of all former Black & Decker shares outstanding and employee related equity awards. The transaction was accounted for using the...

  • Page 72
    ... acquisition dates. The purchase price allocations of these acquisitions are complete. ACTUAL AND PRO-FORMA IMPACT OF THE MERGER AND ACQUISITIONS The Company's Consolidated Statement of Operations for 2011 includes $364.6 million in net sales and $40.6 million in net losses (inclusive of deal costs...

  • Page 73
    ... follows: CDIY ...$ Security ...Industrial ...Consolidated ...$ (Millions of Dollars) 2011 2010 2009 31.8 $ 107.8 42.0 181.6 $ 27.9 $ 95.1 22.3 145.3 $ 2.9 96.8 4.9 104.6 Future amortization expense in each of the next five years amounts to $202.2 million for 2012, $184.3 million for 2013, $164...

  • Page 74
    ... semi-annually in arrears at a rate of 3.40% per annum. The 2021 Term Notes rank equally with all of the Company's existing and future unsecured and unsubordinated debt. The 2021 Term Notes are guaranteed on a senior unsecured basis by The Black & Decker Corporation, a subsidiary of the Company, and...

  • Page 75
    ...semi-annually, in arrears at a rate of 5.20% per annum. The 2040 Term Bonds rank equally with all of the Company's existing and future unsecured and unsubordinated debt. The 2040 Term Bonds are guaranteed on a senior unsecured basis by The Black & Decker Corporation, a subsidiary of the Company. The...

  • Page 76
    ... in cash proceeds from the Convertible Preferred Units offering, net of underwriting fees. These proceeds were used to redeem all of the Company's outstanding 5.902% Fixed Rate/Floating Rate Junior Subordinated Debt Securities due 2045, at a price of $312.7 million, to contribute $150.0 million...

  • Page 77
    ... 31, 2011, the conversion rate on the Convertibles Notes due 2012 was 1.3388 (equivalent to a conversion price set at $74.69 per common share). If a fundamental change occurs, in certain circumstances the conversion rate may be adjusted by a fundamental change make-whole premium. The Company may...

  • Page 78
    ... period") ending on the third business day immediately preceding the triggered early settlement date (the "triggered early remarketing"). A "trigger event" will be deemed to have occurred upon the Company's filing any periodic or annual report under Section 13 or 15(d) of the Securities Exchange Act...

  • Page 79
    ... The $488.1 million net cash proceeds of these offerings and the related financial instruments described below were used to pay down a short-term bridge facility and commercial paper borrowings. Equity Units: In March 2007, the Company issued 330,000 Equity Units, each with a stated value of $1,000...

  • Page 80
    ..., and "make whole" adjustments to the conversion rate may apply, in the event of a cash merger or "fundamental change". Subject to the foregoing, if the market value of the Company's common shares is below the conversion price at conversion, (set at a rate equating to $63.92 per share), the...

  • Page 81
    ....94 (represented by the Stock Warrant strike price as of December 31, 2011). I. DERIVATIVE FINANCIAL INSTRUMENTS The Company is exposed to market risk from changes in foreign currency exchange rates, interest rates, stock prices and commodity prices. As part of the Company's risk management program...

  • Page 82
    ... of $2.3 million in Cost of Sales and a loss of $8.5 million, in Other-net. There was no impact related to the interest rate contracts' hedged items for any period presented. The impact of de-designated hedges was immaterial for all periods presented. During 2011, 2010 and 2009, an after-tax loss of...

  • Page 83
    ... December 2009, the Company executed forward starting interest rate swaps with an aggregate notional amount of $400 million fixing 10 years of interest payments at 4.78% beginning in November of 2012. The objective of the hedge is to offset the expected variability on future payments associated with...

  • Page 84
    ... and the weighted average shares outstanding used to calculate basic and diluted earnings per share for the fiscal years ended December 31, 2011, January 1, 2011, and January 2, 2010. Earnings per Share Computation 2011 2010 2009 Numerator (in millions): ...Net earnings from continuing operations...

  • Page 85
    ... - Common stock share activity for 2011, 2010 and 2009 was as follows: 2011 2010 2009 Outstanding, beginning of year ...Shares issued as part of the merger ...Shares issued from Equity Units Offering ...Issued from treasury...Returned to treasury ...Outstanding, end of year ...Shares subject to the...

  • Page 86
    ...) having a market value equal to two times the exercise price of the right. At December 31, 2011, there were 163,465,561 outstanding rights. STOCK-BASED COMPENSATION PLANS - The Company has stock-based compensation plans for salaried employees and non-employee members of the Board of Directors. The...

  • Page 87
    ... determined at the grant date; that excess spread over the fair value of the option times the applicable tax rate represents the excess tax benefit. In 2011, 2010 and 2009, the Company reported $14.1 million, $10.8 million and $0.3 million, respectively, of excess tax benefits as a financing cash...

  • Page 88
    ... enables eligible employees in the United States and Canada to subscribe at any time to purchase shares of common stock on a monthly basis at the lower of 85% of the fair market value of the shares on the grant date ($53.00 per share for fiscal year 2011 purchases) or 85% of the fair market value of...

  • Page 89
    ... was $70.16 and the applicable upper strike price was $80.35. The capped calls were terminated in July 2011. The Company elected to net share settle the transaction and received 3,052 shares valued at $0.2 million. Convertible Preferred Units and Equity Option As described more fully in Note H, Long...

  • Page 90
    ... to the impact on the Company, the capped...end of each fiscal year was as follows: (Millions of Dollars) 2011 2010 2009 Currency translation adjustment ...$ Pension loss, net of tax ...Fair value of net investment hedge effectiveness, net of tax ...Fair value of cash flow hedge effectiveness, net...

  • Page 91
    ... of $8.0 million in 2009. The increase in net ESOP expense in 2011 is related to the merger of the U.S. Black & Decker 401(k) defined contribution plan into the ESOP and extending the core benefit to these employees. ESOP expense is affected by the market value of the Company's common stock on the...

  • Page 92
    ... retired employees in the United States and Canada. Approximately 10,800 participants are covered under these plans. Net periodic post-retirement benefit expense was comprised of the following elements: Other Benefit Plans 2011 2010 2009 Service cost ...$ Interest cost ...Prior service credit...

  • Page 93
    ... exchange rate changes ...Acquisitions, divestitures and other ...Benefits paid ...Fair value of plan assets at end of plan year ...$ Funded status - assets less than benefit obligation ...$ Unrecognized prior service cost (credit) ...Unrecognized net actuarial loss ...Unrecognized net transition...

  • Page 94
    ...in developing the return assumption. The Company expects to use a weightedaverage rate of return assumption of 6.25% for the U.S. and international plans, in the determination of fiscal 2012 net periodic benefit expense. PENSION PLAN ASSETS - Plan assets are invested in equity securities, government...

  • Page 95
    ...with guaranteed returns. Other investments include diversified private equity holdings. The level 2 investments are primarily comprised of institutional mutual funds that are not publicly traded; the investments held in these mutual funds are generally level 1 publicly traded securities. The Company...

  • Page 96
    ... and January 1, 2011, Other-net included $51.2 million and $36.3 million in merger and acquisition related costs, respectively. Research and development costs, which are classified in SG&A, were $147.2 million, $131.4 million and $18.3 million for fiscal years 2011, 2010 and 2009, respectively. 84

  • Page 97
    ... and cordless electric power tools and equipment including drills, impact wrenches and drivers, grinders, saws, routers and sanders. The consumer power tool business sells corded and cordless power tools, lawn and garden products and home products. The hand tools, fasteners & storage business sells...

  • Page 98
    ...Company's existing reportable segments. The legacy Black & Decker segments, Power Tools and Accessories, Hardware & Home Improvement ("HHI") and Fastening and Assembly Systems, were integrated into the Company's CDIY, Security and Industrial segments, respectively, with the Pfister plumbing products...

  • Page 99
    ... Industrial for the year ended December 31, 2011, with the remainder residing in corporate overhead. In 2010 the Company recorded $277 million of facility closure-related and other charges associated with the merger and other acquisitions across all segments, impacting segment profit by $127 million...

  • Page 100
    ......Asia...Consolidated...$ Property, Plant & Equipment United States...$ Canada...Other Americas...France...Other Europe...Asia...Consolidated...$ Q. INCOME TAXES Significant components of the Company's deferred tax assets and liabilities at the end of each fiscal year were as follows: Deferred tax...

  • Page 101
    ... and prepaid taxes. The 2010 amount includes U.S. Federal refunds of $77.4 million relating to an NOL carry back, an audit settlement and a prior year overpayment. During 2011, 2010, and 2009, the Company had tax holidays in the Czech Republic and China. Tax holidays resulted in a reduction...

  • Page 102
    ... Corporation, tax years 2006 and 2007 have been settled with the Internal Revenue Service as of December 31, 2011, tax years 2008, 2009 and March 12, 2010 are under current audit. For Stanley Black & Decker, Inc. tax years 2008 and 2009 are currently under audit. The Company also files many state...

  • Page 103
    ... is a summary of guarantees as of December 31, 2011: Maximum Potential Payment Carrying Amount of Liability Financial guarantees as of December 31, 2011: Guarantees on the residual values of leased properties Guarantee on the residual value of aircraft Standby letters of credit Commercial customer...

  • Page 104
    ... liability activity for the years ended December 31, 2011, January 1, 2011 and January 2, 2010: Beginning balance...$ Warranties and guarantees issued...Liability assumed in the Merger...Warranty payments...Acquisitions and other...Ending balance...$ S. CONTINGENCIES The Company is involved in...

  • Page 105
    ... million. These businesses were sold as the related product lines provided limited growth opportunity or were not considered part of the Company's core offerings. The net loss from discontinued operations in 2010 and 2009 is primarily related to the aforementioned divestitures in 2011, the wind-down...

  • Page 106
    ...The following debt obligations were issued by Stanley Black & Decker, Inc. ("Stanley") and are fully and unconditionally guaranteed by The Black & Decker Corporation ("Black & Decker"), a 100% owned direct subsidiary of Stanley: 4.9% Notes due 2012; 6.15% Notes due 2013; 3.4% Notes due 2021; and the...

  • Page 107
    ... of Dollars) Year Ended December 31, 2011 Parent Stanley Black & Decker, Inc. The Black & Decker Corporation Non-Guarantor Subsidiaries Eliminations Consolidated NET SALES...$ COSTS AND EXPENSES Cost of sales ...Selling, general and administrative ...Other, net ...Restructuring charges and...

  • Page 108
    ...(Millions of Dollars) Year Ended January 1, 2011 Parent Stanley Black & Decker, Inc. The Black & Decker Corporation Non-Guarantor Subsidiaries Eliminations Consolidated NET SALES...$ COSTS AND EXPENSES Cost of sales ...Selling, general and administrative ...Other, net ...Restructuring charges and...

  • Page 109
    ... Operations (Millions of Dollars) Year Ended January 2, 2010 Parent Stanley Black & Decker, Inc. Non-Guarantor Subsidiaries Eliminations Consolidated $ NET SALES...COSTS AND EXPENSES Cost of sales ...Selling, general and administrative ...Other, net ...Restructuring charges and asset impairments...

  • Page 110
    ... of Dollars) December 31, 2011 Parent Stanley Black & Decker, Inc. The Black & Decker Corporation NonGuarantor Subsidiaries Eliminations Consolidated ASSETS Current Assets Cash and cash equivalents ...$ Accounts and notes receivable, net ...Inventories, net...Other current assets ...Total Current...

  • Page 111
    ... (Millions of Dollars) January 1, 2011 Parent Stanley Black & Decker, Inc. The Black & Decker Corporation NonGuarantor Subsidiaries Eliminations Consolidated ASSETS Current Assets Cash and cash equivalents ...$ Accounts and notes receivable, net ...Inventories, net...Other current assets ...Total...

  • Page 112
    ... Consolidating Statements of Cash Flow (Millions of Dollars) Year Ended December 31, 2011 Parent Stanley Black & Decker, Inc. The Black & Decker Corporation Non-Guarantor Subsidiaries Eliminations Consolidated Cash (used in) provided by operating activities ...$ Investing Activities Capital...

  • Page 113
    ... Consolidating Statements of Cash Flow (Millions of Dollars) Year Ended January 1, 2011 Parent Stanley Black & Decker, Inc. The Black & Decker Corporation Non-Guarantor Subsidiaries Eliminations Consolidated Cash (used in) provided by operating activities ...$ Investing Activities ...Capital...

  • Page 114
    ..., Inc. Condensed Consolidating Statements of Cash Flow (Millions of Dollars) Year Ended January 2, 2010 Parent Stanley Black & Decker, Inc. Non-Guarantor Subsidiaries Eliminations Consolidated Cash (used in) provided by operating activities ...$ Investing Activities ...Capital expenditures and...

  • Page 115
    ... Third Fourth Year 2011 Net sales ...$ Gross profit ...Selling, general and administrative expenses...Net earnings from continuing operations ...Less: (Loss) earnings from non-controlling interest ...Net earnings from continuing operations attributable to Stanley Black & Decker, Inc...Net earnings...

  • Page 116
    ... outstanding from the issuance of stock to former Black & Decker shareowners as a result of the Merger. During 2010, the Company recognized $538 million ($421 million after tax), or $2.80 per diluted share, in charges primarily related to the Merger which included amortization of inventory step-up...

  • Page 117
    ...state of affairs as of the date they were made or at any other time and should not be relied on by any person other than the parties thereto in accordance with their terms. Additional information about the Company may be found in this Annual Report on Form 10-K and the Company's other public filings...

  • Page 118
    ... to the Company's Current Report on Form 8-K filed on September 7, 2010). Fourth Supplemental Indenture, dated as of November 22, 2011, among Stanley Black & Decker, Inc., The Black & Decker Corporation, as Guarantor, and the Bank of New York Mellon Trust Company, N.A., as Trustee, relating to the...

  • Page 119
    ... Report on Form 8-K filed on November 9, 2010). Four Year Credit Agreement, dated as of March 11, 2011, by and among Stanley Black & Decker, Inc., The Black & Decker Corporation, as Subsidiary Guarantor, the lenders named therein, Citibank, N.A., as Administrative Agent, Citigroup Global Markets...

  • Page 120
    ... to Exhibit 10(ix) to the Company's Annual Report on Form 10-K for the year ended December 29, 2007).* 10.6 10.7 10.8 10.9 10.10 10.11 10.12 (a) Stanley Black & Decker Supplemental Retirement Account Plan (as in effect, January 1, 2011, except as otherwise provided therein) (incorporated...

  • Page 121
    ... under the Long-Term Incentive Award Program for fiscal years 2007 through 2009 (incorporated by reference to Exhibit 10(xiii)(g) to the Company's Annual Report on Form 10-K for the year ended December 29, 2007).* (f) Form of Restricted Stock Unit Award Certificate for grants of restricted stock...

  • Page 122
    ... on Form 10-Q filed on November 7, 2011).* 10.21 (a) The Stanley Works Restricted Stock Unit Plan for Non-Employee Directors amended and restated as of December 11, 2007 (incorporated by reference to Exhibit 10(xx) to the Company's Annual Report on Form 10-K for the year ended December 29, 2007...

  • Page 123
    ... of Ethics for CEO and Senior Financial Officers (incorporated by reference to the Company's website, www.stanleyblackanddecker.com. Subsidiaries of Registrant. Consent of Independent Registered Public Accounting Firm. Power of Attorney. Certification by Chief Executive Officer pursuant to Rule 13a...

  • Page 124
    ...fiscal years ended December 31, 2011, January 1, 2011, January 2, 2010, January 3, 2009 and December 29, 2007 (Millions of Dollars) Fiscal Year 2011 2010 2009... 140.3 $ 109.9 $ 63.7 $ 92.0 $ 92.6 Portion of rents representative of interest factor ...17.9 6.2 8.6 9.2 16.2 Fixed charges ...$ 156.5 $ ...

  • Page 125
    ... Systems, Inc...United States (Oklahoma) Delta International Machinery Corp...United States (Minnesota) Devilbiss Air Power Company ...United States (Delaware) Embedded Technologies, LLC ...United States (Delaware) Emglo Products, LLC ...United States (Maryland) Emhart Credit Corporation ...United...

  • Page 126
    ...Stanley Security Solutions, Inc...United States (Indiana) Stanley Supply & Services, Inc...United States (Massachusetts) The Black & Decker Corporation ...United States (Maryland) The Farmington River Power Company ...United States (Connecticut) UNISPEC LLC ...United States (Alabama) Vector Products...

  • Page 127
    ... Auto Magique...Lista International, Ltd...Mac Tools Canada Inc...Microtec Enterprises, Inc...Mont-Hard (Canada) Inc...Stanley Canada Corporation ...Stanley CLP1 ...Stanley CLP2 ...Stanley CLP3 ...Stanley CLP4 ...XMARK Corporation ...Besco Investment Group Co. Ltd...Black & Decker (Cayman) Finance...

  • Page 128
    ...) Stanley (Tianjin) International Trading Co. Ltd...Stanley (Zhongshan) Hardware Co., Ltd...Stanley Technology Co. Ltd...Stanley Works (Wendeng) Tools Co., Ltd...The Stanley Works (Langfang) Fastening Systems Co., Ltd...The Stanley Works (Shanghai) Co., Ltd...The Stanley Works (Shanghai) Management...

  • Page 129
    ... Services Company ...Baltimore Insurance Limited ...Belco Investments Company ...Black & Decker (Ireland)...Chesapeake Falls Holdings Company...Gamrie Limited ...Niscayah Limited ...Stanley Black and Decker International Finance 5 Limited ...Stanley Security Solutions Ireland Limited ...The Stanley...

  • Page 130
    ...B.V...Theo Jeuken Beveiliging & Telecom B.V...The Stanley Works C.V...Black & Decker (New Zealand) Limited ...Stanley Tools (NZ) Limited ...Black & Decker (Norge) A/S ...Emhart Sjong A/S ...Niscayah AS ...Niscayah Holdings AS ...PIH Services ME LLC ... Malaysia Malaysia Malaysia Mexico Mexico Mexico...

  • Page 131
    ..., Lda ...PIH Services ME Ltd...Universal Inspection Systems Ltd...Black & Decker Asia Pacific Pte. Ltd...CRC-Evans Pipeline International Pte. Ltd...Facom Tools Far East Pte. Ltd...Stanley Works Asia Pacific Pte. Ltd...Black & Decker Slovakia S.r.o...African Time Systems Corporation (Proprietary...

  • Page 132
    ... ...Stanley Healthcare Solutions Ltd...Spiralock of Europe Ltd...SRP Security Systems Limited ...Stanley Black & Decker UK Holdings Limited ...Stanley Security Solutions - Europe Limited ...Stanley Security Solutions Ltd...Stanley U.K. Holding Ltd...Stanley UK Acquisition Company Limited ...Stanley...

  • Page 133
    ...dated February 23, 2012 with respect to the consolidated financial statements and schedule of the Company, and the effectiveness of internal control over financial reporting of the Company, included in this Annual Report (Form 10-K) for the fiscal year ended December 31, 2011 Registration Statement...

  • Page 134
    ... indicated below, the Annual Report on Form 10-K for the year ended December 31, 2011 of the Corporation filed herewith (the "Form 10-K"), and any and all amendments thereof, and generally to do all such things in our name and on our behalf in our capacities as officers and directors to enable the...

  • Page 135
    ...report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 23, 2012 /s/ John F. Lundgren John F. Lundgren President and Chief Executive...

  • Page 136
    ... and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 23, 2012 /s/ Donald Allan Jr. Donald Allan Jr. Senior Vice President...

  • Page 137
    ...connection with the Annual Report of Stanley Black & Decker, Inc. (the "Company") on Form 10-K for the period ending December 31, 2011 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, John F. Lundgren, President and Chief Executive Officer, certify, pursuant...

  • Page 138
    ... with the Annual Report of Stanley Black & Decker, Inc. (the "Company") on Form 10-K for the period ending December 31, 2011 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Donald Allan Jr., Senior Vice President and Chief Financial Officer, certify...

  • Page 139
    ... and other Company information. • Meetings with securities analysts and fund managers. Contact the Stanley Black & Decker investor relations department at our corporate offices by calling Kate vanek, vP, Investor Relations at (860) 827-3833 or by mail at 1000 stanley drive, new Britain, ct 06053...

  • Page 140