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yearinreview.stanleyblackanddecker.com
Moving AHEAD
 Annual Report

Table of contents

  • Page 1
    Moving AHEAD 2012 Annual Report yearinreview.stanleyblackanddecker.com

  • Page 2
    ... hand tools like the MIG Weld Framing Hammer deliver GUARANTEED TOUGH® performance. right: The Black & Decker MATRIX Quick Connect System allows easy change of attachments. BACk CovEr: Middle: AeroScout's RTLS solutions are helping transform safety, security and operational efficiency at healthcare...

  • Page 3
    We invent and reinvent what builds and secures the world-delivering solutions, creating value, pursuing sustainable success and always moving AHEAD.

  • Page 4
    ... Home Improvement business (HHI). Working capital turns increased to 7.5, as the benefits of the Stanley Fulfillment System were further realized across our global enterprise. "We take pride in our ability to learn and adapt." The Black & Decker Merger: Closing The Final Chapter1 At the three-year...

  • Page 5
    ... practices from the many successful acquisitions we have completed over the years. revenue Growth in 2012 Stanley Black & Decker: Looking Back and Looking Ahead Stanley Black & Decker today is a diversified global company with a solid track record of operational excellence, innovation and growth...

  • Page 6
    ... sales force to drive revenue in this business. The initiative leverages proprietary technology to drive productivity and efficiency for industrial end users across the globe. In Revenue Return on Capital Employed Operating Margin Working Capital Turns Revenue in Emerging Markets 3. security...

  • Page 7
    ... Consumer Power Tool business grew 6% organically. These successes can be attributed to compelling new products like the DeWALT 18/20V lithium ion drills as well as our Black & Decker Gyro and Matrix products. Our Engineered Fastening business grew 9% organically for the year, far outpacing global...

  • Page 8
    ... 2012 revenues) tHE stAnLEy FULFILLMEnt systEM Com mon P lat forms Co r ov D C A e Sales & Operations Planning ntr Operational Lean I mp ol Breakthrough Customer Value B Order-to-Cash Excellence Global Supply Management Complexity Reduction A: U.S. 48% B: Europe 27% C: Emerging Markets...

  • Page 9
    ... Excludes merger and acquisition-related charges and payments. * Refer to the inside back cover. ** In December 2012, the Company sold its Hardware & Home Improvement business. The results from 2008-2011 were recast for this divestiture, for comparability. Stanley Black & Decker 2012 Annual Report...

  • Page 10
    ... Management believes it is important for the ability to determine the earnings power of the Company and to properly value the Company, due to current high levels of non-cash expenses related to recent acquisitions. The Company's 2012 results include $442 million (pretax) of charges related to merger...

  • Page 11
    ... As a matter of consistency, the total returns of 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...

  • Page 12
    ... safety, security and monitoring solutions, innovative locks and automatic doors, and for healthcare providers, sophisticated patient safety, asset-tracking and productivity solutions. EMPLOYEES NET SALES OPERATING PROFIT LEADInG BrAnDs security Stanley Security Sonitrol Best Access Systems PACOM...

  • Page 13
    ... tools and storage strategy. Infrastructure Stanley Oil & Gas/CRC-Evans offshore revenue up +15% over prior year. Engineered Fastening Highest organic sales growth rate within Stanley Black & Decker, at 9%. Honored with Supplier Quality Award from Renault. Stanley Black & Decker 2012 Annual Report...

  • Page 14
    ... Information Officer Grethel kunkel President, Latin America Massimo Grassi President, Stanley Security Solutions, Europe Mark J. Mathieu Senior Vice President, Human Resources Barbara Popoli President, Infrastructure Solutions Jaime ramirez Senior Vice President & President, Global Emerging Markets...

  • Page 15
    ... STANLEY BLACK & DECKER, INC. (Exact Name Of Registrant As Specified In Its Charter) Connecticut (State Or Other Jurisdiction Of Incorporation Or Organization) 06-0548860 (I.R.S. Employer Identification Number) 1000 Stanley Drive New Britain, Connecticut (Address Of Principal Executive Offices...

  • Page 16
    ...PART III DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT...EXECUTIVE COMPENSATION...SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS...CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE...PRINCIPAL ACCOUNTANT FEES AND SERVICES...

  • Page 17
    ...to Stanley Black & Decker, Inc. The Company is a diversified global provider of power and hand tools, mechanical access solutions (i.e. automatic doors and commercial locking systems), electronic security and monitoring systems, and products and services for various industrial applications with 2012...

  • Page 18
    ... and storage units. The Consumer Power Tool business sells corded and cordless electric 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...

  • Page 19
    ... by the Stanley Fulfillment System ("SFS"). SFS has five primary elements that work in concert: sales and operations planning, operational lean, complexity reduction, global supply management, and order-to-cash excellence. The Company develops standardized business processes and system platforms to...

  • Page 20
    ... but generally run from one to 40 years. The Company has numerous trademarks that are used in its businesses worldwide. In the CDIY segment, the STANLEY®, FatMax®, DEWALT®, Black & Decker®, Bostitch®, Bailey®, Powerlock®, Tape Rule Case Design®, DustBuster®, PorterCable®, and Workmate® of...

  • Page 21
    ... Canada and Western Europe. Also, certain large customers offer house brands that compete with some of the Company's product offerings as a lower-cost alternative. To remain profitable and defend market share, the Company must maintain a competitive cost structure, develop new products and services...

  • Page 22
    ... availability in the sources of the new technology drive down its cost could adversely affect the Company's results of operations. Market acceptance of the new products introduced in recent years and scheduled for introduction in 2013 and beyond may not meet sales expectations due to various factors...

  • Page 23
    ...'s cost of goods sold. Adverse changes in these import costs and restrictions, or the Company'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...

  • Page 24
    ... and other infrastructure. The Company relies heavily on computer systems to manage and operate its businesses, and record and process transactions. Computer systems are important to production planning, customer service and order fulfillment among other business-critical processes. Consistent and...

  • Page 25
    ... in emerging markets and relative stability in North America, the Company's future growth, profitability and financial liquidity could be affected, in several ways, including but not limited to the following depressed consumer and business confidence may decrease demand for products and services...

  • Page 26
    ... in recent years. Market conditions could make it more difficult for the Company to borrow or otherwise obtain the cash required for significant new corporate initiatives and acquisitions. In addition, there could be a number of follow-on effects from such a credit crisis on the Company's businesses...

  • Page 27
    ... will not be realized, the acquired businesses will lose market acceptance or profitability, the diversion of Company management's attention and other resources, the incurrence of unexpected liabilities, and the loss of key personnel and clients or customers of acquired companies. In addition, the...

  • Page 28
    ...'s business. Almost 50% of the Company's 2012 Annual Revenues were from the United States. The Company is targeting a 2-3% increase in organic growth in 2013 and 4-6% organic growth over the long term. Some of this growth will come from the U.S. market. A downturn in the U.S. economy would make it...

  • Page 29
    ... of December 29, 2012, the Company and its subsidiaries owned or leased significant facilities used for manufacturing, distribution and sales offices in 20 states and 17 foreign countries. The Company leases its corporate headquarters in New Britain, Connecticut. The Company has 90 other facilities...

  • Page 30
    ITEM 3. LEGAL PROCEEDINGS In the normal course of business, the Company is involved in various lawsuits and claims, including product liability, environmental and distributor claims, and administrative proceedings. The Company does not expect that the resolution of these matters will have a ...

  • Page 31
    ... Annual Report on Form 10-K. 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 29, 2012: Total Number Of Shares Purchased As Part Of A Publicly...

  • Page 32
    ...data: Dividends per share...Equity per share at year-end...Market price per share - high...Market price per share - low...Average shares outstanding (in 000's): Basic...Diluted...Other information: Average number of employees...Shareowners of record at end of year... 10,191 450 434 884 2.75 2.66...

  • Page 33
    ... The Company's 2011 results include $236 million (pre-tax) of merger and acquisition-related charges incurred in connection with the Black & Decker merger and other acquisition activities, such as Niscayah. These charges include facility closure-related charges, employee related matters, including...

  • Page 34
    ... 25% in 2011, including 17% in sales to the Company's two largest customers. As acquisitions in the various growth platforms (security, engineered fastening, infrastructure and healthcare) are made in future years, the proportion of sales to these valued U.S. and international home centers and mass...

  • Page 35
    ... of the business is part of the HHI sale and is expected to close no later than April 2013, as discussed below. The commercial portion of Tong Lung is being retained by the Company and is included within the Security segment. In June 2012, the Company acquired AeroScout for $238.8 million, net of...

  • Page 36
    ... of hand and power tools used for industrial and automotive repair purposes as well as advanced industrial storage solutions. Continuing to Invest in the Stanley Black & Decker Brands The Company has a strong portfolio of brands associated with high-quality products including Stanley®, FatMax...

  • Page 37
    ... management to understand business trends, as once the aforementioned anticipated cost synergies from the Black & Decker merger and other acquisitions are realized, such charges are not expected to recur. The merger and acquisition-related and other charges are as follows: 2012 The Company reported...

  • Page 38
    ...next few years: (1) increase presence in emerging markets in the Power Tools, Hand Tools and Commercial Hardware mid-price point categories, (2) create a "smart" tools and storage market using radio frequency identification ("RFID") and real-time locating system ("RTLS") technology, (3) leverage the...

  • Page 39
    ... rates in emerging markets, inclusive of continued revenue synergy realizations from the Black & Decker merger. Organic sales volume increased 5% in CDIY, 10% in Industrial and 2% in Security. CDIY's organic volume growth was primarily driven by strength in professional power tools via new product...

  • Page 40
    ... 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 electric power tools, lawn and garden products and home products. The Hand Tools, Fasteners & Storage business...

  • Page 41
    ..., fall management, and emergency call products. The MAS business sells automatic doors, commercial hardware, locking mechanisms, electronic keyless entry systems, keying systems, tubular and mortise door locksets. (Millions of Dollars) 2012 2011 2010 Net sales...$ Segment profit...$ % of Net sales...

  • Page 42
    ... acquired in 2010, and the Hydraulics business. The product lines within the Infrastructure business include custom pipe handling machinery, joint welding and coating machinery, weld inspection services and hydraulic tools, attachments and accessories. (Millions of Dollars) 2012 2011 2010 Net sales...

  • Page 43
    ... in North America, primarily driven by the Industrial and Automotive Repair and hydraulic tools businesses, in Europe, primarily from Engineered Fastening, and in the emerging markets, mostly from Industrial and Automotive Repair. On a pro forma basis, the Industrial segment net sales increased...

  • Page 44
    ..., and Stanley Solutions de Sécurité (SSDS) and GMT within the Security segment. The cash flow provided by investing activities in 2010 also includes $949 million of cash acquired as part of the Merger. Capital and software expenditures were $386.0 million in 2012, $302.1 million in 2011, and...

  • Page 45
    ... net proceeds. In November 2011, the Company issued $400 million of senior unsecured term notes with a 3.40% fixed coupon rate and received $399.6 million in proceeds. The Company used these proceeds to pay down commercial paper. In 2010, the Company received debt proceeds of $396.2 million relating...

  • Page 46
    ...The net proceeds of $729 million from the offering was used for general corporate purposes, including the repayment of short term debt and the refinancing of recent and near term debt maturities. In the third quarter of 2012, the Company repurchased $900 million of its long term debt via open market...

  • Page 47
    ... liabilities, the related amount will be included in the table above. However, due to the high degree of uncertainty regarding the timing of potential future cash flows associated with the $240.1 million of such liabilities at December 29, 2012, the Company is unable to make a reliable estimate...

  • Page 48
    ... actively managed through customer product and service pricing actions, procurement-driven cost reduction initiatives and other productivity improvement projects. The Company experienced inflation, primarily commodity related, of approximately $82 million, $236 million and $70 million in 2012, 2011...

  • Page 49
    ... merger of the Black & Decker U.S. defined contribution plan into the ESOP in 2011. ESOP expense could increase in the future if the market value of the Company's common stock declines. CRITICAL ACCOUNTING ESTIMATES - Preparation of the Company's Consolidated Financial Statements requires management...

  • Page 50
    ... underlying net assets of acquired businesses. The Company reported $7.021 billion of goodwill, $1.608 billion of indefinite-lived trade names and $1.327 billion of definite-lived intangibles at December 29, 2012. Management tests goodwill for impairment at the reporting unit level. A reporting unit...

  • Page 51
    ... further discussion. RISK INSURANCE - To manage its insurance costs efficiently, the Company self insures for certain U.S. business exposures and generally has low deductible plans internationally. For domestic workers' compensation, automobile and product liability (liability for alleged injuries...

  • Page 52
    ...'s ability to generate organic net sales increases of 2-3% in 2013 and 4-6% over the long term; (iv) the Company's ability to identify and execute upon acquisitions and sales opportunities to double its CDIY, IAR and Security businesses in the emerging markets while minimizing associated costs...

  • Page 53
    ... of technologies used in the Company's products and services; (xi) the Company's ability to minimize costs and sales or service disruptions arising from the transition from a direct sales model to a distributor model for its Mechanical Access Solutions business (xii) the Company's ability to manage...

  • Page 54
    ... in the United States of America. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Management has assessed the effectiveness of the Company's internal control over financial reporting as of December 29, 2012. In making its...

  • Page 55
    ...); President of Industrial Tools & Storage (2002); Vice President - Global Consumer Tools Marketing (2001); Vice President Consumer Sales America (1999). Executive Chairman since March 2010. President and Chief Executive Officer and Chairman of the Board of The Black & Decker Corporation (1990-2010...

  • Page 56
    ...); Vice President, Operations, Consumer Tools & Storage (2005). President, Fastening & Accessories since July 2012. President, Professional Power Tools & Products (2010); Vice President-Global Product Development of the Industrial Products Group, The Black & Decker Corporation (2009); Vice President...

  • Page 57
    ... 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K. EQUITY COMPENSATION PLAN INFORMATION Compensation plans under which the Company's equity securities are authorized for issuance at December 29, 2012 follow: (A) (B) (C) Number of securities remaining available for...

  • Page 58
    ... 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 59
    ...or 15(d) 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, Chief Executive Officer Date: February 20, 2013 Pursuant to the...

  • Page 60
    ... H. Griswold, IV * Eileen S. Kraus * Anthony Luiso * Marianne M. Parrs * Robert L. Ryan Director February 20, 2013 Director February 20, 2013 Director February 20, 2013 Director February 20, 2013 Director February 20, 2013 *By: /s/ Bruce H. Beatt Bruce H. Beatt (As Attorney-in-Fact) 46

  • Page 61
    ... Public Accounting Firm - Internal Control Opinion (page 51). Consolidated Statements of Operations - fiscal years ended December 29, 2012, December 31, 2011, and January 1, 2011 (page 52). Consolidated Statements of Comprehensive Income - fiscal years ended December 29, 2012, December 31, 2011...

  • Page 62
    Schedule II - Valuation and Qualifying Accounts Stanley Black & Decker, Inc. and Subsidiaries Fiscal years ended December 29, 2012, December 31, 2011, and January 1, 2011 (Millions of Dollars) ADDITIONS Charged to Charged Costs and To Other Expenses Accounts(b)(c) Beginning Balance (a) Deductions...

  • Page 63
    ... United States of America. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Management has assessed the effectiveness of Stanley Black & Decker Inc.'s internal control over financial reporting as of December 29, 2012. In making...

  • Page 64
    Report of Independent Registered Public Accounting Firm The Board of Directors and Shareholders of Stanley Black & Decker, Inc. We have audited the accompanying consolidated balance sheets of Stanley Black & Decker, Inc. and subsidiaries (the "Company") as of December 29, 2012 and December 31, 2011,...

  • Page 65
    ... of Independent Registered Public Accounting Firm The Board of Directors and Shareholders of Stanley Black & Decker, Inc. We have audited Stanley Black & Decker, Inc. and subsidiaries' (the "Company") internal control over financial reporting as of December 29, 2012, based on criteria established...

  • Page 66
    ... Fiscal years ended December 29, 2012, December 31, 2011, and January 1, 2011 (In Millions of Dollars, Except Per Share Amounts) 2012 2011 2010 Net Sales...$ Costs and Expenses Cost of sales...$ Selling, general and administrative...Provision for doubtful accounts...Other-net...Restructuring...

  • Page 67
    ... Fiscal years ended December 29, 2012, December 31, 2011, and January 1, 2011 (In Millions of Dollars) 2012 Net earnings...$ Other comprehensive income (loss): Currency translation adjustment and other...Unrealized losses on cash flow hedges, net of tax...Unrealized losses on net investment hedges...

  • Page 68
    ...) 2012 2011 Assets Current Assets Cash and cash equivalents...$ Accounts and notes receivable, net...Inventories, net...Prepaid expenses...Assets held for sale...Other current assets...Total Current Assets...Property, Plant and Equipment, net...Goodwill...Customer Relationships, net...Trade Names...

  • Page 69
    ... from sales of assets...Business acquisitions, net of cash acquired...Proceeds from sales of businesses, net of cash sold...Cash acquired from Black & Decker...Undesignated interest rate swap terminations...Proceeds (payments) for net investment hedge settlements...Net cash provided by (used in...

  • Page 70
    ... in Shareowners' Equity Fiscal years ended December 29, 2012, December 31, 2011, and January 1, 2011 (Millions of Dollars,...acquired businesses...Other, stock-based compensation related...Tax benefit related to stock options exercised...ESOP and related tax benefit...Balance December 31, 2011 Net...

  • Page 71
    ... accounts and transactions. The Company's fiscal year ends on the Saturday nearest to December 31. There were 52 weeks in the fiscal years 2012, 2011 and 2010. On March 12, 2010, a wholly owned subsidiary of The Stanley Works was merged with and into The Black & Decker Corporation ("Black & Decker...

  • Page 72
    ...15 3-5 The Company reports depreciation and amortization of property, plant and equipment in cost of sales and selling, general and administrative expenses based on the nature of the underlying assets. Depreciation and amortization related to the production of inventory and delivery of services are...

  • Page 73
    ...include expenses to acquire and manufacture 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...

  • Page 74
    ... and restricted stock units awarded to retirement eligible employees (those aged 55 and over, and with 10 or more years of service) is recognized on the grant date, or (if later) by the date they become retirement-eligible. POSTRETIREMENT DEFINED BENEFIT PLAN - The Company uses the corridor approach...

  • Page 75
    ... 29, 2012 and December 31, 2011, respectively, are reported within Other Assets in the Consolidated Balance Sheets. Financing receivables and long-term financing receivables are predominately related to certain security equipment leases with commercial businesses. Generally, the Company retains...

  • Page 76
    ... the year ended December 29, 2012 and $1,094.5 million ($966.4 million, net) for the year ended December 31, 2011. These sales resulted in a pre-tax loss of $3.0 million and $2.4 million for the years ended December 29, 2012 and December 31, 2011, respectively. These pre-tax losses include servicing...

  • Page 77
    ... division's tool, storage, radio frequency identification ("RFID")-enabled systems, and specialty supply product and service offerings. Tong Lung manufactures and sells commercial and residential locksets. The residential portion of the business was part of the HHI sale and is expected to close no...

  • Page 78
    ... the healthcare and commercial industries and adds an established provider of mobile workstations and asset tracking solutions. AlarmCap is a full service monitoring provider, which significantly increases the Company's Canadian footprint. Both acquisitions are part of the Company's Security segment...

  • Page 79
    ...acquired and liabilities assumed as part of the Merger: (Millions of Dollars) Cash and cash equivalents...$ Accounts and notes receivable, net...Inventories, net...Prepaid expenses and other current assets...Property, plant and equipment...Trade names...Customer relationships...Licenses, technology...

  • Page 80
    ... amounts) Year-to-Date 2012 2011 Net sales...$ 10,297.0 Net earnings attributable to common shareowners...448.4 Diluted earnings per share-continuing operations...2.69 $ 10,408.6 600.3 3.53 The 2012 pro-forma results were calculated by combining the results of Stanley Black & Decker with the...

  • Page 81
    ... were as follows: (Millions of Dollars) 2012 2011 Payroll and related taxes...$ Income and other taxes...Customer rebates and sales returns...Insurance and benefits...Accrued restructuring costs...Derivative financial instruments...Warranty costs...Deferred revenue...Forward stock purchase contract...

  • Page 82
    ... August 2012, the Company repurchased $250.0 million of The Stanley Works 6.15% senior notes due 2013, $350.0 million of The Black & Decker Corporation's 8.95% senior notes due 2014 and $300.0 million of The Black & Decker Corporation's 4.75% senior notes due 2014 by initiating an open market tender...

  • Page 83
    .... The Company executed a full and unconditional guarantee of the existing debt of The Black & Decker Corporation and Black & Decker Holdings, LLC (this guarantee is applicable to all of the Black & Decker outstanding notes payable), and Black & Decker executed a full and unconditional guarantee of...

  • Page 84
    ..., primarily commercial paper, for the fiscal years ended December 29, 2012 and December 31, 2011 were 0.4% and 0.3%, respectively. Convertible Preferred Units In November 2010, the Company issued 6,325,000 Convertible Preferred Units (the "Convertible Preferred Units"), each with a stated amount of...

  • Page 85
    ... the Convertible Preferred Stock will be payable, when, as and if declared by the Company's board of directors, quarterly in arrears on February 17, May 17, August 17 and November 17 of each year. Following the issuance of Convertible Preferred Stock upon settlement of a holder's Purchase Contracts...

  • Page 86
    ... 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 87
    ...value hedges or net investment hedges. Generally, commodity price exposures are not hedged with derivative financial instruments and instead are actively managed through customer pricing initiatives, procurement-driven cost reduction initiatives and other productivity improvement projects. A summary...

  • Page 88
    ... each reporting period and adjusts the carrying value of these assets accordingly. The risk of default is considered remote. In 2012 and 2011, significant cash flows related to derivatives including those that are separately discussed in Cash Flow Hedges, Fair Value Hedges and Net Investment Hedges...

  • Page 89
    ... Operations was a gain of $21.1 million in Cost of Sales. 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 2012, 2011 and 2010, an after-tax loss of $2.9 million, an...

  • Page 90
    ...As of December 31, 2011, the Company had foreign exchange contracts with notional values totaling $925.4 million outstanding hedging a portion of its pound sterling net investment. For the year ended December 29, 2012, maturing foreign exchange contracts resulted in net cash receipts of $5.8 million...

  • Page 91
    ... and the weighted average shares outstanding used to calculate basic and diluted earnings per share for the fiscal years ended December 29, 2012, December 31, 2011, and January 1, 2011. Earnings per Share Computation 2012 2011 2010 Numerator (in millions): Net earnings from continuing operations...

  • Page 92
    ... share activity for 2012, 2011 and 2010 was as follows: 2012 2011 2010 Outstanding, beginning of year...Shares issued as part of the merger...Shares issued from Equity Units Offering...Shares issued, other...Issued from treasury...Returned to treasury...Outstanding, end of year...Shares subject to...

  • Page 93
    ... 5.5 years 18.29 $ 2.7 years 31.4% 2.2% 2.7% 6.3 years 16.68 3.0 years As part of the Merger, the Company exchanged the pre-merger stock options of Black & Decker for 5.8 million Stanley Black & Decker stock options. The following assumptions were used in the valuation of pre-merger Black & Decker...

  • Page 94
    ... Plan ("ESPP") 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 85.0% of the fair market value of the shares on the grant date ($48.94 per share for fiscal year 2012 purchases) or 85.0% of...

  • Page 95
    ... if the employee terminates employment prior to the payout date. Long-Term Performance Awards: LTIP grants were made in 2010, 2011 and 2012. Each grant has separate annual performance goals for each year within the respective three year performance period. Earnings per share and return on capital...

  • Page 96
    ...purchase period which ends in April 2013. The average price is calculated using the volume weighted average price ("VWAP") of the Company's stock (... 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 ...

  • Page 97
    ... million in 2010. 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 monthly...

  • Page 98
    ... paid on the shares acquired with the 1991 internal loan were used solely to pay internal loan debt service in all periods. Dividends on ESOP shares, which are charged to shareowners' equity as declared, were $12.4 million in 2012, $12.2 million in 2011 and $9.7 million in 2010, net of the tax...

  • Page 99
    ...for certain retired employees in the United States and Canada. Approximately 10,600 participants are covered under these plans. Net periodic post-retirement benefit expense was comprised of the following elements: Other Benefit Plans 2011 (Millions of Dollars) 2012 2010 Service cost...$ Interest...

  • Page 100
    ......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 obligation...Net amount recognized...$ 1,501.0 6.6 62.9 (126.6) 100...

  • Page 101
    ... 2012 Other Benefits 2011 2010 Weighted-average assumptions used to determine benefit obligations at year end: Discount rate...Rate of compensation increase...Weighted-average assumptions used to determine net periodic benefit cost: Discount rate...Rate of compensation increase...Expected return...

  • Page 102
    ...of companies with large market capitalizations and to a lesser extent mid and small capitalization securities. Government securities primarily consist of U.S. Treasury securities and foreign government securities with de minimus default risk. Corporate fixed income securities include publicly traded...

  • Page 103
    ...instruments in markets that are not active; and model-derived valuations whose inputs and significant value drivers are observable. Level 3 - Instruments that are valued using unobservable inputs. The Company holds various derivative financial instruments that are employed to manage risks, including...

  • Page 104
    ..., and $36.3 million in merger and acquisition related costs, respectively. Research and development costs, which are classified in SG&A, were $174.8 million, $139.3 million and $124.5 million for fiscal years 2012, 2011 and 2010, respectively. O. RESTRUCTURING AND ASSET IMPAIRMENTS A summary of the...

  • Page 105
    ... 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 electric power tools, lawn and garden products and home products. The Hand Tools, Fasteners & Storage business...

  • Page 106
    ...corporate overhead. In 2011 the Company recorded $120 million of facility closure-related and other charges associated with the merger and other acquisitions across all segments, impacting segment profit by $20 million in CDIY, $15 million in Security, and $9 million in Industrial for the year ended...

  • Page 107
    ...corporate overhead. There were no charges impacting the Security segment for the year ended January 1, 2011. GEOGRAPHIC AREAS (Millions of Dollars) 2012 2011 2010 Net Sales United States...$ Canada...Other Americas...France...Other Europe...Asia...Consolidated...$ Property, Plant & Equipment United...

  • Page 108
    ... to foreign and state net operating loss carry forwards and a U.S. federal capital loss carry forward. A significant portion of the increase in the valuation allowance for the period ended December 29, 2012 pertains to the U.S. capital loss realized upon the sale of the HHI business. Capital losses...

  • Page 109
    ... of the following: (Millions of Dollars) 2012 2011 2010 United States...$ Foreign...Earnings from continuing operations before income taxes...$ 271.6 256.0 527.6 $ $ 171.9 476.5 648.4 $ $ (201.3) 369.9 168.6 Except for certain legacy Black & Decker foreign earnings as described below, all...

  • Page 110
    ...The Black & Decker Corporation, tax years 2008, 2009 and March 12, 2010 have been settled with the Internal Revenue Service as of December 29, 2012. For Stanley Black & Decker, Inc. tax years 2008 and 2009 are currently under audit. The Company also files many state and foreign income tax returns in...

  • Page 111
    ...to the warranty liability as new information becomes available. Following is a summary of the warranty liability activity for the years ended December 29, 2012, December 31, 2011, and January 1, 2011: (Millions of Dollars) 2012 2011 2010 Balance beginning of period...$ Warranties and guarantees...

  • Page 112
    ... of approximately 30 years or more. The EPA has asserted claims in federal court in Rhode Island against certain current and former affiliates of Black & Decker related to environmental contamination found at the Centredale Manor Restoration Project Superfund site, located in North Providence, Rhode...

  • Page 113
    ... Tong Lung business for approximately $100 million is expected to occur no later than April 2013. The $100 million payment relating to the Second Closing has been held in escrow at December 29, 2012. As part of the purchase and sale agreement, the Company will perform transition services relating to...

  • Page 114
    ...the year ended December 29, 2012: 4.90% Notes due 2012; 6.15% Notes due 2013; 8.95% Notes due 2014; and 4.75% Notes due 2014. The Stanley Notes and the Black & Decker Notes were issued under indentures attached as Exhibits to the Company's Annual Report on Form 10-K. Each of the Black & Decker Notes...

  • Page 115
    ..., Millions of Dollars) Year Ended December 29, 2012 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 116
    ..., Millions 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 117
    ... (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 118
    ... December 29, 2012 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...Assets held for sale...Other current assets...Total...

  • Page 119
    ... 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...Assets held for sale...Other current assets...Total...

  • Page 120
    ...Dollars) Year Ended December 29, 2012 Parent Stanley Black & Decker, Inc. The Black & Decker Corporation Non-Guarantor Subsidiaries Eliminations Consolidated Cash (used in) provided by operating activities...$ Investing Activities...Capital expenditures...Proceeds from sales of assets...Business...

  • Page 121
    ...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 expenditures...Proceeds from sales of assets...Business...

  • Page 122
    ... 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 expenditures...Proceeds from sales of assets...Business...

  • Page 123
    ... Third Fourth Year 2012 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 from...

  • Page 124
    ...share, respectively. During 2011, the Company recognized $236 million ($186 million after tax), or $1.09 per diluted share, in charges on continuing operations primarily related to the Black & Decker merger which included facility closure-related charges, integration-related administrative costs and...

  • Page 125
    ... by reference to Exhibit 3(ii) to the Company's Quarterly Report on Form 10-Q filed on May 2, 2012). Indenture, dated as of June 26, 1998, by and among Black & Decker Holdings Inc., as Issuer, The Black & Decker Corporation, as Guarantor, and The First National Bank of Chicago, as Trustee...

  • Page 126
    ... 4.1 to the Company's Current Report on Form 8-K filed on November 22, 2011). Fifth Supplemental Indenture, dated as of November 6, 2012, 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 127
    ...'s Current 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...

  • Page 128
    ... the year ended December 29, 2007).* Stanley Black & Decker Supplemental Retirement Account Plan (as in effect, January 1, 2011, except as otherwise provided therein) (incorporated by reference to the Company's Annual Report on Form 10-K for the period ended January 1, 2011).* Stanley Black & Decker...

  • Page 129
    ... to the Company's Quarterly report on Form 10-Q filed on November 7, 2011).* 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 10K for the year ended...

  • Page 130
    ... 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. 31.1 (a) Certification by Chief Executive Officer pursuant to Rule 13a...

  • Page 131
    ... AGREEMENT (the "Agreement"), dated _____, 2012 is made by and between Stanley Black & Decker, Inc., a Connecticut corporation (the "Company"), and _____ (the "Executive"). WHEREAS, the Board recognizes that, as is the case with many publicly held corporations, the possibility of a Change in Control...

  • Page 132
    ... of an event or circumstance constituting Good Reason, and (ii) the average annual bonus earned by the Executive pursuant to any annual bonus or incentive plan maintained by the Company in respect of the three fiscal years ending immediately prior to the fiscal year in which occurs the Date of...

  • Page 133
    ...Company shall provide the Executive with third-party outplacement services suitable to the Executive's position for the period following the Executive's Date of Termination and ending on December 31 of the second calendar year...whole or part), to the Excise Tax, then, after taking into account any ...

  • Page 134
    ... any provisions of this Agreement to the contrary, if the Executive is a "specified employee" (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be...

  • Page 135
    ... in this Section shall be deemed to prohibit the Executive from acquiring, solely as an investment through market purchases, securities of any corporation which are registered under Section 12 of the Exchange Act and which are publicly traded so long as he is not part of any group in control of such...

  • Page 136
    ... writing in accordance herewith, except that notice of change of address shall be effective only upon actual receipt: To the Company: Stanley Black & Decker, Inc. 1000 Stanley Drive New Britain, Connecticut 06053 Attention: Corporate Secretary 12. Miscellaneous. No provision of this Agreement may be...

  • Page 137
    ... of the Code. (E) "Beneficial Owner" shall have the meaning set forth in Rule 13d-3 under the Exchange Act. (F) "Board" shall mean the Board of Directors of the Company. (G) "Cause" for termination by the Company of the Executive's employment shall mean (i) the willful and continued failure by the...

  • Page 138
    ... such information relating to (1) the development, research, testing, manufacturing, store operational processes, marketing and financial activities, including costs, profits and sales, of the Company and its Subsidiaries, (2) the products and all formulas therefor, (3) the costs, sources of supply...

  • Page 139
    ...Section 6.1 hereof, any claim by the Executive that Good Reason exists shall be presumed to be correct unless the Company establishes to the Board by clear and convincing evidence that Good Reason does not exist. (W) "Grantor Trust" shall have the meaning set forth in Section 6.5 hereof. (X) "Notice...

  • Page 140
    .... (FF) "Subsidiary" means any corporation or other business organization of which the securities having a majority of the normal voting power in electing the board of directors or similar governing body of such entity are, at the time of determination, owned by the Company directly or indirectly...

  • Page 141
    ... 10.19 The Stanley Black & Decker 2012 Management Incentive Compensation Plan 1. Purpose. The purpose of Stanley Black & Decker Management Incentive Compensation Plan is to reinforce corporate, organizational and business-development goals, to promote the achievement of year-to-year financial and...

  • Page 142
    ... of the Board of Directors, the composition of which shall at all times consist solely of two or more "outside directors" within the meaning of section 162(m) of the Code. "Company" shall mean Stanley Black & Decker, Inc. and its successors. "Covered Employee" shall have the meaning set forth in...

  • Page 143
    (p) "Plan" shall mean the Stanley Black & Decker Management Incentive Compensation Plan, as amended from time to time. "Retirement" shall mean a Participant's termination of employment with the Company or an Affiliate thereof at or after attaining age 55 and completing ten years of service. (q) ...

  • Page 144
    ...Company prior to delivery of such payment, an amount sufficient to satisfy any federal, state, local or other withholding tax requirements related thereto. Amendment, Termination and Duration of the Plan. The Board...made by the Committee, in good faith, taking into account such factors as it deems ...

  • Page 145
    incurs a termination by the Company without Cause or if the Participant terminates his or her employment for Good Reason, in each case, prior to the end of the applicable performance period, then, unless otherwise provided for in a Participant's employment or severance agreement or in a severance ...

  • Page 146
    Exhibit 12 COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES For the fiscal years ended December 29, 2012, December 31, 2011, January 1, 2011, January 2, 2010 and January 3, 2009 (Millions of Dollars) Fiscal Year 2012 2011 2010 2009 2008 Earnings from continuing operations before income taxes and...

  • Page 147
    ... Holdings Inc...Cybershift.com, Inc...Delta International Machinery Corp...Devilbiss Air Power Company...Embedded Technologies, LLC...Emglo Products, LLC...Emhart (Asia) Limited...Emhart Hardware Sales Corporation...Emhart Harttung Inc...Emhart Teknologies LLC... United States (Michigan) United...

  • Page 148
    ..., L.L.C...Stanley Fastening Systems, LP...Stanley Housing Fund, Inc...Stanley International Holdings, Inc...Stanley Logistics, L.L.C...Stanley Security Solutions, Inc...Stanley Structures, Inc...Stanley Supply & Services, Inc...The Black & Decker Corporation...The Farmington River Power Company...

  • Page 149
    ... GP Inc...Frisco Finance LP...Les Portes Auto Magique...Lista International, Ltd...Mac Tools Canada Inc...Microtec Enterprises, Inc...Mont-Hard (Canada) Inc...Stanley Black & Decker Canada Corporation...Stanley CLP1... Argentina Australia Australia Australia Australia Australia Australia Australia...

  • Page 150
    ... Manufacturing, Distribution & Global Purchasing Holdings LP...Chiro (Cayman) Holdings Ltd...Jointech Corporation, Ltd...Reid Services Limited...Wintech Corporation Limited...Maquinas y Herramientas Black & Decker de Chile S.A...Anzi Masterfix Tool Ltd...Beijing Bostitch Fastening Systems Co., Ltd...

  • Page 151
    ... Commerciale...Stanley Doors France, S.A.S...Stanley France, S.A.S...Stanley France Services, S.A.S...Stanley Healthcare Solutions France Sarl...Stanley Security France SAS...Stanley Solutions de Sécurité SAS...Stanley Tools, S.A.S...B.B.W. Bayrische Bohrerwerke GmbH...Black & Decker Holdings GmbH...

  • Page 152
    ......Stanley Black & Decker India Limited...Stanley Works (India) Private Limited...Baltimore Financial Services Company...Baltimore Insurance Limited...Belco Investments Company...Black & Decker International Finance 1...Black & Decker International Finance 3...Chesapeake Falls Holdings Company...

  • Page 153
    ...Holdings B.V...Stanley European Holdings II B.V...Stanley Healthcare Solutions Europe B.V...Stanley Israel Investments B.V...Stanley Security Nederland B.V...Stanley Works Holdings B.V...Stichting Beheer Intellectuele Eigendomsrechten Blick Benelux B.V...Black & Decker (New Zealand) Limited...Powers...

  • Page 154
    ... GmbH...Stanley Black & Decker Holding GmbH...Stanley Black & Decker Sales GmbH...Stanley Security Switzerland SA...Stanley Works (Europe) GmbH...Besco Pneumatic Corporation...Fastener Jamher Taiwan Inc...Lucky International (Samoa) Ltd...Stanley Chiro International Ltd...Stanley Fastening Systems...

  • Page 155
    ... Services Ltd...Spiralock of Europe Ltd...Stanley Black & Decker Innovations Limited...Stanley Black & Decker UK Holdings Limited...Stanley Black & Decker UK Limited...Stanley Healthcare Solutions Ltd...Stanley Security Solutions - Europe Limited...Stanley Security Solutions Ltd...Stanley Security...

  • Page 156
    ...of Stanley Black & Decker, Inc. and subsidiaries (the "Company") of our reports dated February 20, 2013 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...

  • Page 157
    ... and Kathryn P. Sherer our true and lawful attorneys with full power of substitution, to sign for us and in our names in the capacities indicated below, the Annual Report on Form 10-K for the year ended December 29, 2012 of the Corporation filed herewith (the "Form 10-K"), and any and all amendments...

  • Page 158
    ..., IV /s/ Eileen S. Kraus Eileen S. Kraus /s/ Anthony Luiso Anthony Luiso /s/ Marianne M. Parrs Marianne M. Parrs /s/ Robert L. Ryan Robert L. Ryan Director February 19, 2013 Director February 18, 2013 Director February 19, 2013 Director February 19, 2013 Director February 18, 2013 144

  • Page 159
    ... 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. /s/ John F. Lundgren Date: February 20, 2013 John F. Lundgren Chief Executive Officer...

  • Page 160
    ... Jr., certify that: 1. I have reviewed this Annual Report on Form 10-K of Stanley Black & Decker, Inc. and subsidiaries; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of...

  • Page 161
    ...connection with the Annual Report of Stanley Black & Decker, Inc. (the "Company") on Form 10-K for the period ending December 29, 2012 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 162
    ... with the Annual Report of Stanley Black & Decker, Inc. (the "Company") on Form 10-K for the period ending December 29, 2012 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 163
    ...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 & Government relations at (860) 827-3833 or by mail at 1000 stanley Drive, new Britain, Ct...

  • Page 164