Black & Decker 2015 Annual Report Download

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WHAT
MAKES US
DIFFERENT
2015 ANNUAL REPORT
YEARINREVIEW.STANLEYBLACKANDDECKER.COM

Table of contents

  • Page 1
    WHAT MAKES US DIFFERENT 2015 A N N UA L R E P O R T YEARINREVIEW.STANLEYBLACKANDDECKER.COM

  • Page 2
    HOW WE OPERATE HOW WE INNOVATE HOW WE GROW HOW WE ARE ECOSMARTâ„¢

  • Page 3
    ... Tools & Storage and Engineered Fastening platforms, while at the same time continuing the positive trajectory in Security. VISIT THE 2015 YEAR IN REVIEW WEBSITE Visit yearinreview. stanleyblackanddecker. com to view stories and pictures that bring exciting aspects of the Stanley Black & Decker...

  • Page 4
    ... point products in emerging markets. Engineered Fastening achieved 4% organic growth, led by its automotive business and within Security, Europe posted 3% organic growth - its best performance in years - while our North America mechanical locks business grew 4% organically • Improved the Company...

  • Page 5
    ... operating margin rate • The post-Black & Decker merger era of 2010 through the present day, when we became the global leader in tools & storage, the number two player in both commercial electronic security and engineered fastening solutions and achieved annual average organic growth closer to...

  • Page 6
    ...• Our Tools & Storage business is the tool company to own with its iconic brands, robust innovation machine, global scale, and broad offering of power and hand tools and related products across many channels in both developed and developing markets • Our Engineered Fastening business is a highly...

  • Page 7
    ... is a comprehensive initiative designed to leverage the power of digital technology and advanced analytics to challenge existing paradigms and improve our products, processes, business models and how our people operate. We are infusing new talent and capabilities into our organization and promoting...

  • Page 8
    ... vision, we believe our 173-year-old Company is as resilient and vital as ever, well prepared to face and capitalize on these forces of change. JOHN F. LUNDGREN Chairman & Chief Executive Officer JAMES M. LOREE President & Chief Operating Officer 06 STANLEY BLACK & DECKER 2015 ANNUAL REPORT

  • Page 9
    ... the first quarter of 2015, the Company combined the CDIY business with certain complementary elements of the IAR and Healthcare businesses (formerly part of the Industrial and Security segments, respectively) to form one Tools & Storage business. As a result of this change, the legacy CDIY segment...

  • Page 10
    ...Management believes it is important for the ability to determine the earnings power of the Company. (b), (c), (d), (e) and (f) refer to the inside back cover. (MILLIONS OF DOLLARS) 2015 2014 2013 2012 . % 2011 Net...54 366 $ 1,691 $ 1,145 08 STANLEY BLACK & DECKER 2015 ANNUAL REPORT . % $

  • Page 11
    ...more of the Company's product lines. Total return assumes reinvestment of dividends. Comparison of -Year Cumulative Total Return VALUE OF $ INVESTMENT AT YEAR END $ $ $ $ $ THE POINTS IN THE ABOVE TABLE ARE AS FOLLOWS: 2010 2011 2012 2013 2014 2015 Stanley Black & Decker S&P 500 Peer...

  • Page 12
    ... BUSINESS IN TOOLS AND STORAGE #1 INDUSTRIAL $2.0B • STANLEY Engineered Fastening • Infrastructure SECURITY $2.1B IN ENGINEERED FASTENING #2 • Commercial Electronic Security • Mechanical Access A GLOBAL INDUSTRIAL LEADER TOOLS & STORAGE $7.1B • Power Tools & Accessories • Hand...

  • Page 13
    ... TM brings to Stanley Black & Decker, we are sharing our safety and environmental performance results in addition to our financial performance. We have realigned our business strategy to ensure our actions improve our operations, our products, our communities, our employees and the protection...

  • Page 14
    ... & Chief Financial Officer Jon Michael Adinolfi President, Hand Tools & Storage, Global Tools & Storage Jeffery D. Ansell Senior Vice President & Group Executive, Global Tools & Storage Govind Arora President, Latin America, Global Emerging Markets Aru Bala President, Stanley Security Europe Michael...

  • 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
    ... MARKET RISK ...FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ...CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE...CONTROLS AND PROCEDURES ...OTHER INFORMATION ...PART III DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE ...EXECUTIVE COMPENSATION...SECURITY...

  • Page 17
    ... to Stanley Black & Decker, Inc. The Company is a diversified global provider of hand tools, power tools and related accessories, mechanical access solutions (i.e. automatic doors and commercial locking systems), electronic security and monitoring systems, healthcare solutions, engineered fastening...

  • Page 18
    ... and cordless electric power tools sold primarily under the BLACK+DECKER brand, lawn and garden products, including hedge trimmers, string trimmers, lawn mowers, edgers and related accessories, and home products such as hand-held vacuums, paint tools and cleaning appliances. Power tool accessories...

  • Page 19
    ... Customers A significant portion of the Company's Tools & Storage products are sold to home centers and mass merchants in the U.S. and Europe. A consolidation of retailers both in North America and abroad has occurred over time. While this consolidation and the domestic and international expansion...

  • Page 20
    ... years due to labor disputes. The Company believes that its relationship with its employees is good. Research and Development Costs Research and development costs, which are classified in SG&A, were $188.0 million, $174.6 million and $170.7 million for fiscal years 2015, 2014 and 2013, respectively...

  • Page 21
    ... can have a negative impact on sales. If customers in the Convergent Security Solutions ("CSS") business are dissatisfied with services and switch to competitive services, or disconnect for other reasons such as preference for digital technology products or other technology enhancements not then...

  • Page 22
    ... 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 America and abroad has occurred over time and the increasing size and importance of individual customers...

  • 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
    ... from Europe and 16% from various emerging market countries. Each of the Company's segments generates sales from these marketplaces. While the Company believes any downturn in the European or emerging marketplaces might be offset to some degree by the relative stability in North America, the Company...

  • 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
    ... and clients or customers of acquired companies. In addition, the success of the Company's long-term growth and repositioning strategy will depend in part on successful general reorganization including its ability to combine businesses and operations; integrate departments, systems and procedures...

  • Page 28
    ...'s financial condition and operating results. If the Company were required to write-down all or part of its goodwill, indefinite-lived trade names, or other definite-lived intangible assets, its net income and net worth could be materially adversely affected. As a result of the Black and Decker...

  • Page 29
    ...and sales offices in 19 states and 16 foreign countries. The Company leases its corporate headquarters in New Britain, Connecticut. The Company has 78 other facilities that are larger than 100,000 square feet. These facilities are broken out by segment as follows: Owned Leased Total Tools & Storage...

  • Page 30
    ...matter was effective November 16, 2015. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company's common stock is listed and traded on the New York Stock Exchange, Inc...

  • Page 31
    October 2016 and March 2017, respectively, or earlier at the Company's option. Refer to Note J, Capital Stock, of the Notes to Consolidated Financial Statements in Item 8 for further discussion. 17

  • Page 32
    ... to Note E, Acquisitions, of the Notes to Consolidated Financial Statements in Item 8 and prior year 10-K filings for further information. (Millions of Dollars) 2015 2014 2013 (a) 2012 (b) 2011 (c) Continuing Operations: Net sales ...Net earnings from continuing operations attributable to common...

  • Page 33
    ... $2.55 per diluted share, related to Security Spain and Italy as well as HHI, partially offset by losses associated with two small businesses previously discussed. The net (loss) earnings from discontinued operations in 2013 and 2012 include net gains related to the HHI sale of $4.7 million and $358...

  • Page 34
    ... of power and hand tools across many channels in both developed and developing markets. The Engineered Fastening business is a highly profitable, GDP+ growth business offering high value-added innovative solutions with recurring revenue attributes and global scale. The Convergent Security Solutions...

  • Page 35
    ... its emerging market mid-price point product strategy. GQ is headquartered in Qidong, China and has been consolidated into the Company's Tools & Storage segment. In February 2013, the Company acquired a 100% ownership interest in Infastech for a total purchase price of $826.4 million, net of...

  • Page 36
    ... is consistent with the Company's strategy to continue to gain market share and consolidate the tool industry. The decision was based on the businesses' powerful family of brands, global scale and breadth of products across power and hand tools, storage and accessories, in addition to diverse...

  • Page 37
    ... and more effective and far reaching through the Company's products, solutions and analytics. Digital Excellence means leveraging the power of emerging technologies across the Company's businesses to connected devices, the Internet of Things, and big data, as well as social and mobile, even...

  • Page 38
    ... drive outsized share gains and margin expansion. • These five pillars will serve as a powerful value driver in the years ahead, feeding the Company's new product innovation machine, embracing outstanding commercial and supply chain excellence, embedding digital into the various business models...

  • Page 39
    ... in North America and emerging markets, which more than offset organic growth in Europe. In the Industrial segment, organic sales grew 2% relative to 2014 due to strong organic growth in the Engineered Fastening business primarily as a result of strong global automotive revenues. Net sales were...

  • Page 40
    ... and cordless electric power tools sold primarily under the BLACK+DECKER brand, lawn and garden products including hedge trimmers, string trimmers, lawn mowers, edgers, and related accessories and home products such as hand held vacuums, paint tools and cleaning appliances. Power tool accessories...

  • Page 41
    ... 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) 2015 2014 2013 Net sales ...$ Segment profit ...$ % of Net sales...

  • Page 42
    ...flat year-over-year while foreign currency fluctuations resulted in a 2% decrease in net sales. Organic growth of 1% in North America and emerging markets was primarily due to growth within the commercial electronics business as a result of vertical selling solutions and the automatic doors business...

  • Page 43
    ... 2014 actions resulted in annual net cost savings of approximately $50 million in 2015, which was primarily related to the Tools & Storage segment. During 2013, the Company recognized $173.7 million of net restructuring charges primarily associated with the Black & Decker merger, Niscayah and other...

  • Page 44
    ... a major financial institution. The $302 million of payments on long-term debt related to the repurchase of $300 million of Black & Decker Corporation 5.75% senior notes, which resulted in the Company paying a premium on the debt extinguishment of $43 million. In January 2013, the Company elected to...

  • Page 45
    ...as well as its commercial paper program (S&P A-1, Fitch F2, Moody's P-2). There have been no changes to any of the ratings during 2015. Failure to maintain strong investment grade rating levels could adversely affect the Company's cost of funds, liquidity and access to capital markets, but would not...

  • Page 46
    ... 2014 and March 2015, the Company entered into forward share purchase contracts which obligate the Company to pay $150.0 million and $350.0 million, respectively, plus additional amounts related to the forward component of the contracts to the respective financial institution counterparties not...

  • Page 47
    ... to debt service requirements. Management estimates the foreign currency impact from its derivative financial instruments outstanding at the end of 2015 would have been approximately $27 million pre-tax loss based on a hypothetical 10% adverse movement in all net derivative currency positions; this...

  • Page 48
    ... million in 2015, $0.7 million in 2014, and $1.9 million in 2013. 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 to make estimates...

  • Page 49
    ... value is less than cost, the Company writes down the related inventory to that value. If a write-down to the current market value is necessary, the market value cannot be greater than the net realizable value, or ceiling (defined as selling price less costs to sell and dispose), and cannot be lower...

  • Page 50
    ... recently implemented SFS 2.0 program), and Infrastructure's leading market position in its respective industries. In the event that future operating results of any of the Company's reporting units do not meet current expectations, management, based upon conditions at the time, would consider taking...

  • Page 51
    ... process, it is possible the ultimate costs will differ from this estimate. WARRANTY - The Company provides product and service warranties which vary across its businesses. The types of warranties offered generally range from one year to limited lifetime, while certain products carry no warranty...

  • Page 52
    ... centers, as well as certain U.S. personal property, predominantly vehicles and equipment. The programs qualify as operating leases for accounting purposes, such that only the monthly rent expense is recorded in the Statement of Operations and the liability and value of the underlying assets are...

  • Page 53
    ...'s ability to negotiate satisfactory payment terms under which the Company buys and sells goods, services, materials and products; (xxiii) the Company's ability to successfully develop, market and achieve sales from new products and services; and (xxiv) the availability of cash to repurchase shares...

  • Page 54
    ... obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date hereof. Investors are advised, however, to consult any further disclosures made on related subjects in the Company's reports filed with the Securities and Exchange...

  • Page 55
    ... statements included in this annual report, has issued an attestation report on the registrant's internal control over financial reporting, a copy of which appears on page 51. Under the supervision and with the participation of management, including the Company's Chairman and Chief Executive Officer...

  • Page 56
    ... Officer, Stanley Security Solutions (2006). Senior Vice President & President, Global Emerging Markets, since October 2012. President, Construction & DIY, Latin America (2010); Vice President and General Manager - Latin America, Power Tools & Accessories, The Black & Decker Corporation (2008); Vice...

  • Page 57
    ...Sales & Marketing - Global Tools & Storage (2015). President, Construction & DIY, Europe and ANZ (2012). President, Construction & DIY, EMEA (2010); President-Europe, Middle East, and Africa, Power Tools and Accessories, The Black & Decker Corporation (2008); Vice President-Consumer Products (Europe...

  • Page 58
    ... Beneficial Owners", "Security Ownership of Directors and Officers", and "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...

  • Page 59
    ... 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 Form 10-K. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES...

  • Page 60
    ... 13 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, Chairman and Chief Executive Officer Date: February 19, 2016...

  • Page 61
    ... BLACK & DECKER, INC. AND SUBSIDIARIES INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE Schedule II - Valuation and Qualifying Accounts is included in Item 15 (page 48). Management's Report on Internal Control Over Financial Reporting (page 49). Report of Independent Registered Public...

  • Page 62
    ... II - Valuation and Qualifying Accounts Stanley Black & Decker, Inc. and Subsidiaries Fiscal years ended January 2, 2016, January 3, 2015, and December 28, 2013 (Millions of Dollars) ADDITIONS Charged To Charged Costs And To Other Expenses Accounts (b) Beginning Balance (a) Deductions Ending...

  • Page 63
    ...- Integrated Framework (2013 Framework). Management concluded that based on its assessment, Stanley Black & Decker, Inc.'s internal control over financial reporting was effective as of January 2, 2016. Ernst & Young LLP, Registered Public Accounting Firm included in this annual report, has issued an...

  • Page 64
    ...basic financial statements taken as a whole, presents fairly 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...

  • 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.'s and subsidiaries (the "Company's") internal control over financial reporting as of January 2, 2016, based on criteria established...

  • Page 66
    ... Statements of Operations Fiscal years ended January 2, 2016, January 3, 2015, and December 28, 2013 (In Millions of Dollars, Except Per Share Amounts) 2015 2014 2013 Net Sales ...$ Costs and Expenses...Cost of sales...$ Selling, general and administrative ...Provision for doubtful accounts...

  • Page 67
    Consolidated Statements of Comprehensive Income (Loss) Fiscal years ended January 2, 2016, January 3, 2015, and December 28, 2013 (In Millions of Dollars) 2015 Net earnings ...$ Other comprehensive loss: Currency translation adjustment and other...Unrealized (losses) gains on cash flow hedges, net ...

  • Page 68
    ...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, net...Other Intangible Assets...

  • Page 69
    ... Activities: Capital expenditures...Proceeds from sales of assets ...Business acquisitions, net of cash acquired ...(Payments) proceeds from sales of businesses, net of cash sold...Proceeds (payments) for net investment hedge settlements...Other...Net cash used in investing activities ...Financing...

  • Page 70
    ...Statements of Changes in Shareowners' Equity Fiscal years ended January 2, 2016, January 3, 2015, and December 28, 2013... 2012 ...$ Net ...businesses ...Stock-based compensation related ...Tax benefit related to stock options exercised ...ESOP and related tax benefit ...Balance December 28, 2013 ...$ Net...

  • Page 71
    ...part of the Industrial and Security segments, respectively) to form one Tools & Storage business. The Company recast segment net sales and profit for all years presented to align with this change in organizational structure. There was no impact to the consolidated financial statements of the Company...

  • 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
    ... the customer is contingent upon the delivery of monitoring services. The Company's contract sales for the installation of security intruder systems and other construction-related projects are recorded under the percentage-of-completion method. Profits recognized on security contracts in process are...

  • Page 74
    ... 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 75
    ... 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating the new guidance to determine the impact it may have on its consolidated financial statements. In November 2015, the FASB issued ASU 2015-17, "Income Taxes (Topic 740): Balance Sheet Classification...

  • Page 76
    ... accepted accounting principles. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. The Company does not expect this new guidance to have a significant impact on its consolidated financial statements...

  • Page 77
    ... as held for sale) that have not been reported in financial statements previously issued or available for issue. The Company adopted this standard in the first quarter of 2015. B. ACCOUNTS AND NOTES RECEIVABLE (Millions of Dollars) 2015 2014 Trade accounts receivable...$ Trade notes receivable...

  • Page 78
    ... totaled $416.9 million for the year ended January 2, 2016 and $400.6 million for the year ended January 3, 2015. All cash flows under the program are reported as a component of changes in accounts receivable within operating activities in the Consolidated Statements of Cash Flows since all the...

  • Page 79
    ...On February 27, 2013, the Company acquired a 100% ownership interest in Infastech for a total purchase price of $826.4 million, net of cash acquired. Infastech designs, manufactures and distributes highly-engineered fastening technologies and applications for a diverse blue-chip customer base in the...

  • Page 80
    ... and Security segments, respectively) to form one Tools & Storage business. As a result, the Company reclassed $569 million of goodwill to the Tools & Storage segment as of January 3, 2015 to reflect the change in organizational structure. There was no impact to the consolidated financial statements...

  • Page 81
    ... recently implemented SFS 2.0 program), and Infrastructure's leading market position in its respective industries. In the event that future operating results of any of the Company's reporting units do not meet current expectations, management, based upon conditions at the time, would consider taking...

  • Page 82
    ... as follows: (Millions of Dollars) 2015 2014 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 share purchase contract...

  • Page 83
    ...may redeem the debentures in whole, but not in part, before December 15, 2018, if certain changes in tax laws, regulations or interpretations occur at 100% of their principal amount plus accrued and unpaid interest. In December 2013, the Company also issued 3,450,000 Equity Units, each with a stated...

  • Page 84
    ... 3, 2015, the Company had no commercial paper borrowings outstanding against the Company's $2.0 billion commercial paper program. In December 2015, the Company amended and restated its existing five-year $1.5 billion committed credit facility with the concurrent execution of a new five-year $1.75...

  • Page 85
    ...Subordinated Notes will change such that they rank senior to all of the Company's existing and future unsecured junior subordinated debt and junior to all of the Company's existing and future senior debt. Interest expense of $7.8 million was recorded for both 2015 and 2014 related to the contractual...

  • Page 86
    ... $5.00, a number of shares of common stock equal to (A) the difference between such Daily Conversion Value and $5.00, divided by (B) the daily volumeweighted average price for such trading day. The Company settled all conversions on December 24, 2015 by paying $632.5 million in cash for the $100 par...

  • Page 87
    ... of common stock. 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, a variety of financial instruments such as interest rate...

  • Page 88
    ... each reporting period and adjusts the carrying value of these assets accordingly. The risk of default is considered remote. In 2015 and 2014, 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
    ... Consolidated Statement of Operations was a loss of $57.4 million and a loss of $0.2 million, respectively, in Cost of Sales. There was no impact related to the interest rate contracts' hedged items for any period presented. For 2015, an after-tax gain of $22.4 million and for 2014 and 2013, after...

  • Page 90
    ... contracts maturing on various dates through 2015. The income statement impacts related to derivatives not designated as hedging instruments for 2015 and 2014 are as follows (in millions): Year-to-Date 2015 Amount of Gain (Loss) Recorded in Income on Derivative Year-to-Date 2014 Amount of Gain...

  • Page 91
    ...of diluted shares outstanding because the effect would be anti-dilutive (in thousands): 2015 2014 2013 Number of stock options ... 646 634 307 As described in detail below, under "Other Equity Arrangements", the Company issued Equity Units comprised of $345.0 million of Notes and Equity Purchase...

  • Page 92
    ... outstanding at that time. In April 2013, the Company received 617,037 shares upon settlement of the capped call options purchased in November 2012. In December 2012, upon executing an accelerated share repurchase contract, the Company received 9,345,794 shares. The Company received an additional...

  • Page 93
    ...01 per right at any time prior to the tenth day following the public announcement that a person has acquired beneficial ownership of 15% or more of the outstanding shares of common stock. In the event that the Company is acquired in a merger or other business combination transaction, provision shall...

  • Page 94
    ... on the grant date ($71.29 per share for fiscal year 2015 purchases) or 85.0% of the fair market value of the shares on the last business day of each month. A maximum of 6,000,000 shares are authorized for subscription. During 2015, 2014 and 2013, 182,039 shares, 128,144 shares and 172,259 shares...

  • Page 95
    ... and 2018 for the 2013, 2014 and 2015 grants, respectively. Total payouts are based on actual performance in relation to these goals. In 2010, the Company initiated a Working Capital Incentive Plan under its 2009 Long Term Incentive Plan. The program provided executives the opportunity to receive...

  • Page 96
    ... market adjustments. In February 2015, the Company net-...2013, the Company settled the contract and received 1.6 million shares determined by the average price per share paid by the financial...100, between 1.0122 and 1.2399 shares of the Company...change occurs, in certain circumstances, the number...

  • Page 97
    ...number of shares of common stock underlying the maximum number of shares of Convertible Preferred Stock issuable upon settlement of the Purchase Contracts. Each of the capped call transactions had a term of approximately five years...2010. On August 5, 2015, the Company net-share settled the capped ...

  • Page 98
    ... Statements of Operations And Comprehensive Income (Loss) Unrealized gain on cash flow hedges ...Unrealized losses on cash flow hedges...Tax effect ...Unrealized gains (losses) on cash flow hedges, net of tax ...Amortization of defined benefit pension items: Actuarial losses and prior service...

  • Page 99
    ... million in 2015, $10.6 million in 2014 and $12.3 million in 2013, net of the tax benefit which is recorded within equity. Dividends on ESOP shares were utilized entirely for debt service in all years. Interest costs incurred by the ESOP on the 1991 internal loan, which have no earnings impact, were...

  • Page 100
    ... employees in the United States and Canada. Approximately 12,900 participants are covered under these plans. Net periodic post-retirement benefit expense was comprised of the following elements: (Millions of Dollars) 2015 Other Benefit Plans 2014 2013 Service cost...$ Interest cost...Prior service...

  • Page 101
    ...Balance Sheets, are shown below. U.S. Plans (Millions of Dollars) 2015 2014 Non-U.S. Plans 2015 2014 Other Benefits 2015 2014 Change in benefit obligation Benefit obligation at end of prior year ...$ 1,460.5 Service cost ...7.0 Interest cost ...54.0 Settlements/curtailments ...Actuarial (gain) loss...

  • Page 102
    ... 2015 Other Benefits 2014 2013 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 103
    ... 1 publicly traded securities. The Company's investment strategy for pension assets focuses on a liability-matching approach with gradual de-risking taking place over a period of many years. The Company utilizes the current funded status to transition the portfolio toward investments that better...

  • Page 104
    ...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 105
    ... totaled $32.7 million relating to the reduction of approximately 1,300 employees, inclusive of reversals due to the elimination of excess severance accruals and changes in management's strategy for certain prior year actions as a result of new developments during 2015. The Company also recognized...

  • Page 106
    ... cordless electric power tools sold primarily under the BLACK + DECKER brand, lawn and garden products, including hedge trimmers, string trimmers, lawn mowers, edgers, and related accessories, and home products such as hand held vacuums, paint tools, and cleaning appliances. Power tool accessories...

  • Page 107
    ...Based on the nature of the Company's cash pooling arrangements, at times corporate-related cash accounts will be in a net liability position. Sales to the Home Depot were 13%, 11%, and 11% of the Tools & Storage segment net sales in 2015, 2014 and 2013, respectively. Sales to Lowes were 14%, 13% and...

  • Page 108
    ...2015 2014 2013 Net Sales United States ...Canada...Other Americas ...France...Other Europe...Asia ...Consolidated ...Property, Plant & Equipment United States ...Canada...Other Americas ...France...Other Europe...tax assets: Employee benefit plans...Doubtful accounts and other customer allowances ......

  • Page 109
    ... loss carry forward of $672.2 million begins expiring in 2017. The capital loss carryforward is primarily attributable to the sale of shares for the U.S. HHI business during the tax year ended December 29, 2012. The U.S. foreign tax credit carryforwards of $15.7 million and research and development...

  • Page 110
    ... benefits: (Millions of Dollars) 2015 2014 2013 Balance at beginning of year...$ Additions based on tax positions related to current year ...Additions based on tax positions related to prior years ...Reductions based on tax positions related to prior years ...Settlements ...Statute of limitations...

  • Page 111
    ... of its income tax returns by the Internal Revenue Service and other tax authorities. Tax years 2008 and 2009 have been settled with the Internal Revenue Service as of December 23, 2014 and tax years 2010, 2011, and 2012 are currently under audit. The Company also files many state and foreign...

  • Page 112
    Following is a summary of the warranty liability activity for the years ended January 2, 2016, January 3, 2015, and December 28, 2013: (Millions of Dollars) 2015 2014 2013 Balance beginning of period...$ Warranties and guarantees issued...Liability assumed from acquisitions...Warranty payments and ...

  • Page 113
    ... the United States District Court for the Central District of California on July 3, 2013. Per the Consent Decree, Emhart Industries, Inc. (a dissolved, former indirectly wholly-owned subsidiary of The Black & Decker Corporation) ("Emhart") has agreed to be responsible for an interim remedy at a site...

  • Page 114
    ...to sell. In July 2015, the Company completed the sale of these businesses resulting in an insignificant incremental loss. During 2013, the Company classified two small businesses within the Security and Industrial segments as held for sale based on management's intention to sell these businesses. As...

  • Page 115
    ... Fourth Year 2015 Net sales...Gross profit...Selling, general and administrative expenses...Net earnings from continuing operations ...Less: Net (loss) earnings attributable to noncontrolling interest...Net earnings from continuing operations attributable to Stanley Black & Decker, Inc...Net loss...

  • Page 116
    ... Form 10-Q filed on May 2, 2012). Amended and Restated ByLaws (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on April 19, 2013). Indenture, dated as of June 26, 1998, by and among Black & Decker Holdings Inc., as Issuer, The Black & Decker Corporation, as...

  • Page 117
    ... 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 118
    ... 3, 2013). Amended and Restated Five-Year Credit Agreement, made as of December 18, 2015 among Stanley Black & Decker, Inc., the initial lenders named therein and Citibank, N.A. as administrative agent for the lenders. (incorporated by reference to Exhibit 10.1 to the Company's Current Report on...

  • Page 119
    ... the Company's Annual Report on Form 10-K for the period ended January 1, 2011).* Stanley Black & Decker, Inc. Supplemental Executive Retirement Program as amended and restated effective October 15, 2015, (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on...

  • Page 120
    ...(incorporated by reference to Exhibit 10(xxv) to the Company's Annual Report on Form 10-K for the year ended January 1, 2005).* The Stanley Black & Decker, Inc. 2012 Management Incentive Compensation Plan (incorporated by reference to Exhibit 10.19 to the Company's Annual Report on Form 10-K for the...

  • Page 121
    32.1 32.2 99.1 Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act...

  • Page 122
    ... CDIY Global Sales & Marketing for Stanley Black & Decker effective December 30, 2014. This position is based in Towson, MD and reports directly to the Sr. Vice President and Group Executive CDIY. This letter generally outlines our various benefits, practices and programs. The Company reserves...

  • Page 123
    ... be 4 weeks. The public/statutory holidays and national holiday practice of the US will be applied. You will also participate in our Executive Car Program with an automobile fair market value up to $90,000. Retirement Benefits The Stanley Black & Decker Retirement Account Plan will become effective...

  • Page 124
    ... relation to the financial and estate planning program annually will be the greater of the cost for income tax filings, or $5,000. Please be aware that your employment at Stanley Black & Decker will be strictly on an "at-will" basis and as such is terminable by either the Company or you at any time...

  • Page 125
    ... Executive Separation Policy 1-1-2014 New Hire Information Sheet Invention and Confidentiality Agreement MICP Restrictive Covenant Agreement 2015 Benefits Guide Cigna Global Overview Cigna Global Welcome Kit 2015 Benefits at a Glance Executive Compensation Program - Level 2 SBD U.S. International...

  • Page 126
    ... be determined by the Company policy addressing executive termination then in effect for employees based in the United States. A copy of the current policy is attached hereto, and incorporated into this Agreement by reference. The Company guarantees you that, regardless of any changes that may occur...

  • Page 127
    ... policy excludes all employees other than those participating in the Corporate Management Incentive Compensation Plan Levels1-5 and equivalent positions. These Policies Are Intended To Serve As A Practical Guide To Stanley Black & Decker's Various Practices And Programs. The Company Reserves The...

  • Page 128
    ... occurs first. These Policies Are Intended To Serve As A Practical Guide To Stanley Black & Decker's Various Practices And Programs. The Company Reserves The Right To Modify Or Revoke Any Policy, At Any Time, With Or Without Notice. Where More Specific Documents Exist, Such As Insurance Plan...

  • Page 129
    ... terms of the Executive Life Insurance plan based on your age and years of service. D. These Policies Are Intended To Serve As A Practical Guide To Stanley Black & Decker's Various Practices And Programs. The Company Reserves The Right To Modify Or Revoke Any Policy, At Any Time, With Or Without...

  • Page 130
    ... must be returned by the employee's last day worked, excluding any extended employment period. In the alternative, the employee may purchase the vehicle from the Company for the wholesale market value price set by the Company. Stock Option Plan Exercise Periods - At the discretion of the Senior Vice...

  • Page 131
    ... each participant with a copy of the summary annual report. • • These Policies Are Intended To Serve As A Practical Guide To Stanley Black & Decker's Various Practices And Programs. The Company Reserves The Right To Modify Or Revoke Any Policy, At Any Time, With Or Without Notice. Where More...

  • Page 132
    ...effect from January 20, 2016: Your employer will change from Black & Decker, Inc. to Emhart Teknologies, LLC; You will be a participant in the Management Incentive Compensation Program for the Engineered Fastening Business (Level 1A) for the 2016 Fiscal Year, with a target bonus equal to 70% of your...

  • Page 133
    ... Stanley Black & Decker, Inc. 1000 Stanley Drive New Britain, CT 06053 Payment and Reimbursement Rules for Specified Employees If you are a "Specified Employee" (as determined by Stanly Black & Decker in accordance with Section 409A of the Code) at the time of your "separation from service...

  • Page 134
    ... Award Program (the "Program") under The Stanley Black & Decker 2013 LongTerm Incentive Plan. This Program is intended to provide substantial, equity-based awards for specified full-time members of our senior executive team, provided specific Corporate goals are achieved during the Program's

  • Page 135
    ... the participant is continuously employed by Stanley Black & Decker until such time, as more fully set forth in the enclosed Terms and Conditions Applicable to Long Term Performance Awards. Financial Measurements The Corporate financial goals for this Program will consist of three metrics. Two...

  • Page 136
    ... Awards This certifies that Stanley Black & Decker, Inc. (the "Company") has, on the Date set forth in Award Letter to which these Terms and Conditions apply, granted to the Participant named above a performance award ("Performance Award") of that number of Performance Units set forth in the Award...

  • Page 137
    ...Company. The participant's pro-rated Performance Award will be settled at the same time... be controlling. The Participant agrees to execute such other agreements, documents or assignments as...of the Company. 8. Capitalized Terms. The following capitalized terms shall have the meaning set forth below...

  • Page 138
    ... & Chief Executive Officer or the Senior Vice President, Human Resources , and the documents referenced therein. Disability. Disability has the meaning provided in Section 22(e)(3) of the Internal Revenue Code of 1986, or any successor provision. Executive Officer. A person who the Company has...

  • Page 139
    ... OF RATIO OF EARNINGS TO FIXED CHARGES For the fiscal years ended January 2, 2016, January 3, 2015, December 28, 2013, December 29, 2012 and December 31, 2011 (Millions of Dollars) Fiscal Year 2015 2014 2013 2012 2011 Earnings from continuing operations before income taxes and non-controlling...

  • Page 140
    ... Inc...Black & Decker (U.S.) Inc...Black & Decker de Panama LLC...Black & Decker Funding Corporation...Black & Decker Group, LLC...Black & Decker Healthcare Management Inc...Black & Decker Holdings, LLC ...Black & Decker Inc...Black & Decker India Inc...Black & Decker Investment Company, LLC...Black...

  • Page 141
    ... C...Stanley International Holdings, Inc...Stanley Inspection US, L.L.C...Stanley Logistics, L.L.C...Stanley Pipeline Inspection, L.L.C...Stanley Security Solutions, Inc...Stanley Supply & Services, Inc...The Black & Decker Corporation ...The Farmington River Power Company ...View Technologies...Zag...

  • Page 142
    ... ...Powers Fasteners Australasia Pty Limited...Powers Fasteners Australia Limited...Powers Rawl Pty. Ltd...Rawl Australasia Pty. Ltd...Rawlplug Unit Trust...SBDK Australia GP ...Stanley Black & Decker Australia Pty Ltd ...Stanley Black & Decker Holdings Australia Pty Ltd...Stanley Security Solutions...

  • Page 143
    ...Pro One Finance S.A.S...Societe Miniere et Commerciale S.A.S ...Stanley Black & Decker France S.A.S...Stanley Black et Decker France Services S.A.S...Stanley Healthcare Solutions France SÃ rl...Stanley Security France SAS ...Stanley Tools S.A.S... China China China China China China China China...

  • Page 144
    ... Fastening Technologies India Private Limited...Stanley Black & Decker India Limited...Stanley Engineered Fastening India Private Limited...Stanley Security Solutions India Private Limited...Stanley Works (India) Private Limited ...PT Stanley Black & Decker...Baltimore Financial Services Company...

  • Page 145
    ... Company S.A.R.L...Global Fastening (Cayman) S.Ã r.l...Infastech S.Ã r.l...Global Fastening (Luxembourg) S.a.r.l...SBD European Security Holdings S.Ã .r.l...Stanley Black & Decker Partnership Japan ...SBD Niscayah S.a.r.l...Black & Decker Macao Commercial Offshore Limited ...Black & Decker...

  • Page 146
    ... S.A...Stanley Black & Decker Holding GmbH...Stanley Black & Decker Sales GmbH ...Stanley Security Switzerland SÃ rl...Stanley Works (Europe) GmbH...Besco Pneumatic Corporation...Fastener Jamher Taiwan Inc... Netherlands Netherlands Netherlands Netherlands Netherlands Netherlands New Zealand...

  • Page 147
    ......Dewalt Industrial Power Tool Company Ltd...ELU Powers Tools Ltd...Emhart International Limited...Global Project (Services) Limited ...Meta Vision Systems Limited...Niscayah Holdings Limited ...PIH Holdings Limited...PIH Services Limited...Pipeline Induction Heat Limited...Stanley Black & Decker...

  • Page 148
    ... Public Accounting Firm We consent to the incorporation by reference in the following registration statements and related prospectuses of Stanley Black & Decker, Inc. and subsidiaries (the "Company") of our reports dated February 19, 2016 with respect to the consolidated financial statements...

  • Page 149
    ... OF ATTORNEY We, the undersigned officers and directors of Stanley Black & Decker, Inc., a Connecticut corporation (the "Corporation"), hereby severally constitute Bruce H. Beatt and Donald J. Riccitelli our true and lawful attorneys with full power of substitution, to sign for us and in our names...

  • Page 150
    ... 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 19, 2016 /s/ John F. Lundgren John F. Lundgren Chairman and Chief Executive Officer

  • Page 151
    ... 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 19, 2016 /s/ Donald Allan Jr. Donald Allan Jr. Senior Vice President and Chief...

  • Page 152
    ...connection with the Annual Report of Stanley Black & Decker, Inc. (the "Company") on Form 10-K for the period ending January 2, 2016 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, John F. Lundgren, Chairman and Chief Executive Officer, certify, pursuant to...

  • Page 153
    ... with the Annual Report of Stanley Black & Decker, Inc. (the "Company") on Form 10-K for the period ending January 2, 2016 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, pursuant...

  • Page 154
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  • Page 155
    ... other Company information • Meetings with securities analysts and fund managers Contact the Stanley Black & Decker investor relations department at our corporate offices by calling Greg Waybright, VP, Investor & Government Relations at (860) 827-3833 or by mail at 1000 Stanley Drive, New Britain...

  • Page 156
    STANLEY BLACK & DECKER | 1000 STANLEY DRIVE | NEW BRITAIN, CT 06053 YEARINREVIEW.STANLEYBLACK ANDDECKER.COM