StanleyBlack&Decker Third Quarter 2021 Overview October 28, 2021 Participants || Jim Loree CEO Don Allan President & CFO Lee McChesney VP, Corporate Finance & CFO, Tools & Storage Dennis Lange VP, Investor Relations 3Q'21 OVERVIEW 2 Cautionary Statements 3Q'21 OVERVIEW 3 | | Certain Statements Contained In This Presentation Are Forward Looking. These Are Based On Assumptions Of Future Events Which May Not Prove To Be Accurate. They Involve Risk And Uncertainty. Actual Results May Differ Materially From Thos ...

Financial Data and Key Metrics Changes - The company reported a record third quarter with 11% growth, primarily driven by 10% organic growth [7] - Adjusted earnings per share for the quarter was $2.77, down 4% year-over-year [13] - The overall adjusted operating margin rate was 12.2%, down from the prior year [12] Business Line Data and Key Metrics Changes - Tools segment generated 13% organic growth, attributed to strong demand and innovation [10] - Industrial segment grew 1% organically, impacted by lower auto production and aerospace market conditions [11] - Security segment delivered 8% organic growth, benefiting from a transformation to data-enabled technology [11] Market Data and Key Metrics Changes - North America tools and storage organic growth was up 9%, Europe up 20%, and emerging markets up 28% [39] - E-commerce revenue grew nearly 20% globally compared to 2020 [42] - Latin America saw 36% organic growth, while Asia experienced 22% organic growth [42] Company Strategy and Development Direction - The company is focusing on innovation, manufacturing, and automation to meet strong demand and fuel sustainable growth [15] - Recent acquisitions of MTD and Excel are expected to create a powerful growth engine in the outdoor category, with approximately $4 billion in revenue [16][17] - The company aims to leverage electrification trends in outdoor products and enhance its market presence [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in multi-year growth and margin expansion plans despite supply chain challenges [14] - The company anticipates significant growth opportunities in the residential and non-residential construction markets [15] - Management highlighted the importance of addressing inflation and supply chain costs through pricing and productivity actions [60][61] Other Important Information - The company is investing approximately $200 million in innovation and growth projects [26] - Free cash flow for the third quarter was a use of cash of $125 million, with expectations for strong fourth-quarter cash performance [54] - The company expects full-year organic revenue growth of 16% to 17% and adjusted EPS expansion of 22% [63] Q&A Session Summary Question: Confidence in surcharge implementation - Management is confident that the surcharge will be implemented in Q4, supported by solid customer feedback [81] Question: Pricing dynamics in North America - The company is executing a 4.5% to 5% price increase and is prepared for potential further price actions in Q1 2022 [87][88] Question: Volume growth confidence for 2022 - Management expressed high confidence in achieving mid-single digit organic volume growth, driven by strong demand and new product introductions [90][92] Question: Operating margin expectations - Management confirmed expectations for a firm-wide operating margin of around 11% in Q4, with gradual improvements anticipated in 2022 [100] Question: Competitive pricing response - Management noted that competitors are also implementing price increases due to similar cost pressures, indicating a shared industry challenge [103][104]

Financial Data and Key Metrics Changes - The company reported its second quarter results, which included significant financial metrics that will be discussed in detail during the call [4]. Business Line Data and Key Metrics Changes - Specific performance metrics for various business lines will be reviewed by the management team, including insights into Tools & Storage [4]. Market Data and Key Metrics Changes - The management will provide updates on market conditions and performance metrics relevant to the company's operations [4]. Company Strategy and Development Direction and Industry Competition - The company will outline its strategic initiatives and competitive positioning within the industry during the call [4]. Management's Comments on Operating Environment and Future Outlook - Management will share their perspectives on the current operating environment and future outlook for the company [4]. Other Important Information - A supplemental presentation will be referenced during the call, which is available on the investor relations section of the company's website [4]. Q&A Session All Questions and Answers Question: What are the key highlights from the second quarter results? - The management will address this question during the Q&A session, providing insights into the performance and strategic direction [4].

StanleyBlack&Decker Second Quarter 2021 Overview July 27, 2021 Participants || Jim Loree CEO Don Allan President & CFO Lee McChesney VP, Corporate Finance & CFO, Tools & Storage Dennis Lange VP, Investor Relations 2Q'21 OVERVIEW 2 Cautionary Statements 2Q'21 OVERVIEW 3 | | Certain Statements Contained In This Presentation Are Forward Looking. These Are Based On Assumptions Of Future Events Which May Not Prove To Be Accurate. They Involve Risk And Uncertainty. Actual Results May Differ Materially From Those ...

Stanley Black & Decker, Inc. (NYSE:SWK) Q1 2021 Results Earnings Conference Call April 28, 2021 8:00 AM ET Company Participants Dennis Lange - VP, IR Jim Loree - President & CEO Don Allan - EVP & CFO Lee Mcchesney - VP of Corporate Finance and CFO of Tools & Storage Conference Call Participants Nigel Coe - Wolfe Research Jeff Sprague - Vertical Research Julian Mitchell - Barclays Tim Wojs - Baird Rob Wertheimer - Melius Research Markus Mittermaier - UBS Nicole DeBlase - Deutsche Bank Ross Gilardi - Bank of ...

StanleyBlack&Decker First Quarter 2021 Overview April 28, 2021 Participants || Jim Loree CEO Don Allan President & CFO Lee McChesney VP, Corporate Finance & CFO, Tools & Storage Dennis Lange VP, Investor Relations 1Q'21 OVERVIEW 2 Cautionary Statements 1Q'21 OVERVIEW 3 | | Certain Statements Contained In This Presentation Are Forward Looking. These Are Based On Assumptions Of Future Events Which May Not Prove To Be Accurate. They Involve Risk And Uncertainty. Actual Results May Differ Materially From Those ...

StanleyBlack&Decker Bank Of America Global Industrials Conference 2021 Don Allan | President & CFO March 16, 2021 Cautionary Statements \\ This presentation contains "forward-looking statements," that is, statements that address future, not past events. In this context, forward-looking statements often address our expected future business and financial performance and financial condition, and often contain words such as: "expect," "anticipate," "intend," "plan," "believe," "seek," or "will." Forward-looking ...

PART I [ITEM 1. BUSINESS](index=3&type=section&id=ITEM%201.%20BUSINESS) The company is a diversified global provider of tools, industrial products, and security solutions, driven by a strategy of growth, acquisition, and operational excellence - Stanley Black & Decker, Inc was founded in 1843 and merged with The Black & Decker Corporation in March 2010[13](index=13&type=chunk) - The Company is a diversified global provider of hand tools, power tools, engineered fastening systems, and commercial electronic security solutions[14](index=14&type=chunk) 2020 Consolidated Annual Revenues and Geographic Distribution | Metric | Value | | :--- | :--- | | 2020 Consolidated Annual Revenues | $14.5 billion | | **Revenue Distribution:** | | | United States | 61% | | Europe | 19% | | Emerging Markets | 11% | | Canada | 5% | - The Company's strategy involves growth through acquisitions, diversification, and leveraging its SBD Operating Model for organic growth and margin expansion[15](index=15&type=chunk) - Since 2002, the Company has completed approximately **$11.5 billion in acquisitions**, including notable purchases like CAM, Newell Tools, and the Craftsman® brand[16](index=16&type=chunk) - In January 2019, the Company acquired a **20% interest in MTD Holdings Inc for $234 million**, with an option to acquire the remaining 80% starting July 1, 2021[17](index=17&type=chunk) - The Company has divested several businesses, including mechanical locks and security businesses, to align with its long-term growth strategy[18](index=18&type=chunk)[19](index=19&type=chunk) - The Company's 2030 Corporate Social Responsibility strategy includes targets for workforce upskilling, product innovation, and environmental preservation[21](index=21&type=chunk) - The Company's operations are classified into three reportable business segments: Tools & Storage, Industrial, and Security[22](index=22&type=chunk) 2020 Segment Revenues | Segment | 2020 Revenues | % of Total Revenues | | :--- | :--- | :--- | | Tools & Storage | $10.3 billion | 71% | | Industrial | $2.3 billion | 16% | | Security | $1.9 billion | 13% | - The Tools & Storage segment includes Power Tools, Equipment, Hand Tools, Accessories & Storage, selling through various channels[25](index=25&type=chunk)[26](index=26&type=chunk)[27](index=27&type=chunk) - The Industrial segment comprises Engineered Fastening and Infrastructure, serving automotive, manufacturing, aerospace, and other sectors[29](index=29&type=chunk)[30](index=30&type=chunk) - The Security segment includes Convergent Security Solutions and Mechanical Access Solutions, primarily sold directly[32](index=32&type=chunk) - Competition is active across all segments, based on product quality, brands, innovation, and value[33](index=33&type=chunk)[34](index=34&type=chunk) Major Customer Sales Contribution to Consolidated Net Sales | Customer | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Lowe's | 15% | 15% | 12% | | The Home Depot | 12% | 10% | <10% | - The Company focuses on Operations Excellence principles to reduce working capital and generate free cash flow[36](index=36&type=chunk) Working Capital Turns | Year | Working Capital Turns | | :--- | :--- | | 2020 | 10.4 | | 2019 | 9.8 | | Long-term Goal | 10+ | - Raw materials are procured globally from multiple sources, with a supplier risk mitigation strategy in place[38](index=38&type=chunk) - The Company owns numerous significant patents and trademarks, including STANLEY®, BLACK+DECKER®, DEWALT®, and CRAFTSMAN®[39](index=39&type=chunk)[40](index=40&type=chunk) - Operations are subject to various laws and regulations, including environmental, international trade, data privacy, and consumer protection[41](index=41&type=chunk) Environmental Remediation Reserves | Metric | January 2, 2021 | December 28, 2019 | | :--- | :--- | :--- | | Total Reserves | $174.2 million | $213.8 million | | Current Portion | $46.7 million | N/A | | Long-term Portion | $127.5 million | N/A | | Net Cash Obligation (2021) | $158.3 million | N/A | | Reasonably Possible Range (2021) | $102.9M - $245.3M | N/A | - As of January 2, 2021, the Company had approximately **53,100 employees** in over 60 countries[46](index=46&type=chunk) - The Company's human capital strategy focuses on culture, leadership, performance management, and Diversity, Equity & Inclusion (DE&I)[47](index=47&type=chunk)[48](index=48&type=chunk) - The Company promotes lifelong learning through internal and external partnerships, focusing on reskilling and upskilling employees[51](index=51&type=chunk) - The Company is committed to employee wellness, health, and safety, demonstrated by its agile response to the COVID-19 pandemic[53](index=53&type=chunk) Safety Performance (Through December 2020) | Metric | Value | | :--- | :--- | | Total Recordable Incident Rate (TRIR) | 0.48 | | Lost Time Incident Rate (LTIR) | 0.17 | | Work-related Fatalities | 0 | Research and Development Costs | Fiscal Year | R&D Costs (Millions USD) | | :--- | :--- | | 2020 | $211.0 | | 2019 | $255.2 | | 2018 | $275.8 | - R&D spending decreased in 2020 due to temporary cost actions in response to COVID-19 but is planned to return to 2019 levels in 2021[57](index=57&type=chunk) [ITEM 1A. RISK FACTORS](index=9&type=section&id=ITEM%201A.%20RISK%20FACTORS) The company faces risks from the COVID-19 pandemic, market competition, international operations, supply chain disruptions, and various financial and regulatory challenges - The COVID-19 pandemic has adversely affected the Company's workforce, operations, customers, and suppliers[60](index=60&type=chunk) - The pandemic caused cost reduction measures, including headcount reductions and supply chain adjustments, which may impact future operational ramp-ups[62](index=62&type=chunk) - Significant reductions or volatility in demand for products could negatively impact results[65](index=65&type=chunk) - Changes in customer preferences and relationships with large customers like Lowe's and Home Depot could adversely affect the business[66](index=66&type=chunk) - Active global competition and pricing pressures require maintaining a competitive cost structure and continuous innovation[69](index=69&type=chunk)[70](index=70&type=chunk) - Failure to effectively apply Operations Excellence principles or execute restructuring could adversely affect competitiveness[71](index=71&type=chunk)[72](index=72&type=chunk) - Low demand for new products or inability to develop them at favorable margins poses significant competitive risks[74](index=74&type=chunk)[75](index=75&type=chunk) - **Significant international operations (39% of revenue outside U.S.)** expose the Company to political, economic, and regulatory risks[78](index=78&type=chunk) - Sourcing and manufacturing overseas are subject to customs requirements, tariffs, and foreign currency variations[79](index=79&type=chunk)[80](index=80&type=chunk) - The Company's success depends on improving productivity and streamlining operations to control costs[84](index=84&type=chunk) - Business disruptions from catastrophic losses or IT system issues could negatively impact operations and reputation[85](index=85&type=chunk)[87](index=87&type=chunk) - Inflationary or deflationary conditions could impact the cost of raw materials, components, freight, and labor[89](index=89&type=chunk)[90](index=90&type=chunk) - Financial instability in economies outside the U.S, including Brexit, could decrease demand and impact receivables[93](index=93&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk) - Exposure to market risk from changes in foreign currency exchange rates could negatively impact profitability[96](index=96&type=chunk)[97](index=97&type=chunk) - Significant indebtedness and potential future equity issuances may limit growth and dilute earnings[99](index=99&type=chunk)[100](index=100&type=chunk) - Tight capital markets or failure to maintain credit ratings could limit access to liquidity[102](index=102&type=chunk)[104](index=104&type=chunk)[105](index=105&type=chunk) - Discontinuation or reform of LIBOR could unpredictably impact contractual mechanics and increase borrowing costs[106](index=106&type=chunk) - Credit risk on accounts receivable could lead to losses if customers fail to meet obligations[107](index=107&type=chunk) - Potential write-downs of **goodwill ($10.0B)**, **indefinite-lived trade names ($2.2B)**, or other intangible assets could materially adversely affect net income[108](index=108&type=chunk) - Underperformance of employee benefit plan investments may require additional contributions, reducing available cash[109](index=109&type=chunk)[110](index=110&type=chunk) - The successful execution of business strategy depends on the ability to recruit, retain, and develop employees[111](index=111&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk) - Acquisitions and reorganizations involve risks such as integration difficulties, unexpected costs, and failure to realize anticipated benefits[114](index=114&type=chunk)[115](index=115&type=chunk) - Expansion into emerging markets carries risks due to differences in business practices and cultures[116](index=116&type=chunk) - Violation of trademark rights or inability to protect intellectual property could negatively impact revenues and brand reputation[117](index=117&type=chunk)[119](index=119&type=chunk)[120](index=120&type=chunk) - Reliance on digital technology exposes the Company to cybersecurity risks, including data breaches and system disruptions[121](index=121&type=chunk)[122](index=122&type=chunk)[123](index=123&type=chunk)[124](index=124&type=chunk) - Compliance with evolving data privacy laws (e.g., GDPR, CCPA) imposes significant costs and risks[125](index=125&type=chunk)[126](index=126&type=chunk)[127](index=127&type=chunk) - Future tax law changes or audit results may materially increase tax expense[128](index=128&type=chunk) - Exposure to various litigation matters and regulatory actions could negatively impact results or cash flows[129](index=129&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk)[133](index=133&type=chunk) - Product recalls could increase costs and adversely impact the Company's reputation[134](index=134&type=chunk)[135](index=135&type=chunk) - Sales to government customers expose the Company to business volatility and procurement regulations[136](index=136&type=chunk)[137](index=137&type=chunk)[139](index=139&type=chunk) - The Company's results of operations may not meet guidance, leading to potential declines in stock price[140](index=140&type=chunk) [ITEM 1B. UNRESOLVED STAFF COMMENTS](index=25&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS) There are no unresolved staff comments to report for the fiscal year - No unresolved staff comments[141](index=141&type=chunk) [ITEM 2. PROPERTIES](index=25&type=section&id=ITEM%202.%20PROPERTIES) The company owns or leases 92 significant facilities totaling approximately 25 million square feet across 20 states and 18 countries - As of January 2, 2021, the Company owned or leased significant facilities in 20 states and 18 countries[142](index=142&type=chunk) Significant Facilities (over 100,000 sq ft) by Segment (January 2, 2021) | Segment | Owned | Leased | Total | | :--- | :--- | :--- | :--- | | Tools & Storage | 43 | 22 | 65 | | Industrial | 15 | 6 | 21 | | Security | 1 | 2 | 3 | | Corporate | 2 | 1 | 3 | | **Total** | **61** | **31** | **92** | - The combined size of these facilities is approximately **25 million square feet**, and they are in good condition and generally fully utilized[142](index=142&type=chunk) [ITEM 3. LEGAL PROCEEDINGS](index=25&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) The company is involved in routine legal proceedings not expected to materially impact its financial position or operations - The Company is involved in various lawsuits and claims, including product liability, environmental, and distributor claims[143](index=143&type=chunk) - Management does not expect the resolution of these matters to have a materially adverse effect on the Company's financial position or liquidity[143](index=143&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=25&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the Company's operations - Not applicable[144](index=144&type=chunk) PART II [ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES](index=26&type=section&id=ITEM%205.%20MARKET%20FOR%20THE%20REGISTRANT'S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) The company's common stock (NYSE: SWK) performance, dividend history, and share repurchase activities are detailed - The Company's common stock is listed on the NYSE under the ticker symbol 'SWK' and is a component of the S&P 500 Index[145](index=145&type=chunk) Quarterly Stock Prices and Dividends (2019-2020) | Quarter | 2020 High | 2020 Low | 2020 Dividend Per Common Share | 2019 High | 2019 Low | 2019 Dividend Per Common Share | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | First | $172.53 | $72.03 | $0.69 | $138.92 | $115.69 | $0.66 | | Second | $148.23 | $92.13 | $0.69 | $153.08 | $127.22 | $0.66 | | Third | $166.25 | $135.61 | $0.70 | $152.51 | $128.85 | $0.69 | | Fourth | $190.94 | $161.48 | $0.70 | $167.76 | $135.09 | $0.69 | | **Total** | | | **$2.78** | | | **$2.70** | - As of February 15, 2021, the registrant had **160,893,004 shares of common stock outstanding**[6](index=6&type=chunk) Issuer Purchases of Equity Securities (Q4 2020) | Period | Total Number Of Shares Purchased | Average Price Paid Per Share | Total Number Of Shares Purchased As Part Of A Publicly Announced Plan Or Program | Maximum Number Of Shares That May Yet Be Purchased Under The Program | | :--- | :--- | :--- | :--- | :--- | | Sep 27 - Oct 31 | 3,494 | $175.67 | — | 11,450,000 | | Nov 1 - Nov 28 | 11 | $164.57 | — | 11,450,000 | | Nov 29 - Jan 2 | 79,591 | $176.76 | — | 11,450,000 | | **Total** | **83,096** | **$176.71** | **—** | **11,450,000** | - Shares purchased were deemed surrendered by benefit plan participants to satisfy taxes related to vesting of restricted share units[146](index=146&type=chunk) - A repurchase program for up to 15.0 million shares was approved in July 2017, with approximately **11.5 million shares remaining available** as of January 2, 2021[146](index=146&type=chunk) Cumulative Total Shareholder Return (2015-2020, $100 invested on Jan 2, 2016) | Year | Stanley Black & Decker | S&P 500 | S&P 500 Industrials | | :--- | :--- | :--- | :--- | | 2015 | $100.00 | $100.00 | $100.00 | | 2016 | $109.65 | $111.95 | $110.16 | | 2017 | $165.01 | $136.38 | $135.19 | | 2018 | $117.68 | $129.28 | $130.05 | | 2019 | $167.54 | $171.90 | $174.00 | | 2020 | $183.69 | $202.96 | $213.76 | [ITEM 6. SELECTED FINANCIAL DATA](index=28&type=section&id=ITEM%206.%20SELECTED%20FINANCIAL%20DATA) This section provides a five-year summary of key consolidated financial data, reflecting the impact of acquisitions and divestitures Selected Financial Data (2016-2020) | Metric (Millions of Dollars, Except Per Share Amounts) | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | Net sales | $14,535 | $14,442 | $13,982 | $12,967 | $11,594 | | Net Earnings Attributable to Common Shareowners | $1,210 | $956 | $605 | $1,227 | $968 | | Earnings per share of common stock: Diluted | $7.77 | $6.35 | $3.99 | $8.05 | $6.53 | | Total assets | $23,566 | $20,597 | $19,408 | $19,098 | $15,655 | | Long-term debt, including current maturities | $4,245 | $3,180 | $3,822 | $3,806 | $3,806 | | Stanley Black & Decker, Inc.'s shareowners' equity | $11,060 | $9,136 | $7,836 | $8,302 | $6,374 | | Total debt to total capital | 27.7 % | 27.8 % | 34.9 % | 31.5 % | 37.4 % | | Income tax rate | 3.3 % | 14.2 % | 40.7 % | 19.7 % | 21.3 % | | Dividends per share | $2.78 | $2.70 | $2.58 | $2.42 | $2.26 | - 2020 results include **$400 million of pre-tax charges** and a **$211 million tax benefit**, resulting in a $199 million decrease in Net earnings[150](index=150&type=chunk) - 2019 results include **$363 million of pre-tax charges** and a **$78 million tax benefit**, resulting in a $309 million decrease in Net earnings[150](index=150&type=chunk)[152](index=152&type=chunk) - 2018 results include **$450 million of pre-tax charges** and a **$181 million net tax charge**, resulting in a $631 million decrease in Net earnings[152](index=152&type=chunk) - 2017 results include **$156 million of pre-tax acquisition-related charges** and a **$264 million pre-tax gain on sales of businesses**[152](index=152&type=chunk) [ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=31&type=section&id=ITEM%207.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section analyzes the company's financial performance, strategic direction, operational results, liquidity, and market risks - The Company's strategic framework aims to deliver top-quartile financial performance through its SBD Operating Model[156](index=156&type=chunk) Long-Term Financial Objectives | Objective | Target | | :--- | :--- | | Organic Revenue Growth | 4-6% | | Total Revenue Growth | 10-12% | | Total EPS Growth (excluding acquisition-related charges) | 10-12% (7-9% organically) | | Free Cash Flow | Equal to, or exceeding, net income | | Working Capital Turns | Sustain 10+ | | Cash Flow Return On Investment (CFROI) | 12-15% | - Capital allocation strategy commits to returning approximately **50% of free cash flow to shareholders** and deploying 50% for acquisitions[158](index=158&type=chunk) - In response to COVID-19, the Company implemented a cost reduction program that delivered **$500 million in savings in 2020**[159](index=159&type=chunk) - The cost reduction program included headcount reductions, furloughs, a voluntary retirement program, and footprint rationalizations[159](index=159&type=chunk)[160](index=160&type=chunk) - The Company repurchased **1,399,732 shares for $200 million** in April 2018 and **2,086,792 shares for $300 million** in July 2018[162](index=162&type=chunk) - Key acquisitions include **CAM (2020, $1.46B)**, **IES Attachments (2019, $653.5M)**, and **Nelson Fastener Systems (2018, $424.2M)**[163](index=163&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk) - Divestitures include Sargent and Greenleaf mechanical locks (2019) and the majority of mechanical security businesses (2017)[172](index=172&type=chunk)[173](index=173&type=chunk) - In 2020, the Company reported **$400 million in pre-tax charges**, including items reducing Gross Profit, SG&A, and a loss on debt extinguishment[175](index=175&type=chunk)[176](index=176&type=chunk) - The 2020 charges resulted in net after-tax charges of **$199 million, or $1.27 per diluted share**, including a one-time tax benefit[177](index=177&type=chunk) - The Company's core franchises (Tools & Storage, Engineered Fastening, Security) are characterized by world-class brands and scalability[180](index=180&type=chunk)[183](index=183&type=chunk) - The Company invests heavily in brand building and commercial support, leveraging sponsorships and digital marketing[185](index=185&type=chunk)[186](index=186&type=chunk)[187](index=187&type=chunk)[188](index=188&type=chunk)[189](index=189&type=chunk) - The SBD Operating Model emphasizes people and technology, focusing on Performance Resiliency, Extreme Innovation, and Operations Excellence[190](index=190&type=chunk)[191](index=191&type=chunk)[192](index=192&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk)[195](index=195&type=chunk)[196](index=196&type=chunk)[197](index=197&type=chunk) - The SBD Operating Model aims for **4-6% organic growth** and expanded operating margins over the next 3-5 years[199](index=199&type=chunk) - For 2021, the Company expects diluted EPS of **$9.15 to $9.85** and free cash flow conversion of approximately 100%[202](index=202&type=chunk) Consolidated Net Sales (2018-2020) | Year | Net Sales (Billions USD) | YoY Change | | :--- | :--- | :--- | | 2020 | $14.535 | +1% | | 2019 | $14.442 | +3% | | 2018 | $13.982 | N/A | - 2020 net sales increased 1% due to acquisitions and price increases, partially offset by pandemic-related volume decreases[206](index=206&type=chunk) - 2019 net sales increased 3% driven by organic growth and acquisitions, partially offset by foreign currency impact[207](index=207&type=chunk) Gross Profit and Margin (2018-2020) | Year | Gross Profit (Billions USD) | Gross Margin | Gross Margin (Excl. Charges) | | :--- | :--- | :--- | :--- | | 2020 | $4.968 | 34.2% | 34.7% | | 2019 | $4.806 | 33.3% | 33.5% | | 2018 | $4.851 | 34.7% | 35.2% | - 2020 gross margin (excl. charges) **increased to 34.7%** from 33.5% in 2019, driven by productivity and price realization[208](index=208&type=chunk) - 2019 gross margin (excl. charges) decreased to 33.5% from 35.2% in 2018, due to tariffs, inflation, and foreign exchange[209](index=209&type=chunk) SG&A Expense (2018-2020) | Year | SG&A (Billions USD) | % of Net Sales | % of Net Sales (Excl. Charges) | | :--- | :--- | :--- | :--- | | 2020 | $3.090 | 21.3% | 20.0% | | 2019 | $3.041 | 21.1% | 20.1% | | 2018 | $3.172 | 22.7% | 21.6% | - 2020 SG&A (excl. charges) was **20.0% of net sales**, reflecting cost management benefits[210](index=210&type=chunk) - Distribution center costs, classified in SG&A, amounted to **$347.8 million in 2020**[212](index=212&type=chunk) Corporate Overhead (2018-2020) | Year | Corporate Overhead (Millions USD) | % of Net Sales (Excl. Charges) | | :--- | :--- | :--- | | 2020 | $297.7 | 1.6% | | 2019 | $229.5 | 1.4% | | 2018 | $202.8 | 1.4% | - Corporate overhead (excl. charges) increased in 2020 to 1.6% of net sales, primarily due to higher employee-related costs[214](index=214&type=chunk) Other, net (2018-2020) | Year | Other, net (Millions USD) | Other, net (Excl. Charges) | | :--- | :--- | :--- | | 2020 | $262.8 | $253.8 | | 2019 | $249.1 | $218.9 | | 2018 | $287.0 | $178.9 | - The year-over-year increase in Other, net in 2020 was driven by higher intangible asset amortization and negative foreign currency impacts[215](index=215&type=chunk) Loss (Gain) on Sales of Businesses (2018-2020) | Year | Loss (Gain) on Sales of Businesses (Millions USD) | | :--- | :--- | | 2020 | $13.5 (net loss) | | 2019 | $(17.0) (gain) | | 2018 | $0.8 (loss) | Loss on Debt Extinguishments (2019-2020) | Year | Loss on Debt Extinguishments (Millions USD) | | :--- | :--- | | 2020 | $46.9 | | 2019 | $17.9 | Interest, net (2018-2020) | Year | Interest, net (Millions USD) | | :--- | :--- | | 2020 | $205.1 | | 2019 | $230.4 | | 2018 | $209.2 | - Net interest expense decreased in 2020 due to lower U.S. interest rates and commercial paper borrowings[218](index=218&type=chunk) Effective Tax Rate (2018-2020) | Year | Effective Tax Rate | Effective Tax Rate (Excl. One-time/Acquisition Charges) | | :--- | :--- | :--- | | 2020 | 3.3% | 15.1% | | 2019 | 14.2% | 16.0% | | 2018 | 40.7% | 16.0% | - The 2020 effective tax rate included a **$118.8 million one-time tax benefit** from a supply chain reorganization[220](index=220&type=chunk) - The 2018 effective tax rate included net charges associated with the Tax Cuts and Jobs Act[222](index=222&type=chunk) Tools & Storage Segment Performance (2018-2020) | Metric (Millions USD) | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Net sales | $10,330 | $10,062 | $9,814 | | Segment profit | $1,842 | $1,533 | $1,393 | | % of Net sales | 17.8% | 15.2% | 14.2% | - Tools & Storage net sales **increased 3% in 2020**, with 4% organic growth driven by strong H2 performance[226](index=226&type=chunk) - Tools & Storage segment profit (excl. charges) **increased to 18.3% of net sales in 2020** from 15.7% in 2019[227](index=227&type=chunk) Industrial Segment Performance (2018-2020) | Metric (Millions USD) | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Net sales | $2,353 | $2,435 | $2,188 | | Segment profit | $226 | $334 | $320 | | % of Net sales | 9.6% | 13.7% | 14.6% | - Industrial net sales **decreased 3% in 2020** due to 15% pandemic-related volume declines, partially offset by acquisition growth[231](index=231&type=chunk) - Industrial segment profit (excl. charges) **decreased to 12.4% of net sales in 2020** from 14.8% in 2019[232](index=232&type=chunk) Security Segment Performance (2018-2020) | Metric (Millions USD) | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Net sales | $1,852 | $1,945 | $1,981 | | Segment profit | $109 | $127 | $169 | | % of Net sales | 5.9% | 6.5% | 8.5% | - Security net sales **decreased 5% in 2020** due to pandemic-related volume declines and divestitures[236](index=236&type=chunk) - Security segment profit (excl. charges) **decreased to 9.8% of net sales in 2020** from 10.9% in 2019[237](index=237&type=chunk) Restructuring Reserve Activity (2019-2021) | (Millions of Dollars) | December 28, 2019 | Net Additions | Usage | Currency | January 2, 2021 | | :--- | :--- | :--- | :--- | :--- | :--- | | Severance and related costs | $140.3 | $63.9 | $(111.0) | $(5.7) | $87.5 | | Facility closures and asset impairments | $7.5 | $19.1 | $(23.9) | — | $2.7 | | **Total** | **$147.8** | **$83.0** | **$(134.9)** | **$(5.7)** | **$90.2** | - In 2020, net restructuring charges of **$83.0 million** were primarily for severance related to a cost reduction program[240](index=240&type=chunk)[243](index=243&type=chunk) - The 2020 restructuring actions are expected to achieve annual net cost savings of approximately **$175 million** by the end of 2021[244](index=244&type=chunk) Cash Flows Provided by Operations (2018-2020) | Year | Cash Flows from Operations (Billions USD) | | :--- | :--- | | 2020 | $2.022 | | 2019 | $1.506 | | 2018 | $1.261 | - Operating cash flows increased in 2020 due to higher earnings and strong cost control[245](index=245&type=chunk) Free Cash Flow (2018-2020) | Metric (Millions USD) | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $2,022 | $1,506 | $1,261 | | Less: capital and software expenditures | $(348) | $(425) | $(492) | | **Free cash flow** | **$1,674** | **$1,081** | **$769** | - Free cash flow improved in 2020 due to higher operating cash flows and lower capital expenditures[247](index=247&type=chunk) - The Company maintains strong investment grade credit ratings and has significant liquidity with **$1.4 billion cash on hand** and **$3.0 billion revolving credit facilities**[248](index=248&type=chunk)[256](index=256&type=chunk) Cash and Cash Equivalents (2019-2021) | Metric | January 2, 2021 | December 28, 2019 | | :--- | :--- | :--- | | Cash and cash equivalents | $1.381 billion | $298 million | | U.S. | $1.119 billion | $57 million | | Foreign | $262 million | $241 million | - The Company has a **$3.0 billion commercial paper program** and committed credit facilities as liquidity back-stops[259](index=259&type=chunk)[260](index=260&type=chunk)[261](index=261&type=chunk) - In April 2020, the 5-Year Credit Agreement was amended to provide greater financial flexibility due to COVID-19 impacts[265](index=265&type=chunk) Contractual Obligations (January 2, 2021) | (Millions of Dollars) | Total | 2021 | 2022-2023 | 2024-2025 | Thereafter | | :--- | :--- | :--- | :--- | :--- | :--- | | Long-term debt | $4,300 | $— | $— | $— | $4,300 | | Interest payments on long-term debt | $3,363 | $161 | $324 | $324 | $2,554 | | Lease obligations | $599 | $141 | $192 | $118 | $148 | | Inventory purchase commitments | $545 | $545 | $— | $— | $— | | **Total contractual cash obligations** | **$9,847** | **$1,166** | **$1,012** | **$640** | **$7,029** | Other Significant Commercial Commitments (January 2, 2021) | (Millions of Dollars) | Total | 2021 | 2022-2023 | 2024-2025 | Thereafter | | :--- | :--- | :--- | :--- | :--- | :--- | | U.S. lines of credit | $3,000 | $1,000 | $2,000 | $— | $— | - The Company is exposed to market risk from changes in foreign currency exchange rates, interest rates, and commodity prices[281](index=281&type=chunk) - Foreign currency risk is managed through derivative financial instruments, with a hypothetical 10% adverse movement estimated at a **$157 million pre-tax impact**[282](index=282&type=chunk)[283](index=283&type=chunk) - Interest rate risk is managed through fixed and floating rate debt and interest rate swaps[284](index=284&type=chunk)[285](index=285&type=chunk) - Commodity price exposures are managed through customer pricing, procurement cost reductions, and productivity improvements[286](index=286&type=chunk) - Fluctuations in common stock fair value affect domestic retirement plan expense and defined benefit plan assets[287](index=287&type=chunk)[288](index=288&type=chunk) - The Company's strong financial position and operating cash flows provide flexibility for dividends, investments, and acquisitions[290](index=290&type=chunk) - ESOP expense was **$6.3 million in 2020**, affected by the market value of the Company's stock[291](index=291&type=chunk) - Critical accounting estimates include allowance for credit losses, inventory valuation, goodwill impairment, and income taxes[292](index=292&type=chunk)[293](index=293&type=chunk)[295](index=295&type=chunk)[297](index=297&type=chunk)[304](index=304&type=chunk)[306](index=306&type=chunk)[308](index=308&type=chunk)[313](index=313&type=chunk)[314](index=314&type=chunk) - The Company had no off-balance sheet arrangements as of January 2, 2021[315](index=315&type=chunk) [ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=57&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section incorporates by reference the detailed discussion of market risks from Item 7 and Note I - The Company incorporates by reference the material captioned 'Market Risk' in Item 7 and in Note I of the Notes to Consolidated Financial Statements[321](index=321&type=chunk) [ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA](index=57&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This item refers to the index of Financial Statements and Financial Statement Schedule provided in Item 15 - See Item 15 for an index to Financial Statements and Financial Statement Schedule, which are incorporated herein by reference[322](index=322&type=chunk) [ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE](index=57&type=section&id=ITEM%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE) There are no changes in or disagreements with accountants on accounting and financial disclosure to report - None[323](index=323&type=chunk) [ITEM 9A. CONTROLS AND PROCEDURES](index=58&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES) Management concluded that the company's internal control over financial reporting and disclosure controls were effective as of January 2, 2021 - Management is responsible for establishing and maintaining adequate internal control over financial reporting[325](index=325&type=chunk) - The Company excluded Consolidated Aerospace Manufacturing, LLC (CAM) from its assessment of internal control over financial reporting as of January 2, 2021[326](index=326&type=chunk) CAM's Contribution to Financials (as of Jan 2, 2021) | Metric | Value | | :--- | :--- | | % of Total Assets | 6% | | % of Net Sales | 2% | - Management concluded that the Company's internal control over financial reporting was **effective** as of January 2, 2021[327](index=327&type=chunk) - The Company's disclosure controls and procedures were evaluated and concluded to be **effective** as of January 2, 2021[328](index=328&type=chunk) - No material changes in internal control over financial reporting occurred during the fiscal year, aside from the CAM acquisition integration[328](index=328&type=chunk) [ITEM 9B. OTHER INFORMATION](index=58&type=section&id=ITEM%209B.%20OTHER%20INFORMATION) There is no other information to report under this item - None[329](index=329&type=chunk) PART III [ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE OF THE REGISTRANT](index=59&type=section&id=ITEM%2010.%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE%20OF%20THE%20REGISTRANT) This section provides information on the company's directors, executive officers, and corporate governance practices - Information on directors, executive officers, and corporate governance is incorporated by reference from the 2021 Proxy Statement[331](index=331&type=chunk) - The Company maintains a Code of Business Ethics for all directors, officers, and employees[332](index=332&type=chunk) Executive Officers as of February 18, 2021 | Name | Age | Office | Date Elected to Office | | :--- | :--- | :--- | :--- | | James M. Loree | 62 | President & Chief Executive Officer | 7/19/1999 | | Donald Allan, Jr. | 56 | Executive Vice President & Chief Financial Officer | 10/24/2006 | | Jeffery D. Ansell | 53 | Executive Vice President, Stanley Black & Decker | 2/22/2006 | | Janet M. Link | 51 | Senior Vice President, General Counsel and Secretary | 7/19/2017 | | Jaime A. Ramirez | 53 | Executive Vice President & President, Global Tools & Storage | 3/12/2010 | | John H. Wyatt | 62 | Senior Vice President & President, Stanley Outdoor | 3/12/2010 | | Robert H. Raff | 54 | President, Stanley Security | 4/19/2018 | | Robert Blackburn | 52 | Senior Vice President of Global Operations | 5/6/2019 | | Graham N. Robinson | 52 | Senior Vice President & President, Stanley Industrial | 4/17/2020 | | Stephen Subasic | 52 | Senior Vice President, Chief Human Resources Officer | 2/18/2021 | [ITEM 11. EXECUTIVE COMPENSATION](index=61&type=section&id=ITEM%2011.%20EXECUTIVE%20COMPENSATION) This item incorporates by reference the detailed information on executive compensation from the company's definitive proxy statement - Information on executive compensation is incorporated by reference from the Company's definitive proxy statement[335](index=335&type=chunk) [ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS](index=61&type=section&id=ITEM%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) This section provides information on security ownership and details on the company's equity compensation plans - Information on security ownership is incorporated by reference from the Company's definitive proxy statement[336](index=336&type=chunk) Equity Compensation Plan Information (January 2, 2021) | Plan Category | Number of securities to be issued upon exercise of outstanding options and stock awards (A) | Weighted-average exercise price of outstanding options (B) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (A)) (C) | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by security holders | 8,004,647 | $138.84 | 9,594,743 | | Equity compensation plans not approved by security holders | — | — | — | | **Total** | **8,004,647** | **$138.84** | **9,594,743** | - Column (A) includes **5,875,246 shares underlying outstanding stock options** and **2,033,157 shares underlying non-vested restricted stock units**[338](index=338&type=chunk) - Column (C) includes **1,480,962 shares available for purchase under the ESPP** and **8,113,781 securities available for future grants**[338](index=338&type=chunk) [ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE](index=63&type=section&id=ITEM%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS%2C%20AND%20DIRECTOR%20INDEPENDENCE) This item incorporates by reference information regarding related party transactions and director independence from the proxy statement - Information on certain relationships, related transactions, and director independence is incorporated by reference from the Company's definitive proxy statement[340](index=340&type=chunk) [ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES](index=63&type=section&id=ITEM%2014.%20PRINCIPAL%20ACCOUNTANT%20FEES%20AND%20SERVICES) This item incorporates by reference the information on principal accountant fees and services from the proxy statement - Information on principal accountant fees and services is incorporated by reference from the Company's definitive proxy statement[341](index=341&type=chunk) PART IV [ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE](index=63&type=section&id=ITEM%2015.%20EXHIBITS%20AND%20FINANCIAL%20STATEMENT%20SCHEDULE) This section provides an index to the financial statements, schedules, and exhibits filed as part of this report - This item provides an index to financial statements and financial statement schedule[342](index=342&type=chunk)[343](index=343&type=chunk)[345](index=345&type=chunk) - Includes Management's Report on Internal Control Over Financial Reporting and Reports of Independent Registered Public Accounting Firm[345](index=345&type=chunk) - The consolidated financial statements for the fiscal years ended January 2, 2021, December 28, 2019, and December 29, 2018, are incorporated by reference[346](index=346&type=chunk)[347](index=347&type=chunk) [ITEM 16. FORM 10-K SUMMARY](index=65&type=section&id=ITEM%2016.%20FORM%2010-K%20SUMMARY) This item indicates that a Form 10-K summary is not applicable - Not applicable[349](index=349&type=chunk) [SIGNATURES](index=66&type=section&id=SIGNATURES) This section contains the required signatures for the Annual Report on Form 10-K, affirming the report's accuracy - The report is signed by James M. Loree (President and CEO), Donald Allan, Jr. (EVP and CFO), and other Directors[352](index=352&type=chunk)[353](index=353&type=chunk) FINANCIAL STATEMENTS AND NOTES [Schedule II — Valuation and Qualifying Accounts](index=67&type=section&id=Schedule%20II%20%E2%80%94%20Valuation%20and%20Qualifying%20Accounts) This schedule details changes in the allowance for credit losses and tax valuation allowance for fiscal years 2018-2020 Allowance for Credit Losses Activity (2018-2020) | (Millions of Dollars) | Beginning Balance | Charged To Costs And Expenses | Charged To Other Accounts | Deductions | Ending Balance | | :--- | :--- | :--- | :--- | :--- | :--- | | Year Ended 2020 | $112.4 | $41.1 | $23.7 | $(36.1) | $141.1 | | Year Ended 2019 | $102.0 | $33.0 | $5.9 | $(28.5) | $112.4 | | Year Ended 2018 | $80.4 | $28.0 | $12.5 | $(18.9) | $102.0 | Tax Valuation Allowance Activity (2018-2020) | (Millions of Dollars) | Beginning Balance | Charged To Costs And Expenses | Charged To Other Accounts | Deductions | Ending Balance | | :--- | :--- | :--- | :--- | :--- | :--- | | Year Ended 2020 | $1,065.0 | $312.0 | $(8.6) | $(309.5) | $1,058.9 | | Year Ended 2019 | $626.7 | $461.5 | $(0.5) | $(22.7) | $1,065.0 | | Year Ended 2018 | $516.7 | $146.2 | $(6.4) | $(29.8) | $626.7 | [MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING](index=68&type=section&id=MANAGEMENT'S%20REPORT%20ON%20INTERNAL%20CONTROL%20OVER%20FINANCIAL%20REPORTING) Management affirms its responsibility for internal control over financial reporting and concluded its effectiveness as of January 2, 2021 - Management is responsible for establishing and maintaining adequate internal control over financial reporting[356](index=356&type=chunk) - The assessment of internal control over financial reporting as of January 2, 2021, excluded the recently acquired Consolidated Aerospace Manufacturing, LLC (CAM)[357](index=357&type=chunk) - Management concluded that the Company's internal control over financial reporting was **effective** as of January 2, 2021, based on the COSO criteria[358](index=358&type=chunk) [Report of Independent Registered Public Accounting Firm](index=69&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Ernst & Young LLP issued an unqualified opinion on the financial statements and internal controls, highlighting critical audit matters - Ernst & Young LLP issued an **unqualified opinion** on the Company's consolidated financial statements as of January 2, 2021[362](index=362&type=chunk) - An **unqualified opinion** was also expressed on the effectiveness of the Company's internal control over financial reporting as of January 2, 2021[363](index=363&type=chunk) - Critical audit matters include accounting for the **CAM acquisition**, the **goodwill impairment test for the Infrastructure reporting unit**, and **uncertain tax positions**[366](index=366&type=chunk)[367](index=367&type=chunk)[369](index=369&type=chunk) - Auditing the CAM acquisition involved subjective judgment due to significant estimation in determining the fair value of customer relationships[368](index=368&type=chunk) - The goodwill impairment test for the Infrastructure reporting unit was challenging due to significant estimation, particularly the revenue growth assumption[369](index=369&type=chunk) - Auditing uncertain tax positions was challenging and subjective due to global operations and interpretations of tax law[369](index=369&type=chunk) [Consolidated Statements of Operations](index=73&type=section&id=Consolidated%20Statements%20of%20Operations) This statement presents the company's financial performance for fiscal years 2018-2020, detailing revenues, expenses, and earnings per share Consolidated Statements of Operations (2018-2020) | (Millions of Dollars, Except Per Share Amounts) | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Net Sales | $14,534.6 | $14,442.2 | $13,982.4 | | Cost of sales | $9,566.7 | $9,636.7 | $9,131.3 | | Selling, general and administrative | $3,048.5 | $3,008.0 | $3,143.7 | | Earnings before income taxes and equity interest | $1,267.0 | $1,130.0 | $1,022.1 | | Net earnings | $1,234.7 | $958.0 | $605.8 | | Net Earnings Attributable to Common Shareowners | $1,210.4 | $955.8 | $605.2 | | Earnings per share of common stock: Diluted | $7.77 | $6.35 | $3.99 | [Consolidated Statements of Comprehensive Income](index=74&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This statement presents the company's net earnings and other comprehensive income components for fiscal years 2018-2020 Consolidated Statements of Comprehensive Income (2018-2020) | (Millions of Dollars) | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Net Earnings Attributable to Common Shareowners | $1,210.4 | $955.8 | $605.2 | | Other comprehensive income (loss) | $170.9 | $(70.3) | $(225.2) | | Comprehensive income attributable to common shareowners | $1,381.3 | $885.5 | $380.0 | [Consolidated Balance Sheets](index=75&type=section&id=Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's financial position as of January 2, 2021, and December 28, 2019 Consolidated Balance Sheets (2019-2020) | (Millions of Dollars) | 2020 | 2019 | | :--- | :--- | :--- | | **ASSETS** | | | | **Total Current Assets** | **$6,036.0** | **$4,456.6** | | Property, Plant and Equipment, net | $2,053.8 | $1,959.5 | | Goodwill | $10,038.1 | $9,237.5 | | **Total Assets** | **$23,566.3** | **$20,596.6** | | **LIABILITIES AND SHAREOWNERS' EQUITY** | | | | **Total Current Liabilities** | **$4,558.3** | **$4,405.7** | | Long-Term Debt | $4,245.4 | $3,176.4 | | **Total Shareowners' Equity** | **$11,066.4** | **$9,142.2** | | **Total Liabilities and Shareowners' Equity** | **$23,566.3** | **$20,596.6** | [Consolidated Statements of Cash Flows](index=76&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This statement details the company's cash inflows and outflows from operating, investing, and financing activities for fiscal years 2018-2020 Consolidated Statements of Cash Flows (2018-2020) | (Millions of Dollars) | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | **Net cash provided by operating activities** | **$2,022.1** | **$1,505.7** | **$1,260.9** | | **Net cash used in investing activities** | **$(1,577.1)** | **$(1,208.6)** | **$(989.1)** | | **Net cash provided by (used in) financing activities** | **$615.9** | **$(292.5)** | **$(561.6)** | | Change in cash, cash equivalents and restricted cash | $1,083.7 | $3.2 | $(343.7) | | **Cash, cash equivalents and restricted cash, end of year** | **$1,398.3** | **$314.6** | **$311.4** | Reconciliation of Cash, Cash Equivalents and Restricted Cash (2019-2021) | | January 2, 2021 | December 28, 2019 | | :--- | :--- | :--- | | Cash and cash equivalents | $1,381.0 | $297.7 | | Restricted cash included in Other current assets | $17.3 | $16.9 | | **Cash, cash equivalents and restricted cash** | **$1,398.3** | **$314.6** | [Consolidated Statements of Changes in Shareowners' Equity](index=78&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareowners'%20Equity) This statement provides an overview of the movements in all components of shareowners' equity for fiscal years 2018-2020 Consolidated Statements of Changes in Shareowners' Equity (2018-2020) | (Millions of Dollars) | Preferred Stock | Common Stock | Additional Paid In Capital | Retained Earnings | Accumulated Other Comprehensive Loss | ESOP | Treasury Stock | Non-Controlling Interests | Shareowners' Equity | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Balance December 29, 2018** | **$750.0** | **$442.3** | **$4,621.0** | **$6,219.0** | **$(1,814.3)** | **$(10.5)** | **$(2,371.3)** | **$3.7** | **$7,839.9** | | Net earnings | | | | $955.8 | | | | $2.2 | $958.0 | | Other comprehensive loss | | | | | $(70.3) | | | | $(70.3) | | **Balance December 28, 2019** | **$1,500.0** | **$442.3** | **$4,492.9** | **$6,772.8** | **$(1,884.6)** | **$(2.3)** | **$(2,184.8)** | **$5.9** | **$9,142.2** | | Net earnings | | | | $1,233.8 | | | | $0.9 | $1,234.7 | | Other comprehensive income | | | | | $170.9 | | | | $170.9 | | **Balance January 2, 2021** | **$1,500.0** | **$442.3** | **$4,832.7** | **$7,547.6** | **$(1,713.7)** | **$—** | **$(1,549.3)** | **$6.8** | **$11,066.4** | [A. SIGNIFICANT ACCOUNTING POLICIES](index=79&type=section&id=A.%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the significant accounting policies used in preparing the Consolidated Financial Statements - The Consolidated Financial Statements include Stanley Black & Decker, Inc and its majority-owned subsidiaries[396](index=396&type=chunk) - Acquisitions in 2020 (CAM), 2019 (IES Attachments), and 2018 (Nelson) were accounted for as business combinations[397](index=397&type=chunk) - A **20% interest in MTD Holdings Inc** was acquired in January 2019, accounted for using the equity method[398](index=398&type=chunk) - Divestitures in 2020 and 2019 are reported in the Consolidated Financial Statements through their sale dates[400](index=400&type=chunk)[401](index=401&type=chunk) - Foreign operations' assets and liabilities are translated at current exchange rates, with adjustments reported in shareowners' equity[404](index=404&type=chunk) - The allowance for credit losses is determined using specific reserves and a percentage-based reserve based on historical data[409](index=409&type=chunk) - U.S. inventories are primarily valued at LIFO cost, while non-U.S. inventories use FIFO cost[410](index=410&type=chunk) - Property, plant and equipment are valued at historical cost less accumulated depreciation[411](index=411&type=chunk) - Goodwill and indefinite-lived intangible assets are not amortized but are tested for impairment annually[414](index=414&type=chunk)[415](index=415&type=chunk)[416](index=416&type=chunk)[417](index=417&type=chunk) - Derivative financial instruments are used to manage foreign currency, interest rate, and commodity price risks[418](index=418&type=chunk)[419](index=419&type=chunk)[420](index=420&type=chunk)[421](index=421&type=chunk) - Revenue is recognized based on a five-step model (ASC 606), primarily at a point in time for tangible products[422](index=422&type=chunk)[425](index=425&type=chunk) - For contracts with multiple performance obligations, transaction price is allocated based on standalone selling price[426](index=426&type=chunk)[427](index=427&type=chunk) - Revenue for security systems and construction projects is recognized over time using the input method[429](index=429&type=chunk)[430](index=430&type=chunk) - Cost of sales includes manufacturing, service delivery, freight, and overhead; SG&A includes selling, distribution, and administrative expenses[434](index=434&type=chunk)[435](index=435&type=chunk) - Advertising costs are expensed when incurred or when the advertisement first airs[436](index=436&type=chunk) - Stock-based compensation is recognized on a straight-line basis over the vesting period[439](index=439&type=chunk) - Income taxes are accounted for under the asset and liability method (ASC 740)[441](index=441&type=chunk)[442](index=442&type=chunk)[443](index=443&type=chunk)[444](index=444&type=chunk) - Recently adopted accounting standards include those for cloud computing costs, fair value disclosures, and credit losses[446](index=446&type=chunk)[447](index=447&type=chunk)[448](index=448&type=chunk)[449](index=449&type=chunk)[450](index=450&type=chunk) - ASU 2016-13 (Credit Losses) adoption in Q1 2020 resulted in a **$3.8 million cumulative-effect adjustment** to opening retained earnings[450](index=450&type=chunk) - Newly issued accounting standards not yet adopted relate to convertible debt, reference rate reform, and income taxes[451](index=451&type=chunk)[452](index=452&type=chunk)[454](index=454&type=chunk)[455](index=455&type=chunk)[456](index=456&type=chunk) [B. ACCOUNTS AND NOTES RECEIVABLE](index=87&type=section&id=B.%20ACCOUNTS%20AND%20NOTES%20RECEIVABLE) This note details the composition of accounts and notes receivable, net of an allowance for credit losses Accounts and Notes Receivable, Net (2019-2020) | (Millions of Dollars) | 2020 | 2019 | | :--- | :--- | :--- | | Gross accounts and notes receivable | $1,653.3 | $1,567.0 | | Allowance for credit losses | $(141.1) | $(112.4) | | **Accounts and notes receivable, net** | **$1,512.2** | **$1,454.6** | | Long-term receivable, net | $139.9 | $146.1 | - Trade receivables are diversified across retailers, distributors, and industrial accounts globally[457](index=457&type=chunk) Changes in Allowance for Credit Losses (2019-2021) | (Millions of Dollars) | Balance December 28, 2019 | Cumulative Effect Adjustment (a) | Charged To Costs and Expenses | Charged To Other Accounts (b) | Deductions (c) | Balance January 2, 2021 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Total** | **$112.4** | **$3.8** | **$41.1** | **$19.9** | **$(36.1)** | **$141.1** | - Financing receivables primarily relate to security equipment sales-type leases[457](index=457&type=chunk)[460](index=460&type=chunk) Expected Timing of Lease Receivable Payments (January 2, 2021) | (Millions of Dollars) | Total | Within 1 Year | 2 Years | 3 Years | 4 Years | 5 Years | Thereafter | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Finance receivables | $209.5 | $80.3 | $56.5 | $38.9 | $21.4 | $8.1 | $4.3 | | Operating leases | $39.7 | $38.5 | $0.9 | $0.3 | $— | $— | $— | Lease Revenue and Sales-Type Lease Profit (2019-2020) | (Millions of Dollars) | 2020 | 2019 | | :--- | :--- | :--- | | **Total lease revenue** | **$257.8** | **$250.5** | | Sales-type lease profit | $45.0 | $35.3 | - The Company sells certain trade accounts receivables to a special purpose subsidiary for liquidity[462](index=462&type=chunk) Accounts Receivable Sale Program (2019-2020) | Metric | 2020 | 2019 | | :--- | :--- | :--- | | Net receivables derecognized | $86.8 million | $100.0 million | | Proceeds from transfers | $259.6 million | $495.4 million | | Pre-tax loss | $1.7 million | $3.6 million | - As of January 2, 2021, deferred revenue totaled **$207.6 million**, with **$1.107 billion** of unearned revenue from long-term contracts[464](index=464&type=chunk)[465](index=465&type=chunk) [C. INVENTORIES](index=89&type=section&id=C.%20INVENTORIES) This note provides a breakdown of inventory by category and details the LIFO and FIFO valuation methods used Inventories, Net (2019-2020) | (Millions of Dollars) | 2020 | 2019 | | :--- | :--- | :--- | | Finished products | $1,922.5 | $1,526.0 | | Work in process | $222.3 | $162.0 | | Raw materials | $592.6 | $567.0 | | **Total** | **$2,737.4** | **$2,255.0** | - Net inventories valued at LIFO cost were **$1.3 billion in 2020** and **$1.1 billion in 2019**[466](index=466&type=chunk) - The CAM acquisition in Q1 2020 included **$124.3 million in net inventory** at fair value[467](index=467&type=chunk) [D. PROPERTY, PLANT AND EQUIPMENT](index=89&type=section&id=D.%20PROPERTY%2C%20PLANT%20AND%20EQUIPMENT) This note presents the gross and net values of property, plant, and equipment and details depreciation and amortization expense Property, Plant and Equipment, Net (2019-2020) | (Millions of Dollars) | 2020 | 2019 | | :--- | :--- | :--- | | Property, plant & equipment, gross | $4,679.9 | $4,290.8 | | Less: accumulated depreciation and amortization | $(2,626.1) | $(2,331.3) | | **Property, plant & equipment, net** | **$2,053.8** | **$1,959.5** | Depreciation and Amortization Expense (2018-2020) | (Millions of Dollars) | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | **Depreciation and amortization expense** | **$376.5** | **$372.8** | **$331.2** | [E. ACQUISITIONS AND INVESTMENTS](index=89&type=section&id=E.%20ACQUISITIONS%20AND%20INVESTMENTS) This note details the company's acquisition activities, including purchase prices, fair values of acquired assets, and resulting goodwill - On February 24, 2020, the Company acquired Consolidated Aerospace Manufacturing, LLC (CAM) for an estimated purchase price of **$1.46 billion**[469](index=469&type=chunk) - The CAM acquisition included an initial cash payment of **$1.30 billion** and future contingent payments up to **$200.0 million**[469](index=469&type=chunk) - In November 2020, **$100 million was paid for contingent consideration** related to the 737 MAX return to service[470](index=470&type=chunk) Estimated Acquisition Date Value of CAM Net Assets (Millions USD) | Asset/Liability | Value | | :--- | :--- | | **Total identifiable net assets** | **$858.6** | | Goodwill | $633.2 | | Contingent consideration | $(155.3) | | **Total consideration paid** | **$1,336.5** | - Goodwill from the CAM acquisition was **$633.2 million**, with $569.8 million estimated to be tax deductible[473](index=473&type=chunk) - In 2020, one smaller acquisition was completed for **$28.2 million**, adding goodwill to the Security segment[476](index=476&type=chunk) - On March 8, 2019, the Company acquired IES Attachments for **$653.5 million**, adding **$311.3 million in goodwill** to the Industrial segment[478](index=478&type=chunk)[480](index=480&type=chunk) - In 2019, five smaller acquisitions totaled **$40.8 million**[483](index=483&type=chunk) - On April 2, 2018, Nelson Fastener Systems was acquired for **$424.2 million**, adding **$216.9 million in goodwill** to the Industrial segment[484](index=484&type=chunk)[485](index=485&type=chunk) - In 2018, six smaller acquisitions totaled **$104.5 million**[487](index=487&type=chunk) Actual Impact from 2020 Acquisitions (Millions USD) | Metric | 2020 | | :--- | :--- | | Net sales | $233.9 | | Net loss attributable to common shareowners | $(89.4) | Pro-forma Impact from Acquisitions (Millions USD, except per share amounts) | Metric | 2020 | 2019 | | :--- | :--- | :--- | | Net sales | $14,592.6 | $14,903.7 | | Net earnings attributable to common shareowners | $1,256.7 | $923.0 | | Diluted earnings per share | $8.06 | $6.13 | - The Company made additional immaterial investments in new and emerging start-up companies in 2020, 2019, and 2018[495](index=495&type=chunk) [F. GOODWILL AND INTANGIBLE ASSETS](index=94&type=section&id=F.%20GOODWILL%20AND%20INTANGIBLE%20ASSETS) This note details changes in goodwill by segment, provides a breakdown of intangible assets, and reports on annual impairment testing Changes in Goodwill by Segment (2018-2021) | (Millions of Dollars) | Tools & Storage | Industrial | Security | Total | | :--- | :--- | :--- | :--- | :--- | | **Balance December 28, 2019** | **$5,161.8** | **$1,995.5** | **$2,080.2** | **$9,237.5** | | Acquisitions | $0.1 | $635.7 | $14.9 | $650.7 | | Foreign currency translation and other | $85.8 | $15.3 | $48.8 | $149.9 | | **Balance January 2, 2021** | **$5,247.7** | **$2,646.5** | **$2,143.9** | **$10,038.1** | - Goodwill for the CAM acquisition is subject to change upon finalization of acquisition accounting[496](index=496&type=chunk) - Goodwill for the Security segment was reduced by **$31.3 million** due to a divestiture[497](index=497&type=chunk) - Annual impairment testing in Q3 2020 determined that the fair values of all reporting units **substantially exceeded their carrying amounts**[498](index=498&type=chunk)[300](index=300&type=chunk) Intangible Assets, Net (2019-2020) | (Millions of Dollars) | 2020 Gross Carrying Amount | 2020 Accumulated Amortization | 2019 Gross Carrying Amount | 2019 Accumulated Amortization | | :--- | :--- | :--- | :--- | :--- | | **Total Amortized Intangible Assets** | **$3,867.8** | **$(2,010.0)** | **$3,209.0** | **$(1,773.3)** | | Indefinite-lived trade names | $2,198.0 | N/A | $2,186.0 | N/A | - Indefinite-lived trade names were tested for impairment in Q3 2020, with fair values exceeding carrying amounts[501](index=501&type=chunk) Intangible Assets Amortization Expense by Segment (2018-2020) | (Millions of Dollars) | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | **Consolidated** | **$201.6** | **$187.4** | **$175.3** | - Future amortization expense is projected at **$201.8 million for 2021**[502](index=502&type=chunk) [G. ACCRUED EXPENSES](index=95&type=section&id=G.%20ACCRUED%20EXPENSES) This note provides a detailed breakdown of the company's accrued expenses as of January 2, 2021, and December 28, 2019 Accrued Expenses (2019-2020) | (Millions of Dollars) | 2020 | 2019 | | :--- | :--- | :--- | | Payroll and related taxes | $324.2 | $262.4 | | Income and other taxes | $241.0 | $243.9 | | Customer rebates and sales returns | $229.6 | $112.0 | | Restructuring costs | $90.2 | $147.8 | | Derivative financial instruments | $185.3 | $22.4 | | **Total** | **$2,110.4** | **$1,977.5** | [H. LONG-TERM DEBT AND FINANCING ARRANGEMENTS](index=95&type=section&id=H.%20LONG-TERM%20DEBT%20AND%20FINANCING%20ARRANGEMENTS) This note details the company's long-term debt, recent issuances and redemptions, and other financing arrangements Long-Term Debt and Financing Arrangements (2019-2021) | (Millions of Dollars) | Interest Rate | Original Notional | 2021 Carrying Value | 2019 Carrying Value | | :--- | :--- | :--- | :--- | :--- | | Notes payable due 2026 | 3.40% | $500.0 | $497.2 | $496.5 | | Notes payable due 2028 | 4.25% | $500.0 | $496.2 | $495.8 | | Notes payable due 2030 | 2.30% | $750.0 | $742.9 | $— | | Notes payable due 2048 | 4.85% | $500.0 | $494.3 | $494.1 | | Notes payable due 2050 | 2.75% | $750.0 | $739.9 | $— | | **Total long-term debt, including current maturities** | | **$4,300.0** | **$4,245.4** | **$3,179.5** | - As of January 2, 2021, total aggregate annual principal maturities of long-term debt are **$4.3 billion thereafter**[505](index=505&type=chunk) - In November 2020, the Company issued **$750.0 million of 2.75% senior unsecured term notes due 2050**[506](index=506&type=chunk) - Contemporaneously, the Company redeemed **$1.2 billion of 2021 and 2022 Term Notes**, recognizing a **$46.9 million pre-tax loss**[507](index=507&type=chunk) - In February 2020, the Company issued **$750.0 million of 2.3% notes due 2030** and **$750.0 million of 4.0% debentures due 2060**[508](index=508&type=chunk)[509](index=509&type=chunk) - In March 2019, **$500.0 million of 3.40% senior unsecured notes due 2026** were issued[510](index=510&type=chunk) - In November 2018, the Company issued **$500.0 million of 4.25% notes due 2028** and **$500.0 million of 4.85% notes due 2048**[511](index=511&type=chunk) - The Company has a **$3.0 billion commercial paper program** and committed credit facilities as liquidity back-stops[515](index=515&type=chunk)[516](index=516&type=chunk)[517](index=517&type=chunk)[518](index=518&type=chunk) - As of January 2, 2021, **no borrowings were outstanding** under the commercial paper program or committed credit facilities[515](index=515&type=chunk)[516](index=516&type=chunk)[518](index=518&type=chunk) - The Company's interest coverage covenant was amended in April 2020 to provide greater financial flexibility[521](index=521&type=chunk) [I. FINANCIAL INSTRUMENTS](index=99&type=section&id=I.%20FINANCIAL%20INSTRUMENTS) This note details the company's use of derivative financial instruments to manage various market risks - The Company uses derivative financial instruments to manage market risks, not for speculative purposes[522](index=522&type=chunk)[523](index=523&type=chunk) Fair Values of Derivatives (2019-2021) | (Millions of Dollars) | 2020 Fair Value | 2019 Fair Value | | :--- | :--- | :--- | | **Total Designated as hedging instruments** | **$175.4** | **$394.9** | | **Derivatives not designated as hedging instruments** | **$15.6** | **$3.7** | | **Total** | **$191.0** | **$401.0** | - The Company is exposed to credit risk for net exchanges but limits exposure by contracting with diverse financial institutions[525](index=525&type=chunk) - After-tax mark-to-market losses for cash flow hedge effectiveness were **$103.0 million in 2020** and **$54.2 million in 2019**[527](index=527&type=chunk) - An after-tax loss of **$20.1 million** from cash flow hedges is expected to be reclassified to earnings within the next twelve months[527](index=527&type=chunk) Pre-tax Effect of Cash Flow Hedge Accounting on Consolidated Statements of Operations (2018-2020) | (Millions of dollars) | 2020 Cost of Sales | 2020 Interest Expense | 2019 Cost of Sales | 2019 Interest Expense | 2018 Cost of Sales | 2018 Interest Expense | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Gain (loss) reclassified from OCI into Income | $12.4 | $(16.3) | $(6.5) | $(16.2) | $(17.9) | $(15.3) | - In 2020, the Company terminated forward starting interest rate swaps totaling **$1.0 billion**, resulting in a **$20.5 million loss**[530](index=530&type=chunk) - The Company uses forward contracts to hedge forecasted inventory purchases and sales[535](index=535&type=chunk) - Net investment hedges offset translation adjustments from foreign subsidiaries, with total after-tax amounts in OCI of **$72.8 million in 2021**[540](index=540&type=chunk) - As of January 2, 2021, the Company had cross currency swaps with a notional value of **$839.4 million**[541](index=541&type=chunk) Pre-tax Gains and Losses from Fair Value Changes on Net Investment Hedges (2018-2020) | (Millions of Dollars) | 2020 Total Gain (Loss) Recorded in OCI | 2019 Total Gain (Loss) Recorded in OCI | 2018 Total Gain (Loss) Recorded in OCI | | :--- | :--- | :--- | :--- | | Forward Contracts | $0.8 | $6.4 | $37.1 | | Cross Currency Swap | $(5.4) | $54.8 | $(2.3) | | Option Contracts | $— | $(3.7) | $(2.0) | | Non-derivative designated as Net Investment Hedge | $(8.5) | $21.7 | $61.8 | Gain (Loss) from Undesignated Foreign Exchange Contracts (2018-2020) | (Millions of Dollars) | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Foreign Exchange Contracts (Other-net) | $(15.7) | $(4.1) | $17.0 | [J. CAPITAL STOCK](index=104&type=section&id=J.%20CAPITAL%20STOCK) This note details earnings per share, common stock activity, stock-based compensation plans, and other equity arrangements Earnings Per Share Reconciliation (2018-2020) | (Millions of Dollars, in thousands for shares) | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Net Earnings Attributable to Common Shareowners | $1,210.4 | $955.8 | $605.2 | | Diluted weighted-average shares outstanding | 155,861 | 150,558 | 151,643 | | Earnings per share of common stock: Diluted | $7.77 | $6.35 | $3.99 | - The 2019