2016 ANNUAL REPORT
BUILDING ON
INNOVATION AND
DIGITAL TRANSFORMATION
SOCIAL
RESPONSIBILITY
HIGH
PERFORMANCE
2016YEARINREVIEW.STANLEYBLACKANDDECKER.COM
BUILDING ON
INNOVATION
AND DIGITAL
TRANSFORMATION
Delivering
breakthrough and
trusted solutions
that power growth
every day, while
becoming a digital
industrial powerhouse
at the forefront of
how work gets done
BUILDING ON
SOCIAL RESPONSIBILITY
Being a force for
positive, needed
change everywhere
we work and live
BUILDING ON
HIGH PERFORMANCE
Continually raising
the bar as we target
outperformance
4
DEAR
SHAREHOLDERS
It is an honor and a privilege to have been named
Stanley Black & Decker’s Chief Executive Officer
as of last August. I am both excited and humbled by
the opportunity to lead this Company, recognizing
the true depth of the responsibility of being just the
13th leader in our long and storied history.
JAMES M. LOREE
President & Chief Executive Officer
I have dedicated the last 18 years of my life to serving this organization, first as
Chief Financial Officer for a decade, and most recently as Chief Operating Officer
for more than seven years. From a $2 billion market cap company with a strong
brand and a modest portfolio of hand tools, hinges, hydraulic tools, entry doors and
automatic doors, we have evolved into a $19 billion large cap, diversified industrial
with iconic brands, the world’s largest tools and storage company, the world’s
second largest commercial electronic security services provider and a leading
provider of engineered fastening solutions. And importantly, we have generated total
shareholder return (TSR) exceeding 400% over this period, well above the S&P 500
and a number of elite industrials.
In 2018, we will be celebrating Stanley Black & Decker’s 175th anniversary.
Fewer than 50 U.S. publicly traded companies have achieved this critical milestone,
and it is a testament to the Company’s openness and willingness to adapt to
changing circumstances over the years. It is clear that in today’s dynamic
world, that same resilience and agility is a prerequisite to success and, increasingly,
corporate longevity.
We have built a winning organization that insists upon high performance in growth,
profitability, asset efficiency and cash flow. At the same time, we have demonstrated
a commitment to grow and develop our people, provide for their health and safety,
and foster an inclusive and respectful work environment. We conduct ourselves
responsibly, with integrity and sustainability at the heart of everything we do. We are
bold and agile, yet thoughtful and disciplined. This approach is what has driven our
history, our results and our evolution through the years, and will be what continues
to make us successful in the future.
VISIT THE 2016 YEAR
IN REVIEW WEBSITE
Visit 2016yearinreview.
stanleyblackanddecker.com
to view stories and pictures
that bring exciting aspects
of the Stanley Black & Decker
story to life, explore our
financials, review our
sustainable practices, and
read about our businesses, our
brands and our plans for growth.
STRONG 2016 RESULTS
In 2016, the Stanley Black & Decker team once again distinguished itself with strong
progress against our long-term strategic and financial objectives. It was a year
characterized by breakthrough and core innovation, transformation and financial
success. The Company performed well in terms of organic growth, margin expansion
1
STANLEY BLACK & DECKER 2016 ANNUAL REPORT
2016 SUMMARY
OF RESULTS
TOTAL REVENUES OF
and free cash flow generation. As always, our entire organization remained focused
on generating value for our shareholders, delivering 10% TSR in 2016. We also
continued to build upon our growth culture, driven by innovation, digital and
commercial excellence, a passion to exceed our customers’ expectations every day,
and elevating our already strong commitment to social responsibility.
Our 2016 financial results included top-quartile organic growth of 4%, along with
record earnings per share, operating margin rate and working capital turns. In
addition, 2016 highlights included:
$11.4 BILLION
•
Launching the revolutionary DEWALT FlexVolt battery system, which contributed
approximately $100 million of revenues in just four months
LED BY 4% ORGANIC
GROWTH
•
Announcing the $1.95 billion acquisition of Newell Tools in October 2016—our
first major acquisition since 2013
OPERATING MARGIN RATE
UP 20 BASIS POINTS
•
Completing our Security portfolio assessment in December 2016, resulting in our
decision to retain the commercial electronic and automatic doors portions of the
Security business and sell the majority of our Mechanical Security businesses for
$725 million
TO 14.4%
OVERCOMING
$155 MILLION OF FOREIGN
CURRENCY HEADWINDS
EARNINGS PER SHARE
UP 10% TO A
RECORD $6.51
FREE CASH FLOW
CONVERSION
OF 118%
ENABLING OUR
49TH CONSECUTIVE
ANNUAL DIVIDEND
INCREASE
These meaningful successes in 2016, in addition to our agreement to purchase the
Craftsman brand from Sears Holdings announced in January 2017, provide for a very
strong setup for 2017.
Solid organic growth was again a hallmark of our results, with solid increases in
several businesses. Tools & Storage generated an impressive 7% organic growth
rate, with each Tools & Storage region demonstrating increases, including 7% in
North America, 8% in Europe and 5% in the Emerging Markets.
This growth was driven by the successful launch of FlexVolt and other innovative
new products, investments in e-commerce and other commercial excellence
initiatives, as well as the continued success of our mid-price-point product launches
in the Emerging Markets, which have now expanded beyond corded to include
cordless power tools.
Importantly, our Security business posted 1% organic growth, its first year of
organic growth since 2012, driven by improved field execution and commercial wins.
Industrial declined organically reflecting pressured industrial end markets and
challenges with one major electronics customer.
BEST IN INDUSTRY
10.6 WORKING
CAPITAL TURNS
UP 1.4 TURNS
VERSUS PRIOR YEAR
CFROI OF 16.1%
UP 320 BASIS POINTS
VERSUS 2015
… ALL POWERED BY OUR
STANLEY FULFILLMENT
SYSTEM (SFS) 2.0
Our operating margin rate rose to 14.4%, up 20 basis points over 2015. We
demonstrated the ability to deliver meaningful operating leverage through disciplined
price management, robust productivity and cost control in the face of significant
foreign currency headwinds, while concurrently investing in growth. Tools & Storage
reported its third consecutive year of record operating margin rate, ending the year
up 60 basis points at 17.0%. Security’s margin increased 140 basis points to 12.8%,
reflecting improved field productivity, SG&A cost actions and benefits from a more
disciplined assessment of new commercial opportunities.
We maintained our balanced capital allocation approach, increasing Stanley Black &
Decker’s annual dividend for the 49th consecutive year, opportunistically repurchasing
approximately $350 million of shares and announcing the acquisition of Newell Tools
and the sale of the majority of our Mechanical Security businesses. Our cash flow
return on investment (CFROI) improved significantly, as we increased this important
shareholder return metric by 320 basis points to 16.1%.
We believe that our industry-leading global franchises, world-class brands and powerful
SFS 2.0 operating system position the Company for sustainable above-market
organic growth, margin expansion and free cash flow generation, and offer the
potential to create continued exceptional shareholder value over the long term.
2
22/22 VISION
We have set a bold vision for the future, continuing on our path to become a great
diversified industrial and doubling the size of the Company to $22 billion in revenue by
2022. Our plan contemplates generating 4%–6% annual organic revenue growth and
$5 billion to $9 billion of revenue from acquisitions over this time horizon across our
business segments, while aspiring to deliver top-quartile total shareholder return.
OUR 2022
GO FORWARD VISION
One of the most important roles of the CEO is to ensure the organization’s long-term
sustainability and success—no small challenge in today’s environment of sociopolitical instability, rapid digital disruption and changing customer expectations.
To evolve and stay ahead of the curve and reach our aggressive performance goals,
we must essentially disrupt ourselves before others do it to us.
DOUBLE REVENUES TO
$22 BILLION
BUILD UPON
To successfully operate in this environment and add richness and texture to our
vision of $22 billion by 2022, we are focused on three key strategic themes:
WORLD-CLASS
FRANCHISES
Becoming Recognized as One of the World’s Most Innovative Companies
In this environment of rapid innovation and digital disruption, nurturing a culture of
innovation and digital transformation is paramount. Our enhanced operating system,
SFS 2.0, is at the heart of this objective.
DELIVER TOP-QUARTILE
TOTAL
SHAREHOLDER
RETURN
Taking a playbook from leading innovators, we are supplementing our traditional
efforts and focus on core innovation with separate Breakthrough Innovation and
“Special Forces” teams around the organization. This is enabling us to innovate
forward-looking, future products without the traditional day-to-day pressures
historically faced by teams working in a results-driven, performance-oriented culture.
To help facilitate this work, we have set up “maker” spaces in various locations and
established relationships with leading universities and venture companies.
SFS 2.0 — BEST-IN-CLASS OPERATING SYSTEM GETTING BETTER
SFS 2.0, our expanded operating system launched in 2015, powers our value creation model,
driving outsized organic growth, margin expansion, and asset and cost efficiency across our enterprise.
2.0 has already meaningfully impacted our results, and the momentum continues to build.
Visit 2016yearinreview.stanleyblackanddecker.com/performance to learn more.
m o n Pl a t f o r m s
CO
PR
IM
Breakthrough
Customer
Value
Order-to-Cash
Excellence
Complexity
Reduction
Breakthrough
Innovation
L
Operational
Lean
RO
Sales &
Operations
Planning
NT
OV
E
Com
Core SFS
SFS
2.0
Global
Supply
Management
Com
m o n Pla t for m s
E X PA N D
3
Digital
Excellence
Commercial
Excellence
Functional
Transformation
STANLEY BLACK & DECKER 2016 ANNUAL REPORT
STANLEY BLACK & DECKER VALUE CREATION MODEL
STRONG, INNOVATION-DRIVEN BUSINESSES
IN DIVERSE, GLOBAL MARKETS
LONG-TERM FINANCIAL
OBJECTIVES
POWERED BY:
World-Class Brands
Attractive Growth Platforms
Scalable, Defensible
Franchises
• 4%–6% Organic Growth
• 10%–12% Total Revenue Growth
• OUTSIZED, CAPITAL-EFFICIENT ORGANIC GROWTH
• ATTRACTIVE, EXPANDABLE OPERATING MARGIN RATE
• 10%–12% EPS Growth
(Including Acquisitions)
• OUTSTANDING FREE CASH FLOW CONVERSION
• FCF ≥ Net Income
• 10+ Working Capital Turns
Differentiable Through
Innovation
INVESTOR-FRIENDLY CAPITAL ALLOCATION
~1/2
~1/2
M&A
RETURN CASH TO
SHAREHOLDERS
World-Class Branded Franchises With Sustainable
Strategic Characteristics That Create Exceptional Shareholder Value
FOCUSING ON
THREE KEY STRATEGIC
IMPERATIVES
Becoming recognized as
one of the world’s most
INNOVATIVE COMPANIES
Continuing to deliver
top-quartile
PERFORMANCE
Elevating our commitment
to corporate social
RESPONSIBILITY
DEWALT FlexVolt is the first result of our Breakthrough Innovation initiative. FlexVolt
represents the most extensive global new product launch in DEWALT’s history
and it is changing the professional jobsite by eliminating the need for corded tools.
Powered by a unique battery system, products as powerful as a table saw, for
example, no longer require cords, which is also an essential safety improvement.
Feedback from our retail partners and end users has been extremely positive, and
we significantly surpassed our initial sales expectations in 2016. See more on
FlexVolt at 2016yearinreview.stanleyblackanddecker.com/innovation.html.
To rapidly enable a digital transformation across the Company we formed a Digital
Accelerator team in Atlanta during 2015, which will double to about 100 employees
by the end of this year. This team is comprised of world-class technology talent from
leading universities and companies, with expertise in Internet of Things, cloud,
advanced analytics, social media, mobile applications, search engine optimization,
and digital products, among others. The team is infusing digital capabilities into
our products, processes and business models across the Company. They are also
exploring future technologies that can help drive business growth and protect our
franchises from disruption. DIYZ is a great example of the type of work that is being
produced by the Accelerator. It is a mobile app for your smartphone that helps
DIYers tackle their home improvement projects. With step-by-step instructions,
DIY videos, tool suggestions, and the option to video chat with a pro advisor, it
makes home improvement easy. Introduced just nine months ago, DIYZ has already
been downloaded over 450,000 times and was featured in the Apple Store “New
Apps We Love” section.
Included as part of our digital initiative is a strong commitment to embrace Industry
4.0. We recently selected two of our manufacturing facilities to become “lighthouse”
factories where we will incorporate digital capabilities as well as other elements of
Industry 4.0 to build truly “Smart Factories.” These facilities will incorporate the
4
latest in robotics, manufacturing execution systems (MES), new machines, 3-D
printing, innovation labs and maker spaces to drive the next wave of flexibility, cost
efficiency and quality improvement.
We are on a path to become known as one of the world’s great innovators, fostering
a culture of innovation and an open-minded, collaborative approach within and
between our various business units, infusing the organization with digital talent and
staying ahead of disruptive threats.
Continuing to Deliver Top-Quartile Performance
There is little disagreement that in this high volatility, low growth world, day-to-day
execution and focus on performance are more important than ever. For the
foreseeable future, we are expecting an intrinsic global economic growth rate of
only about 2%–3% per year. In this environment, SFS 2.0, Stanley Black & Decker’s
operating system, differentiates our performance. The enablers of SFS 2.0—Core
SFS, Functional Transformation, Breakthrough Innovation, Commercial Excellence
and Digital Excellence—are the tenets that will allow us to achieve our revenue
growth and profitability targets.
Value Creation Model
Our well-established value creation model produces exceptional shareholder value.
It starts with our world-class brands, attractive growth platforms, and scalable
and defensible franchises. Importantly, it leverages the power of our SFS 2.0
operating system (see page 3) to generate outsized organic growth, operating margin
rate expansion and strong free cash flow conversion—unleashing the potential for
continued strong total shareholder returns.
We also employ an investor-friendly capital allocation model. Our historical, longterm approach, which we intend to continue in the future, is to return approximately
50% of our capital to shareholders in the form of dividends and/or opportunistic
share repurchases, with the remaining 50% earmarked for acquisitions to further
strengthen our business portfolio and fuel growth.
M&A Opportunities
STRATEGIC FRAMEWORK
CONTINUE ORGANIC
GROWTH MOMENTUM
UTILIZE SFS 2.0 as a catalyst
MIX into higher growth, higher
margin businesses
INCREASE relative weighting
of emerging markets
(goal = 20%+)
BE SELECTIVE AND OPERATE
IN MARKETS WHERE:
BRAND is meaningful
VALUE proposition is definable
and sustainable through
innovation
GLOBAL cost leadership is
achievable
PURSUE ACQUISITIVE
GROWTH
In early 2017, we were pleased to announce an agreement to purchase the
Craftsman brand from Sears Holdings. The transaction will give Stanley Black &
Decker the rights to develop, manufacture and sell Craftsman-branded products
in non-Sears retail, industrial and online sales channels across the U.S. and in
other countries.
BUILD upon global Tools
platform
Craftsman is a legendary, American brand with tremendous consumer awareness
built on a legacy of producing quality products at a great value and standing
behind them. The agreement represents a significant opportunity for Stanley Black &
Decker to invest in the brand and product innovation and grow the market by
increasing consumer availability of Craftsman products in previously underpenetrated channels. Today, only roughly 10% of Craftsman sales occur outside
Sears’ retail channels. This is an investment in organic growth: we are expecting
the Craftsman brand to add one-half to one full point of organic growth annually
to our overall organic growth rate, beginning in year two, following the purchase of
the brand.
CONSOLIDATE Commercial
Electronic Security industry
EXPAND Industrial platform /
diversify Engineered Fastening
and Infrastructure
To accommodate the future growth of the Craftsman brand, we intend to expand
our manufacturing footprint in the U.S., consistent with our “make where we sell”
strategy. Manufacturing in the U.S. is nothing new to Stanley Black & Decker.
We have made products in the U.S. since our founding almost 175 years ago, and
our current U.S. manufacturing footprint still includes our tape measure plant in
5
STANLEY BLACK & DECKER 2016 ANNUAL REPORT
New Britain, Connecticut, where our global headquarters is also located. In fact, we
have increased U.S. tools manufacturing jobs by 40% over the last three years, and
plan to expand from close to 40% localized manufacturing today to more than 50%
over the next three years.
2016 GLOBAL PRESENCE
While manufacturing in the U.S. is not always an obvious choice to some, it makes
good business sense for us. We know our end users generally like to buy products
made in their own countries, especially professionals in the trades. Our make
where we sell strategy improves the supply chain, mitigates currency exposure and
lessens harmful environmental impact.
R.O.W.
EMERGING
MARKETS
9%
16%
52%
23%
EUROPE
% 2016 Revenues
U.S.
We already manufacture many products cost effectively in the U.S. and, in some
cases, we have been able to bring manufacturing back to the U.S. at a lower cost
than producing overseas. Industry 4.0 has become a critical element of our
localization strategy, to significantly improve the effectiveness and efficiency of our
manufacturing plants.
Newell Tools represented our first major acquisition since 2013. This transaction
will enhance the offerings and broaden the reach of our Tools & Storage business.
The $1.95 billion acquisition, with over $700 million of revenues, includes the iconic
Lenox brand and the strong Irwin brand, as well as an array of high performing,
high quality industrial cutting, hand tool and power tool accessories—opening
up new avenues of growth. Newell Tools provides both a source of inorganic growth
in year one and an organic boost thereafter—an acquisition consistent with our
strategy of driving above-market growth in a low growth world.
The sale of the majority of our Mechanical Security businesses allows us to sharpen
our focus on the more strategically attractive commercial electronic security and
automatic doors businesses, and to deploy capital in a more accretive and growthoriented manner.
OUR PURPOSE
WE ARE FOR THOSE
WHO MAKE THE WORLD.
Our primary M&A focus remains on strengthening the core—executing tools
acquisitions, pursuing bolt-ons to expand our Industrial businesses, and further
consolidating the commercial electronic security industry—as well as pursuing
longer-term adjacency opportunities that possess a sound industrial logic and fit
with our value creation model.
Elevating Our Commitment to Corporate Social Responsibility
Particularly in today’s volatile geopolitical environment, a commitment to corporate
social responsibility is not only the right thing to do, but has become a necessity
for attracting and retaining top talent and customers and maintaining permission
to operate in many markets.
Our people create products, tools and solutions for those who make the world,
and we take that accountability seriously. We want to make sure that we are
operating in a way that generates a sustainable impact, and research has proven
that purpose-driven companies—those that operate with a mission beyond
profits—deliver better results and have longer-term sustainable enterprises.
Stanley Black & Decker has made a considerable commitment in this space
already. Our sustainability plan, ECOSMART™, extends across our business from
product design and manufacturing to marketing, selling and transportation. We are
focused on substantially decreasing our environmental impacts by an additional
20% over our 2015 baseline by 2020, through reducing our operational energy
and water consumption, waste generation and carbon emissions. We are
consistently recognized for our sustainability progress, for six consecutive years
by the Dow Jones Sustainability Index and four consecutive years on CDP’s
Climate “A” List.
6
Over the next several years, we will become a much more purpose-driven
organization powered by Purpose-Driven Performance which will allow us to
continue our historical top-quartile results while finding ways to match who we are
as a company with social needs that can be fulfilled by our products, our resources
and our people.
The Stanley Black & Decker team is excited about each of these strategic themes
and fully embraces their importance for our long-term success.
IN CLOSING
In closing, I would like to thank John Lundgren for his extraordinary contributions
to Stanley Black & Decker. There is no doubt that he is leaving the Company in
an exponentially better place than when he joined the organization. Over his tenure,
John and I had a highly successful and rewarding business partnership, and we
enjoyed many successful years working together. I also want to thank our entire
Board for orchestrating a seamless CEO succession process which has served the
Company well during this time of transition.
John set the tone for our high performing, growth-oriented company culture that is
based on a company-first mentality, a winning spirit and a sense of humility. He
provided unwavering support for the leadership team, and me personally, and will
be recognized for the legacy he leaves behind—leading this Company through its
amazing transformational journey:
•
From $2 billion to $11 billion in revenues
•
$2 billion to $18 billion in market cap
•
Over 10x working capital turns
•
And importantly, the execution of one of the great industrial mergers of our time
which created Stanley Black & Decker
2017 is certain to be an exciting year, and Stanley Black & Decker is well positioned.
We have the plans in place to continue executing on our vision of being one of the
great industrial companies of our time, driving innovation and a digital transformation
across the organization, focusing on top-quartile performance, and elevating our
commitment to corporate social responsibility.
WELCOMING
SIR GEORGE BUCKLEY
AS CHAIRMAN
We are honored to have Sir George Buckley,
former Chairman, CEO and President
of 3M as our new Chairman. Dr. Buckley
joined our Board in 2010, having been
a director of Black & Decker since 2006.
Before leading 3M, he was Chairman and
CEO of Brunswick Corporation. He is also
Chairman of Smiths Group plc and a
Director of Hitachi, Ltd. and PepsiCo, Inc.
Dr. Buckley started as an electrician
apprentice at a legacy Stanley Works
Sheffield, UK plant near his childhood
home. The company (where his mother
and sister also worked) sponsored his
undergraduate degree program. This
close personal connection to and passion
for Stanley Black & Decker, with his
breadth and depth of experience leading
multi-national industrial companies, make
him a perfect fit for this role. With George
as Chairman we look to continue to create
long-term shareholder value and build
on our foundation as an innovative,
high performing and human-centered
industrial company.
JAMES M. LOREE
President and Chief Executive Officer
7
STANLEY BLACK & DECKER 2016 ANNUAL REPORT
FINANCIAL
HIGHLIGHTS**
2016
(MILLIONS OF DOLLARS, EXCEPT PER-SHARE AMOUNTS)
2015
2014
2013(1)
2012(1)
SWK
Revenue
Gross Margin — $
Gross Margin — %
Working Capital Turns
Free Cash Flow*
Diluted EPS from Continuing Operations
$
$
$
$
11,406.9
4,267.2
37.4%
10.6
1,138
6.51
$ 11,171.8
$ 4,072.0
36.4%
9.2
$
871
$
5.92
$ 11,338.6
$ 4,102.7
36.2%
9.2
$
1,005
$
5.37
$
$
$ 10,889.5
$ 3,933.2
36.1%
8.1
$
528
$
4.98
$ 10,022.4
$ 3,686.9
36.8%
7.8
$
593
$
4.72
Tools & Storage
Revenue
Segment Profit — $
Segment Profit — %
$
$
7,469.2
1,266.9
17.0%
$
$
$
$
2,097.4
269.2
12.8%
$
$
1,840.3
304.4
16.5%
7,140.7
1,170.1
16.4%
7,033.0
1,074.4
15.3%
$ 6,705.0
$ 969.6
14.5%
$
$
6,413.0
951.3
14.8%
$ 2,092.9
$
239.6
11.4%
$ 2,261.2
$
259.2
11.5%
$ 2,295.9
$ 273.0
11.9%
$ 2,259.3
$
342.6
15.2%
$ 1,938.2
$ 339.9
17.5%
$ 2,044.4
$
350.6
17.1%
$ 1,888.6
$ 300.3
15.9%
$
$
Security
Revenue
Segment Profit — $
Segment Profit — %
Industrial
Revenue
Segment Profit — $
Segment Profit — %
1,350.1
232.1
17.2%
(1) Excludes merger and acquisition-related charges, with the exception of Free Cash Flow.
* Free Cash Flow = Net cash provided by operating activities minus capital expenditures.
** In the first quarter of 2015, the Company combined the legacy CDIY business with certain complementary elements of the legacy 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 former CDIY segment was renamed Tools & Storage. The results
from 2012–2014 were recast to align with this change in organizational structure. There is no impact to the consolidated financial statements of the Company as a result of this change.
8
16
12
$871
$1,138
$1,005
16
6%
4%
16
$10.7
$10.0
$9.9
12
13
14
15
16
(e)
12
13
14
15
16.1%
$10.7
16
Working Capital Turns(d)
15
12.9%
$10.4
9.2
15
14
Organic Sales Growth
10.6
9.2
14
13
13.1%
15
9.0%
14
10.1%
13
Total Sales Growth
8.1
15
0
12
7.8
2%
2%
0
13
14
2
–1%
2
3%
4%
4
4
12
5%
7%
6
6
13
(%)
8
9%
(%)
10
12
Free Cash Flow(c)
($ MILLIONS)
EPS
(Continuing Operations)(b)
EBITDA
(Continuing Operations)(a)
($ MILLIONS)
8
16
$528
15
$6.51
14
$593
13
$5.92
12
$5.37
$4.98
16
$3.28
15
$4.72
14
$2.75
$1,805
13
$1,732
$1,170
12
$1,691
$1,068
2016
SCORECARD
16
Cash Flow Return on Investment(f)
Average Capital Employed
($ BILLIONS)
(a) “EBITDA” (earnings before interest, taxes, depreciation, and amortization) is a non-GAAP measurement. 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.
2016
(MILLIONS OF DOLLARS)
Net earnings from continuing operations
Interest income
Interest expense
Income taxes
Depreciation and amortization
EBITDA from continuing operations
9
$
965
2015
$
904
2014
$
857
2013
$
520
2012
$
458
(23)
194
261
408
(15)
180
249
414
(14)
177
227
444
(13)
160
69
434
(10)
144
76
400
$ 1,805
$ 1,732
$ 1,691
$ 1,170
$ 1,068
STANLEY BLACK & DECKER 2016 ANNUAL REPORT
OUR
BUSINESSES
A GLOBAL DIVERSIFIED INDUSTRIAL LEADER
Industrial $1.8B
• STANLEY Engineered Fastening
• Infrastructure
Tools & Storage $7.5B
• Power Tools
• Hand Tools, Accessories & Storage
Security $2.1B
• Commercial Electronic Security
• Mechanical Access
#1
#2
IN TOOLS &
STORAGE
TOOLS & STORAGE
IN ENGINEERED
FASTENING
SECURITY
+7%
The worldwide leader in tools and storage,
we create the tools that build and maintain
the world. Tradespeople and Do-ItYourselfers alike rely on us every day for
the toughest, strongest, most innovative
hand tools, power tools and storage
solutions in the market.
CONSECUTIVE YEARS
DOW JONES
SUSTAINABILITY INDEX
INDUSTRIAL
+1%
ORGANIC GROWTH
AND RECORD
OPERATING MARGIN
RATE
6
GLOBAL LEADER
IN COMMERCIAL
ELECTRONIC
SECURITY
ORGANIC GROWTH
AND 140 BASIS POINT
OPERATING MARGIN
RATE EXPANSION
+ 9%
AUTOMOTIVE ORGANIC
GROWTH IN STANLEY
ENGINEERED FASTENING
IN EUROPE AND ASIA
We deliver peace of mind with advanced
electronic safety, security and monitoring
solutions, automatic doors, and
sophisticated patient safety, asset tracking
and productivity solutions.
We build the solutions that keep your
world running seamlessly—from preferred
engineered fastening solutions in the
automotive and industrial channels to
infrastructure solutions including pipeline
construction and hydraulic tools.
SECURITY
HEALTHCARE
INFRASTRUCTURE
LEADING BRANDS
TOOLS & STORAGE
STANLEY
Facom
STANLEY Security
STANLEY Healthcare
STANLEY Oil & Gas
DEWALT
MAC
Sonitrol
AeroScout
STANLEY LaBounty
BLACK+DECKER
Sidchrome
PACOM
InnerSpace
STANLEY Hydraulics
Porter Cable
Proto
Hugs
STANLEY Dubuis
BOSTITCH
CribMaster
STANLEY Access
Technologies
Powers
Vidmar
GQ Tools
Lista
ENGINEERED
FASTENING
STANLEY Engineered
Fastening
Wander Guard
10
SOCIAL
RESPONSIBILITY
SUSTAINABILITY AND BEYOND
2016 saw continued sustainability success but also advanced direction on social
responsibility as we articulated our purpose. At the intersection of “Who is Stanley
Black & Decker?” and “What societal need do we fulfill?”, our purpose provides the
necessary alignment between our employees, our brands, our values and our future.
Our people create products, tools and solutions for the people who build, connect
and protect the world. Anticipating the needs of tomorrow, we never compromise
our core values of quality and safety, and our sense of purpose is inextricably tied to
a greater good. At Stanley Black & Decker, we are for those who make the world.
“We see a great and growing need for
responsible businesses on the global
stage, and we intend to be a leader in
this respect.”
PLANET
PEOPLE
PRODUCT
FOR THOSE WHO MAKE THE WORLD CLEANER
FOR THOSE WHO MAKE THE WORLD BETTER
FOR THOSE WHO MAKE THE WORLD SUSTAINABLE
As a responsible and human-centered
industrial company, we continue to identify
ways to reduce the environmental impact of
our operations, while working with our
customers, suppliers and community groups
to make a better world.
We see ourselves as a people company.
Doing right by people remains a core value,
and we strive to enhance our citizenship and
philanthropy in our communities, and to
build our reputation upon the good we do in
the world.
We embed responsible principles into our
products, encompassing everything from
safety and ergonomics to reducing the
environmental impacts of how we design,
source, manufacture, package and distribute
our goods.
JAMES M. LOREE
President & Chief Executive Officer
11
12
14
12
13
14
0.27
15
TRR
Incidents /
100 Employees
0.22
0.70
16
12
13
14
15
0.18
16
0.19
15
0.87
0.84
13
Waste
(LBS / HR)
0.66
16
2.06
15
2.16
14
2.33
2.77
13
Water
(GAL / HR)
2.07
12
4.8
16
5.7
15
5.1
8.7
14
6.0
13
4.29
12
Carbon
(MT / KHR)
4.23
16
4.75
15
4.41
14
Energy
(KBTU / HR)
4.79
35.0
13
36.1
39.9
12
35.4
39.8
0.97
0.31
ECOSMARTTM SCORECARD
16
LTR
Incidents /
100 Employees
HOW WE ARE ECOSMART™:
ECOSMART™ SCORECARD:
2016YEARINREVIEW.STANLEYBLACKANDDECKER.COM/CSR
2016YEARINREVIEW.STANLEYBLACKANDDECKER.COM/SCORECARD
STANLEY BLACK & DECKER 2016 ANNUAL REPORT
OUR
LEADERSHIP
BOARD OF DIRECTORS
MANAGEMENT TEAM
George W. Buckley
Chairman, Stanley Black & Decker, Inc.
Chairman, Smiths Group plc
Retired Executive Chairman, 3M Company
James M. Loree
President & Chief Executive Officer
Pete E. Morris
President, Stanley Oil & Gas
Donald Allan, Jr.
Executive Vice President &
Chief Financial Officer
Bart Muller
President, Emerging Markets Group
Andrea J. Ayers
President & Chief Executive Officer,
Convergys Corporation
Patrick D. Campbell
Retired Senior Vice President &
Chief Financial Officer, 3M Company
Carlos M. Cardoso
Principal, CMPC Advisors LLC
Robert B. Coutts
Retired Executive Vice President,
Electronic Systems,
Lockheed Martin Corporation
Debra A. Crew
President & Chief Executive Officer,
Reynolds American Inc.
Michael D. Hankin
President & Chief Executive Officer,
Brown Advisory Incorporated
James M. Loree
President & Chief Executive Officer,
Stanley Black & Decker, Inc.
Anthony Luiso
Retired President—Campofrio Spain,
Campofrio Alimentación, S.A.
Marianne M. Parrs
Retired Executive Vice President &
Chief Financial Officer,
International Paper Company
Robert L. Ryan
Retired Senior Vice President &
Chief Financial Officer, Medtronic, Inc.
Jon Michael Adinolfi
President, U.S. Retail,
Global Tools & Storage
Jeffery D. Ansell
Executive Vice President & Group Executive,
Global Tools & Storage
Aru Bala
President, Stanley Security Europe
Allison A. Nicolaidis
President, Consumer Products Group,
Global Tools & Storage
James P. O’Sullivan
President, Global Sales & Marketing,
Global Tools & Storage
Michael D. Prado
Vice President, Global Supply Management
Michael A. Bartone
Vice President, Corporate Tax
Jaime A. Ramirez
Senior Vice President & President,
Global Emerging Markets
Bruce H. Beatt
Senior Vice President,
General Counsel & Secretary
James Ray, Jr.
President, Global Industrial,
Stanley Engineered Fastening
Jocelyn S. Belisle
Vice President, Chief Accounting Officer
J. Douglas Redpath
President, Hydraulics
James J. Cannon
President, Stanley Security North America
Steven J. Stafstrom
Vice President, Operations, Global Tools &
Storage and Global Emerging Markets
Craig A. Douglas
Vice President & Treasurer
Rhonda O. Gass
Vice President & Chief Information Officer
Debi J. Geyer
Vice President, Environmental Health &
Safety and Social Responsibility
Shannon L. Lapierre
Vice President, Communications &
Public Relations
Frank A. Mannarino
President, Professional Products Group,
Global Tools & Storage
Lee B. McChesney
President, Hand Tools, Accessories &
Storage, Global Tools & Storage
Stephen M. Subasic
Vice President, Human Resources,
Global Tools & Storage
Joseph R. Voelker
Senior Vice President and Chief Human
Resources Officer
Corbin B. Walburger
Vice President, Business Development
Gregory S. Waybright
Vice President, Investor Relations
John H. Wyatt
President, Stanley Engineered Fastening
Christine Yingli Yan
President, Asia, Global Emerging Markets
Corliss J. Montesi
Vice President & Corporate Controller
12
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FINANCIAL AND INVESTOR COMMUNICATIONS
The Stanley Black & Decker investor relations department provides information to
shareowners and the financial community. We encourage inquiries and will provide
services which include:
• Fulfilling requests for annual reports, proxy statements, forms 10-Q and 10-K,
copies of press releases and other Company information
• Meetings with securities analysts and fund managers
Contact the investor relations department at our corporate offices by calling
Greg Waybright, VP, Investor Relations at (860) 827-3833 or by mail at
1000 Stanley Drive, New Britain, CT 06053. We make earnings releases available
online on the Internet on the day that results are released to the news media.
Stanley Black & Decker releases and a variety of shareowner information can be
found at the Company’s website: www.stanleyblackanddecker.com.
FINANCIAL HIGHLIGHTS AND SCORECARD FOOTNOTES
(b) The Company has excluded the 2013 and 2012 after-tax merger and acquisitionrelated charges of $270 million ($1.70 of diluted EPS) and $329 million ($1.97 of
diluted EPS), respectively, in the calculation of diluted EPS. These amounts were
excluded because the Company believes doing so provides a better indicator
of operating trends when analyzing diluted EPS, due to the unusually large
magnitude of these charges and the fact that they are non-recurring. Therefore,
the Company has provided these measures both including and excluding
such charges.
(c) Free Cash Flow = Net cash provided by operating activities minus capital
expenditures.
(d) Working Capital Turns are computed as annualized fourth quarter sales divided
by year-end working capital (accounts receivable, inventory, accounts payable,
and deferred revenue).
(e) Average Capital Employed is computed by dividing the 2-point average of debt
and equity.
(f) Cash Flow Return on Investment is computed as cash from operations plus
after-tax expense, divided by the 2-point average of debt and equity.
CAUTIONARY STATEMENTS UNDER THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
Statements in this Annual Report that are not historical, including, but not limited to,
those that often contain words such as “expect,” “anticipate,” “intend,” “plan,”
“believe,” “seek,” “see,” or “will,” are “forward-looking statements” and subject to
risk and uncertainty. The results that are expressed or implied in such statements
involve inherent risks and uncertainties that could cause actual outcomes and
results to differ materially from those expectations, including, but not limited to, the
risks, uncertainties and other factors set forth or referred to under Item 1A Risk
Factors and the cautionary statements in Item 7 MD&A of the Company’s 2016
Annual Report on Form 10-K that is part of this Annual Report, and any material
changes thereto set forth in any subsequent Quarterly Reports on Form 10-Q, as
well as those contained in the Company’s other filings with the Securities and
Exchange Commission. The Company undertakes no obligation to publicly update or
revise any forward-looking statements to reflect events or circumstances that may
arise after the date hereof.
FRONT COVER: D EWALT FlexVolt™ 60V MAX* 7-1/4" Circular Saw with Brake.
INSIDE FRONT COVER Top: BLACK+DECKER SMARTECH™ 20V MAX* Lithium
Cordless Drill/Driver. Top Middle: STANLEY Healthcare’s RFID-based Staff Tracking
optimizes workflow and security solutions. Bottom Middle: STANLEY Dura-Glide
GreenStar 2000/3000 Automatic Sliding Door Series. Bottom: STANLEY Engineered
Fastening self-piercing rivets on aluminum car body.
INSIDE BACK COVER Top: STANLEY Oil & Gas’ Pipeline Induction Heat operation
specializes in field joint coating services using state-of-the-art equipment like this
IMPP process. The machine on the field joint is our patented Solaris radiant heater.
Top Middle: DIYZ app puts home improvement projects and live professional advice
at your fingertips. Bottom Middle: The LaBounty UPX Platform has the industry’s
best power-to-weight ratio with a streamlined design for better stress flow which
directly complements the increased power of newer high performance excavators.
Bottom: Stanley Black & Decker employees do their part to keep a local park clean.
Visit www.2016yearinreview.stanleyblackanddecker.com to view pictures
that bring exciting aspects of the Stanley Black & Decker story to life, to explore our
financials, and to read about our businesses, our brands and our plans for growth.
Concept and Design: Ideas On Purpose, ideasonpurpose.com
Printing: DG3
This book was printed using only recycled paper.
©2017 Stanley Black & Decker. All Rights Reserved.
6
STANLEY BLACK & DECKER 2016 ANNUAL REPORT
2016YEARINREVIEW.STANLEYBLACKANDDECKER.COM
STANLEY BLACK & DECKER
1000 STANLEY DRIVE
NEW BRITAIN, CT 06053